ORCO PROPERTY Press Release
Luxembourg, 31 August 2017
ORCO PROPERTY GROUP
H1 2017 Financial ResultsKey recent events
ANNUAL GENERAL MEETING OF SHAREHOLDERS
The annual general meeting of the shareholders of ORCO PROPERTY GROUP (the "Company" and together with its subsidiaries as the "Group") was held on 24 May 2017 in Luxembourg (the "Annual Meeting"), with approximately 97.35% of the voting rights present or represented.
The Annual Meeting approved the statutory annual accounts and consolidated annual accounts for the financial year ending 31 December 2016, as well as the allocation of financial results for the financial year ending 31 December 2016. The Annual Meeting further granted a discharge to the members of the Company's Board of Directors as well as to the auditors for the performance of their duties during the financial year ending 31 December 2016. The Annual Meeting also resolved to appoint the following persons as members of the Company's Board of Directors as of the date of the Annual Meeting and until the annual general meeting of 2018 concerning the approval of the annual accounts for the financial year ending 31 December 2017: Jiří Dedera, Edward Hughes and Erik Morgenstern. Jiří Dedera was also elected Managing Director (administrateur délégué) of the Company. The Annual Meeting finally resolved to appoint KPMG Luxembourg as an auditor (réviseur d'entreprises agréé) of the Company until the annual general meeting of 2018 concerning the approval of the annual accounts for the financial year ending 31 December 2017.
SUSPENSION OF TRADING IN WARSAW:
On 17 February 2017, the Warsaw Stock Exchange informed the Company, that it had suspended trading of the Company shares on the Warsaw Stock Exchange.
DISPOSAL OF CAPELLEN OFFICE BUILDING:
The Company disposed the office building in Capellen, Luxembourg. The building with a leasable area of approximately 7,700 square meters, located in the Capellen business park just outside of the City of Luxembourg, was sold to a private investor. The transaction, structured as a share deal, was completed on 25 January 2017.
INCREASE OF SHARE IN THE JOINT VENTURE:
On 29 June 2017, the Company and Unibail-Rodamco entered into documentation modifying parameters of their joint venture. The agreed modifications include, inter alia, the increase of the
Company's share in the joint venture from 20% to 35%, certain governance rights as well as
modifications of timeframe and parameters of the joint venture.
The joint venture, aimed at developing of a prime shopping centre, is comprised of a 3.6 hectare plot located in the Bubny area, in downtown Prague. The parties will continue to focus on implementing of the development of the Anchor shopping centre in the Bubny area.
Financial highlights
Over the first half of 2017, the Group recorded a
net profit attributable to owners of the Company in the amount of EUR 62.6 million compared to EUR
8.5 million in H1 2016.
Total revenues decreased year-on-year to EUR 1.4 million for the first half of 2017 compared to EUR 4.7 million over the same period in 2016 mainly due to disposal of properties in 2016 and 2017. Operating result as of June 2017 is represented by gain of EUR 78.2 million compared to EUR 15.0 million over the same period in 2016. The improvement of result is mainly due to the positive fair value adjustment on investment property.
Financial result improved from a loss of EUR 4.8 million to a gain of EUR 94 thousand as at 30 June 2017 due to increase in interest income from loans provided to related parties.
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Income statement
Gross rental income Service revenues | 1,189 -- | 3,474 28 |
Net service charge income | (55) | 783 |
Property operating expenses | (837) | (1,223) |
Net rental income | 297 | 3,062 |
Development sales | ||
Cost of goods sold |
198 | 432 | |
(61) | (373) | |
Net development income | 137 | 59 |
Total revenues | 1,332 | 4,717 |
Total direct business operating expenses | (898) | (1,596) |
Net business income | 434 | 3,121 |
74,499 | 10,303 |
Income statement for the six month period ended on 30 June 2017 is as follows:
TEUR 30 June 2017 30 June 2016Net valuation gain or loss on inv. property | ||
Net gain or loss on disposal of inv. property | (21) | (440) |
Net gain or loss on disposal of subsidiaries | 1,056 | 2,045 |
Amortization, depreciation and impairments | 3,098 | 1,985 |
Other operating income | 163 | 315 |
Administrative expenses | (913) | (2,146) |
Other operating expenses | (103) | (209) |
Operating result | 78,213 | 14,974 |
Interest income | 19,212 | 384 |
Interest expense | (10,708) | (4,124) |
Other net financial result | (8,410) | (1,037) |
Net finance income / (costs) | 94 | (4,777) |
Share of profit of equity-accounted investees (net of tax) | (1,009) | 1,041 |
Profit / (Loss) before income tax | 77,298 | 11,238 |
Income tax expense | (14,686) | (2,682) |
Net profit / (Loss) for the period | 62,612 | 8,556 |
Net rental income
Net rental income decreased by 90% to EUR 0.3 million in H1 2017 (H1 2016: EUR 3.1 million). The negative impact of the decrease in gross rental income of 66%, reflecting the disposal of non-core properties in 2016 and 2017.
Net valuation gain
The net valuation gain for the first six months of 2017 amounts to EUR 74.5 million (H1 2016: EUR 10.3 million) which comprises of valuations carried out for Czech properties Bubny, Pragovka and Bubenská. Its gain was driven primarily by the general market conditions as well as by improved assumptions (mainly on ERV and yields) retained by the external valuation experts.
ORCO PROPERTY GROUP | Press Release - H1 2017 Results 3
Administrative expenses
Administrative expenses decreased by 57.5% to EUR 0.9 million in H1 2017 compared to EUR 2.2 million in H1 2016. During 2016 there was a significant cost reduction and this trend continued in H1 2017. Other determinants causing the reduction of costs were the disposals of entities in 2016 and 2017.
Net finance income
Total net finance result dropped from net loss of EUR 4.8 million in H1 2016 to net gain of EUR 0.1 million in H1 2017. The interest income increased from EUR 0.4 million in H1 2016 to EUR 19.2 million in H1 2017. The increase in interest income reflects the provision of new loans by the Company to the third parties. These loans bear an interest rate between 6% - 12%.
Other net financial result
The other net financial result decreased from a loss of EUR 1.0 million to EUR 8.4 million as at 30 June 2017. The main cause of this deterioration is the exchange rate loss (EUR 10.9 million) resulting from the transactions between the Company and CPI Property Group (mainly Czech Property Investments, a.s., whose functional currency is Czech koruna). The Czech koruna has been steadily appreciating since April 2017, when the Czech National Bank ended its Czech koruna floor commitment.
The loss from the exchange rate is partly compensated by the fair value gain on the derivative assets (EUR 3.2 million) reflecting the value of the subscription rights for the new shares of CPI Property Group.
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ORCO Property Group SA published this content on 31 August 2017 and is solely responsible for the information contained herein.
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