Sustained sound operating results

Q1 2014 Financial Highlights

  •  Underlying profit before tax improved to €7m (€6m in Q1 2013)
  • Rental and service revenues sustained at 27m (€28m in Q1 2013); rental margin at 72% (70% in Q1 2013)
  • Liquidity situation significantly improved by €52m of new capital and €48m of new bonds
  • Loan to value at 52% (59% as at 31 December 2013)
  • Cash flow from operations at 12m  (€10 m in Q1 2013)
  • Cash and deposits of €226m were decreased by post balance sheet repayment of €105m of bonds in April 2014

 
“Following the announcement of GTC’s new strategy earlier this year, we are happy to present significant improvements in liquidity situation of the company. In the first quarter of 2014, GTC increased company’s capital by €52 million and issued bonds totaling €48 million in worth. As promised earlier this year, GTC repaid €105 million
of bonds maturing in April. At the same time, we sustained operating results from Q4 2013” – commented Alain Ickovics, GTC Chairman of The Management Board. „Q1 2014 results indicate that we have undertaken the right decisions to guide the company through strategic shift to adapt to evolving market conditions” – added Alain Ickovics.

 

Financial overview

Rental and service revenues at €27m in Q1 2014 compared to €28m in Q1 2013, as a result of disposal of the Platinium Business Park V and softening of rental rates, especially in the office segment. Margin on rental activities was at 72% in Q1 2014 (70% in Q1 2013). As of March 2014, GTC’s completed buildings were leased
in 91%, therefore further rental revenue growth is probable.

Revenues from sale of residential properties increased to €4m in Q1 2014, mostly due to improved sale of residential units in Poland.

Gross profit from operations stood at €20m in Q1 2014 compared to €20m in Q1 2013.

Selling expenses remained at the level of €1m in Q1 2014.

Administrative expenses, on a like-for-like basis, were kept at the level of 3m in Q1 2014.

Net loss on revaluations of investment property and impairments of residential projects was €2m in Q1 2014 which represents investment in properties during the quarter.

Financial expenses net were at the level of €12m in Q1 2014.

Underlying profit before tax[1] improved to €7m in Q1 2014 from €6m in Q1 2013.

Net loss amounted to €2m in Q1 2014 and is attributable mainly to a loss on revaluation of investment properties and impairment of residential projects.

Total debt of €1,070m as of 31 March 2014 includes bonds issued in March 2014 of €48m as well as a loan from Galeria Kazimierz Sp. z o.o. of €61m. Post balance sheet, the Group repaid €105m of bonds and hedges related to bonds, which will decrease the balance of liabilities. The average debt maturity was 5 years and the average cost of debt was 4.3% p.a. Loan to value ratio was at the level of 52% as at 31 March 2012. Interest coverage improved do 3.14 in Q1 2014 from 1.68 at 31 December 2013.

NAV per share stood at €1.9 as at 31 March 2014 compared to €1.9 as at 31 December 2013. EPRA NAV per share was also €1.9 while EPRA NNNAV/per sharewas €2.2.

Cash flow from operations went up to €12m in Q1 2013 (€10m in Q1 2013).

 

Key achievements

Capital Increase of €52 million in January

The January share issue, which was conducted through an Accelerated Book Building, was 250% oversubscribed. GTC issued 32 million J series ordinary bearer shares, raising €52 million in cash.

 

Bond issue of €48 million in March

GTC issued 20,000 new bonds worth €48 million in order to refinance a portion of the bonds maturing in April 2014 and be able to fund future growth of the Group.
The bonds are listed on Catalyst ASO. The bonds are maturing in 2018/2019.

 

 

Finalization of construction of Pascal

Following the re-launch of the construction of 5,500 sq m Pascal office building in Kraków, Poland, in Q1 GTC finalized the construction works in the building. Earlier, a lease agreement with key tenant, IBM, was signed. Lease agreements with other key tenants of Pascal are currently being in the final stage of negotiations.

 

Progress in administrative processes on Galeria Północna and Galeria Wilanów

Administrative proceedings for both shopping mall projects in Warsaw reached their final stages. Land assembly for Galeria Północna at Warsaw’s Białołęka district, after the recent land purchase transactions, is nearly finished. The only remaining small portions of the land are currently owned by Warsaw City Hall and are awaiting final sale approval from authorities.

Moreover, the Self-Government Appeal Court has rejected the environmental protest filed on the GTC’s second shopping mall planned in Warsaw, Galeria Wilanów, removing a formal obstacle to obtain the construction permit.

Term sheets with first tenants were signed earlier in 2013. Advanced talks with next key tenants of both shopping malls are currently underway.

 

Significant  new leases and lease renewals

Despite demanding market conditions and growing pressure on rental rates throughout the region, GTC continues to benefit from outstanding reputation among renowned buyers and reputable tenants who value GTC quality. Q1 2014 was marked by steady flow of new leases and renewals in Central and Eastern Europe.

 

Significant new leases:

  • LG Electronics, Harfa Office Park and Gallerie Harfa (GTC owns 33% stake in the compl           – 1,900 sq m
  • Czech Ice Hockey Association, Harfa Office Park (GTC owns 31.5% stake in the complex) – 1,000 sq m
  • Concare IT, Aeropark, Warsaw               – 700 sq m
  • Teleperformance, Aeropark, Warsaw       – 600 sq m
  • ING Bank, Harfa Office Park, Prague (GTC owns 33% stake in the complex) – undisclosed

Significant renewals:

  • Novo Nordisk in Aeropark, Warsaw                   – 2,127 sq m

 



[1] Profit before tax defined as IFRS profit before tax adjusted for net valuation movement, loss from associates, deferred and current tax of joint ventures, amortisation of tangible assets and change in fair value of hedges.