Press Release
Luxembourg, 31 May 2018
ORCO PROPERTY GROUP
Q1 2018 Financial Results
Key recent events
Annual general meeting of 31 may 2018
The annual general meeting of ORCO PROPERTY GROUP's (hereinafter "OPG", the "Company" or together with its subsidiaries the "Group") shareholders held on 31 May 2018 (the "Meeting") approved the statutory annual accounts and consolidated annual accounts for the financial year ending 31 December 2017, as well as the allocation of financial results for the financial year ending 31 December 2017. The Meeting decided to appoint Mr. Jirí Dedera, Mr. Edward Hughes and Mr. Erik Morgenstern to the Board of Directors of the Company until the annual general meeting of 2019 concerning the approval of the annual accounts of the Company for the financial year ending 31 December 2018. Mr. Jirí Dedera was also elected Managing Director (administrateur délégué) of the Company.
Acquisition of land banks in Czechia
The Company acquired a portfolio of lands located in the North & West Bohemia regions of Czechia, mostly along the D5 & D8 motorways, totalling approximately 3.8 million square meters. As part of the portfolio, the Company also acquired 50% stake on a historical building located in the historic centre of Prague. The portfolio was acquired from another entity belonging to the CPI PROPERTY GROUP.
Financial highlights
| Performance | 31-Mar-18 | 31-Mar-17 | Change | ||
| Gross rental income | € thousands | 348 | 487 | (29%) | |
| Total revenues | € thousands | 4,599 | 579 | 694% | |
| Operating result | € thousands | 2,441 | 3,651 | (33%) | |
| Net profit for the period | € thousands | 12,667 | 2,562 | 394% | |
| | |||||
| Assets | 31-Mar-18 | 31-Dec-17 | Change | ||
| Total assets | € thousands | 2,071,034 | 1,980,303 | 5% | |
| EPRA NAV | € thousands | 606,546 | 598,736 | 1% | |
| Property Portfolio | € thousands | 460,000 | 457,000 | 1% | |
| Gross leasable area | sqm | 28,000 | 28,000 | 0% | |
| Occupancy in % | % | 82% | 82% | 0 pp | |
| Land bank area | sqm | 17,656,000 | 17,675,000 | (0.1%) | |
| Total number of properties | No. | 6 | 6 | 0% | |
| | |||||
| Financing structure | 31-Mar-18 | 31-Dec-17 | Change | ||
| Total equity | € thousands | 636,828 | 628,371 | 1% | |
| Equity ratio | % | 31% | 32% | (1.0 pp) | |
| Net debt | € thousands | (9,365) | (10,901) | (14%) | |
| Project LTV | % | (2.0%) | (2.4%) | 0.4 pp | |
Unaudited Income statement
| € thousands | 31-Mar-18 | 31-Mar-17 | ||
| Gross rental income | 348 | 487 | ||
| Service revenues | 4,295 | -- | ||
| Net service charge income | (69) | -- | ||
| Property operating expenses | (433) | (298) | ||
| Net rental income | 4,141 | 189 | ||
| Development sales | 25 | 92 | ||
| Cost of goods sold | (4) | (34) | ||
| Net development income | 21 | 58 | ||
| Total revenues | 4,599 | 579 | ||
| Total direct business operating expenses | (437) | (332) | ||
| Net business income | 4,162 | 247 | ||
| Net gain or loss on disposal of inv. property | 440 | -- | ||
| Net gain or loss on disposal of subsidiaries | 2,537 | 1,061 | ||
| Amortization, depreciation and impairments | 394 | 2,953 | ||
| Other operating income | 12 | 6 | ||
| Administrative expenses | (4,322) | (659) | ||
| Other operating expenses | (782) | 43 | ||
| Operating result | 2,441 | 3,651 | ||
| Interest income | 23,361 | 5,723 | ||
| Interest expense | (10,971) | (3,673) | ||
| Other net financial result | 807 | (889) | ||
| Net finance income / (costs) | 13,197 | 1,161 | ||
| Share of profit of equity-accounted investees (net of tax) | -- | (1,397) | ||
| Profit / (Loss) before income tax | 15,638 | 3,415 | ||
| Income tax expense | (2,971) | (853) | ||
| Net Profit for the period | 12,667 | 2,562 |
Over the three months of 2018, the OPG group recorded a net profit in the amount of EUR 12.7 million compared to EUR 2.6 million in Q1 2017.
Total revenues increased year-on-year to EUR 4.6 million for the three months of 2018 compared to EUR 0.6 million over the same period in 2017 mainly due to providing services to CPI PROPERTY GROUP entities.
Operating result as of March 2018 is represented by gain of EUR 2.4 million compared to EUR 3.7 million over the same period in 2017. The deterioration of result is mainly due to the increase of advisory services provided by the entity ST Project Limited.
Net finance income improved from EUR 1.2 million in Q1 2017 to EUR 13.2 million during the three months of 2018 due to increase in interest income from loans provided to related parties.
Unaudited Statement of financial position
| € thousands | ||||||
| 31-Mar-18 | 31-Dec-17 | |||||
| NON-CURRENT ASSETS | ||||||
| Investment property | 454,103 | 450,373 | ||||
| Property, plant and equipment | 44 | 35 | ||||
| Equity-accounted investees | 4,571 | 4,571 | ||||
| Available-for-sale financial assets | 98,721 | 104,613 | ||||
| Loans provided | 1,276,881 | 1,196,932 | ||||
| Trade and other receivables | 12 | 12 | ||||
| Deferred tax assets | 123,565 | 123,565 | ||||
| Total non-current assets | 1,957,897 | 1,880,101 | ||||
| CURRENT ASSETS | ||||||
| Inventories | 6,371 | 6,348 | ||||
| Current income tax receivables | 244 | 279 | ||||
| Trade receivables | 8,190 | 4,540 | ||||
| Loans provided | 78,736 | 68,490 | ||||
| Cash and cash equivalents | 9,816 | 11,230 | ||||
| Other current assets | 9,386 | 8,918 | ||||
| Assets held for sale | 394 | 397 | ||||
| Total current assets | 113,137 | 100,202 | ||||
| TOTAL ASSETS | 2,071,034 | 1,980,303 | ||||
| EQUITY | ||||||
| Equity attributable to owners of the Company | 574,354 | 565,688 | ||||
| Non-controlling interests | 62,474 | 62,683 | ||||
| Total equity | 636,828 | 628,371 | ||||
| NON-CURRENT LIABILITIES | ||||||
| Financial debts | 1,170,062 | 1,113,884 | ||||
| Deferred tax liabilities | 36,156 | 33,048 | ||||
| Provisions | 1,593 | 1,559 | ||||
| Other non-current liabilities | 1,955 | 1,991 | ||||
| Total non-current liabilities | 1,209,766 | 1,150,482 | ||||
| CURRENT LIABILITIES | ||||||
| Financial debts | 75,218 | 54,581 | ||||
| Trade payables | 7,517 | 2,723 | ||||
| Advance payments | 84,527 | 84,505 | ||||
| Other current liabilities | 57,178 | 59,641 | ||||
| Total current liabilities | 224,440 | 201,450 | ||||
| TOTAL EQUITY AND LIABILITIES | 2,071,034 | 1,980,303 | ||||
The EPRA NAV per share as of 31 March 2018 and 31 December 2017 is EUR 0.46.
For more information please refer to our website at www.orcogroup.com or contact us at investors@orcogroup.com.
GLOSSARY
The Group presents alternative performance measures (APMs). The APMs used in this press release are commonly referred to and analysed amongst professionals participating in the Real Estate Sector to reflect the underlying business performance and to enhance comparability both between different companies in the sector and between different financial periods. APMs should not be considered as a substitute for measures of performance in accordance with the IFRS. The presentation of APMs in the Real Estate Sector is considered advantageous by various participants, including banks, analysts, bondholders and other users of financial information:
- APMs provide additional helpful and useful information in a concise and practical manner.
- APMs are commonly used by senior management and Board of Directors for their decisions and setting of mid and longterm strategy of the Group and assist in discussion with outside parties.
- APMs in some cases might better reflect key trends in the Group's performance which are specific to that sector, i.e. APMs are a way for the management to highlight the key value drivers within the business that may not be obvious in the consolidated financial statements.
EPRA Net Asset Value per share
EPRA Net Asset Value per share is defined as EPRA NAV divided by the diluted number of shares at the end of period.
EPRA NAV
EPRA NAV is a measure of the fair value of net assets assuming a normal investment property company business model. Accordingly, there is an assumption of owning and operating investment property for the long term. For this reason, deferred taxes on property revaluations and the fair value of deferred tax liabilities are excluded as the investment property is not expected to be sold and the tax liability is not expected to materialize. In addition, the fair value of financial instruments which the company intends to hold to maturity is excluded as these will cancel out on settlement. All other assets including trading property, finance leases, and investments reported at cost are adjusted to fair value.
The performance indicator has been prepared in accordance with best practices as defined by EPRA (European Public Real Estate Association) in its Best Practices Recommendations guide, available on EPRA's website (www.epra.com).
Equity ratio
Equity Ratio provides a general assessment of financial risk undertaken. It is calculated as Total Equity divided by Total Assets.
Gross Leasable Area
Gross leasable area (GLA) is the amount of floor space available to be rented. Gross leasable area is the area for which tenants pay rent, and thus the area that produces income for the property owner.
Occupancy rate
The ratio of leased premises to total GLA.
Project Loan-to-Value
Project Loan-to-Value ("Project LTV ratio") provides a general assessment of financing risk undertaken. It is calculated as Adjusted Net Debt divided by fair value of Property Portfolio. Net Debt is borrowings plus bank overdraft less sum of borrowings from within CPI Property Group and cash and cash equivalents.
Property Portfolio
Property Portfolio covers all properties held by the Group, independent of the balance sheet classification, from which the Group incurs rental or other operating income.
APM reconciliation
| EPRA NAV per share reconciliation (€ thousands) | 31-Mar-18 | 31-Dec-17 |
| Consolidated equity | 574,354 | 565,688 |
| Fair Value adjustment on assets held for sale | -- | -- |
| Fair value adjustments on inventories | -- | -- |
| Deferred taxes on revaluations | 32,192 | 33,048 |
| Goodwill | -- | -- |
| Own equity instruments | -- | -- |
| EPRA Net asset value | 606,546 | 598,736 |
| Existing shares (in thousands) | 1,314,508 | 1,314,508 |
| Net asset value in EUR per share | 0.46 | 0.46 |
| Project LTV ratio reconciliation (€ thousands) | 31-Mar-18 | 31-Dec-17 |
| Financial debts | 451 | 329 |
| Cash and cash equivalents | (9,816) | (11,230) |
| Net debt | (9,365) | (10,901) |
| Total property portfolio | 460,474 | 456,721 |
| Net LTV | (2.0%) | (2.4%) |
| Equity ratio reconciliation (€ thousands) | 31-Mar-18 | 31-Dec-17 |
| Total equity | 636,828 | 628,371 |
| Total assets | 2,071,034 | 1,980,303 |
| Equity ratio | 31% | 32% |
