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GTC: Positive operational results continued

Globe Trade Centre

Globe Trade Centre S.A. (“GTC”) released its second quarter and half year 2014 results.

"So far 2014 proves that most of the markets GTC invested in continue to recover. Occupancy was maintained at high level and efficient cost control enabled GTC to achieve 75% gross margin on rental activities. Due to decline in expected rental values and lack of investors’ interest in Southern and Eastern Europe, especially in Croatia and regional cities in Romania, retail properties and long-term pipeline land plots showed a substantial market value decrease” - said Thomas Kurzmann, GTC new Chief Executive Officer. “GTC’s two key shopping malls projects in Warsaw are progressing on schedule and response from tenants is positive. Moreover, GTC is preparing itself for growth, analysing various investment and development opportunities in CEE and SEE. We remain focused on executing the Company's new strategy. GTC’s mission is to invest in assets with upside potential and create profit from active management of a growing commercial real estate portfolio in CEE and SEE regions, supplemented by selected development activities" – added Thomas Kurzmann.

Rental and service revenues kept virtually unchanged at €27m in Q2 2014 and €55m in H1 2014 compared to €27m in Q2 2013 and €56m in H1 2013. Margin on rental activities was improved to 75% in Q2 2014 and 74% in H1 2014 (72% in Q2 2013 and 71% in H1 2013). As of 30 June 2014, GTC’s completed buildings were leased in 91%, therefore further rental revenue growth is probable.

Revenues from sale of residential properties increased to €5m in Q2 2014 and €9m in H1 2014, mostly due to improved sale of residential units in Romania and Poland.
Gross profit from operations went up to €21m in Q2 2014 and €41m in H1 2014 compared to €20m in Q2 2013 and €39m in H1 2013.

Selling expenses remained at the level of €0,8m in Q2 2014 and 1.4 in H1 2014. Administrative expenses on a like-for-like basis were kept at the level of €3m in Q2 2014 and €6m in H1 2014.

Net loss on revaluations of investment property and residential projects was €65m in Q2 2014 and €67m in H1 2014, mostly as a result of a devaluation of retail properties in Croatia and Romania following a decrease of expected rental values and expansion of yields and devaluation of long-term pipeline land plots in light of limited liquidity.

Finance expenses net were at the level of €11m in Q2 2014 and €22m in H1 2014. Net loss amounted to €70m in Q2 2014 and €72m in H1 2014 and is attributable mainly to loss on revaluation of investment properties and residential projects. Total debt of €960m as of 30 June 2014 includes bonds issued in March 2014 of €48m as well as the loan from Galeria Kazimierz of €61m. The average debt maturity was 4.4 years and the average cost of debt was 4.3% p.a. Loan to value ratio was at the level of 54% as at 30 June 2014. Interest coverage improved do 2.14 in H1 2014 from 1.68 at 31 December 2013.

NAV per share stood at €1.7 as at 30 June 2014 compared to €1.9 as at 31 December 2013. EPRA NAV per share was also €1.7 while EPRA NNNAV/per share was €2.2.
Cash flow from operations went up to €20m in H1 2014 (€11m in H1 2013).

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