Annual Report • Apr 27, 2017
Annual Report
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Company profile — 11
VGP's business review General market overview German market Spanish expansion
Corporate governance statement Risk factors Summary of the accounts and comments Comments on the accounts Information about the share Outlook 2017
Board of Directors Executive Management team
Financial review — 107
Statement of responsible persons — 165
in thousands of €
| INVESTMENT PROPERTIES | 2016 | 2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|
| OWN PORTFOLIO | |||||
| TOTAL LETTABLE AREA (m2) | 416,158 | 548,838 | 268,232 | 761,724 | 674,595 |
| OCCUPANCY RATE (%) | 97.0% | 97.3% | 94.0% | 96.2% | 94.5% |
| FAIR VALUE OF PROPERTY PORTFOLIO | 682,525 | 677,084 | 416,089 | 225,804 | 101,629 |
| VGP EUROPEAN LOGISTICS PORTFOLIO (100%) | — | — | — | — | |
| TOTAL LETTABLE AREA (m2) | 593,454 | — | — | — | — |
| OCCUPANCY RATE (%) | 100.0% | — | — | — | — |
| FAIR VALUE OF PROPERTY PORTFOLIO | 594,198 | — | — | — | — |
| BALANCE SHEET | 2016 | 2015 | 2014 | 2013 | 2012 |
| SHAREHOLDERS' EQUITY | 390,305 | 361,978 | 215,417 | 166,057 | 151,260 |
| GEARING | |||||
| NET DEBT/SHAREHOLDERS' EQUITY | 0.87 | 0.71 | 0.72 | 0.55 | N.A. |
| NET DEBT/TOTAL ASSETS | 39.4% | 35.7% | 33.2% | 24,9% | N.A. |
| INCOME STATEMENT – ANALYTICAL FORM | 2016 | 2015 | 2014 | 2013 | 2012 |
| GROSS RENTAL INCOME | 16,806 | 17,073 | 9,596 | 4,613 | 3,071 |
| PROPERTY OPERATING EXPENSES AND NET SERVICE CHARGE INCOME/(EXPENSES) |
(668) | (550) | (1,082) | (818) | (780) |
| NET RENTAL AND RELATED INCOME | 16,138 | 16,523 | 8,514 | 3,795 | 2,291 |
| PROPERTY AND FACILITY MANAGEMENT/ DEVELOPMENT INCOME |
3,825 | 2,547 | 3,407 | 3,875 | 2,724 |
| OTHER INCOME / (EXPENSES) – INCL. ADMINISTRATIVE COSTS | (16,778) | (13,998) | (7,089) | (4,850) | (4,418) |
| SHARE IN THE RESULTS OF JOINT VENTURE AND ASSOCIATES | 7,897 | 191 | 14,473 | 1,526 | (1,615) |
| OPERATING RESULT (BEFORE RESULT ON PORTFOLIO) | 11,082 | 5,263 | 19,305 | 4,346 | (1,018) |
| NET CURRENT RESULT | (4,702) | 621 | 9,463 | 4,095 | 1,294 |
| NET VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTY | 118,900 | 103,981 | 53,920 | 27,872 | 12,347 |
| DEFERRED TAXES | (22,912) | (18,041) | (14,024) | (7,665) | (2,062) |
| RESULT ON PROPERTY PORTFOLIO | 95,988 | 85,940 | 39,896 | 20,207 | 10,285 |
| PROFIT OF THE YEAR | 91,286 | 86,561 | 49,359 | 24,302 | 11,579 |
COMMITTED ANNUALISED RENT INCOME AND NUMBER OF LEASE CONTRACTS (Including joint venture at 100%)
Last year we created a new 50/50 Joint Venture vehicle with Allianz Real Estate – the aim of this vehicle is to invest exclusively in income generating assets developed by VGP.
The sale of mature assets to this Joint Venture occurs at market price and allows us to free up our invested equity and to continue our strong growth plans without having to dilute our shareholders with requests for new equity or overstretching our balance sheet with taking on board a disproportionate amount of debt.
The creation of this exclusive vehicle with Allianz has also given us a greater visibility in the investor community. We are now well equipped to roll out our ambitious growth plans in the near future.
Overall, we had a good performance in all the markets where VGP is operating in during the past year. We had a record number of new leases signed. Our contracted annual lease income grew with € 27.3 million to € 64.3 million divided over 126 lease agreements.
There is a clear positive trend towards (i) larger units per leases (the average size increased to 17,353 m2 per lease signed in 2016, compared to an average of 7,704 m2 per unit in the previous year), and (ii) longer lease terms – our overall weighted average lease term increased to 10.3 years up from 7.5 the year before.
The increase in size and duration is not only a direct result of our geographical presence (in large consumer markets as Germany and Spain the market tends towards larger units) but also of the fact that today's logistic buildings become more and more sophisticated.
There is a clear trend towards robotics and automation which is very present in the growing e-commerce segment. This trend implies big investments into the building by the tenant, who is therefore willing to commit to longer lease terms.
A very positive trend in our customer base is also the loyalty factor – we have more and more customers with whom we are realizing several projects in different locations. All of these factors allow us to work in a more efficient manner, as you spent as much management time in building a small unit than in a large one. Longer lease terms also mean that you need to put less efforts in the re-letting process freeing-up more management time and finally, having teams develop several similar projects for the same tenant is of course beneficial for the effectiveness of the construction processes.
VGP has significantly invested in the expansion of its team, which counts more than 110 of dedicated professionals as I write this letter.
In most of our markets we now have the necessary management skills and task force to start up construction processes which are entirely coordinated through VGP's own management – in a market where all the general contractors struggle with capacities this is a big advantage, not only from a cost perspective, but especially on timing.
Romania is developing very positively – benefi tting a lot from the serious eff ort the government has put in the expansion of the infrastructure network. We have taken options on new land plots, subject to the necessary permits and will be starting up new developments in the second half year, which we anticipate will be mostly pre-let by that time. In Hungary we will be constructing expansions for existing tenants which will lead to longer lease terms and enhanced rental income. We are actively looking to expand our activities in Slovakia and have bought new land, again subject to permits in the direct vicinity of the capital city of Bratislava. The Czech Republic remains one of our real core markets. We are currently starting-up more than 100,000 m2 of new developments which are almost all completely pre-let. Germany has evolved into our biggest market in only a few years of activity and remains our main focus. The biggest challenge for the near future will be to fi nd suitable land for further developments. We have recently acquired 4 new development sites on which development activity will start in the very near future. We added Spain to our list last year with the acquisition of two major sites in Barcelona and Madrid. We will start up our fi rst developments in the next few weeks and we are very confi dent that with the current positive economic evolution of the country and together with our very motivated local team, we will make it a success. Our park in Tallinn, Estonia is now almost fully let and we just started the last 10,000 m2 construction which is completely pre-let and fi nally… We started up our new VGP Park in Riga, Latvia. What we would like to achieve Romania Germany Hungary Slovakia
Spain
Estonia
Today we have the necessary capital structure and team in place to be able to move closer to this goal and I hope that I can already write you in next year's letter some words about further progress on new activities and ventures into new European countries.
As always, I would like to fi nish this letter with a word of thank to our team with whom it is a real pleasure to work with, thanks to their enthusiasm and dedication, our teams' wives, husbands and children for being so supportive, and fi nally to you our shareholders and bondholders for your trust and loyalty in our company.
Yours sincerely, Jan van Geet
VGP (www.vgpparks.eu) constructs and develops high-end logistic real estate and ancillary offices for its own account and for its VGP European Logistics joint venture, which are subsequently rented out to reputable clients on long term lease contracts.
VGP has an in-house team which manages all activities of the fully integrated business model: from identifi cation and acquisition of land, to the conceptualisation and design of the project, the supervision of the construction works, contracts with potential tenants and the facility management of its own real estate portfolio.
VGP focuses on top locations which are located in the vicinity of highly concentrated living and/or production centres, with an optimal access to transport infrastructure.
VGP is quoted on Euronext Brussels and the Main Market of the Prague Stock Exchange.
VGP owns a property portfolio of € 682.5 million as at 31 December 2016 which represents a total lettable area of over 416,158 m2 (16 buildings) with another 17 buildings under construction representing 381,041 m2 of which 159,981 m2 (6 buildings) are being constructed for the VGP European Logistics joint venture.
The VGP European Logistics joint venture owns a property portfolio of € 594.2 million as at 31 December 2016 which represents a total lettable area of over 593,454 m2 (33 buildings).
As at 31 December 2016 VGP has a land bank in full ownership of 2,993,779 m2. This land bank allows VGP to develop besides the current completed projects and projects under construction (637,218 m²) a further 890,000 m2 of lettable area of which 314,000 m2 in Germany, 258,000 m2 in the Czech Republic, 268,000 m2 in Spain and 50,000 m2 in the other countries. Besides this, VGP had another 417,000 m2 of new plots of land under option, at yearend, allowing to develop approx. 192,000 m2 of new projects. It is expected that these remaining land plots will be acquired, subject to permits, during the course of 2017.
VGP European Logistics has a land bank in full ownership of 1,931,383 m2 as at 31 December 2016. This land bank allows the Joint Venture to develop besides the current completed projects and projects under construction (753,435 m2) a further 94,700 m2 of lettable area of which 21,500 m2 in Germany, 41,800 m2 in the Czech Republic and 31,400 m2 in the other countries.
In order to sustain its growth over the medium term VGP entered into a 50/50 joint venture ('VGP European Logistics') with Allianz Real Estate in February 2016. The new joint venture acts as an exclusive takeout vehicle of the income generating assets and has an exclusive right of first refusal in relation to acquiring the income generating assets developed by VGP which are located in Germany, the Czech Republic, Slovakia and Hungary.
VGP provides certain services, including asset-, property- and development advisory and management, for the VGP European Logistics joint venture and receives fees from the Joint Venture for doing so. Those services are carried out on an arm's-length basis and do not give VGP any control over the relevant Joint Venture (nor any unilateral material decisionmaking rights). Significant transactions and decisions within the Joint Venture require full Board and/or Shareholder approval, in accordance with the terms of the Joint Venture agreement.
The entering into this Joint Venture is of a significant strategic importance to the Group as it allows VGP to recycle its initial (partially or totally) invested equity when such developments are acquired by the Joint Venture and to re-invest these monies in the continued expansion of the development pipeline, including the further expansion of the land bank.
Greenfield developments are the core activity of the VGP Group. Developments are undertaken primarily for the Group's own account and to a lesser extent for the Joint Venture. The Group pursues a growth strategy in terms of development of a strategic land bank which is suitable for the development of turnkey and ready-to-be-let logistic projects. The plots are zoned for logistic activities. The management of VGP is convinced that the top location of the land and the high-quality standards of its real estate projects contribute to the long-term value of its portfolio.
The Group concentrates on the sector of logistic and light industrial accommodation projects situated in Germany, the mid-European region and Spain. The Group aims to expand into other European markets in the near future. High quality projects are always developed on the basis of VGP building standards, with adaptations to meet specific requirements of future tenants but always ensuring multiple purpose use and easy future re-leasability.
In their initial phase of development, some projects are being developed at the Group's own risk (i.e., without being pre-let). The development pipeline which was transferred to the Joint Venture as part of the Seed portfolio in May 2016 is or will be developed at VGP's own risk and subsequently acquired and paid for by the Joint Venture subject to preagreed completion and lease parameters.
The constructions, which respond to the latest modern quality standards, are leased under long term lease agreements to tenants which are active in the logistic sector, including storing but also assembling, re-conditioning, final treatment of the goods before they go to the industrial clients or the retailers. The land positions are located in the vicinity of highly concentrated living and/or production centres, with an optimal access to transport infrastructure and workforce.
The Group relies on the in-house competences of its team to execute its fully integrated business model, consisting of the identification and acquisition of land and development of the infrastructure, the design of the buildings, the coordination of architectural and engineering aspects, the administration to obtain the necessary permits, the tendering and coordination of the construction works including site management, and upon completion the asset- and property management of the real estate portfolio. The Group's team often operates as a building company, enters into contracts with sub-contractors and monitors the follow up and coordination of the building activities itself.
Property management services are exclusively provided to the Group's own portfolio and the Joint Venture whereby the respective VGP property management company is responsible for managing the proper and undisturbed operation of the buildings. In addition, the property manager will on behalf of the Group or Joint Venture identify, supervise and manage the relationship with third party suppliers.
As part of its offered services the VGP property management companies will also perform project management services. These services cover the performance of capital improvements and any other construction works as may be requested by the owner of the buildings. This scope covers the full range of project management services (supervision and coordination of the contractors for design, advising on obtaining permits, advising on he works and any tenders relating thereto).
As part of the property management services VGP will also provide leasing services. The commercial department is responsible for all aspects of the performance and enforcement of the leases and the lease agreements, also on behalf of the VGP European Logistics portfolio, as well as for day-to-day co-operation with the tenants.
The asset management function was created during 2016 as part of the services rendered to the newly established joint venture and entails giving advice and recommendations to the joint venture companies on the joint venture's assets management and strategy. Further advice and recommendations will be given by the asset manager in respect of appropriate tenant mix, execution of leasing strategy that aligns cash flows with portfolio needs, and manage both capital and operating expenses.
Facility management services are carried out in the in the Czech Republic by SUTA s.r.o. ("SUTA") and are focussed on managing the proper and undisturbed operation of the buildings and performing all actions such as maintenance services, waste management services, maintenance greenery etc that may be necessary in this respect.
During 2016 VGP undertook a strategic repositioning of the Suta facility management within the VGP Group. In the past Suta provided facility management services to a broad range of third party customers. In view of the strong growth of the own and the Joint Venture portfolio it was decided during the year to scale down all services provided to third parties and to concentrate solely on the Group's and the Joint Venture's portfolio going forward.
In other countries where no specific facility management team will be in place, the Group will use third party facility management services companies to perform these activities.
IN-HOUSE COMPETENCES ENABLING A FULLY INTEGRATED BUSINESS MODEL
FOCUS ON BUSINESS PARKS TO REALISE ECONOMIES OF SCALE
VGP recorded a strong growth in all the markets where the Group is active, with e-commerce gaining increasing importance in driving the demand for new lettable space.
2016 also marked the start of a new 50/50 joint venture with Allianz Real Estate. The new joint venture (VGP European Logistics) has an exclusive right of fi rst refusal in relation to acquiring the income generating assets developed by VGP which are located in Germany, the Czech Republic, Slovakia and Hungary. VGP will continue to service the joint venture as asset-, propertyand development manager.
VGP European Logistics recorded its fi rst closing at the end of May 2016, in which 15 parks were acquired located in Germany (8 parks), the Czech Republic (4 parks), Slovakia (1 park) and Hungary (2 parks) and comprised 28 logistic buildings. A second closing took place at the end of October 2016, in which a further 5 buildings were acquired i.e. 4 buildings located in Germany and one building located in Slovakia.
During the year 14 buildings were completed totalling 268,945 m2 of lettable area and 1 building
of 185,000 m2 lettable area was acquired. At the end of the year 17 buildings were under construction representing 381,041 m2 of lettable are of which 159,981 m2 (6 buildings) are being constructed for the VGP European Logistics joint venture.
VGP made also a jump start in Spain in 2016 with a sale and lease back transaction whereby VGP acquired a state of the art brand new warehouse from the fashion Group Mango off ering 185,000 m2 of usable space (extendable to circa 260,000 m2) and leased it back to Mango under a long-term lease agreement. At the same time VGP also acquired 400,000 m2 of additional development land located in Barcelona (adjacent to the Mango building) and Madrid (San Fernando de Henares). The total initial invested amount was around € 195 million.
The increase in demand of lettable area resulted in the signing of new lease contracts in excess of € 30.4 million (own and Joint Venture portfolio) of which € 27.4 million related to new or replacement leases million and € 3.0 million were related to renewals of existing lease contracts. During the year lease contracts for a total amount of € 1.0 million were terminated.
The annualised committed leases (on an aggregate own and Joint Venture portfolio basis) therefore increased to € 64.3 million as at the end of December 2016 (compared to € 38.0 million as at 31 December 2015).
The signed lease agreements as at 31 December 2016 represent a total of 1,278,238 m2 of lettable area and correspond to 126 different tenants' lease or future lease agreements (on an aggregate own and Joint Venture portfolio basis).
The weighted average term of the annualised committed leases of the combined own and Joint Venture portfolio stood at 10.3 years at the year-end (7.5 years as at 31 December 2015) and the occupancy rate (own and Joint Venture portfolio) reached 98.8% at yearend (compared to 97.3% at the end of 2015).
During the year 2016 VGP signed new annualised committed leases in excess of € 23.1 million in total, of which € 21.1 million related to new or replacement leases and € 2.0 million to the renewal of existing leases. During the year lease contracts for a total amount of € 0.2 million were terminated.
Germany was the main driver of the increases in annualised committed leases with more than € 8.9 million of new leases signed during the year. The other countries also performed very well with new leases being signed in the Czech Republic + € 3.1 million, Estonia +€ 1.4 million, Slovakia + € 1.1 million and finally in Romania + € 1.0 million. In Spain VGP entered into a € 7.5 million new lease in respect of the newly acquired building in Barcelona.
This brings the annualised committed leases to € 25.7 million as at 31 December 2016. The signed lease agreements represent a total of 565,324 m2 of lettable area and correspond to 62 different tenants' lease or future lease agreements. The weighted average term of the annualised committed leases stood at 14.1 years at the year-end (10.6 years to first break).
As at 31 December 2016 the investment property portfolio consists of 16 completed buildings representing 416,158 m2 of lettable area with another 11 buildings under construction representing 221,060 m² of lettable area.
During the year VGP delivered in total for its own and joint venture portfolio 14 buildings representing 268,945 m2 of lettable and 1 building of 185,000 m2 lettable area was acquired for its own portfolio. Of these completed buildings, 6 buildings representing 116,726 m2 were retained in its own portfolio.
The completed buildings were located in the Czech Republic: 1 building of 2,753 m2 in VGP Park Cesky Ujezd and 1 building of 11,436 m2 in VGP Park Liberec. In Romania: 2 buildings totalling 35,574 m2 in VGP Park Timisoara. In other countries: 1 building of 11,152 m2 in VGP Park Nehatu (Estonia) and 1 building of 55,811 m2 in VGP Park Soltau (Germany).
The occupancy rate of the own portfolio reached 97.0% at the end of 2016.
During the year 2016 VGP negotiated for its Joint Venture new annualised committed leases in excess of € 7.4 million in total of which € 6.3 million related to new or replacement leases and € 1.1 million to the renewal of existing leases. During the year lease contracts for a total amount of € 0.8 million were terminated.
Germany was the main driver of the increases in annualised committed leases with more than € 5.6 million of new leases signed during the year. In the other countries, new leases were signed in Hungary + € 0.8 million, the Czech Republic + € 0.7 million and finally in Slovakia + € 0.2 million.
This brings the annualised committed leases to € 38.6 million as at 31 December 2016. The signed lease agreements represent a total of 712,914 m2 of lettable area and correspond to 64 different tenants' lease or future lease agreements. The weighted average term of the annualised committed leases stood at 7.8 years at the yearend (6.8 years to first break).
As at 31 December 2016 the investment property portfolio consists of 33 completed buildings representing 593,454 m2 of lettable area with another 6 buildings being developed by VGP, on behalf of the Joint Venture, representing 159,981 m2 of lettable area.
For the Joint Venture, VGP completed 8 buildings i.e. Buildings completed prior to the sale of the Seed portfolio on 31 May 2016: In Germany: 2 buildings totalling 68,129 m2 in VGP Park Rodgau. In other countries: 1 building of 3,640 m2 in VGP Park Plzen (Czech Republic) and 1 building of 22,892 m2 in VGP Park Alsonemedi (Hungary). Buildings completed after 31 May 2016: In Germany: 1 building of 7,062 m2 in VGP Park Rodgau, 1 building of 23,270 m2 in VGP Park Bobenheim-Roxheim and 1 building of 14,471 m2 in VGP Park Hamburg. In other countries: 1 building of 12,756 m2 in VGP Park Malacky (Slovakia).
The occupancy rate of the joint venture portfolio was 100% at the end of 2016.
The development activities have shown a consistent strong track record over the past years. Over the past 9 years VGP developed 2.0 million m2 of lettable area.
PROJECTS HELD BY ASSOCIATES AND SOLD IN OCT–14 PROJECTS HELD BY JOINT VENTURE PROJECTS HELD DIRECTLY BY VGP
At the end of December 2016 VGP has the following 11 new buildings under construction for its own account: 1 building in each of the following Czech parks, VGP Park Tuchomerice, VGP Park Usti nad Labem, VGP Park Cesky Ujezd and VGP Park Olomouc. In Germany: 1 building in each of the following German parks: VGP Park Berlin, VGP Park Leipzig, VGP Park Ginsheim, VGP Park Hamburg and VGP Park Schwalbach. In the other countries: 1 building in VGP Park Nehatu (Estonia) and 1 building VGP Park Kekava (Latvia). The new buildings under construction on which 69% pre-leases have already been signed, represent a total future lettable area of 221,060 m² which corresponds to an estimated annualised rent income of € 10.0 million.
During the year VGP continued to target land plots to support the development pipeline for future growth. In 2016, VGP acquired 1,166,000 m2 development land, of which 408,000 m2 was located in Germany, 358,000 m² in the Czech Republic and 400,000 in Spain. These new land plots allow VGP to develop altogether approximately 649,000 m2. Besides this, VGP had another 417,000 m2 of new land plots under option at year-end which are located in Germany, Slovakia, Romania and the Czech Republic. These land plots have a development potential of approx. 192,000 m2 of new lettable areas and are expected to be acquired, subject to permits, during the course of 2017.
The current land bank allows VGP to develop besides the current completed projects and projects under construction (637,218 m2) a further 890,000 m² of lettable area of which 314,000 m2 in Germany, 258,000 m2 in the Czech Republic, 268,000 m2 in Spain and 50,000 m² in the other countries.
The current development potential of the VGP own portfolio as at 31 December 2016 is as follows:
NOTE: The above figures relate to the current secured land bank. The development potential has been calculated by reference to existing or similar developed logistic projects.
At the end of the year VGP had 6 buildings under construction on behalf of the Joint Venture. In Germany: 3 buildings in VGP Park Hamburg and 1 building in VGP Park Frankenthal. In the other countries: 1 building in VGP Park BRNO (Czech Republic) and 1 building in VGP Park Malacky (Slovakia). The new buildings under construction on which 81% pre-leases have already been signed, represent a total future lettable area of 159,981 m2, which corresponds to an estimated annualised rent income of € 8.6 million.
The Joint Venture has currently a land bank in full ownership of 1,931,383 m2. The land bank corresponds to a total development potential of 848,163 m2 of which 753,435 m2 or 89%; has already been developed or is currently being developed.
The current development potential of the VGP European Logistics portfolio as at 31 December 2016 is as follows
| CEE + GERMANY & SPAIN KEY MARKET INDICATORS | |||||
|---|---|---|---|---|---|
| PRIME RENT €/m²/P.A. |
RENTAL CHANGE Y-O-Y (%) |
PRIME YIELD (%) |
YIELD CHANGE Y-O-Y (%) |
||
| PRAGUE | EUR | 48 | — | 6.00 | - 50 |
| BRATISLAVA | EUR | 54 | 8 | 7.75 | - 25 |
| BUCHAREST | EUR | 48 | — | 9.00 | — |
| BUDAPEST | EUR | 46 | — | 8.25 | - 50 |
| WARSAW | EUR | 43 | — | 6.50 | - 25 |
| BERLIN | EUR | 56 | — | 5.10 | - 30 |
| FRANKFURT | EUR | 73 | 1.4 | 5.00 | - 25 |
| MUNICH | EUR | 81 | — | 5.00 | - 25 |
| BARCELONA | EUR | 81 | — | 6.10 | - 65 |
| MADRID | EUR | 61 | 7 | 6.10 | - 65 |
SOURCE: Jones Lang LaSalle
1 SOURCE: Jones Lang LaSalle
At just over €12.56 billion, the 2016 investment volumes represented a 42% increase over 2015 (€8.82 billion) and is the highest CEE investment volume in the regions' history. 2016 has also been a record breaking year at a country level with the highest ever volumes recorded in the Czech Republic and Slovakia and second best ever results recorded in Poland, Hungary and the SEE region. The full year breakdown saw Poland record an overall transactional volume share of 36%, followed by the Czech Republic (29%), Hungary (13%), SEE markets (8%), Romania (7%) and Slovakia (7%). Table below includes Germany where 2016 transaction volume of €52.9 billion was only about 4% lower compared to 2015 and was ranked third behind 2007 (€54 billion) and 2015 (€55.1 billion) in the longterm statistics. The breakdown of volumes for 2016 is as follows:
| 2016 VOLUME (€ millions) | 2015 VOLUME (€ millions) | |
|---|---|---|
| POLAND | 4,540 | 4,090 |
| CZECH REPUBLIC | 3,600 | 2,652 |
| ROMANIA | 890 | 674 |
| SLOVAKIA | 840 | 358 |
| HUNGARY | 1,700 | 788 |
| OTHER CEE | 994 | 260 |
| TOTAL CEE | 12,564 | 8,883 |
| GERMANY | 52,900 | 55,100 |
| SPAIN | 8,706 | 9,448 |
| GRAND TOTAL | 74,170 | 73,431 |
SOURCE: Jones Lang LaSalle
The weight of both international and domestic capital seeking opportunities across the CEE region has provided increased liquidity for a wide range of properties, especially those with large lot-sizes or making up portfolios and platforms.
As core European markets continue to become increasingly tight, the CEE region will attract further capital. Further compression is expected, although at a slower pace than seen in the previous months.
SOURCE: Jones Lang LaSalle, 2017
Following six years of consecutive growth (2010– 2015) and a record volume in 2015, it seemed unlikely until well into December that the transaction volume on the German commercial investment market would reach the € 50-billion mark. However, an unusually strong final spurt involving numerous large individual and portfolio transactions ensured that the year ended on a high note.
Thus the 2016 transaction volume of € 52.9 billion was only about 4% lower compared to 2015 and was ranked third behind 2007 (€ 54.billion) and 2015 (€ 55.1 billion) in the long-term statistics. Whether the growing insecurity gave the market a final push and brought forward the signing of transactions remains a matter of speculation. It is also not proven if there was a significant shift in the flow of capital as a result of threatening Brexit from the UK to Germany.
The historically low interest rates are still the driving force behind the enormous capital investment requirements of all institutional investors. However, it is becoming increasingly challenging to find adequate products to satisfy this need. This essentially applies to all asset classes used for commercial purposes. The fact that the transaction volume was lower last year compared to the previous year is ultimately due to this supply shortage.
Looking ahead to 2017, this year will be shaped by the political environment to an almost unprecedented degree. A number of elections are pending that could upset the political party landscape in countries such as France, the Netherlands or even Germany. Against this backdrop, it remains to be seen what repercussions this will have for the future economic development of the U.S. and European markets in particular, and how the central banks will ultimately react. The era of zero interest rates at least appears to be over. As infl ation rises and yields increase on the bond markets, investors will again turn their attention to other fi nancial market products, especially government bonds. Thus the capital pressure on property will ease somewhat. Germany retains its label as a 'safe haven', and still off ers good investment opportunities in view of its relatively strong economic and real estate market data. In this respect, it is certainly possible that the transaction volume could again reach between € 45 billion and € 50 billion in 2017.
The second half of 2016 recorded a further € 2.60 billion of transacted commercial real estate, providing a full-year volume of more than € 3.6 billion. This represents the highest ever level of annual trading on record and a 36% increase compared to 2015. This volume is also ca. 26% higher when compared to 2007, the former peak-trading year.
The average transaction size in H2 was € 73 million, which is derived from 36 transactions in total. The highest activity was in the office sector (18) followed by retail (11). Volume-wise, the main transaction of the period was the sale of the P3 industrial portfolio by GIC Real Estate from TPG Real Estate and its partner Ivanhoé Cambridge. The Singapore based fund completed its purchase in Q4 2016 for € 760 million. Other significant transactions in 2016 were The Park -acquired by Deka for € 360 million from Starwood Capital Group and Florentinum -purchased by CEFC for in excess of € 280 million from Penta Investments. The latter was the first major office acquisition by a Chinese investor in the Czech Republic.
For 2017, we expect a robust transactional volume supported by a strong first quarter of the year. A significant pipeline of transactions across sectors remain, specifically retail, held over from 2016. In addition, the continued positive financing environment outlook gives us confidence that we will witness solid transactional activity although this may be limited by a scarcity of product for investors.
The 2016 property investment volume for Romania is estimated at € 890 million, a value almost 35% higher than that registered in 2015 (€ 663 million). However, the number of transactions was slightly smaller, meaning that the average deal size increased.
Bucharest accounted for over 70% of the total investment volume, less than in 2015, showing that liquidity in secondary cities has somewhat improved. Market volumes were dominated by office transactions (45%), while retail and industrial accounted for close to 26% each.
The largest transaction registered in 2016 was the acquisition of 26.88% of Globalworth's shares by South African group Growth point for approximately € 186 million. Globalworth is the largest owner of offi ce space in Romania.. In industrial, the largest deal was the acquisition of P3 Logistic Parks by GIC, the Singapore sovereign wealth fund, through the pan-European acquisition of P3.
2016 marked the entry of several new names on the Romanian real estate market, either through the purchase of regional platforms or, individual assets. Among them Logicor (Blackstone's European industrial division), GIC, PPF and Growthpoint.
Market fundamentals remain robust. The macroeconomic forecast for Romania is positive. The country was the EU's top performer in 2016 (with GDP growth estimated at 4.8%) and is expected to hold this position in 2017 as well, despite a minor slowdown. Occupier demand is at record high levels in all market segments. Availability of quality product is increasing and there is significant yield spread between Romania and Poland or the Czech Republic.
Prime office yields are at 7.5%, prime retail yields at 7.25%, while prime industrial yields are at 9.00%. Yields for office and industrial are at the same level as 12 months ago, while retail yields have compressed by 25 bps over the year. However, there is downward pressure on yields and in 2017 significant compression in industrial and mild compression in offices and retail is likely.
The promising recovery in Spain's real estate market has come in phases, starting in 2013 with Opportunistic investors like Goldman Sachs and Blackstone, who bet on high-risk assets in search of big returns. The next year, SOCIMIs, led by Lar España, began to list on Spain's stock exchange and raise funds focused particularly on Value Add investing and shopping centres.
Quantitative Easing coupled with low bond yields and a volatile stock market continues to propel capital flows into the commercial real estate sector, as investors desperately search for decent returns. However, lack of available quality product has quieted Spain´s real estate investment party a bit this year, with total investment expected to reach €8.7 billion, below last year´s record € 9.4, but much higher number than previous records of € 6.7 billion in 2008 and 7.3 billion in 2007.
Year-to-date, all sectors have witnessed a slight decrease in investment, except for logistics, where volume has actually already surpassed last year's total of €434 million (+89%).
So far this year, commercial real estate investment sums € 8.7 billion. In terms of property sectors, retail and office have clearly dominated, accounting for € 2.97 billion and € 2.77 billion (or 66%) of that total. Compared to last year, both volumes have dropped less than expected; -3% for retail and -13% for the office market. At around € 2.155 billion, the hotel sector is coming in at third place, making up 24%. While at € 819 million (9%) the logistics sector accounts for the smallest piece of the investment pie, it is, as mentioned above, by far the best performer this year, when compared to last year. The same time last year, this sector had amassed € 434 million, meaning it has increased 89% year-over year.
Despite significant prime yield compression, the spread over the Spanish government bond remains at a healthy level above 115 bps. In the logistics sector, they now stand at 6.10%. Office yields stand at 3.75% for Madrid and at 4.00% for Barcelona.
In 2016, the investor profile remained diverse, with no significant changes from 2015. Like last year, large numbers of private investors from Asia and the Middle East remain eager to diversify their investments in the face of oil price swings and slower growth in some countries. While foreign investors are the protagonists in terms of investment activity, national players, who historically have been 40% on average, too play an important role.
A new record take-up was achieved in the market for warehousing and logistic space in Germany. Around 6.7 million m2 of space was taken up (for owner-occupation and letting), exceeding the previous year's record by 8%. It was also 22% and 46% higher than the 5- and 10-year averages, respectively. Many indicators for 2017 are positive: in addition to the economic forecasts of 1.4% GDP growth, they include the unwavering demand for space on the part of companies, their willingness to invest and, to a degree, the continued restructuring of industrial locations. It is possible that the 6 million m2 mark will be exceeded in 2017, for the third year in a row.
The "Big 5" conurbations (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) recorded their second -best performance since 2011, at 2.1 million m2 (2011: 2.25 million m2). This was 2% higher year-onyear, and 9% and 24% above the 5- and 10-year averages, respectively. The Munich and Frankfurt regions recorded the biggest annual growth, at 36% and 21% respectively, with Frankfurt even registering its best ever result of 570,000 m2. Also in positive territory was the Hamburg Region (11%), which assumed pole position in the "Big 5" with total take-up of 665,000 m2. Compared to the same period in 2015, market performance in Berlin and Düsseldorf clearly fell short, at -8% and -47%, in Düsseldorf this was due to unusually high take-up volume last year.
The volume of space taken up by retailers increased significantly year-on-year, pushing up their market share from 31% to 41%. They were also responsible for the five biggest deals of the year in the "Big 5": with a major contribution from the Dutch retailer Action, which leased over 82,000 m2 of space in the first quarter in a project development for its new logistic centre in Biblis; and a letting by Amazon of around 65,000 m2 in Winsen on the southern periphery of Hamburg in the fourth quarter, also in a project development. Around 31% of the space was taken up by companies from the distribution / logistics sector; a similar volume as in 2015. Manufacturers followed with 17%, therefore leasing some 133,000 m2 less than in the previous year.
Prime rents for warehouses with more than 5,000 m2 remained stable in most regions over the course of the year. One exception was the Berlin Region, where the prime rent increased from € 4.70 to € 5.00/m2/ month. Nonetheless, space here was still cheaper than in the other four regions. At € 6.75/m2/month, the highest rents were paid in Munich. This was followed by the Frankfurt (€ 6.00/m2/month), Hamburg (€ 5.60/m2/month) and Düsseldorf regions (€ 5.40/ m2/month).
Outside the "Big 5" conurbations*, take-up reached an all-time high at 4.57 million m2. This was 11% above the result for the same period last year, and 33% and 64% above the 5- and 10-year averages, respectively. 57% of the take-up was generated by lettings, 9% more than twelve months ago. Take-up by owner-occupiers also increased by 14%. Particularly worthy of mention is the Ruhr Area, a logistics region in which takeup exceeded the 1 million m2 mark for the first time. Due to its good supply of highly accessible land, the Ruhr Area is in great demand as a location, particularly in the case of land-intensive companies. Several high-volume contracts were registered here and included lettings by the Metro Group (approx. 225,000 m2 in two self-contained buildings in Marl) and highvolume deals concluded by Amazon in Werne and Opel (owner-occupier) in Bochum in the first half of the year. Amazon also concluded the biggest deal in the fourth quarter, taking over 45,000 m2 in Dortmund. As a result of the four deals mentioned above and a further nine contracts signed for units of over 25,000 m2, almost 90% of take-up in the Ruhr Area was secured in new buildings and project developments.
* NOTE Includes only spaces larger than 5,000 m2 in these regions (SOURCE: Jones Lang LaSalle).
| 2011 (m2) | 2012 (m2) | 2013 (m2) | 2014 (m2) | 2015 (m2) | 2016 (m2) | |
|---|---|---|---|---|---|---|
| OUTSIDE THE "BIG 5"-CONURBATIONS: | ||||||
| — LETTINGS | 2,032,000 | 1,637,300 | 1,539,062 | 1,759,872 | 2,406,425 | 2,606,553¹ |
| — OWNER-OCCUPIERS | 1,585,900 | 1,299,600 | 1,772,338 | 1,906,528 | 1,715,875 | 1,966,347¹ |
| — TOTAL | 3,617,900 | 2,936,900 | 3,311,400 | 3,666,400 | 4,122,300 | 4,572,900 |
| "BIG 5"-CONURBATIONS: | ||||||
| — LETTINGS | 1,781,900 | 1,365,500 | 1,206,200 | 1,406,000 | 1,545,000 | 1,724,700 |
| — OWNER-OCCUPIERS | 464,300 | 418,900 | 499,900 | 484,300 | 512,900 | 380,000 |
| — TOTAL | 2,246,200 | 1,784,400 | 1,706,100 | 1,890,300 | 2,057,900 | 2,104,700 |
| LETTINGS | 3,813,900 | 3,002,800 | 2,745,262 | 3,165,872 | 3,951,425 | 4,331,253 |
| OWNER-OCCUPIERS | 2,050,200 | 1,718,500 | 2,272,238 | 2,390,828 | 2,228,775 | 2,346,347 |
| TOTAL | 5,864,100 | 4,721,300 | 5,017,500 | 5,556,700 | 6,180,200 | 6,677,600 |
WAREHOUSING TAKE-UP GERMANY: LETTINGS / OWNER-OCCUPIERS
SOURCE: Jones Lang LaSalle
1 As calculated by the company based on Jones Lang LaSalle data
| WAREHOUSING TAKE-UP GERMANY | ||||||
|---|---|---|---|---|---|---|
| 2011 (m2) | 2012 (m2) | 2013 (m2) | 2014 (m2) | 2015 (m2) | 2016 (m2) | |
| REGION | ||||||
| — BERLIN | 412,000 | 333,600 | 333,000 | 327,400 | 456,100 | 418,300 |
| — DUSSELDORF | 205,800 | 145,100 | 295,200 | 283,200 | 328,900 | 175,900 |
| — FRANKFURT (INCLUDING WIESBADEN/MAINZ) |
540,000 | 455,600 | 415,000 | 559,000 | 470,500 | 570,300 |
| — HAMBURG | 740000 | 575,400 | 450,000 | 450,000 | 600,000 | 665,000 |
| — MUNICH | 348,400 | 274,700 | 212,900 | 270,700 | 202,400 | 275,200 |
| TOTAL "BIG 5"-CONURBATIONS | 2,246,200 | 1,784,400 | 1,706,100 | 1,890,300 | 2,057,900 | 2,104,700 |
| OUTSIDE "BIG 5"-CONURBATIONS | 3,617,900 | 2,936,900 | 3,311,400 | 3,666,400 | 4,122,300 | 4,572,900 |
| TOTAL | 5,864,100 | 4,721,300 | 5,017,500 | 5,556,700 | 6,180,200 | 6,677,600 |
SOURCE: Jones Lang LaSalle
New advances in technology and growing connectivity are driving e-commerce and revolutionising the logistics sector in a trend we expect to intensify going forwards. Recent figures released by Spain's competition authority, the CNMC, evidence the strong growth of e-commerce, and its huge potential for the future. E-commerce stood at € 5.35 billion in the third quarter of 2016, up 20.3% year on year.
Technology developments and e-commerce are driving a major shift in the retail sector from a multichannel to an omnichannel model. A multichannel model involves various channels (store, online, mobile) which are all managed independently. The omnichannel approach, on the other hand, is based on integrated management of the various channels to offer clients a seamless shopping experience regardless of how they choose to make their purchases. The key to the omnichannel approach is integrating processes, IT systems and infrastructure, including property assets, to allow retailers to meet their customers' needs from wherever they choose. An omnichannel model allows retailers to manage orders both from stores and from warehouses, blurring the line between the two. Spearheading the omnichannel approach is Inditex, which has integrated inventory intelligence into its logistics process through RFID technology to allow for real time monitoring and visibility of its stock. As well as incorporating e-commerce into its stores, Inditex has upped online sales – which now account for 5.5% of total group revenues – by 39.1%.
The large-scale retail segment is changing as a result both of e-commerce and of the clear commitment to fresh produce. Food currently accounts for less than 1% of e-commerce, but companies are focusing increasing efforts on this sales channel, which means they need more dynamic logistics structures. Día, Mercadona, Lidl, Carrefour and El Corte Inglés have all opened new logistics centres or plan to do so in the near future. The latest opening was the El Corte Ingles facility in Tarragona. Día has opened a new logistics platform in Aragón, in addition its other 24 centres in Spain. Mercadona is set to open a 150,000 m2 logistics platform in Vitoria, in Alava's Jundíz industrial estate. The centre will supply all of Mercadona's stores in northern Spain. Lidl invested € 70 million in a warehouse in Alcalá de Henares to supply its shopping centres in mainland Spain, and has also announced the acquisition of plots of land in Valencia for its new centres. The logistics space accounted for by major retailers in Spain, including Auchan and Eroski, stands at over 2,000,000 m2.
Logistics take-up stood at 470,000 m2 in 2016, up 23% on the total for 2015. The fourth quarter was the most active of the year, with a total of around 255,000 m2 taken up in Madrid. In terms of logistics take-up, 2016 was an extremely active year, hitting 2010 highs. Over the course of the year, seven deals took place for volumes of over 20,000 m2.
By sectors, 66% of take-up was accounted for by logistics companies, whilst e-commerce players represented 12% of logistics take-up in Madrid. Transactions in the fi rst ring accounted for 44%, including Amazon's 57,000 m2 facility in San Fernando de Henares.
Other major transactions included 57,800 m2 taken up by Michelín in Illescas and the rental of a 48,500 m2 warehouse by Luis Simoes in Cabanillas del Campo.
The vacancy rate has plummeted by almost half from 6.10% on 2015 to 3.41% in 2016. In the second ring, the vacancy rate stands at a record low of 2.63%. In the third ring, the rate is 3.91%. We expect this downward trend to continue, given the lack of available supply and robust take-up levels.
There is approximately 287,000 m2 currently under construction which is set to be delivered in 2017. Tenants have already been secured for 19% of this future supply, and the remaining 81% are speculative developments. There are also a number of logistics projects that are currently undergoing final planning permission processes and will start coming on to the market as of 2018.
Prime industrial rental levels in Madrid stand at € 5.00/ m2/month. In the second and third ring, rental levels are currently at € 3.25 and € 2.60/m2/month, respectively.
Prime logistics rental levels are stable at € 5/m2/month, and second ring rents stand at € 4.50/m2/month. We expect rental levels to rise by 3% overall by the end of 2017.
| MADRID | RENTAL LEVELS €/m²/MONTH | |||
|---|---|---|---|---|
| MIN. | MAX. | |||
| 1ST RING | 4.25 | 5.00 | ||
| 2ND RING | 3.10 | 4.50 | ||
| 3RD RING | 2.00 | 3.25 | ||
| WAREHOUSES > 20,000 m2: € 4.70/m2/month |
The fourth quarter was the most active of the year in Barcelona, with take-up of around 240,077 m2. Logistics take-up hit a record high of 659,000 m2 in 2016, up 17% on the total for 2015. It is important to note that this increase was substantially due to Amazon's transaction in El Prat for 200,000 m2. Amazon's activity in the Catalan market has meant that 43% of the logistics space taken up is accounted for by e-commerce players. By rings, 45% of take-up took place in the first ring, 34% in the second and 20% in the third.
The top logistics transactions of the year included Amazon's new 200,000 m2 centre in El Prat. Amazon's main reasons for locating this major centre in Barcelona were its proximity to "key sites in southern Europe" such as El Prat airport and Barcelona port, as well as the "access to excellent human resources". Kuehne & Nagel leased a 42,000 m2 logistics warehouse in Constantí to provide services for Amazon.
We expect to see an uptick in turn key projects next year, for two reasons: a lack of existing quality warehouses and ongoing active demand.
The average logistics vacancy rate in Catalonia remained practically flat year on year at 4.24%. The first ring vacancy rate has dropped substantially to 2.96%, the lowest figure on record, due to rising take-up and limited supply. Vacancy rates stand at 4.28% in the second ring and 5.13% in the third.
Tenants are already in place for 78% of future supply under construction in Barcelona. A total of 398,897 m2 is currently under construction in Barcelona, of which 59% are owner-occupied projects.
Industrial rental levels are holding steady across all areas. Prime rental levels in Barcelona are €5.25/m2/month, second ring levels are €4.25/m2/month and third ring rents are € 2.50/m2/month. Industrial purchase prices are also holding firm in all rings. As for industrial land, supply is extremely limited in the Barcelona market, particularly in terms of plots with strong transport links in strategic logistics areas. Very few transactions have taken place, and some of those were for land that does not yet have planning permission. As a result, land prices have remained stable at between € 150 and € 250/m2.
Logistics rental levels are holding steady across all rings, with prime logistics rental levels at € 6.75/m2/ month. We expect rental levels to rise by 4% overall by the end of 2017. Logistics rental levels stand at € 5.25/m2/ month in the second ring and € 3.50/m2/month in the third ring.
| BARCELONA | RENTAL LEVELS €/m²/MONTH | |||
|---|---|---|---|---|
| MIN. | MAX. | |||
| 1ST RING | 5.50 | 3.75 | ||
| 2ND RING | 4.00 | 5.25 | ||
| 3RD RING | 2.50 | 3.50 |
2016 saw also the jump start in Spain with the acquisition of the logistics centre and industrial land plots in Mango Logistics Park in Lliçà d'Amunt (Barcelona). The transaction consisted of a sale and lease back transaction whereby VGP acquired a state of the art brand new warehouse from the fashion Group Mango offering 185,000 m2 of usable space (extendable to circa 260,000 m2) and leased it back to Mango under a long-term lease agreement. Besides this building, VGP acquired around 150,000 m2 of additional development land on which VGP will be able to develop approximately 100,000 m2 of new lettable area for other potential tenants in the near future.
The Mango Logistics centre incorporates the latest technology and logistics robotics capable of handling 75,000 clothing units per hour and streamlining all the logistics processes of the Mango Group. This centre will supply the entire Mango network worldwide which consists of more than 2,200 retail outlets in 110 countries.
VGP also acquired a large development land plot in San Fernando de Henares located close to the Madrid Barajas International airport.
The transaction consists in the acquisition of 223,000 m2 of new development land on which VGP will be able to develop around 140,000 m2 of new lettable area for future tenants.
The first developments in Barcelona and Madrid will be started up during the first half of 2017.
THE FIRST DEVELOPMENTS IN BARCELONA AND MADRID WILL BE STARTED UP DURING THE FIRST HALF OF 2017
In accordance with the original Belgian Code on Corporate Governance published in 2004, the Board of Directors has, on 17 January 2008, adopted the VGP Corporate Governance Charter.
Following the publication of the 2009 Belgian Code on Corporate Governance, the Board of Directors has, on 20 April 2010, adopted the 2009 Code as the reference code for VGP and revised the VGP Corporate Governance Charter.
On 8 December 2016 the Board of Directors has further revised the VGP Corporate Governance Charter. VGP complies in principle with the Belgian Corporate Governance Code and explains in the VGP Corporate Governance Charter and in this Corporate Governance Statement why it departs from some of its provisions
The Belgian Corporate Governance Code is available at www.corporategovernancecommittee.be.
The VGP Corporate Governance Charter is available at www.vgpparks.eu
The Board of Directors consists of five members, who are appointed by the General Meeting of Shareholders. The Chairman and the Chief Executive Officer are never the same individual. The Chief Executive Officer is the only Board member with an executive function. All other members are non-executive Directors.
Three of the Directors are independent: Mr Marek Šebesťák (first appointed in 2007), Mr Alexander Saverys (first appointed in 2007) and Rijo Advies BVBA represented by Jos Thys (first appointed in 2007).
The biographies for each of the current directors (see page 72/73), indicate the breadth of their business, financial and international experience. This gives the directors the range of skills, knowledge and experience essential to govern VGP.
For a detailed description of the operation and responsibilities of the Board of Directors we refer to the VGP Corporate Governance Charter, which is published on the company's website.
The Board of Directors have not and do not intend to appoint a company secretary. By doing so the company deviates from the recommendation 2.9 of the Corporate Governance Code. The small size of the company and its Board of Directors make such appointment not necessary.
The Board of Directors is aware of the importance of diversity in the composition of the Board of Directors in general and of gender diversity in particular. The Board is currently establishing a first profile for candidates, given the specific activities of VGP and the countries in which it is active, with the aim to provide an assignment to the remuneration committee to recommend candidates fitting this profile to the Board and consequently by 2019 reaching the upcoming Belgian legal requirements.
The Board of Directors held 6 board meetings in 2016 of which 3 were held by conference call. The most important points on the agenda were:
| NAME | YEAR APPOINTED |
NEXT DUE FOR RE-ELECTION |
MEETINGS ATTENDED |
|---|---|---|---|
| EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER | |||
| JAN VAN GEET s.r.o. represented by JAN VAN GEET | 2013 | 2017 | 6 |
| NON-EXECUTIVE DIRECTOR | |||
| VM INVEST NV, represented by BART VAN MALDEREN | 2013 | 2017 | 6 |
| INDEPENDENT, NON-EXECUTIVE DIRECTORS | |||
| MAREK ŠEBESŤÁK | 2015 | 2019 | 5 |
| ALEXANDER SAVERYS | 2015 | 2019 | 5 |
| RIJO ADVIES BVBA represented by JOS THYS | 2015 | 2019 | 6 |
Immediately after the Annual General Meeting of Shareholders of 12 May 2017 the mandates of the Executive Director ( Jan Van Geet s.r.o.) and the Non-Executive Director (VM Invest NV) will expiry. The proposal for renewal of the directorships will be submitted to the next Annual General Meeting of Shareholders of 12 May 2017 for approval.
The Board of Directors has also established two advisory committees: an Audit Committee and a Remuneration Committee.
The Audit Committee is composed of three members whom are all non-executive Directors. Two members, Mr Jos Thys and Mr Marek Šebesťák, are independent.
The members of the committee possess sound knowledge of financial management.
For a detailed description of the operation and responsibilities of the Audit Committee we refer to the VGP Corporate Governance Charter, which is published on the company's website.
The Audit Committee meets at least twice a year with the statutory auditor to consult with them about matters falling under the power of the Audit Committee and about any matters arising from the audit. The CEO and CFO also attend the meetings of the Audit Committee.
Given the size of the Group no internal audit function has currently been created.
| NAME | YEAR APPOINTED |
EXECUTIVE OR NON-EXECUTIVE |
INDEPENDENT | NEXT DUE FOR RE-ELECTION |
MEETINGS ATTENDED |
|---|---|---|---|---|---|
| JOS THYS (Chairman) | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 | 4 |
| BART VAN MALDEREN | 2013 | NON-EXECUTIVE | — | 2017 | 4 |
| MAREK ŠEBESŤÁK | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 | 3 |
The Audit Committee met four times in 2016. The Chairman of the Audit Committee reported the outcome of each meeting to the Board of Directors. The most important points on the agenda were:
The Remuneration Committee is composed of three members whom are all non-executive Directors. Two members, Mr Jos Thys and Mr Alexander Saverys, are independent.
The committee's competence in the field of remuneration policy is demonstrated by the relevant experience of its members.
For a detailed description of the operation and responsibilities of the Remuneration Committee we refer to the VGP Corporate Governance Charter, which is published on the company's website.
The Remuneration Committee meets at least two times per year, as well as whenever the committee needs to address imminent topics within the scope of its responsibilities.
The CEO and CFO participate in the meetings when the remuneration plan proposed by the CEO for members of the management team is discussed, but not when their own remunerations are being decided.
In fulfilling its responsibilities, the Remuneration Committee has access to all resources that it deems appropriate, including external advice or benchmarking as appropriate.
| NAME | YEAR APPOINTED |
EXECUTIVE OR NON-EXECUTIVE |
INDEPENDENT | NEXT DUE FOR RE-ELECTION |
MEETINGS ATTENDED |
|---|---|---|---|---|---|
| BART VAN MALDEREN (Chairman) |
2013 | NON-EXECUTIVE | — | 2017 | 2 |
| ALEXANDER SAVERYS | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 | 2 |
| JOS THYS | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 | 2 |
The Remuneration Committee met two times in 2016.
The most important points on the agenda were:
— discussion on remuneration policy;
— allocation of variable remuneration;
— mid-term variable remuneration of Little Rock.
The company has not set up a Nomination Committee. By doing so the company deviates from the recommendation in the provisions 5.3 of the Corporate Governance Code. The deviation is justified considering the smaller size of the company.
Since no Management Committee in the meaning of article 524bis et seq of the Belgian Companies Code has been established, the company has not included specific terms of reference of the executive management. The tasks, responsibilities and powers of the CEO and the executive management are set out in the terms of reference of the Board of Directors. By doing so, the company as a smaller listed company deviates from the recommendation in provision 6.1 of the Corporate Governance Code.
In accordance with the VGP Corporate Governance Charter, the Board of Directors shall, at least every three years, conduct an evaluation of its size, composition and performance, and the size, composition and performance of its Committees, as well as the interaction with the Executive Management. Reference is made to the Terms of Reference of the Board of Directors – in Annex 1 of the VGP Corporate Charter – for a description of the main characteristics of the methodology used for this evaluation.
The Board of Directors and its Committees will carry out a new self-assessment during the course of 2017.
The independent and non-executive Directors receive an annual fixed remuneration of € 10,000 (the chairman receives an fixed annual remuneration of € 20,000). The Directors also receive an attendance fee of € 1,000 for each meeting of the Board of Directors (the chairman receives an attendance fee of € 2,000) and € 500 for each meeting of the Audit Committee or the Remuneration Committee they attend.
For further details of the remuneration policy of the Directors we refer to Annex 2 point 6.1 of the VGP Corporate Governance Charter.
Non – executive Directors do not receive any remuneration linked to performance or results.
The remuneration of the members of the Board of Directors is reflected in the table below:
| NAME amounts in € |
FIXED REMUNERATION |
VARIABLE BOARD ATTENDANCE |
VARIABLE COMMITTEE ATTENDANCE |
TOTAL |
|---|---|---|---|---|
| CHAIRMAN | ||||
| MAREK ŠEBESŤÁK | 20,000 | 10,000 | 1,500 | 31,500 |
| DIRECTORS | ||||
| ALEXANDER SAVERYS | 10,000 | 5,000 | 1,000 | 16,000 |
| RIJO ADVIES BVBA represented by JOS THYS |
10,000 | 6,000 | 3,000 | 19,000 |
| VM INVEST NV represented by BART VAN MALDEREN |
10,000 | 6,000 | 3,000 | 19,000 |
| JAN VAN GEET s.r.o. represented by JAN VAN GEET |
10,000 | 6,000 | — | 16,000 |
| TOTAL | 60,000 | 33,000 | 8,500 | 101,500 |
For the Executive Management the remuneration is determined by the Remuneration Committee in line with the rules described in the company's charter Annex 2 point 6.2 of the VGP Corporate Governance Charter.
The Executive Management consists of Jan Van Geet s.r.o. represented by Jan Van Geet (Chief Executive Officer), Jan Prochazka (Chief Operating Officer), Dirk Stoop BVBA represented by Dirk Stoop (Chief Financial Officer), Tomas Van Geet s.r.o. represented by Tomas Van Geet (Chief Commercial Officer) and Jan Papoušek s.r.o. represented by Mr Jan Papoušek (Chief Operating Officer – Outside CZ).
VGP strives overall for a position above the market median on the total reward position with a substantial variable part based on company, team and individual performance.
Given the small organisation of the Group the VGP remuneration including the variable remuneration is set based on the performance criteria defined by the Remuneration Committee on an annual basis and paid out in cash. These criteria relate amongst others to the occupancy rate of the income generating assets, the gearing level of the Group, the profit contribution of the development activities and the maximisation of shareholder value.
The Remuneration Committee will from time to time approve an overall variable remuneration envelope based on the company's performance and delegates the effective allocation of this variable remuneration to the CEO. The allocation by the CEO to executive and senior management will occur based on individual performance taking the overall performance criteria as set by the Remuneration Committee into consideration.
The remuneration policy is reviewed on an annual basis to accommodate potential developments in (labour) market characteristics, company strategy, company and individual performance as well as other relevant factors influencing the performance and motivation of the management team. Currently VGP expects to continue the current practice for the next two financial years.
The amount of the remuneration and other benefits granted directly or indirectly to the executive management members other than the Chief Executive Officer, by the Company or its subsidiaries, in respect of 2016 is set forth below on a global basis.
Little Rock SA is responsible for the Group's daily management, financial management and commercial management and is represented for this purpose by the CEO (Mr Jan Van Geet), CFO (Mr Dirk Stoop) and CCO (Mr Tomas Van Geet) respectively. As a consideration for rendering such services, Little Rock SA is entitled to receive a fixed fee, a short-term variable fee subject to certain criteria being met, and a midterm variable fee of 5% of the profits before taxes of the Group on a consolidated basis, in return for Little Rock SA's (and the aforementioned managers') commitment to observe the Group's daily, financial and commercial management for a period of five years (starting April 2015).
The fixed fee and short term variable remuneration has been included in the remuneration overview of the CEO and the executive management.
The mid-term variable remuneration allocated to Little Rock for 2016 amounts to € 5,951,356 and has been fully provided for in the 2016 consolidated accounts. This amount will be paid out over the next three years at a rate of 1/3 per annum. The aggregate amount which will therefore be paid out in 2017 covering the periods 2015 (1/3) and 2016 (1/3) amounts to € 3,722,209.
For 2016 no post-employment benefits nor share based payment benefits were granted.
The members of the executive team are appointed for an undetermined period and the notification period, in case of termination of their employment contract is 12 months. This rule applies to all members of the executive management.
Furthermore there are no claw back provisions for variable remuneration.
In line with the Royal Decree of 5 March 2006, members of the Board of Directors and the executive committee must notify the FSMA (Financial Services and Markets Authority) of any transactions involving shares of VGP within 5 business days after the transaction. These transactions are made public on the web site of the FSMA (http://www.fsma.be)
Reference is also made to Annex 4 of the VGP Corporate Governance Charter on http://www.vgpparks. eu/investors/corporate-governance/.
In 2016 two transactions with "insiders" were reported i.e. in August 2016, VM Invest NV acquired 481 shares and in September 2016 VM Invest NV acquired another 5,000 shares.
In accordance with Article 523 of the Companies Code, a member of the Board of Directors should give the other members prior notice of any agenda items in respect of which he has a direct or indirect conflict of interest of a financial nature with the Company. One conflict of interests arose during 2016:
"The agenda calls for a discussion and approval to (i) to take a conditional decision to redeem the Securities; and (ii) to grant special powers of attorney.
Pursuant to Article 5 "Redemption" of the Terms and Conditions of the Securities, the Company wishes to redeem all Securities against a price equal to the issue price plus the interest accrued from the issue date of each Security until the date of actual payment to
the Securities Holder, such redemption being subject to the closing of the transaction entered into with Allianz, being the sale of 50% of the shares in the jointventure vehicle VGP European Logistics S.à r.l. by the Company to Allianz Finance VII Luxembourg S.A., SAS Allianz Logistique S.A.S.U. and Allianz Benelux S.A. (the "Closing") in accordance with the terms of the SPA signed on 14 March 2016 (the "Transaction").
After deliberation on all of the items on the agenda the board of directors, with respect to the procedure set forth in article 523 of the Belgian Companies Code and article 16 of the articles of association of the Company, decides (i) to approve the Transaction, and (ii) to appoint Mr Jan Van Geet and Mr Dirk Stoop as its special attorney(s), (acting alone or jointly and with the right of substitution), with the power to in general, do all that is necessary or useful to implement the resolutions adopted during this meeting and to realise the Transaction within a period of 12 months as from the date hereof, including the negotiation, amending and execution of all documents connected to the Transaction."
The complete minutes of this Meeting will be included in the Board of Director's report attached to the 31 December 2016 statutory accounts.
VGP operates a risk management and control function in accordance with the Companies Law Code and the Belgian Corporate Governance Code 2009.
VGP is exposed to a wide variety of risks within the context of its business operations that can result in the objectives being affected or not achieved. Controlling those risks is a core task of the Board of Directors, the Executive Management and all other employees with managerial responsibilities. The risk management and control systems have been set up to reach the following goals:
The principles of the Committee of Sponsoring Organisations of the Treadway Commission ("COSO") reference framework has served as a basis in the setup of VGP's risk management and control system.
VGP strives for an overall compliance and a risk-awareness attitude by defi ning clear roles and responsibilities in all relevant domains. This way, the company fosters an environment in which its business objectives and strategies are pursued in a controlled manner. This environment is created through the implementation of diff erent policies and procedures, such as:
— Quality management and fi nancial reporting system Given the size of the company and required flexibility these policies and procedures are not always formally documented.
The Executive Management ensures that all VGP team members are fully aware of the policies and procedures and ensures that all VGP team members have
suffi cient understanding or are adequately informed in order to develop suffi cient risk management and control at all levels and in all areas of the Group.
All employees are accountable for the timely identification and qualitative assessment of the risks (and significant changes to them) within their area of responsibility. Within the different key, management, assurance, and supporting processes, the risks associated with the business are identified, analysed, preevaluated and challenged by internal and occasionally by external assessments.
In addition to these integrated risk reviews, periodic assessments are performed to check whether proper risk review and control measures are in place and to discover unidentifi ed or unreported risks. These processes are driven by the CEO, COO and CFO which monitor and analyse on an on-going basis the various levels of risk and develop any action plan as appropriate. In addition, control activities are embedded in all key processes and systems in order to assure proper achievement of the company objectives.
Any identified risks which could have a material impact on the financial or operational performance of the Group are reported to the Board of Directors for further discussion and assessment and to allow the Board to decide whether such risks are acceptable from a level of risk exposure.
VGP has identified and analysed all its key corporate risks as disclosed in the 'Risk Factors' section in this annual report. These corporate risks are communicated throughout VGP's organisation.
DELOITTE Bedrijfsrevisoren BV o.v.v.e. CVBA having its offices at Gateway Building, Luchthaven Nationaal 1 J, 1930 Zaventem, Belgium represented by Mr. Rik Neckebroeck has been appointed as Statutory Auditor.
Following the implementation of the EU guideline on mandatory firm rotation in Belgian law through the law of 16 June 2016 a mandatory tendering process is required after 3 audit mandates (9 years) and a mandatory audit firm rotation after 6 audit mandates (18 years) is required. As the current audit mandate of Deloitte started in 2007 (thus exceeding the 9-year threshold), a mandatory tendering process took place during 2016.
Based on the outcome of this tendering process the Board of Directors decided to propose that Deloitte be re-appointed as the Statutory Auditor for a new period of three years taking eff ect aft er the conclusion of the Annual General Meeting of Shareholders of 12 May 2017 and to set the fees at € 123,500 per year.
This fee will be subject to an annual review reflecting the changes in audit scope which might be required in order to ensure that such audit scope is kept in line with the evolution of the VGP Group. If the General Meeting approves this proposal, the statutory auditor will be represented by Mr Rik Neckebroeck.
The following risk factors that could influence the Group's activities, its financial status, its results and further development, have been identified by the Group. The Group takes and will continue to take the necessary measures to manage those risks as effectively as possible.
THE GROUP IS AMONGST OTHERS EXPOSED TO:
Since the Group's business involves the acquisition, development and operation of real estate, it is subject to real estate operating risks, of which some are outside the Group's control. The results and outlook of the Group depend amongst others on the ability to identify and acquire interesting real estate projects and to commercialise such projects at economically viable conditions.
The Group's real estate portfolio is concentrated on logistic property. Due to this concentration, an economic downturn in this sector could have a material adverse effect on the Group's business, financial condition, operating results and cash flows. These risks are mitigated by the fact that the real estate portfolio is becoming more and more geographically diversified. In addition the properties are as much as possible standardised, allowing easy re-utilisation in case a tenant would terminate its lease.
The value of a rental property depends to a large extent on the remaining term of the related rental agreements as well as the creditworthiness of the tenants. The Group applies a strict credit policy by which all future tenants are screened for their creditworthiness prior to being offered a lease agreement. In addition the Group will seek to sign as much as possible future lease agreements in order to secure a sustainable future rental income stream.
Nearly 100% of the lease contracts incorporate a provision whereby rents are annually indexed. Tenants will, in general, be required to provide a deposit or bank guarantee or a corporate guarantee depending on their creditworthiness. The lease contracts are usually concluded for periods between 5-10 years (first break option) and include most of the time an automatic extension clause. The lessee cannot cancel the lease contract until the first break option date.
The Group could be exposed to unforeseen costoverruns and to a delay in the completion of the projects undertaken for its own account or for its Joint Venture. Within VGP there are several internal controls available to minimise these risks i.e. specific cost control functions as well as project management resources which monitor the projects on a daily basis.
The Group may divest income generating assets, as a result of which its operational income would decrease. The proceeds of such divestments may be used for a new development cycle, i.e. to fund the acquisition and development of new plots of land. During the fi rst phase of the development of a new project, no income is generated by the new development until such project is completed and delivered to a tenant.
The Group is subject to a wide range of EC, national and local laws and regulations. In addition the Group may become subject to disputes with tenants or commercial parties with whom the Group maintains relationships or other parties in the rental or related businesses. Finally a change in tax rules and regulations could have an adverse eff ect on the tax position of the Group. All these risks are monitored on an on-going basis and there where necessary, the Group will use external advisors to advice on contract negotiations, regulatory matters or tax matters as the case may be.
To remain attractive and to generate a revenue stream over the longer term a property's condition must be maintained or, in some cases, improved to meet the changing needs of the market. To this end the Group operates an internal facility management team in order to ensure that the properties are kept in good condition. All buildings are insured against such risks as are usually insured against in the same geographical area by reputable companies engaged in the same or similar business.
The facility management not only provides internal services but also facility management services to third parties. VGP will therefore be potentially liable for the quality and or non-performance of its services. In order to minimise this risk a professional indemnity insurance cover has been taken out.
The legal systems of the mid-European countries have undergone dramatic changes in recent years, which may result in inconsistent applications of existing laws and regulations and uncertainty as to the application and effect of new laws and regulations. The Group mitigates this risk by using reputable external local lawyers to advise on such specific legal issues as they arise.
There is a risk that the Joint Venture would discontinue acquiring the completed assets from the Group. However, if the completed asset meets specific investment criteria and as long as Jan Van Geet, as CEO of the Group, devotes sufficient time to the development of the portfolio of the Joint Venture, then the Joint Venture is in principle required to acquire it. Alternatively, VGP will be authorized to market the proposed assets on the open market, allowing it to generate sales proceeds from another source than the Joint Venture. This risk is further mitigated by the strong historic track record of VGP and the good negotiating position of VGP as the operator and manager of the portfolio.
The main risk results from the fact that the Group undertakes development activities on behalf of the Joint Venture and is required to pre-finance the remaining development pipeline of the Joint Venture. As of 31 December 2016, the total outstanding development and construction loans amounted to € 81.6 million. Upon the acquisition of the developed assets by the Joint Venture these loans should be repaid from the additional bank debt. In addition, VGP will also be entitled to a top-up payment based on the agreed market value of such assets and may be adversely affected in case the actual construction costs would be higher than the market value of the completed building. In such case, such difference would need to be fully borne by the Group.
The Group has recognized that it has de facto a constructive obligation towards the Joint Venture (of up to its proportional share) as it will always ensure that the Joint Venture and its subsidiaries will be in a position to fulfill their respective obligations. There is no legal obligation to support the Joint Venture.
Should a member of the Group or the Company itself breach certain material obligations under any management agreement or the Joint Venture Agreement which are not remedied, then Allianz will have the right to terminate all the management agreements and/or exercise a call option over all the Company's shares in the Joint Venture against payment of a discounted price equal to 90% of the fair market value.
Allianz has the right to dilute the Company in the Joint Venture pursuant to the Company defaulting under its funding obligations towards the Joint Venture or pursuant to Allianz being required to consolidate the Joint Venture within its companies' group.
The loans granted to the Joint Venture, which comprise development and construction loans granted directly to the project companies of the Joint Venture as well as other shareholder loans granted to the Joint Venture in a total amount of € 89.9 million as at 31 December 2016, are considered fully collectable. The purpose of the Joint Venture is only to invest in income generating assets and both Joint Venture's partners have agreed that as a result, any development undertaken within the Joint Venture will be in first instance pre-financed by VGP. The repayment of these construction and development loans will be principally driven by the subsequent refinancing of the Joint Venture's assets upon their completion. Should the proceeds of such refinancing be significantly lower than the development costs, then it could be possible that VGP is unable to recoup the total amount of the loans granted to the Joint Venture.
The Group is partly financed by bank credit facilities, bonds and from time to time by shareholder loans. The non- availability of adequate credit facilities or access to the bond markets could have an adverse effect on the growth of the Group as well as on its financial condition in case bank credit facilities cannot be extended at their maturity date or bonds cannot be refinanced through new bank debt or by the issuance of a new bond. The Group ensures that adequate committed credit facilities are in place to sustain its growth. VGP will start renegotiating the extension of maturing credit facilities well in advance of the respective maturity dates (usually 12 months prior to maturity date). For maturing bonds, VGP will gain sufficient comfort well in advance of any bond issue to ensure that the targeted notional amount of the bonds are reached. In case there is insufficient visibility on the outcome of any bond issue VGP will ensure that sufficient back-up credit facilities are in place to finance any shortfall between the targeted notional amount and the effective amount raised through the bond issue.
The bonds issued by the Group and the loan agreements of the Group include financial covenants (see section 22 of the Financial Review for further details). Any breach of covenant could have an adverse effect on the financial position of the Group. Covenants are therefore monitored on an on-going basis in order to ensure compliance and to anticipatively identify any potential problems of non-compliance for action. During 2016 the VGP Group remained well within its bond and bank financing covenants.
The Group expects that in the medium term it will significantly increase the amount of borrowings. The Group expects that for the foreseeable future it will be operating within a gearing level (net debt / total equity and liabilities) of up to 55%.
As at 31 December 2016 the "net debt / total equity and liabilities" ratio was 39.4% compared to 35.7% as at 31 December 2015.
Changes in interest rates could have an adverse effect on the Group's ability to obtain or service debt and other financing on favourable terms. To this end the Group hedges its interest rate exposure by converting the majority of its variable rate debt to fixed rate debt. As at 31 December 2016, 95.2% of the financial debt was at fixed rates.
The Group's revenues are predominantly denominated in Euro, however, expenses, assets and liabilities are recorded in a number of different currencies other than the Euro, in particular the Czech Crown. The Group reviews these risks on a regular basis and uses financial instruments to hedge these exposures as appropriate.
| CONSOLIDATED INCOME STATEMENT – ANALYTICAL FORM (in thousands of €) | 2016 | 2015 |
|---|---|---|
| NET CURRENT RESULT | ||
| GROSS RENTAL INCOME | 16,806 | 17,073 |
| SERVICE CHARGE INCOME / (EXPENSES) | 1,035 | 422 |
| PROPERTY OPERATING EXPENSES | (1,703) | (972) |
| NET RENTAL AND RELATED INCOME | 16,138 | 16,523 |
| PROPERTY AND DEVELOPMENT MANAGEMENT INCOME | 3,141 | 2,215 |
| FACILITY MANAGEMENT INCOME | 684 | 332 |
| OTHER INCOME / (EXPENSES) - INCL. ADMINISTRATIVE COSTS | (16,778) | (13,998) |
| SHARE IN THE RESULT OF JOINT VENTURE AND ASSOCIATES | 7,897 | 191 |
| OPERATING RESULT (BEFORE RESULT ON PORTFOLIO) | 11,082 | 5,263 |
| NET FINANCIAL RESULT | (12,287) | (9,835) |
| REVALUATION OF INTEREST RATE FINANCIAL INSTRUMENTS (IAS 39) | (4,619) | (319) |
| TAXES | 1,122 | 5,512 |
| NET CURRENT RESULT | (4,702) | 621 |
| RESULT ON PROPERTY PORTFOLIO | ||
| NET VALUATION GAINS / (LOSSES) ON INVESTMENT PROPERTIES | 118,900 | 103,981 |
| DEFERRED TAXES | (22,912) | (18,041) |
| RESULT ON PROPERTY PORTFOLIO | 95,988 | 85,940 |
| PROFIT FOR THE YEAR | 91,286 | 86,561 |
1 Excluding the revaluation of interest rate financial instruments.
| CONSOLIDATED BALANCE SHEET (in thousands of €) | 2016 | 2015 |
|---|---|---|
| GOODWILL | — | 631 |
| INTANGIBLE ASSETS | 14 | 12 |
| INVESTMENT PROPERTIES | 550,262 | 173,972 |
| PROPERTY, PLANT AND EQUIPMENT | 517 | 378 |
| NON-CURRENT FINANCIAL ASSETS | 5 | 216 |
| INVESTMENTS IN JOINT VENTURE AND ASSOCIATES | 89,194 | (103) |
| OTHER NON-CURRENT RECEIVABLES | 8,315 | — |
| DEFERRED TAX ASSETS | 3 | 89 |
| TOTAL NON-CURRENT ASSETS | 648,310 | 175,195 |
| TRADE AND OTHER RECEIVABLES | 19,426 | 4,927 |
| CASH AND CASH EQUIVALENTS | 71,595 | 9,825 |
| DISPOSAL GROUP HELD FOR SALE | 132,263 | 527,361 |
| TOTAL CURRENT ASSETS | 223,284 | 542,113 |
| TOTAL ASSETS | 871,594 | 717,308 |
| SHARE CAPITAL | 62,251 | 62,251 |
| RETAINED EARNINGS | 327,985 | 239,658 |
| OTHER RESERVES | 69 | 69 |
| OTHER EQUITY | — | 60,000 |
| SHAREHOLDERS' EQUITY | 390,305 | 361,978 |
| NON-CURRENT FINANCIAL DEBT | 327,923 | 170,800 |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | 5,348 | 967 |
| OTHER NON-CURRENT LIABILITIES | 2,432 | 405 |
| DEFERRED TAX LIABILITIES | 20,012 | 8,247 |
| TOTAL NON-CURRENT LIABILITIES | 355,715 | 180,419 |
| CURRENT FINANCIAL DEBT | 81,674 | 3,522 |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES | 35,496 | 10,342 |
| LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | 8,404 | 161,047 |
| TOTAL CURRENT LIABILITIES | 125,574 | 174,911 |
| TOTAL LIABILITIES | 481,289 | 355,330 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 871,594 | 717,308 |
The net rental income decreased with € 0.4 million to € 16.1 million after taking into effect the full impact of the income generating assets delivered during 2016 and the deconsolidation of the VGP European Logistics portfolio. This newly established joint venture with Allianz Real Estate acquired 15 parks from VGP at the end of May 2016 and another 5 buildings at the end of October 2016.
Including VGP's share of the Joint Venture, net rental income in total has increased by € 7.7 million, or 46.2% compared to 2015 (from € 16.5 million as at 31 December 2015 to 24.2 million as at 31 December 2016) (see Supplementary Notes in the Financial Review section for further details). This increase is mainly due to the impact of income from new developments. The Mango building acquired in December 2016 only contributed a nominal amount of rent income (€ 0.1 million).
Following the significant disposal of assets into the VGP European Logistics joint venture, the analysis of the net rental income on such a 'look-through' basis (with the Joint Venture included at share) provides a more meaningful analysis of the net rent evolution. Given the fact that it is anticipated that there will be around 2 sales closings per year with the Joint Venture in the future we have not adjusted the net rent income for the period in which the sold assets were in full ownership of the Group.
As at 31 December 2016 the net valuation gains on the property portfolio reaches € 118.9 million against a net valuation gain of € 104.0 million per 31 December 2015. The trend of increasingly lower yields maintained in real estate valuations continued to persist during the year. However due to the change of portfolio mix, following the divestment of the seed portfolio to VGP European Logistics, the own property portfolio, excluding development land, is being valued by the valuation expert at 31 December 2016, at a weighted average yield of 6.49% (compared to 7.02% as at 31 December 2015).
The VGP European Logistics portfolio was valued at a weighted average yield of 6.08% as at 31 December 2016 (compared to 6.35% at 30 June 2016) reflecting the contraction of the yields during the second half of 2016.
The (re)valuation of both portfolios was based on the appraisal report of the property expert Jones Lang LaSalle except for Spain where the valuation was made by the property expert valuator Gesvalt.
The property and development management fee income increased from € 1.4 million as at 31 December 2015 to € 3.1 million as at 31 December 2016. The fee income generated during the year was solely related to asset-, property-, and development management services rendered to the VGP European Logistics joint venture which was set up during 2016.
The € 1.4 million fee recorded during 2015 related solely to property management services provided to P3 following the disposal of the VGP CZ I, II and IV real estate portfolio in October 2014 and this contract was terminated in October 2015.
The facility management income decreased during the year from € 1.1 million as at 31 December 2015 to € 0.7 million as at 31 December 2016. Although there were some adverse spill over effects from the discontinuance of the property management agreement with P3, the main reason for the fall in income was the strategic repositioning of the Suta facility management within the VGP Group. In the past Suta provided facility management services to a broad range of third party customers. In view of the strong growth of the own and the Joint Venture portfolio it was decided during the year to scale down all services provided to third parties and to concentrate solely on the Group's and the Joint Venture's portfolio going forward. As a result, € 0.6 million of goodwill was impaired at year-end.
VGP's share of the Joint ventures and associates' profit increased by € 7.7 million (from € 0.2 million at 31 December 2015 to € 7.9 million at 31 December 2016), reflecting the higher income from the Group's VGP European Logistics joint venture. VGP holds 50% directly in the Joint Venture and an additional 5.1% directly into the Joint Venture's subsidiaries holding German assets (Associates).
During the year the associates SNOW CRYSTAL S.à r.l. and SUN S.à r.l. were divested as part of the liquidation process and following the sale of the VGP CZ I, II and IV portfolios to P3 which took place in October 2014.
The other income / (expenses) and administrative costs increased with € 2.8 million (from € 14.0 million at 31 December 2015 to € 16.8 million at 31 December 2016), reflecting mainly the growth of the VGP team in order to support the growth of the development activities of the Group and its geographic expansion and also included the € 0.6 million goodwill impairment (see supra). As at 31 December 2016 the VGP team comprised 105 people active in more than 9 different countries.
For the period ending 31 December 2016, the fi nancial income was € 2.8 million (€ 0.5 million as at 31 December 2015) and included € 2.5 million interest income on loans granted to VGP European Logistics and a € 0.2 million unrealised gain on interest rate derivatives (€ 0.1 million as at 31 December 2015).
The reported financial expenses as at 31 December 2016 are mainly made up of € 13.0 million interest expenses related to financial debt (€ 10.2 million as at 31 December 2015), € 4.8 million unrealised losses on interest rate derivatives (€ 0.4 million as at 31 December 2015), € 3.2 million other financial expenses (€ 2.4 million as at 31 December 2015) mainly relating to the amortisation of the transactions costs of the 2 bonds issued during 2013 and the new bond issued during 2016 and the additional financial costs incurred in respect of closing out existing bank debt in respect of the sale of the initial seed portfolio to VGP European Logistics, € 0.1 million of net foreign exchange losses (compared to € 0.1 million net foreign exchange gains as at 31 December 2015) and a positive impact of € 1.4 million (€ 2.4 million per 31 December 2015) related to capitalised interests. As a result, the net financial expenses reached € 16.9 million as at 31 December 2016 compared to € 10.2 million as at 31 December 2015.
Shareholder loans to VGP European Logistics amounted to € 89.9 million as at 31 December 2016 of which € 81.6 million was related to financing of the buildings under construction and development land held by the VGP European Logistics joint venture. Under the joint venture agreement VGP European Logistics has an exclusive right of first refusal in relation to acquiring the income generating assets developed by VGP and located in Germany, the Czech Republic, Slovakia and Hungary. Consequently, these assets have been classified as investment properties (Disposal group held for sale) using the accounting principles applicable to Investment Properties.
The gearing ratio of the Group increased slightly from 35.7% at 31 December 2015 to 39.4% at 31 December 2016. The financial debt increased from € 174.3 million as at 31 December 2015 to € 409.6 million as at 31 December 2016. The increase was mainly driven by the issuance of a new € 225 million 7-year bond and the € 13 million drawdown on an new committed credit facility with Raiffeisen Bank in Romania.
The Group is subject to tax at the applicable tax rates of the respective countries in which it operates. Additionally, a deferred tax charge is provided for on the fair value adjustment of the property portfolio.
Taxes increased from € 12.5 million as at 31 December 2015 to € 21.8 million for the period ending 31 December 2016. The change in the tax line is mainly due to the variance of the fair value adjustments of the property portfolio and has therefore only residual cash effect.
Profi t for the year increased from € 86.6 million (€ 4.66 per share) as at 31 December 2015 to € 91.3 million (€ 4.91 per share) for the fi nancial year ended 31 December 2016.
Investment properties relate to completed properties, projects under construction as well as land held for development. The fluctuations from one year to the other reflect the timing of the completion and delivery as well as the divestments or acquisitions of such assets.
As at 31 December 2016 the own investment property portfolio consists of 16 completed buildings representing 416,158 m2 of lettable area with another 17 buildings under construction representing 381,041 m2 of lettable area of which 6 buildings (159,981 m2) are being developed on behalf of the Joint Venture.
During the year VGP delivered, for its own account, 14 buildings representing 268,945 m2 of lettable area of which 4 buildings (57,559 m2) were delivered to the Joint Venture after the sale of the initial seed portfolio which occurred in May 2016.
The consolidated financial statements include the Group's share of the results of the joint venture and associates accounted for using the equity method from the date when a significant influence commences until the date when significant influence ceases. When VGP's share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that VGP has incurred obligations in respect of the associate.
At the end of December 2016 the investments in joint venture and associates increased from a negative balance of € 103k (as at 31 December 2015) to a positive balance of € 89.2 million as at 31 December 2016.
The investments in joint venture and associates as at the end of 2016 reflect the Group's Joint Venture with Allianz Real Estate (VGP European Logistics) and the associates, all of which are accounted for using the equity method. VGP European Logistics is incorporated in Luxembourg and owns logistics property assets in Germany, the Czech Republic, Slovakia and Hungary. The associates relate to the 5.1% held directly by VGP NV in the subsidiaries of the Joint Venture holding assets in Germany. During the year, the associates SNOW S.à r.l. and SUN S.à r.l. were sold to Tristan Capital Partners as part of the liquidation process of these respective associates.
Following the sale of the Seed portfolio to VGP European Logistics the balance of the disposal group held for sale fell from € 527.4 million as at 31 December 2015 to € 132.3 million as at 31 December 2016.
Under the joint venture agreement VGP European Logistics has an exclusive right of first refusal in relation to acquiring the income generating assets developed by VGP and located in Germany, the Czech Republic, Slovakia and Hungary. The development pipeline which was transferred to the Joint Venture as part of the Seed portfolio is or will be developed at VGP's own risk and subsequently acquired and paid for by the Joint Venture subject to pre-agreed completion and lease parameters. The balance of € 132.3 million shown as at 31 December 2016 corresponds to the fair value of the assets under construction which are being developed by VGP on behalf of VGP European Logistics. This balance includes the interest bearing development and construction loans (€ 81.6 million) granted by VGP to the Joint Venture to finance the development pipeline of the Joint Venture.
The increase in retained earnings from € 239.7 million as at 31 December 2015 to € 328.0 million as at 31 December 2016 was mainly driven by the impact of the fair value adjustments on the property portfolio.
Following the completion of the acquisition of the initial seed portfolio by the new joint venture at the end of May 2016 (VGP European Logistics); the board of directors approved the redemption of all issued hybrid securities against a price equal to the issue price (in total € 60 million) plus the interest accrued (€ 3.0 million). The redemption took place on 1 June 2016.
The fi nancial debt increased from € 174.3 million as at 31 December 2015 (Before reclassifi cation to disposal group held for sale). to € 409.6 million as at 31 December 2016. The increase was mainly driven by the issuance of a new € 225 million 7 year bond and additional bank fi nancing (€ 13 million) in Romania. The gearing ratio of the Group increased slightly from 35.7% at 31 December 2015 to 39.4% at 31 December 2016.
| SUMMARY (in thousands of €) | 2016 | 2015 |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | 6,793 | (12,609) |
| CASH FLOW FROM INVESTING ACTIVITIES | (124,416) | (147,377) |
| CASH FLOW FROM FINANCING ACTIVITIES | 168,871 | 140,053 |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 51,248 | (19,933) |
The cash from operating activities increased by € 19.4 million, mainly due to the changes in working capital which saw a net increase of € 22.3 million mainly due to the increases in trade payables resulting from the high level of development activities.
The changes in the cash flow from investing activities were due to: (i) € 336.7 million of expenditure incurred for the development activities and land acquisition including the newly acquired building of Mango in Spain; (ii) € 236.1 million cash in from the sale of the initial Seed portfolio and subsequent closings during the year to VGP European Logistics; (iii) € 4.7 million cash in from the repayment of equity from VGP European Logistics; and finally, (iv) € 28.5 million shareholder loans (net) granted to VGP European Logistics.
Following the successful sales of assets to VGP European Logistics during 2016 and in order to further optimise the capital structure of VGP NV the Board of Directors has decided to convene an Extraordinary Shareholders' Meeting to propose an additional capital reduction in cash of € 20,069,694.00. This cash distribution would correspond to € 1.08 per share.
On 21 March 2017, Mr Jan Van Geet acquired 100% of the shares of Alsgard SA from Mr Jan Prochazka. By virtue of this acquisition Mr Jan Van Geet holds 38.3% of the voting rights of the Company.
On 30 March 2017 VGP successfully issued an 8 year bond for a nominal amount of € 80 million. The bonds were placed with institutional investors and are not listed. The fixed rate of the bonds is 3.35% (gross) per year.
On 30 March 2017, VM Invest NV successfully placed 766,203 VGP shares with a broad base of institutional investors through a private placement.
EURONEXT BRUSSELS MAIN MARKET OF PRAGUE
| VGP SHARE VGP VVPR-STRIP |
VGP VGPS |
ISIN BE0003878957 ISIN BE0005621926 |
|---|---|---|
| MARKET CAPITALISATION 31 DEC-16 HIGHEST CAPITALISATION |
1,752,939,107 € 1,752,939,107 € |
|
| LOWEST CAPITALISATION | 568,641,330 € | |
| SHARE PRICE 31 DEC-15 | 33.01 € | |
| SHARE PRICE 31 DEC-16 | 94.33 € |
As at 31 December 2016 the share capital of VGP was represented by 18,583,050 shares. Ownership of the Company's shares as at 31 December 2016 is as follows:
| SHAREHOLDER | NUMBER OF SHARES |
% OF SHARES ISSUED |
|---|---|---|
| VM INVEST NV | 5,217,871 | 28.08% |
| MR BART VAN MALDEREN | 3,545,250 | 19.08% |
| SUB-TOTAL BART VAN MALDEREN GROUP | 8,763,121 | 47.16% |
| LITTLE ROCK SA | 4,707,752 | 25.33% |
| ALSGARD SA | 2,409,914 | 12.97% |
| COMM. VA VGP MISV | 929,153 | 5.00% |
| VADEBO FRANCE NV | 655,738 | 3.53% |
| PUBLIC | 1,117,372 | 6.01% |
| TOTAL | 18,583,050 | 100.00% |
VM Invest NV is a company controlled by Mr. Bart Van Malderen. Little Rock SA is a company controlled by Mr. Jan Van Geet. Alsgard SA is a company controlled by Mr. Jan Prochazka. On 21 March 2017, Mr Jan Van Geet acquired 100% of the shares of Alsgard SA from Mr Jan Prochazka. Comm VA VGP MISV is a company controlled by Mr. Bart Van Malderen and Mr. Jan Van Geet. VM Invest NV, Mr. Bart Van Malderen, Comm VA VGP MISV, Little Rock SA, and Alsgard SA are acting in concert in respect of the holding, the acquisition or disposal of securities. Vadebo France NV is a company controlled by Mrs. Griet Van Malderen.
There are no specifi c categories of shares.
Each share gives the right to one vote.
In accordance with Articles 480 to 482 of the Company Code, the company can create shares without voting rights, subject to the fulfi lling requirements related to the change of the articles of association.
All shares are freely transferable.
The Board of Directors has been authorized by the Extraordinary Shareholders' Meeting held on 8 December 2016 to increase the Company's registered capital in one or more times by an aggregate maximum amount of € 100,000,000 (before any issue premium). The authority is valid for five years from 27 December 2016 and can be renewed in accordance with the applicable statutory provisions. Pursuant to this authorization, the Board of Directors may, among others, effect a capital increase under the authorized capital by means of issuing ordinary shares, subscription rights or convertible bonds and may limit or disapply the preferential subscription right of the Company's shareholders.
Furthermore, the Board of Directors has been authorized, for a period of three years from 27 December 2016, to make use of the authorized capital upon receipt by the Company of a notice from the FSMA of a public takeover bid for the Company's securities.
To improve the liquidity of its shares VGP NV concluded a liquidity agreement with KBC Bank. This agreement ensures that there is increased liquidity of the shares which should be to the benefit of the Group in the future as more liquidity allows new shares to be more easily issued in case of capital increases.
GENERAL MEETING OF SHAREHOLDERS 12 MAY 2017 EXTRAORDINARY SHAREHOLDER'S MEETING 12 MAY 2017 2017 HALF YEAR RESULTS 30 AUGUST 2017
Based on the positive trend in the demands for lettable area recorded by VGP during 2016, and provided there are no unforeseen events of economic and financial markets nature, VGP should be able to continue to substantially expand its rent income and property portfolio through the completion and start-up of additional new buildings.
During the fi rst half of 2017 VGP will continue to review its sources of funding and funding strategy in order to enable the Group to continue to invest in the expansion of the land bank to support its development activities as well as to maximise shareholder value. In this respect VGP will continue to actively review to fi nance its development activities through the bond markets as this source of funding has proven to be an attractive alternative to arranging additional committed bank facilities.
Following the sale of the seed portfolio to VGP European Logistics and the subsequent second closing which occurred in 2016, and in order to further optimise the capital structure of VGP it is the intention to make a € 20 million capital distribution in cash in 2017. As from 2018 it is the intention of the Group to move towards a sustained profi t distribution policy whereby VGP's proportional free cash fl ow generated by and received from the Joint Venture will be distributed to the shareholders.
| COMPOSITION ON 31 DECEMBER 2016 | ||||
|---|---|---|---|---|
| NAME | YEAR APPOINTED |
EXECUTIVE OR NON-EXECUTIVE |
INDEPENDENT | NEXT DUE FOR RE-ELECTION |
| MAREK ŠEBESŤÁK | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 |
| JAN VAN GEET s.r.o. represented by JAN VAN GEET |
2013 | EXECUTIVE AND REFERENCE SHAREHOLDER |
— | 2017 |
| VM INVEST NV represented by BART VAN MALDEREN |
2013 | NON-EXECUTIVE AND REFERENCE SHAREHOLDER |
— | 2017 |
| ALEXANDER SAVERYS | 2015 | NON-EXECUTIVE | INDEPENDENT | 2019 |
| RIJO ADVIES BVBA represented by JOS THYS |
2015 | NON-EXECUTIVE | INDEPENDENT | 2019 |
Mr Šebesťák is founder and former Chairman of BBDO-Czech Republic, one of the leading international advertising and communication agencies.
Jan Van Geet is the founder of VGP. He has overall daily as well as strategic management responsibilities of the Group. He started in the Czech Republic in 1993 and was manager of Ontex in Turnov, a producer of hygienic disposables. Until 2005, he was also managing director of WDP Czech Republic. WDP is a Belgian real estate investment trust.
Mr Bart Van Malderen founded Drylock Technologies in 2012. Drylock Technologies is a new hygienic disposable products manufacturer which introduced the revolutionary fl ufl ess diaper in 2013. Prior to this Bart Van Malderen held diff erent management positions at Ontex, a leading European manufacturer of hygienic disposable products where he became CEO in 1996 and Chairman of the Board in 2003, a mandate which he occupied until mid-July 2007.
Mr Alexander Saverys holds a Master of Laws (University of Leuven and Madrid) and holds an MBA of the Fachhochschule für Wirtschaft Berlin. In 2004 he founded Delphis NV a company off ering multimodal transport solutions throughout Europe. He became a director of CMB (Compagnie Maritime Belge SA) in 2006 and was appointed CEO in September 2014.
Mr Jos Thys holds a Master's Degree in Economics from the University of Antwerp (UFSIA). He is counsel to family owned businesses where he advises on strategic and structuring issues. He also acts as a counsel for the implementation of Corporate Governance at corporate and nonprofi t organisations. Jos previously had a long career in corporate and investing banking with Paribas, Artesia and Dexia.
| COMPOSITION ON 31 DECEMBER 2016 | |
|---|---|
| JAN VAN GEET s.r.o. represented by JAN VAN GEET |
CHIEF EXECUTIVE OFFICER |
| JAN PROCHÁZKA | CHIEF OPERATING OFFICER |
| DIRK STOOP BVBA represented by DIRK STOOP |
CHIEF FINANCIAL OFFICER |
| TOMAS VAN GEET represented by TOMAS VAN GEET |
CHIEF COMMERCIAL OFFICER |
| JAN PAPOUŠEK s.r.o. represented by JAN PAPOUŠEK |
CHIEF OPERATING OFFICER – OUTSIDE CZ |
Jan Van Geet is the founder of VGP. He has overall daily as well as strategic management responsibilities of the Group. He started in the Czech Republic in 1993 and was manager of Ontex in Turnov, a producer of hygienic disposables. Until 2005, he was also managing director of WDP Czech Republic. WDP is a Belgian real estate investment trust with several projects in the Czech Republic
He is civil engineer and architect and joined VGP's team in 2002. He takes responsibility for technical concepts and contract execution. Prior to this position, Jan was the managing director of Dvořák, a civil contracting company, at his time one of the major players in the Czech market. Well known projects under his management are the airport terminal Sever 1 in Prague, the cargo terminal, as well as the headquarters of Česká Spořitelna.
Joined VGP in 2007. He is responsible for all fi nance matters i.e. fi nancial planning, control, forecasting, treasury, tax and insurance for all the countries where VGP is/ will be active, as well as investor relations. Dirk worked at Ontex for 5 years as Group Treasurer where he was also responsible for tax and insurance matters. Prior to this he worked at CHEP Europe based in London as Treasurer Europe, South America & Asia. Dirk Stoop holds a Master's Degree in Financial and Commercial Sciences from VLEKHO (HUB) in Belgium.
Joined VGP in 2005. He takes responsibility for all commercial strategic matters and commercial co-ordination of VGP's key accounts. Prior to joining VGP, Tomas held several positions in the planning and logistics departments of Domo in Germany, Spain, Czech Republic and South Africa, Associated Weavers and Ontex.
He is civil engineer and joined VGP's team in 2007. He takes responsibility for technical concepts and contract execution for all projects outside the Czech Republic. Jan formerly worked for Gardiner and Teobald, a UK based well known cost controlling company with international activities, where he occupied the function of cost and project manager.
01 VGP PARK HAMBURG 02 VGP PARK SOLTAU 03 VGP PARK LEIPZIG 04 VGP PARK BERLIN 05 VGP PARK GINSHEIM 06 VGP PARK SCHWALBACH 07 VGP PARK MÜNCHEN 08 VGP PARK BINGEN 09 VGP PARK RODGAU 10 VGP PARK HÖCHSTADT 11 VGP PARK BORNA 12 VGP PARK BOBENHEIM-ROXHEIM 13 VGP PARK FRANKENTHAL
27 VGP PARK SAN FERNADO DE HENARES 28 VGP PARK MANGO
14 VGP PARK TUCHOMĚŘICE 15 VGP PARK ÚSTÍ NAD LABEM 16 VGP PARK CESKY UJEZD 17 VGP PARK LIBEREC 18 VGP PARK OLOMOUC 19 VGP PARK JENEC 20 VGP PARK CHOMUTOV 21 VGP PARK BRNO 22 VGP PARK HRÁDEK NAD NISOU 23 VGP PARK PLZEŇ
31 VGP PARK MALACKY
29 VGP PARK GYŐR 30 VGP PARK ALSÓNÉMEDI
24 VGP PARK TIMISOARA
01 — VGP PARK HAMBURG 02 — VGP PARK SOLTAU 03 — VGP PARK LEIPZIG 04 — VGP PARK BERLIN 05 — VGP PARK GINSHEIM 06 — VGP PARK SCHWALBACH 07 — VGP PARK MÜNCHEN 08 — VGP PARK BINGEN 09 — VGP PARK RODGAU 10 — VGP PARK HÖCHSTADT 11 — VGP PARK BORNA 12 — VGP PARK BOBENHEIM-ROXHEIM 13 — VGP PARK FRANKENTHAL
| TENANT | Van Eupen Logistik GmbH & Co. KG; Laser Automotive Brandenburg GmbH; Lidl E-Commerce International GmbH & Co. KG |
|---|---|
| LETTABLE AREA | 23,891 m2 |
| BUILT | 2015 |
| TENANT | Lidl E-Commerce International GmbH & Co. KG |
|---|---|
| LETTABLE AREA | 53,776 m2 |
| BUILT | under construction |
| TENANT | Custom Chrome Europe GmbH |
|---|---|
| LETTABLE AREA | 6,400 m2 |
| BUILT | 2014 |
| BUILDING A | |
|---|---|
| TENANT | Lekkerland Deutschland GmbH & Co.KG |
| LETTABLE AREA | 23,270 m2 |
| BUILT | 2016 |
| GmbH & Co.KG | |
|---|---|
| LETTABLE AREA | 13,617 m2 |
| BUILT | 2015 |
| TENANT | Amazon Logistik GmbH |
|---|---|
| LETTABLE AREA | 56,745 m2 |
| BUILT | under construction |
| TENANT | INDAT Robotics GmbH |
|---|---|
| LETTABLE AREA | 33,662 m2 |
| BUILT | under construction |
| BUILDING A0 | |
|---|---|
| TENANT | GEODIS Logistics Deutschland GmbH; JOB AG Personaldienstleistungen AG; Deutsche Post Immobilien GmbH |
| LETTABLE AREA | 35,167 m2 |
| BUILT | 2013 |
| TENANT | Volkswagen Konzernlogistik GmbH & Co. OHG; Drive Medical GmbH & Co. KG; CHEP Deutschland GmbH |
|---|---|
| LETTABLE AREA | 24,665 m2 |
| BUILT | 2014–2016 |
| TENANT | Syncreon Deutschland GmbH |
|---|---|
| LETTABLE AREA | 18,743 m2 |
| BUILT | 2015 |
| TENANT | Zebco Europe GmbH; Karl Heinz Dietrich GmbH & Co KG |
|---|---|
| LETTABLE AREA | 9,387 m2 |
| BUILT | 2015 |
BUILDING A4 TENANT LZ Logistik GmbH LETTABLE AREA 14,471 m2
BUILT 2016
| TENANT | Rhenus SE & Co. KG |
|---|---|
| LETTABLE AREA | 57,479 m2 |
| BUILT | 2015 – under construction |
| BUILDING B2 | ||
|---|---|---|
| TENANT | Geis Industrie-Service GmbH; Karl Heinz Dietrich GmbH & Co KG |
|
| LETTABLE AREA | 41,388 m2 | |
| BUILT | under construction |
| TENANT | Rieck Projekt Kontakt Logistik Hamburg GmbH & Co. KG |
|---|---|
| LETTABLE AREA | 23,615 m2 |
| BUILT | under construction |
| BUILDING D1 | ||
|---|---|---|
| TENANT | AO Deutschland Ltd. | |
| LETTABLE AREA | 2,502 m2 | |
| BUILT | 2015 |
| TENANT | C&A Mode GmbH & Co. KG | |
|---|---|---|
| LETTABLE AREA | 15,140 m2 | |
| BUILT | 2015 |
| TENANT | USM operations GmbH | |
|---|---|---|
| LETTABLE AREA | 24,007 m2 | |
| BUILT | under construction |
| TENANT | A & O GmbH, Geis Ersatzteil-Service GmbH; ELTETE Deutschland GmbH; PTG Lohnabfüllung GmbH |
||||
|---|---|---|---|---|---|
| LETTABLE AREA | 24,754 m2 | ||||
| BUILT | 2016 | ||||
| TENANT | Rhenus SE & Co. KG | ||
|---|---|---|---|
| LETTABLE AREA | 43,375 m2 | ||
| BUILT | 2016 |
| GmbH (LDZ) | |||
|---|---|---|---|
| LETTABLE AREA | 19,774 m2 | ||
| BUILT | 2015 |
VGP Park Rodgau
LETTABLE AREA 7,062 m2 BUILT 2016
TENANT EBARA Pumps Europe S.p.A.;
GERMANY
BUILDING D
| TENANT | PTG Lohnabfüllung GmbH |
|---|---|
| LETTABLE AREA | 8,734 m2 |
| BUILT | 2015 |
| BUILDING A | ||
|---|---|---|
| TENANT | Optimas OE Solutions GmbH | |
| LETTABLE AREA | 8,386 m2 | |
| BUILT | under construction |
TENANT AUDI AG
LETTABLE AREA 55,811 m2
BUILT 2016
| VGP PARK | OWNER LAND AREA (m²) |
LETTABLE AREA (m²) | ||||
|---|---|---|---|---|---|---|
| COMPLETED | UNDER CONSTRUCTION |
POTENTIAL | TOTAL | |||
| VGP PARK HAMBURG | VGP | 106,941 | — | 23,615 | 20,160 | 43,775 |
| VGP PARK SOLTAU | VGP | 119,868 | 55,811 | — | — | 55,811 |
| VGP PARK LEIPZIG | VGP | 105,885 | — | 24,007 | 22,650 | 46,657 |
| VGP PARK BERLIN | VGP | 164,537 | — | 53,776 | 26,765 | 80,541 |
| VGP PARK GINSHEIM | VGP | 59,845 | — | 33,662 | — | 33,662 |
| VGP PARK SCHWALBACH | VGP | 19,587 | — | 8,386 | — | 8,386 |
| VGP PARK MÜNCHEN | VGP | 537,003 | — | — | 244,304 | 244,304 |
| TOTAL | 1,113,666 | 55,811 | 143,445 | 313,879 | 513,135 | |
| VGP PARK BINGEN | Joint Venture | 15,000 | 6,400 | — | — | 6,400 |
| VGP PARK HAMBURG | Joint Venture | 518,123 | 141,481 | 71,697 | 21,458 | 234,635 |
| VGP PARK RODGAU | Joint Venture | 212,740 | 103,699 | — | — | 103,699 |
| VGP PARK HÖCHSTADT | Joint Venture | 45,680 | 15,140 | — | — | 15,140 |
| VGP PARK BERLIN | Joint Venture | 46,540 | 23,891 | — | — | 23,891 |
| VGP PARK BOBENHEIM-ROXHEIM |
Joint Venture | 56,655 | 23,270 | — | — | 23,270 |
| VGP PARK BORNA | Joint Venture | 42,533 | 13,617 | — | — | 13,617 |
| VGP PARK FRANKENTHAL | Joint Venture | 174,832 | — | 56,745 | — | 56,745 |
| TOTAL | 1,112,103 | 327,497 | 128,442 | 21,458 | 477,397 |
14 — VGP PARK TUCHOMĚŘICE 15 — VGP PARK ÚSTÍ NAD LABEM 16 — VGP PARK CESKY UJEZD 17 — VGP PARK LIBEREC 18 — VGP PARK OLOMOUC 19 — VGP PARK JENEC 20 — VGP PARK CHOMUTOV 21 — VGP PARK BRNO 22 — VGP PARK HRÁDEK NAD NISOU 23 — VGP PARK PLZEŇ
| TENANT | KARTON P+P, spol. s r.o. | ||
|---|---|---|---|
| LETTABLE AREA | 12,986 m2 | ||
| BUILT | under construction |
| TENANT | Internet shop s.r.o., SUTA s.r.o.; SECUPACK s.r.o. |
|---|---|
| LETTABLE AREA | 13,673 m2 |
| BUILT | 2013–2016 |
| TENANT | HARTMANN – RICO a.s. |
|---|---|
| LETTABLE AREA | 8,621 m2 |
| BUILT | 2013 |
| TENANT | Yusen Logistics (Czech) s.r.o. |
|---|---|
| LETTABLE AREA | 13,071 m2 |
| BUILT | under construction |
| BUILDING II. | |||
|---|---|---|---|
| -- | -- | -------------- | -- |
| TENANT | FIA ProTeam s.r.o. |
|---|---|
| LETTABLE AREA | 2,753 m2 |
| BUILT | 2016 |
| TENANT | Drylock Technologies s.r.o. |
|---|---|
| LETTABLE AREA | 40,361 m2 |
| BUILT | 2012–2014 |
| BUILDING L1 | |
|---|---|
| TENANT | KNORR-BREMSE Systémy pro užitková vozidla ČR, s.r.o. |
| LETTABLE AREA | 11,436 m2 |
| BUILT | 2016 |
| VGP Park Olomouc | |
|---|---|
| BUILDING G1 | |
| TENANT | Benteler Automotive Rumburk s.r.o.; Gerfl or CZ s.r.o. |
| LETTABLE AREA | 11,648 m2 |
|---|---|
| BUILT | 2016 |
| TENANT | Euro Pool System CZ s.r.o.; FENIX solutions s.r.o. |
|---|---|
| LETTABLE AREA | 19,859 m2 |
| BUILT | 2015 |
TENANT ASSA ABLOY ES Production s.r.o.
LETTABLE AREA 8,711 m2
BUILT 2014
| TENANT | FAIVELEY TRANSPORT CZECH a.s. |
|---|---|
| LETTABLE AREA | 21,918 m2 |
| BUILT | 2015 |
| TENANT | Excell Czech s.r.o.; Sumisho Global Logistics Europe GmbH, odštěpný závod |
|---|---|
| LETTABLE AREA 9,542 m2 | |
| BUILT | 2014–2015 |
| TENANT | COPO TÉXTIL PORTUGAL S.A., organizační složka; TRANSTECHNIK CS, spol. s r.o. |
|---|---|
| LETTABLE AREA | 3,640 m2 |
| BUILT | 2015–2016 |
| BUILDING A | |
|---|---|
| TENANT | CAAMANO CZ INTERNATIONAL GLASS CORPORATION, s.r.o.; invelt – s.r.o.; Lidl Česká republika v.o.s. |
| LETTABLE AREA | 6,396 m2 |
| BUILT | 2013 |
| TENANT | HARTMANN – RICO a.s.; FM ČESKÁ, s.r.o. |
|---|---|
| LETTABLE AREA | 18,594 m2 |
| BUILT | 2014–2016 – partly under construction |
| BUILDING P1 | |
|---|---|
| TENANT | JOTUN CZECH a.s.; Minda KTSN Plastic Solutions s.r.o. |
| LETTABLE AREA | 5,351 m2 |
| BUILT | 2014 |
| TENANT | Treves CZ s.r.o. |
|---|---|
| LETTABLE AREA | 8,296 m2 |
| BUILT | under construction |
TENANT SSI Technologies s.r.o.
LETTABLE AREA 8,025 m2
BUILT 2015
| VGP PARK | OWNER LAND AREA (m²) |
LETTABLE AREA (m²) | ||||
|---|---|---|---|---|---|---|
| COMPLETED | UNDER CONSTRUCTION |
POTENTIAL | TOTAL | |||
| VGP PARK TUCHOMĚŘICE | VGP | 58,701 | 11,630 | 13,360 | — | 24,990 |
| VGP PARK ÚSTÍ NAD LABEM |
VGP | 133,209 | 13,376 | 8,296 | 17,425 | 39,096 |
| VGP PARK CESKY UJEZD | VGP | 45,383 | 2,753 | 13,071 | — | 15,824 |
| VGP PARK LIBEREC | VGP | 36,062 | 11,436 | — | 2,000 | 13,436 |
| VGP PARK OLOMOUC | VGP | 350,344 | — | 11,648 | 138,489 | 150,137 |
| VGP PARK JENEC | VGP | 173,859 | — | — | 50,490 | 50,490 |
| VGP PARK CHOMUTOV | VGP | 95,057 | — | — | 50,096 | 50,096 |
| TOTAL | 892,615 | 39,195 | 46,375 | 258,499 | 344,069 | |
| VGP PARK BRNO | Joint Venture | 63,974 | 22,294 | 12,986 | — | 35,280 |
| VGP PARK HRÁDEK NAD NISOU |
Joint Venture | 180,638 | 40,361 | — | 41,819 | 82,180 |
| VGP PARK PLZEŇ | Joint Venture | 92,354 | 43,809 | — | — | 43,809 |
| VGP PARK OLOMOUC | Joint Venture | 54,674 | 19,859 | — | — | 19,859 |
| TOTAL | 391,640 | 126,323 | 12,986 | 41,819 | 181,128 |
ROMANIA 24 — VGP PARK TIMISOARA
ESTONIA 25 — VGP PARK NEHATU
LATVIA 26 — VGP PARK KEKAVA
SPAIN 27 — VGP PARK SAN FERNADO DE HENARES 28 — VGP PARK MANGO
HUNGARY 29 — VGP PARK GYŐR 30 — VGP PARK ALSÓNÉMEDI
SLOVAKIA 31 — VGP PARK MALACKY
Madrid Barcelona
27 28
| TENANT | Nagel Hungária Logisztikai Korlátolt Felelösségü Társaság |
|---|---|
| LETTABLE AREA | 22,892 m2 |
| BUILT | 2016 |
| TENANT | SKINY Gyártó Korlátolt Felelösségü Társaság; Waberer's-Szemerey Kft.; Gebrüder Weiss Szállítmányozási Kft. |
|---|---|
| LETTABLE AREA | 20,290 m2 |
| BUILT | 2009 |
| TENANT | Lear Corporation Hungary Kft. |
|---|---|
| LETTABLE AREA | 11,740 m2 |
| BUILT | 2012 |
| HUNGARY | |
|---|---|
| VGP Park Győr | |
| BUILDING C |
| TENANT | Dana Hungary Kft. |
|---|---|
| LETTABLE AREA | 6,154 m2 |
| BUILT | 2011 |
| TENANT | Benteler Automotive SK s.r.o. |
|---|---|
| LETTABLE AREA | 14,863 m2 |
| BUILT | 2009 |
| TENANT | Benteler Automotive SK s.r.o. |
|---|---|
| LETTABLE AREA | 18,553 m2 |
| BUILT | 2016 – partly under construction |
| BUILDING C | |
|---|---|
| TENANT | FROMM SLOVAKIA, a.s.; Tajco Slovakia s. r. o.; IKEA Components s.r.o. |
| LETTABLE AREA | 15,255 m2 |
| BUILT | 2015 |
| BUILDING D | |
|---|---|
| TENANT | Volkswagen Konzernlogistik GmbH & Co. OHG |
| LETTABLE AREA | 35,683 m2 |
| BUILT | 2015 |
| TENANT | IDEAL Automotive Slovakia, s.r.o. |
|---|---|
| LETTABLE AREA | 12,756 m2 |
| BUILT | 2016 |
BUILDING A
| TENANT | Boomerang Distribution OÜ; CF&S Estonia AS; Comforta OÜ; Freselle OÜ |
||
|---|---|---|---|
| LETTABLE AREA | 23,235 m2 | ||
| BUILT | 2014 | ||
BUILDING B
| TENANT | ANOBION HULGIMÜÜGI OÜ; SIRELDUS OÜ; Lemoine Estonia OÜ; ON24 AS; Turritis OÜ; D.T.L. Consumer Products Eesti AS |
|---|---|
| LETTABLE AREA | 21,841 m2 |
| BUILT | 2015 |
| TENANT | Estonian Ministry of Defence | |
|---|---|---|
| LETTABLE AREA | 7,410 m2 | |
| BUILT | 2015 |
| TENANT | Instrumentarium Optika Osaühing; WEXL GRUPP OÜ; Fruit Express OÜ |
|---|---|
| LETTABLE AREA | 11,152 m2 |
| BUILT | 2016 |
| TENANT | on-going negotiations |
|---|---|
| LETTABLE AREA | 11,088 m2 |
| BUILT | under construction |
BUILDING A1.1
| TENANT | on-going negotiations |
|---|---|
| LETTABLE AREA | 20,152 m² |
| BUILT | under construction |
| BUILDING A1 | ||||
|---|---|---|---|---|
| TENANT | QUEHENBERGER LOGISTICS ROU SRL; cargo-partner Expeditii SRL |
|||
| LETTABLE AREA | 17,565 m2 | |||
| BUILT | 2016 | |||
| TENANT | SC EKOL INTERNATIONAL LOGISTICS SRL; SC FAN COURIER EXPRESS SRL; VAN MOER GROUP SRL; KLG Europe Logistics SRL |
|
|---|---|---|
| LETTABLE AREA | 18,009 m2 | |
| BUILT | 2016 |
BUILDING B1
| TENANT | QUEHENBERGER LOGISTICS ROU SRL; WHITELAND LOGISTICS SRL; CARGO-PARTNER EXPEDITII SRL; UPS Romania SRL; World Media Trans SRL; S.C. PROFI ROM FOOD SRL; ITC LOGISTIC ROMANIA SRL; CSC ETICHETE SRL |
|---|---|
| LETTABLE AREA | 17,841 m2 |
| BUILT | 2013–2014 |
| TENANT | DHL International Romania SRL; QUEHENBERGER LOGISTICS ROU SRL; RESET EMS srl; SC SIDE TRADING SRL; S.C. DSV SOLUTIONS SRL.; NEFAB PACKAGING ROMANIA SRL; HELBAKO ELECTRONICA SRL; BCVO Logistics SRL |
|---|---|
| LETTABLE AREA | 18,161 m2 |
| BUILT | 2015/under construction |
| TENANT | PUNTO FA, S.L. |
|---|---|
| LETTABLE AREA | 185,938 m2 |
| BUILT | 2016 |
| VGP PARK | OWNER | LAND AREA (m²) |
LETTABLE AREA (m²) | |||
|---|---|---|---|---|---|---|
| COMPLETED | UNDER CONSTRUCTION |
POTENTIAL | TOTAL | |||
| VGP PARK TIMISOARA ROMANIA |
VGP | 188,347 | 71,576 | — | 10,500 | 82,076 |
| VGP PARK NEHATU ESTONIA |
VGP | 155,450 | 63,637 | 11,088 | — | 74,725 |
| VGP PARK KEKAVA LATVIA |
VGP | 146,873 | — | 20,152 | 40,320 | 60,472 |
| VGP PARK SAN FERNANDO DE HENARES SPAIN |
VGP | 222,666 | — | — | 134,764 | 134,764 |
| VGP PARK MANGO SPAIN |
VGP | 274,163 | 185,938 | — | 133,934 | 319,872 |
| TOTAL | 987,498 | 321,151 | 31,240 | 319,518 | 671,909 | |
| VGP PARK GYŐR HUNGARY |
Joint Venture | 121,798 | 38,183 | — | 9,572 | 47,754 |
| VGP PARK ALSÓNÉMEDI HUNGARY |
Joint Venture | 85,349 | 22,892 | — | 12,000 | 34,892 |
| VGP PARK MALACKY SLOVAKIA |
Joint Venture | 220,492 | 78,557 | 18,553 | 9,880 | 106,990 |
| TOTAL | 427,639 | 139,632 | 18,553 | 31,452 | 189,637 |
FOR THE YEAR ENDED 31 DECEMBER 2016
Consolidated financial statements — 108
Notes to the consolidated financial statements — 113
Supplementary notes not part of the audited financial statements — 155
Parent company information — 157
Auditor's report — 161
Glossary of terms — 162
| INCOME STATEMENT (in thousands of €) | NOTE | 2016 | 2015 |
|---|---|---|---|
| REVENUE | 5 | 24,739 | 23,118 |
| GROSS RENTAL INCOME | 5 | 16,806 | 17,073 |
| SERVICE CHARGE INCOME | 6 | 4,108 | 3,498 |
| SERVICE CHARGE EXPENSES | 6 | (3,073) | (3,076) |
| PROPERTY OPERATING EXPENSES | 7 | (1,703) | (972) |
| NET RENTAL INCOME | 16,138 | 16,523 | |
| PROPERTY AND DEVELOPMENT MANAGEMENT INCOME | 5 | 3,141 | 1,433 |
| FACILITY MANAGEMENT INCOME | 5 | 684 | 1,114 |
| NET VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTIES | 8 | 118,900 | 103,981 |
| ADMINISTRATION EXPENSES | 9 | (15,446) | (13,451) |
| OTHER INCOME | 483 | 487 | |
| OTHER EXPENSES | (1,815) | (1,034) | |
| SHARE IN RESULT OF JOINT VENTURE AND ASSOCIATES | 10 | 7,897 | 191 |
| OPERATING PROFIT/(LOSS) | 129,982 | 109,244 | |
| FINANCIAL INCOME | 11 | 2,814 | 466 |
| FINANCIAL EXPENSES | 11 | (19,720) | (10,620) |
| NET FINANCIAL RESULT | (16,906) | (10,154) | |
| PROFIT BEFORE TAXES | 113,076 | 99,090 | |
| TAXES | 12 | (21,790) | (12,529) |
| PROFIT FOR THE YEAR | 91,286 | 86,561 | |
| ATTRIBUTABLE TO: | |||
| SHAREHOLDERS OF VGP NV | 13 | 91,286 | 86,561 |
| NON-CONTROLLING INTERESTS | — | — |
The consolidated income statement should be read in conjunction with the accompanying notes.
| STATEMENT OF COMPREHENSIVE INCOME (in thousands of €) | 2016 | 2015 |
|---|---|---|
| PROFIT FOR THE YEAR | 86,561 | |
| OTHER COMPREHENSIVE INCOME TO BE RECLASSIFIED TO PROFIT OR LOSS IN SUBSEQUENT PERIODS |
— | — |
| OTHER COMPREHENSIVE INCOME NOT TO BE RECLASSIFIED TO PROFIT OR LOSS IN SUBSEQUENT PERIODS |
— | — |
| OTHER COMPREHENSIVE INCOME FOR THE PERIOD | — | — |
| TOTAL COMPREHENSIVE INCOME/(LOSS) OF THE PERIOD | 91,286 | 86,561 |
| ATTRIBUTABLE TO: | ||
| SHAREHOLDERS OF VGP NV | 91,286 | 86,561 |
| NON-CONTROLLING INTEREST | — | — |
| ASSETS (in thousands of €) | NOTE | 2016 | 2015 |
|---|---|---|---|
| GOODWILL | 14 | — | 631 |
| INTANGIBLE ASSETS | 15 | 14 | 12 |
| INVESTMENT PROPERTIES | 16 | 550,262 | 173,972 |
| PROPERTY, PLANT AND EQUIPMENT | 15 | 517 | 378 |
| NON-CURRENT FINANCIAL ASSETS | 17 | 5 | 216 |
| INVESTMENTS IN JOINT VENTURE AND ASSOCIATES | 10 | 89,194 | (103) |
| OTHER NON-CURRENT RECEIVABLES | 10 | 8,315 | — |
| DEFERRED TAX ASSETS | 12 | 3 | 89 |
| TOTAL NON-CURRENT ASSETS | 648,310 | 175,195 | |
| TRADE AND OTHER RECEIVABLES | 18 | 19,426 | 4,927 |
| CASH AND CASH EQUIVALENTS | 19 | 71,595 | 9,825 |
| DISPOSAL GROUP HELD FOR SALE | 26 | 132,263 | 527,361 |
| TOTAL CURRENT ASSETS | 223,284 | 542,113 | |
| TOTAL ASSETS | 871,594 | 717,308 |
| SHAREHOLDERS' EQUITY AND LIABILITIES (in thousands of €) | NOTE | 2016 | 2015 |
|---|---|---|---|
| SHARE CAPITAL | 20 | 62,251 | 62,251 |
| RETAINED EARNINGS | 327,985 | 239,658 | |
| OTHER RESERVES | 21 | 69 | 69 |
| OTHER EQUITY | 21 | — | 60,000 |
| SHAREHOLDERS' EQUITY | 390,305 | 361,978 | |
| NON-CURRENT FINANCIAL DEBT | 22 | 327,923 | 170,800 |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | 23 | 5,348 | 967 |
| OTHER NON-CURRENT LIABILITIES | 24 | 2,432 | 405 |
| DEFERRED TAX LIABILITIES | 12 | 20,012 | 8,247 |
| TOTAL NON-CURRENT LIABILITIES | 355,715 | 180,419 | |
| CURRENT FINANCIAL DEBT | 22 | 81,674 | 3,522 |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES | 25 | 35,496 | 10,342 |
| LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | 26 | 8,404 | 161,047 |
| TOTAL CURRENT LIABILITIES | 125,574 | 174,911 | |
| TOTAL LIABILITIES | 481,289 | 355,330 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 871,594 | 717,308 |
The consolidated balance sheet should be read in conjunction with the accompanying notes.
For the year ended 31 December 2016
| STATEMENT OF CHANGES IN EQUITY (in thousands of €) |
STATUTORY SHARE CAPITAL |
CAPITAL RESERVE (see note 6.8) |
IFRS SHARE CAPITAL |
RETAINED EARNINGS |
SHARE PREMIUM |
OTHER EQUITY |
TOTAL EQUITY |
|---|---|---|---|---|---|---|---|
| BALANCE AS AT 1 JANUARY 2015 |
112,737 | (50,486) | 62,251 | 153,097 | 69 | — | 215,417 |
| OTHER COMPREHENSIVE INCOME/(LOSS) |
— | — | — | — | — | — | — |
| RESULT OF THE PERIOD | — | — | — | 86,561 | — | — | 86,561 |
| EFFECT OF DISPOSALS | — | — | — | — | — | — | — |
| TOTAL COMPREHENSIVE INCOME/(LOSS) |
— | — | — | 86,561 | — | — | 86,561 |
| DIVIDENDS TO SHAREHOLDERS |
— | — | — | — | — | — | — |
| SHARE CAPITAL DISTRIBUTION TO SHAREHOLDERS |
— | — | — | — | — | — | — |
| HYBRID SECURITIES (SEE NOTE 21) |
— | — | — | — | — | 60,000 | 60,000 |
| BALANCE AS AT 31 DECEMBER 2015 |
112,737 | (50,486) | 62,251 | 239,658 | 69 | 60,000 | 361,978 |
| BALANCE AS AT 1 JANUARY 2016 |
112,737 | (50,486) | 62,251 | 239,658 | 69 | 60,000 | 361,978 |
| OTHER COMPREHENSIVE INCOME/(LOSS) |
— | — | — | — | — | — | — |
| RESULT OF THE PERIOD | — | — | — | 91,286 | — | — | 91,286 |
| EFFECT OF DISPOSALS | — | — | — | — | — | — | — |
| TOTAL COMPREHENSIVE INCOME/(LOSS) |
— | — | — | 91,286 | — | — | 91,286 |
| DIVIDENDS TO SHAREHOLDERS |
— | — | — | — | — | — | — |
| SHARE CAPITAL DISTRIBUTION TO SHAREHOLDERS |
— | — | — | — | — | — | — |
| HYBRID SECURITIES (SEE NOTE 21) |
— | — | — | (2,959) | — | (60,000) | (62,959) |
| BALANCE AS AT 31 DECEMBER 2016 |
112,737 | (50,486) | 62,251 | 327,985 | 69 | — | 390,305 |
For the year ended 31 December 2016
| CASH FLOW STATEMENT (in thousands of €) | NOTE | 2016 | 2015 |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | 27 | ||
| PROFIT BEFORE TAXES | 113,076 | 99,090 | |
| ADJUSTMENTS FOR: | |||
| DEPRECIATION | 897 | 734 | |
| UNREALISED (GAINS) /LOSSES ON INVESTMENT PROPERTIES | 8 | (97,696) | (103,975) |
| REALISED (GAINS)/LOSSES ON DISPOSAL OF SUBSIDIARIES AND INVESTMENT PROPERTIES |
8 | (21,204) | (6) |
| UNREALISED (GAINS)/LOSSES ON FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE |
11 | 4,723 | 245 |
| INTEREST (RECEIVED) | (2,636) | (21) | |
| INTEREST PAID | 14,820 | 10,194 | |
| SHARE IN (PROFIT)/LOSS OF JOINT VENTURE AND ASSOCIATES | 10 | (7,897) | (191) |
| OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS |
4,083 | 6,070 | |
| DECREASE/(INCREASE) IN TRADE AND OTHER RECEIVABLES | (14,505) | (8,555) | |
| (DECREASE)/INCREASE IN TRADE AND OTHER PAYABLES | 28,681 | 416 | |
| CASH GENERATED FROM THE OPERATIONS | 18,259 | (2,072) | |
| INTEREST RECEIVED | 157 | 21 | |
| INTEREST (PAID) | (10,684) | (10,194) | |
| INCOME TAXES PAID | (939) | (364) | |
| NET CASH FROM OPERATING ACTIVITIES | 6,793 | (12,609) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | 27 | ||
| PROCEEDS FROM DISPOSAL OF TANGIBLE ASSETS AND OTHER | 46 | 337 | |
| ACQUISITION OF SUBSIDIARIES | — | (224) | |
| INVESTMENT PROPERTY AND INVESTMENT PROPERTY UNDER CONSTRUCTION | (336,654) | (147,490) | |
| DISPOSAL OF SUBSIDIARIES AND INVESTMENT PROPERTIES TO VGP EUROPEAN LOGISTICS JOINT VENTURE |
28 | 236,060 | — |
| DISTRIBUTION BY/(INVESTMENT IN) VGP EUROPEAN LOGISTICS JOINT VENTURE | 4,678 | — | |
| (LOANS PROVIDED TO)/LOANS REPAID BY JOINT VENTURE AND ASSOCIATES | (28,546) | — | |
| NET CASH USED IN INVESTING ACTIVITIES | (124,416) | (147,377) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | 27 | ||
| NET PROCEEDS/(CASH OUT) FROM THE ISSUE/(REPAYMENT) HYBRID INSTRUMENTS |
21 | (62,960) | 60,000 |
| PROCEEDS FROM LOANS | 283,367 | 83,967 | |
| LOAN REPAYMENTS | (51,536) | (3,914) | |
| NET CASH USED IN FINANCING ACTIVITIES | 168,871 | 140,053 | |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 51,248 | (19,934) | |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 9,825 | 43,595 | |
| EFFECT OF EXCHANGE RATE FLUCTUATIONS | 234 | 347 | |
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | 28 | 10,288 | (14,184) |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 71,595 | 9,825 |
The consolidated cash flow statement should be read in conjunction with the accompanying notes.
For the year ended 31 December 2016
VGP NV (the "Company") is a limited liability company and was incorporated under Belgian law on 6 February 2007 for an indefinite period of time with its registered office located at Spinnerijstraat 12, 9240 Zele, and the Company is registered under enterprise number 0887.216.042 (Register of Legal Entities of Ghent – Division Dendermonde).
The Group is a real estate group specialised in the acquisition, development, and management of logistic real estate. The Group focuses on strategically located plots of land in the mid-European region suitable for the development of logistic business parks of a certain size, so as to build up an extensive and welldiversifi ed property portfolio on top locations.
The Company's consolidated financial statements include those of the Company and its subsidiaries (together referred to as "Group"). The consolidated financial statements were approved for issue by the board of directors on 7 April 2017.
The consolidated financial statements have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) which have been adopted by the European Union.
These standards comprise all new and revised standards and interpretations published by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Interpretations Committee of the IASB, as far as applicable to the activities of the Group and effective as from 1 January 2016.
A number of new standards, amendments to standards and interpretations became effective during the financial year:
Amendments to IFRS 11 Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations (applicable for annual periods beginning on or after 1 January 2016);
Amendments to IAS 1 Presentation of Financial Statements – Disclosure Initiative (applicable for annual periods beginning on or after 1 January 2016);
The above new standards, amendments to standards and interpretation did not give rise to any material changes in the presentation and preparation of the consolidated financial statements of the year.
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2016, and have not been applied when preparing financial statements:
for annual periods beginning on or after 1 January 2017, but not yet endorsed in the EU);
The impact, if any, of IFRS 9, IFRS 15 and IFRS 16 is under investigation by the Group The initial application of the other above standards, amendments to standards and interpretation is estimated not to give rise to any material changes in the presentation and preparation of the consolidated financial statements.
The consolidated financial statements are prepared on a historic cost basis, with the exception of investment properties and financial derivatives which are stated at fair value. All figures are in thousands of Euros (in thousands of €), unless stated otherwise. Minor rounding differences might occur.
Subsidiaries are entities over which VGP NV exercises control, which is the case when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Losses within a subsidiary are attributed to the noncontrolling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
A joint venture exists when VGP NV has contractually agreed to share control with one or more other parties, which is the case only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Associates are companies in which VGP NV, directly or indirectly, has a significant influence and which are neither subsidiaries nor joint ventures. This is presumed if the Group holds at least 20% of the voting rights attaching to the shares. The financial information included for these companies is prepared using the accounting policies of the Group. When the Group has acquired joint control in a joint venture or significant influence in an associate, the share in the acquired assets, liabilities and contingent liabilities is initially re-measured to fair value at the acquisition date and accounted for using the equity method. Any excess of the purchase price over the fair value of the share in the assets, liabilities and contingent liabilities acquired is recognized as goodwill. When the goodwill is negative, it is immediately recognized in profit or loss. Subsequently, the consolidated financial statements include the Group's share of the results of joint ventures and associates accounted for using the equity method until the date when joint control or significant influence ceases. If the Group's share of the losses of a joint venture or associate exceeds the carrying amount of the investment, the investment is carried at nil value and recognition of additional losses is limited except to the extent that VGP has incurred constructive or contractual obligations in respect of the associate.
Unrealized gains arising from transactions with joint ventures and associates are set against the investment in the joint venture or associate concerned to the extent of the Group's interest. The carrying amounts of investments in joint ventures and associates are reassessed if there are indications that the asset has been impaired or that impairment losses recognized in prior years have ceased to apply. The investments in joint ventures and associates in the balance sheet include the carrying amount of any related goodwill.
IAS 28.28 only permits recognition of the gain or loss from downstream transactions "to the extent of unrelated investors' interests in the associate or joint venture". However, the standard does not specifically address the treatment of revenue derived from transactions with equity-method investees (e.g. revenue from the sale of goods, or interest revenue) and whether that revenue should be eliminated from the consolidated financial statements. In contrast, according to IFRS 10.25 upon loss of control of a subsidiary, a parent derecognises the assets and liabilities of the subsidiary (including non-controlling interests) in full and measures any investment retained in the former subsidiary at its fair value. In the absence of any other relevant guidance, entities have, in effect, an accounting policy choice of applying either the approach in IFRS 10 or the approach in IAS 28.
VGP has made the accounting policy choice to recognize the gain or loss on the disposal of a subsidiary to a joint venture or associate in full in profi t or loss. In respect of the treatment of revenues derived from transactions with joint ventures and associates (e.g. sales services, interest revenue, …), the Group has opted not to eliminate its interest in these transactions. As a matter of example, VGP receives € 100 interest income on a loan provided to a 50/50 joint venture. Under the accounting policy adopted by VGP this interest income would be accounted for as € 100 interest income of the Group. The cost incurred by the joint venture would be accounted for on a proportional (50%) basis through "results in joint ventures and associates" without making any adjustment for the proportional interest held by VGP. By doing so the Group will only recognise its proportional profi t or loss in its consolidated fi gures and ensure that it does not recognise a higher profi t or loss than its share in the "results in joint ventures and associates".
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in euros (€), which is the Company's functional currency and the Group's presentation currency.
Transactions in foreign currencies are translated to Euro at the foreign exchange rate ruling at the date of the transaction. Consequently, non-monetary assets and liabilities are presented at Euro using the historic foreign exchange rate. Monetary assets and liabilities denominated in a currency other than Euro at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated income statement.
When VGP acquires the control over an integrated set of activities and assets, as defined in IFRS 3 Business Combinations, the identifiable assets, obligations and conditional obligations of the acquired company will be booked to their fair value on the purchase date. The goodwill represents the positive difference between the acquisition cost and the part of the group in the fair value of the acquired net assets. If this difference is negative (negative goodwill) it is immediately booked in the result after a re-evaluation of the values.
Aft er the initial take-up the goodwill is not written down, but subject to an impairment test, which is carried out each year on the cash fl ow generating units to which the goodwill is allocated. If the book value of a cash fl ow generating unit exceeds the operating value, the loss of value following from this will be booked in the result and in the fi rst instance included in the reduction of the possible goodwill and then subsequently to the other assets of the unit, in proportion to their book value. A write-down on the goodwill cannot be reversed in a subsequent fi nancial year.
Intangible assets are measured at cost or fair value less accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over the best estimate of their useful lives. The amortization period and method are reviewed at each financial year-end.
Completed properties are initially measured at cost (including transaction costs). After initial recognition, investment property is carried at fair value. An external independent valuation expert with recognised professional qualifications and experience in the location and category of the property being valued, values the portfolio at least annually. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion
Any gain or loss arising from a change in fair value is recognised in the consolidated income statement.
Property that is being constructed or developed is also stated at fair value. The properties under construction are valued by the same external independent valuation expert used for the valuations of the completed projects but deducting the remaining construction costs from the calculated market value.
Any gain or loss arising from a change in fair value is recognised in the consolidated income statement.
All costs directly associated with the purchase and construction of a property and all subsequent capital expenditure qualifying as acquisition costs are capitalised.
Land of which the Group has the full ownership i.e. registered in the respective land registry as owner and on which the Group intends or has started construction (so called 'development land') is immediately valued at fair value. The development land is valued by the same external independent valuation expert used for the valuations of the completed projects.
Any gain or loss arising from a change in fair value is recognised in the consolidated income statement.
All costs directly associated with the purchase of the development land are capitalised.
Land which is not yet in full ownership but which is secured by a future purchase agreement or purchase option is not recognised as investment property until the Group has become full owner of this land.
The Group will be required to make from time to time down payments when entering into such future purchase agreements or purchase options. The down payments of the land will be recorded as other receivables unless such amounts are immaterial, in which case the Board of Directors may elect to classify such amounts under investment properties.
Infrastructure works are not included in the fair value of the development land but are recognised as investment property and valued at cost.
In case the Board of Directors is of the opinion that the fair value of the development land cannot be reliable determined the Board may elect to value the development land at cost less impairment until the fair value becomes reliably determinable.
Interest and other financial expenses relating to the acquisition of fixed assets incurred until the asset is put in use are capitalised. Subsequently, they are recorded as financial expenses.
Leases under which substantially all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognized, on a straight-line basis, as a reduction of rental expense over the lease term. Improvements to buildings held under operating leases are depreciated over their expected useful lives, or, where shorter, the term of the relevant lease.
Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. At the start of the lease, financial leases are recorded as assets and liabilities in the balance sheet at the fair value of the leased asset or at the cash value of the minimal lease payments, whichever is lower. The minimal lease payments are recorded partly as financing costs and partly as settlement of the outstanding debt such that this results in constant periodic interest over the remaining balance of the liability. The financial charges are directly charged to the result. Conditional lease payments are included as charges in the periods in which they are made.
Properties leased out under operating leases are included in investment property in the consolidated balance sheet. See point 2.20 for the recognition of rental income.
The Group makes payments to agents for services in connection with negotiating lease contracts with the Group's lessees. The letting fees are capitalised within the carrying amount of the related investment property and amortised over the lease term. Lease incentives are recognised as a reduction of rental income on a straight-line basis over the lease term.
Property, plant and equipment are valued at their cost price less the accumulated depreciations and write-downs. The cost price includes all directly attributable costs and the relevant part of the indirect costs incurred to make the asset ready for use. Future disbursements for repairs are immediately recorded in the result unless they increase the future financial profits of the asset. The straight-line depreciation method is applied over the estimated lifetime of the assets. The useful life and the depreciation method are revised at least annually at the end of each financial year. The tangible fixed assets are depreciated in accordance with the following percentages:
Trade receivables do not carry any interest and are stated at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the balance sheet date. An allowance for impairment of trade and other receivables is established if the collection of a receivable becomes doubtful. Such receivable becomes doubtful when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset's carrying amount and the present value of the estimated future cash flows. An impairment loss is recognized in the statement of income, as are subsequent recoveries of previous impairments.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated cash-flow statement.
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. A discontinued operation is a component of an entity which the entity has disposed of or which is classified as held for sale, which represents a separate major line of business or geographical area of operations and which can be distinguished operationally and for financial reporting purposes.
For a sale to be highly probable, the entity should be committed to a plan to sell the asset (or disposal group), an active program to locate a buyer and complete the plan should be initiated, and the asset (or disposal group) should be actively marketed at a price which is reasonable in relation to its current fair value, and the sale should be expected to be completed within one year from the date of classification. Assets (or disposal group) classified as held for sale are measured at the lower of their carrying amount and fair value less costs necessary to make the sale. Any excess of the carrying amount over the fair value less costs to sell is included as an impairment loss. Depreciation of such assets is discontinued as from their classification as held for sale.
Comparative balance sheet information for prior periods is not restated to reflect the new classification in the balance sheet.
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the consolidated income statement over the period of the borrowings on an effective interest basis. The Group classifies as a current portion any part of long-term loans that is due to be settled within one year from the balance sheet date.
Trade and other payables are stated at amortised cost.
A derivative is a financial instrument or other contract which fulfils the following conditions:
Hedging derivatives are defined as derivatives that comply with the company's risk management strategy, the hedging relationship is formally documented and the hedge is effective, that is, at inception and throughout the period, changes in the fair value or cash flows of the hedged and hedging items are almost fully offset and the results are within a range of 80 percent to 125 percent.
Derivative financial instruments that are not designated as hedging instruments are classified as heldfor-trading and carried at fair value, with changes in fair value included in net profit or loss of the period in which they arise.
Fair values are obtained from quoted market prices or discounted cash-flow models, as appropriate. All non-hedge derivatives are carried (as applicable) as current or non-current assets when their fair value is positive and as current or non-current liabilities when their fair value is negative.
VGP holds no derivative instruments nor intends to issue any for speculative purposes.
The carrying amounts of the Group's property, plant and equipment and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the consolidated income statement.
Impairment losses recognised in respect of cashgenerating units reduce the carrying amount of the assets in the unit (group of units) on a pro-rata basis.
An impairment loss is reversed in the consolidated income statement if there has been a change in the estimates used to determine the recoverable amount to the extent it reverses an impairment loss of the same asset that was recognised previously as an expense.
A provision is recognised in the consolidated balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Rental income from investment property leased out under an operating lease is recognised in the consolidated income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income. Rental income is recognised as from the commencement of the lease contract.
The Group did not enter into any financial lease agreements with tenants, all lease contracts qualify as operating leases.
The lease contracts concluded can be defined as ordinary leases whereby the obligations of the lessor under the lease remain essentially those under any lease, for instance to ensure that space in a state of being occupied is available to the lessee during the whole term of the lease. The lease contracts are usually concluded for periods between 5–10 years (first break option) and include most of the time an automatic extension clause. The lessee cannot cancel the lease contract until the first break option date.
Service costs for service contracts entered into and property operating expenses are expensed as incurred.
Net financial result comprises interest payable on borrowings and interest rate swaps calculated using the effective interest rate method net of interest capitalised, interest receivable on funds invested and interest rate swaps, foreign exchange and interest rate swap gains and losses that are recognised in the consolidated income statement.
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets and deferred tax liabilities have been offset, pursuant to the fulfilment of the criteria of IAS 12 §74. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
We refer to the chapter 'Risk factors' for an overview of the risks affecting the businesses of the VGP Group.
The following are the critical judgments made by management, apart from those involving estimations (see note 3.3. below), that have a significant effect on the amounts reported in the consolidated financial statements:
The chief operating decision maker is the person that allocates resources to and assesses the performance of the operating segments. The Group has determined that its chief operating decision-maker is the chief executive officer (CEO) of the Company. He allocates resources to and assesses the performance at country level.
The basic segmentation for segment reporting within VGP is by geographical region. This basic segmentation reflects the geographical markets in Europe in which VGP operates. VGP's operations are split into the individual countries where it is active. This segmentation is important for VGP as the nature of the activities and the customers have similar economic characteristics within those segments.
Business decisions are taken at that level and various key performance indicators (such as rental income, – activity, occupancy and development yields) are monitored in this way as VGP primarily focuses on developing and letting logistical sites. A second segmentation basis is based on the split of income on the property and facility management as well as the development activities carried out on behalf of the Joint Venture.
| INCOME STATEMENT | CZECH REPUBLIC | ||
|---|---|---|---|
| (in thousands of €) | 2016 | 2015 | |
| GROSS RENTAL INCOME | 3,986 | 4,663 | |
| SERVICE CHARGE INCOME/(EXPENSES) | 177 | 42 | |
| PROPERTY OPERATING EXPENSES | (151) | (284) | |
| NET RENTAL INCOME | 4,012 | 4,421 | |
| PROPERTY AND DEVELOPMENT MANAGEMENT INCOME | 894 | 1,324 | |
| FACILITY MANAGEMENT INCOME | 684 | 1,114 | |
| NET VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTY | 17,337 | 25,059 | |
| OTHER INCOME/(EXPENSES) - INCL. ADMINISTRATIVE COSTS | (2,570) | (3,616) | |
| SHARE IN THE RESULT OF JOINT VENTURE AND ASSOCIATES | — | — | |
| OPERATING PROFIT/(LOSS) | 20,357 | 28,302 | |
| NET FINANCIAL RESULT | — | — | |
| TAXES | — | — | |
| PROFIT FOR THE YEAR | — | — |
| BALANCE SHEET | CZECH REPUBLIC | ||
|---|---|---|---|
| (in thousands of €) | 2016 | 2015 | |
| ASSETS | |||
| INVESTMENT PROPERTIES | 90,016 | 47,167 | |
| OTHER ASSETS (INCL. DEFERRED TAX) | 13,981 | 2,785 | |
| DISPOSAL GROUP HELD FOR SALE | 4,465 | 106,139 | |
| TOTAL ASSETS | 108,462 | 156,091 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| SHAREHOLDERS' EQUITY | — | — | |
| TOTAL LIABILITIES | — | — | |
| LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | — | — | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | — | — |
| GERMANY | OTHER COUNTRIES | UNALLOCATED AMOUNTS | TOTAL | |||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| 5,733 | 5,740 | 7,087 | 6,670 | — | — | 16,806 | 17,073 | |
| 183 | 29 | 675 | 351 | — | — | 1,035 | 422 | |
| (765) | (429) | (787) | (259) | — | — | (1,703) | (972) | |
| 5,151 | 5,340 | 6,975 | 6,762 | — | — | 16,138 | 16,523 | |
| 1,314 | 94 | 933 | 15 | — | — | 3,141 | 1,433 | |
| — | — | — | — | — | — | 684 | 1,114 | |
| 41,504 | 58,447 | 7,777 | 20,475 | 52,282 | — | 118,900 | 103,981 | |
| (3,314) | (981) | (2,397) | (513) | (8,497) | (8,887) | (16,778) | (13,997) | |
| — | — | — | — | 7,897 | 191 | 7,897 | 191 | |
| 44,655 | 62,900 | 13,288 | 26,739 | 51,682 | (8,696) | 129,982 | 109,244 | |
| — | — | — | — | (16,906) | (10,154) | (16,906) | (10,154) | |
| — | — | — | — | (21,790) | (12,529) | (21,790) | (12,529) | |
| — | — | — | — | 91,286 | 86,561 | 91,286 | 86,561 |
| GERMANY | OTHER COUNTRIES | UNALLOCATED AMOUNTS | TOTAL | ||||
|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| 174,005 | 53,228 | 286,241 | 73,577 | — | — | 550,262 | 173,972 |
| 9,063 | 617 | 27,050 | 3,574 | 138,975 | 8,999 | 189,069 | 15,975 |
| 41,440 | 333,887 | 4,797 | 87,335 | 81,561 | — | 132,263 | 527,361 |
| 224,508 | 387,732 | 318,088 | 164,486 | 220,536 | 8,999 | 871,594 | 717,308 |
| — | — | — | — | 390,305 | 361,978 | 390,305 | 361,978 |
| — | — | — | — | 472,885 | 194,283 | 472,885 | 194,283 |
| — | — | — | — | 8,404 | 161,047 | 8,404 | 161,047 |
| — | — | — | — | 871,594 | 717,308 | 871,594 | 717,308 |
| INCOME STATEMENT | ESTONIA | SLOVAKIA | |||
|---|---|---|---|---|---|
| (in thousands of €) | 2016 | 2015 | 2016 | 2015 | |
| GROSS RENTAL INCOME | 2,470 | 2,222 | 1,094 | 1,291 | |
| SERVICE CHARGE INCOME/(EXPENSE) | 29 | 59 | 60 | 18 | |
| PROPERTY OPERATING EXPENSES | (103) | (13) | (144) | (86) | |
| NET RENTAL INCOME | 2,396 | 2,268 | 1,010 | 1,223 | |
| PROPERTY AND DEVELOPMENT MANAGEMENT INCOME |
— | — | 11 | 15 | |
| FACILITY MANAGEMENT INCOME | — | — | — | — | |
| NET VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTY |
3,350 | 3,281 | — | 7,129 | |
| OTHER INCOME/(EXPENSES)- INCL. ADMINISTRATIVE COSTS |
(136) | (53) | (633) | 62 | |
| SHARE IN THE RESULT OF JOINT VENTURE AND ASSOCIATES |
— | — | — | — | |
| OPERATING PROFIT/(LOSS) | 5,610 | 5,496 | 388 | 8,429 | |
| NET FINANCIAL RESULT | — | — | — | — | |
| TAXES | — | — | — | — | |
| PROFIT FOR THE YEAR | — | — | — | — |
| BALANCE SHEET | ESTONIA | SLOVAKIA | |||
|---|---|---|---|---|---|
| (in thousands of €) | 2016 | 2015 | 2016 | 2015 | |
| ASSETS | |||||
| INVESTMENT PROPERTIES | 47,400 | 39,776 | 663 | 56 | |
| OTHER ASSETS (INCL. DEFERRED TAX) | 880 | 1,157 | 10 | 14 | |
| DISPOSAL GROUP HELD FOR SALE | — | — | 4,333 | 43,078 | |
| TOTAL ASSETS | 48,280 | 40,933 | 5,006 | 43,148 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | — | — | — | — | |
| SHAREHOLDERS' EQUITY | — | — | — | — | |
| TOTAL LIABILITIES | — | — | — | — | |
| LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
— | — | — | — | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
| HUNGARY | ROMANIA | SPAIN | OTHER | TOTAL | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| 1,000 | 1,929 | 2,281 | 1,228 | 242 | — | — | — | 7,087 | 6,670 |
| 41 | 137 | 549 | 140 | — | — | (4) | (3) | 675 | 351 |
| (85) | (117) | (437) | (29) | (3) | — | (15) | (14) | (787) | (259) |
| 956 | 1,949 | 2,393 | 1,339 | 239 | — | (19) | (17) | 6,975 | 6,762 |
| — | — | — | — | — | — | 922 | — | 933 | 15 |
| — | — | — | — | — | — | — | — | — | — |
| — | 6,663 | 3,763 | 2,591 | — | — | 664 | 811 | 7,777 | 20,475 |
| (196) | (91) | (386) | (123) | (851) | (211) | (195) | (97) | (2,397) | (513) |
| — | — | — | — | — | — | — | — | — | — |
| 760 | 8,521 | 5,770 | 3,807 | (612) | (211) | 1,372 | 697 | 13,288 | 26,739 |
| — | — | — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — | -— | — |
| — | — | — | — | — | — | — | — | — | — |
| HUNGARY | ROMANIA | SPAIN | OTHER | TOTAL | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| — | — | 36,043 | 26,021 | 195,842 | 3,563 | 6,293 | 4,160 | 286,241 | 73,576 |
| 88 | 10 | 13,900 | 1,369 | 12,108 | 988 | 64 | 36 | 27,050 | 3,574 |
| 464 | 44,258 | — | — | — | — | — | — | 4,797 | 87,336 |
| 552 | 44,268 | 49,943 | 27,390 | 207,950 | 4,551 | 6,357 | 4,196 | 318,088 | 164,486 |
| — | — | — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — | ||
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| RENTAL INCOME FROM INVESTMENT PROPERTIES | 14,502 | 17,854 |
| RENT INCENTIVES | 2,304 | (781) |
| TOTAL GROSS RENTAL INCOME | 16,806 | 17,073 |
| PROPERTY MANAGEMENT INCOME | 2,515 | 1,101 |
| DEVELOPMENT MANAGEMENT INCOME | 626 | 332 |
| FACILITY MANAGEMENT INCOME | 684 | 1,114 |
| SERVICE CHARGE INCOME | 4,108 | 3,498 |
| TOTAL REVENUE | 24,739 | 23,118 |
The Group leases out its investment property under operating leases. The operating leases are generally for terms of more than 5 years. The gross rental income reflects the full impact of the income generating assets delivered during 2016 and the sale of the Seed portfolio to the Joint Venture on 31 May 2016. The 2016 rental income included the gross rental income of the Seed portfolio sold, for the period 1 January 2016 to 31 May 2016 for € 10.2 million.
At the end of December 2016 the Group (including the Joint Venture) had annualised committed leases of € 64.3 million1 compared to € 38.0 million2 as at 31 December 2015.
The breakdown of future lease income on an annualised basis for the own portfolio was as follows:
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| LESS THAN ONE YEAR | 25,340 | 37,713 |
| BETWEEN ONE AND FIVE YEARS | 94,376 | 128,461 |
| MORE THAN FIVE YEARS | 242,916 | 117,661 |
| TOTAL | 362,632 | 283,835 |
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| SERVICE CHARGE INCOME | ||
| RECHARGE OF COSTS BORNE BY TENANTS | 4,108 | 3,498 |
| TOTAL | 4,108 | 3,498 |
| SERVICE CHARGE EXPENSES | ||
| ENERGY | (1,778) | (1,838) |
| MAINTENANCE AND CLEANING | (652) | (589) |
| PROPERTY TAXES | (207) | (322) |
| OTHERS | (436) | (327) |
| TOTAL | (3,073) | (3,076) |
Service charge income represents income receivable from tenants for energy, maintenance, cleaning, security, garbage management and usage of infrastructure which relates to the service charge expenses charged to the Group.
2 All related to the Own Property Portfolio.
1 € 38.6 million related to the Joint Venture Property Portfolio and € 25.6 million related to the Own Property Portfolio.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| REPAIRS AND MAINTENANCE | (398) | (185) |
| MARKETING, LEGAL AND PROFESSIONAL FEES | (282) | (354) |
| REAL ESTATE AGENTS | (783) | (237) |
| OTHER | (240) | (196) |
| TOTAL | (1,703) | (972) |
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| UNREALISED VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTIES | 66,006 | 17,211 |
| UNREALISED VALUATION GAINS/(LOSSES) ON DISPOSAL GROUP HELD FOR SALE | 31,690 | 86,764 |
| REALISED VALUATION GAINS/(LOSSES) ON DISPOSAL OF SUBSIDIARIES AND INVESTMENT PROPERTIES |
21,204 | 6 |
| TOTAL | 118,900 | 103,981 |
The own property portfolio, excluding development land, is valued by the valuation expert at 31 December 2016 based on a weighted average yield of 6.49% (compared to 7.02% as at 31 December 2015) applied to the contractual rents increased by the estimated rental value on unlet space. A 0.10% variation of this market rate would give rise to a variation of the total portfolio value of € 6.9 million.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| WAGES AND SALARIES | (3,303) | (2,230) |
| AUDIT, LEGAL AND OTHER ADVISORS | (9,428) | (8,987) |
| OTHER EXPENSES | (2,573) | (1,862) |
| DEPRECIATION | (142) | (372) |
| TOTAL | (15,446) | (13,451) |
The table below presents a summary Income Statement of the Group's Joint Venture with Allianz Real Estate (VGP European Logistics) and the associates, all of which are accounted for using the equity method. VGP European Logistics is incorporated in Luxembourg and owns logistics property assets in Germany, the Czech Republic, Slovakia and Hungary. The associates relate to the 5.1% held directly by VGP NV in the subsidiaries of the Joint Venture holding assets in Germany. During the year, the associates SNOW S.à.r.l. and SUN S.à.r.l. were sold to Tristan Capital Partners as part of the liquidation process of these respective associates.
| INCOME STATEMENT (in thousands of €) |
VGP EUROPEAN LOGISTICS JV AT 100% |
VGP EUROPEAN LOGISTICS GERMAN ASSET COMPANIES AT 100 % |
VGP EUROPEAN LOGISTICS GERMAN ASSET COMPANIES AT 5.1% |
VGP EUROPEAN LOGISTICS JV AT 50% |
2016 | 2015 |
|---|---|---|---|---|---|---|
| GROSS RENTAL INCOME | 16,982 | 9,511 | 485 | 8,491 | 8,976 | — |
| PROPERTY OPERATING EXPENSES |
||||||
| — SERVICE CHARGE INCOME/(EXPENSES)(NET) |
557 | 427 | 22 | 279 | 300 | — |
| — UNDERLYING PROPERTY – OPERATING EXPENSES |
(1,074) | (517) | (26) | (537) | (563) | — |
| — PROPERTY MANAGEMENT FEES |
(1,315) | (752) | (38) | (658) | (696) | — |
| NET RENTAL INCOME | 15,150 | 8,669 | 442 | 7,575 | 8,017 | — |
| NET VALUATION GAINS/ (LOSSES) ON INVESTMENT PROPERTIES |
13,384 | 6,198 | 316 | 6,692 | 7,008 | — |
| ADMINISTRATION EXPENSES | (1,576) | (801) | (41) | (788) | (829) | — |
| OTHER INCOME/ (EXPENSES) (NET) |
(493) | (75) | (5) | (246) | (250) | 191 |
| OPERATING PROFIT/(LOSS) | 26,465 | 13,991 | 713 | 13,234 | 13,946 | 191 |
| FINANCIAL INCOME | 224 | (250) | (12) | 112 | 100 | — |
| FINANCIAL EXPENSES | (7,756) | (3,771) | (192) | (3,878) | (4,070) | — |
| NET FINANCIAL RESULT | (7,532) | (4,021) | (204) | (3,766) | (3,970) | — |
| PROFIT BEFORE TAXES | 18,933 | 9,970 | 508 | 9,468 | 9,976 | 191 |
| TAXES | (3,980) | (1,735) | (88) | (1,990) | (2,078) | — |
| PROFIT FOR THE YEAR | 14,953 | 8,235 | 420 | 7,478 | 7,897 | 191 |
| INCOME STATEMENT (in thousands of €) |
VGP EUROPEAN LOGISTICS JV AT 100% |
VGP EUROPEAN LOGISTICS GERMAN ASSET COMPANIES AT 100 % |
VGP EUROPEAN LOGISTICS GERMAN ASSET COMPANIES AT 5.1% |
VGP EUROPEAN LOGISTICS JV AT 50% |
2016 | 2015 |
|---|---|---|---|---|---|---|
| INVESTMENT PROPERTIES | 574,291 | 390,341 | 19,907 | 287,145 | 307,053 | — |
| OTHER ASSETS | 189 | 29 | 1 | 94 | 96 | — |
| TOTAL NON-CURRENT ASSETS |
574,479 | 390,370 | 19,909 | 287,240 | 307,148 | — |
| TRADE AND OTHER RECEIVABLES |
8,335 | 6,972 | 356 | 4,168 | 4,523 | — |
| CASH AND CASH EQUIVALENTS |
17,342 | 11,464 | 585 | 8,671 | 9,256 | — |
| TOTAL CURRENT ASSETS | 25,678 | 18,436 | 940 | 12,839 | 13,779 | — |
| TOTAL ASSETS | 600,157 | 408,806 | 20,849 | 300,078 | 320,928 | — |
| NON-CURRENT FINANCIAL DEBT |
376,036 | 266,636 | 13,598 | 188,018 | 201,616 | — |
| OTHER NON-CURRENT FINANCIAL LIABILITIES |
1,075 | — | — | 538 | 538 | — |
| OTHER NON-CURRENT LIABILITIES |
1,440 | 16 | 1 | 720 | 721 | — |
| DEFERRED TAX LIABILITIES | 32,723 | 21,318 | 1,087 | 16,361 | 17,449 | — |
| TOTAL NON-CURRENT LIABILITIES |
411,274 | 287,970 | 14,686 | 205,637 | 220,323 | — |
| CURRENT FINANCIAL DEBT | 8,117 | 6,065 | 309 | 4,058 | 4,368 | — |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES |
12,894 | 9,663 | 493 | 6,447 | 6,940 | 311 |
| TOTAL CURRENT LIABILITIES |
21,011 | 15,728 | 802 | 10,505 | 11,308 | 311 |
| TOTAL LIABILITIES | 432,284 | 303,698 | 15,489 | 216,142 | 231,631 | 311 |
| ADJUSTMENT DISPOSAL OF ASSOCIATES |
— | — | — | — | 103 | — |
| NET ASSETS | 167,872 | 105,108 | 5,361 | 83,936 | 89,194 | (311) |
2016 marked the start of a new 50/50 joint venture with Allianz Real Estate. The new joint venture (VGP European Logistics) has an exclusive right of first refusal in relation to acquiring the income generating assets developed by VGP in Germany, the Czech Republic, Slovakia and Hungary.
VGP European Logistics recorded its fi rst closing at the end of May 2016, in which 15 parks were acquired located in Germany (8 parks), the Czech Republic (4 parks), Slovakia (1 park) and Hungary (2 parks) and comprised 28 logistic buildings. A second closing took place at the end of October 2016, in which a further 5 buildings were acquired i.e. 4 buildings located in Germany and one building located in Slovakia.
The VGP European Logistics portfolio was valued at a weighted average yield of 6.08% as at 31 December 2016 (compared to 6.35% at 30 June 2016) reflecting the contraction of the yields during the second half of 2016. The (re)valuation of the Joint Venture portfolio was based on the appraisal report of the property expert Jones Lang LaSalle.
A 0.10% variation of this market rate would give rise to a variation of the total portfolio value of € 10.9 million. VGP provides certain services, including asset-, property- and development advisory and management, for the VGP European joint venture and receives fees from the Joint Venture for doing so. Those services are carried out on an arms-length basis and do not give VGP any control over the relevant Joint Venture (nor any unilateral material decision-making rights). Significant transactions and decisions within the Joint Venture require full Board and/or Shareholder approval, in accordance with the terms of the Joint Venture agreement.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| SHAREHOLDER LOANS TO VGP EUROPEAN LOGISTICS S.à r.l. | 7,506 | — |
| SHAREHOLDER LOANS TO ASSOCIATES (SUBSIDIARIES OF VGP EUROPEAN LOGISTICS S.à r.l.) |
809 | — |
| CONSTRUCTION AND DEVELOPMENT LOANS TO SUBSIDIARIES OF VGP EUROPEAN LOGISTICS S.à r.l. |
81,561 | — |
| CONSTRUCTION AND DEVELOPMENT LOANS RECLASSIFIES AS ASSETS HELD FOR SALE | (81,561) | — |
| TOTAL | 8,315 | — |
For further information, please refer to note 26.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| AS AT 1 JANUARY | (103) | 17 |
| ADDITIONS | 86,077 | — |
| RESULT OF THE YEAR | 7,897 | 191 |
| REPAYMENT OF EQUITY | (4,677) | — |
| PROCEEDS FROM SALE OF PARTICIPATIONS | — | (311) |
| AS AT 31 DECEMBER | 89,194 | (103) |
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| BANK INTEREST INCOME | 1 | 19 |
| INTEREST INCOME - LOANS TO JOINT VENTURE AND ASSOCIATES | 2,479 | — |
| UNREALISED GAIN ON INTEREST RATE DERIVATIVES | 177 | 107 |
| NET FOREIGN EXCHANGE GAINS | — | 339 |
| OTHER FINANCIAL INCOME | 157 | 1 |
| FINANCIAL INCOME | 2,814 | 466 |
| BOND INTEREST EXPENSE | (10,133) | (7,682) |
| BANK INTEREST EXPENSE – VARIABLE DEBT | (2,476) | (2,174) |
| BANK INTEREST EXPENSE – INTEREST RATE SWAPS – HEDGING | (405) | (406) |
| INTEREST CAPITALISED INTO INVESTMENT PROPERTIES | 1,419 | 2,442 |
| UNREALISED LOSS ON INTEREST RATE DERIVATIVES | (4,796) | (426) |
| NET FOREIGN EXCHANGE LOSSES | (104) | — |
| OTHER FINANCIAL EXPENSES | (3,225) | (2,374) |
| FINANCIAL EXPENSES | (19,720) | (10,620) |
| NET FINANCIAL COSTS | (16,906) | (10,154) |
Increase in interest income on loans to the Joint Venture and associates is due to the loans granted to VGP European Logistics during the year. The increase in the bond interest was due to the new € 225 million Sep-23 bond issued during September 2016.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| CURRENT TAX | (939) | (383) |
| DEFERRED TAX | (20,851) | (12,146) |
| TOTAL | (21,790) | (12,529) |
| (in thousands of €) | 2016 | 2015 | ||
|---|---|---|---|---|
| PROFIT BEFORE TAXES | 113,076 | 99,090 | ||
| ADJUSTMENT FOR SHARE IN RESULT OF JOINT VENTURE AND ASSOCIATES | (7,897) | (191) | ||
| RESULT BEFORE TAXES AND SHARE IN RESULT OF JOINT VENTURE AND ASSOCIATES |
105,179 | 98,899 | ||
| INCOME TAX USING THE DOMESTIC CORPORATION TAX RATE | 15.8% | (16,645) | 15.8% | (15,651) |
| IMPACT OF CHANGE IN TAX RATE USED FOR GERMANY (FROM 30.825% TO 15.825%) |
— | 7,056 | ||
| DIFFERENCE IN TAX RATE NON-GERMAN COMPANIES | (7,927) | (1,246) | ||
| NON-TAX-DEDUCTIBLE EXPENDITURE | (2,585) | (515) | ||
| LOSSES/NOTIONAL INTEREST DEDUCTION | 5,362 | (2,202) | ||
| OTHER | 5 | 29 | ||
| TOTAL | 20.7% | (21,790) | 12.7% | (12,529) |
The non-tax deductible expenses are mainly related to the set up VGP European Logistic joint venture and the sale of the Seed portfolio.
In view of the change of place of management of the German assets to Luxembourg during 2015 the tax rate applied for Germany was the corporate income tax rate of 15.825% excluding the trade tax rate of circa 15% for 2015.
The expiry of the tax loss carry forward of the Group can be summarised as follows:
| 2016 (in thousands of €) | < 1 YEAR | 2–5 YEARS | > 5 YEARS |
|---|---|---|---|
| TAX LOSS CARRY FORWARD | 64 | 1,823 | 11,902 |
| 2015 (in thousands of €) | < 1 YEAR | 2–5 YEARS | > 5 YEARS |
| TAX LOSS CARRY FORWARD | 86 | 3,316 | 18,234 |
| (in thousands of €) | ASSETS LIABILITIES |
NET | ||||
|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| FIXED ASSETS | — | — | (28,151) | (38,944) | (28,151) | (38,944) |
| CURRENCY HEDGE ACCOUNTING/DERIVATIVES | 166 | 458 | — | — | 166 | 458 |
| TAX LOSSES CARRIED-FORWARD | 361 | 676 | — | — | 361 | 676 |
| CAPITALISED INTEREST | — | — | (594) | (1,334) | (594) | (1,334) |
| CAPITALISED COST | — | — | (40) | (60) | (40) | (60) |
| OTHER | — | — | (156) | (11) | (156) | (11) |
| TAX ASSETS/LIABILITIES | 527 | 1,134 | (28,940) | (40,349) | (28,413) | (39,215) |
| SET-OFF OF ASSETS AND LIABILITIES | (524) | (1,045) | 524 | 1,045 | — | — |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
— | — | 8,404 | 31,057 | 8,404 | 31,057 |
| NET TAX ASSETS/LIABILITIES | 3 | 89 | (20,012) | (8,247) | (20,009) | (8,158) |
The deferred tax assets and liabilities are attributable to the following:
A total deferred tax asset of € 1,840k (€2,655k in 2015) was not recognised.
| (in number) | 2016 | 2015 |
|---|---|---|
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (BASIC) | 18,583,050 | 18,583,050 |
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (DILUTED) | 18,583,050 | 18,583,050 |
| CORRECTION FOR RECIPROCAL INTEREST THROUGH ASSOCIATES | (398,368) | (398,368) |
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (DILUTED AND AFTER CORRECTION FOR RECIPROCAL INTEREST THROUGH ASSOCIATES |
18,184,682 | 18,184,682 |
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| RESULT FOR THE PERIOD ATTRIBUTABLE TO THE GROUP AND TO ORDINARY SHAREHOLDERS |
91,286 | 86,561 |
| EARNINGS PER SHARE (IN €) – BASIC | 4.91 | 4.66 |
| EARNINGS PER SHARE (IN €) – DILUTED | 4.91 | 4.66 |
| EARNINGS PER SHARE (IN €) – AFTER DILUTION AND CORRECTION FOR RECIPROCAL INTEREST THROUGH ASSOCIATES |
5.02 | 4.76 |
Correction for reciprocal interest relates to the elimination of the proportional equity component of the respective VGP NV shares held by VGP Misv Comm. VA. VGP NV holds 42.87% in VGP Misv Comm. VA.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| COST AND CARRYING AMOUNT AT 1 JANUARY | 631 | 631 |
| IMPAIRMENT LOSSES | (631) | — |
| COST AND CARRYING AMOUNT AS AT 31 DECEMBER | — | 631 |
Impairment charge arose as a result of the strategic repositioning of the SUTA facility management services by which the services provided to third party was scaled down in favour of services delivered to the Group and Joint Venture.
| (in thousands of €) ASSETS |
INTANGIBLE PROPERTY, PLANT AND EQUIPMENT |
|||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| AS AT 1 JANUARY | 12 | 57 | 378 | 370 |
| ACQUISITIONS | 13 | 5 | 322 | 187 |
| DISPOSALS | — | — | (46) | (10) |
| DEPRECIATION | (11) | (50) | (140) | (144) |
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | — | — | 3 | (25) |
| AS AT 31 DECEMBER | 14 | 12 | 517 | 378 |
| (in thousands of €) | 2016 | ||||
|---|---|---|---|---|---|
| COMPLETED | UNDER CONSTRUCTION |
DEVELOPMENT LAND |
TOTAL | ||
| AS AT 1 JANUARY | 38,530 | 47,180 | 88,262 | 173,972 | |
| CAPEX | 34,957 | 39,378 | — | 74,335 | |
| ACQUISITIONS | 126,173 | — | 107,951 | 234,124 | |
| CAPITALISED INTEREST | 783 | 636 | — | 1,419 | |
| CAPITALISED RENT FREE | 406 | — | — | 406 | |
| TRANSFER ON START-UP OF DEVELOPMENT | — | 39,380 | (39,380) | — | |
| TRANSFER ON COMPLETION OF DEVELOPMENT | 47,775 | (47,775) | — | — | |
| NET GAIN FROM VALUE ADJUSTMENTS IN INVESTMENT PROPERTIES |
17,189 | 47,190 | 1,627 | 66,006 | |
| AS AT 31 DECEMBER | 265,813 | 125,989 | 158,460 | 550,262 |
| (in thousands of €) | 2015 | |||||
|---|---|---|---|---|---|---|
| COMPLETED | UNDER CONSTRUCTION |
DEVELOPMENT LAND |
TOTAL | |||
| AS AT 1 JANUARY | 173,616 | 81,083 | 161,390 | 416,089 | ||
| CAPEX | 61,621 | 59,817 | 240 | 121,678 | ||
| CAPITALISED INTEREST | 1,493 | 858 | 91 | 2,442 | ||
| CAPITALISED RENT FREE | 1,469 | 440 | — | 1,909 | ||
| CAPITALISED AGENT'S FEE | 1,349 | — | — | 1,349 | ||
| ACQUISITIONS | 418 | 8,525 | 20,715 | 29,658 | ||
| SALES AND DISPOSALS | — | — | (16) | (16) | ||
| TRANSFER FROM DEVELOPMENT LAND | 9,320 | 55,739 | (65,059) | |||
| TRANSFER FROM UNDER CONSTRUCTION | 79,150 | (79,150) | ||||
| NET GAIN FROM VALUE ADJUSTMENTS IN INVESTMENT PROPERTIES |
46,054 | 50,938 | 6,983 | 103,975 | ||
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | (335,960) | (131,070) | (36,082) | (503,112) | ||
| FAIR VALUE AS AT 31 DECEMBER | 38,530 | 47,180 | 88,262 | 173,972 |
As at 31 December 2016 investment properties totalling € 110.61 million (€ 396.1 million as at 31 December 2015) were pledged in favour the Group's banks. (see note 22).
All of the Group's properties are level 3, as defined by IFRS 13, in the fair value hierarchy as at 31 December 2016 and there were no transfers between levels during the year. Level 3 inputs used in valuing the properties are those which are unobservable, as opposed to level 1 (inputs from quoted prices) and level 2 (observable inputs either directly, i.e. as prices, or indirectly, i.e. derived from prices).
The Group's investment properties were valued at 31 December 2016 by independent professionally qualified valuers. The valuation contracts are typically entered into for a term of one year and the fees of the property experts are fixed for the term of their appointment and are not related to the value of the properties for which an estimate is made.
The valuation methods are determined by the external experts and are based on a multi-criteria approach.
Completed properties are stated at fair value. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
The valuations of properties are prepared by considering the aggregate of the net annual rents receivable from the properties, and where relevant, associated costs. A yield which reflects the risks inherent in the net cash flows is then applied to the net annual rentals to arrive at the property valuation.
In view of the nature of the properties and the basis of valuation the valuation expert, adopted the Income Approach based on the discounted cash flow technique for a 10 year period. The cash flow assumes a ten-year hold period with the exit value calculated on the Estimated Rental Value (ERV). To calculate the exit value the valuation expert has used the exit yield which represents his assumption of the possible yield in the 10th year.
The cash flow is based on the rents receivable under existing lease agreements until their expiry date and the expected rental value for the period remaining in the ten-year period, as applicable. After the termination of existing leases (first break option) the valuator has assumed a certain expiry void i.e. an expiry void of 3-12 months for industrial and office premises. The assumed voids are used to cover the time and the cost of marketing, re-letting and possible reconstruction. For currently vacant industrial and office premises an initial void of 8-12 months has been assumed. Finally, the valuator made a general deduction of 0.5%-2.25% from the gross income to cover potential capital expenditure on the portfolio.
Property that is being constructed or developed for future use as investment property is also stated at fair value. The investment properties under construction are also valued by an independent valuation expert. For the properties under construction the valuation expert has used the same approach as applicable for the completed properties but deducting the remaining construction costs from the calculated market value. whereby "remaining construction costs" means overall pending development cost, which include all hard costs, soft costs, financing costs and developer profit (developer profit expresses the level of risk connected with individual property and is mainly dependent on development stage and pre-letting status).
Land held for development is valued using the Valuation Sales Comparison Approach. The sales comparison approach produces a value indication by comparing the subject property to similar properties and applying adjustments to reflect advantages and disadvantages to the subject property. This is most appropriate when a number of similar properties have recently been sold or are currently for sale in the market.
For the 31 December 2016 valuations Jones Lang LaSalle was retained as external independent valuation expert, except for Spain where the valuation was made by the property expert valuator Gesvalt.
The Group's financial controller reviews the valuations performed by the independent valuers for financial reporting purposes. This financial controller reports directly to the Chief Financial Officer (CFO).
Discussions of valuation processes and results are held between the financial controller CFO, CEO and
the independent valuers at least twice a year. The CFO and CEO report on the outcome of the valuation processes and results to the audit committee and take any comments or decision in consideration when performing the subsequent valuations.
At each semi-annual period end, the financial controller together with the CFO: (i) verify all major inputs to the independent valuation report; (ii) assess property valuation movements when compared to the prior semiannual and annual period; (iii) holds discussions with the independent valuer.
The quantitative information in the following tables is taken from the different reports produced by the independent real estate experts. The figures provide the range of values and the weighted average of the assumptions used in the determination of the fair value of investment properties.
| REGION | SEGMENT | FAIR VALUE 31 DEC-16 (€ '000) |
VALUATION TECHNIQUE |
LEVEL 3 – UNOBSERVABLE INPUTS |
RANGE |
|---|---|---|---|---|---|
| CZECH REPUBLIC |
IP | 30,080 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 50 – 84 |
| DISCOUNT RATE | 6.50 – 8.00% | ||||
| EXIT YIELD | 6.25 – 6.50% | ||||
| WEIGHTED AVERAGE YIELD | 6.77% | ||||
| COST TO COMPLETION (in '000) | 1,200 | ||||
| IPUC | 25,620 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 45 – 55 | |
| DISCOUNT RATE | 6.50 – 8.00% | ||||
| EXIT YIELD | 6.25 – 6.50% | ||||
| WEIGHTED AVERAGE YIELD | 6.88% | ||||
| COST TO COMPLETION (in '000) | 8,700 | ||||
| DL | 34,316 | SALES COMPARISON |
PRICE PER m² | — | |
| GERMANY | IP | 30,360 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 33 |
| DISCOUNT RATE | 6.25% | ||||
| EXIT YIELD | 5.50% | ||||
| WEIGHTED AVERAGE YIELD | 5.83% | ||||
| COST TO COMPLETION (in '000) | — | ||||
| IPUC | 93,169 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 45-68 | |
| DISCOUNT RATE | 6.50 – 7.50% | ||||
| EXIT YIELD | 5.25 – 6.00% | ||||
| WEIGHTED AVERAGE YIELD | 5.71% | ||||
| COST TO COMPLETION (in '000) | 31,838 | ||||
| DL | 50,475 | SALES COMPARISON |
PRICE PER m² | — | |
| SPAIN | IP | 126,173 | SALES COMPARISON |
ACQUISITION VALUE | |
| DL | 69,670 | SALES COMPARISON |
ACQUISITION VALUE | ||
| OTHER COUNTRIES |
IP | 79,200 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 41 – 62 |
| DISCOUNT RATE | 8.00 – 10.00% | ||||
| EXIT YIELD | 7.80 – 9.25% | ||||
| WEIGHTED AVERAGE YIELD | 8.54% | ||||
| COST TO COMPLETION (in '000) | 8,300 | ||||
| IPUC | 7,200 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 46 – 55 | |
| DISCOUNT RATE | 10.00% | ||||
| EXIT YIELD | 7.80 – 8.5% | ||||
| WEIGHTED AVERAGE YIELD | 9.94% | ||||
| COST TO COMPLETION (in '000) | 1,185 | ||||
| DL | 3,999 | SALES COMPARISON |
PRICE PER m² | — | |
| TOTAL | 550,262 |
Given the fact that the new Spanish parks were acquired at the end of December 2016 no revaluation was recorded on the acquired building and development land. The valuation made by the independent valuer Gesvalt confirmed that the acquisition prices were in line with the fair value of the acquired building and land.
| REGION | SEGMENT | FAIR VALUE 31 DEC-15 (€ '000) |
VALUATION TECHNIQUE |
LEVEL 3 – UNOBSERVABLE INPUTS |
RANGE |
|---|---|---|---|---|---|
| CZECH REPUBLIC |
IP AND IPUC |
124,260 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 47 – 66 |
| LETTABLE AREA IN m² | 174,608 | ||||
| DISCOUNT RATE | 7.00% – 9.00% | ||||
| EXIT YIELD | 6.75% – 7.00% | ||||
| WEIGHTED AVERAGE YIELD | 7.08% | ||||
| COST TO COMPLETION (in '000) | 3,930 | ||||
| DL | 27,207 | SALES COMPARISON |
PRICE PER m² | — | |
| LAND AREA IN m² | 520,017 | ||||
| GERMANY | IP AND IPUC |
288,510 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 41 – 86 |
| LETTABLE AREA IN m² | 364,038 | ||||
| DISCOUNT RATE | 4.90% – 7.00% | ||||
| EXIT YIELD | 5.25% – 6.00% | ||||
| WEIGHTED AVERAGE YIELD | 6.25% | ||||
| COST TO COMPLETION (in '000) | 43,901 | ||||
| DL | 83,257 | SALES COMPARISON |
PRICE PER m² | — | |
| LAND AREA IN m² | 973,009 | ||||
| OTHER COUNTRIES |
IP AND IPUC |
139,970 | DISCOUNTED CASH FLOW |
ANNUAL RENT PER m² | 43 – 63 |
| LETTABLE AREA IN m² | 262,175 | ||||
| DISCOUNT RATE | 8.00% – 10.00% | ||||
| EXIT YIELD | 8.00% – 9.75% | ||||
| WEIGHTED AVERAGE YIELD | 8.58% | ||||
| COST TO COMPLETION (in '000) | 21,050 | ||||
| DL | 13,880 | SALES COMPARISON |
PRICE PER m² | — | |
| LAND AREA IN m² | 320,116 | ||||
| TOTAL | 677,084 |
IP = completed investment property IPUC = investment property under construction DL = development land
The sensitivity of the fair value based on changes to the significant non-observable inputs used to determine the fair value of the properties classified in level 3 in accordance with the IFRS fair value hierarchy is as follows (all variables remaining constant):
| NON OBSERVABLE INPUT | IMPACT ON FAIR VALUE IN CASE OF | ||
|---|---|---|---|
| FALL | RISE | ||
| ERV (in EUR/m²) | NEGATIVE | POSITIVE | |
| DISCOUNT RATE | POSITIVE | NEGATIVE | |
| EXIT YIELD | POSITIVE | NEGATIVE | |
| REMAINING LEASE TERM (UNTIL FIRST BREAK) | NEGATIVE | POSITIVE | |
| REMAINING LEASE TERM (UNTIL FINAL EXPIRY) | NEGATIVE | POSITIVE | |
| OCCUPANCY RATE | NEGATIVE | POSITIVE | |
| INFLATION | NEGATIVE | POSITIVE |
A decrease in the estimated annual rent will decrease the fair value.
An increase in the discount rates and the capitalisation rates used for the terminal value i.e. the exit yield of the discounted cash flow method will decrease the fair value.
There are interrelationships between these rates as they are partially determined by market rate conditions. For investment properties under construction, the cost to completion and the time to complete will reduce the fair values whereas the consumption of such cost over the period to completion will increase the fair value.
In addition, the sensitivity of the fair value of the portfolio can be estimated as follows: the effect of a rise (fall) of 1% in rental income results in a rise (fall) in the fair value of the portfolio of approximately € 4.6 million (all variables remaining constant).
The effect of a rise (fall) in the weighted average yield (see note 8) of 25 basis points results in a fall (rise) in the fair value of the portfolio of approximately € 16.9 million (all variables remaining constant).
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| FINANCIAL ASSETS CARRIED AT FAIR VALUE THROUGH PROFIT OR LOSS (FAFVTPL) | ||
| HELD FOR TRADING DERIVATIVES NOT DESIGNATED IN HEDGE ACCOUNTING RELATIONSHIPS |
5 | 216 |
| RECLASSIFICATION TO DISPOSAL GROUP HELD FOR SALE | — | — |
| TOTAL | 5 | 216 |
See also note 29.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| TRADE RECEIVABLES | 2,663 | 2,673 |
| TAX RECEIVABLES – VAT | 14,526 | 9,866 |
| ACCRUED INCOME AND DEFERRED CHARGES | 391 | 300 |
| OTHER RECEIVABLES | 1,846 | 2,129 |
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | (10,041) | |
| TOTAL | 19,426 | 4,927 |
The Group's cash and cash equivalents comprise primarily cash deposits held at German, Czech and Belgian banks.
| SHARE CAPITAL MOVEMENT |
TOTAL OUTSTANDING SHARE CAPITAL AFTER THE TRANSACTION |
NUMBER OF SHARES ISSUED |
TOTAL NUMBER OF SHARES |
||
|---|---|---|---|---|---|
| (in thousands of €) | (in thousands of €) | (in units) | (in units) | ||
| 01. 01. 2006 | CUMULATIVE SHARE CAPITAL OF ALL CZECH COMPANIES |
10,969 | 10,969 | — | — |
| 06. 02. 2007 | INCORPORATION OF VGP NV |
100 | 11,069 | 100 | 100 |
| 05. 11. 2007 | SHARE SPLIT | — | 11,069 | 7,090,400 | 7,090,500 |
| 11. 12. 2007 | CONTRIBUTION IN KIND OF CZECH COMPANIES |
120,620 | 131,689 | 7,909,500 | 15,000,000 |
| 11. 12. 2007 | CAPITAL INCREASE IPO | 50,000 | 181,689 | 3,278,688 | 18,278,688 |
| 28. 12. 2007 | EXERCISE OF OVER ALLOTMENT OPTION – IPO |
4,642 | 186,331 | 304,362 | 18,583,050 |
| 31. 12. 2007 | ELIMINATION CAPITAL INCREASE – CONTRIBUTION IN KIND |
(120,620) | 65,711 | — | 18,583,050 |
The statutory share capital of VGP NV amounts to € 112,737k. The € 50.5 million capital reserve included in the Statement of Changes in Equity, relates to the elimination of the contribution in kind of the shares of a number of Group companies and the deduction of all costs in relation to the issuing of the new shares and the stock exchange listing of the existing shares from the equity of the company, at the time of the initial public off ering ("IPO").
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| SHARE PREMIUM | 69 | 69 |
| OTHER EQUITY | — | 60,000 |
| TOTAL | 69 | 60,069 |
Following the completion of the acquisition of the initial Seed portfolio by the new joint venture with Allianz Real Estate at the end of May 2016 (VGP European Logistics); the Board of Directors approved the redemption of all issued hybrid securities against a price equal to the issue price (in total € 60 million) plus the interest accrued (€ 3.0 million) from the issue date of each Security, after complying with the conflict of interest procedure in accordance with article 523 of the Belgian Companies Code. The redemption took place on 1 June 2016.
The contractual maturities of interest bearing loans and borrowings (current and non-current) are as follows:
| MATURITY (in thousands of €) | 2016 | |||
|---|---|---|---|---|
| OUTSTANDING BALANCE |
< 1 YEAR | > 1–5 YEARS |
> 5 YEARS | |
| NON-CURRENT | ||||
| BANK BORROWINGS | 35,290 | 2,417 | 32,873 | — |
| BONDS | ||||
| 5.10% BONDS DEC-18 | 74,380 | — | 74,380 | — |
| 3.90% BONDS SEP-23 | 220,670 | — | — | 220,670 |
| 295,050 | — | 74,380 | 220,670 | |
| TOTAL NON-CURRENT FINANCIAL DEBT | 330,340 | 2,417 | 107,253 | 220,670 |
| CURRENT | ||||
| BANK BORROWINGS | — | — | — | — |
| BONDS | ||||
| 5.15% BONDS JUL-17 | 74,747 | 74,747 | — | — |
| ACCRUED INTEREST | 4,510 | 4,510 | — | — |
| TOTAL CURRENT FINANCIAL DEBT | 79,257 | 79,257 | — | — |
| TOTAL CURRENT AND NON-CURRENT FINANCIAL DEBT | 409,597 | 81,674 | 107,253 | 220,670 |
| MATURITY (in thousands of €) | 2015 | |||
|---|---|---|---|---|
| OUTSTANDING BALANCE |
< 1 YEAR | > 1–5 YEARS |
> 5 YEARS | |
| NON-CURRENT | ||||
| BANK BORROWINGS | 128,317 | 6,740 | 92,002 | 29,575 |
| BONDS | ||||
| 5.15% BONDS JUL-17 | 74,268 | — | 74,268 | — |
| 5.10% BONDS DEC-18 | 74,059 | — | 74,059 | — |
| 148,327 | — | 148,327 | — | |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
(104,398) | (5,294) | (69,529) | (29,575) |
| TOTAL NON-CURRENT FINANCIAL DEBT | 172,246 | 1,446 | 170,800 | — |
| CURRENT | ||||
| BANK BORROWINGS | 1,070 | 1,070 | — | — |
| ACCRUED INTEREST | 2,076 | 2,076 | — | — |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
(1,070) | (1,070) | — | — |
| TOTAL CURRENT FINANCIAL DEBT | 2,076 | 2,076 | — | — |
| TOTAL CURRENT AND NON-CURRENT FINANCIAL DEBT | 174,322 | 3,522 | 170,800 | — |
The above 31 December 2016 balances include capitalised finance costs on bank borrowings of € 228k (as compared to € 990k for 2015) and capitalised finance costs on bonds € 5,023k (as compared to 1,673k for 2015).
The accrued interest relates to the 3 issued bonds. The coupons of the bonds are payable annually on 12 July, 6 December and 21 September.
The loans granted to the VGP Group are all denominated in € (except for the "other bank debt" which is denominated in CZK) can be summarised as follows:
| 2016 (in thousands of €) |
FACILITY AMOUNT |
FACILITY EXPIRY DATE |
OUTSTANDING BALANCE |
< 1 YEAR | > 1–5 YEARS |
> 5 YEARS |
|---|---|---|---|---|---|---|
| UNICREDIT BANK – CZECH REPUBLIC | 3,030 | 31-DEC-19 | 3,030 | 214 | 2,816 | — |
| RAIFEISEN – ROMANIA | 16,500 | 31-DEC-19 | 13,000 | 750 | 12,250 | — |
| SWEDBANK – ESTONIA | 19,477 | 30-AUG-18 | 19,477 | 1,444 | 18,033 | — |
| OTHER BANK DEBT | 11 | 2016-2018 | 11 | 9 | 2 | — |
| TOTAL BANK DEBT | 39,018 | 35,518 | 2,417 | 33,101 | — |
| 2015 (in thousands of €) |
FACILITY AMOUNT |
FACILITY EXPIRY DATE |
OUTSTANDING BALANCE |
< 1 YEAR | > 1–5 YEARS |
> 5 YEARS |
|---|---|---|---|---|---|---|
| TATRA BANKA | 1,070 | 31-MAR-16 | 1,070 | 1,070 | — | — |
| TATRA BANKA | 3,232 | 31-DEC-18 | 3,232 | 342 | 2,890 | — |
| UNICREDIT BANK – HUNGARY | 13,022 | 30-SEP-19 | 13,006 | 815 | 12,191 | — |
| UNICREDIT BANK – CZECH REPUBLIC | 56,611 | 31-DEC-19 | 14,332 | 591 | 13,741 | — |
| SWEDBANK | 20,888 | 30-AUG-18 | 20,864 | 1,411 | 19,453 | — |
| DEUTSCHE-HYPO | 30,501 | 24-JUL-19 | 30,336 | 1,309 | 29,027 | — |
| DEUTSCHE-HYPO | 52,900 | 31-DEC-21 | 20,551 | 1,171 | 3,412 | 15,968 |
| DEUTSCHE-HYPO | 27,040 | 30-SEP-22 | 18,324 | 751 | 3,966 | 13,607 |
| DEUTSCHE-HYPO | 7,688 | 30-JUN-20 | 7,633 | 315 | 7,318 | — |
| OTHER BANK DEBT | 39 | 2016-2018 | 39 | 35 | 4 | — |
| TOTAL BANK DEBT | 212,991 | 129,387 | 7,810 | 92,002 | 29,575 |
The credit facilities with Tatra Banka, UniCredit Bank Czech Republic (partly), UniCredit Bank Hungary and Deutsche Hypo were prepaid in 2016 as part of the sale of the Seed portfolio to VGP European Logistics.
In order to secure the obligations under these agreements, the Group created:
As a general principle, loans are entered into by the Group in Euro at a floating rate, converting to a fixed rate through interest rate swaps in compliance with the respective loan agreements. For further information on financial instruments we refer to note 29.
The loan agreements granted by the banks are subject to a number of covenants which can be summarised as follows:
The above mentioned ratios are tested based on a 12 month period and are calculated as follows:
During the year the Group operated well within its loan covenants and there were no events of default nor were there any breaches of covenants with respect to loan agreements noted.
VGP has issued the following 3 retail bonds:
All bonds are unsecured.
The terms and conditions of the bonds include following financial covenants:
The above mentioned ratios are tested semi-annually based on a 12 month period and are calculated as follows:
During the year the Group operated well within its bond covenants there were no events of default nor were there any breaches of covenants with respect to the bonds noted.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| FINANCIAL LIABILITIES CARRIED AT FAIR VALUE THROUGH PROFIT OR LOSS (FLFVTPL) |
||
| HELD FOR TRADING DERIVATIVES NOT DESIGNATED IN HEDGE ACCOUNTING RELATIONSHIPS |
5,348 | 2,191 |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | — | (1,224) |
| TOTAL | 5,348 | 967 |
See also note 29.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| DEPOSITS | 1,203 | 869 |
| RETENTIONS | 1,229 | 1,272 |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | — | (1,736) |
| TOTAL | 2,432 | 405 |
Deposits are received from tenants. Retentions are amounts withheld from constructors' invoices. It is common to pay only 90 percent of the total amount due. 5 percent is due upon final delivery of the building; the remaining part is paid, based on individual agreements, most commonly after 3 or 5 years.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| TRADE PAYABLES | 32,622 | 26,684 |
| DEPOSITS | — | 575 |
| RETENTIONS | 900 | 2,325 |
| ACCRUED EXPENSES AND DEFERRED INCOME | 678 | 1,393 |
| OTHER PAYABLES | 1,297 | 926 |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | (21,562) | |
| TOTAL | 35,497 | 10,341 |
Trade payables increased in 2016 reflecting the increase of the projects under construction.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| INTANGIBLE ASSETS | — | — |
| INVESTMENT PROPERTIES | 132,263 | 503,112 |
| PROPERTY, PLANT AND EQUIPMENT | 25 | |
| DEFERRED TAX ASSETS | — | |
| TRADE AND OTHER RECEIVABLES | 10,040 | |
| CASH AND CASH EQUIVALENTS | 14,184 | |
| DISPOSAL GROUP HELD FOR SALE | 132,263 | 527,361 |
| NON-CURRENT FINANCIAL DEBT | (99,104) | |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | (1,224) | |
| OTHER NON-CURRENT LIABILITIES | (1,736) | |
| DEFERRED TAX LIABILITIES | (8,405) | (31,057) |
| CURRENT FINANCIAL DEBT | (6,364) | |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES | (21,562) | |
| LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE | (8,405) | (161,047) |
| TOTAL NET ASSETS | 123,858 | 366,314 |
Under the joint venture agreement VGP European Logistics has an exclusive right of first refusal in relation to acquiring the income generating assets developed by VGP in Germany, the Czech Republic, Slovakia and Hungary. The development pipeline which was transferred to the Joint Venture as part of the Seed portfolio is being or will be developed at VGP's own risk and subsequently acquired and paid for by the Joint Venture subject to pre-agreed completion and lease parameters. The balance of € 132.3 million shown as at 31 December 2016 correspond to the fair value of the asset under construction which are being developed by VGP on behalf of VGP European Logistics. This balance includes the interest bearing development and construction loans (€ 81.6 million) granted by VGP to the Joint Venture to finance the development pipeline of the Joint Venture. (See also note 10.3)
As at 31 December 2015 the assets of the respective project companies which were earmarked to be transferred to the joint venture (the "Seed Portfolio") were reclassified as disposal group held for sale.
| SUMMARY (in thousands of €) | 2016 | 2015 |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | 6,793 | (12,609) |
| CASH FLOW FROM INVESTING ACTIVITIES | (124,416) | (147,377) |
| CASH FLOW FROM FINANCING ACTIVITIES | 168,871 | 140,053 |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 51,248 | (19,933) |
The cash from operating activities increased by € 19.4 million, mainly due to the changes in working capital which saw a net increase of € 22.3 million mainly due to the increases in trade payables resulting from the high level of development activities.
The changes in the cash fl ow from investing activities were due to: (i) € 336.7 million of expenditure incurred for the development activities and land acquisition including the newly acquired building of Mango in Spain; (ii) € 236.1 million cash in from the sale of the initial Seed portfolio and subsequent closings during the year to VGP European Logistics (see below); (iii) € 4.7 million cash in from the repayment of equity from VGP European Logistics; and fi nally (iv) € 28.5 million shareholder loans (net) granted to VGP European Logistics.
| SUMMARY (in thousands of €) | 2016 | 2015 |
|---|---|---|
| INVESTMENT PROPERTY | 534,035 | — |
| TRADE AND OTHER RECEIVABLES | 7,613 | — |
| CASH AND CASH EQUIVALENTS | 10,288 | — |
| NON-CURRENT FINANCIAL DEBT | (128,678) | — |
| SHAREHOLDER DEBT | (222,572) | — |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | (888) | — |
| DEFERRED TAX LIABILITIES | (32,064) | — |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES | (11,782) | — |
| TOTAL NET ASSETS DISPOSED | 155,952 | — |
| REALISED VALUATION GAIN ON SALE | 21,184 | — |
| TOTAL NON-CONTROLLING INTEREST RETAINED BY VGP | (4,940) | — |
| SHAREHOLDER LOANS REPAID AT CLOSING | 150,612 | — |
| EQUITY CONTRIBUTION | (76,460) | — |
| CONSIDERATION PAID IN CASH | 246,348 | — |
| CASH DISPOSED | (10,288) | — |
| NET CASH INFLOW FROM SALE OF VGP EUROPEAN LOGISTICS PORTFOLIO | 236,060 | — |
Exposures to foreign currency, interest rate, liquidity and credit risk arises in the normal course of business of VGP. The company analyses and reviews each of these risks and defines strategies to manage the economic impact on the company's performance. The results of these risk assessments and proposed risk strategies is reviewed and approved by the Board of Directors on regular basis.
Some of the risk management strategies include the use of derivative financial instruments which mainly consists of forward exchange contracts and interest rate swaps. The company holds no derivative instruments nor would it issue any for speculative purposes.
The following provides an overview of the derivative financial instruments as at 31 December 2016. The amounts shown are the notional amounts.
| DERIVATIVES | 2016 | 2015 | ||||
|---|---|---|---|---|---|---|
| (in thousands of €) | < 1 YEAR | 1–5 YEARS | > 5 YEARS | < 1 YEAR | 1–5 YEARS | > 5 YEARS |
| FORWARD EXCHANGE CONTRACTS | ||||||
| HELD FOR TRADING | — | — | — | 8,915 | — | — |
| INTEREST RATE SWAPS | ||||||
| HELD FOR TRADING | 15,900 | 150,000 | — | 70,846 | 150,000 |
The outstanding € 150 million interest rate swaps relate to 2 interest rate swaps, each for a notional amount of € 75 million. These 2 interest rate swaps will respectively start in July 2017 and December. The weighted average interest rate which has been fixed by the interest rate swaps is 0.87% p.a. We refer also to note 17 and 23.
VGP incurs principally foreign currency risk on its capital expenditure as well as some of its borrowings and net interest expense/income.
VGP's policy is to economically hedge its capital expenditure as soon as a firm commitment arises, to the extent that the cost to hedge outweighs the benefit and in the absence of special features which require a different view to be taken.
The table below summarises the Group's main net foreign currency positions at the reporting date. Since the Group has elected not to apply hedge accounting, the following table does not include the forecasted transactions. However, the derivatives the Group has entered into, to economically hedge the forecasted transactions are included.
| (in thousands of €) | 2016 | ||
|---|---|---|---|
| CZK | RON | ||
| TRADE & OTHER RECEIVABLES | 39,319 | 1,286 | |
| NON-CURRENT LIABILITIES AND TRADE & OTHER PAYABLES | (171,064) | (6,033) | |
| GROSS BALANCE SHEET EXPOSURE | (131,745) | (4,748) | |
| FORWARD FOREIGN EXCHANGE | — | ||
| NET EXPOSURE | (131,745) | (4,748) |
| (in thousands of €) | 2015 | |||
|---|---|---|---|---|
| CZK | HUF | RON | ||
| TRADE & OTHER RECEIVABLES | 50,851 | 17,493 | 4,656 | |
| NON-CURRENT LIABILITIES AND TRADE & OTHER PAYABLES | (192,716) | (16,310) | (3,308) | |
| GROSS BALANCE SHEET EXPOSURE | (141,866) | 1,183 | 1,348 | |
| FORWARD FOREIGN EXCHANGE | 240,035 | — | — | |
| NET EXPOSURE | 98,176 | 1,183 | 1,348 |
The following significant exchange rates applied during the year:
| 1 € = | 2016 CLOSING RATE | 2015 CLOSING RATE |
|---|---|---|
| CZK | 27.020 | 27.0250 |
| RON | 4.5411 | 4.5245 |
A 10 percent strengthening of the euro against the following currencies at 31 December 2016 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2015.
| EFFECTS (in thousands of €) |
2016 | ||
|---|---|---|---|
| EQUITY | PROFIT OR (LOSS) | ||
| CZK | — | 443 | |
| RON | — | 95 | |
| TOTAL | — | 538 |
| EFFECTS (in thousands of €) |
2015 | ||||
|---|---|---|---|---|---|
| EQUITY | PROFIT OR (LOSS) | ||||
| CZK | — | (328) | |||
| HUF | — | — | |||
| RON | — | (27) | |||
| TOTAL | — | (355) |
A 10 percent weakening of the euro against the above currencies at 31 December 2016 would have had the equal but opposite effect on the above currencies to amounts shown above, on the basis that all other variables remain constant.
The Group applies a dynamic interest rate hedging approach whereby the target mix between fixed and floating rate debt is reviewed periodically. These reviews are carried out within the confines of the existing loan agreements which require that interest rate exposure is to be hedged when certain conditions are met.
Where possible the Group will apply IAS 39 to reduce income volatility whereby some of the interest rate swaps may be classified as cash flow hedges. Changes in the value of a hedging instrument that qualifies as highly effective cash flow hedges are recognised directly in shareholders' equity (hedging reserve).
The Group also uses interest rate swaps that do not satisfy the hedge accounting criteria under IAS 39 but provide effective economic hedges. Changes in fair value of such interest rate swaps are recognised immediately in the income statement. (Interest rate swaps held for trading).
At the reporting date the Group interest rate profile of the Group's (net of any transaction costs) was as follows:
| NOMINAL AMOUNTS (in thousands of €) | 2016 | 2015 |
|---|---|---|
| FINANCIAL DEBT | ||
| FIXED RATE | ||
| BONDS | 375,000 | 150,000 |
| VARIABLE RATE | ||
| BANK DEBT | 35,518 | 130,376 |
| RECLASSIFIED TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | — | (106,315) |
| 35,518 | 174,061 | |
| INTEREST RATE HEDGING | ||
| INTEREST RATE SWAPS | ||
| HELD FOR TRADING | 15,900 | 70,846 |
| RECLASSIFIED TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE | — | (54,946) |
| 15,900 | 15,900 | |
| FINANCIAL DEBT AFTER HEDGING | ||
| VARIABLE RATE | ||
| BANK DEBT | 35,518 | 8,161 |
| FIXED RATE | ||
| BONDS | 375,000 | 150,000 |
| BANK DEBT | 15,900 | 15,900 |
| 390,900 | 165,900 | |
| FIXED RATE/TOTAL FINANCIAL LIABILITIES | 95.2% | 95.3% |
The effective interest rate on financial debt (bank debt and bonds), including all bank margins and cost of interest rate hedging instruments was 4.16 % for the year 2016. (3.81% in 2015)
In case of an increase/decrease of 100 basis points in the interest rates, profit before taxes would have been € 190k lower/higher (as compared to € 569k lower/higher profit before taxes for 2015). This impact comes from a change in the floating rate debt, with all variables held constant.
For 2016 there is no impact given the fact that there are no interest rate swaps outstanding classified as cash flow hedges as at the reporting date. The same situation applied at the 31 December 2015 reporting date.
Credit risk is the risk of fi nancial loss to VGP if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations, and arises principally from VGP's receivables from customers and bank deposits.
The management has a credit policy in place and the exposure to credit risk is monitored on an on-going basis. Each new tenant is analysed individually for creditworthiness before VGP offers a lease agreement. In addition, the Group applies a strict policy of rent guarantee whereby, in general, each tenant is required to provide a rent guarantee for 6 months. This period will vary in function of the creditworthiness of the tenant.
At the balance sheet date there were no significant concentrations of credit risk except for the lease concluded with Punta Fa in Spain which was concluded at the end of December 2016 and which represents an annual rent of € 7.5 million.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset. The maximum exposure to credit risk at the reporting date was:
| In thousands of € | 2016 CARRYING AMOUNT |
2015 CARRYING AMOUNT |
|---|---|---|
| OTHER NON-CURRENT RECEIVABLES | 8,315 | — |
| TRADE & OTHER RECEIVABLES | 19,426 | 14,968 |
| CASH AND CASH EQUIVALENTS | 68,033 | 24,009 |
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | — | (24,225) |
| TOTAL | 95,774 | 14,752 |
As at 31 December 2016 there was € 3.6 million of restricted cash held in a bank account for settlement of a final payment on land which is due to occur within the first quarter of 2017.
The aging of trade receivables as at the reporting date was:
| In thousands of € | 2016 CARRYING AMOUNT |
2015 CARRYING AMOUNT |
|---|---|---|
| GROSS TRADE RECEIVABLES | ||
| GROSS TRADE RECEIVABLES NOT PAST DUE | 2,121 | 2,172 |
| GROSS TRADE RECEIVABLES PAST DUE | 542 | 502 |
| BAD DEBT AND DOUBTFUL RECEIVABLES | — | 362 |
| PROVISION FOR IMPAIRMENT OF RECEIVABLES (-) | — | (362) |
| RECLASSIFICATION TO (-)/FROM HELD FOR SALE | — | (1,791) |
| TOTAL | 2,663 | 883 |
The company manages its liquidity risk by ensuring that it has sufficient cash available and that it has sufficient available credit facilities and by matching as much as possible its receipts and payments.
The following are contractual maturities of financial assets and liabilities, including interest payments and derivative financial assets and liabilities but excluding non-financial assets or liabilities. The amounts disclosed in the tables below are the contractual undiscounted cash flows. Undiscounted cash flows in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position, as the impact of discounting is not significant.
| (in thousands of €) | 2016 | |||||
|---|---|---|---|---|---|---|
| CARRYING AMOUNT |
CONTRACTUAL CASH FLOW |
< 1 YEAR | 1–2 YEARS |
2–5 YEARS |
MORE THAN 5 YEARS |
|
| ASSETS | ||||||
| CASH AND CASH EQUIVALENTS | 68,033 | 68,033 | 68,033 | — | — | — |
| DERIVATIVE FINANCIAL INSTRUMENTS |
5 | 5 | 5 | — | — | — |
| TRADE AND OTHER RECEIVABLES |
19,035 | 19,035 | 19,035 | — | — | — |
| RECLASSIFIED TO (-) FROM HELD FOR SALE |
— | — | — | — | — | — |
| 87,073 | 87,073 | 87,073 | — | — | — | |
| LIABILITIES | ||||||
| SECURED BANK LOANS | 35,518 | (37,648) | (3,347) | (19,750) | (14,551) | — |
| UNSECURED BONDS | 369,796 | (447,938) | (91,463) | (87,600) | (26,325) | (242,550) |
| DERIVATIVE FINANCIAL INSTRUMENTS |
(5,348) | (320) | (256) | (64) | — | — |
| TRADE AND OTHER PAYABLES | (37,250) | (37,250) | (34,818) | (312) | (1,221) | (899) |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
— | — | — | — | — | — |
| 362,716 | (523,156) | (129,884) | (107,726) | (42,097) | (243,449) |
| (in thousands of €) | 2015 | |||||
|---|---|---|---|---|---|---|
| CARRYING AMOUNT |
CONTRACTUAL CASH FLOW |
< 1 YEAR | 1–2 YEARS |
2–5 YEARS |
MORE THAN 5 YEARS |
|
| ASSETS | ||||||
| CASH AND CASH EQUIVALENTS | 24,009 | 24,009 | 24,009 | — | — | — |
| DERIVATIVE FINANCIAL INSTRUMENTS |
216 | 216 | 216 | — | — | — |
| TRADE AND OTHER RECEIVABLES | 14,669 | 14,669 | 14,669 | — | — | — |
| RECLASSIFIED TO (-) FROM HELD FOR SALE |
(23,957) | (23,957) | (23,957) | — | — | — |
| 14,937 | 14,937 | 14,937 | — | — | — | |
| LIABILITIES | ||||||
| SECURED BANK LOANS | (129,387) | (138,711) | (16,702) | (8,729) | (82,244) | (31,036) |
| UNSECURED BONDS | (148,327) | (169,313) | (7,725) | (82,725) | (78,863) | — |
| DERIVATIVE FINANCIAL INSTRUMENTS |
(2,191) | (2,323) | (1,176) | (728) | (419) | — |
| TRADE AND OTHER PAYABLES | (32,651) | (32,651) | (30,511) | (210) | (1,043) | (887) |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
133,747 | 133,747 | 34,692 | 5,842 | 62,024 | 31,189 |
| (178,809) | (209,251) | (21,422) | (86,550) | (100,545) | (734) |
VGP is continuously optimising its capital structure targeting to maximise shareholder value while keeping the desired flexibility to support its growth. The Group targets a maximum gearing ratio of net debt/total shareholders' equity and liabilities at 55%.
As at 31 December 2016 the Group's gearing was as follows:
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| NON-CURRENT FINANCIAL DEBT | 327,923 | 170,800 |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | 5,348 | 967 |
| CURRENT FINANCIAL DEBT | 81,674 | 3,522 |
| FINANCIAL DEBT CLASSIFIED UNDER LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
— | 104,492 |
| TOTAL FINANCIAL DEBT | 414,945 | 279,781 |
| CASH AND CASH EQUIVALENTS | (71,595) | (9,825) |
| CASH AND CASH EQUIVALENTS CLASSIFIED AS DISPOSAL GROUP HELD FOR SALE | — | (14,184) |
| TOTAL NET DEBT | 343,350 | 255,772 |
| TOTAL SHAREHOLDERS 'EQUITY AND LIABILITIES | 871,594 | 717,308 |
| GEARING RATIO | 39.4% | 35.7% |
The following tables list the carrying amount of the Group's financial instruments that are showing in the financial statements. In general, the carrying amounts are assumed to be a close approximation of the fair value.
The fair value of the financial assets and liabilities is defined as the amount at which the instrument could be exchanged, or settled, between knowledgeable, willing parties in an arm's length transaction.
| 2016 (in thousands of €) |
CARRYING AMOUNT |
AMOUNTS RECOGNISED IN BALANCE SHEET IN ACCORDANCE WITH IAS 39 |
FAIR VALUE |
FAIR VALUE HIERARCHY |
||
|---|---|---|---|---|---|---|
| 2016 | AMORTISED COSTS |
FAIR VALUE THROUGH EQUITY |
FAIR VALUE THROUGH PROFIT OR LOSS |
2016 | 2016 | |
| ASSETS | ||||||
| OTHER NON-CURRENT RECEIVABLES |
8,315 | 8,315 | — | — | 8,315 | LEVEL 2 |
| TRADE RECEIVABLES | 2,663 | 2,663 | — | — | 2,663 | LEVEL 2 |
| OTHER RECEIVABLES | 16,371 | 16,371 | — | — | 16,371 | LEVEL 2 |
| DERIVATIVE FINANCIAL ASSETS | 5 | — | — | 5 | 5 | LEVEL 2 |
| CASH AND CASH EQUIVALENTS | 68,033 | 68,033 | — | — | 68,033 | LEVEL 2 |
| RECLASSIFICATION TO (-) FROM HELD FOR SALE |
— | — | — | — | — | |
| TOTAL | 95,387 | 95,382 | — | 5 | 95,387 | |
| LIABILITIES | ||||||
| FINANCIAL DEBT | ||||||
| BANK DEBT | 35,290 | 35,290 | — | — | 35,290 | LEVEL 2 |
| BONDS | 369,796 | 369,796 | — | — | 385,212 | LEVEL 1 |
| TRADE PAYABLES | 31,661 | 31,661 | — | — | 31,661 | LEVEL 2 |
| OTHER LIABILITIES | 4,628 | 4,628 | — | — | 4,628 | LEVEL 2 |
| DERIVATIVE FINANCIAL LIABILITIES | 5,348 | — | — | 5,348 | 5,348 | LEVEL 2 |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
— | — | — | — | — | |
| TOTAL | 446,723 | 441,375 | — | 5,348 | 462,139 |
| 2015 (in thousands of €) |
CARRYING AMOUNT |
SHEET IN ACCORDANCE WITH IAS 39 | AMOUNTS RECOGNISED IN BALANCE | FAIR VALUE |
FAIR VALUE HIERARCHY |
|
|---|---|---|---|---|---|---|
| 2015 | AMORTISED COSTS |
FAIR VALUE THROUGH EQUITY |
FAIR VALUE THROUGH PROFIT OR LOSS |
2015 | 2015 | |
| ASSETS | ||||||
| OTHER NON-CURRENT RECEIVABLES |
— | — | — | — | — | LEVEL 2 |
| TRADE RECEIVABLES | 2,673 | 2,673 | — | — | 2,673 | LEVEL 2 |
| OTHER RECEIVABLES | 11,995 | 11,995 | — | — | 11,995 | LEVEL 2 |
| DERIVATIVE FINANCIAL ASSETS | 216 | — | — | 216 | 216 | LEVEL 2 |
| CASH AND CASH EQUIVALENTS | 24,009 | 24,009 | — | — | 24,009 | LEVEL 2 |
| RECLASSIFICATION TO (-) FROM HELD FOR SALE |
(16,474) | (16,474) | — | — | (16,474) | |
| TOTAL | 22,419 | 22,203 | — | 216 | 22,419 | |
| LIABILITIES | ||||||
| FINANCIAL DEBT | ||||||
| BANK DEBT | 129,386 | 129,386 | — | — | 129,386 | LEVEL 2 |
| BONDS | 148,327 | 148,327 | — | — | 154,411 | LEVEL 1 |
| TRADE PAYABLES | 25,565 | 25,565 | — | — | 25,565 | LEVEL 2 |
| OTHER LIABILITIES | 5,949 | 5,949 | — | — | 5,949 | LEVEL 2 |
| DERIVATIVE FINANCIAL LIABILITIES | 2,191 | — | — | 2,191 | 2,191 | LEVEL 2 |
| RECLASSIFICATION TO LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
(145,016) | (143,792) | — | (1,224) | (145,016) | |
| TOTAL | 166,402 | 165,435 | — | 967 | 172,486 |
The following methods and assumptions were used to estimate the fair values:
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
During the reporting period ending 31 December 2016, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
As at 31 December 2016 the Group did not provide for any rental guarantees.
Financial assets amounting to € 691k in 2016 (€ 4,580k in 2015) were pledged in favour of VGP's fi nancing banks.
Employee benefit obligations
The Group had no post-employment benefit plans in place at the reporting date.
The Group has concluded a number of contracts concerning the future purchase of land. As at 31 December 2016 the Group had future purchase agreements for land totalling 417,000 m², representing a commitment of € 16.2 million and for which deposits totalling € 0.6 million had been made. As at 31 December 2015 Group had future purchase agreements for land totalling 1,042,000 m², representing a commitment of € 80.8 million and for which deposits totalling € 3.6 million had been made.
The € 0.6 million down payment on land was classified under investment properties as at 31 December 2016 given the immateriality of the amounts involved (same classification treatment applied for 2015).
As at 31 December 2016 the Group had contractual obligations to develop new projects for a total amount of € 80.3 million compared to € 68.9 million as at 31 December 2015.
All commitments are of a short-term nature. The secured land is expected to be acquired during the course of 2017. The contractual construction obligations relate to new buildings or buildings under construction which will be delivered or started-up during the course of 2017 for the own and Joint Venture portfolio.
Unless otherwise mentioned below, the settlement of related party transactions occurs in cash, there are no other outstanding balances which require disclosure, the outstanding balances are not subject to any interest unless specified below, no guarantees or collaterals provided and no provisions or expenses for doubtful debtors were recorded.
As at 31 December 2016 the main shareholders of the company are:
The two main ultimate reference shareholders of the company are therefore (i) Mr Bart Van Malderen who holds 49.6%1 and who is a non-executive director; and (ii) Mr Jan Van Geet who holds 27.3%1 and who is CEO and an executive director. The full details of the shareholding of VGP can be found on page 66.
Following the completion of the acquisition of the initial seed portfolio by the new joint venture with Allianz Real Estate at the end of May 2016 (VGP European Logistics); the board of directors approved the redemption of all issued hybrid securities against a price equal to the issue price (in total € 60 million) plus the interest accrued (€ 3.0 million) from the issue date of each Security, after complying with the conflict of interest procedure in accordance with article 523 of the Belgian Companies Code. The redemption took place on 1 June 2016.
Drylock Technologies s.r.o,, a company controlled by Bart Van Malderen, leases a warehouse from VGP under a long term lease contract. This lease contract was entered into during the month of May 2012. The rent received over the year 2016 amounts to € 0.9 million (compared to € 2.0 million for the year 2015). The warehouse was included in the sale of the Seed portfolio to VGP European Logistics at the end of May 2016.
VGP NV leases a small office from VM Invest NV in Belgium for which it pays € 4k per annum. (same level as in 2015). The lease is for an undetermined period.
Jan Van Geet s.r.o. leases out office space to the VGP Group in the Czech Republic used by the VGP operational team. The leases run until 2018 and 2021 respectively. During 2016 aggregate amount paid under these leases was € 98k compared to € 90k for 2015.
All lease agreements have been concluded on an arm's length basis.
1 Shareholding calculated after taking the respective shareholding of Mr Bart Van Malderen en Mr Jan Van Geet in Comm. VA VGP MISV VGP into consideration.
The table below provides the outstanding balances with Jan Van Geet s.r.o.. The payable balance relates to unsettled invoices. The receivable balances relate to cash advances made to cover representation costs.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| TRADE RECEIVABLE/(PAYABLE) | (52) | (5) |
VGP also provides real estate support services (mainly maintenance work) to Jan Van Geet s.r.o. During 2016 VGP recorded a € 18k revenue for these activities (which was the same amount as in 2015).
The consolidated financial statements include the financial statements of VGP NV and the subsidiaries listed in note 35.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated in the consolidation and are accordingly not disclosed in this note.
The table below presents a summary of the related transactions with the Group's Joint Venture with Allianz Real Estate (VGP European Logistics) and the associates. VGP European Logistics is incorporated in Luxembourg and owns logistics property assets in Germany, the Czech Republic, Slovakia and Hungary. VGP NV holds 50% directly in the Joint Venture and 5.1% directly in the subsidiaries of the Joint Venture holding assets in Germany (associates). During the year, the associates SNOW S.à.r.l. and SUN S.à.r.l. were sold Tristan Capital Partners as part of the liquidation process of these respective associates.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| LOANS OUTSTANDING AT THE YEAR END | 89,876 | 30 |
| EQUITY DISTRIBUTIONS RECEIVED | 4,678 | — |
| ASSETS SOLD TO JOINT VENTURE | 236,060 | — |
| OTHER RECEIVABLES FROM ASSOCIATES AT YEAR END | 32 | 30 |
| MANAGEMENT FEE INCOME | 3,029 | — |
| INTEREST AND SIMILAR INCOME FROM JOINT VENTURE AND ASSOCIATES | 2,191 | — |
Key Management includes the Board of Directors and the executive management. The details of these persons can be found on page 74/75.
| KEY MANAGEMENT REMUNERATION (in thousands of €) | 2016 | 2015 |
|---|---|---|
| NUMBER OF PERSONS | 9 | 9 |
| SHORT TERM EMPLOYEE BENEFITS | ||
| BASIC REMUNERATION | 866 | 837 |
| SHORT TERM VARIABLE REMUNERATION | 700 | 925 |
| REMUNERATION OF DIRECTORS | 102 | 96 |
| TOTAL GROSS REMUNERATION | 1,668 | 1,858 |
| AVERAGE GROSS REMUNERATION | 185 | 206 |
The disclosures relating to the Belgian Corporate Governance Code are included in the Corporate Governance Statement of this annual report.
For 2016 no post-employment benefits nor share based payment benefits were granted.
Little Rock SA is responsible for the Group's daily management, financial management and commercial management and is represented for this purpose by the CEO, CFO and CCO. As a consideration for rendering such services, Little Rock SA receives a fixed fee, a variable fee subject to certain criteria being met, and 5% of the profits before taxes of the Group on a consolidated basis. In return for Little Rock SA's commitment to observe the Group's daily, financial and commercial management for an additional period of five years (starting as from April 2015).
The variable fee allocated to Little Rock for 2016 amounts to € 5,951 thousand of which 1/3 will be paid out in 2016 (together with 1/3 of the 2015 fee) with the remaining balance to be paid out in equal portions in 2017 and 2018. The 1/3 of the 2015 fee together with the 1/3 of the 2016 fee amount to € 3,722 thousand. We refer to the Remuneration Report in the Corporate Governance Statement for further details.
investors through a private placement.
Following the successful sales of assets to VGP European Logistics during 2016 and in order to further optimise the capital structure of VGP NV the board of directors has decided to convene an Extraordinary Shareholders' Meeting to propose an additional capital reduction in cash of € 20,069,694.00. This cash distribution would correspond to € 1.08 per share.
On 21 March 2017, Mr Jan Van Geet acquired 100% of the shares of Alsgard SA from Mr Jan Prochazka. By virtue of this acquisition Mr Jan Van Geet now holds, 38.3% of the voting rights of the Company.
On 30 March 2017 VGP successfully issued an 8 year bond for a nominal amount of € 80 million. The bonds were placed with institutional investors and are not listed. The fixed rate of the bonds is 3.35% (gross) per year. On 30 March 2017, VM Invest NV successfully placed 766,203 VGP shares with a broad base of institutional
The audit fees for VGP NV and its fully controlled subsidiaries amounted to € 106k. In addition, additional non-audit services were performed during the year by Deloitte and related persons for which a total fee of € 30k was incurred.
Non-audit-fees mainly relate to the audit of the closing accounts of SPV's sold to VGP European Logistics in 2016.
The following companies were included in the consolidation perimeter of the VGP Group as at 31 December 2016 and were fully consolidated:
| SUBSIDIARIES | REGISTERED SEAT ADDRESS | % | |
|---|---|---|---|
| VGP NV | ZELE, BELGIUM | PARENT | (1) |
| VGP CZ III a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP CZ VII a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP CZ IX a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP CZ X a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP CZ XI a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP CZ XII a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| TPO HALA G1 a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| GEHOJEDNA a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| GEOVYCHOD a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP PARK CESKY UJEZD a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (2) |
| VGP – INDUSTRIALNI STAVBY s.r.o. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (3) |
| SUTA s.r.o. | PRAGUE, CZECH REPUBLIC | 100 | (3) |
| HCP SUTA s.r.o. | PRAGUE, CZECH REPUBLIC | 100 | (3) |
| VGP FM SERVICES s.r.o. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 | (3) |
| VGP INDUSTRIEBAU GMBH | DÜSSELDORF, GERMANY | 100 | (3) |
| VGP PM SERVICES GMBH | DÜSSELDORF, GERMANY | 100 | (3) |
| VGP PARK LEIPZIG GMBH | DÜSSELDORF, GERMANY | 100 | (2) |
| VGP PARK MÜNCHEN GMBH | DÜSSELDORF, GERMANY | 100 | (2) |
| VGP PARK HAMMERSBACH GMBH | DÜSSELDORF, GERMANY | 100 | (2) |
| VGP DEUTSCHLAND – PROJEKT 8 GMBH | DÜSSELDORF, GERMANY | 100 | (2) |
| VGP PARK HAMBURG 3 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 1 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 2 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 3 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 5 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 6 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 7 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP DEU 8 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (2) |
| VGP ASSET MANAGEMENT S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 100 | (3) |
| VGP ESTONIA OÜ | TALLINN, ESTONIA | 100 | (2) |
| VGP FINANCE NV | ZELE, BELGIUM | 100 | (5) |
| VGP LATVIA S.I.A. | KEKAVA, LATVIA | 100 | (2) |
| VGP ROMANIA S.R.L. | TIMISOARA, ROMANIA | 100 | (2) |
| VGP CONSTRUCTII INDUSTRIALE S.R.L. | TIMISOARA, ROMANIA | 99 | (3) |
| VGP PARK BRATISLAVA a.s. | BRATISLAVA, SLOVAKIA | 100 | (2) |
| VGP SERVICE KFT | GYÖR, HUNGARY | 100 | (3) |
| VGP NEDERLAND BV | TILBURG, THE NETHERLANDS | 100 | (4) |
| VGP NAVES INDUSTRIALES PENINSULA, S.L. |
BARCELONA, SPAIN | 100 | (1) |
| VGP (PARK) ESPANA 1 S.L. | BARCELONA, SPAIN | 100 | (2) |
| VGP (PARK) ESPANA 2 S.L. | BARCELONA, SPAIN | 100 | (2) |
| VGP (PARK) ESPANA 3 S.L. | BARCELONA, SPAIN | 100 | (2) |
| JOINT VENTURE | REGISTERED SEAT ADDRESS | % | |
|---|---|---|---|
| VGP EUROPEAN LOGISTICS S.à r. l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 50.00 | (4) |
The equity method is applied to the following companies:
| ASSOCIATES | REGISTERED SEAT ADDRESS | % | |
|---|---|---|---|
| VGP MISV COMM. VA | ZELE, BELGIUM | 42.87 | (4) |
| VGP PARK RODGAU GMBH | DÜSSELDORF, GERMANY | 5.10 | (2) |
| VGP PARK BINGEN GMBH | DÜSSELDORF, GERMANY | 5.10 | (2) |
| VGP PARK HAMBURG GMBH | DÜSSELDORF, GERMANY | 5.10 | (2) |
| VGP PARK HÖCHSTADT GMBH | DÜSSELDORF, GERMANY | 5.10 | (2) |
| VGP PARK BERLIN GMBH | DÜSSELDORF, GERMANY | 5.10 | (2) |
| VGP PARK HAMBURG 2 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 5.10 | (2) |
| VGP PARK FRANKENTHAL S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 5.10 | (2) |
| VGP PARK LEIPZIG S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 5.10 | (2) |
(1) Holding and service company
(2) Existing or future asset company
(3) Services company
(4) Holding company
(5) Dormant
(6) The remaining 94.9% are held directly by VGP European Logistics S.à r.l.
| SUBSIDIARIES | REGISTERED SEAT ADDRESS | % |
|---|---|---|
| VGP CZ XII a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| SUBSIDIARIES | REGISTERED SEAT ADDRESS | % |
|---|---|---|
| GEHOJEDNA a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| GEOVYCHOD a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| SUBSIDIARIES | REGISTERED SEAT ADDRESS | |
|---|---|---|
| VGP CZ V a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| VGP CZ VI a.s. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| VGP CZ VIII s.r.o. | JENIŠOVICE U JABLONCE NAD NISOU, CZECH REPUBLIC | 100 |
| VGP MALACKY a.s. | MALACKY, SLOVAKIA | 100 |
| VGP HUNGARY KFT | GYÖR, HUNGARY | 100 |
| VGP PARK GYÖR KFT | GYÖR , HUNGARY | 100 |
| VGP PARK ALSÓNÉMEDI KFT | GYÖR , HUNGARY | 100 |
| VGP PARK RODGAU GMBH | DÜSSELDORF, GERMANY | 94.9 |
| VGP PARK BINGEN GMBH | DÜSSELDORF, GERMANY | 94.9 |
| VGP PARK HAMBURG GMBH | DÜSSELDORF, GERMANY | 94.9 |
| VGP PARK HÖCHSTADT GMBH | DÜSSELDORF, GERMANY | 94.9 |
| VGP PARK BERLIN GMBH | DÜSSELDORF, GERMANY | 94.9 |
| VGP PARK HAMBURG 2 S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 94.9 |
| VGP PARK FRANKENTHAL S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 94.9 |
| VGP PARK LEIPZIG S.à r.l. | LUXEMBOURG, GRAND DUCHY OF LUXEMBOURG | 94.9 |
| COMPANIES | COMPANY NUMBER |
|---|---|
| VGP NV | BTW BE 0887.216.042 RPR – GHENT (DIVISION DENDERMONDE) |
| VGP FINANCE NV | BTW BE 0894.188.263 RPR – GHENT (DIVISION DENDERMONDE) |
| VGP MISV COMM. VA | BTW BE 0894.442.740 RPR – GHENT (DIVISION DENDERMONDE) |
For the year ended 31 December 2016
The table below includes the proportional consolidated income statement interest of the Group in the VGP European Logistics joint venture. The interest held directly by the Group (5.1%) in the German asset companies of the Joint Venture have been included in the 50% Joint Venture figures (share of VGP).
| (in thousands of €) | 2016 | 2015 | ||||
|---|---|---|---|---|---|---|
| GROUP | JOINT VENTURE |
TOTAL | GROUP | JOINT VENTURE |
TOTAL | |
| NET CURRENT RESULT | ||||||
| GROSS RENTAL INCOME | 16,806 | 8,976 | 25,782 | 17,073 | — | 17,073 |
| SERVICE CHARGE INCOME/(EXPENSES) | 1,035 | 300 | 1,335 | 422 | — | 422 |
| PROPERTY OPERATING EXPENSES | (1,703) | (1,259) | (2,962) | (972) | — | (972) |
| NET RENTAL AND RELATED INCOME | 16,138 | 8,017 | 24,155 | 16,523 | — | 16,523 |
| PROPERTY AND DEVELOPMENT MANAGEMENT FEE INCOME |
3,141 | — | 3,141 | 1,433 | — | 1,433 |
| FACILITY MANAGEMENT INCOME | 684 | — | 684 | 1,114 | — | 1,114 |
| OTHER INCOME/(EXPENSES) – INCLUDING ADMINISTRATIVE COSTS |
(16,778) | (1,079) | (17,857) | (13,998) | 191 | (13,807) |
| OPERATING RESULT (BEFORE RESULT ON PORTFOLIO) |
3,185 | 6,938 | 10,123 | 5,072 | 191 | 5,263 |
| NET FINANCIAL RESULT (EXCL. IAS 39) | (12,287) | (3,323) | (15,610) | (9,835) | — | (9,835) |
| REVALUATION OF DERIVATIVE FINANCIAL INSTRUMENTS (IAS 39) |
(4,619) | (647) | (5,266) | (319) | — | (319) |
| TAXES | 1,122 | (605) | 517 | 5,512 | — | 5,512 |
| NET CURRENT RESULT | (12,599) | 2,363 | (10,236) | 430 | 191 | 621 |
| RESULT ON PROPERTY PORTFOLIO | ||||||
| NET VALUATION GAINS/(LOSSES) ON INVESTMENT PROPERTY |
118,900 | 7,008 | 125,908 | 103,981 | — | 103,981 |
| DEFERRED TAXES | (22,912) | (1,473) | (24,385) | (18,041) | — | (18,041) |
| RESULT ON PROPERTY PORTFOLIO | 95,988 | 5,535 | 101,523 | 85,940 | — | 85,940 |
| PROFIT FOR THE PERIOD | 83,389 | 7,897 | 91,286 | 86,370 | 191 | 86,561 |
The table below includes the proportional consolidated balance sheet interest of the Group in the VGP European Logistics joint venture. The interest held directly by the Group (5.1%) in the German asset companies of the Joint Venture have been included in the 50% Joint Venture figures (share of VGP).
| (in thousands of €) | 2016 | 2015 | ||||
|---|---|---|---|---|---|---|
| GROUP | JOINT VENTURE |
TOTAL | GROUP | JOINT VENTURE |
TOTAL | |
| INVESTMENT PROPERTIES | 550,262 | 307,053 | 857,315 | 173,972 | — | 173,972 |
| OTHER ASSETS | 8,854 | 96 | 8,950 | 1,223 | — | 1,223 |
| TOTAL NON-CURRENT ASSETS | 559,116 | 307,148 | 866,264 | 175,195 | — | 175,195 |
| TRADE AND OTHER RECEIVABLES | 19,426 | 4,523 | 23,949 | 4,927 | — | 4,927 |
| CASH AND CASH EQUIVALENTS | 71,595 | 9,256 | 80,851 | 9,825 | — | 9,825 |
| DISPOSAL GROUP HELD FOR SALE | 132,263 | — | 132,263 | 527,361 | — | 527,361 |
| TOTAL CURRENT ASSETS | 223,284 | 13,779 | 237,063 | 542,113 | — | 542,113 |
| TOTAL ASSETS | 782,400 | 320,928 | 1,103,328 | 717,308 | — | 717,308 |
| NON-CURRENT FINANCIAL DEBT | 327,923 | 201,616 | 529,539 | 170,800 | — | 170,800 |
| OTHER NON-CURRENT FINANCIAL LIABILITIES | 5,348 | 538 | 5,886 | 967 | — | 967 |
| OTHER NON-CURRENT LIABILITIES | 2,432 | 721 | 3,153 | 405 | — | 405 |
| DEFERRED TAX LIABILITIES | 20,012 | 17,449 | 37,461 | 8,247 | — | 8,247 |
| TOTAL NON-CURRENT LIABILITIES | 355,715 | 220,323 | 576,038 | 180,419 | — | 180,419 |
| CURRENT FINANCIAL DEBT | 81,674 | 4,368 | 86,042 | 3,522 | — | 3,522 |
| TRADE DEBTS AND OTHER CURRENT LIABILITIES |
35,496 | 7,043 | 42,539 | 10,342 | — | 10,342 |
| LIABILITIES RELATED TO DISPOSAL GROUP HELD FOR SALE |
8,404 | — | 8,404 | 161,047 | — | 161,047 |
| TOTAL CURRENT LIABILITIES | 125,574 | 11,411 | 136,985 | 174,911 | — | 174,911 |
| TOTAL LIABILITIES | 481,289 | 231,734 | 713,023 | 355,330 | — | 355,330 |
| NET ASSETS | 301,111 | 89,194 | 390,305 | 361,978 | — | 361,978 |
The financial statements of the parent company VGP NV, are presented below in a condensed form. In accordance with Belgian company law, the directors' report and financial statements of the parent company VGP NV, together with the auditor's report, have been deposited at the National Bank of Belgium.
They are available on request from:
VGP NV Spinnerijstraat 12 B-9240 Zele Belgium
www.vgpparks.eu
The statutory auditor issued an unqualified opinion on the financial statements of VGP NV.
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| OTHER OPERATING INCOME | 3,126 | 3,539 |
| OPERATING PROFIT OR LOSS | (13,797) | (1,985) |
| FINANCIAL RESULT | (72) | 3,062 |
| EXTRAORDINARY RESULT | 132,262 | (123) |
| CURRENT AND DEFERRED INCOME TAXES | (516) | 4 |
| PROFIT OR (LOSS) FOR THE YEAR | 117,877 | 958 |
| (in thousands of €) | 2016 | 2015 |
|---|---|---|
| FORMATION EXPENSES, INTANGIBLE ASSETS | 5,206 | 1,677 |
| TANGIBLE FIXED ASSETS | — | — |
| FINANCIAL FIXED ASSETS | 602,433 | 355,575 |
| TOTAL NON-CURRENT ASSETS | 607,639 | 357,252 |
| TRADE AND OTHER RECEIVABLES | 491 | 92 |
| CASH & CASH EQUIVALENTS | 51,009 | 7,990 |
| TOTAL CURRENT ASSETS | 51,500 | 8,082 |
| TOTAL ASSETS | 659,139 | 365,334 |
| SHARE CAPITAL | 112,737 | 112,737 |
| NON-DISTRIBUTABLE RESERVES | 7,939 | 2,045 |
| RETAINED EARNINGS | 145,499 | 33,515 |
| SHAREHOLDERS' EQUITY | 266,175 | 148,297 |
| AMOUNTS PAYABLE AFTER ONE YEAR | 300,081 | 210,160 |
| AMOUNTS PAYABLE WITHIN ONE YEAR | 92,883 | 6,877 |
| CREDITORS | 392,964 | 217,037 |
| TOTAL EQUITY AND LIABILITIES | 659,139 | 365,334 |
Valuation and foreign currency translation principles applied in the parent company's financial statements are based on Belgian accounting legislation.
The profit after tax for the year ended was € 117,877,265.63
At the General Meeting of Shareholders on 12 May 2017, the Board of Directors will propose that the above result be appropriated as follows:
| (in €) | 2016 | 2015 |
|---|---|---|
| PROFIT OF THE FINANCIAL YEAR | 117,877,265.63 | 957,824.95 |
| PROFIT CARRIED FORWARD | 33,515,296.24 | 32,605,362.54 |
| TRANSFER TO LEGAL RESERVES | (5,893,863.28) | (47,891.25) |
| PROFIT/(LOSS) TO BE CARRIED FORWARD | 145,498,698.59 | 33,515,296.24 |
| PROFIT TO BE DISTRIBUTED (GROSS DIVIDEND) | — | — |
Following the successful sales of assets to VGP European Logistics during 2016 and in order to further optimise the capital structure of VGP NV the Board of Directors has decided to convene an Extraordinary Shareholders' Meeting to propose an additional capital reduction in cash of € 20,069,694.00. This cash distribution would correspond to € 1.08 per share.
As required by law, we report to you in the context of our appointment as the company's statutory auditor. This report includes our report on the consolidated financial statements together with our report on other legal and regulatory requirements. These consolidated financial statements comprise the consolidated balance sheet as at 31 December 2016, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, as well as the summary of significant accounting policies and other explanatory notes.
We have audited the consolidated financial statements of VGP NV ("the company") and its subsidiaries ( jointly "the group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. The consolidated statement of financial position shows total assets of 871,594 (000) EUR and the consolidated income statement shows a consolidated profit (group share) for the year then ended of 91,286 (000) EUR.
The board of directors is responsible for the preparation and fair presentation of consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA) as adopted in Belgium. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the group's preparation and fair presentation of consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements. We have obtained from the group's officials and the board of directors the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the consolidated financial statements of VGP NV give a true and fair view of the group's net equity and financial position as of 31 December 2016, and of its results and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.
The board of directors is responsible for the preparation and the content of the directors' report on the consolidated financial statements.
As part of our mandate and in accordance with the Belgian standard complementary to the International Standards on Auditing applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we make the following additional statement, which does not modify the scope of our opinion on the consolidated financial statements:
— The directors' report on the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.
Zaventem, 7 April 2017 The statutory auditor
DELOITTE Bedrijfsrevisoren/Reviseurs d'Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Rik Neckebroeck
This means the value of the property at the time of acquisition. Any transfer costs paid are included in the acquisition price.
The annualised committed leases or the committed annualised rent income represents the annualised rent income generated or to be generated by executed lease – and future lease agreements.
Means all subsidiaries of VGP European Logistics S.à r.l. in which VGP NV holds a direct 5.1% participation, VGP MISV Comm. VA in which the Company holds 42.87%; and until December 2016 Snow Crystal S.à.r.l. and SUN S.à.r.l., in which the Company held 20% participation.
Drawn up by the Corporate Governance Commission and including the governance practices and provisions to be met by companies under Belgian Law which shares are listed on a regulated market (the"2009 Code"). The Belgian Corporate Governance Code is available online at www. corporategovernancecommittee.be.
First option to terminate a lease.
Central and Eastern Europe
The compliance officer is responsible for monitoring compliance with the code of conduct for financial transactions in the Corporate Governance Charter (the dealing code).
The gross rent as contractually agreed in the lease on the date of signing.
The non-cash assets contributed to a company at the time of formation or when the capital is increased.
The code of conduct containing rules that must be complied with by the members of the Board of Directors, the members of executive management, and all employees of the VGP Group, who by virtue of their position, possess information they know or should know is insider information.
As a borrower, VGP wishes to protect itself from any rise in interest rates. This interest rate risk can be partially hedged by the use of derivatives (such as interest rate swap contracts).
This is a valuation method based on a detailed projected revenue flow that is discounted to a net current value at a given discount rate based on the risk of the assets to be valued.
Estimated rental value (ERV) is the rental value determined by independent property experts.
Is the capitalisation rate applied to the net income at the end of the discounted cash flow model period to provide a capital value or exit value which an entity expects to obtain for an asset after this period.
Day-to-day maintenance, alteration and improvement work. VGP employs an internal team of facility managers who work for the VGP Group and forthe Joint Venture.
The fair value is defined in IAS 40 as the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. In addition, market value must reflect current rental agreements, the reasonable assumptions in respect of potential rental income and expected costs.
The Financial Services and Market Authority (FSMA) is the autonomous regulatory authority governing financial and insurance markets in Belgium.
Is a ratio calculated as net financial debt divided by total equity and liabilities.
International Accounting Standards/International Financial Reporting Standards. The international accounting standards drawn up by the International Accounting Standards Board (IASB), for the preparation of financial statements.
IAS 39 is an IAS/IFRS standard which sets out the way in which a company has to classify and evaluate its financial instruments in its balance sheet. It requires that all derivatives be booked in the balance sheet at their fair value, i.e. their market value at closing date.
The rent is contractually adjusted annually on the anniversary of the contract effective date on the basis of the inflation rate according to a benchmark index in each specific country.
The ratio of (initial) contractual rent of a purchased property to the acquisition price. See also Acquisition price.
Any information not publicly disclosed that is accurate and directly or indirectly relates to one or more issuers of financial instruments or one or more financial instruments and that, if it were publicly disclosed, could significantly affect the price of those financial instruments (or financial instruments derived from them).
The use of derived financial instruments to protect debt positions against interest rate rises.
The value of the portfolio, including transaction costs, as appraised by independent property experts
A transaction in which the parties swap interest rate payments for a given duration. VGP uses interest rate swaps to hedge against interest rate increases by converting current variable interest payments into fixed interest payments.
Means VGP European Logistics S.à r.l., the newly established 50:50 joint venture between VGP NV and Allianz Real Estate and including all of its subsidiaries.
The date on which a lease can be cancelled
Closing stock market price multiplied by the total number of outstanding shares on that date
The value of the total assets minus the value of the total liabilities.
Operating result plus net financial result (financial income – financial charges) less income and deferred taxes.
Total financial debt minus cash and cash equivalents.
The occupancy rate is calculated by dividing the total leased out lettable area (m²) by the total lettable area (m²) including any vacant area (m²).
on the portfolio.
Management of building and renovation projects. VGP employs an internal team of project managers who work exclusively for the company.
Independent property expert responsible for appraising the property portfolio.
The property investments, including property for lease, property investments in development for lease, assets held for sale and development land.
The first 15 VGP parks acquired by the Joint Venture at the end of May 2016, including the respective completed buildings, buildings under construction and development land at the end of May 2016.
Means SUTA s.r.o., having its registered office at Rozšířená 2159/15, Libeň, 182 00 Praha 8 and registered in the Commercial Register maintained by the Municipal Court in Prague, Section C, Entry No. 201835 and being a subsidiary of VGP.
The respective completed buildings, buildings under construction and development land of the Joint Venture.
The weighted average term of financial debt is the sum of the current financial debt (loans and bonds) multiplied by the term remaining up to the final maturity of the respective loans and bonds divided by the total current financial debt.
The weighted average term of leases is the sum of the (current rent and committed rent for each lease multiplied by the term remaining up to the final maturity of these leases) divided by the total current rent and committed rent of the portfolio
The sum of the contractual rent of a property portfolio to the acquisition price of such property portfolio.
Realised and non-realised changes in value compared to the most recent valuation of the expert, including the effective or latent capital gain tax payable in the countries where VGP is active.
Letting of rental spaces to users in the rental market during a specific period.
The undersigned declare that, to the best of their knowledge:
Jan Van Geet as permanent representative of Jan Van Geet s.r.o. CEO
Dirk Stoop as permanent representative of Dirk Stoop BVBA CFO
VGP NV Spinnerijstraat 12 B-9240 Zele Belgium tel +32 52 45 43 86
fax +32 52 45 43 87
Jenišovice 59 468 33 Jenišovice u Jablonce nad Nisou Czech Republic tel +420 483 346 060 fax +420 483 346 070
e-mail [email protected] www.vgpparks.eu
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