RESULTS FOR 6 MONTHS TO 30 JUNE 2018 - Replacement

 

 

The following text amendments have been made to the 'Results for the six months ended 30 June 2018' announcement released on 20 August at 16.30 under RNS No 3312Y.

 

Three numbers have been corrected in the first table within the 'Projected cash flow' section. All three corrected numbers are in the third column of the table, labelled 'H1/2020'. Numbers corrected as follows:

 

1.   Original in 'Bonds - Principal' row: 11.4

Corrected in 'Bonds - Principal' row: 24.6

 

2.   Original in 'Total Uses' row: 13.9

Corrected in 'Total Uses' row: 27.0

 

3.   Original in 'Cash - Closing Balance' row: 24.9

Corrected: 'Cash - Closing Balance' row: 38.1

 

All other details remain unchanged.

 

The full amended text is shown below.

 

 

 

 

 20 August 2018

PLAZA CENTERS N.V.

 

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

 

 

Plaza Centers N.V. ("Plaza" / "Company" / "Group") today announces its results for the six months ended 30 June 2018.

 

Financial highlights:

·      Reduction in total assets to €89.7 million as a result of the Company's deleveraging including principal repayments and the  redemption in full of Series of bonds issued in Poland to the amount of €40 million (31 December 2017: €141 million)

·      Book value of the Company's Trading properties at 30 June 2018 was €70.2 million (30 December 2017: €73.6 million) due  to a € 3.4 million write-down of Trading properties in Poland, Greece, Romania and Serbia

·      Consolidated cash position as at 30 June 2018 (including restricted bank deposits) decreased to €1.2 million (31 December  2017: €44.8 million) and current cash position of circa €1.22 million

·      Recorded loss of €9.8 million (30 June 2017: €6.8 million) as no further disposals took place during the period. Losses are  mainly due to finance expenses and the write-down of Trading properties

·      Basic and diluted loss per share of €1.43 (30 June 2017: loss per share of €0.99)

·      Gearing increased to 100.9% (31 December 2017: 94%) mainly due to finance costs and write downs

 

 

Material events during the period:

 

Settlement agreement with the Bondholders:

 

In January 2018, a settlement agreement was reached and approved (and all the conditions precedent in the agreement fulfilled) between the holders of two Series of Israeli Bonds and the Company regarding the allocation of funds, to be repaid by the Company, across the Israeli Bonds Series. As a result, the Series A Bondholders withdrew their request for immediate repayment.

 

Retirement of Chief Executive Officer:

 

On 11 January 2018, the Company announced that the CEO, Dori Keren, would retire from his position at the end of March 2018. The Board of Directors appointed Avi Hakhamov, who has been with the Company for more than 11 years, as Acting CEO commencing 1 April 2018.

 

Earn-out payment for the sale of Torun:

 

In June 2018, the Company received the earn-out payment for the sale of Torun Plaza totalling €0.35 million, reduced by NAV adjustment of €0.14 million.

 

Sale agreement of plot in India:

 

In January 2018, the Purchaser of the 100% interest in an SPV (in which Plaza holds a 50% stake with its joint venture partner, Elbit Imaging Ltd.), that holds property in Bangalore, India, (the "Agreement" and the "Purchaser" respectively), gave notice that all remaining payments under the Agreement will be stopped until a mutually acceptable solution is reached due to a proposed change (initiated by the Indian authorities) which could potentially impact the development of the land. In February 2018, despite the notice above, the Purchaser paid the January instalment totalling INR 5 Crores (circa €0.65 million).

 

In March 2018, the Company and the Purchaser signed an amended revised agreement as follows: The Purchaser and EPI agreed that the total purchase price shall be increased to INR 350 Crores (approximately €43.8 million; of which the Company's share is approximately €21.9 million). Following the signing of the revised agreement the Purchaser paid EPI an additional INR 22.5 Crores (approximately €2.8 million; of which the Company's share is approximately €1.4 million) further to the INR 45 Crores (approximately €5.6 million; of which the Company's share is approximately €2.8 million) that was already paid during the previous year.

 

An additional INR 70.5 Crores (approximately €8.8 million; of which the Company's share is approximately €4.4 million) will be paid by the Purchaser in unequal monthly instalments until the Final Closing. The Final Closing will take place on 31 August 2019 when the final instalment of INR 212 Crores (approximately €26.5 million; of which the Company's share is approximately €13.25 million) will be paid to EPI against the transfer of the outstanding share capital of the SPV.

 

If the Purchaser defaults before the Final Closing, EPI is entitled to forfeit certain amounts paid by the Purchaser as stipulated in the revised agreement. All other existing Securities granted to EPI under the previous agreements will remain in place until the Final Closing.

 

Redemption of the Polish Bonds:

 

In May 2018, further to the decision of the Israeli Series A and Series B Bondholders, the Company redeemed in full the series of bonds issued in Poland at their principal amount together with interest accrued to the maturity date. Upon completion of the redemption, the Company will have no outstanding bonds issued in Poland.

 

Claim in Greece:

 

In May 2018, a third party filed a legal claim in the court of Greece against Helios Plaza AE ("HP"), a wholly owned subsidiary of Plaza which holds land property in Athens ("Land Property"). The claimant is pursuing HP for a €2.96 million sum, based on an agreement that is alleged to have been agreed in 2010, and has also filed a request for an injunction with respect to the Land Property in order to secure its claim. In June 2018, the injunction was granted until a final decision regarding the main dispute is reached. At this preliminary stage, the Company and its legal advisors are unable to estimate the probability of the claim and its possible implication, if any.

 

Due to these new circumstances the sale of the Land Property has been put on hold, and the Company is discussing options with the existing potential buyer.

 

The Company recorded a write-down of €1.15 million on the property, which reflects expected transaction costs.

 

Motion to reveal and review internal documents:

 

In March 2018, a Shareholder of the Company filed a motion with the Financial Department of the District Court in Tel-Aviv to reveal and review internal documents of the Company and of Elbit Imaging Ltd., with respect to the events surrounding certain agreements signed in connection with the Casa Radio Project in Romania and the sale of the US portfolio. Such events were previously announced by the Company and are detailed in notes 8(6) and 27(d) in the annual financial statement as of 31 December 2017. In July 2018, the Company filed a response to the relevant court.

 

Key highlights since the period end:

Chennai, India:

 

In July 2018, Elbit Plaza India Real Estate Holdings Limited ("EPI") signed a term sheet with its local partner (the "Buyer"), relating to the sale of EPI's Indian subsidiary ("SPV") that holds 74.7 acre plot in Chennai, India ("Term Sheet"). Under the terms of the Term Sheet, the Buyer shall have 60 days to conduct due diligence only with respect to the SPV, following which definitive agreements, for the sale of the SPV in consideration for INR 110 Crores (approximately €13.75 million; of which the Company's share is approximately €6.8 million) (subject to adjustment with respect to the previous deposit that was placed and the existing cash in the SPV level), shall be signed and closing shall take place on the same day.

 

A request to reveal documents

 

An indirect subsidiary of the Group in Romania (which holds a plot of land outside Bucharest) received a request from the Romanian authorities to reveal documents from the period 2007-2011 as part of an ongoing investigation into procedures during those years. The Company is unaware of the subject of the investigation or any illegal acts or irregularities that may have prompted the investigation.

 

Lodz Centrum Plaza:

 

In July 2018, a subsidiary of the Company signed a preliminary agreement with respect to the sale of the land plot known as "Lodz Centrum Plaza", for a consideration of PLN 1.3 million. The agreement is conditional upon the pre-emptive right of the municipality of Lodz.

 

Commenting on the results, acting CEO Avi Hakhamov, said:

"Our active focus has continued to centre on asset disposals and the optimisation of the business with the aim of satisfying our obligations to our stakeholders. This remains our absolute priority for the second of half of the year."

 

For further details, please contact:

 

Notes to Editors

Plaza Centers N.V. (www.plazacenters.com) is an emerging markets developer of shopping and entertainment centres. The Company is listed on the Main Board of the London Stock Exchange, as of 19 October 2007, on the Warsaw Stock Exchange (LSE: "PLAZ", WSE: "PLZ/PLAZACNTR") and, on the Tel Aviv Stock Exchange. Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. ("EI"), an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and on the NASDAQ Global Market in the United States.

 

Forward-looking statements

This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial) performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. Plaza Centers N.V. has no obligation to update the statements contained in this press release, unless required by law.

 

 

MANAGEMENT STATEMENT

During the first half of 2018 we have made additional progress, albeit at a reduced rate, as we seek to substantially deleverage the business and sell liquid plots of land. This disposal process is evidenced by the minor earn-out payments received for the sale of Torun Plaza.

 

Book value of the Company's Trading properties has reduced to €70.2 million due to the write-down of assets in Poland, Greece, Romania and Serbia.

 

The ongoing portfolio rationalisation activity means the Company now has investments in nine assets, two of which are in India and the remainder sit within Central and Eastern Europe.

 

The Company has been in discussions with potential purchasers with regard to several of its land plots. Looking ahead, we have more disposals agreed and further disposals identified.

 

Results

During the first half of the year, Plaza recorded a €9.8 million loss. This increase compared to the losses reported in the first half of 2017 (€6.8 million) is attributable mainly to a write-down of trading properties to the amount of €3.4 million in respect of plots in Lodz (Poland), Helios Plaza (Greece), Krusevac (Serbia) and Brasov (Romania).

 

The consolidated cash position as at 30 June 2018 (including restricted bank deposits) was €1.2 million (31 December 2017: €44.8 million) and the current cash position is circa €1.22 million.

 

Portfolio progress

 

The Company's portfolio of nine assets as at 20 August 2018 is located across Central and Eastern Europe and India. The full details are as follows:

 

 

Liquidity & Financing

 

Plaza ended the period with a consolidated cash position (including restricted bank deposits) of €1.2 million, compared to €44.8 million at the end of 2017.

 

As at June 30 2018 the Group's outstanding obligations to bondholders total €81 million.

 

Information concerning the Group's obligations and commitments to make future payments under contracts, such as debt agreements in the 18 months starting 1 July 2018, is aggregated in the following table.

 

 

(*)      The Company expects to increase the amount of its liquid balances during the 18 months starting July 1, 2018, through the sale of land plots (including in India) and other assets. 

(**)      Including estimated costs of Plots maintenance.

The Board and Management estimate that there are significant doubts regarding the Company's ability to serve its entire debt according to the current repayment schedule. Moreover, following the new payment structure for the sale of the project in Bangalore, India (refer to Note 7(e)), it is expected that the Company will not be able to meet its entire contractual obligations in the next 12 months.

 

As of 30 June  2018, the Company is not in compliance with the Coverage Ratio Covenant ("CRC") as defined in the restructuring plan. This may entitle the bondholders to declare that all or a part of their respective (remaining) claims become immediately due and payable.

 

On 18 January 2018, S&P Maalot announced that it had ceased updating its rating of the Company's bonds at the Company's request.

 

Strategy and Outlook

Plaza's main focus is on its portfolio disposal programme with the aim of meeting the obligations to our bondholders, followed by material cost-cutting.

 

OPERATIONAL REVIEW

Over the course of the year to date, Plaza has continued to make progress against its operational and strategic objectives. The status of the nine projects is outlined in the table below.

 

The Company's current assets are summarised in the table below:

 

(1) A term sheet for the sale of the SPV was signed in July 2018.

(2) A preliminary sale agreement was signed in June 2017 (representing 22% of this holding)

(3) A Preliminary agreement signed in July 2018. Final agreement expected to be signed in the following weeks.

(4) An amended revised sale agreement of the SPV was signed in March 2018.

 

 

FINANCIAL REVIEW

 

Results

Revenue for the period derived from proceeds received from the disposal of Trading properties amounted to €0.2 million, compared to €67 million in the first half of 2017. The reduced income level is attributable to the subsequent price adjustment of the Torun Plaza (Poland) transaction.

 

Administrative expenses decreased from €3.6 million in the first half of 2017 to €1.5 million as result of a material scale down of the Company's activities, mainly in respect of salaries and related expenses and professional services.

 

Finance income decreased to €0.1 million from €0.4 million in the first 6 months of 2017 due to foreign exchange movements.

 

Finance costs decreased from €11 million to €4.4 million (30 June 2017 and 30 June 2018, respectively). The main components of the costs were:

•     Foreign exchange movements (NIS-EUR) - the effect on the debentures totalled €2.7 million in expenses (30 June 2017 -  €4.3 million expense).

•     Interest expenses booked on all series of bonds totalled €3 million (30 June 2017 - €6.2 million expenses recorded).

•     €1.3 million income (non-cash) recorded associated with amortization of discount on debentures (30 June 2017 - €0.5 million expense) including Implementation of IFRS 9.

 

As a result, the loss for the period amounted to circa €9.8 million in H1 2018, representing a basic and diluted loss per share for the period of €1.43 (H1 2017: €0.99 loss).

 

Balance sheet and cash flow

 

The balance sheet as at 30 June 2018 showed total assets of €89.7 million compared to total assets of €141 million at the end of 2017, largely as a result of the implementation of the debt reduction strategy including the settlement agreement with bondholders recorded in January 2018.

 

Plaza's consolidated cash position as at 30 June 2018 (including restricted bank deposits) decreased to €1.2 million (31 December 2017: €45 million) and the current cash position is circa €1.22 million.

 

The value of the Company's trading properties decreased from €73.6 million as at 31 December 2017 to €70.2 million at the end of 30 June 2018 resulting from a write-down of trading properties.

 

Investments in equity accounted investee companies decreased to €16.2 million (31 December 2017 €19.5 million) as a result of foreign exchange rate losses (€0.8 million), repatriation of capital (€2.1 million) and equity losses mainly due to impairment (€0.4 million).

 

Plaza has a balance sheet liability of €76 million (with an adjusted par value of circa €81 million) from issuing bonds on the Tel Aviv Stock Exchange. These bonds are presented at amortised cost under current liabilities.

 

Liabilities include a provision with respect to the obligation connected to Casa Radio project (Bucharest Romania) in an amount of €12.8 million.

 

The main changes in the cash flow are attributable to interest paid for all series of bonds including consent fee (€3 million), repayment of principal of bonds (€40 million) including full redemption of Polish bonds and instalments received from sale of Bangalore project (€2.1 million).

 

PLAZA CENTERS N.V. -STATEMENT AS PER SECTION 2:362 PARA 6 OF THE DUTCH

CIVIL CODE IN RESPECT OF THE ANNUAL ACCOUNTS 2016

 

 

Plaza Centers N.V. (the "Company") wishes to announce as follows:

 

After completion of the audit of the statutory financial statements for the year ended 31 December 2016, it appeared that certain decisions made when preparing these statutory financial statements were susceptible to discussion.

 

After the Company had a discussion with its auditors, Ernst & Young Israel, in respect of the 2016 IFRS financial statements (not being the 2016 statutory financial statements) the Company made the decision to reissue and replace the 2016 IFRS financial statements that were originally approved by the Board of Directors in May 2017. Therewith, the reasons for reissuance and certain adjustments (including error corrections) made in these financial statements were described. The restated 2016 IFRS financial statements were approved by the Board of Directors

in October 2017.

 

The statutory financial statements for 2016, that were adopted by the Company's general meeting of shareholders on 31 July 2017, have not been amended.

 

After nominating Baker Tilly Berk Accountants B.V. as statutory auditors, the Company decided to restate and reclassify the comparative figures in the 2017 statutory consolidated financial statements in order to match with the restated 2016 IFRS financial statements.

 

The Company's 2017 statutory consolidated financial statements are available on the Company's website www.plazacenters.com. For readers of the 2017 statutory consolidated financial statements, the Company specifically makes reference to notes 2(f) and 2(g) thereof and to note 20 to the company (standalone) financial statements for the year 2017, which are reflected in the Appendix hereto ("Quote from Statutory financial statements for the year ended December 31, 2017). The 2017 statutory financial statements (comprising consolidated financial statements and the standalone financial statements) were adopted by the Company's general meeting of shareholders on 14 June 2018.

 

 

Disclosure in accordance with Regulation 10(B)14 of the Israeli Securities Regulations (periodic and immediate reports), 5730-1970

1.    General Background

 

According to the abovementioned regulation, upon existence of warning signs as defined in the regulation, the Company is obliged to attach its report's projected cash flow for a period of two years, commencing with the date of approval of the reports ("Projected Cash Flow").

 

The Material uncertainty related to going concern was included in view of the Management's plans for asset disposals and also in respect of material uncertainty related to the Casa Radio project, as described in Notes 4, 6 of these reviewed condensed consolidated Financial Statements in this announcement.

 

Upon having such warning signs, the Company is required to provide projected cash flow for the period of 24 months following the reporting period, and also provide explanations on differences between previously disclosed estimated projected cash flows with actual cash flows.

 

2.    Projected cash flow

The Company has implemented the restructuring plan that was approved by the Dutch court on July 9, 2014 (the "Restructuring Plan"). Under the Restructuring Plan, principal payments under the bonds issued by the Company and originally due in the years 2013 to 2015 were deferred for a period of four and a half years, and principal payments originally due in 2016 and 2017 were deferred for a period of one year.

 

The Restructuring Plan further provided that, if the Company does not prepay an aggregate amount of at least NIS 434 million (€107.3 million) on the principal of the bonds on or before December 1, 2016 (the "Early Prepayment"), the principal payments due under the Extended Repayment Schedule will be advanced by one year (the "Accelerated Repayment Schedule").  On November 29, 2016, the Company's bondholders approved a postponement of the Early Prepayment date by up to four months and the reduction of the total amount of the required Early Prepayments to at least NIS 382 million (€94.5 million) (a reduction of 12% on the original amount).  In addition, the Company agreed to pay to its bondholders, on 31 March  2018, a one-time consent fee (which is equal to 0.25% from the Company's outstanding debt under the bonds at that time). The consent Fee was paid to the Company's bondholders on a pro rata basis.

 

During first three months 2017, the Company paid to its bondholders a total amount of NIS 199.2 million (€51 million) as an early redemption. Upon such payments, the Company complied with the Early Prepayment Term (early redemption at the total sum of at least NIS 382,000,000) and thus obtained a deferral of one year for the remaining contractual obligations of the bonds.

 

In January 2018, a settlement agreement was signed by the Company and the two Israeli Series of Bonds. In the Settlement Agreement it was agreed, inter alia, to approve:

·      New repayment ratios between the two Israeli Series of Bonds (new ratio: Bond A- 39% Bond B- 61%);

·      An increase in the level of the mandatory early repayments from 75% to 78% of the relevant net income;

·      New repayment schedule;

·      An increase in the compensation to be paid to the Bondholders in the event of successful disposal of Casa Radio Project;

·      A waiver of claims to the Company and its directors and officers; and

·      To waive the request for publication of quarterly financial reports by the Company.

These conditions are included in the forecast.

The materialisation, occurrence consummation and execution of the events and transactions and of the Assumptions on which the projected cash flow is based, including with respect to the proceeds and timing thereof, although probable, are not certain and are subject to factors beyond the Company's control as well as to the consents and approvals of third parties and certain risks factors. Therefore, delays in the realisation of the Company's assets and investments or realisation at a lower price than expected by the Company, as well as any other deviation from the Company's Assumptions (such as additional expenses due to suspension of trading, delay in submitting the statutory reports etc.), could have an adverse effect on the Company's cash flow and the Company's ability to service its indebtedness in a timely manner.

 

 

1.      Including: Riga Plaza (price adjustments), Miercuera Ciuc, part of Casa Radio (€25 million) and Brasov plot in Romania, Lodz residential and Lodz Mall plots in Poland, Krusevac plot in Serbia, Bangalore and Chennai in India. In addition price adjustment in Belgrade Plaza (€1 million) is expected in 2018 and additional €1.8 million are estimated until 2020 depending on the mall's operational results improvement.   

2.      Including €1.5 million compensation to Bondholders related to sale of Casa Radio in H2/2020.

3.      Assuming EUR/NIS rate of 4.20. The repayment schedule takes into consideration that in the case of a disposal of an asset, 78% of the proceeds are used for the early prepayment of the bonds in accordance with the terms of the Amended Restructuring Plan.

 

 

Below is a summary table of the comparison between forecasted and actual cash flows, with explanations on the differences published for the 6-month period ending 30 June 2018.

 

1          Forecast included proceeds from Riga (€0.15 m), Torun Plaza Price Adjustment (€0.15 m), Bangalore (€1.45 m) and Kochi Advance (€1.4 m). Actual included proceeds from Riga (€0.15 m), Torun Plaza Price Adjustment (€0.2 m), Bangalore (€1.45 m) and reimbursement of costs related to Kragujevac project (€0.225 m).

2          Including €0.2 million compensation to Bondholders.

 

Avi Hakhamov

Acting CEO

20 August 2018

 

 

 

PLAZA CENTERS N.V.

 

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

 

AS OF JUNE 30, 2018

 

 

 

 

 

INDEX

 

 

 

 

 

 

- - - - - - - - - - -