Orco Property Group : Q3 2016 Financial Results

Wednesday, 30. November 2016 18:18

Luxembourg, 30 November 2016                                                                                                                        Press Release

Orco Property Group

Q3 2016 Financial Results

Key recent events

Appointment of a valuation expert for the determination of the equitable price to be offered to the shareholders of OPG in the context of the mandatory takeover bid:  On 8 June 2016 CPI PROPERTY GROUP through its wholly owned subsidiary Nukasso indirectly acquired 97.31% shares in ORCO Property Group ("OPG" or the "Company" and together with its subsidiaries as the "Group"). Nukasso has submitted a draft offer document for approval to the CSSF in its capacity as competent supervisory authority. On 22 September 2016, the CSSF appointed PricewaterhouseCoopers société cooperative (Luxembourg) as the independent expert for the determination of the equitable price to be offered to the shareholders of OPG in the context of the mandatory takeover bid over any and all of the ordinary shares of OPG. The valuation report will take 8 June 2016 as the valuation reporting date.

  • Disposal of CPI Property Group shares: On 29 August 2016, the Company disposed of 65,957,446 pieces of ordinary shares of CPI Property Group for an aggregate consideration of EUR 34.59 million. The disposal of shares was based on the Agreement on Put Option over Shares entered into by the Company and Mr. Radovan Vítek on 24 September 2014. The disposal price per share equals to EUR 0.47, plus a 6.00% p.a. interest from 24 September 2014 until 29 August 2016. The shares were acquired by a holding entity of Mr. Vítek. The Company continues to hold app. 1.45% of CPI Property Group shares.
  • Disposal of Vaci 188 and 190 projects: On 30 November 2016 the Company disposed of the Vaci 188 and 190 properties in Budapest, Hungary. The disposal, structured as a share deal transaction, was completed today and the counterparty is a consortium of Hungarian investors. The project company, which was sold owns two properties: Vaci 188 - the office building with 15,000m2 gross area and 5,844m2 plot size and Vaci 190 - the development plot with 4,583m2 area.

Q3 2016 Financial highlights

Over the nine months of 2016 the Group recorded net profit attributable to owners of the Company in the amount of EUR 10.2 million compared to a loss of EUR 20.8 million in Q3 2015.

  • Total revenue decreased year on year to EUR 8.6 million for the nine months of 2016 compared to EUR 9.9 million over the same period in 2015 (13.5% y-o-y). This decrease comes from the Property Investment business line.
  • Operating result as of September 2016 is represented by a gain of EUR 13.0 million compared to a loss of EUR 12.1 million over the same period in 2015. The improvement of results is mainly due to the positive fair value adjustments on investment property.
  • Financial result improved from a loss of EUR 13.3 million to a gain of EUR 6.6 million as at 30 September 2016.
  • The adjusted EBITDA increased by EUR 2.6 million and amounts to EUR 0.5 million as at 30 September 2016 compared to EUR -2.1 million in September 2015. Following the improvement of operational results, Property Investments reports a positive variation of EUR 3.4 million, while the development segment reports worsened to an adjusted EBITDA (EUR 0.8 million).
  • The LTV ratio as at 30 September 2016 is 8.5% and significantly decreased compared to 40.8% as at 31 December 2015. The main reason of this decrease was the repayment of the loan provided by CPI PG to the Group (EUR 32.1 million), the acquisition of New Notes (EUR 49.2 million) and received cash from Put Option (EUR 34.6 million). Total amount of financial liabilities including financial debts and New Notes is EUR 25.6 million as at the end of September 2016 in comparison to EUR 150.3 million at the end of 2015. The Fair value of portfolio is evaluated from EUR 369.3 million to EUR 300.2 million.

Unaudited income statement

   9 months 9 months
    2016 2015
Revenue   8,570 9,907
Sale of goods   1,556 879
Rent   6,080 5,908
Hotels and restaurants   - -
Services   934 3,120
Net gain from fair value      
adjustments on Investment Property   8,496 (14,406)
Other operating income   289 492
Net result on disposal of assets   238 (748)
Cost of goods sold   (2,754) (1,015)
Employee benefits   (179) (572)
Amortization, impairments and provisions   3,774 5,157
Other operating expenses   (5,426) (10,885)
Operating result   13,008 (12,070)
Interest expense   (5,446) (9,427)
Interest income   900 653
Foreign exchange result   (439) 1,629
Other net financial results   11,577 (6,149)
Financial result   6,592 (13,294)
Share of profit or loss of entities accounted for using the equity method   (7,057) 2,928
Profit before income taxes   12,544 (22,436)
Income taxes   (2,351) 1,260
Profit from continuing operations   10,193 (21,176)
Profit after tax from discontinued operations   - -
Net profit for the period   10,193 (21,176)
Total profit attributable to:      
Non-controlling interests   6 (328)
Owners of the Company   10,188 (20,848)


1            Revenue by segment

The revenue decreased by 13.5% compared to 2015, reaching EUR 8.6 million as of September 2016.

Main contributors to the revenue from rent are projects of the renting segment - Na Porící, Hradcanská and Bubenská in the Czech Republic (EUR 3.5 million) and Capellen in Luxembourg (EUR 1.4 million).

Revenue from sale of goods recognized in Q3 2016 includes remaining units sold on project Benice I (EUR 0.3 million) and Benice 1c (EUR 1.2 million).

  Development Property Investments Total
YTD Revenue    
As at September 2016 2,411 6,159 8,570
As at September 2015 1,611 8,296 9,907
Variation 800 (2,137) (1,337)

2            Operating expenses

Total operating expenses decreased by 51.1% to EUR 5.9 million over Q3 2016. This decrease is mainly due to the relevant write-off of receivables towards disposed Hungarian entities in 2015 (EUR 2.0 million) and reduction of legal costs in Luxembourg (EUR 1.0 million) compared to the same period in 2015. Furthermore employee benefits were reduced as a result of continuing reduction in headcount.

  9 months 2016 9 months 2015
Other Operating expenses (5,426) (10,885)
Leases and rents (149) (131)
Building maintenance and utilities supplies (1,696) (1,739)
Marketing and representation costs (143) (351)
Administration costs (2,622) (5,528)
Taxes other than income tax (487) (572)
Other operating expenses (329) (2,564)
Employee benefits (179) (572)
Total operating expenses (5,605) (11,457)

3            Adjusted EBITDA[1]

Operating result is showing positive YoY variation, loss of EUR 12.1 million reported in Q3 2015 improved to a gain of EUR 13.0 million over the same period in 2016, positively affected by gain on fair value adjustment.

  Development Property Investments TOTAL 
Operating Result - 9m 2016 8,034 4,974 13,008
Net gain or loss from fair value adjustments on investment property (6,070) (2,426) (8,496)
Amortisation, impairments and provisions (3,935) 161 (3,774)
Net result on disposal of assets 9 (247) (238)
Adjusted EBITDA - 9m 2016 (1,962) 2,462 500
Adjusted EBITDA - 9m 2015 (1,125) (949) (2,075)
Variation YoY (837) 3,411 2,575

4            Financial Result

4.1            Interests

The interest expenses YoY further decreased by EUR 3.9 million from EUR 9.4 million to EUR 5.5 million. The bank interest for the 9 months of 2016 amounting of EUR 1.5 million relates to the Property investment activity only. The interest on third party loans for the 9 months of 2016 amounts to EUR 0.7 million. As of September 2016, New Notes interests amount to EUR 3.3 million for the 9 months of 2016.

4.2            Other net financial results

Other net financial results amounting to EUR 11.6 million consist mainly of: (i) gain on disposal of SHH stake EUR 8.2 million, (ii) gain on disposal of Czech entities EUR 1.9 million, (iii) gain on New Notes purchase EUR 1.1 million.

5            Consolidated balance sheet

Compared to year-end 2015, the amount of total assets decreased from EUR 378.6 million to EUR 376.6 million as at end of September 2016.

   30 September 31 December
   2016 2015
NON-CURRENT ASSETS 281,898 355,607
  Investment property 242,659 241,825
  Property, plant and equipment 337 353
  Non-current financial assets 38,902 113,429
  Other non-current assets - -
CURRENT ASSETS 85,907 22,955
  Inventories 9,805 7,774
  Trade receivables 2,693 3,409
  Derivative instruments 36,760 -
  Cash and cash equivalents 34,710 3,264
  Other current assets 10,729 8,508
TOTAL 376,595 378,562
Equity and liabilities
   30 September 31 December
   2016 2015
EQUITY 296,275 204,589
  Equity attributable to owners of the Company 295,970 204,402
  Non controlling interests 305 187
LIABILITIES 80,320 173,973
Non-current liabilities 35,484 88,113
  Bonds and financial debts 10,371 81,108
  Other long term liabilities 25,113 7,005
Current liabilities 44,836 85,860
  Current bonds and financial debts 33,393 69,180
  Other current liabilities 11,443 16,680
TOTAL 376,595 378,562

For more information,
visit www.orcogroup.com, or contact us
at investors@orcogroup.com

[1] The adjusted EBITDA is the recurring operational cash result calculated by deduction from the operating result of non-cash items and non-recurring items (Net gain or loss on fair value adjustments - Amortization, impairments and provisions - Net gain or loss on the sale of abandoned developments - Net gain or loss on disposal of assets) and the net results on sale of assets or subsidiaries.

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Source: Orco Property Group via Globenewswire

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