Wrap Text
Annual Results for the year ended 31 December 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")
ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016
HIGHLIGHTS
EPRA NAV/SHARE PLN 8.62 +20%
TOTAL PROPERTY EUR1,624m +23%
GROSS MARGIN FROM RENTAL ACTIVITY EUR86M +10%
FFOI EUR43M +13%
PROFIT FOR THE PERIOD EUR160M +266%
2016 HIGHLIGHTS PORTFOLIO UPDATE
- Total investment of EUR255m (including EUR162m of - Acquisition of income generating
acquisitions) assets of EUR140m and land for
- Revaluation gain of EUR85m (EUR26m in 2015) development of EUR22m (total
driven by projects under construction includes acquisitions in 2015 of EUR53m)
also modest 3% revaluation gain on income - Investment in assets under
generating properties on improved construction of EUR93m (EUR34m in 2015)
performance - 23% growth in total property value up to
- EPRA NAV increased to EUR897m (EUR779m as of EUR1,624m (EUR1,324m as of 31 December 2015)
31 December 2015) - 20% growth in income generating
- EPRA NAV / share increased 20% to PLN 8.62 portfolio to EUR1,261m (EUR1,052m as of 31
from PLN 7.21 as of 31 December 2015 December 2015)
Gross margin from rental activity increased by - 139,000 sq. m NLA under construction
10% to EUR86m (EUR79m in 2015) in five projects with over 83,000 sq. m to be completed in 2017
- 13% FFO I improvement to EUR43m (EUR38m in 2015) - 181,000 sq. m NLA in planning stage
- FFO I / share at PLN 0.39 (PLN 0.38(1) in 2015) - 144,000 sq. m of new lettings and lease 2016
and FFO I yield of 5% - Occupancy rate at 94%
- Profit after tax at EUR160m (EUR44m in 2015)
Earnings per share up by 183% to EUR0.34 (EUR0.12
in 2015)
OPERATING PERFORMANCE
2016 Reported Variance %
Gross margin from rental activity EUR86m +10%
Rental margin 76% +100bps
EBITDA EUR72m +7%
Profit for the period EUR160m +266%
FFO I EUR43m +13%
Total property EUR1,624m +23%
Net debt EUR703m +35%
Net LTV 43% +40bps
EPRA NAV/share PLN 8.62 +20%
(1)Based on GTC's 59% share in FFO I of City Gate to present GTC's fair economical interest in generated funds from operations
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 through its subsidiary.
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 and (iv) residential projects and
landbank.
Since its establishment and as at 31 December 2016 the Group: (i) has developed almost one million sq. m of
gross commercial space and approximately 300 thousand sq. m of residential space; (ii) has sold almost 500
thousand sq. m of gross 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 31 December 2016, the Group`s property portfolio comprised the following properties:
- 31 completed commercial properties, including 27 office properties and four retail properties with a
combined commercial space of approximately 596 thousand sq. m, of which the Group's proportional
interest amounts to approximately 579 thousand sq. m of GLA;
- five commercial projects under construction, including three office projects and two retail project with total
GLA of approximately 139 thousand sq. m, of which the Group's proportional interest amounts to 139
thousand sq. m of NLA;
- commercial landbank designated for future development, with approximately 842 thousand sq. m NLA;
- one residential project under construction with four thousand sq. m area designated for residential use; and
- residential projects and landbank designated for residential use.
The Group also holds a land plot designated for Ana Tower located in Bucharest through its associates and joint
ventures and a land plot in Ukraine through its subsidiary.
As of 31 December 2016, the book value of the Group's portfolio amounts to EUR1,623,791 with: (i) the Group's
completed commercial properties accounting for 78% thereof; (ii) commercial properties under construction –
15%; (iii) a commercial landbank intended for future development– 6%; (iv) residential projects and landbank
accounting for 1%. Based on the Group's assessment approximately 97% of the portfolio is core and remaining
3% is non-core assets, including non-core landplots and residential projects.
As of 31 December 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: three office buildings in Warsaw and one office
building in Katowice.
The Company's shares are listed on the WSE and inward listed on the Johannesburg Stock Exchange. The
Company's shares are included in WIG 30 and the Dow Jones STOXX Eastern Europe 300.
The Group's headquarters are located in Warsaw, at 17 Stycznia 45A Street.
STRATEGY AND DIVIDEND POLICY
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. This leads to accretive funds from
operations and provides for growing dividend potential.
Following the growth and results achieved in 2016, GTC is well positioned to recommend to distribute
PLN 0.27/share from 2016 profits in the form of dividend. The dividend recommendation is guided by, among others things,
the availability of cash, the funds from operations growth plans, the Company's capital expenditure requirements
and planned acquisitions as well as the share of external financing in the Company's overall equity. GTC believes
that the further realization of its growth strategy will provide for a double-digit dividend growth in the future, starting
from 2017 onward.
COMMENTARY
The management board presents the audited condensed consolidated annual results for the 12 months ended 31 December 2016.
KEY OPERATING ACHIEVEMENTS IN 2016
Growth of the income generating portfolio through accelerated acquisitions and completions
- In 2016 GTC increased its income generating portfolio by expanding it's asset base by 20% to EUR1,261m
through the investment of EUR140 million in value accretive office properties and completion of assets
- GTC's latest acquisitions and efficient refinance 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 Lódz (Poland)
- GTC's last office completions further strengthen its position in Belgrade and secondary cities in Poland
- FortyOne II in Belgrade (Serbia)
- University Business Park B in Lódz (Poland)
Growth of the property portfolio through accelerated development; Currently 139,000 sq. m under
construction with over 83,000 sq. m to be completed in 2017, 181,000 sq. m under development
- Construction of FortyOne III, a modern class A office building in Belgrade is progressing as planned with
the opening scheduled for Q1 2017 (pre-leased at 70%)
- Construction of Galeria Pólnocna, a modern shopping mall in Warsaw is progressing as planned with the
opening scheduled for summer 2017 (tenants commitments for 82%)
- 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, was launched in early 2017 after the completion of the pre-
construction works and securing a significant pre-lease
- Ada Mall, a modern shopping center in Belgrade has commenced and is scheduled for completion in the
second half of 2018
- Budapest City Tower, a modern A-class office building in Budapest, concept design is currently ongoing
- Green Heart, a modern A-class office building in Belgrade, concept design is completed and we
commenced permitting process
- Galeria Wilanów is in the building permit application procedure continues
- 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 is expected soon
- Advanced Business Center, a modern A-class office building in Sofia is concept design is currently ongoing
Ongoing letting activity
- Further improvement of overall occupancy currently exceeding 94%
- During 2016 newly leased or renewed 144,000 sq. m of office and retail space, including prolongation of
13,000 sq. m of Romtelecom lease in City Gate, 12,200 sq. m of IBM lease in Korona Office Complex and
8,400 sq. m of Ericsson new lease in University Business Park B
Dividend of PLN 0.27 / share, 3.3% dividend yield
- As part of our strategy, we are developing an income-generating portfolio through acquisition and
development of income-generating assets. This leads to accretive FFO I and NAV growth that provides for
growing dividend potential
- Dividend will be based on the availability of cash, the FFO I growth plans, capital expenditure requirements
and planned acquisitions as well as the share of external financing in the Company's overall equity
- Results of achieved in 2016 allow us to recommend to distribute PLN 0.27 per share, which translates into
3.3% dividend yield
- We believe that implemented growth strategy will enable us to recommend a double-digit dividend growth
in the years from 2017 onward
KEY FINANCIAL HIGHLIGHTS
Rental and service revenues
- Increased to EUR114m in from EUR105m in 2015
Reflects mainly acquisition of Duna Tower, Pixel, Premium Plaza, Premium Point, Sterlinga Business Center
and Neptun Office Center and completion of University Business Park B and FortyOne II
Net profit from revaluation and impairment
- EUR85m in 2016 as compared to EUR26m in 2015
Reflects mainly progress in the construction of Galeria Pólnocna, University Business Park B and FortyOne
II&III as well as modest 3% profit from the revaluation of income generating portfolio mainly Galeria Jurajska,
Duna Tower, Premium Point and Premium Plaza and Galleria Burgas following an improvement in their
operating results.
Financial expenses
- Decrease to EUR30m in 2016 from EUR33m in 2015
Resulting mainly from 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 2016 from 3.4% in 2015.
Taxation
- Tax benefit amounted to EUR35m in 2016
Reflects reversal of temporary deferred tax differences related to intra-group loans and reduction of tax rate in
Hungary and Croatia
Net profit
- EUR160m 2016 compared to EUR44m in 2015
Funds From Operations (FFO I)
- Increased to EUR43m in 2016 from EUR38m in 2015 as a consequence of improvement in the gross margin from
rental activity and a decrease in interest and hedging expenses
Total property value
- At EUR1,624m as of 31 December 2016 (EUR1,324m as of 31 December 2015) due to acquisitions, investment
into assets under construction and revaluation gain
EPRA NAV / share
- Up by 20% to PLN 8.62 in 2016 from PLN 7.21 in 2015
Corresponding to EPRA NAV of EUR897m compared to EUR779m
Financial liabilities
- At EUR881m as of 31 December 2016 compared to EUR718m as of 31 December 2015
- Weighted average debt maturity of 4.1 years and average cost of debt of 3.2% p.a.
- LTV at 43% on 31 December 2016 (39% on 31 December 2015) due to an increase in loans related to
acquired properties, construction and refinancing
- Interest coverage at 3.5x on 31 December 2016 (3.0x on 31 December 2015)
- EUR62m of Euro denominated bonds and corporate loans raised in Q4 2016 and Q1 2017
Cash and cash equivalents
- Decreased to EUR150m as of 31 December 2016 from EUR169m as of 31 December 2015 due to investment
activities
Basis of preparation
The Company maintains its books of account in accordance with accounting principles and practices employed
by enterprises in Poland as required by Polish accounting regulations. The companies outside Poland maintain
their books of account in accordance with local GAAP. The consolidated financial statements include a number
of adjustments not included in the books of account of the Group entities, which were made in order to bring the
financial statements of those entities to conformity with IFRS.
These 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 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 is aware of the fact that IFRS 15 and IFRS 9,
which are effective for financial years beginning on or after 1 January 2018, have been already endorsed by the
European Union. The Group is currently in the process of analysis of quantitative and qualitative impact of those
two standards, as well as of IFRS 16, which is not yet endorsed, on the Group's consolidated financial statements.
Annex 1 Consolidated Statement of Financial Position as at 31 December 2016
31 December 2016 31 December 2015
ASSETS
Non-current assets
Investment property 1,501,770 1,163,552
Investment property landbank 102,905 124,977
Residential landbank 13,761 26,773
Investment in associates and joint ventures 3,803 23,067
Property, plant and equipment 6,002 1,070
Deferred tax asset 1,075 647
Other non-current assets 353 639
1,629,669 1,340,472
Assets held for sale - 5,950
Current assets
Residential inventory 5,355 3,161
Accounts receivables 5,363 5,505
Accrued income 767 1,655
VAT receivable 17,389 4,985
Income tax receivable 652 316
Prepayments and deferred expenses 2,558 1,323
Short-term deposits 27,925 26,711
Cash and cash equivalents 149,812 169,472
209,821 213,128
TOTAL ASSETS 1,839,490 1,559,550
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 (35,702) (20,646)
Hedge reserve (3,631) (4,563)
Foreign currency translation 1,872 1,405
Accumulated profit 315,195 156,647
787,432 642,541
Non-controlling interest 2,891 (21,339)
Total Equity 790,323 621,202
Non-current liabilities
Long-term portion of long-term borrowing 739,031 658,744
Deposits from tenants 8,043 6,242
Long term payable 2,730 4,621
Provision for share based payment 2,046 1,152
Derivatives 2,778 2,755
Provision for deferred tax liability 98,237 133,455
852,865 n 806,969
Current liabilities
Investment and trade payables and provisions 36,739 28,774
Payables related to purchase of non-controlling interest - 18,108
Current portion of long-term borrowing 153,902 80,368
VAT and other taxes payable 1,122 1,572
Income tax payable 530 363
Derivatives 2,553 2,194
Advances received from residential buyers 1,456 -
196,302 131,379
TOTAL EQUITY AND LIABILITIES 1,839,490 1,559,550
Annex 2 Consolidated Income Statement for 12-month period ended 31 December 2016
2016 2015
Revenue from rental activity 114,341 104,999
Residential revenue 5,960 12,364
Cost of rental activity (27,890) (26,462)
Residential costs (5,065) (10,871)
Gross margin from operations 87,346 80,030
Selling expenses (3,236) (2,721)
Administration expenses (12,234) (11,045)
Profit from revaluation/ impairment of assets 84,604 27,611
Impairment of residential projects (53) (1,389)
Other income 1,354 1,645
Other expenses (2,996) (2,430)
Profit/(Loss) from continuing operations before tax and
finance income / expense 154,785 91,701
Foreign exchange differences gain/(loss), net 2,435 1,394
Finance income 1,324 3,849
Finance cost (29,500) (33,205)
Share of loss of associates and joint ventures (4,474) (8,163)
Profit/(loss) before tax 124,570 55,576
Taxation 35,005 (11,937)
Profit/(Loss) for the year 159,575 43,639
Attributable to:
Equity holders of the Company 158,548 45,192
Non-controlling interest 1,027 (1,553)
Basic earnings per share (in Euro) 0.34 0.12
Annex 3 Consolidated Statement of Cash Flow for the 12-month period ended 31 December 2016
Year ended Year ended
31 December 31 December
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax 124,570 55,576
Adjustments for:
Loss/(profit) from revaluation/impairment of assets and residential projects (84,551) (26,222)
Share of loss of associates and joint ventures 4,474 8,163
Loss (Profit) on disposal of asset 65 (1,014)
Foreign exchange differences loss/(gain), net (2,434) (1,394)
Finance income (1,324) (3,849)
Finance cost 29,500 33,205
Provision for share based payment loss/(profit) 894 863
Depreciation and amortization 468 509
Operating cash before working capital changes 71,662 65,837
Increase in accounts receivables and prepayments and other current assets 374 (1,340)
Decrease in residential inventory 2,303 10,263
Decrease/(increase) in advances received from residential 1,456 (545)
Increase in deposits from tenants 1,801 663
Increase/(decrease) in trade payables (202) 966
Cash generated from operations 77,394 75,844
Tax paid in the period (4,113) (2,735)
Net cash from operating activities 73,281 73,109
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditure on investment property (93,259) (33,519)
Purchase of completed assets and land (139,646) (53,080)
Sale of investment property 12,640 42,665
Sale of residential landbank and inventory - 8,504
VAT/tax on purchase/sale of investment property (8,900) (4,571)
Sale of subsidiary 10,179 13,032
Purchase of subsidiary (9,844) (191)
Purchase of minority (18,558) (800)
Sale of associates and Joint ventures 3,947 -
Interest received 425 1,279
Liquidation of Joint Ventures - 3,890
Loans granted to associates (123) (288)
Loans repayments from associates 11,349 244
Net cash used in investing activities (231,790) (22,835)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of shares - 140,102
Share issuance expenses - (2,481)
Proceeds from long-term borrowings 273,517 62,947
Repayment of long-term borrowings (103,193) (137,970)
Repayment of hedge - (1,928)
Interest paid (25,075) (26,708)
Loans origination payment (2,229) (1,148)
Decrease/(Increase) in short term deposits (2,214) 4,558
Net cash from /(used) in financing activities 140,806 37,372
Net foreign exchange difference (1,957) 763
Net increase/ (Decrease) in cash and cash equivalents (19,660) 88,409
Cash and cash equivalents at the beginning of the period 169,472 81,063
Cash and cash equivalents at the end of the period 149,812 169,472
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: 20 March 2014
Sponsor: Investec Bank Limited
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