GTC presents Q2 2015 results
GTC commences construction of Galeria Północna while restructing loans, disposing of non-core assets and further improving operating results.
2Q 2015 HIGHLIGHTS
- Commencement of Galeria Północna construction with an attractive loan and 32% prelease
- Capital increase voted by shareholders and planned for Q3 2015
- All loans restructured; no breach of covenants
- Rental margin improved to 77% (75% in Q2 2014)
- No change in the value of commercial assets and minor impairment on residential land
- Profit before tax at €7m (loss of €71m in Q2 2014)
- Interest cover at 2.5x (2.1x in H1 2014)
“GTC is now proceeding full steam ahead on a path to growth. The recent shareholders’ approval of a capital increase will enable GTC to use its expertise and presence in its core markets to execute new developments and acquisitions.” – Thomas Kurzmann, GTC’s CEO said. “We have achieved much during the last few months. In addition to the loan restructuring, we made significant progress in the disposal of non-core assets. On the other hand, we commenced construction of Galeria Północna, Warsaw, one of GTC’s key shopping mall projects. In Belgrade, the first building of the FortyOne office park was handed over to its tenants. We are analysing a number of investment opportunities across the CEE and SEE regions and we remain focused on our mission to invest in assets with upside potential and other selected development projects” – Mr Kurzmann added.
Rental and service revenues at €26m in Q2 2015 compared to €27m in Q2 2014 and at €53m in H1 2015 compared to €55m in H1 2014, mostly due to disposal of Kazimierz Office Center and Galleria Buzau. Margin on rental activities was improved to 77% in Q2 2015 from 75% in Q2 2014 and to 75% in H1 2015 from 74% in H1 2014.
Gross profit from operations was kept unchanged at €20m in Q2 2015 compared to €21m in Q2 2014 and €40m in H1 2015 compared to €41m in H1 2014.
Administrative expenses, excluding provision for stock based program, decreased to €2.5m in Q2 2015 compared to €3.2m in Q2 2014 and to €4.8m in H1 2015 compared to €6.2m in H1 2014 due to cost efficiency.
Underlying profit before tax1 up to €10m in Q2 2015 compared to €8m in Q2 2014 and up to €19m in H1 2015 compared to €14m in H1 2014 due to cost savings.
Financial expenses net were at the level of €8m in Q2 2015 compared to €11m in Q2 2014 and at €16m in Q2 2015 compared to €22m in Q2 2014 due to deleveraging activity.
Profit before tax was at €7m in Q2 2015 compared to €71m loss in Q2 2014 and €11m profit in H1 2015 compared to €68m loss in H1 2014.
Tax charge was €9m in Q2 2015 compared to €1m of tax benefit in Q2 2014 and tax charge was at €5m in H1 2015 compared to €4m in H1 2014.
Net loss of €2m in Q2 2015 compared to €70m in Q2 2014 and net profit of €6m in H1 2015 compared to €72m loss in H1 2014 due to improved operating results combined with no movement in the valuation of investment property and impairment of residential projects and taxation charge.
Value of the properties at €1,231m as of 30 June 2015 compared to €1,293m as of 31 December 2014 due to disposal of Kazimierz Office Centre.
Total bank debt and financial liability down to €726m as of 30 June 2015 from €811m as of 31 December 2014. The weighted average debt maturity was 3.2 years and the average cost of debt was 4.3% p.a.
Loan to value ratio was at the level of 50% as at 30 June 2015 compared to 54% as at 31 December 2014.
Interest coverage was at 2.5x as at 30 June 2015 compared to 2.1x as at 31 December 2014.
NAV (before minority) per share stood at €1.3 as at 30 June 2015 compared to €1.4 as at 31 December 2014.
Cash flow from operations went up to €24m in H1 2015 (€21m in H1 2014) mostly due cost savings.
Construction of Galeria Północna launched (Warsaw, Poland)
In June 2015, GTC reached an important milestone when it obtained a building permit for one of its key retail projects, Galeria Północna in Warsaw, Poland. Construction is progressing on schedule and the feedback from tenants is positive. GTC also recently signed a €116m construction loan and €150m investment loan agreements with Bank Pekao to finance the project.
Debt restructuring (Romania, Bulgaria and Croatia)
In June/July 2015, GTC successfully restructured the loan agreements of its Romanian, Croatian and Bulgaria subsidiaries, OTP and MKB, with the European Bank for Reconstruction and Development. Under these agreements, GTC was released from guaranteeing the loans and instead became a co-borrower alongside its subsidiaries. As of today, GTC is not in breach of the covenants under any of its loans
Disposal of non-core assets (Romania and Croatia)
During the first half of 2015, GTC continued to dispose of its non-core assets, selling the Felicity residential project (Romania), Galleria Buzau (Romania), Avenue Mall Osijek (Croatia) and Galleria Varna Project (Bulgaria). All the sales were at book value.
Shareholders approved a capital increase; SPO planned in Q3 2015
On 30 June 2015, the Extraordinary General Meeting of Shareholders adopted a resolution to increase GTC’s share capital through a rights issue of ordinary bearer shares and a public offering of newly issued shares. The record date for pre-emptive rights related to newly issued shares was set for 10 September 2015. This will allow the company to focus on its mission to invest in assets with upside potential and create profit from the active management of an expanding real estate portfolio.
1 Profit before taxes, movement in valuation of investment assets, depreciation and change in fair value of hedges