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Wereldhave N.V. Earnings Release 2019
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Earnings Release
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JULY 26, 2019
PRESS RELEASE RESULTS FIRST HALF 2019
Direct result € 65.8m (H1 2018: € 59.7 from continuing operations) EPRA EPS € 1.44 (H1 2018: € 1.33 from continuing operations) Netherlands and Belgium solid performance, France challenging Indirect result € -125.1m (H1 2018: € -29.3m from continuing operations) Outlook: EPRA EPS 2019 between € 2.75 - € 2.80 (€ 2.75 – € 2.85) Dividend 2019 unchanged at € 2.52, or € 0.63 per quarter
OUR MARKETS
THE NETHERLANDS
A continued strong housing market has resulted in good turnover growth in the DIY, furniture and household goods segments. Retail sales in general are still showing decent growth, but this does not mean that the pressure on retailer margins is decreasing. The fashion segment continues to struggle, whilst supermarkets and food and beverage are still expanding. The number of retailer bankruptcies increased year-on-year, often resulting in a restart, which puts pressure on rents.
BELGIUM
As a result of increased spending power, private consumption in Belgium is expected to increase by some 1.2% in 2019. However, the retail market is lacklustre, which is particularly felt in peripheral areas and B-quality high streets. High-quality locations can still rely on a healthy demand from retailers, albeit larger floor-plates are less in demand. Where fashion operators take more time in their decision making and have a cautious stance, others are stepping in. Demand is strong from expanding food & beverage operators, optical chains, medical operators and services. As good quality locations are scarce, these retailers accept rent levels above ERV.
FRANCE
The French economic growth is stable at some 1.2%. Under pressure from yellow-vest protesters, the government announced plans to improve private spending power by reducing taxes. Private consumption picked up during the first half. However, demand from retailers to expand is low and the leasing process is protracted due to their cautious decision making. Demand is mainly coming from food & beverage, sports and health & beauty segments. Current rental levels are facing downward pressure. Mixed-use alternatives that are interested in opening on high footfall locations are becoming more active, such as co-working spaces, healthcare & medical and services.
OPERATIONS
- Like-for-like rental growth shopping centres at 0.8% (indexation 1.7%). •
- Occupancy rate of shopping centres at 95.6% (YE 2018: 96.3%) •
- Q2 shows improving occupancy in the Netherlands and Belgium compared to Q1, decreasing in France •
- Increase in YTD footfall of 1.0% from 62.9m to 63.5m •
Occupancy increased during the second quarter in Belgium (+0.4%) and the Netherlands (+0.2%). In France, occupancy decreased by 0.2%. At June 30, 2019, average occupancy stood at 95.6%, against 95.5% at the end of the first quarter (YE 2018: 96.3%).
Like-for-like rental growth of the shopping centres came out at 0.8%, with the indexation at 1.7%.
THE NETHERLANDS
In the Netherlands, occupancy stood at 97.2% at the end of the second quarter, against 97.0% at the previous quarter (YE 2018: 97.1%). Leasing activity and retailer expansion was the largest in the food & convenience segment. Six supermarket contracts were signed during the first half totaling 17,000 sqm with rents at or above ERV levels. The deal underpins the consistent demand from food & grocery retailers, and five of these transactions include an expansion. Lease levels were in line with market rents and rental contracts are typically for a ten-year's term.
A package deal was agreed with H&M for all their 7 units in our centres, taking effect in 2020 and 2021. Meanwhile, the mixed-use approach to replace struggling fashion retailers is making progress. A good first step was the lease of Basic Fit in Presikhaaf, Arnhem. Wereldhave aims to further increase the health sector presence in the centre.
Most of the bankruptcies that occurred during the first half of the year have already been dealt with. All Intertoys' stores have been leased out again, and the Op=Op Voordeelshop and Sissy Boy units in our centres will be continued. Like-for-like rental growth came out at a solid +1.5%, which is 0.2% above the indexation. The bankruptcy of 6 CoolCat units had limited impact on rental growth in the first half of the year. Commercialisation of these units is in progress.
Footfall in our Dutch centres saw a healthy increase, particularly in De Koperwiek in Capelle aan den IJssel (+9%) and the Pieter Vreedeplein in Tilburg (+11%). Overall, footfall increased by 1.1%, which is 1.7% above the market average.
OPERATIONS
BELGIUM
In Belgium, occupancy of the shopping centres improved from 95.8% at the end of Q1 to 96.2% at June 30, 2019 (year-end 2018: 97.2%). The occupancy of the Belgian offices improved from 90.6% at year-end 2018 to 92.6% at June 30, 2019. Like-for-like rental growth during H1 2019 was 1.9%. The bankruptcy of CoolCat impacted occupancy of four units, but this was more than compensated by the good progress in letting of the former Carrefour unit in Belle-Île, Liège. The 5,500 sqm that were vacated by the Carrefour hypermarket are now almost fully let, with large new anchor tenants as Action, Decathlon and Medi-Market. Good progress is also made in Shopping 1 in Genk. The occupancy passed the 90% mark, but as the Carrefour is not yet entirely relet, occupancy in Shopping 1 is likely to drop in Q3 when the Carrefour unit will become partially empty. Albert Heijn and Medi-Market signed leases for the unit and The Fashion Store will open a 1,000 sqm shop in Genk. Eyes+more signed leases for the shopping centres in Genk, Nivelles and Liège.
Footfall increased by 4.4%, whilst the market average was 1.7% down. All shopping centres saw a positive development of footfall, with the exception of Belle-Île in Liege, where footfall declined by 4.7%. This can be fully attributed to the announcement by Carrefour to decrease its footprint and by the subsequent works to change the lay-out for new tenants.
OPERATIONS
FRANCE
In France, leasing was slow during the first half of 2019. Like-for-like rental growth in France during the first half amounted to -1.5%. Tenant bankruptcies were still relatively low, but retailers in several segments continue to struggle. Occupancy decreased from 92.2% at the end of the first quarter to 92.0% at June 30, 2019 (year-end 2018: 94.0%). Package deals were signed with Promod (Docks 76 and Docks Vauban), Jules (Rivetoile, Docks Vauban and Docks 76) and Histoire d'Or (Docks 76 and Saint Sever). The Saint Sever shopping centre in Rouen benefits from the opening of the Verrerie project, a food hall in front of the cinema. Sales were slow during the first quarter but picked up from May onwards. The development of sales is positive in Docks Vauban and Saint Sever and negative in the other centres. Overall, sales levels are still some 3.6% below the previous year. H&M, JD Sports, Stradivarius, Mango, KIABI and Promod are the top performing retailers in Wereldhave's French portfolio.
Footfall in the French shopping centres decreased by 0.4%. All centres recorded higher visitor numbers, with the exception of Mériadeck and Docks Vauban. Continuing Saturday yellow vest protests caused a 8.6% drop in visitor numbers in this centre. On the other hand, the Verrerie project in Rouen boosted footfall in Saint Sever by 11%.
*
| Occupancy | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 |
|---|---|---|---|---|---|
| Belgium | 96.7% | 96.8% | 97.2% | 95.8% | 96.2% |
| Finland | 96.4% | 96.5% | n.a. | n.a | n.a. |
| France | 93.6% | 93.7% | 94.0% | 92.2% | 92.0% |
| Netherlands | 96.8% | 97.0% | 97.1% | 97.0% | 97.2% |
| Shopping centres | 96.1% | 96.2% | 96.3% | 95.5% | 95.6% |
| Offices (Belgium) | 90.6% | 90.6% | 90.6% | 88.9% | 92.6% |
| Total portfolio | 95.8% | 95.9% | 96.1% | 95.2% | 95.5% |
| Occupancy Cost Ratio* | Q2 2018 | Q4 2018 | Q2 2019 | ||
| Belgium | 10.4% | 10.8% | 10.4% | ||
| France | 13.4% | 13.4% | 13.1% | ||
| 12.3% | 12.2% | 11.7% |
The Occupancy Cost Ratio is defined as the ratio between 1) invoiced rents, including discounts, plus rental charges passed on to tenants, excluding taxes, for the past 12 months, and 2) the tenants' revenues over the past 12 months, excluding taxes, for the same tenant base, excluding supermarkets, hypermarkets and stores above 750 sqm).
PROPERTY PORTFOLIO
Investment portfolio
During the first half of 2019, in the Netherlands, Wereldhave acquired a C&A store in Tilburg for € 11m and sold the former V&D department store in Hoofddorp for € 7m to a residential property developer, at book value. This transaction is to be completed during the second half of the year. In Belgium the leasehold was acquired of a food & beverage unit directly adjacent to the Kortrijk Ring shopping centre. Also in Belgium, a unit of the Genk Shopping 1 shopping centre was acquired. The total investments in Belgium amounted to € 3m. At June 30, 2019, the value of the investment portfolio amounted to € 3,141.7m (December 31, 2018: € 3,213.5m).
The Customer Journey project to upgrade the shopping centres is making good progress. In 2019, 8 Play & Relax areas will be implemented and new restrooms will be installed in 4 shopping centres. Wayfinding will be improved in 9 shopping centres and parking facilities are to be upgraded in 3 assets in 2019. The capex involved for the year 2019 is estimated at € 5.0m, of which € 2.2m was spent during the first half year.
Development pipeline
At June 30, 2019, Wereldhave's development portfolio amounted to € 66m (December 31, 2018: € 60m).
The committed development portfolio consists of four projects in the Netherlands and several smaller projects across the portfolio.
In Dordrecht, agreement has been reached to create a new and larger unit to accommodate the Jumbo supermarket. The project is expected to be completed in 2021.
In Capelle aan den IJssel, the second phase of the redevelopment of De Koperwiek was completed in June 2019. The next phase includes a change in layout to accommodate an expansion for the Jumbo supermarket. The investment amounts to € 6m. The application for a building permit has been filed.
In Arnhem, the refurbishment of the Presikhaaf project is progressing well. The refurbishment of the centre is to be completed in the first quarter of 2020. In Tilburg, the second phase of the inner city redevelopment has started, with the partial demolition of the Emmapassage. A new shopping street will be created, to make the connection to the Heuvelstraat.
De Koperwiek, Capelle aan den IJssel
PROPERTY PORTFOLIO
In Belgium, the refurbishment of smaller retail units directly opposite the Les Bastions retail park was completed during the second quarter. The investment amounted to € 2m and the units are fully let. The change in lay-out of the former Carrefour in the Belle-Île shopping centre in Liège will be completed during the third quarter. The investment amounts to € 8m. A further expansion of the centre is being studied. Wereldhave Belgium is focusing on the addition of more mixed-use elements, to evolve Belle-Île into a full-service concept that serves more purposes than just shopping.
Good progress was made on the revitalisation of Mériadeck in Bordeaux. The Truffaut gardening centre will open its doors in November and the applications for the permit to upgrade the food & beverage facilities will be filed in September.
(In €m)
| Key Developments | Total investment |
Capex (net) so far |
Capex spent 2019 |
YoC | Prelet | Comple tion |
|---|---|---|---|---|---|---|
| Committed | ||||||
| Koperwiek | 38 | 30 | 5 | 5.0% | 89% | 2020 |
| Presikhaaf | 23 | 19 | 1 | 6.0% | 78% | 2020 |
| Sterrenburg | 14 | 3 | 1 | 5.6% | 90% | 2021 |
| Tilburg | 16 | 0 | 3 | 6.0% | 6% | 2021 |
| Total | 91 | 52 | 10 | |||
RESULTS H1 2019
- Total result € -59.3m (H1 2018: € 30.4m from continuing operations; € 29.0m including Finland) •
- Direct result € 65.8m (H1 2018: € 59.7 from continuing operations; € 74.5m including Finland) •
- Indirect result € -125.1m (H1 2018: € -29.3m from continuing operations; € -45.5m including Finland) •
- Direct result per share € 1.44 (H1 2018: € 1.33 from continuing operations, € 1.70 including Finland) •
- NAV per share (EPRA): € 40.90 (FY 2018: € 43.82) •
- Loan-to-Value: 40.0% (FY 2018: 37.5%)
- Like-for-like shopping centres 0.8% (indexation 1.7%) •
Total result
The total result for the first half of 2019 amounts to € -59.3m (H1 2018: € 29.0m). The decrease is largely due to a lower indirect result compared to the first half of 2018. The direct result decreased by 12% to € 65.8m, mainly from the disposal of the Itis shopping centre in Finland. The indirect result for the first half of 2019 was € -125.1m, against € -45.5m in H1 2018. The total result per share amounted to € -1.65 (H1 2018: € 0.54).
Direct result
The direct result from continuing operations for the first semester stood at € 65.8m against € 59.7m in 2018. The increase is partly due to the acquisition of two retail parks in Belgium in December 2018. The direct result for the first half of the year amounted to € 65.8m against € 74.5m in 2018. This reflects a 12% decrease, almost fully attributable to the disposal of the Itis shopping centre. The direct result per share amounted to € 1.44 (H1 2018: € 1.70).
Due to the ongoing focus on cost efficiency, general costs decreased by 12% from € 7.8m to € 6.9m in H1 2019 and interest costs decreased by 7% from € 15.5m to € 14.4m.
Indirect result
The indirect result consists of a negative property revaluation of € 123.0m and a negative revaluation of financial instruments of € 2.1m. In Belgium, property values of shopping centres remained more or less stable, with a depreciation of the Belgian offices, resulting in an overall slight decrease of € 2m or 0.2% of the value of the portfolio. The Belgian investment market saw several shopping centres on offer, with a broad variance in quality. The transaction of Woluwe's second part was the latest reference in the shopping centre investment market. These yields are still significantly below the valuation yields for our portfolio.
In the Netherlands, there was a negative revaluation of € 84m, reflecting 5.7% of the value of the portfolio. The investment market for shopping centres in the Netherlands has remained slow. Investors are demanding higher returns for retail real estate. The revaluation is predominantly caused by expanding yields on the portfolio. The effect is that although our operations are relatively strong, these rising yields have resulted in the mark-down of the portfolio.
RESULTS H1 2019
Since December 2018, there have been five transactions of convenience shopping centres that support the revised yield levels. The average size of the shopping centres were smaller than Wereldhave's average shopping centre size at ca. 11,000 sqm. The average valuation yield for these transactions were recorded at 5.9% and € 3,250 per sqm, which supports Wereldhave's adjusted valuation levels in the Netherlands.
In France, there was a negative revaluation of € 36m, or 4.1% of the value of the portfolio. The activity level of the investment market for shopping centres remained low in the first six months of the year. The lower property valuation is caused by lower market rents and yield expansion.
The EPRA net initial yield as at June 30, 2019 increased to 5.5% (December 31, 2018: 5.4%).
Equity
At June 30, 2019, Wereldhave's stake in Wereldhave Belgium stood at 66.53%, against 65.90% at yearend 2018. The increase is the result of Wereldhave's choice for a dividend in shares.
On June 30, 2019, shareholders' equity amounted to € 1,627.9m (December 31, 2018: € 1,744.5m). The net asset value per share (EPRA) including current profit stood at € 40.90 at June 30, 2019 (December 31, 2018: € 43.82). The number of ordinary shares in issue was unchanged at 40,270,921.
Financing
The repayment of debt maturing in the first half of 2019 (a € 56m in US Private Placements in February and a € 250m convertible bond in May) was funded by cash from the Itis disposal and by new drawings under revolving credit facilities. Interest-bearing debt was € 1,316.5m at June 30, 2019 (December 31, 2018: € 1,358.3m), which together with a cash balance of € 26.4m (December 31, 2018: € 125.9m) gives a net debt of € 1,290.1m (December 31, 2018: € 1,232.4m).
Undrawn borrowing capacity amounted to € 244m and the Loan-to-value ratio increased to 40.0% (2018: 37.5%) due to development capex and revaluation of investment property. As at June 30, 2019 the average cost of debt and ICR were 1.90% (2.08% YE 2018) and 6.5x (6.2x YE 2018) respectively. The weighted average term to maturity of interest-bearing debt was 4.4 years.
Dividend dates for the financial year 2019
| ex-dividend #1 2019 | July 30, 2019 |
|---|---|
| Dividend record date | July 31, 2019 |
| Payment date dividend #1 2019 |
August 2, 2019 |
| ex-dividend #2 2019 | October 29, 2019 |
| Dividend record date | October 30, 2019 |
| Payment date dividend #2 2019 |
November 1, 2019 |
| ex-dividend #3 2019 | January 28, 2020 |
| Dividend record date | January 29, 2020 |
| Payment date dividend #3 2019 |
January 31, 2020 |
| ex-dividend #4 Final 2019 |
April 28, 2020 |
| Dividend record date | April 29, 2020 |
| Payment date dividend #4 2019 |
May 4, 2020 |
OUTLOOK 2019
- Outlook: direct result 2019 between € 2.75 and € 2.80 per share (was: € 2.75 – 2.85) •
- Dividend for 2019 confirmed at € 0.63 per quarter, or € 2.52 on an annual basis •
- Strategy Review: to be published with the FY 2019 results. •
Bankruptcies and restarting tenants will impact rental growth during the second half of the year. The direct result for the year 2019 is expected to be between € 2.75 and € 2.80 per share (previously: € 2.75 – 2.85).
Dividend for 2019 is confirmed at a level of € 2.52, payable in four equal (interim) dividend payments of € 0.63 per quarter.
At the EGM on July 9, 2019, Matthijs Storm was appointed CEO, with effect from August 1, 2019. Herman van Everdingen, who acted as Interim CEO from February 1, 2019, will step down, but he will remain available to assist the Board of Management in August.
During the second half of 2019. the Board of Management will review Wereldhave's strategy, in close consultation with the Supervisory Board. The outcome of this review is to be presented with the publication of the FY 2019 results, on February 7, 2020.
Schiphol, 26 July 2019
Wereldhave N.V. Board of Management
Herman van Everdingen, interim CEO Dennis de Vreede, CFO
Conference call / webcast
Wereldhave will present the results for the first half year of 2019 via a webcast and conference call at 10.00 CEST, today. This webcast will be available at https://www.wereldhave.com/.
For further information Ruud van Maanen E [email protected] T + 31 20 702 78 43
ABOUT WERELDHAVE
Wereldhave invests in convenience shopping centres that are dominant in their micro environment in larger provincial cities in Northwest continental Europe. The catchment area of our centres comprises of at least 100,000 inhabitants within 10 minutes travel time. We focus on shopping centres that have a sound balance between shopping convenience and experience. With easy accessibility, an offer that covers 90% of shopping needs of goods and services, successful (inter) national and local retail formulas and strong food anchors, our centres provide convenience shopping to accommodate an ageing population, ongoing urbanisation and a busy lifestyle. We aim for attractive, immersive experiences that go beyond shopping, with fully embedded food & beverage functions, kid's playgrounds and high-quality facilities, to attract families and prolong average engagement times. For more information: www.wereldhave.com
DIRECT & INDIRECT RESULT
for the period ended June 30, 2019
| (x € 1,000) | Six months ended June 30, 2019 | Six months ended June 30, 2018 | |||
|---|---|---|---|---|---|
| direct | indirect | direct | indirect | ||
| result | result | result | result | ||
| Gross rental income | 102,860 | - | 96,739 | - | |
| Service costs charged | 15,162 | - | 13,450 | - | |
| Total revenues | 118,022 | - | 110,190 | - | |
| Service costs paid | -19,088 | - | -16,817 | - | |
| Property expenses | -11,571 | - | -9,846 | - | |
| Total expenses | -30,659 | - | -26,663 | - | |
| Net rental income | 87,363 | - | 83,527 | - | |
| Valuation results | - | -122,951 | - | -26,656 | |
| Results on disposals | - | -156 | - | -250 | |
| General costs | -6,921 | -1,313 | -7,775 | -1,476 | |
| Other income and expense | - | -27 | - | -169 | |
| Operational result | 80,442 | -124,447 | 75,752 | -28,551 | |
| Interest charges | -14,465 | - | -15,589 | - | |
| Interest income | 18 | - | 48 | - | |
| Net interest | -14,447 | - | -15,540 | - | |
| Other financial income and expense | - | -2,089 | - | -1,428 | |
| Result before tax | 65,995 | -126,535 | 60,212 | -29,979 | |
| Income tax | -188 | 974 | -530 | 710 | |
| Result from continuing operations | 65,807 | -125,561 | 59,682 | -29,269 | |
| Result from discontinued operations | - | 413 | 14,838 | -16,264 | |
| Result | 65,807 | -125,148 | 74,520 | -45,534 | |
| Profit attributable to: | |||||
| Shareholders | 57,857 | -124,351 | 68,482 | -46,730 | |
| Non-controlling interest | 7,950 | -797 | 6,038 | 1,196 | |
| Result | 65,807 | -125,148 | 74,520 | -45,534 | |
| Earnings per share from continuing operations (€) | 1.44 | -3.10 | 1.33 | -0.75 | |
| Earnings per share from discontinued operations (€) | - | 0.01 | 0.37 | -0.41 | |
| Earnings per share (€) | 1.44 | -3.09 | 1.70 | -1.16 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at June 30, 2019
| (x € 1,000) | |||
|---|---|---|---|
| Assets | Note | June 30, 2019 | December 31, 2018 |
| Non-current assets | |||
| Investment property in operation | 3,141,708 | 3,213,454 | |
| Lease incentives | 6,854 | 6,754 | |
| Investment property under construction | 66,072 | 59,999 | |
| Investment property | 5 | 3,214,633 | 3,280,207 |
| Property and equipment | 6,899 | 2,120 | |
| Intangible assets | 720 | 897 | |
| Derivative financial instruments | 30,762 | 27,245 | |
| Other financial assets | 784 | 717 | |
| Total non-current assets | 3,253,799 | 3,311,185 | |
| Current assets | |||
| Trade and other receivables | 57,525 | 52,697 | |
| Tax receivables | 8,071 | 13,693 | |
| Cash and cash equivalents | 26,426 | 125,925 | |
| Total current assets | 92,021 | 192,314 | |
| Investments held for sale | 6,940 | 6,940 | |
| Total assets | 3,352,760 | 3,510,440 | |
| Equity and Liabilities | |||
| Equity | |||
| Share capital | 6 | 40,271 | 40,271 |
| Share premium | 1,711,033 | 1,711,033 | |
| Reserves | -123,363 | -6,815 | |
| Attributable to shareholders | 1,627,941 | 1,744,489 | |
| Non-controlling interest | 228,114 | 231,347 | |
| Total equity | 1,856,055 | 1,975,836 | |
| Non-current liabilities | |||
| Interest bearing liabilities | 7 | 1,209,532 | 1,019,151 |
| Deferred tax liabilities | 6,393 | 6,648 | |
| Derivative financial instruments | 36,796 | 36,421 | |
| Other long term liabilities | 35,383 | 14,774 | |
| Total non-current liabilities | 1,288,104 | 1,076,994 | |
| Current liabilities | |||
| Trade payables | 5,461 | 8,529 | |
| Tax payable | 6,576 | 11,651 | |
| Interest bearing liabilities | 7 | 107,000 | 339,167 |
| Other short term liabilities | 89,565 | 96,031 | |
| Derivative financial instruments | - | 2,230 | |
| Total current liabilities | 208,602 | 457,610 | |
| Total equity and liabilities | 3,352,760 | 3,510,440 |
CONDENSED CONSOLIDATED INCOME STATEMENT
for the period ended June 30, 2019
(x € 1,000)
| Note | June 30, 2019 | June 30, 2018 | |
|---|---|---|---|
| Gross rental income | 102,860 | 96,739 | |
| Service costs charged | 15,162 | 13,450 | |
| Total revenue | 118,022 | 110,190 | |
| Service costs paid | -19,088 | -16,817 | |
| Property expenses | -11,571 | -9,846 | |
| Net rental income | 10 | 87,363 | 83,527 |
| Valuation results | -122,951 | -26,656 | |
| Results on disposals | -156 | -250 | |
| General costs | -8,234 | -9,251 | |
| Other income and expense | -27 | -169 | |
| Operating result | -44,004 | 47,201 | |
| Interest charges | -14,465 | -15,589 | |
| Interest income | 18 | 48 | |
| Net interest | -14,447 | -15,541 | |
| Other financial income and expense | -2,089 | -1,428 | |
| Result before tax | -60,540 | 30,232 | |
| Income tax | 786 | 180 | |
| Result from continuing operations | -59,754 | 30,412 | |
| Result from discontinued operations | 413 | -1,426 | |
| Result for the year | -59,341 | 28,986 | |
| Result attributable to: | |||
| Shareholders | -66,495 | 21,752 | |
| Non-controlling interest | 7,154 | 7,234 | |
| Result for the year | -59,341 | 28,986 | |
| Basic earnings per share from continuing operations (€) | -1.66 | 0.58 | |
| Diluted earnings per share from continuing operations (€) | -1.66 | 0.58 | |
| Basic and diluted earnings per share from discontinued operations (€) | 0.01 | -0.04 | |
| Basic earnings per share (€) | -1.65 | 0.54 | |
| Diluted earnings per share (€) | -1.65 | 0.54 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period ended June 30, 2019
(x € 1,000)
| Six months ended June | Six months ended June | |
|---|---|---|
| 30, 2019 | 30, 2018 | |
| Result from continuing operations | -59,754 | 30,412 |
| Result from discontinued operations | 413 | -1,426 |
| Result | -59,341 | 28,986 |
| Items that may be recycled to the income statement subsequently | ||
| Effective portion of change in fair value of cash flow hedges | -636 | -6,744 |
| Changes in fair value of cost of hedging | 693 | 1,683 |
| Total comprehensive income | -59,284 | 23,925 |
| Attributable to: | ||
| Shareholders | -66,384 | 16,639 |
| Non-controlling interest | 7,100 | 7,286 |
| -59,284 | 23,925 | |
| Total comprehensive income attributable to shareholders arises from: | ||
| Continuing operations | -66,797 | 18,065 |
| Discontinued operations | 413 | -1,426 |
| -66,384 | 16,639 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period ended June 30, 2019
| (x € 1,000) | Attributable to shareholders | |||||||
|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium |
General reserve |
Hedge reserve |
Cost of hedging reserve |
Total attributable to share holders |
Non controlling interest |
Total equity | |
| Balance at January 1, 2018 | 40,271 | 1,711,033 | 186,071 | -4,847 | -4,366 | 1,928,162 | 188,351 | 2,116,513 |
| Comprehensive income | ||||||||
| Result | - | - | 21,752 | - | - | 21,752 | 7,234 | 28,986 |
| Effective portion of change in fair value | ||||||||
| of cash flow hedges | - | - | - | -6,796 | - | -6,796 | 52 | -6,744 |
| Changes in fair value of cost of hedging | - | - | - | - | 1,683 | 1,683 | - | 1,683 |
| Total comprehensive income | - | - | 21,752 | -6,796 | 1,683 | 16,639 | 7,286 | 23,925 |
| Transactions with shareholders | ||||||||
| Shares for remuneration | - | - | 202 | - | - | 202 | - | 202 |
| Dividend | - | - | -62,016 | - | - | -62,016 | -4,598 | -66,614 |
| Change non-controlling interest | - | - | -224 | - | - | -224 | 1,504 | 1,280 |
| Other | - | - | -301 | - | - | -301 | 15 | -286 |
| Balance at June 30, 2018 | 40,271 | 1,711,033 | 145,484 | -11,643 | -2,683 | 1,882,462 | 192,558 | 2,075,020 |
| Balance at January 1, 2019 | 40,271 | 1,711,033 | 4,495 | -9,605 | -1,706 | 1,744,489 | 231,347 | 1,975,835 |
| Comprehensive income | ||||||||
| Result | - | - | -66,495 | - | - | -66,495 | 7,154 | -59,341 |
| Effective portion of change in fair value | ||||||||
| of cash flow hedges | - | - | - | -582 | - | -582 | -54 | -636 |
| Changes in fair value of cost of hedging | - | - | - | - | 693 | 693 | - | 693 |
| Total comprehensive income | - | - | -66,495 | -582 | 693 | -66,384 | 7,100 | -59,284 |
| Transactions with shareholders | ||||||||
| Shares for remuneration | - | - | 318 | - | - | 318 | - | 318 |
| Dividend | - | - | -50,740 | - | -50,740 | -5,947 | -56,687 | |
| Change non-controlling interest | - | - | 276 | - | 276 | -4,386 | -4,110 | |
| Other | - | - | -18 | - | - | -18 | - | -18 |
| Balance at June 30, 2019 | 40,271 | 1,711,033 | -112,164 | -10,187 | -1,013 | 1,627,941 | 228,114 | 1,856,055 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period ended June 30, 2019
(x € 1,000)
| Note | Six months ended June 30, 2019 |
Six months ended June 30, 2018 |
|
|---|---|---|---|
| Operating activities | |||
| Result | -59,341 | 28,986 | |
| Adjustments: | |||
| Valuation results | 122,951 | 44,918 | |
| Net interest | 14,447 | 15,533 | |
| Other financial income and expense | 2,089 | 1,428 | |
| Results on disposals | -257 | 250 | |
| Deferred tax | -974 | -3,861 | |
| Amortisation | 773 | 424 | |
| Movements in working capital | -14,692 | -1,027 | |
| Cash flow generated from operations | 64,996 | 86,651 | |
| Interest paid | -12,894 | -13,536 | |
| Interest received | 18 | 37 | |
| Income tax paid | -904 | -689 | |
| Cash flow from operating activities | 51,216 | 72,463 | |
| Investment activities | |||
| Proceeds from disposals direct investment properties | -156 | 12,450 | |
| Proceeds from disposals indirect investment property | -2,318 | - | |
| Investments in investment property | -41,569 | -80,522 | |
| Investments in equipment | -142 | -332 | |
| Investments in financial assets | -68 | 32 | |
| Investments in intangible assets | -37 | -79 | |
| Cash flow from investing activities | -44,290 | -68,451 | |
| Financing activities | |||
| Proceeds from interest bearing debts | 7 | 261,760 | 93,316 |
| Repayment interest bearing debts | 7 | -312,317 | -36,416 |
| Proceeds of other long-term liabilities | 500 | 402 | |
| Other movements in reserve | 319 | - | |
| Transactions non-controlling interest | - | 4,241 | |
| Dividend paid | -56,687 | -66,614 | |
| Cash flow from financing activities | -106,425 | -5,071 | |
| Increase/decrease in cash and cash equivalents | -99,499 | -1,059 | |
| Cash and cash equivalents at January 1 | 125,925 | 13,585 | |
| Cash and cash equivalents at June 30 | 26,426 | 12,526 |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. REPORTING ENTITY
Wereldhave N.V. ('the Company') is an investment company which invests in real estate (shopping centres and offices). The property portfolio of Wereldhave N.V. and its subsidiaries ('the Group') is located in Belgium, France and the Netherlands. The Group is principally involved in leasing investment property under operating leases. The property management is performed by Group management companies. The Company is a limited liability company incorporated and domiciled in the Netherlands. The address of the Company's registered office is Schiphol Boulevard 233, 1118 BH Schiphol. The shares of the Company are listed on the Euronext Stock Exchange of Amsterdam. These condensed consolidated interim financial statements for the period ended June 30, 2019 were approved for issue on July 25, 2019. The figures of this press release are unaudited.
2. TAX STATUS
Wereldhave N.V. has the tax status of an investment company (FBI status) in accordance with section 28 of the Dutch 'Wet op de Vennootschapsbelasting 1969'. This status assumes that the Group is (almost) exclusively engaged in portfolio investment activities. As a consequence, corporation tax is due at a rate of 0% in the Netherlands, provided that certain conditions are met. The main conditions concern the requirement to distribute the taxable result as dividend and restrictions with regard to the leverage. The taxable result of Wereldhave N.V. must be distributed as a dividend to its shareholders within eight months after the year during which the result was made. In general terms, the leverage restrictions imply that investments in real estate (including qualifying real estate companies) may only be financed through debt up to a maximum of 60% of their value. For investments in other assets the maximum level of debt allowed is only 20%. There is no requirement to include capital gains, arising on disposal of investments, in the result to be distributed.
The subsidiaries in Belgium (OGVV status) and France (SIIC status) have a similar status. Subsidiaries in Finland are subject to corporation tax. In Belgium the net value of one single asset may not exceed 20% of the total Belgium portfolio. A concession was granted by the FSMA for a maximum period of 2 years expiring December 31, 2020. At June 30, 2019, the net value of Belle-Ile was below the threshold of 20%.
3. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements for the period ended June 30, 2019 are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
3.1 Basis of accounting
Statement of compliance
This condensed consolidated interim financial information for the six months ended June 30, 2019 has been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated interim financial information should be read in conjunction with the financial statements for the year ended December 31, 2018, which have been prepared in in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
Income and cash flow statement
The Group presents a separate 'statement of profit or loss' and 'other comprehensive income'.
The Group reports cash flows from operating activities using the indirect method. Interest received and interest paid is presented within operating cash flows. The acquisitions of investment properties are disclosed as cash flows from investing activities as this most appropriately reflects the Group's business activities.
Preparation of the condensed consolidated interim financial statements
These condensed consolidated interim financial statements for the period ended June 30, 2019 have been prepared on a going concern basis, applying a historical cost convention, except for the measurement of investment property and derivative financial instruments that have been measured at fair value.
The preparation of these condensed consolidated interim financial statements for the period ended June 30, 2019 in conformity with EU-IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the condensed consolidated interim financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate.
Change in accounting policy and disclosures
New and amended standards adopted by the Group
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended December 31, 2018.
IFRS 16
Wereldhave adopted IFRS 16, 'Leases' from January 1, 2019. IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model.
Classification and Measurement The Group as a lessee
A right-of-use asset and a lease liability is recognised at the lease commencement date. The right-of-use asset is initially measured at cost and subsequently at cost less any accumulated depreciation, impairment losses and adjusted for certain remeasurements of the lease liability. Right-of-use assets are presented under property and equipment. Right-of-use assets that meet the definition of investment property are presented under investment property and subsequently measured at fair value in accordance with the Group's accounting policies.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date which are discounted using the Group's incremental borrowing rate, unless the interest rate implicit in the lease is available. The lease liability is subsequently increased by the interest costs on the lease liability and decreased by any lease payments made. Lease liabilities are remeasured when there is a change in future lease payments arising from a change in an index or changes to the assessment whether a purchase or extension options is reasonably certain to be exercised. Judgement may need to be applied to determine the lease term for some lease contracts that contain renewal or termination options. The assessment may significantly affect the amount of lease liabilities and right-of-use assets recognised.
For the transition at January 1, 2019 the Group accounted for its leasehold contracts, office and car leases under IFRS 16 using the modified retrospective approach. As permitted under the specific transitional provisions, the 2018 comparative information is not restated. On adoption of IFRS 16 Wereldhave elected to use the transition practical expedient to recognise only lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17. Therefore, the definition of a lease under IFRS 16 has only been applied to contracts entered into or changed on or after January 1, 2019. Wereldhave elected to use the recognition exemptions for leases with a lease term of 12 months or less at date of initial application and lease contracts for which the underlying asset is of low value.
Lease liabilities were measured at the present value of the remaining lease payments and discounted using the incremental borrowing rate as of January 1, 2019. The weighted average rate applied is 5%. Lease liabilities are included in other long-term liabilities in the statement of financial position.
Right-of-use assets were measured at the amount equal to the lease liability and adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet at December 31, 2018.
The impact of the transition to IFRS 16 is summarised below.
(x € 1,000)
| January 1, | |
|---|---|
| Assets | 2019 |
| Investment property | 16,050 |
| Property and equipment | 5,180 |
| Total right-of-use assets recognised under IFRS 16 | 21,230 |
| January 1, | |
| Liabilities | 2019 |
| Other long-term liabilities | 21,230 |
| Total lease liabilities recognised under IFRS 16 | 21,230 |
| Operating lease commitments at December 31, 2018 | 85,518 |
| Discounted using the incremental borrowing rate at January 1, 2019 | 21,230 |
| Lease liabilities recognised at January 1, 2019 | 21,230 |
For leases under IFRS 16 the Group recognised depreciation and interests costs instead of operating lease expenses. For the six months ended June 30, 2019 the Group recognised depreciation charges of € 0.4m and interest costs of € 0.5m. No depreciation is recognised for right-of-use assets that meet the definition of investment property. Payments of lease liabilities are presented as cash flows from financing activities in the cash flow statement.
The Group as a lessor
IFRS 16 did not result in any changes to the accounting of leases where Wereldhave acts as the lessor.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after January 1, 2019, but do not have an impact on these interim condensed consolidated financial statements.
3.2 Consolidation
Changes in ownership interests in subsidiaries without change of control
As result of the election to receive stock dividend from Wereldhave Belgium the Group's stake in Wereldhave Belgium changed to 66.53% at June 30, 2019 (yearend 2018: 65.90%).
4. SEGMENT INFORMATION
Geographical segment information – the period ended June 30, 2019
| Belgium | Finland | France | Netherlands | Headoffice | Total |
|---|---|---|---|---|---|
| 30,053 | - | 26,216 | 46,591 | - | 102,860 |
| 4,806 | - | 6,184 | 4,171 | - | 15,162 |
| 34,860 | - | 32,400 | 50,762 | - | 118,022 |
| -6,057 | - | -8,223 | -4,808 | - | -19,088 |
| -1,537 | - | -3,956 | -6,079 | - | -11,571 |
| 27,266 | - | 20,222 | 39,876 | - | 87,363 |
| -2,473 | - | -36,058 | -84,420 | - | -122,951 |
| -19 | - | -6 | -131 | - | -156 |
| -1,813 | - | -2,060 | -1,319 | -3,043 | -8,234 |
| - | - | -2 | - | -25 | -27 |
| 22,962 | - | -17,904 | -45,994 | -3,068 | -44,004 |
| -1,438 | - | -7,915 | -10,244 | 5,132 | -14,465 |
| 9 | - | - | 5 | 3 | 18 |
| -664 | - | - | - | -1,425 | -2,089 |
| 214 | - | 30 | 543 | - | 786 |
| 21,083 | - | -25,789 | -55,690 | 642 | -59,754 |
| 413 | |||||
| 21,083 | 413 | -25,789 | -55,690 | 642 | -59,341 |
| 3,141,708 66,072 |
|||||
| 6,940 | |||||
| 1,560,159 | |||||
| -1,422,118 | |||||
| 3,352,760 | |||||
| 6,546 | - | 7,461 | 13,024 | - | 27,031 |
| 22,182 7,871 |
- - |
26,216 - |
46,591 - |
- - |
94,989 7,871 |
| - 957,341 12,165 - 32,478 -10,033 991,950 |
413 - - - - - - |
- 849,049 - - 55,438 - 904,487 |
- 1,335,318 53,907 6,940 324,002 -65,000 1,655,167 |
- - - - 1,148,241 -1,347,085 -198,844 |
Geographical segment information – the period ended June 30, 2018
| v E | 1 ೧೧೧) | |
|---|---|---|
| (x € 1,000) | ||||||
|---|---|---|---|---|---|---|
| Result | Belgium | Finland | France | Netherlands | Headoffice | Total |
| Gross rental income | 25,574 | - | 24,866 | 46,300 | - | 96,739 |
| Service costs charged | 4,450 | - | 5,003 | 3,997 | - | 13,450 |
| Total revenue | 30,024 | - | 29,869 | 50,296 | - | 110,190 |
| Service costs paid | -5,375 | - | -6,860 | -4,582 | - | -16,817 |
| Property expenses | -1,203 | - | -2,565 | -6,078 | - | -9,846 |
| Net rental income | 23,446 | - | 20,445 | 39,636 | - | 83,527 |
| Valuation results | 3,341 | - | -4,134 | -25,863 | - | -26,656 |
| Results on disposals | - | - | -2 | -249 | - | -250 |
| General costs | -1,821 | - | -1,797 | -944 | -4,689 | -9,251 |
| Other income and expense | 8 | - | - | - | -176 | -169 |
| Operating result | 24,974 | - | 14,512 | 12,580 | -4,866 | 47,201 |
| Interest charges | -1,293 | - | -7,582 | -9,810 | 3,096 | -15,589 |
| Interest income | 34 | - | - | 14 | - | 48 |
| Other financial income and expense | - | - | - | - | -1,428 | -1,428 |
| Income tax | -53 | - | -175 | 408 | - | 180 |
| Result from continuing operations | 23,663 | - | 6,755 | 3,192 | -3,198 | 30,412 |
| - | ||||||
| Result from discontinued operations | - | -1,426 | - | - | - | -1,426 |
| Result | 23,663 | -1,426 | 6,755 | 3,192 | -3,198 | 28,986 |
| Total assets at December 31, 2018 | ||||||
| Investment properties in operation | 940,584 | - | 877,646 | 1,395,224 | - | 3,213,454 |
| Investment properties under construction | 14,692 | - | - | 45,307 | - | 59,999 |
| Assets held for sale | - | - | - | 6,940 | - | 6,940 |
| Other segment assets | 35,712 | - | 37,410 | 308,617 | 1,411,925 | 1,793,664 |
| minus: intercompany | -10,532 | - | - | -65,000 | -1,488,085 | -1,563,617 |
| 980,456 | - | 915,056 | 1,691,088 | -76,160 | 3,510,440 | |
| Investments six months ended June 30, 2018 | 26,012 | 10,302 | 14,598 | 30,726 | - | 81,638 |
| Gross rental income by type of property | ||||||
| Shopping centres | 21,475 | - | 24,866 | 46,300 | - | 92,640 |
| Offices | 4,099 | - | - | - | - | 4,099 |
| 25,574 | - | 24,866 | 46,300 | - | 96,739 |
5. INVESTMENT PROPERTY
| (x € 1,000) | 2019 | |||
|---|---|---|---|---|
| Investment property | Investment property | Total Investment | ||
| in operation | Lease incentives | under construction | property | |
| Balance at January 1 | 3,213,454 | 6,754 | 59,999 | 3,280,207 |
| Purchases | 14,195 | - | - | 14,195 |
| Investments | 11,350 | - | 15,681 | 27,031 |
| From / to development properties | 9,805 | - | -9,805 | - |
| To / from investments held for sale | - | - | - | - |
| Valuations | -123,146 | - | 197 | -122,949 |
| Right-of-use assets recognised (IFRS 16) | 16,050 | - | - | 16,050 |
| Other | - | 100 | - | 100 |
| Balance at June 30 | 3,141,708 | 6,854 | 66,072 | 3,214,633 |
(x € 1,000) 2018 Investment property in operation Lease incentives Investment property under construction Total Investment property Balance at January 1 3,643,322 8,014 122,361 3,773,697 Purchases - - - - Investments 33,549 - 48,089 81,638 From / to development properties 108,780 - -108,780 - To investments held for sale -18,370 - - -18,370 Valuations -40,164 - -4,753 -44,917 Other - 1,310 - 1,310 Balance at June 30 3,727,117 9,324 56,917 3,793,358
Investment property in operation
In H1 2019 Wereldhave acquired a C&A store in Tilburg for € 11m and a part of the leasehold in Kortrijk for € 3m.
Fair value
In total 99.8% (2018: 99.8%) of the total property portfolio was measured at fair value. The assets in the Group and its subsidiaries mainly consists of the property portfolio. The market value of these assets cannot be assessed using official quotations or listings.
A valuation based on fair value is a time- and location based estimate. The estimate is based on the price level on which two well-informed parties under normal market conditions would make a transaction for that specific property on the date of valuation. The fair value of a property in the market can only be determined accurately at the moment of the actual sale of the property.
Twice a year (June 30 and December 31) the properties are valued by external valuers. The valuer appraises at fair value with his own market knowledge and information. The valuation is prepared by the valuer and verified and approved by Wereldhave.
The fair value is based on a net yield calculation, where market rents are capitalised. Elements of this calculation include current and future rent levels, expected vacancy rates, rent indexations, turnover rents, lease incentives, etc. The yields and market rents used are specific for the country, the location, the type of property, the level of maintenance and the general rent ability of every single property. The determination of applicable yields is based upon comparable transactions, supplemented with market and building specific knowledge and remaining other assumptions, in which the professional judgment of the valuer will become more important if the available transaction information is not sufficient.
Apart from assumptions with respect to yields, costs for future maintenance investments are also taken into account in the valuation. Furthermore, explicit assumptions are made per lettable location and per tenant with regard to (re)letting, the start date of such (re)letting and the costs related thereto. Also, adjustments are made for expected costs of vacancy (present and future) and for differences between the market rent and contractual rent. Sales costs at the expense of the buyer, including transfer tax payable, are deducted from the market value.
Investment properties in operation
The significant assumptions used relating to valuations are set out below. The portfolio is appraised every six months.
| June 30, 2019 | Belgium | France | Netherlands |
|---|---|---|---|
| Total market rent per sqm (€) | 207 | 237 | 226 |
| EPRA Net Initial Yield | 5.7% | 4.8% | 5.8% |
| EPRA vacancy rate | 4.3% | 8.0% | 2.8% |
| Average vacancy period (in months) | 6-12 | 9 | 7 |
| Bandwith vacancy (in months) | 0-21 | 6-12 | 5-13 |
EPRA Net Initial Yield
The EPRA Net Initial Yield is calculated by annualised rental income based on cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, including estimated purchasers' cost. The total average EPRA Net Initial Yield amounts to 5.5% (yearend 2018: 5.4%).
A change in yield with 0.25% results in a change of approximately € 127m in equity and result (€ 3.15 per share). A 5% drop of the estimated market rent, assuming stable yields, has a negative impact on shareholders' equity and result of approximately € 157m (€ 3.90 per share).
6. NET ASSET VALUE PER SHARE
The authorised capital comprises 75,000,000 million shares each with a nominal value of € 1. As at June 30, 2019, 40,270,921 ordinary shares were issued.
| the period ended June 30, 2019 |
the period ended December 31, 2018 |
|
|---|---|---|
| Equity available for shareholders (x € 1,000) | 1,627,941 | 1,744,489 |
| Number of ordinary shares per 30 June | 40,270,921 | 40,270,921 |
| Purchased shares for remuneration | -14,729 | -27,927 |
| Number of ordinary shares per 30 June for calculation net asset value | 40,256,192 | 40,242,994 |
| Net asset value per share (x € 1) | 40.44 | 43.35 |
|---|---|---|
7. INTEREST BEARING LIABILITIES
(x € 1,000)
| June 30, 2019 | December 31, 2018 | |
|---|---|---|
| Long term | ||
| Bank loans | 469,820 | 283,835 |
| Private placement | 730,286 | 725,936 |
| EMTN | 9,426 | 9,380 |
| 1,209,532 | 1,019,151 | |
| Short term | ||
| Bank loans | 9,000 | - |
| Private placement | - | 55,616 |
| Treasury notes | 98,000 | 35,000 |
| Convertible bonds | - | 248,551 |
| 107,000 | 339,167 | |
| Total interest bearing liabilities | 1,316,532 | 1,358,318 |
(x € 1,000)
| June 30, 2019 | December 31, 2018 |
|---|---|
| 1,358,318 | 1,557,658 |
| 261,760 | 35,996 |
| -312,317 | -247,819 |
| 723 | 1,474 |
| 2,181 | 531 |
| 5,867 | 10,478 |
| 1,316,532 | 1,358,318 |
The carrying amount and fair value of long term interest bearing debt is as follows:
| (x € 1,000) | June 30, 2019 | December 31, 2018 | |||
|---|---|---|---|---|---|
| carrying | carrying | ||||
| amount | fair value | amount | fair value | ||
| Bank loans, private placement and | |||||
| EMTN | 1,209,532 | 1,251,506 | 1,019,151 | 1,056,633 | |
| Total | 1,209,532 | 1,251,506 | 1,019,151 | 1,056,633 |
8. FAIR VALUE MEASUREMENT
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities:
| (x € 1,000) | Fair value measurement using | ||||
|---|---|---|---|---|---|
| Quoted | Observable | Unobservable | |||
| prices | input | input | |||
| June 30, 2019 | Total | Level 1 | Level 2 | Level 3 | |
| Assets measured at fair value | |||||
| Investment property in operation | 3,148,562 | - | - | 3,148,562 | |
| Investment property under construction | 59,781 | - | - | 59,781 | |
| Investments held for sale | 6,940 | - | - | 6,940 | |
| Financial assets | |||||
| Derivative financial instruments | 30,762 | - | 30,762 | - | |
| Liabilities for which the fair value has been disclosed | |||||
| Interest bearing debt | 1,358,506 | - | 1,358,506 | - | |
| Derivative financial instruments | 36,796 | - | 36,796 | - |
| Quoted | Observable | Unobservable | ||
|---|---|---|---|---|
| prices | input | input | ||
| December 31, 2018 | Total | Level 1 | Level 2 | Level 3 |
| Assets measured at fair value | ||||
| Investment property in operation | 3,220,208 | - | - | 3,220,208 |
| Investment property under construction | 51,074 | - | - | 51,074 |
| Investments held for sale | 6,940 | - | - | 6,940 |
| Financial assets | ||||
| Derivative financial instruments | 27,245 | - | 27,245 | - |
| Liabilities for which the fair value has been disclosed | ||||
| Interest bearing debt | 1,398,692 | 251,443 | 1,147,249 | - |
| Derivative financial instruments | 38,651 | - | 38,651 | - |
Wereldhave categorizes its financial instruments measured at fair value in three hierarchies of inputs to valuation techniques used to measure fair value. Level 1 inputs are based on quoted prices, level 2 inputs are inputs other than quoted prices included in level 1 that are observable for the asset or liability, either direct or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
There were no transfers between levels during the year under review.
9. OFF BALANCE SHEET ASSETS AND LIABILITIES
The Group has contracted capital commitments for an amount of € 16m (YE 2018: € 11m) with regard to investment properties under construction. As of June 30, 2019 the Group has not issued guarantees to third parties (2018: € 34m).
10. RENTAL INCOME BY COUNTRY
| Property expenses, | ||||||
|---|---|---|---|---|---|---|
| service costs and | ||||||
| (x € 1,000) | Gross rental income | operating costs | Net rental income | |||
| Six months | Six months | Six months | Six months | Six months | Six months | |
| ended June | ended June | ended June | ended June | ended June | ended June | |
| 30, 2019 | 30, 2018 | 30, 2019 | 30, 2018 | 30, 2019 | 30, 2018 | |
| Belgium | 30,053 | 25,574 | 2,787 | 2,128 | 27,266 | 23,446 |
| France | 26,216 | 24,866 | 5,994 | 4,421 | 20,222 | 20,444 |
| The Netherlands | 46,591 | 46,300 | 6,715 | 6,664 | 39,876 | 39,636 |
| Total | 102,860 | 96,739 | 15,497 | 13,212 | 87,363 | 83,527 |
11. RELATED PARTIES
The Board of Management, the Supervisory Board and subsidiaries of Wereldhave N.V. are considered to be related parties. The members of the Supervisory Board and of the Board of Management had no personal interest in any of the Company's investments during the year.
Related party transactions were made on terms equivalent to those that prevail in arm's length transactions if such terms can be substantiated.
12. EVENTS AFTER BALANCE SHEET DATE
In the Extraordinary Meeting of Shareholders held on July 9, 2019, Matthijs Storm was appointed as Chief Executive Officer (CEO) with effect from August 1, 2019.
DECLARATION OF THE BOARD OF MANAGEMENT 13.
The Board of management of Wereldhave N.V., consisting of H.J. van Everdingen and A.W. de Vreede, hereby declares that, to the best of their knowledge:
-
the interim financial statement over the first half year of 2019 gives a true and fair view of the assets, liabilities, financial position and result of Wereldhave N.V. and the companies included in the consolidation as a whole;
-
the interim financial statement over the first half year of 2019 provides a true and fair view on the condition as at the balance sheet date and the course of business during the half year under review of Wereldhave N.V. and the related companies of which the data have been included in the interim statement, and the expected course of business, where, in as far as important interest do not oppose, particular attention is paid to the investments and the conditions of which the development of turnover and profitability depend; and
-
the interim financial statement over the first half year of 2019 includes a true and fair review of the information required pursuant to section 5:25d, subsections 8 and 9 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
Wereldhave considers the market risk, liquidity risk and credit risk as financial risks. The market risk can be divided into interest risk and currency risk. Rapidly changing economic environments and uncertainty about the solidity of the Euro(zone) may affect the market circumstances, and thus both the letting prospects as well as the market value of the properties. The continuation of the Euro(zone) is assumed. For further comments we refer to the annual report 2018. Our risks are being monitored on a continuous basis.
Schiphol, 26 July 2019
Board of management Herman van Everdingen, interim CEO Dennis de Vreede, CFO