Interim Results
Plaza Centers N.V.
29 August 2007
29 August, 2007
PLAZA CENTERS N.V.
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Plaza reports strong growth, realization of investments and excellent progress
with its portfolio of 24 current development schemes
Plaza Centers N.V. ('Plaza' / 'Company' / 'Group'), a leading emerging markets
property developer, today announces interim results for the six months ended 30
June 2007.
In the period since the Admission of its shares to trading on the Official List
of the London Stock Exchange in November 2006, Plaza has utilised circa 60% of
the IPO proceeds, mainly by acquiring 12 new development projects. The Company
also continues to make excellent progress in its acquisitions programme and the
delivery of its existing schemes.
Financial highlights:
• The Company's NAV was €1.02 billion at June 30, 2007 (At IPO: €809
million)
• NAV per share of £2.37 per share (At IPO: £1.90)
• Estimated value of portfolio at completion of €2.8 billion
• Increase to €264 million in balance sheet of real estate trading
properties being developed for future sale (31 December 2006: €160 million)
• Total assets of €540 million (31 December 2006: €475 million)
• Gross revenues and net gains from sale and operating of real estates of
€97 million (30 June 2006: €58 million)
• Profit before tax of €22.6 million (30 June 2006: €6.5 million) owing to
the disposal of two shopping and entertainment centres in Poland and an
office building in Budapest
• Basic and diluted EPS of €0.08 (30 June 2006: €3.12, due to much fewer
shares pre-IPO in 2006)
• Cash position of €186 million (31 December 2006: €219 million) and working
capital of €372 million (31 December 2006: €324 million)
Operational highlights in the reporting period:
• Successful opening and handover of Sosnowiec Plaza and Rybnik Plaza in
Poland. Both shopping malls were 100% let on opening, resulting in a higher
closing consideration paid to the Company than disclosed in the Company's
Prospectus and a combined total market value for the two properties of €90.1
million, an increase of €18.6 million
• Purchase of two additional developments in Timisoara and Miercurea Ciuc,
Romania with an anticipated gross lettable area ('GLA') of 39,500 sqm and
12,000 sqm, respectively
• Purchase of land for an additional housing development in the Roztoky
suburb of Prague in the Czech Republic
• Second and third mixed-use Joint Venture development projects acquired in
India in the Kharadi district of Pune and in Trivandrum, the capital city of
the State of Kerala. The combined Gross Built Area ('GBA') of the scheme in
Pune is approximately 225,000 sqm, while the scheme in Trivandrum has a GBA
of approximately 195,000 sqm
• Additional development project acquired in Poland in the city of Torun for
shopping and entertainment centre development with GLA of circa 33,000 sqm.
Key highlights since the period end:
• Forward-sale of Arena Plaza in Budapest, which will be the largest
shopping centre in Hungary and one of the biggest in Central and Eastern
Europe ('CEE'), to Active Asset Investment Management Plc (aAIM). The
estimated transaction price will not be less than €380 million and capped at
€400 million. The estimated value of the asset upon completion in the
Company's Prospectus was €333 million
• The disposal of Plaza's 50% stake in Lublin Plaza Poland to Klepierre SA.
The shopping centre was 100% let on opening. The market value of the total
project was €78 million compared to the estimated value of approximately €62
million at the time of the Company's IPO
• Acquisition of sites in Romania for a retail-led mixed use development in
Iasi (GLA 52,000 sqm) and a mixed use retail and residential scheme in
Slatina (GBA 25,000 sqm)
• Debut in Serbia, winning a tender process run by the Government of Serbia
for the development of a new shopping, entertainment and business centre in
Belgrade with a GBA of 100,000 sqm
• Examining the possibility of dual listing in the Warsaw Stock Exchange
(WSE), to allow higher liquidity and fulfil local investors' demand
• Gross proceeds raised of New Israeli Shekels ('NIS') 305 million
(approximately €53.3 million) from a bond issue to Israeli institutional
investors in July 2007.
Commenting on the results, Mordechay Zisser, Chairman and Ran Shtarkman,
President and Chief Executive Officer, of Plaza Centers N.V., said:
'Tenant and investor demand for our high quality retail and entertainment
centres in the CEE region continues to be strong. We also continue to leverage
our track record and experience built up over eleven years into new countries
such as Serbia, Bulgaria, Slovakia, Ukraine and Russia as well as continuing our
expansion into India. We have made good progress in driving our acquisitions
programme in 2007 and have built an exciting pipeline of assets, which we expect
to bring to fruition during the rest of 2007 and in the following years.
'In line with our strategy for the year, we have already opened three shopping
and entertainment centres in Poland and are on track to open one in Hungary and
one in the Czech Republic by the end of the year. We have also successfully
disposed of our landmark Arena Plaza scheme in Budapest for circa €400 million,
some €67 million more than the project's value at our Admission.
'We are confident that the Company will achieve its goal to complete at least
four to five developments each year and, thereby, deliver strong income and
capital growth for our shareholders. We therefore look forward to the future
with considerable confidence.'
For further details please contact:
Plaza
Mordechay Zisser, Chairman +972 3 6086000
Ran Shtarkman, President and CEO +36 1 462 7221
Roy Linden, CFO +36 1 462 7105
Financial Dynamics
Stephanie Highett/Lauren Mills +44 20 7831 3113
Notes to Editors
Plaza Centers N.V. (www.plazacenters.com) is a leading emerging markets
developer of shopping and entertainment centres, focusing 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 an indirect subsidiary of Elbit Medical Imaging Ltd. ('EMI'), 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 N.V. is a member of the Europe Israel Group of companies which is
controlled by its founder, Mr. Mordechay Zisser. It has been present in real
estate development in emerging markets for over 11 years.
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
We are delighted to report excellent progress and high levels of activity across
all Plaza's operations in the six months ended 30 June 2007 and in the second
half of the year to date.
The gross proceeds of the Company's IPO were approximately £166 million
(including the exercise of an over-allotment option). Since Admission in
November 2006, we have invested approximately 60% of these proceeds through the
acquisition of 12 projects and through capital expenditure on the construction
and delivery of our existing schemes.
Results
We ended H1 2007 with gross revenues of €97 million and a net profit of €22.6
million, resulting mainly from the sale of our shopping and entertainment
centres in Rybnik and Sosnowiec, Poland and the sale of the Duna Plaza offices
in Budapest, Hungary.
Following our strategic decision to focus more on assets to be built for sale,
in 2006 and 2007 we invested heavily in existing assets under construction as
well as acquiring a substantial future pipeline. Our total investment in real
estate inventories under construction ('trading properties') increased to €264
million and we expect to present significant revenues out of these inventories
from H2 2007 onwards.
With our cash position of approximately €186 million at the period end (and €162
million as at today's date) and with the benefit of the gross proceeds of
approximately €53.3 million from the bond issue in July 2007 to Israeli
institutional investors, Plaza is strongly positioned to fulfil its potential,
secure additional investment pipeline projects and thereby create substantial
value for our shareholders.
NAV
The Company's portfolio as at June 30, 2006 was valued by King Sturge LLP and
their summary valuation is shown below.
The Company has seen a significant increase in the value of some of its assets,
especially in regard to the Arena Plaza in Budapest which was valued at €333
million at IPO and was recently forward sold to aAIM for circa €400 million. The
three shopping and entertainment centres sold in Poland were also handed over at
a price higher than their value estimated at IPO. In addition, seven new assets
were acquired and valued post IPO by June 30, 2007, which resulted in a
substantial increase in the Company's Net Asset Value.
The Company's NAV was calculated as follows:
Use EUR (Thousand)
Market value of land and projects by King Sturge LLP (1) 906,585
Assets minus liabilities as at June 30, 2007 (2) 113,889
Total 1,020,474
(1) per valuation attached
(2) excluding book value of assets which were valued by King Sturge LLP
The resulting NAV per share is £2.37 as at June 30, 2007.
Strategy
Plaza is a leading emerging markets developer of shopping and entertainment
centres, focusing on constructing new centres and, where there is significant
redevelopment potential, redeveloping existing centres, in both capital cities
and important regional cities.
The Company's reputation for successful property development in Central and
Eastern Europe is well-established, with a total of 24 centres now built and
sold or forward sold to leading investors such as Klepierre, the Dawnay Day
Group and, most recently, Active Asset Investment Management (aAIM). As a
result, 'Plaza Centers' has become a widely recognised brand name for
western-style, institutional quality shopping and entertainment centres.
Over the past 11 years, the Company has expanded its operations in central
Europe and eastwards into Poland, the Czech Republic, Romania, Latvia and Greece
and, more recently, India and - as announced to shareholders yesterday - Serbia.
During this time, it has clearly demonstrated its ability to anticipate market
trends and deliver innovative large scale projects. The Company is now actively
seeking to leverage its successful expertise and track record to new countries
located adjacent to its existing areas of operation, such as Croatia, Bulgaria,
Slovakia, Ukraine and Russia.
The strength of our reputation in Central and Eastern Europe has led the Board
to decide to explore the possibility of a dual listing of the Company's shares
on the thriving Warsaw Stock Exchange ('WSE'). The WSE has been extremely
active over the past few years, with fast-increasing levels of investment
activity from both institutional (particularly pension and mutual funds) and
retail investors. On the basis that we have received numerous enquiries from
investors in Poland and Central and Eastern Europe wishing to invest in our
company and the likely benefits it will bring to all our shareholders in terms
of increased liquidity in the shares, we believe this dual listing could be an
attractive strategic option for the Company. It is anticipated that, should
market conditions stabilize, this will be achieved within the current financial
year.
The Company continues to make strong progress on its ongoing operational
strategy, as detailed in its Prospectus, namely to:
• develop four to five modern western-style shopping and entertainment
centres per year in the capital and regional cities of selected countries,
primarily in CEE (focusing on the medium term in Poland, Czech Republic,
Romania, Slovakia, Ukraine, Russia, Serbia and Greece) and mixed use
developments in India for the medium and long term;
• acquire operating shopping centres that show significant redevelopment
potential (either as individual assets or as portfolios) for refurbishment
and subsequent re-sale;
• pre-sell, where prevailing market and economic conditions are favourable,
the centres during construction, or prior to commencement of construction or
redevelopment; and where the opportunity exists in CEE and India, extend its
developments beyond shopping and entertainment centres by leveraging its
strengths and drawing upon the experience and skills of the Company's
executive management team and the Europe Israel Group to participate in
residential, hotel, offices and other development schemes where such
developments form part of integrated large scale business and leisure
developments.
Portfolio progress
The Company is currently engaged in 24 assets and projects under development
located across the Central and Eastern European region and in India. The
location of the assets under development, as well as office buildings, is
summarised as follows:
Number of assets
Location Under development Offices
Romania 5 -
Czech Republic 5 1
Hungary 4 1
Poland 4 -
Latvia 1 -
Greece 1 -
Serbia 1 -
India 3 -
Total 24 2
The Company invested a total of €42 million in six acquisitions and joint
ventures during the six months, namely a retail development scheme in Torun,
Poland, two joint venture projects in India, a residential project in Roztoky in
the Czech Republic and the acquisition of two sites in Romania at Timisoara and
Miercurea Ciuc.
In addition, in a busy period following the period end, Plaza has undertaken a
number of significant transactions. The most important of these was the
forward-sale of Arena Plaza in Budapest, the future largest shopping centre in
Hungary and amongst the largest in Central and Eastern Europe, to Active Asset
Investment Management Plc ('aAIM'). The estimated transaction price is based on
the current rent levels and is not less than €380 million and capped at €400
million. The estimated value at Admission was €333 million.
In addition, during the weeks since 30 June 2007, we have sold our 50% stake in
Lublin Plaza, Poland to Klepierre SA. The shopping centre was 100% let on
opening in June 2007 and had a market value of €78 million (the whole project
value) compared to the estimated value of approximately €62 million at the time
of the Company's IPO. We have also announced the acquisitions of a 20,000 sqm
site at Slatina in southern Romania for the development of a shopping and
entertainment centre and a 46,500 sqm site in Iasi, Romania for a retail-led
mixed use development.
Additionally, as announced yesterday, Plaza has won a tender process run by the
Government of Serbia for the development of a new circa 100,000 sqm GBA
shopping, entertainment and business centre in Belgrade, as a brownfield
development on the prominent site of the former federal Ministry of Internal
Affairs of Yugoslavia.
To date, we have utilized approximately 60% of the gross IPO proceeds as
follows:
Use EUR (m)
Finance of current developments 22
Acquisition of pipeline projects in the CEE 87
Replacement of existing loan facilities that are incompatible 19
Expansion of operations in India 23
Total 151
Dividend Policy
As explained in the Company's Prospectus, the Directors intend to adopt a
dividend policy which will reflect the long-term earnings and cash flow
potential of the Group, taking into account the Group's capital requirements,
while at the same time maintaining an appropriate level of dividend cover.
Subject to all of these factors, and where it is otherwise appropriate to do so,
the Directors intend to make distributions out of the annual net profits of the
Group starting with the 2007 financial year. Dividends are expected to be paid
at the rate of 25% on the first €30 million of such annual net profits, and
thereafter at the rate of between 20% and 25%, as determined by the Directors,
on any additional annual net profits which exceed €30 million. The dividends
will be paid on or about 31 March following the publication of the Company's
financial results on the basis of the aggregate of the annual net profits
accumulated during the preceding financial year. The first dividend is therefore
expected to be paid in 2008 following the 2007 results.
Outlook
Tenant and investor demand for our high quality retail and entertainment centres
in the CEE region continues to be strong. We also continue to leverage our
track record and experience built up over eleven years into new countries such
as Serbia, Bulgaria, Slovakia, Ukraine and Russia as well as continuing our
expansion into India. We have made good progress in driving our acquisitions
programme in 2007 and have built an exciting pipeline of assets, which we expect
to bring to fruition during the rest of 2007 and in the following years.
In line with our strategy for the year, we have already opened three shopping
and entertainment centres in Poland and are on track to open one in Hungary and
one in the Czech Republic by the end of the year. We have also successfully
disposed of our landmark Arena Plaza scheme in Budapest for €400 million, some
€67 million more than the project's value at our Admission.
We are confident that the Company will achieve its goal to complete at least
four to five developments each year and, thereby, deliver strong income and
capital growth for our shareholders. We therefore look forward to the future
with considerable confidence.
Mordechay Zisser Ran Shtarkman
Chairman President and CEO
29 August 2007 29 August 2007
BUSINESS OVERVIEW
H1 2007 and the following weeks have been a highly active period for Plaza
across all areas of its business. Particular highlights included:
• Completion of developments: successful openings of Rybnik, Sosnowiec and
Lublin shopping and entertainment centres in Poland, all 100% let upon
opening; Arena Plaza and Plzen Plaza will be opened on schedule in Q4 this
year;
• Exits: Handover of the interests in the above mentioned centres to
Klepierre and the forward sale of Arena Plaza at terms more favourable than
those reflected in our Prospectus;
• Acquisition of pipeline: nine new developments acquired (12 since IPO);
• Financial strength and flexibility: High cash balances and an A+/positive
rating granted by the Israeli affiliate of Standard & Poor's for the raising
of up to $400 million at favourable interest rates, of which approximately
$72 million has already been raised through a bond issue in July.
Plaza is involved in the development of 24 schemes, of which five are located in
Romania, five in the Czech Republic, four in Hungary, four in Poland, one in
Latvia, one in Greece, one in Serbia and three in India.
The projects are at varied stages of the development cycle, from the purchase of
land through to the planning and completion of construction. In addition, Plaza
is negotiating to purchase sites for the development of several additional
schemes throughout the CEE region and India.
The Company's current assets and pipeline projects are summarised in the table
below:
Asset/Project Location Nature of asset Size sqm (GLA) Plaza ownership Status
%
Arena Plaza Budapest, Retail and entertainment 66,000 100 Construction
Hungary scheme commenced in 2006;
completion scheduled
for Q4 2007.
Pre-sold to aAIM
Arena Plaza Budapest, Mixed use of retail, 19,500 (for rent 100 Under planning
extension Hungary residential and other and sale)
Dream Island Budapest, Major business and 350,000 (GBA) 30 Under planning.
Hungary leisure resort (for rent and Construction will
(Obuda) sale) commence in Q4 2007;
completion scheduled
for 2012
David House Budapest, Headquarters/Office 2,000 100 Operational
Hungary
Duna Plaza Budapest, Retail and entertainment 15,000 Development Under planning
extension Hungary scheme rights
Suwalki Plaza Suwalki, Retail and entertainment 21,000 100 Construction will
Poland scheme commence in Q1 2008;
completion scheduled
for 2009
Lodz Lodz, Poland Residential/Office 68,000 100 Under planning
scheme
Zgorzelec Plaza Zgorzelec, Retail and entertainment 16,000 100 Construction will
Poland scheme start in Q1 2008;
completion scheduled
for 2009
Torun Plaza Torun, Poland Retail and entertainment 33,000 100 Planning and permits
scheme phase
Plzen Plaza Plzen, Czech Retail and entertainment 20,000 100 Construction started
Rep. scheme in 2006; completion
scheduled for Q4
2007, pre-sold to
Klepierre
Prague 3 Prague, Czech Office, for future use 61,600 100 Currently
Rep. for residential (residential for operational as an
sale) office building,
re-zoning for future
use for residential
is in progress
Opava Plaza Opava, Czech Retail and entertainment 14,000 100 Construction will
Rep. scheme start in late 2008;
completion scheduled
for 2010
Liberec Plaza Liberec, Retail and entertainment 17,000 100 Construction started
Czech Rep. scheme in 2007; completion
scheduled for 2008
Roztoky Prague, Residential units 14,000 100 Under planning
Czech Rep.
Casa Radio Bucharest, Mixed-use retail and 360,000 (GBA) 75 Construction
Romania leisure plus residential commenced in 2007;
/office scheme completion scheduled
during 2010-2012
Timisoara Plaza Timisoara Retail entertainment and 59,500 100 Under planning
residential scheme (including
20,000 of
residential)
Miercurea Ciuc Miercurea Retail and entertainment 12,000 100 Under planning
Plaza Ciuc scheme
Iasi Plaza Iasi Retail, entertainment 52,000 100 Under planning
and office scheme
Slatina Slatina Retail, entertainment 25,000 (GBA) 100 Under planning
and residential
Belgrade Serbia Retail, entertainment 100,000 (GBA) 85 Under palnning
and business centre
Riga Plaza Riga, Latvia Retail and entertainment 49,000 50 Construction started
scheme in 2007; completion
scheduled for 2009
Helios Plaza Athens, Retail and entertainment 35,000 100 Under planning and
Greece or office scheme permits stage
Koregaon Park Pune, India Retail, entertainment 107,500 (GBA) 50 Construction started
and office scheme in 2007, expected
completion in 2009
Kharadi Pune, India Retail, entertainment, 225,000 (GBA) 50 Under planning
office and apart-hotel
scheme
Trivandrum, Kerala, India Retail, entertainment, 195,000 (GBA) 50 Under planning
office and apart-hotel
scheme
Details of these activities by country are as follows:
Hungary
During 1996-2004, Plaza built, managed and eventually sold 16 shopping centres
throughout Hungary. During 2007, Plaza continued to develop the Arena Plaza, its
landmark shopping centre scheme in central Budapest, comprising approximately
66,000 sqm GLA which will make it one of the biggest in CEE. The mall was
pre-sold to aAIM in August 2007.
In addition, Plaza holds a 30% stake in Dream Island, a prestigious development
on the Obuda Island in central Budapest, with a land area of 320,000 sqm, which
is intended to be developed as a major resort area including hotels, recreation
facilities, a casino and a business and leisure complex with a development
budget of over €1 billion and 350,000 sqm of GBA. Preliminary design and
excavation works are already underway.
Two further projects are in feasibility and planning stages, namely the
extension of the Duna Plaza and the Arena Plaza, both of which are located in
central Budapest.
The Group continues to own its office building in Budapest, David House on
Andrassy Boulevard.
Poland
Between 2001 and 2005, Plaza built, managed and, in 2005, sold four shopping
centres located across Poland. In 2007, the Company completed the construction
of three shopping centres in Rybnik (approximately 18,000 sqm GLA), Sosnowiec
(approximately 13,000 sqm GLA) and Lublin (50% held, approximately 26,000 sqm
GLA). All three were 100% let upon opening and have all been handed over to
Klepierre successfully and on better terms than those mentioned in our
Prospectus.
In addition, Plaza continued the feasibility and planning of its development
scheme in Lodz (designated for shopping centre or alternatively residential/
office use), as well as an acquisition of an additional plot of land for a
planned shopping centre in Torun (comprising approximately 33,000 sqm of GLA).
Czech Republic
Construction of the Plzen Plaza (approximately 20,000 sqm GLA) commenced in 2006
and is currently expected to be completed in Q4 2007.
Plaza has purchased 39,000 sqm of private land in Roztoky, a town close to
Prague, which includes a valid planning permit for 81 family homes. It is
intended to commence construction in 2008.
The Company continued to own an income-yielding office building in Prague which
is designated to be re-zoned for a scheme of 61,600 sqm of residential units.
Romania
In November 2006, Plaza acquired a 75% interest in a company which has entered
into a public-private partnership agreement with the Government of Romania to
develop the approximately US$1 billion budget Casa Radio (Dambovica) scheme in
Bucharest, the largest development plot available in the city centre. The
Romanian Government will remain a 15% partner in the scheme. The development of
Casa Radio comprises approximately 360,000 sqm of GBA, including a 110,000 sqm
GLA shopping mall and leisure centre (one of the largest in Europe), residential
units, offices, hotel, casino, hypermarket and convention and conference hall.
The Group has continued its rapid expansion in Romania, with the purchase of
four exciting sites. It has acquired a plot in Timisoara for the development of
a shopping centre comprising approximately 39,500 sqm GLA and residential units
of approximately 20,000 sqm; a plot in Iasi for the development of a shopping
centre providing approximately 37,000 sqm GLA and 15,000 sqm of office space; a
site in Miercurea Ciuc which will be developed into a shopping centre with
approximately 12,000 sqm of GLA and another site of 20,000 sqm at Slatina for
the development of a shopping and entertainment centre of GBA 25,000 sqm. In
addition the site at Slatina comes with an option to develop approximately
10,000 sqm of residential accommodation.
Latvia
Construction works started in March 2007 on the Riga Plaza project comprising
approximately 49,000 sqm of GLA in Riga, Latvia (a 50% holding). The scheme is
located on the western bank of the river Daugava by the Sala Bridge and Plaza
expects this project to be completed during 2009.
Serbia
Plaza has successfully tendered for a state-owned plot and building in Belgrade,
Serbia. The building was formerly occupied by the federal ministry of internal
affairs in the former Yugoslavia, and is located in the centre of Belgrade in a
neighbourhood of government offices and foreign embassies.
Serbia is one of the Eastern European nations where Plaza sees strong potential
for future investment opportunities. Plaza also believes that the Belgrade
market offers particular potential, with its large populated catchment area of
approximately 2.5 million people. Additionally, as Belgrade has not to date
benefited from 'institutional grade' investment in retail or commercial real
estate, this development will have particular significance in terms of providing
a new commercial and cultural destination for both domestic and international
visitors.
Plaza will partner a local Serbian developer for the project, which is expected
to have a gross development budget of circa €150 million. The local partner will
be entitled to participate in up to 15% of the project, subject to certain
conditions, while project management will be handled solely by Plaza.
The development will comprise a shopping, entertainment and business centre
totalling circa 100,000 sqm of GBA.
Greece
Plaza owns a 15,000 sqm plot of land centrally located in Piraeus Avenue,
Athens. Plaza is currently working on securing building permits for the
construction of a shopping centre, or alternatively an office complex, totalling
approximately 35,000 sqm of GLA.
Russia and Ukraine
New country directors have been appointed to these countries to focus on
possible investments and to gain deeper understanding of the local market.
Negotiations are currently underway to purchase plots in the major cities of
these countries.
India
As outlined in its Prospectus, Plaza has identified strong potential in emerging
India and, during the reporting period, acquired two additional development
projects in 50-50 Joint Venture in the Kharadi district of Pune, totalling
approximately 225,000 sqm of GBA and in Trivandrum, the capital city of the
State of Kerala, of approximately 195,000 sqm GBA. Both projects are for mixed
use development (shopping centre, offices, hotel and serviced apartments), with
Kharadi featuring a shopping area of 120,000 sqm, office space of approximately
81,000 sqm and 24,000 sqm of serviced apartments. The project in Trivandrum
will provide retail space of some 67,000 sqm, an office complex of 90,500 sqm
and 37,500 sqm of serviced apartments.
Prospects
The Group continues to examine additional developments to acquire across its
target region as well as examining other future emerging market opportunities,
which we consider to offer strong potential consumer demand for Plaza's
development projects.
FINANCIAL REVIEW
Results
In line with the Group's commercial decision to focus its business more on the
development and sale of shopping and entertainment centres, the Group is
classifying its current projects under development as trading properties rather
than investment properties. Accordingly, revenues from the sale of trading
properties are presented at gross amounts.
Revenues for the period ended at June 30, 2007 increased to €95 million (H1
2006: €52 million), mainly due to the sale of Rybnik Plaza and Sosnowiec Plaza
in Poland.
Gains from the sale of investment property decreased to €2.4 million (H1 2006:
€6.5 million), mainly due to the policy of the Group to classify properties as
trading properties. The gain in H1 2007 represents the net result from the sale
of the Duna Plaza Offices in Budapest, while the H1 2006 gain was mainly from
the Poznan Plaza price adjustment.
The cost of operations is attributable to the cost of projects sold mentioned
above (Rybnik and Sosnowiec) which were classified as trading properties
(inventories).
Administrative expenses increased to €8.2 million (H1 2006: €4.3 million),
mainly due to non-cash share-based payments (€3.6 million) which were not in
place in H1 2006 and to the increase in the Company's volume of activities.
Net finance was positive in H1 2007 at €3.3 million (H1 2006: expenses of €0.6
million) due to higher cash balances and more favourable lending terms achieved.
Tax expenses continue to remain very low at €93,000 (H1 2006: €834,000),
reflecting less than 1% (H1 2006: 13%) of profits before tax and resulting from
the Group's favourable tax structure.
Profit for the period amounted to €22.6 million in H1 2007, above market
expectations, compared to €5.7 million in H1 2006 and again reflects the sale of
three assets as mentioned above in comparison with the one asset sold in H1 2006
(Novo Plaza in Prague).
Basic earnings per share for H1 2007 were €0.08 per share (H1 2006: €3.12). The
decrease is due to the public share offering that took place subsequent to June
30, 2006 when the number of outstanding shares was increased significantly.
Balance sheet and cash flow
The balance sheet as at 30 June 2007 showed current assets of €496 million
compared to current assets of €414 million at the end of 2006. This rise
primarily results from Plaza's realization of three assets and investment in our
substantial pipeline of development projects.
The cash position of cash and short term deposits decreased to €186 million
(2006: €219 million), mainly due to acquiring six pipeline projects during the
period net of receipts from the three assets sold.
Investment properties decreased to €13 million (2006: €26.6 million), due to the
sale of Duna Plaza Offices. Currently only the Prague 3 logistic building is
classified as an investment property.
Total bank borrowings (long and short term) increased to €80 million (2006: €57
million) reflecting the increase of construction activities net of repayment of
the loans used to construct the Rybnik Plaza and Sosnowiec Plaza and their
subsequent sale.
Trade payables and other liabilities increased to €26 million and €14 million,
respectively (2006: €16 million and €3 million, respectively), due to the
increase in the volume of construction activities.
Related Party balances are presented gross (both in the assets and in the
liabilities sections of the balance sheet) as the balances are with different
Plaza group subsidiaries and therefore netting was not possible under IFRS.
However, the net balance of the Plaza Group with its controlling shareholders is
approximately €2.5 million (liability). The majority of this (€1.9 million) is
due to a provision in respect of project management fees charged by the Control
Centers group, relating to project supervision services granted in respect of
the extensive development of projects within the Group.
Valuation Summary by King Sturge LLP as at June 30, 2007
Project Name Market Value on Market Value of Market Value of
completion 30 the land and the land and
June, 2007 Market Value on project project
completion 31
€ May, 2006 30 June, 2007 31 May, 2006
Country € € €
Hungary Arena Plaza 382,000,000 333,388,000 300,000,000 172,424,000
Arena Plaza extension 71,300,000 76,163,000 27,000,000 38,722,000
Dream Island 462,100,000 454,820,000 81,160,000 76,163,000
David House, Budapest 5,275,000 5,512,000 5,275,000 5,512,000
Duna Plaza extension 47,100,000 46,870,000 25,000,000 25,203,000
Poland Torun Plaza 89,150,000 - 18,000,000 -
Suwalki Plaza 60,900,000 40,600,000 11,300,000 9,410,000
Lodz Plaza 128,105,000 70,800,000 16,500,000 11,663,000
Zgorelec Plaza 41,800,000 - 6,500,000 -
Lublin Plaza 39,000,000 30,988,000 39,000,000 15,011,000
Czech Republic Plzen Plaza 61,800,000 42,814,000 29,010,000 3,056,000
Prague 3 116,575,000 98,023,000 24,600,000 22,449,000
Opava Plaza 41,600,000 42,300,000 11,900,000 10,868,000
Liberec Plaza 63,500,000 60,045,000 25,330,000 21,770,000
Romania Miercurea Ciuc Plaza 19,200,000 - 4,400,000 -
Timisoara Plaza 104,600,000 - 24,000,000 -
Casa Radio Plaza 646,900,000 460,875,000 164,000,000 87,380,000
Latvia Riga Plaza 75,000,000 51,681,000 23,000,000 23,020,000
Greece Helios Plaza 95,625,000 89,600,000 30,210,000 29,459,000
India Koregaon Park 51,650,000 - 12,750,000 -
Kharadi Plaza 76,600,000 - 17,000,000 -
Trivandrum Plaza 78,900,000 - 10,650,000 -
Value of sold - 85,343,000 - 28,959,000
projects
Total €2,757,380,000 €1,989,822,000 €906,585,000 €581,069,000
Notes
• Please note both Torun and Zgorzelec are owned by third party, non Plaza
Centers related companies, albeit with preliminary purchase or
pre-agreements in place. Our valuations reflect the potential value of the
projects if available for development today.
• Plaza Centers has a 50% interest in the Riga Plaza development.
• Plaza Centers has a 50% interest in the Lublin Plaza development.
• All land and project values assume full planning consent for the proposed
use.
• Plaza has a 50% interest in Koregaon Park, Kharadi Plaza and Trivandrum
Plaza.
• Plaza has a 30% share in Dream Island.
• Plaza has a 75% share of Casa Radio.
• All the figures reflect Plaza's share.
Independent report on review of condensed consolidated interim financial
information
To the directors of Plaza Centers N.V.
We have reviewed the accompanying consolidated condensed balance sheet of Plaza
Centers N.V. ('the Company') as at June 30, 2007 and the related consolidated
condensed statements of income, changes in equity and cash flows for the
six-month period then ended ('the interim financial information'). Management is
responsible for the preparation and presentation of the consolidated interim
financial information in accordance with IAS 34, 'Interim Financial Reporting',
as adopted by the EU. Our responsibility is to express a conclusion on the
interim financial information based on our review.
We conducted our review in accordance with the International Standard on Review
Engagements 2410 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial information as at June 30, 2007, is not
prepared, in all material respects, in accordance with IAS 34, 'Interim
Financial Reporting', as adopted by the EU.
Budapest, August 28, 2007
KPMG Hungaria Kft.
Condensed consolidated interim income statement
For the six months ended
June 30,
2007 2006
Unaudited Audited
€ '000
Revenues 94,571 51,653
Gain from the sale of investment property, net 2,471 6,539
Changes in fair value of investment property - 293
97,042 58,485
Cost of operations 69,131 46,993
Gross profit 27,911 11,492
Administrative expenses (*) 8,191 4,315
Operating profit 19,720 7,177
Finance income 3,858 1,527
Finance expenses (586) (2,108)
Finance income, net 3,272 (581)
Other income 126 26
Other expenses (441) (169)
Share in gain (loss) of associate (33) 40
Profit before tax 22,644 6,493
Income tax expense 93 834
Profit for the period 22,551 5,659
Attributable to:
Equity holders of the Company: 22,546 5,659
Minority interest 5 -
22,551 5,659
Basic and diluted earnings per share attributable to the 0.08 3.12
equity holders of the Company (in EUR)
(*) Including non-cash share based payments of EUR 3,570 thousands for the six
month period ended June 30, 2007 (2006: Nil).
Condensed consolidated interim balance sheet
June 30, December 31,
2007 2006
Unaudited Audited
€ '000
ASSETS
CURRENT ASSETS
Cash and cash equivalents 176,057 212,683
Restricted bank deposits 9,715 616
Short-term deposits - 6,154
Trade accounts receivables, net 21,551 1,059
Other accounts receivable and prepayments 12,777 29,222
Other debtors and related parties 11,917 4,283
Trading properties 263,594 159,961
495,611 413,978
NON CURRENT ASSETS
Investment in associate 1,115 1,148
Long-term balances and deposits 2,237 2,257
Other debtors and related parties 18,734 22,027
Property, plant and equipment 8,444 7,550
Investment property 12,970 26,654
Restricted bank deposits 350 350
Other non-current assets 664 933
44,514 60,919
Total assets 540,125 474,897
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Interest bearing loans from banks 74,068 51,201
Trade payables 26,300 15,703
Other liabilities 13,955 3,088
Amounts due to related parties 9,729 17,771
Creditor due to selling of investment property - 2,418
124,052 90,181
NON-CURRENT LIABILITIES
Interest bearing loans from banks 5,668 5,875
Amounts due to related parties 12,967 8,474
Other long term liabilities 927 1,551
Deferred tax liabilities 1,403 4,139
20,965 20,039
Equity
Share capital 2,923 2,923
Translation reserve (351) (1,895)
Other reserves 7,431 1,840
Share premium 248,860 248,860
Retained earnings 135,495 112,949
Shareholders' equity attributable to equity holders of the Company 394,358 364,677
Minority interest 750 -
Total equity 395,108 364,677
Total shareholders' equity and liabilities 540,125 474,897
Condensed consolidated interim statement of changes in shareholders' equity
Attributable to equity holders of the Company
Share Share Capital Translation Retained Total Minority Total equity
capital premium reserve reserve earnings interest
€ '000
Balance at 2,923 248,860 1,840 (1,895) 112,949 364,677 - 364,677
December 31, 2006
(Audited)
Foreign currency - - - 1,544 - 1,544 - 1,544
translation
adjustment
Share based - - 5,591 - - 5,591 - 5,591
payments
First time - - - - - - 745 745
consolidated
minority interest
Profit for the - - - - 22,546 22,546 5 22,551
period
Balance at June 2,923 248,860 7,431 (351) 135,495 394,358 750 395,108
30, 2007
(Unaudited)
Balance at 18 - (181) (2,059) 98,229 96,007 - 96,007
December 31, 2005
(Audited)
Transfer to income - - - (33) - (33) - (33)
statement due to
selling of trading
property
Net profit for the - - - - 5,659 5,659 - 5,659
period
Balance at June 18 - (181) (2,092) 103,888 101,633 - 101,633
30, 2006 (Audited)
Condensed consolidated interim statement of cash flow
For the six months ended June
30,
2007 2006
Unaudited Audited
€ 000'
Cash flows from operating activities
Profit for the period 22,546 5,659
Adjustments necessary to reflect cash flows used in operating activities:
Depreciation 229 439
Change in fair value of investment property - (293)
Minority interest 5 -
Finance income, net (836) (488)
Company's share in loss (profit) of associate 33 (40)
Gain on sale of investment property subsidiaries (2,471) (6,539)
Gain on sale of trading property subsidiaries (23,062) (2,134)
Income tax expenses 93 555
Increase in trade accounts receivable (788) (1,602)
Increase in other accounts receivable (6,639) (1,218)
Payments on account for projects to be acquired (9,099) -
Increase in trading properties (127,265) (35,953)
Purchase of trading property companies (see appendix A) (14,657) -
Increase in trade accounts payable 15,941 6,043
Increase in other liabilities 8,825 3,891
Net proceeds from sale of trading property subsidiaries (see appendix B) 31,119 4,525
Share based payments 3,570 -
Net cash used in operating activities (102,456) (27,155)
Cash from investing activities
Purchase and development of property, plant and equipment (908) (934)
Proceeds from sale of property, plant and equipment - 54
Investment in associate - (50)
Short term deposits, net 7,066 (8,575)
Decrease in long term deposits 185 1,047
Increase in long term deposits (527) (2,344)
Net proceeds from disposal of other subsidiaries (see appendix B) 11,526 -
Long term loans granted to partners in jointly controlled company (7,934) (2,116)
Net cash provided by (used for) investing activities 9,408 (12,918)
Cash from financing activities
Short term loans from banks, net 70,576 21,675
Long term loans repaid to banks (6,908) (2,427)
Loans repaid to related parties (7,438) (6,766)
Net cash provided by financing activities 56,230 12,482
Foreign currency translation adjustment 192 -
Decrease in cash and cash equivalents during the period (36,626) (27,591)
Cash and cash equivalents at the beginning of the period 212,683 46,699
Cash and cash equivalents at the end of the period 176,057 19,108
Condensed consolidated interim statement of cash flow
For the six months ended June
30,
2007 2006
€' 000
Appendix A - Acquisition of subsidiaries
Cash and cash equivalents of subsidiaries acquired (14) -
Working capital (excluding cash and cash equivalents) 22,695 -
Trading property (38,097) -
Minority interest 745 -
Less- Cash and cash equivalents of subsidiaries acquired 14 -
Acquisitions of subsidiaries, net of cash held (14,657) -
Appendix B - Disposal of Subsidiaries
Cash and cash equivalents of subsidiaries disposed 3,064 463
Working capital (excluding cash and cash equivalents) 52,446 43,404
Long-term deposits 547 1,047
Investment property and other assets 13,800 -
Long-term loans and liabilities (49,681) (42,026)
Net identifiable assets and liabilities disposed (20,176) (2,888)
Cash from sale of subsidiaries 45,709 4,988
Less- Cash and cash equivalents of subsidiaries disposed (3,064) (463)
42,645 4,525
Non cash movements
Share based payment capitalized 2,626 -
Interest paid 1,366 1,663
Interest received 2,989 285
NOTES TO THE ACCOUNTS
1. Reporting entity
Plaza Centers N.V. ('the Company') conducts its activities in the field of
establishing, operating and selling of commercial and entertainment centres in
Central and Eastern Europe, and, from 2006, in India.
In line with the Group's commercial decision to focus its business more on the
development and sale of shopping and entertainment centres, the Group has
classified its current projects under development as trading properties rather
than investment properties.
. The condensed consolidated interim financial statements of the Company as
at June 30, 2007 and for the six month period then ended comprise the
Company and its subsidiaries (together referred to as the ' Group') and
the Group's interests in associates and jointly controlled entities.
The consolidated financial statements of the Group as at and for the year ended
31 December 2006 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.
The Company has its primary listing on the London Stock Exchange.
During the six month period ended June 30, 2007 the following changes and
additions occurred in the Company's holdings:
a. The Company acquired interests in an additional two joint venture
projects in India through its wholly owned subsidiary, Spiralco Ltd, which
acquired a 50% stake in P-one infoport private Ltd. ('P-One'), an Indian Limited
liability company. P-One owns two projects: Kharadi (in Pune) and Trivandrum (in
Kerala state)
b. Additional companies acquired and activated in Romania:
The Company completed the purchase of 75% of the Casa Radio project in Bucharest
through acquiring 75% of the shares of Dombovita S.R.L. Dombovita S.R.L has a
plot and building leased for 49 years.
The Company also activated two shell companies, Elite residence Esplanada s.r.l
and North Gate Plaza s.r.l, wholly owned by the company, to purchase two plots
of land in the Cities of Timisoara and Miercurea Ciuc, respectively.
c. Sale of Rybnik and Sosnowiec shopping centres:
The Company sold to Klepierre SA, a leading French property group, effective
March 31, 2007, Rybnik Plaza Sp. z.o.o and Sosnowiec Plaza Sp.z.o.o, which own
shopping centres in Rybnik and Sosnowiec, Poland, respectively.
d. Sale of Duna Plaza Offices:
The Company sold to Klepierre, effective May 14, 2007, the Duna Plaza Offices in
Budapest. The sale took place by selling Duna Plaza Irodahaz Kft., a wholly
owned subsidiary of the Company, which owns the office compound.
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim
Financial Reporting, as adopted by the EU. They do 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 31 December 2006.
The condensed consolidated interim financial statements were approved for issue
by the board of directors on 28 August 2007.
3. Significant accounting policies
The accounting policies adopted by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in its
consolidated financial statements for the year ended 31 December 2006.
4. Estimates
The preparation of interim financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
Estimates have been made in a basis consistent with the basis used in 31
December 2006 financials statements.
5. Financial risk management
There have been no significant changes in 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 31 December 2006.
6. Income tax expense
Income tax expense is recognised based on management's best estimate of the
weighted average annual effective income tax rate expected for the full
financial year. The estimated average annual tax rate used for the six months
ended June 30, 2007 was 0.3% (for the six months ended June 30, 2006: 12.8%).
This change in effective tax rate was caused mainly by a one-time tax expense in
the Czech Republic, as well as the release of deferred tax liabilities in
respect of the revaluation of an investment property item in 2006. Since the
Company meets the participation exemption rules in the Netherlands, its
effective tax rate in 2007 is almost nil.
7. Interest-bearing loans from banks
The following interest-bearing loans from banks
relating to trading properties were received and repaid during the six months
ended June 30, 2007:
Interest Face Carrying Year of
Currency rate value amount maturity
Thousands Euro
Balance at 1 January 2007 51,201
Received loans
Secured bank loan Euro 3m Euribor+1.95% 9,769 9,769 2007
Secured bank loan Euro 3m Euribor+1.65% 11,438 11,438 2007
Secured bank loan Euro 3m Euribor+1.95% 5,041 5,041 2007
Secured bank loan PLN 1Y Wibor+1.4% 4,071 4,071 2007
Secured bank loan Euro 3m Euribor+2% 9,022 9,022 2007
Secured bank loan Euro 3m Euribor+1.65% 31,299 31,299 2022
Repayments
Secured bank loan Euro 3m Euribor+1.95% 24,039 24,039 2007
Secured bank loan Euro 3m Euribor+1.95% 11,438 11,438 2007
Secured bank loan Euro 3m Euribor+1.85% 1,540 1,540 2007
Secured bank loan Euro 3m Euribor+2% 5,570 5,570 2007
Secured bank loan PLN 1Y Wibor+1.4% 5,162 5,162 2007
Balance at June 30, 2007 74,092
8. Related parties
The Control Centers Group of companies, held by Mr. Mordechay Zisser, the main
shareholder of Elbit Medical Imaging ('EMI') who is the indirect controlling
shareholder of the Company, is providing project management services to various
projects developed by the Company and has charged EUR 7.0 million for services
provided in the first half of 2007.
Jet Link, a Company held by Mr. Mordechay Zisser, which provides aviation
services for the Company has charged a total of EUR 0.5 million for services
provided in the first half of 2007.
The Company estimates the liability arising from an agreement signed with the
Executive Vice Chairman of EMI, as described in the annual report 2006, in an
amount of EUR 674,000. A provision has been recorded in other liabilities -
related parties and was included as administrative expenses in the consolidated
income statement.
EMI has charged EUR 300,000 for accounting and legal services provided to the
Company in the first half of 2007.
9. Earnings per share
Earnings per share attributable to equity holders of the Company arise from
continuing operations as follows:
For the six month period ended
June 30, 2007
Earnings per share for profit from continuing operations
Attributable to the equity holders of the Company (expressed in EUR cents
per share)
Basic: 7.7
Diluted: 7.7
10. Standards, interpretations and amendments to published standards not
yet effective
Since the publication of the 2006 financial statements, the following statements
have been issued:
Revised IAS 23 Borrowing Costs (effective from 1 January 2009)
The revised Standard will require the capitalization of borrowing costs that
relate to assets that take a substantial period of time to get ready for use or
sale.
The Group does not expect the revised Standard to have any impact on the
consolidated financial statements, since it already capitalizes such borrowing
costs.
11 Significant acquisitions and transactions
A. Sale of Rybnik and Sosnowiec shopping centres
The Company sold, effective at March 31, 2007 Rybnik Plaza and Sosnowiec Plaza
Shopping and Entertainment centres in Poland to Klepierre SA, a leading French
property group. Both shopping malls which were 100% let to international and
local tenants on their opening to the public in March 2007 were pre-sold to
Klepierre in July 2005.
An aggregate fair value of EUR 90.1 million was agreed between the Company and
Klepierre. The Company has recorded a gain from this transaction in the amount
of approximately EUR 22.9 million.
B. Kharadi project - Pune, India
In February 2007, the Company indirectly entered into an agreement to acquire
through a 100% subsidiary a 50% stake in P-one infoport private Ltd. ('JV1') an
Indian limited liability company, which owns the freehold of approximately
fourteen acres of land situated in the Kharadi district of Pune, Maharashtra
State, India. The remaining 50% stake in JV1 is held by a property developer in
Pune. The consideration paid totalled EUR 17 million, invested in the form of
equity. The actual transfer of ownership occurred in April 2007.
JV1 intends to develop its plot of land through the construction of a project
totalling approximately 2.4 million sq ft (225,000 sqm) of Gross Built Area
which will include:
• a shopping centre with a total area of approximately 1.3 million sq ft
(approximately 120,000 sqm);
• an office complex measuring approximately 870,000 sq ft (approximately
81,000 sqm) and;
• a serviced apartment facility of approximately 260,000 sq ft
(approximately 24,000 sqm).
The total investment in the project (100%) is anticipated to be approximately
USD 175 million (approximately EUR 133 million).
C. Timisoara project - Romania
In March 2007, the Company acquired a site in Timisoara, West Romania, for a
total consideration of EUR 12.5 million. The site totals 31,800 sqm. The Company
plans to build a multi-storey shopping centre of approximately 39,500 sqm Gross
Lettable Area, exclusive of parking area.
The Company has also secured an option to develop on the site approximately
20,000 sqm of new mixed retail, office and residential space adjacent to the
shopping centre.
The total estimated development cost of the project is EUR 92.5 million.
D. Casaradio Project - Bucharest, Romania
On October 11, 2006, the Company entered into an agreement, according to which
it acquired a 75% interest in a company ('Project SPV') which under a
public-private partnership agreement with the Government of Romania was to
develop the Casa Radio site in central Bucharest. The consummation of the
transaction is subject to the fulfilment of certain conditions, including
obtaining the approval of the Government of Romania to an amendment to the
public-private partnership agreement. The cost of the acquisition of the
interest in Project SPV amounts to approximately USD 40 million (EUR 30
million).
The other investors include the Government of Romania, which will assure that
the development company is granted the necessary development and exploitation
rights in relation to the site for a 49-year period in consideration for a 15%
interest in Project SPV, and the seller which will retain a 10% interest in the
Project SPV.
In November 2006 the public -private partnership agreement was approved by the
Government of Romania subject to ratification by the Romanian Parliament which,
as of the date of the approval of these financial statements, has been obtained.
The transaction approval and the nomination of directors in Project SPV by the
Company were adopted by the general shareholders meeting of Project SPV in
February 2007.
The Project, which will have an estimated built area of approximately 360,000
square meters, will include a shopping and entertainment centre, a five star
hotel, residential units and offices. The owners (including the Company) have
undertaken to cause Project SPV to construct an office building measuring
approximately 13,000 sqm for the Government of Romania at its own cost.
E. Torun Project - Poland
In February 2007, the Group won a tender and signed a preliminary purchasing
agreement with the Municipality of Torun, Poland for a project to be constructed
on a site in Torun. The initial consideration was EUR 1.7 million and the total
plot price will be EUR 12.6 million, to be paid in the course of the following
two years. The plot size is 62,800 sqm. The planned Gross Lettable Area is
approximately 33,000 sqm. Construction is due to commence in 2009 and the centre
is scheduled to open in 2010.
F. Selling of Duna Plaza Offices - Hungary
The Company sold in May 2007 the Duna Plaza offices in Budapest, Hungary, to
Klepierre for a consideration of EUR 14.2 million, an increase in the value
disclosed in the Company's Admission Document at the time of its IPO, which was
EUR 13.8 million.
G. Trivandrum project purchase - India
On June 19, 2007 the Company (through P-One, its 50% indirectly held subsidiary)
entered into a joint venture with a leading Indian property developer, to
acquire a plot of land with an area of approximately 10.78 acres (approximately
43,600 sqm), situated in Trivandrum, the capital city of the State of Kerala,
India. The total cost of the land amounted to 1,060 million Rupees
(approximately EUR 20 million). The Company and its partner intend to use the
plot to develop a project totalling approximately 2.1 million sq ft (195,000
sqm), which is currently intended to comprise:
• A shopping and entertainment centre with a total area of approximately
720,000 sqft (approximately 67,000 sqm);
• An office complex with a total area approximately 970,000 sqft
(approximately 90,500 sqm);
• A hotel and apartment hotel with a total area of approximately 400,000
sqft (approximately 37,500 sqm).
H. The company purchased a plot of land in a Prague suburb
In May 2007 the Company purchased 39,000 sqm of private land in Roztoky, a town
next to Prague. The company intends to develop there a residential compound. The
plot includes a valid planning permit for 81 units of family houses.
Construction is intended to begin in 2008 and is anticipated to be completed in
2009-2010.
12 Events occurring after the balance sheet date
A. Agreement for the sale of Arena Plaza - Budapest, Hungary
On August 7, 2007 the Company executed a binding agreement for the sale of its
Arena Plaza shopping and entertainment centre in Budapest to UK based Active
Asset Investment Management ('aAIM').
The selling price will be finally determined on the completion of the
transaction, which is expected to take place within a month of Arena Plaza's
opening date, on the basis of the actual rent levels achieved capitalized at an
agreed yield. The Company will remain responsible for the letting of the
centre's remaining units for a period of up to one year following the closing,
and is anticipated to benefit from further price adjustments reflecting the
signing of any additional leases during the two consecutive earn-out periods,
which end three months and twelve months respectively following the completion.
The Company's management estimates the final transaction price based on actual
rent levels will be no less than approximately EUR 380 million, with an overall
transaction price cap of EUR 400 million, as agreed with aAIM. The final
expected transaction price represents a significant upside comparing to the
project's estimated value upon completion at the time of the Company's Admission
to trading in November 2006, which was approximately EUR 333 million.
B. Miercurea Ciuc project, Romania
On July 4, 2007 the Company acquired a 33,000 sqm retail development site in the
city of Miercurea Ciuc, in Central Romania. Total expected investment in the
project is EUR 16 million. The Company intends to build a retail mall totalling
some 12,000 sqm, together with provision for car parking over an area of
approximately 13,000 sqm.
C. Issuance of debt securities
On July 5, 2007 the Company agreed with Israeli institutional investors to issue
an aggregate principal amount of New Israeli Shekels ('NIS') 305 million
(approximately EUR 53.3 million) Par Value of series one of unsecured
non-convertible debentures to institutional investors in Israel. The debentures
are rated by an Israeli affiliate ('Maalot') of Standard & Poor's at a local
rating of A+/Positive.
The debentures are repayable in eight equal annual instalments, on December 31
of each of the years 2010 to 2017, inclusive. The debentures bear an annual
interest rate of 4.5%. Interest is payable semi-annually in arrears on December
31 and July 1 of each of the years 2007 to 2017 (the first instalment to be
effected on December 31, 2007 and the last instalment to be effected on December
31, 2017). Both the principal and interest of the debentures are linked to
changes in the Israeli Consumer Price Index.
As the Company's functional currency is the Euro, the Company is hedging the
future expected payments in NIS (principal and interest) to correlate with the
Euro.
The debentures also provide that the debentures will be prepaid by the Company,
inter alia, at the option of the trustee or the holders of the debentures if the
Company delays the publication of its financial reports for more than 60 days
from the dates provided by applicable law or if the debentures cease to be rated
for a period of more than 60 days.
The debentures will be listed for trade on the Institutional Retzef System,
which is a trading system for institutional investors in Israel. The Company may
also, in its sole discretion, register the debentures for trade on the Tel Aviv
Stock Exchange (the 'TASE'). So long as the Debentures are not registered for
trade on the TASE, the Company has undertaken (i) to pay an additional interest
at an annual rate of 0.5% (namely 5%) until a prospectus is published for the
registration of the debentures for trade on the TASE; (ii) to pay an additional
interest rate at an annual rate of 0.25% in the event the rating of the
debentures decreases to (BBB+) rating on a local scale by Maalot - The Israel
Securities rating Company Ltd. or an equivalent rating by another Rating Company
and (iii) to prepay the debentures at the option of the trustee or the holders
of the debentures if made a special resolution on their general meeting upon the
occurrence of each of the following events: (A) Should the rating of the
debentures in Israel decrease below the BBB+ investment level rating of Maalot -
or other equivalent rating by another rating company; (B) if the Company is
required to prepay another series of debentures issued by the Company; or (C) if
the holdings of Elbit Medical Imaging Ltd., the indirect parent of the Company,
fall below 25% of the Company's issued and outstanding share capital. Such
undertakings would be terminated upon the registration for trade of the
debentures on the TASE.
D. Iasi project, Romania
On July 25, 2007 the Company acquired a retail development project in Iasi,
Romania. The estimated development budget for the project is EUR 115 million.
The project will see a new retail-led mixed use development built in Iasi
County.
The development, which occupies a plot of 46,500 sqm, will include 37,000 sqm of
retail space, 15,000 sqm of office space and 46,200 sqm of parking, providing
1,400 spaces. Additionally, the terms of the acquisition provide the option to
develop 70,000 sqm of residential accommodation on the site. Completion of the
project is expected in 2010.
E. Handing over of 50% stake in Lublin Plaza project - Poland
On July 30, 2007 the Company completed the sale of its 50% stake in the Lublin
Plaza Shopping and Entertainment centre in Poland to Klepierre. The Company
developed the Lublin Plaza project together with a 50% joint venture party. Both
joint venture parties agreed to sell their holdings to Klepierre.
The agreed selling value of the shopping centre, which was 100% let to
international and local tenants on its opening to the public in June 2007,
totals approximately EUR 78 million (on a 100% basis), compared to the estimated
value of approximately EUR 62 million at the time of the Company's Admission to
trading.
F. Slatina project - Romania
On August 17, 2007 the Company acquired a site in Slatina, in southern Romania.
The Slatina site totals approximately 20,000 sqm and is located in the
north-western part of Slatina. The Company plans to build a shopping and
entertainment centre with approximately 25,000 sqm of built area, plus 450
parking places. In addition the site comes with an option to develop
approximately 10,000 sqm of residential accommodation, which the Company may
consider selling to a third party.
The Company's total investment in the Slatina scheme is expected to be
approximately EUR 24.5 million.
G. Belgrade project - Serbia
In August 2007 the Company won a competitive tender from the Government of
Serbia for the development of a new shopping, entertainment and business centre
on a total built up area of approximately 100,000 sqm (with over 2000 parking
spaces) in the Centre of Belgrade, Serbia.
The Company will partner a local Serbian developer for the project, which is
expected to have a gross development budget of EUR 150 million. The local
partner will be entitled to participate in up to 15% of the project, subject to
certain conditions, while the project management will be rendered solely by the
Company.
END
This information is provided by RNS
The company news service from the London Stock Exchange
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