Wrap Text
Interim results for the nine months period ended 30 September 2016
GLOBE TRADE CENTRE SA
(Incorporated and registered in Poland with KRS No. 61500)
(Share code on the WSE: GTC)
(Share code on the JSE: GTC ISIN: PLGTC0000037)
("GTC" or "the Company")
INTERIM RESULTS
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
HIGHLIGHTS
TOTAL
NOI PROFIT BEFORE TAX FFO EPRA NAV PROPERTY
EUR65M EUR71M EUR33M EUR837M EUR1,544m
+10% +220% +14% +8% +17%
9M 2016 HIGHLIGHTS
- NOI increased by 10% to EUR65m (EUR59m in 9M 2015)
- Revaluation gain of EUR39m (loss of EUR2m in 9M 2015)
mainly driven by ongoing projects under construction
- Profit after tax of EUR107m (EUR17m in 9M 2015),
positively impacted by successful merger of
GTC SA with its Dutch entities
- 14% FFO improvement to EUR33m (EUR29m in 9M 2015)
- EUR175m of new project financing raised
- EPRA NAV increased by 8% to EUR837m (EUR779m
as of 31 December 2015), corresponding to an
EPRA NAV per share of EUR 1.82 [PLN 7.85]
(EUR1.69 [PLN 7.29] as of 31 December 2015)
PORTFOLIO UPDATE
- Total property value of EUR1,544m as of
30 September 2016 (EUR1,324m as of 31 December 2015)
- 16% growth in income generating
portfolio to EUR1,222m (EUR1,052m as of 31 December 2015)
- Total investment volume of EUR221m YTD
(thereof EUR152m of acquisitions)
- Disposal of non-core standing assets
successfully executed; ongoing land
bank disposal; total sales of EUR29m in 9M 2016
- 106,000 sq. m NLA under construction
in four projects with over 82,000 sq. m
to be completed in 2017
- 160,000 sq. m in planning stage and
another 39,000 sq. m in pre-planning stage
- 94,000 sq. m of new lettings and lease
renewals for office and retail space
- Stable occupancy rate at 91%
OPERATING PERFORMANCE
9M 2016 Reported V%
NOI EUR65m +10%
Rental margin 76% +100bps
EBITDA EUR54m +7%
Profit before tax EUR71m +220%
FFO EUR33m +14%
Total property EUR1,544m +17%
Net debt EUR689m +32%
Net LTV 45% +600bps
EPRA NAV EUR837m +8%
CORPORATE OVERVIEW
NATURE OF BUSINESS
The GTC Group is a leading developer and commercial real estate manager in CEE and SEE, operating in
Poland, Romania, Hungary, Croatia, Serbia and Bulgaria. Additionally, it holds land in Ukraine and Russia
through its associates and joint ventures. The Group was established in 1994 and has been present in the real
estate market since then.
The Group's portfolio comprises: (i) completed commercial properties; (ii) commercial properties under
construction; (iii) a commercial landbank intended for future development or for sale and (iv) residential projects
and landbank.
Since its establishment and as at 30 September 2016 the Group: (i) has developed approximately 980 thousand
sq. m of commercial space and approximately 300 thousand sq. m of residential space; (ii) has sold
approximately 430 thousand sq. m of commercial space in completed commercial properties and approximately
299 thousand sq. m of residential space; and (iii) has acquired approximately 90 thousand sq. m of commercial
space in completed commercial properties.
As of 30 September 2016, the Group`s property portfolio comprised the following properties:
31 completed commercial properties, including 27 office properties and 4 retail properties with a combined
commercial space of approximately 592 thousand sq. m, of which the Group's proportional interest amounts to
approximately 575 thousand sq. m of NRA;
4 commercial projects under construction, including 3 office projects and 1 retail project with total NRA of
approximately 106 thousand sq. m, of which the Group's proportional interest amounts to 106 thousand sq. m of NRA;
- commercial landbank designated for future development, with approximately 860 thousand sq. m NRA;
- 1 residential project under construction with 4 thousand sq. m area designated for residential use;
- residential projects and landbank designated for residential use; and
- 3 assets held for sale: land plots in Romania, Hungary and Slovakia.
The Group also holds a land plot located in Russia, and a land plot designated for Ana Tower located in
Romania through its associates and joint ventures.
As of 30 September 2016, the book value of the Group's portfolio amounts to EUR1,544m with: (i) the Group's
completed commercial properties accounting for 79% thereof; (ii) commercial properties under construction -
11%; (iii) a commercial landbank intended for future development or for sale - 8%; (iv) residential projects and
landbank accounting for 1% and (v) assets held for sale accounting for 1%. Based on the Group's assessment
approximately 96% of the portfolio is core and remaining 4% is non-core assets, including assets held for sale
and residential projects.
As of 30 September 2016, the Group's completed properties in its three most significant markets, i.e. Poland,
Hungary and Romania, constitute 44%, 17% and 15% of the total book value of all completed properties.
Additionally, the Group manages third party assets, including: one office building in Budapest, three office
buildings in Warsaw and one office building in Katowice.
The Company's shares are listed on the WSE and on the Johannesburg Stock Exchange. The Company's
shares are included in WIG 30, the Dow Jones STOXX Eastern Europe 300.
The Group's headquarters are located in Warsaw, at 17 Stycznia 45A.
STRATEGY
GTC's objective is to create value from active management of a growing commercial real estate portfolio in CEE
and SEE, supplemented by selected development activities; and enhancing deal flow, mitigating risks and
optimising performance through its regional platform, by investing its own funds, the proceeds from share capital
increases and reinvesting potential proceeds from the sale of real properties.
GTC will re-invest profit after tax in order to support the long-term growth of the business. The Group may
recommend a change in its dividend policy upon completion of certain material development projects.
COMMENTARY
The management board presents the unaudited condensed consolidated interim results for the nine months
ended 30 September 2016.
OPERATIONAL REVIEW
Growth of the income generating portfolio through accelerated acquisitions and completions
- In 9M 2016 GTC increased its income generating portfolio by expanding the
company's asset base by 16% to EUR1,222m through the investment of EUR152 million in
value accretive office properties
- GTC's latest acquisitions successfully strengthened its position in the CEE and SEE regions
- Pixel, an iconic and unique office building located in Poznan (Poland),
- Premium Plaza and Premium Point; two A-class office buildings in Bucharest (Romania)
- Neptun Office Center, a high-rise office building in Gdansk (Poland)
- Sterlinga Business Center in Lodz (Poland) with 13,900 sq. m of leasable office
Growth of the property portfolio through accelerated development;
Currently 106,000 sq. m under construction with over 82,000
to be completed in 2017, 160,000 sq. m in the planning stage
and another 39,000 sq. m in the pre-planning stage
- Completion of University Business Park B, a modern A-class office building in Lodz
- Completion of FortyOne II, a modern A-class office building in Belgrade
- Construction of Galeria Polnocna progression as planned with the opening
scheduled for summer 2017 (pre-leased at 63%)
- Construction of FortyOne III progressing as planned with the opening scheduled for
Q1 2017 (pre-leased at 70%)
- Construction of Artico, a modern A-class office building in Warsaw, according to the
initial plan. Opening is scheduled for Q3 2017 (pre-leased at 100%)
- White House, a modern A-class office building, is expected to be launched in early
at the beginning of Q1 2017 after the completion of the pre-construction works
- Ada Mall, a modern shopping center in Belgrade, is in the permitting stage with
building permit expected by the end of the year; commercialization has already started
- Budapest City Tower, a modern A-class office building in Budapest, concept design
and all related works in order to obtain a building permit currently ongoing
- Green Heart, a modern A-class office building in Belgrade, concept design and
zoning process have commenced
- Galeria Wilanów, a modern shopping mall in Warsaw, is in the permitting stage
- GTC X, a modern A-class office building in Belgrade, concept design is being prepared
- Avenue Park, a modern A-class office building in Zagreb is undergoing a design
refreshment, building permit in place
Ongoing letting activity
- Further improvement of overall occupancy currently exceeding 91%
- During 9M 2016 newly leased or renewed 94,000 sq. m of office and retail space,
including prolongation of 13,000 sq. m of Romtelecom lease in City Gate and
12,200 sq. m of IBM lease in Korona Office Complex
FINANCIAL REVIEW
Revenues
- Rental and service revenues increased by EUR6m to EUR85m in 9M 2016 due to the
acquisitions of Duna Tower, Pixel, Premium Plaza, Premium Point, Sterlinga
Business Center and Neptun Office Center
Net profit from revaluation and impairment
- EUR39m in 9M 2016 as compared to a loss of EUR2m in 9M 2015
- Reflects progress in construction of Galeria Polnocna, University Business Park B
and Fortyone II as well as profit from the revaluation of Galeria Jurajska and Galleria
Burgas following an improvement in the respective operating results
Net financial expenses
- Decrease to EUR20m in 9M 2016 from EUR22m in 9M 2015 mainly due to refinancing
activity, and the repayment of more expensive loans
- Reduction also supported by change in hedging strategy that allowed to benefit from
a low EURIBOR environment and therefore resulted in a decrease in the average
borrowing cost to 3.2% in 9M 2016 from 3.4% 9M 2015
Taxation
- Non-cash reversal of tax provision recognized at EUR36m in 9M 2016, resulting mainly
form a merger of GTC S.A. with GTC Real Estate Investments Ukraine B.V. and
GTC RH B.V. which reversed the temporary tax differences related to Euro
denominated loans granted by GTC S.A. to GTC RH B.V.
Net profit
- EUR107m in 9M 2016 compared to EUR17m in 9M 2015
Funds From Operations (FFO)
- Increased to EUR33m in 9M 2016 from EUR29m in 9M 2015 as a consequence of the NOI
improvement and a decrease in interest and hedging expenses
Total property value
- At EUR1,544m as of 30 September 2016 (EUR1,324m as of 31 December 2015) due to
acquisitions, investment into assets under construction and revaluation gain
EPRA NAV
- Up by 8% to EUR837m in 9M 2016 from EUR779m in 2015
- Corresponding to an EPRA NAV per share of EUR1.82 [PLN 7.85] compared to EUR1.69 [PLN 7.29]
Financial liabilities
- At EUR827m as of 30 September 2016 compared to EUR717m as of 31 December 2015
- Weighted average debt maturity of 3.9 years and average cost of debt of 3.2% p.a.
- LTV at 45% on 30 September 2016 (39% on 31 December 2015) due to increase in
loans of EUR175m related to acquired properties, construction and refinancing
- Interest coverage at 3.6x on 30 September 2016 (3.0x on 31 December 2015)
Cash and cash equivalents
- Decreased to EUR107m as of 30 September 2016 from EUR169m as of 31 December 2015,
due to investment activities partially offset by an increase in loans
- EUR28.9m of euro-denominated bonds issued on the Polish market in November 2016
Basis of preparation
The Interim Condensed Consolidated Financial Statements for the three and nine months ended 30 September
2016 have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim condensed
consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards ("IFRS" ) as adopted by the EU ("EU IFRS"). At the date of authorisation of these Interim Condensed
Consolidated Financial Statements, taking into account the EU's ongoing process of IFRS endorsement and the
nature of the Group's activities, there is a difference between International Financial Reporting Standards and
International Financial Reporting Standards endorsed by the European Union. The Group applied the possibility
existing for the companies applying International Financial Reporting Standards endorsed by the EU, to apply
IFRIC 21 for reporting periods beginning on or after 1 January 2015 and to apply amendments to IFRS 2 and
amendments to IFRS 3, being part of Improvements to IFRSs resulting from the review of IFRS 2010-2012, for
reporting periods beginning on or after 1 January 2016.
The Interim Condensed Consolidated Financial Statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction with the Group's consolidated
financial statements and the notes thereto for the year ended 31 December 2015. The interim financial results
are not necessarily indicative of the full year results.
Annex 1 Consolidated Statement of Financial Position as at 30 September 2016
30 September 2016 31 December 2015
(unaudited) (audited)
ASSETS
Non-current assets
Investment property 1,394,059 1,163,732
Investment property landbank 119,354 124,797
Residential landbank 14,293 26,773
Investment in associates and joint ventures 4,845 23,067
Property, plant and equipment 5,794 1,070
Deferred tax asset 1,254 647
Other non-current assets 189 386
1,539,788 1,340,472
Assets held for sale 11,959 5,950
Current assets
Residential inventory 4,107 3,161
Accounts receivables 4,647 5,505
Receivables from sale of assets 2,743 -
Accrued income 566 1,655
VAT and other tax receivable 20,118 4,985
Income tax receivable 513 316
Prepayments and deferred expenses 2,511 1,323
Short-term deposits 31,075 26,711
Cash and cash equivalents 107,303 169,472
173,583 213,128
TOTAL ASSETS 1,725,330 1,559,550
30 September 2016 31 December 2015
(unaudited) (audited)
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Company
Share capital 10,410 10,410
Share premium 499,288 499,288
Capital reserve (35,652) (20,646)
Hedge reserve (4,715) (4,563)
Foreign currency translation reserve 1,647 1,405
Accumulated profit 263,317 156,647
734,295 642,541
Non-controlling interest 1,809 (21,339)
Total Equity 736,104 621,202
Non-current liabilities
Long-term portion of long-term loans and bonds 728,796 658,744
Deposits from tenants 8,124 6,242
Long term payable 2,669 4,621
Provision for share based payment 1,991 1,152
Derivatives 3,629 2,755
Provision for deferred tax liability 97,809 133,455
843,018 806,969
Current liabilities
Trade and other payables and provisions 29,391 28,774
Payables related to purchase of non-controlling interest 400 18,108
Current portion of long-term loans and bonds 104,438 80,368
VAT and other taxes payable 1,782 1,572
Income tax payable 490 363
Derivatives 2,519 2,194
Advances received from buyers 943 -
139,963 131,379
Liabilities related to asset held for sale 6,245 -
TOTAL EQUITY AND LIABILITIES 1,725,330 1,559,550
Annex 2 Consolidated Income Statement for 3 and 9-month periods ended 30 September 2016
Nine-month Three-month Nine-month Three-month
period ended 30 period ended 30 period ended 30 period ended 30
September 2016 September 2016 September 2015 September 2015
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues from rental activity 85,159 30,109 78,757 25,941
Residential revenue 5,306 1,530 9,254 2,039
Cost of rental activity (20,533) (7,260) (19,772) (6,694)
Residential costs (4,383) (1,430) (8,615) (1,816)
Gross margin from operations 65,549 22,949 59,624 19,470
Selling expenses (2,304) (907) (1,840) (610)
Administration expenses (8,682) (3,685) (7,536) (2,597)
Profit (Loss) from revaluation/
impairment of assets 37,921 13,854 (833) (387)
Reversal of Impairment (impairment) of
residential projects 1,464 1,464 (1,401) (21)
Other income 1,126 357 1,497 97
Other expenses (2,456) (868) (1,639) (511)
Profit (loss) from continuing operations
before tax and finance income / 92,618 33,164 47,872 15,441
(expense)
Foreign exchange differences gain/
(loss), net 2,589 (547) (224) 1,410
Finance income 1,242 81 2,885 968
Finance cost (21,690) (7,803) (24,812) (6,920)
Share of profit/(loss) of associates and
joint ventures (4,178) (375) (3,683) (102)
Profit before tax 70,581 24,520 22,038 10,797
Taxation 36,031 46,885 (5,206) (29)
Profit (loss) for the period 106,612 71,405 16,832 10,768
Attributable to:
Equity holders of the Company 106,670 71,406 16,834 10,449
Non-controlling interest (58) (1) (2) 319
Basic earnings per share (in Euro) 0.23 0.16 0.05 0.03
Annex 3 Consolidated Statement of Cash Flow for the 9-month period ended 30 September 2016
Nine-month period Nine-month period
ended ended
30 September 2016 30 September 2015
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax 70,581 22,038
Adjustments for:
Loss/(profit) from revaluation/impairment of assets (39,385) 2,234
Share of loss (profit) of associates and joint ventures 4,178 3,683
Profit on disposal of assets (5) (1,039)
Foreign exchange differences loss/(gain), net (2,589) 224
Finance income (1,242) (2,885)
Finance cost 21,690 24,812
Share based payment (income) / expenses 839 325
Depreciation and amortization 325 345
Operating cash before working capital changes 54,392 49,737
Increase in accounts receivables, prepayments and other current assets 723 (4,272)
Decrease in inventory and residential land bank 2,768 7,869
Increase/(decrease) in advances received 942 (317)
Increase in deposits from tenants 1,951 553
Decrease in trade and other payables (1,492) (230)
Cash generated from operations 59,284 53,340
Tax paid in the period (3,183) (2,118)
Net cash flows from operating activities 56,101 51,222
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditure on investment property (63,823) (16,517)
Purchase of completed assets and land (133,551) -
Purchase of subsidiary (5,601) -
Sale of investment property 9,614 51,280
Selling of subsidiaries 4,800 6,386
Liquidation of joint venture - 3,890
Purchase of minority (18,108) (800)
Sale of shares in associate 3,334 -
VAT/tax on purchase/sale of investment property (10,145) (4,034)
Interest received 319 888
Loans granted to associates (123) (38)
Loans repayments from associates 11,347 137
Net cash flows from/(used in) investing activities (201,937) 41,192
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings 174,116 22,023
Repayment of long-term borrowings (67,572) (104,474)
Repayment of hedge - (1,489)
Interest paid (18,377) (20,559)
Loans origination cost (959) -
Decrease/(increase) in blocked deposits (4,408) 2,280
Net cash from/(used in) financing activities 82,800 (102,219)
Effect of foreign currency translation 867 936
Net increase / (decrease) in cash and cash equivalents (62,169) (8,869)
Cash and cash equivalents at the beginning of the period 169,472 81,063
Cash and cash equivalents at the end of the period 107,303 72,194
Management Board Supervisory Board
Thomas Kurzmann (Chief Executive Officer) Alexander Hesse (Chairman)
Erez Boniel (Chief Financial Officer) Philippe Couturier
Jan Düdden
Mariusz Grendowicz
Ryszard Koper
Marcin Murawski
Katharina Schade
Tomasz Styczynski
Registered office of the Company
17 Stycznia 45A,
02-146
Warsaw
Poland
Warsaw, Poland
Date: 28 November 2016
Sponsor: Investec Bank Limited
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