Wrap Text
Unaudited condensed consolidated financial results for the six months ended 30 June 2018
NEPI Rockcastle plc is incorporated and registered in the Isle of Man with registered number 014178V
Registered office: 2(nd) Floor, 30 Athol Street Douglas, Isle of Man, IM1 1JB
JSE share code: NRP Euronext share code: NRP ISIN: IM00BDD7WV31
('NEPI Rockcastle', 'the Group' or 'the Company')
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
All financial information below is based on IFRS (and excludes joint ventures).
DIRECTORS' COMMENTARY
In the first half of 2018, NEPI Rockcastle continued to focus on consolidating the Group's
operations across nine Central and Eastern European (CEE) countries, through pro-active management,
refurbishment and extension of owned properties, as well as greenfield development and selective
acquisition of high quality assets.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Portfolio valued at EUR5.3 billion, compared to EUR4.9 billion at the end of 2017, with retail
properties delivering like-for-like growth in net rental income of 4.1% compared to the six
months ended 30 June 2017.
- Three dominant centres were acquired, one of which provided entry into the attractive
Lithuanian market.
- Major new centres in Serbia and Romania on track to open in the second half of 2018.
- Direct property portfolio delivered like-for-like tenants' turnover increase of 7.7%, with
EPRA vacancy rate of 3.8% and a collection rate of 99.9%.
- Net listed securities portfolio represents 6.3% of total assets, down from 10% as at
31 December 2017, in line with previously announced strategy.
- Strong balance sheet: loan-to-value ratio of 28% below the Group's target of 35% and
conservative in comparison to real-estate peers in Europe.
- Investment grade credit ratings from all three major credit rating agencies (Moody's,
Standard & Poor's and Fitch).
- Distributable earnings per share for the first half of 2018 of 26.49 euro cents, 12.9% higher
than the combined distribution of New Europe Property Investments plc (NEPI) and
Rockcastle Global Real Estate Company Limited (Rockcastle) for the six-month period
ended 30 June 2017. This increase is due to the effect of acquisitions and developments
finalised in 2017 being concentrated in the second half of the year.
- EPRA NAV per share reached EUR7.14,6% higher than the combined NEPI and Rockcastle
EPRA NAV per share of EUR6.74 as at 30 June 2017.
NEPI Rockcastle delivered strong operational performance in H1 and we continue to implement our
strategy as CEE's premier owner and operator of shopping centres", said Alex Morar, CEO.
"During the first half of the year we have consolidated our portfolio in existing markets through
further acquisitions of high-quality retail properties and asset management initiatives, while
expanding into the affluent Baltic states with our first deal in Lithuania. With our focus on
dominant retail assets in the high-growth markets of the CEE region, we continue to reinforce our
standing as a partner of choice for both international and regional retailers. We are confident
that NEPI Rockcastle is well placed to maintain its leading position in our markets, and to
continue to create value for its shareholders."
Net rental income H1 2017 Like-for-like
(EUR thousand) H1 2018 (combined) Growth(%) growth (%)
Retail 151,925 115,253 31.8% 4.1%
Office 11,713 10,204 14.8% 1.6%
Industrial 997 925 7.8% 7.8%
TOTAL 164,635 126,382 30.3% 4.0%
NEPI Rockcastle has joined the European Public Real Estate Association (EPRA) and
started reporting EPRA indicators, with the aim of enhancing its disclosure and aligning to
industry standards.
30 June 2018
Total portfolio valuation (EUR thousand) 5,324,194
EPRA Earnings (EUR thousand) 164,104
EPRA Earnings per Share (EUR cents per share) 28.40
EPRA Net Asset Value (EUR per share) 7.14
EPRA Net Initial Yield (NIY)(%) 6.70%
EPRA 'topped-up' NIY (%) 6.77%
EPRA Vacancy rate (%) 3.8%
Leasing activity was strong in the first half of 2018, with retailers seeking to expand into
CEE due to increased consumption across the region. The Group consolidated its position as
strategic partner for major retailers targeting the CEE countries, and tenant relationships are
managed at Group level with a focus on cross-country collaboration. The Group benefits from
exposure to a large number of tenants and retail concepts and offers a wide regional platform
for their expansion.
During H1 2018 the Group signed 360 new lease agreements covering over 107,000m2 of GLA,
of which 242 leases (54,000m2) for units located in existing shopping centres
(excluding extensions of lease agreements) and 118 leases (53,000m2 GLA) in relation to projects
under development.
GEOGRAPHIC DIVERSIFICATION AND ACQUISITIONS OF INVESTMENT PROPERTY
The geographic diversification by market value as at 30 June 2018 is presented below:
Romania 39%
Poland 26%
Bulgaria 10%
Slovakia 8%
Hungary 5%
Croatia 5%
Czech Republic 3%
Lithuania 3%
Serbia 1%
NEPI Rockcastle has made three acquisitions since December 2017 for a total consideration
of EUR311 million, at a weighted average yield of 7.2%. The acquisitions fit the Group's strategy
of investing in dominant, centrally located assets with significant growth potential. These
acquisitions include Ozas Shopping and Entertainment Centre in Vilnius, the Company's first
mall in Lithuania, a high-growth investment-grade country. The other two acquisitions
consolidated the Group's leading positions in Slovakia (Galeria Mlyny) and Poland (Aura
Centrum). Details of the property acquisitions completed during the period are provided below.
The location and effective date are included in brackets. Population figures are estimates.
Ozas Shopping and Entertainment Centre (Vilnius, Lithuania - 31 May 2018)
Ozas is a 62,300m2 GLA modern shopping centre with a strong fashion and entertainment-
oriented tenant mix, benefitting from an excellent location in Vilnius. The top five tenants by
rented area are Maxima, H&M, Zara, Multikino and Peek&Cloppenburg.
Vilnius, the capital city of Lithuania, has a population of 574,000 residents, with 432,000
inhabitants within a 15-minute drive from Ozas. The acquisition of Ozas marked the Group's entry
point into the Baltic region, one of the most developed areas in CEE with an affluent and highly
educated population.
The expansion into the Baltics further enhances the geographic diversification of the Group,
consolidating NEPI Rockcastle's market position in CEE and its ability to leverage its
best-in-class operating platform.
Galeria Mlyny Shopping Centre (Nitra, Slovakia - 31 May 2018)
With a GLA of over 33,200m2, Galeria Mlyny is the largest and most central shopping and
entertainment destination in Nitra, Slovakia. Footfall exceeded 9 million in the last year. The top
five tenants by rented area are H&M, Billa, Mlyny Cinemas, C&A and New Yorker.
The city is inhabited by approximately 79,000 people and is the capital of the Nitra region,
populated by over 689,000 people. It is an important university and industrial centre.
Approximately 356,000 inhabitants are within a 30-minute drive from the shopping centre.
The acquisition of Galeria Mlyny strengthens the Company's competitive position in Slovakia,
NEPI Rockcastle becoming the largest retail landlord in the country. The Group envisages several
asset management initiatives, including enhancements to the tenant mix and improvements
to common areas. Although the transaction was completed in July 2018, and thus it is not
reflected in the results for the six months ended 30 June 2018, the economic effective date of
the acquisition was 31 May 2018.
Aura Centrum (Olsztyn, Poland - 30 May 2018)
Aura Centrum is a prominent shopping and entertainment destination in the heart of Olsztyn city
centre, with 25,400m2 GLA. The shopping centre attracts 5.5 million people on an annual
basis. The top five tenants by rented area are Kino Helios, H&M, Carrefour, Reserved and
New Yorker.
Olsztyn is located in north-eastern Poland and is the capital of the Warmian-Masurian province.
The city has 173,000 inhabitants, whilst the province's population is over 1.4 million people. It
is a popular tourist destination due to its rich history and picturesque medieval old town and is
considered one of the best places in Poland to live and work. The shopping centre is within a
15-minute drive for over 180,000 inhabitants.
The acquisition of Aura Centrum creates regional synergies for NEPI Rockcastle, which also owns
Galeria Warminska, the dominant shopping centre in Olsztyn. Consolidation of these properties
allows for a more bespoke positioning of the two centres and a tailoring of the offering to their
respective customers in the regional catchment area.
Serenada and Krokus Shopping Centres (Krakow, Poland)
NEPI Rockcastle entered into an agreement in October 2017 to acquire Serenada and Krokus
Shopping Centres, which will be effective subject to satisfaction or waiver of a number of
conditions precedent, which were expected to occur in Q3 2018. The timelines relating to the
zoning condition precedent have shifted and the transaction is now expected to conclude
in Q4 2018.
The shopping centres have a current GLA of 68,900m2 and the envisaged extension will result
in a single integrated shopping centre with a GLA of over 100,000m2 with a planned completion
date in 2021.
The acquisition consolidates the Group's position as one of the largest retail landlords in Poland.
Krakow, Poland's second largest city, has a population of 767,000 residents, with 336,000
inhabitants within a 15-minute drive of the two shopping centres.
DEVELOPMENTS AND EXTENSIONS
The Group is one of the most active developers in CEE, specializing in developments of large
dominant shopping malls. The development pipeline includes the largest retail schemes to be
opened this year in Serbia (Novi Sad) and Romania (Satu Mare) and several other greenfield and
brownfield projects.
The Group invests strategically in developments that strengthen the property portfolio and
contribute to growth in distributable earnings per share. NEPI Rockcastle has a development
pipeline of over EUR1.3 billion (including redevelopments and extensions, estimated at cost), of
which EUR259 million were spent by 30 June 2018.
A key focus of the Group is to redevelop and extend existing cash generative assets, for which
there is retailer and consumer demand and which therefore carry a lower development risk.
Size and opening dates below are estimates dependent on various external factors.
Promenada Novi Sad (Serbia)
The project is the largest retail development in Serbia outside of Belgrade and will become one
of the landmark shopping centres in the country. It is located in the inner city centre of Novi
Sad, the second largest city in Serbia, with 319,000 inhabitants. The shopping mall's first phase
of 48,900m2 GLA is scheduled to open for trading in November 2018, a record time given the
project's size and complexity.
Tenant demand is very strong with various international brands joining the scheme, such as
Armani Exchange, Calvin Klein, Cineplexx, LC Waikiki, LPP (Cropp, House, Mohito, Reserved,
Sinsay), New Yorker and Inditex (Zara, Massimo Dutti, Bershka, Oysho, Pull&Bear, Stradivarius,
Zara Home).
Satu Mare Shopping City (Romania)
The Group is working towards opening the only modern shopping and entertainment destination
in Satu Mare in December 2018. Satu Mare has a population of 123,000 inhabitants, with 182,000
people living within 30-minute drive of Satu Mare Shopping City. It is located in the north-west of
Romania near the border with Hungary. The centre will have 29,100m2 GLA (as a first phase) and
will include tenants such as Carrefour, CCC, Cineplexx, Deichmann, Douglas, Hervis, Intersport,
KFC, LC Waikiki, New Yorker, Orsay, Reserved and Smyk.
Platan Shopping Centre extension (Poland)
Extension and refurbishment works will increase the shopping centre's GLA to 36,700m2 and
include the construction of a multi-level car park. The extension of 14,000m2 GLA is scheduled to
open in October 2018. The centre is located in the city of Zabrze which has 175,000 inhabitants.
Several international brands have been signed, including Cropp, House, KIK, Pepco,
Planet Cinema, Reserved and Smyk.
Solaris Shopping Centre extension (Poland)
Works for the 9,000m2 GLA extension, including the development of a 300 bay multi-level
basement car park and a new town square in front of the centre's main entrance, are progressing.
The extension is scheduled to be completed in Q1 2019. The centre, located in the city of Opole,
which has 128,000 inhabitants, will have a total GLA of over 26,000m2 after the extension.
Festival Sibiu (Romania)
Works have started on a 42,200m2 GLA development of Festival mall, the second NEPI
Rockcastle asset in Sibiu which will complement the Group's other retail property in the city
(Shopping City Sibiu). Festival has an excellent location within walking distance from both Sibiu's
historical city centre and the main train station.
Sibiu has a population of 170,000 residents and is one of the most vibrant economic centres in
Romania. The city has a high rate of foreign investments, is an important university centre and is
visited by a large number of tourists (400,000 in 2017).
Several tenants have been signed, including: CineGold, Inditex (Zara, Bershka, Massimo Dutti,
Oysho, Pull & Bear, Stradivarius), Kaufland (their first unit in a shopping mall in Romania) and
New Yorker. Opening is planned for the end of 2019. Together with Shopping City Sibiu, Festival
will give the Group a unique position in one of Romania's most dynamic cities.
Aurora Mall Buzau extension and refurbishment (Romania)
The necessary permits and approvals for the development of an extension of Aurora Mall in
Buzau, Romania, were obtained in August 2018. Following the extension and refurbishment,
the centre will have a GLA of 23,400m2 and will serve a catchment area of 250,000 inhabitants
within a 30-minute drive. The extension will include a new Cinema City multiplex with 6 screens
and a new food-court area with an exterior terrace. The development is expected to be finalised
in the first half of 2019.
Aurora Mall is the only modern shopping mall within a 70km radius and perfectly complements
the Group's presence in this region of Romania. The Group also has dominant properties in the
nearby cities of Ploiesti, Braila and Galati.
Shopping City Targu Mures (Romania)
Zoning has been obtained and permitting is underway for the construction of a 33,600m2
(phase I) GLA regional, new generation shopping centre in Targu Mures (140,000 inhabitants).
Targu Mures is a historical town in the heart of Transylvania, with a strong industrial base and an
important university centre. The Group's shopping centre will be the second to open in the city,
although its superior location and design is expected to make it dominant in the city
and its surroundings. Site preparation has started and construction is envisaged to commence
by the end of 2018. Tenant demand is strong and Carrefour has already signed a lease agreement
for 10,000m(2) GLA.
Plovdiv (Bulgaria)
During the first half of 2018, the Group completed the acquisition of a land plot of over 2.9 ha
in Plovdiv (the 2nd largest city in Bulgaria), adjacent to another recently acquired plot. NEPI
Rockcastle currently owns over 6.5 ha in the city and is planning a 59,500m2 GLA shopping mall.
Tenant interest is high and permitting efforts are ongoing with works targeted to commence in
the second quarter of 2019. The mall is estimated to become the dominant shopping centre in Plovdiv,
which is currently underserved by modern retail.
Arena Zagreb - retail park development (Croatia)
The Group will start developing a 8,000m2 GLA retail park adjacent to its shopping mall in
Zagreb, Croatia. Permitting for the development is ongoing. The retail park will bring additional
large-format tenants to the mall, creating a complete offering that will contribute to making
Arena the premier retail destination in Zagreb. Several tenants have already shown interest in the
project. It is expected that the works will be finalised by the end of Q1 2019.
Focus Mall Zielona Gora (Poland)
The Group has commenced construction of multilevel parking, which is the first phase of the
redevelopment and extension of Focus Mall Zielona Gora. Once completed, construction of the
second phase, a 15,000m2 GLA extension of the mall will commence. The extension is scheduled
to open in Q1 2020.
Other extensions
The Group is undertaking other extensions of existing properties in Poland (e.g. Pogoria Dabrowa
Gornicza) and Romania (e.g. Sighisoara) that will generate additional areas of up to 1,000m2 GLA
at each project.
VALUATION
NEPI Rockcastle updates the valuation of its property portfolio twice a year. Fair value is
determined by external, independent professional valuers with appropriate and recognised
qualifications, and recent experience in the locations and category of properties being
valued. Valuations for each property in all categories (Investment property in use, Investment
property held for sale and Land held for developments), as at 30 June 2018 were performed by
Cushman&Wakefield and Jones Lang LaSalle.
CHANGES TO THE BOARD OF DIRECTORS
Following the merger of NEPI and Rockcastle in July 2017, Mr. Alex Morar and Mr. Spiro Noussis
were appointed as joint Chief Executive Officers of NEPI Rockcastle. The joint CEOs have since worked
together to implement the Company's strategy. As announced on 12 June 2018, Mr. Morar has been appointed
as the sole Chief Executive Officer of NEPI Rockcastle, and will, in this capacity, further integrate the
business of the Group. To facilitate the Group's transition to a sole-CEO structure, Mr. Noussis will remain
as an executive director of the Group until December 2018, after which he will pursue other opportunities.
As announced on 12 July 2018, Mr. Dan Pascariu retired from his position as non-executive
director and Chairman with effect from 28 August 2018. The Board has appointed Mr. Robert
Reinhardt Emslie as the new independent non-executive Chairman of the Company.
Mr. Michael Mills will also be retiring from his professional activity. The Group warmly thanks Mr.
Pascariu and Mr. Mills for their substantial contribution to the Company since the inception of
NEPI in 2007.
Mr. Nick Matulovich did not offer himself for re-election at the Company's annual general meeting
held on 28 August 2018 (AGM). Mr. Matulovich will work with the Group until February 2019 to
ensure a smooth transition in his areas of responsibility. The Company thanks Mr. Matulovich for
his contribution as Executive Director.
All other existing Board members were re-elected at the AGM, including Mr. Sipho Vuso Majija,
who was appointed by the Board as a non-independent non-executive director of the Group with
effect from 6 June 2018. Mr. Majija has 13 years' experience in property and asset management,
and is an executive director of Fortress, NEPI Rockcastle's largest shareholder.
Mr. George Aase, who was recommended for appointment by the Board, was also appointed as
a director at the AGM. Mr. Aase has extensive experience in leadership roles, with core specialties
including corporate finance, capital markets, international finance and controlling and more than
12 years of experience in the real estate sector.
HALF-YEAR DISTRIBUTION
The Board of Directors declares a distribution of 26.49 euro cents per share for the first half of
2018, which will be paid in cash in September 2018. An announcement in this respect will be
issued on the Stock Exchange News Service (SENS) of the JSE and Euronext Amsterdam
in due course.
CASH MANAGEMENT AND DEBT
During the year, the Group extended its EUR250 million unsecured revolving facilities from ING,
Societe Generale and Garanti Bank for a period of three years.
NEPI Rockcastle benefits from a diversified funding base. The Company's loan-to-value (interest
bearing debt less cash divided by investment property and net listed securities) was 28%, below
the gearing ratio target of 35%.
The weighted average interest rate, including hedging costs, was 2.3% during the six month
period ended 30 June 2018. 45% of the Euribor-linked debt was hedged with interest rate caps
and 55% with interest rate swaps.
The Group had a strong liquidity profile at 30 June 2018, with over EUR120 million in cash, EUR300
million in available unsecured revolving facilities and EUR382 million net available in the listed
security portfolio.
Depending on market conditions, the Group may initiate a repurchase of issued bonds or shares
during the following reporting periods.
PROSPECTS AND EARNINGS GUIDANCE
The Group pursues a sizeable development and acquisition pipeline, while maintaining a key
focus on a strong liquidity profile and balance sheet. With a quality asset base and operating
platform, the Group is best positioned to remain the leading CEE real estate investor.
Distributable earnings per share for the year ended 31 December 2018 are expected to be
approximately 10% higher than the 2017 distribution of 48.26 euro cents per share.
This guidance remains based on the assumptionsthat a stable macroeconomic environment prevails,
no major corporate failures occur and that planned developments and acquisitions remain on schedule.
This forecast has not been audited or reviewed by NEPI Rockcastle's auditors and is the
responsibility of the Board.
By order of the Board of Directors
Alex Morar Mirela Covasa
Chief Executive Officer Chief Financial Officer
29 August 2018
EPRA DEFINITIONS
EPRA Earnings: Profit after tax attributable to the equity holders of the Company, excluding
non-controlling interest, fair value adjustments of investment property, profits or losses on
investment property disposals and related tax adjustment for losses on disposals, gains on
acquisition of subsidiaries, acquisition costs, fair value and net result on sale of financial
investments at fair value through profit or loss and deferred tax expense.
EPRA Earnings Per Share: EPRA Earnings divided by the number of shares outstanding at the
period or year-end.
EPRA Net Assets (EPRA NAV): Net assets per the statement of financial position, excluding the
goodwill, deferred taxation net balance and mark-to-market of interest rate derivatives.
EPRA NAV Per Share: EPRA NAV divided by the number of shares outstanding at the period or year-end.
EPRA Vacancy Ratio: vacancy ratio computed based on estimated rental value of vacant space
compared to the estimated rental value of the entire property.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 Jun 2018 31 Dec 2017 30 Jun 2017
ASSETS
Non-current assets 5 527 537 5 127 197 2 847 257
Investment property 5 324 194 4 927 509 2 708 396
Investment property in use 5 022 792 4 725 093 2 501 001
Investment property under development 301 402 202 416 181 395
Advances for investment property - - 26 000
Goodwill 82 582 82 582 58 390
Deferred tax assets 14 148 12 490 -
Investments in joint ventures 45 827 40 856 38 475
Long-term loans granted to joint ventures 20 546 25 792 30 556
Other long-term assets 26 516 36 175 10 844
Interest rate derivatives financial assets at fair value through profit or loss 13 724 1 793 596
Current assets 573 436 860 366 81 814
Trade and other receivables 69 780 60 793 34 871
Financial investments at fair value through profit or loss 300 115 326 565 6 721
Equity derivative collateral 76 811 265 541 -
Financial assets at fair value through profit or loss 6 161 11 923 -
Cash and cash equivalents 120 569 195 544 40 222
Investment property held for sale 10 270 10 238 11 780
Total assets 6 111 243 5 997 801 2 940 851
EQUITY AND LIABILITIES
Total equity attributable to equity holders 3 920 458 3 914 719 2 025 675
Share capital 5 778 5 778 3 340
Share premium 3 625 568 3 625 568 1 439 703
Share-based payment reserve - - 4 797
Currency translation reserve - - (1 229)
Accumulated profit 288 633 282 897 579 064
Non-controlling interest 479 476 -
Total liabilities 2 190 785 2 083 082 915 176
Non-current liabilities 1 966 739 1 937 282 768 773
Bank loans 728 788 734 493 171 165
Bonds 890 912 889 917 395 628
Deferred tax liabilities 302 571 271 105 184 072
Other long-term liabilities 40 869 37 089 17 908
Interest rate derivatives financial liabilities at fair value through profit or loss 3 599 4 678 -
Current liabilities 224 046 145 800 146 403
Trade and other payables 123 595 113 553 60 272
Financial liabilities at fair value through profit or loss 1 239 10 934 -
Bank loans 91 678 10 568 82 738
Bonds 7 534 10 745 3 393
Total equity and liabilities 6 111 243 5 997 801 2 940 851
Currency
CONSOLIDATED STATEMENT Share Share Share-based translation Accumulated Non-controlling
OF CHANGES IN EQUITY capital premium payment reserve reserve profit interest Total
Balance at 1 January 2017 3 215 1 368 171 4 797 (1 229) 439 598 - 1 814 552
Transactions with owners 125 71 532 - - (15 425) - 56 232
- Issue of shares 125 71 514 - - - - 71 639
- Sale of shares issued under the
Initial Share Scheme - 18 - - - - 18
- Earnings distribution - - - - (15 425) - (15 425)
- Profit for the period - - - - 154 891 - 154 891
Total comprehensive income - - - - 154 891 - 154 891
Balance at 30 June 2017 3 340 1 439 703 4 797 (1 229) 579 064 - 2 025 675
Balance at 1 July 2017 3 340 1 439 703 4 797 (1 229) 579 064 - 2 025 675
Transactions with owners 2 438 2 185 865 (4 797) 1 229 438 418 196 2 623 349
- Issue of shares 389 324 082 - - - - 324 471
- Issue of shares for the acquisition of Rockcastle 2 049 2 747 950 (4 797) 1 229 (424 152) 196 2 322 475
- Transfer of goodwill impairment on acquisition
- (886 167) - - 886 167 - -
of Rockcastle Group to share premium
- Earnings distribution - - - - (23 597) - (23 597)
Total comprehensive income - - - - (734 585) 280 (734 305)
- Impairment of goodwill - - - - (886 167) - (886 167)
- Profit for the period excluding
impairment of goodwill - - - - 151 582 280 151 862
Balance at 31 December 2017 5 778 3 625 568 - - 282 897 476 3 914 719
Balance at 1 January 2018 5 778 3 625 568 - - 282 897 476 3 914 719
Transactions with owners - - - - (143 306) - (143 306)
- Earnings distribution - - - - (143 306) - (143 306)
- Profit for the period - - - - 149 042 3 149 045
Total comprehensive income - - - - 149 042 3 149 045
Balance at 30 June 2018 5 778 3 625 568 - - 288 633 479 3 920 458
RECONCILIATION OF PROFIT FOR THE PERIOD TO DISTRIBUTABLE EARNINGS 30 Jun 2018 31 Dec 2017 30 Jun 2017
Profit/(Loss) for the period attributable to equity holders 149 042 (579 694) 154 891
Reverse indirect result (13 409) 776 019 (78 498)
Foreign exchange loss 1 157 1 255 13
Acquisition fees 3 241 10 681 1 523
Fair value adjustments of investment property (86 143) (162 022) (92 171)
Gain on disposal of investment property - (9) (695)
Fair value and net result on sale of financial investments
at fair value through profit or loss 72 091 24 112 (89)
Income from financial investments at fair value through
profit or loss (29 564) (18 084) (363)
Fair value adjustment of Interest rate derivatives financial
assets and liabilities (94) (500) (236)
Deferred tax expense 27 916 46 199 25 208
Impairment of goodwill - 886 167 -
Adjustments related to joint ventures
Fair value adjustments of investment property for joint ventures (3 108) (14 344) (13 875)
Fair value adjustment of Interest rate derivatives financial
assets and liabilities for joint ventures (92) (439) (310)
Deferred tax expense for joint ventures 1 176 2 903 2 424
Foreign exchange loss for joint ventures 11 100 73
Company specific adjustments 17 408 17 004 (778)
Amortisation of financial assets (911) (1 807) (881)
Realised foreign exchange loss (476) (769) (79)
Realised foreign exchange gain/(loss) for joint ventures (2) 3 1
Accrued income from financial investments at fair value through profit or loss 18 733 19 803 181
Fair value adjustment of Investment property for
non-controlling interest 15 (392) -
Deferred tax expense for non-controlling interest 49 166 -
Antecedent dividend - 6 861 1 277
Antecedent dividend - Rockcastle distribution Jun 2017 - 49 531 49 531
Distributable earnings 153 041 269 721 126 438
Less: Distribution declared (153 041) (269 721) (126 438)
Interim distribution* (153 041) (126 438) (126 438)
Final distribution - (143 283) -
Earnings not distributed - - -
Number of shares entitled to interim distribution* 577 800 734 538 953 794 538 953 794
Number of shares entitled to final distribution - 577 800 734 -
Distributable earnings per share (euro cents) 26.49 48.26 23.46
Less: Distribution declared per share (euro cents) (26.49) (48.26) (23.46)
Interim distribution per share (euro cents)* (26.49) (23.46) (23.46)
Final distribution per share (euro cents) - (24.80) -
Earnings not distributed (euro cents) - - -
* Interim distribution, interim distribution per share and number of shares entitled to interim distribution computed on a combined basis for H1 2017.
Ozas Shopping
and Entertainment Aura
BUSINESS COMBINATIONS Centre Centrum Total
31 May 2018 30 May 2018
Investment property 124 829 64 935 189 764
Investment property under development 576 - 576
Current assets 2 818 1 268 4 086
Current liabilities (3 746) (1 084) (4 830)
Non current liabilities (560) - (560)
Deferred tax liabilities (1 893) - (1 893)
Total identifiable net assets at fair value 122 024 65 119 187 143
Total consideration payable 122 024 65 119 187 143
Payable to sellers (2 420) (1 187) (3 607)
Total consideration paid 119 604 63 932 183 536
Profit after tax for the period after acquisition 4 298 6 117 10 415
Recoveries and contractual rental income for the period after acquisition 1 166 621 1 787
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 30 Jun 2018 31 Dec 2017 30 Jun 2017
Net rental and related income 164 635 232 085 90 981
Revenues from rent and expense recoveries 236 243 336 977 128 911
Property operating expenses (71 608) (104 892) (37 930)
Administrative expenses (8 979) (15 191) (7 300)
EBITDA 155 656 216 894 83 681
Net result from financial investments (42 527) (6 028) 452
Income from financial investments at fair value through profit or loss 29 564 18 084 363
Fair value and net result on sale of financial investments at fair
value through profit or loss (72 091) (24 112) 89
Acquisition fees (3 241) (10 681) (1 523)
Fair value adjustments of investment property 86 143 162 022 92 171
Foreign exchange loss (1 157) (1 255) (13)
Gain on disposal of investment property - 9 695
Profit before net finance expense 194 874 360 961 175 463
Net finance expense (18 963) (22 906) (8 179)
Finance income 1 386 2 567 1 411
Finance expense (20 349) (25 473) (9 590)
Fair value adjustment of Interest rate derivatives financial assets and liabilities 94 500 236
Share of profit of joint ventures 4 971 16 068 13 686
Impairment of goodwill* - (886 167) -
Profit/(Loss) before tax 180 976 (531 544) 181 206
Income tax (31 931) (47 870) (26 315)
Current tax expense (4 015) (1 671) (1 107)
Deferred tax expense (27 916) (46 199) (25 208)
Profit/(Loss) after tax 149 045 (579 414) 154 891
Total comprehensive profit/(loss) for the period 149 045 (579 414) 154 891
Non-controlling interest (3) (280) -
Profit/(Loss) for the period attributable to equity holders 149 042 (579 694) 154 891
Profit for the period attributable to equity holders excluding impairment of goodwill 149 042 306 473 154 891
Weighted average number of shares in issue 577 800 734 436 806 684 328 304 103
Diluted weighted average number of shares in issue 577 800 734 436 809 203 328 309 197
Basic earnings/(loss) per share (euro cents) 25.79 (132.71) 47.18
Diluted earnings/(loss) per share (euro cents) 25.79 (132.71) 47.18
Basic earnings per share (euro cents) excluding impairment of goodwill 25.79 70.16 47.18
Diluted earnings per share (euro cents) excluding impairment of goodwill 25.79 70.16 47.18
* Impairment of goodwill arising from the merger with Rockcastle, computed as the difference between Rockcastle's market capitalisation and its net
asset value at merger date.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 30 Jun 2018 31 Dec 2017 30 Jun 2017
Profit/(Loss) after tax 149 045 (579 414) 154 891
Adjustments 8 341 801 695 (59 047)
Interest and coupon paid (22 089) (24 034) (18 202)
Changes in working capital (21 603) 14 829 (10 422)
Cash flows from operating activities 113 694 213 076 67 220
Proceeds from issue of shares - 396 128 71 657
Earnings distribution (143 306) (39 022) (15 425)
Net movements in bank loans and bonds 75 367 422 048 (70 650)
Other proceeds / payments (12 845) 196 -
Cash flows used in financing activities (80 784) 779 350 (14 418)
Investments in acquisitions and developments (288 926) (947 245) (69 778)
Net cash flow from financial investments/assets at fair value through profit or loss 170 833 102 712 9 178
Other investments 10 208 (369) -
Cash flows used in investing activities (107 885) (844 902) (60 600)
Net (decrease) / increase in cash and cash equivalents (74 975) 147 524 (7 798)
Cash and cash equivalents brought forward 195 544 48 020 48 020
Cash and cash equivalents carried forward 120 569 195 544 40 222
RECONCILIATION OF PROFIT FOR THE YEAR TO HEADLINE EARNINGS 30 Jun 2018 31 Dec 2017 30 Jun 2017
Profit/(Loss) for the period attributable to equity holders 149 042 (579 694) 154 891
Fair value adjustments of investment property (86 143) (162 022) (92 171)
Gain on disposal of investment property - (9) (695)
Impairment of goodwill - 886 167 -
Tax effects of adjustments 13 258 27 089 15 417
Fair value adjustments of investment property for joint ventures (3 108) (20 928) (13 875)
Tax effect of adjustments for joint ventures 497 2 295 2 220
Headline earnings 73 546 152 898 65 787
Weighted average number of shares in issue 577 800 734 436 806 684 328 304 103
Diluted weighted average number of shares in issue 577 800 734 436 809 203 328 309 197
Headline earnings per share (euro cents) 12.73 35.00 20.04
Diluted headline earnings per share (euro cents) 12.73 35.00 20.04
RECONCILIATION OF NET ASSET VALUE TO EPRA NET ASSET VALUE 30 Jun 2018 31 Dec 2017 30 Jun 2017
Net Asset Value per the Statement of financial position 3 920 458 3 914 719 2 025 675
Deferred tax liabilities 302 571 271 105 184 072
Deferred tax assets (14 148) (12 490) -
Goodwill (82 582) (82 582) (58 390)
Deferred tax liabilities for joint ventures 10 032 8 856 8 376
Interest rate derivatives financial assets at fair value through profit or loss (13 724) (1 793) (596)
Interest rate derivatives financial liabilities at fair value through profit or loss 3 599 4 678 -
EPRA NAV 4 126 206 4 102 493 2 159 137
EPRA NAV per share (euro) 7.14 7.10 6.46
Net Asset Value per share (euro) 6.79 6.78 6.06
Number of shares for Net Asset Value per share 577 800 734 577 800 734 334 027 068
Number of shares for EPRA NAV per share 577 800 734 577 800 734 334 027 068
SEGMENTAL ANALYSIS Retail Office Industrial Corporate Total
Six months ended 30 June 2018
Revenues from rent and expense recoveries 214 275 20 860 1 108 - 236 243
Profit before Net finance expense 230 927 9 795 545 (46 393) 194 874
Total Assets 5 180 492 452 435 16 240 462 076 6 111 243
Total Liabilities 1 144 265 52 445 2 623 991 452 2 190 785
Year ended 31 December 2017
Revenues from rent and expense recoveries 299 862 35 089 2 026 - 336 977
Profit before Net finance expense 340 084 37 584 2 205 (18 912) 360 961
Total Assets 4 762 373 461 738 16 906 756 784 5 997 801
Total Liabilities 1 103 047 53 076 2 567 924 392 2 083 082
Six months ended 30 June 2017
Revenues from rent and expense recoveries 111 661 16 219 1 031 - 128 911
Profit before Net finance expense 157 897 17 955 739 (1 128) 175 463
Total Assets 2 486 407 404 506 15 944 33 994 2 940 851
Total Liabilities 378 854 56 650 2 476 477 196 915 176
LEASE EXPIRY PROFILE 2018 2019 2020 2021 2022 2023 2024 2025 2026 more than or Total
equal to 2027
Total based on rental income 2.5% 14.0% 20.1% 15.2% 11.8% 12.8% 6.6% 2.6% 2.6% 11.8% 100%
Total based on rented area 1.8% 10.3% 16.3% 14.5% 10.9% 12.8% 6.5% 3.7% 4.7% 18.5% 100%
DEBT REPAYMENT PROFILE Lender Type Secured/Unsecured Ownership Outstanding amount*
Aupark Kosice Mall & Tower Tatra Banka Term loan Secured 100% 91 184
Aupark Zilina VUB Term loan Secured 100% 61 512
Aupark Piestany Komercni Banka Term loan Secured 100% 18 909
Ploiesti Shopping City (joint venture) BRD - Societe Generale Term loan Secured 50% 13 596
The Office, Cluj-Napoca (joint venture) Raiffeisen Bank Term loan Secured 50% 30 424
Karolinka Shopping Centre PBB/Helaba/ING Term loan Secured 100% 87 200
Pogoria Shopping Centre PBB/Helaba/ING Term loan Secured 100% 44 900
Platan Shopping Centre PBB/Helaba/ING Term loan Secured 100% 31 500
Focus Park Zielona Gora PBB/Helaba/ING Term loan Secured 100% 67 145
Solaris Shopping Centre ING Term loan Secured 100% 34 800
Bonarka City Center ING/BerlinHyp/NN Term loan Secured 100% 188 416
Forum Liberec Shopping Centre Erste Bank Term loan Secured 100% 41 000
Galeria Warminska Berlin Hyp Term loan Secured 100% 76 000
NE Property Cooperatief Public Fixed coupon bonds Unsecured 100% 900 000
NE Property Cooperatief Raiffeisen Bank Revolving facility Unsecured 100% 80 000
NE Property Cooperatief ING Revolving facility Unsecured 100% -
NE Property Cooperatief Societe Generale Revolving facility Unsecured 100% -
/Garanti Bank
Total 1 766 586
Available for
DEBT REPAYMENT PROFILE drawdown 2018 2019 2020 2021 2022 2023 2024
Aupark Kosice Mall & Tower - 2 763 5 526 82 895 - - - -
Aupark Zilina - 1 190 2 462 2 548 2 636 52 676 - -
Aupark Piestany - 198 396 396 17 919 - - -
Ploiesti Shopping City (joint venture) - 548 1 095 1 095 1 095 1 095 1 095 7 573
The Office, Cluj-Napoca (joint venture) - 975 1 950 1 950 1 950 23 599 - -
Karolinka Shopping Centre - 436 872 872 85 020 - - -
Pogoria Shopping Centre - 225 449 449 43 777 - - -
Platan Shopping Centre - 158 315 315 30 712 - - -
Focus Park Zielona Gora - 336 671 671 65 467 - - -
Solaris Shopping Centre - - - 34 800 - - - -
Bonarka City Center - 483 965 186 968 - - - -
Forum Liberec Shopping Centre - - 308 410 410 564 615 38 693
Galeria Warminska - - - - - 380 1 520 74 100
NE Property Cooperatief - - - - 400 000 - - 500 000
NE Property Cooperatief 50 000 80 000 - - - - - -
NE Property Cooperatief 100 000 - - - - - - -
NE Property Cooperatief 150 000 - - - - - - -
Total 300 000 87 312 15 009 313 369 648 986 78 314 3 230 620 366
* The outstanding amounts represent the principal payable on bank loans and bonds, and does not include accrued interest or capitalised finance
raising costs.
BASIS OF PREPARATION
In accordance with IFRS 3 - Business Combinations, the merger between NEPI and Rockcastle was classified as a purchase of Rockcastle by NEPI, with
NEPI Rockcastle being assessed in substance as a continuation of NEPI. Consequently, in these consolidated financial statements and in accordance
with IFRS, NEPI Rockcastle presents the results of the former NEPI Group before the merger date (11 July 2017), and the results of the combined Group
from the merger date onwards. The comparatives are the audited consolidated financial results of NEPI Rockcastle for the year ended 31 December 2017
and the unaudited consolidated financial results of NEPI for the six months ended 30 June 2017. These unaudited condensed consolidated financial results
for the six months ended 30 June 2018 have been prepared in accordance with the requirements of the JSE Limited Listings Requirements for interim
reports. These require interim reports to be prepared in accordance with, and containing the information required by IAS 34: Interim Financial
Reporting, as well as the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council. The accounting policies
which have been applied are consistent with those used in the preparation of the Group's financial statements for the year ended 31 December 2017.
These financial results have not been reviewed or reported on by the Group's auditors.
The listed securities portfolio is measured at fair value being the quoted closing price at the reporting date and is categorized as a Level 1
investment, according to IFRS 13 - Fair value measurement. Realised and unrealised gains and losses arising from changes in the fair value of these
investments are recognised in profit or loss in the period in which they arise. Attributable transaction costs are recognised in the statement of
comprehensive income as incurred. The listed securities portfolio includes physical shares with a fair value of EUR300.1 million presented as
Financial investments at fair value through profit or loss within the Consolidated Statement of Financial Position. The equity derivative collateral
of EUR76.8 million represents the cash held at Prime Brokers and provides the Group with gross exposure to equity derivative swaps. The Group's equity
derivatives swaps have a net fair value of EUR4.9 million from Financial assets at fair value through profit or loss of EUR6.1 million and Financial
liabilities at fair value through profit or loss of EUR1.2 million. Within the Consolidated Statement of Comprehensive Income, the Income from financial
investments at fair value through profit or loss of EUR29.6 million includes the gross income from dividends that the Group earns on the gross exposure
netted off with the interest expense on the gross liability. The Fair value and net result on sale of financial investments shows the change in fair
value of the financial instruments as well as the net result on sales of such instruments.
NEPI Rockcastle Results Presentation June 2018 will be available on the Company's website starting
with 29 August 2018. For additional queries in this respect, please contact office@nepirockcastle.com
For further information please contact: NEPI Rockcastle Plc, Mirela Covasa: +40 21 232 1398
JSE sponsor: Java Capital: +27 11 722 3050
www.nepirockcastle.com
Date: 29/08/2018 11:00:00 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
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