- IFRS profit before tax of £686.5 million (2014: £654.4 million) combines higher underlying profits with another year of significant capital value growth.
- Adjusted EPS of 18.4 pence represents a 7 per cent increase from 2014 (17.2 pence), driven by improving like-for-like rental income, a record low vacancy rate of 4.8 per cent, new developments, acquisitions and lower financing and operating costs.
- 21 per cent increase in EPRA NAV per share to 463 pence reflecting capital value increases from a high quality portfolio which has benefited from yield shift and rental growth, particularly in the UK, as well as gains from developments and profits on disposal.
- Development programme and well-located land bank to drive significant future growth. The current construction programme and medium term development projects are capable of delivering annual rental income of approximately £109 million, equivalent to 38 per cent of SEGRO’s current income stream, over the next five years.
- Final dividend increased by 3.9 per cent to 10.6 pence (2014: 10.2 pence).
“2015 has been another very good year for SEGRO and we are reporting strong results. The outlook for occupational demand remains encouraging and the new year has started well, with a healthy pipeline of lettings and new development opportunities. Whilst there are a number of broader economic and geopolitical uncertainties, we are confident that our portfolio is well positioned to be able to deliver growth and outperform the wider property market.”
FINANCIAL AND OPERATING HIGHLIGHTS1
Strong operating performance across the Group
- 4.2 per cent like-for-like net rental income growth, including 5.2 per cent in the UK and 1.2 per cent in Continental Europe.
- 11 per cent increase in new rent contracted to £39.3 million (2014: £35.4 million), including £18.7 million from standing stock and £14.1 million from new development pre-let agreements.
- Completed developments added £9.9 million of annualised rental income (£11.8 million when fully leased). Additionally, the committed development pipeline is 61 per cent pre-let and expected to deliver £26.1 million of annualised rental income when completed and fully leased.
- Vacancy rate improved further to 4.8 per cent (31 December 2014: 6.3 per cent) largely due to strong net absorption of existing space and development lettings. Approximately a quarter of current vacant space is in newly completed developments, which we expect to lease in the near future.
- Portfolio capital value growth of 11.1 per cent. The UK completed portfolio increased by 13.1 per cent (outperforming the MSCI-IPD UK All Industrial Quarterly Index capital return of 10.6 per cent) combining a 30 basis point reduction in equivalent yield, development completions, asset management initiatives and rental value growth of 4.4 per cent. The Continental European completed portfolio increased by 7.9 per cent, reflecting mainly a 100 basis point improvement in equivalent yield. Rental values fell 0.9 per cent for the year overall but were stable in the second half.
- EPRA NAV per share increased by 21 per cent to 463 pence (31 December 2014: 384 pence), primarily the result of the improvement in the value of completed assets and development gains.
- £719 million of investment in our portfolio, focused on developing new assets (£164 million) and adding to the land bank (£221 million), as well as £334 million of acquisitions in a number of markets where we wish to build scale: Northern Italy, the Netherlands and the UK.
- £661 million of disposals of assets not core to our strategy, including offices in Milan and (post year-end) in Slough which resulted in a pro forma look-through LTV ratio of 34 per cent (31 December 2014: 40 per cent).
- Occupational market conditions remain favourable, particularly in the UK, principally reflecting the structural changes in consumer demand from e-commerce driving retailers to review and re-design their supply chains and fuelling demand for last mile delivery space. The supply of modern, flexible warehouse space has also remained limited, and there are no signs of an impending over-supply.
- Investment market appetite remains healthy but increasingly selective, focused on prime buildings in prime locations, where rental growth prospects can justify current yield levels. We see potential for further capital growth across our markets, but the pace is likely to slow, in the UK in particular, and be based more on the prospects for rental growth than on further yield compression.
- Group’s priorities remain focused on disciplined capital allocation and operational excellence. Notwithstanding broader economic and geopolitical uncertainties, we will continue to actively manage our existing assets and develop modern warehousing on our well-located land bank to take advantage of the favourable supply-demand dynamics in our markets and to drive attractive risk-adjusted returns for our shareholders.
1All figures quoted in this statement refer to SEGRO’s share, except for land (hectares) and space (square metres) which are quoted at 100 per cent, unless otherwise stated.
source: sergo.com
