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EPP N.V. - Summarised condensed consolidated results for the 12 months ended 31 December 2020

Release Date: 10/03/2021 07:05
Code(s): EPP     PDF:  
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Summarised condensed consolidated results for the 12 months ended 31 December 2020

EPP N.V. (Incorporated in The Netherlands)
(Company number 64965945)
JSE share code: EPP
ISIN: NL0011983374
LEI code: 7245003P7O9N5BN8C098
("EPP" or "the company" or "the group")

SUMMARISED CONDENSED CONSOLIDATED RESULTS
FOR THE 12 MONTHS ENDED 31 DECEMBER 2020

FINANCIAL HIGHLIGHTS
- Distributable earnings per share amounted to EUR5.56 cents, exceeding the upper end of guidance of
  between EUR4.75 cents and EUR5.25 cents
- Net property income declined to EUR114.2 million due to COVID-19 impact and rental concessions
- Investment properties declined to EUR2.13 billion due to COVID-19 impact
- Net finance costs increased to EUR42.7 million
- Net loan to value increased to 54.8%
- Cost of debt remained stable at 2.6%
- Weighted average debt maturity 2.3 years
- Hedging remains high at 84%
- Net asset value per share declined to EUR1.09
- Distributable earnings declined to EUR50.5 million

OPERATIONAL HIGHLIGHTS
- Currently 96% of EPP's retail GLA is allowed to trade
- Retail WALT increased to 5.3 years up from 4.7 years in May 2020
- Retail occupancy in the portfolio remained stable at 96%
- Higher conversation rates seen post lockdowns with tenant sales outperforming footfall growth
- First Primark in Poland opened and despite the pandemic many other stores also opened such as Modivo,
  eobuwie.pl, PEPCO, Martes Sport, Sephora, CCC or KIWI

                                                              FY2020      FY2019
Rental income and recoveries      EUR'000                    133 807     163 633
Net property income               EUR'000                    114 205     148 100
Profit from operations            EUR'000                     97 124     132 576
Profit/loss for the period        EUR'000                   (109 656)    131 836
HEPS                              EUR cents per share          11.01        6.92
EPS                               EUR cents per share           (9.7)        7.5
Net asset value per share         EUR                          1.087       1.317
                                                        See dividend
Dividend distribution             EUR cents per share      paragraph       11.62

This short-form announcement is the responsibility of the directors and is only a summary of the
information in the full announcement and does not contain full or complete details. The full announcement
is available on the JSE website at https://senspdf.jse.co.za/documents/2021/jse/isse/EPPE/annuals20.pdf
and on the company website at https://www.epp-poland.com/s,91,financial-statements.html. Copies of
the full announcement may also be requested by emailing ir@epp-poland.com.

Any investment decision should be based on the full announcement published on SENS and the company
website.

EPP is a Dutch-based real estate company that follows the REIT formula and is one of the leading owners
of retail space in Poland. As at 31 December 2020, the company manages a portfolio of 25 retail centres
and six high-quality offices located in the majority of regional cities in Poland. In addition to these income-
generating properties, EPP owns the Towarowa 22 development in Warsaw. The 25 retail centres under
management include the flagship Warsaw development Galeria Mlociny, which successfully opened in
May 2019. Within the month of March 2021, EPP expects to own or co-own 29 shopping centres post the
conclusion of the final tranche of the M1 transaction.

Prospects and Outlook
2020 was an extremely challenging year for the business with its operations severely impacted by
governmental lockdowns which significantly limited trade within shopping centres for more than 10 weeks.

However, EPP currently continues to have an excellent operational platform with an attractive portfolio of
retail assets across Poland which is complemented by well let office assets. The platform is backed by a
fully internalised team of experienced professionals with a track record of delivering above market performance.

We believe our centres are well located and managed, and we expect them to benefit from the broader
reopening and recovery of the economy throughout 2021.

Importantly, in addition to being focused on operations, cash flows and liquidity, EPP is also focused on
strengthening its balance sheet, namely progressing EPP's key strategic objective of materially
reducing LTV in the business, which we intend to achieve through outright sales or stake sales to the
appropriate joint venture partners. In January 2021 we announced the appointment of an industry expert
to EPP's executive team to drive this process and we believe this move will optimise the process and
maximise delivery prospects.

EPP management is of the view that there is liquidity in the Polish real estate market, which remains one
of the key investment destinations in CEE. However, given the COVID-19 pandemic and the need for the
markets to recover from it, additional time is foreseen by management in order for the abovementioned
transactions to be finalised.

Also, an appropriate headroom remains in the financial covenant levels in EPP's debt portfolio. EPP does
not envisage any capital raises in 2021.

Notwithstanding the above positive aspects, the current market remains challenging and although the
majority of EPP's retail assets are allowed to operate, the COVID-19 pandemic continues to present some
uncertainty with regards to trading in the future.

DIVIDENDS
Given the unprecedented and uncertain impact and duration of the COVID-19 pandemic the board has
decided it is prudent to refrain from paying a dividend during the year. It believes it is in the best interests
of the company and all its stakeholders to preserve EPP's financial liquidity as the current environment
continues to stabilise. Future dividend payments will take into consideration the stability of the retail
environment, progress made on disposals, refinancing of EPP's upcoming debt and overall capital structure.

The board will continue to monitor the impact of COVID-19 on the company's operations and its financial
position and will provide updates on material impacts to the business.

2021 Distributable earnings per share guidance
Full year distributable earnings per share guidance are expected to be between EUR7 and EUR7.25 cents
per share for the year ended 31 December 2021.

The forecasts are based on the following assumptions:
- the Polish economy continues its projected recovery in the year ahead and the vaccination programme
  progresses as planned;
- no significant tenant failures occur;
- no further lockdowns occur that will have a detrimental impact on shopping centres such as closures of
  shops for extended periods of time.

The forecast financial information has not been reviewed or reported on by EPP's auditors.

Summarised consolidated financial statements
The auditors, EY, have issued their unmodified opinion, which includes disclosure on key audit matters
namely Valuation of IP and Revenue Recognition, on the annual financial statements for the year ended
31 December 2020 and a copy of the audit opinion together with their underlying audited annual financial
statements are available for inspection at the company's registered office, and on
https://www.epp-poland.com/s,128,annual-reports.html.

By order of the board
10 March 2021

Directors
Tomasz Trzoslo (chief executive officer)
Jacek Baginski (chief financial officer)
Robert Weisz* (Chairman)
Marek Belka*, Maciej Dyjas**
Dionne Ellerine*
Andrew Konig**
James Templeton*
Pieter Prinsloo**
Taco de Groot*
* Independent non-executive
** Non-executive

LuxSE listing agent
Harney Westwood & Riegels SARL

JSE sponsor
Java Capital






Date: 10-03-2021 07:05:00
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