Earnings Release • Feb 23, 2018
Earnings Release
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Press Release Regulated Information
23 February 2018 – 7.30 a.m. CET, Diegem (Belgium): VGP NV ('VGP' or 'the Company'), today announced results for year ended 31 December 2017.
1 Based on the closing share price of € 62.20 as at 20 February 2018.
VGP, the developer, manager and owner of high quality logistics real estate in Europe, has today published its annual 2017 results. The Company experienced strong growth in all its active markets, with profits for the period up to € 96.0 million, an increase of 5.2% compared to last year, and net valuation gain on the portfolio amounting to € 94.6 million.
Jan Van Geet, CEO of VGP Group, said: "2017 delivered record profits and was a record year on many measures for VGP and importantly, we are delivering on all our commitments – strong underlying commercial performance, geographical expansion into Western Europe towards EPRA Index inclusion eligibility, build-up of our land bank, successful completion of disposals to our joint venture and an 2018-onwards shareholder aligned long-term remuneration plan."
Jan Van Geet added: "Our key asset remains our decentralised, comprehensive and experienced team with strong knowledge of the local business environment and legal framework, providing our client base one-stop turn-key solutions for high quality properties in top locations. We are seeing exciting opportunities to invest for the future, to continue to deliver on our commitments as we grow into a pan-European pure-play logistics real-estate company".
The Group's portfolio has continued to make strong progress during the second half of 2017, growing both in value and physical size. The value of annualised committed leases stood at € 82.8 million1 , as at 31 December 2017. For the whole year 2017, the annualised committed leases increased with € 21.7 million on a like for like basis2 . The signed annualised committed leases at the end of December 2017 represent a total of 1,658,414 m² of lettable area, a 35.0 % increase since 31 December 2016 (excluding VGP Estonia). Of this total space 648,474 m² belong to the own portfolio (545,715 m² as at 31 December 2016) and 1,009,940 m² to the VGP European Logistics joint venture (732,523 m² at 31 December 2016).
During the year 2017 VGP delivered a total of 17 projects representing 349,871 m² of lettable area, with an additional 22 projects under construction representing 475,113 m² of future lettable area. It is expected that more than 200,000 m² of lettable area will be delivered during the first quarter of 2018. At the end of May 2017, a third successful closing occurred with the VGP European Logistics joint venture (50/50 JV with Allianz Real Estate). The transaction value of the third closing was in excess of € 173 million. It is currently anticipated that a fourth closing will occur at the end of March 2018 which will have an estimated transaction value of > € 370 million.
Gearing level of the Group increased slightly to 42.3% as at 31 December 2017 (39.4% at 31 December 2016) despite raising of new debt during the first half of 2017.
The portfolio's strong performance during the year allows the Company to propose a dividend distribution of € 35.3 million (€ 1.90 per share).
1 Including VGP European Logistics (joint venture with Allianz Real Estate). As at 31 December 2017 the annualised committed leases for VGP European Logistics stood at € 52.5 million (30 June 2017: € 51.3 million) compared to € 38.6 million as at 31 December 2016.
2 Excluding the € 3.2 million committed leases outstanding as at 31 December 2016 related to VGP Estonia, which was divested during Sep-17.
During 2017 VGP continued its strong growth in all the markets where the Group is active. E-commerce continues to be a strong driver of demand for new lettable space. Development and letting activities continue to perform at record levels.
During the first half of 2017, a third closing was made with VGP European Logistics (the 50/50 joint venture with Allianz Real Estate) in which the Joint Venture acquired 6 new parks from VGP, comprising 7 logistic buildings, and another 4 newly completed logistic buildings which were developed in parks previously transferred to the Joint Venture. The 6 parks are located in Germany (3) and in the Czech Republic (3). The additional 4 buildings which were acquired by the Joint Venture are also located in Germany (3 buildings) and in the Czech Republic (1 building).
VGP continued to improve its financial debt profile with the successful private placement of an 8 year, € 80 million bond at the end of March 2017, and the issue at the beginning of July of a new € 75 million, 7 year retail bond to refinance the Jul-17 Bond maturing on 12 July 2017.
VGP's activities during the year 2017 can be further summarised as follows:
1 Including € 1.0 million of new leases of VGP Estonia
2 Including € 0.4 million of renewed leases of VGP Estonia.
of € 94.6 million (against a net valuation gain of € 118.9 million per 31 December 2016).
| ADJUSTED OPERATING PROFIT (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Gross rental income | 17,046 | 16,806 |
| Service charge income / (expenses) - net | 706 | 1,035 |
| Property operating expenses | (1,759) | (1,703) |
| Net rental income | 15,993 | 16,138 |
| Joint venture management fee income | 8,057 | 3,825 |
| Development gains on development properties destined to the Joint Venture | 75,053 | 111,103 |
| Administration expenses | (19,353) | (15,446) |
| Other income/(expenses) - net | (888) | (1,332) |
| Share of joint ventures' Adjusted operating profit after tax | 8,757 | 2,905 |
| Adjusted operating profit before interest and tax | 87,619 | 117,193 |
| Net financial costs (including adjustments) | (13,913) | (12,287) |
| Adjusted operating profit before tax | 73,706 | 104,906 |
| Tax on Adjusted operating profit | (15,656) | (21,132) |
| Adjusted operating profit after tax | 58,050 | 83,775 |
See also Note 2 for further details.
In view of the broadened investor base and in order to provide a more transparent and consistent basis to enable comparison between European property companies the Directors have introduced the Adjusted operating profit measure. Whilst this measure does not include the development activities outside Germany, the Czech Republic, Slovakia and Hungary the Directors are of the opinion that it provides a fair representation of the recurrent profit generated by VGP and provides a reasonable basis to reconcile to EPRA metrics.
Given the fact that VGP is currently mainly geared towards its development activities, the Directors have elected to apply only the most relevant EPRA metrics. Further review and application of additional EPRA metrics will be considered when VGP will have reached a more mature investment portfolio profile.
Reconciliations between VGP Adjusted operating metrics and EPRA metrics are provided in the Supplementary Notes to the condensed financial information, which also include EPRA metrics as well as VGP's Adjusted income statement and balance sheet presented on a proportionally consolidated basis.
Adjusted operating profit before tax decreased by 29.7 % to € 73.7 million (2016: € 104.9 million) during 2017 as a result of the above movements (see Note 2). When including the net valuation gain on developments undertaken in counties outside Germany, the Czech Republic, Slovakia and Hungary the Adjusted operating profit before tax (including other countries)1 would increase to € 87.3 million (2016: € 107.2 million).
1 Including the net valuation gain on development properties in Spain, Romania, Latvia and Estonia which amount to € 13.6 million as at 31 December 2017 and € 2.3 million as at 31 December 2016.
The net rental income decreased slightly with € 0.1 million to € 16.0 million after taking into effect the full impact of the income generating assets delivered during 2017, the deconsolidation of the VGP European Logistics portfolio in May 2016 and the third closing with the Joint Venture in May 2017.
Following the entering into the VGP European Logistics joint venture, the analysis of the net rental income on a 'look-through' basis (with the Joint Venture included at share) provides a more meaningful analysis of the net rent evolution.
Therefore, taking into account VGP's share of the Joint Venture, net rental income in total has increased by € 9.6 million, or 39.9% compared to 2016 (from € 23.9 million as at 31 December 2016 to 33.5 million as at 31 December 2017)1 .
The increase in demand of lettable area resulted in the signing of new lease contracts in excess of € 27.4 million in total of which € 24.3 million related to new or replacement leases (€ 8.6 million on behalf of VGP European Logistics) and € 3.1 million (€ 1.9 million on behalf of VGP European Logistics) were related to renewals of existing lease contracts. During the year lease contracts for a total amount of € 1.6 million (€ 1.3 million on behalf of VGP European Logistics) were terminated.
The annualised committed leases therefore increased to € 82.8 million2 , as at the end of December 2017 (compared to € 64.3 million as at 31 December 2016).
Germany was the main driver of the growth in committed leases with € 12.5 million of new leases signed during the year (€ 7.1 million on behalf of VGP European Logistics).
The other countries also performed very well with new leases being signed in the Czech Republic + € 6.2 million (€ 0.8 million on behalf of VGP European Logistics), in Spain + € 1.4 million (own portfolio), in Latvia + € 1.4 million, in Romania + € 1.1 million (own portfolio), in Hungary + € 0.6 million (JV portfolio), in Slovakia + € 0.1 million (JV portfolio), and finally in Estonia + € 1.0 million (own portfolio) which was divested in September 2017.
The signed committed lease agreements of the own portfolio represent a total of 648,474 m² of lettable area with the weighted average term of the annualised committed leases standing at 13.0 years3 as at the end of December 2017.
The signed committed lease agreements of the Joint Venture portfolio represent a total of 1,009,940 m² of lettable area with the weighted average term of the annualised committed leases standing at 7.9 years4 as at the end of December 2017.
1 See Note 2 of the Supplementary notes not part of the condensed interim financial information.
2 Including VGP European Logistics (joint venture with Allianz Real Estate). As at 31 December 2017 the annualised committed leases for VGP European Logistics stood at € 52.5 million (30 June 2017: € 51.3 million) compared to € 38.6 million as at 31 December 2016.
3 The weighted average term of the committed leases up to the first break stands at 10.1 years as at 31 December 2017.
4 The weighted average term of the committed leases up to the first break stands at 7.1 years as at 31 December 2017.
The weighted average term of the annualised leases of the combined own and Joint Venture portfolio stood at 9.7 years1 at the end of December 2017 compared to 10.3 years at the end of December 2016.
| Net valuation gains on the property portfolio | |||||||
|---|---|---|---|---|---|---|---|
| ----------------------------------------------- | -- | -- | -- | -- | -- | -- | -- |
| (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Development gains on development properties destined to the Joint Venture | 75,053 | 111,103 |
| Net valuation gains / (losses) on development properties – other countries | 13,586 | 2,295 |
| Net valuation gains / (losses) on investment properties | 1,691 | 5,502 |
| Profit on disposal of investment properties | 4,298 | - |
| Total | 94,628 | 118,900 |
See also Note 2 for further details.
As at 31 December 2017 the net valuation gains on the property portfolio reached € 94.6 million compared to a net valuation gain of € 118.9 million for the period ended 31 December 2016.
The trend of increasingly lower yields in real estate valuations continued to persist during the second half year. The own property portfolio, excluding development land, is valued by the valuation expert at 31 December 2017 based on a weighted average yield of 6.26% (compared to 6.49% as at 31 December 2016) applied to the contractual rents increased by the estimated rental value on unlet space.
The (re)valuation of the own portfolio was based on the appraisal report of the property expert Jones Lang LaSalle.
The Joint Venture management fee income increased by € 4.2 million to € 8.1 million. The increase was mainly due to the growth of the Joint Venture portfolio and the development activities undertaken on behalf of the Joint Venture.
Property and facility management fee income increased from € 3.2 million for the period ending 31 December 2016 to € 4.4 million for the period ending 31 December 2017. The development management fee income generated during the period was € 3.7 million, an increase of € 3.0 million compared to 31 December 2016.
| (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Share of joint ventures' Adjusted operating profit after tax | 8,757 | 2,905 |
| Adjustments to the share of operating profit from joint ventures after tax | 20,472 | 4,991 |
| Total | 29,229 | 7,897 |
See also Note 6 for further details.
VGP's share of the Joint Venture's profit for the period increased by € 21.3 million from 7.9 million in 2016 to € 29.3 million in 2017, reflecting the increased income generating contribution of the Joint Venture portfolio and the contraction of the yields on the investment properties.
1 The weighted average term of the committed leases up to the first break stands at 8.2 years as at 31 December 2017.
Net rental income at share increased to € 17.5 million for the period ending 31 December 2017 compared to € 7.8 million for the period ended 31 December 2016. The increase reflects the underlying growth of the Joint Venture Portfolio resulting from the different closings made between the Joint Venture and VGP since May 2016.
At the end of December 2017, the Joint Venture (100% share) had € 52.5 million of annualised committed leases representing 1,009,940 m² of lettable area compared to € 38.6 million of annualised committed leases representing 732,523 m² at the end of December 2016.
The net valuation gains on investment properties at share increased to € 24.4 million for the period ending 31 December 2017 (compared to € 6.9 million for the period ending 31 December 2016). The VGP European Logistics portfolio was valued at a weighted average yield of 5.63% as at 31 December 2017 (compared to 5.92% as at 30 June 2017 and 6.08% at 31 December 2016) reflecting the further contraction of the yields during the second half of 2017. The (re)valuation of the Joint Venture portfolio was based on the appraisal report of the property expert Jones Lang LaSalle.
The net financial expenses of the Joint Venture at share as at 31 December 2017 increased to € 5.5 million from € 3.9 million as at 31 December 2016. For the period ending 31 December 2017, the financial income at share was € 0.8 million (€ 0.1 million for the period ending 31 December 2016) and included a € 0.7 million unrealised gain on interest rate derivatives (€ 85k as at 31 December 2016). The financial expenses at share increased from € 4.0 million for the period ending 31 December 2016 to € 6.3 million for the period ending 31 December 2017 and included € 1.3 million interest on shareholder debt (€ 0.7 million as at 31 December 2016), € 5.3 million interest on financial debt (€ 2.3 million as at 31 December 2016), € 85k unrealised losses on interest rate derivatives (€ 0.6 million as at 31 December 2016), € 1.0 million other financial expenses (€ 0.6 million as at 31 December 2016) mainly relating to the amortisation of capitalised finance costs on bank borrowings and a positive impact of € 1.3 million (€ 0.6 million per 31 December 2016) related to capitalised interests.
The other income / (expenses) and administrative costs for the period were € 20.2 million compared to € 16.1 million for the period ended 31 December 2016, reflecting mainly the continued growth of the VGP team in order to support the growth of the development activities of the Group and its geographic expansion. As at 31 December 2017 the VGP team comprised more than 130 people active in more than 9 different countries.
| (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Net financial costs (including adjustments) | (13,913) | (12,287) |
| Net fair value gain/(loss) on interest rate swaps and other derivatives | 3,447 | (4,619) |
| Net financial costs | (10,466) | (16,906) |
See also Note 2 and 7 for further details.
For the period ending 31 December 2017, the financial income was € 9.7 million (€ 2.8 million for the period ending 31 December 2016) and included € 5.3 million interest income on loans granted to VGP European Logistics (€ 2.5 million as at 31 December 2016), 3.5 million unrealised gain on interest rate
derivatives (€ 0.2 million as at 31 December 2016), € 0.6 million of net foreign exchange gains (compared to € 0.1 million losses as at 31 December 2016) and € 0.3 million other financial income (€ 0.2 million as at 31 December 2016).
The reported financial expenses as at 31 December 2017 are mainly made up of € 19.4 million interest expenses related to financial debt (€ 13.0 million as at 31 December 2016), € 0.1 million unrealised losses on interest rate derivatives (€ 4.8 million as at 31 December 2016), € 3.7 million other financial expenses (€ 3.2 million as at 31 December 2016) and a positive impact of € 3.0 million (€ 1.4 million for the period ending 31 December 2016) related to capitalised interests.
As a result, the net financial costs reached € 10.5 million for the period ending 31 December 2017 compared to € 16.9 million at the end of December 2016.
Shareholder loans to VGP European Logistics amounted to € 149.9 million as at 31 December 2017 (compared to € 89.9 million as at 31 December 2016) of which € 137.1 million (€ 81.6 million as at 31 December 2016) was related to financing of the buildings under construction and development land held by the VGP European Logistics joint venture.
The development activities of 2017 can be summarised as follows:
During the year 17 buildings were completed totalling 349,871 m² of lettable area.
For its own account VGP delivered 12 buildings i.e. In the Czech Republic: 1 building of 14,383 m² in VGP Park Tuchomerice, 1 building of 8,725 m² in VGP Park Usti nad Labem, 3 buildings in VGP Park Olomouc totalling 28,778 m², and 2 buildings in VGP Park Jenec totalling 54,466 m². In Germany: 1 building of 53,777 m² in VGP Park Berlin, 1 building of 35,670 m² in VGP Park Ginsheim, 1 building of 23,679 m² in VGP Park Hamburg, 1 building of 24,587 m² in VGP Park Leipzig and 1 building of 8,386 m² in VGP Park Schwalbach.
Of these buildings the Joint Venture acquired at the end of May 2017: In the Czech Republic the building of VGP Park Tuchomerice (14,383 m²), and in Germany: the buildings in VGP Park Leipzig (24,587 m²), in VGP Park Schwalbach (8,386 m²) and 1 building in VGP Park Hamburg (23,679 m²)
For the Joint Venture VGP completed 5 buildings i.e. In the Czech Republic: 1 building of 12,226 m² in VGP Park Brno, in Germany 3 buildings in VGP Park Hamburg of 72,982 m² in total and finally, in Hungary, 1 building of 12,212 m² in VGP Park Györ.
At the end of December 2017 VGP has the following 22 buildings under construction:
For its own account VGP has 15 new buildings under construction i.e. in the Czech Republic: 2 buildings in VGP Park Usti nad Labem, 1 building in VGP Park Olomouc, 2 buildings in VGP Park Jenec, and 1 building in VGP Park Chomotov, In Germany: 2 buildings in VGP Park Berlin, 1 building in VGP Park Wetzlar, 1 building in VGP Park Göttingen, and 2 buildings in VGP Park Wustermark. In other countries: 1 building in VGP Park San Fernando de Henares (Spain), 1 building in VGP Park Kekava (Latvia) and
1 building in VGP Park Timisoara (Romania). The new buildings under construction on which 67%1 pre-leases have already been signed as at 31 December 2017, represent a total future lettable area of 255,699 m² which corresponds to an estimated annualised rent income of € 12.6 million.
On behalf of the Joint Venture VGP is constructing 7 new buildings: In the Czech Republic: 1 building in VGP Park Cesky Ujezd and 1 building in VGP Park Hradek nad Nisou. In Germany: 1 building in VGP Park Hamburg, 1 building in VGP Park Frankenthal and 2 buildings in VGP Park Leipzig. In the other countries: 1 building in VGP Park Malacky (Slovakia). The new buildings under construction on which 82%¹ pre-leases have already been signed as at 31 December 2017, represent a total future lettable area of 219,414 m², which corresponds to an estimated annualised rent income of € 11.5 million.
During the year, VGP continued to target land plots to support the development pipeline for future growth. In 2017, VGP acquired 729,939 m² of new development land of which 469,203 m² was located in Germany, 169,792 m² in the Czech Republic and 90,944 m² in Romania. These new land plots have a development potential of 357,000 m² of future lettable area.
Besides this VGP has another 1,452,336m² of new land plots under option which are located in Germany, the Czech Republic, Romania. Slovakia. These land plots have a development potential of approximately 665,000 m² of new lettable areas and the bulk of the land plots are expected to be purchased during 2018, subject to obtaining the necessary permits.
VGP has currently a remaining secured development land bank of 3,261,364 m² of which 56% or 1,809,028 m² is in full ownership. The secured land bank allows VGP to develop, in addition to, the current completed projects and projects under construction an additional 1,560,000 m² of lettable area of which 530,000 m² in Germany, 462,000 m² in the Czech Republic, 245,000 m² in Spain, 206,000 m² in Slovakia, 77,000 m² in Romania and 37,000 m² in Latvia.
The Joint Venture has currently a remaining development land bank in full ownership of 126,605 m² on which a total of 52,518 m² of new lettable area can be developed.
The balance of the Disposal group held for sale increased from € 132.3 million as at 31 December 2016 to € 442.0 million as at 31 December 2017 and relates to the assets under construction and development land (at fair value) which are being / will be developed by VGP on behalf of VGP European Logistics.
It is currently planned that a fourth closing will occur at the end of March 2018 with the Joint Venture whereby assets for a total amount of > € 370 million (at fair value) will be transferred.
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 that are located in Germany, the Czech Republic, Slovakia and Hungary. The development pipeline which is transferred to the Joint Venture as part of the different closings between Joint Venture and VGP is being developed at VGP's own risk and subsequently acquired and paid for by the Joint Venture subject to pre-agreed completion
1 Calculated based on the contracted rent and estimated market rent for the vacant space.
and lease parameters. The fair value of the asset under construction which are being developed by VGP on behalf of VGP European Logistics amounted to € 194.9 million as at 31 December 2017 (compared to € 132.3 million as at 31 December 2016).
During September 2017, VGP completed the sale of its VGP Park Nehatu located in Tallinn (Estonia) to East Capital Baltic Property fund III, a fund managed by East Capital. The transaction covered a total of 5 modern logistics buildings with a total of more than 77,000 m2 of lettable area. The assets and liabilities related to VGP Park Nehatu were only reclassified as held for sale at the end of June 2017.
During 2017 VGP continued to improve its financial debt profile with the successful private placement of an 8-year, € 80 million bond at the end of March 2017 with a fixed rate of 3.35% per annum. At the beginning of July VGP issued another new € 75 million, 7-year retail bond, with a fixed rate of 3.25% per annum, to refinance the Jul-17 Bond maturing on 12 July 2017.
The financial debt increased from € 409.6 million as at 31 December 2016 to € 471.4 million as at 31 December 2017. The increase was mainly driven by a private placement of a new 8-year, € 80 million bond at the end of March 2017 and bank debt decreased with € 18.1 million following the divestment of VGP Park Nehatu in September 2017.
The gearing ratio1 of the Group increased from 39.4% at 31 December 2016 to 42.3% as at 31 December 2017.
In view the successful and sustainable evolution of the Group's results, the Board of Directors of VGP has decided to propose to the Annual General Meeting a distribution of a gross dividend of € 35,307,795 (€1.90 per share).
Based on the positive trend in demands for lettable area recorded by VGP during the second half of 2017, VGP expects to be able to continue expanding its rental income and property portfolio through the completion and start-up of circa 500,000 m² of additional new buildings in 2018. It is expected that more than 200,000 m² of lettable area will be delivered during the first quarter of 2018.
We expect a > € 370 million closing with VGP European Logistics joint venture by the end of March 2018.
1 Calculated as Net debt / Total equity and liabilities
Mr Jan Van Geet Mr Dirk Stoop CEO CFO Tel. + 420 602 404 790 Tel.+32 2 719 00 45 E-mail: [email protected] E-mail: [email protected]
VGP (www.vgpparks.eu) constructs and develops high-end logistic real estate and ancillary offices for its own account and for the account of its VGP European Logistics joint venture (50:50 joint venture between Allianz Real Estate and VGP), 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.
VGP is quoted on Euronext Brussels and the Main Market of the Prague Stock Exchange.
| INCOME STATEMENT (in thousands of €) | NOTE | 2017 | 2016 |
|---|---|---|---|
| Revenue1 | 4 | 28,224 | 24,739 |
| Gross rental income | 4 | 17,046 | 16,806 |
| Service charge income | 3,121 | 4,108 | |
| Service charge expenses | (2,415) | (3,073) | |
| Property operating expenses | (1,759) | (1,703) | |
| Net rental income | 15,993 | 16,138 | |
| Joint Venture management fee income | 4 | 8,057 | 3,825 |
| Net valuation gains / (losses) on investment properties | 5 | 94,628 | 118,900 |
| Administration expenses | (19,353) | (15,446) | |
| Other income | 624 | 483 | |
| Other expenses | (1,512) | (1,815) | |
| Share in result of Joint Venture | 6 | 29,229 | 7,897 |
| Operating profit / (loss) | 127,666 | 129,982 | |
| Financial income | 7 | 9,730 | 2,814 |
| Financial expenses | 7 | (20,196) | (19,720) |
| Net financial result | (10,466) | (16,906) | |
| Profit before taxes | 117,200 | 113,076 | |
| Taxes | (21,205) | (21,790) | |
| Profit for the period | 95,995 | 91,286 | |
| Attributable to: | |||
| Shareholders of VGP NV | 95,995 | 91,286 | |
| Non-controlling interests | - | - |
| RESULT PER SHARE | NOTE | 2017 | 2016 |
|---|---|---|---|
| Basic earnings per share (in €) | 8 | 5.17 | 4.91 |
| Diluted earnings per share (in €) | 8 | 5.17 | 4.91 |
1 Revenue is composed of gross rental income, service charge income, property and facility management income and property development income.
| STATEMENT OF COMPREHENSIVE INCOME (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Profit for the year | 95,995 | 91,286 |
| 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 | 95,995 | 91,286 |
| Attributable to: | ||
| Shareholders of VGP NV | 95,995 | 91,286 |
| Non-controlling interest | - | - |
| ASSETS (in thousands of €) N0TE |
2017 | 2016 |
|---|---|---|
| Goodwill | - | - |
| Intangible assets | 36 | 14 |
| Investment properties | 9 392,291 |
550,262 |
| Property, plant and equipment | 507 | 517 |
| Non-current financial assets | 322 | 5 |
| Investments in joint venture and associates | 143,312 | 89,194 |
| Other non-current receivables | 12,757 | 8,315 |
| Deferred tax assets | 32 | 3 |
| Total non-current assets | 549,257 | 648,310 |
| Trade and other receivables | 11,074 | 19,426 |
| Cash and cash equivalents | 30,269 | 71,595 |
| Disposal group held for sale | 441,953 | 132,263 |
| Total current assets | 483,296 | 223,284 |
| TOTAL ASSETS | 1,032,553 | 871,594 |
| SHAREHOLDERS' EQUITY AND LIABILITIES (in thousands of €) |
N0TE | 2017 | 2016 |
|---|---|---|---|
| Share capital | 62,251 | 62,251 | |
| Retained earnings | 403,910 | 327,985 | |
| Other reserves | 69 | 69 | |
| Shareholders' equity | 466,230 | 390,305 | |
| Non-current financial debt | 390,067 | 327,923 | |
| Other non-current financial liabilities | 1,966 | 5,348 | |
| Other non-current liabilities | 1,680 | 2,432 | |
| Deferred tax liabilities | 11,750 | 20,012 | |
| Total non-current liabilities | 405,463 | 355,715 | |
| Current financial debt | 81,358 | 81,674 | |
| Trade debts and other current liabilities | 38,379 | 35,496 | |
| Liabilities related to disposal group held for sale | 41,123 | 8,404 | |
| Total current liabilities | 160,860 | 125,574 | |
| Total liabilities | 566,323 | 481,289 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,032,553 | 871,594 |
| STATEMENT OF CHANGES IN EQUITY (in thousands of €) |
Statutory share capital |
Capital reserve (see note 20) |
IFRS share capital |
Retained earnings |
Share premium |
Other equity |
Total equity |
|---|---|---|---|---|---|---|---|
| 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 | - | - | - | (2,959) | - | (60,000) | (62,959) |
| Balance as at 31 December 2016 | 112,737 | (50,486) | 62,251 | 327,985 | 69 | - | 390,305 |
| Balance as at 1 January 2017 | 112,737 | (50,486) | 62,251 | 327,985 | 69 | - | 390,305 |
| Other comprehensive income / (loss) | - | - | 0 | - | - | - | 0 |
| Result of the period | - | - | 0 | 95,995 | - | - | 95,995 |
| Effect of disposals | - | - | 0 | - | - | - | 0 |
| Total comprehensive income / (loss) | - | - | 0 | 95,995 | - | - | 95,995 |
| Dividends to shareholders | - | - | 0 | - | - | - | 0 |
| Share capital distribution to shareholders | (20,070) | 20,070 | 0 | (20,070) | - | - | (20,070) |
| Hybrid securities | - | - | 0 | - | 0 | ||
| Balance as at 31 December 2017 | 92,667 | (30,416) | 62,251 | 403,910 | 69 | - | 466,230 |
| CASH FLOW STATEMENT (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before taxes | 117,200 | 113,076 |
| Adjustments for: | ||
| Depreciation | 216 | 897 |
| Unrealised (gains) /losses on investment properties | (90,272) | (97,696) |
| Realised (gains) / losses on disposal of subsidiaries and investment | ||
| properties | (4,356) | (21,204) |
| Unrealised (gains) / losses on financial instruments and foreign exchange | (4,011) | 4,723 |
| Interest (received) | (5,619) | (2,636) |
| Interest paid | 20,096 | 14,820 |
| Share in (profit)/loss of joint venture and associates | (29,229) | (7,897) |
| Operating profit before changes in working capital and provisions | 4,025 | 4,083 |
| Decrease/(Increase) in trade and other receivables | (7,308) | (14,505) |
| (Decrease)/Increase in trade and other payables | 17,113 | 28,681 |
| Cash generated from the operations | 13,830 | 18,259 |
| Interest received | 393 | 157 |
| Interest (paid) | (20,247) | (10,684) |
| Income taxes paid | (762) | (939) |
| Net cash from operating activities | (6,786) | 6,793 |
| Cash flows from investing activities | ||
| Proceeds from disposal of tangible assets and other | 8 | 46 |
| Proceeds from disposal of subsidiaries | 33,662 | - |
| Investment property and investment property under construction | (168,379) | (336,654) |
| Sale of investment properties to VGP European Logistics joint venture | 122,053 | 236,060 |
| Distribution by / (investment in) VGP European Logistics joint venture | 1,000 | |
| (Loans provided to) / loans repaid by Joint Venture and associates | (78,619) | (28,546) |
| Net cash used in investing activities | (90,274) | (124,416) |
| Cash flows from financing activities | ||
| Repayment hybrid instruments | (62,960) | |
| Net Proceeds / (cash out) from the issue / (repayment) of share capital | (20,070) | - |
| Proceeds from loans | 157,444 | 283,367 |
| Loan repayments | (79,749) | (51,536) |
| Net cash used in financing activities | 57,625 | 168,871 |
| Net increase / (decrease) in cash and cash equivalents | (39,434) | 51,248 |
| Cash and cash equivalents at the beginning of the period | 71,595 | 9,825 |
| Effect of exchange rate fluctuations | 426 | 234 |
| Reclassification to (-) / from held for sale | (2,318) | 10,288 |
| Cash and cash equivalents at the end of the period | 30,269 | 71,595 |
The financial information set out in this announcement is based on the consolidated financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial information is in accordance with the accounting policies set out in the 2016 financial statements.
While the financial information included in these condensed financial statements has been prepared in accordance with the recognition and measurement criteria of IFRS as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRS by April 2018.
There have been no changes to the basis of accounting on adoption of new standards and amendments to standards and interpretations which have become effective for the first time for this financial year
Adjusted operating profit is a non-IFRS measure and is the Group's measure of underlying operating profit, which is used by the Board and senior management to measure and monitor the Group's recurrent income performance.
It is based on the Best Practices Recommendations Guidelines of European Public Real Estate Association (EPRA), which calculate profit excluding investment and development property revaluations and gains or losses on disposals. Changes in the fair value of financial instruments and their related taxation are also excluded. The Directors have elected not to report all EPRA metrics. Refer to the Supplementary Notes for the selected EPRA metrics.
The Directors have made a company specific non-EPRA adjustment in respect of the fair value gains/(losses) generated on the investment properties located in Germany, the Czech Republic, Slovakia and Hungary which are due to be sold to the VGP European Logistics joint venture.
In March 2016, the Group entered into a 50/50 joint venture with Allianz Real Estate for an initial term of 10 years. The joint venture allows VGP to recycle (partially or totally) its initial invested capital when completed projects are acquired by the joint venture, and allows VGP to re-invest these cash flows 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. It is the intention to have 1- to 2 closings with the joint venture per annum.
This non-EPRA adjustment, therefore, reflects the operational and recurrent nature of the development activities undertaken in these 4 countries and allows VGP to better match the development administrative cost to the development profits.
In order to have a comprehensive view of the performance of the development activities as a whole the net valuation gains / (losses) on development properties – other countries i.e. all countries except for Germany, the Czech Republic, Slovakia and Hungary, should also be taken into consideration
| Adjusted operating profit (in thousands of €) | 2017 | 2016 |
|---|---|---|
| Gross rental income | 17,046 | 16,806 |
| Service charge income / (expenses) - net | 706 | 1,035 |
| Property operating expenses | (1,759) | (1,703) |
| Net rental income | 15,993 | 16,138 |
| Joint venture management fee income | 8,057 | 3,825 |
| Development gains on development properties destined to the Joint Venture ¹ | 75,053 | 111,103 |
| Administration expenses | (19,353) | (15,446) |
| Other income/(expenses) - net | (888) | (1,332) |
| Share of joint ventures' Adjusted operating profit after tax ² | 8,757 | 2,905 |
| Adjusted operating profit before interest and tax | 87,619 | 117,193 |
| Net financial costs (including adjustments) | (13,913) | (12,287) |
| Adjusted operating profit before tax | 73,706 | 104,906 |
| Adjustments to reconcile to IFRS: | ||
| Adjustments to the share of operating profit from joint ventures after tax ² | 20,472 | 4,991 |
| Net valuation gains / (losses) on development properties – other countries ³ | 13,586 | 2,295 |
| Net valuation gains / (losses) on investment properties | 1,691 | 5,502 |
| Profit on disposal of investment properties⁴ | 4,298 | 0 |
| Net fair value gain/(loss) on interest rate swaps and other derivatives | 3,447 | (4,619) |
| Total adjustments | 43,494 | 8,169 |
| Profit before tax | 117,200 | 113,076 |
| Tax | ||
| On Adjusted operating profit | (15,656) | (21,132) |
| In respect of adjustments | (5,549) | (658) |
| (21,205) | (21,790) | |
| Profit for the year | 95,995 | 91,286 |
| Attributable to: | ||
| Owners of the Company | 95,995 | 91,286 |
| Non-controlling interests | - | - |
¹ Non-EPRA related adjustment referred to in third paragraph above.
² A detailed breakdown of the adjustments to the share of profit from the joint venture is included in Note 6.
³ Relates to developments in countries outside of the JV perimeter i.e. Spain, Romania, Latvia and Estonia.
⁴ Relates to disposal of VGP Estonia
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 business line and country level.
The segmentation for segment reporting within VGP is primarily by business line and secondly by geographical region.
Business decisions are taken based on various key performance indicators (such as rental income, - activity, occupancy and development yields) and are monitored in this way as VGP primarily focuses on (i) development activities; (ii) letting logistical sites; and finally (iii) asset- and property management (including facility management) mainly provided to the VGP European Logistics joint venture.
For management purpose, the Group also presents financial information according to management breakdowns, based on these functional allocations of revenues and costs. These amounts are based on a number of assumptions, and accordingly are not prepared in accordance with IFRS audited consolidated financial statements of VGP NV for the years ended 31 December 2017 and 2016.
The Group's investment or so called rental business consists of operating profit generated by the completed and leased out projects of the Group's portfolio and the proportional share of the operating profit (excluding net valuation gains) of the completed and leased out projects of the Joint Venture's portfolio. Revenues and expenses allocated to the rental business unit include 10% of the Group's property operating expenses; other income; other expenses, after deduction of expenses allocated to property development; and share in result of the joint venture, excluding any revaluation result.
The Group's property development business consists of the net development result on the Group's development activities. Valuation gains (losses) on investment properties related to Germany, Czech Republic, Slovakia and Hungary are assumed to be for these purposes cash generating, as these assets are assumed to be sold to the Joint Venture at a certain point in time and hence crystallizing an effective cash inflow at the moment of such sale. Valuation gains/(losses) on investment properties related to Romania, Spain, Estonia and Latvia are excluded, as they are assumed to be non-cash generating, on the basis that these assets are assumed to be kept in the Group's own portfolio for the foreseeable future. In addition, 90% of total property operating expenses are allocated to the property development business, as are administration expenses after rental business and property management expenses.
Property and asset management revenue includes asset management, property management and facility management income. Associated operating, administration and other expenses include directly allocated expenses from the respective asset management, property management and facility management service companies. The administrative expenses of the Czech and German property management companies have been allocated on a 50:50 basis between the rental business and the property and management business.
Breakdown summary of the business lines
| In thousands of € | 2017 | 2016 |
|---|---|---|
| Investment Adjusted operating EBITDA | 25,140 | 19,358 |
| Property development Adjusted operating EBITDA | 57,120 | 96,217 |
| Property management and asset management Adjusted operating EBITDA | 5,558 | 1,760 |
| Total Adjusted operating EBITDA | 87,818 | 117,335 |
| In thousands of € | For the year ended 31 December 2017 | |||||
|---|---|---|---|---|---|---|
| Property and asset |
||||||
| Investment | Development | management | Total | |||
| Gross rental income | 17,046 | - | - | 17,046 | ||
| Service charge income / (expenses) - net | 706 | - | - | 706 | ||
| Property operating expenses | (176) | (1,583) | - | (1,759) | ||
| Net rental income | 17,576 | (1,583) | - | 15,993 | ||
| Joint venture management fee income | - | - | 8,057 | 8,057 | ||
| Development gains on development properties destined to the Joint Venture |
- | 75,053 | - | 75,053 | ||
| Administration expenses | (922) | (16,350) | (1,882) | (19,154) | ||
| Other income/(expenses) -net | (271) | - | (617) | (888) | ||
| Share of joint ventures' Adjusted operating profit after tax ¹ |
8,757 | - | - | 8,757 | ||
| Adjusted operating EBITDA | 25,140 | 57,120 | 5,558 | 87,818 | ||
| Depreciation and amortisation | (6) | (124) | (69) | (199) | ||
| Adjusted operating profit before interest and tax | 25,134 | 56,996 | 5,489 | 87,619 | ||
| Net financial costs (including adjustments) | (13,913) | |||||
| Adjusted operating profit before tax | 73,706 | |||||
| Tax on Adjusted operating profit | (15,656) | |||||
| Adjusted operating profit after tax | 58,050 | |||||
| Adjustments to reconcile to IFRS: | ||||||
| Adjustments to the share of profit from joint ventures after tax ¹ |
20,472 | |||||
| Net valuation gains / (losses) on development properties – other countries ² |
13,586 | |||||
| Net valuation gains / (losses) on investment properties |
1,691 | |||||
| Profit on disposal of investment properties | 4,298 | |||||
| Net fair value gain/(loss) on interest rate swaps and other derivatives |
3,447 | |||||
| Tax in respect of adjustments | (5,549) | |||||
| Total adjustments | 37,944 | |||||
| Profit for the year | 95,995 |
¹ A detailed breakdown of the adjustments to the share of profit from the joint venture is included in Note 6.
² Relates to developments in countries outside of the JV perimeter i.e. Spain, Romania, Latvia and Estonia.
| In thousands of € | For the year ended 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Property and asset |
||||||
| Investment | Development | management | Total | |||
| Gross rental income | 16,806 | - | - | 16,806 | ||
| Service charge income / (expenses) - net | 1,035 | - | - | 1,035 | ||
| Property operating expenses | (170) | (1,533) | - | (1,703) | ||
| Net rental income | 17,671 | (1,533) | - | 16,138 | ||
| Joint venture management fee income | - | - | 3,825 | 3,825 | ||
| Development gains on development properties destined to the Joint Venture |
- | 111,103 | - | 111,103 | ||
| Administration expenses | (278) | (13,353) | (1,673) | (15,304) | ||
| Other income/(expenses) -net | (940) | - | (392) | (1,332) | ||
| Share of joint ventures' Adjusted operating profit after tax ¹ |
2,905 | - | - | 2,905 | ||
| Adjusted operating EBITDA | 19,358 | 96,217 | 1,760 | 117,335 | ||
| Depreciation and amortisation | (1) | (90) | (51) | (142) | ||
| Adjusted operating profit before interest and tax | 19,357 | 96,127 | 1,709 | 117,193 | ||
| Net financial costs (including adjustments) | (12,287) | |||||
| Adjusted operating profit before tax | 104,906 | |||||
| Tax on Adjusted operating profit | (21,132) | |||||
| Adjusted operating profit after tax | 83,775 | |||||
| Adjustments to reconcile to IFRS: | ||||||
| Adjustments to the share of profit from joint ventures after tax ¹ |
4,991 | |||||
| Net valuation gains / (losses) on development properties – other countries ² |
2,295 | |||||
| Net valuation gains / (losses) on investment properties |
5,502 | |||||
| Profit on disposal of investment properties | 0 | |||||
| Net fair value gain/(loss) on interest rate swaps and other derivatives |
(4,619) | |||||
| Tax in respect of adjustments | (658) | |||||
| Total adjustments | 7,511 | |||||
| Profit for the year | 91,286 |
¹ A detailed breakdown of the adjustments to the share of profit from the joint venture is included in Note 6.
² Relates to developments in countries outside of the JV perimeter i.e. Spain, Romania, Latvia and Estonia.
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.
| 31 December 2017 In thousands of € |
Gross rental income¹ |
Net rental income¹ |
Share of joint venture's Adjusted profit after tax |
Adjusted operating PBIT |
Investment properties Own |
Investment properties JV at share |
Capital expenditure² |
|---|---|---|---|---|---|---|---|
| Western Europe | |||||||
| Germany | 13,835 | 12,024 | 5,473 | 46,061 | 375,367 | 263,215 | 175,475 |
| Spain | 7,500 | 6,958 | - | 3,921 | 209,976 | - | 5,546 |
| 21,335 | 18,982 | 5,473 | 49,982 | 585,343 | 263,215 | 181,021 | |
| Central and Eastern Europe |
|||||||
| Czech Republic | 6,405 | 6,005 | 2,144 | 35,783 | 156,688 | 75,416 | 58,703 |
| Slovakia | 1,631 | 1,496 | 933 | 1,402 | 11,262 | 21,722 | 902 |
| Hungary | 1,735 | 1,717 | 764 | 2,004 | 9,101 | 22,725 | 5,620 |
| Romania | 3,058 | 3,088 | - | 2,678 | 45,660 | - | 5,365 |
| 12,829 | 12,306 | 3,841 | 41,867 | 222,711 | 119,863 | 70,590 | |
| Baltics | |||||||
| Estonia | 2,210 | 2,301 | - | 2,154 | - | - | 3,894 |
| Latvia | - | (12) | - | (221) | 14,535 | - | 5,463 |
| 2,210 | 2,289 | - | 1,933 | 14,535 | - | 9,357 | |
| Other³ | - | (87) | (557) | (6,163) | - | - | - |
| Total | 36,374 | 33,490 | 8,757 | 87,619 | 822,589 | 383,078 | 260,968 |
¹ Includes joint venture at share.
² Capital expenditures includes additions and acquisition of investment properties and development land but does not include tenant incentives, letting fees, and capitalised interest. Capital expenditure directly incurred for the own portfolio amounts to € 171.1 million and amounts to € 89.8 million on development properties of the Joint Venture.
³ Other includes the Group central costs and costs relating to the operational business which are not specifically geographically allocated.
| 31 December 2016 In thousands of € |
Gross rental income¹ |
Net rental income |
Share of joint venture's Adjusted profit after tax |
Adjusted operating PBIT |
Investment properties Own |
Investment properties JV at share |
Capital expenditure² |
|---|---|---|---|---|---|---|---|
| Western Europe | |||||||
| Germany | 10,732 | 9,708 | 1,592 | 91,884 | 284,791 | 168,683 | 100,119 |
| Spain | 242 | 239 | - | (612) | 195,842 | - | 195,821 |
| 10,974 | 9,947 | 1,592 | 91,272 | 480,633 | 168,683 | 295,940 | |
| Central and Eastern Europe |
|||||||
| Czech Republic | 5,850 | 5,724 | 1,013 | 25,911 | 100,221 | 52,261 | 26,099 |
| Slovakia | 1,989 | 1,700 | 409 | 1,533 | 9,671 | 21,511 | 3,601 |
| Hungary | 1,977 | 1,845 | 470 | 2,871 | 2,264 | 22,049 | 0 |
| Romania | 2,281 | 2,393 | - | 2,007 | 36,043 | - | 5,904 |
| 12,097 | 11,662 | 1,892 | 32,322 | 148,199 | 95,821 | 35,604 | |
| Baltics | |||||||
| Estonia | 2,469 | 2,396 | - | 2,260 | 47,400 | - | 3,992 |
| Latvia | 0 | (10) | - | (205) | 6,293 | - | 1,467 |
| 2,469 | 2,386 | - | 2,055 | 53,693 | - | 5,459 | |
| Other³ | - | (61) | (579) | (8,456) | - | - | - |
| Total | 25,540 | 23,934 | 2,905 | 117,193 | 682,525 | 264,504 | 337,003 |
¹ Includes joint venture at share.
² Capital expenditures includes additions and acquisition of investment properties and development land but does not include tenant incentives, letting fees, and capitalised interest. Capital expenditure directly incurred for the own portfolio amounts to € 308.5 million and amounts to € 28.5 million on development properties of the Joint Venture.
³ Other includes the Group central costs and costs relating to the operational business which are not specifically geographically allocated.
| In thousands of € | 2017 | 2016 |
|---|---|---|
| Rental income from investment properties | 16,759 | 14,502 |
| Rent incentives | 287 | 2,304 |
| Total gross rental income | 17,046 | 16,806 |
| Joint Venture property and facility management income | 4,400 | 3,199 |
| Joint Venture development management income | 3,657 | 626 |
| Service charge income | 3,121 | 4,108 |
| Total revenue | 28,224 | 24,739 |
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 2017 and the third closing with the Joint Venture on 31 May 2017. The 2017 rental income includes € 1.7 million of rent for the period 1 January 2017 to 31 May 2017 related to the property portfolio sold during the third closing at the end of May 2017. On 14 September 2017 the sale of VGP Park Nehatu was completed. The rental income of VGP Park Nehatu for the period up to 14 September 2017 was € 2.2 million.
At the end of December 2017, the Group (including the Joint Venture at 100%) had annualised committed leases of € 82.8 million1 compared to € 64.3 million 2 as at 31 December 2016. The annualised committed leases of VGP Park Nehatu was € 3.2 million as at 31 December 2016.
| In thousands of € | 2017 | 2016 |
|---|---|---|
| Unrealised valuation gains / (losses) on investment properties | 65,343 | 66,006 |
| Unrealised valuation gains / (losses) on disposal group held for sale | 24,929 | 31,690 |
| Realised valuation gains / (losses) on disposal of subsidiaries and | ||
| investment properties | 4,356 | 21,204 |
| Total | 94,628 | 118,900 |
The own property portfolio, excluding development land, is valued by the valuation expert at 31 December 2017 based on a weighted average yield of 6.26% (compared to 6.49% as at 31 December 2016) 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 € 8.3 million.
1 € 52.5 million related to the JV Property Portfolio and € 30.3 million related to the Own Property Portfolio.
2 € 38.6 million related to the JV Property Portfolio and € 25.6 million related to the Own Property Portfolio.
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. VGP NV holds 50% directly in VGP European Logistics S.à r.l. and holds another 5.1% in the subsidiaries of the Joint Venture holding assets in Germany.
| 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% |
2017 | 2016 |
|---|---|---|---|---|---|---|
| Gross rental income | 36,328 | 22,831 | 1,164 | 18,164 | 19,328 | 8,734 |
| Property Operating expenses | 0 | |||||
| - service charge income / (expenses) - net |
637 | 490 | 25 | 319 | 343 | 289 |
| - underlying property operating expenses |
(1,242) | (689) | (35) | (621) | (656) | (550) |
| - property management fees | (2,853) | (1,811) | (92) | (1,426) | (1,519) | (677) |
| Net rental income | 32,870 | 20,821 | 1,062 | 16,435 | 17,497 | 7,796 |
| Administration expenses | (1,672) | (690) | (35) | (836) | (871) | (808) |
| Other income / (expenses) - net | 71 | 29 | 1 | 35 | 37 | (38) |
| Net financial result (including adjustments) |
(11,556) | (7,675) | (391) | (5,778) | (6,169) | (3,331) |
| Adjusted operating profit/(loss) before tax |
19,713 | 12,485 | 637 | 9,857 | 10,493 | 3,618 |
| Tax on Adjusted operating profits | (3,278) | (1,915) | (98) | (1,639) | (1,737) | (713) |
| Adjusted operating profit/(loss) after tax |
16,435 | 10,570 | 539 | 8,218 | 8,757 | 2,905 |
| Adjustments | ||||||
| Net valuation gains / (losses) on investment properties |
44,984 | 37,207 | 1,898 | 22,492 | 24,390 | 6,851 |
| Profit/(loss) on disposal of investment properties |
65 | 92 | 5 | 32 | 37 | (0) |
| Net fair value loss on interest rate swaps and other derivatives |
1,338 | 0 | 0 | 669 | 669 | (538) |
| Tax in respect of adjustments | (8,664) | (5,720) | (292) | (4,332) | (4,624) | (1,321) |
| Total adjustments | 37,722 | 31,579 | 1,611 | 18,861 | 20,472 | 4,991 |
| Profit/(loss) after tax | 54,158 | 42,149 | 2,150 | 27,079 | 29,229 | 7,897 |
| BALANCE SHEET (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% |
2017 | 2016 |
|---|---|---|---|---|---|---|
| Investment properties | 715,067 | 500,887 | 25,544 | 357,534 | 383,078 | 307,053 |
| Other assets | 269 | - | - | 135 | 135 | 96 |
| Total non-current assets | 715,336 | 500,887 | 25,544 | 357,669 | 383,213 | 307,149 |
| Trade and other receivables | 11,843 | 10,596 | 540 | 5,922 | 6,462 | 4,523 |
| Cash and cash equivalents | 22,151 | 15,338 | 782 | 11,076 | 11,858 | 9,256 |
| Total current assets | 33,994 | 25,934 | 1,322 | 16,998 | 18,320 | 13,779 |
| Total assets | 749,330 | 526,821 | 26,866 | 374,667 | 401,533 | 320,928 |
| Non-current financial debt | 389,692 | 276,954 | 14,125 | 194,846 | 208,971 | 201,616 |
| Other non-current financial liabilities |
- | - | - | - | - | 538 |
| Other non-current liabilities | 3,544 | 1,981 | 101 | 1,773 | 1,874 | 721 |
| Deferred tax liabilities | 53,752 | 36,536 | 1,863 | 26,876 | 28,739 | 17,448 |
| Total non-current liabilities | 446,988 | 315,471 | 16,089 | 223,495 | 239,584 | 220,323 |
| Current financial debt | 10,651 | 7,887 | 402 | 5,326 | 5,728 | 4,368 |
| Trade debts and other current | ||||||
| liabilities | 23,852 | 19,265 | 983 | 11,926 | 12,909 | 6,940 |
| Total current liabilities | 34,503 | 27,152 | 1,385 | 17,252 | 18,637 | 11,308 |
| Total liabilities | 481,491 | 342,623 | 17,474 | 240,747 | 258,221 | 231,631 |
| Adjustment disposal of associates¹ |
103 | |||||
| Net assets | 267,839 | 184,198 | 9,392 | 133,920 | 143,312 | 89,194 |
¹ In 2016 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.
VGP European Logistics recorded its third closing at the end of May 2017, with the acquisition of 6 new parks from VGP, comprising of 7 logistic buildings, and another 4 newly completed logistic buildings which were developed in parks previously transferred to the Joint Venture. The 6 parks are located in Germany (3) and in the Czech Republic (3). The additional 4 buildings which are being acquired by the Joint Venture are also located in Germany (3 buildings) and in the Czech Republic (1 building).
The VGP European Logistics portf olio was valued at a weighted average yield of 5.63% as at 31 December 2017 compared to 6.08% as at 31 December 2016 (5.92% as at 30 June 2017) reflecting the continued contraction of the yields during 2017. A 0.10% variation of this market rate would give rise to a variation of the total Joint Venture portfolio value of € 16.9 million.
The (re)valuation of the Joint Venture portfolio was based on the appraisal report of the property expert Jones Lang LaSalle.
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 € | 2017 | 2016 |
|---|---|---|
| Shareholder loans to VGP European Logistics S.à r.l. | 11,539 | 7,506 |
| Shareholder loans to associates (subsidiaries of VGP European Logistics S.à r.l.) | 1,218 | 809 |
| Construction and development loans to subsidiaries of VGP European Logistics S.à r.l.) |
137,150 | 81,561 |
| Construction and development loans reclassifies as assets held for sale | (137,150) | (81,561) |
| Total | 12,757 | 8,315 |
| in thousands of € | 2017 | 2016 |
|---|---|---|
| As at 1 January | 89,194 | (103) |
| Additions | 25,787 | 86,077 |
| Result of the year | 29,229 | 7,897 |
| Repayment of equity | (1,000) | (4,677) |
| Adjustments from sale of participations | 102 | - |
| As at the end of the period | 143,312 | 89,194 |
| In thousands of € | 2017 | 2016 |
|---|---|---|
| Bank interest income | 45 | 1 |
| Interest income - loans to joint venture | 5,300 | 2,479 |
| Fair value gain on interest rate derivatives | 3,547 | 177 |
| Net foreign exchange gains | 564 | 0 |
| Other financial income | 274 | 157 |
| Financial income | 9,730 | 2,814 |
| Bond interest expense | (18,769) | (11,190) |
| Bank interest expense – variable debt | (540) | (1,419) |
| Bank interest expense – interest rate swaps - hedging | (74) | (405) |
| Interest capitalised into investment properties | 2,966 | 1,419 |
| Fair value loss on interest rate derivatives | (100) | (4,796) |
| Net foreign exchange losses | 0 | (104) |
| Other financial expenses | (3,679) | (3,225) |
| Financial expenses | (20,196) | (19,720) |
| Net financial costs | (10,466) | (16,906) |
Net financial costs (including adjustments) in Adjusted operating profit (Note 2) are € 13.9 million (2016: € 12.3 million). This excludes net fair value gains and losses on interest rate swaps and other derivatives of € 3.4 million gain (2016: € 4.6 million loss).
| In number | 2017 | 2016 |
|---|---|---|
| Weighted average number of ordinary shares (basic) | 18,583,050 | 18,583,050 |
| Dilution | - | - |
| Weighted average number of ordinary shares (diluted) | 18,583,050 | 18,583,050 |
| Correction for reciprocal interest through associates | (401,648) | (401,648) |
| Weighted average number of ordinary shares (diluted and after correction | 18,181,402 | 18,181,402 |
| for reciprocal interest through associates |
| In thousands of € | 2017 | 2016 |
|---|---|---|
| Result for the period attributable to the Group and to ordinary | ||
| shareholders | 95,995 | 91,286 |
| Earnings per share (in €) - basic | 5.17 | 4.91 |
| Earnings per share (in €) - diluted | 5.17 | 4.91 |
| Earnings per share (in €) – after dilution and correction for reciprocal | ||
| interest through associates | 5.28 | 5.02 |
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 43.23% in VGP Misv Comm. VA.
| EPRA NAV – In thousands of € | 2017 | 2016 |
|---|---|---|
| IFRS NAV | 466,230 | 390,305 |
| Effect of exercise of options, convertibles and other equity interests | - | - |
| Diluted NAV | 466,230 | 390,305 |
| To exclude: | ||
| Fair value of financial instruments | 1,644 | 5,342 |
| Deferred tax | 34,942 | 28,414 |
| EPRA NAV | 502,816 | 424,061 |
| Number of shares | 18,583,050 | 18,583,050 |
| EPRA NAV per share (EUR/share) | 27.06 | 22.82 |
| EPRA NNNAV – In thousands of € | 2017 | 2016 |
|---|---|---|
| EPRA NAV | 502,816 | 424,061 |
| To include: | ||
| Fair value of financial instruments | (1,644) | (5,342) |
| Deferred tax | (34,942) | (28,414) |
| Fair value adjustment in respect of issued debt | (14,084) | (12,737) |
| EPRA triple net NAV (NNNAV) | 452,146 | 377,568 |
| Number of shares | 18,583,050 | 18,583,050 |
| EPRA NNNAV per share (EUR/share) | 24.33 | 20.32 |
| 2017 | ||||||
|---|---|---|---|---|---|---|
| In thousands of € | Completed | Under Construction |
Development land |
Total | ||
| As at 1 January | 265,813 | 125,989 | 158,460 | 550,262 | ||
| Capex | 82,320 | 63,619 | - | 145,939 | ||
| Acquisitions | - | - | 25,211 | 25,211 | ||
| Capitalised interest | 1,732 | 1,226 | 8 | 2,966 | ||
| Capitalised rent free and agent's fee | 2,025 | 231 | - | 2,256 | ||
| Sales and disposal to Joint Venture | (148,810) | (12,186) | (3,244) | (164,240) | ||
| Transfer on start-up of development | - | 34,437 | (34,437) | - | ||
| Transfer on completion of development | 120,984 | (120,984) | - | - | ||
| Net gain from value adjustments in | ||||||
| investment properties | 8,861 | 53,105 | 3,377 | 65,343 | ||
| Reclassification to (-) / from held for sale | (180,314) | (50,432) | (4,700) | (235,446) | ||
| As at 31 December | 152,611 | 95,005 | 144,675 | 392,291 |
| 2016 | ||||||
|---|---|---|---|---|---|---|
| Under | Development | |||||
| In thousands of € | Completed | Construction | 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 | ||
| Reclassification to (-) / from held for sale | ||||||
| Fair value as at 31 December | 265,813 | 125,989 | 158,460 | 550,262 |
The table below includes the most relevant EPRA metrics which have been considered given the focus of the VGP Group towards development activities. Further review and application of additional EPRA metrics will be considered when VGP will have reached a more mature investment portfolio profile.
| In thousands of € | 2017 | 2016 |
|---|---|---|
| EPRA earnings | 1,088 | (4,311) |
| EPRA NAV | 502,816 | 424,062 |
| EPRA NNNAV | 452,146 | 377,568 |
| EPRA vacancy rate (combined Own and Joint Venture) | 0.0% | 0.8% |
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).
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| In thousands of € | Group | Joint Venture |
Total | Group | Joint Venture |
Total |
| Gross rental income | 17,046 | 19,328 | 36,374 | 16,806 | 8,734 | 25,540 |
| Service charge income / (expenses) | 706 | 343 | 1,049 | 1,035 | 289 | 1,324 |
| Property operating expenses | (1,759) | (2,175) | (3,934) | (1,703) | (1,227) | (2,930) |
| Net rental and related income | 15,993 | 17,497 | 33,490 | 16,138 | 7,796 | 23,934 |
| Joint venture management fee income | 8,057 | - | 8,057 | 3,825 | - | 3,825 |
| Administration expenses | (19,353) | (871) | (20,224) | (15,446) | (808) | (16,254) |
| Other income/(expenses) - net | (888) | 37 | (851) | (1,332) | (38) | (1,370) |
| Operating profit before interest and tax |
3,809 | 16,663 | 20,472 | 3,185 | 6,949 | 10,134 |
| Net financial costs (including adjustments) |
(13,913) | (6,169) | (20,082) | (12,287) | (3,331) | (15,618) |
| Profit before tax | (10,104) | 10,493 | 389 | (9,102) | 3,618 | (5,484) |
| Tax on EPRA earnings | 2,436 | (1,737) | 699 | 1,886 | (713) | 1,173 |
| EPRA earnings | (7,668) | 8,757 | 1,088 | (7,216) | 2,905 | (4,311) |
| Company adjustment: | ||||||
| Development gains on development properties destined to the Joint Venture |
75,053 | - | 75,053 | 111,103 | - | 111,103 |
| Tax on company adjustment | (18,091) | - | (18,091) | (23,017) | - | (23,017) |
| Adjusted operating profit after tax | 49,293 | 8,757 | 58,050 | 80,870 | 2,905 | 83,775 |
| EPRA EARNINGS PER SHARE | 2017 | 2016 | ||||
|---|---|---|---|---|---|---|
| Group | Joint Venture |
Total | Group | Joint Venture |
Total | |
| Number of shares - Basic | 18,583,050 | 18,583,050 | ||||
| EPRA earnings per share (€/share) - basic | 0.06 | (0.23) | ||||
| Adjusted operating earnings per share (€/share) - basic |
3.12 | 4.51 | ||||
| Number of shares - diluted | 18,583,050 | 18,583,050 | ||||
| EPRA earnings per share (€/share) - diluted | 0.06 | (0.23) | ||||
| Adjusted operating earnings per share (€/share) - diluted |
3.12 | 4.51 |
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).
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| In thousands of € | Group | Joint Venture |
Total | Group | Joint Venture |
Total |
| Investment properties | 392,291 | 383,078 | 775,369 | 550,262 | 264,504 | 814,766 |
| Investment properties included in assets held for sale |
430,298 | - | 430,298 | 132,263 | - | 132,263 |
| Total investment properties | 822,589 | 383,078 | 1,205,667 | 682,525 | 264,504 | 947,029 |
| Investments in joint venture and associates |
143,312 | (143,312) | - | 89,194 | (89,194) | - |
| Other het assets/(liabilities) | (56,549) | (36,925) | (93,474) | (38,064) | (20,593) | (58,657) |
| Net debt | (443,122) | (202,841) | (645,963) | (343,350) | (154,717) | (498,067) |
| Total shareholders' equity | 466,230 | - | 466,230 | 390,305 | - | 390,305 |
| EPRA adjustments | ||||||
| To exclude: | ||||||
| Fair value of financial instruments | 1,644 | 1,644 | 5,343 | 5,343 | ||
| Deferred tax | 34,942 | 34,942 | 28,414 | 28,414 | ||
| EPRA NAV | 502,816 | 502,816 | 424,062 | 424,062 | ||
| Number of shares - basic | 18,583,050 | 18,583,050 | ||||
| EPRA NAV per share (€/share) - basic | 27.06 | 22.82 | ||||
| EPRA NAV | 502,816 | - | 502,816 | 424,062 | - | 424,062 |
| Effect of exercise of options, convertibles and other equity interests |
- | - | - | - | ||
| Diluted EPRA NAV | 502,816 | 502,816 | 424,062 | 424,062 | ||
| Number of shares - diluted | 18,583,050 | 18,583,050 | ||||
| EPRA NAV per share (€/share) - diluted | 27.06 | 22.82 |
| ERV Vacancy | 2017 | 2016 | |||||
|---|---|---|---|---|---|---|---|
| In thousands of € | Group | Joint Venture at 100% |
Total | Group | Joint Venture at 100% |
Total | |
| Estimated Rental Value of vacant | |||||||
| space | 0 | 0 | 0 | 416 | 0 | 416 | |
| Estimated rental value of the whole | |||||||
| portfolio | 12,984 | 38,130 | 51,114 | 21,834 | 31,672 | 53,505 | |
| EPRA Vacancy Rate | 0.0% | 0.0% | 0.0% | 1.9% | 0.0% | 0.8% |
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.
First option to terminate a lease.
The gross rent as contractually agreed in the lease on the date of signing.
Is a ratio calculated as consolidated net financial debt divided by total equity and liabilities or total assets.
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.
The European Public Real Estate Association, a real estate industry body, which has issued Best Practices Recommendations Guidelines in order to provide consistency and transparency in real estate reporting across Europe.
Estimated rental value (ERV) is the market 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 for third parties
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.
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.
The use of derived financial instruments to protect debt positions against interest rate rises.
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 the Issuer and Allianz.
The date on which a lease can be cancelled
The value of the total assets minus the value of the total liabilities.
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).
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 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.
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