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2020 perfomance
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Financial statements
WDP 2020 Annual Report
101
OUTLOOK ◆
The forecasts described below contain the expectations for the 2021 financial year with regard to the consolidated EPRA earnings and WDP’s consolidated balance sheet. The basis for their drafting and preparation is similar to that of the outlook for the 2020 and 2019 financial years and is in accordance with the WDP’s accounting policy and IFRS. These forecasts were drawn up on the basis of information available on 31 December 2020. The forecasts with regard to the consolidated balance sheet and the EPRA Earnings are predictions that will depend on changes in the economy, the financial markets and property markets. This prospective information and these forecasts, opinions and estimates prepared by WDP relating to its currently expected future performance and the market in which WDP operates do not constitute a commitment for the company. By their very nature, ‘forward-looking statements’ imply inherent risks, uncertainties and assumptions (both general and specific), including a risk that these statements will not prove to be accurate.
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Assumptions that are within WDP’s direct control ◆
Assumptions concerning elements that WDP cannot influence directly ◆
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Inflation: a weighted average inflation rate of 1.1% on the indexation of the leases in 2021, based on the economic consensus expectations as per 31 December 2020. Interest rates: an average level of one, three and six-month Euribor rates of -0.56%, -0.54% and -0.52% respectively. Financial hedging instruments: given their volatility, variations in their market values were not taken into account. These changes are irrelevant to the forecasts associated with the EPRA Earnings. Valuation of real estate portfolio and solar panels: no predictions are made regarding the variations in the fair value of the real estate portfolio and solar panels. This would be unreliable and subject to a multitude of external factors over which the company has no influence. These variations are also not relevant to the outlook for EPRA earnings. External events: It is assumed that no material changes will occur in the (geo)political and/or economic climate which could have a material impact on the Group, as well as no serious negative consequences from subsequent Covid-19 waves and/or lockdowns.
Regulatory and tax framework: it is assumed that no material changes occur in tax legislation or regulatory requirements that would affect the Group’s results or its accounting methods. Risks: the outlook may be affected, inter alia, by market, operational, financial and regulatory risks as described in chapter 9. Risk factors.
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Net rental result: the increase is mainly driven by external growth. The net investment volume of over 392 million euros achieved in 2020 will largely contribute to the result during the 2021 financial year. In addition, as announced, various pre-leased new construction projects are in execution with gradual delivery over 2021. As regards organic growth, the indexation of the leases is taken into account (see above). In 2021, 10% of the contracts will come to maturity, of which 57% could already be renewed at the time of the publication of the 2020 results and for which the current rent is therefore known. For the remaining 43%, rent renewals and/or extensions at comparable rent levels and after a possible vacancy period are taken into account. WDP is assuming a minimum average occupancy rate of 97% for 2020, compared to 98.6% at the end of 2020. Solar energy revenues: are estimated at around 17 million euros, an increase driven by the additional PV projects in the Netherlands and Belgium. Other operating income/expenses: this item includes the net effect of property taxes, the property management fee charged by WDP as well as some non-recurring income. Property costs: these are mainly the net costs (i.e. after any recharges) for maintenance and repairs, insurance contracts and commission. They have been estimated for 2021 on the basis of the current portfolio, the expected investments, and the evolution of the figures from previous financial years. General costs: these costs evolve in line with the growth of the portfolio, where the operational platform is further developed in a cost-efficient manner, in particular while maintaining the high operating margin above 91% (limited year-on-year increase given there was a one-off cost of 1.5 million euros related to digitisation in 2020). These costs include the operating costs of WDP, mainly salaries, renting offices, fees to external advisors and costs related to the stock exchange listing and external communication.
