Voluntary trading update and pre-closing statement
MAS P.L.C.
Registered in Malta
Registration number C 99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
(?MAS?, ?the Group? or ?the Company?)
VOLUNTARY TRADING UPDATE AND PRE-CLOSING STATEMENT
Introduction
This voluntary announcement is a pre-closing update prior to the release of MAS? financial results for the six months ending
31 December 2022 and details economic developments in the Group?s markets and operations. Unless otherwise stated,
figures are presented on a proportionate consolidated basis.
The Group is a green property owner and operator focused on Central and Eastern Europe (?CEE?), with investments in
retail assets in Romania, Bulgaria, and Poland. MAS also benefits from exposure to high-quality commercial and residential
developments via the Development Joint Venture (?DJV?)1 with developer and general contractor Prime Kapital. MAS aims
to maximise total long-term returns from property investments, on a per share basis, by focusing on capital allocation,
operational excellence, sensible leverage and cost efficiency, sustainably growing distributable earnings per share.
Macroeconomic considerations
The global macroeconomic sentiment continues to be influenced by the effects of increasing interest rates and rising inflation
on costs of services and goods. The European energy supply shortage and its increased price and volatility is likely to
continue affecting economies. Across the European Union (?EU?), local governments are implementing a range of policy
responses aimed at stabilising and reducing energy costs, as well as increasing energy security in the short and medium
term. These include energy price caps, regulated tariffs or support programs to manage short-term supply costs. Policies
aimed at accelerating the EU?s transition to a climate-neutral economy have been prioritised, fast-tracking permitting
procedures for the rollout of certain renewable energy projects, aimed at increasing access to energy from renewable
sources, and reducing dependence on fossil fuel and/or supply from non-EU sources. Central banks, including European
Central Bank (?ECB?), have continued tightening monetary policies to address higher-than-targeted inflation, by adjusting
reference interest rates, despite a sharp slowdown in economic growth in the third quarter of 2022. The ECB signalled that,
to reduce inflation to the 2% long-term target, it is likely to further lift interest rates to levels higher than previously anticipated.
The European Commission?s latest forecast estimates annual EU inflation for 2022 at 9.3%, before a decline to 7% in 2023
and to 3% in 2024.
The current consensus projects the EU to undergo a technical recession in the first half of 2023, before regaining lacklustre
growth in 2024. However, not all EU members are expected to be affected to the same extent. The European Commission
forecasts Romania?s real GDP to grow by 5.8% in 2022, by 1.8% during 2023 and regaining momentum in 2024 with a real
GDP increase of 2.2%. In MAS? largest market, Romania, year-on-year average RON-denominated wages have continued
to increase and track inflation (13.1% versus 15.3% inflation) up to October 2022. As a result, consumers? affordability was
largely protected from inflation and rising interest rates.
Operations
Trading in all Central and Eastern European countries where the Group operates was exceptional for the first five months
of the 2023 financial year. All properties have benefitted from robust footfall and tenant sales, with no Covid-19 social
distancing restrictions affecting operations. Asset management initiatives are ongoing, aimed at achieving MAS? strategic
asset management targets by the end of the 2026 financial year.
Overall like-for-like (?LFL?) footfall for the five months to 30 November 2022 was on par with the same period in 2019, and
tenants? turnovers comfortably exceeded pre-pandemic levels by 19%, both in enclosed malls (16% increase) and in open-
air malls (22% increase).
Information regarding MAS? Central and Eastern European LFL footfall and tenants? sales (compared to the same period in
2021), and collection rates for the five months to 30 November 2022, is detailed in Table 1. All figures are reported on 21
December 2022.
Table 1:
Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 2 Total
Footfall (2022 compared to 2021) % 108 109 108 126 172 120
Open-air malls % 107 107 104 122 171 118
Enclosed malls % 109 112 116 133 175 124
Tenants? sales per m2 (2022 compared to % 113 114 113 119 149 120
2021)
Open-air malls % 107 110 105 114 142 115
Enclosed malls % 121 120 126 128 162 129
Collection rate % 100 100 99 99 98 99
Collection rates were excellent for the five-month period, although the collection process is still ongoing for November 2022.
The Group has not provided any further Covid-19 support measures to tenants (deferred or waived rentals).
Occupancy cost ratios (excluding certain tenant categories: supermarkets, DIYs, entertainment and services) to 30
November 2022 decreased slightly, to 10.9% (11.1% on 30 June 2022), as a result of excellent tenants? sales performance
despite higher total occupancy costs due to increased rentals and service charges.
Leasing efforts in the Group?s centres continue, and occupancy of Central and Eastern European assets increased slightly
to 96.4% on 30 November 2022 (96.3% on 30 June 2022).
Asset management initiatives are ongoing at Flensburg Galerie, aimed at positioning the asset for optimal disposal. By 30
November 2022, part of the centre?s planned tenant mix changes were implemented, and occupancy has increased to 88%
(81.5% on 30 June 2022). As a result, footfall (11% increase) and tenants? sales (9% increase) have outperformed those in
the same five months to 30 November 2021.
Western European disposals
Disposals of MAS? remaining Western European assets are progressing well, with the completion of the contracted disposal
of the Langley Park development land (UK) to a local property developer effective on 21 December 2022, and Flensburg
Galerie (Germany) and the Arches street retail units (UK) currently undergoing competitive sales processes.
Developments, extensions, and refurbishments
Construction works in respect of extensions of the value centres in Baia Mare and Roman are finalised, and the additional
retail units have become operational, as scheduled, on 30 October and 1 December, respectively. The additional 7,700m2
retail GLA complements the centres? existing retail offering and secures dominance in their respective catchment areas for
the foreseeable future.
Developments previously reported continue broadly in accordance with expectations, and further details will be made
available in due course.
Prospects
The Company is well positioned to achieve its previously announced earnings guidance for the financial year to 30 June
2023, expected to range from 9.40eurocents to 10.10eurocents per share, as management expects the inflationary impact
on rentals and service charges, to be absorbed by tenants without significant pressure on occupancy costs.
The current macroeconomic environment points to a recession starting to take hold in Europe, which is likely to lead to a
contraction in consumption, affecting discretionary income and affordability in the Group?s markets. Uncertainty remains in
respect of the length and severity of further measures and policy incentives aimed at reducing demand and diversifying
energy supply, measures to reduce inflationary pressure on economies to be adopted by European governments and central
banks, or other macroeconomic disruptions. Nevertheless, it is expected that CEE fundamentals, especially long-term
consumption growth in Romania and other CEE countries, will remain robust and outperform growth in Western European
countries for the foreseeable future.
1
DJV is an abbreviation for a separate corporate entity named PKM Development Limited (PKM Development), an associate of MAS since 2016, with
independent governance. MAS owns 40% of PKM Development?s ordinary equity, an investment conditional on it irrevocably undertaking to provide
preferred equity to PKM Development on notice of drawdown. By 30 November 2022, MAS had invested ?240.1million in preferred equity and had an
obligation of ?229.9million outstanding, as well as a drawn revolving credit facility of ?30million (figures not proportionally consolidated).
The balance of the ordinary equity in PKM Development was taken up by Prime Kapital in 2016 for ?30million in cash, and, in terms of applicable
contractual undertakings and restrictions, Prime Kapital:
(i) is not permitted to undertake real estate development in CEE outside of PKM Development until the earliest of the DJV?s capital
commitments being fully drawn and invested, or 2030;
(ii) contributed secured development pipeline to PKM Development at cost;
(iii) takes responsibility for sourcing further developments, and
(iv) provides PKM Development with all necessary construction and development services via integrated in-house platform.
2
Tenants? operations were affected in November 2021 by social distancing measures introduced by Romanian and Bulgarian authorities end of October 2021.
22 December 2022
For further information please contact:
Leon Alison, MAS P.L.C. +27 82 307 3667
Dan Petrisor, MAS P.L.C. +356 77 186 791
Java Capital, JSE Sponsor +27 11 722 3050
Date: 22-12-2022 09:15:00
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