NEPI Rockcastle : Interim Financial Report H1 2021

Interim Financial Report

3o June 2021

NEPI ROCKCASTLE PLC INTERIM FINANCIAL REPORT 30 June 2021

Statement of Directors' responsibilities	3
Directors' commentary	4
Independent Auditor's review report	17

Interim Condensed Consolidated Financial Statements

for the six months ended 30 June 2021

Interim Condensed Consolidated Statement of financial position	19
Interim Condensed Consolidated Statement of comprehensive income	21
Interim Condensed Consolidated Statement of changes in equity	23
Interim Condensed Consolidated Statement of cash flows	25
Notes to the Interim Condensed Consolidated Financial Statements	27
Appendix 1 EPRA Performance Measures	64
Glossary	71

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NEPI ROCKCASTLE PLC

INTERIM FINANCIAL REPORT

30 June 2021

Statement of Directors' responsibilities

The Directors are responsible for preparing the Interim Financial Report and the Interim Condensed Consolidated Financial Statements in accordance with applicable laws and regulations.

The Directors have prepared the Interim Condensed Consolidated Financial Statements in accordance with International Financial Reporting Standard, IAS 34 "Interim Financial Reporting", the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council.

In preparing these Interim Condensed Consolidated Financial Statements, the Directors are responsible for:

• selecting suitable accounting policies and then applying them consistently;
• stating whether they have been prepared in accordance with IAS 34 Interim Financial Reporting;
• making judgements and accounting estimates that are reasonable and prudent; and
• preparing the Interim Condensed Consolidated Financial Statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors confirm that they have complied with the above in preparing the Interim Condensed Consolidated Financial Statements.

The Directors confirm that the Interim Condensed Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group for the six-month period ended 30 June 2021 as well as the comparative periods presented and that the interim financial report give a fair review of the information required pursuant to section 5:25 d(8)/(9) of the Dutch Financial Supervision Act.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website.

The Interim Condensed Consolidated Financial Statements on pages 19 to 63 were approved and authorized for issue by the Board of Directors on 18 August 2021 and signed on its behalf by:

Alex Morar

Chief Executive Officer

Mirela Covasa

Chief Financial Officer

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NEPI ROCKCASTLE PLC

INTERIM FINANCIAL REPORT

30 June 2021

Directors' commentary

"After a difficult first quarter, Q2 saw our business fully reopening, driven by good progress in vaccinations and a decline in Covid-19 cases in all CEE countries. Most trading restrictions have been lifted and all GLA is operational. The risk of new restrictions remains, as the spread of new virus variants elsewhere in the world and the slowdown in vaccinations in some CEE countries create the possibility of a new surge in Covid-19 cases during the second half of the year.

Recent trading data is very encouraging and points to a quick recovery. Tenant sales since reopening came very close to 2019 levels and rebounded faster than after the summer reopening of 2020. Retailers and customers adapted to the new circumstances which made the impact of restrictions in 2021 less severe than in 2020. There were no material tenant bankruptcies; occupancy reached 95.6% on 30 June 2021, and a positive trend is expected to continue as retailers are expanding to take advantage of the economic rebound.

More than 99% of reported revenues for FY 2020 have been collected, while significant progress is being made with tenant negotiations for 2021, leading to a collection rate for H1 2021 reported revenues of 94% at mid-August.After repaying secured bank loans of €242 million in H1 2021, available liquidity is close to €1 billion. NEPI Rockcastle will pay 100% of its H1 2021 earnings as dividends, in cash, confirming the strength of the Company's balance sheet.

The Group recently announced several changes to the Board of Directors and executive management team. These are being implemented in an orderly fashion, while maintaining the continuity of the Group's strategy and operations. I have full confidence that the future leadership team will build on the Company's established strengths and consolidate its position as one of CEE's premier real estate operators." Alex Morar, CEO

BUSINESS HIGHLIGHTS

Distributable earnings

• Distributable earnings per share ('DEPS') for the first six months ('H1') ended 30 June 2021 were 17.64 euro cents, 10.3% lower than in H1 2020.
• Net Operating Income ('NOI') in H1 2021 was €155 million, 3% lower than in H1 2020. Excluding the impact of the disposal of the Romanian office portfolio (completed in August 2020), NOI was 4% higher in H1 2021 vs H1 2020. The total value of Covid-19 related discounts granted in H1 2021 was €36.1 million (€47.9 million in H1 2020), while the average number of "closed" days for non-essential stores was 60 (58 "closed" days in H1 2020).

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NEPI ROCKCASTLE PLC

INTERIM FINANCIAL REPORT

30 June 2021

• Other factors contributing to the DEPS decrease include higher finance costs due to maintaining additional liquidity compared to H1 2020.
• The Board of Directors declared a dividend of 17.64 euro cents per share for H1 2021, corresponding to 100% of the distributable earnings per share for this period. The distribution will be paid in cash on 16 September 2021, and further detailed announcements will follow

Operational highlights

• After a first quarter marked by significant trading restrictions, Covid-19 infection rates in the second quarter ('Q2') declined across Central and Eastern Europe ('CEE'). During May and June 2021 all remaining trading restrictions were lifted and on 30 June 100% of the Group's Gross Lettable Area ('GLA') was operational.
• Vaccination roll-out accelerated during Q2 but recently slowed as new Covid-19 cases dropped to low levels. Most CEE countries had between 35% and 55% of their population fully vaccinated at mid-August. There are no indications yet of a significant pick-up in Covid- 19 cases in CEE.
• Footfall in H1 2021 was 106 million, 5.3% higher than in H1 2020 and 31.6% lower than in H1 2019 (considering like-for-like properties comparable in all three periods, footfall in H1 2021 was 77.6 million, 2.2% higher than in H1 2020 and 34.3% lower than in H1 2019). Since the reopening of cinemas and food courts, footfall recovered significantly and reached 90% of 2019 levels in the second half of June.
• Tenant sales recovered even faster than footfall, indicating an increase in the average basket size. Turnover in H1 2021 was 28.1% higher than in H1 2020 and 23.1% lower than in H1 2019 (on a property like-for-like basis, excluding hypermarkets and entertainment). In May and June, when there were no trading restrictions, tenant sales were only 0.4% lower than in the corresponding period of 2019.
• By the end of July, the Group signed 2,400 addenda to lease agreements, representing 71% of rent concessions for H1 2021. The general approach was to commence negotiations on rent concessions after reopening, based on tenants' performance data.
• Collection rate of over 99% for FY 2020 income and 88% for H1 2021 reported revenues (net of concessions granted) as of 30 June 2021. The collection rate for H1 2021 improved to 94% at mid-August. EPRA occupancy rate was 95.6% on 30 June 2021.

Financial highlights

• The Group had a strong liquidity position of €950 million on 30 June 2021, including cash and cash equivalents of €380 million and undrawn available credit facilities of €570 million. During H1 2021, the Group repaid five of its secured bank loans from Slovakia and Poland, totalling €242 million. Total liquidity increased to €1.1 billion at 31 July.

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