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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Secure Property Development & Investment Plc    SPDI   CY0102102213

SECURE PROPERTY DEVELOPMENT & INVESTMENT

(SPDI)
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Secure Property Development & Invest : - RNS 2019 Half Year Report & Financial Statements

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09/30/2019 | 11:16am EST

30 September 2019

Secure Property Development & Investment PLC ('SPDI' or 'the Company')

Half-year Report

Secure Property Development & Investment PLC, the AIM quoted South Eastern European focused property company, is pleased to announce its unaudited half-year report for the period ended 30 June 2019.

Realising value from a portfolio of prime South Eastern European real estate

Financial Highlights

Positive financial trend in:

  • EBITDA - increased to €0.47m compared to €0.31m in H1 2018, an increase of 52%
  • Operating loss after finance and tax expenses - reduced to -€0.09m (H1 2018: -€0.29m)

Significant asset backing behind the Company:

  • Net Equity of €35.7million as at 30 June 2019 (H1 2018: €35.6million)
  • €0.28 NAV per share as at 30 June 2019 represents a c. 250% premium to current share price

Recent Operational Development Highlights

Sale of Non-Greek assets at a premium to SPDI's total current market capitalisation

  • Progressing staged completion process of conditional sale of the Company's Non-Greek asset portfolio to Arcona Property Fund N.V, an Amsterdam-listed company focused on Central Eastern European commercial property, in exchange for the issue of shares and warrants in ARCONA
  • Closing of Stage 1 now expected in October 2019
  • Progress continues on Stage 2 and further updates will be provided as and when appropriate

Ongoing discussions regarding the Olympians logistics portfolio in Romania

Lambros Anagnostopoulos, Chief Executive Officer of SPDI, said; "Much progress has been made during the summer towards completing the exchange of our non-Greekassets for shares and warrants in the Amsterdam listed property fund Arcona. We expect closing of Phase one and signing of Phase 2 to take place in the months to come. At this point, SPDI will be issued with equity in a dividend-payingCentral East European fund with a diversified portfolio of income producing properties."

* * ENDS * *

For further information please visit www.secure-property.euor contact:

Lambros Anagnostopoulos

SPDI

Tel: +357 22 030783

Rory Murphy

Strand Hanson Limited

Tel: +44 (0) 20 7409 3494

Ritchie Balmer

Jack Botros

Jon Belliss

Novum Securities Limited

Tel: +44 (0) 207 399 9400

Frank Buhagiar

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

Cosima Akerman

Notes to Editors

Secure Property Development and Investment plc is an AIM listed property development and investment company focused on the South East European markets. The Company's strategy is focused on generating healthy investment returns principally derived from: the operation of income generating commercial properties and capital appreciation through investment in high yield real estate assets. The Company is focused primarily on commercial and industrial property in populous locations with blue chip tenants on long term rental contracts. The Company's senior management consists of a team of executives that possess extensive experience in managing real estate companies both in the private and the publicly listed sector, in various European countries.

1. Management Report

In Summary

SPDI's core property asset portfolio currently consists of South Eastern European prime commercial and industrial real estate, the majority of which is let to blue chip tenants on long leases.

In 2018 the Company, in line with its strategy to maximise value for shareholders, entered into a conditional implementation agreement for the sale of its property portfolio, excluding its Greek logistics property, in an all- share transaction to Arcona Property Fund N.V, an Amsterdam and Prague listed company that invests in commercial property in Central Europe. Arcona currently holds high yielding real estate investments in Czech Republic, Poland and Slovakia.

Such a sale of the Company's non-Greek portfolio, together with existing debt, is to be settled through the issuance

of new Arcona Property Fund N.V. shares and warrants which will be distributed to existing SPDI shareholders pro- rata to their shareholding in the Company's shares.

The combination of the two complimentary asset portfolios is expected to create a significant European Property company, benefiting both the Company's and the buyer's respective shareholders.

During H1 2019, and thereafter, management engaged together with the Company's consultants in the implementation of the aforementioned transaction, which among others, included structuring of each asset transaction individually, conducting due diligence on Arcona's assets, drafting relevant framework and sale and purchase agreements, and negotiating with Banks for relevant consents and approvals.

During the same period, the Company enjoyed strong interest from potential buyers of its Greek logistics property, and management engaged in evaluating relevant offers and discussions for the best utilization of the property. Finally, the property sold during early H2 2019 at a valuation of €12,5m. This excludes a receivable of €0,6m due to be received by the Company within the next 18 months from the property's previous owner.

Regarding the economic environment in which the Company operates, the Romanian economy continued to grow strongly with a 5,1% increase. Whilst maintaining record low unemployment. Bucharest is bustling with property development and it is expected that this year will set new records especially in Logistics and Office markets, backed by international and domestic investor interest.

Greece, which exited the financing and stabilisation programme, experiences economic growth for the third consecutive year and, following recent elections, has a strong new government in place. The country maintains a strong primary surplus, and with considerably lower spreads, entered the markets for debt re-financing in 2019. As a result, Greece is now back on the radar for a number of property investors.

P&L

The table below presents the operating performance for H1 2019 compared to H1 2018. EBITDA reached €0,47m compared to €0,31m in H1 2018, net finance costs reduced by 3% to €0,54m, and operating result after finance and tax expenses increased by 61% to -€0,09m from -€0,29m in H1 2018.

EUR

30 June 2019

30 June 2018

Continued

Discontinued

Total

Continued

Discontinued

Total

Operations

Operations

Operations

Operations

Rental, Utilities, Management & Sale of electricity

150.041

1.203.928

371.724

1.094.433

Income

1.353.969

1.466.157

Net gain/(loss) on disposal of investment property

-

120.022

120.022

-

162.731

162.731

Income from Operations of Investments

150.041

1.323.950

1.473.991

371.724

1.257.164

1.628.888

Asset operating expenses

-

(319.445)

(319.445)

(45.789)

(212.419)

(258.208)

Net Operating Income from Investments

150.041

1.004.505

1.154.546

325.935

1.044.745

1.370.680

Share of profits from associates

-

224.177

Impairment allowance for inventory and provisions

-

-

Total Income

150.041

1.228.682

Administration expenses

(800.710)

(111.352)

224.177

-

1.378.723

(912.062)

-

-

325.935

(800.186)

138.637

(297.200)

886.182

(100.478)

138.637

(297.200)

1.212.117

(900.664)

Operating Result (EBITDA)

Finance Cost, net

Income tax expense

Operating Result after Finance and Tax Expenses

Other income / (expenses), net

Income Tax - One off

Fair value adjustments from Investment Properties

Gain realized on acquisition of subsidiaries

Foreign exchange differences, net

(650.669)

1.117.330

165.067

(701.091)

(2.212)

(16.368)

(487.814)

399.871

66.056

237.474

-

-

-

286.595

-

-

(43.865)

(274.005)

466.661

(536.024)

(18.580)

(87.943)

303.530

-

286.595

-

(317.870)

(474.251)

247.117

(9.923)

(237.057)

(370)

-

(999.313)

-

(14.311)

785.704

(797.826)

(37.364)

(49.486)

26.937

-

(791.721)

-

(1.369)

311.453

(550.709)

(47.287)

(286.543)

26.567

-

(1.791.034)

-

(15.680)

Result for the year

(465.623)

649.935

Exchange difference on I/C loans to foreign holdings

-

21.828

Exchange difference on translation due to

-

presentation currency

(183.153)

Total Comprehensive Income for the year

(465.623)

488.610

184.312

21.828

(183.153)

22.987

(1.251.051)

-

-

(1.251.051)

(815.639)

14.449

880.539

79.349

(2.066.690)

14.449

880.539

(1.171.702)

2. Regional Economic Developments Romania

Following annual growth of 4,1% in 2018, real GDP growth in Romania accelerated in the first quarter of 2019 to 5,1% year-on-year. Private consumption remained the main driver, increasing 7,0% year on-year thanks to still double-digit wage growth. Investment picked up, mainly due to the recovery in construction, and by recent fiscal stimulus.

The strong real GDP growth in the first months of the year led to an upward revision of growth for the whole year. Annual real GDP growth is forecast to reach 4% in 2019 and 3,7% in 2020. However, it is important that the composition of growth is now expected to be more balanced as a pick-up in private investment will strengthen total investment.

In 2018, HICP inflation stood at 4,1%, one of the the highest in the EU. Inflation remained strong in the first quarter of 2019, at 3,8%, and is expected to have exceeded 4% in the second quarter, before decelerating again during the next period. Rising food prices led to upward price dynamics coupled by a depreciation of the currency at the beginning of the year and strong consumption and wage growth. As a result, annual inflation is expected to average 4,2% in 2019, before decreasing to 3,7% in 2020. The decrease in 2020 is expected to follow moderate wage pressures and softer domestic demand.

Bulgaria

Real GDP growth strengthened from 3,1% in 2018 to 3,5% year-on-year in the first quarter of 2019. The recovery in exports that had begun in the second half of 2018 continued in the first months of 2019 and contributed strongly to the economic expansion. Private consumption continued to exhibit strong growth, underpinned by favourable labour market outcomes and strong lending activity.

Investment increased only slightly but positive expectations about future economic activity and high capacity utilisation in industry, imply increases in private investment. As a result, real GDP growth is forecast to recover to 3,3% in 2019 and 3,4% in 2020.

Inflation dropped at the end of 2018 as the effects of high energy prices dissipated closing at 2,6% at a year-on-year basis. In the first five months of 2019, however, inflation gathered pace again due to higher fuel prices and the continued rise of food prices. In the second half of the year, the effects from energy and services price increases will gradually disappear, and inflation is expected to ease to 2,4% in 2019 and 1,7% in 2020.

Greece

The Greek economy experienced 1,9% growth in terms of Real GDP in 2018 for the second consecutive year (2017: 1,5%), primarily due to a rise in exports, but also due to an increase in domestic demand. In the first quarter of 2019 the growth rate weakened to 1,3% (year-on-year), down from 1,5% in the previous quarter. This slowdown highlights the fragile nature of Greece's recovery. Growth in the first quarter was mainly driven by a rebound in investment, particularly in non-residential construction and equipment investment, while the external sector was a considerable drag on growth, and public consumption declined as well.

Private consumption is expected to pick up in the rest of the year and thus compensate for some of the unfavourable developments in the external sector. In addition to the positive effect of the minimum wage increase to household disposable income, which may be more pronounced in the second quarter, fiscal measures legislated in May 2019 should provide further support to private consumption. Overall, real GDP growth is forecast to reach 2,1% in 2019 and accelerate slightly to 2,2% in 2020 as private investment picks up.

Downside risks are related to the stronger-than-expectedpass-through of the weakening external environment and underexecution of the budget. Price pressures remain muted, with consumer price inflation at 0,6% in May, which

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Disclaimer

SPDI - Secure Property Development & Investment plc published this content on 30 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 September 2019 14:52:05 UTC

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Managers
NameTitle
Labros Georgios Anagnostopoulos Chief Executive Officer & Executive Director
Michael Petros Beys Chairman
Theofanis Antoniou Finance Director
Harin J. Thaker Vice Chairman
Ian Domaille Non-Executive Director