Unaudited Condensed Consolidated Financial Statements for the six months ended 30 June 2021
EPP N.V. (Incorporated in The Netherlands)
(Company number 64965945)
JSE share code: EPP
LEI code: 7245003P7O9N5BN8C098
("EPP" or "the company" or "the group")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
30 JUNE 2021
Net property income up by 12% to EUR59.2 million (June 2020: EUR52.6 million)
Financial costs up marginally to EUR22.3 million (June 2020: EUR21.4 million)
Interest costs were stable at 2.6% with an average hedging level of 81%
Distributable earnings increased to EUR33.2 million (June 2020: EUR21.7 million)
Distributable earnings per share increased by 54% to 3.66 euro cents (June 2020: 2.38 euro cents)
Successful acquisition of four retail parks in March 2021 concluding tranche 3 of the Metro transaction
Investment properties value increased by 6% to EUR2.25 billion (December 2020: EUR2.13 billion)
Net loan to value ratio increased marginally to 55.8% (December 2020: 54.8%)
Net asset value per share increased by 3% to EUR1.12 (December 2020: EUR1.09)
100% of EPP's retail GLA is operational
Retail GLA increased by 110 000 m2 with the addition of four retail parks
Footfall continues to trend positively and was at 84% of 2019 footfall levels in August 2021
Higher conversion rates have continued during the period and tenant sales in July were at 102% compared
to the same period in 2019
Top performing categories in July 2021 vs July 2019 were household goods & appliances (+9%), speciality
goods (+7%), fashion & accessories (+5%) and health & beauty (+3%)
Retail occupancy stable at 95.4%
Retail WALT by GLA as per September 2021 is approximately 5 years
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Rental income and recoveries EUR'000 66 106 63 673
Net operating profit EUR'000 53 208 42 806
Profit from operations EUR'000 55 639 (52 515)
Profit/(loss) for the period EUR'000 9 187 (24 311)
Headline earnings per share EUR cents per share 0.9 6.9
Earnings per share EUR cents per share 1.0 (2.7)
Distributable earnings per share EUR cents per share 3.66 2.38
Dividend per share * *
Net asset value per share EUR 1.12 1.09
* Dividend not declared. See "Dividends" below.
EPP is a Dutch-based real estate company and the largest owner of retail real estate located in Poland in
terms of gross lettable area ("GLA"). As at 30 June 2021, the company owns a portfolio of 29 retail
properties and six high-quality office complexes located in the majority of regional cities in Poland. In
addition, EPP owns the Towarowa 22 development in Warsaw.
At period end, EPP owned and managed approximately 1 000 000 m2 of retail GLA and 160 000 m2 of office
GLA, including joint venture projects. The investment portfolio has a high quality and diversified tenant base
of leading retailers including 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.
EPP's strategy is to own large dominant shopping centres located in medium-sized and large cities with
strong catchment areas across Poland.
The company aims to capitalise on the scale of its operations and on the best-in-class asset and property
management services that have been developed within EPP.
Strategy and outlook
The first six months of 2021 were challenging for EPP and its operations, as the retail market was affected
by governmental lockdowns and trade limitations within shopping centres for 11 weeks in total.
Fortunately, EPP benefits from operating in one of the strongest retail markets in Europe, which is expected
to show a strong bounce back after the pandemic, having already returned to growth and exceeding
pre-pandemic values. A rebound in footfall and tenant sales has also been observed. At the same time,
e-commerce penetration levels began to drop once retail restrictions were lifted, demonstrating again that
shopping centres remain the most favourable place for Poles to purchase items. The company remains
optimistic about further continuous growth in operational performance, given the low COVID-19 infection
rates and the progress of Poland's vaccination programme.
EPP will continue to focus on activities that attract shoppers and drive turnovers at its shopping centres.
Asset management initiatives have progressed since the beginning of the year and EPP's teams will continue
to create the best offering for the tenants. Despite challenges relating to the pandemic, EPP continues to
observe stable demand from retailers and confidence in the Polish brick-and-mortar retail market.
EPP's main strategic objective is to reduce leverage in the business through the disposal of a selected
group of assets by means of either outright sales or sales to new long-term joint venture partners. The
company's management believes that there is liquidity in the market and will continue focusing on this
strategy in the next months.
EPP is able to meet all its financial obligations and is within the debt covenant levels of 67% set by credit
providers (EPP's current LTV is at 55.8%). In the coming months the company will further advance on
re-financing of its upcoming debt and remains confident of achieving this goal given the quality of the
assets, sustainable income generated by the assets and strong historical track record of the income
generation by the assets. In addition, the company has adequate liquidity for the period ahead and at this
stage does not envisage requiring any capital raises given the headroom within financial covenant levels.
EPP's operational metrics have been encouraging for the first half of 2021, despite COVID-19 related retail
limitations. The ongoing COVID-19 pandemic requires EPP to proceed with caution and, as a consequence,
the Board deems it prudent to continue to prioritise liquidity by resolving to not declare a dividend at this
stage. The decision on the 2021 dividend will be made when the full year results are approved and will take
into consideration the progress made on asset disposals, refinancing of EPP's upcoming debt, the stability
of the retail environment and the overall improvements achieved in the capital structure.
2021 distributable earnings per share guidance
The Board believes that the full year distributable earnings per share guidance of between 7 and 7.25 euro
cents per share for the year ended 31 December 2021, will be achieved. This is after taking into
consideration the absorption of the impacts of two lockdowns in January and March-April 2021. This
guidance is based on the assumption that until the end of 2021 no significant tenant failures occur and no
further COVID-19 lockdowns impacting EPP's business are imposed in Poland.
This guidance has not been audited, reviewed or reported on by EPP's auditors.
By order of the Board
15 September 2021
Tomasz Trzoslo (Chief Executive Officer)
Jacek Baginski (Chief Financial Officer)
Robert Weisz* (Chairman)
Sandra van Loon*
Taco de Groot*
* Independent non-executive
LuxSE listing agent
Harney Westwood & Riegels SARL
Date: 15-09-2021 07:05:00
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