REG - Plaza Centers N.V. - Half-year Report
22/08/2024 09:00
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RNS Number : 4215B Plaza Centers N.V. 22 August 2024
22 August 2024
PLAZA CENTERS N.V.
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Plaza Centers N.V. ("Plaza" / "Company" / "Group") today announces its results
for the six months ended 30 June 2024. The financial information for the half
year ended 30 June 2024 and 30 June 2023 has neither been audited nor reviewed
by the auditors.
Financial highlights:
· Consolidated cash position as of June 30, 2024 decreased by circa
€1.1 million to app. €4.6 million (December 31, 2023: €5.7 million) as a
result of general and legal expenses.
· €0.9 million loss recorded at an operating level (June 30,
2023: €0.9 million loss) mainly due to general and legal expenses.
· Recorded loss of €8.9 million (June 30, 2023: €0.6 million),
mainly due to finance results on bonds, general and legal expenses.
· Basic and diluted loss per share of €1.30 (30 June 2023: loss
per share of €0.09).
Material events during the period:
Tax authority investigation:
On March 25, 2024 the Company announced that further to its announcement dated
March 27, 2023 with regards to the search and seizure operations carried by
the Indian tax authorities at the offices of Elbit Plaza India Management
Services Private Limited (hereinafter: "EPIM") (which is a private company
wholly owned by Elbit Plaza India Real Estate Holdings Limited), EPIM has
received a favorable order under which investigation for one of the three
years under investigation is completed without imposing any liability on EPIM.
Inquiry into the remaining periods of the investigation is continuing and the
Company will update on any development.
Update regarding a change Ragnar Trade holdings:
On January 31, 2024 the Company announced that, Ragnar Trade spółka z
ograniczoną odpowiedzialnością ("Ragnar Trade") acquired about 343.9
thousand shares of the Company, which amounted to 5.02% of the Company's
issued and paid capital. On February 5, 2024 the Company announced that
Ragnar Trade acquired share of the Company up to level of 11.70% of the
Company's issued and paid capital and on February 19, 2024 it was announced
that Ragnar Trade holdings in the Company is decreased to 4.81% of the
Company's issued and paid capital, thus Ragnar Trade ceased to be related
party of the Company.
Deferral of payment of Debentures and partial interests' payment:
Refer to the below in Liquidity & Financing.
Dutch statutory auditor:
Refer to Note 6(c) in the interim condensed consolidated financial statements
as of June 30, 2024.
Update regarding submission of a request for arbitration against Romania with
respect to the "Casa Radio" project:
On March 29, 2024 the Company announced that, it has received a further
engagement letter ("Further Engagement Letter"), from the Company's primary
legal advisers in connection with the arbitration for the "Casa Radio" project
(the "Project"). The Further Engagement Letter is in line with Company's
projected cash flow that was approved at Bondholders' Meeting from October 11,
2023.
On April 2, 2024 the Company filed its Reply on the merits and counter
memorial on jurisdiction at the International Centre for the Settlement of
Investment Disputes. The Company's updated full compensation for its losses
with respect to the Project is currently estimated to be up to EUR 425,500,000
as at 31 March, 2024.
Key highlights since the period end:
Update regarding submission of a request for arbitration against Romania with
respect to the "Casa Radio" project:
On July 15, 2024 Plaza received a notice, on behalf of the Ministry of Finance
of Romania, to start an arbitration procedure under the rules of the London
Court of International Arbitration (hereafter: "Request") against the Company,
Elbit Imaging Ltd and a third-party private investor (the Company, Elbit
Imaging Ltd and the third-party private investor will be collectively referred
to below as: "the Respondents"). As part of the request, the Ministry of
Finance of Romania demands compensation from the Respondents amounting to
approximately EUR 96 million (before VAT and interest).
Commenting on the results, executive director Ron Hadassi said:
"The Company is continuing to take all necessary steps with Casa Radio
Project. The Company has submitted with the International Centre for
Settlement of Investment Disputes ("ICSID") a Request for Arbitration (the
"Request") against Romania for compensation of losses incurred due to failure
of the Romanian authorities to cooperate, negotiate and adjust the PPP
agreement."
For further details, please contact:
Plaza
Ron Hadassi, Executive
Director
972-526-076-236
Notes to Editors
Plaza Centers N.V. (www.plazacenters.com (http://www.plazacenters.com) ) is
listed on the Main Board of the London Stock Exchange, as of 19 October 2007,
on the Warsaw Stock Exchange (LSE: "PLAZ", WSE: "PLZ/PLAZACNTR") and, on the
Tel Aviv Stock Exchange.
Forward-looking statements
This press release may contain forward-looking statements with respect to
Plaza Centers N.V. future (financial) performance and position. Such
statements are based on current expectations, estimates and projections of
Plaza Centers N.V. and information currently available to the company. Plaza
Centers N.V. cautions readers that such statements involve certain risks and
uncertainties that are difficult to predict and therefore it should be
understood that many factors can cause actual performance and position to
differ materially from these statements.
MANAGEMENT STATEMENT
During first half of 2024 the Company also continued cost reductions in
administrative expenses and costs of operations. In connection with Casa Radio
Project, as stated above, the Company issued a Notice of Dispute and
Acceptance of Offer and Consent to Arbitrate to Romania with respect to the
Project and we hope this will help us to unblock the current status of the
Project. In addition, on December 4, 2023 the Company and AFI Europe N.V.
("AFI Europe") agreed to extend the Long Stop Date, which is the date on which
the parties will execute a share purchase agreement, subject to the
satisfaction of conditions precedent (the "SPA"), until December 31, 2024.
Due to the board and management estimation that the Company is unable to serve
its entire debt according to the current redemption date (January 1, 2025) in
its current liquidity position, the Company intends to request from the
bondholders of both series (Series A and Series B) postponement of the
repayment of the remaining balance of the bonds.
Results
During the first half of the year, Plaza recorded a €8.9 million loss
attributable to the shareholders of the Company (30 June 2023: €0.6
million). Total result of operations excluding finance income and finance cost
was a loss of €0.9 million in 2024 compared to reported loss of €0.9
million in the first half of 2023. The losses were mainly due to
administrative expenses and arbitration costs.
Liquidity & Financing
Plaza ended the period with a consolidated cash position of circa €4.6
million, compared to €5.7 million at the end of 2023.
As of June 30, 2024, the Group's outstanding obligation to bondholders
(including accrued interests) are app. €142.3 million.
As disclosed in Note 6(d) below the Company was not able to meet its final
redemption obligation to its (Series A and Series B) bondholders, due on July
1, 2024, and the bondholders approved to postpone the final redemption date to
January 1, 2025.
Due to the board and management estimation that the Company is unable to serve
its entire debt according to the current bond's repayment schedule in its
current liquidity position, the Company intends to request the bondholders of
both series to postpone the repayment of the remaining balance of the bonds.
However, there is an uncertainty if the bondholders will approve the request.
In the case that the bondholders would declare their remaining claims to
become immediately due and payable, the Company would not be in a position to
settle those claims and would need to enter into an additional debt
restructuring or might cease to be a going concern.
Strategy and Outlook
The Company's priorities are focused on efforts to sign definitive sale
agreement of Casa Radio project. The Company also intends to seek for
bondholders' approval for postponement of the repayment of the bonds. In
addition, the Company intends to continue the cost-cutting of its operational
cost.
OPERATIONAL REVIEW
The Company's current assets are summarised in the table below (as of balance
sheet date):
Asset/ Project Location Nature of asset Size Plaza's effective ownership Status
sqm (GLA) %
Casa Radio Bucharest, Romania Mixed-use retail, hotel and leisure plus office scheme 467,000 (GBA including parking spaces) 75 Pre-sale agreement signed
FINANCIAL REVIEW
Results
In 2024, the administrative expenses amounted to €0.9 million, which was
comparable to the first half of 2023. Administrative expenses for both periods
include expenses for legal services in respect to initiated by the Company of
an arbitration process in Romania as states above in connection with Casa
Radio Project.
Net finance result changed from €0.3 million gain in the first 6 months of
2023 to €8.9 million loss in the first 6 months of 2024. The main
components of net finance incomes were foreign currency gain on bonds
(including inflation) and interests' expenses accrued on the debentures which
includes also penalty interest calculated on the deferred principal.
As a result, the loss for the period amounted to circa €8.9 million in the
first 6 months of 2024, representing a basic and diluted loss per share for
the period of €1.30 (H1 2022: €0.09 loss).
Balance sheet and cash flow
The balance sheet as of 30 June 2024 showed total assets of €4.7 million
compared to total assets of €5.8 million at the end of 2023, mainly as a
result of administrative expenses and costs of operations.
The consolidated cash position (cash on standalone basis as well as fully
owned subsidiaries) as of 30 June 2023\4 decreased to €4.6 million (31
December 2023: €5.7 million).
As of 30 June 2024, the Company has a balance sheet liability of €97.2
million from issuing bonds on the Tel Aviv Stock Exchange. Additionally, the
Company recorded provision for interests on bonds as of June 30, 2024, in an
amount of €45.1 million (31 December 2023: €38.8 million).
Disclosure in accordance with Regulation 10(B)14 of the Israeli Securities
Regulations (periodic and immediate reports), 5730-1970
1. General Background
According to the abovementioned regulation, upon existence of warning signs as
defined in the regulation, the Company is obliged to attach its report's
projected cash flow for a period of two years, commencing with the date of
approval of the reports ("Projected Cash Flow").
The material uncertainty related to going concern was included in Note 1(b).
In light of the material uncertainty that the SPA between the Company and AFI
Europe N.V. will eventually be executed and/or that the transaction will be
consummated as presented above or at all (refer to Note 5), the board and
management estimates that the Company is unable to serve its entire debt
according to the due date the bondholders approved to postpone the final
redemption date. Accordingly, it is expected that the Company will not be able
to meet its entire contractual obligations in the following 12 months.
With such warning signs, the Company is providing projected cash flow for the
period of 24 months following for the coming two years.
2. Projected cash flow
The Company has implemented the restructuring plan that was approved by the
Dutch court on July 9, 2014 (the "Restructuring Plan"). Under the
Restructuring Plan, principal payments under the bonds issued by the Company
and originally due in the years 2013 to 2015 were deferred for a period of
four and a half years, and principal payments originally due in 2016 and 2017
were deferred for a period of one year. During first three months of 2017, the
Company paid to its bondholders a total amount of NIS 191.7 million (EUR 49.2
million) as an early redemption. Upon such payments, the Company complied with
the Early Prepayment Term (early redemption at the total sum of at least NIS
382 million) and thus obtained a deferral of one year for the remaining
contractual obligations of the bonds.
In January 2018, a settlement agreement was signed by and among the Company
and the two Israeli Series of Bonds.
On November 22, 2018 the Company announced based on its current forecasts,
that the Company expected to pay the accrued interest on Series A and Series B
Bonds on December 31, 2018, in accordance with the repayment schedule
determined in the Company's Restructuring Plan and Settlement Agreement with
Series A and Series B Bondholders from 11 January 2018 (the "Settlement
Agreement"). The Company noted that it will not meet its principal repayment
due on December 31, 2018 as provided for in the Settlement Agreement. On
February 18, 2019 the Company paid principal of circa EUR 250,000 and Penalty
interest on arrears of EUR 150,000 following the bondholder's approval to
defer principal repayment to July 1, 2019.
In addition, during June 2019 the bondholders approved the deferral of the
full payment of principal due on July 1, 2019 and of 58% ("deferred interest
amount") of the sum of interest (consisting of the total interest accrued for
the outstanding balance of the principal, including interest for part of the
principal payment which was deferred as of February 18, 2019, plus interest
arrears for part of the principal which was fixed on February 18, 2019 and was
not paid by the Company and all in accordance with the provisions of the trust
deed; "the full amount of interest"), the effective date of which is June 19,
2019, and the payment date was fixed as of July 1, 2019. The company paid on
the said date a total amount of circa EUR 1.17 million, which is only 42% of
the full amount of interest.
On July 11, 2019, the Company announced that its Romanian subsidiary had
signed a binding agreement to sell land in Romania (refer to Note 5(3)(f) of
the consolidated financial statements as of December 31, 2020), and that the
Company would use part of the proceeds now received by it EUR 0.75 million
(hereinafter: "the amount payable"), in order to make a partial interest
payment to the bondholders (Series A) and (Series B) issued by the Company.
The payment required changes in the repayment schedule and amendments of the
trust deeds which was approved unanimously by the Bondholders. The amount
payable was paid on August 14, 2019 and reflects 30% of accrued interest as of
that date.
On November 17, 2019, the bondholders of Series A and Series B approved a
deferral of all the scheduled Principal payment and app. 87% of deferral of
the scheduled Interest payment, both, as of December 31, 2019 to July 1, 2020.
On May 4, 2020, the bondholders of Series A and Series B approved: (i) to
postpone the final redemption date to January 1, 2021 of all the scheduled
Principal; (ii) that on July 1, 2020 the Company will pay to its bondholders a
partial interest payment in the total amount of EUR 250,000 and to deferral
all other unpaid scheduled Interest payment.
Following receiving the Settlement Amount related to the final price
adjustment of the sale of Belgrade Plaza and in light of the potential
negative impact of the Covid-19 on the possibility to receive future proceeds
from the Company's plots in India, the Company decided to increase the amount
to be paid to the bondholders on July 1, 2020, from EUR 250,000 to EUR
500,000. The amount reflected 6.74% of accrued interest as of that date.
On November 12, 2020, the bondholders of Series A and Series B approved: (i)
to postpone the final redemption date to July 1, 2021 of all the scheduled
Principal; that on January 1, 2021 the Company will pay to its bondholders a
partial interest payment in the total amount of EUR 200,000 and to deferral
all other unpaid interest. The amount reflected 1.84% of accrued interest as
of that date.
On April 12, 2021, the bondholders of Series A and Series B approved: (i) to
postpone the final redemption date to January 1, 2022; (ii) that on July 1,
2021 the Company will pay to its bondholders a partial interest payment in the
total amount of EUR 125,000 and to deferral all other unpaid interest. The
amount reflected 0.84% of accrued interest as of that date.
On November 25, 2021, the bondholders of Series A and Series B approved: (i)
to postpone the final redemption date to July 1, 2022; (ii) that on January 1,
2022 the Company will pay to its bondholders a partial interest payment in the
total amount of EUR 125,000 and to deferral all other unpaid interest. The
amount reflected 0.92% of accrued interest as of that date.
On June 16, 2022, the bondholders of Series A and Series B approved to
postpone the final redemption date to January 1, 2023.
On November 8, 2022, the bondholders of Series A and Series B approved: (i) to
postpone the final redemption date to July 1, 2023; (ii) that on January 1,
2023 the Company will pay to its bondholders a partial interest payment in the
total amount of EUR 2,000,000 and to deferral all other unpaid interest. The
amount reflected 6.08% of accrued interest as of that date.
Further, in 2023 the bondholders of Series A and Series B approved: (i) to
postpone the final redemption date to January 1, 2024; (ii) that on July 1,
2023 the Company will pay to its bondholders a partial interest payment in the
total amount of EUR 750,000 and to deferral all other unpaid interest. The
amount reflected 6.08% of accrued interest as of that date.
On November 11, 2023, the bondholders of Series A and Series B approved: (i)
to postpone the final redemption date to July 1, 2024; (ii) that on January 1,
2024 the Company will pay to its bondholders a partial interest payment in the
total amount of EUR 200,000 and to defer all other unpaid interest. The amount
reflected 0.51% of accrued interest as of that date.
Further, in 2024 the bondholders of Series A and Series B approved: (i) to
postpone the final redemption date to January 1, 2025.
The materialisation, occurrence consummation and execution of the events and
transactions and of the assumptions on which the projected cash flow is based,
including with respect to the proceeds and timing thereof, although probable,
are not certain and are subject to factors beyond the Company's control as
well as to the consents and approvals of third parties and certain risks
factors. Therefore, delays in the realisation of the Company's assets and
investments or realisation at a lower price than expected by the Company, as
well as any other deviation from the Company's assumptions (such as additional
expenses due to suspension of trading, delay in submitting the statutory
reports etc.), could have an adverse effect on the Company's cash flow and the
Company's ability to service its indebtedness in a timely manner.
In € millions 7-12/2024 2025
Cash - Opening Balance ((2)) 4.60 3.10
Proceeds from other income ((3)) - -
Total Sources 4.60 3.10
Debentures - principal - -
Debentures - interest ((4)) - -
Other operational costs ((5)) 1.2 1.55
G&A expenses (including property maintenance) ((6)) 0.3 0.8
Total Uses 1.5 2.35
Cash - Closing Balance ((2)) 3.10 0.75
1. The above cash flow is subject to the approval of the bondholders
of both series to postpone the repayment of the remaining balance of the
bonds which is due on January 1, 2025.
2. Total cash on standalone basis as well as fully owned subsidiaries.
3. The Company did not include any proceeds from pre-sale agreement
signed with AFI, due to the uncertainty as to the fulfilment of the conditions
set out in the preliminary agreement as mentioned in Note 5 of the interim
condensed consolidated financial statements as of June 30, 2024, thus there
can be no certainty an the SPA will eventually be executed and/or that the
Transaction will be completed.
4. Payments of interests are subject to the approval of the
bondholders of both series.
5. The cost includes a provision for arbitrations / legal costs based
on projection of arbitration process.
6. Total general and administrative expenses includes both costs of
the Company and of all the subsidiaries.
Ron Hadassi
Executive Director
22 August 2024
PLAZA CENTERS N.V.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2024
NOT AUDITED AND NOT REVIEWED
IN '000 EUR
CONTENTS
Page
Interim condensed consolidated statements of financial position 2 - 3
Interim condensed consolidated statements of profit or loss 4
Interim condensed consolidated statements of comprehensive income 5
Interim condensed consolidated statements of changes in equity 6
Interim condensed consolidated statements of cash flows 7
Notes to interim condensed consolidated financial statements 8 - 12
- - - - - - - - - - -
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, December 31,
2024 2023
EUR '000 EUR '000
Not audited Audited
Not reviewed
ASSETS
Cash and cash equivalents 4,619 5,705
Restricted bank deposits 5 24
Prepayments and other receivables 123 93
Total current assets 4,747 5,822
Total assets 4,747 5,822
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, December 31,
2024 2023
EUR '000 EUR '000
Not audited Audited
Not reviewed
LIABILITIES AND EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Bonds 97,161 95,462
Accrued interests on bonds 45,152 38,842
Trade payables 70 41
Other liabilities 245 472
Total current liabilities 142,628 134,817
Share capital 6,856 6,856
Other reserves (19,983) (19,983)
Share based payment reserve 35,376 35,376
Share premium 282,596 282,596
Retained losses (442,726) (433,840)
Total equity (137,881) (128,995)
Total equity and liabilities 4,747 5,822
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
August 21, 2024
Ron Hadassi David Dekel
Date of approval of the Executive Director Chairman of the Board of Directors
financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Six months ended
June 30,
2024 2023
EUR '000 EUR '000
(except per share data) (except per share data)
Not audited Not audited
Not reviewed Not reviewed
Gains and other
Other income 29 180
Total gains 29 180
Total revenues and gains 29 180
Expenses and losses
Cost of operations (48) (62)
Share in results of equity-accounted investees - (39)
Administrative expenses (869) (959)
Other expenses - -
Expenses and losses 917 1,060
Finance income 75 6,259
Finance costs (8,073) (5,980)
Finance income (costs), expenses and losses (8,915) (781)
Loss before income tax (8,886) (601)
Income tax expense - -
Loss for the period (8,886) (601)
Earnings per share
Basic and diluted loss per share (in EURO) (1.30) (0.09)
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six months ended
June 30,
2024 2023
EUR '000 EUR '000
(except per share data) (except per share data)
Not audited Not audited
Not reviewed Not reviewed
Loss for the period (8,886) (601)
Other comprehensive income (loss)
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences - foreign operations (Equity - (24)
accounted investees)
Other comprehensive gain (loss) for the period - (24)
Total comprehensive loss for the period (8,886) (625)
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Premium Share based payment reserves Translation Reserve Other Retained Total
capital reserves losses
Balance on January 1, 2024 6,856 282,596 35,376 - (19,983) (433,840) (128,995)
Comprehensive loss for the period
Net loss for the period - - - - - (8,886) (8,886)
Foreign currency translation differences - - - - - - -
Total comprehensive loss for the period - - - - - (8,886) (8,886)
Balance on June 30, 2024 (Not audited, not reviewed) 6,856 282,596 35,376 - (19,983) (442,726) (137,881)
Share Share Premium Share based payment reserves Translation Reserve Other reserves Retained Total
capital losses
Balance on January 1, 2023 6,856 282,596 35,376 (30,742) (19,983) (394,891) (120,788)
Comprehensive loss for the period
Net loss for the period - - - - - (601) (601)
Foreign currency translation differences - - - (24) - - (24)
Total comprehensive loss for the period - - - (24) - (601) (625)
Balance on June 30, 2023 (Not audited, not reviewed) 6,856 282,596 35,376 (30,766) (19,983) (395,492) (121,413)
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
June 30,
2024 2023
EUR '000 EUR '000
Not audited Not audited
Not reviewed Not reviewed
Cash flows from operating activities:
Loss for the period (8,886) (601)
Adjustments necessary to reflect cash flows used in operating activities
Net finance costs (incomes) 7,998 (279)
Share of loss of equity-accounted investees - 39
(888) (841)
Changes in:
Trade receivables (26) 6
Other receivables (4) (193)
Change in restricted cash - -
Trade payables 29 35
Other liabilities, related parties' liabilities and provisions (227) (104)
(228) (256)
Interest paid - (750)
Interest received 75 -
Net cash used in operating activities (1,041) (1,847)
Cash from investing activities
Investment in restricted deposit 19 422
Net cash provided by investing activities 19 422
Cash from financing activities
Net cash used in financing activities - -
Effect of exchange fluctuations on cash held (64) 29
Decrease in cash and cash equivalents during the period (1,022) (1,425)
Cash and cash equivalents as of January 1(st)
5,705 7,769
Cash and cash equivalents as of June 30 4,619 6,373
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
NOTE 1: - CORPORATE INFORMATION
a. Plaza Centers N.V. ("the Company" and together with its
subsidiaries, "the Group") was incorporated and is registered in the
Netherlands. The Company's registered office is at Tolstraat 112, 1074 VK,
Amsterdam, the Netherlands. In the past the Company conducted its activities
in the field of establishing, operating and selling of shopping and
entertainment centres, as well as other mixed-use projects (retail, office,
residential) in Central and Eastern Europe (starting 1996) and India (from
2006). Following debt restructuring plan approved in 2014 the Group's main
focus is to reduce corporate debt by early repayments following sale of assets
and to continue with efficiency measures and cost reduction where possible.
The condensed interim consolidated financial statements for each of the
periods presented comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group's interest in jointly controlled entities.
The Company is listed on the premium segment of the Official List of the UK
Listing Authority and to trading on the main market of the London Stock
Exchange ("LSE"), the Warsaw Stock Exchange ("WSE") and on the Tel Aviv Stock
Exchange ("TASE").
Until December 19, 2018 the Company's immediate parent company was Elbit
Ultrasound (Luxemburg) B.V./ s.a.r.l ("EUL"), which held 44.9% of the
Company's shares. At that date EUL informed the Company that it had signed a
trust agreement according to which EUL will deposit all of its outstanding
investment with a trustee and no longer consider itself to be the controlling
shareholder of the Company. As of December 31, 2023 EUL had sold all of the
Company's shares and therefore ceased to be a related party.
b. Going concern and liquidity position of the Company:
As of June 30, 2024, the Company's outstanding obligations to bondholders
(including accrued interests) are app. EUR 142.3 million due date of which was
postponed to January 1, 2025 (the "Current Due date") (please refer to Note
6(d)).
Due to the above the Company's primary need is for liquidity. The Company's
current and future resources include the following:
1. Cash and cash equivalents (including the cash of fully owned
subsidiaries) of approximately EUR 4.6 million.
2. The Company and AFI Europe N.V. ("AFI Europe") entered into an addendum
to the pre-sale agreement entered into between the Parties in connection with
the sale of its subsidiary (the "SPV") which holds 75% in the Casa Radio
Project (the "Project") (the "Addendum" and the "Agreement", respectively)
pursuant to which the Parties agreed to extend the Long Stop Date, which is
the date on which the parties will execute a share purchase agreement, subject
to the satisfaction of conditions precedent (the "SPA"), until December 31,
2024. There can be no certainty that the SPA will eventually be executed
and/or that the transaction will be consummated as presented above or at all.
3. In addition, as detailed in note 5(2) of the annual financial statements
as of December 31, 2023, the Company has submitted with the International
Centre for Settlement of Investment Disputes ("ICSID") a Request for
Arbitration (the "Request") against Romania for compensation of losses
incurred due to failure of the Romanian authorities to cooperate, negotiate
and adjust the PPP agreement as described in the note 5(1)(c) of the annual
financial statements as of December 31, 2023 which
NOTE 1: - CORPORATE INFORMATION (Cont.)
include the Company's investment in the Project SPV, loss of potential profit,
and costs and expenses of the arbitration.
At this stage there is no certainty about the result of the dispute, hence no
resources are expected to be available in the foreseeable future.
As of June 30, 2024, the Company is not in compliance with the main Covenants
as defined in the restructuring plan (for more details refer also to Note 8 of
the annual financial statements as of December 31, 2023), hence under
defaulted which could also trigger early repayment clause by the bondholders.
Due to the abovementioned and due to the board and management estimation that
the Company is unable to serve its entire debt on the Current Due Date, the
Company intends to request the bondholders of both series an additional
postponement of the repayment of the remaining balance of the bonds. However,
there is an uncertainty if the bondholders will approve the request. In the
case that the bondholders would declare their remaining claims to become
immediately due and payable, the Company would not be in a position to settle
those claims and would need to enter to an additional debt restructuring or
might cease to be a going concern basis.
Due to the abovementioned conditions a material uncertainty exists that casts
significant doubt about the Company's ability to continue as a going concern.
The interim condensed consolidated financial statements have been prepared on
a going concern basis, which assumes that the Group will be able to meet the
mandatory repayment obligations of its bonds and other working capital
requirements.
NOTE 2: - BASIS OF PREPARATION
a. Basis of preparation of the interim condensed consolidated
financial data:
The interim condensed consolidated financial data for the six months period
ended June 30, 2024 have been prepared in accordance with the International
Financial Reporting Standard IAS 34 ("Interim Financial Reporting") as adopted
by the European Union.
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the Group's annual consolidated financial
statements as of 31 December 2023. These interim condensed consolidated
financial statements as of June 30, 2024 have been neither audited nor
reviewed by the Company's auditors.
The financial information for the half year ended 30 June 2023 has neither
been audited nor reviewed by the auditors.
Selected explanatory notes are, however, included to explain events and
transactions that are significant to understanding the changes in the Group's
financial position and performance since the last annual consolidated
financial statements as of and for the year ended December 31, 2023.
The interim condensed consolidated financial statements as of June 30, 2024
were authorized by the Board of Directors on 21 August 2024.
NOTE 3: - USE OF JUDGEMENT AND ESTIMATES
In preparing this interim condensed consolidated financial information,
management has made judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing this interim condensed consolidated financial information, the
significant judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were principally the
same as those that applied to the consolidated financial statements as at and
for the year ended December 31, 2023, save for the changes highlighted above.
Refer also to Note 1(b) above for significant estimations performed.
NOTE 4: - FINANCIAL INSTRUMENTS
Carrying amounts and fair values
In respect to the Company's financial instruments assets not presented at fair
value, being mostly short-term market interest bearing liquid balances, the
Company believes that the carrying amount approximates its fair value. In
respect of the Company's financial instruments liabilities:
Fair value of the quoted debentures is based on price quotations at the
reporting date.
Carrying amount Fair value
June 30, December 31, June 30, December 31
2024 2023 2024 2023
Not audited Not audited Audited
Not reviewed Audited Not reviewed
EUR '000 EUR '000 EUR '000 EUR '000
Statement of financial position
Debentures A - Israeli NIS bonds 40,104 39,403 3,676 2,991
Debentures B - Israeli NIS bonds 57,057 56,059 5,539 5,176
Total 97,161 95,462 9,215 8,167
The total contractual liability of the Debentures was EUR 142.3 million as of
June 30, 2024.
NOTE 5: - CASA RADIO
a. Following Note 5(1)(c) to the annual financial statements relating the
discussions with the Romanian authorities, on July 15, 2024 the Company
received a notice, on behalf of the Ministry of Finance of Romania (for more
details refer to Note 7(a)).
b. Following Note 5(1)(e) to the annual consolidated financial
statements as of December 31, 2023 which discloses that the The Company and
AFI Europe N.V. ("AFI Europe") entered into an addendum to the pre-sale
agreement entered into between the Parties in connection with the sale of its
subsidiary (the "SPV") which holds 75% in the Casa Radio Project (the
"Project") (the "Addendum" and the "Agreement", respectively) pursuant to
which the Parties agreed to extend the Long Stop Date, which is the date on
which the parties will execute a share purchase agreement, subject to the
satisfaction of conditions precedent (the "SPA"), until December 31, 2024.
NOTE 5: - CASA RADIO (Cont.)
Following the above, the Parties continue their attempts to receive the
authority's approval in order to be able to execute the SPA, still there has
been no progress since the pre-sale has been signed. In light of the above the
Company is exploring all its options in order to obtain progress, including
among others its legal options. For details regarding the issuance of a notice
of dispute and acceptance of offer and consent to arbitrate to Romania with
respect to the "Casa Radio" project refer to Note 5(2). Accordingly, the
hearing is due to commence in 4q 2024.
Due to the above, there can be no certainty that the SPA will eventually be
executed and/or that the transaction will be completed.
c. Write-down of trading properties:
As detailed in the annual consolidated financial statements, the value of the
trading property of the Project was fully reduced (for more details refer to
Note 5(2) to the annual consolidated financial statements as of December 31,
2023).
Still, the Company believes that despite this reduction there is no change in
the value of the Company's rights under the PPP Agreement. In addition,
management, believes that in case they will decide to pursue it material
economic damage, the Company has a good case to claim compensation for such
damages.
NOTE 6:- MATERIAL EVENTS DURING THE REPORTING PERIOD
a. Update regarding a change in Ragnar Trade holdings:
On January 31, 2024 the Company announced that, Ragnar Trade spółka z
ograniczoną odpowiedzialnością ("Ragnar Trade") acquired about 343.9
thousand shares of the Company, which amounted to 5.02% of the Company's
issued and paid capital. On February 5, 2024 the Company announced that
Ragnar Trade acquired share of the Company up to level of 11.70% of the
Company's issued and paid capital and on February 19, 2024 it was announced
that Ragnar Trade holdings in the Company is decreased to 4.81% of the
Company's issued and paid capital, thus Ragnar Trade ceased to be related
party of the Company.
b. Tax authority investigation:
On March 25, 2024 the Company announced that further to its announcement dated
March 27, 2023 with regards to the search and seizure operations carried by
the Indian tax authorities at the offices of Elbit Plaza India Management
Services Private Limited (hereinafter: "EPIM") (which is a private company
wholly owned by Elbit Plaza India Real Estate Holdings Limited), EPIM has
received a favorable order under which investigation for one of the three
years under investigation is completed without imposing any liability on EPIM.
Inquiry into the remaining periods of the investigation is continuing and the
Company will update on any development.
NOTE 6:- MATERIAL EVENTS DURING THE REPORTING PERIOD (cont.)
c. Dutch statutory auditor:
Following Note 16(b)(6) to the annual consolidated financial statements as of
December 31, 2023, which discloses statutory filing requirements, the Company
submitted the annual consolidated financial statements as of December 31, 2023
which were filed to the London Stock Exchange, the Warsaw Stock Exchange and
the Tel Aviv Stock Exchange, to the Authority for the Financial Markets and to
other relevant Dutch authorities.
d. Deferral of payment of Debentures and partial interests'
payment:
As previously disclosed by the Company in Note 8(c) to its annual consolidated
financial statements as of December 31, 2024, the Company was not able to meet
its final redemption obligation to its (Series A and Series B) bondholders,
due on July 1, 2024. In light of the above the bondholders approved to
postpone the final redemption date to January 1, 2025.
e. Update regarding Arbitration against Romania with respect to
the "Casa Radio" project:
On March 29, 2024 the Company announced that, it has received a further
engagement letter ("Further Engagement Letter"), from the Company's primary
legal advisers in connection with the arbitration for the "Casa Radio" project
(the "Project"). The Further Engagement Letter is in line with Company's
projected cash flow that was approved at Bondholders' Meeting from October 11,
2023.
On April 2, 2024 the Company filed its Reply on the merits and counter
memorial on jurisdiction at the International Centre for the Settlement of
Investment Disputes. The Company's updated full compensation for its losses
with respect to the Project is currently estimated to be up to EUR 425,500,000
as at 31 March, 2024.
NOTE 7: - SUBSEQUENT EVENTS
a. Update regarding Arbitration against Romania with respect to
the "Casa Radio" project:
On July 15, 2024 Plaza received a notice, on behalf of the Ministry of Finance
of Romania, to start an arbitration procedure under the rules of the London
Court of International Arbitration (hereafter: "Request") against the Company,
Elbit Imaging Ltd and a third-party private investor (the Company, Elbit
Imaging Ltd and the third-party private investor will be collectively referred
to below as: "the Respondents"). As part of the request, the Ministry of
Finance of Romania demands compensation from the Respondents amounting to
approximately EUR 96 million (before VAT and interest).
- - - - - - - - - -
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