Discussion of the consolidated results of

WDP for the first half-year 2009

Income statement

 

The property result increased by 25.4% to EUR 27.8 million, compared to EUR 22.2 million for the first 6 months of the preceding year. The key contributory factors were the continuing high occupancy rate of the portfolio (97.2% as at 30/06/2009) and the further growth of the portfolio due to acquisitions and the successful completion of own projects (for details on the acquisitions and completions, see the ‘Interim management report’ on p. 10 ff). Income from solar panels likewise had a substantial impact on results (largely as from the 2nd quarter 2009).

 

This property result includes an amount of EUR 478,000 for impairments recognised on trade receivables, mainly for the impairment of EUR 400,000 recognised for the receivable due from Kinnarps in connection with a legal dispute with this ex-lessee. In addition, WDP applies a policy of writing off all receivables past due by more than 6 months.

 

Property and other general expenses amounted to EUR 2.4 million, unchanged from the same period of last year. The net property result for the first half-year 2009 therefore came to EUR 25.4 million, compared to EUR 19.7 million in the comparative period of last year.

 

The result on the portfolio (excluding the impact of deferred taxes relating thereto) for the first half-year 2009 was EUR -20.6 million (negative fair value change), as a result of a decrease of the valuations applied by the property experts in the various countries. This negative result was partly offset by the increase in the valuation on completion of projects executed. A small gain was realised on the sale of two non-strategic properties (EUR 6,000).

 

The financial result was EUR -16.2 million (-9.0 million EUR excluding the IAS 39 result) for the first half-year 2009 compared to EUR 2.3 million in 2008. This result includes net interest charges of EUR -9.0 million owing to the higher debt position. The investments made in 2008 and 2009 were financed in full by additional debts with credit institutions and leasing companies. In addition, the impact of the IAS 39 result was EUR -7.2 million. This arose from negative fair value changes of the interest rate hedges (chiefly Interest Rate Swaps) entered into on 30 June 2009 due to declining interest rates. This result is taken directly through the income statement and not via shareholders’ equity. As it related to an unrealised result and a non-cash item, it is excluded from the financial result and reported separately in the breakdown of results (see ‘Key figures’ on p. 4).

 

Taxes comprise both the actual tax expense, mainly at the subsidiaries to which the tax regime of closed-end property investment companies does not apply (Czech Republic, Netherlands, Romania), and the taxes on disallowed expenses in Belgium. In addition, deferred taxes are recognised for changes in the fair value of investment property. Due to a decrease of these values in 2009 they had a positive impact on the income statement.

 

The net result of the group for the first six months of 2009 was EUR -9.2 million in 2009, compared to EUR 21.2 million in 2008. The negative net result was attributable to a negative fair value change on the hedging instruments (see above) and the decrease of the fair value of the portfolio (see above).

On the other hand, the net current result was EUR 16.02 million, which resulted in net current earnings per share of EUR 1.7 EUR (compared to EUR 1.62 last year).

 

Balance sheet

 

The fair value of the investment property (including the project developments in accordance with the revised IAS 40 standard) and assets held for sale was estimated by the property experts at EUR 809.4 million, up EUR 62.6 million from the end of the preceding financial year. The fair value is recognised in the consolidated balance sheet by applying the IAS 40 standard and is calculated by deducting the transaction costs from the investment value. The investment value of the portfolio is the value as determined by the independent property experts, before deducting transaction costs. For a detailed discussion of the portfolio see ‘Review of portfolio’ on p. 19 ff.

 

The substantial increase in the value of the other property, plant and equipment items is mainly attributable to the investments made in solar panels. These are valued in conformity with IAS 16 by applying the revaluation model and represent a value of EUR 43.0 million.

 

The shareholders’ equity of the group amounted to EUR 353.2 million as at 30/06/09 compared to EUR 261.3 million at the end of the preceding financial year. The net asset value per share was EUR 28.18 (compared to EUR 30.41 as at 31/12/2008). The net asset value excluding the IAS 39 result was EUR 30.66.

 

Total financial liabilities declined in the first half-year from EUR 477 million as at 31/12/2008 to EUR 467 million. They declined by EUR 52 million compared to 31/03/2009. This decrease is attributable to the reduction in short-term debt (commercial paper and straight loans) repaid with a portion of the funds raised in the capital increase realised as at 30/06/2009. On the other hand, the first quarter included the sale and rent back transaction completed with DHL by means of payment in shares**. The gearing consequently declined in the course of the first half-year from 63.04% as at 31/12/2008 to 55.36%. For more information on these transactions, see the ‘Interim management report’ on p. 15 – New capital for further growth).

 

* See press release of 26 June 2009 or consult the website www.wdp.be

** See press release of 31 March 2009 or consult the website www.wdp.be

 

 

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