Wrap Text
Summarised consolidated financial results for the 12 months ended 31 December 2018
EPP N.V.
(previously Echo Polska Properties N.V.)
(Incorporated in The Netherlands)
(Company number 64965945)
JSE share code: EPP
ISIN: NL0011983374
LEI code: 7245003P7O9N5BN8C098
("EPP" or "the company" or "the group")
SUMMARISED CONSOLIDATED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2018
Financial highlights
Net operating income up 38% to EUR143 million (2017: EUR103.3 million)
Distributable earnings up 26% to EUR96 million (2017: EUR76.6 million)
Distributable income per share up 6.7% to EUR11.60 cents (2017: EUR10.87 cents)
Investment properties up 33% to EUR2.2 billion (2017: EUR1.65 billion)
Successfully executed acquisitions of over EUR400 million
Total asset value up 27% to EUR2.5 billion (2017: EUR1.95 billion)
Net asset value excluding deferred tax ("NAV") up 20% to EUR1.18 billion (2017: EUR928 million)
NAV per share up 2.4% to EUR1.35 (2017: EUR1.32)
Loan-to-value ("LTV") of 51.9% (2017: 47.4%)
Cost of debt was 2.33% (2017: 2.14%) with a weighted maturity of 3.9 years
Operational highlights
Retail
Total retail gross lettable area ("GLA") increased by 54% to 684 000 m2 (2017: 444 350 m2)
Vacancies improved to 0.4% (2017: 1.4%)
Footfall increased to over 100 million
Footfall and sales up +1%
Like-for-like NRI growth 4.2%
Successfully acquired five quality retail assets totalling 240 000 m2 GLA
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Audited Audited
2018 2017
EUR'000 EUR'000
Rental income and recoveries* 157 506 151 706
Straight-line rental income - 504
Service charge income 39 610 -
Property operating expenses (54 442) (48 955)
Net property income 142 674 103 255
Other income 378 713
Other expenses (1 414) (1 348)
Administrative expenses (15 821) (15 586)
Net operating profit 125 817 87 034
Net gain from fair value adjustment
on investment properties 17 473 75 305
Profit from operations 143 290 162 339
Finance income 4 865 7 419
Finance costs (39 758) (23 085)
Foreign exchange gains/(losses) 5 814 (1 827)
Participation in profits of joint ventures 23 381 16 059
Profit before taxation 137 592 160 905
Current income tax (8 914) (4 873)
Deferred tax (4 513) (27 684)
Profit for the period 124 165 128 348
Attributable to EPP shareholders 124 165 128 348
Earnings per share:
Basic and diluted earnings, on profit
for the period (EUR cents) 15.4 19.1
* Rental income includes EUR1 950 000 of straight-line rental income accrual in 2018.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
2018 2017
EUR'000 EUR'000
Profit for the period 124 165 128 348
Foreign currency translation
reserve joint ventures (2 128) 3 553
Foreign currency translation
reserve subsidiaries (3 681) (3 403)
Other comprehensive income,
net of tax, to be reclassified
to profit or
loss in subsequent periods (5 809) 150
Total comprehensive income
for the period, net of tax 118 356 128 498
Total comprehensive income attributable
to the owners of EPP for the
period, net of tax 118 356 128 498
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
2018 2017
EUR'000 EUR'000
ASSETS
Non-current assets 2 360 360 1 797 545
Investment property 2 201 737 1 655 572
Investment in joint ventures 138 698 116 009
Tangible assets - 47
Loans receivable 16 202 25 917
Other non-current assets 1 815 -
Deferred tax asset 1 908 -
Current assets 111 355 154 569
Inventory 250 525
Tax receivable 589 209
Trade and other receivables 16 970 26 723
Loans receivable 5 635 3 955
Restricted cash 27 571 23 613
Cash and cash equivalents 60 340 99 544
Total assets 2 471 715 1 952 114
EQUITY AND LIABILITIES
Equity 1 022 688 833 821
Share capital 672 292 571 026
Share premium 203 318 147 534
Treasury shares - (783)
Accumulated profit 147 250 111 419
Share-based payment reserve 5 921 4 909
Foreign currency translation reserve (6 093) (284)
Non-current liabilities 1 387 212 941 710
Bank borrowings 1 273 767 831 183
Loans payable - 1 741
Other liabilities 16 335 15 033
Deferred tax liability 97 110 93 753
Current liabilities 61 815 176 583
Bank borrowings 30 575 117 155
Loans payable 92 18 019
Tax payables 1 960 879
Trade and other payables 29 188 40 353
Provisions - 177
Total liabilities 1 449 027 1 118 293
Total equity and liabilities 2 471 715 1 952 114
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Accumu-
premium/ lated
Share capital Treasury profit/
capital reserves shares (loss)
EUR'000 EUR'000 EUR'000 EUR'000
Balance as at
31 December 2016 (audited) 474 702 95 095 - 38 075
Profit for the year - - - 128 348
Other comprehensive income - - - -
Other comprehensive income
from joint ventures - - - -
Total comprehensive income - - - 128 348
Issue of ordinary shares 96 324 56 650 - -
Transaction cost related
to issuance of shares - (4 211) - -
Acquisition of own shares - - (1 810) -
Recognition of share-
based payments - - - -
Transfer of shares - - 1 027 -
Dividend paid - - - (55 004)
Balance as at
31 December 2017 (audited) 571 026 147 534 (783) 111 419
Profit for the year - - - 124 165
Other comprehensive income - - - -
Other comprehensive
income from joint ventures - - - -
Total comprehensive income - - - 124 165
Issue of ordinary shares (note 11) 101 266 56 234 - -
Transaction cost related to
issuance of shares (note 11) - (450) - -
Acquisition of own shares - - (2 312) -
Transfer of own shares (note 13) - - 3 095 -
Share-based payments
expenses (note 13) - - - -
Dividend provided for
or paid (note 12) - - - (88 334)
Balance as at
31 December 2018 (audited) 672 292 203 318 - 147 250
Total
equity
Foreign Share- attributable
currency based to the
translation payment owners
reserve reserve of EPP
EUR'000 EUR'000 EUR'000
Balance as at
31 December 2016 (audited) (434) - 607 438
Profit for the year - - 128 348
Other comprehensive income (3 403) - (3 403)
Other comprehensive income
from joint ventures 3 553 - 3 553
Total comprehensive income 150 - 128 498
Issue of ordinary shares - - 152 974
Transaction cost related
to issuance of shares - - (4 211)
Acquisition of own shares - - (1 810)
Recognition of share-
based payments - 5 936 5 936
Transfer of shares - (1 027) -
Dividend paid - - (55 004)
Balance as at
31 December 2017 (audited) (284) 4 909 833 821
Profit for the year - - 124 165
Other comprehensive income (3 681) - (3 681)
Other comprehensive
income from joint ventures (2 128) - (2 128)
Total comprehensive income (5 809) - 118 356
Issue of ordinary shares (note 11) - - 157 500
Transaction cost related to
issuance of shares (note 11) - - (450)
Acquisition of own shares - - (2 312)
Transfer of own shares (note 13) - (3 095) -
Share-based payments
expenses (note 13) - 4 107 4 107
Dividend provided for
or paid (note 12) - - (88 334)
Balance as at
31 December 2018 (audited) (6 093) 5 921 1 022 688
CONSOLIDATED STATEMENT OF CASH FLOW
Audited Audited
2018 2017
EUR'000 EUR'000
Profit before tax 137 592 160 905
Adjustments:
Amortisation/depreciation of fixed assets - 39
Straight line adjustment (1 950) (504)
Share-based payment reserve 1 012 4 909
Valuation gain on investment property (17 473) (71 721)
Share of profit in joint ventures (23 381) (16 059)
Finance income (4 865) (7 419)
Finance expense 39 802 23 085
Working capital adjustments:
Increase in rent and other receivables 8 166 10 043
Increase in prepayments and accrued income (1 587) (3 634)
Increase in inventory and other assets 275 (451)
Increase of restricted cash (3 958) (1 768)
Increase in trade, other payables and accruals (12 803) 18 677
Movements in tenants' deposits 916 2 547
Cash generated from operations 121 746 118 649
Tax paid (8 212) (4 167)
Net cash generated from operating activities 113 534 114 482
Investing activities
Purchase of investment property (498 643) (321 849)
Investments in joint ventures - (19 317)
Capital expenditure on completed
investment property (24 745) (44 724)
Disposal of investment property - 155 551
Loans granted (1 273) (46 174)
Loans repaid 11 396 7 596
Interest received 1 361 188
Profit share - 5 795
Net cash utilised in investing activities (511 904) (262 934)
Financing activities
Proceeds from borrowings 731 952 311 562
Repayment of borrowings (379 013) (144 778)
Borrowing arrangement fees (2 598) -
Proceeds from issue of share capital 157 500 152 975
Transaction costs on issue of shares (450) (4 211)
Acquisition of own shares (2 312) (783)
Transfer of own shares 3 095 -
Dividends paid (88 334) (66 923)
Loans repaid (19 633) -
Interest paid (34 295) (18 571)
Interest received - 198
Net cash generated from financing activities 365 912 229 469
Net increase in cash and cash equivalents (32 458) 81 017
Cash and cash equivalents at the
beginning of the period 99 544 21 921
Effect of foreign exchange fluctuations (6 746) (3 394)
Cash and cash equivalents at the end
of the period 60 340 99 544
NAV PER SHARE
Audited Audited
2018 2017
EUR'000 EUR'000
NAV attributable to ordinary equity holders
of the parent (excluding
deferred tax) 1 117 891 927 574
Net tangible asset value (excluding
deferred tax) 1 117 891 927 574
Number of ordinary shares at the reporting
date (thousands) 829 990 704 970
NAV per share (excluding deferred tax) (EUR) 1.35 1.32
Net tangible asset value per share (EUR) 1.35 1.32
COMMENTARY
1. Reporting entity
EPP is a Dutch-based real estate company that follows the REIT formula and is one of the
leading owners of retail space in Poland. The company's portfolio is complemented by high
quality offices located in regional cities across Poland. As of 31 December 2018 the
company manages a portfolio of 19 retail centres and six offices located in the majority of
regional cities in Poland. In addition to these income generating properties, EPP also has
two developments in the capital - Warsaw, namely Towarowa 22 and Mlociny (expected to
open in Q2 2019). By the end of 2020 EPP expects to own 28 shopping centres post the
conclusion of the M1 transaction.
As of 31 December 2018, EPP owned and operated 684 000 m2 of retail GLA and
147 000 m2 of office GLA, excluding joint ventures. The investment portfolio has a
diversified tenant base of leading retailers with international brands in the retail properties,
and primarily blue-chip companies in the office properties.
The company's operations are fully internalised and all asset management and property
management is done in-house.
EPP's shares are listed on the official list and admitted to trading on the Euro MTF market
of the Luxembourg Stock Exchange ("LuxSE") and on the Main Board of the JSE Limited
("JSE") in the Real Estate Holdings and Development Sector. The company has primary
listings on both the LuxSE and the JSE.
The company's strategy is to own large dominant shopping centres, located in strong
catchment areas and which have asset management opportunities in terms of extensions
across Poland. EPP intends continuing to divest from offices and recycle the proceeds to
fund purchases of retail assets.
2. Basis of preparation
The summarised consolidated financial statements for the year ended 31 December 2018
have been prepared by the management of the company in accordance with the
measurement and recognition requirements of International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB"), the
requirements of IAS 34: Interim Financial Reporting, the JSE Listings Requirements and in
accordance with Dutch law and the LuxSE rules and regulations.
The group's financial statements were prepared on a historical cost basis, except for
investment properties measured at fair value and bank loans measured at amortised cost.
The consolidated financial statements are presented in Euro (EUR) and all values are
rounded to the nearest thousand (EUR'000), except where otherwise indicated.
These summarised consolidated financial statements are extracted from the audited
consolidated financial statements, but are not themselves audited. The directors take full
responsibility for the preparation of the summarised consolidated financial statements and
for ensuring that the financial information has been correctly extracted from the underlying
audited consolidated financial statements. The auditors, Ernst & Young, have issued their
unmodified opinion on the audited consolidated financial statements for the year ended
31 December 2018 and a copy of the audit opinion, together with the underlying audited
consolidated financial statements are available for inspection at the company's registered
office.
The company's integrated report containing the audited consolidated financial statements
for the year ended 31 December 2018 has been published and is available on the
company's website at https://www.epp-poland.com/s,155,investor-relations.html. EPP's
notice of annual general meeting will be published in due course and an announcement
will be released once published.
3. Significant accounting policies - impact of new standards
IFRS 9: Financial Instruments
The group has adopted IFRS 9: Financial Instruments issued in July 2014 with a date of
initial application of 1 January 2018. The requirements of IFRS 9 represent a significant
change from IAS 39: Financial Instruments: Recognition and Measurement; however, the
impact on the group results is not material. In accordance with the transitional provisions in
IFRS 9, comparative figures have not been restated.
The nature and effects of the key changes to the group's accounting policies resulting from
its adoption of IFRS 9 are summarised below.
Classification of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured at
amortised cost, fair value through other comprehensive income ("FVOCI") and fair value
through profit and loss ("FVTPL"). The classification of financial assets under IFRS 9 is
generally based on the business model in which a financial asset is managed and its
contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of
held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives
embedded in contracts where the host is a financial asset in the scope of the standard are
never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.
Impairment of financial assets
IFRS 9 replaces the "incurred loss" model in IAS 39 with an expected credit loss ("ECL")
model. The new impairment model applies to financial assets measured at amortised cost,
contract assets and debt investments at FVOCI. Under IFRS 9, credit losses are recognised
earlier than under IAS 39.
Classification of financial assets and financial liabilities on the date of initial application
of IFRS 9
The following table shows the original measurement categories under IAS 39 and the new
measurement categories under IFRS 9 for each class of the group's financial assets as at
1 January 2018.
Original New
carrying carrying
amount amount
Original New under under
classification classification IAS 39 IFRS 9
under IAS 39 under IFRS 9 EUR'000 EUR'000
Financial assets
Loans receivable Loans and receivables Financial assets
at FVTPL 29 872 29 872
Long-term loans granted Loans and receivables Financial assets
to JV (presented under (presented under at amortised cost 21 780 21 780
Investments in Investment in joint
joint ventures) ventures)
Restricted cash Loans and receivables Financial assets
at amortised cost 23 613 23 613
Cash and cash Loans and receivables Financial assets
equivalents at amortised cost 99 544 99 544
Trade and other Loans and receivables Financial assets
receivables at amortised cost 11 692 11 692
Total financial assets 186 504 186 504
Trade and other receivables that were classified as loans and receivables under IAS 39 are
now classified as financial assets at amortised cost. The impact of IFRS 9 expected credit
loss allowance compared to the loss allowance recognised based on IAS 39 was not
material.
The loans receivable were classified as financial assets at FVTPL as a result of the business
model assessment and the fact that the SPPI test is not met. Description of loans
receivable is presented in note 8 of the audited financial statements.
The long-term loans granted to JVs (presented under Investments in joint ventures) were
classified as financial assets at amortised cost as a result of business model assessment
and the fact that the SPPI test is met. We assessed the credit risk of JVs, taking into
consideration the net assets and liquidity situation and assessed the carrying amount
approximates the fair value.
There was no material impact on classification of financial liabilities.
IFRS 15: Revenue from Contracts with Customers
The group performed an assessment of IFRS 15 and concluded that IFRS 15 will be
implemented using the modified retrospective approach. The group concluded that IFRS 15
does not have a significant impact on the group's consolidated financial statements and
accounting policies at the implementation date. The only impact would be that service
charged income is separately presented on the consolidated statement of profit or loss; in
the prior period this was included in rental income. Note that IFRS 15 did not affect the
recognition of lease income as this is still dealt with under IAS 17: Leases.
IFRS 16: Leases
IFRS 16: Leases is effective for annual periods beginning on or after 1 January 2019. There
is no impact on the recognition of leases in situations where EPP is the lessor.
In the management board's opinion, the new standard will have an effect on the accounting
policies applied in situations where the group is the lessee. Under IFRS 16, all lease
contracts, including those currently classified as operating leases, will be recognised as a
right-of-use asset and as a lease liability in the statement of financial position.
The group will implement the standard using the modified retrospective method, with the
cumulative effect of the first application of IFRS 16 recognised as at 1 January 2019,
without restating the comparative data.
On transition to IFRS 16 the group elected to apply the practical expedient to grandfather
the assessment of which transaction was originally classified as a lease. It applied IFRS 16
only to those contracts which were previously classified as leases under IAS 17.
For leases previously classified as operating leases the group will recognise a lease liability,
measured at the present value of the remaining lease payments, discounted using the
lessee's incremental borrowing rate at the date of initial application. The group will recognise
the respective right-of-use asset at an amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments recognised immediately before the date
of initial application.
For leases previously classified as finance leases the carrying amount of the right-of-use
asset and the lease liability at the date of initial application shall be the carrying amount of
the lease asset and lease liability immediately before that date measured applying IAS 17.
The group has analysed all concluded agreements to identify those to which the new
recognition method applies following the implementation of IFRS 16. The group identified
the following types of agreements which were recognised as operating leases under IAS 17:
- Office rental agreement.
- Cars and IT equipment lease agreements.
- Perpetual usufruct rights to land.
- Land lease agreement.
The key management's estimation relates to the discounting rates (incremental borrowing
rate) used in measuring the lease liabilities.
On a transition to IFRS 16 the company will recognise an additional EUR33.4 million of
right-of-use assets (added to the value of investment property) and EUR33.4 million of
lease liabilities, recognising the difference in retained earnings for each group of the lease
contracts:
Value of Value of
right-to-use financial
asset liability
1 January 1 January
2019 2019
EUR'000 EUR'000
Office rental agreement 78 78
Cars and IT equipment lease agreements 746 746
Perpetual usufruct rights to land 30 426 30 426
Land lease agreement 2 119 2 119
Total 33 369 33 369
4. Financial results
The net profit for the 12 months ended 31 December 2018 amounted to EUR124.2 million
and distributable income totalled EUR96.3 million. Total NAV excluding deferred tax
amounted to EUR1 118 million equating to a NAV per share of EUR1.35. The net LTV ratio
as of 31 December 2018 was 51.9% with an average cost of debt of 2.33%.
Acquisition of M1 portfolio
In October 2017, EPP reached an agreement to acquire a portfolio of retail properties for a
combined consideration that values the portfolio at EUR692.1 million. During the first half
of 2018, the group successfully purchased the first tranche of the M1 portfolio consisting
of four properties for a consideration of EUR359 million.
Acquisition of the remaining properties is conditional upon fulfilment of outstanding
conditions precedent and is scheduled as follows:
- the second tranche portfolio comprising a further six properties with an aggregate GLA of
184 000 m2, an aggregate value of EUR222.5 million and an aggregate purchase
consideration of EUR75.2 million with the expected completion date by June 2019; and
- the third tranche portfolio comprising a further two properties with an aggregate GLA of
68 100 m2, an aggregate value of EUR110.9 million and an aggregate purchase
consideration of EUR44.1 million with the expected completion date by June 2020.
The delay in completing the second and third tranche acquisitions is to enable the seller to
implement various contracted asset management initiatives (including certain lease
renewals or renegotiations) to align those acquisitions with EPP's investment requirements
and strategy.
Acquisition of Symetris Business Park phase II
On 27 July 2018 EPP, concluded the acquisition of the second phase of Symetris Business
Park as part of the ROFO agreement.
Acquisition of King Cross Marcelin Shopping Centre in Poznan
King Cross Marcelin is the major shopping destination in western Poznan with an immediate
catchment of over 202 000 people living within a 15 minute drive of the centre. The local
average per capita purchasing power is close to EUR9 000 (37% above the national
average). An additional 459 000 people live within a 16 to 30 minute drive.
King Cross Marcelin opened in March 2005 and occupies a prominent and highly visible
location on Bukowska Street, one of the important roads leading west towards Poznan -
Lawica Airport. King Cross Marcelin is situated at the fringe of the Poznan Grunwald and
Lawica districts. Approximately 95% of King Cross Marcelin is let to popular international
and national retailers including Auchan, Media Markt, H&M, Intersport, Jysk, Reserved,
New Yorker, CCC, Smyk, Empik Pepco, Rossmann, Super-Pharm and McDonalds.
New equity raise
In July 2018, EPP successfully placed 36 436 916 new shares with Redefine Properties
Limited at a price of EUR1.24 (R19.26) per share to partially fund the acquisition of the
King Cross Marcelin Shopping Centre.
5. Segment information
The group is considered to have two reportable segments, as follows:
- Retail: acquires, develops and leases shopping malls; and
- Office: acquires, develops and leases offices.
The group's administrative costs, finance revenue, finance costs and income taxes are not
reported to the members of the executive management team on a segment basis. The
operations between segments are eliminated for consolidation purposes.
Segment assets represent investment property and the investment in the joint ventures.
Segment liabilities represent loans and borrowing, as these are the only liabilities reported
to the board on a segmental basis.
Retail Office Unallocated Total
EUR'000 EUR'000 EUR'000 EUR'000
31 December 2018
Segment profit
Rent and recoveries income 162 256 33 402 1 458 197 116
Property operating expenses (43 878) (10 134) (430) (54 442)
Net property income 118 378 23 268 1 028 142 674
Investment in joint ventures 138 698 - - 138 698
Investment property 1 885 337 316 400 - 2 201 737
Total segment assets 2 024 035 316 400 - 2 340 435
Bank borrowings 1 009 100 171 412 123 830 1 304 342
Total segment liabilities 1 009 100 171 412 123 830 1 304 342
2017
Segment profit
Rent and recoveries income 105 913 44 602 1 695 152 210
Property operating expenses (34 116) (14 287) (552) (48 955)
Net property income 71 797 30 315 1 143 103 255
Investment in joint ventures 116 009 - - 116 009
Investment property 1 347 072 308 500 - 1 655 572
Total segment assets 1 463 081 308 500 - 1 771 581
Bank borrowings 686 982 161 699 99 657 948 338
Total segment liabilities 686 982 161 699 99 657 948 338
All revenues were generated from external customers based in Poland.
All investment properties are located in Poland.
6. Dividend declaration
EPP's dividend policy states that the company intends to declare 100% of its distributable
income to shareholders. The company intends declaring half-yearly dividends, which are
expected to be declared for the periods ended 30 June and 31 December of the relevant
year. No assurance can be made that dividends will be proposed or declared in any given
year.
The EPP board of directors ("board") has declared an interim dividend of 5.78000 euro
cents per ordinary share for the six months ended 31 December 2018.
A further announcement informing shareholders of the salient dates and tax treatment of
the dividend will be released in due course.
7. Future reporting
Due to the LuxSE requirement for companies with less than three years trading to report
quarterly, EPP has reported quarterly since listing. However, as three years have elapsed
since listing this requirement falls away following the last reported quarterly results for Q3
2018 released in December. Going forward EPP will be reporting on a six monthly basis to
align to the company's JSE listed property peers.
GROUP MANAGEMENT REPORT
HEADLINE EARNINGS AND DISTRIBUTABLE INCOME RECONCILIATION
Audited Audited
2018 2017
EUR'000 EUR'000
Profit for the period attributable
to EPP shareholders 124 165 128 348
Change in fair value of investment
properties including joint ventures
(net of tax) (36 711) (82 295)
Headline and diluted earnings
attributable to EPP shareholders 87 454 46 053
Change in deferred tax (other than
the deferred tax change related to
fair value of investment properties) 1 194 14 057
Fair value losses/(gains) in joint
ventures (other than the change
in fair value of investment properties
in JV) (92) 5 380
Cost of refinancing 2 598 -
Amortised cost valuation
of long-term financial liabilities
and other 3 405 2 621
Provision for long-term
incentive plan 4 106 4 909
Distribution of shares to the board (2 349) (782)
Other items (2 159) 680
Antecedent dividend 2 121 3 678
Distributable income 96 278 76 596
Actual number of shares in issue 829 989 804 704 970 210
Shares in issue for
distributable earnings 829 989 804 704 970 210
Weighted number of shares in issue 808 554 466 671 412 270
Basic and diluted earnings
per share (EUR cents) 15.4 19.1
Headline earnings and diluted
headline earnings per share
(EUR cents)* 10.82 6.90
Distributable income per share
(EUR cents)** 11.60 10.87
* There are no dilutionary instruments in issue and therefore headline earnings and diluted
headline earnings are the same.
** Calculated based on actual number of shares in issue as at 31 December 2018 and
31 December 2017, respectively.
Portfolio performance
EPP significantly increased the scale of the business during 2018 by adding 240 000 m2
GLA of quality retail space.
These acquisitions include the first tranche of the M1 portfolio consisting of four properties
for a consideration of EUR359 million. The total GLA added was over 194 000 m2 with an
average property size of over 48 000 m2. The majority of these assets are located in the
desirable Silesia region in Poland. In addition, EPP purchased Kings Cross Marcelin, a
45 393 m2 shopping centre located in the affluent western part of Poznan. EPP now holds
approximately 684 000 m2 of quality retail space.
Footfall and tenant sales were up for the year despite the introduction of the Sunday trading
ban in March 2018. The ban had no significant impact on operations and more than a
100 million customers visited our shopping centres during 2018. Our asset and property
managers have worked extremely hard during the year and this was seen with like-for-like
net rental income ("NRI") growth up 4.2% for the full year 2018.
Our flagship Warsaw-based shopping centre Mlociny (84 400 m2) is on schedule to open in
Q2 2019. Mlociny is more than 90% pre-leased, with several retailers who will be opening
in Poland for the first time expected to debut in the shopping centre.
Vacancy profile
The vacancy profile indicated below reflects the vacancy percentage in terms of current
GLA by sector.
31 December 31 December
2017 2018
Vacancy based on total GLA (%)
Office 4.0 4.6
Retail 1.4 0.4
Sectoral profile 31 December 2018
By GLA By revenue
% %
Retail 82 83
Office 18 17
Total 100 100
Prospects
EPP's core portfolio is expected to perform well, and net operating income is expected to
grow at 2% to 3% for the year ending 31 December 2019 on a like for like basis. This
forecast is based on the following assumptions: that a stable global and Polish macro-
economic environment will prevail and no major tenant failures will occur. This forecast has
not been reviewed or reported on by the company's auditors. A dividend per share
forecast has not been provided as this is dependent on the outcome and timing of
a number of initiatives to reduce the company's LTV. However, with the expected
growth in net operating income, even after the impact of the initiatives currently
underway to reduce the company's LTV, growth in distributions per share is expected
to be flat or better.
There have been no changes to the board during the period under review.
By order of the board
EPP N.V.
7 March 2019
COMPANY INFORMATION
Directors
Hadley Dean (chief executive officer)
Jacek Baginski (chief financial officer)
Robert Weisz* (chairman)
Marek Belka*
Peter Driessen*
Maciej Dyjas**
Dionne Ellerine*
Andrew Konig**
Nebil Senman**
Andrea Steer*
Marc Wainer**
* Independent non-executive
** Non-executive
Registered office
Gustav Mahlerplei
28, 1082 Amsterdam
The Netherlands
Company secretary
Rafal? Kwiatkowski (Master of Laws)
al. Solidarnosci 36
25-323 Kielce
Poland
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers
15 Biermann Avenue
Rosebank, 2195
(PO Box 61051, Marshalltown, 2107)
LuxSE listing agent
M Partners
56, rue Charles Martel L-2134
Luxembourg
JSE sponsor
Java Capital
6A Sandown Valley Crescent
Sandton
2196
EPP Investor Relations
Curwin Rittles
+48 885 982 310
curwin.rittles@epp-poland.com
Singular Systems IR
Michele Mackey
+27 (0)10 003 0700
michele@singular.co.za
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