Half Year Results/media/Files/S/Segro/documents... · 2015. 10. 5. · Farnham Road, STE 100 Family...

0

>OPERATIONAL DELIVERY

Half Year Results23 August 2011

1


Overview

Focus on:

1. Leasing

2. Pro-active customer and asset

management

3. Tight control of costs

4. Development

Outcomes:

• Significant income generated - £20.2m

versus £19.8m

• Retention rate up - 74% versus 58%

• Vacancy rate reduced - 11.4% versus 12.0%

• Total cost ratio down - 23.6% versus 28.9%

• Expanded development pipeline – represents

£24m of annualised rental income

Delivering

Strong operating performance despite the economic climate

2


FinancialReviewAndrew Pilsworth, Acting CFO and Group Treasurer

3


Key financial highlights

4.34.74.9Interim dividend per share (pence)

Change

%

FY 2010H1 2011

2.24647LTV (%)

4.52,203.22,303.1Net borrowings (£m)

0.3376377EPRA NAV per share¹ (pence)

8.08.79.4EPRA EPS (pence)

10.664.371.1EPRA PBT (£m)

Change

%

H1 2010H1 2011

1. EPRA NAV per share and excluding fair value of derivatives but including trading property uplifts

4


EPRA profit before tax

2.69.7Share of joint ventures’ EPRA profit after tax1

(35.3)(26.0)Property operating expenses

144.3135.5Net rental income

-1.8Joint venture management fee

(17.7)(15.8)Administration expenses (excluding exceptionals)

129.2131.2EPRA operating profit

64.371.1EPRA profit before tax

(64.9)(60.1)Net finance costs (excluding fair value movements on derivatives)

179.6161.5Gross rental income

H1 2010£m

H1 2011£m

1. Net property rental income less administrative expenses, net interest expenses and taxation.

5


144.3

(4.8)

(4.9)

(5.1)

6.10.7 0.2

(1.0) 135.5

Net rental

income 30

June 2010

Like-for-like

rent

Development

(lettings net of

takebacks)

Acquisitions Lease

surrenders

(premium net of

rent lost)

Disposals

(excluding to

APP)

Disposals to

APP

Other income Net rental

income 30

June 2011

Net rental income (£m)

6


EPRA NAV per share (pence)

377

(4)

(10)

376

14

10

EPRA NAV per

share as 31 Dec

2010

EPRA PBT Currency translation Other Dividends Realised and

unrealised property

gains including joint

venture adjustments

EPRA NAV per

share as 30 Jun

2011

7


Cash flow summary

-(25.5)Net settlement of foreign exchange derivatives

(180.1)(0.4)Investment in joint ventures

288.321.8Investment property sales (including joint ventures)

(41.8)(66.0)Dividends paid

(14.0)(65.6)Capital expenditure (excluding trading properties)

90.0(75.3)Net funds flow

(0.2)7.0Other items

37.853.4Free cash flow

(2.3)(2.1)Tax paid

2.43.3Dividends received (net)

(66.5)(54.3)Net finance costs

104.2106.5Cash flow from operations

H1 2010£m

H1 2011£m

8


0.0

100.0

200.0

300.0

400.0

500.0

600.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+

Year

Bonds and Notes Bank Debt drawn Cash Undrawn facilities

£m

Strong financial position

� Net borrowings of £2.3bn and adjusted gearing of 83%

� £454.6m of funds available from cash balances and undrawn facilities

� Weighted average cost of debt 5.2% (5.5% including commitment fees and amortised costs)

� 97% of debt unsecured

� Limited interest rate exposure (80% of net borrowings at fixed rates)

Average weighted

maturity = 9.0 years

9


� EPRA NAV broadly flat at 377 pence per share

� Strong balance sheet with LTV maintained at 47%

� Strong EPRA earnings growth driven by good operating performance

Summary

10


Operational ReviewDavid Sleath, Chief Executive

11


Overview

Focus on:

1. Leasing


management


4. Development

Outcomes:


versus £19.8m






Delivering


12


H1 Activity

DEVELOPMENT

•10 new pre-let developments signed

•5 speculative schemes approved

•Expanded pipeline* - £24m of annualised

rental income and £205m of capex

COST CONTROL

•Active management of property costs

•Reduction of administration expenses

•Total cost ratio improved from 28.9% to

23.6%

CUSTOMER & ASSET MANAGEMENT

•185 lease renewals and break options

successfully negotiated

•£18.9m of income secured (247,500 sq m)

•116 rent reviews concluded with 2.2%

average uplift

LEASING

•138 new leases signed - £13.9m of

annualised rental income (203,100 sq

m)

•Transactional rental values 2.9% above

December 2010 ERVs

•Incentives of 7.7%

* Completed and under construction developments plus contracted pre-lets and approved spec projects

13


Leasing

Park Royal, UK – 1,500 sq m to High Point Global Solutions

Park Royal, UK – 1,600 sq m to Magnet

Frankfurt, Germany – 1,800 sq m to TSE Systems

Willich, Germany – 6,500 sq m to Comcoplast

Holzwickede, Germany – 9,500 sq m to Kruse Warenhandel

Heathrow, UK – 4,400 sq m to Velocity Supply Chain Logistics

Heathrow (APP), UK – 3,700 sq m to Worldwide Flight Services

Warsaw, Poland – 6,500 sq m to Pepsi-Cola Bottlers Poland

Paris, France – 6,700 sq m to CMP

Warsaw, Poland – 8,200 sq m to ACTION SA

Paris, France – 21,200 sq m to Bovis Transports

Slough, UK – 2,200 sq m to Southern Express Storage

Warsaw, Poland – 2,900 sq m to NAVO

Hemel Hempstead, UK – 7,900 sq m to Gyron Internet

14


Customer and asset management

Prague, Czech Republic – 13,300 sq m – Kuehne & Nagel

Strykow, Poland – 17,000 sq m – Hellmann Worldwide Logistics

Paris, France – 17,300 sq m – Cinram

Pegasus Park, Belgium – 3,500 sq m - Emerson

Heathrow, UK – 2,400 sq m - Airworld Services

Heathrow (APP), UK – 3,100 sq m - Bonded Services

Park Royal, UK – 4,000 sq m - leading high street retailer

Dusseldorf, Germany – 20,100 sq m - Kleine Logistik

Portsmouth, UK – 4,700 sq m - Contego Packaging (Nampak)

Park Royal, UK – 4,200 sq m - Claire O Aceti GMBH

Newbury, UK – 10,100 sq m - SPX International

Paris, France – 26,000 sq m – Geodis

15


Development – completed developments

Takko, Hamburg

Lodz, PolandAdler, Czech Republic

Selco, Slough

Gliwice, Poland

16


Development – in process

Alcatel, Italy

D B Schenker, Heathrow

Casino, Paris

Selig, Slough

17


Development Pipeline – 30 June 201173% pre-let

UK

Speculative projects

5,900-Ajax Avenue, STE

2,800-Galvin Road, STE

1,200Family BargainsFarnham Road, STE

200KFCFarnham Road - STE

51,900Total

3,100-Galvin Road, STE

9,900DB SchenkerHeathrow, London

3,800Budget hotelEdmonton, London

Contracted pre-let projects

3,300Ragus SugarsYeovil Road, STE

5,500LonzaBath Road, STE

7,000SeligAjax Avenue, STE

3,500GeoPostEnfield, London

5,700HCHPoyle, London

Pre-let projects under construction

Space to be built (sq m)

CustomerProject

34,000Alcatel-LucentMilan, Italy

CONTINENTAL EUROPE

Speculative projects

8,200-Paris, France

12,200-Berlin, Germany

18,900ZabkaTychy, Poland

1,200EurocashPoznan, Poland

171,400Total

12,200-Dusseldorf, Germany

Contracted pre-let projects

11,200IT & Consumer electronics (72%)

Milan, Italy

26,000GM/ S&T Polska/ Muller (62%)

Gliwice, Poland

17,000Navo/Nexteer (68%)Tychy, Poland

2,500CumminsRumst, Belgium

28,000CasinoParis, France

Pre-let projects under construction

Space to be built (sq m)

CustomerProject

£21m of annualised rental income and £180m of capex

18


£20.2m of new annualised rental income generated

0

5

10

15

20

25

H1 2010 H1 2011

Lettings of existing vacant space Pre-lets contracted but not taken up in the period

Take up (Lettings and pre-lets completed)

£m

an

nu

ali

sed

ren

tal

inco

me

19


Retention rates significantly improved

55

65 64

5255

72

0

10

20

30

40

50

60

70

80

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 H1 2011

UK

•Continental European retention rate also improved to 83% (H1 2010: 66%)

% o

f cu

sto

mers

reta

ined

20


Takebacks down significantly

0

5

10

15

20

H1 2010 H1 2011

UK Continental Europe

£m

an

nu

ali

sed

ren

tal

inco

me

• 71% of 2011 income at risk from potential break or expiry decided with only £11.4 million at risk in H2

£19.2m

£13.1m

21


Vacancy further reduced

10

12

14

Jun-1

0

Jul-1

0

Aug-1

0

Sep-1

0

Oct-1

0

Nov-1

0

Dec-1

0

Jan-1

1

Feb-1

1

Mar-1

1

Apr-1

1

May-1

1

Jun-1

1

Group vacancy

% b

y r

enta

l valu

e

14.0%

11.4%

12.0%

22


Group vacancy bridge

11.4%

(6.4)%(0.1)%

12.0%

(0.1)%(0.2)%6.2%

Vacancy rate as at 31

December 2010

Space returned Space made redundant Disposals Other (ERV changes) Space let Vacancy Rate as at 30

June 2011

23


Operational summary

Focus on:

1. Leasing


management


4. Development

Outcomes:


versus £19.8m






Delivering


24


Property valuation – UKIPD UK Industrial +0.1%

-5

-4

-3

-2

-1

0

1

2

3

% v

alu

ati

on

mo

vem

en

t

31.4

214.8

Heathrow

(wholly owned)

12.9

3,468.4

UK overall

15.3

317.3

Rest of Greater London

7.5

447.8

APP/

Big Box

22.35.411.211.9Vacancy (%)

264.1378.71,313.9531.8Value* (£m)

Midlands & North

South & West

Thames Valley

Park Royal

•Value and valuation movement relate to the completed portfolio.

Joint ventures shown at share.

1.6%

0.8%0.4%

0.3% 0.1% (0.3)% (1.3)% (4.1)%

25


Property valuation – Continental Europe

-5

-4

-3

-2

-1

0

1

2

3

% v

alu

ati

on

mo

vem

en

t

8.0

1,486.1

CE Overall

3.4

233.1

Poland

8.4

298.7

Rest of Germany

9.218.93.1Vacancy (%)

343.1213.9397.3Value* (£m)

Neckermann/ Pegasus Park &

Vimercate

Other

(incl. Benelux)

France

•Value and valuation movement relate to the completed portfolio.

Joint ventures shown at share.

2.2%

0.8%

0.2% (0.8)% (1.2)% (4.7)%

26


Outlook

� Satisfactory pipeline of leasing enquiries and negotiations

� Growing development programme – 73% pre-let

� Macro economic uncertainty

� SEGRO remains focused on operational delivery and prudent financial

management

27


Half Year Results23 August 2011

28


APPENDICES

29


Pre-let Development - UK

Q4 2011200RetailKFC100Farnham Road - STE

47,200Total

Q2 20121,200RetailFamily Bargains100Farnham Road, STE

Q4 20129,900Air freight handlingDB Schenker100Heathrow, London

Q4 20123,800Budget HotelBudget Hotel100Edmonton, London

Contracted projects

Q1 20123,300ManufacturingRagus Sugars100Yeovil Road, STE

Q2 20125,500R&D and officeLonza100Bath Road, STE

-3,700Trade CounterSelco100Farnham Road, STE

Q4 20117,000ManufacturingSelig100Ajax Avenue, STE

Q3 20113,500DistributionGeoPost100Enfield, London

Q4 20115,700Air freight handlingHCH100Poyle, London

Projects under construction

Sold3,400DistributionGeoPost100Southall, London

Completed projects

Expected completionSpace to be built (sq m)

Building useCustomer% pre-let

Project

30


Pre-let Development – Continental Europe

August 201128,000LogisticsCasino100Paris, France

177,900Total

Q4 201118,900LogisticsZabka100Tychy, Poland

Contracted projects

Q2 201334,000OfficeAlcatel-Lucent100Milan, Italy

Q3 201211,200OfficeIT & Consumer electronics

72Milan, Italy

Q1 20121,200OfficeEurocash100Poznan, Poland

Q3 201126,000LogisticsGM Poland/ S&T Polska/ Muller

62Gliwice, Poland

Q4 201117,000LogisticsNavo/Nexteer68Tychy, Poland

-20,700LogisticsTakko100Hamburg, Germany

Q4 20112,500OfficeCummins100Rumst, Belgium


-8,700Light IndustrialAdler/Templin79Ostrava, Czech Republic

-9,700Light IndustrialHL Display100Gilwice, Silesia, Poland

Completed projects

Expected completionSpace to be built (sq

m)

Building useCustomer% pre-let

Project

31


Development - Speculative

47,800Total

Q3 20123,100Other business spaceSTE, Galvin Road

Approved projects

Q2 201212,200Light industrialDusseldorf, Germany

Q1 201212,200Light industrialBerlin, Germany

Q1 20128,200Light IndustrialParis, France

Q1 20122,800Other business spaceSTE, Galvin Road

Q1 20125,900DatacentreSTE, Ajax Avenue


-3,400Small Business UnitsLodz, Poland

Completed projects

Expected completionSpace to be built (sq m)

Building useProject

£5 million of annualised rental income and £35 million of capex

32


UK Vacancy – 30 June 2011 – by region

Rest of Thames

Valley

21%

Slough Trading

Estate

12%

Heathrow

21%

Park Royal

13%

Rest of London

14%

Midlands & North

15%

Rest of UK South

4%

Split of current UK vacancy of 12.9% by region

Joint ventures included at share

33


UK Vacancy – 30 June 2011 – by age of building

UK vacancy and lettings by rental value excluding acquired properties where no age data is available. Age of construction or latest major refurbishment.

June 2011 vacant portfolio and H1 2011 lettings by age

Blue = vacant portfolio , Grey = Lettings by Age

22%

16%

26%

17%

19%

31%

28%

12%

10%

19%

0%

5%

10%

15%

20%

25%

30%

35%

< 10 years 10 - 20 years 20 - 30 years 30 - 40 years > 40 years

34


< 12 months,

56%

12 - 24

months, 36%

> 24 months,

8%

UK Vacancy – 30 June 2011By number of months vacant

35


Profit before tax

2.01.4Profit on sale of investment properties

148.964.6Profit before tax

84.6(6.5)Total adjustments

22.319.7Net fair value gain on interest rate swaps and other derivatives

(13.8)(0.1)Amounts written off on acquisitions

2.01.9Other investment income

(1.4)-Loss on sale of investments in JVs

(3.6)(2.3)Increase in provision for impairment of trading properties

1.84.6Profit on sale of trading properties

64.6(35.6)Valuation (deficit)/surplus on investment and owner occupied properties

10.73.9Adjustments to share of profit from JVs after tax

Adjustments:

64.371.1EPRA profit before tax

H1 2010£m

H1 2011£m

36


Breakdown of Joint VenturesIncome Statement

Jun-10

APP Big Box Other Total Total

Gross rental income 12.3 3.6 1.0 16.9 6.1

Property operating expenses (1.8) (0.2) (0.2) (2.2) (0.7)Net rental income 10.5 3.4 0.8 14.7 5.4

Net finance costs (3.2) (1.1) (0.7) (5.0) (3.0)

EPRA profit before tax 7.3 2.3 0.1 9.7 2.4

Tax - - - - 0.2

EPRA profit after tax 7.3 2.3 0.1 9.7 2.6

Adjustments:

Profit on sale of investment properties 0.7 - - 0.7 -

Valuation surplus/(deficit) on investment properties 2.7 1.1 (0.6) 3.2 9.9

Profit on sale of trading properties - - 0.2 0.2 0.1

(Increase)/decrease in provision for impairment of trading properties - - (0.7) (0.7) 0.4

Net fair value gain on interest rate swaps and other derivatives 0.1 0.3 - 0.4 -

Other investment income - - - - 0.2

Tax on additional adjustments - - 0.1 0.1 0.1

Total adjustments 3.5 1.4 (1.0) 3.9 10.7

Profit/(loss) after tax 10.8 3.7 (0.9) 13.6 13.3

Jun-11

37


Breakdown of Joint VenturesBalance Sheet

Jun-11 Jun-10

APP Big Box Other Total Total

Investment properties (completed and development) 360.2 103.5 4.0 467.7 446.7

Other investments 8.4 - 0.1 8.5 8.8 Total non-current assets 368.6 103.5 4.1 476.2 455.5

Trading properties - - 34.1 34.1 35.3

Other receivables 4.2 0.1 15.7 20.0 11.5

Cash 12.6 2.4 3.3 18.3 11.8

Total current assets 16.8 2.5 53.1 72.4 58.6

Total assets 385.4 106.0 57.2 548.6 514.1

Borrowings - 45.0 6.5 51.5 216.7

Deferred tax - - 1.5 1.5 1.1

Other liabilities 0.3 - 7.2 7.5 15.9

Total non-current liabilities 0.3 45.0 15.2 60.5 233.7

Borrowings 159.3 - 12.0 171.3 11.0

Other liabilities 13.9 3.5 4.2 21.6 16.6 Total current liabilities 173.2 3.5 16.2 192.9 27.6

Total liabilities 173.5 48.5 31.4 253.4 261.3

Group share of net assets 211.9 57.5 25.8 295.2 252.8

38


Euro currency exposure and hedging

2,015

527

954

119

Balance sheet as at 30 June 2011

Euro gross assets

Euro debt

Euro currency swaps

Other Euro liabilities

€m

illio

n

•€1.11:£1 as at 30 June 2011

•€ assets 79% hedged by € liabilities

•€415m (£374m) of residual exposure – 14% of Group NAV

•Sensitivity:

•+/- 10% (€1.22/€1.00) = +/- c.£37m (c5.1p per share)

56

39

Income statement six months to 30 June 2011

Euro income

Euro costs (incl €32m interest)

€m

illio

n

•Average rate for 6 months to 30 June 2011 €1.15:£1

•€ income 70% hedged by € expenditure (including interest)

•Net € income for the period €17m (£15m) – 22% of Group

•Sensitivity versus €1.15

•+/- 10% (€1.26/€1.03) = +/- c.£1.5m (c0.2p per share)

1,600

39


Forward-looking statements

This presentation may contain certain forward-looking statements with respect to

SEGRO’s expectations and plans, strategy, management’s objectives, future

performance, costs, revenues and other trend information. These statements and

forecasts involve risk and uncertainty because they relate to events and depend

upon circumstances that may occur in the future. There are a number of factors

which could cause actual results or developments to differ materially from those

expressed or implied by these forward looking statements and forecasts. The

statements have been made with reference to forecast price changes, economic

conditions and the current regulatory environment. Nothing in this presentation

should be construed as a profit forecast. Past share performance cannot be relied on

as a guide to future performance.

Half Year Results/media/Files/S/Segro/documents... · 2015. 10. 5. · Farnham Road, STE 100 Family...

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Transcript of Half Year Results/media/Files/S/Segro/documents... · 2015. 10. 5. · Farnham Road, STE 100 Family...