| | POLISH FINANCIAL SUPERVISION AUTHORITY | | | | | | | UNI - EN REPORT No | 3 | / | 2015 | | | | | | Date of issue: | 2015-03-19 | | | | | | | | | | | Short name of the issuer | | | | | | | | | | PLAZA CENTERS N.V. | | | | Subject | | | | | | | | | | | | | Full Year results for the year ended 31 December 2014 | | | | Official market - legal basis | | | | | | | | | Inne uregulowania | | | | Unofficial market - legal basis | | | | | | | | Contents of the report: | | | | | | | | | | | CONTINUED OPERATIONAL IMPROVEMENT, PROGRESS IN PORTFOLIO REPOSITIONING AND COMPLETION OF THE RESTRUCTURING PROCESS
Plaza Centers N.V. (“Plaza" / the “Company" / the “Group"), a leading property developer and investor with operations in Central and Eastern Europe (“CEE") and India, today announces its full year results for the year ended 31 December 2014.
Financial highlights:
• Reduction in total assets to €466 million (31 December 2013: €586 million), primarily due to the impairment of trading properties and equity accounted investees, and to the strategic disposal of Kragujevac Plaza, Serbia.
o 25% (€124 million) reduction in the book value of the Company’s trading properties, largely due to impairments recorded.
• A 3.5% increase in 2014 in NOI from the operation of shopping centres (from €17 million to €17.6 million, including company share in NOI from commercial centre of Riga, Latvia). Excluding the impact of the commercial centre Kragujevac, which was sold in the summer of 2014, the Group recorded a 13% increase in NOI from the operation of shopping centres (from €13.2 million to €14.9 million).
• Net Asset Value decreased by 44% to €153 million (31 December 2013: €274 million) primarily as a result of the impairment of assets, mainly in Romania, Greece and India.
o Net Asset Value per share of £0.17 (31 December 2013: £0.79), a decline of 78%, attributable to dilution (increase in the number of shares by 130%) and the abovementioned impairments.
• Losses in the period of €120 million (31 December 2013: Loss of €218 million), stemming from a non-cash €89 million impairment of trading properties and equity accounted investees (31 December 2013: €186 million of impairments), and an overall net finance cost of €36 million (2013: €39 million).
o Basic and diluted loss per share of €0.39 (31 December 2013: loss per share of €0.73).
• Consolidated cash position at year end (including restricted bank deposits, short term deposits and held for trading financial assets) of €41.7 million (31 December 2012: €33.7 million) and current cash position of circa €39.5 million (€7 million restricted).
• Gearing increased to 74% (31 December 2013: 64%) as a result of impairment losses and finance costs incurred during the year.
 
Asset and operational highlights:
• During the period, Plaza made significant headway in the repositioning of its portfolio, disposing of a number of non-core assets:
o In the fourth quarter of 2014, 18 months ahead of schedule, Plaza successfully completed the disposal of Kragujevac Plaza in Serbia for €38.6 million, in line with the asset’s last reported book value. Following the repayment of related bank debt of c. €28.2 million, 75% of the net cash proceeds (c. €12.4 million, including the released restricted cash deposit of c. €2 million) were distributed to the Company's bondholders as an early repayment of the bonds, in line with the Company’s stated restructuring plan.
o Successful disposals of non-core sites in Romania, at Targu Mures (September 2014) and Hunedoara (December 2014), for €3.5 million and €1.2 million respectively, consistent with the assets’ last reported book values.
• Improved occupancy and turnover were recorded across the Company’s existing shopping and entertainment centres in the CEE, with the overall portfolio occupancy level increasing to 94% as of 31 December 2014.
o At Torun Plaza, Poland, occupancy increased to 92.5% (2013: 89%). An additional 4,100 sqm of GLA was opened during the year, and asset management initiatives contributed to a 21.2% increase in turnover and 6.3% increase in footfall compared to 2013.
o In Latvia, Riga Plaza’s occupancy level increased to 99.5% (2013: 97%) and the shopping centre recorded the second highest increase in turnover in the portfolio (15.6%) along with a 7.2% increase in footfall.
o Occupancy at Suwalki Plaza, Poland increased to 97.7% (2013: 91%) and it continues to perform well, with a 7% increase in turnover in 2014.
o Zgorzelec Plaza, Poland also experienced strong occupancy growth, reaching 95.2% (2013: 91%), attributable to the opening of a 547 sqm store for Carry and a number of smaller fashion and service stores. The centre reported a 14.1% increase in turnover and 8.4% in footfall.
o Liberec Plaza, Czech Republic reported a 7.5% increase in turnover in 2014. Occupancy remains steady at 84% (2013: 86%), the slight decrease due to lease agreement expiries, which were in part offset by the opening of a 1,611 sqm Sports Direct store in April.
• Considerable letting success was achieved and contracts with a number of significant new tenants improved the overall tenant strength and mix in the portfolio, including TK Maxx, Sports Direct and Carry. In April, H&M opened its largest store in Latvia (2,700 sqm) at Riga Plaza, where a further 1,060 sqm was leased to Elkor Kids. At Suwalki Plaza, more than 87% of the existing tenants signed lease options or renewals during the year and leases for new premises were secured with KIK and several fashion stores.
 
Key highlights since the period end:
• On 24 February 2015, the Israeli credit rating agency which is a division of International Standard & Poor’s, updated the credit rating of Plaza’s two series of Notes traded on Tel Aviv Stock Exchange from “D" to “BBB-", on a local Israeli scale, with a stable outlook.
• On March 13, 2015, one of the Company’s subsidiaries in Romania, which has a 49 year leasehold on a plot in Bucharest, Romania (Cina), signed a pre-agreement to waive its leasehold rights for a certain consideration to be agreed with the owner of the property (a subsidiary of EI) and approved by the relevant stakeholders of these entities. The mentioned pre-agreement is subject to the fulfilment of certain conditions and approval by the relevant stakeholders of the Company.
• After almost 10 years at the helm, Plaza’s CEO, Ran Shtarkman has informed the Board of Directors that he intends to leave the Company to pursue other opportunities. The Board of Directors has accepted Mr. Shtarkman's resignation and he has agreed to continue in the role until the end of July, to ensure an orderly succession. Commenting on the results, Ran Shtarkman, the President and CEO of Plaza Centers, said:
“During 2014 we successfully completed the restructuring process midway through the year, with resounding support from our creditors. This was followed by the completion of a successful rights offering in the last quarter, which provided Plaza with a €20 million capital injection and marked an important final step in the restructuring process. A third listing on the Tel Aviv Stock Exchange and the recent upgrade in our credit rating from the Israeli division of Standard & Poor’s have further underlined the achievements of the year and put us in a strengthened position going into 2015.
“In terms of the portfolio, we have continued our efforts to dispose of non-core assets and we are pleased to report considerable operational improvements across our CEE shopping centre portfolio. Of particular note was the sale of Kragujevac Plaza in Serbia, which was completed a year and a half ahead of schedule, with 75% of proceeds being returned to our bondholders as per our restructuring agreement, as well as sales of two non-core sites in Romania. These disposals have been in line with our strategy to shed the portfolio of non-core assets in order to deleverage the balance sheet and pay down debt.
“Alongside this activity, operational and asset management initiatives have been continuing with strength. Occupancy has risen to 94% across the portfolio and our centres continued to attract high profile, international brands including TK Maxx, Sports Direct and H&M, contributing to higher footfall and turnover across our core CEE portfolio.
“We have been working closely with our reconfigured Board and its continued confidence in the management’s ability to deliver value and repay the Company’s creditors is supportive of our strategy going forward. The economic landscape in our core markets is improving slightly and we have entered 2015 with renewed focus.
“In light of this, after 13 years with Plaza and following the recent successful completion of the debt arrangement, I have decided to embark on a new journey, confident in the knowledge that Plaza is now a stronger and more resilient business.
“While Plaza Centers is a real estate company, one of its best assets is its people. I wish to thank all of my colleagues, especially the founder of the company Motti Zisser, who gave me my first major role at Plaza, and the current and former shareholders and Directors. Most importantly I would like to pay tribute to the hard work of the Company's employees across seven countries who are at the heart of the day to day running of this international real estate development company. I hope that in the next chapter of my career I can achieve the same level of satisfaction and fulfilment as I have experienced in the growth and management of Plaza Centers."For further details please contact:
Plaza
Ran Shtarkman, President and CEO
Roy Linden, CFO
+36 1 462 7221
+36 1 462 7222
FTI Consulting
Dido Laurimore/Claire Turvey
+44 20 3727 1000
 
Notes to Editors
Plaza Centers N.V. (www.plazacenters.com) is a leading property developer and investor with a significant presence across Central and Eastern Europe and operations in India. It focuses on constructing new shopping and entertainment centres and, where there is significant potential, redeveloping existing centres in both capital cities and important regional centres. The Company is listed on the Main Board of the London Stock Exchange, the Warsaw Stock Exchange and, as of 27 November 2014, the Tel Aviv Stock Exchange (LSE:"PLAZ", WSE: “PLZ/PLAZACNTR"; TASE: “PLAZ"). Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. (“EIL"), an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and the NASDAQ Global Market in the United States. It has been active in real estate development in emerging markets for over 19 years.
Forward-looking statements
This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial) performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. Plaza Centers N.V. has no obligation to update the statements contained in this press release, unless required by law.
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