TIDMPLAZ
RNS Number : 9688Z
Plaza Centers N.V.
14 March 2013
14 March 2013
PLAZA CENTERS N.V.
Full Year results for the year ended 31 December 2012
Plaza REPORTS STRONG OPERATIONAL PROGRESS with improved
portfolio occupancy
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 full year
results for the year ended 31 December 2012.
Financial highlights:
-- Reduction in total assets to EUR958 million (31 December
2011: EUR1.3 billion), primarily due to the disposal of the
Company's US assets of EUR263 million
-- Increase of 45.3% in the value of completed trading
properties due to the completion of Kragujevac Plaza and Koregaon
Park Plaza
-- Book value of the Company's landbank reduced by 11% over the
year, or by EUR60 million, primarily due to impairments recorded
mainly within the Romanian and Hungarian land portfolio
-- Increase in gross revenue of 77% to EUR41.6 million (2011;
EUR23.5 million) due to additional rental income received during
the year from shopping centres completed and opened to the public
during 2012 and late 2011. (The rental income along with all other
elements related to the disposed US operation in the Financial
Statements as of 31 December 2011 were restated due to
reclassification of income and expenses from discontinued
operations)
-- Net Asset Value decreased by 24% to EUR459 million (31
December 2011: EUR601 million) primarily through the impairment of
assets in Romania and Hungary
-- Net Asset Value per share of GBP1.26 (31 December 2011:
GBP1.69), a decline of 25%, attributable mainly to the above
mentioned impairments
-- Loss for the year of EUR85.9 million (31 December 2011:
EUR13.9 million profit), which stems from a non-cash EUR79 million
impairment of trading properties, of which 59% related to
impairments of assets in Hungary and Romania and an overall net
finance cost of EUR16.5 million compared to a net finance income of
EUR74 million of 2011. The prior year finance income figure of
EUR74 million was based on the substantial decrease in fair value
debentures and related foreign exchange gains measured through the
profit or loss account
-- Basic and diluted loss per share of EUR0.29 (31 December 2011: EUR0.03 earnings per share)
-- Cash position at year end (including restricted bank
deposits, short term deposits and available for sale financial
assets) of EUR102 million (31 December 2011: EUR108 million) with
working capital of EUR558 million (31 December 2011: EUR585
million); current cash position of circa EUR90 million
-- Gearing reduced to 53% (31 December 2011: 59%) through a
EUR138 million repayment of debt including assumption of part of
bank loans related to US assets
-- (On 20 November 2012, the Board approved the extension of the
Company's second bond buyback programme of A and B series Notes
traded on the Tel Aviv Stock Exchange. The bond buyback programme
will conclude by 31 December 2014 with a maximum amount to be
purchased of up to NIS 600 million, increased from NIS 150 million.
Under the two bond buyback schemes (the first was concluded on 28
November 2011 in which the target of NIS 150 million was fully
executed), Plaza has to date repurchased and cancelled NIS 38.6
million par value of its A and B series bonds and an additional NIS
232 million of par value A and B bonds have been re-purchased and
held in treasury through the Company's wholly owned subsidiary. As
of 31 December 2012 the outstanding amount was NIS 181 million par
value, as a result of bond repayments.
Operational highlights:
-- Improved occupancy levels achieved across the Company's
existing shopping and entertainment centres, with the overall
portfolio occupancy rate increasing from 85% in 2011 to 88.5% as at
the reporting date, with the following notable successes;
o At Torun Plaza, Poland, occupancy increased to 84% (2011:
80%)
o At Suwalki Plaza, Poland, occupancy to 90% (2011: 89%)
o At Zgorzelec Plaza, Poland, occupancy increased to 89% (2011:
79%), in addition to a 14% increase in footfall compared to the
prior year
o At Liberec Plaza, Czech Republic, occupancy increased to 80%
(2011: 78%)
o At Riga Plaza, Latvia, occupancy increased to 94% (2011: 90%)
and footfall by 21% on a year-on-year basis
-- The construction of Plaza's first retail scheme in Serbia,
Kragujevac Plaza, was completed and opened to the public on 20
March 2012. The 22,000 sqm GLA centre was 90% let on opening and a
further 8% of space has been let since with strong interest
expressed in the remaining units. Early trading has been extremely
encouraging with over 3,000,000 visitors in its first year of
operation
-- In June 2012, EPN Group, Plaza's US based joint venture,
completed the sale of 47 of its 49 US based assets to BRE DDR
Retail Holdings LLC, a joint venture between Blackstone Real Estate
and DDR Corp. in a transaction valued at US$1.428 billion. The
transaction generated a gross cash inflow of circa US$120 million
(EUR92 million) to the Company before taxes and transaction
costs
-- In July EPN Group completed the disposal phase of the
Company's highly successful first venture in to the US with the
sale of its two remaining US assets for US$41.8 million out of
which US$13 million was settled by assumption of debt. The
transaction generated a gross cash inflow of circa US$6.6 million
(EUR5 million) to the Company
-- Phase one of the Kharadi Plaza project known as "Matrix One",
a 50:50 joint venture with a local partner, was completed in
February 2012. Located in Pune, India, 'Matrix One', a 28,000 sqm
GLA office, was 70% pre-sold upon opening. The construction of the
second office building, out of a total of four offices planned for
the development, commenced in Q3 2012 and 37% of the space
available has been pre-sold to date
Key highlights since the period end:
-- On 8 March 2013 the Company has received a notification that
the ING Open Pension Fund of Poland (with assets under management
of over 15 billion Euros) has increased its stake from 9.8% to
11.8% (representing 35,075,662 shares) in the Company,
demonstrating its confidence in the Company
Commenting on the results, Ran Shtarkman, the President and CEO
of Plaza Centers, said:
"Plaza has achieved a number of operational successes during the
year through the opening of shopping centres in new markets for the
Company , including Serbia and India, as well as achieving
significant improvements in occupancy levels over the year, which
at the reporting date stands at 88.5% compared to 85% at the end of
2011. This improvement has arisen through the leveraging of the
deep relationships we have created with retailers over a number of
years, many of whom we have helped introduce into new geographies.
Furthermore, during the year we completed the disposal of EPN
Group's, our US based joint venture, entire portfolio of US assets.
This generated gross proceeds of USD$ 120 million, an excellent
return on the USD$82 million of equity invested, generated in less
than two years, bringing to a close a highly successful first
venture into the US market for the Company.
"We continue to evaluate our extensive development pipeline,
which we believe offers substantial opportunities for the future.
However, in the short term, we cannot ignore the impact, potential
or actual, of the ongoing issues of the Eurozone on the economies
in which we operate. We will therefore continue to take a prudent
and pragmatic approach to committing significant equity to commence
new projects. This being said, we continue to progress a limited
number of projects in the most resilient countries of the CEE, such
as Poland and Serbia, where GDP growth and forecasts remain above
the averages for Europe. During the year, we have been especially
pleased with the success of Kragujevac Plaza in Serbia, the first
shopping and entertainment centre to be built outside the capital,
Belgrade, which has attracted over 3,000,000 visitors in its first
year of trading. This notable achievement gives us real confidence
for the remainder of our carefully considered Serbian development
programme.
"In our efforts to best position the Company against this
ongoing economic and market uncertainty, we made good progress
during the year in our ambitions to deleverage, reducing our level
of debt by EUR138 million or from 59% to 53% of the balance sheet,
and our intention is to reduce this further over the coming year.
We will continue to develop selectively where we see the strongest
tenant demand and where development financing can be secured,
ensuring we appropriately de-risk our development pipeline."
For further details please contact:
Plaza
Ran Shtarkman, President and CEO +36 1 462 7221
Roy Linden, CFO +36 1 462 7222
FTI Consulting
Stephanie Highett/Daniel O'Donnell +44 20 7831 3113
Notes to Editors
Plaza Centers N.V. (www.plazacenters.com) is a leading property
developer and investor with operations in Central and Eastern
Europe, India and the USA. 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. Plaza Centers is a member of the Europe Israel Group of
companies which is controlled by its founder, Mr Mordechay Zisser.
It has been active in real estate development in emerging markets
for over 17 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.
PRESIDENT AND CHIEF EXECUTIVE OFFICER'S STATEMENT
I am pleased to report that Plaza has delivered a further year
of operational progress with the delivery of projects into new high
demand markets, driving occupancy at our previously completed
assets and the completion of the disposal of our highly successful
first venture into the US market.
Despite GDP growth of +1.8% in CEE during 2012, it remained a
challenging year for some of the economies in which we operate,
particularly Hungary and Romania (GDP decreased by 1% in Hungary
and in Romania recorded anaemic growth of 0.9%), and this has been
reflected by the write downs to our landbank assets recorded during
the year. Real estate investment volumes for CEE in 2012 also
decreased significantly, recording a 35% drop year on year. These
trends confirm that we were correct in our strategy to hold and
actively asset manage our completed developments, enjoying the
rental income they produce, until sales prices which appropriately
reflect their current and existing potential are achieved.
Key Events
In June 2012, EPN Group, Plaza's US based joint venture,
completed the sale of 47 of its 49 US based shopping centres in a
deal totalling US$1.428 billion. The centres were acquired by BRE
DDR Retail Holdings LLC, a joint venture between Blackstone Real
Estate and DDR Corp. in a transaction of total US$1.428 billion, a
where US$934 million (as of the agreement date) was paid by the
assumption of the property level debt.
The successful completion of the transaction generated a gross
cash inflow for the Company of US$120 million, a significant return
over a period of less than two years on its equity investment of
circa $82 million. This was in addition to a dividend received from
EPN in September 2011 of $US5.9 million. During the investment
period, Plaza and its joint venture partners were able to
successfully restructure, reposition and improve the portfolio of
47 properties by taking EDT Retail Trust private and transferring
key personnel and management from Australia to the U.S. and
undertaking a number of management initiatives. These included the
refinancing of circa US$500 million of portfolio debt, improving
the cost structure, improving occupancy by 3% since EPN's initial
acquisition of the properties and increasing the stabilized NOI of
the properties via re-letting expiring lease agreements.
The remaining two assets in the US portfolio were sold in July
for US$41.8 million out of which US$13 million was settled by
assumption of debt, completing the disposal phase of the Company's
highly successful first investment in to the US market.
The construction of Plaza's first retail scheme in Serbia,
Kragujevac Plaza, was completed and opened to the public on 20
March 2012. Early trading at the mall has exceeded the Company's
already high expectations with excellent feedback received from
both retailers and shoppers. Since opening, the centre has
attracted over 3,000,000 visitors, as at March 2013.
Kragujevac Plaza is the first shopping centre to be completed
outside Serbia's capital, Belgrade, and enjoys a catchment area of
approximately 590,000 inhabitants within a 30 minute journey of the
centre. The 22,000 sqm GLA centre was 90% let on opening, and a
further 8% of space has been let since with strong interest
expressed in the remaining units.
The Company secured another first during the year with the
completion and opening of its first shopping centre in India.
Koregaon Park Plaza, a 48,000 sqm total built area (excluding
parking) shopping and entertainment centre located in Pune, held a
successful opening on 2 March 2012 and is 85% let with signed lease
agreements.
Unfortunately, on 21 June 2012, the centre was substantially
damaged by a fire caused by a tenant's faulty electrical equipment.
The centre's safety and evacuation procedures were implemented
extremely quickly and efficiently and Plaza is pleased to report
that no one was injured in the incident. Roughly two-thirds of the
mall's rentable area was reopened in August 2012 but the remainder
of the centre required extensive renovation which is scheduled to
complete in April-May 2013. Plaza believes that all damages and
loss of profits resulting from the fire are fully recoverable from
the asset's insurers.
Results
As a result of a EUR79 million impairment charged against the
Company's landbank assets and the non cash financial expenses
resulting from the fair value adjustments of bonds, Plaza ended the
year with a loss attributable to the owners of the Company of
EUR86.1 million. 29% of the EUR79 million impairment charge related
to writedowns of our landbank assets in Romania and Hungary, which
in turn reflected the worsening market conditions and macroeconomic
conditions in those countries.
Plaza invested a total of EUR30 million during the year in real
estate inventories under construction.
The Company continues to have a cash position (including
restricted bank deposits, short term deposits and available for
sale financial assets) of approximately EUR102 million at the year
end (and circa EUR90 million as at today's date). This cash
position will be utilised in meeting the Company's forthcoming
liabilities and, where debt financing is available, in driving its
selective development programme into markets with the highest
demand. In addition, mindful of the ongoing macroeconomic and
market uncertainty, the Company underwent efforts to deleverage
during the year, reducing debt from 59% to 53% of the balance
sheet.
NAV
The Company's property portfolio (CEE and India) was valued by
Jones Lang LaSalle as at 31 December 2012 and their summary
valuation is shown below.
Net Asset Value per share has decreased by 24%, attributable
primarily to the impairment of trading property amounting to EUR79
million. The write down in value reflects the depressed rental
levels in the abovementioned countries as well as low transaction
volumes from a constrained supply of debt. The majority of written
down assets comprise land with associated planning consent, which
management continues to value at the lower of cost or net
realisable value. Management will continue to evaluate the local
economic context before any development programme is commenced as
well as looking at other alternatives to monetise the land bank if
development is not economically viable. The decrease was partly
offset by the completion during the year of Koregaon Park Plaza and
Kragujevac.
The Company's NAV was calculated as follows:
Use EUR (Thousand)
-------------------------------------------- ---------------
Market value of land and projects by Jones
Lang LaSalle (1) 748,345
-------------------------------------------- ---------------
Assets minus liabilities as at 31 December
2012 (2) (289,587)
-------------------------------------------- ---------------
Total 458,758
-------------------------------------------- ---------------
(1) per valuation attached below, except for Prague 3 project
included in Assets minus liabilities
(2) excluding book value of assets which were valued by Jones
Lang LaSalle
Portfolio progress
Currently the Company is engaged in 26 development projects and
owns seven operational shopping and
entertainment centre assets, and two office schemes, located
across the Central and Eastern European region
and in India. The location of the projects, as at 14 March 2013,
is summarised as follows:
Number of assets (CEE and India)
---------------- --------------------------------------
Location Active Under development/ Offices
planning
---------------- ------- ------------------- --------
Romania - 8 1
---------------- ------- ------------------- --------
India 1 5 -
---------------- ------- ------------------- --------
Poland 3 4 -
---------------- ------- ------------------- --------
Hungary - 3 1
---------------- ------- ------------------- --------
Serbia 1 2 -
---------------- ------- ------------------- --------
Czech Republic 1 2 -
---------------- ------- ------------------- --------
Bulgaria - 1 -
---------------- ------- ------------------- --------
Greece - 1 -
---------------- ------- ------------------- --------
Latvia 1 - -
---------------- ------- ------------------- --------
Total 7 26 2
---------------- ------- ------------------- --------
Liquidity & Financing
Plaza ended 2012 with cash position (including restricted bank
deposits, short term deposits and available for sale financial
assets) of EUR102 million, compared to EUR108 million at the end of
2011. Working capital at 31 December 2012 totalled EUR558 million
(31 December 2011: EUR585 million). The Company's current
consolidated cash position is circa EUR90million.
The Group continues to pursue a conservative financing policy
and has made progress, mindful of the wider macroeconomic climate,
in deleveraging its balance sheet. EUR138million of debt was repaid
during the year and part disposed of by way of assumption in the US
portfolio transaction, reducing the level of debt to 53% of the
balance sheet (2011: 59%).
On 7 March 2013 MIDROOG Ltd., the Israeli Credit Rating Agency
and an affiliate of Moody's Investors Service ("Midroog"), has
updated the rating of Plaza's two Israeli listed series of Notes to
"Ba1/Negative" on a local Israeli scale
Strategy and Outlook
The Company achieved significant strategic and development
milestones during 2012 notwithstanding the ongoing Eurozone crisis,
which continues to impact the core markets in which Plaza operates.
Despite the current challenges, Plaza continues to believe in the
long term fundamentals of the CEE region and many of its economies
are forecasted to grow at a greater rate than their Western
European counterparts. An IMF update in January 2013 estimated that
the Euro area economy receded by -0.4% in 2012, compared to annual
GDP growth of +1.8% for CEE.
Our belief in the region was underlined by the opening during
the year of Plaza's 32(nd) shopping and entertainment centre in
CEE. To date, 26 of these centres with an aggregate gross value of
circa EUR1.16 billion have been subsequently sold. These disposals
comprise 17 shopping centres in Hungary, seven in Poland and two in
the Czech Republic. Plaza now retains seven shopping and
entertainment centres as operational assets, three of which are
located in Poland, one in the Czech Republic, one in Latvia, one in
Serbia and one in India.
2012 was notable for its lack of transactional activity in CEE,
declining by 35% year-on-year from 2011. Against this backdrop of
limited transactional activity, largely stemming from the scarcity
of real estate finance in the region, we are confident that our
strategy of holding our completed assets, and enjoying the rental
income they produce, until sales prices which appropriately reflect
their current and existing potential are achieved remains the
correct course for the Company.
Notable improvements at the operational level of the portfolio
were achieved during 2012, improving overall occupancy from 85% in
2011 to 88.5% in 2012. We will continue this focus on maximising
the income and value of our shopping centres through active asset
management initiatives and seeking to obtain the optimal tenant mix
to ensure our centres continue to meet the needs and wants of
consumers and continue to be the dominant retail offering in its
location.
Plaza continues to evaluate its extensive development pipeline,
which it believes offers significant opportunities for the future.
However, in the shorter term, we cannot disregard the impact of the
ongoing issues of the Eurozone on the economies in which we
operate. We will therefore remain prudent and pragmatic in our
approach to deploying significant levels of equity to commence new
projects. This being said, we continue to progress a limited number
of projects in the most resilient countries of the CEE, such as
Poland and Serbia where GDP growth and forecasts remain above the
averages for Europe, and, as such, Visnjicka Plaza in Belgrade,
Serbia and Lodz Plaza, Poland, will be the next centres to commence
construction.
Mindful of the impact of the ongoing economic crisis on our
business, Plaza will continue to pay down debt where possible. A
total of EUR138 million of debt was repaid during 2012, and we
further reducing our gearing levels.
Bolstered by the US$127 million gross proceeds received from the
sale of the assets of our US joint venture, an excellent return on
the equity the Company invested, Plaza will continue to find the
optimal blend of reducing our levels of gearing whilst progressing
our limited development programme into the strongest economies of
the CEE. We believe that our cautious but opportunistic approach is
set to unlock significant value on behalf of our shareholders.
Ran Shtarkman
President and Chief Executive Officer
14 March 2013
OPERATIONAL REVIEW
Over the course of the reporting period and since the year end,
Plaza has continued to make good progress against its operational
and strategic objectives, whilst delivering improved occupancy at
the portfolio level.
Highlights for the financial year included:
-- Openings: Kragujevac Plaza Kragujevac, Serbia; Koregaon Park
Plaza, Pune, India
-- Operation: Improving performance of the seven operating
shopping and entertainment centres located in five countries over
two continents
-- Investments: Total gross investment in 2012 in our selected
development programme of EUR29 million
-- Financial strength and flexibility:Plaza's current cash
position stands at circa EUR90 million.
As of the reporting date, Plaza has 35 assets in nine countries,
out of which 26 are under development across the CEE region and
India. Of these, eight are located in Romania, five in India, four
in Poland, three in Hungary, two in Serbia, two in the Czech
Republic, one in Bulgaria and one in Greece. In addition to these
developments, Plaza retains the ownership of and operates seven
shopping and entertainment centres in Poland, Czech Republic,
Serbia, India and Latvia and two office buildings in Budapest and
Bucharest.
The development projects are at various stages of the
development cycle, from the purchase of land through to the
planning and completion of construction. Plaza's first shopping and
entertainment centre in Serbia, Kragujevac Plaza, was opened to the
public on 20 March 2012.
The Company's current assets and pipeline projects are
summarised in the table below:
Asset/Project Location Nature of asset Size sqm Plaza's Status (*)
(GLA) effective
ownership
%
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Suwalki, entertainment Operating, opened
Suwalki Plaza Poland scheme 20,000 100 in May 2010
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Lodz (Residential) Lodz, Poland Residential scheme 80,000 100 Under planning
(GBA)
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2014;
entertainment completion scheduled
Lodz Plaza Lodz, Poland scheme 35,000 100 for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Zgorzelec Zgorzelec, entertainment Operating, opened
Plaza Poland scheme 13,000 100 in March 2010
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Torun, entertainment Operating, opened
Torun Plaza Poland scheme 40,000 100 in November 2011
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
commence in
Retail and 2014-2015;
Kielce, entertainment completion scheduled
Kielce Plaza Poland scheme 33,000 100 for 2015-2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2015;
Leszno, entertainment completion scheduled
Leszno Plaza Poland scheme 16,000 100 for 2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Under planning.
Construction
scheduled to
commence in 2014;
Arena Plaza Budapest, completion scheduled
Extension Hungary Office scheme 40,000 100 for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Dream Island Budapest, Major business 350,000 43.5 Initial excavation
(Obuda) Hungary and leisure resort (GBA) (for and archaeological
rent and works commenced;
sale) Staged completion
scheduled for
2015-2017.
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Operating, currently
working on
refurbishment
plans, Building
Retail and permit expected
Budapest, entertainment to be granted
Uj Udvar Hungary scheme 16,000 35 in 2014
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Budapest,
David House Hungary Office 2,000 100 Operational office
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Prague 3 Prague, Office, for future 61,600 (residential 100 Currently
Czech Rep. residential use for sale) operational
as an office
building, re-zoning
for future
residential
use obtained
in 2012
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Liberec, entertainment Operating, opened
Liberec Plaza Czech Rep. scheme 17,000 100 in March 2009
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Roztoky Prague, Residential units 14,000 100 Zoning is in
place. Construction
scheduled to
commence in 2014;
completion scheduled
for 2015
Czech Rep. (GBA)
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Casa Radio Bucharest, Mixed-use retail 600,000 75 Under planning,
Romania and leisure plus (GBA including completion scheduled
office scheme parking) for 2014-2017;
approval from
the Urban Technical
Commission has
been obtained
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2014;
Timisoara Timisoara, entertainment completion scheduled
Plaza Romania scheme 36,000 100 for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
commenced in
Miercurea Retail and late 2008; awaiting
Ciuc, entertainment external financing
Csiki Plaza Romania scheme 14,000 100 for completion
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
commence in
2014-2015;
Iasi, Retail, entertainment completion scheduled
Iasi Plaza Romania and office scheme 58,000 100 for 2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2015;
Slatina, entertainment completion scheduled
Slatina Plaza Romania scheme 17,000 100 for 2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2015;
Hunedoara Hunedoara, entertainment completion scheduled
Plaza Romania scheme 13,000 100 for 2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2015;
Targu Mures Targu Mures, entertainment completion scheduled
Plaza Romania scheme 30,000 100 for 2016-
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2014;
Constanta Constanta, entertainment completion scheduled
Plaza Romania scheme 18,000 100 for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Bucharest,
Palazzo Ducale Romania Office 700 100 Operational
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Belgrade Belgrade, Apart-hotel and 70,000 (GBA) 100 Construction
Plaza Serbia business centre scheduled to
with a shopping commence in 2014;
gallery completion scheduled
for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
commence in late
Retail and 2013; completion
Visnjicka Belgrade, entertainment scheduled for
Plaza Serbia scheme 40,000 100 2014-2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Kragujevac Kragujevac, entertainment Operating, opened
Plaza Serbia scheme 22,000 100 in March 2012
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2015;
Shumen, entertainment completion scheduled
Shumen Plaza Bulgaria scheme 20,000 100 for 2016
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Retail and
Riga, entertainment Operating; opened
Riga Plaza Latvia scheme 49,000 50 in March, 2009
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Construction
scheduled to
Retail and commence in 2014;
Athens, entertainment completion scheduled
Pireas Plaza Greece scheme 26,000 100 for 2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Koregaon Pune, Retail, entertainment 110,000 100 Operating; opened
Park Plaza India and office scheme (GBA) in March, 2012
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Kharadi Pune, Office Scheme 250,000 50 Construction
India (GBA) commenced in
late 2010; Phase
One completed
(28,000 sqm GLA),
expected overall
completion in
2015
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Trivandrum Trivandrum, Residential scheme 120,000 50 Under planning
India (GBA)
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Bangalore Bangalore, Residential Scheme 310,000 23.75 Construction
India (GBA) scheduled to
commence in late
2013; phased
completion scheduled
over 2013-2020
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Chennai Chennai, Residential Scheme 230,000 38 Construction
India (for sale) scheduled to
commence in late
2013; phased
completion scheduled
over 2013-2018
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
Kochi Island Kochi, High-end residential 575,000 23.75 Under planning
India apartment buildings, (GBA)
office complexes,
a hotel and serviced
apartments complex,
retail area and
a marina
-------------------- -------------- ---------------------- -------------------- ----------- ---------------------
(*) all completion dates of the projects are subject to securing
external financing.
Details of these activities by country are as follows:
Poland
Plaza owns and operates three completed shopping and
entertainment centres across Poland. During the year each of the
centres have delivered notable asset management successes, with
over 3,100 sq m of new lettings achieved, improving overall
occupancy amongst the Polish portfolio from 82% to 87%.
Torun Plaza, which was completed and opened in late 2011,
comprises approximately 40,000 sqm of GLA and represents Plaza's
tenth completed centre in Poland. Occupancy has risen to 84% as at
the reporting date compared to 80% upon its opening. The centre is
currently let to premium local and international brands such as
Cinema City, H&M, C&A, KappAhl, Zara, Bershka,
Stradivarius, Pull & Bear and Massimo Dutti.
The mall has demonstrated a strong operational performance over
2012, and Plaza's focus on asset management and marketing
activities since the mall opened has led to strong footfall at the
centre with over 4.2 million visitors during 2012, which peaked at
18,000 visitors per day in December 2012. As a result, average
monthly turnover at the mall over the 2012 Christmas period
improved by 5% compared to the same period last year.
Suwalki Plaza, comprising approximately 20,000 sqm of GLA and
including tenants such as H&M, Rossmann, New Yorker, KappAhl
and Cinema Lumiere, continues to perform well. Successful asset
management initiatives undertaken by Plaza has seen occupancy
improve from 89% in 2011 to 90% as at the reporting date and a 4%
increase in the centre's yearly turnover as compared to the prior
year.
Significant operational improvement was also achieved at the
13,000 sqm GLA Zgorzelec Plaza, where occupancy has increased from
79% in 2011 to 89% as at the reporting date. In addition, Plaza has
been successful at driving footfall at the centre, recording a 14%
increase compared to 2011.
In addition, Plaza continued the feasibility and planning
studies of four development schemes; in Kielce (comprising
approximately 33,000 sqm of GLA); in Leszno (comprising
approximately 16,000 sqm of GLA); and two schemes in Lodz, Lodz
Residential (designated for residential use) and Lodz Plaza
(comprising approximately 35,000 sqm of GLA).
Hungary
Plaza owns a plot of land which will serve as an office
extension next to the previously built Arena Plaza shopping centre.
The extension will comprise an office complex with approximately
40,000 sqm of GLA.
Plaza currently holds a stake of 43.5% in the Dream Island large
scale, mixed-use development in Budapest. The consortium now
comprises an 87% holding interest of the 50:50 joint venture
partnership between Plaza and MKB Bank (a leading Hungarian
commercial bank which is a subsidiary of the German Bayerische
Landesbank), a company controlled by the managing director of the
consortium (10% interest) and a further 3% owned by other minority
shareholders.
The Dream Island project is a prestigious development on the
Obuda Island in central Budapest, with a land area of 320,000 sqm.
It will be developed into a major resort including hotels,
recreation facilities, a casino and a business and leisure complex
of 350,000 sqm GBA. The project is currently in planning phase.
In September 2007 the Company bought a 35% stake in the Uj Udvar
shopping centre in Budapest, Hungary. The shopping centre is
currently operational and Plaza's co-shareholders are working on a
new design to be implemented.
The Group continues to own its office building in Budapest,
David House on Andrassy Boulevard.
Czech Republic
Plaza continues to hold and manage Liberec Plaza shopping and
entertainment centre (approximately 17,000 sqm GLA), which opened
in March 2009. During the period occupancy has improved from 78% in
2011 to 80% as at the reporting date.
Romania
Plaza holds a 75% interest in a company in partnership with the
Government of Romania to develop Casa Radio (Dambovita), the
largest development plot in central Bucharest. It willcomprise
approximately 600,000 sqm of GBA, including a 158,000 sqm GBA
shopping mall and leisure centre (one of the largest in Europe),
offices, hotel, an apartment hotel, casino, hypermarket and a
convention and conference hall. The Company has obtained the
approval of the Urban Technical Commission of Bucharest and
completion of the first phase is scheduled for 2014.
Latvia
In March 2009, Plaza completed and opened its Riga Plaza
shopping and entertainment centre, which comprises approximately
49,000 sqm of GLA, in which Plaza owns a 50% stake.
Riga Plaza is located on the western bank of the River Daugava
by the Sala Bridge. During 2010, an eight screen cinema multiplex
was opened. The centre has seen significant operational improvement
during the year, with occupancy increasing to 94% as at the
reporting date compared to 90% in 2011. Discussions are ongoing
with potential occupiers for the remaining space at the centre and
Plaza hopes to conclude further lettings shortly.
Latvia was the fastest growing economy in the EU in 2012, which,
alongside the strengthening household consumption, is expected to
underpin further improvements in the performance of Riga Plaza over
the coming years.
Serbia
On 20 March 2012 Plaza opened to the public its first Serbian
shopping and entertainment centre in Kragujevac, a city of 180,000
inhabitants. Kragujevac Plaza comprises 22,000 sqm of GLA and was
over 90% let at opening to tenants including Nike, Adidas, Aldo,
New Yorker, Deichmann, TerraNova, Fashion and Friends, H&O,
Oviesse, Fox, Chicco and Home Center. As at the reporting date
occupancy has risen to 98%, demonstrating the success of the
Company's first venture into Serbia. The initial response from
consumers has been extremely encouraging with the centre receiving
over 3,000,000 visitors in its first year of opening.
Kragujevac Plaza is the first western style shopping centre to
be completed outside the capital Belgrade, and enjoys a catchment
area of approximately 590,000 inhabitants within a 30 minute car
journey of the centre. With a six screen Cineplexx cinema facility,
the centre contains the only cinema and bowling facilities in the
region.
Plaza's first investment in Serbia was a state-owned plot and
building in Belgrade, which Plaza secured in a competitive tender.
The building was formerly occupied by the federal ministry of
internal affairs of the former Yugoslavia and is located in the
centre of Belgrade in a neighbourhood of government offices and
foreign embassies. On completion, the scheme, Belgrade Plaza, will
comprise a shopping gallery, an apartment-hotel and business centre
totalling circa 70,000 sqm of GBA. Construction is planned to
commence in 2014 and is scheduled for completion in 2015. The
project is currently in the process of securing the relevant local
planning and permitting approvals.
The Company also owns a plot of land in Belgrade which will be
developed into a shopping and entertainment centre. Concept designs
have been submitted and approved ("location permit granted) for
Visnjicka Plaza (previously known under the project name Sport Star
Plaza), Plaza's proposed scheme comprising a total GLA of
approximately 40,000 sqm, and construction is planned to commence
during 2013 with anticipated completion scheduled for 2015.
On 1 March 2013 Serbia gained candidate status as a part of the
process of becoming a member of European Union. Plaza believes that
Serbian membership of the European Union will bring about
significant investment into the country from international sources
of capital. The Company's carefully selected Serbian development
pipeline, and completed and managed asset, is set to benefit from
this anticipated increase in investment volume arising from
European Union membership.
Greece
Plaza continues to hold a land plot, purchased free of debt, on
which the relevant planning has been obtained for a 26,000 sqm GLA
centre. However, Plaza will continue to monitor the macroeconomic
situation in Greece before committing additional capital to the
project. Taking a long term view, the land plot is in an excellent
location and when the Greek economy does eventually recover Plaza
expects to be able to create additional value from it.
Bulgaria
The Group owns a 25,000 sqm plot of land in Shumen, the largest
city in Shumen County, which it intends to develop into a new
shopping and entertainment centre with a total GLA of 20,000 sqm.
Construction is expected to commence during 2015, subject to
securing financing.
As a part of its efforts to deleverage, the Company has disposed
of the Ramstore development in Sofia, Bulgaria, therefore
extinguishing EUR6 million of bank debt from the balance sheet.
India
In 2012, Plaza began to deliver on the strong long-term
potential it identified in India and completed its first shopping
centre in the country, Koregaon Park Plaza located in Pune. A
successful public opening was held on 2 March 2012. The 48,000 sqm
gross built area ('GBA') (excluding parking) shopping centre is
circa 85% let with signed lease agreements.
On 21 June 2012 the centre suffered substantial damage from a
fire which started in a tenant's unit. Approximately 33% of the
mall subsequently had to be closed for refurbishment which is
expected to be completed in April-May 2013. The remainder of the
centre continues to trade. The insurance policy taken out on the
centre is expected to cover the costs of all damage and recompense
Plaza for the loss of profit.
During 2007, Plaza acquired two additional development projects
in a 50:50 joint venture. The first is located in the Kharadi
district of Pune, opposite to EON Park Project (the highest quality
IT park in the region), and totals approximately 250,000 sqm of
total built area (including parking). The second is in Trivandrum,
the capital city of the State of Kerala, and totals approximately
120,000 sqm GBA. The Kharadi development consists of four office
buildings and a small retail area and a large residential scheme is
planned for the Trivandrum development.
Phase one of the Kharadi Plaza project known as "Matrix One",
was completed in February 2012. The 28,000 sqm GLA office, was 70%
pre-sold upon opening. The construction of the second office
building, out of a total of four offices planned for the
development, commenced in Q3 2012 and 37% of the available space
was pre-sold as at the reporting date.
During 2008, Plaza formed a joint venture with Elbit Imaging
("JV") to develop three mega mixed-use projects in India located in
the cities of Bangalore, Chennai and Kochi. Under this agreement
Plaza acquired a 47.5% stake in Elbit India Real Estate Holding
Limited, which already owned stakes of between 50% and 80% in three
mixed-use projects in India, in conjunction with local Indian
partners. This joint venture's voting rights are split 50:50
between Elbit and Plaza.
These three projects are as follows:
Bangalore - This residential project, owned in an equal share
between the JV and a prominent local developer, is located on the
eastern side of Bangalore, India's fifth largest city with a
population of more than 8 million inhabitants. With a total built
area of over 310,000 sqm, it will comprise over 1,100 luxury
residential Units.
In 2010, the JV has signed a new framework agreement which inter
alia entitles the JV to receive 70% of the net proceeds from the
project until a target 20% IRR is received. Once the JV has
received this 20% IRR on its investment, the JV will exit the
project. Currently the project is in Planning phase
Chennai - A residential development, which is 80% owned by the
JV and 20% by a prominent local developer, will be developed into a
residential project consisting of approximately 160,000 sqm of
plotted area for development and approximately 70,000 sqm for high
quality villas. Chennai is India's fourth largest city with a
population of more than 8 million inhabitants. These days, the JV
is in advanced negotiations towards signing of a joint development
agreement with a reputable local developer for the execution of
this project
Kochi Island - A 50:50 partnership with a prominent local
developer, this mixed-use project will comprise more than 575,000
sqm of high-end residential apartment buildings, office complexes,
a hotel and serviced apartments complex, retail area and a marina.
It is located on a backwater island adjacent to the administrative,
commercial and retail hub of the city of Kochi, in the state of
Kerala, with a local population of more than two million
inhabitants.
The construction of the JV's first two projects in Bangalore and
Chennai are planned to commence in late 2013, and the Kochi Island
development is currently in the design phase
USA
In January 2012, EPN Group, Plaza's US based joint venture,
reached an agreement to sell 47 of its 49 US based shopping centres
in a deal totalling US$1.428 billion. The centres were acquired by
BRE DDR Retail Holdings LLC, a joint venture between Blackstone
Real Estate and DDR Corp. in a transaction of total US$1.428
billion, a where US$934 million (as of the agreement date) was paid
by the assumption of the property level debt. In addition, all
excess cash within EDT, which upon signing the agreement amounted
to US$30 million, was retained by Plaza and its joint venture
partners.
The transaction was completed in June 2012, realised a cash
inflow of US$120m before taxes and transaction costs for Plaza
which corresponds to nearly 50% pre-tax ROE in less than two
years.
FINANCIAL REVIEW
Results
During 2012, Plaza, alongside its joint venture partners, exited
its highly successful first investment into the US market by
completing disposals of all its 49 assets. The Company also opened
its 32(nd) shopping and entertainment centre in CEE and its 33(rd)
worldwide.
As Plaza focuses its business on the development and sale of
shopping and entertainment centres, the Group classifies its
current projects under development or self-developed projects as
trading properties rather than investment properties. Accordingly,
revenues from the sale of trading properties are presented as gross
amounts. The Group does not revalue its trading properties, and
profits from these assets therefore represent actual cash-based
profits due to realisations. On the other hand, an impairment of
value is booked in the consolidated income statement where
applicable.
Following the disposal of EPN Group's, Plaza US based joint
venture, the Company has discontinued its US activity. Therefore
the results of US operations are disclosed in the income statement
as a separate line item, with prior years' numbers restated
accordingly. The figures stated below as 2011 comparative are the
restated numbers.
Revenue for 2012 largely comprised rental income (EUR20.5
million in 2012 compared to of EUR10 million in 2011), management
fees from operating malls (EUR6.3 million in 2012 compared to
EUR4.9 million in 2011), income from sale of offices in India
(EUR6.4 million) and income derived from the Group's subsidiary,
Fantasy Park, which provides gaming and entertainment services in
active shopping centres, which accounted for EUR6.9 million (2011:
EUR7.1 million) during the year.
Revenue increased to EUR42 million (31 December 2011: EUR23.5)
million due additional rental income received during the year from
shopping centres which were completed and opened to the public
during 2012 and late 2011 and the above mentioned income from sale
of offices in India.
The total cost of operation amounted to EUR99 million (2011:
EUR63 million). The increase, and majority of the cost of
operations, is largely attributable to the EUR79 million impairment
charge recorded in connection with the value of trading properties,
as compared to a charge of EUR48 million in the prior year. 59% of
the write down was in respect of assets in Romania (EUR34.1
million) and in Hungary (EUR12.4 million), as well as further
impairments in India (EUR10.7 million), Serbia (EUR9.1 million),
Poland (EUR6.8 million) and Czech Republic (EUR3.1 million). The
cost of property operation and maintenance also increased during
the year when compared to the reclassified prior year amount, from
EUR5.5 million in 2011 to EUR8 million in 2012, the increase is in
line with the Company's growing letting activity and increased
number of completed shopping centres. Cost of the offices sold in
India was also included in the total cost of operation in the
amount of EUR3.9 million in 2012.
Expenses relating to Fantasy Park operation were classified
under Operations of Entertainment Centres in the notes to the
Financial Statements.
Administrative expenses amounted to EUR16.8 million (2011:
EUR18.9 million after restatement). The general and administrative
expenses, including the cost of non-cash share-based payments
(EUR0.2 million in 2012 and EUR3.1 million in 2011), decreased from
EUR16.4 million in 2011 to EUR12.7 million in 2012 as a result of
the Company's efforts to drive down costs during the year. Sales
and marketing expenses increased from EUR2.4 million in 2011 to
EUR4.1 million in 2012 as a result of increased operating activity
throughout the year and the promotion of newly opened shopping
centres.
A net finance loss of EUR16.5 million was recorded in 2012
against a 2011 comparator of net finance income of EUR74 million.
The movement to a net finance loss was caused by a number of
factors, including a EUR21 million loss (2011: EUR79 million
profit) attributed to the increase in fair value debentures, and
related foreign exchange losses, measured through the profit and
loss account. Finance income earned from marketable securities and
monies on deposit declined to EUR4 million in 2012, against EUR10.2
million in 2011, as a result of the utilisation of long term
deposits to pay down debt. In addition, there was a decrease in the
gain from repurchased bonds from EUR7.9 million in 2011 against
EUR4.3 million in 2012. These decreases were partially offset by
the increase in the gain from hedging activities of EUR11.7
million, from EUR5.2 million in 2011,and a net increase in the
value of derivatives in 2012 of EUR0.2 million, compared to a
decrease in value of derivatives of EUR16.6 million in 2011.
A tax benefit of EUR5.5 million recorded in the consolidated
income statement mainly represents the decrease in the deferred tax
liability recorded in connection with the fair value changes of the
debentures measured through the profit and loss.
As a result of the above, the loss for the year amounted to
circa EUR85.9 million in 2012, compared to EUR13.9 million profit
in 2011.
Basic and diluted loss per share for 2012 were EUR0.29 (2011:
EUR0.03 profit).
Balance sheet and cash flow
The balance sheet as at 31 December 2012 showed total assets of
EUR0.96 billion compared to total assets of EUR1.35 billion at the
end of 2011 with the decrease was mainly driven by the disposal of
the US portfolio. The decrease in the value of trading property, as
a result of the impairment adjustment, and the cash effect of bond
repayments, also contributed to the overall decrease.
The Company's cash position deriving from cash, short term
deposits, restricted cash deposits and available for sale financial
assets decreased slightly to EUR102 million (2011: EUR108 million),
with the decrease reflecting the above mentioned bond repayments
and bond buybacks offset by the receipts from the sale of the US
portfolio. The gearing position improved with debt comprising only
53% of balance sheet (31 December 2011: 59%) as a result of bond
repayments and the disposal of the leveraged US portfolio.
The value of the investment property decreased from EUR272
million in 2011 to EUR14.5 million in 2012, due to the completion
of the sale of EPN Group's entire US portfolio, which leaves the
Prague 3 project in Czech Republic as the sole investment property
as at the year end.
Total bank borrowings (long and short term) amounted to EUR270
million (2011: EUR449 million). This decrease is primarily the
result of loans disposed of and repaid in respect of the sale of
the US portfolio which amounted to approximately EUR162
million.
Apart from bank financing, Plaza has a balance sheet liability
of EUR189 million (with an adjusted par value of circa EUR226
million) from issuing debentures on the Tel Aviv Stock Exchange and
to Polish institutional investors. These debentures are presented
at their fair value with the exception of the debentures issued
from August 2009 onward, which are presented at amortised cost.
Plaza has substantially hedged the future expected payments in
Polish Zloty to correlate with the Euro and the BIBOR interest
rate, using cross currency interest rate swaps and, in the case of
its currency risk exposure of its NIS denominated bonds, by selling
options to correlate with changes in the EUR/NIS rate. At 31
December, 2012 the aggregate liability associated with these
hedging transactions amounted to circa EUR0.8 million. In 2012 the
Company extended its bond buyback programme, which, in addition to
the bond principal repayments and fair value changes, amounted to a
EUR63 million decrease in liabilities from 2011.
Trade payables decreased to EUR9 million (2011: EUR27 million),
due to the completion of construction in progress.
At the 2012 year end, the net balance of the Plaza Group with
its controlling shareholders is a liability of approximately EUR0.5
million, of which EUR15,000 is due to a provision in respect of
project management fees charged by the Control Centers group. These
fees relate to the project supervision services granted in respect
of the extensive schemes within the Group.
Derivatives liabilities recorded in 2011 (EUR3.6 million),
presented as non-current, (comprising cross currency swap
transactions to hedge interest rates and foreign exchange risks
associated with NIS and PLN denominated bonds, interest rate swaps
relating to project financing loans), are measured as at 31
December 2012 as EUR3.3 million, and are presented as a current
liability as at the year end.
Other current liabilities have decreased in line with the
smaller number of malls that the Company owns and operates, as a
result of the disposal of US assets upon which payments in advance
are collected.
In summary, Plaza's balance sheet reflects decreasing levels of
gearing and a substantial total equity of approximately EUR449
million. We anticipate that the profitability of operating assets
will further improve as the Company begins to enjoy the full effect
of improved occupancy at its completed assets, much of which was
secured in the later part of the year. As a result, the Company
continues to position itself to deliver selected developments into
the strongest performing markets of the CEE and India.
Roy Linden
Chief Financial Officer
14 March 2013
Valuation Summary by Jones Lang LaSalle as at 31 December 2012
(in EUR)
Country Project name Market Value Market Value
Market Value Market Value of the land of the land
upon completion upon completion and project and project
---------------- -----------------------
31 December 31 December 31 December 31 December
2011 2012 2011 2012
---------------- ----------------------- ----------------- ----------------- -------------- --------------
Hungary Arena Plaza extension 69,838,000 67,842,000 8,700,000 8,500,000
----------------------- ----------------- ----------------- -------------- --------------
Dream Island 452,652,000 223,905,000 51,300,000 20,900,000
---------------------------------------- ----------------- ----------------- -------------- --------------
David House 4,000,000 4,000,000 4,000,000 4,000,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Uj Udvar 3,010,000 2,940,000 3,010,000 2,940,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Poland Kielce Plaza 15,200,000 109,600,000 4,800,000 109,600,000
----------------------- ----------------- ----------------- -------------- --------------
Torun Plaza 121,200,000 18,900,000 121,200,000 18,900,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Suwalki Plaza 48,600,000 46,800,000 48,600,000 46,800,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Lodz (Resi) n/a(*) n/a(*) 11,000,000 8,400,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Lodz Plaza 105,200,000 83,000,000 8,700,000 8,600,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Zgorzelec Plaza 21,400,000 26,000,000 21,400,000 1,900,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Leszno Plaza n/a(*) n/a(*) 1,800,000 4,800,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Czech Republic Prague 3 138,090,000 157,905,000 14,180,000 14,460,000
----------------------- ----------------- ----------------- -------------- --------------
Liberec Plaza 31,600,000 29,400,000 31,600,000 29,400,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Roztoky 19,030,000 18,190,000 3,100,000 2,800,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Miercurea Ciuc
Romania Plaza 20,127,000 1,950,000 7,700,000 1,950,000
----------------------- ----------------- ----------------- -------------- --------------
Timisoara Plaza 63,615,000 331,701,000 11,700,000 168,150,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Casa Radio Plaza 331,700,000 68,189,000 170,325,000 11,000,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Iasi Plaza 97,252,000 19,322,000 14,700,000 7,100,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Slatina Plaza n/a(*) n/a(*) 1,900,000 6,100,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Palazzo Ducale 2,060,000 n/a(*) 2,060,000 2,900,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Targu Mures Plaza n/a(*) n/a(*) 6,400,000 1,800,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Constanta Plaza 14,427,000 93,550,000 10,500,000 13,100,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Hunedoara Plaza n/a(*) 13,872,500 3,100,000 10,000,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Latvia Riga Plaza 42,150,000 42,350,000 42,150,000 42,350,000
---------------- ----------------------- ----------------- ----------------- -------------- --------------
Greece Helios Plaza 106,400,000 98,500,000 25,000,000 21,000,000
---------------- ----------------------- ----------------- ----------------- -------------- --------------
Koregaon Park
India Plaza 78,800,000 67,779,000 68,000,000 55,866,000
----------------------- ----------------- ----------------- -------------- --------------
Kharadi Plaza 70,870,000 67,297,000 18,100,000 15,393,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Trivandrum Plaza 47,707,000 46,780,000 7,618,000 7,329,500
---------------------------------------- ----------------- ----------------- -------------- --------------
Bangalore 178,665,000 119,722,000 40,077,000 14,486,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Chennai 169,145,000 n/a(*) 21,069,000 5,149,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Kochi Island n/a(*) 42,701,000 4,876,000 10,731,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Bulgaria Shumen Plaza 37,800,000 n/a(*) 5,200,000 4,600,000
----------------------- ----------------- ----------------- -------------- --------------
Serbia Belgrade Plaza 142,700,000 138,600,000 21,700,000 19,700,000
----------------------- ----------------- ----------------- -------------- --------------
Sport Star Plaza 107,200,000 107,159,000 20,300,000 20,000,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Kragujevac Plaza 44,700,000 42,100,000 35,000,000 42,100,000
---------------------------------------- ----------------- ----------------- -------------- --------------
Total 2,585,138,000 2,090,054,500 870,865,000 762,805,000
----------------------------------------- ----------------- ----------------- -------------- --------------
(*) Assets were valued with the comparative sales price method,
no value at completion was estimated
Notes
-- All values of land and project assume full planning consent for the proposed use.
-- Plaza Centers has a 50% interest in the Riga Plaza shopping centre development.
-- Plaza Centers has a 35% interest in the Uj Udvar Shopping Centre development.
-- Plaza Centers has a 50% interest in Kharadi Plaza and Trivandrum Plaza.
-- Plaza Centers has a 43.5% interest in Dream Island.
-- Plaza Centers has a 75% share of Casa Radio Plaza.
-- Plaza Centers has a 23.75% share of Bangalore.
-- Plaza Centers has a 38% share of Chennai.
-- Plaza Centers has a 23.75% share of Kochi Island.
-- All the figures reflect Plaza's share.
CONSOLIDATED INCOME STATEMENT IN '000 EUR
For the year ended
December 31,
--------------------------------
Note 2012 2011 (reclassified)*
----- --------- ---------------------
Continuing operations
Revenues 12 41,593 23,462
Write-down of trading properties 5 (78,833) (47,987)
Cost of operations 13 (20,385) (14,849)
--------- ---------------------
Gross loss (57,625) (39,374)
Administrative expenses 14 (16,848) (18,856)
Other income 2,763 169
Other expenses (1,122) (1,783)
--------- ---------------------
Results from operating activities (72,832) (59,844)
Finance income 15 20,515 103,018
Finance costs 15 (37,055) (29,032)
Net finance income (costs) (16,540) 73,986
--------- ---------------------
Share in loss of equity-accounted
investees (68) (153)
--------- ---------------------
Profit (loss) before income tax (89,440) 13,989
Tax benefit (expense) 16 5,463 (12,910)
Profit (loss) from continuing operations (83,977) 1,079
--------- ---------------------
Discontinued operation
Profit (loss) from discontinued
operation, net of tax 17 (1,950) 12,785
Profit (loss) for the year (85,927) 13,864
--------- ---------------------
Profit (loss) attributable to:
Owners of the Company (86,163) 9,346
Non-controlling interests 236 4,518
(85,927) 13,864
========= =====================
Earnings per share
Basic and diluted earnings (loss)
per share (in EURO) 11 (0.290) 0.031
Earnings per share - continuing
operations
Basic and diluted earnings (loss)
per share (in EURO) 11 (0.282) 0.003
(*) In respect of 2011 reclassifications - refer to note.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN '000 EUR
December December
31, 31,
Note 2012 2011
----- ------------- ------------
ASSETS
Cash and cash equivalents 3 64,440 58,261
Restricted bank deposits 25,518 21,428
Short-term deposits - 3,102
Available for sale financial assets 11,714 25,568
Trade receivables 4,687 5,432
Other receivables and prepayments 4 46,749 46,030
Trading properties 5 780,963 850,229
Total current assets 934,071 1,010,050
------------- ------------
Long term deposits and other investments - 51,330
Deferred tax assets - 316
Property and equipment 8,109 9,026
Investment property 14,489 272,348
Restricted bank deposits 978 4,961
Other non-current assets 358 495
Total non-current assets 23,934 338,476
------------- ------------
Total assets 958,005 1,348,526
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing loans from banks 6 264,296 296,235
Debentures at fair value through profit
or loss 8 34,966 32,930
Debentures at amortized cost 9 34,184 22,831
Trade payables 8,748 27,329
Related parties 7 511 2,228
Derivatives 3,320 -
Provisions 15,597 15,597
Other liabilities 14,094 27,464
Total current liabilities 375,716 424,614
------------- ------------
Interest bearing loans from banks 6 5,773 152,387
Debentures at fair value through profit
or loss 8 81,181 110,320
Debentures at amortized cost 9 39,010 86,052
Other liabilities 232 5,757
Derivatives - 3,561
Deferred tax liabilities 6,947 15,673
Total non-current liabilities 133,143 373,750
------------- ------------
Share capital 10 2,972 2,972
Translation reserve 10 (26,359) (10,672)
Capital reserve due to transaction
with Non-controlling interests (20,706) (19,342)
Other reserves 10 35,262 31,954
Share premium 261,773 261,773
Retained earnings 189,274 275,437
Total equity attributable to equity holders
of the Company 442,216 542,122
Non-controlling interests 6,930 8,040
Total equity 449,146 550,162
------------- ------------
Total equity and liabilities 958,005 1,348,526
============= ============
March 13, 2013
--------------------------------------------- --------- ---------------------------
Ran Shtarkman Shimon Yitzchaki
Date of approval of Director, President
the and Chief Executive Director and Chairman
financial statements Officer of the Audit Committee
CONSOLIDATED STATEMENT OF CASH FLOWS IN '000 EUR
For the year ended
December 31,
Note 2012 2011
----- ---------------------- ---------------
Cash flows from operating activities
Profit (loss) for the year (85,927) 13,864
Adjustments necessary to reflect cash
flows used in operating activities:
Depreciation and impairment of equipment
and other assets 1,095 2,517
Write-down of Trading properties 5 78,833 47,987
Change in fair value of Investment
property 1,417 (8,084)
Gain from selling discontinued operation (391) -
Net finance costs (income) 15 16,540 (73,986)
Interest received 5,777 9,356
Interest paid (29,920) (36,593)
Equity-settled share-based payment
transaction 197 2,978
Equity-settled share-based payment
- discontinued operation 2,781 680
Gain from a bargain purchase - (1,523)
Gain on sale of property and equipment (13) (4)
Gain on sale of trading property 12 (3,851) -
Share of loss in equity-accounted
investees 68 153
Proceeds from disposal of trading
property, net of cash disposed 97 712
Proceeds from net assets held for
sale - discontinued operation 5,137 -
Tax expense (tax benefit) from discontinued
operation 17 (600) 2,276
Tax expense (tax benefit) 16 (5,463) 12,910
(14,223) (26,757)
Changes in:
Trade receivables 810 (1,298)
Other accounts receivable 10,224 (2,300)
Trading properties 5 (30,157) (70,629)
Trade payables (18,122) 543
Other liabilities, related parties
and provisions (2,500) 5,093
(39,745) (68,591)
Taxes paid (613) (58)
---------------- ---------------
Net cash used in operating activities (54,581) (95,406)
---------------- ---------------
Purchase of property, equipment and
other assets (498) (380)
Purchase of Investment property - (1,204)
Proceeds from sale of property and
equipment 250 30
Changes in long term deposits, net 50,643 -
Capital expenditure for discontinued
operation (1,949) (2,438)
Proceeds from disposal of discontinued
operation assets 17 127,723 -
Purchase of available for sale financial
assets (16,089) (9,307)
Proceeds from sale of available for
sale financial assets 31,294 9,051
Short term deposits, net 3,102 (3,213)
Net cash from (used in) investing
activities 194,476 (7,461)
---------------- ---------------
Cash from financing activities
Proceeds from bank loans and financial
institutions 47,181 80,098
Proceeds from utilization and settlement
of derivatives 238 39,331
Proceeds from hedging activities
through sell of options 11,683 5,212
Acquisition of non-controlling interests (3,754) (40,370)
Repurchase of debentures (18,814) (29,966)
Dividend paid - (30,018)
Changes in restricted cash (4,118) 17,694
Proceeds from issuance of long term
debentures - 62,895
Repayment of debentures 8,9 (65,320) (76,075)
Disposal of discontinued operation
bank loans 17 (48,014) -
Repayment of borrowings (52,840) (4,667)
---------------- ---------------
Net cash from (used in) financing
activities (133,758) 24,134
---------------- ---------------
Effect of exchange rate fluctuations
on cash held 42 (807)
Increase (decrease) in cash and cash
equivalents during the year 6,179 (79,540)
Cash and cash equivalents at 1st
of January 58,261 137,801
---------------- ---------------
Cash and cash equivalents at 31st
of December 64,440 58,261
================ ===============
SELECTIVE NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION IN
'000 EUR
NOTE 1 - STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union ("EU").
These consolidated financial statements are not intended for
statutory filing purposes. The Company is required to file
consolidated financial statements prepared in accordance with The
Netherlands Civil Code. At the date of approving these financial
statements the Company had not yet prepared consolidated financial
statements for the year ended December 31, 2012 in accordance with
the Netherlands Civil Code.
The consolidated financial statements were authorized for issue
by the Board of Directors on 13March 2013.
NOTE 2 - BASIS OF PREPARATION
a. Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis, except for the following material items in
the statement of the financial position:
-- Investment properties is measured at fair value
-- Liabilities for cash-settled share-based payment arrangements are measured at fair value
-- Available for sale financial assets are measured at fair value
-- Derivative financial instruments are measured at fair value
-- Non-Derivative financial instruments at fair value through
profit or loss are measured at fair value.
b. Functional and presentation currency
These consolidated financial statements are presented in EURO
("EUR"), which is the Company's functional currency. All financial
information presented in EUR has been rounded to the nearest
thousand, unless otherwise indicated.
c. Use of estimates and judgments
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Functional currency
The EUR is the functional currency for Group companies (with the
exception of Indian companies - in which the functional currency is
the Indian Rupee - INR, and the investment in the USA until June
30, 2012 - in which the functional currency was the USD) since it
best reflects the business and results of operations of the Group
companies. This is based upon the fact that the EUR (and in India
and the USA - the INR and USD respectively) is the currency in
which management determines its budgets, transactions with tenants,
potential buyers and suppliers, and its financing activities and
assesses its currency exposures.
NOTE 2 - BASIS OF PREPARATION (Cont.)
Information about other critical judgements in applying
accounting policies that have the most significant effect on the
amounts recognised in the consolidated financial statements is
included in the following notes:
-- Note 8,9 - debentures at fair value through profit or loss
-- Note 5 - Suspension of borrowing costs capitalization
-- Note 5 - Normal operating cycle
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment
within the next financial year are included in the following
notes:
-- Note 5
d. Going concern
The consolidated financial statements have been prepared on the
assumption that the Group companies will continue as a going
concern in the foreseeable future, for at least twelve months.
As forecast relates to future events, inherently it is subject
to uncertainties and therefore, the Management cannot guarantee
that all assumptions relating to cash flows will materialize,
however it believes that as of the date of the financial statements
these assumptions are reasonably achievable.
NOTE 3 - CASH AND CASH EQUIVALENTS
Interest rate as
Bank deposits and of
cash December 31, December 31, December 31,
------------- -------------
denominated in 2012 2012 2011
------------------------ -------------------- ------------- -------------
EUR See (1) below 21,138 34,437
United States Dollar
(USD) Mainly 0.3% 33,249 9,944
Polish Zlotys (PLN) Mainly O/N WIBOR 3,469 7,369
Indian Rupee (INR) Mainly 3.5%-9.8% 2,668 3,550
New Israeli Shekel
(NIS) Mainly 0% 2,272 1,028
Hungarian Forints
(HUF) Mainly 4% 269 640
Serbian Dinar (RSD) Mainly 11% 266 628
Romanian Lei (RON) Mainly 5% 231 253
Czech Crowns (CZK) Mainly 0.5% 298 167
Latvian Lat (LVL) Mainly O/N RIGIBOR 561 182
in other currencies 0% 19 63
------------- -------------
Cash and cash equivalents in the statement
of cash flows 64,440 58,261
============= =============
(1) As at December 31, 2012, cash in several commercial banks is
deposited for periods up to 3 months.
Fixed deposits bear interest rates varying between 0.2% and
2.5%, while floating deposits bear interest rates as determined by
various benchmarks (e.g EURIBOR, LIBOR).
NOTE 4 - OTHER RECEIVABLES AND PREPAYMENTS
December December 31,
31,
--------- -------------
2012 2011
--------- -------------
Advances for plot purchases (1) 27,384 29,828
Insurance company receivable 7,611 -
(2)
VAT receivables 2,387 6,125
Loans to partners in jointly
controlled entities 2,673 2,930
Prepaid expenses 1,586 2,009
Accrued interest receivable 335 1,685
Advances to suppliers 2,466 1,252
Related parties 1,435 1,227
Others 872 974
--------- -------------
46,749 46,030
========= =============
(1) As of December 31, 2012 and 2011, including mainly advance
payments in the amount of EUR 26.4 million and EUR 28.3 million,
respectively for the purchase of plots in India, as part of the
Joint venture with EI. Out of this amount, an amount of EUR 4.1
million (2011 -EUR 5 million) is guaranteed by EI.
(2) Receivable incurred in respect of the fire in the Company
shopping centre in India from the insurer
NOTE 5 - TRADING PROPERTIES
December 31, December
31,
------------- ---------
2012 2011
------------- ---------
Balance as at 1 January 850,229 807,887
Acquisition and construction costs 25,763 84,827
Capitalized borrowing costs (1) 21,806 29,154
Write-down of trading properties
(2) (86,444) (47,987)
Effect of movements in exchange
rates (8,567) (23,652)
Trading properties disposed (refer
to notes13) (21,824) -
------------- ---------
Balance as at 31 December (3) 780,963 850,229
============= =========
Completed trading properties 294,528 202,769
Trading properties under construction 17,411 117,526
Trading properties under planning
and design stage (3),(4) 469,024 529,934
Total 780,963 850,229
======== ========
(1) In certain cases, the Group ceases to capitalize borrowing
cost if management decides that the assets can no longer be defined
as a "qualified asset". In other circumstances, capitalization is
suspended for certain time periods, generally where the efforts to
develop a project are significantly diminished due to inter-alia
lack of external finance, or ongoing difficulties in obtaining
permits. The conclusions whether an asset is qualified for
capitalization or not, or whether capitalization is to be
suspended, involve also management plans with regard to the
specific asset, such as the ability to raise bank loans, find
anchors and local market conditions that support or deny the
construction of the project.
(2) Write-down of trading properties to net realisable value was
performed based on independent valuation reports. In the course of
2012 write-downs were recognized in respect of projects in Romania
(EUR 34.1 million), India (EUR 18.3 million), Hungary (EUR 12.4
million), Serbia (EUR 9.1 million), Poland (EUR 6.8 million), the
Czech Republic (EUR 3.1 million) and Bulgaria (EUR 2.6
million).
In respect of Write-down in Indian projects, an amount of EUR
7.6 million of the loss was offset with insurance company
receivable, hence the net loss effect of trading property
impairments totalled EUR 78.8 million.
NOTE 5 - TRADING PROPERTIES (Cont.)
(3) Including cost of Large scale projects (Bangalore in India,
Casaradio in Romania and Dream Island in Hungary) in a total amount
of EUR 221 million (2011 - EUR 230 million).
The abovementioned projects are expected to generate an
operating cycle closer to eight years (refer to (5) below)
comparing to other projects the Company holds.
(4) The value of the Casa radio project in Romania includes two
gas turbines with a total book value of EUR 9.1 million. A
write-down of EUR 1.9 million was recognised in respect of the
turbines in the course of 2012.
(5) The Group is involved in projects some of which may take up
to eight years to complete from the asset acquisition date. The
cost of trading property, loans and related derivatives which
financed the development projects are presented as current assets
and liabilities.
As of December 31, 2012, the Company has trading properties in
Poland, Czech Republic, Latvia, India, Romania, Serbia, Bulgaria,
Hungary and Greece. The properties are in various stages of
development as shopping and entertainment centres, residential
units, offices or mixed-use.
As of December 31, 2012, a total carrying amount of EUR 322
million (December 31, 2011 - EUR 377 million) of the abovementioned
trading properties is pledged against bank loans.
As of December 31, 2012 and 2011 trading properties include
accumulated capitalization of share based payments in the amount of
EUR 10.7 million.
NOTE 6 - INTEREST BEARING LOANS FROM BANKS
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost. All interest bearing loans from banks
are secured. Terms and conditions of outstanding loans were as
follows:
December 31, December
31,
----------------- ---------
2012 2011
----------------- ---------
Non-current loans
Investment property secured bank loans 3,175 140,335
Other secured bank loans 2,598 12,052
----------- --------------
5,773 152,387
=========== ==============
Current loans (including current maturities
of long term loans)
Trading properties secured bank loans 246,377 227,624
Investment property secured bank loans 469 22,402
Other secured bank loans 17,450 46,209
264,296 296,235
================= =========
NOTE 6 - INTEREST BEARING LOANS FROM BANKS (Cont.)
Below is the breakdown of all outstanding group loans:
December 31,
------------------------------------ ----------------- --------- ------------- -------------------------
2012 2011
------------------------------------ ----------------- --------- ------------- ------------ -----------
Nominal interest Year
rate Currency of maturity Carrying amount
------------------------------------ ----------------- --------- ------------- -------------------------
Trading property secured bank
loan 3M EURIBOR+2.5% EUR 2014 31,925 33,323
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+3% EUR 2017 49,028 33,845
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+2.7% EUR 2014 21,064 21,800
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+3% EUR 2015 20,664 20,285
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+3% EUR - 2,040
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+2.5% EUR - 3,772
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+1.65% EUR 2020 32,303 32,963
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+2.75% EUR 2016 21,608 20,811
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+5% EUR 2027 30,123 17,820
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+2.25% EUR - 5,927
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 13.25% INR 2021 26,943 29,016
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 11.5% INR 2013 6,987 -
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+3.5% EUR 2013 4,100 4,100
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+5.5% EUR 2013 882 1,172
------------------------------------ ----------------- --------- ------------- ------------ -----------
Trading property secured bank
loan 3M EURIBOR+4.5% EUR 2013 750 750
------------------------------------ ----------------- --------- ------------- ------------ -----------
246,377 227,624
------------------------------------ ----------------- --------- ------------- ------------ -----------
Other secured bank loans 3M EURIBOR+0.5% EUR - 6,867
------------------------------------ ----------------- --------- ------------- ------------ -----------
Other secured bank loans 3M EURIBOR+0.4% EUR - 26,225
------------------------------------ ----------------- --------- ------------- ------------ -----------
Other secured bank loans 12M EURIBOR+0.4% EUR - 10,000
------------------------------------ ----------------- --------- ------------- ------------ -----------
Other secured bank loans 6M TELBOR+6% NIS 2013 17,268 12,150
------------------------------------ ----------------- --------- ------------- ------------ -----------
Other secured bank loans 3M USD LIBOR+4% USD 2014 2,780 3,019
------------------------------------ ----------------- --------- ------------- ------------ -----------
20,048 58,261
------------------------------------ ----------------- --------- ------------- ------------ -----------
US portfolio bank loans 4.91%-6.4% USD - 158,624
------------------------------------ ----------------- --------- ------------- ------------ -----------
Investment property secured
bank loan 3M EURIBOR+1.75% EUR 2016 3,644 4,113
------------------------------------ ----------------- --------- ------------- ------------ -----------
3,644 162,737
------------------------------------ ----------------- --------- ------------- ------------ -----------
Total interest bearing liabilities 270,069 448,622
------------------------------------ ----------------- --------- ------------- ============ ===========
NOTE 7 - RELATED PARTIES
December
December 31, 31,
Currency 2012 2011
---------- ------------- ---------
EI Group- ultimate parent company
- expenses recharged EUR, USD 109 1,389
Other related parties (*) EUR 15 452
EUL (parent company) EUR, USD 387 387
------------- ---------
511 2,228
============= =========
(*) Liability to Control Centers group, a group of companies
which provides project consulting and supervision services and
controlled by the ultimate parent company's controlling
shareholder.
Transactions with related parties are priced at an arm's length
basis.
NOTE 8 - LONG TERM DEBENTURES AT FAIR VALUE THROUGH PROFIT OR
LOSS
The Company is presenting part of its debentures Series A
(raised in July 2007) and debentures Series B (raised in February
and May 2008) at fair value through profit or loss. Both debentures
principal are linked to the change in the Israeli Consumer Price
Index ("CPI"). Accrued interest on both debentures is paid every
six months. Debentures Series A and Series B raised from 2009
onwards are presented at amortized cost (refer to note 9). Below is
a summary of information on the debentures presented at fair value
through profit or loss:
Series A debentures Series B debentures
----------------------------------- -----------------------------------
Fair Fair Total Par
value CPI adjusted Par value value CPI adjusted Par value value
January 1, 2012
(NIS) 170,839 266,986 228,852 536,547 722,212 638,366 867,218
Repayment 2012
(NIS) (*) (34,330) (159,592) (193,922)
Buyback programme (22,870) - (22,870)
December 31, 2012
(NIS) 138,366 203,150 171,652 433,147 549,490 478,774 650,426
January 1, 2012
(EUR) 65,538 64,113 56,353 194,777 185,817 168,420
December 31, 2012
(EUR) 28,120 41,286 34,884 88,027 111,671 97,300
(*) One sixth of outstanding Series A bond was repaid on
December 31, 2012 and one fourth of outstanding debentures Series B
was repaid on July 1, 2012.
Both debentures series are rated (effective as of the date of
signing these financial statements) ilBBB- by S&P Maalot Ltd.
on a local scale (down from ilBBB+/stable in December 2012) and
Ba1/Negative by Midroog Ltd., the Israeli Credit Rating Agency and
an affiliate of Moody's Investors Service (Down from Baa1/Negative
in March 2013). Debentures Series A bears an annual interest rate
of 4.5% (paid semi-annually) with 8 annual equal principal
instalments between December 2010 and 2017. Debentures Series B
bears an annual interest rate of 5.4% (paid semi-annually) with 5
annual equal principal instalments between July 2011 and 2015.
NOTE 9 - LONG TERM DEBENTURES AT AMORTISED COST
Bonds issued in Israel
Series Series
A debentures B debentures
Par value Par value Total CPI adjusted CPI adjusted
TNIS TNIS TNIS TNIS TEUR
January 1, 2012
(NIS) 52,152 365,156 417,308 473,959 95,980
Repayment (1) - (86,074) (86,074)
Buyback programme (52,152) (27,831) (79,983)
December 31, 2012 - 251,251 251,251 288,362 58,603(2)
(1) One sixth of outstanding Series A bond was repaid on
December 31, 2012 and one fourth of outstanding debentures Series B
was repaid on July 1, 2012.
(2) Before offset of unamortized cost of raising debentures in
the amount of EUR 0.1 million.
NOTE 9 - LONG TERM DEBENTURES AT AMORTISED COST (cont.)
Bonds issued in Poland
On November 16, 2010, the Company completed the first tranche of
a bond offering to Polish institutional investors. The Company
raised a total of PLN 60 million (approximately EUR 15.2 million).
The unsecured bearer bonds governed by Polish law (the "Bonds")
have a three year maturity at an interest rate of six months Wibor
plus 4.5%. Interest is paid every six months and principal after
three years. As of December 31, 2012, the amortized cost is EUR
14.7 million (December 31, 2011- EUR 13.4 million).
NOTE 10 - EQUITY
December 31,
2012 2011
-------------
Remarks Number of shares
----------------------------
Authorized ordinary shares of par
value EUR 0.01 each 1,000,000,000 1,000,000,000
============= =============
Issued and fully paid:
At the beginning of the year 297,174,515 296,722,129
See (a)
Exercise of share options below 11,623 452,386
-------------
At the end of the year 297,186,138 297,174,515
============= =============
a. In the course of 2011, 951,564 vested options were exercised
into 452,386 shares of EUR 0.01. In the course of 2012, 108,335
vested options were exercised into 11,623 shares of EUR 0.01.
Other Capital reserve due to share option plans
Other capital reserve is in respect of Employee Share Option
Plans ("ESOP") in the total amount of EUR 34,889 as of December 31,
2012 (2011 - EUR 33,470).
Translation reserve
The translation reserve comprises, as of December 31, 2012, all
foreign exchange differences arising from the translation of the
financial statements of foreign operations in India.
Dividend policy
The payment of dividends is dependent on the financial
performance and condition of the Group, the Company's financial
position and the capital and anticipated working capital
requirements of the Group. The distribution of dividend is based
upon the statutory report's distributable results and retained
earnings of the Company itself. Subject to mandatory provisions of
Dutch laws, and the agreement reached with bond holders, the
dividend policy will reflect the long-term earnings and cash flow
potential of the Group, taking into account the Group's capital
requirements, while at the same time maintaining an appropriate
level of dividend cover.
NOTE 11 - EARNINGS PER SHARE
The calculation of basic earnings per share at 31 December 2012
was based on the loss attributable to ordinary shareholders of EUR
86,163 thousand (2011: profit of EUR 9,346 thousand) and a weighted
average number of ordinary shares outstanding of 297,181 thousand
(2011: 296,995 thousand).
Weighted average number of ordinary
shares
In thousands of shares with a EUR
0.01 par value December 31,
2012 2011
------------- --------
Issued ordinary shares at 1 January 297,175 296,722
Share based payment - exercise of
options 6 273
------------- --------
Weighted average number of ordinary
shares at 31 December 297,181 296,995
============= ========
The calculation of diluted earnings per share from continuing
operations for comparative figures is calculated as follows:
Weighted average number of ordinary shares
(diluted)
In thousands of shares with a EUR 0.01
par value December 31,
2012 2011
-------- --------
Weighted average number of ordinary shares
(basic) 297,181 296,995
Effect of share options on issue 792 4,527
-------- --------
Weighted average number of ordinary shares
(diluted) at 31 December 297,973 301,522
======== ========
The average market value of the Company's shares for purposes of
calculating the dilutive effect of share options was based on
quoted market prices for the period that the options were
outstanding.
Refer to note 17 for calculations of earnings per share from
discontinued operation
NOTE 12 - REVENUES
Continuing Discontinued Total
Operations Operation (refer
to note 17)
2012 2011 2012 2011 2012 2011
Rental income from
tenants (1) 20,543 9,995 13,907 25,528 34,450 35,523
Operation of entertainment
centers (2) 6,911 7,121 - - 6,911 7,121
Management fees 6,327 4,859 - - 6,327 4,859
Revenue from selling
trading properties
(3) 6,372 712 - - 6,372 712
Other 1,440 775 - - 1,440 775
------- ------- --------- -------- ------- -------
Total 41,593 23,462 13,907 25,528 55,500 48,990
======= ======= ========= ======== ======= =======
(1) As of the end of the reporting period, the main rental
income from continuing operations is derived from projects in
Latvia, Poland, India, Serbia
and the Czech Republic.
(2) Revenue from operation of entertainment centres is
attributed to a subsidiary of the Company trading as "Fantasy Park"
which provides gaming
and entertainment services in active shopping centres. As of
December 31, 2012, these subsidiaries operate in 13 shopping
centres.
(3) Main revenue from selling trading properties in 2012 is
mainly due to selling office units in India. The revenue of EUR 6
million generated a profit in
2012 in a total amount of EUR 2.4 million.
NOTE 13 - COST OF OPERATIONS
For the year ended
December 31,
2012 2011 (a)
--------- ----------
Direct expenses:
Property operations and maintenance
(b) 8,064 5,465
Cost of sold trading properties
(refer to note 12 (3)). 3,920 603
Salaries and related expenses 356 136
Initiation costs - 387
Local taxes 1,525 1,391
13,865 7,982
Operations of entertainment centers 6,227 6,442
--------- ----------
20,092 14,424
Depreciation and amortization 293 425
--------- ----------
20,385 14,849
========= ==========
(a) Reclassification due to discontinued operation - refer to
note 17. Reclassification was also performed to present separately
the operations of entertainment centres.
(b) 2012 - Includes EUR 4.0 million of energy related expenses
and EUR 4.1 million due to other utilities expenses. 2011 -
Includes EUR 3.3 million of energy related expenses and EUR 2.2
million due to other utilities expenses.
NOTE 14 - ADMINISTRATIVE EXPENSES
For the year ended
December 31,
2012 2011(1)
--------- ----------
Selling and marketing expenses
Advertising and marketing 2,919 1,423
Salaries and relating expenses 1,130 971
Others 50 41
4,099 2,435
--------- ----------
General and administrative
expenses
Salaries and related expenses
(2) 5,743 8,472
Depreciation and amortization 403 630
Professional services 4,366 4,317
Travelling and accommodation 891 1,077
Offices and office rent 934 1,038
Others 412 887
------- -------
12,749 16,421
------- -------
Total 16,848 18,856
======= =======
General and administrative
(1) Salaries and related expenses reclassified to discontinued
operation - refer to note 17.
(2) Including non-cash expenses due to the share option plan
from continuing operations in the amount of EUR 0.2 million (2011-
EUR 3.1 million).
NOTE 15 - NET FINANCE INCOME (COSTS)
For the year ended
December 31,
Recognized in profit or loss 2012 2011(1)
---------- ---------
Changes in debentures measured at fair
value through profit or loss (2) - 59,891
Gain from bonds buyback programme 4,333 7,879
Interest income on bank deposits 1,182 3,003
Finance income from available for sale
financial assets 712 2,017
Interest income on structured deposits 2,085 5,221
Finance income from hedging activities
through sell of options 11,683 5,212
Foreign exchange gain on debentures - 19,418
Changes in fair value of derivatives 199 -
Interest from loans to related parties 321 377
Finance income 20,515 103,018
Interest expense on bank loans and debentures
(including CPI) (33,555) (35,958)
Changes in fair value of derivatives - (16,622)
Interest expenses on loans on structures (497) (635)
Changes in debentures measured at fair
value through profit or loss (2) (19,032) -
Foreign exchange losses on debentures (2,033) -
Loss from available for sale financial
assets sold (1,222) -
Changes in fair value of structured deposit (45) (1,320)
Foreign exchange losses on bank deposits,
bank loans (1,091) (3,140)
Cost of raising loans amortized to profit
or loss (676) -
Other finance expenses (710) (511)
---------- ---------
(58,861) (58,186)
Less- borrowing costs capitalized to trading
properties under development 21,806 29,154
---------- ---------
Finance costs (37,055) (29,032)
---------- ---------
Net finance income (expenses) (16,540) 73,986
========== =========
(1) Regarding reclassification of 2011 finance expense due to
discontinued operation refer to note 17.
(2) The change in fair value includes a total of EUR 2.8 million
(2011 - EUR 60.1 million) attributable to the credit risk of the
Company.
NOTE 16 - TAXES
Tax recognized in profit or loss
For the year ended
December 31,
2012 2011(1)
---------- ---------
Current year 1,435 103
Deferred tax expense (benefit) (6,898) 12,807
Total (5,463) 12,910
========== =========
Deferred tax expense (tax benefit)
For the year ended
December 31,
2012 2011(1)
---------- ---------
Origination and reversal of temporary
differences (4,377) 16,051
Recognition of previously unrecognized
tax losses (2,521) (3,244)
(6,898) 12,807
========== =========
Reconciliation of effective tax rate:
For the year ended
December 31,
% 2012 2011(1)
-------- ---------- ----------
Dutch statutory income tax rate 25% 25%
Profit (loss) from continuing operations
before income taxes (89,440) 13,989
Tax at the Dutch statutory income
tax rate 25% (22,360) 3,497
Recognition of previously unrecognized
tax losses 2.8% (2,521) (3,244)
Effect of tax rates in foreign
jurisdictions (7.6%) 6,817 6,108
Current year tax loss for which
no deferred tax asset is provided (2.0%) 1,809 8,775
Variances stemming from different
measurement rules applied for the
financial statements and those
applied for income tax purposes 3.7% (3,315) (5,173)
Non-deductible expenses (tax exempt
income) (15.8%) 14,107 2,947
Tax Expense (Tax benefit) (6.1%) (5,463) 12,910
======== ========== ==========
(1) 2012 - Mainly due to impairments not recognized for tax
purposes.
NOTE 16 - TAXES (Cont.)
The main tax laws imposed on the Group companies in their
countries of residence:
The Netherlands
a. Companies resident in the Netherlands are subject to
corporate income tax at the general rate of 25%. The first EUR
200,000 of profits is taxed at a rate of 20%. Tax losses may be
carried back for one year and carried forward for nine years. As
part of the measures to combat the consequences of the economic
crisis, taxpayers can elect for an extension of the loss carry back
period to three years (instead of one year). The election is only
available for losses suffered in the taxable years 2009, 2010 and
2011. If a taxpayer makes use of the election, two additional
limitations apply: (i) the loss carry forward period for the
taxable years 2009, 2010 and/or 2011 will be limited to a maximum
of six years (instead of nine years); and (ii) the maximum amount
of loss that can be carried back to the second and third year
preceding the taxable year will be limited to EUR 10 million per
year. The amount of loss that can be carried back to the year
directly preceding the taxable year for which the election is made
will remain unrestricted. As of the taxable year 2012, the election
for extended loss carry back is not available anymore and the
regular loss carry back and carry forward limitations apply.
b. Under the participation exemption rules, income (including
dividends and capital gains) derived by Netherlands companies in
respect of qualifying investments in the nominal paid up share
capital of resident or non-resident investee companies, is exempt
from Netherlands corporate income tax provided the conditions as
set under these rules have been satisfied. Such conditions require,
among others, a minimum percentage ownership interest in the
investee company and require the investee company to satisfy at
least one of the following tests:
- Motive Test, the investee company is not held as passive investment;
- Tax Test, the investee company is taxed locally at an
effective rate of at least 10% (calculated based on Dutch tax
accounting standards);
- Asset Test, the investee company owns (directly and
indirectly) less than 50% low taxed passive assets.
USA
The US federal corporate income tax rate is 35%. Some states may
also impose corporate income taxes, which vary from zero to
approximately 12%, resulting in an effective corporate tax rate of
generally around 40%. The federal tax rate on corporate capital
gains is the same as that of ordinary income. The statutory
withholding tax rate on US sourced income is generally 30%, which
may be lowered under a relevant tax treaty.
NOTE 16 - TAXES (Cont.)
India
The corporate income tax rate applicable to the taxable income
of an Indian Company is 33.22% (including surcharge of 7.5% and
rate of 3%. Surcharge is applicable only if the gross total income
exceeds INR 10 million (EUR 0.14 million)). Minimum alternate tax
(MAT) of 19.93% (of the taxable income of a company) is applicable
only if a Company books profits which exceed INR 10 million. Book
profits are computed in accordance with relevant provisions of the
Indian Income Tax Act. The final tax payable is the higher of the
MAT liability or corporate income tax payable. If taxes are paid
under MAT, then credit to the extent of MAT paid over corporate
income tax is available (MAT credit). MAT Credit can be availed, if
the company has future taxable profits in the following ten years.
Capital gains on transfer of capital assets (on which tax
depreciation has not been claimed) are taxed at the rate of 22.145%
(Including surcharge of 7.5% and rate of 3%. Surcharge is
applicable only if the gross total income exceeds INR 10 million)
provided that the capital assets were held for more than 36 months
immediately preceding the date of the transfer or 33.2175%
(including surcharge of 7.5% and rate of 3%. Surcharge is
applicable only if the gross total income exceeds INR 10 million)
if they were held for less than 36 months. Dividends paid out of
the profits are subject to Dividend Distribution Tax at the rate of
16.61% (including surcharge of 7.5% and rate of 3%. Surcharge is
applicable only if the gross total income exceeds INR 10 million).
There is no withholding tax on dividends distributed by an Indian
company and no additional taxes need to be paid by the Shareholder.
Business losses can be offset against profits and gains on any
business or profession for a period of eight years from the
incurrence year's end. There is no limit for carry forward
unabsorbed depreciation.
Cyprus
The taxation of companies incorporated in Cyprus is based on tax
residence and all companies are taxed under corporation tax at the
rate of 10%. Dividend income paid from overseas subsidiaries that
earn more than 50% of their income from trading activities and
profits from the sale of shares and other titles of companies are
tax exempt. There is no withholding tax on payments of dividends to
non-resident shareholders or shareholders that are companies
resident in Cyprus. Companies, which do not distribute 70% of their
profits after tax, as defined by the relevant tax law within two
years after the end of the relevant tax year, will be deemed to
have distributed as dividends 70% of these profits. Defence tax at
17% will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents.
The amount of deemed distribution is reduced by any actual
dividends paid out of the profits of the relevant year during the
following two years. This defence tax is paid by the company for
the account of the shareholders. Non- Cyprus tax resident
shareholders are exempt from this taxation.
NOTE 17 - DISCONTINUED OPERATION
Following the disposal of US assets the Company discontinued its
US activity.
2012 2011
Results for discontinued operation
Revenues 13,907 25,528
Expenses (1) (16,848) (10,467)
------------ ---------
Results from operating activity (2,941) 15,061
------------ ---------
Tax benefit (expense) 600 (2,276)
------------ ---------
Results from operating activities,
net of tax (2,341) 12,785
------------ ---------
Gain on sale of discontinued operation 391 -
Profit (loss) for the year from
discontinued operation (1,950) 12,785
============ =========
Earnings per share
Basic and diluted earnings (loss)
per share (in EURO) (0.01) 0.04
(1) Including reduction in value of investment property in the amount of 2,254 thousands EUR.
Below is the information on allocation of profit between owner
of the Company and non-controlling interests:
2012 2011
--------- --------
Profit (loss) for the year from
continuing operations (83,977) 1,079
Attributable to owners of the Company (84,119) 1,167
Attributable to non-controlling
interests 142 (88)
2012 2011
------------ --------
Profit (loss) for the year from
discontinued operations (1,950) 12,785
Attributable to owners of the Company (2,044) 8,179
Attributable to non-controlling
interests 94 4,606
Cash flow from (used in) discontinued operation
2012 2011
--------- ---------
Net cash from operating activities 12,106 5,511
Net cash from (used in) investing
activities 125,774 (3,642)
Net cash used in financing activities (51,768) (40,370)
Effect of exchange rate fluctuations
on cash held (88) (59)
--------- ---------
Net cash flow for the year 86,024 (38,560)
========= =========
Effect of disposal on the financial position of the group
2012
----------
Investment property 263,047
Interest bearing loan from banks (161,560)
Trade and other payables (14,064)
Net cash inflow from US transaction 87,423
==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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