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NEW EUROPE PROPERTY INVESTMENTS PLC - Unaudited condensed consolidated financial results for the three months ended 31 March 2014

Release Date: 15/05/2014 08:00
Code(s): NEP     PDF:  
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Unaudited condensed consolidated financial results for the three months ended 31 March 2014

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)
Registered office: 2nd Floor, Anglo International House, Lord Street, Douglas,
Isle of Man, IM1 4LNAIM share code: NEPI JSE share code: NEP BVB share code: NEP
ISIN: IM00B23XCH02
(“NEPI”, “the Group” or “the company”)



UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE THREE MONTHS
ENDED 31 MARCH 2014


The Company is required to publish financial results for the three months ended 31 March 2014 in terms of the rules
of the Romanian Financial Supervisory Authority (‘RFSA’) and the Rule Book of the Bucharest Stock Exchange
(‘BVB’). Accordingly, this announcement presents the unaudited condensed consolidated financial results of the
Group in respect of the financial period from 1 January 2014 to 31 March 2014 in a form compliant with the
requirements of the RFSA and the BVB.

CONSOLIDATED STATEMENTS OF INCOME
                                                 Pro forma Pro forma Pro forma     IFRS                 IFRS      IFRS
                                                 Unaudited Unaudited Unaudited Unaudited              Audited Unaudited
                                                   31 Mar     31 Dec   31 Mar    31 Mar               31 Dec    31 Mar
                                                      2014      2013      2013      2014                2013      2013

Net rental and related income                                      45 188       9 867                  41 420     7 548
                                                      15 522                                14 624
 Contractual rental income and expense
  recoveries                                          21 228       60 927      13 210       19 763     55 322     9 897
 Property operating expenses                         (5 706)     (15 739)     (3 343)       (5 139)   (13 902)   (2 349)
Administrative expenses                                (587)       (2 452)      (630)        (536)     (2 180)    (561)
Acquisition fees                                       (107)       (4 986)      (429)        (107)     (4 986)    (426)
Fair value adjustments of investment property              –       19 913            –           –     19 787         –
Fair value gains of financial investments at
 fair value through profit or loss                     (150)          970       3 205        (150)        970     3 205
Net result on sale of financial investments                –          586            –           –        586         –
Dividends received from financial
 investments                                             803        2 906         887          803      2 906       887
Share-based payment expense                               (3)        (955)        (10)          (3)     (955)      (10)
Foreign exchange (loss)/gain                           (833)         (290)         35        (847)      (238)        41
Gain on acquisition of subsidiaries                    1 400        5 547            –       1 400      5 547         –
Gain on disposal of investment property held
 for sale                                                  –          527            –           –        527         –
Impairment of goodwill                                     –         (816)           –           –      (816)         –

Profit before net finance (expense)/income                         66 138      12 925                  62 568    10 684
                                                      16 045                                15 184
Net finance (expense)/income                                       (1 816)      (826)                   1 784       658
                                                     (2 707)                                (1 516)
 Finance income                                     464       5 300      1 944       1 385    7 514     2 372
 Finance expense                                 (3 171)     (7 116)   (2 770)     (2 901)   (5 730)   (1 714)
Share of (loss)/profit of joint ventures              –           –         –        (368)    1 241       120

Profit before tax                                            64 322     12 099               65 593    11 462
                                                 13 338                            13 300
Deferred tax expense                               (573)     (7 736)     (388)       (535)   (9 007)     (274)
Profit after tax                                 12 765      56 586     11 711     12 765    56 586    11 188
Non-controlling interest                            515         878         –         515       878         –

Profit for the period attributable to equity
 holders                                                     57 464     11 711               57 464    11 188
                                                 13 280                            13 280

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
All amounts in EUR ‘000 unless otherwise stated
                                              Pro forma Pro forma Pro forma     IFRS           IFRS      IFRS
                                              Unaudited Unaudited Unaudited Unaudited        Audited Unaudited
                                                31 Mar     31 Dec   31 Mar    31 Mar         31 Dec    31 Mar
                                                   2014      2013      2013      2014          2013      2013

ASSETS

Non-current assets                                          920 924    523 571               898 040   439 578
                                                933 624                           910 017
 Investment property                            886 003     872 465    484 808    818 560    807 465   361 237
  Investment property at fair value             760 789     758 623    457 318    705 920    703 811   339 895
  Investment property under development         125 214     113 842     27 490    112 640    103 654    21 342
 Goodwill                                        16 218      16 218     17 326     16 218     16 218    13 135
 Investments in subsidiaries                          –           –         –           –          –     8 600
 Investments in joint ventures                        –           –         –       5 124      5 055     3 644
 Long term loans granted to joint ventures            –           –         –      38 714     37 064    30 627
 Other long-term assets                          30 117      29 831     21 367     30 115     29 828    22 265
 Financial assets at fair value through
  profit or loss                                  1 286       2 410        70       1 286      2 410       70
Current assets                                              149 920    134 753               143 168   176 684
                                                166 740                           156 424
 Trade and other receivables                     34 672      31 443     22 771     33 047     28 036    15 597
 Financial investments at fair value through
  profit or loss                                 30 649      61 079     72 773     30 649     61 079    72 773
 Cash and cash equivalents                       99 858      55 837     10 544     91 167     52 492    59 649
 Investment property held for sale
                                                   1 561      1 561     28 665      1 561      1 561    28 665

Total assets                                               1 070 844   658 324
                                               1 100 364                         1 066 441 1 041 208   616 262
EQUITY AND LIABILITIES

Equity attributable to equity holders                       712 236    405 613               712 236    405 090
                                                724 494                           724 494
 Share capital                                     1 947      1 947      1 354      1 947      1 947      1 354
 Share premium                                  612 064     611 949    355 620    612 064    611 949    355 620
 Share-based payment reserve                     23 746      23 852     15 369     23 746     23 852     15 369
 Currency translation reserve                    (1 229)     (1 229)   (1 229)     (1 229)    (1 229)   (1 229)
 Accumulated profit                              89 360      76 595     34 499     89 360     76 595     33 976
 Non-controlling interest                        (1 394)       (878)        –      (1 394)      (878)         –

Total liabilities                                           358 608    252 711               328 972    211 172
                                                375 870                           341 947
Non-current liabilities                                     244 542    138 299               232 260    110 160
                                                257 669                           240 113
 Loans and borrowings                           195 235     185 624    104 874    178 080    173 568     83 060
 Deferred tax liabilities                        50 733      50 160     26 846     51 213     50 678     21 841
 Other long-term liabilities                       6 864      4 059         –       6 759      4 059          –
 Financial liabilities at fair value through
  profit or loss                                   4 837      4 699      6 579      4 061      3 955      5 259
Current liabilities                                         114 066    114 412                96 712    101 012
                                                118 201                           101 834
 Trade and other payables                        28 411      29 974     17 216     25 790     28 807     12 319
 Loans and borrowings                            88 513      80 512     94 143     74 773     64 466     86 049
 Tenant deposits                                   1 277      3 580      3 053      1 271      3 439      2 644

Total equity and liabilities                               1 070 844   658 324
                                               1 100 364                         1 066 441 1 041 208    616 262

RECONCILIATION OF PROFIT FOR THE PERIOD TO DISTRIBUTABLE EARNINGS
                                                        Pro
                                                      forma
                                Pro forma Pro forma Unaudite     IFRS    IFRS      IFRS
                               Unaudited  Unaudited        d Unaudited Audited Unaudited
                                  31 Mar     31 Dec 31 Mar     31 Mar  31 Dec    31 Mar
                                     2014      2013    2013       2014   2013      2013

Profit for the period attributable to equity
 holders                                                      57 464   11 711                 57 464    11 188
                                                 13 280                            13 280
 Unrealised foreign exchange (gain)/loss            868         256       (34)        868        256       (41)
 Acquisition fees                                   107        4 986      429         107      4 986       426
 Share-based payment expense                          3         955        10           3        955        10
 Accrued interest on share-based payments           141         563       141         141        563       141
 Fair value adjustments of investment                 –     (19 913)        –           –    (19 787)        –
  property
 Fair value gains of financial investments at
  fair value through profit or loss                150      (970)    (3 205)      150      (970)    (3 205)
 Financial assets at fair value                  1 262     (2 040)   (1 145)    1 230     (1 157)    (837)
 Amortisation of financial assets                (184)      (476)      (99)     (184)      (476)      (99)
 Net result on sale of listed securities             –      (586)         –         –      (586)         –
 Dividends received from listed securities
  investments                                    (803)     (2 906)    (887)     (803)     (2 906)    (887)
 Accrued income from financial investments
  at fair value through profit or loss           1 016      4 364     1 127     1 016      4 364     1 127
 Gain on disposal of investment property held
  for sale                                           –      (527)         –         –      (527)         –
 Gain on acquisition of subsidiaries            (1 400)    (5 547)        –    (1 400)    (5 547)        –
 Deferred tax expense                              573      7 736       388       535      9 007       274
 Impairment of goodwill                              –        816         –         –        816         –
 Shares issued cum distribution                      –      3 577         –         –      3 577         –

Adjustments related to The Lakeview
 acquisition
 Profit for the period                               –          –         –         –          –       523
 Deferred tax expense                                –          –         –         –          –        77

Adjustments related to joint ventures
 Fair value adjustments of investment
  property                                           –          –         –         –      (126)         –
 Unrealised foreign exhange loss                     –          –         –         –          –         6
 Acquisition fees                                    –          –         –         –          –         3
 Financial assets at fair value                      –          –         –        32      (883)     (308)
 Deferred tax expense                                –          –         –        38     (1 271)       38

Adjustments related to non-controlling
 interest
 Fair value adjustments of investment
  property
 Deferred tax expense                                –      (108)         –         –      (108)         –
 Acquisition fees                                    –      (275)         –         –      (275)         –

Distributable earnings for the period                      47 370     8 436               47 370     8 436
                                                15 013                         15 013
Distribution from reserves                           –      1 574         –         –      1 574         –
Less: distribution declared                          –    (48 944)        –         –    (48 944)        –
 Interim distribution                                   –    (20 594)             –          –    (20 594)         –
 Final distribution                                     –    (28 350)             –          –    (28 350)         –

Earnings not distributed                                             –        8 436                     –      8 436
                                                   15 013                               15 013
                                                  204 544                   144 362    204 544    204 544    144 362
Number of shares entitled to distribution
                                                      236 204 544 236           152        236        236        152

Distributable earnings per share (euro
 cents)                                              7.34        25.79         5.84       7.34       25.79      5.84
Distribution from reserves per share (euro
cents)
                                                        –         1.00            –          –        1.00         –
Less: distribution declared per share (euro
 cents)                                                 –       (26.79)           –          –     (26.79)         –
 Interim distribution per share (euro cents)            –       (12.93)           –          –     (12.93)         –
 Final distribution per share (euro cents)              –       (13.86)           –          –     (13.86)         –

Earnings per share not distributed (euro
cents)                                                               –         5.84                     –       5.84
                                                     7.34                                 7.34

RECONCILIATION OF NET ASSET VALUE TO ADJUSTED NET ASSET VALUE
                                Pro forma Pro forma Pro forma    IFRS                               IFRS      IFRS
                               Unaudited Unaudited Unaudited Unaudited                            Audited Unaudited
                                  31 Mar     31 Dec   31 Mar   31 Mar                             31 Dec    31 Mar
                                     2014      2013      2013     2014                              2013      2013

 Net asset value per the statement of financial
  position                                        724 494    712 236        405 613    724 494    712 236    405 090
 Loans in respect of the Initial Share Scheme      11 574       11 574       12 483     11 574     11 574     12 483
 Deferred tax liabilities                          50 733       50 160       26 846     51 213     50 678     21 841
 Goodwill                                         (16 218)   (16 218)       (17 326)   (16 218)   (16 218)   (13 135)
 Deferred tax liabilities for joint ventures            –            –            –      (480)       (518)         –
Adjusted net asset value
                                                  770 583    757 752        427 616    770 583    757 752    426 279
Net asset value per share (euro)                                  3.56         2.91                   3.56      2.91
                                                     3.63                                 3.63
Adjusted net asset value per share (euro)                         3.70         2.96                   3.70      2.95
                                                     3.77                                 3.77
Number of shares for net asset value per share    199 836    199 836        139 258    199 836    199 836    139 258
 purposes                                             882        882            914        882        882        914
Number of shares for adjusted net asset value     204 544    204 544        144 362    204 544    204 544    144 362
 per share purposes                                   236        236            152        236        236        152

KEY PERFORMANCE INDICATORS
                                                    Pro forma             Pro forma           IFRS              IFRS
                                                     Unaudited          Unaudited        Unaudited          Unaudited
                                                   31 Mar 2014        31 Mar 2013      31 Mar 2014        31 Mar 2013

Current liquidity ratio                                     1.41              1.18              1.54               1.75
Gearing ratio (debt to equity)                             27%                26%               25%                21%
Tenant’s receivable turnover                          7.48 days         13.57 days         7.54 days        10.86 days
Return on investment property                   8% per annum        8% per annum 8% per annum           8% per annum

BASIS OF PREPARATION

These unaudited condensed consolidated quarterly financial results (the ‘IFRS Statements’) for the three months
ended 31 March 2014 have been prepared in accordance with the recognition and measurement criteria of the
International Financial Reporting Standards (‘IFRS’) and its interpretations adopted by the International Accounting
Board (‘IASB’). The accounting policies which have been applied are consistent with those used in the preparation of
the annual financial statements for the year ended 31 December 2013.

As the Group is focusing on being consistent on those areas of reporting that are seen to be of most relevance to
investors and on providing a meaningful basis of comparison for users of the financial information, it has prepared an
unaudited pro forma statement of financial position and an unaudited pro forma statement of income (the ‘pro forma
statements’). The main difference between the pro forma statements and the IFRS statements is that the pro forma
statements are prepared using the proportionate consolidation method for the investments in joint ventures, while the
IFRS statements use the equity method for accounting for these investments (as a result of the adoption of IFRS 11
‘Joint Arrangements’ effective 1 January 2013). The pro forma statements for the three months ended 31 March 2013
include the financial position and results of the Lakeview acquisition.

The unaudited pro forma statement of financial position and the unaudited pro forma statement of income have been
prepared by and are the responsibility of the directors of NEPI. Due to their nature, the unaudited pro forma statements
of financial position and income may not fairly reflect the financial position and results of the Group after the
differences set out above.

The condensed consolidated quarterly financial results prepared in accordance with IFRS, the pro forma statement of
financial position and the pro forma statement of income have not been reviewed or reported on by the Group’s
external auditors.

By order of the Board of Directors,
Martin Slabbert (Chief Executive Officer), Victor Semionov (Finance 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                                                          +44 20 7131 4000

JSE sponsor
Java Capital                                                           +27 11 283 0042

Romanian advisor
SSIF Intercapital Invest SA
Razvan Pasol                                                           +40 21 222 8731

15 May 2014

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