TIDMPLAZ
RNS Number : 7978X
Plaza Centers N.V.
31 August 2022
31 August 2022
PLAZA CENTERS N.V.
RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Plaza Centers N.V. ("Plaza" / "Company" / "Group") today
announces its results for the six months ended 30 June 2022. The
financial information for the half year ended 30 June 2022 and 30
June 2021 has neither been audited nor reviewed by the
auditors.
Financial highlights:
-- Reduction in total assets by EUR1.2 million to EUR8.6 million
mainly as a result of the decrease in equity accounted investees as
detailed below, administrative expenses and costs of
operations.
-- Consolidated cash position as of June 30, 2022 decreased by
circa EUR1. 5 million to app. EUR 3.2 million (December 31, 2021:
EUR4.7 million) as a result of administrative expenses and
arbitration costs.
-- EUR1.3 million loss recorded at an operating level (June 30,
2021: EUR1.5 million loss) mainly due to share in results of equity
accounted investees and administrative expenses.
-- Recorded loss of EUR6.3 million (June 30, 2021: EUR9
million), mainly due to finance expenses on bonds.
-- Basic and diluted loss per share of EUR0.92 (30 June 2021: loss per share of EUR1.31).
Impact of the Covid-19:
The risks associated with the Covid-19 global health and
economic crisis may affect the Company indirectly, through possible
regulatory changes and the impact on the macroeconomic environment,
which may affect the conducted activities which are concentrated at
selling of the assets. The Company monitors the consequences of the
event and the actions taken in countries in which it operates and
assesses the risks and exposures arising from these
consequences.
Material events during the period:
Sale agreement of plot in Bangalore, India:
As of this date, the Partner paid to EPI approximately INR 87.00
crores (approximately EUR 11.2 million) (Company's part INR 43.5
crores (approximately EUR 5.6 million)) and has to pay to EPI the
remaining amount out of the consideration of approximately INR 269
crores (approximately EUR 32.6 million) (Plaza part INR 134.5
crores (approximately EUR 16.3 million)) as per the Agreement.
On April 13, 2022 the Company announced that the Partner
submitted to EPI an unformal non-binding proposal to purchase 100%
of EPI's interest in the Project and the completion of the
transaction in exchange for a payment of INR 112-117 crores
(approximately EUR 13.6-14.2 million) in lieu of the remain amount
of consideration according to the Agreement (INR 269 crores
(approximately EUR 32.6 million)). The negotiation between the
Parties have not yet matured into a binding agreement. In order to
preserve EPI's rights, EPI has initiated arbitration proceeding in
Singapore versus the Partner in accordance with the provisions of
the Agreement between the Partner and EPI.
In the period since May 19, 2022 till August 24, 2022 the
Partner deposited in the SPV INR 22.5 crores (approximately EUR
2.77 million). There is no certainty that it will lead to closing,
however the negotiation between the Parties is in advanced stage
and the Parties continue to act to complete the transaction on the
terms as set forth in non-binding proposal. Accordingly, the
Company is taking necessary steps to protect its interest,
including submitting an appeal before the National Company Law
Appellate Tribunal, Chennai, India against the decision of the
National Company Law Tribunal, Bengaluru, India, which dismissed
the insolvency proceedings initiated against the Purchaser for the
recovery of the amounts due, and filing a motion with court in
order to collect checks given by the Partner to secure payments
under the transaction, but were dishonoured.
Update regarding a change in Elbit Imaging Ltd holdings:
Since August 5, 2020 and up to last announcement Elbit Imaging
sold about 1,670 thousand shares of the Company for a total
consideration of approximately NIS 1,683, thus, Elbit Imaging
holdings in the Company have diminished from 44.9% to 20.55% of the
Company's issued and paid-up capital. During the reporting date,
out of the above, Elbit Imaging sold about 77 thousand shares of
the Company for a total consideration of approximately NIS 150
thousand, thus, Elbit Imaging holdings in the Company have
diminished by 2.67%.
Deferral of payment of Debentures and partial interests'
payment:
Refer to the below in Liquidity & Financing.
Dutch statutory auditor:
Refer to Note 7(d) in the interim condensed consolidated
financial statements as of June 30, 2022.
Update regarding proposal the Company received:
As previously disclosed by the Company in Note 18(d) to its
annual consolidated financial statements as of December 31, 2021,
the Company received proposals from G.C. Hevron Capital Ltd
("Hevron Capital").
On March 30, 2022 the Company announced that Hevron Capital
submitted to the Company a request to extend the No-Shop period,
due to the complexity and the vast amount of data that needs to be
procced in order to evaluate the proposed settlement ("Hevron
Capital' Request"). Following the above, the Company's Board of
Directors approved Hevron Capital's Request to extend the "No-Shop"
which expired as of May 20, 2022.
Update regarding an Engagement letter with a law firm in London
in connection with the legal proceedings in the "Casa Radio"
project:
On January 14, 2022 the Company announced, that further to the
Company's bondholders meeting dated November 25, 2021 and the
Company's bondholders' approval to initiate legal procedures in
connection with the "Casa Radio" project (the "Project"); that on
January 13, 2022, the Company signed an engagement letter with a
law firm in London in order to take any relevant actions in
connection with the Project. For details in connection with the
legal proceedings in the "Casa Radio" project please refer to Note
5 in the interim condensed consolidated financial statements as of
June 30, 2022.
Update regarding the issuance of a notice of dispute and
acceptance of offer and consent to arbitrate to Romania with
respect to the "Casa Radio" project:
On February 15, 2022 the Company announced, further to the
Company's bondholders meeting dated November 25, 2021 and the
Company's bondholders' approval to initiate legal procedures in
connection with the "Casa Radio" project (the "Project"); that on
January 13, 2022, the Company signed an engagement letter with a
law firm in London in order to take any relevant actions in
connection with the Project.
For details in connection with the legal proceedings in the
"Casa Radio" project please refer to Note 5 in the interim
condensed consolidated financial statements as of June 30,
2022.
Key highlights since the period end:
Annual General Meeting:
Annual General Meeting of the Shareholders of the Company was
held on July 20, 2022, all the proposed resolutions were
passed.
Environmental Sustainability Policy:
On August 30, 2022 the Company adopted Environmental
Sustainability Policy.
Commenting on the results, executive director Ron Hadassi
said:
"Our active focus has continued to centre on asset disposals.
Regarding our Plot in Bangalore, India, as stated above, the
Company is continuing to take all necessary steps to protect its
interest in its plot while continuing its efforts to materialize
the deal; in connection with Casa Radio Project, the Company issued
a Notice of Dispute and Acceptance of Offer and Consent to
Arbitrate to Romania with respect to the Project and we hope this
will help us to unblock the current status of the Project."
For further details, please contact:
Plaza
Ron Hadassi, Executive Director 972-526-076-236
Notes to Editors
Plaza Centers N.V. ( www.plazacenters.com ) is listed on the
Main Board of the London Stock Exchange, as of 19 October 2007, on
the Warsaw Stock Exchange (LSE: "PLAZ", WSE: "PLZ/PLAZACNTR") and,
on the Tel Aviv Stock Exchange.
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.
MANAGEMENT STATEMENT
During first half of 2022 the Company together with Elbit
continued efforts to sell plot in Bangalore, India. Accordingly,
the Company is taking all necessary steps to protect its interest
in the Bangalore project, including by filling an appeal before the
National Company Law Appellate Tribunal, Chennai, India against the
decision of the National Company Law Tribunal, Bengaluru, India,
which dismissed the insolvency proceedings initiated against the
Purchaser for the recovery of the amounts due (refer also to Note
6). The Company also continued cost reductions.
In connection with Casa Radio Project, as stated above, the
Company issued a Notice of Dispute and Acceptance of Offer and
Consent to Arbitrate to Romania with respect to the Project and we
hope this will help us to unblock the current status of the
Project. In addition, on December 20, 2021 the Company and AFI
Europe N.V. ("AFI Europe") agreed to extend the Long Stop Date,
which is the date on which the parties will execute a share
purchase agreement, subject to the satisfaction of conditions
precedent (the "SPA"), until December 31, 2022. The addendum was
approved by the bondholders meeting held on November 25, 2021.
Due to the board and management estimation that the Company is
unable to serve its entire debt according to the current redemption
date (January 1, 2023) in its current liquidity position, the
Company intends to request from the bondholders of both series
(Series A and Series B) postponement of the repayment of the
remaining balance of the bonds.
Results
During the first half of the year, Plaza recorded a EUR6.3
million loss attributable to the shareholders of the Company (30
June 2021: EUR 9 million). The losses were mainly from the Net
Finance Costs which were decreased to EUR4.9 million in 2022, from
EUR7.5 million in 2021 mainly due to foreign currency gain on bonds
(including inflation) and interests' expenses accrued on the
debentures (partly due to penalty interest calculated on the
deferred principal); and from administrative expenses and share in
results of equity-accounted investees.
Total result of operations excluding finance income and finance
cost was a loss of EUR1.3 million in 2022 compared to reported loss
of EUR1.5 million in the first half of 2021, mainly due to share in
result of equity accounted investees and administrative
expenses.
The consolidated cash position (cash on standalone basis as well
as fully owned subsidiaries) as of 30 June 2022 was EUR3.2 million
(31 December 2021: EUR4.7 million).
Liquidity & Financing
Plaza ended the period with a consolidated c ash position of
circa EUR3.2 million, compared to EUR4.7 million at the end of
2021.
As of June 30, 2022, the Group's outstanding obligation to
bondholders (including accrued interests) are app. EUR126.6
million.
As disclosed in Note 7(e) below the Company was not able to meet
its final redemption obligation to its (Series A and Series B)
bondholders, due on July 1, 2022, and on June 16, 2022, the
bondholders approved to postpone the final redemption date to
January 1, 2023.
Due to the board and management estimation that the Company is
unable to serve its entire debt according to the current bond's
repayment schedule in its current liquidity position, the Company
intends to request the bondholders of both series to postpone the
repayment of the remaining balance of the bonds. However, there is
an uncertainty if the bondholders will approve the request. In the
case that the bondholders would declare their remaining claims to
become immediately due and payable, the Company would not be in a
position to settle those claims and would need to enter into an
additional debt restructuring or might cease to be a going
concern.
Strategy and Outlook
The Company's priorities are focused on efforts to sign
definitive sale agreement of Casa Radio project, getting further
proceeds for Bangalore. The Company also intends to seek for
bondholders' approval for postponement of the repayment of the
bonds. In addition, the Company intends to continue the
cost-cutting of its operational cost.
OPERATIONAL REVIEW
Over the course of the year to date, Plaza has continued to make
progress against its operational and strategic objectives. The
Company's current assets are summarised in the table below (as of
balance sheet date):
Asset/ Location Nature of asset Size Plaza's Status
Project sqm (GLA) effective
ownership
%
Casa Radio Bucharest, Mixed-use retail, 467,000 (GBA 75 Pre-sale agreement
Romania hotel and leisure including signed
plus office scheme parking spaces)
------------ --------------------- ----------------- ----------- -------------------
Amended revised
Bangalore, agreement
Bangalore India Residential Scheme 218,500 47.5 in place
------------ --------------------- ----------------- ----------- -------------------
FINANCIAL REVIEW
Results
In 2022, the administrative expenses amounted to EUR0.6 million,
an increase comparing to EUR0.4 million in the first half of 2021.
The increase was a result of additional expenses for legal services
in respect to initiated by the Company of an arbitration process in
Romania as states above in connection with Casa Radio Project.
Net Finance Costs decreased from EUR7.5 million in the first 6
months of 2021 to EUR4.9 million in the first 6 months of 2022. The
main components of Net Finance Costs were foreign currency gain on
bonds (including inflation) and interests' expenses accrued on the
debentures which includes also penalty interest calculated on the
deferred principal.
As a result, the loss for the period amounted to circa EUR6.3
million in the first 6 months of 2022, representing a basic and
diluted loss per share for the period of EUR0.92 (H1 2021: EUR1.31
loss).
Balance sheet and cash flow
The balance sheet as of 30 June 2022 showed total assets of
EUR8.6 million compared to total assets of EUR9.8 million at the
end of 2021 , mainly as a result of administrative expenses and
costs of operations and decrease in Equity accounted investees
.
The consolidated cash position (cash on standalone basis as well
as fully owned subsidiaries) as of 30 June 2022 decreased to EUR3.2
million (31 December 2021: EUR4.7 million).
Investments in equity accounted investee companies has decreased
by EUR0.6 million to circa EUR4.5 million (31 December 2021: EUR5.1
million) mainly as a result of write down in trading
properties.
As of 30 June 2022, the Company has a balance sheet liability of
EUR99.8 million from issuing bonds on the Tel Aviv Stock Exchange.
Additionally, the Company recorded provision for interests on bonds
as of June 30, 2022, in an amount of EUR26.8 million (31 December
2021: EUR21.7 million).
Disclosure in accordance with Regulation 10(B)14 of the Israeli
Securities Regulations (periodic and immediate reports),
5730-1970
1. General Background
According to the abovementioned regulation, upon existence of
warning signs as defined in the regulation, the Company is obliged
to attach its report's projected cash flow for a period of two
years, commencing with the date of approval of the reports
("Projected Cash Flow").
The material uncertainty related to going concern was included
in Note 1(b). In light of the material uncertainty that the SPA
between the Company and AFI Europe N.V. will eventually be executed
and/or that the transaction will be consummated as presented above
or at all, (refer to Note 5) as well as the default of purchaser of
Bangalore project to meet payments schedule according to the signed
amendment agreement (refer to Note 6), the board and management
estimates that the Company is unable to serve its entire debt
according to the due date the bondholders approved to postpone the
final redemption date. Accordingly, it is expected that the Company
will not be able to meet its entire contractual obligations in the
following 12 months.
With such warning signs, the Company is providing projected cash
flow for the period of 24 months following for the coming two
years.
2. Projected cash flow
The Company has implemented the restructuring plan that was
approved by the Dutch court on July 9, 2014 (the "Restructuring
Plan"). Under the Restructuring Plan, principal payments under the
bonds issued by the Company and originally due in the years 2013 to
2015 were deferred for a period of four and a half years, and
principal payments originally due in 2016 and 2017 were deferred
for a period of one year. During first three months of 2017, the
Company paid to its bondholders a total amount of NIS 191.7 million
(EUR 49.2 million) as an early redemption. Upon such payments, the
Company complied with the Early Prepayment Term (early redemption
at the total sum of at least NIS 382 million) and thus obtained a
deferral of one year for the remaining contractual obligations of
the bonds.
In January 2018, a settlement agreement was signed by and among
the Company and the two Israeli Series of Bonds.
On November 22, 2018 the Company announced based on its current
forecasts, that the Company expected to pay the accrued interest on
Series A and Series B Bonds on December 31, 2018, in accordance
with the repayment schedule determined in the Company's
Restructuring Plan and Settlement Agreement with Series A and
Series B Bondholders from 11 January 2018 (the "Settlement
Agreement"). The Company noted that it will not meet its principal
repayment due on December 31, 2018 as provided for in the
Settlement Agreement. On February 18, 2019 the Company paid
principal of circa EUR 250,000 and Penalty interest on arrears of
EUR 150,000 following the bondholder's approval to defer principal
repayment to July 1, 2019.
In addition, during June 2019 the bondholders approved the
deferral of the full payment of principal due on July 1, 2019 and
of 58% ("deferred interest amount") of the sum of interest
(consisting of the total interest accrued for the outstanding
balance of the principal, including interest for part of the
principal payment which was deferred as of February 18, 2019, plus
interest arrears for part of the principal which was fixed on
February 18, 2019 and was not paid by the Company and all in
accordance with the provisions of the trust deed; "the full amount
of interest"), the effective date of which is June 19, 2019, and
the payment date was fixed as of July 1, 2019. The company paid on
the said date a total amount of circa EUR 1.17 million, which is
only 42% of the full amount of interest.
On July 11, 2019, the Company announced that its Romanian
subsidiary had signed a binding agreement to sell land in Romania
(refer to Note 5(3)(f) of the consolidated financial statements as
of December 31, 2020), and that the Company would use part of the
proceeds now received by it EUR 0.75 million (hereinafter: "the
amount payable"), in order to make a partial interest payment to
the bondholders (Series A) and (Series B) issued by the Company.
The payment required changes in the repayment schedule and
amendments of the trust deeds which was approved unanimously by the
Bondholders. The amount payable was paid on August 14, 2019 and
reflects 30% of accrued interest as of that date.
On November 17, 2019, the bondholders of Series A and Series B
approved a deferral of all the scheduled Principal payment and app.
87% of deferral of the scheduled Interest payment, both, as of
December 31, 2019 to July 1, 2020.
On May 4, 2020, the bondholders of Series A and Series B
approved: (i) to postpone the final redemption date to January 1,
2021 of all the scheduled Principal; (ii) that on July 1, 2020 the
Company will pay to its bondholders a partial interest payment in
the total amount of EUR 250,000 and to deferral all other unpaid
scheduled Interest payment.
Following receiving the Settlement Amount related to the final
price adjustment of the sale of Belgrade Plaza and in light of the
potential negative impact of the Covid-19 on the possibility to
receive future proceeds from the Company's plots in India, the
Company decided to increase the amount to be paid to the
bondholders on July 1, 2020, from EUR 250,000 to EUR 500,000. The
amount reflected 6.74% of accrued interest as of that date.
On November 12, 2020, the bondholders of Series A and Series B
approved: (i) to postpone the final redemption date to July 1, 2021
of all the scheduled Principal; that on January 1, 2021 the Company
will pay to its bondholders a partial interest payment in the total
amount of EUR 200,000 and to deferral all other unpaid interest.
The amount reflected 1.84% of accrued interest as of that date.
On April 12, 2021, the bondholders of Series A and Series B
approved: (i) to postpone the final redemption date to January 1,
2022; (ii) that on July 1, 2021 the Company will pay to its
bondholders a partial interest payment in the total amount of EUR
125,000 and to deferral all other unpaid interest. The amount
reflected 0.84% of accrued interest as of that date.
On November 25, 2021, the bondholders of Series A and Series B
approved: (i) to postpone the final redemption date to July 1,
2022; (ii) that on January 1, 2022 the Company will pay to its
bondholders a partial interest payment in the total amount of EUR
125,000 and to deferral all other unpaid interest. The amount
reflected 0.92% of accrued interest as of that date.
On June 16, 2022, the bondholders of Series A and Series B
approved to postpone the final redemption date to January 1,
2023.
The materialisation, occurrence consummation and execution of
the events and transactions and of the assumptions on which the
projected cash flow is based, including with respect to the
proceeds and timing thereof, although probable, are not certain and
are subject to factors beyond the Company's control as well as to
the consents and approvals of third parties and certain risks
factors. Therefore, delays in the realisation of the Company's
assets and investments or realisation at a lower price than
expected by the Company, as well as any other deviation from the
Company's assumptions (such as additional expenses due to
suspension of trading, delay in submitting the statutory reports
etc.), could have an adverse effect on the Company's cash flow and
the Company's ability to service its indebtedness in a timely
manner.
In EUR millions 7-12/2022 2023
Cash - Opening Balance (2) 3.19 8.19
Proceeds from sales transactions, price
adjustments (3) - -
Cashflow from equity companies in India
(4) 7.0 -
Total Sources 10.19 8.19
Debentures - principal - -
Debentures - interest (5) 1.5 -
Other operational costs (6) - 2.0
G&A expenses (including property maintenance)
(7) 0.5 1.1
Total Uses 2.0 3.1
Cash - Closing Balance (2) 8.19 5.09
1. The above cash flow is subject to the approval of the
bondholders of both series to postpone the repayment of the
remaining balance of the bonds which is due on January 1, 202 3
.
2. Total cash on standalone basis as well as fully owned subsidiaries.
3. The Company did not include any proceeds from pre-sale
agreement signed with AFI, due to the uncertainty as to the
fulfilment of the conditions set out in the preliminary agreement
as mentioned in Note 5 of the interim condensed consolidated
financial statements as of June 30, 2022, thus there can be no
certainty an the SPA will eventually be executed and/or that the
Transaction will be completed.
4. The Company included proceeds from its holdings in an
indirect subsidiary (50%) which holds a property in Bangalore,
India in line with advanced negotiations between the Parties and
the fact, that the Parties continue to act to complete the
transaction on the terms as set forth in non-binding proposal (as
detailed in Note 6 of the interim condensed consolidated financial
statements as of June 30, 2022). However, there can be no certainty
that the deal will be completed.
5. Payments of interests is only estimation, subject to receive
proceeds from the disposal of Company's holding in an indirect
subsidiary (50%) which holds in Bangalore, India (as detailed in
Note 6 of the interim condensed consolidated financial statements
as of June 30, 2022).
6. The cost includes a provision for arbitrations / legal cost s
based on projection of arbitration process.
7. Total general and administrative expenses includes both costs
of the Company and of all the subsidiaries.
Ron Hadassi
Executive Director
31 August 2022
PLAZA CENTERS N.V.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOT AUDITED AND NOT REVIEWED
IN '000 EUR
CONTENTS
Page
Interim condensed consolidated statements of financial
position 2 - 3
Interim condensed consolidated statements of profit
or loss 4
Interim condensed consolidated statements of comprehensive
income 5
Interim condensed consolidated statements of changes
in equity 6
Interim condensed consolidated statements of cash flows 7
Notes to interim condensed consolidated financial statements 9 - 21
- - - - - - - - - - -
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
December
June 30, 31,
2022 2021
------------- --------
EUR '000 EUR '000
Not audited Audited
Not reviewed
ASSETS
Cash and cash equivalents 3,190 4,688
Restricted bank deposits 347 -
Prepayments and other receivables 104 39
Total current assets 3,641 4,727
------------- --------
Equity accounted investees 4,469 5,113
Restricted bank deposits 487 -
Total non-current assets 4,956 5,113
------------- --------
Total assets 8,597 9,840
============= ========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
December
June 30, 31,
2022 2021
------------- ---------
EUR '000 EUR '000
Not audited Audited
Not reviewed
LIABILITIES AND EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Bonds 99,823 99,999
Accrued interests on bonds 26,795 21,693
Trade payables 217 110
Other liabilities 334 425
------------- ---------
Total current liabilities 127,169 122,227
------------- ---------
Share capital 6,856 6,856
Translation reserve (30,747) (30,838)
Other reserves (19,983) (19,983)
Share based payment reserve 35,376 35,376
Share premium 282,596 282,596
Retained losses (392,670) (386,394)
------------- ---------
Total equity (118,572) (112,387)
------------- ---------
Total equity and liabilities 8,597 9,840
============= =========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
August 30, 2022
--------------------- ------------------ ---------------------
Ron Hadassi David Dekel
Date of approval Executive Director
of the Chairman of the Board
financial statements of Directors
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Six months ended
June 30,
----------------------------
2022 2021
EUR '000 EUR '000
(except per (except
share data) per share
data)
Not audited Not audited
Not reviewed Not reviewed
Gains and other
Other income 146 125
------------- -------------
Total gains 146 125
------------- -------------
Total revenues and gains 146 125
------------- -------------
Expenses and losses
Cost of operations (47) (37)
Share in results of equity-accounted investees (823) (1,142)
Administrative expenses (623) (403)
Other expenses - (10)
------------- -------------
Finance income 884 -
Finance costs (5,813) (7,484)
------------- -------------
Total expenses and losses (6,422) (9,076)
------------- -------------
Loss before income tax (6,276) (8,951)
Income tax expense - -
------------- -------------
Loss for the period (6,276) (8,951)
============= =============
Earnings per share
Basic and diluted loss per share (in EURO) (0.92) (1.31)
============= =============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Six months ended
June 30,
----------------------------
2022 2021
------------- -------------
EUR '000 EUR '000
(except (except
per share per share
data) data)
Not audited Not audited
Not reviewed Not reviewed
Loss for the period (6,276) (8,951)
Other comprehensive income
Items that are or may be reclassified to profit
or loss:
Foreign currency translation differences -
foreign operations (Equity accounted investees) 91 224
------------- -------------
Other comprehensive gain (loss) for the period 91 244
------------- -------------
Total comprehensive loss for the period (6,185) (8,727)
============= =============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
Share
Share Share based payment Translation Other Retained
capital Premium reserves Reserve reserves losses Total
-------- -------- -------------- ----------- --------- --------- ---------
Balance on January 1,
2022 6,856 282,596 35,376 (30,838) (19,983) (386,394) (112,387)
-------- -------- -------------- ----------- --------- --------- ---------
Comprehensive loss
for
the period
Net loss for the
period - - - - - (6,276) (6,276)
Foreign currency
translation
differences - - - 91 - 91
Total comprehensive
loss
for the period - - - 91 - (6,276) (6,185)
-------- -------- -------------- ----------- --------- --------- ---------
Balance on June 30,
2022
(Not audited, not
reviewed) 6,856 282,596 35,376 (30,747) (19,983) (392,670) (118,572)
-------- -------- -------------- ----------- --------- --------- ---------
Share Share Share based Translation Other Retained
capital Premium payment reserves Reserve reserves losses Total
-------- -------- ----------------- ----------- --------- --------- --------
Balance on January
1,
2021 6,856 282,596 35,376 (31,292) (19,983) (359,305) (85,752)
-------- -------- ----------------- ----------- --------- --------- --------
Comprehensive loss
for
the period
Net loss for the
period - - - - - (8,951) (8,951)
Foreign currency
translation
differences - - - 224 - 224
-------- -------- ----------------- ----------- --------- --------- --------
Total comprehensive
loss
for the period - - - 224 - (8,951) (8,727)
Balance on June 30,
2021
(Not audited, not
reviewed) 6,856 282,596 35,376 (31,068) (19,983) (368,256) (94,479)
-------- -------- ----------------- ----------- --------- --------- --------
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
June 30,
----------------------------
2022 2021
------------- -------------
EUR '000 EUR '000
Not audited Not audited
Not reviewed Not reviewed
Cash flows from operating activities:
Loss for the period (6,276) (8,951)
Adjustments necessary to reflect cash flows used
in operating activities
Net finance costs 4,929 7,484
Share of loss of equity-accounted investees 823 1,142
(524) (325)
------------- -------------
Changes in:
Trade receivables (19) (14)
Other receivables (46) (196)
Change in restricted cash (834) -
Trade payables 107 (14)
Other liabilities, related parties' liabilities
and provisions (91) (62)
------------- -------------
(883) (286)
------------- -------------
Interest paid - (125)
Net cash used in operating activities (1,407) (736)
------------- -------------
Cash from investing activities
Distribution received from equity accounted investees (88) 34
Net cash provided by investing activities (88) 34
------------- -------------
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
June 30,
----------------------------------------
2022 2021
------------------- -------------------
EUR '000 EUR '000
Not audited Not audited
Not reviewed Not reviewed
Cash from financing activities
Repayment of debentures - -
Net cash used in financing activities - -
------------------- -------------------
Effect of exchange fluctuations on cash held (3) (55)
Decrease in cash and cash equivalents during
the period (1,498) (757)
Cash and cash equivalents as of January 1(st) 4,688 1,709
------------------- -------------------
Cash and cash equivalents as of June 30 3,190 952
=================== ===================
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTE 1: - CORPORATE INFORMATION
a. Plaza Centers N.V. ("the Company" and together with its
subsidiaries, "the Group") was incorporated and is registered in
the Netherlands. The Company's registered office is at
Pietersbergweg 283 , 1105 BM, Amsterdam, the Netherlands. In the
past the Company conducted 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) and
India (from 2006). Following debt restructuring plan approved in
2014 the Group's main focus is to reduce corporate debt by early
repayments following sale of assets and to continue with efficiency
measures and cost reduction where possible.
The condensed interim consolidated financial statements for each
of the periods presented comprise the Company and its subsidiaries
(together referred to as the "Group") and the Group's interest in
jointly controlled entities.
The Company is listed on the premium segment of the Official
List of the UK Listing Authority and to trading on the main market
of the London Stock Exchange ("LSE"), the Warsaw Stock Exchange
("WSE") and on the Tel Aviv Stock Exchange ("TASE").
The Company's immediate parent company was Elbit Ultrasound
(Luxemburg) B.V. / s.a.r.l ("EUL"), which held 44.9% of the
Company's shares, till December 19, 2018 when EUL informed that it
has signed a trust agreement according to which EUL will deposit
its shares of the Company with a trustee and no longer considers
itself to be the controlling shareholder of the Company. At the
date of approval of these financial statements EUL held 20.55% of
the Company's shares (please refer to note 7(a) regarding the sale
of app. 2. 67 % of the Company's shares held by EUL).
b. Going concern and liquidity position of the Company :
As of June 30, 2022, the Company's outstanding obligations to
bondholders (including accrued interests) are app. EUR 126.6
million due date of which was postponed to January 1, 2023 (the
"Current Due date") (please refer to Note 7(e)).
Due to the above the Company's primary need is for liquidity.
The Company's current and future resources include the
following:
1. Cash and cash equivalents (including the cash of fully owned
subsidiaries) of approximately EUR 3.2 million.
2. The Company and AFI Europe N.V. ("AFI Europe") entered into
an addendum to the pre-sale agreement entered into between the
Parties in connection with the sale of its subsidiary (the "SPV")
which holds 75% in the Casa Radio Project (the "Project") (the
"Addendum" and the "Agreement", respectively) pursuant to which the
Parties agreed to extend the Long Stop Date, which is the date on
which the parties will execute a share purchase agreement, subject
to the satisfaction of conditions precedent (the "SPA"), until
December 31, 2022. The addendum was approved by the bondholders
meeting held on November 25, 2021. There can be no certainty that
the SPA will eventually be executed and/or that the transaction
will be consummated as presented above or at all.
3. Following the default of purchaser of Bangalore project to
meet payments schedule according to the signed amendment agreement
(refer to Note 6) there can be no certainty that the agreement will
be completed, hence at this time no resources are expected to be
available in forceable future.
NOTE 1: - CORPORATE INFORMATION (Cont.)
As of June 30, 2021, the Company is not in compliance with the
main Covenants as defined in the restructuring plan (for more
details refer also to Note 8 of the annual financial statements as
of December 31, 2020), hence under defaulted which could also
trigger early repayment clause by the bondholders.
Due to the abovementioned and due to the board and management
estimation that the Company is unable to serve its entire debt on
the Current Due Date, the Company intends to request the
bondholders of both series an additional postponement of the
repayment of the remaining balance of the bonds. However, there is
an uncertainty if the bondholders will approve the request. In the
case that the bondholders would declare their remaining claims to
become immediately due and payable, the Company would not be in a
position to settle those claims and would need to enter to an
additional debt restructuring or might cease to be a going concern
basis.
Due to the abovementioned conditions a material uncertainty
exists that casts significant doubt about the Company's ability to
continue as a going concern.
The interim condensed consolidated financial statements have
been prepared on a going concern basis, which assumes that the
Group will be able to meet the mandatory repayment obligations of
its bonds and other working capital requirements.
c. Impact of the Covid-19
The risks associated with the Covid-19 global health and
economic crisis may affect the Company indirectly, through possible
regulatory changes and the impact on the macroeconomic environment,
which may affect the conducted activities which are concentrated at
selling of the assets. The Company monitors the consequences of the
event and the actions taken in countries in which it operates and
assesses the risks and exposures arising from these
consequences.
d. The effects of the Russia-Ukraine war:
In February 2022, a war broke out between Russia and Ukraine
which is ongoing and continues to cause numerous casualties,
damages to infrastructure and disruption of the Ukraine economy. In
response, several countries (including the U.S., the UK and the EU)
imposed economic sanctions against certain Russian and Russian
related entities and individuals around the world and various
sanctions have also been imposed on Belarus. These sanctions are
likely to directly impact those entities and individuals and
indirectly affect third parties which have business affiliations
with those entities and individuals as well as certain industries
in Russia and Belarus.
Potential fluctuations in commodity prices and foreign exchange
rates, import and export restrictions, availability of local
materials and services and access to local resources are all liable
to affect entities that have significant operations or exposures in
or with Russia, Belarus or Ukraine.
NOTE 2: - BASIS OF PREPARATION
a. Basis of preparation of the interim condensed consolidated financial data:
The interim condensed consolidated financial data for the six
months period ended June 30, 2022 have been prepared in accordance
with the International Financial Reporting Standard IAS 34
("Interim Financial Reporting") as adopted by the European
Union.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual consolidated financial statements as of 31 December
2021. These interim condensed consolidated financial statements as
of June 30, 2022 have been neither audited nor reviewed by the
Company's auditors.
The financial information for the half year ended 30 June 2021
has neither been audited nor reviewed by the auditors.
Selected explanatory notes are, however, included to explain
events and transactions that are significant to understanding the
changes in the Group's financial position and performance since the
last annual consolidated financial statements as of and for the
year ended December 31, 2021.
The interim condensed consolidated financial statements as of
June 30, 2021 were authorized by the Board of Directors on 30
August 2022.
b. New standards, interpretations and amendments adopted by the Group:
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2021, except for the adoption of new standards effective as of 1
January 2022. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Amendment to IAS 37, "Provisions, Contingent Liabilities and
Contingent Assets":
In May 2020, the IASB issued an amendment to IAS 37, regarding
which costs a company should include when assessing whether a
contract is onerous ("the Amendment").
According to the Amendment, costs of fulfilling a contract
include both the incremental costs (for example, raw materials and
direct labour) and an allocation of other costs that relate
directly to fulfilling a contract (for example, depreciation of an
item of property, plant and equipment used in fulfilling the
contract).
The Amendment is effective for annual periods beginning on or
after January 1, 2022 and applies to contracts for which all
obligations in respect thereof have not yet been fulfilled as of
January 1, 2022. The application of the Amendment does not require
the restatement of comparative data. Instead the opening balance of
retained earnings on the date of initial application date is
adjusted for the cumulative effect of the Amendment.
The application of the Amendment did not have a material impact
on the Company's interim financial statements.
NOTE 2: - BASIS OF PREPARATION (Cont.)
Annual improvements to IFRSs 2018-2020:
In May 2020, the IASB issued certain amendments in the context
of the Annual Improvements to IFRSs 2018-2020 Cycle. The main
amendment is to IFRS 9, "Financial Instruments" ("the Amendment").
The Amendment clarifies which fees a company should include in the
"10% test" described in paragraph B3.3.6 of IFRS 9 when assessing
whether the terms of a debt instrument that has been modified or
exchanged are substantially different from the terms of the
original debt instrument.
According to the Amendment, fees paid net of any fees received
that are included in the cash flows are only those fees paid or
received between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other's
behalf.
The Amendment is effective for annual periods beginning on or
after January 1, 2022. The Amendment is applied to financial
liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first
applies the Amendment that is from January 1, 2022.
c. Disclosure of new standards in the period prior to their adoption:
There are currently no amendments to existing standards and/or
newly issued standards other than those disclosed in the annual
consolidated financial statements.
NOTE 3: - USE OF JUDGEMENT AND ESTIMATES
In preparing this interim condensed consolidated financial
information, management has made judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing this interim condensed consolidated 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, 2021, save for the changes highlighted
above. Refer also to Note 1(b) above for significant estimations
performed.
NOTE 4: - FINANCIAL INSTRUMENTS
Carrying amounts and fair values
In respect to the Company's financial instruments assets not
presented at fair value, being mostly short-term market interest
bearing liquid balances, the Company believes that the carrying
amount approximates its fair value. In respect of the Company's
financial instruments liabilities:
Fair value of the quoted debentures is based on price quotations
at the reporting date and is classified as Level 1 in the fair
value hierarchy.
NOTE 4: - FINANCIAL INSTRUMENTS (Cont.)
Carrying amount Fair value
------------------------ -----------------------
June 30, December June 30, December
31, 31
2022 2021 2022 2021
------------- --------- ------------- --------
Not audited Not audited
Not reviewed Audited Not reviewed Audited
------------- --------- ------------- --------
EUR '000 EUR '000 EUR '000 EUR
'000
------------- --------- ------------- --------
Statement of financial
position
Debentures A - Israeli NIS
bonds 41,203 41,275 4,576 6,025
Debentures B - Israeli NIS
bonds 58,620 58,724 8,190 8,849
The total contractual liability of the Debentures was EUR 126.6
million as of June 30, 2022.
NOTE 5: - CASA RADIO
a. Following Note 5(2)(c) to the annual financial statements
relating the discussions with the Romanian authorities, there have
been no significant events since the publication of the annual
financial statements as of December 31, 2021.
b. Following Note 5(2)(e) to the annual consolidated financial
statements as of December 31, 2021 which discloses that the The
Company and AFI Europe N.V. ("AFI Europe") entered into an addendum
to the pre-sale agreement entered into between the Parties in
connection with the sale of its subsidiary (the "SPV") which holds
75% in the Casa Radio Project (the "Project") (the "Addendum" and
the "Agreement", respectively) pursuant to which the Parties agreed
to extend the Long Stop Date, which is the date on which the
parties will execute a share purchase agreement, subject to the
satisfaction of conditions precedent (the "SPA"), until December
31, 2022. The addendum was approved by the bondholders meeting held
on November 25, 2021.
Following the above, the Parties continue their attempts to
receive the authority's approval in order to be able to execute the
SPA, still there has been no progress since the pre-sale has been
signed. In light of the above the Company is exploring all its
options in order to obtain progress, including among others its
legal options. For details regarding an Engagement letter with a
law firm in London in connection with the legal proceedings in the
"Casa Radio" project refer to Note 18(b) to the annual consolidated
financial statements as of December 31, 2021. For details regarding
the issuance of a notice of dispute and acceptance of offer and
consent to arbitrate to Romania with respect to the "Casa Radio"
project refer to Note 7(c). Accordingly, as of May 16, 2022 the
Company has submitted with International Centre for Settlement of
Investment Disputes (the "Centre") a Request for Arbitration (the
"Request") against Romania. The Request was registered by the
Centre on June 3, 2022. Further to the Centre's registration of the
Request and pursuant to Rule 2(1)(a) of the Rules of Procedure for
Arbitration Proceedings (the "Arbitration Rules"), the Company set
out Romania proposal with respect to the number of arbitrators and
the method for their appointment in these proceedings. At the
current stage, the Company and Romania are in the process of
agreeing above mentioned proposal.
Due to the above, there can be no certainty that the SPA will
eventually be executed and/or that the transaction will be
completed.
NOTE 5: - CASA RADIO (Cont.)
c. Write-down of trading properties:
As detailed in the annual consolidated financial statements, the
value of the trading property of the Project was fully reduced (for
more details refer to Note 5(3) to the annual consolidated
financial statements as of December 31, 2021).
Still, the Company believes that despite this reduction there is
no change in the value of the Company's rights under the PPP
Agreement. In addition, management, believes that in case they will
decide to pursue it material economic damage, the Company has a
good case to claim compensation for such damages.
On the other hand, if the Company comes to an understanding with
the Romanian authorities, it will measure the Casa Radio NRV to
reflect its updated financial projections.
NOTE 6 :- EQUITY ACCOUNTED INVESTEES
Material events and updates during the reporting period:
Bangalore:
Following Note 6(b)(1) to the annual consolidated financial
statements regarding the agreement (the "Sale Agreement") between
Elbit Plaza India Real Estate Holdings Limited (a subsidiary held
by the Company (50%) and Elbit Imaging ltd.(50%)) ("EPI") and a
third-party local developer (the "Partner") to sell 100% of EPI's
interest in the SPV (subsidiary of EPI, which owns 54 acres plot in
Bangalore, India) to the Partner, on April 13, 2022 the Company
announced that the Partner submitted to EPI an unformal non-binding
proposal to purchase 100% of EPI's interest in the Project and the
completion of the transaction in exchange for a payment of INR
112-117 crores (approximately EUR 13.6-14.2 million) in lieu of the
remain amount of consideration according to the Sale Agreement (INR
269 crores (approximately EUR 32.6 million)).
On June 28, 2022 the Company announced that the founder and CEO
of the Partner has been arrested by Indian law enforcement
authorities on suspicion of money laundering and on August 2, 2022
the Company updated that the founder and CEO of Partner has been
released from custody of the certain government agency which had
arrested him.
The negotiation between the Parties have not yet matured into a
binding agreement. In order to preserve EPI's rights, EPI has
initiated arbitration proceeding in Singapore versus the Partner in
accordance with the provisions of the Agreement between the Partner
and EPI.
In the period since May 19, 2022 till August 24, 2022 the
Partner deposited in the SPV INR 22.5 crores (approximately EUR
2.77 million). There is no certainty that it will lead to closing,
however the negotiation between the Parties is in advanced stage
and the Parties continue to act to complete the transaction on the
terms as set forth in non-binding proposal.
As of this date, the Partner paid to EPI approximately INR 87.00
crores (approximately EUR 11.2 million) (Company part INR 43.5
crores (approximately EUR 5.6 million)) and has to pay to EPI the
remaining amount out of the consideration of approximately INR 269
crores (approximately EUR 32.6 million) (Plaza part INR 134.5
crores (approximately EUR 16.3 million)) as per the Sale
Agreement.
NOTE 6 :- EQUITY ACCOUNTED INVESTEES (Cont.)
Net realizable value measurement of Bangalore project
As for June 30, 2022 and December 31, 2021, the Group measured
the net realizable value of the project. The net realizable value
of the project based on the comparable method is INR 159 crores
(App. EUR 19.3 million); 2021 - INR 172 crores (App. EUR 20.4
million). Due to decrease in value of the plot EPI recognized a
write off in the amount of app. EUR 1.53 million (the Company's
part (50%) app. EUR 0.76 million).
The evaluation Value in INR Value in EUR
method million million
Comparable Method 1,592 19.3
------------- -------------
DCF Method 1,461 17.7
------------- -------------
In light of the Company's intention to sell the Plot to the
Partner or to any other third party (see above), and in light of
the uncertainty as to the completion of the transaction with the
Partner, the Company believes that the comparable method reliably
reflects the net realizable value of the Plot and therefore the
Company recorded the value of the plot as of June, 2022 at the
value of INR 159.2 crores (EUR 19.3 million) (the Company's part
(50%) app. EUR 9.6 million).
The plot in Bangalore is still in land stage and therefore the
value of the plot has been derived using land comparable method.
The valuation of the property reflects the interest that the
Partner still holds in the plot (10% as described above), the size
of the plot, the non-contiguous land parcel, the
petition/application filed with NCLAT against the partner and the
money laundering by Enforcement Directorate against the Mantri
Promoters.
The following main parameters have been considered to arrive at
the land value of the subject property by land sale comparison
method:
Parameter Premium
(Discount)
Applicable land value (INR Mn/acre) 99
------------
Total land value (INR Mn) 5,361
------------
Discount on account of Revised Master Plan
2015 Buffer zone norms (%) -25%
------------
Land Value after discount for RMP 2015 Buffer
zone Norms (INR Mn /acre) 74
------------
Presence of minority shareholder (partner) -20%
------------
Applicable Land Value after discount (INR
Mn /acre) 59
------------
Total land value (INR Mn) 3,217
------------
Discount on account of the insolvency petition/appeal
filed with NCLAT -45%
------------
Total land value (INR Mn) 1,769
------------
Discount on account of money laundering by
Enforcement Directorate against the Mantri
Promoters -10%
------------
Total land value (INR Mn) 1,592
------------
NOTE 7:- MATERIAL EVENTS DURING THE REPORTING PERIOD
a. Update regarding a change in Elbit Imaging Ltd holdings
Since August 5, 2020 and up to last announcement, Elbit Imaging
sold about 1,670 thousand shares of the Company for a total
consideration of approximately NIS 1,683, thus, Elbit Imaging
holdings in the Company have diminished from 44.9% to 20.55% of the
Company's issued and paid-up capital. During the reporting date,
out of the above, Elbit Imaging sold about 77 thousand shares of
the Company for a total consideration of approximately NIS 150
thousand, thus, Elbit Imaging holdings in the Company have
diminished by 2.67%.
b. Update regarding the sale agreement of the plot in Bangalore, India.
For the details regarding sale agreement of the plot in
Bangalore, India please refer to the Note 6.
c. Update regarding the issuance of a notice of dispute and
acceptance of offer and consent to arbitrate to Romania with
respect to the "Casa Radio" project.
Following Note 18(c) to the annual consolidated financial
statements as of December 31, 2021, as of May 16, 2022 the Company
has submitted with International Centre for Settlement of
Investment Disputes (the "Centre") a Request for Arbitration (the
"Request") against Romania. The Request was registered by the
Centre on June 3, 2022. Further to the Centre's registration of the
Request and pursuant to Rule 2(1)(a) of the Rules of Procedure for
Arbitration Proceedings (the "Arbitration Rules"), the Company set
out Romania proposal with respect to the number of arbitrators and
the method for their appointment in these proceedings. At the
current stage, the Company and Romania are in the process of
agreeing above mentioned proposal.
d. Dutch statutory auditor
Following Note 16(b)(7) to the annual consolidated financial
statements as of December 31, 2021, which discloses statutory
filing requirements, the Company submitted the annual consolidated
financial statements as of December 31, 2021 which were filed to
the London Stock Exchange, the Warsaw Stock Exchange and the Tel
Aviv Stock Exchange, to the Authority for the Financial Markets and
to other relevant Dutch authorities.
e. Deferral of payment of Debentures and partial interests' payment
As previously disclosed by the Company in Note 8(c) to its
annual consolidated financial statements as of December 31, 2021,
the Company was not able to meet its final redemption obligation to
its (Series A and Series B) bondholders, due on July 1, 2022. In
light of the above on June 16, 2022 the bondholders approved to
postpone the final redemption date to January 1, 2023 .
f. Update regarding proposal from G.C. Hevron Capital Ltd
As previously disclosed by the Company in Note 18(d) to its
annual consolidated financial statements as of December 31, 2021,
the Company received proposals from G.C. Hevron Capital Ltd
("Hevron Capital").
On March 30, 2022 the Company announced that Hevron Capital
submitted to the Company a request to extend the No-Shop period,
due to the complexity and the vast amount of data that needs to be
proceed in order to evaluate the proposed settlement
NOTE 7:- MATERIAL EVENTS DURING THE REPORTING PERIOD (Cont.)
("Hevron Capital' Request"). Following the above, the Company's
Board of Directors approved Hevron Capital's Request to extend the
"No-Shop" which expired as of May 20, 2022.
NOTE 8 : - SUBSEQUENT EVENTS
a. Annual General Meeting
Annual General Meeting of the Shareholders of the Company was
held on July 20, 2022, all the proposed resolutions were
passed.
b. Update regarding the sale agreement of plot in Bangalore, India
For the details regarding sale agreement of plot in Bangalore,
India please refer to the Note 6.
c. Environmental Sustainability Policy
On August 30, 2022 the Company adopted Environmental
Sustainability Policy.
d. Taskforce on Climate-related Financial Disclosures ("TCFD")
The Company notes the TCFD recommendations on climate-related
financial disclosures.
(1) BACKGROUND
Released in 2017, the TCFD recommendations set out eleven
recommended disclosures around four core areas for companies to
report material climate-related information to the market via the
mainstream financial report, as shown in Figure 1, below.4 In
focusing on these four core areas of business practice and
disclosure, the TCFD sought to ensure that consideration for
climate-related matters were adequately embedded throughout the
organization's governance, strategy, and risk management processes
and transparently reflected for both preparers and users alike. In
doing so, this addresses the demand for information that is
consistent, comparable, reliable and clear. The TCFD
recommendations also promoted the use of climate scenario analysis
for the assessment of corporate strategic resilience. Climate
scenario analysis is offered as a means to inform users5 about a
company's strategic resilience, and enable companies to prepare and
respond to the uncertainties of climate change and decarbonization
efforts over different time horizons, both in terms of the timings
of potential impacts as well as their magnitudes.6 By exploring a
range of plausible and coherent climate futures and assessing the
potential corporate risks and opportunities of each, companies can
test their thinking and strategies, better understand the key
drivers that will likely affect their business going forward, and
adapt their strategies and ambitions accordingly. Whilst
potentially challenging, scenario analysis is an essential
component to TCFD reporting. It brings considerations of the
short-, medium-, and long-term impacts of climate change into the
present day, enabling companies and investors can act in a more
informed and effective manner
The UK took the pioneer status and local firms will be required
to disclose climate-related financial information, ensuring they
consider the risks and opportunities they face as a result of
climate change.
NOTE 8 : - SUBSEQUENT EVENTS (Cont.)
-- The UK is the first G20 country to make it mandatory for
Britain's largest businesses to disclose their climate-related
risks and opportunities, in line with TCFD recommendations
-- new legislation will require firms to disclose
climate-related financial information, with rules set to come into
force from April 2022
-- follows publication of UK's landmark Net Zero Strategy and
forms part of the government's commitment to making the UK
financial system the greenest in the world
The UK is becoming the first G20 country to enshrine in law
mandatory TCFD-aligned requirements for Britain's largest companies
and financial institutions to report on climate-related risks and
opportunities.
From 6 April 2022, over 1,300 of the largest UK-registered
companies and financial institutions will have to disclose
climate-related financial information on a mandatory basis - in
line with recommendations from the Task Force on Climate-Related
Financial Disclosures. This will include many of the UK's largest
traded companies, banks and insurers, as well as private companies
with over 500 employees and GBP500 million in turnover.
The TCFD is an industry-led group which helps investors
understand their financial exposure to climate risk and works with
companies to disclose this information in a clear and consistent
way. It was launched at the Paris COP21 in 2015 by the Financial
Stability Board (FSB) and Mark Carney, the UN Special Envoy on
Climate Action and Finance and UK Finance Adviser for COP26, and
has since published a clear and achievable set of recommendations
on climate-related financial disclosures.
TCFD Recommendations
The TCFD Recommendations, first launched in 2017, are designed
to encourage consistent and comparable reporting on climate-related
risks and opportunities by companies to their stakeholders. The
TCFD Recommendations are structured around four content pillars:
(i) Governance; (ii) Strategy; (iii) Risk Management; and (iv)
Metrics & Targets; and eleven recommendations to support
effective disclosure under each pillar.
NOTE 8 : - SUBSEQUENT EVENTS (Cont.)
Why it is important to respond to the TCFD recommendations
now?
The UK's Green Finance Strategy sets out the Government's
expectations for all listed companies to disclose in line with the
TCFD recommendations by 2022.
CDP has already amended its disclosures to include a section
related to the risks and opportunities arising from climate change,
which is based on the TCFD recommendations.
According to a 2019 TCFD status report, 340 investors with
nearly $34 trillion in assets under management are asking companies
to report under the recommendations.
(2) CORPORATE INFORMATION
For the details please refer to the Note 1.
(3) GOVERNANCE
In relation to the above trend and legislation, the Company
finds itself, as a premium traded firm, in the reporting category.
However, the intention was to regulate the way the largest firms in
the UK are reporting in relation to the climate change. The
legislation clearly specifies "companies with over 500 employees
and GBP500 million in turnover."
The Company with its five employees, directors and the four
lands it holds, clearly falls far behind the regulator's criteria
for reporting firms. The Company does not have its own offices, but
sharing two offices in business hubs.
The Company is a very small company and cannot be compared with
the above-mentioned giant scales. In fact, we are under the
impression, the Company has by far an insignificant impact over the
climate change, compared even with a micro company.
Just like the rest of the western world, the Company takes
climate changes very seriously and is taking measures in order to
increase its climate change orientation and to decrees negative
effect on it in areas that are in the company's control.
Previously, the Company, was not very active on the topic of
global warming, mainly due to is type and limited operations. In
2022, due to new reporting requirements and world trends, the
company is much more aware of the topic and is taking a proactive
approach.
Since this year, the company is carefully looking into its own
operation and constantly strives to reduce carbon footprint and
improve the impact of its operations have on the environment, even
though, that impact is negligible.
The Company has written an environmental sustainability policy
that is being reviewed and adopted in Q4 of 2022. That policy
creates a commitment of the company to global climate change and
will influence the company's operations in favour of minimalizing
carbon footprint.
(4) STRATEGY
As the board of the Company is made aware of the climate change
issues and the TFCD reporting, it starts to embed climate changing
considerations into board daily decisions.
The first challenge was to study the issue and the board
empowered the Chairman to study the issue and educate the
Board.
NOTE 8 : - SUBSEQUENT EVENTS (Cont.)
The second challenge, was to create an environmental
sustainability policy that will set the company in the right
direction in terms of climate change countering.
Despite of the very limited current level of operations the
company experiences, a provisional environmental policy was drafted
and will be adopted by the Board on next Board meeting.
This policy will add the environmental consideration to every
business decision the company takes in the future.
As the Company is in a runoff mode, climate related risks are
potentially relevant in the short and maybe medium time frame.
In both terms, the company sees a small risk of higher level of
maintenance attributed to the four plots it has, due to extreme
weather events. These are included but not limited to: cleaning,
evacuating and maintaining the plots.
The first impact of environmental study and climate change, was
on the company's Board. After the adoption of the environmental
policy by the Board, the Company will observe the management taking
actions accordingly and having the environment in mind in daily
operations, according to the new policy.
In light if the above mentioned, resilience, is very limited to
absence, when taking into account the current operations of the
Company.
(5) RISK MANAGEMENT
Risks analysis requires a sufficient amount of data in order to
produce an accurate analysis.
In the Company case, there is only so much data that can be used
for such a study. While the company does not build, develop or
produce anything, the risks study is very limited.
Physical risks
As long as the Company is not developing its lands, there is no
value chain that might be affected by storms, extreme weather or
weather changes. Not even whether related disasters.
The Company does not see how changes such as floods, extreme
waves or droughts can have a major impact on its office related
work.
The consequences of the above phenomena are limited to an
increase in either cooling or warming expenses.
One low factor risk is identified in an extreme weather
condition, when any of a company's plot is damaged due to such
weather. That will lead to some expenses of cleaning, evacuating
and restoring expenses.
A further related risk study is advised to the BOD to be
performed in the current lands where the company have the four
plots. Any new risk identified locally, will be imbedded to the
financial planning ahead.
NOTE 8 : - SUBSEQUENT EVENTS (Cont.)
Transition risks
Just like Physical risks, transitional risks are minimized when
dealing with a five office n]based people, rather than a productive
firm with mage processes and output.
Figure 1 - non-exhaustive list of climate-related risks and
opportunities:
Risk type Risk example Opportunity example
Technology Technology related risks The C ompany does not
are considered very see any opportunity
limited in affecting in technology in relations
the Company operations to current operations
at the moment
----------------------------- ----------------------------
Policy Regulatory changes can Currently, the C ompany
only have an impact does not identify any
of the way the C ompany opportunity in weather
reports at the moment. related policy change.
Local regulatory changes
may affect to some effect,
some of the plots the
C ompany holds.
----------------------------- ----------------------------
Market In current situation, The C ompany is not
where the C ompany operates operating in B to C
as B to B, rather than markets and therefore
B to C, it does not the market opportunity
recognize a market relevant is irrelevant.
risk.
----------------------------- ----------------------------
Legal and A climate-related incident The C ompany does not
reputational affecting recognize an opportunity
an industry can and in this section.
might affect a more
comprehensive look into
the plots the C ompany
has.
----------------------------- ----------------------------
(6) METRIC AND TARGETS
Taking into account the limited scope of company's operations,
it is clear that the metrics and targets are somewhat irrelevant
for these operations. So is the disclosing of scopes 1-3 and the
GHG emission. One needs sufficient operations in order to be able
to produce, analyse and counter measures. The Company is by far not
having significant operations in order to demonstrate the study and
the cure. The Company's impact on climate change is negligible.
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IR SDDFEFEESEEA
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August 31, 2022 08:27 ET (12:27 GMT)
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