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NEP - New Europe Property Investments plc - Condensed consolidated unaudited

Release Date: 10/08/2011 17:30
Code(s): NEP
Wrap Text

NEP - New Europe Property Investments plc - Condensed consolidated unaudited financial statements for the six months ended 30 June 2011 NEPI - New Europe Property Investments plc (Incorporated and registered in the Isle of Man with registered number 001211V) (Registered as an external company with limited liability under the laws of South Africa, Reg No 2009/000025/10) JSE share code: NEP BVB share code: NEP AIM share code: NEPI ISIN code: IM00B23XCH02 ("NEPI", "the Group" or "the Company") CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2011 DIRECTORS` COMMENTARY 1 DISTRIBUTABLE EARNINGS The Group has achieved consolidated distributable earnings of 9.77 euro cents per share and accordingly, the Board declared an interim dividend of 9.77 euro cents per share in respect of the six month period ended 30 June 2011. This strong performance represents a 17% increase over the 8.35 euro cents per share distributed for the comparable prior interim period. 2 OTHER HIGHLIGHTS On 20 June 2011, the Company was admitted to trading on the regulated market of the Bucharest Stock Exchange. The Bucharest Stock Exchange is a regulated European market that makes the Company`s shares accessible to Romanian investors, including Romanian institutional investors. Although the Romanian institutions do not have high levels of capital under management yet, this is expected to significantly change over time. Further, the regulated nature of the Bucharest Stock Exchange paves the way for a potential listing on a major European exchange. In June 2011, the Company raised euro28.8 million through a private placement that was heavily oversubscribed. The proceeds will be used to fund the Group`s investment and development pipeline. This private placement extended the Company`s shareholder base. Liquidity in the trading of the Company`s shares has further improved during this period. 3 PROPERTY ACQUISITIONS AND DEVELOPMENT As reported in the 2010 Annual Report following the year-end, the Group has acquired land adjacent to Carrefour Property`s operating property in Ploiesti and has reached preliminary agreement with Carrefour Property to redevelop the combined properties into a 50,000 m2 regional shopping centre. Since then Carrefour Property`s board has approved the transaction and significant progress has been made in securing bank financing and agreeing pre-leases with tenants. The Group also acquired land adjacent to its retail asset in Brasov that borders a Carrefour hypermarket. The combined property is being redeveloped into a 5,300 m2 strip mall. Tenants have been secured and the re-development is under way. During the period, the Group exercised its option to acquire a 7,000 m2 underperforming galleria linked to Retail Park Auchan Pitesti that will be redeveloped into a value centre. As a significant step in the redevelopment plan, the Group concluded an agreement with Auchan to extend the hypermarket area by a further 3,500 m2, of which 1,042 m2 is related to the acquired galleria. This extension will result in this hypermarket being one of the largest in Romania outside of the capital city. It is expected that this will strengthen Auchan`s leading position in the Pitesti area and contribute to the re- generation of the galleria. The Group finalised and opened the first phase of the extension of Promenada Mall Braila consisting of a 10 screen Cinema City complex and a large entertainment area including an ice rink (Cinema City is the largest cinema operator in Central and Eastern Europe). Further extensions and re- configurations are ongoing and are expected to include the addition of several large international fashion retailers. In June 2011, the Group finalised the refurbishment of the Brasov office building and is currently in negotiations with three potential tenants to lease the refurbished property. 4 DEBT In April 2011, the Group repaid the euro6.8 million Alpha Bank loan facility that was due for repayment and replaced this in June 2011 with a euro9.5 million revolving facility from Unicredit Bank. The new revolving facility carries an interest rate of 1 month Euribor plus 3.0% and matures on 31 May 2012 when, at the Group`s option, the facility is convertible into a term loan repayable on 31 December 2014. The new facility remains undrawn. 5 PROSPECTS NEPI`s property portfolio continues to perform well supported by the length of its lease profile and tenants with strong corporate covenants. The Group is actively pursuing further acquisition and investment opportunities and is in negotiations to conclude three transactions, which include a sizeable office acquisition, a land acquisition and a joint venture shopping centre development. By order of the Board Martin Slabbert Chief executive officer Victor Semionov Financial director 10 August 2011 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro ASSETS Non-current assets 345 483 741 328 991 707 211 084 981 Investment property 321 839 207 313 755 281 196 914 767 Investment property at fair value 307 077 251 300 899 292 189 752 881 Investment property under development 14 761 956 12 855 989 7 161 886 Goodwill 13 849 887 13 849 887 12 790 551 Financial assets at fair value through profit or loss 3 706 983 1 386 539 1 379 663 Loans 6 087 664 - - Current assets 39 578 986 31 185 529 27 932 073 Trade and other receivables 4 139 975 7 338 247 4 465 634 Cash and cash equivalents 35 439 011 23 847 282 23 466 439 Total assets 385 062 727 360 177 236 239 017 054 EQUITY AND LIABILITIES Total equity attributable to equity holders 190 900 189 155 087 026 114 862 261 Share capital 808 328 712 686 562 686 Share premium 188 019 113 159 308 324 119 042 233 Share based payment reserve 7 179 934 759 550 542 246 Currency translation reserve (3 108 678) (2 964 825) (3 318 045) Accumulated loss (1 998 508) (2 728 709) (1 966 859)
Total liabilities 194 162 538 205 090 210 124 154 793 Non-current liabilities 181 677 497 185 374 433 116 257 774 Interest bearing borrowings 165 139 885 168 564 379 105 223 417 Deferred tax liabilities 15 586 362 15 586 362 9 952 647 Financial liabilities at fair Value through profit or loss 951 250 1 223 692 1 081 710 Current liabilities 12 485 041 19 715 777 7 897 019 Trade and other payables 5 143 621 7 656 857 6 335 216 Loans and borrowings 5 114 911 9 847 153 1 561 803 Tenant deposits 2 226 509 2 211 767 - Total equity and liabilities 385 062 727 360 177 236 239 017 054 Net asset value per share 2.30 2.18 2.04 Adjusted net asset value per share 2.33 2.22 2.03 CONSOLIDATED STATEMENT OF INCOME Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro Net rental and related income 11 996 800 16 224 196 7 797 115 Contractual rental income and expense recoveries 16 184 734 21 269 338 10 126 772 Property operating expenses (4 187 934) (5 045 142) (2 329 657) Share based payments (440 384) (524 650) (307 346) Foreign exchange gain 227 552 178 175 421 927 Investment advisory fees - (703 323) (679 627) Administrative expenses (813 007) (1 991 478) (461 517) Fair value adjustment on investment property - 1 111 927 - Profit before net finance expense 10 970 961 14 294 847 6 770 552 Net finance expense (3 809 261) (5 906 809) (3 827 037) Finance income 143 453 581 765 196 896 Finance expense (3 952 714) (6 488 574) (4 023 933) Profit before tax 7 161 700 8 388 038 2 943 515 Tax - (1 476 694) (9 813) Profit for the period attributable to equity holders 7 161 700 6 911 344 2 933 702 Weighted average number of shares in issue 75 963 602 52 388 748 47 255 904 Diluted weighted average number of shares in issue 81 628 632 56 334 549 49 444 271 Basic weighted average earnings per share (euro cents) 9.43 13.19 6.21 Diluted weighted average earnings per share (euro cents) 8.77 12.27 5.93 Distributable earnings per share (euro cents) 9.77 17.61 8.35 Headline earnings per share (euro cents) 9.43 11.07 7.62 Diluted headline earnings per share (euro cents) 8.77 10.29 7.28 ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro Cash flows from operating activities* 8 755 571 3 335 524 1 872 019 Cash flows from financing activities 11 708 126 53 813 129 18 346 688 Cash flows from investing activities (8 955 636) (45 441 330) (8 697 486) Net increase in cash and cash equivalents 11 508 061 11 707 323 11 521 221 Cash and cash equivalents brought forward 23 847 282 12 276 543 12 276 543 Translation effect on cash and cash equivalents 83 668 (136 584) (331 325) Cash and cash equivalents carried forward 35 439 011 23 847 282 23 466 439 *Includes interest paid on bank borrowings in amount of euro3 947 973 for the six months ended 30 June 2011, euro5 542 335 for the year ended 31 December 2010 and euro2 989 403 for the six months ended 30 June 2010 RECONCILIATION OF PROFIT FOR THE PERIOD TO DISTRIBUTABLE EARNINGS Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro
Profit for the period attributable to equity holders 7 161 700 6 911 344 2 933 702 Unrealised foreign exchange loss (227 552) (178 175) (421 927) Acquisition fees - 831 369 332 839 Share based payment fair value 440 384 524 650 307 346 Accrued interest on share based payments 338 206 491 064 133 639 Fair value adjustment - (1 111 927) - Financial assets at fair value 23 166 836 397 701 291 Amortisation of the financial assets (464 722) (426 032) (159 600) Deferred tax expense - 1 460 883 - Share issue cum distribution 1 022 551 2 325 443 1 042 706 Distributable earnings for the period 8 293 733 11 665 016 4 869 996 Number of shares entitled to distribution 84 910 831 73 346 586 58 346 586 Distributable earnings per share for the period (euro cents) 9.77 17.61 8.35 First interim dividend (euro cents) 9.77 8.35 8.35 Second interim dividend (euro cents) - 9.26 - STATEMENT OF OTHER COMPREHENSIVE INCOME Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro Profit for the period attributable to equity holders 7 161 700 6 911 344 2 933 702 Other comprehensive income - currency translation differences (143 853) (314 756) (667 976) Total comprehensive income for the period 7 017 847 6 596 588 2 265 726 RECONCILIATION OF PROFIT FOR THE PERIOD TO HEADLINE EARNINGS Unaudited Audited Unaudited
30 Jun 11 31 Dec 10 30 Jun 10 euro euro euro Profit for the period attributable to equity holders 7 161 700 6 911 344 2 933 702 Changes in currency translation reserve of foreign subsidiaries - - 667 976 Fair value adjustment of investment property - (1 111 927) - Headline earnings 7 161 700 5 799 417 3 601 678 RECONCILIATION OF NET ASSET VALUE TO ADJUSTED NET ASSET VALUE Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10
euro euro euro Adjusted net asset value 206 385 100 170 571 937 125 772 793 Net asset value per the statement of financial position 190 900 189 155 087 026 114 862 261 Loans in respect of the share purchase scheme 13 748 436 13 748 436 13 748 436 Deferred tax 15 586 362 15 586 362 9 952 647 Goodwill (13 849 887) (13 849 887) (12 790 551) Net asset value per share 2.30 2.18 2.04 Adjusted net asset value per share 2.33 2.22 2.03 Number of shares for net asset value per share purposes 82 832 949 71 268 704 56 268 704 Number of shares for adjusted net asset value per share purposes 88 497 979 76 933 734 61 933 734 STATEMENT OF CHANGES IN EQUITY Share based Sharere Share payments
capitalal premium reserve Group unaudited Euro Euro Euro Opening balance 1 January 2010 386 247 76 731 744 234 900 Transactions with owners 176 439 42 310 489 307 346 - issue of shares 176 439 42 532 625 - - issue cost recognised to equity - (222 136) - - share based payment reserve - - 307 346 - dividend distribution - - - Total comprehensive income - - - - other comprehensive income - - - - profit for the period - - -
Balance at 30 June 2010 562 686 119 042 233 542 246 Opening balance 1 July 2010 562 686 119 042 233 542 246 Transactions with owners 150 000 40 266 091 217 304 - issue of shares 150 000 40 417 268 - - issue cost recognised to equity - (151 177) - - share based payment reserve - - 217 304 - dividend distribution - - - Total comprehensive income - - - - other comprehensive income - - - - profit for the period - - - Balance at 31 December 2010 712 686 159 308 324 759 550 Opening balance 1 January 2011 712 686 159 308 324 759 550 Transactions with owners 95 642 28 710 789 6 420 384 - issue of shares 95 642 28 734 126 - - issue cost recognised to equity - (23 337) - - share based payment reserve - - 6 420 384 - dividend distribution - - - Total comprehensive income - - - - other comprehensive income - - - - profit for the period - - - Balance at 30 June 2011 808 328 188 019 113 7 179 934 Currency
translation Accumulated reserve loss Total Group unaudited Euro Euro Euro Opening balance 1 January 2010 (2 650 069) (1 983 359) 72 719 463 Transactions with owners - (2 917 202) 39 877 072 - issue of shares - - 42 709 064 - issue cost recognised to equity - - (222 136) - share based payment reserve - - 307 346 - dividend distribution - (2 917 202) (2 917 202) Total comprehensive income (667 976) 2 933 702 2 265 726 - other comprehensive income (667 976) - (667 976) - profit for the period - 2 933 702 2 933 702 Balance at 30 June 2010 (3 318 045) (1 966 859) 114 862 261 Opening balance 1 July 2010 (3 318 045) (1 966 859) 114 862 261 Transactions with owners - (4 739 492) 35 893 903 - issue of shares - - 40 567 268 - issue cost recognised to equity - - (151 177) - share based payment reserve - - 217 304 - dividend distribution - (4 739 492) (4 739 492) Total comprehensive income 353 220 3 977 642 4 330 862 - other comprehensive income 353 220 353 220 - profit for the period - 3 977 642 3 977 642
Balance at 31 December 2010 (2 964 825) (2 728 709) 155 087 026 Opening balance 1 January 2011 (2 964 825) (2 728 709) 155 087 026 Transactions with owners - (6 431 499) 28 795 316 - issue of shares - - 28 829 768 - issue cost recognised to equity - - (23 337) - share based payment reserve - - 6 420 384 - dividend distribution - (6 431 499) (6 431 499) Total comprehensive income (143 853) 7 161 700 7 017 847 - other comprehensive income (143 853) - (143 853) - profit for the period - 7 161 700 7 161 700 Balance at 30 June 2011 (3 108 678) (1 998 508) 190 900 189 BANK LOANS AND BORROWINGS AS AT 30 JUNE 2011 Facility Outstanding Available amount amount for drawdown
Group unaudited Euro Euro Euro Nepi Bucharest One SRL 6 200 000 6 200 000 - General Investment SRL 15 000 000 10 892 282 - Nepi Bucharest Two and Unique Delamode SRL 9 500 000 - 9 500 000 Premium Portfolio 13 995 000 13 448 858 - Promenada Mall 40 000 000 40 000 000 - Retail Park Auchan Pitesti 28 813 000 28 813 000 - Floreasca Business Park 77 000 000 70 269 270 - Total 190 508 000 169 623 410 9 500 000 Group unaudited Interest rate Hedge Nepi Bucharest One SRL 1M Euribor+4.5% 1M Euribor capped at 2.25% General Investment SRL Fixed at 6.23% - Nepi Bucharest Two and Unique Delamode SRL 1M Euribor+3% 1M Euribor capped at 2.25% Premium Portfolio Fixed at 5.17% - Promenada Mall 3M Euribor+3.0% 3M Euribor capped at 2.25% Retail Park Auchan Pitesti 1M Euribor+4.0% 1M Euribor capped at 2.25% Floreasca Business Park 3M Euribor+2.5% 3M Euribor capped at 2.00% Total BANK LOANS REPAYMENT PROFILE 2011 2012 2013 Borrower Euro Euro Euro Nepi Bucharest One SRL - - 6 200 000 General Investment SRL 508 422 1 064 641 1 137 283 Nepi Bucharest Two and/or Unique - - - Delamode SRL Premium Portfolio 117 943 241 105 334 550 Promenada Mall - 2 155 653 2 155 654 Retail Park Auchan Pitesti - 2 204 195 1 887 251 Floreasca Business Park 2 484 875 4 399 692 63 384 703 Total 3 111 240 10 065 286 75 099 441 2014 2015 Total Borrower Euro Euro Euro Nepi Bucharest One SRL - - 6 200 000 General Investment SRL 8 181 936 - 10 892 282 Nepi Bucharest Two and/or Unique - - - Delamode SRL Premium Portfolio 12 755 260 - 13 448 858 Promenada Mall 35 688 693 - 40 000 000 Retail Park Auchan Pitesti 2 247 414 22 474 140 28 813 000 Floreasca Business Park - - 70 269 270 Total 58 873 303 22 474 140 169 623 410 LEASE EXPIRY PROFILE Year Total based on Total based on rental income rented area 2011 0.2% 1.0% 2012 4.2% 1.9% 2013 4.2% 6.9% 2014 17.4% 14.3% 2015 21.4% 16.2% 2016 4.2% 3.9% 2017 4.6% 3.4% 2018 3.3% 1.6% 2019 1.2% 1.1% >=2020 39.3% 49.7% Total 100% 100% SEGMENTAL ANALYSIS Unaudited Audited Unaudited 30 Jun 11 31 Dec 10 30 Jun 10
euro euro euro Contractual rental income and expense recoveries Retail 7 437 887 13 636 990 7 108 561 Industrial 906 069 1 376 030 594 417 Office 7 840 778 6 256 318 2 423 794 Total 16 184 734 21 269 338 10 126 772 Profit before net finance expense Retail 6 232 174 16 902 869 5 317 544 Industrial 775 367 961 679 474 707 Office 4 989 415 (430 901) 1 815 713 Corporate (1 025 995) (3 138 800) (837 412) Total 10 970 961 14 294 847 6 770 552 NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS BASIS OF PREPARATION The condensed unaudited consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS), its interpretations adopted by the International Accounting Standard Board (IASB), the presentation and the disclosure requirements of IAS 34 Interim Financial Reporting and the Listing Requirements of the JSE. The accounting policies adopted are consistent with those of the prior year. These condensed consolidated interim financial results have not been reviewed or reported on by the Company`s auditor. INVESTMENT PROPERTY Investment property are those held either to earn rental income or for capital appreciation or both. After initial recognition investment property are measured at fair value. Fair value is determined annually by external independent professional valuators with appropriate and recognised professional qualifications and recent experience in the location and category of property being valued. PAYMENT OF INTERIM DIVIDEND The board has approved and notice is hereby given of a dividend per share of 9.77 euro cents for the six months ended 30 June 2011. The salient dates for the dividend are set out below: 2011
Last day to trade (JSE) Friday, 2 September Ex-dividend date (JSE) Monday, 5 September Ex-dividend date (AIM and BVB) Wednesday, 7 September Record date Friday, 9 September Payment date Monday, 12 September No dematerialisation or rematerialisation of share certificates, nor transfer of shares between sub-registers in the Isle of Man, South Africa and Romania will take place between Monday, 5 September 2011 and Friday, 9 September 2011. Shareholders on the South African sub-register will receive dividends in South African cents of 99.79078 per share, based on an exchange rate of 10.2140 South African Rand per euro. Registered office 2nd Floor, Anglo International House, Lord Street, Douglas, Isle of Man, IM1 4LN Transfer secretaries and settlement agent Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001, South Africa (PO Box 61051, Marshalltown, 2107, South Africa) Computershare Investor Services (Jersey) Limited, 2nd floor, Queensway House, Hilgrove Street, St Helier, JE1 1ES, Jersey Directors Dan Pascariu (Chairman)*, Desmond de Beer#, Michael Mills*, Dewald Joubert*, Jeffrey Zidel*, Victor Semionov (Financial director), Martin Slabbert (Chief executive officer) *Independent non-executive director #Non-executive director For further information please contact New Europe Property Investments plc Martin Slabbert +40 74 432 8882 Nominated Adviser and Broker Smith & Williamson Corporate Finance Limited Azhic Basirov/Siobhan Sergeant +44 20 7131 4000 South African Sponsor Java Capital +27 11 283 0042 Romanian Advisor Intercapital Invest SA Razvan Pasol +40 21 222 8731 10 August 2011 Date: 10/08/2011 17:30:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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