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Outlook
The outlook set out below comprises the outlook for the financial year 2010 for the consolidated net current result and the consolidated balance sheet of WDP Comm. VA. The estimates were prepared at the level of the net current result, and consequently include neither the impact of IAS 39 nor the impact of fair value movements on the property portfolio.
1. Assumptions
1.1. Assumptions relating to factors that WDP cannot influence directly
- The rental income does not take account of the effects of indexation estimated by the Federal Planning Bureau (+1,6% for 2010). The estimates of rental income are only affected to a limited extent by the level of inflation.
- An estimated Euribor (3 months), of 1%, to be increased by the average bank margin of 0,7%, was applied to the variable portion of the debt position (the portion that is not hedged by Interest Rate Swaps) for the full year.
- The financial result does not include the effect of possible fluctuations in exchange rates in the Czech Republic (CZK) and Romania (RON). The functional currency of the Czech subsidiary WDP CZ sro was converted to EUR with effect from 1 January 2009, and consequently the impact of potential exchange rate fluctuations is limited. The effect of exchange rates in Romania is limited to the loan financing of the subsidiary (with an impact in 2009 of EUR 202.000).
- The financial instruments (mainly IRSs) are carried at fair value in accordance with IFRS (IAS 39) in the accounts at group level. Given the current uncertainties in the financial markets, no account was taken of movements in these fair values.
1.2. Assumptions relating to factors that WDP can influence directly
Net rental result
- This result was estimated on the basis of the present contracts and signed contracts for current investment projects. The assumptions relating to rental renewals were made in accordance with market practice. Rents relating to current projects and new lease contracts that will be concluded in 2010 were estimated in accordance with current market practice.
- Renewals of lease contracts due to expire in the course of 2010 were verified on an individual basis. Accordingly, contracts that have not yet been renewed were not taken into account in the forecast.
Other operating income/expense
This comprises mainly income relating to the production of solar energy (EUR 5,1 million) and the management fee for the property that WDP allocates to tenants (EUR 600.000).
Income from solar energy derives from green electricity certificates and the income from the energy supplied. The estimate was made on the basis of statistical information on the number of hours of sunshine, which led to an estimated yield of 12,5% on the investment value of the solar panels installed.
The property management fee allocation was estimated on the basis of the current number of lease contracts and relevant fees applicable within those contracts.
On the basis of the current lease contracts concluded by WDP up to 31 December 2009, the estimated rental income for 2010 is some EUR 55,4 million. The projects in Genk, Tilburg and Nijmegen will be completed in the course of 2010, and will on the basis of signed lease contracts generate additional rental income of some EUR 1,5 million in 2010.
Property charges and other general expenses
Property charges
These charges consist mainly of the net costs of maintenance and repairs, utilities, taxes, insurance contracts and commission. They have been estimated for 2010 on the basis of the current portfolio and prior-year figures.
Overhead costs
These charges were estimated on a case-by-case basis for the financial year 2010, partly on the basis of prior-year figures. The main charges under this heading are:
- Fees for business manager
As business manager of WDP, De Pauw NV receives an annual fee that was approved by the remuneration committee (EUR 825.000 in 2009). Part of this fee is capitalised for current project developments.
- Remuneration of administrative staff
These costs relate to the administrative staff working for the company. The current remuneration levels were projected for the full financial year 2010. Personnel costs vary according to a pattern connected with developments in the current workforce and the growth level targeted by WDP.
- Accommodation costs
These costs comprise the contractual rents payable for WDP’s offices in Wolvertem.
- Fees for services
This category comprises mainly the estimated fees payable to outside advisers or experts including property surveyors, lawyers, tax specialists, accounting fees and auditor’s fees for audit and consulting services.
- Communication expenses
This category comprises the budget of the company relating to financial and business communications.
- Costs relating to the stock exchange listing and the status of WDP
This category comprises the annual CBI charge (taks op de collectieve beleggingsinstellingen), fees payable to the financial agent and the liquidity provider, and fees for the Euronext listing.
- Depreciation and amortisation
Depreciation and amortisation were estimated on the basis of the assets currently owned by WDP (except investment property and solar panels).
- Write-down on trade receivables
These costs were estimated taking into account the current economic climate.
Interest charges
- To calculate these costs, financial debt was estimated as follows:
- outstanding debt at 31 December 2009;
- an estimate of the additional debt for financing the ongoing investment
programme in 2010.
- As WDP hedges its interest rate risk on floating rate loans via Interest Rate Swaps this was taken into account on the basis of the currently existing swap contracts. The following (fixed) weighted average interest rates were applied to the hedged portion of the outstanding debt, including an average bank margin of 70 basis points on the basis of the currently existing loans:
- 4,62% for the first quarter of 2010;
- 4,65% for the second quarter of 2010;
- 4,65% for the third quarter of 2010;
- 4,75% for the fourth quarter of 2010.
- Total financial costs were further reduced by an estimated amount in capitalised interest. This estimate takes account of the current project developments and the scope for interest capitalisation (intercalaire rente op basis van gemiddeld 4,5%).
Taxes
These mainly comprise the corporate income tax payable annually. The tax base of WDP in Belgium and France is virtually zero (except for the effect on disallowed expenses and unusual benefits). An estimate was drawn up on the basis of the estimated local results for the other companies forming part of the WDP group. Account was taken for the Dutch companies (WDP Nederland BV and Royvelden Vastgoed BV) of a possible reorganisation for tax purposes.
Capital expenditure
The following investments are included in the outlook:
- the completion of the project in Tilburg (pre-let to Kuehne & Nagel) in the second quarter of 2010, worth EUR 11 million;
- the completion of the project in Genk (pre-let to Terumo) in the second quarter of 2010, worth EUR 7 million;
- the implementation of the investment in solar panels for the project in Genk (0,8 MWp), worth EUR 2,4 million;
- the completion of the project in Nijmegen (pre-let to Ter Beke) in the fourth quarter of 2010, worth EUR 15 million;
- the definitive sale of two thirds of the site in Sint-Niklaas in the course of the second quarter of 2010, worth EUR 12,8 million.
In addition, there are projects in the course of construction in Ternat, Puurs, Merchtem, Venlo (phase II) and Libercourt. These projects will possibly be completed in line with the degree to which they are let. This was not taken into account in the balance sheet forecasts.
These investments will be financed with additional debt and own funds.
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