2014-2015 halfyearly financial results
In retail we trust
Table of contents
Key figures REAL ESTATE PORTFOLIO
Total retail properties Total lettable area in m²
30/09/14
31/03/14
562
548
591,195
570,870
Estimated fair value in EUR
767,815,000
745,916,000
Estimated investment value in EUR
786,514,000
764,193,000
Average rent prices per m²
Key figures Management report
5
91.56
90.78
98.50%
98.17%
30/09/14
31/03/14
346,697,000
356,524,000
51.72%
49.10%
RESULTS
30/09/14
30/09/13
Net rental income
25,541,000
22,294,000
Property result
25,367,000
22,169,000
Property charges
-1,638,000
-1,432,000
General costs and other operating costs and income
-1,545,000
-1,147,000
Operating result before result on the portfolio
22,183,000
19,589,000
1,291,000
2,281,000
Operating result
23,474,000
21,871,000
Financial result
-8,514,000
-7,894,000
Net result
14,737,000
13,608,000
Net current result (excl. result on the portfolio)
13,446,000
11,327,000
INFORMATION PER SHARE
30/09/14
31/03/14
7,290,411
7,290,411
Real estate report 45
Net asset value IFRS
47.56
48.90
Net asset value EPRA
51.12
52.18
Net asset value (investment value) excl. dividend excl. IAS 39
52.16
51.70
1. Real estate expert’s report 46 2. Note 47 3. Commercial activities of tenants 48 4. Subdivision by type of building 48
Occupancy rate BALANCE SHEET INFORMATION
Shareholders' equity Debt ratio (RREC legislation*, max. 65%)
Result on the portfolio
Number of shares
Closing price on closing date Over-/undervaluation compared to net asset value IFRS *The R.D. of 13 July 2014 in execution of the Law of 12 May 2014 on regulated real estate companies (Belgian REITs).
0. Introduction 6 1. Report on activities for the first half of the 2013-2014 financial year, closed on 30 September 2014 6 2. Amendments to articles of association of Retail Estates nv 9 3. Analysis of the results 10 4. Prospects 11 5. Changes to the composition of the board of directors 11 6. Future-oriented statements 11
Financial report 13 1. Condensed consolidated income statement 2. Condensed consolidated balance sheet 3. Condensed statement of changes in shareholders’ equity 4. Condensed, non-audited consolidated cashflow statement 5. Notes on the condensed consolidated interim figures 6. Limited review report on the consolidated interim financial information for the six-month period ended 30 September 2014
14 16 18 22 24 36
Share performance report 39 1. 2 3. 4.
Stock market performance Stock market capitalisation Dividend and yield Financial calendar
40 41 41 42
61.50
58.92
General information 51
29.31%
20.49%
Lexicon 52 Information sheet 55
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Management report
LEADING ROLE Retail Estates is a leading market player thanks to a portfolio that has been built up in a consistent manner, based on its market knowledge.
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0. I
ntroduction
General
2014 - 2015 Retail Estates
1. Report on activities for the first half of the 2014-2015 financial year, closed on 30 September 2014
Retail Estates nv is one of Belgium’s largest real
properties of the real estate certificates amounts
Bruges
to EUR 13.10 million.
On 6 May 2014, an agreement was signed regarding the purchase of the piece of land
As at 30 September 2014, the real estate portfolio
onto which the retail park Bruges V-Mart was
estate companies, specialised in peripheral
1.1. Rental income and occupancy rate
consists of 562 properties with a lettable area of
built, for an amount of EUR 3.32 million (excl.
retail properties. Its property portfolio consists
Rental income during the first half of the financial
591,195 m².
registration fees). In 2012, Retail Estates nv
of 562 retail properties in Belgium, representing
year amounts to EUR 25.80 million, 13.76 %
concluded a superficies agreement regarding
1.3. Investments2 - retail parks
a total lettable area of 591,195 m² and an
up on the figure for the comparable half of the
investment value of EUR 786.51 million (including
2013-2014 financial year (EUR 22.68 million).
a participating interest of 85.28 % in Immobilière
This increase is almost entirely attributable to the
Beringen (Mijn Retail nv)
as the required formalities relative to the OVAM
Distri-Land nv property certificates).
growth of the real estate portfolio.
On 10 April 2014, Retail Estates nv and be-MINE
regulation will be realised, expected before the
nv concluded a cooperation agreement for the
end of the current financial year.
Retail Estates nv manages its property portfolio
The occupancy rate1 on 30 September 2014
development of a retail park, with a total built-up
itself and has a proven track record in real estate
remains at a high 98.50 %, compared with 98.17 %
area of 18,000 m². On 27 May 2014, the partners
Erembodegem
development and redevelopment for its own
on 31 March 2014.
established a special purpose company “Mijn
On 1 June 2014, the extension and transformation
Retail nv”. Except for unforeseen circumstances,
of the distribution centre of Brantano nv in
the retail park is expected to be delivered before
Erembodegem, was delivered. The additional
the end of 2015. The required building permit
investment realised by Retail Estates nv amounts
account.
1.2. Fair value of the real estate Retail Estates nv is a listed company (Euronext
portfolio
this parcel and constructed the retail park on this ground. The purchase will be completed as soon
Brussels), with a market capitalisation
The fair value of the real estate portfolio amounts
and socio-economic authorisation were already
to EUR 5.08 million. For the renewed site, a lease
of approximately EUR 448.36 million on
to EUR 767.81 million. The rental yield (in
granted.
agreement for a new, fixed term of 10 years was
30 September 2014.
relation to the investment value) on this portfolio
concluded, at a rental price of EUR 1.12 million.
established by the real estate experts is 6.92 %
Risk management
Wetteren – Oudenaarde
based on the actual rent.
On 14 July 2014, Retail Estates nv acquired
Although management endeavours to limit the risk factors to a minimum, careful account still has
The stability of the value of peripheral retail
the exclusive control of the companies Frunpark
to be taken of a certain number of risks. For an
properties is explained mainly by continuing
Wetteren nv and Gentpoort nv. These companies
overview of these risks, reference is made to pages
interest on the part of wealthy private individuals
own retail parks situated respectively in Wetteren
4 to 11 of the annual report 2013-2014.
in this type of investment. Retail Estates nv
and Oudenaarde.
noticed this when carrying out its annual ongoing divestment programme.
Since its opening in 2008, the retail park in Wetteren is a well-known, frequently visited
EUR
767.81
million fair value
Retail Estates nv also holds a significant interest
location in the region between Ghent and
of 85.28 % in the real estate certificates issued
Alost and owes this to its strategic position
by Immobilière Distri-Land nv. The fair value of
on the intersection Gentsesteenweg –
this property portfolio as at 30 September 2014
Oosterzelesteenweg, in the immediate proximity of
amounts to EUR 16.60 million. Retail Estates nv’s
the E40 highway’s exit ‘Wetteren’. The retail park
share in the total fair value of the real estate
consists of 14 retail properties with a total area of
1 The occupancy rate is calculated as the effective leased area versus the lettable area, expressed in m2.
6
2 The purchase and sale values of the investments and disposals are in line with the investment values as appraised by the real estate experts.
10,423 m² and generates a gross rental income of EUR 1.30 million. All retail properties are leased.
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2014 - 2015 Retail Estates
It is a typical “out-of-town” location, with non-food
The mergers of these subsidiaries facilitate the
company statutes to the regulations regarding the
retailers with a large area of coverage.
administrative management and lead to a decrease
regulated real estate companies and in particular,
of the taxable income of Retail Estates nv’s
to the stipulations pursuant to the RREC Law and
subsidiaries.
the R.D. of 13 July 2014 on regulated real estate
The retail park in Oudenaarde is situated in the
companies. The status amendment was approved
outskirts of the city Oudenaarde, on a former
2. Status of a public regulated real estate company (‘RREC’ - Belgian REIT)
industrial site. It is an example of an “edge-oftown” location, aiming at a local, urban area of
under the condition of the former status of Retail Estates nv of vastgoedbevak/sicafi being actually changed into the status of public RREC.
coverage. This park’s retailers focus on the daily needs of the consumer. The most important tenants
On 1 September 2014, Retail Estates nv was
are Albert Heijn, Kruidvat, Blokker and C&A. The
granted by the FSMA (Belgian Financial Services
As a result of the above-mentioned approval of
retail park consists of 10 retail properties with a
and Markets Authority) a license as a public
the change of status of Retail Estates nv by the
total area of 7,963 m² and generates a gross rental
Regulated Real Estate Company (‘RREC’), under
EGM of 24 October 2014, the condition for the
income of EUR 0.67 million. All retail properties are
specific conditions precedent pursuant to the
entry into force of the change of status of Retail
leased, with the exception of a 300 m² surface, for
12 May 2014 Law on regulated real estate
Warehousing Invest nv, approved by the EGM of
which negotiations are ongoing.
companies (the ‘RREC Law’).
26 September 2014, has thus been fulfilled. The amendment has entered into force and Retail
1.4. Disposals2
1.5. Private placement of bonds
The extraordinary general meeting of
Warehousing Invest benefits from the institutional
On 4 April 2014, the Luxembourgian company
On 2 April 2014, Retail Estates nv proceeded to
shareholders of Retail Estates nv that was held
RREC status as from 24 October 2014.
Belgium Retail 1 Luxembourg sàrl was sold, for
a private placement of bonds for a total amount
on 24 October 2014 (the ‘EGM’), approved with
an amount of EUR 8.22 million. On the buildings
of EUR 30 million. The bonds have a 7-year term
unanimity the change of status from a public real
in this company, a net added value of EUR 0.19
and are due in 2021. They represent a fixed annual
estate investment company into a public RREC
million was realised (after deduction of the real
gross yield of 3.566 %. The bonds were placed
(Belgian REIT) in accordance with the RREC Law.
estate agent’s fees).
with institutional investors. The net proceeds of the bond issue will be used for the further
As no exit right has been exercised, and all
Over the past six months, four retail properties
growth of the portfolio and will contribute to the
conditions precedent to which the modification
were sold for a net selling price of EUR 4.43
diversification of the financial resources. The bonds
of the articles of association by the EGM and
million. On these buildings, a net added value of
also contribute to the increase of the average
the authorisation granted by the FSMA were
EUR 0.26 million was realised. The retail properties
maturity of the total debt and to the decrease of
subject, have thus been fulfilled, Retail Estates
sold are situated in Genval (Délitraiteur), Wanze
the average interest rate.
nv benefits from the public RREC status as from
(Action), Tienen (Brantano) and Gosselies (Charles
24 October 2014.
Vögele). The fair value of these properties at the
1.6. Merger by absorption of subsidiaries
time of sale amounted to EUR 3.61 million.
On 11 June 2014, the merger proposal regarding
For more information, please check our website
the merger by absorption of the companies SDW
www.retailestates.com, under Investor Relations
These sales are part of an annual reoccurring sales
Invest bvba and Ducova bvba was submitted.
(www.retailestates.com/en/investor/general-
programme concerning individual retail properties
The board of directors established the merger
assembly/2014-2015).
that, due to their location or retail size and/or the
by notarial deed on 26 September 2014, with
business activity practiced therein, do not fit within
effect on respectively 30 September 2014 and
On 26 September 2014, the EGM of Retail
the core portfolio of Retail Estates nv.
31 October 2014.
Warehousing Invest nv decided to amend the
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3. Analysis of the results
2014 - 2015 Retail Estates
2, p. 9). After deduction of general costs, the regulated real estate company posts an operating
Interim results as at 30 September 2014: net
result before result on the portfolio of EUR 22.18
current result of the Group up by 18.71 %
million. The operating margin is 86.85 %.
compared to 30 September 2013 - fair value of the real estate portfolio up to EUR 767.81
Net earnings from disposals of investment
million.
properties amount to EUR 0.45 million out of total sales of EUR 4.06 million. Variations in the
For the six months to 30 September 2014, the
fair value of investment properties amount to
net current result (i.e. profit before the results on
EUR 0.84 million, representing the net surplus of
the portfolio) amounts to EUR 13.45 million, an
various positive and negative variations.
increase of 18.71 % compared to the same period in the previous year.
The financial result is EUR - 8.51 million, a rise in
The debt ratio amounts to 51.72 % as at
rents. However, it has been identified that at the
30 September 2014 compared to 49.10 % on
moment, contrary to previous financial years, the
31 March 2014.
inflation by rent indexation hardly has its role in the rental increase.
costs of EUR 0.62 million compared with the same
4. Prospects
Net rental income rose from EUR 22.29 million
period last year. Retail Estates nv finances its real
to EUR 25.54 million. This is mainly due to
estate portfolio mainly with long-term bank debts
the acquisition of additional properties in the
at fixed interest rates. The average interest rate as
The macro-economic uncertainties do not enable
current financial year and the contribution of
at 30 September 2014 is 4.50 %.
predictions to be made as to the evolution of the
retail properties purchased during the previous
5. Changes to the composition of the board of directors
fair value of property or the negative variations in
At the annual shareholders’ meeting of 4 July
financial year and which are contributing 100 %
The net result (share Group) for the first half of
the fair value of financial hedging instruments. The
2014, the resignation of Mr Luc Geuten as a
for the first time this financial year. Compared with
the year is EUR 14.74 million, consisting of the
evolution of the net asset value of the share, which
non-executive director, effective 4 July 2014, was
30 September 2013, the real estate portfolio grew
net current result of EUR 13.45 million and the
is sensitive to such variations and uncertainties, is
acknowledged. During the previous financial year,
by EUR 64.54 million. With respect to 31 March
result on the portfolio of EUR 1.29 million. Per
therefore uncertain. On 30 September 2014, the
Mr Geuten has reached the age limit of 70 years.
2014, the portfolio grew by EUR 21.90 million.
share this represents a net current result available
weak consumer confidence and the lower retail
He will not be replaced so that henceforth, the
for distribution of EUR 1.84 for the first half of
turnover of some retail firms have not resulted in
board of directors will consist of 10 directors.
After deduction of property charges, this gives
the year (on the basis of the weighted average
an increase of unoccupied premises or collection
an operating property result of EUR 23.73 million
number of shares).
issues at Retail Estates nv. This is probably the
6. Future-oriented statements
result of the discount character of the peripheral
compared to EUR 20.74 million last year. The fair value of the property portfolio,
retail formulas.
This half-yearly report contains a number of future-
Property charges amount to EUR 1.64 million
including assets held for sale, amounts to
compared to EUR 1.43 million the year before.
EUR 773.61 million as at 30 September 2014,
It is estimated that the net current result per
risks and uncertainties which means that the actual
The increase is thus in line with the increase in
compared to EUR 750.30 million on 31 March
share for the financial year 2014-2015 will exceed
results can differ significantly from those expected
rental income. The general costs amount to EUR
2014.
3.10 EUR per share. The expected dividend
on the basis of such future-oriented statements
(EUR 3.10 gross per share) is confirmed. This
in this interim statement. Significant factors that
1.54 million, an increase with EUR 0.40 million
oriented statements. Such statements are subject to
compared to the previous year. This is mainly due
The net asset value (fair value) per share amounts
represents a 3.33 % increase in the dividend
can influence such results include changes in the
to the non-recurrent cost within the framework of
to EUR 46.01 (excluding 50 % of the expected
compared with 2013-2014. These expectations
economic situation and commercial, fiscal and
the change of status from vastgoedbevak/sicafi
dividend) as at 30 September 2014. As of
were filled in the hypothesis of stable consumer
environmental factors.
to regulated real estate company (see chapter
31 March 2014 this was EUR 45.90 (excl. dividend).
spending and provided a positive evolution of
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Financial report
SUSTAINABILITY
The reinforcement of the company’s registered capital and the recently issued private bond loan allow further growth of the company.
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2014 - 2015 Retail Estates
1. A. Condensed consolidated income statement INCOME STATEMENT (in € 000)
Rental income Rental related expenses Net rental income
30.09.14
30.09.13
25,797
22,678
-256
-384
25,541
22,294
Recovery of property expenses Recovery of rental charges and taxes normally payable by tenants on let properties
2,750
2,363
Rental charges and taxes normally payable by tenants on let properties
-2,916
-2,479
-9
-9
Other rental related income and expenses
30.09.14
30.09.13
14,960
13,977
-223
-368
Net result
14,737
13,608
Attributable to: Shareholders of the Group Minority interests
14,737
13,608
Note: Net current result (share Group)3 Result on portfolio
13,446
11,327
1,291
2,281
RESULT PER SHARE
30.09.14
30.09.13
INCOME STATEMENT (in € 000)
Result before taxes Taxes
Property result
25,367
22,169
Technical costs
-720
-522
Commercial costs
-103
-126
Number of ordinary shares in circulation
7,290,411
7,290,411
Charges and taxes on unlet properties
-111
-62
Weighted average number of shares
7,290,411
6,571,948
Property management costs
-701
-721
Net profit per ordinary share (in EUR)
2.02
2.07
Diluted net profit per share (in EUR)
2.02
2.07
-1,638
-1,433
Profit available for distribution per share (in EUR)4
1.86
1.56
Net current result per share (in EUR)
1.84
1.72
Property charges
5
Operating property result
23,728
20,736
Operating corporate costs
-1,545
-1,146
Result on disposals of investment properties
22,183
19,589
451
28
840
2,253
23,474
21,871
Result on sales of other non-financial assets Changes in fair value of investment properties
4 Based on the number of shares in circulation. 5 The net current result per share is calculated from the weighted average number of shares, counted from the time of issue (which does not necessarily coincide with first dividend entitlement date). As at 30.09.2014, the weighted average number of shares is equal to the total number of shares.
Other current operating income and expenses Operating result before result on portfolio
3 The net current result is calculated as follows: net result excluding changes in fair value of investment properties and exclusive the result on disposal of investment properties.
1. B. Statement of other comprehensive income Statement of other comprehensive income (in € 000)
Net result Operating result Financial income Interest charges Other financial charges Financial result
14
76
562
-8,569
-8,430
-21
-26
-8,514
-7,894
30.09.14
30.09.13
14,737
13,608
-457
-1,074
-2,134
5,775
12,146
18,309
Other components of other comprehensive income, recyclable in income statements: I mpact on the fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties Changes in the fair value of cash-flow hedges COMPREHENSIVE INCOME
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2014 - 2015 Retail Estates
2. Condensed consolidated balance sheet
SHAREHOLDERS’ EQUITY AND LIABILITIES (in € 000) 30.09.14
31.03.14
Non-current assets Goodwill Intangible non-current assets
768,140
746,245
37
26
Investment properties6
767,815
745,916
284
297
5
5
ASSETS (in € 000)
Other tangible non-current assets Financial non-current assets Trade receivables and other non-current assets Current assets
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
14,287
9,620
Non-current assets or groups of assets held for sale
5,800
4,385
Trade receivables
2,311
725
Tax receivables and other current assets
1,479
1,899
Cash and cash equivalents
2,561
2,189
Deferred charges and accrued income
2,136
421
782,427
755,865
TOTAL ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES (in € 000)
Current liabilities Current financial debts Credit institutions Trade debts and other current debts Other current liabilities Accrued charges and deferred income
30.09.14
31.03.14
346,697
356,524
DEBT RATIO
Debt ratio7
NET ASSET VALUE PER SHARE (in €) - SHARE GROUP
Net asset value per share IFRS8 Net asset value per share EPRA9 Net asset value per share excl. dividend excl. IAS 3910
30.09.14
31.03.14
65,534
33,516
51,797
22,421
51,797
22,421
9,074
7,992
77
86
4,586
3,017
782,427
755,865
30.09.14
31.03.14
51.72%
49.10%
30.09.14
31.03.14
47.56
48.90
51.12
52.18
52.16
51.70
6 Including project developments (IAS 40).
Shareholders’ equity Shareholders’ equity attributable to the shareholders of the parent company Capital Issue premiums Reserves Net result of the financial year
346,697
356,524
160,962
160,962
93,095
93,095
77,904
73,900
14,737
28,568
Liabilities
435,730
399,341
Non-current liabilities Provisions Non-current financial debts Credit institutions Other non-current financial liabilities Other non-current liabilities
370,196
365,825
87
102
329,015
327,677
299,255
327,677
7 The debt ratio is calculated as follows: obligations (excluding provisions, accrued charges and deferred income, financial instruments and deferred taxes), divided by the total assets (excluding financial instruments). 8 The net asset value per share IFRS (fair value) is calculated as follows: shareholders’ equity (attributable to shareholders of the parent company) divided by the number of shares. 9 The net asset value per share EPRA (fair value) is calculated as follows: shareholders‘ equity (excluding changes in the effective part of the fair value of the permitted hedging instruments in a cash flow hedge as defined in IFRS) divided by the number of shares. 10 The net asset value per share excl. dividend excl. IAS 39 (investment value) is calculated as follows: shareholders‘ equity (excluding the impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties, exclusive changes in the effective part of the fair value of the permitted hedging instruments in a cash flow hedge as defined in IFRS and exclusive dividend) divided by the number of shares.
Minority interests
16
29,760 41,094
38,046
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2014 - 2015 Retail Estates
3. Condensed consolidated statement of changes in shareholders’ equity Capital ordinary shares
Issue premiums
Reserves*
Net result of the financial year
Minority interests
TOTAL Shareholders’ Equity
129,389
52,857
57,760
29,582
0
269,588
- Transfer of portfolio result to reserves
8,579
-8,579
0
- Transfer of net current result to reserves
4,145
-4,145
0
-16,858
-16,858
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (in € 000)
Balance according to IFRS on 31 March 2013 - Net appropriation of profits 2012-2013
- Reclassification between reserves - Dividends of the financial year 2012-2013 - Capital increase - Capital increase through contribution in kind
32,699
39,601
72,300
540
636
1,176
- Minority interests - Costs of capital increase
-1,667
-1,667
- Other
40
- Total result 30/09/2013
40
4,701
13,608
Balance according to IFRS on 30 September 2013
160,962
93,095
75,225
13,608
0
342,890
18,309
Balance according to IFRS on 31 March 2014
160,962
93,095
73,900
28,568
0
356,524
- Transfer of portfolio result to reserves
3,260
-3,260
0
- Transfer of net current result to reserves
3,437
-3,437
0
-21,871
-21,871
-2,591
14,737
12,146
77,904
14,737
- Net appropriation of profits 2013-2014
- Reclassification between reserves
0
- Dividends of the financial year 2013-2014 - Capital increase - Capital increase through contribution in kind - Minority interests - Costs of capital increase - Other
-102
- Total result 30/09/2014 Balance according to IFRS on 30 September 2014
18
160,962
93,095
-102 0
346,697
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2014 - 2015 Retail Estates
Legal reserve
Reserve for the positive/ negative balance of changes in the fair value of real estate properties
420
76,775
* Detail of the reserves (in € 000)
Balance according to IFRS on 31 March 2013
Available reserves
Impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties
Reserve for the balance of changes in the fair value of authorised hedging instruments qualifying for hedge accounting as defined by IFRS
Results carried forward from previous financial years
TOTAL
9,431
-15,763
-30,092
16,989
57,760
4,145
4,145
- Net appropriation of profits 2012-2013 - Transfer of portfolio result to reserves
8,579
8,579
- Transfer of net current result to reserves - Reclassification between reserves
-248
248
-64
64
0
1
1,810
-1,820
64
-15
40
-1,074
5,775
Balance according to IFRS on 30 September 2013
421
86,916
7,859
-16,837
-24,317
21,183
75,225
Balance according to IFRS on 31 March 2014
437
86,926
7,859
-18,386
-23,882
20,946
73,900
3,437
3,437
-102
0
- Capital increase through contribution in kind - Minority interests - Costs of capital increase - Other - Total result 30/09/2013
4,701
- Net appropriation of profits 2013-2014 - Transfer of portfolio result to reserves
3,260
3,260
- Transfer of net current result to reserves - Reclassification between reserves
-1,429
1,429
102
- Capital increase through contribution in kind - Minority interests - Costs of capital increase - Other
-29
-102
- Total result 30/09/2014 Balance according to IFRS on 30 September 2014
20
408
88,757
9,288
29
-457
-2,134
-18,843
-26,016
-102 -2,591
24,310
77,904
21
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2014 - 2015 Retail Estates
4. Condensed consolidated cash-flow statement CASH-FLOW STATEMENT (in € 000)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE SEMESTER 1. Cash-flow from operating activities
30.09.14
30.09.13
2,188
1,879
-365
4,006
Operating result Interest paid Interest received Dividends received Corporate taxes paid Estimated corporate tax Other
23,474
21,871
-8,297
-8,305
42
27
-3,164
-36
-474
78
Non-cash elements to be added to / deducted from the result: * Depreciations and write-downs - Depreciation / Write-downs (or write-backs) on tangible and intangible assets -D epreciation / Write-downs (or write-backs) on trade receivables
-1,182
-2,262
66
79
58
-30
* Other non-cash elements - Changes in the fair value of investment properties - Profit on disposal of investment properties * Other Change in working capital requirements: * Movement of assets - Trade receivables and other receivables - Tax receivables and other current assets - Deferred charges and accrued income * Movement of liabilities - Trade debts and other current debts - Other current liabilities - Accrued charges and deferred income
22
-840
-2,253
-451
-28
-15
-29
-10,764
-7,341
-1,628
-2,043
422
106
-1,699
-922
-9,152
-1,647
4
-4,541
1,289
1,705
(in € 000)
2. Cash-flow from investment activities Purchase of intangible assets Purchase of investment properties Disposal of investment properties and assets held for sale Acquisition of shares of real estate companies Disposal of shares of real estate companies Purchase of other tangible assets Disposal of non-current financial assets Income from trade receivables and other non-current assets Disposal of assets held for sale 3. Cash-flow from financing activities * Change in financial liabilities and financial debts - Increase in financial debts - Decrease in financial debts * Change in other liabilities - Increase (+) / Decrease (-) in other liabilities - Increase (+) / Decrease (-) in minority interests
30.09.14
30.09.13
-9,018
-13,002
-21
-9
-4,732
-6,412
4,167
2,569
-15,081
-9,106
6,691 -42
-2
9,756
CASH AND CASH EQUIVALENTS AT THE END OF THE SEMESTER
50,105
52,757
69,663
-22,044
-63,324
914
-10,009
* Change in shareholders' equity - Capital increase and issue premiums - Costs of capital increase - Other * Dividend - Dividend for the previous financial year
-42
72,300 -1,667
-21,871
-16,858
2,561
42,987
Rounding up or down to the nearest thousand can lead to rounding-off differences between the balance sheet and income statement and the attached details.
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2014 - 2015 Retail Estates
5. Notes on the condensed consolidated interim figures
the first six months of the current financial
5.5 Valuation of projects
year, their influence on the condensed interim
In accordance with the modified IAS 40 standard,
5.1 Basis for preparation
In these condensed interim financial statements
financial statements, the main risk factors and
project developments are included under
The interim financial report for the first six-month
the same accounting principles and calculation
uncertainties for the remaining months of
investment properties. On purchase they are
period ending on 30 September 2014 has been
methods are applied as in the consolidated
the financial year, and the main transactions
valued at purchase cost, including incidental
prepared using accounting standards consistent
financial statements for the year ending on
between related parties and their possible
expenses and non-deductible VAT.
with International Financial Reporting Standards
31 March 2014.
impact on the condensed interim financial
as implemented by the Belgian Royal Decree of 13 July 2014 on the accounting, annual accounts and consolidated annual accounts of public regulated real estate companies, and
5.2 Application of IFRS 3 Business combinations
statements if these transactions are of significant
After initial recognition, projects are valued at
importance and were not concluded under
fair value once contractors have been found,
normal market conditions.
the necessary licences are acquired, and the
Corporate transactions of the past semester
properties are let. This fair value valuation is based
in accordance with IAS 34 ”Interim Financial
were not processed as business combinations
5.4 Segmented information
Reporting”.
such as required under IFRS 3 definition, based
IFRS 8 defines an operating segment as follows:
on the conclusion that this definition is not
an operating segment is a component of the
In determining the fair value of investment
applicable, given the nature and the size of the
company (IFRS 8.2):
properties in accordance with IAS 40 ”Property
acquired companies. The companies in question
Investments”, an estimated amount of transfer
own a limited number of properties which are
rights and costs is deducted by the independent
not intended to be kept on as an independent
may earn revenues and incur expenses (including
property expert. The impact on the fair value of
businesses. The companies are fully consolidated
revenues and expenses relating to transactions
investment properties of these estimated transfer
through the application of IAS 40.
with other components of the same company);
on the valuation by the real estate expert, after deduction of work still to be done. A project can relate to a plot of land, a building to be demolished, or an existing building whose
• that engages in economic activities from which it
rights and costs on the hypothetical disposal of
purpose is to be changed, requiring considerable renovation work to realise the desired purpose.
5.6 Additional comments on the debt ratio development
shareholders’ equity under the heading ”lmpact
5.3 Declaration by the person responsible within Retail Estates nv
by the ‘chief operating decision maker’ with a
Principle
on fair value of estimated transfer rights and
In accordance with article 13 § 2 of the R.D.
view to taking decisions concerning allocation of
Article 24 of the R.D. of 13 July 2014 on regulated
costs resulting from the hypothetical disposal of
of 14 November 2007, Jan De Nys, managing
available resources and assessing the segment’s
real estate companies (the so-called GVV / SIR
investment properties” expressly provided for
director, declares that, to his knowledge,
performance; and
or ‘Belgian REIT’) requires public regulated real
investment properties is recorded directly in the
• whose operating results are reviewed regularly
estate companies to establish a financial plan with
in the above R.D. In the first six-month periods ending on 30 September 2014 and 30 September
a) the condensed interim financial statements
• for which separate financial information is
an implementation schedule when its consolidated
2013, amounts of, EUR - 0.46 million and EUR
prepared on the basis of financial reporting
- 1.07 million, respectively, were directly recorded
principles consistent with IFRS and with IAS 34
in the shareholders’ equity under this account.
‘Interim Financial Reporting’ as adopted by the
Given that peripheral retail properties account for
taken to prevent the consolidated debt ratio from
European Union, give a true and fair view of the
more than 90 % of the Retail Estates nv’s portfolio,
exceeding 65 % of consolidated assets.
net equity, financial position and results of Retail
a breakdown of activities by operating segment is
Estates nv and of the companies included in the
not relevant. The board of directors does not use
A separate report on the financial plan is prepared
consolidation.
any other segment in its decision-making process.
by the auditor, confirming that the latter has
86.85 %
operating margin
24
available.
debt ratio exceeds 50 % of consolidated assets. The financial plan describes the measures to be
verified the method of drawing up the plan, b) the interim report presents an accurate description of the main events occurred during
particularly as regards the economic bases, and that the figures contained in this plan concur with
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2014 - 2015 Retail Estates
the accounts of the public regulated real estate
Short-term evolution of the debt ratio
• results of the second semester 2014-2015
In the event that substantial value reductions occur
company.
Every quarter, the board of directors is presented
The results of the second semester as indicated in
that cause the debt ratio to exceed 65 %, Retail
with a prognosis of how the debt ratio will evolve
the budget for 2014-2015, approved by the board
Estates nv can sell a number of its properties.
The general guidelines of the financial plan are
during the following quarter. The board also
of directors.
Retail Estates nv has a solid track record with
included in the annual and half-yearly financial
discusses any deviations which may have occurred
reports. The annual and half-yearly financial
between the estimated and actual debt ratio
reports will describe and justify how the financial
during the previous quarter.
regard to selling properties at their estimated •p lanned investments in the second semester 2014-2015
investment value. In the 2011-2012 financial year, 12 retail properties were sold for a net selling price
Investments amounting to EUR 46.50 million are
of EUR 17.87 million. In the 2012-2013 financial
under review and how the public regulated real
The projection of the debt ratio as at 31 December
planned, of which EUR 12.40 million in the fourth
year, 14 retail properties, 2 carcass apartments,
estate company will implement the plan in the
2014 takes into account the following assumptions:
quarter of the financial year 2014-2015.
1 food service building, 3 plots of land, 1 small
plan has been implemented during the period
and middle-sized building and 1 villa were sold
future. • disposals in the third quarter 2014-2015
Considering the additional planned investments
for a net selling price of EUR 19.25 million. In the
Notes 2014-2015
Disposals amounting to EUR 0.73 million are
and the earnings expectations for the full year,
2013-2014 financial year, 4 retail properties and
Historical evolution of the debt ratio
planned.
the debt ratio at 31 March 2015 would amount to
2 carcass apartments were sold for a net selling
50.55 %.
price of EUR 5.07 million. Globally speaking, these
Since 2008-2009, the debt ratio of Retail Estates nv has risen above 50 %. In the aforementioned
• results of the third quarter 2014-2015
financial year, the debt ratio was 56 %,
The results of the third quarter as indicated in the
The projection of the debt ratio only takes into
value. At 30 September 2014, 4 retail properties
subsequently remaining stable at around 53 %. In
budget for 2014-2015, approved by the board of
account acquisitions and disposals in respect of
were sold for a net selling price of EUR 4.43 million
2014, the debt ratio decreased at a level under
directors.
which a private agreement has been signed and
and the company Belgium Retail 1 Luxembourg sàrl
investments that are planned and contracted out.
was sold for an amount of EUR 8.22 million.
Other elements that influence the debt ratio
Conclusion
Investments amounting to EUR 34.10 million are
The valuation of the real estate portfolio also has an
Retail Estates nv is of the opinion that, based on
50 % as a result of the capital increase, to rise above 50 % again as from 30 September 2014. Throughout its history, the Retail Estates nv’s debt ratio has never exceeded 65 %.
properties were sold at the estimated investment
• planned investments in the third quarter 2014-2015 planned for the third quarter of the financial year
impact on the debt ratio. Considering the current
Long-term evolution of the debt ratio
2014-2015. EUR 14.80 million will be invested
capital basis, the maximum debt ratio of 65 %
The board of directors considers a debt ratio of
through a contribution in kind (see 5.12.1, p. 34).
would be exceeded in the event of a reduction in the fair value of real estate investments of EUR
+ 55 % ideal for the shareholders of the regulated
• the historical evolution of the regulated real estate company (Belgian REIT) and • the track record of disposals,
real estate company (Belgian REIT) in terms of
Considering the aforementioned assumptions, the
159.86 million. This reduction in value could be the
the return and the current earnings per share.
debt ratio as at 31 December 2014 will amount to
result of an increase in the yield (if the rental values
no additional measures need to be taken to
The impact of every investment on the debt ratio
51.01 %.
remain unchanged, the yield would have to increase
prevent the debt ratio exceeding 65 %. As a result
by 1.86 % in order to exceed the debt ratio) or a
of the capital increase on 28 June 2013, the debt
is reviewed and if necessary the investment is not carried out if it has a negative influence on
A projection is also made of the debt ratio as
reduction in rents (if the yields remain unchanged,
ratio declined. It is the intention of the regulated
the debt ratio. Based on the current debt ratio
at 31 March 2015 (end of the financial year).
the rents would have to drop by EUR 11.06 million).
real estate company (Belgian REIT) to maintain
of 51.72 %, Retail Estates nv has an investment
This projection takes into account the following
Historically, the fair value of the real estate portfolio
the debt ratio between 50 % and 55 %. This level
potential of EUR 296.88 million without exceeding
assumptions:
has always risen or was at least stable since the
is evaluated regularly and will be reviewed by the
regulated real estate company (Belgian REIT) was set
board of directors if deemed necessary in the light
potential of EUR 161.96 million without exceeding
• disposals in the second semester 2014-2015
up. There are currently no indications in the market
of changing market and influencing factors.
a debt ratio of 60 %.
Disposals amounting to EUR 2.93 million are planned,
to assume an increase in the yield.
as such a debt ratio of 65 %, and an investment
of which EUR 2.20 million in the fourth quarter.
26
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2014 - 2015 Retail Estates
5.7 Rental income
(in € 000)
During the first half of this financial year, Retail
Four properties and the company Belgium Retail 1
Estates nv expanded its property portfolio with
Luxembourg sàrl were also divested in the first six-
25 retail properties. These represent a rental income
month period of the financial year. These represent
of EUR 2.00 million. In the consolidated figures as of
a rental income of EUR 0.75 million. In the
30 September 2014 these new properties represent
consolidated figures as of 30 September 2014,
a rental flow of EUR 0.43 million.
these properties represent EUR 0.084 million.
Rental income (in € 000)
30.09.14
30.09.13
Rent Guaranteed income Operational lease income Rental discounts Rental benefits ('incentives') Fees for early terminated rental agreements
25,247
22,220
Total rental income
25,797
550
458
22,678
30.09.14
Within one year Between one and five year(s) Within more than five years
30.09.13
53,056
47,685
218,752
203,916
254,338
257,344
Type of lease
a rental guarantee, usually in the form of a bank
The Group concludes commercial rental contracts
guarantee amounting to three months’ rent.
for its buildings, for a minimum period of 9 years, which can usually be terminated upon expiry
At the start of the lease an inventory of fixtures
of the third and sixth year, subject to 6 months’
and fittings is drawn up between the parties by an
notice prior to the expiry date. Rents are usually
independent real estate expert. On expiry of the
paid monthly in advance (sometimes quarterly).
lease the lessee must return the rented premises
They are indexed annually on the anniversary of
in the state described in the inventory of fixtures
the lease.
and fittings drawn up when it took up occupancy, subject to normal wear and tear.
Taxes and levies, including the advance levy on income derived from real estate, the insurance
The lessee may not transfer the lease or sublet
premium and the communal charges, are in theory
the premises wholly or in part, other than subject
The rise in rental income is mainly due to the
nv will actually collect, based on the current
borne by the lessee. To guarantee compliance
to prior written permission from the lessor. The
growth of the real estate portfolio and the
lease agreements. This does not detract from the
with the obligations imposed on the lessee by
lessee is obliged to register the lease at its own
indexation of the rents.
theoretical risk of all tenants exercising their legal
virtue of the agreement, the lessee must provide
expense.
right of termination at the end of the current threeThe following table uses a theoretical exercise to
year period. In this case, all retail properties will by
show the amount of rental income Retail Estates
definition be vacant within 3 years and 6 months.
28
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5.9 Long- and short-term financial debts
5.8 Investment properties Investment properties Investment and revaluation table (in € 000)
Balance at the end of the previous financial year Acquisition through purchase or contribution real estate companies Capitalised interest cost Acquisition and contribution of investment properties Disposal through sale of real estate companies Disposal of investment properties Transfers to assets held for sale Change in fair value (+/-) At the end of the financial year
30.09.14
Assets held for sale
31.03.14
745,916
675,593
30.09.14
4,385
Total
31.03.14
30.09.14
7,488
750,301
Breakdown by due date of credit lines (in € 000)
Current Bilateral loans - variable or fixed rate Subtotal
51,797
22,422
51,797
22,422
380,812
350,098
30.09.14
31.03.14
42,787
168
624
168
624
4,290
27,476
4,290
27,476
-6,874 -3,635
-1,848
-3,579
-3,262
-301
3,262
301
0
0
1,512
3,372
175
1,512
3,547
767,815
745,916
4,385
773,613
750,301
5,800
-7,214
OTHER INFORMATIONS Investment value of the property
786,514
Project developments (in € 000)
764,193
5,945
4,495
792,459
768,688
30.09.14
31.03.14
Balance at the end of the previous financial year
8,077
5,734
Increase during the financial year Reception during the financial year
4,613
6,318
-834
-3,975
11,856
8,077
At the end of the financial year
29,760
Total Breakdown by maturity of non-current financial debts (in € 000)
Between one and two year(s) Between two and five years More than five years
327,677
49,794
49,917
201,394
199,794
77,827
77,966
Of all loans, EUR 282.92 million have a variable
5.10 Financial instruments
interest rate. These are all long-term loans.
The most important financial instruments of the
97.51 % of the outstanding loans are hedged via
Group are financial and trade receivables and
interest rate swap contracts that swap variable
debts, investments, cash and cash equivalents and
interest rates for fixed interest rates or have a fixed
financial instruments such as ‘Interest Rate Swaps’
interest rate. The average interest rate of the loans
(IRS).
is 4.50 %. Retail Estates nv has agreed in principle on a debt ratio of 60 % with its banks. The ‘other non-current financial liabilities’ concern the bond loan, emitted on 23 April 2014 with a
During the first half of the financial year control was
companies was paid for in cash. This resulted in a
acquired of three real estate companies for a total
EUR 28.89 million increase of investment properties
amount of EUR 15.08 million. The acquisition of the
and a EUR 13.81 million variation of working capital.
30
327,677
329,015
28,383
-4,167
299,255
683,081
42,787
-2,319
31.03.14
Non-current Bilateral loans - variable or fixed rate Other non-current financial liabilities Subtotal
31.03.14
28,383
-6,874
30.09.14
7-year term and an interest rate of 3.556 %.
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2014 - 2015 Retail Estates
The categories correspond with the following
Below is an overview of the financial instruments as at 30 September 2014:
financial instruments: Summary of financial instruments as at closing date 30.09.14 (in € 000)
I. Non-current assets Financial non-current assets Loans and receivables II. Current assets Trade receivables and other receivables Cash and cash equivalents
Categories
Book value
Fair value
Level
• or because they have a variable interest rate.
C
0
0
2
A
5
5
2
receivables and loans) held until maturity, at the
The fair value of debts having a fixed interest rate
amortised cost.
is estimated by means of an actualisation of their future cash flows, taken into account the Group’s
B. Investments held until maturity, at the amortised A
3,790
3,790
2
B
2,561
2,561
2
Total financial instruments on the liabilities side of the balance sheet
6,356
6,356
credit risk.
cost.
5.11 Minority interests C. Assets or liabilities, held at the fair value
II. Current liabilities Interest-bearing liabilities Current trade debts and other debts
(like trade receivables and debts),
A. Financial assets or liabilities (including
Total financial instruments on the assets side of the balance sheet I. Non-current liabilities Interest-bearing liabilities Credit institutions Other non-current financial liabilities Other non-current liabilities Other financial liabilities
• either because they have a short-term maturity
On 30 September 2014, Retail Estates nv holds a
through the profit and loss account, except for
62.50 % interest in Retail Warehousing Invest nv.
financial instruments determined as hedging
According to the agreement entered into with a
instruments.
view to acquiring the controlling interest in Retail Warehousing Invest nv, Retail Estates nv shall, at the
A
329,015
334,704
2
A
299,255
301,556
2
The aggregate financial instruments of the Group
latest effective 1 July 2016, acquire all shares of this
A
29,760
33,148
2
A
15,078
15,078
2
correspond with level 2 in the fair values hierarchy.
company that are not yet held by it, on the basis
C
26,016
26,016
2
Fair value valuation is carried out regularly.
of the same valuation formula used to gain control
Level 2 in the fair values hierarchy includes the
interest, the underlying real estate value used in this
A
51,797
51,797
2
other financial assets and liabilities, in respect of
formula will be checked against the value applicable
A
9,151
9,151
2
which the fair value is based on other information,
at that time as determined by the real estate expert
which can, directly or indirectly, be determined for
and, as the case may be, be limited to such value
431,057
436,746
the relevant assets or liabilities.
in accordance with article 37 of the Belgian Law of
on 4 July 2012. Upon acquisition of the minority
12 May 2014 on regulated real estate companies. The valuation techniques regarding the fair value of the level 2 financial instruments are the
On 30 September 2014, Retail Estates nv holds a
following:
51 % interest in the shares of the company Mijn Retail nv, as a result of the cooperation agreement
- The categories ‘other financial liabilities’ and
concluded between Retail Estates nv and be-MINE
‘financial fixed assets’ concern Interest Rate
nv on 10 April 2014, regarding the realisation of a
Swaps (IRS), in respect of which the fair value
retail park in Beringen with a total built-up area of
is determined by means of interest rates
18,000 m².
applicable in active markets, and generally provided by financial institutions.
As of 31 December 2012, the balance sheet was drawn up based on the assumption that all minority
- The fair value of the other level 2 financial assets
32
interests would be acquired (in accordance with
and liabilities is almost equal to their book
IFRS), irrespective of the timing of the acquisition
value:
and assuming that these would be paid for in cash.
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2014 - 2015 Retail Estates
This reflects the maximum debt ratio on the basis of
the authorised capital. The total investment value
5.12.2 Disposals
By the approved change of status of Retail Estates
available information and the development stage of
for these five properties is EUR 14.80 million and
Maasmechelen
nv, the condition of the change of status of the
the projects.
this represents a capital increase of approximately
On 18 November 2014, a vacant retail property
company Retail Warehousing Invest nv has also
EUR 6.05 million (the balance, approximately EUR
at a solitary location was sold to a local SME.
been fulfilled. On 26 September 2014, the EGM
The impact on the non-current liabilities amounts to
8.74 million, is assigned to the balance sheet item
The net selling price amounts to EUR 0.50 million.
of Retail Warehousing Invest nv had approved the
EUR 14.71 million.
“issue premium”).
Compared to the fair value of this property,
amendment of the institutional vastgoedbevak/
EUR 0.63 million as at 30 September 2014, Retail
sicafi status into the status of institutional RREC
Estates nv sustained a loss of EUR 0.13 million.
(Belgian REIT) under this condition. Therefore,
5.12 Events occurring after the balance
Regarding 12 of the 14 retail properties to acquire, the transaction is thus executed in accordance with
sheet date
Retail Warehousing Invest nv benefits from the
the framework agreement of 14 October 2014,
Huy
5.12.1 Investments – capital increase
as announced in the press release of 15 October
An agreement has been signed regarding the
Acquisition 14 retail properties
2014. Two retail properties are not yet acquired
disposal of two retail properties in Huy, located
On 14 October 2014, Retail Estates nv entered
due to obligations relative to the OVAM regulation,
in an SME area. The retail properties are let to
into a framework agreement with Orchestra-
which are not yet fulfilled. In expectation of this
Van Marcke (sanitary equipment) and Carglass
Prémaman Belgium nv with a view to acquiring
fulfilment, the transfer of these properties has been
(automobile repairs). The expected net selling
the ownership of 14 retail properties for an
postponed.
price amounts to EUR 1.87 million.
expected rental income of EUR 2.18 million. This
As regards the property that will be part of a
5.12.3 Merger by absorption of subsidiary
transaction is two-fold: (i) the purchase of 8 retail
second contribution in kind in the Retail Estates
On 11 June 2014, the merger proposal with a view
properties and (ii) the contribution in kind of 6
nv’s capital, the issue price of the new shares to
to completing a merger by absorption of Ducova
retail properties.
be issued will be adapted if this contribution does
bvba was submitted. This merger has become
not take place by 31 December 2014 ultimately.
effective on 31 October 2014.
11
institutional RREC status as from 24 October 2014.
investment value of EUR 34.59 million and an
In execution of the first part of the transaction,
As a result of this, the total number of new shares,
7 retail properties were purchased on 29 October
referred to in the press release of 15 October
5.12.4 Change of status
2014. This acquisition represents an investment of
2014, can be amended.
On 24 October 2014, the EGM of shareholders
EUR 12.95 million.
of Retail Estates nv approved unanimously the Wilrijk
change of status of public vastgoedbevak/sicafi
On 28 November 2014, the second part of the
On 27 October 2014, Retail Estates nv
into the status of public regulated real estate
transaction has been completed partially by
acquired a retail property in Wilrijk, along the
company (‘RREC’, Belgian REIT), in accordance
transferring 5 retail properties as part of a capital
Boomsesteenweg, for a total investment of EUR
with the Law of 12 May 2014. Since no exit right
increase by means of a contribution in kind. For
4.24 million. This property is let at a rental price of
has been exercised and all conditions have been
this contribution in kind the board of directors of
EUR 0.26 million and is used as a retail subsidiary
fulfilled, Retail Estates nv benefits from the public
Retail Estates nv issued 269,062 new shares, within
with the brand name GAMMA (DIY).
RREC status as from 24 October 2014.
the framework of powers granted to it regarding
11 For more information we refer to the press release of 15 October 2014.
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2014 - 2015 Retail Estates
6. Limited review report on the consolidated interim financial information for the six-month period ended 30 September 2014 To the board of directors We have performed a limited review of the
substantially less in scope than an audit performed
accompanying consolidated condensed balance
in accordance with the International Standards on
sheet, condensed income statement, condensed
Auditing (ISA). Accordingly, we do not express an
statement of comprehensive income, condensed
audit opinion on the interim financial information.
cash flow statement, condensed statement of changes in equity and selective notes 5.1 to 5.12
Based on our limited review, nothing has come
(jointly the “interim financial information”) of Retail
to our attention that causes us to believe that the
Estates nv/sa (“the company”) and its subsidiaries
interim financial information for the six-month
(jointly “the group”) for the six-month period
period ended 30 September 2014 is not prepared,
ended 30 September 2014. The board of directors
in all material respects, in accordance with IAS
of the company is responsible for the preparation
34 “Interim Financial Reporting” as adopted by
and fair presentation of this interim financial
the EU and implemented by the Royal Decree of
information. Our responsibility is to express a
13 July 2014 with respect to regulated real estate
conclusion on this interim financial information
companies.
based on our review. The interim financial information has been prepared in accordance with IAS 34, “Interim
Diegem, 28 November 2014
Financial Reporting” as adopted by the EU and implemented by the Royal Decree of 13 July 2014 with respect to regulated real estate companies. Our limited review of the interim financial
The statutory auditor
information was conducted in accordance with
DELOITTE Bedrijfsrevisoren / Réviseurs
international standard ISRE 2410 – Review of
d’entreprises
interim financial information performed by the
BV o.v.v.e. CVBA / SC s.f.d. SCRL
independent auditor of the entity. A limited review
Represented by Kathleen De Brabander
consists of making inquiries of group management and applying analytical and other review procedures to the interim financial information and underlying financial data. A limited review is
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• M anagement report • F inancial report > Share performance report • R eal estate report • G eneral information
Share performance report
ESTABLISHED COMPANY
Since its listing on Euronext Brussels, Retail Estates’ results and portfolio have been growing continuously and consistently.
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• M anagement report • F inancial report > Share performance report • R eal estate report • G eneral information
2014 - 2015 Retail Estates
2. Stock market capitalisation
Share performance
Retail Estates nv is listed on the Euronext continuous market. As of 30 September 2014, the market
1. Stock market performance
capitalisation of Retail Estates nv amounts to EUR 448.36 million. Stock market capitalisation in EUR million
Retail Estates NV - Bel 20
500
220
Retail Estates NV
200
400
180 160
300
140 120
200
BEL 20
100 80
100
60 40
0
20 0 98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
3. Dividend and yield During the first six months of the 2014-2015
the stock exchange listing. The Retail Estates
financial year, the stock market price fluctuated
share has increased in value over the period by
between EUR 56.99 and EUR 66.00. The graph
95.05 % while the BEL 20 has increased by 8.20 %.
above shows the share performance of the Retail
The average closing price during this period was EUR 61.02.
Estates share in comparison with the BEL 20 since 70 60 50
3.10 EUR 40 30
20 expected dividend 10 0 40
NET ASSET VALUE PER SHARE (in €)
30.09.14
31.03.14
30.09.13
Net asset value per share IFRS 12
47.56
48.90
47.03
Net asset value per share EPRA
51.12
52.18
50.37
Net asset value per share excl. dividend excl. IAS 39 14
52.16
51.70
51.18
13
Gross dividend
3.00
Net dividend
2.25
Share price on closing date
61.50
58.92
54.00
12 The net asset value per share IFRS (fair value) is calculated as follows: shareholders’ equity (attributable to shareholders of the parent company) divided by the number of shares. 13 The net asset value per share EPRA (fair value) is calculated as follows: shareholders‘ equity (excluding changes in the effective part of the fair value of the permitted hedging instruments in a cash flow hedge as defined in IFRS) divided by the number of shares. 14 The net asset value per share excl. dividend excl. IAS 39 (investment value) is calculated as follows: shareholders‘ equity (excluding the impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties, exclusive changes in the effective part of the fair value of the permitted hedging instruments in a cash flow hedge as defined in IFRS and exclusive dividend) divided by the number of shares.
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40 20
• M anagement report • F inancial report >0Share performance report • R eal estate report • G eneral information
2014 - 2015 Retail Estates
Retail Estates NV - NAV 70
Retail Estates NV 60 50
NAV (incl. div.)
40 30 20 10 0
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
The net asset value (NAV) of the share in the case
The change in net asset value is explained by
of a property valuation at fair value is EUR 47.56.
the further decline in market value of interest rate hedging instruments and the payment of a dividend for the 2013-2014 financial year.
4. Financial calendar Announcement results third quarter 2014-2015
13 February 2015
Announcement annual results financial year 2014-2015
22 May 2015
Dividend made available for payment
10 July 2015
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• M anagement report • F inancial report • S hare performance report > Real estate report • G eneral information
Real estate report ECONOMIES OF SCALE
Retail Estates’ cluster strategy results in an optimisation of the management costs.
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• M anagement report • F inancial report • S hare performance report > Real estate report • G eneral information
2014 - 2015 Retail Estates
Real estate report Valuation as at 30 September 2014
1. R
eal estate expert’s report
The investment value is defined as the estimated
In order to calculate the investment value of
comparison, then we could establish that the
amount for which a property should exchange
the retail park in Tongeren, we have capitalised
portfolio increases with 1.07 % in comparison with
Retail Estates nv enlists the services of Cushman &
on the date of valuation between a willing buyer
its adjusted market rent. It is standard market
the last quarter.”
Wakefield and CBRE as its real estate experts. In
and a willing seller in an arm’s-length transaction
practice to take into account that no more than
practice, each real estate expert values a part of
after proper marketing wherein the parties had
60 % of the gap between the actual passing
Report by CBRE
the real estate portfolio.
each acted knowledgeably, prudently and without
rent and the estimated rental value (ERV) can be
The report by CBRE dated 30 September 2014
compulsion. This definition corresponds to our
bridged in renegotiations. This is the case when
covers a portion of the property of Retail Estates nv
definition of the market value.
the market rent is higher than the actual rent paid.
and its subsidiaries. The investment value of this
This is mainly due to the high legal protection for
real estate is herewith estimated at EUR 332.60
sitting tenants under Belgian commerce law.
million and the fair value at EUR 324.49 million.
Report by Cushman & Wakefield Cushman & Wakefield’s report dated 30 September 2014 covers a portion of the property
The sale of a building is in theory subject to
of Retail Estates nv and its subsidiaries. This
transfer rights collected by the government. This
reports mentions amongst others:
amount depends amongst other on the transfer
When now the market rent (ERV) is under the
EUR 23.15 million, representing a gross yield of 6.81 %.
These properties account for a rent collection of
manner, the profile of the purchaser and the
passing rent however, the highest rent a landlord
“We have the pleasure to give you our valuation
geographical situation of the building. The first
should hope to achieve is the market rent. Since,
update as at 30 September 2014 of the Retail
two conditions and the amount to pay for the
being prudent, one should assume that the sitting
2. Note
Estates portfolio and Immobilière Distri-Land nv.
rights is only known when the sale has been
tenant will use the break to negotiate his rent
The investment market is evolving in different
concluded. As independent experts, we confirm
downward and bring it in line with the market.
directions under the influence of the worldwide economic uncertainties. On the one hand
We confirm that we carried out this task as
that on the basis of a representative sample of the
independent expert. We also confirm that our
market (between 2002 and 2005) the weighted
The portfolio of Immobilière Distri-Land nv has as
a number of foreign institutional investors have
valuation was carried out in accordance with the
average of the rights (average transfer costs)
at 30.09.2014 an investment value (corrections
realised their investments faster than originally
national and international standards and their
is 2.50 % (for goods with a higher value than
incl.) of EUR 17.01 million and a fair value of
intended, in order to secure their capital gains and
application procedures, amongst other in the
EUR 2.50 million).
EUR 16.60 million. The investment value, in
reinvest in their home markets where the credit
absolute terms, remained stable. This gives a yield
crunch is offering new purchase opportunities. On
The properties are here considered as a portfolio.
of 7.40 % for Immobilière Distri-Land nv.
the other hand the private market remains active,
Our “investment value” is based on the
We obtain an investment value (corrections incl.)
interest in transactions of between EUR 1 and
capitalisation with a Gross Yield of the passing
as at 30.09.2014 for the portfolio of EUR 448.97
5 million. The rental market remains active, but
rent, taking into account possible corrections
million and a fair value of EUR 438.02 million.
is more sensitive than in the past to quality of
like vacancy, step-rents, rent-free periods, etc.
On the basis of the investment value, the
location, with a preference for retail properties on
The Gross yield is depending on current output
portfolio increases in absolute terms with 7.95 %
multi-shop sites (retail parks) or along major city
on the investment market, taking into account the
compared to 30.06.2014, due to the purchase
access roads with strong concentrations of similar
location, the suitability of the site, the quality of
of the Frunparks in Oudenaarde and Wetteren.
properties (retail clusters). Isolated buildings in
the tenant and the building on the moment of the
This gives a yield of 6.89 % to the portfolio. If we
well-populated residential areas are popular with
valuation.
would leave out both Frunparks from the evolution
food supermarkets.
valuation of regulated real estate companies (Belgian REITs) – (According to the present
with wealthy private investors showing continuing
decisions. We preserve ourselves the right to review our valuation in case of modified decisions).
591,195 m² retail area
1
1 Portfolio : Retail Estates nv + Immobilière Distri-Land nv + Tongeren + Ducova bvba + Wetteren + Oudenaarde
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2014 - 2015 Retail Estates
segment represents 19.98 % of Retail Estates nv’s
in conjunction with other shops, form part of an
premises that form part of a new-build project or a
property portfolio (compared with 19.57 % as at
integrated commercial complex. All properties
renovation project.
31 March 2014).
use a central car park with a shared entrance and exit road. This enables consumers to go to
3. Commercial activities of tenants
4. Subdivision by type of building
several shops without having to move their cars.
Retailers selling clothing and footwear (30.51 %
Individual peripheral retail properties are
A location of this kind will typically have at least
compared with 29.26 % as at 31 March 2014)
individual retail properties adjacent to the public
five properties.
together with food, electrical goods and toy
highway. Every outlet has its own car park and
retailers, account for more than 55 % of the
entrance and exit roads, connecting it to the public
Other real estate consists mainly of offices,
leased surface area. Both categories provide a
highway, and making it easily recognisible. In the
residential dwellings, hospitality establishments
stable basis, because they are the least sensitive
immediate vicinity, there are, in principle, no retail
and a logistics complex at Erembodegem.
to economic fluctuations. Moreover, the socio-
properties of the same kind.
The Erembodegem site was leased in its totality
economic permits for these activities are the most
to Brantano nv under a 10-year lease agreement
difficult to obtain. This is conducive to an increase
Retail clusters are a collection of peripheral retail
that ends on 31 May 2024. Retail Estates nv
in the value of the properties on the one hand and
properties, located along the same traffic axis and,
only invests in real estate properties used for
a stronger loyalty to the location on the other.
from the consumer’s point of view, they form a self-
the aforementioned purposes if they are already
contained whole, although they do not possess a
embedded in a retail property or are part of a real
The larger margins in the interior decoration and
joint infrastructure other than the traffic axis. This is
estate portfolio that can only be acquired as a
home furnishings sector make it possible to obtain
the most typical concentration of peripheral retail
whole.
sizeable rent increases in favourable economic
properties in Belgium. Retail premises under development are
climates, but it is this sector that is hardest hit by any downturn in consumer confidence. This
Retail parks are made up of retail properties that,
Commercial activities of tenants 9.97
6.49
Type of building 7.23
1.55
7.79
30.09.14
31.03.14
767,815,000
745,916,000
6.92%
6.93%
Contractual rents
53,377,504
51,144,211
Contractual rents incl. rental value of vacant buildings
54,130,090
51,823,578
591,195
570,870
Estimated fair value
2.59
Yield in % (investment value) 19.98
8.55
Total m² in portfolio
68.31
30.51 DIY Drugstore Electrical goods Fitness Restaurant/bar Interior/decoration Office/paper
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RETAIL ESTATES
24.46
6.66 0.47 2.13
1.50
Key figures
Number of properties
1.81 Clothing/footwear Toy retailers Garden/animal Vacancy Miscellaneous Food
Individual peripheral retail properties Retail clusters and retail parks
562
548
Occupancy rate in %
98.50%
98.17%
Total m² under development
20,100
1,800
Other
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• M anagement report • F inancial report • S hare performance report • R eal estate report > General information
General information
QUALITY The Retail Estates expert team is at your service.
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2014 - 2015 Retail Estates
General information L
exicon
Acquisition value
Debt ratio
Gross dividend
Investment value of a property
This is the term to be used for the purchase of
The debt ratio is calculated as follows: liabilities
The gross dividend per share is the operating
This is the value of a building as estimated by
a building. Any conveyance fees payable are
(excluding provisions, accrued charges and
profit distributed.
the independent real estate expert, including
included in the acquisition price.
deferred income, hedging instruments and
Book value of a company
the conveyance charges after deduction of the
deferred taxes), divided by the total assets
IAS standards
registration charges. This value corresponds with
(excluding hedging instruments).
The International Accounting Standards (IAS)/
what was formerly called ‘value after costs paid by
International Financial Reporting Standards (IFRS)
the vendor’ or ‘value in hand’.
The book value of a company means the totality of its equity. The book value can be found in the
Dividend yield
were drawn up by the International Accounting
company’s balance sheet.
The ratio of the most recently paid gross dividend
Standards Board (IASB), defining international
IRS
to the final share price of the financial year over
standards for the preparation of annual accounts.
An Interest Rate Swap (IRS) is an agreement between
Book value of a share
which the dividend is payable.
NAV (Net Asset Value) means equity divided by the number of shares.
parties to exchange interest rate cash flows during a European listed companies are required to apply
predetermined period of time on an amount agreed
Estimated investment value
the rules in their consolidated accounts for financial
beforehand. This concerns only the interest rate cash
This is the value of the real estate portfolio,
years starting from 1 January 2005.
flows. The amount itself is not swapped. IRS is often
Chain stores
including costs, registration charges, fees and
These are companies that have a central
VAT, as estimated each quarter by an independent
IFRS standards
purchasing department and operate at least five
expert.
The International Financial Reporting Standards
different retail outlets.
used to hedge interest rate increases. In this case, a fixed interest rate will be swapped for a variable one.
are a set of accounting principles and valuation
Net dividend
Exit tax
rules prepared by the International Accounting
The net dividend is equal to the gross dividend
Contractual rents
The exit tax is a special corporate tax rate applied
Standards Board. The aim is to simplify
after retention of 25 % withholding tax.
The index-linked basic rents as provided in the
to the difference between the fair value of the
international comparison between European listed
lease agreements as of 30 September 2014, before
registered capital of companies and the book
companies.
deduction of gratuities or other benefits granted to
value of its capital at the time that a company is
tenants.
recognised as a regulated real estate company, or
Listed companies are required to prepare their
merges with a regulated real estate company.
consolidated accounts according to these
Occupancy rate
standards starting from the first financial year
The occupancy rate is calculated as the ratio of the
beginning after 1 January 2005.
surface area actually leased out to the surface area
Fair value
562
retail properties
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Net inventory value Revalued net assets.
This value is equal to the amount for which a
available for leasing, expressed in m².
building could be swapped between properly
Intrinsic value
informed parties, consenting and acting under
The intrinsic value of a share is the actual estimated
Peripheral retail properties
normal competitive conditions. From the point of
value of the share, assuming that the company was
Retail premises grouped along roads leading into
view of the seller, it must be construed minus the
to cash in all of its assets.
and out of cities and towns. Each peripheral retail
registration charges.
property has its own car park and an entrance and exit road connecting to the public highway.
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2014 - 2015 Retail Estates
Real estate certificate
Retail park
A real estate certificate is a security that entitles
Retail properties that form part of an integrated
the holder to a proportionate part of the income
commercial complex and are grouped together
obtained from a building. The holder also shares in
with other retail properties. All properties use a
the proceeds if the building is sold.
central car park with a shared entrance and exit
Information sheet Name:
Retail Estates nv
Status:
Public regulated real estate company (‘Belgian REIT’) according to Belgian law
Address:
Industrielaan 6 – B-1740 Ternat, Belgium
Tel:
+32 2 568 10 20
Fax:
+32 2 581 09 42
E-mail:
info@retailestates.com
Website:
www.retailestates.com
Register of legal entities:
Brussels
Vat:
BE 434.797.847
Retail cluster
Enterprise number:
0434.797.847
A collection of peripheral retail properties,
Date of incorporation:
12 July 1988
located along the same traffic axis and, from
Status as fixed-capital real estate investment fund granted:
27 March 1998 (until 23 October 2014)
Status as regulated real estate company granted:
24 October 2014
Duration:
Unlimited
Management:
Internal
Auditor:
Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA – Berkenlaan 8B, at B-1831 Diegem, represented by Mrs. Kathleen De Brabander
Financial year closing:
31 March
Capital:
164,037,087.74 EUR
Number of shares:
7,290,411
Annual shareholders’ meeting:
First Friday of July
Share listing:
Euronext - continuous market
Financial services:
KBC Bank
Value of real estate portfolio:
Investment value EUR 786.14 million – fair value EUR 767.81 million (incl. value of “Immobilière Distri-Land nv” real estate certificates)
Real estate experts:
Cushman & Wakefield and CBRE
Number of properties:
562
Type of properties:
Peripheral retail real estate
Liquidity provider:
KBC Securities
road. Result on portfolio Achieved and unachieved higher or lower values
Stock market capitalisation
relative to the most recent valuation by the expert,
This is the total number of shares at the end of the
including the exit tax owed on account of inclusion
financial year multiplied by the closing price at the
of the property of the acquired companies in the
end of the financial year.
system of regulated real estate companies.
the consumer’s point of view, they form a selfcontained whole, although they do not possess a joint infrastructure other than the traffic axis.
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Industrielaan 6 B - 1740 Ternat T. +32 (0)2 568 10 20 F. +32 (0)2 581 09 42 info@retailestates.com www.retailestates.com