TIDMPLAZ
RNS Number : 3362M
Plaza Centers N.V.
23 August 2013
23 August 2013
PLAZA CENTERS N.V.
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
PLAZA REPORTS OPERATIONAL PROGRESS at its ACTIVEly managed
ASSETS
AND ongoing success in REALIsing NON CORE ASSEts to reduce
LEVERAGE
Plaza Centers N.V. ("Plaza" / "Company" / "Group"), a leading
property developer and investor with operations in Central and
Eastern Europe ("CEE") and India, today announces its results for
the six months ended 30 June 2013.
Financial highlights:
-- Reduction in total assets to EUR793 million (31 December
2012: EUR886 million), mainly as a result of non-cash,
predominantly market-related impairment adjustments of EUR61
million booked in the period (decrease in the value of trading
properties to EUR561 million (31 December 2012: EUR612
million))
-- Total revenues more than doubled following the EUR16.7
million disposal of an Indian investment, and an increase in
revenue from operating shopping centres, to EUR14.3 million (H1
2012: EUR14.1 million), despite a decrease in revenue at Fantasy
Park (decrease of EUR1 million due to the closure of some gaming
and entertainment units) and Koregaon Park, which was partly closed
for the majority of the period
-- Loss for the six months of EUR81 million (30 June 2012: EUR10
million loss), stemming mainly from the non-cash EUR61 million
impairment of trading properties (of which 42% relates to assets in
Serbia, 21% to Czech Republic, 26% to India and 11% to Greece),
fair value adjustments and the share in loss of associated
companies
-- Basic and diluted loss per share of EUR0.27 (30 June 2012: EUR0.03 loss per share)
-- Cash position at the period end (including restricted bank
deposits and available for sale financial assets) of EUR100 million
(31 December 2012: EUR66 million) with working capital of EUR390
million (31 December 2012: EUR391 million); current cash position
of circa EUR32 million following a EUR67 million bond principal and
interest repayment on 1 July 2013
Operational highlights:
-- Plaza successfully completed its first exit in India
following the sale of its 50% stake in a vehicle which primarily
owns interests in an office complex project located in Pune,
Maharashtra. The transaction valued the assets collectively at
EUR33.4 million and, as a result, Plaza has received gross cash
proceeds of circa EUR16.7 million in line with its holding
-- Improved occupancy levels achieved across the Company's
existing shopping and entertainment centres, with the overall
portfolio occupancy rate increasing to 89% (31 December 2012: 88%)
as at the reporting date, with the following notable successes:
o At Zgorzelec Plaza, Poland, three contracted anchor tenants
opened their stores in the second quarter, increasing the turnover
by 65% and footfall by 42% compared to June last year
o At Kragujevac Plaza, occupancy reached 100% a year since
opening and turnover increased by 23% compared to June 2012
o At Riga Plaza, H&M was signed as a new anchor tenant,
bringing the mall to almost full occupancy. Turnover and footfall
at the centre has increased by 14% compared to June 2012
o At Torun Plaza, Poland, turnover increased by 24% and footfall
rose by 20% compared to the corresponding period last year
Key highlights since the period end:
-- Plaza has successfully completed the sale of 100% of its
stake in a vehicle which owns the interest in the Prague 3 project
("Prague 3"), a logistics and commercial centre in the third
district of Prague. Earlier this year, Plaza completed a successful
application to change the zoning use of Prague 3 to a residential
scheme. The transaction valued the asset at circa EUR11 million
and, as a result, further to related bank financing and other
balance sheet adjustments, Plaza received net proceeds of circa
EUR7.5 million in cash
-- Plaza has also sold its interest in a SPV which owns a site
in Roztoky, Czech Republic being held for a potential residential
development. The site was sold for circa EUR2 million, resulting in
net cash proceeds of EUR1.3 million after debt-related
deductions
Commenting on the results, Ran Shtarkman, the President and CEO
of Plaza Centers, said:
"We have seen sustained progress towards our key strategic and
operational objectives in the year to date, driven by our continued
commitment to the realisation of completed and non-core assets and
the management of both the level of our debt and active assets in
our portfolio.
"Across our portfolio of operating shopping centres, we have
seen increases against all of our three key performance metrics of
occupancy, footfall and turnover during the first half of the year,
with the most notable improvements shown at our assets in the more
resilient economies in Central and Eastern Europe. Of these, the
most outstanding performance has been at Zgorzelec Plaza in Poland
which, further to recent asset management initiatives,
significantly increased turnover and footfall in June by 65% and
42% respectively, compared to June 2012. The continued increase in
overall occupancy rates throughout our portfolio is indicative of
our ability to leverage our long-term, strong relationships with
leading international retailers.
"By contrast, the persistent uncertainty in the economic and
consumer environment across Europe leads us to maintain our
cautious approach to development, with the result that we will only
press forward with our pipeline of projects when external funding
becomes available. In addition, we will continue our track record
of successful asset disposals in order to deleverage the Company
and reallocate realised capital from stabilised completed projects
and non-core assets to the core yielding assets in the portfolio,
thereby creating additional capital value and driving income
growth."
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/Nina Legge +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 and India. It focuses on constructing new centres and, where
there is significant redevelopment potential, redeveloping existing
centres in both capital cities and important regional centres. The
Company is dual listed on the Main Board of the London Stock
Exchange and, as of 19 October 2007, the Warsaw Stock Exchange
(LSE:"PLAZ", WSE: "PLZ/PLAZACNTR"). Plaza Centers N.V. is an
indirect subsidiary of Elbit Imaging Ltd. ("EI"), an Israeli public
company whose shares are traded on both the Tel Aviv Stock Exchange
in Israel and the NASDAQ Global Market in the United States. 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, during the first six months, Plaza
has again delivered improvements at the operational level of our
business, highlighted by the increases in occupancy, footfall and
turnover at our active assets. In addition, the realisations made
during and after the period have enabled the Group to recycle and
reallocate capital from completed and non-core assets to core
assets.
The economies in Central Europe are beginning to present signs
of a rebound in growth, with preliminary second-quarter GDP figures
showing that the Eurozone's economy expanded 0.3% compared with the
first quarter of 2013. We expect full recovery to be slow, however,
with the more resilient countries such as Poland and Latvia making
the most progress. The ongoing challenges resulted in a non-cash,
market driven writedown of EUR61 million in the first half and the
decision to maintain our prudent approach towards development,
whilst continuing to dispose of non-core and completed assets to
de-risk the Group by further deleveraging and strengthening our
balance sheet.
Key Events
During the year to date, Plaza has successfully disposed of
three non-core projects through the following transactions:
-- Plaza sold 100% of its stake in a vehicle which owns the
interest in the Prague 3 project ("Prague 3"), a logistics and
commercial centre in the third district of Prague, in a transaction
that was concluded in July 2013. Earlier in the year, Plaza had
completed a successful application to change the zoning use of
Prague 3 to a residential scheme. The disposal valued the asset at
circa EUR11 million and, as a result, further to related bank
financing and other balance sheet adjustments, Plaza received net
proceeds of circa EUR7.5 million in cash.
-- Plaza has also sold its interest in the SPV which owns a site
in Roztoky being held for a potential residential development. The
site was sold for circa EUR2 million, resulting in net cash
proceeds of EUR1.3 million after debt-related deductions.
-- Plaza also sold its 50% stake in a vehicle which primarily
holds interests in an office complex project located in Pune,
Maharashtra. The transaction valued the assets owned by the vehicle
collectively at EUR33.4 million and, as a result, Plaza received
gross cash proceeds of circa EUR16.7 million.
These sales were conducted in line with the Company's strategy
to deleverage and reallocate capital realised from the disposal of
stabilised completed projects and non-core assets to the core
yielding assets across our portfolio.
We have also made progress during the year through the active
management of our income-generating assets. In particular, we have
improved a number of key metrics at our operating shopping and
leisure centres, increasing occupancy, footfall and rental
income.
As reported in 2012, Koregaon Park Plaza was substantially
damaged by a fire caused by a tenant's faulty electrical equipment.
Although roughly two-thirds of the mall's rentable area was
reopened in August 2012, the remainder of the centre required
extensive renovation and these works were finally completed in the
second quarter of 2013. Plaza is pleased to report that, during
this reporting period, the project received approximately EUR6.9
million from the insurance policy which has covered all the
renovation costs.
Results
As a result of a EUR61 million non-cash impairment,
predominantly charged against the Company's trading assets in
Serbia, India, the Czech Republic and Greece, fair value
adjustments of bonds and the share in loss of associated companies,
Plaza ended the first half of the year with a loss attributable to
the owners of the Company of EUR81 million. In addition, the
Company recorded a loss of EUR5.1 million following the disposal of
an Indian investment largely as a result of foreign currency
losses. The revenue from operating shopping centres increased to
EUR14.3 million (H1 2012: EUR14.1 million) despite the decreasing
revenue from Fantasy Park gaming and entertainment centres (EUR1
million decrease as a result of some gaming and entertainment units
closing down) and Koregaon Park Plaza, which was partially closed
for most of the period.
Of the EUR61 million impairment charge, 53% related to the
writedown of assets in Serbia and Greece which, in turn, reflected
the well publicised worsening market and macroeconomic conditions
in those countries.
As at 30 June 2013, the Company had a cash position (including
restricted bank deposits and available for sale financial assets)
of approximately EUR100 million. As at the date of this
announcement, the Company has a current cash position of circa
EUR32 million following an EUR67 million bond principal and
interest repayment in July.
NAV
In line with previous half yearly results, Plaza's property
portfolio is revalued at the end of every financial year and
therefore no update on NAV is provided at the half year.
Portfolio progress
Currently the Company is engaged in 22 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 23 August
2013, is summarised as follows:
Number of assets (CEE and India)
---------------- --------------------------------------
Location Active Under development/ Offices
planning
---------------- ------- ------------------- --------
Romania - 8 1
---------------- ------- ------------------- --------
India 1 3 -
---------------- ------- ------------------- --------
Poland 3 4 -
---------------- ------- ------------------- --------
Hungary - 3 1
---------------- ------- ------------------- --------
Serbia 1 2 -
---------------- ------- ------------------- --------
Czech Republic 1 - -
---------------- ------- ------------------- --------
Bulgaria - 1 -
---------------- ------- ------------------- --------
Greece - 1 -
---------------- ------- ------------------- --------
Latvia 1 - -
---------------- ------- ------------------- --------
Total 7 22 2
---------------- ------- ------------------- --------
Liquidity & Financing
Plaza ended the period with a cash position (including
restricted bank deposits and available for sale financial assets)
of EUR100 million, compared to EUR66 million at the end of 2012.
Working capital at 30 June 2013 totalled EUR390 million (31
December 2012: EUR391 million). As mentioned above, the Company's
current consolidated cash position is circa EUR32 million following
an EUR67 million bond principal and interest repayment in July.
The Group continues to pursue a conservative financing policy
and has made progress, mindful of the wider macroeconomic climate,
in deleveraging its balance sheet. Whilst EUR18 million of debt was
repaid during the period, the level of debt increased to 50% of the
balance sheet (31 December 2012: 45%) primarily as a result of the
impairment losses booked in the period. The Company continues to
prioritise the deleveraging of its balance sheet, seeking a variety
of financing options alongside traditional bank debt and
additionally pursuing avenues to lengthen the date of its debt
facilities.
On 22 July 2013 Standard & Poor's Maalot, the Israeli credit
rating agency which is a division of International Standard &
Poor's Rating Services, updated the credit rating of Plaza's two
series of Notes from "ilBB+" on a local Israeli scale to "ilB",
with a negative outlook. The re-rating reflects the persistent
challenging economic environments in which Plaza operates.
Strategy and Outlook
In response to ongoing global economic uncertainty, Plaza
adjusted its activity in line with market conditions and limited
the commencement of new construction projects, instead choosing to
focus on the intensive management of its core active assets and the
paying down of debt to ensure the Group remains conservatively
geared and strongly positioned to resist any further macroeconomic
shocks.
Despite the current challenges which continue to impact the core
markets in which Plaza operates, the Group has successfully met a
number of its key strategic objectives over the last six months.
Notable improvements at the operational level of the portfolio
include improving overall occupancy, footfall and turnover and we
remain successful in ensuring that our centres continue to meet the
demands of our customers by delivering the dominant retail offering
in our regions.
Real estate finance from banks in the region remains scarce,
which is emphasised by the continued lack of transactional activity
in CEE during the period. Whilst we are seeking alternative
financing options to push out the maturity of our debt, we will
continue to focus on active asset management initiatives to
maximise the income and value of our shopping centres and are
confident that our strategy of enjoying the rental income our
completed assets provide, until sales prices that appropriately
reflect their current and existing potential are achieved, remains
the correct course for the Group.
Continuing the success of our realisations during the period,
which all delivered a satisfactory return on the equity invested,
the Company will seek to optimise opportunities to further reduce
its levels of gearing whilst advancing our limited development
programme into the strongest economies of the CEE. We therefore
hope to see a reduction in our gearing level during the second half
of the year.
Improving business activity and sentiment has provided evidence
that the Eurozone's tentative recovery will continue into the
second half of 2013 and into 2014. We are convinced of the
underlying fundamentals of the regions in which we operate but feel
a pragmatic yet opportunistic approach is still the right approach.
We will remain committed to our strategic objectives of improving
our active operational assets, while selling non-core and completed
assets to enable us to continue to deleverage. We will also
continue to seek alternative financing options to extend and
diversify our funding sources, which we believe will better
position the Company for further growth. It is through this
combination of factors, underpinned by our expert management
skills, which will ensure that we will remain well positioned to
create significant future value for our shareholders.
Ran Shtarkman
President and Chief Executive Officer
23 August 2013
OPERATIONAL REVIEW
Over the course of the year to date, Plaza has continued to make
good progress against its operational and strategic objectives,
delivering improved occupancy at the portfolio level and disposing
of non-core assets.
Highlights for the period included:
-- Operation: An improved performance of the Company's seven
operating shopping and entertainment centres located in five
countries over two continents, through the application of intensive
asset management skills
-- Disposals:
o Sale of Plaza's 50% interests in a vehicle which mainly holds
interests in an office complex project located in Pune,
Maharashtra, India
o Sale of the Prague 3 project following the successful change
of its zoning permit
o Sale of the Roztoky Project (Prague, Czech Republic)
o Dissolving the US holding entity and receiving a EUR32 million
residual payment from the subsidiary
As at the reporting date, Plaza has 31 assets in nine countries
across the CEE region and India, of which 22 are at various phases
of development. Of these, eight are located in Romania, five in
India, four in Poland, three in Hungary, two in Serbia, 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.
Footfall
During the second quarter of 2013, the centres continued the
positive growth trend in terms of footfall shown in the first
quarter. A significant increase of 35% was achieved at Zgorzelec
Plaza in second quarter of 2013 compared to the same quarter last
year, with a particularly strong increase of 42% in June 2013
compared to June 2012.
The very pleasing growth trend also continues at Torun Plaza,
where the number of visitors in second quarter of 2013 rose by 20%
compared to the same quarter last year.
Riga Plaza also demonstrated strong growth in the second
quarter, with visitor growth up 12% compared to the corresponding
quarter in 2012.
Satisfactory increases in visitor numbers were also achieved in
the second quarter at Liberec Plaza, with 10% growth on last year,
and at Kragujevac Plaza with 6% growth compared to the same period
in 2012.
Turnover
All of the Company's operating shopping and leisure centres saw
strong performance during the second quarter of 2013, with May and
June recording particularly strong turnover figures.
Again, the greatest success was shown in Zgorzelec Plaza, where
the second quarter turnover was 53% higher than the corresponding
quarter last year. This was the result of the opening of three new
anchor tenants in May and June 2013, which led to the 66% growth in
turnover, compared to June last year.
A very high increase in turnover was also enjoyed at Torun Plaza
which recorded a rise of 24% in the second quarter compared to the
same period last year.
Riga Plaza also experienced buoyant growth with a total increase
of 20.5% in turnover during the second quarter of 2013, including a
25.6% increase in May 2013 (both compared to the same period last
year).
After one full year of operation, Kragujevac Plaza saw a 14%
increase in turnover over the quarter, with the best performance
month in June, when turnover rose 23% compared to June 2012.
Positive increases during the second quarter were also shown at
Liberec Plaza (up 11%) while Suwalki Plaza saw a 5% turnover
increase in June 2013.
Occupancy
The most notable proportional occupancy increase was achieved in
Zgorzelec Plaza where three new anchor stores (an electronic store,
Media Expert, a furniture store, Zarycki Furniture, and sports
store, Martes Sport) were opened during the second quarter of 2013.
In addition, leases were agreed for two smaller units. It is also
pleasing to report that at Riga Plaza contract terms were agreed
with H&M (including "H&M Home") during the second quarter
to take 2,900 sq m of space.
The Company's other development projects are at various stages
of the development cycle, with Plaza's skilled management teams
continuing actively to make progress with planning and design.
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
Retail and commence in 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, with the
Retail and building permit
Budapest, entertainment expected to be
Uj Udvar Hungary scheme 16,000 35 granted in 2014
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Budapest,
David House Hungary Office 2,000 100 Operational
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Retail and
Liberec, entertainment Operating, opened
Liberec Plaza Czech Rep. scheme 17,000 100 in March 2009
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Casa Radio Bucharest, Mixed-use retail 600,000 75 Under planning,
Romania and leisure plus (GBA including with completion
office scheme parking) scheduled for
2015-2018; 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 2015-2016
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Bucharest,
Palazzo Ducale Romania Office 700 100 Operational
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Belgrade Belgrade, Apart-hotel and 70,000 (GBA) 100 Construction
Plaza Serbia business centre scheduled to
(MUP) with a shopping commence in 2014;
gallery completion scheduled
for 2015-2016
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Construction
scheduled to
commence at the
beginning of
Retail and 2014; completion
Belgrade Belgrade, entertainment scheduled for
Plaza (Visnjicka) Serbia scheme 32,000 100 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 2015-2016
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Koregaon Pune, Retail, entertainment 110,000 100 Operating; opened
Park Plaza India and office scheme (GBA) in March 2012
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Bangalore Bangalore, Residential Scheme 310,000 23.75 Construction
India (GBA) scheduled to
commence at the
beginning of
2014; phased
completion scheduled
over 2014-2020
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
Chennai Chennai, Residential Scheme 230,000 38 Construction
India (for sale) scheduled to
commence in 2014;
phased completion
scheduled over
2014-2018
-------------------- -------------- ------------------------ ---------------- ----------- -----------------------
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.
FINANCIAL REVIEW
Results
During the reporting period of the first six months of 2013 and
the months to date, Plaza has continued to execute its core
operations and implement its strategy.
Because 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 (or equity accounted investees, where
appropriate), 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 adoption of IFRS 11 Joint Arrangements, the
comparative figures for the year end of 2012 were restated. The
effect of this restatement is detailed in the Company's condensed
consolidated financial information for the six-month period ended
on 30 June 2013 in note 6 to the Accounts. The adoption of IFRS 11
affected the accounting treatment of the following projects:
Kharadi, Trivandrum, Chennai, Bangalore, Dream Island, Uj Udvar and
our US operations.
Revenue for the period largely comprised rental income in Europe
(EUR8.3 million in H1 2013 compared to EUR8 million in H1 2012),
but rental income improvement in our operating centres in CEE was
offset by a reduction in rental income collected from Koregaon Park
which was partially closed for most of the period. Management fees
from operating malls increased by 30% (EUR3 million in H1 2013
compared to EUR2.3 million in H1 2012), but income derived from the
Group's subsidiary, Fantasy Park, which provides gaming and
entertainment services in active shopping centres decreased to
EUR2.3 million (H1 2012: EUR3.3 million) during the period as a
result of closing down some of these centres. Aside from income
from operating assets, EUR16.7 million of income was also generated
from the sale of a stake in an Indian JV company.
The total cost of operation amounted to EUR88 million (H1 2012:
EUR8 million). The increase, and majority of the cost of
operations, is largely attributable to the EUR61 million impairment
charge recorded in connection with the value of trading properties,
as compared to a charge of EUR1.7 million in the period H1 2012.
42% related to impairments of assets in Serbia, 21% to Czech
Republic, 26% to India and the remaining to Greece. The EUR21.8
million cost of the Indian vehicle which was sold was booked in the
total cost of operations and included approximately EUR4.5 million
of foreign currency exchange differences. The cost of property
operation and maintenance has decreased during the period when
compared to the reclassified H1 2012 period amount, from EUR4
million to EUR2.9 million in H1 2013, as a result of ongoing
operational efficiencies and successful asset management
initiatives at the Company's operating shopping centres.
Administrative expenses amounted to EUR6.2 million (H1 2012:
EUR7.5 million after restatement). Of these, general and
administrative expenses decreased from EUR5.8 million in H1 2012 to
EUR5.1 million in H1 2013 as a result of further optimization of
the Company's operations. Sales and marketing expenses decreased
from EUR1.7 million in H1 2012 to EUR1.1 million for the six month
period ended 30 June 2013 as no promotion of newly opened shopping
centres occurred in the period.
A net finance cost of EUR9 million was recorded in H1 2013 (H1
2012: net finance loss of EUR9.1 million). The main components of
the loss comprised:
-- Interest expense on bank loans and debentures (EUR7.4
million), an increase compared to the H1 2012 expense of EUR7.1
million where the interest on bank loans was increasing in line
with the higher volume of investment financing loans, while on the
other hand the interest expense on bonds was decreasing as a result
of principal repayments
-- Net cost related to the companies debentures (revaluation,
hedge and loss on reissuance) of EUR3.9 million
-- Net income from interest on deposits, foreign exchange
differences and interest rate swap hedging related to bank loan
interest EUR2.3 million.
As a result of the above, the loss for the period amounted to
circa EUR81 million in H1 2013, compared to a EUR10 million loss in
H1 2012.
Basic and diluted loss per share for the period were EUR0.27 (H1
2012: EUR0.03 loss).
Balance sheet and cash flow
The balance sheet as at 30 June 2013 showed total assets of
EUR793 million compared to total assets of EUR886 million at the
end of 2012, largely as a result of the decrease in the value of
trading properties due to impairment adjustments.
The Company's cash position deriving from cash, restricted cash
and available for sale financial assets increased to EUR100 million
(31 December 2012: EUR66 million), as a result of proceeds from the
sale of an Indian investment and the dissolution of our US venture.
The gearing position stood at 50% of the balance sheet (31 December
2012: 45%) as a result of losses realised from the impairment of
trading properties. After the end of the period Plaza collected the
proceeds from the sale of Prague 3 and the Roztoky projects (in
Prague, Czech Republic) and paid a EUR67 million bond principal and
interest repayment, leaving the Company with a cash position of
circa EUR32 million.
The value of trading properties has decreased from EUR612
million as at 31 December 2012 to EUR561 million at the end of the
period after the impairment losses relating to projects in Serbia,
Czech Republic, India and Greece were recorded.
Investments in investee companies decreased by 41% (30 June
2013: EUR92 million; 31 December 2012: EUR155 million) after the
above-mentioned dissolution of the US holding entity and the sale
of Plaza's share in the project company holding which primarily
owns interests in an office complex project located in Pune,
India.
Total bank borrowings (long and short term) amounted to EUR186
million (30 June 2012: EUR212 million). This decrease is primarily
as a result of loans repaid in relation to the bond buyback and the
change in the value of foreign exchange denominated loans.
Aside from bank financing, Plaza has a balance sheet liability
of EUR206 million (with an adjusted par value of circa EUR257
million including a EUR5.8 million bond B held in treasury) 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.
Trade payables decreased to EUR3.5 million (2012: EUR7.6
million), due to the completion of reconstruction works in
India.
Derivatives liabilities recorded at the period end were EUR1.2
million comprising interest rate swaps relating to project
financing loans, compared to EUR3.3 million as at 31 December 2012,
which had also included cross currency swap transactions to hedge
interest rates and foreign exchange risks associated with the
Group's NIS and PLN denominated bonds.
Other current liabilities have increased mainly due to accrued
interest on the issued bonds of the Company.
Roy Linden
Chief Financial Officer
23 August 2013
Plaza Centers N.V.
Condensed consolidated interim statement of Profit or loss
For the six months period ended
June 30,
----------------------------------
2013 2012 restated(*)
------------ --------------------
EUR '000 EUR '000
------------ --------------------
Unaudited Unaudited
------------ --------------------
Continuing operations
Revenue 14,298 14,148
Proceeds from disposal of equity 16,699
accounted investee -
------------ --------------------
Total revenue 30,997 14,148
Write-down of Trading properties (60,906) (1,688)
Cost of equity accounted investee (21,842)
disposed -
Cost of operations (5,490) (6,551)
------------ --------------------
Gross profit (loss) (57,241) 5,909
Administrative expenses (6,212) (7,538)
Other income 318 363
Other expenses (4,771) (672)
------------ --------------------
Results from operating activities (67,906) (1,938)
Finance income 6,671 12,836
Finance costs (15,636) (21,927)
Net finance costs (8,965) (9,091)
------------ --------------------
Share in results of equity-accounted
investees, net of tax (4,472) (935)
------------ --------------------
Loss before income tax (81,343) (11,964)
Tax benefit 754 4,048
Loss from continuing operations (80,589) (7,916)
------------ --------------------
Discontinued operation
Loss from discontinued operation,
net of tax (454) (1,892)
Loss for the period (81,043) (9,808)
------------ --------------------
Loss attributable to:
Owners of the Company (81,043) (9,808)
Earnings per share
Basic and diluted loss per
share (in EURO) (0.27) (0.03)
Earnings per share - continuing
operations
Basic and diluted loss per
share (in EURO) (0.27) (0.03)
(*) Restated due to Retrospective application - refer to Note 4
and 6 regarding initial application of the new suite of
standards
Plaza Centers N.V.
Condensed consolidated interim statement of other comprehensive
income
For the six months period ended
June 30,
-----------------------------------
2013 2012 restated(*)
--------------- ------------------
EUR '000 EUR '000
--------------- ------------------
Unaudited Unaudited
--------------- ------------------
Loss for the period (81,043) (9,808)
Other comprehensive income
Items that may be reclassified
to profit or loss in subsequent
periods:
Net changes in fair value
on Available for sale financial
assets transferred to income
statement (723) 1,942
Change in fair value of available
for sale financial assets (14) (161)
Foreign currency translation
differences - foreign operations
(Discontinued operation) - (6,912)
Foreign currency translation
differences - foreign operations
(Equity accounted investees) (3,650) (4,107)
Foreign currency translation
differences - foreign operations
(Other) (2,006) (932)
Income tax effect on other
comprehensive income due
to change in fair value of
Available for sale financial
assets 184 (445)
Other comprehensive loss
for the period, net of income
tax (6,209) (10,615)
--------------- ------------------
Total comprehensive loss
for the period, net of tax (87,252) (20,423)
Total comprehensive loss
attributable to:
Owners of the Company: (87,200) (20,402)
Non-controlling interests (52) (21)
(*) Restated due to Retrospective application - refer to Note 4
and 6 regarding initial application of the new suite of
standards
Plaza Centers N.V.
Condensed consolidated interim statement of financial
position
June 30, December 31,
---------- --------------
2013 2012 Restated
(*)
---------- --------------
EUR '000 EUR '000
---------- --------------
Unaudited Audited
---------- --------------
ASSETS
Cash and cash equivalents 86,934 35,374
Restricted bank deposits 12,128 18,759
Available for sale financial assets 883 11,714
Trade receivables 3,551 3,399
Other receivables and prepayments 9,103 19,313
Trading properties 560,831 612,475
Assets held for sale 12,865 -
---------- --------------
Total current assets 686,295 701,034
---------- --------------
Equity accounted investees 91,549 154,830
Loan to equity accounted investees 6,994 6,949
Property and equipment 6,838 7,381
Investment property - 14,489
Restricted bank deposits 495 779
Other non-current assets 393 356
Total non-current assets 106,269 184,784
---------- --------------
Total assets 792,564 885,818
========== ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Interest bearing loans from banks 186,452 205,977
Liabilities held for sale 3,997 -
Debentures at fair value through
profit or loss 33,929 34,966
Debentures at amortized cost 37,899 34,184
Trade payables 3,504 7,569
Related parties 698 546
Provisions 15,597 15,597
Derivatives 1,170 3,320
Other liabilities 13,159 7,648
Total current liabilities 296,405 309,807
---------- --------------
Non-current liabilities
Interest bearing loans from banks - 5,773
Debentures at fair value through
profit or loss 80,618 81,181
Debentures at amortized cost 53,483 39,010
Other liabilities 147 185
Deferred tax liabilities 6,016 6,930
Total non-current liabilities 140,264 133,079
---------- --------------
Equity
Share capital 2,972 2,972
Translation reserve (31,963) (26,359)
Other reserves 14,218 14,556
Share premium 261,773 261,773
Retained earnings 108,231 189,274
Total equity attributable to equity
holders of the Company 355,231 442,216
---------- --------------
Non-controlling interests 664 716
---------- --------------
Total equity 355,895 442,932
---------- --------------
Total equity and liabilities 792,564 885,818
========== ==============
(*) Restated due to Retrospective application - refer to Note 4
and 6 regarding initial application of the new suite of
standards
22 August 2013
----------------------- ------------------------ -----------------------
Date of approval of the Ran Shtarkman Shimon Yitzchaki
financial statements Director, President and Director and Chairman
Chief Executive Officer of the Audit Committee
Plaza Centers N.V.
Condensed consolidated interim statement of cash flows
For the six month period ended June
30,
2013 2012 restated (*)
------------- -----------------------
EUR 000' EUR 000'
------------- -----------------------
Unaudited Unaudited
------------- -----------------------
Cash flows from operating activities
Loss for the period (81,043) (9,808)
Adjustments for:
Depreciation and write-down 60,962 2,035
Change in fair value of Investment 3,439
property -
Loss from disposal of equity accounted 5,143
investee -
Net finance costs 8,965 9,091
Interest received in cash 385 2,901
Interest paid (6,558) (5,745)
Share of loss of equity accounted
investee, net of tax 4,472 935
Gain on sale of property and equipment (19) (30)
Tax benefit (754) (4,048)
Share based payments 262 3,206
------------- -----------------------
(4,746) (1,463)
Changes in:
Trade receivables (223) 652
Other accounts receivable 7,083 2,959
Trading properties (3,232) (27,640)
Trade payables (2,443) (146)
Other liabilities, related parties
and provisions (146) 806
1,039 (23,369)
Income tax paid (344) (144)
------------- -----------------------
Net cash used in operating activities (4,051) (24,976)
------------- -----------------------
Cash flows from investing activities
Purchase of property, equipment and
other non-current assets (4) (107)
Proceeds from disposal of fixed assets 44 56
Proceeds from dissolving of equity 32,438
accounted investee -
Investment in short term deposits - 3,102
Investment in equity accounted investees (1,684) (1,711)
Proceeds from selling equity accounted 16,699
investee -
Purchase of available for sale financial
assets (155) (2,187)
Proceeds from sale of available for
sale financial assets 11,014 26,496
Changes in long term deposits - 50,663
Net cash from investing activities 58,352 76,312
------------- -----------------------
(*) Restated due to Retrospective application - refer to Note 4
and 6 regarding initial application of the new suite of
standards
Plaza Centers N.V.
Condensed consolidated interim statement of cash flows
continued
For the six
month period
ended June 30,
2013 2012 restated (*)
---------------- ------------------
EUR 000' EUR 000'
---------------- ------------------
Unaudited Unaudited
---------------- ------------------
Cash flows from financing activities
Proceeds from bank loans and financial
institutions 509 25,222
Changes in restricted cash 3,193 8,381
Net cash resulting from currency
options (1,950) 5,320
Reselling (repurchase) of own debentures 13,772 (9,836)
Proceeds from settlement of SWAP - 238
Repayment of loans to banks and financial
institutions (17,833) (46,711)
Net cash used in financing activities (2,309) (17,386)
---------------- ------------------
Effect of exchange rate fluctuation
on cash held (432) (36)
Net increase in cash and cash equivalents 51,560 33,914
Cash and cash equivalents at the
beginning of the period 35,374 51,433
Cash and cash equivalents at the
end of the period 86,934 85,347
================ ==================
(*) Restated due to Retrospective application - refer to Note 4
and 6 regarding initial application of the new suite of
standards
Plaza Centers N.V.
Notes to the condensed consolidated interim financial
information
1. Reporting entity
Plaza Centers N.V. ("the Company") was incorporated and is
registered in the Netherlands. The Company's registered office is
at Keizersgracht 241, Amsterdam, the Netherlands. The Company
conducts its activities in the field of establishing, operating and
selling of shopping and entertainment centres, as well as other
mixed-use projects (retail, office, residential) in Central and
Eastern Europe (starting 1996), India (from 2006), and, between
2010 and 2012, also in the USA.
The Company is dual listed on the Main Board of the London Stock
Exchange ("LSE") and, starting October 2007, on the Warsaw Stock
Exchange ("WSE").
The Company's immediate parent company is Elbit Ultrasound
(Luxembourg) B.V. / S.Ã r.l. ("EUL"), which holds 62.5% of the
Company's shares, as of the end of the reporting period. The
ultimate parent company is Elbit Imaging Limited ("EI"), which is
indirectly controlled by Mr. Mordechay Zisser.
The condensed consolidated interim financial information of the
Company as at June 30, 2013 and for the six months then ended
comprise the Company and its subsidiaries (together referred to as
the "Group") and the Group's interests in joint ventures.
The consolidated financial statements of the Group as at and for
the year ended December 31, 2012 are available on the Company's
website (www.plazacenters.com) and also upon request from the
Company's registered office at Keizersgracht 241, 1016EA Amsterdam,
The Netherlands.
During the six months period ended June 30, 2013, two
significant changes occurred in theCompany's holdings, being the
dissolving of EPUS, the Company's 50% equity accounted investee in
the USA (refer to note 12(e)), and the selling of the Company
subsidiary in India ("P-One")(refer to note 12b).
2. Basis of presentation
a. Statement of compliance
This condensed consolidated interim financial information has
been prepared in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU. It does not include all of the
information required for full annual financial statements, and
should be read in conjunction with the annual consolidated
financial statements of the Group for the year ended December 31,
2012.
However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since
the last annual consolidated financial statements as at and for the
year ended December 31, 2012.
The condensed consolidated interim financial information was
authorized for issue by the Company's Board of Directors on August
22, 2013.
b. Judgments and estimates
The preparation of interim financial information requires
management to make judgments, estimates and assumptions that affect
the application of policies and reported amounts of assets and
liabilities, income and expenses. Actual results may differ from
these estimates.
In preparing this condensed consolidated interim financial
information, the significant judgments made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were principally the same as those that
applied to the consolidated financial statements as at and for the
year ended December 31, 2012. However, management reassessment of
the business plans of certain properties is done on an ongoing
basis, and resulted in impairments in 2013, as described in note
12a below.
c. Going concern
The condensed consolidated interim financial informationhave
been prepared on the assumption that the Group will continue as a
going concern in the foreseeable future, for at least but not
limited to twelve months from the end of the reporting period.
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.
For a detailed discussion about the group's liquidity position
refer to note 8.
3. Significant accounting policies
Except as described in Note 4, the accounting policies applied
by the Group in this condensed consolidated interim financial
statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended
December 31, 2012. The following change in accounting policies will
also be reflected in the Group's consolidated financial statements
as at and for the year ending December 31, 2013 (For the effect of
the changes on the Company statement of financial position for
December 31, 2012, the statement of profit or loss and the
statement of other comprehensive income and statement of cash flows
for the six months period ended June 30, 2012 and the equity as of
January 1, 2012, refer to Note 6).
4. Initial application of new standards
The Group has early adopted IFRS 10 Consolidated Financial
Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of
Interests in Other Entities, as well as the consequential
amendments to IAS 28 Investments in Associates and Joint Ventures
(2011) and IFRS 13 Fair value measurement, with a date of initial
application of January 1, 2013. The adoption of these standards has
the following effect on the interim condensed consolidated
financial statements.
-- IFRS 11 Joint Arrangements
-- IFRS 12 Disclosure of Interests in Other Entities
As a result of the adoption of IFRS 11, the Group has changed
its accounting policy with respect to its interests in joint
arrangements.
Under IFRS 11, the Group classifies its interests in joint
arrangements as either joint operations or joint ventures depending
on the Group's rights to the assets and obligations for the
liabilities of the arrangements. When making this assessment, the
Group considered the structure of the arrangements, the legal form
of any separate vehicles, the contractual terms of the arrangements
and other facts and circumstances. Previously, the structure of the
arrangement was the sole focus of classification.
The Group evaluated its involvement in the joint arrangements it
holds and classified them as joint ventures. Following the
application of IFRS 11 joint ventures will henceforward be
accounted for using the equity method, whereas until application of
the standard the Company's accounting policy was the proportionate
consolidation method.
Since the Company did not provide guarantees to the joint
ventures, losses from the joint ventures will be accounted for
until the investment is reduced to zero. If the joint venture
subsequently reports profits, the Company resumes recognizing its
share of those profits only after its share of the profits equals
the share of the losses not recognized. Any unrecorded losses at
the date of transition are recorded at the retained earnings. The
Group disclosed the interests at the joint ventures as required
under IFRS 12 (refer to Note 5).Note 6 includes a summary of the
adjustments made to the Group's statements of financial position at
December 31, 2012, and its statements of profit or loss and the
statement of other comprehensive income and cash flows for the six
months period ended at June 30, 2012 as a result of the
implementation of the equity method instead of proportionate
consolidation.
IFRS 10 Consolidated Financial Statements and the consequential
amendments to IAS 28 Investments in Associates and Joint Ventures
(2011) did not have any material effect on the Company condensed
consolidated interim financial report.
IFRS 13, fair value measurement, provides a single framework for
measuring fair value. The measurement of the fair value of an asset
or liability is based on assumptions that market participants would
use when pricing the asset or liability under current market
conditions, including assumptions about risk. The company adopted
IFRS 13 on January 1, 2013 on a prospective basis. The adoption of
IFRS 13 did not require any adjustments to the valuation techniques
used by the Company to measure fair value and did not result in any
measurement adjustments as at January 1, 2013
Presentation of Items of Other Comprehensive Income (Amendments
to IAS 1) - as a result of the amendments to IAS 1, the Group has
modified the presentation of items of other comprehensive income in
its condensed consolidated statement of profit or loss and other
comprehensive income, to present separately items that would be
reclassified to profit or loss in the future from those that would
never be. Comparative information has also been re-presented
accordingly. The adoption of the amendment to IAS 1 has no impact
on the recognised assets, liabilities and comprehensive income of
the Group
Apart from the above, the Company has not early adopted any
other standard, interpretation or amendment that has been issued
but is not yet effective.
5. Interests at the joint ventures
The Company has the following interest (directly and indirectly)
in the below joint ventures, as of June 30, 2013 and December 31,
2012:
Company name Country Interest of holding (percentage)
June 30, 2013 December 31,
2012
--------- ------------------ ---------------
Elbit Plaza USA LP (1) USA N/A 50%
Elbit Plaza USA II LP USA 50% 50%
P-One Infrastructure Pvt. Ltd.
(2) India N/A 50%
Elbit Plaza India Real Estate
Holdings Ltd. Cyprus 47.5% 47.5%
Adams Invest S.R.L Romania 25% 25%
Colorado Invest S.R.L Romania 25% 25%
Spring Invest S.R.L Romania 25% 25%
Sunny Invest S.R.L Romania 25% 25%
Primavera Invest S.R.L Romania 25% 25%
Bas development S.R.L Romania 25% 25%
SIA Diksna Latvia 50% 50%
Erocorner Gazdasagi Szolgaltato
Kft. Hungary 50% 50%
SBI Hungary Ingatlanforgalmazo
es Epito Kft. Hungary 35% 35%
(1) Refer also to note 12 (e) for the dissolving of
investee.
(2) Refer also to note 13 (c) for the selling of the
investee.
6. Effect of initial application of new standards
(1) Effect on the statement of financial position
December 31, 2012
-------------------------------------------------------
Effect of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
--------------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
--------------------- -------------- ----------------
Assets
Cash and cash equivalents 64,440 (29,066) 35,374
Restricted bank deposits 25,518 (6,759) 18,759
Available for sale financial
assets 11,714 - 11,714
Trade receivables 4,687 (1,288) 3,399
Other receivables and prepayments 46,749 (27,436) 19,313
Trading properties 780,963 (168,488) 612,475
Total current assets 934,071 (233,037) 701,034
-------- -------------- ----------------
Equity accounted investees - 154,830 154,830
Loans to equity accounted
investee - 6,949 6,949
Property and equipment 8,109 (728) 7,381
Investment property 14,489 - 14,489
Restricted bank deposits 978 (199) 779
Other non-current assets 358 (2) 356
Total non-current assets 23,934 160,850 184,784
-------- -------------- ----------------
Total assets 958,005 (72,187) 885,818
======== ============== ================
Liabilities
Interest bearing loans from
banks 264,296 (58,319) 205,977
Debentures at fair value
through profit or loss 34,966 - 34,966
Debentures at amortized cost 34,184 - 34,184
Trade payables 8,748 (1,179) 7,569
Related parties 511 35 546
Provisions 15,597 - 15,597
Derivatives 3,320 - 3,320
Other liabilities 14,094 (6,446) 7,648
Total current liabilities 375,716 (65,909) 309,807
-------- --------- --------
Interest bearing loans from
banks 5,773 - 5,773
Debentures at fair value
through profit or loss 81,181 - 81,181
Debentures at amortized cost 39,010 - 39,010
Other liabilities 232 (47) 185
Deferred tax liabilities 6,947 (17) 6,930
Total non-current liabilities 133,143 (64) 133,079
-------- --------- --------
Total liabilities 508,859 (65,973) 442,886
======== ========= ========
Non-controlling interests 6,930 (6,214) 716
-------- --------- --------
Equity attributable to owners
of the Company 442,216 - 442,216
-------- --------- --------
Total equity 449,146 (6,214) 442,932
-------- --------- --------
Total liabilities and equity 958,005 (72,187) 885,818
======== ========= ========
(2) Effect on equity
January 1, 2012
-----------------------------------------------
Effect of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
------------- -------------- ----------------
Non-controlling interests 8,040 (7,289) 751
-------- -------- --------
Equity attributable to owners
of the Company 542,122 - 542,122
-------- -------- --------
Total equity 550,162 (7,289) 542,873
-------- -------- --------
June 30, 2012
-----------------------------------------------
Effect of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
------------- -------------- ----------------
Non-controlling interests 10,322 (9,592) 730
-------- --------- --------
Equity attributable to owners
of the Company (1) 524,052 (2,590) 521,462
-------- --------- --------
Total equity 534,374 (12,182) 522,192
-------- --------- --------
(1) The change in equity attributable to owners of the Company
is stemming entirely from decrease in the retained earnings, due to
non-specific finance expenses which were de-capitalized as equity
accounted investees assets are not qualified assets as defined IAS
23.
(3) Effect on the statement of profit or loss and statement of
comprehensive income
For the six months ended
June 30, 2012
-----------------------------------------------
Effect
of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
------------- -------------- ----------------
Continuing operations
Revenue 33,650 (19,502) 14,148
Change in fair value of Investment
properties (2,314) 2,314 -
------------- -------------- ----------------
31,336 (17,188) 14,148
Write-down of Trading properties (2,799) 1,111 (1,688)
Cost of operations (15,505) 8,954 (6,551)
Gross profit 13,032 (7,123) 5,909
Administrative expenses (11,457) 3,919 (7,538)
Gain from sale of Investment
property, net 390 (390) -
Other income 363 - 363
Other expenses (672) - (672)
------------- -------------- ----------------
Results from operating activities 1,656 (3,594) (1,938)
Finance income 12,941 (105) 12,836
Finance costs (25,809) 3,882 (21,927)
Net finance costs (12,868) 3,777 (9,091)
------------- -------------- ----------------
Share in loss of equity-accounted
investees (14) (921) (935)
------------- -------------- ----------------
Loss before income tax (11,226) (738) (11,964)
Tax benefit 4,076 (28) 4,048
Loss from continuing operations (7,150) (766) (7,916)
------------- -------------- ----------------
Discontinued operation
Loss from discontinued operation,
net of tax - (1,892) (1,892)
Loss for the period (7,150) (2,658) (9,808)
------------- -------------- ----------------
Loss attributable to:
Owners of the Company (7,218) (2,590) (9,808)
Non-controlling interests 68 (68) -
Earnings per share
Basic and diluted loss per
share (in EURO) (0.02) - (0.03)
Earnings per share - continuing
operations
Basic and diluted loss per
share (in EURO) (0.02) - (0.03)
For the six months ended
June 30, 2012 (unaudited)
-----------------------------------------------
Effect
of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
------------- -------------- ----------------
Loss for the period (7,150) (2,658) (9,808)
Other comprehensive income
Items that may be reclassified to
profit or loss in subsequent periods:
Net changes in fair value on Available
for sale financial assets transferred
to income statement 1,942 - 1,942
Change in fair value of available
for sale financial assets (161) - (161)
Foreign currency translation differences
- foreign operations (Discontinued
operation) - (6,912) (6,912)
Foreign currency translation differences
- foreign operations (other) (12,440) 7,401 (5,039)
Income tax effect on other comprehensive
income due to change in fair value
of Available for sale financial assets (445) - (445)
Other comprehensive loss for the period,
net of income tax (11,104) 489 (10,615)
Total comprehensive loss for the period,
net of tax (18,254) (2,169) (20,423)
Total comprehensive loss attributable
to:
Owners of the Company (17,812) (2,590) (20,402)
Non-controlling interests (442) 421 (21)
(4) Effect on the statement of cash flows
For the six months ended June
30, 2012 (unaudited)
-----------------------------------------------
Effect of
retrospective As presented
in
As presented application these financial
of
in the past IFRS 11 statements
------------- -------------- ----------------
EUR 000' EUR 000' EUR 000'
------------- -------------- ----------------
Net cash used in operating activities (29,097) 4,121 (24,976)
========= ========== =========
Net cash from investing activities 209,771 (133,459) 76,312
========= ========== =========
Net cash used in financing activities (62,996) 45,610 (17,386)
========= ========== =========
Effect of exchange rate fluctuations
on cash and cash equivalents (421) 385 (36)
Net increase in cash and cash equivalents 117,257 (83,343) 33,914
Cash and cash equivalents as at the
beginning of the period 58,261 (6,828) 51,433
--------- ---------- ---------
Cash and cash equivalents at the
end of the period 175,518 (90,171) 85,347
========= ========== =========
7. Segment reporting
The Group comprises the following main geographical segments:
CEE and India. In presenting information on the basis of
geographical segments, segment revenue is based on the revenue
resulting from either selling or operating of Trading properties
and Investment property geographically located in the relevant
segment.
Data regarding the geographical analysis in the six months
period ended June 30, 2013 and 2012 is as follows:
Central
& Eastern
Europe India Total
----------- --------- ---------
EUR 000' EUR 000' EUR 000'
----------- --------- ---------
Six months period ended June 30,
2013:
Revenue 13,915 383 14,298
Proceeds from disposal of equity
accounted investee - 16,699 16,699
Cost of equity accounted investee
disposed - (21,842) (21,842)
Operating loss by segment (1) (44,709) (16,726) (61,435)
Net finance costs (2,555) (1,899) (4,454)
Other expenses, net (2) (4,121) (332) (4,453)
Share in profit ( loss) of equity-accounted
investees (3) 537 (5,009) (4,472)
Reportable segment loss before tax (51,582) (23,297) (74,814)
Less - unallocated general and administrative
expenses (2,018)
Discontinued operations (454)
Less - unallocated finance costs (4,511)
Loss before income taxes (81,797)
Tax benefit 754
---------
Loss for the period (81,043)
Assets and liabilities as of June
30, 2013
Total segment assets 555,026 131,756 686,782
Unallocated assets 105,782
---------
Total assets 792,564
Segment liabilities 182,585 33,934 216,519
Unallocated liabilities 220,150
---------
Total liabilities 436,669
(1) CEE - including impairment of EUR 45.3 million. India -
including impairment of EUR 15.6 million.
(2) CEE- including fair value negative adjustment of Investment
property of EUR 3.4 million.
(3) India - including equity accounted investees loss mainly due
to impairment of EUR 4.3 million
Central
& Eastern
Europe India Total
----------- --------- ---------
EUR 000' EUR 000' EUR 000'
----------- --------- ---------
Six months period ended June
30, 2012:
Revenue 13,116 1,032 14,148
Operating profit (loss) by segment 1,546 (503) 1,043
Net finance costs (4,939) (802) (5,741)
Other expenses, net (309) - (309)
Share in loss of equity-accounted
investees (1) (23) (912) (935)
Reportable segment loss before
tax (3,725) (2,217) (5,942)
Less - unallocated general and
administrative expenses (2,672)
Discontinued operations (1,892)
Unallocated finance costs (3,350)
Loss before income taxes (13,856)
Tax benefit 4,048
---------
Loss for the period (9,808)
Assets and liabilities as of
December 31, 2012
Total segment assets 603,071 180,723 783,794
Unallocated assets 102,024
---------
Total assets 885,818
Segment liabilities 205,530 37,765 243,295
Unallocated liabilities 199,591
---------
Total liabilities 442,886
(1) - India - including equity accounted investees loss mainly
due to impairment of EUR 1.2 million.
8. Financial risk management
As a result of the ongoing euro area crisis and in particular
the prolonged credit conditions tightening and reduced investment
market activity which continue to impact the core markets in which
the Group operates, management decided to continue with the
deleveraging process (described in detail below) of its financial
position commenced in the previous year. Mindful of the approaching
maturities dates of the Group's financial liabilities the Group has
taken the following steps in order to increase its liquidity
position:
-- Increased the efforts of realization of operating commercial
centres as well as certain land banks where development is not
economically viable. In addition, management continue to take a
cautious approach and evaluate the local economic environment
before any development program is commenced.
-- Disposed of the majority of its available for sale financial assets
-- Sell non-core real estate assets or assets that are close to
fulfilling their valuation potential
As of June 30, 2013 the Group has a cash balance of EUR 87
million and total commitments of principal and interest to
bondholders until the end of the current year of EUR 98 million, of
which EUR 67 million were paid (principal and interest) to holders
of the Israeli Series bonds on July 1, 2013. The cash needed by the
end of the year 2013 is planned to be raised by realization of
certain properties, some of which already consummated as disclosed
in note 13c, or by ways of achieving alternative financing or
capital increase.
Management believes the Group has sufficient Trading Properties
that can be realized in a value that will produce sufficient cash
flows to service its debt over the coming 24 months. The Group is
in the process of such realization program.
Furthermore, management believes that the Company's statement of
financial position reflects sufficient value to enable the
achievement of alternative financing or increase in capital.
Management believes that similarly to prior years all expiring
asset loan contracts will be renewed and covenants technically in
breach will not be called by the lender because historic evidence
shows that loans expiring in the previous years were prolonged or
waived by the same lender and also some covenants technically in
breach were in the same status in recent periods.
In addition, the Company suspended its currency options
activity, and is currently seeking other possibilities of
mitigating the currency risks resulting from having bonds
denominated in NIS.
Other aspects of the Group's financial risk management
objectives and policies are consistent with those disclosed in the
consolidated financial statements as at and for the year ended
December 31, 2012.
9. Financial instruments
Carrying amounts versus fair values
The fair values of financial assets and financial liabilities as
of June 30, 2013 approximates the carrying amounts in the condensed
consolidated statement of financial position, with the exception of
Debentures at amortized cost which is as follows:
Carrying amount Fair value
---------------- -----------
EUR 000'
-----------------------------
Statement of financial position
Debentures at amortized cost - short term 37,899 30,704
Debentures at amortized cost - long term 53,483 37,234
Fair value hierarchy
The table below analyses recurring fair value measurements for
financial assets and financial liabilities. These fair value
measurements are categorised into different levels in the fair
value hierarchy based on the inputs to valuation techniques used.
The different levels are defined as follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly.
-- Level 3: unobservable inputs for the asset or liability
Level 1 Level 2 Level 3 Total
-------- ---------- -------- --------
EUR 000'
----------------------------------------
Assets
Available for sale financial assets 883 - - 883
Liabilities
Derivatives - 1,170 - 1,170
Cash settled share based payment transaction with the former Vice
Chairman of EI - - 431 431
Debentures at fair value through profit or loss 114,547 - - 114,547
Total financial liabilities carried at fair value 114,547 1,170 431 116,148
10. Income tax
The group calculates the period income tax using the tax rate
that would be applicable to the expected total annual earnings.
The Group's consolidated effective tax rate in respect of
continuing operations for the six months period ended June 30, 2013
was 1% (six month period ended June 30, 2012: 18.2%) .The change in
effective tax rate was caused mainly by the following factors:
-- Change in fair value of Debentures at fair value through profit or loss.
-- Impairment of trading properties.
11. Related parties
June 30, December 31,
2013 2012
--------- -------------
EUR 000'
------------------------
Statement of financial position
Trade and other receivables 163 936
Trade and other payables 698 546
For the six months period ended June 30,
2013 2012
------------------- ----------------------
EUR 000'
-------------------------------------------
Income statements
Related parties - interest income 68 112
Related parties - charges to Indian subsidiaries - 63
Related parties - charges by Indian subsidiaries - (427)
Related parties - recharges from Elbit (67) (179)
The Control Centers Group of companies, controlled by Mr.
Mordechay Zisser, the main shareholder of Elbit, is providing
project management services to various projects developed by the
Company. During the six months period ended June 30, 2013 the Group
paid EUR 0.3 million (June 30, 2012 - EUR 0.4 million) for such
services. The agreement with Control Centers expired on May 31,
2011, but it continues to apply in regards to projects that their
initiation commenced prior to such date.
12. Significant events during the period
a. Write-downs of Trading properties during the six month period
ended June 30, 2013
During the six months ended June 30, 2013, the Company wrote
down its Trading properties in Greece, Czech Republic, Serbia and
India by EUR 60.9 million (six months ended June 30, 2012: EUR 1.7
million). The write down caused mainly by the following
factors:
-- Management reassessment of the business plans of certain properties, and;
-- Disposal certain properties subsequent to the reporting
period at a selling price below their carrying amount (refer to
note 13(c) for more details)
The write down is included in a separate line item in the
condensed consolidated interim statement of profit or loss.
b. Selling of joint venture in India
On May 29, 2013 the Company completed the sale of its 50%
interests in an Investee which mainly holds interests in an office
complex project located in Pune, Maharashtra. The transaction
valued the Investee collectively at EUR 33.4 million and, as a
result, the Company has received gross cash proceeds of circa EUR
16.7 million in line with its holding. The Company recorded a loss
of EUR 5.1 million due to the disposal, mainly from
reclassification of foreign currency translation reserve associated
with the investment to the statement of profit or loss.
c. Net capitalization ratio
Under the terms of the bonds issued in Poland in November 2010
(Totalling PLN 60 million (EUR 14 million), the Company is required
to maintain a Net Capitalization Ratio (the "Ratio") which should
not exceed 70%. As at statement of financial position date the
Ratio was 46%.
d. Credit rating update
As of the authorization date of these condensed consolidated
interim financial information , both debentures series are rated
ilB/Negative by S&P Maalot Ltd. on a local scale (down from
ilBB+/Negative in May 2013).
e. Dissolving of an equity accounting investee
In March 2013, the Company's 50% joint arrangement investee
Elbit Plaza USA ("EPUS") was liquidated. As part of the liquidation
procedure, the Company received an amount of USD 42 million (EUR 32
million), being its part in the remaining cash in EPUS. The
dissolving did not result in any material effect on the income
statement of the Company.
f. Bonds held in treasury
The Company's subsidiary had a loan from a commercial bank,
secured by the Company's bonds repurchased, with a scheduled loan
repayment in the third quarter of 2013. Due to a rating event, the
Company negotiated with the bank and finally concluded an early
repayment of the loan during the reported period.
The loan balance, including accrued interest, was circa ILS 77.5
millions (Circa Euro 16.3 millions). The early repayment is
expected to reduce the Company's interest expenses for 2013 with
circa EUR 0.2 million. For the financing of the early repayment,
the Company initiated the selling of some of the loan's collateral
(a re-sell of the repurchased bonds).
In addition to the above, NIS 75 million par value of series B
notes were bought in June 2013 by the Company itself from its
wholly owned subsidiary, hence delisted from further trading in the
market.
Following the above, and as of the date of approval of this
condensed consolidated interim financial information the Company,
through its wholly owned subsidiary holds in treasury NIS 15.9
million par value of series B bonds.
g. Receiving of insurance claim in India
In June 2013 the Company collected INR 529 million (EUR 6.9
million) refund from the Insurance Company in connection with the
damage occurred in the fire in its shopping centre in Pune,
India.
13. Post balance sheet events
a. Payment of bonds
On July 1, 2013, the Company paid principal and interest of
series A and B bonds in a total amount of EUR 67 million. Following
this payment, the total liquid balances on consolidation level were
reduced to circa EUR 33 million (restricted cash included).
b. Update on financial covenants
All of the group's companies are in compliance with the entire
loan covenants, with the exception of four bank facilities, for two
of which the Company has received waiver, and in respect of the
other two facilities the Company negotiates with financial
institutions for obtaining of waivers, on all outstanding
breaches.
c. Disposal of assets held for sale
On July 18(th) 2013 the Company completed the sale of 100% of
its interest in a vehicle which holds the interest in the Prague 3
project ("Prague 3"), a logistics and commercial centre in the
third district of Prague. Earlier this year, Plaza completed its
successful application to change the zoning use of Prague 3 to a
residential scheme. The transaction values the asset at circa EUR
11 million and, as a result, further to related bank financing and
other adjustments to the statement of financial position, the
Company has received cash proceeds of net circa EUR 7.5 million.
The Company has reclassified the Prague 3 investment property asset
to short term, and has recorded a loss from fair value adjustment
of EUR 3.4 million, included in other expenses in the income
statement.
In Addition, in July 2013 the Company completed the sale of 100%
of its interest in a vehicle which holds the interest in another
plot of land in Prague. The transaction values the asset at circa
EUR 1.9 million and, as a result, further to liability to third
parties, the Company has received cash proceeds of EUR 1.3 million.
The Company has reclassified the trading property asset as held for
sale, and the third party liability as held for sale liability, and
has performed an impairment of EUR 3.5 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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