TIDMGWI
RNS Number : 3850S
Globalworth Real Estate Inv Ltd
11 March 2019
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this information is considered to be in the public
domain.
11 March 2019
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Preliminary Financial Results for the year ended 31 December
2018 & Intention to raise additional equity capital
Globalworth, the leading office investor in Central and Eastern
Europe, is pleased to provide a comprehensive update of its
operations, along with a preliminary release of its unaudited
Condensed Consolidated Financial Statements for the year ended 31
December 2018.
Dimitris Raptis, Deputy Chief Executive Officer and Chief
Investment Officer of Globalworth, commented: "2018 was a
tremendous year for Globalworth as we continued our strong growth
trajectory both through compelling investments in income producing
assets with asset management potential and through development
projects, delivered a significant step-up in our financial results,
and demonstrated strong operating results across our portfolio in
Romania and Poland. We are proud to have established Globalworth as
the leading institutional office landlord in the CEE region with a
portfolio of prime office assets, supported by a strong team of
experienced professionals. With further investments targeted and,
in our view, a compelling market outlook, we are set to take
further strides forward in 2019".
Operational Highlights
-- EUR538.3 million of acquisitions were completed in Poland
spanning five standing investments in Warsaw (EUR346.0 million),
Krakow (EUR139.0 million) and Wroclaw (EUR35.8 million) and three
land plots in Bucharest, Romania (EUR17.5 million) on which the
Group aims to develop new office projects.
-- Globalworth's combined portfolio(1) value rose by 35.6% to
EUR2.5 billion at 31 December 2018 (31 December 2017: EUR1.8
billion), split 51% in Romania and 49% in Poland. The total GLA of
the Group's combined portfolio reached 1.0 million sqm, an increase
of over 250k sqm on 31 December 2017.
-- During 2018, the Group negotiated the take-up or extension of
121.8k sqm of commercial space in Romania and Poland, comprising
some 67.9k sqm of new lettings or expansions and 54.0k sqm of
renewals, with an average weighted average lease length (WALL) of
7.1 years.
-- As at 31 December 2018, 955.8k sqm of commercial space was
let to some 650 tenants, of which 76% is to multinational
corporates, with a WALL of 5.0 years (31 December 2017: 5.3 years).
Total annualised contracted rental income for the standing combined
portfolio increased by 46.2% to EUR159.5 million (31 December 2017:
EUR109.1 million).
-- Occupancy of the commercial standing portfolio was 95.1%
(96.3% including tenant expansion options) at 31 December 2018,
compared to 93.3% (95.4% including tenant expansion options) at 31
December 2017. Like-for-like occupancy of the portfolio improved by
2.8% over the year.
-- In terms of the Company's developments, Phase A of
Globalworth Campus (following the delivery of the second tower of
the project) and Renault's new HQ, both in Bucharest, were
completed adding 70.5k sqm of new high-quality space. Construction
of the 34.8k sqm third and final Campus tower is well underway and
due for completion in Q4-19, and the Group is pleased to have 60.0%
of the development leased or subject to a letter of intent since 31
December 2018. Two further projects have started: the 26.4k sqm
Globalworth Square project in Bucharest and a 17.7k sqm unit at the
Group's TAP II logistics project in Timisoara. In addition, plans
are in progress for a further 76k sqm of new office projects in
Bucharest and up to 150k sqm of light-industrial and logistics
projects in Timisoara.
-- Green-certified properties accounted for 70.6% of our
standing commercial portfolio at 31 December 2018, with the
potential to rise to 100% through properties currently under
certification.
Financial Highlights
-- Net operating income ("NOI") of EUR133.4 million (2017:
EUR51.1 million), an increase of 161% on 2017. This increase, as is
the case across other earnings metrics, was largely driven by the
full year consolidation of Globalworth Poland, as compared to the
prior year when Polish operations were consolidated for less than
one month, alongside the further acquisitions in Poland(2) . In
addition, NOI saw ongoing growth from our properties in Romania
following leasing activity and development completions.
-- EBITDA(3) of EUR121.8 million, up 287% on 2017 (EUR31.5
million) as a result of higher valuation gains and lower
acquisitions costs, partly offset by higher administration and
other expenses. Adjusted EBITDA(3) , which includes the share of
minority interests, was EUR150.8 million, up 368% on 2017 (EUR32.2
million).
-- Normalised EBITDA(3) from ongoing operating activities of
EUR96.9 million an increase of 135% on 2017 (EUR41.2 million) due
to the growth in NOI. Adjusted normalised EBITDA(3) , which
includes the share of minority interests, was EUR119.0 million, up
178% on 2017 (EUR42.8 million).
-- Earnings before tax of EUR115.3 million, an increase of 341%
on 2017 (EUR26.2 million). IFRS earnings per share increased by
130% from 26.40 cents to 60.67 cents.
-- EPRA earnings of EUR60.9 million, an increase of 262% on 2017
(EUR16.8 million). EPRA earnings per share increased by 153% from
18.17 to 46.03 cents per share in 2018.
-- Loan to Value of 43.9% (31 December 2017: 34.0%). The
weighted average interest rate on debt financing as at 31 December
2018 amounted to 2.91% (31 December 2017: 2.62%), with a weighted
average period to maturity of 5.1 years (31 December 2017: 5.4
years).
-- EPRA Net Asset Value (NAV) of EUR1,200.2 million, up 2.5% on
2018 (31 December 2017: EUR1,171.5 million) and EPRA NAV per share
of EUR9.04, up 2.3% (31 December 2017: EUR8.84). Factoring in
dividend distributions paid during 2018 of 49 cents per share, the
combined total accounting return of NAV growth and dividends rose
to 7.8%, up from 5.7% in 2017.
-- For 2018, the Company declared dividends of EUR0.54 per
share, an increase of 22.7% over 2017 (EUR0.44 per share). Of this,
EUR0.27 was paid in August 2018, and a second interim dividend of
EUR0.27 per share was paid in February 2019.
-- In March 2018, the Company successfully issued a EUR550
million unsecured Eurobond at a coupon of 3% with seven years
duration under the Company's EUR1.5 billion Euro Medium Term Notes
programme, in an issue which was more than twice oversubscribed. In
June 2018, Globalworth Poland completed a EUR450 million equity
capital raise to support its ongoing portfolio expansion, of which
EUR300 million was subscribed by Globalworth and EUR150 million by
Globalworth's largest shareholder, Growthpoint Properties.
Outlook
2018 was another dynamic year for Globalworth and one in which
the Company bolstered its leading position in the CEE office real
estate market. The Company's entry into the Polish market in
December 2017 and the successful acquisitions completed since then
have, within a very short period, established Globalworth as the
largest institutional office landlord in Poland. Meanwhile, the
development pipeline in Romania positions the Company well for
further expansion in this market. Globalworth's portfolio is now
evenly balanced between the two markets, with the weighting towards
Poland expected to increase further in the future.
As a result of this expansion, new developments, and successful
management of its existing portfolio the Company recorded an
impressive increase in both net operating income and operating
profits in 2018.
The Company has demonstrated that it is able to acquire and
develop high-quality properties at yields which are considerably
higher than prime property yields in its core markets and, with
healthy tenant demand and a supportive economic environment, it
considers that market fundamentals in both markets remain
compelling. It is expected that these conditions will sustain
investor interest in the region and, as such, provides a healthy
backdrop for the Company's activities. In addition, the Company's
activities are increasingly well positioned to benefit from greater
scale and efficiency as it further consolidates its position.
Intention to Raise Additional Equity
Consistent with its strategy since IPO, the Group continues to
evaluate a strong pipeline of further high-quality investment
opportunities. Currently, the Group has EUR280 million of
acquisitions under exclusivity in Poland, with a blended stabilised
acquisition yield of over 7.5%, and is also currently analysing a
number of other value accretive acquisitions. This pipeline offers
assets with a clear strategic fit in prime locations alongside an
attractive income profile, building not only critical mass and
providing scale benefits, but also providing further asset
management angles and value creation potential. In addition, the
Company has a very active development pipeline in Romania, where
the Company has an excellent track record of delivering value from
such projects. With these investments in mind, and with a view to
managing a long-term LTV target of below 40%, the Company will be
looking, in the near term, to raise additional equity capital of up
to EUR500 million at or around prevailing EPRA NAV per share.
A further announcement providing details of any potential equity
raise will be issued in due course. In order to provide the
shareholder authorities necessary to issue shares as part of the
process, a circular (the "Circular") convening an Extraordinary
General Meeting ("EGM") at which the required shareholder approvals
will be sought will shortly be published and sent to
shareholders.
Update on Possible Move to a Premium Listing on the London Stock
Exchange
The Board continues to recognise the potential benefits,
including improved liquidity in its shares, of moving to a Premium
Listing of the London Stock Exchange. While its previously
announced intention in this regard remains valid, the Board is
mindful that the uncertainty arising from the UK's proposed
departure from the European Union may as yet have unforeseen
impacts. Until there is greater clarity, the Board intends to
proceed with caution and maintain its strategic flexibility.
In addition, the Board has been considering opportunities to
simplify the Company's corporate structure as the business evolves.
These are areas of key strategic focus of the Board, and
shareholders will be kept updated on all developments in this
regard.
The Company's audited 2018 Annual Report and Financial
Statements for the year ended 31 December 2018 will be published by
early April 2019.
(1) Combined real estate portfolio is defined as the aggregation
of all assets in the Company's portfolio, including consolidation
of 100% of Globalworth Poland, in which the Company has a 73.7%
shareholding (31 December 2018: 69.7%), and 100% of the investment
referred to as Renault Bucharest Connected.
(2) includes the effect of the settlement of certain master
lease and NOI guarantees in Poland, as announced on 21 December
2018, which resulted in a EUR21.5 million cash payment to GPRE.
(3) Refer to glossary section below for definition.
For further information visit www.globalworth.com or
contact:
Andrew Cox Tel: +44 20 3026
Head of Investor Relations & Corporate Development 4027
Jefferies (Joint Broker) Tel: +44 20 7029
Stuart Klein 8000
Panmure Gordon (Nominated Adviser and Joint Tel: +44 20 7886
Broker) 2500
Alina Vaskina
Milbourne (Financial Public Relations) Tel: +44 7903 802545
Tim Draper
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central
and Eastern Europe, quoted on the AIM-segment of the London Stock
Exchange. It has become the pre-eminent office investor in the CEE
real estate market through its market-leading positions both in
Romania and in Poland, where the Company has a majority
shareholding in Globalworth Poland, a pure-play Polish real estate
platform listed on the Warsaw Stock Exchange. Globalworth acquires,
develops and directly manages high-quality office and
logistics/light-industrial real estate assets in prime locations,
generating rental income from high quality tenants from around the
globe. Managed by nearly 200 professionals across Romania and
Poland, the combined value of its portfolio is EUR2.5 billion, as
at 31 December 2018. Over 90% of the portfolio is in
income-producing assets, predominately in the office sector, and
leased to a diversified array of some 650 national and
multinational corporates. In Romania, Globalworth is present in
Bucharest, Timisoara and Pitesti, while in Poland its assets span
Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice. For more
information, please visit www.globalworth.com and follow us on
Facebook, Instagram and LinkedIn.
IMPORTANT NOTICE: This announcement has been prepared for the
purposes of complying with the applicable laws and regulations of
the United Kingdom and the information disclosed may not be the
same as that which would have been disclosed if this announcement
had been prepared in accordance with the laws and regulations of
any jurisdiction outside of the United Kingdom. This announcement
may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may
be identified by the use of forward-looking terminology, including
the terms "targets", "believes", "estimates", "plans", "projects",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward looking
statements include all matters that are not historical facts and
involve predictions. Forward-looking statements may and often do
differ materially from actual results. Any forward-looking
statements reflect the Company's current view with respect to
future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the
Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in
which it operates. Forward-looking statements speak only as of the
date they are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, the Company
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
announcement.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
PRELIMINARY FULL YEAR RESULTS AND UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2018
MANAGEMENT REVIEW
In 2018, our portfolio continued to expand as a result of
acquisitions, predominantly in Poland, completed developments and
further progress on developments underway in Romania. This
expansion and the successful negotiation of ongoing leases led to
further growth in our rental income and has created the potential
for future rental growth.
REVIEW OF NEW ACQUISITIONS
-- Eight investments for EUR538.3 million in Poland and Romania
-- 185.8k sqm of class "A" office GLA acquired in Poland
-- Three land plots acquired in Bucharest with the potential to
add 76.0k sqm of class "A" GLA in the future
Over the course of the year, Globalworth completed eight new
investments in Poland and Romania for a total consideration of
EUR538.3 million.
Poland
We are very pleased to have been able to acquire some of the
most recognisable office properties available in the Polish market,
which included three of the 10 largest office transactions of the
year. In total we concluded five transactions for EUR520.8 million,
adding 185.8k sqm of class "A" office space, which at the end of
2018 were 94.8% occupied and had EUR37.3 million of contracted rent
with an average WALL of 3.5 years.
These acquisitions offer an attractive entry yield of 7.2%, with
the scope for this to rise to 7.6% under full occupancy. This is
consistent with the Group's strategy of acquiring standing
properties at yields above prime market levels, where we believe
that we can enhance the attractiveness and performance of our
investments by applying different asset management initiatives over
time.
The majority of our new acquisitions were properties in Warsaw,
the country's principal real estate market, where we have now
established a strong presence. In addition, we continued to pursue
opportunities in select regional cities, successfully expanding our
portfolio through new investments in Krakow and Wroclaw.
-- Skylight & Lumen: The Group's largest property
transaction to-date was finalised in Q4-18 for a total
consideration of EUR190.0 million. The investment comprises two
offices, offering 45.4k sqm of GLA and 453 parking spaces, forming
part of the "Z ote Tarasy" multifunctional mixed-use complex in the
heart of Warsaw, which combines high-quality office, retail and
leisure space with excellent connectivity to the capital's main
train station.
-- Spektrum Tower: is a high-rise class "A" office in the heart
of Warsaw's Central Business District, acquired for a total
consideration of EUR101.0 million. It was completed in 2003 and
underwent extensive refurbishment in 2015, when it was converted
into a multi-tenanted building offering 32.1k sqm of GLA and 318
parking spaces.
-- Warta Tower: is a class "A" office located in the extended
West Central Business District of Warsaw and was acquired for a
total consideration of EUR55.0 million. It offers 33.7k sqm of GLA
and 542 parking spaces.
-- Quattro Business Park ("QBP"): is a high-quality office
complex of five buildings in Krakow acquired for a total
consideration of EUR139.0 million. QBP was completed in phases and
offers a total of 60.2k sqm of GLA and 1,327 parking spaces.
-- West Link: is a recently completed class "A" office in
Wroclaw, acquired for a total consideration of EUR35.8 million.
West Link is located to the west of the city centre, offering 14.4k
sqm of GLA and 265 parking spaces. The property is adjacent to West
Gate (also owned by the Group), creating an office complex with a
total of 31.0k sqm of high-quality office space almost exclusively
leased to Nokia Solutions & Network.
Romania
In Romania, where the Group is looking to its next phase of
development projects, Globalworth completed the acquisition of two
land plots in the new CBD of Bucharest for a total consideration of
EUR15.5 million.
-- On the plot located between Globalworth Plaza and the Green
Court "B" offices owned by the Group, a new class "A" office,
Globalworth Square (26.4k sqm GLA), is currently under
construction
-- The second land plot is adjacent to Globalworth's Green Court
complex and will be used to further expand this development with a
fourth class "A" office (16.2k sqm GLA), Green Court D.
In addition, in June 2018 we acquired a third land plot for
EUR2.0 million, which is directly adjacent to the Renault Bucharest
Connected project in the west part of Bucharest, on which we are
now progressing preparations and design for a new 33.4k sqm GLA
property offering predominantly class "A" office space and,
thereby, creating a campus of over 75.6k sqm of GLA at this
location.
REVIEW OF STANDING PORTFOLIO
-- GAV of our standing income generating properties increased by
39.2% in 2018 to EUR2.4 billion
-- Total standing GLA increased by over 250k sqm to reach 1.0m sqm of leasable space
-- 70.6% of standing commercial portfolio by value is green certified
-- Standing commercial occupancy of 95.1% (96.3% including tenant options)
-- EUR159.5 million contracted rent (99.0% from commercial properties)
-- WALL of commercial properties of 5.0yrs
Our portfolio of standing properties continued to expand in 2018
following the acquisition of five standing investments (10 office
properties) in Poland, the completion of Globalworth Campus Tower 2
and Renault Bucharest Connected projects in Bucharest.
As of 31 December 2018, there were 31 standing investments in
our portfolio with a total of 52 standing properties in Poland and
Romania.
Our standing portfolio comprised 25 class "A" office investments
(39 properties in total) and three mixed-use investments (with
seven properties in total) in central locations in Bucharest
(Romania), Warsaw (Poland) and five of the largest office
markets/cities of Poland (Krakow, Wroclaw, Katowice, Gdansk and
Lodz). In addition, we own a light industrial park with four
facilities in Timisoara (Romania), a modern warehouse in Pitesti
(Romania), and part of a residential complex in Bucharest
(Romania).
Globalworth's total standing commercial GLA at the end of
December 2018 had increased by 34.3% to reach 1.0 million sqm, with
the overall standing portfolio GLA increasing 31.7% to 1.04 million
sqm.
The independently appraised value of our standing properties
rose to EUR2.4 billion (31 December 2018), representing an annual
increase of 39.2%, mainly due to new additions (acquisitions and
deliveries), while properties held throughout the period
(like-for-like) marginally improved in value (+0.6%) in 2018.
Evolution of Standing Portfolio
-------------------------------------------------------------------------------------------------
31 Dec. Like-for-Like New Acquisitions New Deliveries Apt. Sales 31 Dec.
17 (& BOMA 18
adj.(1)
)
------------ -------- -------------- ----------------- --------------- ----------- --------
GLA (k
sqm) 791.0 - 185.8 70.5 (5.2) 1,042.0
------------ -------- -------------- ----------------- --------------- ----------- --------
GAV (EURm) 1,710.3 10.8 540.2 128.6 (8.7) 2,381.1
------------ -------- -------------- ----------------- --------------- ----------- --------
(1) Includes impact in areas (sqm) from the remeasurement of
certain properties.
We consider our portfolio to be modern, with the majority of our
properties having been completed or refurbished since 2011. It is
worth noting that 37 of our standing properties, accounting for
64.1% of our GLA and 65.2% of our standing combined portfolio value
have been delivered or significantly refurbished in the past five
years. In addition, following the delivery of our development
projects (Globalworth Campus - Towers 3 and Globalworth Square) and
other future completions, the proportion of modern office stock in
our portfolio will further increase in the short-medium term.
Age of Portfolio
--------------------------------------------------------------------------------------
Age <= 3 yrs 3 < x <= 5 < x <= 7 < x <= + 10 yrs
5 yrs 7 yrs 10 yrs
------------------------------- --------- --------- --------- --------- ---------
By Year of Completion 29.1% 16.1% 9.6% 11.1% 34.2%
------------------------------- --------- --------- --------- --------- ---------
By Year of Last Refurbishment 41.1% 24.1% 9.6% 8.5% 16.8%
Consistent with our commitment to energy efficient properties,
we added nine environmentally certified properties to our
portfolio. All properties acquired this year were green with WARTA
Tower, Quattro Business Park (three of five buildings) and Spektrum
Tower being certified with BREEAM Very Good accreditation, and the
remaining two buildings at Quattro Business Park, Skylight and
Lumen being certified with BREEAM Excellent accreditation. West
Link, which was green certified at the time of acquisition, is
currently in a re-certification process. In addition, Globalworth
Campus Tower 1, a class "A" office developed by the Group, was also
awarded BREEAM Excellent certification in Q4-2018.
Overall, our standing portfolio as of 31 December 2018 comprised
30 green certified properties, accounting for 70.6% of our standing
commercial portfolio, further increasing to 73.2% in January 2019
following the BREEAM Excellent accreditation received for
Globalworth Campus Tower 2, and we are in the process of certifying
or re-certifying 19 other properties in our portfolio. Upon receipt
of environmentally friendly accreditations for the properties which
are under certification or re-certifying process, 100% of our
portfolio will be green accredited.
Total Standing Properties 31 Dec. 2017 31 Dec. 2018
-------------------------------- ------------- -------------
Number of Investments 25 31
-------------------------------- ------------- -------------
Number of Properties 39 52
-------------------------------- ------------- -------------
GLA (k sqm) (1) 791.0 1,042.0
-------------------------------- ------------- -------------
GAV (EUR m) (2) : 1,710.3 2,381.1
-------------------------------- ------------- -------------
Contracted Rent (EUR m) (3) 109.1 159.5
-------------------------------- ------------- -------------
Of which Commercial Properties 31 Dec. 2017 31 Dec. 2018
-------------------------------- ------------- -------------
Number of Investments 24 30
-------------------------------- ------------- -------------
Number of Properties 38 51
-------------------------------- ------------- -------------
GLA (k sqm) 748.1 1,004.8
-------------------------------- ------------- -------------
GAV (EUR m) (2) 1,632.6 2,312.2
-------------------------------- ------------- -------------
Occupancy (4) 93.3% 95.1%
-------------------------------- ------------- -------------
Contracted Rent (EUR m) (3) 107.6 157.9
-------------------------------- ------------- -------------
WALL (years) 5.3 5.0
-------------------------------- ------------- -------------
(1) Includes c.42.8sqm and c.37.2k sqm of residential space in
31 December 2017 and 2018 respectively.
(2) Appraised valuations as of 31 December 2017 and 2018 respectively.
(3) Contracted Rent includes c.EUR1.5 million from residential space in 31 December 2017 and 2018 respectively.
(4) Occupancy including tenant options of 96.3% and 95.4% in 31
December 2017 and 2018 respectively
At 31 December 2018, Renault Bucharest Connected is presented on
an 100% basis held by Elgan Offices SRL in Romania. Globalworth
holds a 50% share in Elgan Offices SRL.
REVIEW OF DEVELOPMENTS
-- Committed pipeline: 78.9k sqm of GLA to be delivered by
H1-2020E with total remaining capex of EUR84.1 million
-- Future secured pipeline: 226.6k sqm of GLA in phases
-- Potential to increase in current commercial GLA by over 30%
Globalworth continues with its active development/construction
programme in Romania, making excellent progress with the
construction and delivery of high-quality office and
light-industrial space.
In April, we completed Phase A of our Globalworth Campus project
in Bucharest with the delivery of the second tower, with Tower 2
offering 28.2k sqm GLA and 180 parking spaces. Phase A comprises
two twin class "A" office towers with total GLA of 57.2k sqm. On
completion of Phase B, currently under construction, Globalworth
Campus will become the largest office campus in Bucharest with a
total of 92.0k sqm of GLA and 960 parking spaces.
Renault Bucharest Connected ("RBC") was completed at the end of
the year, and was subsequently handed over to the tenant in line
with its targeted timeline in February 2019. We are particularly
pleased with the efforts of our team and partners in delivering
such a high-quality project within a compressed timeline. RBC is
100% leased to Groupe Renault and houses their new headquarters in
Romania, as well as a dedicated design centre for the development
of future models of cars, over 42.3k sqm of GLA and 1,000 parking
spaces.
RBC is the ninth property delivered by Globalworth in Romania
since the beginning of 2015, increasing the total GLA developed by
the Group to c.250k sqm.
Following the delivery of these high-quality properties and as
of year-end, we had two active developments in Bucharest under
construction and one in Timisoara, which on completion will further
increase our footprint by 78.9k sqm of GLA.
Developments Under Construction
TAP-II Globalworth Globalworth
Campus T3 Square
--------------------------- ---------- ------------------ ------------------
Location Timisoara New CBD Bucharest New CBD Bucharest
--------------------------- ---------- ------------------ ------------------
Expected Delivery Q2-2019E Q4-2019E Q1-2020E
--------------------------- ---------- ------------------ ------------------
GLA (k sqm) 17.7 34.8 26.4
--------------------------- ---------- ------------------ ------------------
Capex to 31 Dec. 18
(EURm) 3.3 17.0 14.2
--------------------------- ---------- ------------------ ------------------
GAV (EURm) 5.4 25.5 13.8
--------------------------- ---------- ------------------ ------------------
Remaining Estimated
Capex (EURm) 5.2 39.0 39.9
--------------------------- ---------- ------------------ ------------------
ERV 100% Occupied
(EURm) 0.8 5.6 5.1
--------------------------- ---------- ------------------ ------------------
Est. Yield on Development
Cost 10.0% 10.0% 9.5%
In addition, we continue to prepare our next phase of office and
logistic / light-industrial development projects in Bucharest and
other regional cities in Romania. These projects are not yet
committed, but continue to be progressed in terms of design,
planning and pre-leasing, and on current expectations have the
potential to add 226.6k sqm of high-quality real estate space.
Future Developments
-------------------------------------------------------------------------------------------
TAP & TAP Green Globalworth Luterana
II (expansion) Court D West Development
--------------------------- ---------------- ----------- ------------ -----------------
Location Timisoara New CBD West of CBD Bucharest
Bucharest Bucharest
--------------------------- ---------------- ----------- ------------ -----------------
Expected Delivery 2019-20E Q4-2020E Q2-2021E Q2-2021E
--------------------------- ---------------- ----------- ------------ -----------------
GLA (k sqm) 150.6 16.2 33.4 26.4
--------------------------- ---------------- ----------- ------------ -----------------
Capex to 31 Dec. 18
(EURm) 5.0 2.6 3.0 7.1
--------------------------- ---------------- ----------- ------------ -----------------
GAV (EURm) 7.8 5.1 3.2 14.3
--------------------------- ---------------- ----------- ------------ -----------------
Remaining Estimated
Capex (EURm) 59.1 23.9 42.4 40.4
--------------------------- ---------------- ----------- ------------ -----------------
ERV 100% Occupied
(EURm) 6.5 2.9 4.8 5.8
--------------------------- ---------------- ----------- ------------ -----------------
Est. Yield on Development
Cost 10.2% 11.0% 10.6% 12.2%
Right of First Offer (ROFO) Portfolio
Globalworth, through Globalworth Poland, has invested in two
projects in Poland which are at different phases of construction,
in each of which it owns a 25% economic stake, with the right to
acquire the remaining interest once certain conditions have been
satisfied.
-- Beethovena I & II are a class "A" office project located
in Warsaw comprising two, four-floor offices, which on completion
will offer total GLA of 35.8k sqm. Beethovena I and II are of
similar size (18.9k sqm and 16.9k sqm) and are expected to be
delivered in Q2-2019 and Q3-2020 respectively. The first phase is
currently pre-leased at c.64% to tenants such as Havas, MasterCard
and others.
-- The Gatehouse Offices (previously Browary J) is a class "A"
office project located in Warsaw comprising a stepped shaped "main"
building extending over 11 floors and the lower 7th floor wing. The
project was delivered in Q4-2018 and, offers 15.7k sqm of GLA, of
which 100% is leased to blue-chip office tenants (including Epam,
L'Oreal, Sony and WeWork).
The sale of Gatehouse Offices to a fund managed by GLL Real
Estate Partners was preliminarily signed in Q4 2018.
Overview of ROFO properties (31 December 2018)
---------------------------------------------------------------------- ----------------------------------
Location Completion Date GLA Equity Invested (EURm)
(k sqm)
--------------------------------------- ---------- ----------------- --------- -----------------------
Beethovena I Warsaw Q2-2019 18.9 2.9
--------------------------------------- ---------- ----------------- --------- -----------------------
Beethovena II Warsaw Q3-2020E 16.9 2.8
--------------------------------------- ---------- ----------------- --------- -----------------------
The Gatehouse Offices (ex. Browary J) Warsaw Q4-2018 15.7 4.2
--------------------------------------- ---------- ----------------- --------- -----------------------
Total ROFO 51.5 9.9
Other Pipeline Investment Opportunities
Consistent with its on-going growth strategy, Globalworth,
through Globalworth Poland, is under exclusivity and in an advanced
stage of negotiation for the acquisition of four property
investments in Poland.
All investments involve high-quality standing offices in line
with the Group's strategy, with one property located in Warsaw and
three in major regional cities.
The properties benefit from high occupancy rates and are leased
to well-known national and international corporates operating in
Poland and abroad, on market standard triple-net, Euro denominated
and annually indexed leases. This pipeline is expected to
potentially contribute additional contracted rental income of
approximately EUR20.4 million (EUR21.8 million on stabilisation)
per annum. Total investment is estimated at c.EUR280 million and
the Group is currently undertaking the necessary due diligence on
the properties.
Acquisition Pipeline under exclusivity (28 February 2019)
--------------------------------------------------------------------------------------------------
Pipeline Location GLA (k sqm) Stabilised Rent (EURm) Est. Investment Cost EURm)
------------------ ---------- ------------ ----------------------- ---------------------------
Class "A" office Warsaw 45 10.1 130
------------------ ---------- ------------ ----------------------- ---------------------------
Class "A" office Regional 18 3.3 37
------------------ ---------- ------------ ----------------------- ---------------------------
Class "A" office Regional 29 4.5 54
------------------ ---------- ------------ ----------------------- ---------------------------
Class "A" office Regional 22 3.9 59
------------------ ---------- ------------ ----------------------- ---------------------------
Total 114 21.8 280
------------------------------ ------------ ----------------------- ---------------------------
ASSET MANAGEMENT REVIEW
-- 121.8k sqm of commercial space successfully leased in Romania
and Poland at an average WALL of 7.1 years
-- Net take-up of 31.3k sqm improving like-for-like occupancy by 2.8% to 95.8%
-- Overall commercial occupancy up by 2.0% to 95.1% (96.3% including tenant options)
-- EUR15.0 million invested in our renovation and maintenance
program on 20 properties of our portfolio
Leasing Review
Globalworth maintained its strong leasing momentum in 2018.
Market conditions continued to be positive, with Globalworth
benefiting from healthy demand for high quality office space in its
target real estate markets.
Over the course of the year, driven by its proactive internal
leasing team, the Group successfully negotiated the take-up
(including expansions) or extension of 121.8k sqm of commercial
space in Romania (62.5% of transacted GLA) and Poland (37.5% of
transacted GLA), with an average WALL of 7.1 years.
New leases for 51.3k sqm were signed at a WALL of 8.5 years and
included tenants such as Mindspace, Dell, Honeywell, Calypso, Coca
Cola and Delphi as well as 47 other corporates. Leases were
renewed, and thus extended, for 51 of our tenants for a total of
54.0k sqm of GLA at a WALL of 6.3 years, with the most notable
extensions involving Nokia, Huawei, Carrefour and Eurozet. The
remaining 16.6k sqm of space signed in the period related to
additional expansion space leased to 25 tenants, with an average
WALL of 5.7 years.
Leasing Activity Summary (2018)
GLA (k No of Tenants WALL (yrs) Selected Tenants
sqm)
------- -------------- ----------- ------------------------------------
Mindspace (Romania), Dell,
Honeywell, Calypso, Coca-Cola,
New Leases Delphi, Mazars, MX1, Chain
/ New Contracts 51.3 53 8.5 IQ, Crowdstrike
================== ------- -------------- ----------- ------------------------------------
Mindspace (Poland), Vodafone,
New Leases Cegedim, Group, ADP, International
/ Expansion 16.6 25 5.7 Paper
------- -------------- ----------- ------------------------------------
Nokia, Huawei, Carrefour,
Renewals Eurozet, World Class, Baxter,
/ Extensions 54.0 51 6.3 ZBP, CITR, NX Data, Luxoft
================== ------- -------------- ----------- ------------------------------------
Total 121.8 115* 7.1
* Number of unique tenants
In December 2018, Globalworth settled certain master lease and
net operating income ("NOI") guarantees which had been granted
ahead of the GPRE initial public offering in April 2017 by its
previous controlling shareholders and were due to expire in April
2022. The purpose of these guarantees was to cover previously
unleased office space across GPRE's original IPO portfolio and to
top up any NOI shortfall to a specified level on the retail
component of GPRE's three mixed-use assets for five years post IPO,
as well as covering certain specified situations to top up rent
subject to a rent-free period and other related costs. They were
settled in exchange for GPRE receiving a cash settlement of EUR21.5
million (representing the net present value of the expected
guaranteed income) to compensate for any and all amounts due now or
in the future under these agreements.
The master leases settled accounted for 0.5% of our standing
commercial GLA (1.1% of standing commercial GLA in Poland) at the
time of their settlement, with the Group being confident that it
will be able to lease the corresponding spaces in the short to
medium term.
On a like-for-like basis, occupancy increased by 2.8% to 95.8%
following the successful lease-up of previously vacant spaces,
offsetting the impact of the master lease termination. New take-up
exceeded space becoming available during the year, with net take-up
for 2018 being 31.3k sqm, thus increasing occupancy in our
portfolio.
Overall occupancy of our standing commercial portfolio as of 31
December 18 was 95.1% (96.3% including tenant options),
representing a 2.0% increase over the past 12 months (93.3% as of
31 December 2017, 95.4% including tenant options).
The overall vacancy level was modestly weighed down by several
new additions to the standing portfolio during the period where
occupancy rates were lower than the average, but as part of
identified asset management opportunities we are confident there is
near-term scope for further upside in both occupancy and contracted
rents.
Going forward, our asset management initiatives target a
reduction of the remaining available space. Taking into
consideration positive market conditions and the quality and
location of our properties, we are confident of demonstrating
further progress in the forthcoming period.
In total, as at 31 December 2018, we had 955.8k sqm of
commercial GLA leased to approximately 650 tenants, at an average
WALL of 5.0 years, the majority of which is let to national and
multinational corporates which are well-known within their
respective markets.
The Group's rent roll is well diversified, with the largest
tenant accounting for 6.1% of contracted rents, while the top three
tenants account for 12.1% and the top 10 tenants account for 28.4%,
a characteristic which we expect to diversify further as the
portfolio continues to expand.
Contracted Rent Profile as at 31 December 2018
Romania Poland Combined Portfolio
----------- -------- ------------------------
Contracted
Rent
(EUR
m) 76.1 81.8 157.9
----------------------- ----------- -------- ------------------------
Tenant Origin
- %
Multinational 89.9% 63.1% 76.0%
National 7.3% 34.1% 21.2%
State
Owned 2.8% 2.4% 2.6%
Master
Lease - 0.4% 0.2%
Occupancy
-
% 94.9% 95.4% 95.1%
----------------------- ----------- -------- ------------------------
WALL
-
years 6.1 3.9 5.0
Note: Contracted Rent excludes c.EUR1.5 million from residential
space as at 31 December 2018.
Lease Expiration Profile - Commercial properties as at 31 December
2018 (EUR m)
-----------------------------------------------------------------------------------------
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 >=2028
------------- ----- ----- ------ ------ ------ ------ ----- ----- ----- -------
Lease
Agreements 9.8 14.9 17.2 28.3 19.1 24.8 12.3 5.6 7.2 18.3
------------- ----- ----- ------ ------ ------ ------ ----- ----- ----- -------
Master -- 0.3 -- -- -- -- -- -- -- --
Lease
------------- ----- ----- ------ ------ ------ ------ ----- ----- ----- -------
Total 9.8 15.2 17.2 28.3 19.1 24.8 12.3 5.6 7.2 18.3
------------- ----- ----- ------ ------ ------ ------ ----- ----- ----- -------
% of total 6.2% 9.6% 10.9% 17.9% 12.1% 15.7% 7.8% 3.6% 4.6% 11.6%
Leasing momentum has continued into 2019 with 60.0% (31 December
2018: 0%) of our Globalworth Campus T3 development now leased or
subject to a letter of intent, to high-quality international
tenants, with a WALL of 10 years.
Renovation and Maintenance Programme of Standing Properties
Globalworth takes a long-term approach to its portfolio, looking
to maximise returns over the full life cycle of its individual
buildings. Continuous management and investment in our portfolio
enables us to preserve value and offer best-in-class real estate
space to our business partners.
Every asset has an asset management strategy. Depending on the
stage in the life cycle of each of our buildings, improvements in
technology and their prevailing condition, we may conduct works
which extend from small scale upgrades to large scale
refurbishments. Larger scale refurbishments allow us to more fully
upgrade an asset, secure new leases and re-set the life clock of
the property.
In 2018, EUR15.0 million was invested under our renovation and
maintenance programme, with works on 20 properties in our standing
portfolio to upgrade primarily both indoor and outdoor common
areas, and minor works on others.
Renovation and Maintenance Programme 2018
---------------------------------------------------------------------------------
Standing Buildings Selected Upgrades in our Portfolio
-------------------- -----------------------------------------------------------
* GW Tower * Upgrades for Globalworth App pilot installation
* GW Plaza * Lobby and other select floors refurbishments /
rejuvenations
* City Offices
* Upgrades and modernisation of access areas
* Hala Koszyki
* Upgrades of communal interion and open areas
* Renoma
* Upgrades of communal green areas
* Other
* Upgrades of heating & ventilation systems improving
quality of work spaces
EUR15.0 million
Investment in Co-working
-- 10.8k sqm taken-up by Mindspace in three locations in Bucharest on long-term contracts
-- Mindspace also occupies 5.5k sqm in our Hala Koszyki property in Warsaw
-- US$10 million equity investment by Globalworth in Mindspace to facilitate further growth
-- 23.4k sqm of co-working space in our portfolio
The rising popularity of the co-working concept has become a
major global trend in real estate in recent years, with increasing
take-up of space by co-working operators in a wide range of
locations and building types. While at an early stage of
development in our markets, we expect this segment to experience
rapid growth in years to come.
In June 2018, Globalworth announced the following transactions
with Mindspace Ltd., a leading global operator of high-end,
inspiring coworking space:
-- Mindspace is opening its first locations in Romania in three
of our buildings, taking up 10.8k sqm of GLA in total on 16-year
leases. The three locations chosen have been branded as Mindspace
Business District (Globalworth Campus) which opened in Q4-2018,
Mindspace City Offices (City Offices) and Mindspace Victoriei
(TCI), both scheduled to open in 2019. Romania marks the seventh
country in which Mindspace is offering flexible workplace
solutions
-- Globalworth made an equity investment in Mindspace of US$10
million (c.EUR8.6 million) to support its ongoing growth
Prior to this transaction, Globalworth had already built a close
collaboration and respect for the activities and approach of
Mindspace through its presence at our flagship Hala Koszyki
property in Warsaw.
Overall, as at 31 December 2018, Globalworth had 23.4k sqm of
co-working space in its portfolio, let or pre-let to five operators
and accounting for 2.8% of our standing office portfolio. We
believe that this adds an important vibrancy and added amenity
value to all users of the properties in which such space is
available.
Investment in Technology Initiatives
Investment in technology is becoming a focal part of our asset
management strategy, and it is very much linked to our strategic
target of creating communities, connecting the employees that work
in our buildings and offering turnkey, flexible, amenity-rich and
experience-driven workplace solutions. We strongly believe that
this will become a key success factor when it comes to attracting
and retaining tenants to our properties as companies will use such
offering as a key tool for attracting and retaining talented
employees.
Globalworth App
In conjunction with Honeywell, in 2018 we started to develop the
Globalworth App through which our portfolio will become "smarter",
allowing more interactive engagement and operation between the
people working in or visiting our buildings.
The application will include functions such as access to a
building, news and events taking place at the building and
elsewhere within the Globalworth estate, and alerts. It will also
allow administrators to control and monitor the performance of both
individual spaces and the building. It is aimed at improving the
experience of those working and visiting our properties by allowing
access, indoor navigation, the ability to control the working
environment, and improving efficiency. At the same time it allows
us, as the landlord, to better monitor and operate our portfolio
and interact with people working or visiting our properties.
The Globalworth App is currently at a development stage and we
plan to implement it in phases, rolling it out to a selection of
our buildings in 2019 and deploying it to the whole portfolio once
testing is completed.
Supporting Other Technology Initiatives
As part of an effort to promote technological innovation,
Globalworth directly or indirectly invests in various opportunities
and initiatives, including technology-related venture capital
funds. We believe that making modest investments in such ventures
will provide Globalworth with direct access and intelligence to the
latest property and other technology related developments enabling
it to be ahead of the curve compared to other landlords.
In 2018, the Group made a EUR 2.0 million commitment in Early
Games Venture ("EGV"), a venture capital fund focused on innovative
companies in Romania and funded through the Competitiveness
Operational Program (2014-2020), co-funded by the European Regional
Development Fund.
Other initiatives include participation in the Techcelerator in
Bucharest, where Globalworth, GapMinder Venture Partners and
certain others, target investing up to EUR1 million in Romanian
technology companies.
The Group is also planning to make additional technology related
investments in 2019, either in general technology funds or ventures
focusing on real estate solutions in the domain of smart buildings
/ smart city, mobility and energy, property automation and real
estate software.
Integration with Globalworth Poland (GPRE)
Globalworth, as part of its strategic initiatives in the Polish
market, has enhanced its corporate identity and further
strengthened the integration of GPRE, most notably through the
rebranding of its Polish subsidiary to Globalworth Poland.
Globalworth's shareholding in GPRE was 69.7% as at 31 December
2018, down slightly from the 71.7% at the start of the year,
following the EUR450 million equity raise in July 2018, in which it
invested EUR300 million (two thirds of the raise) and further share
purchases in December 2018. In January 2019, Globalworth acquired a
further stake in GPRE in exchange for newly issued shares in
Globalworth, increasing its stake to 73.7% as of present.
Reinforcing our In-House Team of Professionals
To meet our expansion needs and to maintain and improve the high
standards and success of our business, we have continued to invest
in multi-disciplined, skilled professionals, adding 84 team members
to the Group in 2018.
The majority of our new team members were recruited to work in
Bucharest and Warsaw, primarily to support our asset management
operations which are core to our customer service and product
offering, as well as maintaining and strengthening the broad
network of relationships in our main real estate markets. The asset
management function, which is core to our customer service and
product offering, has been a prime focus and we have reduced
reliance on third-party providers by replacing these services with
in-house professionals.
The Globalworth Team
---------------------------------------------------------------------------------------------
Other
Department Romania Poland Locations Total
--------------------------- ---------------- ---------------- ---------- ----------------
Management 4 3 2 9
--------------------------- ---------------- ---------------- ---------- ----------------
Administration 8 5 1 14
--------------------------- ---------------- ---------------- ---------- ----------------
Marketing & Communication 5 - - 5
--------------------------- ---------------- ---------------- ---------- ----------------
Asset Management 22 30 - 52
--------------------------- ---------------- ---------------- ---------- ----------------
Construction & Development 10 - - 10
--------------------------- ---------------- ---------------- ---------- ----------------
Leasing 4 7 - 11
--------------------------- ---------------- ---------------- ---------- ----------------
Investments & Capital
Markets 6 3 1 10
--------------------------- ---------------- ---------------- ---------- ----------------
Legal 4 6 - 10
--------------------------- ---------------- ---------------- ---------- ----------------
Technical 5 10 - 15
--------------------------- ---------------- ---------------- ---------- ----------------
Compliance 5 - 1 6
--------------------------- ---------------- ---------------- ---------- ----------------
Finance & Accounting 20 21 1 42
--------------------------- ---------------- ---------------- ---------- ----------------
HR 3 1 - 4
--------------------------- ---------------- ---------------- ---------- ----------------
IT 2 2 - 4
--------------------------- ---------------- ---------------- ---------- ----------------
TOTAL 98 88 6 192
---------------- ---------------- ---------- ----------------
FINANCIAL REVIEW
Overview
The significant expansion of the group in late 2017 through its
entry into Poland and subsequent further acquisitions had a
positive impact on our 2018 financial results. Along with new
leasing activity and the completion of developments in Romania,
this produced a strong uplift in our earnings.
Revenue and Net Operating Income (NOI) increased year on year by
148% to EUR192.8 million and 161% to EUR133.4 million respectively,
while normalised EBITDA and adjusted normalised EBITDA rose by 135%
to EUR96.9 million and 178% to EUR119.0 million respectively.
EPRA Earnings per share for 2018 increased by 153% compared to
2017, reaching 46.03 cents per share from 18.17 cents per share in
2017, while IFRS Earnings per share for 2018 amounted to 60.67
cents, as compared to 26.40 cents in 2017, an increase of 130%.
Dividends declared and paid in respect to 2018 of 54 cents per
share, as compared to 44 cents for 2017, represented a 22.7%
increase.
EPRA NAV per share as at 31 December 2018 increased by 2.3% from
31 December 2017 to EUR9.04 per share (31 December 2017: EUR8.84).
Combined with dividends paid in 2018, this resulted in a Total
Accounting Return of 7.8%, an increase of 210 basis points on the
prior year (2017 TAR: 5.7%).
The Open Market Value of the portfolio grew by EUR646.8 million,
an increase of 35.6%, to EUR2.5 billion, primarily through
acquisitions and revaluation gains.
LTV at 31 December 2018 amounted to 43.9%, increased from 34.0%
at 31 December 2017 mainly as a result of the second Eurobond
issued in March 2018 of EUR550 million and subsequent acquisitions
of properties. EUR150 million of equity was invested in Globalworth
Poland in June 2018, while the last major equity raise at
Globalworth level took place in December 2017.
Revenues and Profitability
Group revenues of EUR192.8 million in 2018 rose by 148% on 2017
(EUR77.9 million), driven by:
-- the full year consolidation of Globalworth Poland, as well as
further acquisitions in Poland, with revenues of EUR102.7 million,
as compared to the prior year (EUR4.9 million) when it was
consolidated for less than one month. This includes the effect of
the settlement of master lease and NOI guarantees, as announced on
21 December 2018 (see "Leasing Review"), which resulted in a
EUR21.5 million cash payment to GPRE.
-- an increase of 23.5% on 2017 in revenues derived from our
properties in Romania following leasing activity, the full year
effect of prior year acquisitions and development completions.
Group revenues were split 53% Poland / 47% Romania, which
contrasted to 6% Poland / 94% Romania in 2017.
Net Operating Income of EUR133.4 million in 2018, a 161%
increase over 2017 (EUR51.1 million), in line with the increase in
Group revenue. The growth in NOI reflected an increase of EUR74.6
million in Poland and an additional EUR7.7 million in Romania. NOI
was split 59% Poland / 41% Romania, compared to 8% Poland / 92%
Romania in 2017.
EBITDA(1) of EUR121.8 million in 2018, an increase of 287% over
2017 (EUR31.5 million). In addition to the growth in NOI (by
EUR59.6 million), higher valuation gains on investment property and
financial instruments (by EUR25.5 million) and lower acquisition
costs (by EUR9.0 million) contributed to the increase, partly
offset by an increase in administration, other income and other
expenses (by EUR3.8 million) while reflecting the full year
inclusion of Globalworth Poland.
Adjusted EBITDA(2) of EUR150.8 million, which includes the share
of minority interests, an increase of 368% over 2017 (EUR32.2
million), resulting from the increase of NOI (by EUR82.3 million)
but also higher valuation gains on investment property and
financial instruments (by EUR32.8 million) and lower acquisition
costs (by EUR9.6 million), partly offset by the increase in
administration, other income and other expenses (by EUR6.1
million).
Normalised EBITDA(3) of EUR96.9 million, an increase of 135%
over 2017 (EUR41.2 million), while adjusted normalised EBITDA(4)
amounted to EUR119.0 million, which includes the share of minority
interests, an increase of 178% over 2017 (EUR42.8 million),
tracking more closely the rise in NOI.
A modest 3.8% increase in net financial costs reflecting the
additional EUR550 million Bonds issuance and reduction in secured
bank loan balances of c.EUR167 million during the year, but offset
by EUR15.2 million lower one-off refinancing restructuring charges
(2018: EUR0.9 million; 2017: EUR16.1 million).
Earnings before tax of EUR115.3 million, an increase of 341%
over 2017 (EUR26.2 million), mainly as a result of the increase in
NOI and savings from non-recurring costs incurred in 2017 related
to the acquisition of the majority stake in Globalworth Poland.
IFRS earnings per share increased by 130% from 26.40 cents to 60.67
cents.
EPRA earnings of EUR60.9 million, an increase of 262% over 2017
(EUR16.8 million), similarly resulting from the ongoing expansion
of the Group's operations and notably NOI but which also factors in
the positive effect of the Polish master lease and NOI guarantee
settlement. EPRA earnings per share increased by 153% from 18.17
cents per share to 46.03 cents per share in 2018.
Reconciliation of IFRS EPS to
EPRA EPS
------------------------------- ----------
EUR cents
------------------------------- ----------
IFRS EPS 60.67
------------------------------- ----------
Add/(subtract):
------------------------------- ----------
Fair value gain on Investment
Property (25.80)
------------------------------- ----------
Fair value gain on Financial
Instruments (4.10)
------------------------------- ----------
Deferred Tax in relation
to above 13.20
------------------------------- ----------
Other Impacts 2.06
------------------------------- ----------
EPRA EPS 46.03
------------------------------- ----------
1 Earnings attributable to equity holders of the Company before
finance cost, tax, depreciation, amortisation of other non-current
assets and purchase gain on acquisition of subsidiaries.
2 Earnings before finance cost, tax, depreciation, amortisation
of other non-current assets and purchase gain on acquisition of
subsidiaries.
3 EBITDA less: fair value gains on investment property and
financial instruments (2018: EUR32.2 million; 2017: EUR6.7
million), non-recurring income (2018: EUR0.2 million; 2017:
EURnil); plus: acquisition costs (2018: EUR1.0 million; 2017:
EUR10.0 million); plus: non-recurring administration and other
expense items (2018: EUR6.5 million; 2017: EUR6.4 million).
4 Adjusted EBITDA less: fair value gains on investment property
and financial instruments (2018: EUR39.6 million; 2017: EUR6.7
million), non-recurring income (2018: EUR0.3 million; 2017:
EURnil); plus: acquisition costs (2018: EUR1.2 million; 2017:
EUR10.8 million); plus: non-recurring administration and other
expense items (2018: EUR6.9 million; 2017: EUR6.5 million). The
adjustments listed include the share of minority interests.
Balance Sheet
The Open Market Value of the portfolio grew by EUR646.8 million,
an increase of 35.6%, to EUR2.5 billion. This comprises EUR2.4
billion of investment property and a further EUR0.1 billion
representing other balance sheet adjustments including the full
share of our JV property, RBC.
Investment activity in 2018, which included c.EUR573.0 million
of new acquisitions and development projects as well as valuation
gains of EUR34.1 million, contributed to a 33.4% increase in the
balance sheet value of our investment property portfolio at 31
December 2018 to EUR2.4 billion (31 December 2017: EUR1.8
billion).
Growth in Portfolio Value (EURmillion)
------------------------------------------ -------- ------
Poland Romania Group
--------------------------------- ------- -------- ------
Investment Property - 31
Dec 2017 680 1,112 1,792
--------------------------------- ------- -------- ------
JV and others - 31 Dec
2017 - 23 23
--------------------------------- ------- -------- ------
Open Market Value - 31
Dec 2017 680 1,135 1,815
--------------------------------- ------- -------- ------
Acquisitions 508 15 523
--------------------------------- ------- -------- ------
Capex 11 39 50
--------------------------------- ------- -------- ------
Valuation Uplift 17 17 34
--------------------------------- ------- -------- ------
Apartment Disposals - (9) (9)
--------------------------------- ------- -------- ------
JV Capex & Valuation Uplift - 48 48
--------------------------------- ------- -------- ------
Open Market Value - 31
Dec 2018 1,216 1,245 2,462
--------------------------------- ------- -------- ------
JV and others - 31 Dec
2018 - (71) (71)
--------------------------------- ------- -------- ------
Investment Property - 31
Dec 2018 1,216 1,174 2,390
--------------------------------- ------- -------- ------
Total assets at 31 December 2018 exceeded EUR2.7 billion and
increased by 26.6% from 31 December 2017 (EUR2.2 billion),
primarily due to the expansion of the property portfolio.
EPRA NAV of EUR1,200.2 million at 31 December 2018, an increase
of 2.5% on 31 December 2017 (EUR1,171.5 million), while EPRA NAV
per share increased by 2.3% to EUR9.04 per share (31 December 2017:
EUR8.84 per share). Factoring in the receipt of the dividend
distributions paid during 2018 of 49 cents per share, the adjusted
EPRA NAV per share at 31 December 2018 would be EUR9.53 per share,
representing a total accounting return of NAV growth and dividend
return for 2018 of 7.8%, up from 5.7% in 2017.
Evolution of EPRA NAV/Share
-------------------------------
EUR
----------------------- ------
EPRA NAV 31 Dec 2017 8.84
----------------------- ------
Valuation +0.25
----------------------- ------
EPRA Earnings +0.46
----------------------- ------
Dividends -0.49
----------------------- ------
Other Impacts -0.02
----------------------- ------
EPRA NAV 31 Dec 2018 9.04
----------------------- ------
Cash Flows
Cash flows from operating activities were EUR80.1 million,
compared to EUR10.1 million in 2017, reflecting the expansion of
the Group's operating activities and the full inclusion of
Poland.
Net proceeds from the successful debt financing in 2018 of
EUR648.7 million, with EUR270.7 million being used to repay senior
debt facilities secured on some of our properties in Poland.
Cash used for investments made in 2018 of EUR575.0 million,
including the acquisition of six standing properties in Poland, two
land plots in Romania and the completion or further advancing of
the construction of properties under development in Romania.
Dividends paid in 2018 of EUR64.9 million in respect of the
six-month periods ended 31 December 2017 and 30 June 2018 of
EUR29.1 million and EUR35.8 million respectively.
Cash and cash equivalents at 31 December 2018 stood at EUR229.5
million, EUR43.8 million lower than 31 December 2017 (EUR273.3
million). At 31 December 2017 the higher level of cash and cash
equivalents was due in large part to the EUR340 million of equity
raised in December 2017.
Dividends
In January and August 2018, the Company made interim dividend
payments of 22 cents per share (c.EUR29.1 million) and 27 cents per
share (c.EUR35.8 million) in respect of the six-month periods ended
31 December 2017 and 30 June 2018 respectively. A second interim
dividend of 27 cents per share (c.EUR35.8 million) was paid in
February 2019 in respect of the six-month period ended 31 December
2018, resulting in a full year dividend of 54 cents per share in
respect to the 2018 financial year, an increase of 22.7% over 2017
(44 cents per share).
Financing Activity
In March 2018, the Group successfully issued a second EUR550
million unsecured seven-year Eurobond at a coupon of 3% to March
2025. This was part of a newly established EUR1.5 billion Euro
Medium Term Notes programme, under which a further EUR950 million
of bonds can still be issued. This bond issuance, despite being
undertaken at a time of increased market volatility, received
significant support from a variety of institutional investors,
predominantly from the UK and Continental Europe, resulting in the
issue being oversubscribed more than two times. Part of the net
proceeds (c.EUR214 million) were used in April 2018 to repay all
but one of the bank loans secured on our properties in Poland,
thereby extending the flexibility of Globalworth's predominantly
unsecured debt structure across the Group and further simplifying
the Group's financial structure by consolidating debt and reducing
the number of financing banks.
Although primarily focused on unsecured debt, the Group
selectively uses secured bank financing facilities in order to
diversify sources of funding and build greater flexibility in its
debt book. In 2018, the Group took advantage of favourable
conditions in the bank financing market to secure various
facilities. In June 2018, the Group signed a EUR100 million
seven-year facility in Poland at a competitive interest rate with a
consortium consisting of Landesbank Hessen-Thüringen and Deutsche
Pfandbriefbank AG, following the above-mentioned repayment of all
but one of the bank loan facilities secured on our properties in
Poland. In August 2018, a new EUR46 million long-term facility was
signed in Romania with Banca Comerciala Romana (BCR, part of Erste
Bank Group) for the financing of the development costs of the
Renault Bucharest Connected project, which was completed by the end
of 2018 and delivered to the tenant in mid-February 2019. In
December 2018, a subsidiary of the Group signed a EUR65 million
10-year secured financing agreement with Erste Bank AG (part of
Erste Bank Group) for the refinancing of Globalworth Tower in
Bucharest, Romania. It is anticipated that the facility will be
drawn down during March 2019.
In June 2018, at the Globalworth Poland subsidiary level, the
Group completed a EUR450 million equity capital raise. The
transaction was fully subscribed by Globalworth (66.7%) and
Growthpoint Properties (33.3%), resulting in EUR150 million of new
capital becoming available to fund further growth of the Polish
portfolio. The remaining EUR300 million was used to partially repay
outstanding debt under various inter-company loans previously
entered into between Globalworth Poland and Globalworth.
Debt Summary
The total debt portfolio of the Group at 31 December 2018 of
EUR1.26 billion comprises predominately medium to long-term debt,
denominated mostly in EUR, with insignificant facilities
denominated in Romanian Leu ('RON') and Polish Zloty ('PLN').
Loan to value at 31 December 2018 was 43.9%, increasing over the
course of the year as a result of acquisitions (31 December 2018:
34.0%). The Group has a long-term LTV target of below 40%, but is
comfortable with this level at this time, marking its intention to
issue further equity as it seeks to sustain its dynamic growth
profile while managing its leverage target.
The weighted average interest rate on debt financing as at 31
December 2018 amounted to 2.91% versus 2.62% at 31 December 2017.
The small increase in the weighted average interest rate should be
viewed in light of the seven-year EUR550 million unsecured Eurobond
issued in March 2018 at a 3% coupon, which has helped to maintain
the weighted average period to maturity of our debt at 31 December
2018 (5.1 years) at a similar level as at 31 December 2017 (5.4
years).
The Group has delivered on its strategy over the last few years
of extending the weighted average period to maturity of its debt
financing, while reducing the applicable weighted average interest
rate. The current weighted average interest rate of 2.91% compares
to 5.25% at 31 December 2016, while the average maturity has
increased to 5.1 years at 31 December 2018.
Servicing of Debt During 2018
In 2018, we repaid in total c.EUR270.7 million of loan capital,
the majority of which relates to the refinancing of existing
facilities using the proceeds of the Eurobond issued in March 2018,
and c.EUR21.2 million of accrued interest on the Group's drawn debt
facilities.
Liquidity
The Group seeks to maintain at all times sufficient liquidity to
enable it to finance its ongoing, planned property investments and
the completion of properties under development, while maintaining
the flexibility to react quickly to attractive new investment
opportunities.
As at 31 December 2018, the Group had cash and cash equivalents
of EUR229.5 million, while additional available liquidity from
committed, undrawn loan facilities at 31 December 2018 amounted to
EUR30.8 million.
Debt Structure as at 31 December 2018
Secured vs. Unsecured Debt
The majority of the Group's debt at 31 December 2018 (EUR1.1
billion of Eurobonds) is unsecured (87.3%; 31 December 2017:
63.2%), with the remainder secured with real estate mortgages,
pledges on shares, receivables and loan subordination agreements in
favour of the financing parties.
Maturity Profile
The Group has credit facilities and Eurobonds with different
maturities, 99.9% of which are long-term (compared to 98.5 % at 31
December 2017).
Maturity by year of the principal balance outstanding at 31
December 2018 (EUR million)
2019 2020 2021 2022 2023 2024 2025 2026-2035
0.3 - - 567.9 - - 652.0 40.3
----- ----- ------ ----- ----- ------ ----------
Debt Denomination Currency and Interest Rate Risk
Our long-term loan facilities are almost entirely
Euro-denominated and bear interest based either at one-month or
three-months Euribor plus a margin, or at a fixed interest rate.
This ensures a natural hedging to the Euro, the currency in which
the most significant part of our liquid assets (cash and cash
equivalents and rental receivables) is originally denominated and
the reporting currency for the fair market value of our investment
property.
Debt Covenants and Securities
The Group's financial indebtedness is arranged with standard
terms and financial covenants, the most notable as at 31 December
2018 being the following:
Unsecured Eurobonds
-- the Consolidated Coverage Ratio, with minimum value of 200%;
-- the Consolidated Leverage Ratio, with maximum value of 60%; and
-- the Consolidated Secured Leverage Ratio with a maximum value of 30%.
Secured Bank Loans
-- the debt service cover ratio ('DSCR') / interest cover ratio
('ICR'), with values ranging from 120% to 300% (be it either
historic or projected);
-- the LTV ratio, with contractual values ranging from 60% to
83% (versus the significantly lower overall LTV at 31 December 2018
of 43.9%); and
-- the loan to cost ratio ('LTC') with a maximum value of 75%.
There were no breaches of the aforementioned covenants during
the year ended 31 December 2018.
The Group's credit facilities concluded with local banks in
Romania and Poland are secured with real estate mortgages, pledges
on shares, receivables and loan subordination agreements in favour
of the financing banks.
Further details on the Group's debt financing facilities are
provided in note 13 of the condensed consolidated financial
statements.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2018
2018 2017
Unaudited Audited
Note EUR'000 EUR'000
=========================================== ==== ================= =========
Revenue 7 192,801 77,866
Operating expenses 8 (59,360) (26,772)
Net operating income 133,441 51,094
=========================================== ==== ================= =========
Administrative expenses (15,253) (10,231)
Acquisition costs (1,182) (10,809)
Fair value gain on investment
property 3 34,088 6,727
Bargain purchase gain on acquisition
of subsidiaries 251 28,897
Share-based payment expense 19 (509) (143)
Depreciation on other long-term
assets (398) (150)
Other expenses (4,332) (4,091)
Other income 330 5
Foreign exchange loss (1,214) (317)
Gain from fair value of financial
instruments 14 5,463 -
------------------------------------------- ---- ----------------- ---------
17,244 9,888
------------------------------------------- ---- ----------------- --------
Profit before net financing
cost 150,685 60,982
=========================================== ==== ================= ========
Net financing cost
Finance cost 9 (41,727) (38,465)
Finance income 3,289 1,447
------------------------------------------- ---- ----------------- --------
(38,438) (37,018)
------------------------------------------- ---- ----------------- --------
Share of profit of joint venture 22 3,095 2,188
Profit before tax 115,342 26,152
=========================================== ==== ================= ========
Income tax expense 10 (15,425) (2,405)
=========================================== ==== ================= ========
Profit for the year 99,917 23,747
=========================================== ==== ================= ========
Other comprehensive income - -
=========================================== ==== ================= ========
Profit attributable to: 99,917 23,747
=========================================== ==== ================= ========
- Equity holders of the Company 80,263 24,426
- Non-controlling interest 24 19,654 (679)
=========================================== ==== ================= ========
Cents Cents
=========================================== ==== ================= ========
Earnings per share
- Basic 11 60.67 26.40
- Diluted 11 60.57 26.04
=========================================== ==== ================= ========
EPRA Earnings per share
- Basic 11 46.03 18.17
- Diluted 11 45.95 17.92
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
2018 2017
Unaudited Audited
Note EUR'000 EUR'000
----------------------------------------- ---- ---------- ---------
ASSETS
Non-current assets
Investment property 3 2,390,994 1,792,414
Goodwill 12,349 12,349
Advances for investment property 5 4,209 3,355
Investments in joint-ventures 22 38,316 21,939
Equity investments 15 8,837 -
Other long-term assets 1,035 689
Other receivables - 416
Prepayments 1,472 1,578
Available for sale financial assets 14 - 5,897
Financial assets at fair value through
profit or loss 14 2,829 -
Long-term restricted cash 16 - 2,958
----------------------------------------- ---- ---------- ---------
2,460,041 1,841,595
----------------------------------------- ---- ---------- ---------
Current assets
Debentures - 18,389
Available for sale financial assets 14 - 4,346
Financial assets at fair value through
profit or loss 14 12,878 -
Trade and other receivables 25,281 22,419
Contract assets 3,937 -
Guarantees retained by tenants 11 304
Income tax receivable 395 295
Prepayments 4,929 325
Cash and cash equivalents 16 229,527 273,272
----------------------------------------- ---- ---------- ---------
276,958 319,350
----------------------------------------- ---- ---------- ---------
Total assets 2,736,999 2,160,945
----------------------------------------- ---- ---------- ---------
EQUITY AND LIABILITIES
Total equity
Issued share capital 17 897,314 894,509
Treasury shares 19.4 (842) (270)
Share based payment reserve 19 2,117 2,240
Retained earnings 186,326 172,405
----------------------------------------- ---- ---------- ---------
Equity attributable to equity holders
of the Company 1,084,915 1,068,884
----------------------------------------- ---- ---------- ---------
Non-controlling interest 24 212,407 67,572
========================================= ==== ========== =========
1,297,322 1,136,456
========================================= ==== ========== =========
Non-current liabilities
Interest-bearing loans and borrowings 13 1,235,106 834,044
Deferred tax liability 10 106,978 99,574
Guarantees retained from contractors 693 2,616
Deposits from tenants 13,754 8,931
Provision for tenant lease incentives 3.1 780 1,509
Trade and other payables 694 -
========================================= ==== ========== =========
1,358,005 946,674
========================================= ==== ========== =========
Current liabilities
Interest-bearing loans and borrowings 13 23,965 36,360
Guarantees retained from contractors 3,353 1,057
Provision for tenant lease incentives 3.1 1,211 859
Trade and other payables 32,956 34,776
Contract liability 1,401 -
Other current financial liabilities 2,084 2,638
Deposits from tenants 2,241 1,256
Dividend payable 24 10,731 -
Income tax payable 3,730 869
========================================= ==== ========== =========
81,672 77,815
----------------------------------------- ---- ---------- ---------
Total equity and liabilities 2,736,999 2,160,945
----------------------------------------- ---- ---------- ---------
EUR EUR
========================================= ==== ========== =========
NAV per share 12 8.19 8.09
Diluted NAV per share 12 8.18 8.07
EPRA NAV per share 12 9.04 8.84
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2018
Equity attributable to equity holders of the Company Non-controlling Total
interest equity
----------------- ---------- ----------
Issued Treasury Unpaid Share Retained Total
share shares share based earnings
capital capital payment
Note reserve
----------------- ---------- -------- --------- ----------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------- ---------- -------- --------- -------- -------- --------- ---------- ---------------- ----------
As at 1 January
2017 (Audited) 538,114 - 8,584 2,139 166,557 715,394 - 715,394
Shares issued
for cash 340,000 - - - - 340,000 - 340,000
Transaction
costs on
issuance of
shares (2,271) - - - - (2,271) - (2,271)
Transaction
costs on issue
of shares
settled in
shares 8,584 - (8,584) - - - - -
Fair value of
options
warrants issued
for executive
share scheme - - - 17 - 17 - 17
Shares issued
under Executive
share option
plan 8,950 - - (175) - 8,775 - 8,775
Shares issued to
the Executive
Directors and
other
senior
management
employees 1,132 - - (1,132) - - - -
Interim dividend
paid by the
Company - - - - (19,933) (19,933) - (19,933)
Acquisition of
own shares - (428) - - - (428) - (428)
Shares granted
under the
subsidiaries'
employees
share award
plan - - - 126 - 126 - 126
Shares issued to
the Executive
Directors and
other
senior
management
employees - - - 1,423 - 1,423 - 1,423
Shares vested
under the
subsidiaries'
employees
share award
plan - 158 - (158) - - - -
Acquisition
through
business
acquisition - - - - - - 77,306 77,306
Acquisition of
non-controlling
interest for
cash - - - - 1,355 1,355 (9,055) (7,700)
Profit for the
year - - - - 24,426 24,426 (679) 23,747
----------------- ---------- -------- --------- -------- -------- --------- ---------- ---------------- ----------
As at 31
December 2017
(Audited) 894,509 (270) - 2,240 172,405 1,068,884 67,572 1,136,456
----------------- ---------- -------- --------- -------- -------- --------- ---------- ---------------- ----------
Shares issued to
the Executive
Directors for
vested
warrants 19.1 153 - - (3) - 150 - 150
Transaction
costs on
issuance of
shares (40) - - - - (40) - (40)
Shares issued to
the Executive
Directors and
other
senior
management
employees 19.2 1,874 - - (1,874) - - - -
Interim dividend
paid by the
Company 18 - - - - (64,870) (64,870) - (64,870)
Interim dividend
paid to
non-controlling
interest
holders 24 - - - - - - (14,229) (14,229)
Shares issued
under the
subsidiaries'
employees
share award
plan 19.4 818 (818) - - - - - -
Share based
payment expense 19.4,19.2 - - - 2,000 - 2,000 - 2,000
Shares vested
under the
subsidiaries'
employees
share award
plan 19.4 - 246 - (246) - - - -
Acquisition of
non-controlling
interest for
cash 24 - - - - 279 279 (9,319) (9,040)
Change in
non-controlling
interest
arising from
shares issue in
subsidiary 24 - - - - (1,102) (1,102) 1,102 -
Shares issue in
subsidiary 24 - - - - (649) (649) 147,627 146,978
Profit for the
year - - - - 80,263 80,263 19,654 99,917
----------------- ---------- -------- --------- -------- -------- --------- ---------- ---------------- ----------
As at 31
December 2018
(Unaudited) 897,314 (842) - 2,117 186,326 1,084,915 212,407 1,297,322
----------------- ---------- -------- --------- -------- -------- --------- ---------- ---------------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
2018 2017
Unaudited Audited
Note EUR'000 EUR'000
======================================== ==== ========== =========
Profit before tax 115,342 26,152
Adjustments to reconcile profit
before tax to net cash flows
Fair value movement on investment
property 3 (34,088) (6,727)
Bargain purchase gain on acquisition
of subsidiaries (251) (28,897)
Loss on sale of investment property 2,701 3,807
Share-based payment expense 19 509 143
Depreciation on other long-term
assets 398 150
Net movement in provision for doubtful
debts 1,087 129
Foreign exchange loss 1,214 317
Gain from fair valuation of financial
instrument 14 (5,463) -
Share of profit of joint ventures 22 (3,095) (2,188)
Net financing costs 38,438 37,018
======================================== ==== ========== =========
Operating profit before changes
in working capital 116,792 29,904
Increase in trade and other receivables (11,179) (3,027)
Decrease in trade and other payables (1,239) (3,010)
Interest paid (21,161) (13,352)
Interest received 2,282 170
Income tax paid (5,420) (614)
======================================== ==== ========== =========
Cash flows from operating activities 80,075 10,071
---------------------------------------- ---- ---------- ---------
Investing activities
Expenditure on investment property
completed and under development 3 (51,392) (50,076)
Payments for land acquisitions 3 (15,500) -
Payments for acquisition of investment
property 21 (481,876) -
Payment for acquisition of subsidiaries
less cash acquired - (317,653)
Proceeds from non-controlling interest
holders in subsidiary's share capital 24 146,978 -
Payments for the acquisition of
non-controlling interest 24 (9,040) (7,700)
Investment in unquoted equity shares 15 (8,740) -
Proceeds from sale of investment
properties 6,736 10,392
Investment in available for sale
financial assets - (3,464)
Investment in and loans given to
joint ventures 22 (26,208) (19,360)
Repayment of loans from joint ventures 22 12,875 -
Acquisition of other long-term assets (741) (117)
======================================== ==== ========== =========
Cash flows used in investing activities (426,908) (387,978)
---------------------------------------- ---- ---------- ---------
Financing activities
Proceeds from share issuance 17 150 348,775
Payment of transaction costs on
issue of shares 17 (40) (3,896)
Purchase of own shares - (428)
Proceeds from interest-bearing loans
and borrowings 648,711 548,989
Repayment of interest-bearing loans
and borrowings (270,700) (430,213)
Payment of interim dividends by
the Company 18 (64,870) (19,933)
Payment of interim dividends to
non-controlling interest (3,498) -
Payment of loan arrangement fees
and other financing costs (9,623) (15,702)
Change in restricted cash reserve 16 2,958 2,971
======================================== ==== ========== =========
Cash flows from financing activities 303,088 430,563
---------------------------------------- ---- ---------- ---------
Net (decrease)/increase in cash
and cash equivalents (43,745) 52,656
======================================== ==== ========== =========
Cash and cash equivalents at the
beginning of the year 16 271,022 218,366
======================================== ==== ========== =========
Cash and cash equivalents at the
end of the year(1) 16 227,277 271,022
---------------------------------------- ---- ---------- ---------
(1) Net of the EUR2.3 million (2017: EUR2.3 million) cash
reserve, see note 16.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited ('the Company' or
'Globalworth') is a company with liability limited by shares and
incorporated in Guernsey on 14 February 2013, with registered
number 56250. The registered office of the Company is at Ground
Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 2HT.
Globalworth, being a real estate Company, has had its ordinary
shares admitted to trading on AIM (Alternative Investment Market of
the London Stock Exchange) under the ticker "GWI" since 2013. The
Company's Eurobonds were admitted to trading on the Official List
of the Irish Stock Exchange and the Bucharest Stock Exchange since
2017.
Basis of Preparation and Compliance
The financial information contained in this announcement has
been based on the unaudited results for the year ended 31 December
2018 which have been prepared in conformity the International
Financial Reporting Standards ('IFRS'), as adopted by the European
Union ('EU') and in compliance with the Companies (Guernsey) Law
2008, as amended.
This financial information ('unaudited condensed consolidated
financial statements' or 'financial statements') has been prepared
on a historical cost basis, except for investment property,
financial assets at fair value through other comprehensive income
and financial assets at fair value through profit or loss which are
measured at fair value.
Accounting policies
These unaudited condensed consolidated financial statements
apply the same accounting policies, presentation and methods of
calculation as those followed in the preparation of the Group's
consolidated financial statements for the year ended 31 December
2017 except for those new accounting policies where it is necessary
to comply with amendments to IFRS, none of which had a material
impact on the consolidated results, financial position or cash
flows of the Group (further analysis on adoption of IFRS 9, IFRS 15
and IFRS 16 are disclosed in note 27). The unaudited condensed
consolidated financial statements included in this announcement
should be read in conjunction with the consolidated financial
statements for the year ended 31 December 2017.
The significant accounting policies adopted are set out in the
relevant notes to the financial statements and consistently applied
throughout the periods presented except for the new and amended
IFRS, see note 27, which were adopted on 1 January 2018. These
condensed consolidated financial statements are prepared in Euro
('EUR' or 'EUR'), rounded to the nearest thousand unless otherwise
indicated, being the functional currency and presentation currency
of the Company.
These financial statements are prepared on a going concern
basis. The Directors believe that it is appropriate to adopt the
going concern basis in preparing the financial statements. The
Directors based their assessment on the Group's detailed cash flow
projections for the period up to 30 June 2020. These projections
take into account the latest contracted rental income, anticipated
additional rental income from new lease agreements to be concluded
during the period covered by the projections, as well as contracted
debt financing, CAPEX, and other commitments. The projections show
that, in the period up to 30 June 2020, the Company has sufficient
resources to continue to fund ongoing operations and asset
development without the need to raise any additional debt or equity
financing or the need to reschedule existing debt facilities or
other commitments.
Basis of Consolidation
These unaudited condensed consolidated financial statements
comprise the financial statements of the Company and its
subsidiaries ('the Group') as of and for the year ended 31 December
2018. Subsidiaries are fully consolidated (refer to note 23) from
the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such
control ceases. The financial statements of the subsidiaries are
prepared for the period from the date of obtaining control to 31
December, using consistent accounting policies. All intra-group
balances, transactions and unrealised gains and losses resulting
from intra-group transactions are eliminated in full.
Non-controlling interest represents the portion of profit or loss
and net assets not held by the Group and are presented separately
in the income statement and within equity in the consolidated
statement of financial position, separately from net assets and
profit and loss attributable to equity holders of the Company.
2. Critical Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with IFRS
requires management to make certain judgements, estimates and
assumptions that affect reported amounts of revenue, expenses,
assets and liabilities, and the accompanying disclosures and the
disclosures of contingent liabilities.
Selection of Functional Currency
The Company and its subsidiaries used their judgement based on
the criteria outlined in IAS 21 'The Effects of Changes in Foreign
Exchanges Rates' and determined that the functional currency of all
the entities is the EUR.
Further additional critical accounting judgements, estimates and
assumptions are disclosed in the following notes to the condensed
consolidated financial statements:
-- Investment Property, see note 3 and Fair value measurement
and related estimate and judgements, see note 4;
-- Commitments (operating leases commitments - Group as lessor),
see note 6;
-- Taxation, see note 10;
-- Financial assets at fair value through profit or loss, see
note 14;
-- Performance Incentive Scheme, see note 19.3;
-- Subsidiaries acquisitions, see note 21;
-- Investment in Joint venture, see note 22;
-- Investment in Subsidiaries, see note 23.
3. Investment Property
Investment
Completed property Land
bank
investment under for further
property development development Total
Note EUR'000 EUR'000 EUR'000 EUR'000
--------------------------------------- ----- ----------- ------------ ------------ -------------
1 January 2017 (Audited) 891,722 71,120 18,050 980,892
--------------------------------------- ----- ----------- ------------ ------------ -------------
Business acquisition 767,190 - - 767,190
Subsequent expenditure and net lease
incentive movement 15,323 31,921 4,822 52,066
Other operating lease commitment (1,003) - - (1,003)
Capitalised borrowing costs 18 138 - 156
Disposal during the year (13,614) - - (13,614)
Fair value movement on investment
property (3,401) 7,300 2,828 6,727
Transfer to completed investment
property 56,129 (56,129) - -
--------------------------------------- ----- ----------- ------------ ------------ -------------
31 December 2017 (Audited) 1,712,364 54,350 25,700 1,792,414
--------------------------------------- ----- ----------- ------------ ------------ -------------
Acquisition of investment property 21 507,474 - - 507,474
Land acquisition - - 15,500 15,500
Transfer to investment property under
development - 14,351 (14,351) -
Subsequent expenditure and net lease
incentive movement 24,972 23,599 1,522 50,093
Other operating lease commitment (378) - - (378)
Capitalised borrowing costs - 411 - 411
Transfer to completed investment
property 55,700 (55,700) - -
Disposal during the year (8,608) - - (8,608)
Fair value movement on investment
property 23,170 7,689 3,229 34,088
--------------------------------------- ----- ----------- ------------ ------------ -------------
31 December 2018 (Unaudited) 2,314,694 44,700 31,600 2,390,994
--------------------------------------- ----- ----------- ------------ ------------ -------------
3.1 Other operating lease commitment
Other operating lease commitment of EUR1.9 million (2017: EUR2.3
million) as of 31 December 2018 (a similar corresponding amount was
recorded as provisions for tenant lease incentives under current
and non-current liabilities) represents the Group's estimated net
cost for undertaking existing operating leases in properties owned
by third parties, as well as for the commitment to undertake
additional operating lease expense, under certain conditions,
related to one of the Group's tenants. The net cost is estimated by
deducting from the operating lease expenses the revenues from
sub-letting the respective properties to third parties selected by
the Group, for the unexpired portion of their leases.
4. Fair Value Measurement and Related Estimates and Judgements
Investment Property Measured at Fair Value
The Group's investment property portfolio for Romania was valued
by Colliers Valuation and Advisory SRL, CBAR Research &
Valuation Advisors SRL, Cushman & Wakefield LLP and for Poland
by Knight Frank Sp. z o.o. and CBRE Sp. z o.o., independent
professionally qualified valuers who hold a recognised relevant
professional qualification and have recent experience in the
locations and segments of the investment properties valued, using
recognised valuation techniques.
Our Property Valuation Approach and Process
The Group's investment department includes a team that reviews
twice in a financial year the valuations performed by the
independent valuers for financial reporting purposes. For each
independent valuation performed, the investment team along with the
finance team:
-- verifies all major inputs to the independent valuation
report;
-- assesses property valuation movements when compared to the
initial valuation report at acquisition or latest period end
valuation report; and
-- holds discussions with the independent valuer.
The fair value hierarchy levels are specified in accordance with
IFRS 13 Fair Value Measurement. Some of the inputs to the
valuations are defined as "unobservable" by IFRS 13 and these are
analysed in the tables below. Any change in valuation technique or
fair value hierarchy (between Level 1, Level 2 and Level 3) is
analysed at each reporting date or as of the date of the event or
variation in the circumstances that caused the change. As of 31
December 2018 (2017: same) the values of all investment properties
were classified as Level 3 fair value hierarchy under IFRS 13 and
there were no transfers from or to Level 3 from Level 1 and Level
2.
Valuation Techniques, Key Inputs and Underlying Management's
Estimations and Assumptions
Property valuations are inherently subjective as they are made
on the basis of assumptions made by the valuer. Key information
about fair value measurements, valuation technique and significant
unobservable inputs (Level 3) used in arriving at the fair value
under IFRS 13 are disclosed below:
Carrying value Range
========================= ===================================
2018 2017
Unaudited Audited 2018 2017
Class of Valuation
property EUR'000 EUR'000 technique Country Input Unaudited Audited
============ ============== ========= =========== ======= ============ ================ =================
Discounted Rental value
Completed 1,216,790 680,130 cash flows Poland (sqm) EUR11.5-EUR22 EUR12-EUR28
investment Discount
property rate 4.84%-10.32% 5.85%-8.58%
Exit yield 5.37%-8.75% 5.58%-8.58%
Income Rental value
1,029,390 955,495 approach Romania (sqm) EUR2.82-EUR44.64 EUR2.77-EUR65
Discount
rate 7.50%-9.50% 7.20%-9.20%
Exit yield 6.25%-8.50% 6.65%-8.75%
============== ========= =========== ======= ============ ================ =================
2,246,180 1,635,625
Sales Sales value
68,514 76,739 comparison Romania (sqm) EUR1,867 EUR1,852
2,314,694 1,712,364
============ ============== ========= =========== ======= ============ ================ =================
Investment
property
under Residual Rental value
development 44,700 54,350 method Romania (sqm) EUR4.00-EUR15 EUR3.33-EUR17.00
Exit yield 7.00%-8.50% 7.25%-8.75%
Capex (EURm) EUR78.26 EUR33.96
------------ -------------- --------- ----------- ------- ------------ ---------------- -----------------
Land bank - Residual Rental value
for further 25,200 - method Romania (sqm) EUR14-EUR20 -
development Exit yield 7.00%-7.25% -
Sales Sales value
6,400 25,700 comparison Romania (sqm) EUR24 EUR1,819-EUR1,896
------------ -------------- --------- ----------- ------- ------------ ---------------- -----------------
TOTAL 2,390,994 1,792,414
============ ============== ========= =========== ======= ============ ================ =================
All class of property portfolio were categorised as Level 3
under fair value hierarchy. The fair value movement on investment
property recognised, as gain, in the income statement includes an
amount of EUR34.1 million (2017: EUR6.7 million) for fair value
measurements as of the statement of financial position date related
to investment properties categorised within Level 3 of the fair
value hierarchy. In arriving at estimates of market values as at 31
December 2018 and 2017, the independent valuation experts used
their market knowledge and professional judgement and did not rely
solely on comparable historical transactions. In these
circumstances, there was a greater degree of uncertainty in
estimating the market values of investment properties than would
have existed in a more active market.
Other Disclosures Related to Investment Property
Interest-bearing loans and borrowings are secured on investment
property, see note 13 for details.
5. Advances for Investment Property
2018 2017
Unaudited Audited
EUR'000 EUR'000
================================================== ========= =======
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for investment properties
under development 2,209 1,355
================================================== ========= =======
4,209 3,355
================================================== ========= =======
6. Commitments
Commitments for Investment Property Under Construction
As at 31 December 2018 the Group had agreed construction
contracts with third parties and is consequently committed to
future capital expenditure in respect of completed investment
property of EUR5.5 million (2017: EUR3.4 million), investment
property under construction of EUR34.6 million (2017: EUR13.6
million) and had committed with tenants to incur fit-out works of
EUR5.5 million (2017: EUR7.3 million).
The Group's joint venture was committed for the construction of
investment property for the amount of EUR2.1 million (2017: EUR37.2
million) at 31 December 2018.
Operating Leases Commitments - Group as Lessor
Judgements Made for Properties Under Operating Leases
The Group has determined, based on an evaluation of the terms
and conditions of the arrangements, that it retains all the
significant risks and rewards of ownership of the investment
properties leased to third parties, therefore, accounts for these
leases as operating leases.
The duration of these leases is one year or more (2017: one year
or more) and rentals are subject to annual upward revisions based
on the consumer price index.
The future aggregate minimum rentals receivable under
non-cancellable operating leases are as follows:
2018 2017
Unaudited Audited
EUR'000 EUR'000
===================================== ========= =======
Not later than 1 year 148,865 117,290
Later than 1 year and not later than
5 years 393,813 366,182
Later than 5 years 130,825 126,849
===================================== ========= =======
673,503 610,321
===================================== ========= =======
7. Revenue
2018 2017
Unaudited Audited
EUR'000 EUR'000
====================================== ========= =======
Gross Rent 144,634 59,055
====================================== ========= =======
Adjustment for lease incentives (7,006) (5,199)
====================================== ========= =======
Rental income 137,628 53,856
====================================== ========= =======
Revenue from contracts with customers
Service charge income 47,438 19,107
Fit-out services income 6,717 4,616
Asset management fees 300 250
Marketing and other income 718 37
====================================== ========= =======
55,173 24,010
====================================== ========= =======
192,801 77,866
====================================== ========= =======
The total contingent rents and surrender premiums recognised as
rental income during the year amounted to EUR0.6 million
(2017EUR0.8 million) and EUR0.3 million (2017: EUR0.3 million),
respectively.
8. Operating Expenses
2018 2017
Unaudited Audited
EUR'000 EUR'000
===================================================== ========= =======
Property management, utilities and insurance 52,249 21,927
Property maintenance costs and other non-recoverable
costs 1,398 850
----------------------------------------------------- --------- -------
Property expenses arising from investment property
that generate rental income 53,647 22,777
Fit-out services costs 5,713 3,995
----------------------------------------------------- --------- -------
59,360 26,772
===================================================== ========= =======
9. Finance Cost
2018 2017
Unaudited Audited
EUR'000 EUR'000
========================================= ========= =======
Interest on secured loans 5,468 11,367
Interest on Fixed rate Bonds 27,806 8,427
Debt cost amortisation and other finance
costs 7,715 17,683
Other financial expenses 39 237
Bank charges 699 751
========================================= ========= =======
41,727 38,465
========================================= ========= =======
10. Taxation
2018 2017
Unaudited Audited
Income tax expense EUR'000 EUR'000
============================ ========= =======
Current income tax expense 8,021 870
Deferred income tax expense 7,404 1,535
============================ ========= =======
15,425 2,405
============================ ========= =======
The income tax rate applicable to the Company in Guernsey is
nil. The subsidiaries in Romania, the Netherlands, Poland,
Luxembourg and Cyprus are subject to income taxes in respect of
local sources of income. The current income tax charge of EUR8.0
million (2017: EUR0.9 million) represents tax charges on profit
arising in the subsidiaries located in Romania, Poland and Cyprus
(2017: Romania, Poland and Cyprus). Tax charges on profit arising
in Poland, Luxembourg, Romania, the Netherlands and Cyprus are
subject to corporate income tax at the rate of 19% (15% for small
entities where revenue is less than EUR1.2 million for taxpayers
starting a new business for their first tax year in operation),
26.01% (15% tax rate for small entities if taxable profit does not
exceed EUR25,000), 16%, 25% (20% for tax on profit up to EUR0.2
million), and 12.5%, respectively.
In 2018 the Polish tax authorities introduced the minimum tax
applied to income from ownership of certain high-value fixed assets
at a rate of 0.035 percent per month of the initial value of the
asset that exceeds PLN 10 million (EUR2.33 million). The minimum
tax may be deducted from the advance corporate income tax and
annual CIT liability in a year for which minimum tax is due. The
tax is applied only to leased buildings while no tax applies on
vacant buildings or on vacant space in partially occupied
buildings.
The Group's subsidiaries registered in Luxembourg, Cyprus and
the Netherlands comply with the Cyprus and Netherlands tax
regulations; however, the Group does not expect any taxable income,
other than dividend and interest income (excluding Luxembourg),
which are the most significant future sources of income of the
Group companies registered in these countries. Dividend income is
tax exempt under certain conditions in Cyprus, the Netherlands and
Luxembourg, respectively; on the other hand, interest income is
subject to corporate income tax at the rate of 12.5% in Cyprus and
ranges from 20% to 25%, depending on total taxable profit (20% for
tax on profit up to EUR0.2 million), in the Netherlands.
Judgements and Assumptions Used in the Computation of Current
Income Tax Liability
Uncertainties exist, particularly in Romania and Poland where
the Group has significant operations, with respect to the
interpretation of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income. Differences arising
between the actual results and the assumptions made, or future
changes to such assumptions, could necessitate future adjustments
to tax income and expense already recorded. Such differences of
interpretation may arise on a wide variety of issues depending on
the conditions prevailing in the respective company's domicile. In
Romania and Poland, the tax position is open to further
verification for five years and no subsidiary in Romania has had a
corporate income tax audit in the last five years while in Poland
some entities are currently under tax audits for the fiscal year
2017.
Consolidated Consolidated
statement statement
of financial of comprehensive
position income
------------------- ------------------
2018 2017 2018 2017
--------- -------- --------- -------
Unaudited Audited Unaudited Audited
Deferred Tax Liability EUR'000 EUR'000 EUR'000 EUR'000
================================================ ========= ======== ========= =======
Acquired under business combinations in 2017 - 27,464 (27,464) -
Deferred tax asset - (5,087) - -
Deferred tax liability - 32,551 - -
========= ======== ========= =======
Valuation of investment property at fair value 128,639 82,075 46,564 4,954
Deductible temporary differences (11,227) 1,678 (12,905) 1,966
Discounting of tenant deposits and long-term
deferred costs 54 82 (28) (229)
Share issue cost recognised in equity (7) (7) - -
Valuation of financial instruments at fair
value 532 (428) 960 144
Recognised unused tax losses (11,013) (11,290) 277 (5,300)
================================================ ========= ======== ========= =======
106,978 99,574 7,404 1,535
=============================================== ========= ======== ========= =======
The Group has unused assessed tax losses carried forward of
EUR80.3 million (2017: EUR103.1 million) and EUR24 million (2017.
EUR76.7 million) respectively that are available for offsetting
against future taxable profits of the respective entity in Romania
and Poland, in which the losses arose, within seven years and five
years from the year of origination, respectively. As of the
statement of financial position date the Group had recognised
deferred tax assets of EUR11.0 million (2017: EUR12.9 million) in
Romania and Poland out of the total available deferred tax assets
of EUR17.2 million (2017: EUR31.1 million) calculated at the
corporate income tax rate of 16% in Romania and 19% (15% for small
entities) in Poland, respectively.
Expiry year 2019 2020 2021 2022 2023 2024 2025 TOTAL
======================= ==== ==== ==== ==== ==== ==== ==== =====
Available deferred tax
assets (EURm) 0.4 1.5 3.0 4.5 2.8 4.9 0.1 17.2
======================= ==== ==== ==== ==== ==== ==== ==== =====
There are also temporary non-deductible interest expenses and
net foreign exchange losses of EUR15.3 million (2017: EURnil)
related to intercompany and bank loans. Such amounts can be carried
forward indefinitely, and each year an amount up to 30% of EBITDA
would become tax deductible, for which no deferred tax asset was
recorded.
11. Earnings Per Share
The following table reflects the data used in the calculation of
basic and diluted earnings per share and number of shares used in
the basic and diluted NAV and EPRA NAV per share:
Number
of % of Weighted
shares the average
Note (000) period (000)
----------- ------------------------------------------------------- ---- ------- ------- --------
2017 At the beginning of the year (Audited) 90,397 90,397
Shares issued for:
- Subsidiaries' Employee Share Award
July 2017 Plan (treasury shares) (57) 48.4 (28)
- Subsidiaries' Employee Share Award
Aug 2017 Plan (vested and exercised) 21 39.8 8
Dec 2017 - cash 38,857 5.2 2,028
Dec 2017 - transaction costs on issue of shares 1,073 2.5 27
- Executive share option plan (vested
Dec 2017 and exercised) 1,755 2.5 43
April-Dec. - the Executive Directors and other senior
2017 management employees 137 38.0 52
----------- ------------------------------------------------------- ---- ------- ------- --------
2017 Shares in issue at year end - basic (Audited) 132,183 92,527
----------- ------------------------------------------------------- ---- ------- ------- --------
Dilutive effect of:
Jan 2017 - transaction costs on issue of shares - 97.5 1,046
April - Shares issued for Executive share option
2017 plan 69 69.8 48
- Shares purchased for Subsidiaries'
Aug 2017 Employee Share Award Plan (unvested) 17 39.8 7
- Shares issued to Executive share option
Nov 2017 plan (vested and exercised) - 8.8 154
- Share warrants vested but not exercised
Nov 2017 during the year 50 11.3 6
- Shares to be issued for Executive share
Dec 2017 option plan 165 - -
----------- ------------------------------------------------------- ---- ------- ------- --------
Shares in issue at year end - diluted
2017 (Audited) 132,484 93,788
----------- ------------------------------------------------------- ---- ------- ------- --------
Jan 2018 At the beginning of the year (Audited) 132,183 132,183
- Executive share option plan (vested
Jan 2018 and exercised) 19.1 30 99 30
April * Shares issued for executive share plan- shares
2018 released subsequent to Dec 2017 19.2 98 74 73
- Shares purchased for Subsidiaries'
Aug 2018 Employee Share Award Plan (vested) 19.4 33 38 13
- Shares issued for Executive share option
Dec 2018 plan - transferred 114 4 5
----------- ------------------------------------------------------- ---- ------- ------- --------
2018 Shares in issue at year end - basic (Unaudited) 132,458 132,304
----------- ------------------------------------------------------- ---- ------- ------- --------
Dilutive effect of:
- Share warrants vested but not exercised
Jan 2018 during the year 20 100 20
- Shares issued for Executive share option
Mar 2018 plan 19.2 47 87 41
- Shares issued for Subsidiaries' Employee
Jun 2018 Share Award Plan (unvested) 19.4 48 51 24
- Shares purchased for Subsidiaries'
Aug 2018 Employee Share Award Plan (vested) 19.4 - 60 20
- Shares issued for Executive share option
Dec 2018 plan (vested and exercised) 19.2 - 96 109
- Shares to be issued for Executive share
Dec 2018 option plan 19.2 126 - -
----------- ------------------------------------------------------- ---- ------- ------- --------
Shares in issue at year end - diluted
2018 (Unaudited) 132,699 132,518
IFRS Earnings Per Share
2018 2017
Unaudited Audited
EUR'000 EUR'000
Profit attributable to equity holders of the
Company for basic and diluted earnings per
share 80,263 24,426
IFRS earnings
per share cents cents
- Basic 60.67 26.40
- Diluted 60.57 26.04
Subsequent to 31 December 2018, 3,135,459 shares were
issued.
The following table reflects the reconciliation between earnings
as per the statement of comprehensive income and EPRA earnings:
2018 2017
Unaudited Audited
EUR'000 EUR'000
Earnings attributable to equity holders of the Company
(IFRS) 80,263 24,426
Changes in fair value of financial instruments and
associated close-out costs 298 15,247
Fair value gain on investment property (34,088) (6,727)
Losses on disposal of investment properties 2,701 3,807
Changes in value of financial assets at fair value
through profit or loss (5,463) -
Acquisition costs 1,182 10,809
Bargain purchase gain on acquisition of subsidiaries (251) (28,897)
Tax credit relating to losses on disposals (13) (80)
Deferred tax charge in respect of above adjustments 17,501 1,218
Adjustments in respect of joint ventures for above
items (4,088) (2,528)
Non-controlling interest in respect of the above 2,853 (467)
EPRA earnings 60,895 16,808
EPRA earnings per share cents cents
- Basic 46.03 18.17
- Diluted 45.95 17.92
12. Net Asset Value ('NAV') Per Share
NAV Per Share
The following reflects the net assets used in the NAV per share
computations:
2018 2017
Unaudited Audited
EUR'000 EUR'000
Net assets attributable to equity holders
of the Company 1,084,915 1,068,884
EUR EUR
NAV per share 8.19 8.09
Diluted NAV per share 8.18 8.07
EPRA Net Asset Value ('EPRA NAV') Per Share
2018 2017
Unaudited Audited
The following reflects the net assets used in the EPRA NAV per share computations: Note EUR'000 EUR'000
Net assets attributable to equity holders of the Company 1,084,915 1,068,884
Exclude:
Deferred tax liability on investment property 10 128,639 112,092
Fair value of interest rate swap instrument 2,084 2,638
Goodwill as a result of deferred tax (5,697) (5,697)
Adjustment in respect of the joint venture for above items 1,341 533
Non-controlling interest effect on above adjustments (11,111) (6,983)
EPRA NAV attributable to equity holders of the Company 1,200,171 1,171,467
EUR EUR
EPRA NAV per share 9.04 8.84
13. Interest-Bearing Loans and Borrowings
This note describes information on the material contractual
terms of the Group's interest-bearing loans and borrowings.
2018 2017
Unaudited Audited
EUR'000 EUR'000
=========
Current
Current portion of secured loans and accrued
interest 3,039 27,795
Accrued interest on unsecured fixed rate
bonds 20,926 8,565
Sub-total 23,965 36,360
Non-current
Secured loans 155,642 296,641
Unsecured fixed rate bonds 1,079,464 537,403
Sub-total 1,235,106 834,044
=========
TOTAL 1,259,071 870,404
2018 2017
Unaudited Audited
13.1 Key terms and conditions of outstanding
debt: Carrying Carrying
Face
value value Face value value
Maturity
Facility Currency Nominal interest rate date EUR'000 EUR'000 EUR'000 EUR'000
=========
Loan
16 EUR EURIBOR 1M+ margin Jun 2022 17,946 17,946 19,142 19,142
Loan
17 RON ROBOR 1M+ margin Apr 2019 85 85 400 400
Loan
25 EUR Fixed rate bond June 2022 558,404 548,120 558,565 545,968
Loan
26 EUR EURIBOR 3M + margin April 2019 - - 34,817 34,647
Loan
27 EUR EURIBOR 3M + margin March 2020 - - 45,127 44,846
Loan
28 EUR EURIBOR 3M + margin June 2018 - - 6,221 6,216
Loan January
29 EUR EURIBOR 3M + margin 2034 - - 7,471 7,284
Loan
30 EUR EURIBOR 3M + margin June 2018 - - 7,177 7,171
Loan
31 EUR EURIBOR 3M + margin July 2034 - - 13,694 13,466
Loan
32 EUR NBP rate less social indicator June 2034 3,434 2,535 4,320 4,320
Loan February
33 PLN WIBOR 1M + margin 2019 187 187 251 251
Loan
34 EUR EURIBOR 1M + margin August 2026 36,840 36,782 53,804 52,148
Loan
35 EUR EURIBOR 1M + margin June 2026 - - 96,393 95,650
Loan
36 EUR EURIBOR 3M + margin June 2027 - - 39,334 38,893
Loan
37 EUR Fixed rate bond March 2025 562,522 552,271 - -
Loan Fixed rate & Floating rate
38(1) EUR EURIBOR 3M +margin May 2025 100,299 99,306 - -
Loan
40 EUR EURIBOR 3M + margin April 2025 2,011 1,839 - -
Total 1,281,728 1,259,071 886,716 870,402
(1) Loan 38 was drawn down in two tranches - 95% of the amount
bearing a fixed interest rate and 5% bearing a floating interest
rate.
Unsecured Corporate Bond
In June 2017, the Group issued a EUR550 million unsecured
Eurobond (loan 25). The five-year euro-denominated Bond matures on
20 June 2022 and carries a fixed interest rate of 2.875%.
In March 2018, the Group issued a EUR550 million unsecured
Eurobond (Loan 37). The seven-year euro-denominated Bond matures on
29 March 2025 and carries a fixed interest rate of 3.0%. The net
proceeds were used for refinancing existing debt (loans 26-31 and
35-36), acquisition of investment properties and general corporate
purposes.
Secured facilities
In the second quarter of 2018 the Group has entered into new
loan agreements (loan 38). The new facility carries fixed interest
rates (95% of the amounts drawn down) and partly floating interest
rates (5% of the amounts drawn down). The net proceeds were used to
fund the acquisition of investment property. Similarly, during the
year the Company withdrew from an existing revolving loan facility
from Erste Group Bank AG (part of Erste Bank Group), secured on our
TAP property (loan 40) an amount of EUR2 million. Secured bank
loans are secured by investment properties with a carrying value of
EUR320.7 million at 31 December 2018 (2017: EUR796.0 million) and
also carry pledges on rent receivable balances of EUR4.02 million
(2017: EUR9.6 million), tenant deposits of nil (2017: EUR6.1
million), VAT receivable balances of EUR0.9 million (2017: EUR1.3
million) and a moveable charge on the bank accounts (see note
16).
Other Disclosures
All the loans are subject to certain financial covenants, which
are calculated based on the individual financial statements of the
respective subsidiaries and of the Group. The Group is in
compliance with all financial covenants and there were no defaults
for payments during the years 2018 and 2017. Financial covenants
mainly include the gross loan-to-value ratio ("LTV") with ranges
from 60% - 83%, the loan to cost ratio ("LTC") with a maximum value
of 75%, and the debt service cover ratio ('DSCR') / interest cover
ratio ("ICR") with ranges from 120% - 300% and the secured
leveraged ratio of maximum value of 30%. LTV is calculated as the
loan value divided by the market value of the relevant property
(for a calculation date), LTC is calculated by dividing the value
of drawdowns by the total project cost, and DSCR (historical and/or
projected, as the case may be, for a 12-month period) and ICR are
mainly calculated as net operating income divided by the debt
service / interest. As of 31 December 2018, the Group had undrawn
borrowing facilities of EUR30.84 million (2017: EUR32.7
million).
14. Financial assets at fair value through profit and loss
In prior year, the Group acquired the following financial
instruments through the acquisition of a subsidiary, which had been
classified as available for sale financial assets under IAS 39 and
subsequently as at fair value through profit and loss under IFRS 9,
see more detail in note 27.
As at 31 December 2018 (Unaudited)
(measured at fair value through
profit or loss under IFRS
9) Project
completion
Project name Interest rate date Total Long-term Short-term
======= ========= ==========
EUR'000 EUR'000 EUR'000
September
Beethovena I fixed 2019 3,608 - 3,608
September
Beethovena II fixed 2020 2,829 2,829 -
Browary Stage J fixed April 2019 9,270 - 9,270
15,707 2,829 12,878
As at 31 December 2017
(Audited)
(available for sale under
IAS 39) Project
completion
Project name Interest rate date Total Long-term Short-term
EUR'000 EUR'000 EUR'000
Beethovena I fixed March 2019 3,002 3,002 -
Beethovena II fixed June 2019 2,895 2,895 -
December
Browary Stage J fixed 2018 4,346 - 4,346
10,243 5,897 4,346
Right of First Offer Agreements ('ROFO')
The fair value of the financial assets is individually
determined by taking into account number of factors e.g. percentage
of completion ('PoC'), leasing progress. The maturity dates
presented in the table above are stated in the agreements, however
the planned repayment dates of debentures would take place upon
completion of each ROFO project. As at 31 December, a gain of
EUR5.5 million (2017: nil) from the fair valuation of the above
financial instruments was recognised in the statement of
comprehensive income.
In 2017 prior to acquisition date, GPRE and its subsidiaries
signed an agreement for the acquisition of 25% stakes in ROFO
projects, being developed by Echo Investment S.A. ("ROFO Bonds").
Under the agreement, GPRE (the "Bondholder") purchased bonds issued
by the respective limited partners of all of the respective ROFO
SPVs (the "ROFO Agreement"). The ROFO Agreement covers all of the
ROFO Assets. Echo indirectly holds 100% of the shares or interest
in the ROFO SPVs and the ROFO SPVs are developing the ROFO Assets.
GPRE intended to invest (indirectly through the Bondholder), on the
terms and conditions set out in the ROFO Agreement, in each of the
ROFO Assets the amount of 25% of the funds required by each of the
ROFO SPVs (less the external construction bank financing at a loan
to construction ratio of 60%) to complete the development of each
respective ROFO Asset. Based on the construction budget presented
by Echo to the Issuer in connection with the execution of the ROFO
Agreement, the amount of the contribution (the investment) made by
the Company under the ROFO Agreement amounts to EUR9.9 million.
The redemption date for all the series of the ROFO Bonds is 12
June 2032, and the ROFO Bonds will be redeemed by way of the
payment of a sum equal to the nominal value of each of the bonds.
The ROFO Bonds accrue interest at a fixed interest rate in the
amounts of and on the conditions provided in the terms and
conditions of the ROFO Bonds. Final amount of interest will be
adjusted based on the terms of the accompanied option agreement so
that it reflects actual development profit realised on each of the
projects. The ROFO Bonds have been issued as unsecured bonds.
15. Equity investments
2018 2017
Unaudited Audited
EUR'000 EUR'000
Equity investments (unquoted) 8,837 -
On 27 June 2018, the Group entered into an agreement with
Mindspace Ltd. by investing in Preferred A-2 class shares for an
amount of EUR8.6 million (US$10 million), receiving a 4.99% stake
in Mindspace Ltd.
At initial recognition the Group, at its sole irrevocable option
under IFRS 9, designated the unquoted equity investment as
financial assets at fair value through other comprehensive income.
Under this option, qualifying dividends will be recognized in
profit or loss. Changes in fair value, net of deferred tax if any,
will be recognized in other comprehensive income and will not be
reclassified to profit and loss on future impairment or
derecognition. At 31 December 2018, no fair value gain or loss was
recognised in other comprehensive income as there was no
significant change in the net assets of the investee since the
acquisition date and there were no indicators of impairment.
16. Cash and Cash Equivalents
2018 2017
Unaudited Audited
Note EUR'000 EUR'000
Cash at bank and in hand 99,087 158,773
Short-term deposits 128,190 112,249
Cash and cash equivalents as per statement
of cash flows 227,277 271,022
Guarantee deposits - cash reserve 13 2,250 2,250
Cash and cash equivalents as per statement
of financial position 229,527 273,272
Long-term restricted cash balance - 2,958
Short-term deposits are made for varying periods depending on
the immediate cash requirements of the Group and earn interest at
rates ranging from minus 0.62% to nil (2017: -0.60% to nil) for EUR
deposits, from nil to 3.16% (2017: nil to 0.25%) for RON deposits
and from nil to 0.97% (2017: nil) for PLN deposits per annum. Cash
at bank and in hand includes restricted cash balances of EUR10.5
million (2017: EUR9.7 million) and short-term deposits includes
restricted deposits of EUR3.0 million (2017: EUR9.3 million).
17. Issued Share Capital
2018 2017
Unaudited Audited
Number Number
Note EUR'000 ('000') EUR'000 ('000')
==== =======
Opening balance (Audited) 894,509 132,288 538,114 90,397
Shares issued to the Executive Directors
and other senior management
employees - transferred 19.2 1,874 143 1,132 137
Shares issued to the Executive Directors
and other senior management
employees - not transferred - 47 - 69
Shares issued for cash - - 340,000 38,857
Transaction costs on issue of shares (40) - (2,271) -
Transaction costs on issue of shares
settled in shares - - 8,584 1,073
Shares issued under the Executive share
option plan 19.1 153 30 8,950 1,755
Treasury shares 19.4 818 91 - -
Balance at 31 December (Unaudited) 897,314 132,599 894,509 132,288
Ordinary shares carry no right to fixed income but are entitled
to dividends as declared from time to time. Each Ordinary share is
entitled to one vote at meetings of the Company. There is no limit
on the authorised share capital of the Company. The Company can
issue no par value and par value shares as the shareholders see fit
for the five-year period following the incorporation of the Company
(unless renewed, revoked or varied by a general meeting). This
authority has not been revoked by the shareholders.
Under Guernsey Company Law there is no distinction between
distributable and non-distributable reserves, requiring instead
that a company passes a solvency test in order to be able to make
distributions to shareholders. Similarly, share premium for
issuance of shares above their par value per share is recognised
directly under share capital and no separate share premium reserve
account is recognised.
18. Dividends
2018 2017
Unaudited Audited
EUR'000 EUR'000
Declared and paid during the year
Interim cash dividends: 49 cents per share (2017:
22 cents per share) 64,870 19,933
On 3 January 2018, the Board of Directors has approved the
payment of an interim dividend in respect of the six-month
financial period ended 31 December 2017 of EUR0.22 per ordinary
share, which was paid on 26 January 2018 to the eligible
shareholders.
On 11 July 2018, the Board of Directors has approved the payment
of second interim dividends in respect of the six-month financial
period ended 30 June 2018 of EUR0.27 per ordinary share, which was
paid on 17 August 2018 to the eligible shareholders. During 2018,
the total dividends per ordinary share distributed amounted to
EUR0.49 and there were no income tax consequences related to the
payment of these dividends by the Group to its shareholders.
19. Share-Based Payment Reserve
2018 2017
Unaudited Audited
Treasury Treasury
shares shares
Number Number
Share-based payments reserve Note EUR'000 ('000) EUR'000 ('000)
Executive share option plan 19.1 158 - 161 -
Shares granted to Executive Directors
and other senior management
employees - not transferred 19.2 1,528 (47) 1,911 (69)
Subsidiaries' Employee Share Award Plan 19.4 431 (94) 168 (36)
=======
2,117 (141) 2,240 (105)
=======
2018 2017
Unaudited Audited
Share-based payments expense Note EUR'000 EUR'000
Executive Share Option Plan 19.1 - 17
Subsidiaries' Employee Share Award Plan 19.4 509 126
=======
Closing balance 509 143
=======
19.1 Executive Share Option Plan
Under the plan, the Directors of the Group were awarded share
option warrants as remuneration for the services performed. The
share options granted to the Directors of the Group are equity
settled.
In 2013, the Group granted warrants to the Founder and the
Directors which entitle each holder to subscribe for Ordinary
shares in the Company at an exercise price of EUR5.00 per share if
the market price of an Ordinary share, on a weighted average basis
over 60 consecutive days, exceeds a specific target price and the
holder is employed on such date. The contractual term of each
warrant granted is 10 years. There are no cash settlement
alternatives and the Group does not have the intention to offer
cash settlement for these warrants.
The following table analyses the total cost of the executive
share option plan (Warrants), together with the number of options
outstanding.
2018 2017
Unaudited Audited
Cost Number Cost Number
EUR'000 ('000) EUR'000 ('000)
At the beginning of the year 161 2,880 319 4,635
Share-based payment expense during the year - - 17 -
Warrants vested and exercised during the year (3) (30) (175) (1,755)
At 31 December 158 2,850 161 2,880
Weighted average remaining contractual life
(years) 4.58 5.58
Warrants vested and exercisable at 31 December 20 50
Warrants exercised subsequent to 31 December - 30
The fair value of the warrants was estimated at the grant date
(i.e. July 2013) at EUR0.073 per share. There have been no
cancellations or modifications to any of the plans during the year.
On 3 January 2018, 30,000 of the vested warrants were exercised at
EUR5.00 per share under the contractual terms for an amount of
EUR0.15 million and a corresponding EUR3,000 share-based payment
reserve was also transferred to share capital.
19.2 Shares granted to Executive Directors and other senior
management employees
2018 2017
Unaudited Audited
EUR'000 EUR'000
At the beginning of the year 1,911 1,820
Shares granted to Executive Directors and other
senior management employees 1,491 1,423
Transferred to subsidiaries' employee share award
plan - (200)
Shares issued to the Executive Directors and other
senior management employees (1,874) (1,132)
Closing balance 1,528 1,911
Shares issued to the Executive Directors and other senior
management employees
On 28 March 2018, the Company issued 0.2 million Ordinary shares
(Ordinary shares of no par value), out of which 0.09 million
Ordinary shares were delivered to the Executive Directors and other
senior management employees, from share-based payment reserve, in
their capacity as Globalworth Investment Advisers Limited's
("GIAL") preference shareholders, on behalf of its subsidiary GIAL,
in order to settle part of the liability of EUR 1.66 million owed
by the Company to its subsidiary, related to the fees charged by
GIAL to the Company pursuant to the Investment Advisory Agreement
concluded between the Company and GIAL. The 0.2 million new shares
rank pari passu with the existing shares of the Company. The
Ordinary shares have been issued at EUR8.75 per Ordinary share
(market price on the issue date being EUR9.15 per Ordinary share)
and are subject to the vesting conditions set out in the
performance incentive scheme for the Investment Adviser.
On 12 December 2018, pursuant to the above decision, GIAL
transferred the following shares to the Executive Directors and
certain other preference shareholders of GIAL:
-- the third tranche of 0.07 million Ordinary shares, comprising
part of the Ordinary Shares that were allotted to GIAL in part
settlement of the fee due to GIAL by the Company for the year ended
31 December 2016; and
-- the second tranche of 0.05 million Ordinary shares,
comprising part of the Ordinary Shares that were allotted to GIAL
in part settlement of the fee due to GIAL by the Company for the
year ended 31 December 2017.
As at 31 December 2018, 0.05 million shares held by GIAL and not
transferred yet are accounted for as treasury shares.
Subsidiaries' Employee Share Award Plan
Under the share award plan, the subsidiaries' employees are
required to remain in service for one-year period since the date of
acceptance of the share offer letter, by the employees, of the
shares assigned under the scheme. During the year, the Company
recorded EUR0.5 million as share-based payment expense in the
income statement for the lapsed vested period. Therefore, as of 31
December 2018 a total of 93,976 Ordinary shares were held by the
Company as treasury shares.
19.3 Performance Incentive Scheme
The Company's Admission document in July 2013 stated that the
Company would implement a performance incentive plan based on Total
Shareholder Return.
Post Admission, and following extensive discussions with the
Board, the Board of the Company adopted the current Investment
Adviser Incentive Plan which the Company's shareholders approved at
an Extraordinary General Meeting in November 2016 (the "Plan"). The
Plan comprises the following three main elements:
-- an annual fee which includes a fixed component and an amount
by way of profit margin to the Investment Adviser for the relevant
financial year;
-- an annual incentive amount based on the achievement of
targets set by the Board at the start of the relevant year; and
-- a long-term incentive fee ("LTF"), primarily based on
achieving certain returns for shareholders.
Following discussions during 2018 by the Company's management
with the Company's major shareholders, as well as other key
shareholders and potential new investors, regarding the LTF,
concerns were raised over the potential uncapped dilutive future
effect of the LTF. It is evident that should the Company continue
to grow as it has so far, at termination of the Plan, the
LTF-related liability would be significantly higher than if it was
to be terminated today. If decided to be terminated over the course
of the current year, any consideration could represent a
significant discount to the potential future value of the LTF
component of the Plan.
As a result of these concerns over this future uncapped
liability the Board requested the Remuneration Committee to conduct
a detailed analysis of what could be the potential payout to the
Investment Adviser (and subsequently to its preference
shareholders, which comprise the Executive Directors and other
members of senior management of the Company) in the future should
the LTF's related conditions be met and what would be a reasonable
and fair value to terminate the Plan today in order to prevent a
potentially much bigger liability to the Company in the future.
The Remuneration Committee, supported by international expert
remuneration consultants, conducted such detailed analysis and has
recommended to the Board an appropriate termination value for the
LTF should the Board decide to terminate the LTF.
The Board is currently in the process of further assessing and
analysing the proposal of the Remuneration Committee, and since no
final decision has been taken and implemented, no accounting
entries have been recorded in the current financial year.
19.4 Subsidiaries' Employee Share Award Plan
2018 2017
Unaudited Audited
EUR'000 EUR'000
Opening balance related to subsidiaries employees 168 -
Transfer from Shares granted to Executive Directors
and other senior management employees -
not transferred - 200
Share-based payment expense during the year 509 126
Shares vested and exercised during the year (246) (158)
Closing balance 431 168
Weighted average remaining unvested period (years) 0.5 0.5
Weighted average price per share - vested and exercised
share EUR7.55 EUR7.55
Weighted average price per share - unvested shares EUR8.95 -
The Company estimated that all employees will remain in service
until the expiry of the unvested period.
Treasury shares
2018 2017
Unaudited Audited
Amount Number Amount Number
EUR'000 ('000') EUR'000 ('000')
Opening balance (270) (36) - -
Shares purchased under the subsidiaries'
employee share award plan - - (428) (57)
Shares issued under the subsidiaries' employee
share award plan (818) (91) - -
Shares vested and exercised under the subsidiaries'
employee share award Plan 246 33 158 21
Shares held in treasury under the subsidiaries'
employee share award plan (842) (94) (270) (36)
20. Capital Management
The Company has no legal capital regulatory requirement. The
Group's policy is to maintain a strong equity capital base to
maintain investor, creditor and market confidence and to sustain
the continuous development of its business. The Board considers
from time to time whether it may be appropriate to raise new
capital by a further issue of shares.
The Group monitors capital primarily using an LTV ratio, which
is calculated as the amount of outstanding debt, less cash and cash
equivalents, divided by the open market value of its investment
property portfolio as certified by external valuers. As at 31
December 2018 the LTV ratio amounted to 43.9% (2017: 34.0%).
2018 2017
Unaudited Audited
Note EUR'000 EUR'000
Interest-bearing loans and borrowings
(face value) 13.1 1,281,728 886,716
Less:
Cash and cash equivalents 16 229,527 273,272
Group Interest-bearing loans and borrowings
(net of cash) 1,052,201 613,444
Add:
50% Share of Joint Venture interest-bearing
loans and borrowings 14,348 -
50% Share of Joint Venture cash and
cash equivalents (1,930) (145)
Combined Interest-bearing loans and
borrowings (net of cash) 1,064,619 613,299
Investment property 3 2,390,994 1,792,414
Less:
Other operating lease commitment 1,514 1,432
Group Open Market value as of financial
position date 2,389,480 1,790,982
Add:
50% Share of Joint Venture Open Market
value as of financial position date 36,300 12,200
Combined open Market value as of financial
position date 2,425,780 1,803,182
Loan-to-value ratio ("LTV") 43.9% 34.0%
21. Subsidiaries Acquisitions
The Group acquired controlling interest in the following
entities during the year. Considering the absence of existing
strategic management functions and associated processes in
underlying subsidiaries owning the properties, the management
considered these transactions as acquisitions of an asset rather
than a business acquisition.
Asset acquisitions
During 2018 the Group acquired 100% of the issued shares in
Warta Tower Sp. z o.o. Sp. k., holding an office building called
"Warta Tower", West Gate II - Projekt Echo - 114 Sp. z o.o. Sp. k.,
holding an office building called "West Link", Blackwyn Investments
Sp. z o.o., holding an office building called "Quattro Business
Park", Spektrum Tower spó ka z ograniczon odpowiedzialności ,
holding legal rights to the office building Spektrum Tower in
Warsaw, Poland, and Gold Project Spó ka z ograniczon
odpowiedzialności Sp. j. holding two office buildings, called
"Skylight & Lumen".
The acquisitions were judged as asset acquisitions on
acquisition date as per the criteria outlined above for a gross
cash consideration of EUR508.8 million. The aggregate fair values
of investment properties, cash and cash equivalents, other current
assets and current liabilities acquired were EUR513.6 million,
EUR7.2 million, EUR4.1 million and EUR11.04 million,
respectively.
The aggregate cash consideration in respect of the subsidiaries'
acquisitions
2018
Unaudited
EUR'000
Acquisition price 508,857
Less:
Net working capital of the subsidiary (1,383)
Investment property acquired 507,474
Cash of acquired entities (7,200)
Sub-total 500,274
Less:
Debentures (outstanding from the acquiree)(1) 18,684
Cash consideration paid 481,876
Other incidental costs paid 1,947
Consideration receivable from the seller 2,233
(1) non-cash settlement
22. Investment in Joint venture
2018 2017
Unaudited Audited
Investments EUR'000 EUR'000
Opening balance 2,218 -
Cost of investment in Joint venture at acquisition
date - 30
Additions in investment 6 -
Share of profit during the year 3,095 2,188
Sub-total 5,319 2,218
Loans receivable from joint venture
Opening balance 19,721 -
Loan given to the joint venture 26,202 19,330
Loan repayments from the joint venture (12,875) -
Interest repayment (1,470) -
Interest income for the year 1,419 391
Sub-total 32,997 19,721
TOTAL 38,316 21,939
In February 2017, the Group's subsidiary Minory Investments
Limited entered into a joint venture agreement with Diti Holding
Limited and through which it acquired a 50% shareholding interest
in Elgan Offices SRL ("Elgan O"), an unlisted company in Romania,
currently owning an investment property in Bucharest, Romania. The
property is fully occupied by Groupe Renault Romania being its new
headquarters in Bucharest. The joint venture was funded by loans
from venture partners, which carry fixed interest rate, and an
interest-bearing bank loan.
The joint venture had no other contingent liabilities or
commitments as at 31 December 2018, except construction commitments
as disclosed in note 6. Elgan Offices SRL cannot distribute its
profits without the consent from the other venture partner.
23. Investment in Subsidiaries
Key Judgements and Assumptions used in Determining the Control
over an Entity:
-- Power over the investee (i.e. existing rights, directly or
indirectly, in the investee that give it the current ability to
direct the relevant activities of the investee). If the Group has
less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances
in assessing whether it has power over an investee, including the
contractual arrangement with the other vote holders of the
investee, rights arising from other contractual arrangements and
the Group's voting rights and potential voting rights.
-- Exposure, or rights, to variable returns from its involvement
with the investee.
-- The ability to use its power over the investee to affect its
returns (such as appointment of administrator or director in the
subsidiary or investee).
Details on all direct and indirect subsidiaries of the Company,
over which the Group has control and consolidated as of 31 December
2018 and 2017, are disclosed in the table below.
As of 31 December 2018 and 31 December 2017, the Group
consolidated following subsidiaries, being holding companies as
principal activities.
Subsidiary Name 2018 Shareholding 2017 Place
interest Shareholding of incorporation
(%) interest
(%)
Guernsey,
Globalworth Investment Advisers Limited, Channel
Globalworth Finance Guernsey Limited 100 100 Islands
Globalworth Holding B.V. 100 100 Netherlands
Globalworth Poland Real Estate N.V. (GPRE
Group or GPRE), formerly known as Griffin
Premium RE. N.V. 69.70 71.66 Netherlands
Elgan Automotive Kft. 100 100 Hungary
Globalworth Holdings Cyprus Limited, Zaggatti
Holdings Limited, Tisarra Holdings Limited,
Ramoro Limited, Vaniasa Holdings Limited,
Serana Holdings Limited, Kusanda Holdings
Limited, Kifeni Investments Limited, Casalia
Holdings Limited, Pieranu Enterprises Limited,
Dunvant Holding Limited, Oystermouth Holding
Limited, Saniovo Holdings Limited, Kinolta
Investments Limited, Minory Investments
Limited 100 100 Cyprus
IB 14 Fundusz Inwestycyjny Zamkni ty Aktywów
Niepublicznych, Akka RE Sp. z o.o., Charlie
RE Sp. z o.o., December RE Sp. z o.o., Nordic
Park Offices Sp. z o.o., Lamantia Sp. z
o.o., Dom Handlowy Renoma Sp. z o.o. , Wagstaff
Investments Sp. z o.o., Wetherall Investments
Sp. z o.o., Iris Capital Sp. z o.o., GPRE
Management Sp. z o.o., Lima Sp. z o.o.,
Luapele Sp. z o.o., Warta Tower Sp. z o.o.,
Warta LP Sp. z o.o., GPRE Property Management
Sp. z o.o., Elissea Investments Sp. z o.o.,
West Link Sp. z o.o. (previously Projekt
Echo - 114 Sp. z o.o.), Ormonde Sp. z o.o.,
Emfold Investments Sp. z o.o., West Gate
Wroc aw Sp. Z.o.o., Gold Project Sp. z o.o.
(formerly: Haola Sp. z o.o.), 69.70 71.66 Poland
Griffin Premium RE Lux S.á r.l., Akka
SCSp, Charlie SCSp, December SCSp. 69.70 71.66 Luxembourg
As of 31 December 2018 and 31 December 2017, the Group
consolidated the following subsidiaries, who own real estate assets
in Romania and Poland, being asset holding companies as their
principal activities, except Globalworth Building Management SRL
with building management activities.
Subsidiary Name 2018 2017 Place
Shareholding Shareholding of incorporation
interest interest
(%) (%)
Corinthian Five SRL, Tower Center International
SRL, Upground Estates SRL, BOB Development
SRL, BOC Real Property SRL, Netron Investment
SRL, SEE Exclusive Development SRL, Aserat
Properties SRL, Corinthian Tower SRL,
Globalworth EXPO SRL (formerly Bog'Art
Offices SRL), SPC Beta Property Development
Company SRL, SPC Gamma Property Development
Company SRL, Globalworth Asset Managers
SRL, Globalworth Building Management
SRL, Elgan Automotive SRL, SPC Epsilon
Property Development Company SRL, Corinthian
Twin Tower SRL 100 100 Romania
DH Supersam Katowice Sp. z o.o., Hala
Koszyki Sp. z o.o., Dolfia Sp. z o.o.,
Ebgaron Sp. z o.o., Bakalion Sp. z o.o.,
Centren Sp. z o.o., Emfold investments
Spó ka z ograniczon odpowiedzialności
Sp. k., A4 Business Park - "Iris Capital"
- Spó ka z ograniczon odpowiedzialności
Sp. k., West Gate II - Projekt Echo -
114 Sp. z o.o. Sp. k., Dom Handlowy Renoma
Spó ka z ograniczon odpowiedzialności
Sp. k., Lamantia Spó ka z ograniczon
odpowiedzialności Sp. k., Nordic
Park Offices Spó ka z ograniczon
odpowiedzialności Sp. k., Warta
Tower Spó ka z ograniczon odpowiedzialności
Sp. k., Blackwyn Investments Sp. z o.o.,
West Gate Wroc aw Spó ka z ograniczon
odpowiedzialności Sp. k. (formerly:
Echo - West Gate Spó ka z ograniczon
odpowiedzialności Sp.k.), Gold Project
Spó ka z ograniczon odpowiedzialności
Sp. j. (formerly: Z ote Tarasy Tower
Warsaw III S. Ã r.l. Sp. j.), Spektrum
Tower Sp. z o.o. 69.70 71.66 Poland
Changes in Group structure during 2018
Circolo Holding Limited, a holding company and a wholly owned
subsidiary which was incorporated in 2017 in Cyprus was liquidated.
Circolo had held no assets and was a dormant company.
GWI Finance B.V and GW Real Estate Finance B.V., holding
companies and wholly owned subsidiaries which were incorporated in
The Netherlands, were liquidated. They held no real estate assets.
Globalworth Tech Ltd. was incorporated in Cyprus, a holding
subsidiary, which is 80% owned by the Group and 20% by Mr. Ioannis
Papalekas. The total cost of investment was EUR1,000.
During the year ended 31 December 2018, the Group also
incorporated in Poland GPRE Property Management Sp. z o.o. (asset
management company), Luapele Sp. z o.o. (intra-group loan financing
company) and Warta Tower Sp. z o.o., Warta LP Sp. z o.o., Gold
Project sp. z o.o, Light Project Sp. z o.o. (being holding
companies). All companies were wholly owned subsidiaries of the
Group as at 31 December 2018.
New acquisitions during the year
On 23 February 2018, the Group acquired 100% of the equity stake
in Corinthian Twin Tower SRL, holding a land plot in the Gara
Herastrau / Barbu Vacarescu corridor of Bucharest's new CBD, for a
total consideration of EUR13 million. The land plot is located
between Globalworth Plaza and Green Court B office properties owned
by the Group.
On 14 March 2018, the Group acquired 100 % of the equity stake
in Warta Tower Sp. z o.o. Sp. k., holding an office building called
"Warta Tower". On 25 May 2018, the Group acquired 100 % of the
equity stake in West Gate II - Projekt Echo - 114 Sp. z o.o. Sp.
k., holding an office building called "West Link", and on 21 June
2018 the Group acquired 100 % of the equity stake in Blackwyn
Investments Sp. z o.o., holding an office building called "Quattro
Business Park".
On 12 July 2018, the Group concluded an agreement based on which
it purchased 100% of the issued shares in Spektrum Tower spó ka z
ograniczon odpowiedzialności , holding legal rights to the office
building Spektrum Tower in Warsaw, Poland.
On 21 December 2018, the Group acquired 100 % of the shares of
Gold Project Spó ka z ograniczon odpowiedzialności Sp. j. holding
two office buildings, "Skylight & Lumen".
24. Subsidiary with significant non-controlling interest
GPRE Group represents a material subsidiary not fully owned by
the Group as of 31 December 2018, where non-controlling interest
had 30.30% (31 December 2017: 28.30%) interest in the GPRE Group.
On 12 June 2018, the Group participated in GPRE's EUR450 million
capital raise and made an additional investment of EUR300 million
in GPRE (representing 66.67% of the shares issued). This decreased
the Group's interest in GPRE from 71.66 to 68.43%. In December
2018, the Group acquired 1.27% of non-controlling interest
(representing 5.7 million shares) from non-controlling interest
holders in cash for an amount of EUR9.0 million, which increased
the Group's share from 68.43% to 69.70% as at 31 December 2018.
The summary of key statements from GPRE's unaudited condensed
consolidated financial statements as of and for the years ended 31
December 2018 and 31 December 2017 is presented below. The amounts
are presented before inter-company eliminations.
2018 2017
Unaudited Audited
Summarised statement of financial position EUR '000 EUR '000
Non-current assets
Investment property 1,216,790 680,130
Available for sale financial assets - 5,897
Financial assets at fair value through profit or
loss 2,828 -
Other long-term assets 378 116
Long-term restricted cash - 2,958
Current assets
Trade and other receivables and other current asset 13,431 10,695
Debentures and available for sale financial assets - 22,735
Financial assets at fair value through profit or
loss 12,878 -
Cash and cash equivalents 72,746 34,685
Non-current liabilities
Interest-bearing loans and borrowings (135,124) (278,690)
Intra-group loans (392,233) -
Other long-term liabilities and deferred tax liability (33,443) (30,229)
Current liabilities
Interest-bearing loans and borrowings (3,686) (26,202)
Intra-group loans - (165,413)
Dividends payable(1) (35,421) -
Other current-term liabilities (18,734) (16,749)
EQUITY 700,410 239,933
Attributable to:
Equity holders of parent 488,003 172,361
Non-controlling interest 212,407 67,572
(1) It represents 100% dividend payable at 31 December out of
which EUR10.7 million was payable to non-controlling interest
holders.
Period from
For the year 6 to 31
31 December December
2018 2017
Unaudited Audited
Summarised statement of comprehensive income EUR'000 EUR'000
Revenue 102,709 4,905
Operating expenses (24,452) (1,036)
Administrative expenses (6,407) (370)
Acquisition costs - (2,657)
Other net income 24,155 814
Net finance cost (26,819) (2,191)
Income tax expense (4,506) (1,862)
Profit/(Loss) for the year 64,680 (2,397)
Other comprehensive income - -
Profit/(Loss) attributable to non-controlling interest 19,654 (679)
Period from
For the year 6 to 31
31 December December
2018 2017
Unaudited Audited
Summarised statement of cash flow EUR'000 EUR'000
Operating 62,414 2,736
Investing (493,062) (157,583)
Financing 474,823 158,873
Net increase in cash and cash equivalents 44,175 4,026
Subsequent to 31 December 2018, the Group acquired another 4.03%
of non-controlling interest (representing 17.8 million shares of
the investee) from non-controlling interest holders in exchange for
3.1 million newly issued ordinary shares of the Company. There was
no cash consideration. As a result, the Group's interest increased
from 69.70% to 73.73% on 23 January 2019.
25. Segmental Information
The Board of Directors is of the opinion that the Group is
engaged mainly in real estate business, comprising following
Offices investment property, High-street mixed-use, office
investment property, residential investment property and other, in
two geographical areas, Romania and Poland. Operating segments are
reported in a manner consistent with the internal reporting
provided to the chief operating decision-makers. The chief
operating decision-makers who are responsible for allocating
resources and assessing performance of the operating segments, have
been identified as the Executive Directors.
The Group is domiciled in Guernsey. The Group earns revenue and
holds non-current assets (investment properties) in Romania and
Poland, the geographical area of its operations. For investment
property, discrete financial information is provided on a
property-by-property basis (including those under construction) to
members of executive management, which collectively comprise the
Executive Directors of the Group. The information provided is Net
Operating Income (gross rental income less property expenses) and
property valuation gains/losses. The individual properties are
aggregated into segments with similar economic characteristics,
such as the nature of the property and the occupier market it
serves. Management considers that this is best achieved by
aggregating into the office, mixed use and other segments however
residential segment is disclosed separately as it meets the
quantitative threshold of IFRS 8.
Consequently, the Group is considered to have four reportable
operating segments: the Offices segment (acquires, develops, leases
and manages offices and spaces), the Residential segment (builds,
acquires, develops and leases apartments) and the Other segment
(acquires, develops, leases and manages industrial spaces and
corporate holding offices). Share-based payments expense is not
allocated to individual segments as underlying instruments are
managed at Group basis. Segment assets and liabilities reported to
executive management on a segmental basis are set out below:
2018 2017
Unaudited Audited
High High
street Inter street Inter
Mixed segment mixed segment
Office use Residential Other eliminations Total Office use Residential Other eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
========= ============ ========= =========
Segment
non-current
assets 1,966,202 306,466 76,432 114,729 (3,788) 2,460,041 1,331,727 309,197 84,719 116,102 (150) 1,841,595
Romania 1,048,944 - 76,432 114,729 (167) 1,239,938 951,823 - 84,719 116,102 (150) 1,152,494
Poland 917,258 306,466 - - (3,621) 1,220,103 379,904 309,197 - - - 689,101
Total
assets 2,048,863 332,080 78,530 281,764 (4,238) 2,736,999 1,407,799 331,530 89,336 333,283 (1,003) 2,160,945
Total
liabilities 1,282,366 52,921 26,844 81,195 (3,649) 1,439,677 728,216 207,674 27,465 62,038 (904) 1,024,489
Additions
to
non-current
Assets
- Romania 50,163 - 1,047 3,477 - 54,687 41,321 - 569 10,332 - 52,222
- Poland 7,856 3,461 - - - 11,317 - - - - - -
Income statement reported to executive management on a segmental
basis are set out below:
2018 2017
Unaudited Audited
High High
Street Inter- Street Inter-
Mixed segment Mixed segment
Office use Residential Other eliminations Total Office use Residential Other eliminations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============ ========
Rental income
- Total 95,836 31,298 2,251 8,735 (492) 137,628 43,012 2,269 2,315 6,768 (508) 53,856
Romania 47,462 - 2,251 8,735 (492) 57,956 41,416 - 2,315 6,768 (313) 50,186
Poland 48,374 31,298 - - - 79,672 1,596 2,269 - - (195) 3,670
Revenue from
contract with
customers
- Total 42,490 8,172 683 4,658 (830) 55,173 19,890 881 634 3,720 (1,115) 24,010
Romania 27,624 - 683 4,658 (830) 32,135 19,536 - 634 3,720 (1,115) 22,775
Poland 14,866 8,172 - - - 23,038 354 881 - - - 1,235
Revenue-total 138,326 39,470 2,934 13,393 (1,322) 192,801 62,902 3,150 2,949 10,488 (1,623) 77,866
Operating
(59,360)
expenses (44,236) (8,711) (1,253) (5,075) (85) (21,902) (492) (1,220) (3,451) 293 (26,772)
Segment NOI 94,090 30,759 1,681 8,318 (1,407) 133,441 41,000 2,658 1,729 7,037 (1,330) 51,094
NOI- Romania 46,027 - 1,681 8,318 (1,012) 55,014 39,595 - 1,729 7,037 (1,135) 47,226
NOI - Poland 48,063 30,759 - - (395) 78,427 1,405 2,658 - - (195) 3,868
Administrative
expenses (6,124) (510) (607) (8,956) 944 (15,253) (4,346) (233) (777) (6,059) 1,184 (10,231)
Acquisition
costs (1,182) - - - - (1,182) (5,810) (4,492) - (507) - (10,809)
Change in
fair
value of
investment
property 38,474 (7,120) 2,339 395 - 34,088 7,170 - (3,801) 3,358 - 6,727
Depreciation
on other
long-term
assets (323) (9) (63) (3) (398) (84) - (64) (2) (150)
------------
Gain on
acquisition
of
subsidiary 251 - - - - 251 14,600 11,658 - 2,639 - 28,897
Other expenses (1,335) (286) *(2,711) (11) 11 (4,332) (153) - *(3,938) - - (4,091)
Other income 230 94 - 3 3 330 - - 5 - - 5
Foreign
exchange loss (992) (170) 31 (83) - (1,214) (109) (71) (29) (108) - (317)
(41,727)
Finance cost (38,538) (2,091) (4) (1,094) - (31,801) (168) (3,469) (3,027) - (38,465)
Finance income 2,685 90 7 507 - 3,289 1,357 47 - 43 - 1,447
============
Segment results 87,236 20,757 673 (924) (449) 107,293 21,824 9,399 (10,344) 3,374 (146) 24,107
Share-based
payment
expense - - - (509) - (509) - - - (143) - (143)
Gain from
fair valuation
of financial
instruments 5,463 - - - - 5,463 - - - - - -
Share of profit
of
joint
ventures 3,095 - - - - 3,095 2,188 - - - - 2,188
Profit before
tax 95,794 20,757 673 (1,433) (449) 115,342 24,012 9,399 (10,344) 3,231 (146) 26,152
* Other expenses represent loss on sale of non-core investment
property (apartments).
Revenues are derived from a large number of tenants and no
tenant contributed more than 10% of the Group's rental revenues for
the year ended 31 December 2018 (2017: nil).
None of the Group's non-current assets are located in Guernsey
except for goodwill (there are no employment benefit plan assets,
deferred tax assets or rights arising under insurance contracts)
recognised on business combination.
26. Transactions with Related Parties
The Group's related parties are the Company's Executive and
Non-Executive Directors, key other Executives, as well as all
companies controlled by them or under their joint control, or under
significant influence.
The related party transactions are set out in the table
below:
Statement of
Income statement financial position
Amounts owing
Income/(expense) (to)/from
2018 2017 2018 2017
Unaudited Audited Unaudited Audited
Nature of transactions/balance
Name amounts EUR'000 EUR'000 EUR'000 EUR'000
Elgan Offices SRL (50%
Joint Venture) Shareholder loan receivable - - 32,997 19,330
Finance income 1,419 391 - -
Management fees 300 250 - -
Office rent 24 14.5 - -
Mindspace Ltd(2) Trade and other receivables - - 267 -
Revenue 896 - - -
Deposits from tenant - - (1,142) -
Lease incentives cost(1) - - 2,868 -
Trade and other payables - - (175) -
Mr. Adrian Danoiu (Chief Advances received for
Operating Officer)(3) sale of commercial property - - (70) -
Revenue 6 - - -
(1) Lease incentive cost granted in the period was capitalised
in the value of Investment Property.
(2) A key Executive of Mindspace Ltd. is a close family member
of a non-Executive Director of the Company. The transactions
disclosed in above table were entered between the subsidiaries of
Mindspace Limited (namely Mindspace Co-working SRL and Mindspace
Poland S.A) and certain subsidiaries of the Company.
(3) During the year, Upground Estates SRL, a fully owned
subsidiary of the Group, signed a preliminary agreement for the
sale of a commercial space for an amount of up to EUR215 thousand,
depending on the final determination of the exact surface of the
space to be sold. The completion of the sale and the final price
determination are subject to the completion of a final sale and
purchase agreement. During the year, the subsidiary received an
advance based on the preliminary agreement of EUR70 thousand. In
addition, during the year, Upground Estates SRL sold two exterior
parking spaces for an amount of EUR5 thousand and a storage room
for an amount of EUR1 thousand. The sale proceeds were collected
during the year 2018.
Directors' Emoluments
The Directors' emoluments during the year ended 31 December 2018
comprised a fixed level of salary and/or fees, plus dividends from
GIAL in the case of the two Executive Directors.
During the year ended 31 December 2018 the emoluments of the
Directors were as follows:
Company Subsidiaries(1) Dividends(2)
Total(3)
Amounts in EUR'000 Fees Fees Salary Total emoluments
Ioannis Papalekas - - 1,051 1,051 1,400 2,451
Dimitris Raptis - - 185 185 625 810
Geoff Miller(4) 228 28 - 28 - 256
Eli Alroy 200 - - - - 200
John Whittle 77 28 - 28 - 105
Akbar Rafiq - - - - - -
Alexis Atteslis - - - - - -
Andreea Petreanu 65 - - - - 65
Norbert Sasse - - - - - -
Peter Fechter 65 - - - - 65
George Muchanya - - - - - -
Richard van Vliet 65 - - - - 65
Bruce Buck 104 - - - - 104
804 56 1,236 1,292 2,025 4,121
1. GIAL and Aserat Properties SRL for Ioannis Papalekas, and
GIAL for Dimitris Raptis, Geoff Miller and John Whittle.
2. The Executive Directors receive dividends in their capacity
as preference shareholders of GIAL, the amount of which depends on
the performance and profitability of GIAL. GIAL provides investment
advisory services to the Company and is rewarded for the services
it provides pursuant to the Investment Management Agreement signed
on 24 July 2013, as amended from time to time (the 'IMA'). For
Ioannis Papalekas dividends include an accrual of EUR1.4 million
(EUR0.7 million to be settled in cash and EUR0.7 million by the
issuance of shares of the Company); and for Dimitris Raptis
dividends include an accrual of EUR0.425 million (EUR0.213 million
to be settled in cash and EUR0.212 million by the issuance of
shares of the Company).
3. The amounts indicated represent accrued amounts corresponding to the period during which the beneficiaries were members of the Board. Out of the amounts disclosed in the above table EUR1.825 million was payable to the Directors as of 31 December 2018. An additional amount of EUR14,081 was due to the Directors as of 31 December 2018 for out-of-pocket expenses incurred, which was settled subsequent to 31 December 2018.
4. For Geoff Miller the emoluments received from the Company
during the year ended 31 December 2018 include EUR85 thousand which
was awarded in respect of the year ended 31 December 2017 after the
date of publication of the Annual Report and Financial Statements
for the year ended 31 December 2017.
During the year ended 31 December 2017 the emoluments of the
Directors were as follows:
Company Subsidiaries(1) Dividends(2)
Total(3)
Amounts in EUR'000 Fees Fees Salary Total emoluments
Ioannis Papalekas - - 869 869 1,600 2,469
Dimitris Raptis - - 150 150 725 875
Geoff Miller 56 29 - 29 - 85
Eli Alroy 200 - - - - 200
John Whittle 56 29 - 29 - 85
Akbar Rafiq - - - - - -
Alexis Atteslis - - - - - -
Andreea Petreanu 46 - - - - 46
Norbert Sasse - - - - - -
Peter Fechter 37 - - - - 37
George Muchanya - - - - - -
Richard van Vliet 38 - - - - 38
Bruce Buck 6 - - - - 6
439 58 1,019 1,077 2,325 3,841
1. GIAL and Aserat Properties SRL for Ioannis Papalekas, and
GIAL for Dimitris Raptis, Geoff Miller and John Whittle.
2. The Executive Directors receive dividends in their capacity
as preference shareholders of GIAL, the amount of which depends on
the performance and profitability of GIAL. GIAL provides investment
advisory services to the Company and is rewarded for the services
it provides pursuant to the IMA. For Ioannis Papalekas dividends
include an accrual of EUR1.6 million (EUR0.8 million to be settled
in cash and EUR0.8 million by the issuance of shares of the
Company); and for Dimitris Raptis dividends include an accrual of
c.EUR0.53 million (c.EUR0.26 million to be settled in cash and
c.EUR0.26 million by the issuance of shares of the Company).
3. The amounts indicated represent accrued amounts corresponding to the period during which the beneficiaries were members of the Board. Out of the amounts disclosed in the above table c.EUR2.14 million was payable to the Directors as of 31 December 2017. An additional amount of EUR48,302 was due to the Directors as of 31 December 2017 for out-of-pocket expenses incurred, which was settled subsequent to 31 December 2017.
27. New and Amended Standards
Starting from 1 January 2018 the Group adopted the following new
and amended standards and interpretations. The impact from the
adoption of IFRS 9 and IFRS 15 on the Group's financial position
and performance is disclosed below.
Effective
Narrow scope amendments and new Standards date
IFRS 9 Financial Instruments Jan-18
IFRS 15 Clarifications: Revenue from Contracts with
Customers Jan-18
IAS 40: (Amendments) Transfers of Investment Property Jan-18
IFRS 2 Classification and measurement of Share-based
Payment Transactions Jan-18
Annual Improvements to IFRS Standards 2014-2016 Cycle Jan-18
IFRIC 22 Foreign Currency Transactions and Advance
Consideration Jan-18
a) Adoption of IFRS 15
The Group adopted IFRS 15 on 1 January 2018 without restarting
prior year figures.
IFRS 15 does not apply to rental income, but only applies to
service charge income, marketing income and fit-out services income
generated by the Group. The Group has identified few lease
agreements which required the reclassification of EUR0.8 million
from the rental revenues to service charge revenue starting during
2018. However, this did not impact the net operating income (NOI)
and only reclassified revenues from 'Rental income' to 'Service
charge income'. The reclassification of such amounts was not
material for the Group as at 31 December 2017. There was no impact
on fit-out services income for contracts in progress at 31 December
2017.
Furthermore, Group also reclassified deferred income from trade
and other payables to contract liability on the face of financial
position. Similar, for trade receivables for which services has
been performed but invoices were not issued and were not due were
classified as contract asset.
b) Classification and reconciliation of financial assets and
liabilities upon the initial application of IFRS 9
The classification of Group's financial assets and liabilities
according to IAS 39 and IFRS 9 as at 1 January 2018 are presented
below. The table below summarises the carrying value reconciliation
of the Group's financial assets upon the transition from the
previous classification categories under IAS 39 at 31 December 2017
to the new classification categories under IFRS 9 at 1 January
2018. From the adoption of IFRS 9 there was an impact of EUR0.5
million on the statement of profit or loss for the twelve months
ended 31 December 2018.
The Group's financial liabilities were classified and measured
at amortised cost according to IAS 39 (except when required to be
measured at fair value through profit or loss such as financial
liabilities related to derivatives) until 31 December 2017 and
according to IFRS 9 starting from 1 January 2018. From adoption of
IFRS 9 there was no impact on the statement of profit or loss for
the twelve months ended 31 December 2018 and statement of financial
position as at 31 December 2018.
Financial Classification Classification category 31 December Reclassification 1 January
assets category IFRS 9 2017 2018
IAS 39
EUR'000 EUR'000 EUR'000
Available
for sale Financial Financial assets measured
financial assets available at fair value through
assets for sale profit or loss 10,243 (10,243) -
Financial
assets at
fair value Financial assets measured
through profit at fair value through
or loss - profit or loss - 10,243 10,243
Equity investments - Financial assets measured - - -
at fair value through
other comprehensive
income
Financial
assets measured
at amortised Financial assets measured
Debentures cost at amortised cost 18,389 - 18,389
Financial
Loan receivable assets measured
from joint at amortised Financial assets measured
venture cost at amortised cost 19,721 - 19,721
Financial
Restricted assets measured
cash long at amortised Financial assets measured
term cost at amortised cost 2,958 - 2,958
Financial
Trade receivables assets measured
- net of at amortised Financial assets measured
provision cost at amortised cost 15,316 - 15,316
Financial
assets measured
at amortised Financial assets measured
Other receivables cost at amortised cost 1,420 - 1,420
Contract Financial Financial assets measured - - -
assets assets measured at amortised cost
at amortised
cost
Financial
Guarantees assets measured
retained at amortised Financial assets measured
by tenants cost at amortised cost 304 - 304
Financial
assets measured
VAT and other at amortised Financial assets measured
taxes receivable cost at amortised cost 6,099 - 6,099
Financial
assets measured
Income tax at amortised Financial assets measured
receivable cost at amortised cost 295 - 295
Financial
assets measured
Cash and at amortised Financial assets measured
cash equivalents cost at amortised cost 273,272 - 273,272
For other standards issued but not yet effective and not early
adopted by the Group, the management believes that there will be no
significant impact in the Group's consolidated financial statements
except for IFRS 16 which is disclosed below.
Effective
Narrow scope amendments and new Standards date
IFRS 16 Leases Jan-19
IFRS 9 Amendments: Prepayment Features with
Negative Compensation Jan-19
IFRIC 23 Uncertainty over Income Tax Treatments Jan-19
IAS 28 Amendments: Long-term Interests in Associates
and Joint Ventures Jan-19
Effective
Narrow scope amendments and new Standards date (EU endorsement)
Not yet endorsed
IFRS 14 Regulatory Deferral Accounts by EU
Not yet endorsed
IAS 19: Plan Amendment, Curtailment or Settlement by EU
Not yet endorsed
IFRS 17 Insurance Contracts by EU
Not yet endorsed
Amendments to IAS 1 and IAS 8: Definition of Material by EU
Not yet endorsed
Amendment to IFRS 3 Business Combinations by EU
Amendments to References to the Conceptual Framework Not yet endorsed
in IFRS by EU
Not yet endorsed
Annual Improvements to IFRS Standards 2015-2017 Cycle by EU
IFRS 16 leases and impact on the consolidated financial
statements
The Group performed a detailed analysis of the impact of IFRS 16
on the consolidated financial statements. The analysis of the
Group's contracts has identified the right of perpetual usufruct of
the land (the "RPU") contracts for property portfolio in Poland
which meet the criteria of leases under IFRS 16.
RPU is a contract with a term from 40 up to 99 years. Neither
the right-to-use asset nor the lease liability regarding RPU were
recognised on Group's balance sheet as of 31 December 2018 under
IAS 17. Thus, the value of both right-to-use asset and lease
liability was calculated at the date of initial application of IFRS
16, 1 January 2019.
The value of right-to-use assets was estimated as Net Present
Value of future annual fees with following assumptions:
-- Initial application date: 1 January 2019
-- End date: RPU end date for each land right individually
-- Discount rate: 5.77%
-- Annual RPU fee: EUR1.5 million for 2018
-- Total annual RPU charge is reinvoiced to tenants as a part of
service charge reconciliation.
Impact on Consolidated statement of financial position:
Assets 1 January Right to use asset 1 January 2019
2019 Effect of IFRS (restated)
IAS 17 16 transition IFRS 16
EUR000 EUR000 EUR000
Investment property 2,390,994 26,196 2,417,190
Liabilities 1 January Lease liability 1 January 2019
2019 for RPU (restated)
IAS 17 Effect of IFRS IFRS 16
16 transition
EUR000 EUR000 EUR000
Total current liabilities 81,672 1,512 83,184
Total non-current liabilities 1,358,007 24,684 1,382,691
Total liabilities 1,439,679 26,196 1,465,875
The right-to-use asset will be presented as part of the value of
investment property. The corresponding lease liability will be
presented in the consolidated financial statements as a part
of:
-- Trade and other payables (current) - not discounted annual
RPU charge.
-- Trade and other payables (non-current) - discounted RPU cost
until the end date of each RPU agreement.
In the following years, as at balance sheet date the Group will
continue the approach regarding the valuation of the right-to-use
asset in the amount of lease liability calculated as NPV of future
lease payment until RPU closing date.
Impact on Consolidated statement of comprehensive income and
consolidated statement of cash flows:
At initial application date, the right-to-use asset equals the
related lease liability recognised in the consolidated financial
position as of 1 January 2019, therefore the impact on the
consolidated statement of comprehensive income is nil. The Group
does not expect impact on cash flows in 2019 as RPU payments
remains unchanged.
To arrive at the carrying amount of the investment property
using the fair value model, recognised right-to-use asset
representing the same amount as lease liability will be added back
to a valuation obtained for a property (that is net of all payments
expected to be made under RPU). Any change in carrying amount of
investment property will be charged to profit and loss and
presented under the line "Fair value movement".
Subsequent years effect on consolidated statement of
comprehensive income
The Group is planning to implement the cost model for the
depreciation charge of right-to-use assets amounts to approximately
EUR1.5 million being the annual RPU charge. The depreciation of
right-to-use asset will be presented in the Statement of profit and
loss under the line "Fair value movement". The amortised cost
valuation effect of lease liability will be presented in the
Statement of profit and loss under the line "Finance cost".
Other operating leases
The Group is planning to use a simplified approach i.e., not to
calculate lease assets/liabilities for short-term leases and
low-value leases (e.g., coffee machines, low-value electronic
equipment).
28. Contingencies
Legal Claims
One of the Company's subsidiaries (the 'Subsidiary') is involved
in court proceedings with a third party. Following the third
party's decision to terminate the lease agreement signed with the
Subsidiary, the Subsidiary enforced the c.EUR3.16 million bank
letter of guarantee provided by the third party, on the grounds
that the third party has unlawfully terminated the agreement. The
third party claimed that the Subsidiary was not entitled to enforce
the guarantee and requested before the court that the Subsidiary
reimburses the guarantee amount. On top of the cashed-in guarantee,
the Subsidiary has submitted a court claim against the third party
claiming an amount of c.EUR24.7 million representing penalties as
per the agreement for the unlawful termination of the agreement by
the third party. The presiding judge accepted the Subsidiary's
claim to merge the two claims into one court case and resolved the
two cases together. On 19 July 2017, the presiding judge announced
that it has accepted the third party's claim and denied the
Subsidiary's claim. Based on the legal advice it has received,
management has filed an appeal against the decision and believes
that the court of appeal will embrace its view that the Subsidiary
acted in accordance with the applicable law and the remedies
available to it under the agreement when enforcing the bank letter
of guarantee provided by the third party. The judges are expected
to issue their decision on the appeal filed on 20 March 2019.
Taxation
All amounts due to State authorities for taxes have been paid or
accrued at the balance sheet date. The tax system in Romania and
Poland undergoes a consolidation process and is being harmonised
with the European legislation. Different interpretations may exist
at the level of the tax authorities in relation to the tax
legislation that may result in additional taxes and penalties
payable. Where the State authorities have findings from reviews
relating to breaches of tax laws, and related regulations these may
result in confiscation of the amounts in case; additional tax
liabilities being payable; fines and penalties (that are applied on
the total outstanding amount). As a result, the fiscal penalties
resulting from breaches of the legal provisions may result in a
significant amount payable to the State. The Group believes that it
has paid in due time and in full all applicable taxes, penalties
and penalty interests in the applicable extent.
Transfer Pricing
According to the applicable relevant tax legislation in Romania
and Poland, the tax assessment of related party transactions is
based on the concept of market value for the respective transfers.
Following this concept, the transfer prices should be adjusted so
that they reflect the market prices that would have been set
between unrelated companies acting independently (i.e. based on the
"arm's length principle"). It is likely that transfer pricing
reviews will be undertaken in the future in order to assess whether
the transfer pricing policy observes the "arm's length principle"
and therefore no distortion exists that may affect the taxable base
of the tax payer in Romania and Poland.
29. Subsequent Events
On 14 January 2019, the Company announced that its Board of
Directors has approved the payment of an interim dividend in
respect of the six-month financial period ended 31 December 2018 of
EUR0.27 per ordinary share, which was paid on 8 February 2019 to
the eligible shareholders.
APPIX
PORTFOLIO SNAPSHOT - 31 December 2018
Portfolio Summary
As at 31 Dec 2018(1) Romania Poland Combined Portfolio
Standing Investments(2) 14 17 31
EUR1,245m / EUR1,217m /
GAV(3) / Standing GAV EUR1,164m EUR1,217m EUR2,462m / EUR2,381m
Occupancy(4) 94.9% 95.4% 95.1%
WALL(5) 6.1 years 3.9 years 5.0 years
Standing GLA sqm(6) 613.3 428.7 1,042.0
Contracted Rent(7) 77.6 81.8 159.5
GAV Split by Asset Usage
Office 82.1% 74.9% 78.6%
Mixed-Use - 25.1% 12.4%
Logistics 8.6% - 4.3%
Others 9.3% - 4.7%
GAV Split by City
Bucharest 90.8% - 45.9%
Timisoara 5.4% - 2.8%
Pitesti 3.8% - 1.9%
Warsaw - 44.7% 22.1%
Krakow - 17.4% 8.6%
Wroclaw - 16.9% 8.4%
Katowice - 10.4% 5.1%
Lodz - 5.9% 2.9%
Gdansk - 4.6% 2.3%
GAV as % of Total 50.6% 49.4% 100.0%
1. Globalworth Poland is 100% consolidated by Globalworth (69.7%
owned at 31 December 2018, increasing to 73.7% at 23 January
2019). Renault Bucharest Connected is presented on the 100% basis
held by Elgan Offices SRL in Romania; Globalworth holds a 50%
share in Elgan Offices SRL.
2. Standing Investments representing income producing properties.
1 investment can comprise multiple buildings. e.g. Green Court
Complex comprises 3 buildings or 1 investment
3. Includes all property assets, land and development projects
at 31 December 20 18, but excludes forward funded and ROFO assets
in Poland.
4. Occupancy of standing commercial properties, and in the case
of Poland, including rental guarantees
5. Includes pre-let commercial standing and development
assets
6. Including 37.2k sqm of residential
assets in Romania
7. Total rent comprises commercial (EUR157.9 million) and residential
(EUR1.5 million in Romania) standing properties, and includes
contracted rent under master lease agreement.
PORTFOLIO SNAPSHOT ROMANIA - 31 December 2018
Property name Number of Location Year of GLA Occupancy Contracted WALL Potential rent GAV
Properties completion / (k sqm)(1) (%) rent (years) at 100% (EURm)
Latest (EURm) occupancy
Refurbishment (EURm) (2)
Office (Standing or Under Construction)
BOB 1 Bucharest 2008 / 2017 22.4 95.2% 3.5 4.3 3.7 48.6
BOC 1 Bucharest 2009 / 2014 57.0 99.5% 10.0 3.8 10.1 145.2
City Office 2 Bucharest 2014 / 2017 36.1 71.0% (77.8%*) 3.8 7.7 5.9 61.5
Gara Herastrau 1 Bucharest 2016 12.0 77.5% (86.5%*) 1.7 4.4 2.1 29.5
Green Court 2014 / 2015 /
Complex 3 Bucharest 2016 54.3 98.1% 9.9 3.7 10.1 142.6
Globalworth Campus 3 Bucharest Tower 1: 2017 29.0 85.6% (96.8%*) 3.9 10.2 4.5 145.6
Tower 2: 2018 28.2 71.6% (90.9%*) 3.2 7.8 4.3
Tower 3:
2019(E) 34.8(E) - - - 5.6
Globalworth Plaza 1 Bucharest 2010 / 2017 24.1 94.7% 4.4 4.4 4.6 13.8
Globalworth Square 1 Bucharest 2020E 26.4(E) - - - 5.1 13.8
Globalworth Tower 1 Bucharest 2016 54.7 99.3% 11.5 7.3 11.7 179.0
Renault Bucharest
Connected (3) 2 Bucharest 2018 42.3 100.0% 5.5 11.0 5.5 73.5
TCI 1 Bucharest 2012 22.4 99.6% 5.1 4.6 5.1 73.5
UniCredit HQ 1 Bucharest 2012 15.5 100.0% 3.9 3.4 3.9 52.3
Industrial (Standing or Under
Construction)
Dacia Warehouse 1 Pitesti 2010 68.4 100.0% 4.2 6.5 4.2 46.8
TAP 4 Timisoara 2011 - '17 103 100.0% 4.6 8.9 4.6 54.6
TAP II 1 Timisoara 2019E 17.7 - - - 0.8 5.4
Retail / Residential
(Standing)
Retail:
Retail: 8.8 /
Retail: 99.7% 0.8 / Resi: Retail: 0.9 /
Upground Towers 1 Bucharest 2011 43.5 / Resi: 64.0% Resi: 1.5 1.1 Resi: 1.5 79.6
Land for future development
4.0 /
GCD - Bucharest 2020(E) 16.2(E) - - - - 5.1
TAP II (additional 263.2 /
land) - Timisoara 2019-2020(E) 122.1(E) - - - - 6.4
7.6 /
GW West - Bucharest 2021(E) 33.4(E) - - - - 3.2
6.6 /
Luterana Lands - Bucharest 2021(E) 26.4(E) - - - - 14.3
31.9 /
TAP (expansion) - Timisoara na 28.5(E) - - - - 1.4
Herastrau One - Bucharest na 3.2 / na - - - - 5.8
Total Standing Commercial Portfolio
No of Commercial
Investments: 13 21 576.1 94.9% (97.0%*) 76.1 6.1 81.2 1,095.4
Notes
(1) GLA of "Land for future development" represents size of land plot / expected GLA upon
completion of development
(2) Contracted rent at 100% occupancy (including ERV on available spaces).
(3) Renault Bucharest Connected is presented on the 100% basis held by Elgan Offices SRL in
Romania. Globalworth holds a 50% share in Elgan Offices SRL.
(4) Potential rent at 100% occupancy, excludes residential
(*) Includes tenant options
PORTFOLIO SNAPSHOT POLAND - 31 December 2018
Property name Number of Location Year of GLA Occupancy Contracted WALL Potential rent GAV
Properties completion / (k sqm) (%) rent (years) at 100% (EURm)
Latest (EURm) occupancy
Refurbishment (EURm) (1)
Office (2)
Batory
Building (1) 1 Warsaw 2000 / 2017 6.6 91.9% 0.9 2.7 1.0 12.0
Bliski
Centrum 1 Warsaw 2000 / 2018 4.9 96.5% 1.0 7.6 1.0 12.5
Nordic Park 1 Warsaw 2000 / 2018 9.0 87.2% 1.6 3.8 1.8 23.8
Philips 1 Warsaw 1999 / 2018 6.2 91.9% 1.1 3.3 1.2 13.7
Skylight &
Lumen 2 Warsaw 2007 45.4 88.8% 11.5 3.7 13.0 191.2
Spektrum
Tower 1 Warsaw 2003 / 2015 32.1 96.8% 6.7 4.6 7.0 107.2
WARTA Tower 1 Warsaw 2000 33.7 92.4% 5.9 2.5 6.5 63.1
Tryton 1 Gdansk 2016 24.1 100.0% 3.9 3.3 3.9 56.3
A4 Business
Park 3 Katowice 2014 - '16 30.6 100.0% 5.1 3.7 5.1 68.6
2000 & '09 /
CB Lubicz (3) 2 Krakow 2018 & '09 24.0 96.1% 4.7 2.7 5.0 70.5
Quattro 2010, '11,
Business '13, '14 &
Park 5 Krakow '15 60.2 98.3% 10.7 2.6 10.9 141.7
Green Horizon 2 Lodz 2012 - '13 33.5 98.9% 5.2 4.7 5.3 72.0
West Gate 1 Wroclaw 2015 16.6 99.5% 2.9 6.6 2.9 41.8
West Link 1 Wroclaw 2018 14.4 100.0% 2.5 6.2 2.5 37.0
Mixed-Use (2)
Hala Koszyki 5 Warsaw 5x2016 22.2 96.9% 6.9 5.8 7.0 120.3
Supersam 1 Katowice 2015 24.2 91.6% 3.6 4.1 4.0 57.8
Renoma 1 Wroclaw 2009 40.9 91.7% 7.6 3.5 8.2 127.4
Right of
First Offer
(ROFO) (5)
Beethovena I 1 Warsaw 2019(E) 18.9 63.6% n/a n/a 3.4 17.8
Beethovena II 1 Warsaw 2020(E) 16.9 - n/a n/a 2.9 4.2
The Gatehouse
Offices (4) 1 Warsaw 2018 15.7 100.0% 3.8 n/a 3.8 65.0
Total Standing Commercial Portfolio
No of
Commercial
Investments:
17 30 428.7 95.4% 81.8 3.9 86.3 1,216.8
Notes
(1) Contracted rent at 100% occupancy (including ERV on available spaces).
(2) All properties are 100% owned by Globalworth Poland. Globalworth at 31 December 2018 held
69.7% in Globalworth in Globalworth Poland, subsequently increasing its stake in the company
to 73.7% on 23 January 2019.
(3) CB Lubicz - I, property currently under refurbishment (partially completed).
(4) The Gatehouse Offices, is the investment previously known as Browary J
(5) Globalworth Poland has a 25% economic interest in the ROFO assets
GLOSSARY
Asset or Property
Represent the individual land plot or building under development
or standing building which forms part or the entirety of an
investment.
Bargain Purchase Gain
Any excess between the fair value of net assets acquired and
consideration paid, in accordance with IFRS 3 "Business
Combination".
BREEAM
Building Research Establishment Assessment Method, which
assesses the sustainability of the buildings against a range of
criteria.
CAPEX
Represents the estimated Capital Expenditure to be incurred for
the completion of the development projects.
CBD
Central Business District
CEE
Central and Eastern Europe
CIT
Corporate income tax
Commercial Properties
Comprises the office, light-industrial and retail properties or
areas of the portfolio.
Completed Investment Property
Completed developments consist of those properties that are in a
condition which will allow the generation of cash flows from its
rental.
Completion Dates
The date when the properties under development will be completed
and ready to generate rental income after obtaining all necessary
permits and approvals.
Contracted Rent
The annualised headline rent as at 31 December 2018 that is
contracted on leases (including pre-leases) before any customary
tenant incentive packages.
Debt Service Cover Ratio ("DSCR")
It is calculated as net operating income for the year as defined
in specific loan agreements with the respective lenders, divided by
the principal plus interest due over the same year.
Discount Rates
The discount rate is the interest rate used to discount a stream
of future cash flows to their present value.
Discounted Cash Flow Analysis ("DCF")
Valuation method that implies income projections of the property
for a discrete period of time, usually between 5-10 years. The DCF
method involves the projection of a series of periodic cash flows
either to an operating property or a development property.
Discounted cash flow projections based on significant unobservable
inputs taking into account the costs to complete and completion
date.
Earnings Per Share ("EPS")
Profit after tax divided by the basic/diluted weighted average
number of shares in issue during the year or period.
EBITDA
Earnings attributable to equity holders of the Company before
finance cost, tax, depreciation, amortisation of other non-current
assets and purchase gain on acquisition of subsidiaries.
Adjusted EBITDA
Earnings before finance cost, tax, depreciation, amortisation of
other non-current assets and purchase gain on acquisition of
subsidiaries. This includes the share of minority interests.
EBITDA (normalised)
Earnings attributable to equity holders of the Company before
finance cost, tax, depreciation, amortisation of other non- current
assets, purchase gain on acquisition of subsidiaries, fair value
movement, and other non-operational and/or non- recurring income
and expense items.
Adjusted EBITDA (normalised)
Earnings before finance cost, tax, depreciation, amortisation of
other non- current assets, purchase gain on acquisition of
subsidiaries, fair value movement, and other non-operational and/or
non- recurring income and expense items. This includes the share of
minority interests.
EPRA
The European Public Real Estate Association is a non-profit
association representing Europe's publicly listed property
companies.
EPRA Earnings
Profit after tax attributable to the equity holders of the
Company, excluding investment property revaluation, gains, losses
on investment property disposals and related tax adjustment for
losses on disposals, bargain purchase gain on acquisition of
subsidiaries, acquisition costs, changes in the fair value of
financial instruments and associated close-out costs and the
related deferred tax impact of adjustments made to profit after
tax.
EPRA Earnings Per Share
EPRA Earnings divided by the basic or diluted number of shares
outstanding at the year or period end.
EPRA NAV Per Share
EPRA NAV divided by the basic/diluted number of shares
outstanding at the year or period end.
EPRA Net Assets ("EPRA NAV")
Net assets per the statement of financial position, excluding
the mark-to-market on effective cash flow hedges and related debt
adjustments and deferred taxation on revaluations excluding
goodwill.
Estimated Rental Value ("ERV")
ERV is the external valuers' opinion as to the open market rent
which, on the date of valuations, could reasonably be expected to
be obtained on a new letting or rent review of a property.
EURIBOR
The Euro Interbank Offered Rate: the interest rate charged by
one bank to another for lending money, often used as a reference
rate in bank facilities.
Financial Year
Period from 1 January to 31 December.
GLA
Gross leasable area.
IFRS
International Financial Reporting Standards as adopted by the
European Union.
NBP
National Bank of Poland.
Property Under Development
Properties that are in development process that do not meet all
the requirements to be transferred to completed investment
property.
Interest Cover Ratio ("ICR")
Calculated as net operating income divided by the debt service /
interest.
Investment
Represent a location in which the Company owns / has interests
in.
IPO
Admission to the AIM Market of the London Stock Exchange.
Land Bank for Further Development
Land bought for further development but for which the Group did
not obtain all the legal documentations and authorisation permits
in order to start the development process.
LEED
Leadership in Energy & Environmental Design, a green
building certification programme that recognises best-in-class
building strategies and practices.
Loan-to-Cost Ratio ("LTC")
Calculated by dividing the value of loan drawdowns by the total
project cost.
Loan to Value ("LTV")
Calculated as the total outstanding debt excluding amortised
cost, less cash and cash equivalents as of financial position date,
divided by the appraised value of owned assets as of the financial
position date. Both outstanding debt and the appraised value of
owned assets include our share of these figures for joint ventures,
which are accounted for in the consolidated financial statements
under the equity method.
Maintenance Costs
Including necessary investments to maintain functionality of the
property for its expected useful life.
Master Lease
Master lease, includes various rental guarantees, which range
between 3 and 5 years, covering the majority of space which is
currently vacant in the properties owned through GPRE.
Net Assets Value ("NAV")
Equity attributable to shareholders of the Company and/or net
assets value.
Net Asset Value ("NAV") Per Share
Equity attributable to owners of the Company divided by the
number of Ordinary shares in issue at the period end.
Net Operating Income ("NOI")
Net operating income (being the gross operating income less
operating expenses that are not paid by or rechargeable to tenants,
excluding funding costs, depreciation and capital expenditure).
Non-Controlling Interest ("NCI")
The equity in a subsidiary not attributable, directly or
indirectly to the parent.
Occupancy Rate
The estimated let sqm (GLA) as a percentage of the total
estimated total sqm (GLA) of the portfolio, excluding development
properties. It includes spaces under offer or subject to asset
management (where they have been taken back for refurbishment and
are not available to let as of the financial position date).
Portfolio Open Market Value ("OMV" or "GAV")
Portfolio open market value means the fair value of the Group's
investment properties determined by CBAR Research & Valuation
Advisors SRL, Colliers Valuation and Advisory SRL, Cushman &
Wakefield LLP (C&W), Knight Frank Sp. z.o.o ("Knight Frank")
and CBRE Sp. z.o.o. ("CBRE") independent professionally qualified
valuers who hold a recognised relevant professional qualification
and have recent experience in the locations and segments of the
investment properties valued, using recognised valuation
techniques.
When presenting the total portfolio value of the Group, we have
included 100% of the appraised value of property held by Elgan
Offices SRL in Romania. Group holds a 50% share in Elgan Offices
SRL and its investment is included in the financial statements
under "share of net assets and loans provided".
Residual Value Method
Valuation method that estimated the difference between the
market value of the building upon completion that can be built on
the plot of land and all the building's construction costs, as well
as the developer's profit. This method relies on the contribution
concept by estimating from the future income of the building, the
amount that can be distributed to the land.
Sales Comparison Approach
Valuation method that compares the subject property with quoted
prices of similar properties in the same or similar location.
SPA
Share sale purchase agreement.
SQM
Square metres.
The Company or the Group
Globalworth Real Estate Investments Limited and its
subsidiaries.
The Investment Adviser
Globalworth Investment Advisers Limited, a wholly owned holding
subsidiary incorporated in Guernsey.
Total Accounting return
Total accounting return is the growth in EPRA NAV per share plus
dividends paid, expressed as a percentage of EPRA NAV per share at
the beginning of the period.
WALL
Represents the remaining weighted average lease length of the
contracted leases as of the financial position date, until the
lease contracts full expiration.
Weighted Average Interest Rate
The average of the interest rate charged on the Group's loans,
weighted by the relative outstanding balance of each loan at the
year or period end.
WIBOR
Warsaw Interbank Offered Rate.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GGUAPWUPBPPU
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