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Acquisition of City Park, Constantia
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,
registration number 2009/000025/10
AIM share code: NEPI JSE share code: NEP BVB share code: NEP
ISIN: IM00B23XCH02
(“NEPI” or “the Company”)
ACQUISITION OF CITY PARK, CONSTANTA
INTRODUCTION
Shareholders are advised that, on 17 December 2013, NEPI through its subsidiaries NEPI Four Real Estate Solutions S.R.L.
and NEPI Bucharest Two S.R.L. (collectively, “the Purchasers”), concluded an agreement to acquire all the issued shares
in and the shareholder’s claims against Everest Investitii Si Consultanta S.A. (“EIC” or “the Project Company”) from
Triad Trading B.V. and to repay all the outstanding debt of EIC (“the Transaction”).
The Project Company owns a shopping mall of 29 284 square metres of retail GLA situated in Constanta, Romania, known
as City Park (“the Property”).
RATIONALE FOR THE TRANSACTION
City Park is well located on a busy intersection close to the Constanta city centre and a short distance from Mamaia, the
most popular sea-side resort in Romania. The Constanta metropolitan area has approximately 425,000 residents
whilst Mamaia attracts large numbers of visitors from elsewhere to the area each summer holiday. City Park contains a wide
range of international fashion brands such as Bershka, Koton, LC Waikiki, Mango, Marks and Spencer, Orsay, Oysho,
Pull&Bear, Stradivarius and Zara. Other tenants include a Cora supermarket, several international fast food brands such as
KFC, McDonalds and Pizza Hut and various other international and national tenants. City Park benefits from substantial
additional approved building rights which NEPI intends to use for the development of a fashion and leisure extension.
SALIENT TERMS OF THE TRANSACTION
The aggregate purchase price for all the issued shares in and shareholder’s claims against the Project Company, including
the outstanding debt is approximately EUR81 million, which was settled in cash. The Transaction was funded partly from
the proceeds of the accelerated book build announced on 28 November 2013, in terms of which 9 020 844 new NEPI shares
were placed at ZAR77 per share raising approximately ZAR695 million (approximately EUR50 million) (“the Book
build”), with the balance of the purchase price being funded from NEPI’s existing cash resources.
Although the Transaction was completed on 17 December 2013, the effective date is 31 October 2013 (“Effective Date”).
The purchase agreement for the Transaction contains warranties typical for acquisitions of this nature.
The change of the management of the Property is subject to the approval of Competition Council in Romania.
DETAILS OF THE PROPERTY
The details of the Property, including the valuation, effective as at 17 December 2013, attributed to the Property by NEPI,
are as follows:
Monthly weighted
Property Rentable Purchase
Region Sector average rental per Valuation
description area (GLA) price
m2
(EUR' (EUR'
(EUR) (m2)
million) million)
Constanta,
City Park Retail 21 29 284 81* 87**
Romania
*The purchase price reflects the price for the acquisition of the issued shares in and shareholder’s claims against EIC and
settlement of debt, as noted above, whilst the valuation amount reflects the value attributed to the Property by the Company.
**The difference between the purchase price and valuation amount is represented by the estimated deferred taxation
liability.
FINANCIAL EFFECTS OF THE TRANSACTION
The pro forma financial effects, which are presented in the table below, have been prepared for illustrative purposes only to
provide information on how the Book Build and the Transaction may have impacted on the historical financial results of
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NEPI for the six months ended 30 June 2013. Due to their nature, the pro forma financial effects may not fairly present
NEPI's financial position, changes in equity, results of operations or cash flows after implementation of the Book Build and
the Transaction. The pro forma financial effects are the responsibility of the directors of NEPI. The pro forma financial
effects have not been reviewed or reported on by NEPI's external auditors.
The pro forma financial effects have been prepared in accordance with IFRS and the accounting policies of NEPI that were
used in the preparation of the unaudited condensed consolidated financial results for the six months ended 30 June 2013.
Change after
Pro forma the Book Build
Before the Book after the Book and the
Build and the Build and the Transaction
Transaction Transaction (%)
Basic weighted average earnings per share (EUR
cents) 14.97 15.61 4.30
Diluted weighted average earnings per share (EUR
cents) 14.46 15.11 4.51
Distributable earnings per share (EUR cents) 11.87 12.89 8.62
Headline earnings per share (EUR cents) 14.60 15.27 4.56
Diluted headline earnings per share (EUR cents) 14.11 14.78 4.76
Net asset value per share (EUR) 3.07 3.21 4.54
Adjusted net asset value per share (EUR) 3.10 3.26 5.25
Net tangible asset value per share (EUR) 2.96 3.10 4.77
Weighted average number of shares in issue 145 133 096 154 153 940 6.22
Diluted weighted average number of shares in issue 150 236 334 159 257 178 6.00
Number of shares in issue for net asset value and net
tangible asset value per share purposes 154 174 551 163 195 395 5.85
Number of shares in issue for adjusted net asset value
per share purposes 159 277 789 168 298 633 5.66
Notes and assumptions:
1. The amounts set out in the "Before the Book Build and the Transaction" column have been extracted, without
adjustment, from the unaudited condensed consolidated financial results for the six months ended 30 June 2013.
2. The Book Build and the Transaction are assumed to have been implemented on 1 January 2013 for basic weighted
average earnings, diluted weighted average earnings, distributable earnings, headline earnings and diluted headline
earnings per share purposes and on 30 June 2013 for net asset value, adjusted net asset value and net tangible asset
value per share purposes.
3. In respect of the Book Build the following assumptions and adjustments have been made
* 9 020 844 new shares were issued pursuant to the Book Build, thereby raising capital of approximately EUR
50 million (ZAR 695 million).
* The proceeds of the Book Build are assumed to be fully used to fund the purchase price of the Transaction.
* Estimated costs relating to the Book Build of approximately EUR0.25 million have been written off against
share premium.
* A EUR:ZAR exchange rate of €1.00:R13.90 is assumed to apply.
4. In respect of the Transaction, the amounts set out in the “Pro forma after the Book Build and the Transaction”
column were calculated by consolidating the results of NEPI for the six months ended 30 June 2013 and the
management accounts of EIC, subject to the assumptions and adjustments set out below. The management accounts
of EIC have not been reviewed or reported on by reporting accountants or external auditors. However, the directors of
NEPI are satisfied with the quality of the information:
* All the issued shares in and shareholder’s claims against EIC and outstanding debt of EIC were acquired at the
aggregate purchase price of approximately EUR81 million, which was settled in cash.
* For the six months ended 30 June 2013, EIC earned historical net rental income of approximately EUR4
million and incurred administrative expenditure of approximately EUR1 million. EIC earned a profit before tax
for the six months ended 30 June 2013 of EUR3 million.
* It has been assumed that NEPI earned EUR0.3 million less in finance income as a result of partly settling the
purchase price using existing cash resources.
* The additional distributable income which results from the Transaction is assumed to be earned evenly
throughout the six months ended 30 June 2013.
* Estimated transaction costs of EUR0.45 million were expensed in accordance with IFRS 3 Revised, (Business
Combinations).
* The net asset value of the issued shares in and shareholder’s claims against EIC and the outstanding debt of
EIC acquired by NEPI as at the Effective Date was EUR81 million.
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* The acquisition of EIC has been accounted for under IFRS 3 (Revised), (Business Combinations) whereby
trade and other receivables, trade and other payables, deferred taxation and goodwill have been recognised.
* An amount of EUR6 million was recognised as a deferred taxation liability.
CATEGORISATION OF THE TRANSACTION
The Transaction is classified as a category 2 transaction in terms of paragraph 9.5(a) of the Listings Requirements of the
JSE Limited and accordingly does not require approval by NEPI’s shareholders.
18 December 2013
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
JSE sponsor and South African corporate advisor
Java Capital +27 11 283 0042
Romanian advisor
SSIF Intercapital Invest SA
Razvan Pasol +40 21 222 8731
Date: 18/12/2013 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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