Earnings Release • Mar 1, 2016
Earnings Release
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704,000 m² of new development land acquired during the year with another 1,042,000 m² land plots targeted and already partially committed to expand land bank and support development pipeline
Establishment of presence in Spain with the opening of a new office in Barcelona and with first substantial (223,000 m²) land plot secured and to be acquired subject to permits, allowing to potentially develop circa 179,000 m² of lettable area
2015 was a record year for VGP.
The momentum in leasing and development activities seen during the first half of 2015 continued throughout the second half of 2015 resulting in record signing of new leases and record development activities. This trend continued during the first weeks of 2016.
In order to sustain its growth over the medium term VGP entered into a 50/50 joint venture with Allianz Real Estate. The new joint venture will act as an exclusive take-out vehicle of the income generating assets located in Germany, the Czech Republic, Slovakia and Hungary. VGP will continue to service the joint venture as asset-, property- and development manager.
The joint venture is of a significant strategic importance to the Group as it will allow 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, thus allowing VGP to concentrate on its core development activities.
Finally VGP will retain a 50% stake in a growing rent income generating logistic and semi industrial real estate portfolio which over time will generate a recurrent cash flow stream which can support a sustained dividend policy.
VGP's activities during the year 2015 can be summarised as follows:
1 Before reclassification to "Disposal Group held for sale". The investment property amount after such reclassification amounts to € 174.0 million as at 31 December 2015.
| CONSOLIDATED INCOME STATEMENT – ANALYTICAL FORM | 2015 | 2014 |
|---|---|---|
| (in thousands of €) | ||
| NET CURRENT RESULT | ||
| Gross rental income | 17,073 | 9,596 |
| Service charge income / (expenses) | 422 | 431 |
| Property operating expenses | (972) | (1,513) |
| Net rental and related income | 16,523 | 8,514 |
| Property and facility management income | 2,215 | 3,161 |
| Property development income | 332 | 246 |
| Other income / (expenses) - incl. administrative costs | (13,998) | (7,089) |
| Share in the result of associates | 191 | 14,473 |
| Operating result (before result on portfolio) | 5,263 | 19,305 |
| Net financial result1 | (9,835) | (6,220) |
| Revaluation of interest rate financial instruments (IAS 39) | (319) | (1,455) |
| Taxes | 5,512 | (2,167) |
| Net current result | 621 | 9,463 |
| RESULT ON PROPERTY PORTFOLIO | ||
| Net valuation gains / (losses) on investment properties | 103,981 | 53,920 |
| Deferred taxes | (18,041) | (14,024) |
| Result on property portfolio | 85,940 | 39,896 |
| PROFIT FOR THE YEAR | 86,561 | 49,359 |
| RESULT PER SHARE | 2015 | 2014 |
|---|---|---|
| Number of ordinary shares | 18,583,050 | 18,583,050 |
| Net current result per share (in €) | 0.03 | 0.51 |
| Net result per share (in €) | 4.66 | 2.66 |
1 Excluding the revaluation of interest rate financial instruments.
The gross rental income reflects the full impact of the income generating assets delivered during 2015. The gross rental income for the financial year ending 31 December 2015 increased by 77.9% from € 9.6 million for the period ending 31 December 2014 to € 17.1 million for the period ending 31 December 2015.
During the year VGP signed 32 new lease contracts representing more than € 16.3 million annualised rental income of which € 15.5 million related to new leases and € 0.8 million related to replacement leases.
The annualised committed leases increased to € 38.0 million as at the end of December 2015 (compared to € 22.6 million as at 31 December 2014).
The committed annualised rental income represents the annualised rental income generated or to be generated by executed lease – and future lease agreements.
Germany was the main driver of the increases in committed leases with more than € 7.1 million of new leases signed during the year. The other countries also performed very well with new leases being signed in the Czech in the Czech Republic + € 3.4 million, Slovakia + € 2.5 million, Hungary + € 1.5 million, Romania + € 1.3 million and finally € 0.4 million in Estonia.
The signed committed lease agreements represent a total of 709,124 m² of lettable area with the weighted average term of the committed leases standing at 7.5 years at the end of December 2015 compared to 7.8 years as at 31 December 2014.
The property and facility management income reached € 2.5 million for the period compared to € 3.4 million for the period ending 31 December 2014.
In addition to providing property and development management, VGP will also act as asset manager to the joint venture with Allianz Real Estate and this throughout the initial 10 year term of the joint venture. These existing and new activities will result in organisational changes in view of the expected growth of the joint venture and a new asset management team has been put in place.
The asset management, property management and development management activities will result in an increased contribution to the result of the VGP Group benefitting from the growth of the joint venture's real estate portfolio.
As at 31 December 2015 the net valuation gain on the property portfolio reaches € 104.0 million against a net valuation gain of € 53.9 million per 31 December 2014.
The trend of improving yields continued during the second half of 2015. As a result the total property portfolio, excluding development land, is being valued by the valuation expert at 31 December 2015 based on an average market rate of 7.02% (compared to 7.81% as at 31 December 2014 and 7.42% as at 30 June 2015) applied to the contractual rents increased by the estimated rental value on unlet space.
The (re)valuation of the portfolio was based on the appraisal report of Jones Lang LaSalle.
For the period ending 31 December 2015, the reported financial income was € 0.5 million (€ 3.0 million as at 31 December 2014) and was mainly composed of € 0.4 million of net foreign exchange gains (compared to € 7k net foreign exchange loss as at 31 December 2014) and€ 0.1 million of unrealised gains on interest rate derivatives.
In order to mitigate its future interest rate risk the Group concluded 2 new interest rate swaps, each for a notional amount of € 75 million during the first half of 2015. These 2 interest rate swaps will start in July 2017 and December 2018 and will run until July 2022 and December 2023 respectively. The average interest rate which has been fixed is 0.84% p.a. As at 30 June 2015 a € 2.7 million of unrealised gains was recorded on these interest rate derivatives which due to the change in long term interest rates during the second half of 2015 reversed to a € 0.2 million of unrealised loss.
As at 31 December 2015 no interest income from loans to associates was recorded (compared to € 2.9 million as at 31 December 2014) due to the repayment of all shareholder loans from the associates in October 2014.
The reported financial expenses as at 31 December 2015 are mainly made up of € 10.3 million interest expenses related to financial debt (€ 9.1 million as at 31 December 2014), € 0.4 million unrealised losses on interest rate derivatives, € 2.4 million other financial expenses (€ 0.9 million as at 31 December 2014) mainly relating to the amortisation of the transactions costs of the 2 bonds issued during 2013 and a positive impact of € 2.4 million (€ 1.0 million per 31 December 2014) related to capitalised interests.
As a result the net financial expenses reached € 10.2 million as at 31 December 2015 compared to € 7.7 million as at 31 December 2014.
The financial debt increased from € 198.8 million as at 31 December 2014 to € 279.8 million as at 31 December 2015. The increase was mainly driven by an increase in bank debt which increased to €129.4 million compared to € 49.1 million as at 31 December 2014.
The gearing ratio1 of the Group remains conservative and stood at 35,7% at the end of December 2015 compared to a gearing level of 33.2% as at 31 December 2014.
The fair value of the investment property and the investment property under construction (the "property portfolio") as at 31 December 2015 increased with 62.7% to € 677.1 million2 compared to
1 Gearing calculated as "net debt / total equity and liabilities"
2 Before reclassification to "Disposal Group held for sale". The investment property amount after such reclassification amounts to € 174.0 million as at 31 December 2015.
€ 416.1 million as at 31 December 2014. The increase of the property portfolio was due to the acquisition of new development land; the start-up of new projects during the year and the further contraction of the yields, as well as the reflection of the transaction value of the assets held for sale which will be transferred to the joint venture with Allianz Real Estate.
During the year 18 buildings were completed totalling 279,861 m².
These buildings were delivered in following locations. In Germany: 4 buildings totalling 65,154 m² in VGP Park Hamburg, 2 buildings totalling 28,273 m² in VGP Park Rodgau, 1 building of 15,140 m² in VGP Park Höchstadt, 1 building of 24,228 m² in VGP Park Berlin and 1 building of 13,885 m² in VGP Park Borna. In the Czech Republic: 1 building of 5,336 m² in VGP Park Usti nad Labem; 2 buildings totalling 31,459 m² in VGP Park Plzen and 1 building of 19,855 m² In VGP Park Olomouc. In the other countries: 2 buildings totalling 50,938 m² in VGP Park Malacky (Slovakia), 2 buildings (subsequently merged into one building) of 18,183 m² in VGP Park Timisoara (Romania) and finally 1 building of 7,410 m² in VGP Park Nehatu (Estonia).
At the end of December 2015 VGP has the following 14 new buildings under construction: In Germany: 1 building in VGP Park Hamburg, 3 buildings in VGP Park Rodgau, 1 building in VGP Park Bobenheim-Roxheim and 1 building in VGP Park Frankenthal. In the Czech Republic: 1 building in VGP Park Tuchomerice, 1 building in VGP Park BRNO and 1 building in VGP Park Plzen. In the other countries: 1 building in VGP Park Nehatu (Estonia), 2 buildings in VGP Park Malacky (Slovakia), 1 building in VGP Park VGP Park Alsónémedi (Hungary and finally 1 building in VGP Park Timisoara (Romania). The new buildings under construction on which several pre-leases have already been signed, represent a total future lettable area of 272,334 m².
During the year VGP continued to target a significant amount of land plots in order to ensure that the land bank remains sufficiently large to support the development pipeline for future growth. In 2015 VGP acquired 704,000 m² of new development land of which 388,000 m² was located in the Czech Republic, 167,000 m² located in Germany, 85,000 m² in Hungary and 64,000 m² in Latvia.
VGP has currently a land bank in full ownership of 3,654,692 m². The land bank allows VGP to develop besides the current completed projects and projects under construction a further 760,000 m² of lettable area of which 440,000 m² in Germany, 189,000 m² in the Czech Republic, and 130,000 in the other countries.
Besides this VGP has another 1,042,000 m² of new land plots under option. These land plots have a development potential of approx. 542,000 m² of new projects. These remaining land plots are expected to be acquired during the course of 2016.
In order to strengthen its consolidated equity base and support its further growth, VGP NV issued subordinated perpetual securities during 2015 for an aggregate amount of € 60 million. The securities were fully underwritten by the reference shareholders of the company, VM Invest NV and Little Rock SA after complying with the conflict of interest procedure in accordance with article 523 of the Belgian
Companies Code and article 16 of the articles of association of the Company. The securities are not convertible into VGP shares and, hence, do not entail dilution for the shareholders.
Based on the positive trend in the demands for lettable area recorded by VGP during 2015 and the continuing trend seen during the first weeks of 2016, and provided there are no unforeseen events of economic and financial markets nature, VGP should be able to continue to substantially expand its rental income and property portfolio through the completion and start-up of additional new buildings.
| Annual report 2015 | 12 April 2016 |
|---|---|
| General meeting of shareholders | 13 May 2016 |
| 2016 half year results | 30 August 2016 |
| Mr Jan Van Geet | Mr Dirk Stoop |
|---|---|
| CEO | CFO |
| Tel. + 42 0602 404 790 | Tel.+32 52 45 43 86 |
| E-mail: [email protected] | E-mail: [email protected] |
VGP (www.vgpparks.eu) constructs and develops high-end semi-industrial real estate and ancillary offices, 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 identification 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 is quoted on Euronext Brussels and the Main Market of the Prague Stock Exchange.
For the year ended 31 December 2015
| INCOME STATEMENT (in thousands of €) | 2015 | 2014 |
|---|---|---|
| Revenue | 23,118 | 15,114 |
| Gross rental income | 17,073 | 9,596 |
| Service charge income | 3,498 | 2,110 |
| Service charge expenses | (3,076) | (1,679) |
| Property operating expenses | (972) | (1,513) |
| Net rental income | 16,523 | 8,514 |
| Property and facility management income | 2,215 | 3,161 |
| Property development income | 332 | 246 |
| Net valuation gains / (losses) on investment properties | 103,981 | 53,920 |
| Administration expenses | (13,451) | (6,556) |
| Other income | 487 | 348 |
| Other expenses | (1,034) | (881) |
| Share in result of associates | 191 | 14,473 |
| Operating profit / (loss) | 109,244 | 73,225 |
| Financial income | 466 | 2,880 |
| Financial expenses | (10,620) | (10,555) |
| Net financial result | (10,154) | (7,675) |
| Profit before taxes | 99,090 | 65,550 |
| Taxes | (12,529) | (16,191) |
| Profit for the year | 86,561 | 49,359 |
| Attributable to: | ||
| Shareholders of VGP NV | 86,561 | 49,359 |
| Non-controlling interests | - | - |
| RESULT PER SHARE | 2015 | 2014 |
|---|---|---|
| Basic earnings per share (in €) | 4.66 | 2.66 |
| Basic earnings per share – after correction of reciprocal interest | ||
| through associates (in €) | 4.76 | 2.71 |
| Basic earnings per share (in €) - diluted | 4.66 | 2.66 |
1 The statutory auditor has confirmed that his audit procedures, which have been substantially completed, have not revealed any material adjustments which would have to be made to the accounting information disclosed in this press release. The consolidated financial statements have been prepared in accordance with IFRS as adopted by the European Union.
| STATEMENT OF COMPREHENSIVE INCOME (in thousands of €) | 2015 | 2014 |
|---|---|---|
| Profit for the year | 86,561 | 49,359 |
| 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 | 86,561 | 49,359 |
| Attributable to: | ||
| Shareholders of VGP NV | 86,561 | 49,359 |
| Non-controlling interest | - | - |
| ASSETS (in thousands of €) | 2015 | 2014 |
|---|---|---|
| Goodwill | 631 | 631 |
| Intangible assets | 12 | 57 |
| Investment properties | 173,972 | 416,089 |
| Property, plant and equipment | 378 | 370 |
| Non-current financial assets | 216 | 0 |
| Investments in associates | (103) | 17 |
| Deferred tax assets | 89 | 258 |
| Total non-current assets | 175,195 | 417,422 |
| Trade and other receivables | 4,927 | 6,822 |
| Cash and cash equivalents | 9,825 | 43,595 |
| Disposal group held for sale | 527,361 | - |
| Total current assets | 542,113 | 50,417 |
| TOTAL ASSETS | 717,308 | 467,839 |
| SHAREHOLDERS' EQUITY AND LIABILITIES (in thousands of €) |
2015 | 2014 |
|---|---|---|
| Share capital | 62,251 | 62,251 |
| Retained earnings | 239,658 | 153,097 |
| Other reserves | 69 | 69 |
| Other equity | 60,000 | - |
| Shareholders' equity | 361,978 | 215,417 |
| Non-current financial debt | 170,800 | 193,034 |
| Other non-current financial liabilities | 967 | 1,656 |
| Other non-current liabilities | 405 | 1,122 |
| Deferred tax liabilities | 8,247 | 27,329 |
| Total non-current liabilities | 180,419 | 223,141 |
| Current financial debt | 3,522 | 5,722 |
| Trade debts and other current liabilities | 10,342 | 23,559 |
| Liabilities related to disposal group held for sale | 161,047 | - |
| Total current liabilities | 174,911 | 29,281 |
| Total liabilities | 355,330 | 252,422 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 717,308 | 467,839 |
The assets held for sale and liabilities related to disposal group held for sale reflect the assets and liabilities which will be transferred to the new joint venture held by VGP and Allianz Real Estate.
| STATEMENT OF CHANGES IN EQUITY (in thousands of €) |
Statutory share capital |
Capital reserve ¹ |
IFRS share capital |
Retained earnings |
Share premium |
Other equity |
Total equity |
|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2014 | 112,737 | (50,486) | 62,251 | 103,737 | 69 | - | 166,057 |
| Other comprehensive income / (loss) | - | - | - | - | - | - | - |
| Result of the period | - | - | - | 49,359 | - | - | 49,359 |
| Effect of disposals | - | - | - | - | - | - | - |
| Total comprehensive income / (loss) | - | - | - | 49,359 | - | - | 49,359 |
| Dividends to shareholders | - | - | - | - | - | - | - |
| Share capital distribution to shareholders | - | - | - | - | - | - | - |
| Hybrid securities² | - | - | - | - | - | - | - |
| Balance as at 31 December 2014 | 112,737 | (50,486) | 62,251 | 153,097 | 69 | - | 215,417 |
| 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 securities² | - | - | - | - | - | 60,000 | 60,000 |
| Balance as at 31 December 2015 | 112,737 | (50,486) | 62,251 | 239,658 | 69 | 60,000 | 361,978 |
¹ Capital reserve 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 offering ("IPO").
² In order to strengthen its consolidated equity base and support its further growth, VGP NV issued subordinated perpetual securities during 2015. The securities were fully underwritten by the reference shareholders of the company, VM Invest NV and Little Rock SA. The securities are not convertible into VGP shares and, hence, do not entail dilution for the shareholders.
| CASH FLOW STATEMENT (in thousands of €) | 2015 | 2014 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before taxes | 99,090 | 65,550 |
| Adjustments for: | ||
| Depreciation | 734 | 178 |
| Unrealised (gains) /losses on investment properties | (103,975) | (58,160) |
| Realised( gains) / losses on disposal of subsidiaries and investment properties | (6) | 4,241 |
| Unrealised (gains) / losses on financial instruments and foreign exchange | 245 | 1,407 |
| Interest (received) | (21) | (2,880) |
| Interest paid | 10,194 | 9,093 |
| Share in result of associates | (191) | (9,248) |
| Operating profit before changes in working capital and provisions | 6,070 | 10,181 |
| Decrease/(Increase) in trade and other receivables | (8,555) | 7,561 |
| (Decrease)/Increase in trade and other payables | 413 | (12,654) |
| Cash generated from the operations | (2,072) | 5,088 |
| Interest received | 21 | 2,880 |
| Interest (paid) | (10,194) | (9,093) |
| Income taxes paid | (364) | (417) |
| Net cash from operating activities | (12,609) | (1,542) |
| Cash flows from investing activities | ||
| Proceeds from disposal of subsidiaries | 311 | 0 |
| Proceeds from disposal of tangible assets | 26 | 3,324 |
| Acquisition of subsidiaries | (224) | (406) |
| (Loans provided to) / loans repaid by associates | 0 | 49,812 |
| Investment property and investment property under construction | (147,490) | (112,221) |
| Net cash from investing activities | (147,377) | (59,491) |
| Cash flows from financing activities | ||
| Gross dividends paid | 0 | 0 |
| Net Proceeds / (cash out) from the issue / (repayment) hybrid instruments | 60,000 | 0 |
| Proceeds from loans | 83,967 | 26,862 |
| Loan repayments | (3,914) | (1,612) |
| Net cash from financing activities | 140,053 | 25,250 |
| Reclassification to (-) / from held for sale | (14,184) | 0 |
| Net increase / (decrease) in cash and cash equivalents | (34,117) | (35,783) |
| Cash and cash equivalents at the beginning of the period | 43,595 | 79,226 |
| Effect of exchange rate fluctuations | 347 | 152 |
| Cash and cash equivalents at the end of the period | 9,825 | 43,595 |
| Net increase / (decrease) in cash and cash equivalents | (34,117) | (35,783) |
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