| | POLISH FINANCIAL SUPERVISION AUTHORITY | | | | | | | UNI - EN REPORT No | 8 | / | 2016 | | | | | | Date of issue: | 2016-03-29 | | | | | | | | | | | Short name of the issuer | | | | | | | | | | PLAZA CENTERS N.V. | | | | Subject | | | | | | | | | | | | | Preliminary results for the year ended 31 December 2015 | | | | Official market - legal basis | | | | | | | | | Inne uregulowania | | | | Unofficial market - legal basis | | | | | | | | Contents of the report: | | | | | | | | | | | FOCUS ON OPERATIONAL PERFORMANCE, KICK STARTING DEVELOPMENT PROJECTS AND DISPOSING OF NON-CORE ASSETS
Plaza Centers N.V. _“Plaza" / the “Company" / the “Group"_, a leading property developer and investor with a focus on operations in Central and Eastern Europe _“CEE"_, today announces its preliminary full year results for the year ended 31 December 2015.
Financial highlights:
• Reduction in total portfolio value to €392 million _31 December 2014: €466 million_, following strategic disposals _mainly of Koregaon Park Plaza and the Iasi plot of land_ and write-down and uplift changes at trading properties and equity accounted investees _related to assets in the Czech Republic _€6.2 million_, Romania _€9.2 million_, Poland _€6 million_, other regions _€3.7 million_ and an uplift in Serbia _€4.8 million__. Cash proceeds from disposals were used to repay liabilities from bonds issued, in line with the restructuring plan.
• While disposals resulted in an 8% decrease in Group NOI, excluding the impact of the sale of Kragujevac Plaza in 2014, the Group recorded a 10% increase in NOI _from €14.9 million to €16.4 million_ from the operation of its other shopping centres including equity accounted investee.
• Net Asset Value decreased to €114 million _31 December 2014: €153 million_ primarily as a result of an increased NIS against the EUR, as well as the write-down of assets, mainly in the Czech Republic, Romania and Poland.
o Net Asset Value per share of £0.12 _31 December 2014: £0.17_, attributable to the abovementioned factors.
• Losses in the period reduced significantly to €46 million _31 December 2014: loss of €120 million_, stemming from a non-cash €19.4 million impairment of trading properties and equity accounted investee _31 December 2014: €87.5 million of impairments_, and an overall mostly non-cash net finance cost of €31 million _2014: €36 million_.
o Basic and diluted loss per share of €0.07 _31 December 2014 loss per share of €0.39_.
• Consolidated cash position at year end _including restricted bank deposits, short term deposits and held for trading financial assets_ of €20.4 million _31 December 2014: €41.7 million_ and current cash position of circa €18 million _€5.5 million restricted_.
• Gearing increased to 79% _31 December 2014: 74%_ as a result of write-down and finance costs incurred during the year.
 
Operational and Group highlights:
• On 13 May 2015, Plaza announced the agreement to sell its Indian shopping mall located in Pune, India, for c. €35 million. The net cash proceeds _after repayment of the related bank loan, other liabilities and transaction costs_ from the sale were c. €7.4 million _525 million INR_, which are being put towards Plaza’s future investments and used for general corporate purposes.
• On 24 June 2015, Plaza reached an agreement to sell its 46,500 sqm development site in Iasi, Romania, in two separate transactions _one for the sale of 37,334 sqm and the other for the sale of 9,166 sqm_, for a gross consideration of €7.3 million. There was no bank debt secured against the property. In line with the Company’s stated restructuring plan, 75% of the net cash proceeds from the transactions were distributed to the Company’s bondholders at the end of September 2015 as an early principal repayment.
• Plaza’s subsidiary, Elbit Plaza India Real Estate Holdings Limited _in which Plaza holds a 50% stake with its joint venture partner, Elbit Imaging Ltd._ _“EPI"_, on 2 December 2015 signed an agreement to sell 100% of its interest in a special purpose vehicle which holds a site in Bangalore to a local investor. The total consideration for the sale is INR 321 Crores _circa €45.4 million_ which will be paid when the transaction closes. Following this closing, 50% of the proceeds will go to Plaza, of which 75% will be repaid to the Company’s bondholders in line with the Company’s stated restructuring plan. The transaction is subject to certain conditions precedent, and closing will take place once these conditions are met and no later than 30 September 2016. The investor is providing certain security in order to guarantee this deadline.
• A stable occupancy level was recorded across the Company’s existing shopping and entertainment centres in the CEE, with the overall portfolio occupancy level at 94.96% as of 31 December 2015 _31 December 2014: 95.34%_.
o At Torun Plaza, Poland, occupancy increased to 96.08% _2014: 92.5%_ and turnover remained stable despite a slight decrease of 3.2% in the footfall.
o Riga Plaza in Latvia recorded an 8.6% increase in turnover along with a 2.2% increase in footfall, compared to 2014. A small decrease in the occupancy level to 97% _2014: 99.5%_ was a direct result of a small number of retailers exiting the Latvian market altogether.
o Suwalki Plaza, Poland, continued to perform well, with a 2.5% increase in turnover in 2015 and 5.7% increase in footfall, compared to the same period in 2014. Occupancy decreased very slightly to 96.5% compared to the same period in 2014 _97.7%_.
o Zgorzelec Plaza delivered a 2.8% increase in turnover compared to the same period in 2014, while footfall remained stable. The increase was despite a reduction in occupancy from 95.2% to 88.91% after the closure of the Stokrotka supermarket, following which successful discussions with tenants resulted in most of them agreeing to remain at the centre.
o A 10.6% turnover increase was recorded at Liberec Plaza, compared to 2014, while occupancy remained stable at 83.67% _2014: 84%_.
• Considerable letting success was achieved across the portfolio and contracts were agreed with a number of significant new tenants. This improved the overall tenant strength and mix in the portfolio, and included agreements with KIK, Kinder Planeta, Pink and Cliff Sport. In the second half of the year, Adidas, Drogas, Calzedonia, Subway and other well-known brands opened stores in Latvia at Riga Plaza. Both Suwalki Plaza and Zgorzelec Plaza successfully agreed to extend their first five-year lease agreements which helped to keep a high occupancy level and will deliver a more resilient, higher quality income over the coming years.
• On 21 December 2015 Mr. Ron Hadassi was reappointed as Chairman of the Board of Directors following a meeting of the Board.
Key highlights since the period end:
• Since the year end, on 28 January 2016 Plaza announced the appointment of Dori Keren and Yitshak _Izzie_ Elias to the roles of Acting Chief Executive Officer and Chief Financial Officer, respectively. Both roles will become effective on 1 April 2016 while Dori Keren will become Chief Executive Officer on 1 January 2017.
• On 4 March 2016, Plaza agreed to sell its subsidiary holding Liberec Plaza, a shopping and entertainment centre in the Czech Republic, for €9.5 million. In line with the terms of the agreement, the buyer deposited 15% of the consideration in escrow. The due diligence process, final closing and settlement is expected to conclude by the end of March. The disposal follows an agreement announced by Plaza on 29 September 2015 whereby a wholly owned subsidiary of Plaza _"PCE"_ won a tender to buy the loan to the holding and operating company for Liberec Plaza for €8.5 million. Upon completion of the Liberec Plaza disposal, PCE will receive €8.5 million on account of the bank loan it previously purchased. Out of the remaining proceeds, 75% will be distributed to the Company’s bondholders by the end of June this year.
• On 24 March 2016 Plaza completed the sale of its 23,880 sqm site in Slatina, Romania, to a third party developer for €0.66 million, consistent with the asset’s last reported book value. In line with the Company’s stated restructuring plan, 75% of the cash proceeds will be distributed to the Company’s bondholders by the end of June this year as an early repayment.
• Today, 29 March 2016, Plaza announces that Sarig Shalhav, a Non-Executive Director of the Company, has indicated his intention to retire from the Board in June 2016 to allow him to focus on other interests. The Board wishes to thank Mr Shalhav for his contribution over previous years, and will confirm any changes to the Board if and as required in due course.Commenting on the results, Roy Linden, CFO and Acting CEO of Plaza Centers, said:
“Having completed the restructuring process in the prior year, 2015 was very much about delivering on our plan to create a more streamlined, better performing business. With the successful sale of non-core assets and subsequent delivery of proceeds to bondholders, together with a stronger operational performance across the shopping and entertainment centres portfolio and several development and asset management milestones achieved, in particular two new building permits in Belgrade and Timisoara, we are pleased with what we have accomplished during the year.
“There is still plenty more progress to be made, but our portfolio and underlying business is now in a stronger position and the new management team has a clear mandate for further development in 2016 and beyond."
Ron Hadasi, Chairman of Plaza Centers said: “On behalf of the Board of Directors and our shareholders, I would like to thank Roy Linden sincerely for his many years of hard work and dedication to the Company in his role as CFO, and his significant efforts during the last several months as Acting CEO. We wish him the very best of luck in the next stage of his career.
“Roy leaves the Company in good hands as we welcome the new management team of Dori Keren and Izzie Elias to Plaza. Under their guidance we look to the remainder of the year with confidence as we continue with an orderly disposal of non-core or mature assets, work hard to reduce debt levels and bring our development projects to fruition. The progress being made at Belgrade Plaza, which is currently the biggest commercial construction site in Serbia, as well as the sale of Liberec Plaza and the negotiation for the disposal of our share in Riga Plaza are all reflective of the opportunities we have to deliver the strategy and meet our objectives."
For further details please contact:
Plaza
Roy Linden, CFO and Acting CEO
+36 1 462 7222
FTI Consulting
Dido Laurimore / Claire Turvey / Tom Gough
+44 20 3727 1000
 
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