29th Aug 2007 07:01
Plaza Centers N.V.29 August 2007 29 August, 2007 PLAZA CENTERS N.V. INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Plaza reports strong growth, realization of investments and excellent progress with its portfolio of 24 current development schemes Plaza Centers N.V. ("Plaza" / "Company" / "Group"), a leading emerging marketsproperty developer, today announces interim results for the six months ended 30June 2007. In the period since the Admission of its shares to trading on the Official Listof the London Stock Exchange in November 2006, Plaza has utilised circa 60% ofthe IPO proceeds, mainly by acquiring 12 new development projects. The Companyalso continues to make excellent progress in its acquisitions programme and thedelivery of its existing schemes. Financial highlights: • The Company's NAV was €1.02 billion at June 30, 2007 (At IPO: €809 million) • NAV per share of £2.37 per share (At IPO: £1.90) • Estimated value of portfolio at completion of €2.8 billion • Increase to €264 million in balance sheet of real estate trading properties being developed for future sale (31 December 2006: €160 million) • Total assets of €540 million (31 December 2006: €475 million) • Gross revenues and net gains from sale and operating of real estates of €97 million (30 June 2006: €58 million) • Profit before tax of €22.6 million (30 June 2006: €6.5 million) owing to the disposal of two shopping and entertainment centres in Poland and an office building in Budapest • Basic and diluted EPS of €0.08 (30 June 2006: €3.12, due to much fewer shares pre-IPO in 2006) • Cash position of €186 million (31 December 2006: €219 million) and working capital of €372 million (31 December 2006: €324 million) Operational highlights in the reporting period: • Successful opening and handover of Sosnowiec Plaza and Rybnik Plaza in Poland. Both shopping malls were 100% let on opening, resulting in a higher closing consideration paid to the Company than disclosed in the Company's Prospectus and a combined total market value for the two properties of €90.1 million, an increase of €18.6 million • Purchase of two additional developments in Timisoara and Miercurea Ciuc, Romania with an anticipated gross lettable area ("GLA") of 39,500 sqm and 12,000 sqm, respectively • Purchase of land for an additional housing development in the Roztoky suburb of Prague in the Czech Republic • Second and third mixed-use Joint Venture development projects acquired in India in the Kharadi district of Pune and in Trivandrum, the capital city of the State of Kerala. The combined Gross Built Area ("GBA") of the scheme in Pune is approximately 225,000 sqm, while the scheme in Trivandrum has a GBA of approximately 195,000 sqm • Additional development project acquired in Poland in the city of Torun for shopping and entertainment centre development with GLA of circa 33,000 sqm. Key highlights since the period end: • Forward-sale of Arena Plaza in Budapest, which will be the largest shopping centre in Hungary and one of the biggest in Central and Eastern Europe ("CEE"), to Active Asset Investment Management Plc (aAIM). The estimated transaction price will not be less than €380 million and capped at €400 million. The estimated value of the asset upon completion in the Company's Prospectus was €333 million • The disposal of Plaza's 50% stake in Lublin Plaza Poland to Klepierre SA. The shopping centre was 100% let on opening. The market value of the total project was €78 million compared to the estimated value of approximately €62 million at the time of the Company's IPO • Acquisition of sites in Romania for a retail-led mixed use development in Iasi (GLA 52,000 sqm) and a mixed use retail and residential scheme in Slatina (GBA 25,000 sqm) • Debut in Serbia, winning a tender process run by the Government of Serbia for the development of a new shopping, entertainment and business centre in Belgrade with a GBA of 100,000 sqm • Examining the possibility of dual listing in the Warsaw Stock Exchange (WSE), to allow higher liquidity and fulfil local investors' demand • Gross proceeds raised of New Israeli Shekels ("NIS") 305 million (approximately €53.3 million) from a bond issue to Israeli institutional investors in July 2007. Commenting on the results, Mordechay Zisser, Chairman and Ran Shtarkman,President and Chief Executive Officer, of Plaza Centers N.V., said: "Tenant and investor demand for our high quality retail and entertainmentcentres in the CEE region continues to be strong. We also continue to leverageour track record and experience built up over eleven years into new countriessuch as Serbia, Bulgaria, Slovakia, Ukraine and Russia as well as continuing ourexpansion into India. We have made good progress in driving our acquisitionsprogramme in 2007 and have built an exciting pipeline of assets, which we expectto bring to fruition during the rest of 2007 and in the following years. "In line with our strategy for the year, we have already opened three shoppingand entertainment centres in Poland and are on track to open one in Hungary andone in the Czech Republic by the end of the year. We have also successfullydisposed of our landmark Arena Plaza scheme in Budapest for circa €400 million,some €67 million more than the project's value at our Admission. "We are confident that the Company will achieve its goal to complete at leastfour to five developments each year and, thereby, deliver strong income andcapital growth for our shareholders. We therefore look forward to the futurewith considerable confidence." For further details please contact: PlazaMordechay Zisser, Chairman +972 3 6086000Ran Shtarkman, President and CEO +36 1 462 7221Roy Linden, CFO +36 1 462 7105 Financial DynamicsStephanie Highett/Lauren Mills +44 20 7831 3113 Notes to Editors Plaza Centers N.V. (www.plazacenters.com) is a leading emerging marketsdeveloper of shopping and entertainment centres, focusing on constructing newcentres and, where there is significant redevelopment potential, redevelopingexisting centres, in both capital cities and important regional centres. TheCompany is an indirect subsidiary of Elbit Medical Imaging Ltd. ("EMI"), anIsraeli public company whose shares are traded on both the Tel Aviv StockExchange in Israel and the NASDAQ Global Market in the United States. Plaza Centers N.V. is a member of the Europe Israel Group of companies which iscontrolled by its founder, Mr. Mordechay Zisser. It has been present in realestate development in emerging markets for over 11 years. CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT We are delighted to report excellent progress and high levels of activity acrossall Plaza's operations in the six months ended 30 June 2007 and in the secondhalf of the year to date. The gross proceeds of the Company's IPO were approximately £166 million(including the exercise of an over-allotment option). Since Admission inNovember 2006, we have invested approximately 60% of these proceeds through theacquisition of 12 projects and through capital expenditure on the constructionand delivery of our existing schemes. Results We ended H1 2007 with gross revenues of €97 million and a net profit of €22.6million, resulting mainly from the sale of our shopping and entertainmentcentres in Rybnik and Sosnowiec, Poland and the sale of the Duna Plaza officesin Budapest, Hungary. Following our strategic decision to focus more on assets to be built for sale,in 2006 and 2007 we invested heavily in existing assets under construction aswell as acquiring a substantial future pipeline. Our total investment in realestate inventories under construction ("trading properties") increased to €264million and we expect to present significant revenues out of these inventoriesfrom H2 2007 onwards. With our cash position of approximately €186 million at the period end (and €162million as at today's date) and with the benefit of the gross proceeds ofapproximately €53.3 million from the bond issue in July 2007 to Israeliinstitutional investors, Plaza is strongly positioned to fulfil its potential,secure additional investment pipeline projects and thereby create substantialvalue for our shareholders. NAV The Company's portfolio as at June 30, 2006 was valued by King Sturge LLP andtheir summary valuation is shown below. The Company has seen a significant increase in the value of some of its assets,especially in regard to the Arena Plaza in Budapest which was valued at €333million at IPO and was recently forward sold to aAIM for circa €400 million. Thethree shopping and entertainment centres sold in Poland were also handed over ata price higher than their value estimated at IPO. In addition, seven new assetswere acquired and valued post IPO by June 30, 2007, which resulted in asubstantial increase in the Company's Net Asset Value. The Company's NAV was calculated as follows: Use EUR (Thousand)Market value of land and projects by King Sturge LLP (1) 906,585Assets minus liabilities as at June 30, 2007 (2) 113,889Total 1,020,474 (1) per valuation attached(2) excluding book value of assets which were valued by King Sturge LLP The resulting NAV per share is £2.37 as at June 30, 2007. Strategy Plaza is a leading emerging markets developer of shopping and entertainmentcentres, focusing on constructing new centres and, where there is significantredevelopment potential, redeveloping existing centres, in both capital citiesand important regional cities. The Company's reputation for successful property development in Central andEastern Europe is well-established, with a total of 24 centres now built andsold or forward sold to leading investors such as Klepierre, the Dawnay DayGroup and, most recently, Active Asset Investment Management (aAIM). As aresult, "Plaza Centers" has become a widely recognised brand name forwestern-style, institutional quality shopping and entertainment centres. Over the past 11 years, the Company has expanded its operations in centralEurope and eastwards into Poland, the Czech Republic, Romania, Latvia and Greeceand, more recently, India and - as announced to shareholders yesterday - Serbia.During this time, it has clearly demonstrated its ability to anticipate markettrends and deliver innovative large scale projects. The Company is now activelyseeking to leverage its successful expertise and track record to new countrieslocated adjacent to its existing areas of operation, such as Croatia, Bulgaria,Slovakia, Ukraine and Russia. The strength of our reputation in Central and Eastern Europe has led the Boardto decide to explore the possibility of a dual listing of the Company's shareson the thriving Warsaw Stock Exchange ("WSE"). The WSE has been extremelyactive over the past few years, with fast-increasing levels of investmentactivity from both institutional (particularly pension and mutual funds) andretail investors. On the basis that we have received numerous enquiries frominvestors in Poland and Central and Eastern Europe wishing to invest in ourcompany and the likely benefits it will bring to all our shareholders in termsof increased liquidity in the shares, we believe this dual listing could be anattractive strategic option for the Company. It is anticipated that, shouldmarket conditions stabilize, this will be achieved within the current financialyear. The Company continues to make strong progress on its ongoing operationalstrategy, as detailed in its Prospectus, namely to: • develop four to five modern western-style shopping and entertainment centres per year in the capital and regional cities of selected countries, primarily in CEE (focusing on the medium term in Poland, Czech Republic, Romania, Slovakia, Ukraine, Russia, Serbia and Greece) and mixed use developments in India for the medium and long term; • acquire operating shopping centres that show significant redevelopment potential (either as individual assets or as portfolios) for refurbishment and subsequent re-sale; • pre-sell, where prevailing market and economic conditions are favourable, the centres during construction, or prior to commencement of construction or redevelopment; and where the opportunity exists in CEE and India, extend its developments beyond shopping and entertainment centres by leveraging its strengths and drawing upon the experience and skills of the Company's executive management team and the Europe Israel Group to participate in residential, hotel, offices and other development schemes where such developments form part of integrated large scale business and leisure developments. Portfolio progress The Company is currently engaged in 24 assets and projects under developmentlocated across the Central and Eastern European region and in India. Thelocation of the assets under development, as well as office buildings, issummarised as follows: Number of assetsLocation Under development Offices Romania 5 -Czech Republic 5 1Hungary 4 1Poland 4 -Latvia 1 -Greece 1 -Serbia 1 -India 3 -Total 24 2 The Company invested a total of €42 million in six acquisitions and jointventures during the six months, namely a retail development scheme in Torun,Poland, two joint venture projects in India, a residential project in Roztoky inthe Czech Republic and the acquisition of two sites in Romania at Timisoara andMiercurea Ciuc. In addition, in a busy period following the period end, Plaza has undertaken anumber of significant transactions. The most important of these was theforward-sale of Arena Plaza in Budapest, the future largest shopping centre inHungary and amongst the largest in Central and Eastern Europe, to Active AssetInvestment Management Plc ("aAIM"). The estimated transaction price is based onthe current rent levels and is not less than €380 million and capped at €400million. The estimated value at Admission was €333 million. In addition, during the weeks since 30 June 2007, we have sold our 50% stake inLublin Plaza, Poland to Klepierre SA. The shopping centre was 100% let onopening in June 2007 and had a market value of €78 million (the whole projectvalue) compared to the estimated value of approximately €62 million at the timeof the Company's IPO. We have also announced the acquisitions of a 20,000 sqmsite at Slatina in southern Romania for the development of a shopping andentertainment centre and a 46,500 sqm site in Iasi, Romania for a retail-ledmixed use development. Additionally, as announced yesterday, Plaza has won a tender process run by theGovernment of Serbia for the development of a new circa 100,000 sqm GBAshopping, entertainment and business centre in Belgrade, as a brownfielddevelopment on the prominent site of the former federal Ministry of InternalAffairs of Yugoslavia. To date, we have utilized approximately 60% of the gross IPO proceeds asfollows: Use EUR (m)Finance of current developments 22Acquisition of pipeline projects in the CEE 87Replacement of existing loan facilities that are incompatible 19Expansion of operations in India 23Total 151 Dividend Policy As explained in the Company's Prospectus, the Directors intend to adopt adividend policy which will reflect the long-term earnings and cash flowpotential of the Group, taking into account the Group's capital requirements,while at the same time maintaining an appropriate level of dividend cover. Subject to all of these factors, and where it is otherwise appropriate to do so,the Directors intend to make distributions out of the annual net profits of theGroup starting with the 2007 financial year. Dividends are expected to be paidat the rate of 25% on the first €30 million of such annual net profits, andthereafter at the rate of between 20% and 25%, as determined by the Directors,on any additional annual net profits which exceed €30 million. The dividendswill be paid on or about 31 March following the publication of the Company'sfinancial results on the basis of the aggregate of the annual net profitsaccumulated during the preceding financial year. The first dividend is thereforeexpected to be paid in 2008 following the 2007 results. Outlook Tenant and investor demand for our high quality retail and entertainment centresin the CEE region continues to be strong. We also continue to leverage ourtrack record and experience built up over eleven years into new countries suchas Serbia, Bulgaria, Slovakia, Ukraine and Russia as well as continuing ourexpansion into India. We have made good progress in driving our acquisitionsprogramme in 2007 and have built an exciting pipeline of assets, which we expectto bring to fruition during the rest of 2007 and in the following years. In line with our strategy for the year, we have already opened three shoppingand entertainment centres in Poland and are on track to open one in Hungary andone in the Czech Republic by the end of the year. We have also successfullydisposed of our landmark Arena Plaza scheme in Budapest for €400 million, some€67 million more than the project's value at our Admission. We are confident that the Company will achieve its goal to complete at leastfour to five developments each year and, thereby, deliver strong income andcapital growth for our shareholders. We therefore look forward to the futurewith considerable confidence. Mordechay Zisser Ran ShtarkmanChairman President and CEO29 August 2007 29 August 2007 BUSINESS OVERVIEW H1 2007 and the following weeks have been a highly active period for Plazaacross all areas of its business. Particular highlights included: • Completion of developments: successful openings of Rybnik, Sosnowiec and Lublin shopping and entertainment centres in Poland, all 100% let upon opening; Arena Plaza and Plzen Plaza will be opened on schedule in Q4 this year; • Exits: Handover of the interests in the above mentioned centres to Klepierre and the forward sale of Arena Plaza at terms more favourable than those reflected in our Prospectus; • Acquisition of pipeline: nine new developments acquired (12 since IPO); • Financial strength and flexibility: High cash balances and an A+/positive rating granted by the Israeli affiliate of Standard & Poor's for the raising of up to $400 million at favourable interest rates, of which approximately $72 million has already been raised through a bond issue in July. Plaza is involved in the development of 24 schemes, of which five are located inRomania, five in the Czech Republic, four in Hungary, four in Poland, one inLatvia, one in Greece, one in Serbia and three in India. The projects are at varied stages of the development cycle, from the purchase ofland through to the planning and completion of construction. In addition, Plazais negotiating to purchase sites for the development of several additionalschemes throughout the CEE region and India. The Company's current assets and pipeline projects are summarised in the tablebelow: Asset/Project Location Nature of asset Size sqm (GLA) Plaza ownership Status %Arena Plaza Budapest, Retail and entertainment 66,000 100 Construction Hungary scheme commenced in 2006; completion scheduled for Q4 2007. Pre-sold to aAIMArena Plaza Budapest, Mixed use of retail, 19,500 (for rent 100 Under planningextension Hungary residential and other and sale)Dream Island Budapest, Major business and 350,000 (GBA) 30 Under planning. Hungary leisure resort (for rent and Construction will(Obuda) sale) commence in Q4 2007; completion scheduled for 2012David House Budapest, Headquarters/Office 2,000 100 Operational HungaryDuna Plaza Budapest, Retail and entertainment 15,000 Development Under planningextension Hungary scheme rightsSuwalki Plaza Suwalki, Retail and entertainment 21,000 100 Construction will Poland scheme commence in Q1 2008; completion scheduled for 2009Lodz Lodz, Poland Residential/Office 68,000 100 Under planning schemeZgorzelec Plaza Zgorzelec, Retail and entertainment 16,000 100 Construction will Poland scheme start in Q1 2008; completion scheduled for 2009Torun Plaza Torun, Poland Retail and entertainment 33,000 100 Planning and permits scheme phasePlzen Plaza Plzen, Czech Retail and entertainment 20,000 100 Construction started Rep. scheme in 2006; completion scheduled for Q4 2007, pre-sold to KlepierrePrague 3 Prague, Czech Office, for future use 61,600 100 Currently Rep. for residential (residential for operational as an sale) office building, re-zoning for future use for residential is in progressOpava Plaza Opava, Czech Retail and entertainment 14,000 100 Construction will Rep. scheme start in late 2008; completion scheduled for 2010Liberec Plaza Liberec, Retail and entertainment 17,000 100 Construction started Czech Rep. scheme in 2007; completion scheduled for 2008Roztoky Prague, Residential units 14,000 100 Under planning Czech Rep.Casa Radio Bucharest, Mixed-use retail and 360,000 (GBA) 75 Construction Romania leisure plus residential commenced in 2007; /office scheme completion scheduled during 2010-2012Timisoara Plaza Timisoara Retail entertainment and 59,500 100 Under planning residential scheme (including 20,000 of residential)Miercurea Ciuc Miercurea Retail and entertainment 12,000 100 Under planningPlaza Ciuc schemeIasi Plaza Iasi Retail, entertainment 52,000 100 Under planning and office schemeSlatina Slatina Retail, entertainment 25,000 (GBA) 100 Under planning and residentialBelgrade Serbia Retail, entertainment 100,000 (GBA) 85 Under palnning and business centreRiga Plaza Riga, Latvia Retail and entertainment 49,000 50 Construction started scheme in 2007; completion scheduled for 2009Helios Plaza Athens, Retail and entertainment 35,000 100 Under planning and Greece or office scheme permits stageKoregaon Park Pune, India Retail, entertainment 107,500 (GBA) 50 Construction started and office scheme in 2007, expected completion in 2009Kharadi Pune, India Retail, entertainment, 225,000 (GBA) 50 Under planning office and apart-hotel schemeTrivandrum, Kerala, India Retail, entertainment, 195,000 (GBA) 50 Under planning office and apart-hotel scheme Details of these activities by country are as follows: Hungary During 1996-2004, Plaza built, managed and eventually sold 16 shopping centresthroughout Hungary. During 2007, Plaza continued to develop the Arena Plaza, itslandmark shopping centre scheme in central Budapest, comprising approximately66,000 sqm GLA which will make it one of the biggest in CEE. The mall waspre-sold to aAIM in August 2007. In addition, Plaza holds a 30% stake in Dream Island, a prestigious developmenton the Obuda Island in central Budapest, with a land area of 320,000 sqm, whichis intended to be developed as a major resort area including hotels, recreationfacilities, a casino and a business and leisure complex with a developmentbudget of over €1 billion and 350,000 sqm of GBA. Preliminary design andexcavation works are already underway. Two further projects are in feasibility and planning stages, namely theextension of the Duna Plaza and the Arena Plaza, both of which are located incentral Budapest. The Group continues to own its office building in Budapest, David House onAndrassy Boulevard. Poland Between 2001 and 2005, Plaza built, managed and, in 2005, sold four shoppingcentres located across Poland. In 2007, the Company completed the constructionof three shopping centres in Rybnik (approximately 18,000 sqm GLA), Sosnowiec(approximately 13,000 sqm GLA) and Lublin (50% held, approximately 26,000 sqmGLA). All three were 100% let upon opening and have all been handed over toKlepierre successfully and on better terms than those mentioned in ourProspectus. In addition, Plaza continued the feasibility and planning of its developmentscheme in Lodz (designated for shopping centre or alternatively residential/office use), as well as an acquisition of an additional plot of land for aplanned shopping centre in Torun (comprising approximately 33,000 sqm of GLA). Czech Republic Construction of the Plzen Plaza (approximately 20,000 sqm GLA) commenced in 2006and is currently expected to be completed in Q4 2007. Plaza has purchased 39,000 sqm of private land in Roztoky, a town close toPrague, which includes a valid planning permit for 81 family homes. It isintended to commence construction in 2008. The Company continued to own an income-yielding office building in Prague whichis designated to be re-zoned for a scheme of 61,600 sqm of residential units. Romania In November 2006, Plaza acquired a 75% interest in a company which has enteredinto a public-private partnership agreement with the Government of Romania todevelop the approximately US$1 billion budget Casa Radio (Dambovica) scheme inBucharest, the largest development plot available in the city centre. TheRomanian Government will remain a 15% partner in the scheme. The development ofCasa Radio comprises approximately 360,000 sqm of GBA, including a 110,000 sqmGLA shopping mall and leisure centre (one of the largest in Europe), residentialunits, offices, hotel, casino, hypermarket and convention and conference hall. The Group has continued its rapid expansion in Romania, with the purchase offour exciting sites. It has acquired a plot in Timisoara for the development ofa shopping centre comprising approximately 39,500 sqm GLA and residential unitsof approximately 20,000 sqm; a plot in Iasi for the development of a shoppingcentre providing approximately 37,000 sqm GLA and 15,000 sqm of office space; asite in Miercurea Ciuc which will be developed into a shopping centre withapproximately 12,000 sqm of GLA and another site of 20,000 sqm at Slatina forthe development of a shopping and entertainment centre of GBA 25,000 sqm. Inaddition the site at Slatina comes with an option to develop approximately10,000 sqm of residential accommodation. Latvia Construction works started in March 2007 on the Riga Plaza project comprisingapproximately 49,000 sqm of GLA in Riga, Latvia (a 50% holding). The scheme islocated on the western bank of the river Daugava by the Sala Bridge and Plazaexpects this project to be completed during 2009. Serbia Plaza has successfully tendered for a state-owned plot and building in Belgrade,Serbia. The building was formerly occupied by the federal ministry of internalaffairs in the former Yugoslavia, and is located in the centre of Belgrade in aneighbourhood of government offices and foreign embassies. Serbia is one of the Eastern European nations where Plaza sees strong potentialfor future investment opportunities. Plaza also believes that the Belgrademarket offers particular potential, with its large populated catchment area ofapproximately 2.5 million people. Additionally, as Belgrade has not to datebenefited from 'institutional grade' investment in retail or commercial realestate, this development will have particular significance in terms of providinga new commercial and cultural destination for both domestic and internationalvisitors. Plaza will partner a local Serbian developer for the project, which is expectedto have a gross development budget of circa €150 million. The local partner willbe entitled to participate in up to 15% of the project, subject to certainconditions, while project management will be handled solely by Plaza. The development will comprise a shopping, entertainment and business centretotalling circa 100,000 sqm of GBA. Greece Plaza owns a 15,000 sqm plot of land centrally located in Piraeus Avenue,Athens. Plaza is currently working on securing building permits for theconstruction of a shopping centre, or alternatively an office complex, totallingapproximately 35,000 sqm of GLA. Russia and Ukraine New country directors have been appointed to these countries to focus onpossible investments and to gain deeper understanding of the local market.Negotiations are currently underway to purchase plots in the major cities ofthese countries. India As outlined in its Prospectus, Plaza has identified strong potential in emergingIndia and, during the reporting period, acquired two additional developmentprojects in 50-50 Joint Venture in the Kharadi district of Pune, totallingapproximately 225,000 sqm of GBA and in Trivandrum, the capital city of theState of Kerala, of approximately 195,000 sqm GBA. Both projects are for mixeduse development (shopping centre, offices, hotel and serviced apartments), withKharadi featuring a shopping area of 120,000 sqm, office space of approximately81,000 sqm and 24,000 sqm of serviced apartments. The project in Trivandrumwill provide retail space of some 67,000 sqm, an office complex of 90,500 sqmand 37,500 sqm of serviced apartments. Prospects The Group continues to examine additional developments to acquire across itstarget region as well as examining other future emerging market opportunities,which we consider to offer strong potential consumer demand for Plaza'sdevelopment projects. FINANCIAL REVIEW Results In line with the Group's commercial decision to focus its business more on thedevelopment and sale of shopping and entertainment centres, the Group isclassifying its current projects under development as trading properties ratherthan investment properties. Accordingly, revenues from the sale of tradingproperties are presented at gross amounts. Revenues for the period ended at June 30, 2007 increased to €95 million (H12006: €52 million), mainly due to the sale of Rybnik Plaza and Sosnowiec Plazain Poland. Gains from the sale of investment property decreased to €2.4 million (H1 2006:€6.5 million), mainly due to the policy of the Group to classify properties astrading properties. The gain in H1 2007 represents the net result from the saleof the Duna Plaza Offices in Budapest, while the H1 2006 gain was mainly fromthe Poznan Plaza price adjustment. The cost of operations is attributable to the cost of projects sold mentionedabove (Rybnik and Sosnowiec) which were classified as trading properties(inventories). Administrative expenses increased to €8.2 million (H1 2006: €4.3 million),mainly due to non-cash share-based payments (€3.6 million) which were not inplace in H1 2006 and to the increase in the Company's volume of activities. Net finance was positive in H1 2007 at €3.3 million (H1 2006: expenses of €0.6million) due to higher cash balances and more favourable lending terms achieved. Tax expenses continue to remain very low at €93,000 (H1 2006: €834,000),reflecting less than 1% (H1 2006: 13%) of profits before tax and resulting fromthe Group's favourable tax structure. Profit for the period amounted to €22.6 million in H1 2007, above marketexpectations, compared to €5.7 million in H1 2006 and again reflects the sale ofthree assets as mentioned above in comparison with the one asset sold in H1 2006(Novo Plaza in Prague). Basic earnings per share for H1 2007 were €0.08 per share (H1 2006: €3.12). Thedecrease is due to the public share offering that took place subsequent to June30, 2006 when the number of outstanding shares was increased significantly. Balance sheet and cash flow The balance sheet as at 30 June 2007 showed current assets of €496 millioncompared to current assets of €414 million at the end of 2006. This riseprimarily results from Plaza's realization of three assets and investment in oursubstantial pipeline of development projects. The cash position of cash and short term deposits decreased to €186 million(2006: €219 million), mainly due to acquiring six pipeline projects during theperiod net of receipts from the three assets sold. Investment properties decreased to €13 million (2006: €26.6 million), due to thesale of Duna Plaza Offices. Currently only the Prague 3 logistic building isclassified as an investment property. Total bank borrowings (long and short term) increased to €80 million (2006: €57million) reflecting the increase of construction activities net of repayment ofthe loans used to construct the Rybnik Plaza and Sosnowiec Plaza and theirsubsequent sale. Trade payables and other liabilities increased to €26 million and €14 million,respectively (2006: €16 million and €3 million, respectively), due to theincrease in the volume of construction activities. Related Party balances are presented gross (both in the assets and in theliabilities sections of the balance sheet) as the balances are with differentPlaza group subsidiaries and therefore netting was not possible under IFRS.However, the net balance of the Plaza Group with its controlling shareholders isapproximately €2.5 million (liability). The majority of this (€1.9 million) isdue to a provision in respect of project management fees charged by the ControlCenters group, relating to project supervision services granted in respect ofthe extensive development of projects within the Group. Valuation Summary by King Sturge LLP as at June 30, 2007 Project Name Market Value on Market Value of Market Value of completion 30 the land and the land and June, 2007 Market Value on project project completion 31 • May, 2006 30 June, 2007 31 May, 2006 Country • • •Hungary Arena Plaza 382,000,000 333,388,000 300,000,000 172,424,000 Arena Plaza extension 71,300,000 76,163,000 27,000,000 38,722,000 Dream Island 462,100,000 454,820,000 81,160,000 76,163,000 David House, Budapest 5,275,000 5,512,000 5,275,000 5,512,000 Duna Plaza extension 47,100,000 46,870,000 25,000,000 25,203,000Poland Torun Plaza 89,150,000 - 18,000,000 - Suwalki Plaza 60,900,000 40,600,000 11,300,000 9,410,000 Lodz Plaza 128,105,000 70,800,000 16,500,000 11,663,000 Zgorelec Plaza 41,800,000 - 6,500,000 - Lublin Plaza 39,000,000 30,988,000 39,000,000 15,011,000Czech Republic Plzen Plaza 61,800,000 42,814,000 29,010,000 3,056,000 Prague 3 116,575,000 98,023,000 24,600,000 22,449,000 Opava Plaza 41,600,000 42,300,000 11,900,000 10,868,000 Liberec Plaza 63,500,000 60,045,000 25,330,000 21,770,000Romania Miercurea Ciuc Plaza 19,200,000 - 4,400,000 - Timisoara Plaza 104,600,000 - 24,000,000 - Casa Radio Plaza 646,900,000 460,875,000 164,000,000 87,380,000Latvia Riga Plaza 75,000,000 51,681,000 23,000,000 23,020,000Greece Helios Plaza 95,625,000 89,600,000 30,210,000 29,459,000India Koregaon Park 51,650,000 - 12,750,000 - Kharadi Plaza 76,600,000 - 17,000,000 - Trivandrum Plaza 78,900,000 - 10,650,000 -Value of sold - 85,343,000 - 28,959,000projects Total €2,757,380,000 €1,989,822,000 €906,585,000 €581,069,000 Notes • Please note both Torun and Zgorzelec are owned by third party, non Plaza Centers related companies, albeit with preliminary purchase or pre-agreements in place. Our valuations reflect the potential value of the projects if available for development today. • Plaza Centers has a 50% interest in the Riga Plaza development. • Plaza Centers has a 50% interest in the Lublin Plaza development. • All land and project values assume full planning consent for the proposed use. • Plaza has a 50% interest in Koregaon Park, Kharadi Plaza and Trivandrum Plaza. • Plaza has a 30% share in Dream Island. • Plaza has a 75% share of Casa Radio. • All the figures reflect Plaza's share. Independent report on review of condensed consolidated interim financialinformation To the directors of Plaza Centers N.V. We have reviewed the accompanying consolidated condensed balance sheet of PlazaCenters N.V. ("the Company") as at June 30, 2007 and the related consolidatedcondensed statements of income, changes in equity and cash flows for thesix-month period then ended ("the interim financial information"). Management isresponsible for the preparation and presentation of the consolidated interimfinancial information in accordance with IAS 34, 'Interim Financial Reporting',as adopted by the EU. Our responsibility is to express a conclusion on theinterim financial information based on our review. We conducted our review in accordance with the International Standard on ReviewEngagements 2410 "Review of Interim Financial Information Performed by theIndependent Auditor of the Entity". A review of interim financial informationconsists of making inquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing and consequently does not enable us toobtain assurance that we would become aware of all significant matters thatmight be identified in an audit. Accordingly, we do not express an auditopinion. Based on our review, nothing has come to our attention that causes us to believethat the accompanying interim financial information as at June 30, 2007, is notprepared, in all material respects, in accordance with IAS 34, "InterimFinancial Reporting", as adopted by the EU. Budapest, August 28, 2007 KPMG Hungaria Kft. Condensed consolidated interim income statement For the six months ended June 30, 2007 2006 Unaudited Audited • '000Revenues 94,571 51,653Gain from the sale of investment property, net 2,471 6,539Changes in fair value of investment property - 293 97,042 58,485 Cost of operations 69,131 46,993 Gross profit 27,911 11,492 Administrative expenses (*) 8,191 4,315 Operating profit 19,720 7,177 Finance income 3,858 1,527Finance expenses (586) (2,108)Finance income, net 3,272 (581) Other income 126 26Other expenses (441) (169) Share in gain (loss) of associate (33) 40 Profit before tax 22,644 6,493 Income tax expense 93 834 Profit for the period 22,551 5,659 Attributable to:Equity holders of the Company: 22,546 5,659 Minority interest 5 - 22,551 5,659 Basic and diluted earnings per share attributable to the 0.08 3.12equity holders of the Company (in EUR) (*) Including non-cash share based payments of EUR 3,570 thousands for the sixmonth period ended June 30, 2007 (2006: Nil). Condensed consolidated interim balance sheet June 30, December 31, 2007 2006 Unaudited Audited • '000ASSETSCURRENT ASSETSCash and cash equivalents 176,057 212,683Restricted bank deposits 9,715 616Short-term deposits - 6,154Trade accounts receivables, net 21,551 1,059Other accounts receivable and prepayments 12,777 29,222Other debtors and related parties 11,917 4,283Trading properties 263,594 159,961 495,611 413,978 NON CURRENT ASSETSInvestment in associate 1,115 1,148Long-term balances and deposits 2,237 2,257Other debtors and related parties 18,734 22,027Property, plant and equipment 8,444 7,550Investment property 12,970 26,654Restricted bank deposits 350 350Other non-current assets 664 933 44,514 60,919 Total assets 540,125 474,897 LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIESInterest bearing loans from banks 74,068 51,201Trade payables 26,300 15,703Other liabilities 13,955 3,088Amounts due to related parties 9,729 17,771Creditor due to selling of investment property - 2,418 124,052 90,181NON-CURRENT LIABILITIESInterest bearing loans from banks 5,668 5,875Amounts due to related parties 12,967 8,474Other long term liabilities 927 1,551Deferred tax liabilities 1,403 4,139 20,965 20,039EquityShare capital 2,923 2,923Translation reserve (351) (1,895)Other reserves 7,431 1,840Share premium 248,860 248,860 Retained earnings 135,495 112,949Shareholders' equity attributable to equity holders of the Company 394,358 364,677Minority interest 750 -Total equity 395,108 364,677 Total shareholders' equity and liabilities 540,125 474,897 Condensed consolidated interim statement of changes in shareholders' equity Attributable to equity holders of the Company Share Share Capital Translation Retained Total Minority Total equity capital premium reserve reserve earnings interest • '000Balance at 2,923 248,860 1,840 (1,895) 112,949 364,677 - 364,677December 31, 2006(Audited)Foreign currency - - - 1,544 - 1,544 - 1,544translation adjustmentShare based - - 5,591 - - 5,591 - 5,591paymentsFirst time - - - - - - 745 745consolidatedminority interestProfit for the - - - - 22,546 22,546 5 22,551period Balance at June 2,923 248,860 7,431 (351) 135,495 394,358 750 395,10830, 2007(Unaudited) Balance at 18 - (181) (2,059) 98,229 96,007 - 96,007December 31, 2005(Audited)Transfer to income - - - (33) - (33) - (33)statement due toselling of tradingpropertyNet profit for the - - - - 5,659 5,659 - 5,659periodBalance at June 18 - (181) (2,092) 103,888 101,633 - 101,63330, 2006 (Audited) Condensed consolidated interim statement of cash flow For the six months ended June 30, 2007 2006 Unaudited Audited • 000'Cash flows from operating activitiesProfit for the period 22,546 5,659Adjustments necessary to reflect cash flows used in operating activities:Depreciation 229 439Change in fair value of investment property - (293) Minority interest 5 - Finance income, net (836) (488)Company's share in loss (profit) of associate 33 (40) Gain on sale of investment property subsidiaries (2,471) (6,539)Gain on sale of trading property subsidiaries (23,062) (2,134)Income tax expenses 93 555Increase in trade accounts receivable (788) (1,602)Increase in other accounts receivable (6,639) (1,218)Payments on account for projects to be acquired (9,099) -Increase in trading properties (127,265) (35,953)Purchase of trading property companies (see appendix A) (14,657) -Increase in trade accounts payable 15,941 6,043Increase in other liabilities 8,825 3,891Net proceeds from sale of trading property subsidiaries (see appendix B) 31,119 4,525Share based payments 3,570 -Net cash used in operating activities (102,456) (27,155) Cash from investing activitiesPurchase and development of property, plant and equipment (908) (934)Proceeds from sale of property, plant and equipment - 54Investment in associate - (50)Short term deposits, net 7,066 (8,575)Decrease in long term deposits 185 1,047 Increase in long term deposits (527) (2,344)Net proceeds from disposal of other subsidiaries (see appendix B) 11,526 -Long term loans granted to partners in jointly controlled company (7,934) (2,116)Net cash provided by (used for) investing activities 9,408 (12,918) Cash from financing activitiesShort term loans from banks, net 70,576 21,675Long term loans repaid to banks (6,908) (2,427)Loans repaid to related parties (7,438) (6,766) Net cash provided by financing activities 56,230 12,482 Foreign currency translation adjustment 192 - Decrease in cash and cash equivalents during the period (36,626) (27,591)Cash and cash equivalents at the beginning of the period 212,683 46,699 Cash and cash equivalents at the end of the period 176,057 19,108 Condensed consolidated interim statement of cash flow For the six months ended June 30, 2007 2006 •' 000Appendix A - Acquisition of subsidiariesCash and cash equivalents of subsidiaries acquired (14) -Working capital (excluding cash and cash equivalents) 22,695 -Trading property (38,097) -Minority interest 745 -Less- Cash and cash equivalents of subsidiaries acquired 14 - Acquisitions of subsidiaries, net of cash held (14,657) - Appendix B - Disposal of SubsidiariesCash and cash equivalents of subsidiaries disposed 3,064 463Working capital (excluding cash and cash equivalents) 52,446 43,404Long-term deposits 547 1,047Investment property and other assets 13,800 -Long-term loans and liabilities (49,681) (42,026) Net identifiable assets and liabilities disposed (20,176) (2,888) Cash from sale of subsidiaries 45,709 4,988Less- Cash and cash equivalents of subsidiaries disposed (3,064) (463) 42,645 4,525Non cash movementsShare based payment capitalized 2,626 - Interest paid 1,366 1,663Interest received 2,989 285 NOTES TO THE ACCOUNTS 1. Reporting entity Plaza Centers N.V. ("the Company") conducts its activities in the field ofestablishing, operating and selling of commercial and entertainment centres inCentral and Eastern Europe, and, from 2006, in India. In line with the Group's commercial decision to focus its business more on thedevelopment and sale of shopping and entertainment centres, the Group hasclassified its current projects under development as trading properties ratherthan investment properties. . The condensed consolidated interim financial statements of the Company as at June 30, 2007 and for the six month period then ended comprise the Company and its subsidiaries (together referred to as the " Group") and the Group's interests in associates and jointly controlled entities. The consolidated financial statements of the Group as at and for the year ended31 December 2006 are available on the Company's website (www.plazacenters.com)and also upon request from the Company's registered office at Keizersgracht 241,1016EA Amsterdam, The Netherlands. The Company has its primary listing on the London Stock Exchange. During the six month period ended June 30, 2007 the following changes andadditions occurred in the Company's holdings: a. The Company acquired interests in an additional two joint ventureprojects in India through its wholly owned subsidiary, Spiralco Ltd, whichacquired a 50% stake in P-one infoport private Ltd. ("P-One"), an Indian Limitedliability company. P-One owns two projects: Kharadi (in Pune) and Trivandrum (inKerala state) b. Additional companies acquired and activated in Romania: The Company completed the purchase of 75% of the Casa Radio project in Bucharestthrough acquiring 75% of the shares of Dombovita S.R.L. Dombovita S.R.L has aplot and building leased for 49 years. The Company also activated two shell companies, Elite residence Esplanada s.r.land North Gate Plaza s.r.l, wholly owned by the company, to purchase two plotsof land in the Cities of Timisoara and Miercurea Ciuc, respectively. c. Sale of Rybnik and Sosnowiec shopping centres: The Company sold to Klepierre SA, a leading French property group, effectiveMarch 31, 2007, Rybnik Plaza Sp. z.o.o and Sosnowiec Plaza Sp.z.o.o, which ownshopping centres in Rybnik and Sosnowiec, Poland, respectively. d. Sale of Duna Plaza Offices: The Company sold to Klepierre, effective May 14, 2007, the Duna Plaza Offices inBudapest. The sale took place by selling Duna Plaza Irodahaz Kft., a whollyowned subsidiary of the Company, which owns the office compound. 2. Statement of compliance These condensed consolidated interim financial statements have been prepared inaccordance with International Financial Reporting Standard (IFRS) IAS 34 InterimFinancial Reporting, as adopted by the EU. They do not include all of theinformation required for full annual financial statements, and should be readin conjunction with the annual consolidated financial statements of the Groupfor the year ended 31 December 2006. The condensed consolidated interim financial statements were approved for issueby the board of directors on 28 August 2007. 3. Significant accounting policies The accounting policies adopted by the Group in these condensed consolidatedinterim financial statements are the same as those applied by the Group in itsconsolidated financial statements for the year ended 31 December 2006. 4. Estimates The preparation of interim financial statements in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making the judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates. Estimates have been made in a basis consistent with the basis used in 31December 2006 financials statements. 5. Financial risk management There have been no significant changes in the Group's financial risk management.Objectives and policies are consistent with those disclosed in the consolidatedfinancial statements as at and for the year ended 31 December 2006. 6. Income tax expense Income tax expense is recognised based on management's best estimate of theweighted average annual effective income tax rate expected for the fullfinancial year. The estimated average annual tax rate used for the six monthsended June 30, 2007 was 0.3% (for the six months ended June 30, 2006: 12.8%).This change in effective tax rate was caused mainly by a one-time tax expense inthe Czech Republic, as well as the release of deferred tax liabilities inrespect of the revaluation of an investment property item in 2006. Since theCompany meets the participation exemption rules in the Netherlands, itseffective tax rate in 2007 is almost nil. 7. Interest-bearing loans from banks The following interest-bearing loans from banksrelating to trading properties were received and repaid during the six monthsended June 30, 2007: Interest Face Carrying Year of Currency rate value amount maturity Thousands EuroBalance at 1 January 2007 51,201Received loansSecured bank loan Euro 3m Euribor+1.95% 9,769 9,769 2007Secured bank loan Euro 3m Euribor+1.65% 11,438 11,438 2007Secured bank loan Euro 3m Euribor+1.95% 5,041 5,041 2007Secured bank loan PLN 1Y Wibor+1.4% 4,071 4,071 2007Secured bank loan Euro 3m Euribor+2% 9,022 9,022 2007Secured bank loan Euro 3m Euribor+1.65% 31,299 31,299 2022RepaymentsSecured bank loan Euro 3m Euribor+1.95% 24,039 24,039 2007Secured bank loan Euro 3m Euribor+1.95% 11,438 11,438 2007Secured bank loan Euro 3m Euribor+1.85% 1,540 1,540 2007Secured bank loan Euro 3m Euribor+2% 5,570 5,570 2007Secured bank loan PLN 1Y Wibor+1.4% 5,162 5,162 2007Balance at June 30, 2007 74,092 8. Related parties The Control Centers Group of companies, held by Mr. Mordechay Zisser, the mainshareholder of Elbit Medical Imaging ("EMI") who is the indirect controllingshareholder of the Company, is providing project management services to variousprojects developed by the Company and has charged EUR 7.0 million for servicesprovided in the first half of 2007. Jet Link, a Company held by Mr. Mordechay Zisser, which provides aviationservices for the Company has charged a total of EUR 0.5 million for servicesprovided in the first half of 2007. The Company estimates the liability arising from an agreement signed with theExecutive Vice Chairman of EMI, as described in the annual report 2006, in anamount of EUR 674,000. A provision has been recorded in other liabilities -related parties and was included as administrative expenses in the consolidatedincome statement. EMI has charged EUR 300,000 for accounting and legal services provided to theCompany in the first half of 2007. 9. Earnings per share Earnings per share attributable to equity holders of the Company arise fromcontinuing operations as follows: For the six month period ended June 30, 2007Earnings per share for profit from continuing operations Attributable to the equity holders of the Company (expressed in EUR centsper share)Basic: 7.7Diluted: 7.7 10. Standards, interpretations and amendments to published standards notyet effective Since the publication of the 2006 financial statements, the following statementshave been issued: Revised IAS 23 Borrowing Costs (effective from 1 January 2009) The revised Standard will require the capitalization of borrowing costs thatrelate to assets that take a substantial period of time to get ready for use orsale. The Group does not expect the revised Standard to have any impact on theconsolidated financial statements, since it already capitalizes such borrowingcosts. 11 Significant acquisitions and transactions A. Sale of Rybnik and Sosnowiec shopping centres The Company sold, effective at March 31, 2007 Rybnik Plaza and Sosnowiec PlazaShopping and Entertainment centres in Poland to Klepierre SA, a leading Frenchproperty group. Both shopping malls which were 100% let to international andlocal tenants on their opening to the public in March 2007 were pre-sold toKlepierre in July 2005. An aggregate fair value of EUR 90.1 million was agreed between the Company andKlepierre. The Company has recorded a gain from this transaction in the amountof approximately EUR 22.9 million. B. Kharadi project - Pune, India In February 2007, the Company indirectly entered into an agreement to acquirethrough a 100% subsidiary a 50% stake in P-one infoport private Ltd. ("JV1") anIndian limited liability company, which owns the freehold of approximatelyfourteen acres of land situated in the Kharadi district of Pune, MaharashtraState, India. The remaining 50% stake in JV1 is held by a property developer inPune. The consideration paid totalled EUR 17 million, invested in the form ofequity. The actual transfer of ownership occurred in April 2007. JV1 intends to develop its plot of land through the construction of a projecttotalling approximately 2.4 million sq ft (225,000 sqm) of Gross Built Areawhich will include: • a shopping centre with a total area of approximately 1.3 million sq ft (approximately 120,000 sqm); • an office complex measuring approximately 870,000 sq ft (approximately 81,000 sqm) and; • a serviced apartment facility of approximately 260,000 sq ft (approximately 24,000 sqm). The total investment in the project (100%) is anticipated to be approximatelyUSD 175 million (approximately EUR 133 million). C. Timisoara project - Romania In March 2007, the Company acquired a site in Timisoara, West Romania, for atotal consideration of EUR 12.5 million. The site totals 31,800 sqm. The Companyplans to build a multi-storey shopping centre of approximately 39,500 sqm GrossLettable Area, exclusive of parking area. The Company has also secured an option to develop on the site approximately20,000 sqm of new mixed retail, office and residential space adjacent to theshopping centre. The total estimated development cost of the project is EUR 92.5 million. D. Casaradio Project - Bucharest, Romania On October 11, 2006, the Company entered into an agreement, according to whichit acquired a 75% interest in a company ("Project SPV") which under apublic-private partnership agreement with the Government of Romania was todevelop the Casa Radio site in central Bucharest. The consummation of thetransaction is subject to the fulfilment of certain conditions, includingobtaining the approval of the Government of Romania to an amendment to thepublic-private partnership agreement. The cost of the acquisition of theinterest in Project SPV amounts to approximately USD 40 million (EUR 30million). The other investors include the Government of Romania, which will assure thatthe development company is granted the necessary development and exploitationrights in relation to the site for a 49-year period in consideration for a 15%interest in Project SPV, and the seller which will retain a 10% interest in theProject SPV. In November 2006 the public -private partnership agreement was approved by theGovernment of Romania subject to ratification by the Romanian Parliament which,as of the date of the approval of these financial statements, has been obtained.The transaction approval and the nomination of directors in Project SPV by theCompany were adopted by the general shareholders meeting of Project SPV inFebruary 2007. The Project, which will have an estimated built area of approximately 360,000square meters, will include a shopping and entertainment centre, a five starhotel, residential units and offices. The owners (including the Company) haveundertaken to cause Project SPV to construct an office building measuringapproximately 13,000 sqm for the Government of Romania at its own cost. E. Torun Project - Poland In February 2007, the Group won a tender and signed a preliminary purchasingagreement with the Municipality of Torun, Poland for a project to be constructedon a site in Torun. The initial consideration was EUR 1.7 million and the totalplot price will be EUR 12.6 million, to be paid in the course of the followingtwo years. The plot size is 62,800 sqm. The planned Gross Lettable Area isapproximately 33,000 sqm. Construction is due to commence in 2009 and the centreis scheduled to open in 2010. F. Selling of Duna Plaza Offices - Hungary The Company sold in May 2007 the Duna Plaza offices in Budapest, Hungary, toKlepierre for a consideration of EUR 14.2 million, an increase in the valuedisclosed in the Company's Admission Document at the time of its IPO, which wasEUR 13.8 million. G. Trivandrum project purchase - India On June 19, 2007 the Company (through P-One, its 50% indirectly held subsidiary)entered into a joint venture with a leading Indian property developer, toacquire a plot of land with an area of approximately 10.78 acres (approximately43,600 sqm), situated in Trivandrum, the capital city of the State of Kerala,India. The total cost of the land amounted to 1,060 million Rupees(approximately EUR 20 million). The Company and its partner intend to use theplot to develop a project totalling approximately 2.1 million sq ft (195,000sqm), which is currently intended to comprise: • A shopping and entertainment centre with a total area of approximately 720,000 sqft (approximately 67,000 sqm); • An office complex with a total area approximately 970,000 sqft (approximately 90,500 sqm); • A hotel and apartment hotel with a total area of approximately 400,000 sqft (approximately 37,500 sqm). H. The company purchased a plot of land in a Prague suburb In May 2007 the Company purchased 39,000 sqm of private land in Roztoky, a townnext to Prague. The company intends to develop there a residential compound. Theplot includes a valid planning permit for 81 units of family houses.Construction is intended to begin in 2008 and is anticipated to be completed in2009-2010. 12 Events occurring after the balance sheet date A. Agreement for the sale of Arena Plaza - Budapest, Hungary On August 7, 2007 the Company executed a binding agreement for the sale of itsArena Plaza shopping and entertainment centre in Budapest to UK based ActiveAsset Investment Management ('aAIM'). The selling price will be finally determined on the completion of thetransaction, which is expected to take place within a month of Arena Plaza'sopening date, on the basis of the actual rent levels achieved capitalized at anagreed yield. The Company will remain responsible for the letting of thecentre's remaining units for a period of up to one year following the closing,and is anticipated to benefit from further price adjustments reflecting thesigning of any additional leases during the two consecutive earn-out periods,which end three months and twelve months respectively following the completion. The Company's management estimates the final transaction price based on actualrent levels will be no less than approximately EUR 380 million, with an overalltransaction price cap of EUR 400 million, as agreed with aAIM. The finalexpected transaction price represents a significant upside comparing to theproject's estimated value upon completion at the time of the Company's Admissionto trading in November 2006, which was approximately EUR 333 million. B. Miercurea Ciuc project, Romania On July 4, 2007 the Company acquired a 33,000 sqm retail development site in thecity of Miercurea Ciuc, in Central Romania. Total expected investment in theproject is EUR 16 million. The Company intends to build a retail mall totallingsome 12,000 sqm, together with provision for car parking over an area ofapproximately 13,000 sqm. C. Issuance of debt securities On July 5, 2007 the Company agreed with Israeli institutional investors to issuean aggregate principal amount of New Israeli Shekels ("NIS") 305 million(approximately EUR 53.3 million) Par Value of series one of unsecurednon-convertible debentures to institutional investors in Israel. The debenturesare rated by an Israeli affiliate ("Maalot") of Standard & Poor's at a localrating of A+/Positive. The debentures are repayable in eight equal annual instalments, on December 31of each of the years 2010 to 2017, inclusive. The debentures bear an annualinterest rate of 4.5%. Interest is payable semi-annually in arrears on December31 and July 1 of each of the years 2007 to 2017 (the first instalment to beeffected on December 31, 2007 and the last instalment to be effected on December31, 2017). Both the principal and interest of the debentures are linked tochanges in the Israeli Consumer Price Index. As the Company's functional currency is the Euro, the Company is hedging thefuture expected payments in NIS (principal and interest) to correlate with theEuro. The debentures also provide that the debentures will be prepaid by the Company,inter alia, at the option of the trustee or the holders of the debentures if theCompany delays the publication of its financial reports for more than 60 daysfrom the dates provided by applicable law or if the debentures cease to be ratedfor a period of more than 60 days. The debentures will be listed for trade on the Institutional Retzef System,which is a trading system for institutional investors in Israel. The Company mayalso, in its sole discretion, register the debentures for trade on the Tel AvivStock Exchange (the "TASE"). So long as the Debentures are not registered fortrade on the TASE, the Company has undertaken (i) to pay an additional interestat an annual rate of 0.5% (namely 5%) until a prospectus is published for theregistration of the debentures for trade on the TASE; (ii) to pay an additionalinterest rate at an annual rate of 0.25% in the event the rating of thedebentures decreases to (BBB+) rating on a local scale by Maalot - The IsraelSecurities rating Company Ltd. or an equivalent rating by another Rating Companyand (iii) to prepay the debentures at the option of the trustee or the holdersof the debentures if made a special resolution on their general meeting upon theoccurrence of each of the following events: (A) Should the rating of thedebentures in Israel decrease below the BBB+ investment level rating of Maalot -or other equivalent rating by another rating company; (B) if the Company isrequired to prepay another series of debentures issued by the Company; or (C) ifthe holdings of Elbit Medical Imaging Ltd., the indirect parent of the Company,fall below 25% of the Company's issued and outstanding share capital. Suchundertakings would be terminated upon the registration for trade of thedebentures on the TASE. D. Iasi project, Romania On July 25, 2007 the Company acquired a retail development project in Iasi,Romania. The estimated development budget for the project is EUR 115 million.The project will see a new retail-led mixed use development built in IasiCounty. The development, which occupies a plot of 46,500 sqm, will include 37,000 sqm ofretail space, 15,000 sqm of office space and 46,200 sqm of parking, providing1,400 spaces. Additionally, the terms of the acquisition provide the option todevelop 70,000 sqm of residential accommodation on the site. Completion of theproject is expected in 2010. E. Handing over of 50% stake in Lublin Plaza project - Poland On July 30, 2007 the Company completed the sale of its 50% stake in the LublinPlaza Shopping and Entertainment centre in Poland to Klepierre. The Companydeveloped the Lublin Plaza project together with a 50% joint venture party. Bothjoint venture parties agreed to sell their holdings to Klepierre. The agreed selling value of the shopping centre, which was 100% let tointernational and local tenants on its opening to the public in June 2007,totals approximately EUR 78 million (on a 100% basis), compared to the estimatedvalue of approximately EUR 62 million at the time of the Company's Admission totrading. F. Slatina project - Romania On August 17, 2007 the Company acquired a site in Slatina, in southern Romania. The Slatina site totals approximately 20,000 sqm and is located in thenorth-western part of Slatina. The Company plans to build a shopping andentertainment centre with approximately 25,000 sqm of built area, plus 450parking places. In addition the site comes with an option to developapproximately 10,000 sqm of residential accommodation, which the Company mayconsider selling to a third party. The Company's total investment in the Slatina scheme is expected to beapproximately EUR 24.5 million. G. Belgrade project - Serbia In August 2007 the Company won a competitive tender from the Government ofSerbia for the development of a new shopping, entertainment and business centreon a total built up area of approximately 100,000 sqm (with over 2000 parkingspaces) in the Centre of Belgrade, Serbia. The Company will partner a local Serbian developer for the project, which isexpected to have a gross development budget of EUR 150 million. The localpartner will be entitled to participate in up to 15% of the project, subject tocertain conditions, while the project management will be rendered solely by theCompany. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Plaza