Wrap Text
Q1 2017 results for the three-month period ended 31 March 2017
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")
Q1 2017 RESULTS
FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2017
EPRA NAV/SHARE FFO I/SHARE EARNINGS/SHARE
EUR2.03 EUR0.026 EUR0.07
+4% +18% +96%
Q1 2017 HIGHLIGHTS PORTFOLIO UPDATE
- Development profit of EUR24m driven by - Completion of FortyOne phase III (Belgrade)
projects under construction and assets for sale with 10,700 sq m and GAV of EUR23m
- GAV of income generating portfolio at
- Profit after tax at EUR32m (EUR16m in Q1 2016) EUR1,290m (2% increase)
- Earnings per share up by 96% to EUR0.07 - 154,000 sq. m GLA under construction in 5
(EUR0.04 in Q1 2016) projects with over 72,000 sq. m to be completed
in 2017
- EPRA NAV increased to EUR933m (EUR897m as of
31 December 2016) - 156,000 sq. m GLA in planning stage
- EPRA NAV / share increased 4% to EUR2.03 as - 34,000 sq. m of office and retail space newly
of 31 March 2017 from EUR1.95 as of 31 leased and renewed
December 2016
- Occupancy at 93% (94% as at 31 December
- Gross margin from rental activity increased 2016) impacted by completion of FortyOne
by 6% to EUR22m in Q1 2017 (EUR21m in Q1 2016) III and preparation of space for extension by
some tenants
- 18% FFO I improvement to EUR12m (EUR10m in - Strong pipeline of accretive acquisition
Q1 2016) opportunities of approx. EUR200m of income
generating assets and development land in
- FFO I / share at EUR0.026 (EUR0.022 in Q1 2016) various stages of negotiations
OPERATING PERFORMANCE
Q1 2017 Reported Variance %
GMRA EUR22m +6%
EBITDA EUR19m +7%
Profit for the period EUR32m +96%
FFO I EUR12m +18%
Total property EUR1,681m +4%
Net debt EUR729m +4%
Net LTV 43% +0bps
EPRA NAV/share EUR2.03 +4%
CORPORATE OVERVIEW
NATURE OF BUSINESS
The GTC Group is a leading real estate investor and developer focusing on Poland and three capital cities in
Eastern Europe. The GTC Group is 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 March 2017 the Group: (i) has developed 1.1 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 March 2017, the Group`s property portfolio comprised the following properties:
- 35 completed commercial buildings, including 33 office buildings and two retail properties with a combined
commercial space of approximately 549 thousand sq. m of GLA , of which the Group's proportional interest
amounts to approximately 539 thousand sq. m of GLA;
- two assets held for sale, including two assets in Bulgaria (Galleria Stara Zagora and Galleria Burgas)
- five commercial projects under construction, including three office projects and two retail project with total
GLA of approximately 154 thousand sq. m, of which the Group's proportional interest amounts to 154
thousand sq. m of GLA;
- commercial landbank designated for future development;
- 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 in Ukraine through its subsidiary.
As of 31 March 2017, the book value of the Group's portfolio amounts to EUR1,680,682 with: (i) the Group's
completed commercial properties accounting for 73% thereof; (ii) commercial properties under construction –
16%; (iii) a commercial landbank intended for future development– 6%; (iv) residential projects and landbank
accounting for 1% and (v) assets held for sale – 4%. 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 March 2017, the Group's completed properties in its three most significant markets, i.e. Poland, Hungary
and Romania, constitute 46%, 18% and 15% of the total book value of all completed properties.
Additionally, the Group manages third party assets, including: three office buildings in Warsaw, one office building
in Katowice and five office buildings in Prague.
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.
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 unaudited interim condensed consolidated results for the 3 months ended 31 March 2017.
KEY OPERATING ACHIEVEMENTS IN Q1 2017
Further growth of yielding portfolio despite capital recycling
- GAV of income generating portfolio at EUR1,290m (2% increase)
- Completion of FortyOne phase III (Belgrade) with 10,700 sq m and GAV of EUR23m
- Galleria Stara Zagora and Galleria Burgas sold in Q2 2017 (EUR62m of asset value, EUR3.6 m above the book
value) in line with GTC'S strategy to focus on Poland and three capital cities
Further boost to NAV will come from 5 projects under construction with total of 154,000 sq. m GLA and
5 projects in the planning stage with a total GLA of 156,000 sq. m
- Developments on track with 72,000 sq. m expected to be delivered in 2017
- Construction of Galeria Pólnocna progressing as planned with the opening scheduled for summer 2017
(currently tenants commitments for 89% of retail space)
- Construction of Artico according to the initial plan. Opening is scheduled for Q3 2017
- Another 156,000 sq. m GLA of retail and office space is in the planning stage in 5 projects
Strong leasing performance in Q1 2017
- 34,000 sq. m of office and retail space newly leased and renewed
- Occupancy at 93% (94% as at 31 December 2016) impacted by completion of FortyOne III and short-term
reserve of space for key tenants expansion
KEY FINANCIAL HIGHLIGHTS IN Q1 2017
Rental and service revenues
- Increased to EUR30m in from EUR27m in Q1 2016
Reflects mainly completion of University Business Park B and FortyOne II in 2016 and acquisition of
Premium Point and Premium Plaza in Bucharest, Sterlinga Business Center in Lódz and Neptun
Office Center in Gdansk.
Net profit from development revaluation and impairment
- EUR24m as compared to EUR7m in Q1 2016
Reflects mainly progress in the construction of Galeria Pólnocna and completion of FortyOne III as well
as revaluation gain on Galleria Stara Zagora and Galleria Burgas which were sold in Q2 207
Financial expenses
- Stable at EUR7m despite an increase in average level of debt
Cost of finance at 3.2% due to decrease in average interest rate and change in hedging strategy that
allowed to benefit from a low EURIBOR environment
Taxation
- Tax amounted to EUR1m as comparted to EUR2m in Q1 2016
Net profit
- EUR32m 2016 compared to EUR16m in Q1 2016 mostly on revaluation gain
Funds From Operations (FFO I)
- Increased to EUR12m from EUR10m in Q1 2016 as a consequence of improvement in the gross margin from
rental activity and a decrease in interest and hedging expenses
Total property value
- At EUR1,681m as of 31 March 2017 (EUR1,624m as of 31 December 2016) due to completions, investment into
assets under construction and revaluation gain
EPRA NAV / share
- Up by 4% to EUR2.03 from EUR1.95 in Q1 2016
Corresponding to EPRA NAV of EUR933m compared to EUR897m as of 31 December 2016
Financial liabilities
- At EUR894m as of 31 March 2017 compared to EUR881m as of 31 December 2016
- Weighted average debt maturity of 4 years and average cost of debt of 3.2% p.a.
- LTV at 43% on 31 March 2017 (43% on 31 December 2016)
- Interest coverage at 3.9x on 31 March 2017 (3.5x on 31 December 2016)
- EUR28.5m of Euro denominated bonds and corporate loans raised in Q1 2017
- EUR11.4m investment loan for Corius refinancing
Cash and cash equivalents
- Increased to EUR157m as of 31 March 2017 from EUR150m as of 31 December 2016 due to finance activity
CORPORATE HIGHLIGHTS
Re-appointment of CEO
- On 12 May 2017, the Supervisory Board of GTC re-appointed Thomas Kurzmann as president of the
Management Board for new three-year terms.
BASIS OF PREPARATION
The Interim Condensed Consolidated Financial Statements for the three-months period ended
31 March 2017 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by EU.
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 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 2016, which were authorized for
issue on 17 March 2017. The interim financial results are not necessarily indicative of the full year results.
The Group's Interim Condensed Consolidated Financial Statements are presented in Euro, which is also GTC's
functional currency. For each entity, the Group determines the functional currency and items included in the
financial statements of each entity are measured using the functional currency.
The financial statements of those entities prepared in their functional currencies are included in the Interim
Condensed Consolidated Financial Statements by translation into Euro using appropriate exchange rates
outlined in IAS 21. Assets and liabilities are translated at the period end exchange rate, while income and
expenses are translated at average exchange rates for the period. All resulting exchange differences are
classified in equity as "Foreign currency translation" without affecting earnings for the period.
These Interim Condensed Consolidated Financial statements have been prepared on the assumption that the
Group will continue as a going concern in the foreseeable future. As at the date of approval of these financial
statements, no circumstances were identified which would indicate any threat to the Group' continuing as a going concern.
Annex 1 Consolidated Statement of Financial Position as at 31 March 2017
(in thousands of euro)
31 March 2017 31 December 2016
(unaudited) (audited)
ASSETS
Non-current assets
Investment property 1,495,918 1,501,770
Investment property landbank 103,261 102,905
Residential landbank 13,761 13,761
Investment in associates and joint ventures 2,481 3,803
Property, plant and equipment 6,878 6,002
Deferred tax asset 59 1,075
Other non-current assets 377 353
1,622,735 1,629,669
Assets held for sale 61,970 -
Current assets
Residential inventory 5,772 5,355
Accounts receivables 5,491 5,363
Accrued income 994 767
VAT receivable 21,729 17,389
Income tax receivable 658 652
Prepayments and deferred expenses 4,998 2,558
Short-term deposits 27,651 27,925
Cash and cash equivalents 157,260 149,812
224,553 209,821
TOTAL ASSETS 1,909,258 1,839,490
31 March 2017 31 December 2016
(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 (36,054) (35,702)
Hedge reserve (3,566) (3,631)
Foreign currency translation 2,058 1,872
Accumulated profit 347,375 315,195
819,511 787,432
Non-controlling interest 2,806 2,891
Total Equity 822,317 790,323
Non-current liabilities
Long-term portion of long-term borrowing 753,304 739,031
Deposits from tenants 8,850 8,043
Long term payable 2,731 2,730
Provision for share based payment 2,198 2,046
Derivatives 2,498 2,778
Provision for deferred tax liability 98,044 98,237
867,625 852,865
Current liabilities
Investment and trade payables and provisions 37,188 36,739
Current portion of long-term borrowing 153,578 153,902
VAT and other taxes payable 1,640 1,122
Income tax payable 650 530
Derivatives 2,074 2,553
Advances received 4,324 1,456
199,454 196,302
Liabilities held for sale 19,862 -
TOTAL EQUITY AND LIABILITIES 1,909,258 1,839,490
Annex 2 Consolidated Income Statement for 3-month period ended 31 March 2017
(in thousands of euro)
Three-month Three-month
period ended period ended
31 March 2017 31 March 2016
(unaudited) (unaudited)
Revenue from rental activity 29,788 27,110
Residential revenue 442 3,700
Cost of operations (7,946) (6,531)
Residential costs (379) (2,878)
Gross margin from operations 21,905 21,401
Selling expenses (453) (627)
Administrative expenses (2,642) (2,694)
Profit from revaluation/impairment of assets 24,424 7,436
Other income 346 416
Other expenses (452) (821)
Profit from continuing operations before tax and finance 43,128 25,111
income/(expense)
Foreign exchange differences gain/(loss), net (3,752) 293
Finance income 52 570
Finance cost (6,542) (6,851)
Share of gain/(loss) of associates and joint ventures 184 (483)
Profit before tax 33,070 18,640
Taxation (975) (2,301)
Profit for the period 32,095 16,339
Attributable to:
Equity holders of the Company 32,180 16,440
Non-controlling interest (85) (101)
Basic earnings per share (Euro) 0.07 0.04
Annex 3 Consolidated Statement of Cash Flow for the 3-month period ended 31 March 2017
(in thousands of euro)
Three-month period Three-month period
ended ended
31 March 2017 31 March 2016
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax 33,070 18,640
Adjustments for:
Loss/(profit) from revaluation/impairment of assets (24,424) (7,436)
Share of loss (profit) of associates and joint ventures (184) 483
Profit on disposal of assets - 2
Foreign exchange differences loss/(gain), net 3,752 (293)
Finance income (52) (570)
Finance cost 6,542 6,851
Share based payment expenses 151 53
Depreciation and amortization 167 118
Operating cash before working capital changes 19,022 17,848
Increase in debtors and prepayments and other current assets (2,947) (1,975)
Decrease in inventory (416) 2,682
Increase/(decrease) in advances received 2,868 (1)
Increase in deposits from tenants 808 129
Increase/(decrease) in trade and other payables 1,623 (249)
Cash generated from operations 20,958 18,434
Tax paid in the period (985) (828)
Net cash from operating activities 19,973 17,606
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditure on investment property under construction (33,818) (31,688)
Purchase of completed investment property - (32,230)
Sale of investment property 1,738 2,773
Sale of shares in associates and joint ventures 1,250 -
Purchase of minority - (18,108)
VAT/tax on purchase/sale of investment property (3,614) (10,560)
Interest received 31 126
Loans repayments from associates and joint ventures 406 -
Net cash from/(used in) investing activities (34,007) (89,687)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings 42,728 49,479
Repayment of long-term borrowings (16,978) (24,442)
Interest paid (5,631) (6,018)
Loans origination cost (437) (252)
Decrease/(increase) in short term deposits 274 2,057
Net cash from/(used in) financing activities 19,956 20,824
Effect of foreign currency translation 1,526 (208)
Net increase / (decrease) in cash and cash equivalents 7,448 (51,465)
Cash and cash equivalents at the beginning of the period 149,812 169,472
Cash and cash equivalents at the end of the period 157,260 118,007
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: 15 May 2017
Sponsor: Investec Bank Limited
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