Posting of Annual Report and Notice of AGM

RNS Number : 7387H

Globalworth Real Estate Inv Ltd

26 March 2020

 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this information is considered to be in the public domain.

26 March 2020

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Audited Results for the year ended 31 December 2019,

Posting of Annual Report and

Notice of AGM

Globalworth, the leading office investor in Central and Eastern Europe, announces that further to the publication on 6 March 2020 of its Condensed Unaudited Financial Results, it is pleased to release its Annual Report and Audited Consolidated Financial Results for the year ended 31 December 2019 ("FY2019").

Operational Highlights

· Combined portfolio value rose by 23.7% to over €3.0bn at 31 December 2019

· Completed or announced 11 new real estate investments for a total of €613.8m

· Took full ownership of and delisted our subsidiary Globalworth Poland from the Warsaw Stock Exchange for a total of €216.1m

· Delivered a 17.8k sqm industrial facility and, have seven office and industrial properties under development in Romania and Poland

· Standing portfolio footprint increased by over 170k sqm to 1.2m sqm of GLA. Commercial occupancy of 95.0% including tenant options, with 0.4% increase in like-for-like occupancy

· Record year in leasing, with 179.5k sqm of commercial space taken-up or extended at an average WALL of 5.5 years

· Standing contracted rent increased by 15.6% to €184.4m, increasing to €191.0m when including pre-lets on properties under construction

· Increased the number of green-certified properties by 13 to 43, now 81.3% of our standing commercial portfolio by value with the remainder under certification

· Eurobonds recognised as investment grade by all three major rating agencies following upgrades from Moody's and S&P to Baa3 and BBB-, respectively

· Further strengthened our in-house asset management footprint, with 76.9% of our standing commercial portfolio, by value, now internally managed by our team of c.240 professionals

Financial Highlights

· Revenue and Net Operating Income increased by 15.3% to €222.2m and 10.7% to €147.7m respectively, mainly due to the successful leasing activity in 2019 and the addition of eight new office properties in Poland

· Normalised EBITDA for the year increased by 52.4% to €128.0m and adjusted normalised EBITDA (including share in minority interests) by 34.3% to €134.8m

· IFRS earnings per share increased to 93 cents in 2019, an increase of 52.5% compared to the previous year (FY2018: 61 cents)

· EPRA Earnings of €80.6m for FY2019, representing an annual increase of 32.4%, with EPRA earnings per share decreasing by 4.3% to 44 cents per share, as a result of the higher weighted average number of shares in issue following the two Groups' successful equity capital raises

· Dividends declared and paid for FY2019 of 60 cents per share, compared to 54 cents for FY2018

· Loan to Value of 34.7% at 31 December 2019, down from 43.9% at 31 December 2018, consistent with the Group's strategy to manage its long-term LTV target at below 40% while still pursuing strong growth

· EPRA NAV per share increased by 2.9% to €9.30 per share at 31 December 2019 (31 December 2018: €9.04)

· Total Accounting Return of 9.2%, an increase of 140 basis points compared to FY2018

· Total Shareholder Return of 21.7% for holders of Globalworth shares throughout 2019

Covid-19 Update and related Outlook

Globalworth has become the leading office landlord in the CEE, unfortunately however, the rapid spread of the coronavirus, has caught us, as well as the global economic system and businesses off guard, creating significant uncertainty for the future. The impact it will have on economic growth at both a European and Global level, and on the performance of our business and the real estate markets in Poland and Romania, is difficult to predict. No sector or business will be unaffected by this situation.

At Globalworth, the safety and wellbeing of our people, partners, communities, and other stakeholders, are and we will continue to be our top priority as we focus on safeguarding our business, protecting our assets and minimising our exposure to the impact of Covid-19. We have already implemented numerous significant measures to protect ourselves, and will continue to do so in the future as long as is required. In this respect, since the beginning of the year Globalworth has further improved its liquidity, which is currently close to €600 million of available cash, and which we will safeguard in order to be able to navigate through this period of significant uncertainty. The entire Globalworth team is committed to fight and overcome this unprecedented crisis.

Availability of Annual Report and notice of AGM

Globalworths' audited 2019 Annual Report and Consolidated Financial Statements is available on the Company's website: https://www.globalworth.com/investor-relations/financial-reports-and-presentation , and copies will shortly be posted to shareholders.

The Annual General Meeting of the Company ("AGM") will be held on 29 June 2020 at 10.00am British Summer Time. It is currently intended that the AGM will be held at Ground Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey. However, in light of travel and other restrictions that are currently in place as a result of Covid-19, the Company may make other arrangements to enable attendance and participation by shareholders. Details of any such arrangements will be included in the notice of this year's AGM ("Notice of AGM") which will itself be out in a separate circular to shareholders, and issued to shareholders and notified via RNS at least 10 clear days before the meeting. The Notice of AGM will also in due course be available on the Company's website in accordance with AIM Rule 20.

For further information visit  www.globalworth.com  or contact: 

Enquiries Stamatis Sapkas Deputy Chief Investment Officer	Tel: [phone]
Jefferies (Joint Broker) Stuart Klein	Tel: [phone]
Panmure Gordon (Nominated Adviser and Joint Broker) Alina Vaskina	Tel: [phone]

About Globalworth / Note to Editors:

Globalworth is a listed real estate company active in Central and Eastern Europe, quoted on the AIM-segment of the London Stock Exchange. It has become the pre-eminent office investor in the CEE real estate market through its market-leading positions both in Romania and in Poland. Globalworth acquires, develops and directly manages high-quality office and logistics/light-industrial real estate assets in prime locations, generating rental income from high quality tenants from around the globe. Managed by c.240 professionals across  Cyprus, Guernsey, Romania and Poland , the combined value of its portfolio is 3.0 billion, as at 31 December 2019. Approximately 93.4% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 715 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania its assets span in Bucharest, Timisoara, Constanta and Pitesti. For more information, please visit  www.globalworth.com  and follow us on Facebook, Instagram and LinkedIn.

IMPORTANT NOTICE: This announcement has been prepared for the purposes of complying with the applicable laws and regulations of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, the Company disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

STRATEGIC REVIEW

CHIEF EXECUTIVE'S REVIEW

2019 was another dynamic year for Globalworth. We expanded our platform in Poland and Romania, where our portfolio value now exceeds €3.0 billion. We invested in our team, improved the services provided across our portfolio, and took advantage of favourable market trends and value-added opportunities, with the ongoing aim of creating sustainable value for our shareholders and other stakeholders.

Globalworth has become the leading office landlord in the CEE, unfortunately however, the rapid spread of the coronavirus, has caught us, as well as the global economic system and businesses offguard, creating huge uncertainty for the future. No sector or business will be unaffected by this situation, and as a Group we have implemented several significant measures to protect ourselves, and will continue to do so going forward.

Amid this situation, the safety and wellbeing of our people, clients and communities continues to be our top priority while we try to safeguard the business, protect its assets and aim to limit the liabilities and the consequences of this evolving crisis. This will be the focus of our daily operations, for as long as it takes, to mitigate the impact of this unprecedented crisis . It is not easy as we are part of an ecosystem with regulations, with new restrictions being imposed every day and with almost every country being in a state of emergency.

I am concerned and very cautious how this will play out in the weeks and months to come and what else we shall witness in the future, but the entire Globalworth team is committed to fight it and overcome this unprecedented situation.

I have resigned from the Board to focus entirely on the operational side of our business. My focus over the next days, weeks and months is to implement several precautionary measures in Romania and Poland (we have already started their implementation), that will ensure not only the maximum possible protection for all parties concerned, but also business continuity and long-term viability. This last concern is of paramount importance for the business and I believe (though I sincerely hope I am wrong!) it will be a journey.

We will have to rethink our overall strategy in parallel to containing this disruption, while looking to our long-term activities and investment. Since the beginning of the year we have further improved our liquidity which is close to €600 million of available cash, and which we will safeguard to "ride out" this unprecedented storm.

Our Market

The Polish and Romanian economies, in which the Group is active, again expanded in 2019. In line with our expectations, these positive economic conditions have been reflected in firm demand for office and industrial real estate, the sectors on which we focus, with investment volumes, particularly in the Polish office market, reaching a record level during the year. Together with Romania, these exceeded €5.4 billion (office and industrial) and average vacancy for office space remained at a healthy level of less than 10.0% at the end of 2019.

Our Portfolio

Our portfolio has reached another milestone, growing to over €3.0 billion by value, following the acquisition of standing office properties in Poland and further progress with our development programme, with several properties at various stages of development in both Romania and Poland.

In addition, through our hands-on approach to actively managing our standing properties, we have added further value to our existing portfolio. Our Polish properties now account for more than half of our overall portfolio by value (54.1%), with the remainder being in Romania.

2019 saw strong operational performance, with 179.5k sqm of commercial space leased in Romania and Poland at an average lease length of 5.5 years, marking a record year for the Group. Total contracted rents grew to €191.0 million (€159.5 million as at 31 December 2018), with over 1.1 million sqm of commercial GLA leased at an average remaining term of 4.5 years as at 31 December 2019. Occupancy of our standing commercial portfolio remained high at 94.7% (95.0% incl. tenant options), albeit decreasing from the 2018 year-end level (95.1% / 96.3% incl. tenant options), mainly reflecting lower occupancy on certain properties added in the period where we see an opportunity for improvement in the near term. Illustrative of our strategy with such acquisitions, we are delighted to have secured a major 11.9k sqm renewal with AXA at our Warsaw Trade Tower property acquired in April 2019, and are pleased with leasing progress at other properties in our portfolio, notably Skylight & Lumen and Supersam.

As part of our commitment to offering best-in-class services to our tenants, we have continued to invest in our in-house asset and property management teams in order to internalize the management of our assets, and are delighted that 80.5% (by value) of our standing office and mixed-use properties are now managed in-house.

People, Places and Technology

At Globalworth we recognise that technology is a major disruptor for the real estate industry globally and aspire to be the most technologically-advanced landlord in the CEE office market. With more than 200,000 people estimated to be entering and passing through our buildings in Poland and Romania every day, a number which is ever-increasing, we believe that a holistic approach to the use of technology can add value to our portfolio, by working with these people to create a strong community. Creating such communities for our tenants is a strategic ambition for the Group. We seek to provide environments where businesses can flourish and their employees enjoy working. So in addition to our commitment to investing in environmentally friendly properties, we are pleased with the positive impact that successful events, such as the Globalworth District, "Meet Globalworth" and other initiatives within or around our office space, have had on the vibrancy and feel of our assets.

Results & Corporate Activity

The Group reported a strong uplift in its earnings with an increase of 10.7% in our net operating income to €147.7 million, 34.3% in our adjusted normalised EBITDA to €134.8 million and 32.4% in our EPRA earnings to €80.6 million, as compared to 2018. For the 2019 financial year the total dividend per share was 60 cents per share, paid in two semi-annual instalments in August 2019 and February 2020 (54 cents in 2018).

We are delighted that in 2019 we successfully completed our largest equity issuance to-date, raising a total of €793.3 million at a premium to the prevailing EPRA NAV at the time through two operations. This included €611.9 million of new equity placed with new and existing shareholders (€347.6 million in April and €264.3 million in October), and the issuance of a further €181.4 million of new shares in January and April to certain shareholders of Globalworth Poland in exchange for its shareholding in our subsidiary, Globalworth Poland, as part of a wider process undertaken to buy in remaining minority interests.

The progress made by Globalworth was also reflected in the investment in the Group by two of the largest property companies in Western Europe and the CEE, with Aroundtown SA entering the Group's shareholder base in 2019 and CPI Property Group becoming the largest shareholder in 2020, each now holding 21.9% and 29.4% of the share capital respectively. Our EPRA net asset value grew by 72.4% to €2,069 million, predominantly as a result of the share issues and the buy-in of minorities, while EPRA NAV/ Share grew marginally to €9.30 (31 December 2018: €9.04).

CSR and Governance

Sustainability has always been an important focus for Globalworth. We have continued to increase the proportion of our portfolio comprising environmentally friendly properties, with 13 additions in 2019 and, by year-end, 74.3% of our portfolio (by value) being green-certified (81.3% of standing commercial properties). We have another 18 properties at various stages of certification.

The Group also issued its first standalone sustainability report to meet the needs of our many stakeholders, and to support the ESG frameworks that many of our investors have applied, and we will update this in the future.

In 2019, the Globalworth Foundation again supported a number of social causes in both Poland and Romania. The Foundation's goal is to make a real contribution to the welfare of society and better shape conditions for future generations, consistent with our overriding focus on People, Places and Technology.

At this point, I would also like to thank the Board for its constructive engagement and support during my tenure as a Board member, which extended from the inception of Globalworth in 2013 until March 2020. I am delighted that Dimitris Raptis has been appointed as Co-Chief Executive Officer for the Group and confident that we will continue to steer Globalworth to new levels of success, while my sole focus is now managing the Group's business and operations in the near term, especially in light of the outbreak of the COVID-19 global pandemic.

Ioannis Papalekas

Chief Executive Officer

25 March 2020

REVIEW OF NEW ACQUISITIONS

In 2019, we continued to benefit from a positive real estate market and further expanded our portfolio through high-quality real estate investments in standing properties and development projects in Poland and Romania.

We simplified our corporate structure by becoming the sole shareholder of our Globalworth Poland subsidiary and improved efficiency at Group level by taking it private.

This expansion and the active management of our portfolio has led to further growth in our rental income and created the potential for additional rental growth in the future.

Over the course of the year, Globalworth completed or announced 11 new real estate investments in Poland and Romania for a total of €618.3 million and a further €216.1 million in becoming the sole shareholder in Globalworth Poland.

Becoming the sole shareholder and taking private our Polish subsidiary Globalworth Poland simplifies our corporate structure and will improve efficiency at Group level, while reiterating our commitment to this important and fast-developing market.

The continuous growth of our asset base and the active management of our portfolio resulted in a further increase in our rental income in 2019 and has created the potential for additional rental growth in the future.

POLAND

Globalworth completed several corporate and asset transactions in Poland in 2019, making this the most active investment market for the Group.

We are pleased to have successfully acquired the remaining shareholding in our Warsaw-listed subsidiary, Globalworth Poland, which we formally delisted on 29 September 2019.

The purchase cost of the remaining shares totalled €216.1 million, which was settled through the issuance of €183.1 million in new Globalworth shares (19.9 million new shares issued) to certain shareholders in Globalworth Poland, such as Growthpoint Properties Limited and EBRD, and the direct purchase of other shares via the market for a total of €33.0 million.

In addition, we acquired or announced the future acquisition of some of the most recognisable properties and developments available in the Polish market. In total we concluded 5 transactions for €321.8 million, including the fifth largest single office transaction of the year, adding 139.2k sqm of Class "A" office space, which at the end of 2019 was 88.3% occupied, with €22.0 million of contracted rent and an average WALL of 4.1 years.

Two of the properties acquired, part of the Podium Park in Krakow, are developments; Podium II and Podium III which on completion will add a further 36.5k sqm of Class "A" office GLA. The Group has signed a development management agreement with the Vendor in relation to the construction and completion of the respective properties, which mark our first "quasi-development" projects in Poland since entering the market.

We also announced the future acquisition of two properties under development, which will be purchased on completion and following the satisfaction of certain conditions. Assuming these conditions are satisfied, the acquisition of these properties is estimated to further increase our Class "A" office space by 58.8k sqm adding €12.0 million of rent on full occupancy.

The standing properties acquired in 2019 offer an entry yield of 7.0%, with the scope for this to rise to 7.7% on full occupancy. This, together with the four high-quality properties under development, acquired or announced through a forward purchase, maintains our strategy of achieving yields above prevailing prime market levels, where we believe that we can enhance the attractiveness and performance of our investments by applying various asset management initiatives over time.

The majority of our activity has been in regional cities, with Krakow, Wroclaw and Katowice accounting for c.60% of our investments over the year. The balance was in Warsaw, which remains our single largest market in Poland.

Real Estate Activity in Poland in 2019
	City	Acquisition Price (€m)	GLA (k sqm)	Initial Yield (*)	100%  Occupancy Yield (*)
Warsaw Trade Tower	Warsaw	132.9	46.8	6.8%	7.6%
Retro Office House	Wroclaw	58.8	23.2	6.6%	6.7%
Silesia Star	Katowice	54.4	30.2	8.8%	8.8%
Rondo Business Park	Krakow	37.0	20.3	8.2%	8.9%
Podium Park I(**)	Krakow	38.7	18.9	4.4%	7.2% / 6.9%
Total Standing Properties Acquired		321.8	139.2	7.0%	7.7%
Developments Acquired: Podium II & III	Krakow	87.3(***)	36.5	-	7.4%
Properties Announced:
Chmielna 89	Warsaw	185.0	25.2	-	6.5%
Tischnera Office	Krakow		33.6
Total 2019 Transactions Completed & Announced		594.1	234.5	-	7.3%
(*) Initial Yield and 100% Occupancy Yield based on acquisition data, divided by acquisition price. (**)Final acquisition price for Podium I may increase up to €46.7 million, subject to the vendor's ability to lease the available space in the property in H1-2020. (***)Investment cost of €87.3 million, out of which €20.2 million invested in 2019 and remainder to be invested during the development phases (Podium II and III to be completed in Q4-2020 and Q4-2021 respectively).

ROMANIA

In Romania, our primary focus was to further build on the success of our logistics/ light-industrial properties and, against the still attractive market backdrop, we continued to invest in high-quality projects in the country, and launched the Globalworth Industrial brand for our industrial (logistics/light-industrial) portfolio.

Globalworth also formed a partnership with Global Vision, a leading construction and property management company in Romania, for the development of two new high-quality projects in the country. The first is a last-mile logistics park in the greater Bucharest area, Chitila Logistics Hub, which, on completion, will offer a GLA of 76.1k sqm over a 13.7ha estate. Globalworth has a 50% interest in the project, to be developed in phases, with the first 23.1k sqm of logistics space scheduled for delivery in the first half of 2020. The location benefits from excellent accessibility, being positioned next to the Bucharest ring road, which connects the project to the A1 and DN7 roads and the city's central districts.

The second project is the development of a major logistics/light-industrial and commercial hub in Constanta (South-East Romania), also through a 50/50 joint venture with Global Vision. This marks Globalworth's first investment in Constanta, one of the largest metropolitan areas in Romania and a location we view as a relatively undeveloped real estate market, offering significant potential for future growth.

The project, known as Constanta Business Park, will span a 100ha land plot close to Constanta Port on Romania's East coast on the Black Sea, with easy access to the A2 and A4 motorways and the railway network. Constanta is Romania's primary port and one of the largest in Europe (top 20), located at the junction of key pan-European transport corridors and providing a strategic link to Central Asia, the Far East and Transcaucasia.

The total project is to be developed in phases and is expected to offer 571k sqm of high-quality logistics/light-industrial (c.80%), office and other commercial space upon completion.

In the first half of 2019, the Group enlarged the 30ha landbank acquired in October 2017 in Timisoara (Western part of Romania), located next to our very successful Timisoara Industrial Park I complex, through the acquisition of an additional 5 hectares to enable its potential expansion.

Based on preliminary estimates, the development of these two joint venture projects and the additional expansion land in Timisoara may add €34.3 million of rental income to our portfolio and result in a potential yield at cost of 11.8%, illustrating the attractive opportunities we are able to take advantage of by developing such properties.

Finally, the Group acquired the remaining 50% of our Renault Bucharest Connected property, located in the Western part of Bucharest, from our joint venture partner. The property, which was completed in 2018, comprises two distinct buildings extending over 42.3k sqm, and houses Groupe Renault's new headquarters in Romania.

STANDING PORTFOLIO REVIEW

The standing income generating portfolio increased in value by 19.5% to €2.8bn.

Our portfolio of standing properties continued to expand in 2019 following 5 investments (8 office properties) in Poland, and the completion of the first facility in the Timisoara Industrial Park II in Romania.

As of year-end 2019, there were 37 standing investments in our portfolio, with a total of 61 standing properties in Poland and Romania. Our standing portfolio comprised 30 Class "A" office investments (47 properties in total) and three mixed-use investments (with seven properties in total) in central locations in Bucharest (Romania), Warsaw (Poland) and five of the largest office markets in Poland (Krakow, Wroclaw, Katowice, Gdansk and Lodz). In addition, we own two light industrial parks with five facilities in Timisoara (Romania), a modern warehouse in Pitesti (Romania), and part of a residential complex in Bucharest (Romania).

The total gross leasable area of Globalworth's combined standing commercial portfolio increased by 17.4% in 2019 to reach 1,180.1k sqm, with the overall combined standing portfolio GLA increasing 16.5% to 1,213.7k sqm. The increase was mainly attributable to the addition of 157.0k sqm from acquired standing properties and delivered development during the year, and the remeasurement of certain properties in our portfolio (18.5k sqm), marginally offset by the sale of residential and retail units in our Upground residential complex.

The appraised value of our standing portfolio rose to €2.8 billion (as at 31 December 2019), representing an annual increase of 19.5%, with new additions to our standing properties (acquisitions and delivery) accounting for 76.9% of the total increase, while the value of properties held throughout the period (like-for-like) increased by 4.5% in 2019.

Consistent with our commitment to energy efficient properties, we added 13 environmentally certified properties to our portfolio.

We are very pleased that the two class "A" offices developed and delivered by Globalworth in 2018, Globalworth Campus Tower 2 and Renault Bucharest Connected ("RBC"), were both awarded BREEAM Excellent certifications in 2019, with RBC receiving a second green certification from EDGE. In addition, this year we certified the first two industrial properties in our portfolio, with the facility leased to Valeo in the Timisoara Industrial Park I, and the Pitesti Industrial Park being accredited with BREEAM Very Good and EDGE certification respectively.

Furthermore, the recently acquired Podium I in Krakow is certified with BREEAM Outstanding certification, while WTT which was BREEAM Very Good certified at the time of acquisition, is currently under re-certification process.

Overall, as at 31 December 2019, our combined standing portfolio comprised 43 green certified properties, accounting for 81.3% of our standing commercial portfolio by value. BREEAM accredited properties account for 76.7% of our green certified portfolio by value (BREEAM Excellent: 49.6%, BREEAM Very Good: 25.2% and BREEAM Outstanding: 1.8%), with the remainder of properties being of other certification (LEED Gold or Platinum, Edge).

In addition, we are aiming for 100% of our portfolio to be green accredited and are currently in the process of certifying or re-certifying 18 other properties in our portfolio principally targeting BREEAM certifications.

We consider our portfolio to be modern with 40 of our standing properties, accounting for 68.5% of our GLA and 71.0% of our standing combined portfolio value, having been delivered or significantly refurbished in or after 2014.

Total Standing Properties
	31 Dec. 2018	31 Dec. 2019
Number of Investments	31	37
Number of Assets	52	61
GLA (k sqm)(1)	1,042.0	1,213.7
GAV (€ m) (2)	2,381.1	2,844.7
Contracted Rent (€ m) (3)	159.5	184.4

Of which Commercial Properties
	31 Dec. 2018	31 Dec. 2019
Number of Investments	30	36
Number of Assets	51	60
GLA (k sqm)	1,004.8	1,180.1
GAV (€ m) (2)	2,312.2	2,783.1
Occupancy (%)(4)	95.1%	94.7%
Contracted Rent (€ m)	157.9	183.3
Potential rent at 100% occupancy (€ m)	167.5	195.9
WALL (years)	5.0	4.5
(1) Includes c.37.2k sqm and c.33.7k sqm of residential space in 31 December 2018 and 2019 respectively. (2) Appraised valuations as of 31 December 2018 and 2019 respectively. (3) Contracted Rent includes c.€1.5 million and c. €1.1 million from residential space in 31 December 2018 and 2019 respectively. (4) Occupancy including tenant options of 96.3% and 95.0%% in 31 December 2018 and 2019 respectively.

Green Accreditations
	% No. of Properties	% of Standing GAV Total
BREEAM Outstanding	1.6%	1.5%
BREEAM Excellent	32.8%	39.4%
BREEAM Very Good	23.0%	20.1%
LEED Platinum	1.6%	6.7%
LEED Gold	9.8%	10.1%
EDGE	1.6%	1.7%

DEVELOPMENTS REVIEW

Our ability to develop high-quality properties remains a key feature of our Group strategy, as it allows us to both meet current and future tenant needs and achieve higher risk-adjusted returns on capital deployed.

Globalworth's development expertise is evidenced by the success of its in-house projects and the very active pipeline of projects currently under construction or to be developed in the future.

Globalworth continued with its active development programme in Romania in 2019, with the Group delivering a new facility in Timisoara and making progress with the development of five high-quality office and industrial projects.

In addition, as part of the Podium Park transaction in Krakow, the Group has for the first time engaged in developments in Poland, with two office buildings under development.

Review of Projects Delivered

In April 2019, we delivered a 17.8k sqm facility at our new Timisoara Industrial Park II ("TIP II"). This is the first facility developed on the 35ha of land owned by the Group near our very successful Timisoara Industrial Park I complex.

The first facility of TIP II represents the tenth property delivered by Globalworth in Romania since the beginning of 2015, increasing the total GLA developed by the Group to c.260k sqm.

TIP II will be developed in phases, designed to suit a variety of occupiers, and on completion will offer 173.5k sqm of high-quality space which, together with TIP I, will form one of the largest industrial hubs in Romania with c.305k sqm of high-quality industrial space. We are currently progressing with planning and permitting for the development of the next phases of the project.

Review of Projects Under Construction

As at the end of 2019, Globalworth had four active developments in Bucharest, two in Krakow and one in Constanta, which together are expected to further increase our footprint by 176.2k sqm of GLA on completion.

At our Globalworth Campus development, construction of Tower 3 (centre tower) was in its final phase, with the office space being essentially completed and the first tenants arriving in January 2020, in line with the targeted timeline. The third tower, which represents the second and final phase of the project, offers 32.2k sqm of Class "A" office space (c.96% of total GLA) as well as other amenities such as a 750-seat conference centre and c.500 parking spaces. The new building extends over 14 floors above ground and two underground levels. As at 31 December 2019, the remaining works at the property were the conference centre and "bespoke-finishes" to the office spaces.

Globalworth Square is the Group's second class "A" office under construction in the New CBD of Bucharest. The property is located between our own Globalworth Plaza and Green Court B offices, and on completion in (Q4-2020) will offer 28.4k sqm of high-quality GLA and c.450 parking spaces over 15 floors above ground and three underground levels. As at the end of February 2020, construction is in progress with the building having reached the 6th floor.

The development of our Globalworth West project commenced in December 2019. To date certain preparatory activities have been completed, with the future pace of development being assessed based on tenant demand and market conditions. The property is located in the West part of Bucharest adjacent to our Renault Bucharest Connected ("RBC") project and will offer, on completion, 33.4k sqm of high-quality office space and 570 parking spaces over 9 floors above ground and 2 underground levels.

Globalworth West, together with RBC, will create a critical mass with a GLA of over 75.7k sqm in the West part of the city, benefiting from easy access through private and public transport, with the properties situated in front of the metro station.

In addition, in the fourth quarter of 2019, we started construction of the initial phases of the two projects under development in Romania within our joint venture partnership. The first of these, the Chitila Logistics Hub, is located in the greater Bucharest area and, on completion, this facility is expected to offer a GLA of 23.1k sqm. The facility which is partially leased to Mega Image, part of the Delhaize Group, is the first industrial facility the Group is developing in the capital, and works are expected to be completed in 2020.

In Constanta, phase A of the mixed-use Constanta Business Park project is also under construction, involving the development of a 21.3 sqm logistics/light-industrial facility. The construction of our first development project in the Eastern part of Romania is expected to be finalised in 2020, with the remaining phases to be developed over the next five years. In Poland we have two buildings under development, Podium Park II & III, part of the office complex known as Podium Park, comprising three interconnected buildings in the East of Krakow. Podium Park II and III are currently under development. Building II is a multi-tenant class "A" office, currently 82.6% pre-let to tenants including Ailleron and FMC Technologies, whose construction is in progress, having reached the 8th floor as at February 2020. On completion it will offer high-quality GLA of 18.8k sqm and c.265 parking spaces over 11 floors above ground and two underground levels. Podium Park III is at an early stage of development, with the necessary preparatory activities completed, while the future pace of development will be assessed based on tenant demand and market conditions. The property is expected on completion will offer a high-quality GLA of 17.7k sqm and c.330 parking spaces over 11 floors above ground and two underground levels.

Properties Under Development
	Globalworth Campus T3	Constanta Business Park (Phase A)( 1 )	Chitila Logistics Hub (Phase A)(1)	Globalworth Square	Podium II	Podium III	Globalworth West
Type	Office, Bucharest	Mix-Use, Constanta	Industrial , Bucharest	Office, Bucharest	Office, Krakow	Office, Krakow	Office, Bucharest
Delivery	Q1-20A	2020E	2020E	2021E	2020E	-	-
Est. GLA(k sqm)	33.6	21.3	23.1	28.4	18.8	17.7	33.4
Cost / Capex to 2019YE (€m)	51.2	2.9	3.5(2)	25.2(2)	12.0	7.5	4.4
GAV (€m)	71.1	3.3	3.1	25.1	19.1	8.9	7.5
Est. Remaining Capex (€m)	6.9	7.3	7.3	30.6	33.0	34.1	41.1
Est. Rental Income (100%)	5.9	1.1	1.1	5.4	3.4	3.1	5.1
Est. Yield on Cost	10.1%	10.4%	10.2%	9.7%	7.4%	7.5%	11.1%
1)  50:50 Joint Venture; figures shown on 100% basis 2)  Includes advances paid * Office component completed in January 2020 with remaining works to be performed in the Conference centre

Review of Other Future Developments

Globalworth owns, directly or through JV partnerships, additional land in prime locations in Bucharest and other regional cities in Romania, covering a total land surface of 1.4 million sqm (comprising 2.0% of its combined GAV), for future developments of office, logistics/light-industrial or mixed-use properties.

We are currently progressing with the required preparatory activities, including planning and/or permitting, for this land bank, and have prioritised the office projects in Bucharest, future phases of Timisoara Industrial Park II and the subsequent phases of Chitila Logistics Hub and Constanta Business Park.

When fully developed, these projects have the potential to add a further 829.5k sqm (mainly office and industrial) to our combined standing portfolio footprint in Romania.

Right of First Offer

Globalworth has invested in the two-phase My Place (formerly Beethovena) project in Warsaw, in which it owns a 25% economic stake, with the right to acquire the remaining interests once certain conditions have been satisfied.

My Place I & II (formerly: Beethovena I & II) are Class "A" office projects in the South of Warsaw comprising two, four-floor offices, which on completion will offer a total GLA of 36.1k sqm. The two offices are of similar size (19.0k sqm and 17.1k sqm). The first phase, completed in Q2-2019, is currently c.73% leased to tenants such as Havas or MasterCard, whereas Phase II is expected to be delivered in Q4-2020.

ASSET MANAGEMENT REVIEW

Record year in leasing, with 179.5k sqm of commercial space taken-up or extended at an average WALL of 5.5 years.

Leasing Review

As a result of our proactive approach to leasing and a healthy demand for high-quality space in our target real estate markets of Poland and Romania, in 2019 Globalworth achieved its strongest leasing performance since foundation.

Over the course of the year, the Group successfully negotiated the take-up (including expansions) or extension of 179.5k sqm of commercial space in Poland (52.6% of transacted GLA) and Romania (47.4% of transacted GLA), at an average WALL of 5.5 years.

New leases for 66.9k sqm were signed at a WALL of 7.5 years, higher than the average 5.0 year leases typically observed in our market, a testament to the quality of our properties and the services offered by our local asset management teams. These leases accounted for 37.3% of our total take-up and included tenants such as Allianz, UniCredit and NDB Logistica Romania, as well as 75 other corporates.

The level of renewals in our portfolio came as further evidence of our capabilities, with 108 of our tenants (totalling 94.4k sqm of GLA) renewing their leases and extending their stay in our properties at a WALL of 4.6 years. The most notable extensions were signed with AXA, Google Poland, IBM, International Paper, Capita, Luxoft, Schneider Electric and Airbus Defence. The remaining 18.2k sqm of space related to expansion by 48 tenants, at an average WALL of 4.8 years. We are pleased to see that several of our tenants are continuing to grow their operations within our properties where we are able to meet their occupational requirements.

Although rental levels can vary significantly between buildings and submarkets, these remained relatively stable during the year in both Poland and Romania. This was reflected in the leases negotiated in 2019 across our portfolio.

Office leases were negotiated at an average rent of €14.19/sqm/month, in line with our office portfolio overall average of €14.15/sqm/ month as at 31 December 2019. Our overall commercial GLA take-up during the year was agreed at an average rent of €12.80/sqm/ month, with industrial and retail spaces leased at €3.3 and €14.6/sqm/month respectively.

Summary Leasing Activity for Combined Portfolio 2019
	GLA (k sqm)	No. of Tenants	WALL (yrs)
New Leases / New Contracts	66.9	78	7.5
New Leases / Expansion	18.2	48	4.8
Renewals / Extensions	94.4	108	4.6
Total	179.5	211*	5.5
*Number of individual tenants

Overall occupancy of our combined standing commercial portfolio as at 31 December 2019 was 94.7% (95.0% including tenant options), falling marginally by 0.4% over the past twelve months (95.1% as at 31 December 2018, 96.3% including tenant options). This was due mainly to the addition of certain new properties to the standing portfolio over the course of the year where occupancy rates were lower than the Group average, but where we are confident that there is near term scope to increase both occupancy and contracted rents.

On a like-for-like basis, occupancy increased by 0.4% to 95.5% at the end of 2019. This was achieved in spite of a slow first half of the year, impacted by the movements of certain tenants, mainly in our Romanian portfolio, and the partial repositioning of a mixed-use property in Poland. New uptake exceeded space becoming available during the period, resulting in a positive net uptake of 3.2k sqm.

Our asset management initiatives target a reduction of the remaining vacant space and, taking into consideration positive market conditions and the quality and location of our properties, we are confident of demonstrating progress in the forthcoming period.

Across the portfolio, as at 31 December 2019, we had a commercial GLA of 1,356.3k sqm (c.87.0% standing commercial GLA) leased to approximately 718 tenants, at an average WALL of 4.6 years (4.5 years on standing commercial GLA), the majority of which is let to national and multinational corporates that are well-recognised names in their respective markets.

The Group's rent roll is well diversified, with the largest tenant accounting for 5.3% of contracted rent, while the top three tenants account for 10.9% and the top 10 tenants for 26.1%. We expect to see further diversification as the portfolio expands.

Combined Commercial Contracted Rent Profile as at 31 December 2019
	Poland	Romania	Combined Portfolio
Contracted Rent	107.8	82.1	189.9
Tenant Origin - %
Multinational	63.2%	91.4%	75.4%
National	34.4%	7.3%	22.7%
State Owned	1.9%	1.3%	1.6%
Master Lease	0.5%	-	0.3%
Occupancy(1)	94.1%	95.3%	94.7%
WALL	3.7	5.8	4.6
(1)  Figures refer to Commercial Standing Properties (*) Contracted Rent excludes c.€1.1 million from residential space as at 31 December 2019 (**) Multinational, National, State Owned and Master Lease refers to rent contribution by tenant origin (***) Occupancy including tenant options of 95.0% at 31 December 2019

Combined Commercial Portfolio Lease Expiration Profile as at 31 December 2019 (€m)
Year	2020	2021	2022	2023	2024	2025	2026	2027	2028	≥2029
Lease Agreements	13.6	19.3	31.1	23.3	36.2	19.0	11.2	9.0	5.4	21.3
Master Lease	0.3	-	-	-	0.2	-	-	-	-	-
Total	13.9	19.3	31.1	23.3	36.4	19.0	11.2	9.0	5.4	21.3
% Expiring	7.3%	10.1%	16.4%	12.3%	19.2%	10.0%	5.9%	4.7%	2.9%	11.2%
Note: Contracted Rent excludes c.€1.1 million from residential space as at 31 December 2019

Standing Properties Operation, Renovation and Upgrade Programme

Offering best-in-class real estate space to our business partners is a key component of our strategy at Globalworth.

As a long-term investor we are looking to maximise returns over the full life cycle of our properties. Continuous active management and investment in our portfolio enables us to preserve and enhance value, as well as offer best-in class real estate space to our business partners.

The Group has developed in-house expertise which allows us to customise our asset management strategy to each asset. Depending on the stage in the life cycle of each of our properties, improvements in technology, and their prevailing conditions and trends, we may conduct works which extend from small-scale upgrades to large-scale refurbishments. Typically, larger-scale refurbishments allow us to fully upgrade an asset, secure new leases and re-set the life clock of the property.

In 2019 we continued to implement this strategy, focusing on a more hands-on approach to the management and operation of our properties, as well as on our renovation and upgrade programme at selected properties in the portfolio.

Internalising the property management of our portfolio is a prime area of focus for the Group and we continue to build up our in-house capabilities. Over the course of the year we added 47 professionals to our property and asset management team, which by year-end had grown to c.240 members.

Our investment in improvement works on selected properties was focused predominantly on 14 standing properties in our portfolio, with minor works performed on a number of others. In total, €22.2 million was invested under our renovation and upgrade programme with works involving primarily the upgrade of both indoor and outdoor common areas.

We refurbished the ground floor lobby at our flagship Globalworth Tower in Bucharest, which now features a number of innovations and technological improvements and other features including one of the world's largest kinetic floor in an office building and the largest natural green wall in an office building in Southern and Eastern Europe. In addition, the Group extended the parking area by adding 79 new spaces.

At CB Lubicz in Krakow, value accretive works are in progress, that on completion are estimated to increase the GLA of the property by an additional 2.0k sqm to 25.9k sqm.

We are also in the process of examining alternative scenarios for certain properties in our portfolio, for example, Warta Tower in Warsaw, which will enable us to maintain and extend their useful life in the medium to long term. We are also progressing with the partial repositioning/reclassification of certain uses/floors in Renoma in Wroclaw where we aim to increase the office component on the upper floors of the property.

Renovation and Upgrade Programme 2019
Standing Building	Selected Upgrades in Our Portfolio
· Globalworth Tower · Spektrum · Skylight & Lumen · Tryton · Quattro Business Park · CB Lubicz	Upgrades and modernisation of communal interior and open areas Building extensions Upgrades and modernisation of access areas Upgrades of communal green areas Upgrades of heating & ventilation systems improving quality of work spaces Upgrades for Globalworth App pilot installation

FINANCIAL REVIEW

Further acquisitions, progress on developments and leasing activity in 2019 continued to fuel the growth in our portfolio, revenues and profitability.

Investment in high-quality standing properties and development projects in Poland and Romania and a record year in leasing were the principal drivers of growth in our 2019 financial results.

The continued expansion of the Group into Poland with five real estate investments (eight standing buildings and two under construction) in 2019, along with our successful leasing activity, and an active development programme (principally) in Romania where we delivered a new facility in Timisoara and made further progress with the development of five high-quality office and industrial projects, continued to produce a strong uplift in our earnings.

Revenue and Net Operating Income (NOI) increased year on year by 15.3% to €222.2 million and 10.7% to €147.7 million respectively. Normalised EBITDA and adjusted normalised EBITDA rose by 52.4% to €128.0 million and 34.3% to €134.8 million respectively.

In 2019 we successfully completed our largest equity issue to date, raising a total of €793.3 million, principally in two rounds, increasing the weighted average number of shares from 132.3 million in 2018 to 182.1 million in 2019, which however influenced our per share metrics. This is particularly evidence by our EPRA Earnings per share which decreased by 4.3% compared to 2018 to 44 cents per share from 46 cents per share in 2018, while IFRS Earnings per share for 2019 amounted to 93 cents, as compared to 61 cents in 2018, an increase of 52.5%.

Dividends declared and paid in respect to 2019 of 60 cents per share, as compared to 54 cents for 2018, represented a 11.1% increase.

EPRA NAV per share as at 31 December 2019 increased by 2.9% from 31 December 2018 to €9.30 per share (31 December 2018: €9.04). Combined with dividends paid in 2019, this resulted in a Total Accounting Return of 9.2%, an increase of 140 basis points on the prior year (2018 TAR: 7.8%).

The Open Market Value of the portfolio grew by €583.0 million, an increase of 23.7%, to €3.0 billion, primarily through acquisitions and revaluation gains.

LTV at 31 December 2019 amounted to 34.7%, decreasing from 43.9% at 31 December 2018 as a result of the two successful equity raises in April and October 2019.

Revenues and Profitability

Group revenues of €222.2 million in 2019 up by 15.3% on 2018 (€192.8 million), principally driven by:

- acquisition of 8 offices in Poland, with rental income of €12.1 million in 2019;

- increase of 21.9% (by €24.9 million) on 2018 rental income derived from our properties in Poland (37.5% increase) and Romania (6.8% increase) excluding new acquisitions in 2019, following successful leasing activity;

- increase of 31.4% (by €14.9 million) in service charge income due to new acquisitions and higher occupancy in some properties; and

- negative impact of the €23.7 million rental guarantee income recorded during 2018, €18.6 million of which is the portion of the NOIG/RGA settlement amount received in December 2018 (€21.5 million) which can be attributed to the period from January 2019 to March 2022, considering the original duration of these NOIG/RGA.

However, adjusting for the effect of recording the entire settlement amount for the NOIG/RGA in 2018 and apportioning it on a pro-rata basis to the remaining original duration of the NOIG/RGA (€5.7 million for year 2019), the increase in Group revenues would amount to 30.9%.

Group revenues were split 56% Poland / 44% Romania, as compared to 53% Poland / 47% Romania in 2018.

EPRA NAV / Total Accounting Return
	2017	2018	2019
EPRA NAV / Share	8.84	9.04	9.30
Total Accounting Return	5.7%	7.8%	9.2%

Net Operating Income of €147.7 million in 2019, a 10.7% increase over 2018 (€133.4 million), in line with the increase in Group revenue. The growth in NOI  reflected an increase of €9.6 million in Poland and €4.7 million in Romania.

However, adjusting for the effect of recording the entire settlement amount for the NOIG/RGA in 2018 and apportioning it on a pro-rata basis to the remaining original duration of the NOIG/RGA, the increase in NOI would be 33.6%.

 NOI was split 60% Poland / 40% Romania, compared to 59% Poland / 41% Romania in 2018.

Share by Country - FY2019
	Poland	Romania
Revenue ( € m)	56%	44%
NOI ( € m)	60%	40%

EBITDA¹ of €228.4 million in 2019, an increase of 87.5% over 2018 (€121.8 million).

In addition to the growth in NOI (of €31.4 million), higher valuation gains on investment property (by €83.9 million), higher other income (by €0.7 million) and lower acquisition costs (by €0.8 million) contributed to the increase, partly offset by higher administration and other expenses (by €8.2 million), and lower valuation gains of financial instruments (by €2.0 million).

Adjusted EBITDA² of €240.1 million, which includes the share of minority interests, registering an increase of 59.2% over 2018 (€150.8 million), resulting from the increase in NOI (of €14.3 million), higher valuation gains on investment property (by €83.6 million), higher other income (by €0.6 million) and lower acquisition costs (by €1.0 million) contributed to the increase, partly offset by an increase in administration and other expenses (by €6.6 million), and lower valuation gains financial instruments (by €3.6 million).

Normalised EBITDA³ of €128.0 million, increasing by 52.4% over 2018 (€84.0 million), while adjusted normalised EBITDA⁴ amounted to €134.8 million, which includes the share of minority interests, an increase of 34.3% over 2018 (€100.4 million), which correlates to the increase in NOI of 33.6%⁵.

1.Earnings attributable to equity holders of the Company before finance cost, tax, depreciation, amortisation of other non-current assets and purchase gain on acquisition of subsidiaries. The 2018 comparative has been adjusted by €12.9m to exclude the effect of recording the portion of the NOIG/RGA settlement relating to 2019-2022 in 2018 in line with related IFRS provisions.

2.Earnings before finance cost, tax, depreciation, amortisation of other non-current assets and purchase gain on acquisition of subsidiaries. The 2018 comparative has been adjusted by €18.6m to exclude the effect of recording the portion of the NOIG/RGA settlement relating to 2019-2022 in 2018 in line with related IFRS provisions.

3.EBITDA less: fair value gains on investment property and financial instruments (2019: €114.1 million; 2018: €32.2 million), non-recurring income (2019: €0.9 million; 2018: €0.2 million); plus: acquisition costs (2019: €0.2 million 2018: €1.0 million); plus: non-recurring administration and other expense items (2019: €9.1 million; 2018: €6.5 million) and an adjustment to apportion on a pro-rata basis part of the NOIG/RGA settlement amount received in December 2018 to year 2019 (2019: €5.3 million addition; 2018: €12.9 million reduction).

4.Adjusted EBITDA less: fair value gains on investment property and financial instruments (2019: €119.6 million; 2018: €39.6 million), non-recurring income (2019: €0.9 million; 2018: €0.3 million); plus: acquisition costs (2019: €0.2 million; 2018: €1.2 million); plus: non-recurring administration and other expense items (2019: €9.2 million; 2018: €6.9 million) and an adjustment to apportion on a pro-rata basis part of the NOIG/RGA settlement amount received in December 2018 to year 2019 (2019: €5.7 million addition; 2018: €18.6 million reduction). The adjustments listed include the share of minority interests.

5.Adjusting for the effect of recording the entire settlement amount for the NOIG/RGA in 2018 and apportioning it on a pro-rata basis to the remaining original duration of the NOIG/RGA.

Financial costs increased by 8.0% in 2019 resulting mainly from the 12 month coupon (2018: c.9 months coupon) on the €550 million bonds issuance at the end of March 2018. Included in finance costs for 2019 are €1.1 million (2018: €2.0 million) debt costs previously capitalised which were amortised in full upon the repayment of bank loans.

Earnings before tax of €207.7 million, an increase of 80.1% over 2018 (€115.3 million), mainly as a result of the increase in NOI and increased valuations gains on investment property, contained by the negative effect of higher administration and other expenses and higher net finance costs.

IFRS earnings per share reached 93 cents in 2019, an increase of 52.5% compared to 2018 (61 cents).

IFRS Earnings to EPRA Earnings (€m)
IFRS Earnings	FV gain on properties	FV gain on financial  instruments	Deferred tax	Minority, JVs & Others	EPRA Earnings
170.2	(117.7)	(1.9)	29.7	0.6	80.9

IFRS EPS to EPRA EPS (€ cents per share)
IFRS EPS	FV gain on properties	FV gain on financial instruments	Deferred tax	Minority, JVs & Others	EPRA EPS
93	(64)	(1)	16	0	44

Balance Sheet

The Open Market Value of the portfolio up by €583.0 million, an increase of 23.7%, to €3.05 billion. This comprises €3.02 billion of investment property and a further €0.03 billion representing other balance sheet adjustments including the full share of our JV properties.

Investment activity in 2019, which included c.€515.1 million of new property acquisitions (including the acquisition of the JV partner in the RBC property, transforming it into a wholly owned property) and development projects as well as valuation gains of €117.7 million, contributed to a 26.4% increase in the balance sheet value of our investment property portfolio at 31 December 2019 to €3.02 billion (31 December 2018: €2.39 billion).

Growth in Portfolio Value €m (by location)
	Romania	Poland	Total
Investment Property - Dec 18	1,174.2	1,216.8	2,391.0
JV and others - Dec 18	71.1	-	71.1
OMV Dec 18	1,245.3	1,216.8	2,462.1
Acquisitions	89.5	335.0	424.5
CAPEX	65.0	25.5	90.5
Valuation Uplift	47.7	70.0	117.7
Apartment Disposals	(6.8)	-	(6.8)
JV's CAPEX, Uplift & reclass to IP	(42.9)	-	(42.9)
OMV Dec 19	1,397.7	1,647.4	3,045.1
JV and others	(28.2)	-	(28.2)
Investment Property - Dec 19	1,369.5	1,647.4	3,016.9

Total assets at 31 December 2019 reached €3.48 billion and increased by 27.2% from 31 December 2018 (€2.74 billion), primarily due to the expansion of the property portfolio.

EPRA NAV increased to €2.07 billion at 31 December 2019, an increase of 72.4% on 31 December 2018 (€1.20 billion), while EPRA NAV per share increased by 2.9% to €9.30 per share (31 December 2018: €9.04 per share). Reflecting the dividend distributions made during 2019 of 57 cents per share, the adjusted EPRA NAV per share at 31 December 2019 would be €9.87 per share, representing a total accounting return of NAV growth and dividend return for 2019 of 9.2%, up from 7.8% in 2018.

EPRA NAV per share bridge from 31 December 2018 to 31 December 2019 (€)
EPRA NAV Dec-18	9.04
EPRA Earnings	0.44
FV gain on properties	0.53
Non- EPRA Earnings	0.00
Dividends	(0.57)
Equity raise - cash (Gross)	0.04
Buy-in of Minority	0.07
Others*	(0.25)
EPRA NAV Dec-19	9.30
* Others includes the costs associated with the change in the arrangements for the long-term incentive plan for the Group's Executives (cash payment of €25.8 million and transfer of 3.2 million shares), as well as other movements within equity.

Evolution of NAV/share and OMV by semester
	EPRA NAV per share (€ cents)	EPRA NAV (€m)	OMV (€m)
Dec-17	8.84	1,173	1,815
Jun-18	9.06	1,201	2,130
Dec-18	9.04	1,200	2,462
Jun-19	9.05	1,754	2,745
Dec-19	9.30	2,069	3,045

Cash Flows

Cash flows from operating activities were €80.3 million, higher compared to €80.1 million in 2018.

Net proceeds from the successful equity raises in April and October 2019 of €599 million.

Cash used for investments made in 2019 of €383.5 million, including the acquisition of five investments (8 standing properties and two under construction) in Poland, the acquisition of the remaining 50% stake in Elgan Offices SRL (Renault Bucharest Connected), invested in new Joint Ventures, a land plot in Romania and the completion or further progress in our development pipeline in Romania.

Dividends paid in 2019 of €93.8 million in respect of the six-month periods ended 31 December 2018 and 30 June 2019 of €35.7 million and €58.1 million respectively.

Cash and cash equivalents at 31 December 2019 stood at €291.7 million, €62.2 million higher than 31 December 2018 (€229.5 million), as influenced by the equity raise in October 2019.

FINANCIAL AND LIQUIDITY REVIEW

The Group had in 2019 an active year in the capital markets, conducting two equity raises, as well as various bank loan financing activities, that continued to fuel its growth trajectory.

During 2019, the Group successfully concluded new equity issues of €793.3 million in total.

At the end of October 2019, the Group entered into a €200 million unsecured Revolving Credit Facility ("RCF"), with an option to increase it by an additional €50 million, with a syndicate of Banks providing committed liquid funds at a modest cost.

In Romania:

- During the year 2019, €39 million of the bank loan, secured for the financing of the development of the Renault Bucharest Connected Project, was drawn down

- In March 2019, a €65 million 10-year secured loan granted for refinancing the Globalworth Tower Project, concluded in December 2018, was drawn down

- In June 2019 the €2 million outstanding balance of the €30 million secured financing granted for the TIP Project was repaid in full

In Poland:

- In June 2019, the loan facilities secured on the Hala Koszyki property were repaid in full

- The acquisition of Warsaw Trade Tower in April 2019 was carried out with the taking over of the existing bank loan secured on the Property, amounting to c.€75 million

- In November 2019, the remaining outstanding loan balance of €75 million was repaid in full, while in December 2019 a new €65 million 10-year bank loan was secured at better terms and conditions. The new facility was drawn down in full at the end of January 2020.

- In February 2020 a €62.3 million bank loan for the refinancing of the acquisition of Retro and Silesia Star properties was drawn down in full.

Dividends

In February 2019 the Company paid an interim dividend of 27 cents per share (c.€35.7 million) in respect of the six-month period ended 31 December 2018 while in August 2019 it paid an interim of 30 cents per share (c.€58.1 million) in respect of the six-month period ended 30 June 2019.

Another interim dividend of 30 cents per share (c.€66.6 million) was paid in February 2020 in respect of the six-month period ended 31 December 2019.

Debt Summary

The total debt portfolio of the Group at 31 December 2019 of €1.32 billion (31 December 2018: €1.26 billion) comprises of medium to long-term debt, denominated entirely in Euro.

The Group has delivered on its strategy over the last few years of extending the weighted average period to maturity of its debt financing, while reducing the applicable weighted average interest rate. The weighted average interest rate at 31 December 2019 amounted to 2.83% compared to 2.91% at 31 December 2018, while the average period to maturity decreased slightly to 4.3 years at 31 December 2019, from 5.1 years at 31 December 2018, as presented in the table below:

It is worth mentioning that in March 2020 we drew down the €200 million RCF, which led to a decrease in the weighted average interest rate.

Weighted average interest rate versus debt duration to maturity
	Dec.17	Jun.18	Dec.18	Jun.19	Dec.19
Weighted average interest rate versus debt duration to maturity	2.62%	2.91%	2.91%	2.85%	2.83%
Weighted average duration to maturity (years)	5.4	5.6	5.1	4.9	4.3

Servicing of Debt During 2019

During 2019, we repaid in total €129.1 million of loan capital and €38.3 million of accrued interest on the Group's drawn debt facilities, including c.€32.3 million in relation to the annual coupon for both Eurobonds of the Company.

Liquidity & Loan to value ratio

The Group seeks to maintain at all times sufficient liquidity to enable it to finance its ongoing, planned property investments and the completion of properties under development, while maintaining the flexibility to react quickly to attractive new investment opportunities.

As at 31 December 2019, the Group had cash and cash equivalents of €291.7 million (31 December 2018: €229.5 million). Additionally, the available liquidity from committed undrawn loan facilities amounted €265 million (out of which €65 million was drawn down in January 2020 as mentioned above).

The Group's loan to value ratio at 31 December 2019 was 34.7%, marking a significant decrease compared to 31 December 2018 (43.9%) as a result of the last equity raise in October 2019. This is consistent with the Group's strategy to manage its long-term target LTV of below 40%, whilst pursuing its strong growth profile.

Debt Structure as at 31 December 2019

Debt Structure -

Secured vs. Unsecured Debt

The majority of the Group's debt at 31 December 2019 is unsecured: 83.30% (31 December 2018: 87.3%), with the remainder secured with real estate mortgages, pledges on shares, receivables and loan subordination agreements in favour of the financing parties.

The slight decrease in the percentage of the unsecured debt compared to 31 December 2018 is connected with the secured bank loan taken over upon the acquisition of the Warsaw Trade Tower, as well as the acquisition of the 50% joint venture partner for the Renault Bucharest Connected property (thus becoming a fully owned property) and consequently the bank loan obtained for the financing of the development of this property.

Loans and borrowings maturity and short-term / long-term debt structure mix

The Group has credit facilities and Eurobonds with different maturities, all on medium and long-term (compared to 99.9% at 31 December 2018).

Maturity by year of the principal balance outstanding at 31 December 2019 (€m)
2020-2021	2022	2023	2024	2025	2026-2035
-	566.6	-	39	650	65

Debt Denomination Currency and Interest Rate Risk

Our loan facilities are entirely Euro denominated and bear interest based either at one month or three months EURIBOR plus a margin (9.5%), or at a fixed interest rate (90.5%). This ensures a natural hedging to the Euro, the currency in which the most significant part of our liquid assets (cash and cash equivalents and rental receivables) is originally denominated and the reporting currency for the fair market value of our investment property.

Debt Covenants

The Group's financial indebtedness is arranged with standard terms and financial covenants, the most notable as at 31 December 2019 being the following:

Unsecured Eurobonds and RCF

- the Consolidated Coverage Ratio, with minimum value of 200%

- the Consolidated Leverage Ratio, with maximum value of 60%

- the Consolidated Secured Leverage Ratio with a maximum value of 30%

- the Total Unencumbered Assets Ratio, with minimum value of 125% (applicable only to the RCF) Secured Bank Loans

- the debt service cover ratio ('DSCR') / interest cover ratio ('ICR'), with values ranging from 120% to 350% (be it either historic or projected)

- the LTV ratio, with contractual values ranging from 48% to 83%.

There have been no breaches of the aforementioned covenants occurring during the period ended 31 December 2019.

Further details on the Group's debt financing facilities are provided in note 15 of the consolidated financial statements

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

		31 December	31 December
		2019	2018
	Note	€'000	€'000
Revenue	7	222,246	192,801
Operating expenses	8	(74,534)	(59,360)
Net operating income		147,712	133,441
Administrative expenses	9	(19,302)	(15,253)
Acquisition costs		(240)	(1,182)
Fair value gain on investment property	3	117,718	34,088
Bargain purchase gain on acquisition of subsidiaries		-	251
Share-based payment expense	25	(496)	(509)
Depreciation on other long-term assets		(406)	(398)
Other expenses	10	(7,192)	(4,332)
Other income		932	330
Gain resulting from acquisition of joint venture as subsidiary	29.2	2,864	-
Foreign exchange loss		(888)	(1,214)
Gain from fair value of financial instruments at fair value through profit or loss	17	1,898	5,463
		94,888	17,244
Profit before net financing cost		242,600	150,685
Net financing cost
Finance cost	11	(45,050)	(41,727)
Finance income		2,416	3,289
		(42,634)	(38,438)
Share of profit of equity-accounted investments in joint ventures	29	7,750	3,095
Profit before tax		207,716	115,342
Income tax expense	12	(31,535)	(15,425)
Profit for the period		176,181	99,917
Other comprehensive income		-	-
Total comprehensive income		176,181	99,917

Profit attributable to:		176,181	99,917
- Equity holders of the Company		170,177	80,263
- Non-controlling interests		6,004	19,654
		Cents	Cents
Earnings per share
- Basic	13	93	61
- Diluted	13	93	61

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2019

	Note	2019	2018
		€'000	€'000
ASSETS
Non-current assets
Investment property	3	3,048,955	2,390,994
Goodwill	28	12,349	12,349
Advances for investment property	5	32,440	4,209
Investments in joint ventures	29	17,857	38,316
Equity investments	18	9,840	8,837
Other long-term assets		1,493	1,035
Prepayments		619	1,472
Financial assets at fair value through profit or loss	17	3,098	2,829
Deferred tax asset	12	2,869	-
		3,129,520	2,460,041
Current assets
Financial assets at fair value through profit or loss	17	20,487	12,878
Trade and other receivables	19	28,963	25,281
Contract assets		5,257	3,937
Guarantees retained by tenants		858	11
Income tax receivable		255	395
Prepayments		4,653	4,929
Cash and cash equivalents	20	291,694	229,527
		352,167	276,958
Total assets		3,481,687	2,736,999
EQUITY AND LIABILITIES
Issued share capital	22	1,704,374	897,314
Treasury shares	25.6	(8,379)	(842)
Share-based payment reserve	25	5,571	2,117
Retained earnings		213,101	186,326
Equity attributable to ordinary equity holders of the Company		1,914,667	1,084,915
Non-controlling interests	30.5	-	212,407
Total equity		1,914,667	1,297,322
Non-current liabilities
Interest-bearing loans and borrowings	15	1,299,616	1,235,106
Deferred tax liability	12	134,302	106,978
Lease liabilities	3.2	30,190	-
Guarantees retained from contractors		1,074	693
Deposits from tenants		3,460	13,754
Provision for tenant lease incentives		-	780
Trade and other payables		1,316	694
		1,469,958	1,358,005
Current liabilities
Interest-bearing loans and borrowings	15	24,304	23,965
Guarantees retained from contractors		4,754	3,353
Trade and other payables	16	44,633	32,956
Contract liability		1,824	1,401
Other current financial liabilities	21.3	1,498	2,084
Current portion of lease liabilities	3.2	1,887	-
Deposits from tenants		15,988	2,241
Provision for tenant lease incentives		1,353	1,211
Dividends payable		-	10,731
Income tax payable		821	3,730
		97,062	81,672
Total equity and liabilities		3,481,687	2,736,999

The financial statements were approved by the Board of Directors on 25 March 2020 and were

signed on its behalf by John Whittle (Director)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

		Equity attributable to equity holders of the Company
		Issued share capital	Treasury shares	Share-based payment reserve	Retained earnings	Total	Non- controlling interests	Total Equity
	Note	€'000	€'000	€'000	€'000	€'000	€'000	€'000
As at 1 January 2018		894,509	(270)	2,240	172,405	1,068,884	67,572	1,136,456
Shares issued to the Executive Directors for vested warrants		153	-	(3)	-	150	-	150
Transaction costs on issuance of shares		(40)	-	-	-	(40)	-	(40)
Shares issued to the Executive Directors and other senior management employees		1,874	-	( 1,874)	-	-	-	-
Interim dividends paid by the company		-	-	-	(64,870)	(64,870)	-	(64,870)
Interim dividends declared by the subsidiary to non-controlling interest holders		-	-	-	-	-	(14,229)	(14,229)
Shares issued under the subsidiaries' employees share award plan		818	(818)	-	-	-	-	-
Share based payment expense		-	-	2,000	-	2,000	-	2,000
Shares vested under the subsidiaries' employees share award plan		-	246	(246)	-	-	-	-
Acquisition of non-controlling interest for cash		-	-	-	279	279	(9,319)	(9,040)
Change in non-controlling interest arising from shares issue in subsidiary		-	-	-	(1,102)	(1,102)	1,102	-
Shares issue in subsidiary		-	-	-	(649)	(649)	147,627	146,978
Total comprehensive income for the year		-	-	-	80,263	80,263	19,654	99,917
As at 31 December 2018		897,314	(842)	2,117	186,326	1,084,915	212,407	1,297,322
Issuance of shares subscribed in cash	22.1	611,921	-	-	-	611,921	-	611,921
Transaction costs on issuance of shares		(12,828)	-	-	-	(12,828)	-	(12,828)
Shares issued to the Executive Directors and other senior managementemployees	25.2	3,467	(2,564)	(818)	-	85	-	85
Interimdividends	23	-	-	128	(93,927)	(93,799)	-	(93,799)
Share based payment expense under the subsidiaries' employees shareawardplan	25.3	-	-	353	-	353	-	353
Shares vested under the subsidiaries' employees share awardplan	25.3	-	784	(784)	-	-	-	-
Shares purchased with cash by the Company	25.6.1	-	(7,295)	-	-	(7,295)	-	(7,295)
Shares issued for share swap with non-controllinginterestholders	22.2	179,395	-	-	5,840	185,235	(185,235)	-
Shares acquired in cash from non-controlling interest holders in thesubsidiary	30.5	-	-		(315)	(315)	(33,176)	(33,491)
Performance incentive scheme termination	25.4	25,105	1,538	2,544	(55,000)	(25,813)	-	(25,813)
Deferred annal bonus plan reserve fortheyear	25.5.1	-	-	1,888	-	1,888	-	1,888
Long-term incentive plan reserve fortheyear	25.5.2	-	-	143	-	143	-	143
Total comprehensive income for the year		-	-	-	170,177	170,177	6,004	176,181
As at 31 December 2019		1,704,374	(8,379)	5,571	213,101	1,914,667	-	1,914,667

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

	Note	2019	2018
		€'000	€'000
Profit before tax		207,716	115,342
Adjustments to reconcile profit before tax to net cash flows
Fair value gain on investment property	3	(117,718)	(34,088)
Bargain purchase gain on acquisition of subsidiaries		-	(251)
Loss on sale of investment property		1,576	2,701
Share-based payment expense	25	496	509
Depreciation on other long-term assets		406	398
Net movement in allowance for doubtful debts	21.2	(156)	1,087
Foreign exchange loss		888	1,214
Gain from fair valuation of financial instrument	17	(1,898)	(5,463)
Gain resulting from acquisition of joint venture as subsidiary	29.2	(2,864)	-
Share of profit of equity-accounted joint ventures	29	(7,750)	(3,095)
Net financing costs		42,634	38,438
Operating profit before changes in working capital		123,330	116,792
(Increase) in trade and other receivables		(714)	(11,179)
Increase/(decrease) in trade and other payables		3,966	(1,239)
Interest paid		(38,259)	(21,161)
Interest received		782	2,282
Income tax paid		(9,406)	(5,420)
Interest received from joint ventures		627	-
Cash flows from operating activities		80,326	80,075
Investing activities
Expenditure on investment property completed and under development		(92,784)	(51,392)
Payment for land acquisitions		(925)	(15,500)
Advances for investment property	5	(25,040)	-
Payments for acquisition of investment property	27	(233,952)	(481,876)
Proceeds from non-controlling interest holders in subsidiary's share capital		-	146,978
Payments for the acquisition of non-controlling interest		-	(9,040)
Proceeds from sale of investment property		5,773	6,736
Investment in financial assets at fair value through profit or loss	17	(5,980)	-
Payments for equity investments	18	(1,003)	(8,740)
Investment in and loans given to joint ventures	29	(16,719)	(26,208)
Repayment of loans from joint ventures	29	4,389	12,875
Payment for the acquisition of remaining 50% stake in joint venture	29.2	(8,131)	-
Payment for purchase of other long-term assets		(588)	(741)
Cash flows used in investing activities		(374,960)	(426,908)
Financing activities
Proceeds from issuance of share capital	22	611,921	150
Payment of transaction costs on issuance of shares	22	(12,828)	(40)
Purchase of own shares	25.6.1	(7,295)	-
Payments for the acquisition of shares from non-controlling interest	30.5	(33,491)	-
Proceeds from interest-bearing loans and borrowings	15	64,545	648,711
Repayments of interest-bearing loans and borrowings	15	(129,094)	(270,700)
Payment for performance incentive scheme termination	25.4	(25,813)	-
Payment of interim dividend to equity holders of the Company	23	(93,799)	(64,870)
Payment for lease liability obligations	3.2	(1,601)	-
Payment of dividend to non-controlling interests in the subsidiary		(10,731)	(3,498)
Payment of bank loan arrangement fees and other financing costs		(3,902)	(9,623)
Change in long term restricted cash reserve	20	1,250	2,958
Cash flows from financing activities		359,162	303,088
Net increase/(decrease) in cash and cash equivalents		64,528	(43,745)
Effect of exchange rate fluctuations on cash and bank deposits held		(1,111)	-
Cash and cash equivalents at the beginning of the year	20	227,277	271,022
Cash and cash equivalents at the end of the year1	20	290,694	227,277
1 Net of the €1.0 million restricted cash reserve (31 December 2018: €2.3 million).

The aforementioned references to the Financial Statements above are in relation to the notes that are contained in the 2019 Annual Report, which will shortly be available at http://www.globalworth.com/investor-relations/financial-reports-and-presentation  from page 160.  In addition, the Annual Report provides further information about the activities of Globalworth and also a glossary of terms.

 

END

 

 

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