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Unaudited condensed consolidated financial results for the three months ended 31 March 2017
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)
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 2017
DIRECTORS' COMMENTARY
HIGHLIGHTS
The Group achieved 12.02 euro cents in distributable earnings per share for the first three months of 2017. This is due
to NEPI's assets continued strong performance, combined with the positive impact of acquisitions and developments
completed during 2016.
MERGER OF NEPI AND ROCKCASTLE
During the first quarter of 2017, NEPI and Rockcastle Global Real Estate Company Limited (Rockcastle), a property
investment company established in Mauritius and listed on the JSE and the Stock Exchange of Mauritius (SEM), have
progressed with the proposed merger of their respective businesses into an entity newly-incorporated in the Isle of
Man, NEPI Rockcastle PLC (NewCo) which is expected to be implemented with reference to an effective share swap
ratio of 4.7 Rockcastle shares for one NEPI share (the Swap Ratio). NEPI expects to issue its circular to shareholders
regarding the merger, together with a prospectus for NewCo, by the end of May 2017. The circular would include
notice of a general meeting of NEPI shareholders regarding approval of the merger, which is to be scheduled for late
June 2017.
Rockcastle will follow the same timing in respect of the general meeting of its shareholders, with the result that, if
all conditions to the merger are fulfilled, it will be implemented during July 2017 and NewCo will pay the distribution
for the six month period ending 30 June 2017.
PIPELINE
NEPI continues to pursue investment opportunities in Central and Eastern Europe, consolidating its position in
existing markets, and planning to enter new markets.
RETAIL DEVELOPMENTS AND EXTENSIONS
During the period, the Group made progress with planning and permitting for several developments and extensions,
including those in Galati, Novi Sad and Ramnicu Valcea. Further to the receipt of certain approvals, Victoriei Office is
expected to receive permitting for the internal fit-out during the next quarter, enabling tenants to start operations in
the fourth quarter of 2017. Zoning and permitting for the Promenada Mall extension continue to experience delays.
Shopping City Galati extension (Romania)
The Group commenced construction of the 21,000m(2) Gross Leasable Area (GLA) extension to Shopping City
Galati, currently a 27,200m(2) GLA regional mall. The extension includes an eight-screen Cinema City, food court and
international fashion brands, such as Hervis, Jysk, Levi's, LC Waikiki, Orsay and Pepco. The extension is targeted to
be completed during the fourth quarter of 2017.
Promenada Novi Sad (Serbia)
The building permit for the first phase of a 56,000m(2) GLA mall, of approximately 47,000m(2) GLA, in Novi Sad,
Serbia's second largest city, has been obtained and construction is set to start in May 2017. NEPI targets completing
the development by the end of 2018. Tenant demand is strong and various international brands are considering
entering the scheme.
Ramnicu Valcea Mall (Romania)
Zoning was obtained, while permitting is underway, and construction on the 27,900m(2) GLA regional mall will begin
during the second quarter of 2017. Site preparation works have already commenced. The centre will include a Carrefour
hypermarket, Cinema City and numerous national and international brands, such as Hervis, Jysk, NewYorker, Orsay
and Textil Market. The centre is scheduled to open during the fourth quarter of 2017.
OTHER HIGHLIGHTS
Peek&Cloppenburg opened in NEPI's Shopping City Timisoara their first store in the city. Inditex opened their first
Bershka, Pull&Bear and Stradivarius stores outside Slovakia's capital city, in Aupark Kosice.
CASH MANAGEMENT AND DEBT
NEPI contracted a EUR100 million unsecured revolving facility from ING Bank. The Group also raised EUR72 million through
the issue of new ordinary shares in March 2017 and EUR56 million through the election to receive the dividend for the
second half of 2016 by way of a return of capital in April 2017.
As of 31 March 2017, the Group had EUR54 million in cash and undrawn facilities of EUR240 million. NEPI's gearing
ratio (interest bearing debt less cash divided by investment property and listed property shares) reached 23.2%,
compared to 26.8% at the end of 2016.
The average interest rate for the first quarter, including hedging costs, was 3.4%, down from 3.7% at 31 December
2016. As of 31 March 2017, fixed-coupon bonds represented 72.2% of outstanding debt, and out of the remaining
debt exposed to Euribor, 89% was hedged with interest rate caps and 11% with interest rate swaps.
PROSPECTS
The Group continues to be well positioned to operate and grow in its target markets, and the Board considers
that the pending merger with Rockcastle will further improve the Group's ability to perform in accordance with its
strategy.
By order of the Board of Directors,
Alexandru Morar Mirela Covasa
Chief Executive Officer Chief Financial Officer
12 May 2017
All amounts in EURO'000 unless otherwise stated
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
ASSETS
Non-current assets 2 690 172 2 674 176 1 866 744
Investment property 2 560 936 2 546 772 1 774 558
Investment property in use 2 377 159 2 370 760 1 635 486
Investment property under development 183 777 176 012 139 072
Goodwill 58 390 58 390 23 986
Investments in joint ventures 25 943 22 023 14 802
Long-term loans granted to joint ventures 28 734 31 015 35 038
Other long-term assets 15 406 15 299 17 212
Financial assets at fair value through profit or loss 763 677 1 148
Current assets 115 144 107 538 380 794
Trade and other receivables 42 642 40 539 49 763
Financial investments at fair value through profit or loss 18 339 18 979 22 015
Cash and cash equivalents 54 163 48 020 309 016
Investment property held for sale 13 339 15 525 23 605
Total assets 2 818 655 2 797 239 2 271 143
EQUITY AND LIABILITIES
Total equity attributable to equity holders 1 917 450 1 814 552 1 503 330
Share capital 3 283 3 215 3 027
Share premium 1 440 147 1 368 171 1 213 265
Share-based payment reserve 4 797 4 797 4 797
Currency translation reserve (1 229) (1 229) (1 229)
Accumulated profit 470 452 439 598 284 517
Non-controlling interest – – (1 047)
Total liabilities 901 205 982 687 767 813
Non-current liabilities 742 764 831 995 687 594
Bank loans 163 647 260 593 183 737
Bonds 395 216 394 819 393 048
Deferred tax liabilities 165 955 158 864 94 000
Other long-term liabilities 17 946 17 403 15 054
Financial liabilities at fair value through profit or loss – 316 1 755
Current liabilities 158 441 150 692 80 219
Trade and other payables 65 362 71 536 66 978
Bank loans 18 306 17 999 11 833
Bonds 74 773 61 157 1 408
Total equity and liabilities 2 818 655 2 797 239 2 271 143
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Net rental and related income 45 059 145 532 29 773
Revenues from rent and expense recoveries 64 439 209 890 43 206
Property operating expenses (19 380) (64 358) (13 433)
Administrative expenses (1 964) (8 186) (1 825)
EBITDA 43 095 137 346 27 948
Acquisition fees (1 133) (4 339) (721)
Fair value adjustments of investment property – 143 163 –
Fair value (loss)/gain on financial investments
at fair value through profit or loss (640) (369) 995
Dividends received from financial investments – 738 292
Net result on sale of financial investments – (355)
Foreign exchange gain/(loss) 5 (127) 111
Loss on disposal of investment property held for sale (16) (485) (235)
Profit before net finance expense 41 311 275 572 28 390
Net finance expense (4 188) (13 059) (3 003)
Finance income 681 4 784 1 613
Finance expense (4 869) (17 843) (4 616)
Changes in fair value of financial instruments 403 228 (740)
Share of profit of joint ventures 1 154 6 383 (838)
Profit before tax 38 680 269 124 23 809
Income tax (7 826) (36 472) (4 427)
Current tax expense (735) (1 664) (79)
Deferred tax expense (7 091) (34 808) (4 348)
Profit after tax 30 854 232 652 19 382
Total comprehensive income for the year 30 854 232 652 19 382
Non-controlling interest – 2 316 2 676
Profit for the period attributable to equity holders 30 854 234 968 22 058
Weighted average number of shares in issue 323 095 335 309 760 628 298 977 923
Diluted weighted average number of shares in issue 323 102 335 309 778 913 299 002 923
Basic earnings per share (euro cents) 9.55 75.85 7.38
Diluted earnings per share (euro cents) 9.55 75.85 7.38
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based Currency Non-
Share Share payment translation Accumulated controlling Total
capital premium reserve reserve profit interest
Balance at
1 January 2016 2 986 1 213 325 4 797 (1 229) 275 042 1 629 1 496 550
Transactions with owners 229 154 846 – – (70 412) 687 85 350
– Issue of shares 229 154 800 – – – – 155 029
– Sale of shares issued under – 46 – – – – 46
the Initial Share Scheme
– Earnings distribution – – – – (48 288) – (48 288)
- Acquisition of non- – – – – (22 124) 687 (21 437)
controlling interest
Total comprehensive income – – – – 234 968 (2 316) 232 652
– Profit for the period – – – – 234 968 (2 316) 232 652
Balance at
31 December 2016 3 215 1 368 171 4 797 (1 229) 439 598 – 1 814 552
Balance at
1 January 2017 3 215 1 368 171 4 797 (1 229) 439 598 – 1 814 552
Transactions with owners 68 71 976 – – – – 72 044
– Issue of shares 68 71 976 – – – – 72 044
Total comprehensive income – – – – 30 854 – 30 854
– Profit for the period – – – – 30 854 – 30 854
Balance at
31 March 2017 3 283 1 440 147 4 797 (1 229) 470 452 – 1 917 450
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Profit after tax 30 854 232 652 19 382
Adjustments 12 261 (93 262) 7 007
Interest and coupon paid (16 116) (10 164) (2 961)
Changes in working capital (4 188) 15 230 7 992
Cash flows from operating activities 22 811 144 456 31 420
Proceeds from issue of shares 72 044 155 075 (19)
Earnings distribution – (48 288) (12 583)
Net movements in bank loans and bonds (71 967) 134 890 20 558
Other payments – (24 500) –
Cash flows from financing activities 77 217 177 7 956
Investments in acquisitions and developments (16 745) (621 262) (36 242)
Net cash flow used in investments in financial assets – (18 961) (20 728)
Cash flows used in investing activities (16 745) (640 223) (56 970)
Net increase/(decrease) in cash and cash equivalents 6 143 (278 590) (17 594)
Cash and cash equivalents brought forward 48 020 326 610 326 610
Cash and cash equivalents carried forward 54 163 48 020 309 016
RECONCILIATION OF NET ASSET VALUE TO ADJUSTED NET ASSET VALUE
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Net Asset Value per the Statement of financial position 1 917 450 1 814 552 1 503 330
Loans in respect of the Initial Share Scheme 18 18 64
Deferred tax liabilities for controlled subsidiaries 165 955 158 864 94 000
Goodwill (58 390) (58 390) (23 986)
Deferred tax liabilities for joint ventures 5 963 5 952 4 154
Adjusted Net Asset Value 2 030 996 1 920 996 1 577 562
Net Asset Value per share (euro) 5.96 5.64 4.97
Adjusted Net Asset Value per share (euro) 6.32 5.98 5.21
Number of shares for Net Asset Value per share 321 479 204 321 479 204 302 689 153
Number of shares for adjusted Net Asset Value per share 321 486 204 321 486 204 302 714 153
LEASE EXPIRY PROFILE 2017 2018 2019 2020 2021 2022 2023 2024 2025 =2026 Total
Total based on rental income 2.9% 10.4% 14.1% 17.0% 18.3% 12.2% 4.2% 3.9% 2.8% 14.2% 100%
Total based on rented area 1.4% 8.0% 14.1% 14.5% 16.3% 11.7% 6.0% 4.9% 4.8% 18.3% 100%
KEY PERFORMANCE INDICATORS
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Current liquidity ratio* 2.18 1.01 5.74
Gearing ratio** 23.2% 26.8% 15.6%
Tenant receivable turnover (days) 29 30 30
Return on investment property*** 7.58% 6.14% 7.28%
* Current liquidity ratio=(Current assets+Unused Revolving Facilities)/ Current liabilities
** Gearing ratio=(Loans and borrowings-Cash and cash equivalents)/(Investment property+Financial investments at fair value
through profit or loss)
***Includes actual (not annualised) result for acquisitions and developments completed during the respective period
RECONCILIATION OF PROFIT FOR THE PERIOD TO DISTRIBUTABLE EARNINGS
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Profit for the period attributable to equity holders 30 854 234 968 22 058
Reverse indirect result 8 369 (108 683) 5 327
Foreign exchange (gain)/loss (5) 127 (111)
Acquisition fees 1 133 4 339 721
Fair value adjustments of investment property
for controlled subsidiaries – (143 163) –
Loss on disposal of investment property held for sale 16 485 235
Fair value loss of financial investments 640 369 –
Net result on sale of financial investments – 355 (995)
Dividends received from financial investments – (738) (292)
Fair value adjustment of financial assets and
liabilities for controlled subsidiaries (403) (228) 740
Deferred tax expense for controlled subsidiaries 7 091 34 808 4 348
Adjustments related to joint ventures
Fair value adjustments of investment property for joint ventures – (7 252) –
Fair value adjustment of financial assets
and liabilities for joint ventures (178) 227 457
Deferred tax expense for joint ventures 11 2 034 235
Foreign exchange loss/(gain) for joint ventures 64 (46) (11)
Company specific adjustments (325) (558) (1 239)
Amortisation of financial assets (422) (3 730) (1 670)
Realised foreign exchange loss for controlled subsidiaries (146) (101) (26)
Realised foreign exchange (loss)/gain for joint ventures (3) 7 3
Accrued dividend for financial investments 246 1 202 394
Accrued interest on share-based payments – 2 1
Fair value adjustment of Investment property for
non-controlling interest – 2 514 –
Deferred tax expense for non-controlling interest – (452) 59
Antecedent dividend 556 5 469 341
Distributable earnings for the period 39 454 131 196 26 487
Less: Distribution declared – (126 688) –
Antecedent dividend for equity issues prior to ex div date – (4 508) –
Interim distribution – (59 566) –
Final distribution – (71 630) –
Earnings not distributed 39 454 – 26 487
Number of shares entitled to distribution 328 335 519 321 486 204 302 714 153
Distributable earnings per share for the period (euro cents) 12.02 40.50 8.75
Less: Distribution declared per share (euro cents) – (40.50) –
Interim distribution per share (euro cents) – (18.68) –
Final distribution per share (euro cents) – (21.82) –
Earnings not distributed (euro cents) 12.02 – 8.75
SEGMENTAL ANALYSIS
Retail Office Industrial Corporate Total
31 March 2017 (unaudited)
Revenues from rent and expense recoveries 55 642 8 263 534 – 64 439
Profit before net finance expense 37 269 5 637 472 (2 067) 41 311
Total Assets 2 367 195 388 298 16 411 46 751 2 818 655
Total Liabilities 364 968 52 335 2 349 481 553 901 205
31 December 2016 (audited)
Revenues from rent and expense recoveries 177 614 30 263 2 013 – 209 890
Profit before Net finance expense 249 753 27 167 1 023 (2 371) 275 572
Total Assets 2 338 444 388 883 16 243 53 669 2 797 239
Total Liabilities 369 027 49 105 2 519 562 036 982 687
31 March 2016 (unaudited)
Revenues from rent and expense recoveries 35 475 7 226 505 – 43 206
Profit before Net finance expense 22 838 4 579 443 530 28 390
Total Assets 1 570 301 379 650 17 407 303 785 2 271 143
Total Liabilities 262 240 108 558 2 403 394 612 767 813
RECONCILIATION OF PROFIT FOR THE PERIOD TO HEADLINE EARNINGS
Unaudited Audited Unaudited
31 Mar 2017 31 Dec 2016 31 Mar 2016
Profit for the period attributable to equity holders 30 854 234 968 22 058
Fair value adjustments of investment property – (143 163) –
Loss on disposal of investment property held for sale 16 485 235
Tax effects of adjustments for controlled subsidiaries – 24 446 –
Fair value adjustments of investment property for joint ventures – (7 252) –
Tax effects of adjustments for joint ventures – 1 160 –
Headline earnings 30 870 110 644 22 293
Weighted average number of shares in issue 323 095 335 309 760 628 298 977 923
Diluted weighted average number of shares in issue 323 102 335 309 778 913 299 002 923
Headline earnings per share (euro cents) 9.55 35.72 7.46
Diluted headline earnings per share (euro cents) 9.55 35.72 7.46
DEBT REPAYMENT PROFILE
Type Secured/Unsecured Ownership Outstanding Available for
amount drawdown
Aupark Kosice Mall & Tower Term loan Secured 100% 98 092 –
Aupark Zilina Term loan Secured 100% 54 514 10 000
Aupark Piestany Term loan Secured 100% 19 404 –
Ploiesti Shopping City (joint venture) Term loan Secured 50% 14 965 –
The Office, Cluj-Napoca (joint venture) Term loan Secured 50% 20 506 –
NE Property Cooperatief Fixed coupon bonds Unsecured 100% 400 000 –
NE Property Cooperatief Fixed coupon bonds Unsecured 100% 75 000 –
NE Property Cooperatief Revolving facility Unsecured 100% – 130 000
NE Property Cooperatief Revolving facility Unsecured 100% – 100 000
New Europe Property Investments plc Revolving facility Unsecured 100% 10 942 –
Total 693 423 240 000
2017 2018 2019 2020 2021 2022
and beyond
Aupark Kosice Mall & Tower 4 145 5 526 5 526 82 895 – –
Aupark Zilina 1 459 2 013 2 083 2 156 2 231 44 572
Aupark Piestany 297 396 396 396 17 919 –
Ploiesti Shopping City (joint venture) 821 1 095 1 095 1 095 1 095 9 764
The Office, Cluj-Napoca (joint venture) 950 1 320 1 320 1 320 15 596 –
NE Property Cooperatief – – – – 400 000 –
NE Property Cooperatief 75 000 – – – – –
NE Property Cooperatief – – – – – –
NE Property Cooperatief – – – – – –
New Europe Property Investments plc 10 942 – – – – –
Total 93 614 10 350 10 420 87 862 436 841 54 336
BASIS OF PREPARATION
These unaudited condensed consolidated financial results for the three months ended 31 March 2017 have been prepared in
accordance with IAS 34 Interim Financial Reporting and the JSE Listings Requirements. The accounting policies which have
been applied are consistent with those used in the preparation of the financial statements for the year ended 31 December 2016.
These unaudited condensed consolidated financial results have not been reviewed or reported on by the Group's external auditors.
For further information please contact: New Europe Property Investments Plc, Mirela Covasa: +40 21 232 1398
JSE sponsor: Java Capital: +27 11 722 3050 BVB advisor: SSIF Intercapital Invest SA, Razvan Pasol: +40 21 222 8731
www.nepinvest.com
Date: 12/05/2017 07:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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