| | POLISH FINANCIAL SUPERVISION AUTHORITY | | | | | | | UNI - EN REPORT No | 13 | / | 2015 | | | | | | Date of issue: | 2015-08-19 | | | | | | | | | | | Short name of the issuer | | | | | | | | | | PLAZA CENTERS N.V. | | | | Subject | | | | | | | | | | | | | RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015 - SIGNIFICANT OPERATIONAL PROGRESS IN FIRST HALF AS FOCUS ON CORE MARKETS CONTINUES | | | | Official market - legal basis | | | | | | | | | Inne uregulowania | | | | Unofficial market - legal basis | | | | | | | | Contents of the report: | | | | | | | | | | | Plaza Centers N.V. (“Plaza" / “Company" / “Group"), a leading property developer and investor with operations in Central and Eastern Europe (“CEE") and India, today announces its results for the six months ended 30 June 2015.
Financial highlights:
• Successful sale of non-core assets saw total assets reduce to €428 million (31 December 2014: €466 million), primarily due to the divestment of Koregaon Park Plaza
• Book value of the Company’s Trading property decreased by 12% (€46 million) over the period, primarily due to the disposals and focus on income-producing assets
• Net Operating Income (“NOI") (excluding Riga Plaza shopping centre which is accounted for as an equity accounted investee) for the Company in the first six months of 2015 slightly decreased to €6.5 million (first six months of 2014: €7.9 million), mainly due to the Kragujevac disposal (effective end August 2014) with 2014 comparatives including NOI to June 2014 of circa €1.9 million
• Across our core shopping centres (excluding Riga Plaza), NOI rose by circa 8% compared to the first six months of 2014
• Loss narrowed in the first half of 2015 to €36 million (first half of 2014: loss of €98.5 million), stemming from €28 million of mostly non-cash net finance costs (Forex and Bonds discount amortisation), as well as impairments and losses in connection with selling Trading property for a total net amount of €15 million in 2015 compared to a net (and mostly non-cash) finance costs of €27 million and impairments of €70 million in the first half of 2014. Basic and diluted loss per share of €0.05 (June 30, 2014: loss per share of €0.33)
• Consolidated cash position as at June 30, 2015 (including restricted bank deposits, short term deposits and held for trading financial assets) rose to €46.5 million (31 December 2014: €41.7 million) and current cash position of circa €41.4 million (€11.4 million restricted).
• Gearing increased to 78% (31 December 2014: 74%) due to non-finance costs incurred during the first six months of 2015Asset and operational highlights:
Operational performance
• A stable occupancy level was recorded across the Company’s existing shopping and entertainment centres in the CEE, with the overall portfolio occupancy level decreasing slightly to 93.11% as of 30 June 2015 compared to 94% at 31 December 2014.
o At Torun Plaza, Poland, occupancy increased to 94.08% (2014: 92.5%) which contributed to a slight 6.5% increase in both turnover and footfall compared to the same period in 2014.
o In Latvia, Riga Plaza’s occupancy level showed a decrease to 96.17% (2014: 99.5%) which is the direct result of a small number of retailers leaving the Latvian market altogether, but despite this the shopping centre recorded a 11.27% increase in turnover along with a 4.7% increase in footfall, compared to the same period in 2014.
o Occupancy at Suwalki Plaza, Poland, decreased to 96.33% compared to the same period in 2014 due to the expiry of the first five-year lease term (although most of the tenants continued with their leases) from 2014 (97.7%). The vacancy level is expected to improve through ongoing negotiations with replacement tenants and we expect that the mall will reach close to 100% occupancy soon. The centre continues to perform well, with a 1.75% increase in turnover in first half of 2015 and 2.44% increase in footfall, compared to the same period in 2014.
o Zgorzelec Plaza, Poland, experienced an occupancy decrease, reaching 87.3.% (2014: 95.2%), attributable to the closing of the supermarket unit (Stokrotka). Despite this, after successful discussions with tenants most of them chose to stay with the centre. Positively, Zgorzelec Plaza was able to make a 3.5% increase in turnover compared to the same period in 2014 while footfall was stable.
o At Liberec Plaza, Czech Republic, occupancy slightly decreased to 82.83% (2014: 84%), due to lease agreement expiries while turnover increased by 11,6% in 2015 compared to the same period in 2014.
• Across the portfolio, considerable letting success was achieved and contracts agreed with a number of significant new tenants. This improved the overall tenant strength and mix in the portfolio, and included agreements with KIK, Kinder Planeta, Pink and Cliff Sport. In August, Adidas, Drogas and other well-known brands will open stores in Latvia at Riga Plaza. Both Suwalki Plaza and Zgorzelec Plaza successfully agreed to extend their first five-year lease agreements which will help to deliver sustainable income for the coming years.
Progress in portfolio rationalisation
• On 24 June 2015, Plaza reached an agreement to sell its 46,500 sqm development site in Iasi, Romania, in two separate transactions (one for the sale of 37,334 sqm and the other for the sale of 9,166 sqm), for a gross consideration of €7.3 million. There was no bank debt secured against the property. In line with the Company’s stated restructuring plan, 75% of the net cash proceeds from the transactions will be distributed to the Company’s bondholders by the end of September 2015 as an early principal repayment.
• On 13 May 2015, Plaza announced the agreement to sell its Indian shopping mall located in Pune, India, for c. €35 million. The net cash proceeds (after repayment of the related bank loan, other liabilities and transaction costs) from the sale was c. €7.4 million (525 million INR). The net cash proceeds from the sale will be put towards Plaza’s future investments and used for general corporate purposes.
Key highlights since the period end:
• On 10 July 2015, the Board of the Company announced the appointment of Mr. Akiva Azulay as its new CEO, starting in August 2015. This follows the announcement made by the Company on 17 March 2015 that Mr. Ran Shtarkman, the previous CEO of Plaza, would retire from his position at the end of July. Akiva Azulay joins Plaza with a strong business management and financial background alongside extensive real estate and retail experience. Most recently, Akiva was at Delek Group, one of Israel's largest companies. Akiva supported Delek’s activities in the UK and played a key role on behalf of Delek in the eventual sale of its major UK real estate led operational business, in September 2014. Akiva previously held senior roles at AFI Europe (part of Africa-Israel Investments) between 2004 and 2010, most recently as Vice President, where he managed real estate operations across Central and Eastern Europe. Before this, Akiva also worked at Bank Hapoalim, the largest Israeli Bank, as an economist in the real estate investment department, handling the provision of credit to construction and development projects in Israel. Akiva holds a B.Sc and M.Sc from Ben-Gurion University as well as a certificate in real estate valuation and appraisal certification from Tel-Aviv University.
• In July 2015, Plaza received building permits to develop two new shopping and entertainment centres: Belgrade Plaza (32,000 sqm GLA) and Timisoara Plaza (37,000 sqm GLA)
o Belgrade Plaza located on Visnjicka Street and adjacent to the Danube River in old Belgrade, is a new development which will include approximately 110 retail units, a supermarket and a multi-screen cinema complex. Belgrade Plaza will be the first modern, western style shopping and entertainment centre in the old part of Belgrade and Plaza expects to attract both local and international brand occupiers. The project is in line with Plaza’s strategy to develop shopping centres in capital and regional cities, primarily in Central and Eastern Europe. Plaza is in the final stages of agreeing bank financing and construction is expected to commence by the end of 2015, with completion targeted for the first half of 2017.
o Situated close to the Hungarian border, Timisoara is the primary social, economic and cultural centre in the western part of Romania, with a population of 320,000 inhabitants and a catchment area of approximately 700,000. The new development, on a site which is well located at a three-way junction near to the city centre, will comprise around 120 retail units, including a hypermarket complex across a whole floor, international fashion retailers, a leisure and entertainment centre, and a food court. Construction is expected to commence on the project in autumn 2015 with completion expected during the first half of 2017. A binding financing offer has also been agreed with the Hungarian Export-Import Bank Plc (Exim bank) for circa 65% of the project cost.
• Today Plaza Centers also announces that the Company’s CFO for the past nine years, Mr. Roy Linden, has indicated his wish to step down from the Company in order to seek a new career challenge. Mr, Linden joined the Company in November 2006 following its London IPO at a time when total assets were nearly half a billion euros, and served through peak times when total assets reached €1.5 billion with activities in twelve countries. The Board and Management thank Mr. Linden for his vast contribution to the Company. Mr. Linden, is expected to remain in position over the coming months until a successor is named.
For further details, please contact:
Plaza
Akiva Azulay, CEO
Roy Linden, CFO
+36 1 462 7221
+36 1 462 7222
FTI Consulting
Dido Laurimore / Claire Turvey / Tom Gough
+44 (0)20 3727 1000
Notes to Editors
Plaza Centres N.V. (www.plazacenters.com) is a leading emerging markets developer of shopping and entertainment centres with operations in Central and Eastern Europe and India. It focuses on constructing new centres and, where there is significant redevelopment potential, redeveloping existing centres in both capital cities and important regional centres. The Company is dual listed on the Main Board of the London Stock Exchange and, as of 19 October 2007, the Warsaw Stock Exchange (LSE:"PLAZ", WSE: “PLZ/PLAZACNTR"). Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. (“EI"), 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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