Flexibility and stability
Q-Park is benefiting from the economic recovery in Europe. We are seeing the effects of greater consumer confidence in growing revenue figures, but the attacks in Paris and the threat of terrorism in Brussels certainly had an impact on our business in November 2015. We have even noticed a knock-on effect in London and Amsterdam. However, people quickly recovered and went about their daily business again.
December was a more than excellent month in terms of revenue. Our focus on the quality of our investments, higher utilisation rates by utilising commercial opportunities and continuing attention to operational efficiency has also contributed to the positive developments.
More important for the longer term is that we underpin our position as parking services provider, that adds value for all its stakeholders, with stable cash flows, robust funding and a cost-effective investment property portfolio. With this, Q-Park will become less dependent on fluctuations in the economy and our results will be more predictable.
It is exactly in times like we are currently experiencing, where social and technological developments emerge in rapid succession and when little is certain, that Q-Park will and can be a qualitative and functional anchor that others can count on.
Our financial policy is designed to put us in control of our company so that, together with all our stakeholders, we can reap the benefits of positive results. We aim to have sufficient working capital to enable us to optimise our operational business and to have sufficient investment strength to reinforce our position.
The refinancing that was arranged this year is particularly successful in this regard. The measures we have taken, in combination with new agreements with the banks, provide a broader financial basis for the company itself.
Very good financial results
Q-Park closed the 2015 financial year with positive results. We were able to maintain the upward trend that commenced in 2014 in revenue growth, operational result and free cash flow. The revenue increased by 5.2% compared to 2014 and came out at EUR 809.1 million.
The operational result is EUR 174.9 million (2014: EUR 174.7 million). Corrected for the additional lease costs (approximately EUR 8.5 million) as a result of the sale-and-leaseback transactions conducted in 2014, this represents a growth of approximately 5.0%. The net result grew from EUR -227.7 million to EUR 90.9 million.
We are perfectly on schedule with the four-year plan that our shareholders approved in 2015.
In this report we give an account of our non-financial results. Corporate social responsibility is an integral part of our identity, of our policy, and of the way in which we manage our company.
We contribute to societal value with our parking products: they improve the quality of life in urban areas and help reduce air pollution generated by traffic cruising for a place to park. We enhance our employees job satisfaction and their competences by providing relevant education and manuals. And for the parking customer, we add value by providing functional products and services and by involving them in our activities.
Appeal of the multifunctional city
Q-Park wants to grow in multifunctional cities and sees good opportunities for this. Urbanisation continues: population is declining in rural areas faster than expected. The wealthy are migrating to the cities. This affects the number of vehicles and the demand for parking spaces, which will continue to grow in large cities. This drift coincides with the trend towards increasingly autonomous and more environmentally friendly cars. One of the accompanying challenges for city councils is to maintain a liveable city.
We observe municipalities developing an integral vision on mobility, liveability and sustainability and that they are defining rules for these priorities. Their measures include traffic restrictions, P+R facilities, environmental zones, differentiated parking tariffs and EV charging facilities. There is still much uncertainty about the future features of the smart city. Yet city councils are often faced with major investment decisions associated with, for example, an integral mobility policy.
In this respect, a decision about constructing a parking facility is no longer an isolated investment property decision. Parking is part of the mobility policy and therefore of smart city policy. In order to realise this policy, city councils have a need for solid parking providers who make long-term commitments and who offer sufficient flexibility to adapt to local circumstances.
Our vision and strategy to expand Q-Park's position in multifunctional inner cities fits in with this seamlessly. In Amsterdam, for example, we have this position, which has enabled us to implement good solutions to improve the quality of life in the city. One feature allows parking permit holders to park their cars in parking facilities at night at no charge. The city, the residents and Q-Park benefit from this good collaboration.
The bankruptcy of a number of major retail chains in the Netherlands in 2015 is not an isolated incident. Similar trends are observed in other countries. It shows that the retail landscape has changed permanently, and a new equilibrium will emerge. In the retail sector, and particularly in fashion, store sales have declined in recent years, while online sales have increased.
That doesn't mean to say that people stay at home. The larger cities with an attractive retail offering still attract many shoppers. Their purchasing behaviour may have changed, but the reason they come to the shops and how they get there has not. We see this reflected in the utilisation rates of our parking facilities: this has improved. Even in Finland, where the economic climate is still stormy, we see the utilisation rates improving.
What we also observe is that there is no relationship between paid parking and the retail turnover. In other words: free parking does not increase retail sales.
A learning organisation
For the Q-Park organisation, 2015 was a year of change. We focussed on stability in combination with flexibility. We have configured the company's management so that we can take maximum advantage of our scale of operations by introducing more uniformity in the processes and systems while maintaining the flexibility to respond to local customer needs or differences in the market.
For this, we have created a regional structure as organisational layer between the holding company and the individual countries. The regions monitor the strategic direction and ensure that local requirements are interpreted properly. This change also encourages the exchange of knowledge and ideas. Countries can copy each other's ideas about how to encourage customers to use a payment card instead of labour-intensive and risk-sensitive cash. They can also share expertise so that the most cost-effective projects are selected.
ICT plays a crucial role in standardisation as well as enabling a flexible response to local requirements. We bring in knowledge and offer technical solutions, such as number plate recognition and paying by smartphone or payment card. With such solutions, Q-Park sets the convenience standard for the parking customer.
Employees: the strength of our organisation
Q-Park stands for quality in parking, and we fulfil this promise through our employees. We are at the centre of society and we feel responsible for the well-being of our people. We do a great deal for them, such as providing training to increase their resilience.
We want to make better use of the strength of our organisation, not only for our customers but also for our employees. That is why, in 2015, we commenced preparations for internationally supported baseline assessment concerning employee motivation and satisfaction. This employee satisfaction survey will be conducted in 2016. We will use the outcome to initiate the dialogue with our employees about possible improvements.
Executive and supervisory boards
During the past two years there have been many changes to Q-Park's executive and supervisory boards. In August 2014, Frank De Moor became our CEO and in October 2015, we appointed a new CFO: Marcello Iacono. He comes from the PLUS supermarket chain and brings extensive retail knowledge.
There have also been comings and goings among the members of the supervisory board: Mr Elverding and Mrs Peijs retired and Mrs Dertje Meijer and Mr Michel Schaeffer were appointed in their place. With this new combination of Executive Board and Supervisory Board, we are well equipped to position Q-Park, with the Q for 'Quality', even more firmly as the stable and qualitative company that adds value for its stakeholders and society.
Theo Thuis - COO
Maastricht, 16 March 2016