DGAP-News: CPI PROPERTY GROUP reports financial results for the first quarter of 2019

DGAP-News: CPI PROPERTY GROUP / Schlagwort(e): Quartals-/Zwischenmitteilung/Immobilien

CPI PROPERTY GROUP reports financial results for the first quarter of 2019

22.05.2019 / 19:36

Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

Press Release

Luxembourg, 22 May 2019

CPI PROPERTY GROUP reports financial results for the first quarter of 2019

CPI PROPERTY GROUP (hereinafter "CPIPG" the "Company" or together with its subsidiaries the "Group"), the largest owner of income-generating real estate in the Czech Republic, Berlin and the CEE region, hereby publishes its financial results for the first quarter of 2019.

"In the first quarter of 2019, CPIPG continued our strong trajectory," said Martin Nemecek, CEO of CPIPG. "Income and profitability are rising, and our capital structure is extremely strong."

Key highlights for the first quarter of 2019, plus recent events, include:

• Total assets of EUR8.7 billion at the end of Q1, an increase of EUR0.5 billion from the end of 2018, primarily driven by an increase in cash and cash equivalents.
• Total revenues in Q1 of EUR163 million (up 12 % versus Q1 2018), reflecting the combined effects of acquisitions in 2018 and 2019 and 3.2 % like-for-like growth in rental income.
• Group occupancy increased to 94.7 % in Q1, versus 94.5 % at year-end.
• Funds from operations increased to EUR50 million for the quarter (up 8 % versus Q1 2018).
• EPRA NAV remained unchanged at EUR4.5 billion.
• Net Interest Coverage Ratio increased to 7.7x for Q1 2019 (compared to 4.2x for 2018), reflecting the Group's successful refinancing activities during 2017 and 2018.
• Net Loan to Value (LTV) increased slightly from 36.7 % at year-end to 37.4 %.
• Unencumbered assets as a percentage of total assets rose to 67 %, versus 65 % at the end of 2018.
• Secured debt was reduced to 32 % of total debt, relative to 37 % at the end of 2018.
• Issuance of HKD 450 million (approximately EUR50 million) of senior bonds under the Group's EMTN programme in February 2019.
• Issuance of USD 350 million (approximately EUR312 million) of senior bonds under the Group's EMTN programme in March 2019.
• Issuance of senior unsecured Schuldschein (assignable loans) totaling EUR170 million in March 2019.
• New 3-year unsecured revolving credit facility of EUR510 million signed in March 2019 with 11 regional and international banks.
• Total available liquidity at the end of Q1 of about EUR1 billion, currently exceeds EUR1.5 billion following the issuance of hybrid bonds in April 2019.
• The Group's EMTN programme was increased to EUR5 billion in April 2019.

"Once again, our teams delivered excellent results for the Group," said David Greenbaum, CFO of CPIPG. "We remain focused on creating long-term sustainable value for all our stakeholders, and will continue investing in our portfolio throughout 2019."

U.S. Litigation

On 10 April 2019, a group of Kingstown companies, Investhold LTD and Verali Limited (together, the Kingstown Plaintiffs) filed a claim in the United States District Court of the Southern District of New York against, among others, CPIPG and Mr Radovan Vitek. The claims brought by the Kingstown Plaintiffs against CPIPG include alleged violations of RICO. CPIPG believes that the claims are without merit, and were designed to create negative press attention for CPIPG and force an undue settlement. CPIPG intends to vigorously contest the claims and has retained an international law firm, Hogan Lovells, with an experienced team of litigators and significant experience in RICO cases. At this time, CPIPG has no further comments on developments in the case, aside from the Group's previously published statements.

FINANCIAL HIGHLIGHTS

Performance

31-Mar-19

31-Mar-18

Change

Gross rental income

EUR million

77

73

6 %

Total revenues

EUR million

163

145

12 %

Net rental income

EUR million

73

67

10 %

Consolidated adjusted EBITDA

EUR million

72

64

12 %

Funds from operations (FFO)

EUR million

50

46

8 %

Profit before tax

EUR million

33

29

17 %

Net Interest expense

EUR million

(9)

(19)

(50 %)

Net profit for the period

EUR million

29

24

23 %

Assets

31-Mar-19

31-Dec-18

Change

Total assets

EUR million

8,719

8,259

6 %

Property Portfolio

EUR million

7,594

7,555

1 %

Gross leasable area*

sqm

3,308,000

3,318,000

0 %

Occupancy

%

94.7

94.5

0.2 p.p.

Total number of properties**

No.

376

375

0 %

Total number of residential units

No.

11,915

11,917

0 %

Total number of hotel beds***

No.

11,670

11,300

3 %

* Excluding hotels
** Excluding residential properties in the Czech Republic
*** Including hotels operated, but not owned by the Group

Financing structure

31-Mar-19

31-Dec-18

Change

Total equity

EUR million

4,384

4,362

0.5 %

EPRA NAV

EUR million

4,494

4,480

0 %

Net debt

EUR million

2,842

2,775

2.4 %

Loan to value ratio (Net LTV)

%

37.4

36.7

0.7 p.p.

Secured consolidated leverage ratio

%

12.2

12.9

(0.7 p.p.)

Secured debt to total debt

%

31.8

36.7

(4.9 p.p.)

Unencumbered assets to total assets

%

66.7

65.1

1.6 p.p.

Net ICR

multiple

7.7x

4.2x

3.5x

STATEMENT OF COMPREHENSIVE INCOME

The income statement for the 3 months period ended on 31 March 2019 and 31 March 2018 was as follows:

INCOME STATEMENT (EUR million)

31-Mar-19

31-Mar-18

Gross rental income

77

73

Service charge and other income*

31

28

Cost of service and other charges*

(23)

(21)

Property operating expenses

(12)

(13)

Net rental income

73

67

Development sales

15

7

Development operating expenses**

(15)

(8)

Net development income

-

(1)

Hotel revenue

19

18

Hotel operating expenses

(17)

(15)

Net hotel income
Revenues from other business operations

2

3

Other business revenue

21

19

Other business operating expenses**

(12)

(12)

Net other business income

9

7

Total revenues*

163

145

Total direct business operating expenses*

(79)

(69)

Net business income

84

76

Net valuation gain / (loss)***

4

(5)

Amortization, depreciation and impairment

(14)

(7)

Administrative expenses

(12)

(12)

Other operating income

1

1

Other operating expenses

(2)

(1)

Operating result

61

52

Interest income

3

4

Interest expense

(12)

(23)

Other net financial result***

(18)

(4)

Net finance costs

(27)

(23)

Share of profit of equity-accounted investees (net of tax)

-

-

Profit before income tax

33

29

Income tax expense

(4)

(5)

Net profit from continuing operations

29

24

* In connection with the adoption of IFRS 15, the Group changed, in respect of service charges, revenue recognition from net to gross, before deduction of cost of services (refer to the annual management report for 2018 for further detail). The presentation of the statement of profit or loss for the three months period of 2018 was adjusted due to the changes in the accounting policy as follows:

31 March 2018

Effect of IFRS 15 adoption

31 March 2018 Adjusted

Gross rental income

73

-

73

Net service revenue

7

(7)

-

Service charge and other income

-

28

28

Cost of service and other charges

-

(21)

(21)

Property operating expense

(13)

-

(13)

Net rental income

67

-

67

Total revenues

124

21

145

Total direct business operating expenses

(48)

(21)

(69)

Net business income

76

-

76

** To provide reliable and more relevant information, the Group reclassified (firstly as at 31-Dec-2018) the following items, which are no longer presented separately, in the consolidated financial statements:

• Cost of goods sold related to Development sales and Other business were reclassified to Development operating expenses and Other business operating expenses. Comparative information of EUR 7 million and EUR 1 million as at 31 March 2018 was adjusted accordingly.

*** The Group reclassified effect of changing foreign exchange rates on the revaluation of the investment properties from the Other net financial result to the Net valuation gain or loss. Management finds the adjusted presentation reliable and more relevant, because the effect is already included in determination of the fair value of the relevant investment properties by the Group's subsidiaries.

Comparative information as of 31 March 2018 was adjusted accordingly. The change in the accounting policy had no impact on the statement of financial position, the impact on the statement of comprehensive income is presented in the table below:

31 March 2018

Effect of the accounting policy change

31 March 2018 Adjusted

Net business income

76

-

76

Net valuation gain

(3)

(2)

(5)

Operating result

54

(2)

52

Other net financial result

(6)

2

(4)

Net finance costs

(25)

2

(23)

Profit before income tax

29

-

29

Net profit from continuing operations

24

-

24

Net rental income

Net rental income increased by 10 % to EUR73 million compared to EUR67 million in Q1 2018, driven primarily by an increase in gross rental income reflecting 2018's acquisitions of Futurum Hradec Králové shopping centre (net increase of EUR2 million) and Atrium office complex in Poland (net increase of EUR1.6 million). The better performance of our Berlin portfolio (net increase of EUR2.2 million) contributed to the overall increase in net rental income.

Net development income

Development sales in Q1 2019 were represented by sales of apartments in Nice (revenue of EUR11.6 million) and sales of family houses in Březiněves (revenue of EUR3.3 million).

Net valuation gain / (loss)

Valuation gain in Q1 2019 relates mainly to an FX gain on our property portfolio.

Amortization, depreciation and impairments

The increase in amortization, depreciation and impairments in Q1 2019 was affected by the write-off of goodwill (EUR7 million), which was recognized in 2014 in connection with the acquisition of the Group's agriculture business.

Interest expense

Interest expense was EUR12 million in Q1 2019 compared to EUR23 million in Q1 2018. Interest expense dropped due to the substantial change in the Group's financing structure, resulting into a significant decrease in interest expense from bank loans (net decrease of EUR4.7 million) and bonds (net decrease of EUR5.4 million).

Other net financial result

Other net financial result in Q1 2019 was adversly affected by foreign exchange losses of EUR14 million.

BALANCE SHEET

BALANCE SHEET (EUR million)

31-Mar-19

31-Dec-18

NON-CURRENT ASSETS

Intangible assets and goodwill

103

110

Investment property

6,717

6,687

Property, plant and equipment

754

736

Deferred tax assets

195

195

Other non-current assets

135

91

Total non-current assets

7,904

7,819

CURRENT ASSETS

Inventories

64

72

Trade receivables

83

68

Cash and cash equivalents

464

99

Assets linked to assets held for sale

61

67

Other current assets

143

134

Total current assets

815

440

TOTAL ASSETS

8,719

8,259

EQUITY

Equity attributable to owners of the Company

3,789

3,776

Perpetual notes

549

542

Non-controlling interests

46

44

Total equity

4,384

4,362

NON-CURRENT LIABILITIES

Bonds issued

2,011

1,648

Financial debts

1,178

1,062

Deferred tax liabilities

761

762

Other non-current liabilities

58

53

Total non-current liabilities

4,008

3,525

CURRENT LIABILITIES

Bonds issued

15

7

Financial debts

103

158

Trade payables

85

98

Other current liabilities

124

109

Total current liabilities

327

372

TOTAL EQUITY AND LIABILITIES

8,719

8,259

Total assets

Total assets increased by EUR460 million (6 %) to EUR8,719 million as at 31 March 2019. The predominant driver of this growth was the increase in cash and cash equivalents by EUR365 million.

Increase in investment property by EUR29 million reflects primarily capex and development costs incurred in Q1 2019. Due to the acquisition of Orchard hotel in Ostrava the Group's property portfolio rose by of EUR11 million.

Total liabilities

Non-current and current liabilities totalled EUR4,335 million as at 31 March 2019, an increase of EUR438 million (11.2 %) compared to 31 December 2018. During the first quarter, the Group raised USD bonds (EUR312 million), HKD bonds (EUR50 million), and Schuldschein (EUR170 million). The Group also signed a new secured bank loan of EUR170 million from Unicredit Bank AG and repaid loans totaling EUR102 million.

NAV AND EPRA NAV

Total equity increased from EUR4,362 million as at 31 December 2018 to EUR4,384 million as at 31 March 2019. The main elements impacting equity were:

• an increase in equity due to profit for three months of 2019 in the amount of EUR29 million;
• a decrease by EUR12 million due to a shift in hedging and translation reserves;
• an increase by EUR5 million due to the change in revaluation reserve.

EPRA NAV was EUR4,494 million as at 31 March 2019, an increase of 0.3 % relative to 31 March 2018. The main positive effect was the positive equity elements described above.

EPRA NAV (EUR million)

31-Mar-19

31-Dec-18

Equity per the financial statements (NAV)

3,790

3,776

Effect of exercise of options, convertibles and other equity interests

0

0

Diluted NAV, after the exercise of options, convertibles and other equity interests

3,790

3,776

Revaluation of trading property and PPE

5

7

Fair value of financial instruments

(3)

(5)

Deferred tax on revaluations

745

745

Goodwill as a result of deferred tax

(43)

(43)

Total

4,494

4,480

Investor Contact:

David Greenbaum
Chief Financial Officer
CPI Property Group
d.greenbaum@cpipg.com

Media / PR Contact:

Kirchhoff Consult AG
Andreas Friedemann
Borselstraße 20
22765 Hamburg
T +49 40 60 91 86 50
F +49 40 60 91 86 16
E andreas.fridemann@kirchhoff.de

GLOSSARY

Alternative Performance Measures (APM)

Definition

Rationale

EPRA NAV

Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model.

Makes adjustments to IFRS NAV to provide stakeholders with the most relevant information on the fair value of the assets and liabilities within a true real estate investment company with a long-term investment strategy.

Loan-to-Value or Net LTV

It is calculated as Net debt divided by fair value of Property Portfolio.

Loan-to-value provides a general assessment of financing risk undertaken.

Net ICR

It is calculated as Consolidated adjusted EBITDA divided by a sum of interest income as reported and interest expense as reported.

This measure is an important indicator of a firm's ability to pay interest and other fixed charges from its operating performance, measured by EBITDA.

Secured debt to total debt

It is calculated as a sum of secured bonds and secured financial debts as reported divided by a sum of bonds issued and financial debts as reported.

This measure is an important indicator of a firm's financial flexibility and liquidity. Lower levels of secured debt typically also means lower levels of mortgage debt - properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales.

Unencumbered assets to total assets

It is calculated as total assets as reported less a sum of encumbered assets as reported divided by total assets as reported.

This measure is an important indicator of a commercial real estate firm's liquidity and flexibility. Properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales. The larger the ratio of unencumbered assets to total assets, the more flexibility a company generally has in repaying its unsecured debt at maturity, and the more likely that a higher recovery can be realized in the event of default.

Consolidated adjusted EBITDA

Net business income as reported deducted by administrative expenses as reported.

This is an important economic indicator showing a business's operating efficiency comparable to other companies, as it is unrelated to the Group's depreciation and amortization policy and capital structure or tax treatment. It is one of the fundamental indicators used by companies to set their key financial and strategic objectives.

Funds from operations or FFO

It assumes net income (computed in accordance with IFRS), excludes non-recurring (non-cash) items like gains (or losses) from sales of property and inventory, impact of derivatives revaluation and impairment transactions. Calculation excludes accounting adjustments for unconsolidated partnerships and joint ventures.

Funds from operations provide an indication of core recurring earnings.

Secured consolidated leverage ratio

Secured consolidated leverage ratio is a ratio of a sum of secured financial debts and secured bonds to Consolidated adjusted total assets.

Consolidated adjusted total assets is total assets as reported deducted by intangible assets and goodwill as reported.

This measure is an important indicator of a firm's financial flexibility and liquidity. Lower levels of secured debt typically also means lower levels of mortgage debt - properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales.

Non-financial definitions

Definition

Company

CPI Property Group S.A.

Property Portfolio value or PP value

The sum of value of Property Portfolio owned by the Group

Gross Leasable Area or GLA

Gross leasable area 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.

Group

CPI Property Group S.A. together with its subsidiaries

Net debt

Net debt is borrowings plus bank overdraft less cash and cash equivalents.

Occupancy

Occupancy is a ratio of estimated rental revenue regarding occupied GLA and total estimated rental revenue, unless stated otherwise.

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 reconciliation (EUR million)

31-Mar-19

31-Dec-18

Equity per the financial statements (NAV)

3,790

3,776

Effect of exercise of options, convertibles and other equity interests

0

0

Diluted NAV, after the exercise of options, convertibles and other equity interests

3,790

3,776

Revaluation of trading property and PPE

5

7

Fair value of financial instruments

(3)

(5)

Deferred tax on revaluation

745

745

Goodwill as a result of deferred tax

(43)

(43)

EPRA NAV

4,494

4,480

Net LTV reconciliation (EUR million)

31-Mar-19

31-Dec-18

Financial debts

1,281

1,219

Bonds issued

2,026

1,655

Net debt linked to AHFS

0

0

Cash and cash equivalents

(464)

(99)

Net debt

2,842

2,775

Total property portfolio

7,594

7,555

Net LTV

37.4 %

36.7 %

Net Interest coverage ratio reconciliation (EUR million)

31-Mar-19

31-Dec-18

Interest income

3

14

Interest expense

(12)

(78)

Net Business Income

84

320

Administrative expenses

(12)

(49)

Net Interest coverage ratio

7.7x

4.2x

Secured debt as of Total debt reconciliation (EUR million)

31-Mar-19

31-Dec-18

Secured bonds

0

0

Secured financial debts

1,052

1,055

Total debts

3,306

2,874

Secured debt as of Total debt

31.8 %

36.7 %

Unencumbered assets reconciliation (EUR million)

31-Mar-19

31-Dec-18

Bonds collateral

0

0

Bank loans collateral

2,902

2,883

Total assets

8,719

8,259

Unencumbered assets ratio

66.7 %

65.1 %

Consolidated adjusted EBITDA reconciliation (EUR million)

31-Mar-19

31-Mar-18

Net business income

84

76

Administrative expenses

(12)

(12)

Consolidated adjusted EBITDA

72

64

Funds from operations reconciliation (EUR million)

31-Mar-19

31-Mar-18

Net profit for the period

29

24

Deferred income tax

1

3

Net valuation gain or loss on investment property

(4)

3

Net valuation gain or loss on revaluation of derivatives

(4)

1

Net gain or loss on disposal of investment property

0

0

Net gain or loss on disposal of inventory

0

0

Net gain or loss on disposal of assets

(1)

0

Amortization, depreciation and impairments

14

7

Other non-recurring / non-cash items

16

9

Funds from operations

50

46

Secured consolidated leverage ratio reconciliation (EUR million)

31-Mar-19

31-Dec-18

Secured bonds

0

0

Secured financial debts

1,052

1,055

Consolidated adjusted total assets

8,616

8,149

Secured consolidated leverage ratio

12.2 %

12.9 %

22.05.2019 Veröffentlichung einer Corporate News/Finanznachricht, übermittelt durch DGAP - ein Service der EQS Group AG.
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Sprache:

Deutsch

Unternehmen:

CPI PROPERTY GROUP

40, rue de la Vallée

L-2661 Luxembourg

Luxemburg

Telefon:

+352 264 767 1

Fax:

+352 264 767 67

E-Mail:

contact@cpipg.com

Internet:

www.cpipg.com

ISIN:

LU0251710041

WKN:

A0JL4D

Börsen:

Regulierter Markt in Frankfurt (General Standard); Freiverkehr in Düsseldorf, Stuttgart

EQS News ID:

814871

Ende der Mitteilung

DGAP News-Service

814871 22.05.2019