Press Release
Luxembourg, 22 May 2019
CPI FIM SA (formerly ORCO PROPERTY GROUP) reports financial information for the first quarter of 2019
CPI FIM SA (hereinafter “CPI FIM”, the “Company” or together with its subsidiaries the “Group“), a real estate group with a portfolio in Central and Eastern Europe, is pleased to publish financial information for the first quarter of 2019.
As at 31 March 2019, CPI PROPERTY GROUP S.A. (hereinafter also the “CPI PG”, and together with its subsidiaries as the “CPI PG Group”) indirectly owns 97.31% of the Company shares (97.31% voting rights).
Financial highlights
| Performance | 31-Mar-19 | 31-Mar-18 | Change | ||
| Gross rental income | € thousands | 322 | 348 | (7%) | |
| Total revenues | € thousands | 7,583 | 4,744 | 60% | |
| Operating result | € thousands | 3,693 | 1,824 | 102% | |
| Net profit for the period | € thousands | 14,165 | 12,667 | 12% | |
| Assets | 31-Mar-19 | 31-Dec-18 | Change | ||
| Total assets | € thousands | 3,618,336 | 3,192,868 | 13% | |
| EPRA NAV | € thousands | 749,191 | 736,066 | 2% | |
| Property Portfolio | € thousands | 491,000 | 483,000 | 2% | |
| Gross leasable area | sqm | 92,000 | 92,000 | 0% | |
| Occupancy in % | % | 87.3% | 87.3% | 0 pp | |
| Land bank area | sqm | 17,626,000 | 17,626,000 | 0% | |
| Total number of properties | No. | 6 | 6 | 0% | |
| Financing structure | 31-Mar-19 | 31-Dec-18 | Change | ||
| Total equity | € thousands | 882,903 | 868,866 | 2% | |
| Equity ratio | % | 24% | 27% | (3.0 pp) | |
Income statement
Income statement for the three months period ended on 31 March 2019 and 31 March 2018 was as follows:
| INCOME STATEMENT (€ thousands) | 31-Mar-19 | 31-Mar-18 | ||
| Gross rental income | 322 | 348 | ||
| Sale of services* | 7,261 | 4,371 | ||
| Cost of service charges* | (892) | (145) | ||
| Property operating expenses | (260) | (433) | ||
| Net service and rental income | 6,431 | 4,141 | ||
| Development sales | -- | 25 | ||
| Development operating expenses | -- | (4) | ||
| Net development income | -- | 21 | ||
| Total revenues* | 7,583 | 4,744 | ||
| Total direct business operating expenses* | (1,152) | (582) | ||
| Net business income | 6,431 | 4,162 | ||
| Net valuation gain/(loss) on investment property** | 436 | (617) | ||
| Net gain on the disposal of investment property and subsidiaries | 248 | 2,977 | ||
| Amortization, depreciation and impairments | (277) | 394 | ||
| Administrative expenses | (3,179) | (4,322) ) | ||
| Other operating income | 29 | 12 | ||
| Other operating expenses | 5 | (782) | ||
| Operating result | 3,693 | 1,824 | ||
| Interest income | 34,424 | 23,361 | ||
| Interest expense | (15,188) | (10,971) | ||
| Other net financial result** | (5,090) | 1,424 | ||
| Net finance income | 14,146 | 13,814 | ||
| Share of profit/ (loss) of equity-accounted investees (net of tax) | (190) | - | ||
| Profit before income tax | 17,649 | 15,638 | ||
| Income tax expense | (3,484) | (2,971) | ||
| Net profit from continuing operations | 14,165 | 12,667 |
* 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). Management also concluded that service revenue should no longer be presented separately from other service charges, because combined presentation of the service charges provides more relevant information about the business. 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 | 348 | - | 348 |
| Service revenues | 4,295 | (4,295) | - |
| Sale of services | - | 4,371 | 4,371 |
| Net service charge income | (69) | 69 | - |
| Cost of service charges | - | (145) | (145) |
| Property operating expenses | (433) | - | (433) |
| Net service and rental income | 4,141 | - | 4,141 |
| Total revenues | 4,599 | 145 | 4,744 |
| Total direct business operating expenses | (437) | (145) | (582) |
| Net business income | 4,162 | - | 4,162 |
**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 | 4,162 | - | 4,162 |
| Net valuation loss | - | (617) | (617) |
| Operating result | 2,441 | (617) | 1,824 |
| Other net financial result | 807 | 617 | 1,424 |
| Net finance income | 13,197 | 617 | 13,814 |
| Profit before income tax | 15,638 | - | 15,638 |
| Net profit from continuing operations | 12,667 | - | 12,667 |
Sale of services
Service revenue increased to €7.3 million for the three months of 2019 compared to €4.4 million over the same period in 2018 mainly due to the provision of advisory services to entities controlled by the ultimate shareholder of the Group.
Net finance income
Total net finance income improved from €13.8 million to €14.1 million for the three months of 2019. The increase in interest income from €23.4 million to €34.4 million reflects the increase in loans provided by the Company to entities within the CPI PG Group and other related parties.
Other net financial result for Q1 2019 was mainly represented by the net foreign exchange loss of €5.1 million primarily driven by movement of EUR against CZK.
Balance sheet
| BALANCE SHEET (€ thousands) | ||||||
| 31-Mar-19 | 31-Dec-18 | |||||
| NON-CURRENT ASSETS | ||||||
| Intangible assets | 17 | 27 | ||||
| Investment property | 482,647 | 474,778 | ||||
| Property, plant and equipment | 403 | 398 | ||||
| Equity accounted investees | 3,699 | 3,890 | ||||
| Other investments | 125,816 | 125,406 | ||||
| Loans provided | 2,474,464 | 2,283,819 | ||||
| Trade and other receivables | 7,964 | 7,988 | ||||
| Deferred tax assets | 180,379 | 180,021 | ||||
| Total non-current assets | 3,275,389 | 3,076,327 | ||||
| CURRENT ASSETS | ||||||
| Inventories | 7,956 | 7,967 | ||||
| Income tax receivables | 275 | 275 | ||||
| Trade receivables | 9,268 | 5,400 | ||||
| Loans provided | 108,306 | 84,474 | ||||
| Cash and cash equivalents | 213,211 | 14,705 | ||||
| Other current assets | 3,545 | 3,334 | ||||
| Assets held for sale | 386 | 386 | ||||
| Total current assets | 342,947 | 116,541 | ||||
| TOTAL ASSETS | 3,618,336 | 3,192,868 | ||||
| EQUITY | ||||||
| Equity attributable to owners of the Company | 716,075 | 702,413 | ||||
| Non-controlling interests | 166,828 | 166,453 | ||||
| Total equity | 882,903 | 868,866 | ||||
| NON-CURRENT LIABILITIES | ||||||
| Financial debts | 2,515,601 | 2,091,697 | ||||
| Deferred tax liabilities | 37,902 | 34,160 | ||||
| Provisions | 1,570 | 1,574 | ||||
| Other financial liabilities | 3,295 | 2,356 | ||||
| Total non-current liabilities | 2,558,368 | 2,129,787 | ||||
| CURRENT LIABILITIES | ||||||
| Financial debts | 102,145 | 87,853 | ||||
| Trade payables | 13,697 | 18,941 | ||||
| Income tax liabilities | 110 | 141 | ||||
| Other current liabilities | 61,113 | 87,280 | ||||
| Total current liabilities | 177,065 | 194,215 | ||||
| TOTAL EQUITY AND LIABILITIES | 3,618,336 | 3,192,868 | ||||
Total assets and total liabilities
Total assets increased by €425.5 million (13 %) from €3,192.9 million as at 31 December 2018 to €3,618.3 million as at 31 March 2019. The main reason is the increase of long-term loans provided to entities within the CPI PG Group.
Other factor of the growth is the increase in cash and cash equivalents by €199 million since 31 December 2018. Other factor of the growth is the increase in cash and cash equivalents by €199 million since 31 December 2018.
Non-current and current liabilities total €2,735 million as at 31 March 2019 which represents an increase by €411.4 million (18 %) compared to 31 December 2018. The main driver of this growth was the additional drawdown of loan provided to the Group by CPI PG (net increase of €420.6 million).
For more information please refer to our website at www.orcogroup.com or contact us at investors@orcogroup.com.
GLOSSARY
The Group presents alternative performance measures (APMs). The APMs used in this press release are commonly referred to and analysed amongst professionals participating in the Real Estate Sector to reflect the underlying business performance and to enhance comparability both between different companies in the sector and between different financial periods. APMs should not be considered as a substitute for measures of performance in accordance with the IFRS. The presentation of APMs in the Real Estate Sector is considered advantageous by various participants, including banks, analysts, bondholders and other users of financial information:
- APMs provide additional helpful and useful information in a concise and practical manner.
- APMs are commonly used by senior management and Board of Directors for their decisions and setting of mid and long-term strategy of the Group and assist in discussion with outside parties.
- APMs in some cases might better reflect key trends in the Group’s performance which are specific to that sector, i.e. APMs are a way for the management to highlight the key value drivers within the business that may not be obvious in the consolidated financial statements.
EPRA Net Asset Value per share
EPRA Net Asset Value per share is defined as EPRA NAV divided by the diluted number of shares at the end of period.
EPRA NAV
EPRA NAV is a measure of the fair value of net assets assuming a normal investment property company business model. Accordingly, there is an assumption of owning and operating investment property for the long term. For this reason, deferred taxes on property revaluations and the fair value of deferred tax liabilities are excluded as the investment property is not expected to be sold and the tax liability is not expected to materialize. In addition, the fair value of financial instruments which the company intends to hold to maturity is excluded as these will cancel out on settlement. All other assets including trading property, finance leases, and investments reported at cost are adjusted to fair value.
The performance indicator has been prepared in accordance with best practices as defined by EPRA (European Public Real Estate Association) in its Best Practices Recommendations guide, available on EPRA’s website (www.epra.com).
Equity ratio
Equity Ratio provides a general assessment of financial risk undertaken. It is calculated as Total Equity divided by Total Assets.
Gross Leasable Area
Gross leasable area (GLA) 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.
Occupancy rate
The ratio of leased premises to total GLA.
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 per share reconciliation (€ thousands) | 31-Mar-19 | 31-Dec-18 |
| Consolidated equity | 716,075 | 702,413 |
| Deferred taxes on revaluations | 33,116 | 33,653 |
| EPRA Net asset value | 749,191 | 736,066 |
| Existing shares (in thousands) | 1,314,508 | 1,314,508 |
| Net asset value in € per share | 0.57 | 0.56 |
| Equity ratio reconciliation (€ thousands) | 31-Mar-19 | 31-Dec-18 |
| Total equity | 882,903 | 868,866 |
| Total assets | 3,618,336 | 3,192,868 |
| Equity ratio | 24% | 27% |
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