Q1 2013 Financial Highlights
- Gross margin from rental activity back to 70% (63% in Q4 2012)
- Earnings before taxes and revaluations up to €5m (-€1m in Q1 2012) from increased efficiency in asset management
- Rental and service revenues at €30m (€32m in Q1 2012) reflecting sale of Platinium Business Park
- Net revaluation of investment properties and impairment of €25m mainly related to change of zoning of Galleria Bucharest land site following changes in law and expansion of yields in Romania;
- Loan to value ratio improved to 55% (60% in Q1 2012)
- Cash flow from operations after interest payment up to €5m (€3m in Q1 2012)
- Cash and cash equivalents and deposits of €230m.
Q1 2013 Operating Highlights
- New leases of over 5,000 sqm
- Significant lease renewals and extensions of 4,400 sqm office space
- Occupancy at 91% (91% in Q1 2012).
“First quarter 2013 was another busy quarter for the Company. In addition to two projects in Warsaw, Galeria Wilanów and Galeria Białołęka, that keep us busy, we also put a lot of attention to the improvement of our retail properties in Bulgaria, Croatia and Romania. We also realized our assets disposal plan by selling the fifth building in Platinium Business Park which improved our cash position by €16m.” – said Alain Ickovics, Chairman of the Supervisory Board of GTC S.A. “We entered 2013 stronger and confident that we can further increase liquidity via the asset disposal program and decrease leverage in order to meet our financial obligations and finance new properties development, including three new shopping malls, two in Warsaw and one in Belgrade as well as planning an office building in Bucharest. ” – added Alain Ickovics.
Rental and service revenues decreased by €1m to €30m in Q1 2013 from €32m in Q1 2012, as a result of disposal of Platinium Business Park project in Warsaw. The margin on rental revenues was stable at 70% in Q1 2013 (72% in Q1 2012). As of March 2013, GTC’s completed buildings were leased in 91%, therefore further rental revenue growth is probable.
Revenues from the sale of residential properties decreased to €3m in Q1 2013 from €5m in Q1 2012 mostly due to a decrease in available inventory and softer demand in various markets.
Gross profit from operations was €21m in Q1 2013 compared to €23m in Q1 2012 mostly due to the disposal of Platinium Business Park.
Selling expenses decreased by 52% y-o-y to €1m in Q1 2013 mainly due to a decrease in sale and leasing activities.
Administrative expenses decreased by €4m to €0.5m in Q1 2013, due to reversal of provision for mark-to-market of phantom shares project (€2m) and cost cutting (€1m). Excluding stock based program provision, administrative expenses decreased by 34% to €3m from €4m due to cost cutting initiatives.
Net loss on revaluations of investment property and impairments of residential projects was €25m in Q1 2013 and is attributable to a change of designation of Galleria Bucharest land following a change of law in Romania and expansion of yield in Bucharest.
Financial expenses decreased to €13m, which was mainly due to a decrease in interest on financial liabilities following a decrease in the debt level due to repayment of loans and bonds.
Net loss amounted to €26m in Q1 2013. This is attributable mainly to a loss on revaluation of investment properties and impairment of residential projects.
The value of the property portfolio was at the level of €1,753m as at 31 March 2013 (including €8m of assets held for sale). The next review of the value of completed assets and the land bank will be conducted as of 30 June 2013 by the external valuers.
NAV per share stood at €2.5 as at 31 March 2013 compared to €2.7 as at 31 December 2012.
Important leases improved occupancy
GTC’s continues to benefit from its ability to deliver high quality space and from its ability to provide tailor-made solutions for companies from various business sectors. In the first quarter of 2013, GTC signed a number of new lease agreements for office space (over 5,000 sq m), mainly in University Business Park in Łódź. It will improve its overall occupancy and, as a result, have a positive impact on cash flow and the valuation of certain assets in its portfolio:
New lease agreements
– New tenants in University Business Park in Łódź: Accenture has leased 1,700 sq m office space, Mobica has leased nearly 1,200 sq m of office space with further extension option, Samsung Electronics Poland leased 1,100 sq m of office space with further extension option and PKP Informatyka leased nearly 900 sq m of office space.
– Marketing and advertising agency Event has become a new tenant of Korona Office Complex (500 sq m).
Significant renewals and extensions
– IBM has extended the lease agreement for approximately 3,000 sqm office space in Korona Office Complex in Cracow.
– Medicover has extended the lease agreement for 1,400 sqm space in the Globis Wrocław building.