Management Reports • Mar 31, 2010
Management Reports
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| Russia | 8 000 000 | 1 450 000 |
|---|---|---|
| Germany | 910 000 | 14 000 |
| Total | 37 130 000 | 2 844 000 |
The major iconic project and largest landbank site of EUR 13 Million (-14.7%). Its value as of December 2009 reached 75 08, remains at 75 Million EUR since June 09. of the group Bubny has also suffered of a significant devaluation Million EUR also EUR vs 88 Million EUR in Dec
The 25 ha Bubny site is located on the outskirt of Prague historic city center. It was acquired Million, and the Company has invested since then EUR financing, complementary plot centre. Within 15 years, the Group with high quality office spaces playgrounds and a large shopping centre. creation over 15 years. , 27 Million (total additional costs, including acquisitions. The Bubny plot is the largest undeveloped site in the Prague city aims to get Master Plan for 1 059 000 sqm gross external GEFA by H1 spaces, residential apartments, public services buildings, This project represents a potential of EUR in 2006 for EUR43 (total planning costs, y is Prague 2011 gs, space for leisure activities, EUR 400 -600 Million value
Orco developed a multiple strategy of development ltiple development for this key sitebased on four Orco based acting as:
End of 2009, a Letter of Intent for the partial sale of the land (8.2% of the land) total revenues of EUR 17.4 Million within , was revenues within the next three years. signed. The sale shall result in
Other large sites owned by the Company are Wertheim in central Berlin Russia. The company is currently looking into selli Kaluga in land bank during the zoning permitting the Berlin, Germany and Kaluga near Moscow, selling Wertheim site in spring 2010 permitting. 2010, while it has decided to keep
In 2009, as shown in table below, 8.4 Million generating a profit of EUR 1.0 the Group completed several land bank disposals for a total sale price of EUR Million. disposals EUR
| Asset disposals | Number of assets |
Total selling price (in Million Euro) |
Net Result (in Million Euro) |
|---|---|---|---|
| Czech Republic | 1 | 1.6 | 0. 0.7 |
| Germany | 1 | 1.5 | 0. 0.1 |
| Hungary | 1 | 5.3 | 0. 0.2 |
The Company's commercial investment properties business line is comprised of investment properties (generating rental income), hospitality portfolio and Endurance real estate fund management (generating income from management fees). Concerning the latter one, Orco acts as a fund m income), hospitality manager.
As of December 2009, Orco's asset management portfolio represented EUR portfolio and 18% hospitality portfolio) commercial investment properti fall in value of the hospitality assets 1.03 Billion % portfolio); Corrected from sales of assets and investment properties division has declined by EUR 90 Million. This decline is mainly driven by the assets (--14%). Excluding the hospitality assets, the relative deviation is 1.03 Billion in value (82 % rental investments, the valuation of the , -5%.
The Group's rental portfolio encompasses cities. focusing on commercial prime assets with prime tenants in major Central and Eastern European buildings. European 1.24 Million sqm, with
The main components of the Company's rental portfolio are the rental :
As of December 2009, the investment property portfolio comprised a total leasable area of 1. an average occupancy rate of 76.7 76.7%.
According to DTZ valuations, t it still have not reached its potential Peugeot, classified in "inventories", the reversionary potential of the portfolio stands at 12% have potential. When including Sky Office, Helberger, Rudna II, Vysocanska Brana and "inventories", it reaches 27%. (More information is available in the Appendix 5 12%, which reflects the fact that berger, and Appendix 5)
The following table sets forth the Company's rental portfolio by sector and by country country as of 31 December 2009
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Orco's portfolio attracts prime tenants, such as: KPMG , Monster, Radio Free Europe, McKinsey, T Vodafone, Telefonica, Honeywell, Lovells, Komercni Banka, Raffeisen Bank, Ceska Sporitelna, CEZ, Roland Berger, Cobra, CGM, Estee Lauder, etc. tenants, contributors in 2009 were: GSG in Berlin, Molcom in Russia and Radio Free Europe in T-Mobile,
The top three rental income cont Prague. ributors Molcom Radio SME) located in various areas in
GSG is a portfolio of 45 buildings Berlin, Germany. It has a total area of 818 (up by 6 points since acquisition in June 2007 in 2012. The portfolio was valued at first consolidation EUR 445 Million. ldings (most of them are rented shell and core to local SME 818 thousand sqm and its occupancy reached 76.2% as of December 2009 ints 2007). The portfolio is financed by EUR 302 consolidation for EUR 404 Million and its December 2009 value reached of 302 Million bank loan, maturing
In 2009, the GSG assets were devalued (EUR -7.3 million), Wolfenerstraße 32 (EUR -3.1 million), all located in Berlin. devalued for a total amount of EUR - 26.4 million, among which 7.3 32-36 (EUR -5.5 million), Pankow (EUR -4.8 million) lion, Plaunaerstraße 4.8 million) and Schwedenstraße
Molcom is a logistic asset located to the north Yaroslavskoeshosse, close to Pushkino town. The Property comprises warehouse with a total area of over 92,000 3.1 the north-east of Moscow Region, within 14 km from the MKAD ring via warehouses, indus 92,000 square meters. The occupancy rate of the existing warehouses east , industrial and office premises of at the end of 2009
slightly decreased by 2% to 89%. In addition, Several negotiations are in proc project is financed through a December 2009 was EUR 7.6 Million whereas the existing one is valued at EUR 45.4 Million as of December 2009, due to decreased revenues (EUR 18.8 Million instead of EUR 21.3 Million in December 2008), and currency effects. Note that revenues 89%. a new warehouse of 18.500 sqm has been completed in 2009. process with potential clients which could lead new lease contract USD 16 Million loan maturing in 2015. The new . not only include rental income but also logistic services provided to tenants. a 2009. contracts in Q2 2010. The . warehouse fair value as of
Radio Free Europe is located approximately 3 km to the east of the city centre, in Prague 10. There is good access to the site via Vinohradska, one of the city's main roads con Highway. Access by public transport is good, with a tram stop directly opposite and a metro stop in close proximity. The scheme comprises a turn building is 100% leased by Radio Free Europe and therefore the specification of the building is very high with particular emphasis on security. The building has a substantial boundary and is fully secure with perimeter fencing and security gates for both vehicular and personnel access. Its Million compared to EUR 55.7 Million The asset is financed through a the connecting directly to the city centre and the Magistrala turn-key office unit of 15,276 sq m (NLA) with underground pa emphasis fair value as of December 2009 was EUR Million in December 2008. Its revenue contribution in 2009 was EUR 37 Million bank loan, maturing in 2023. 45.4 EUR c east is access necting and A) parking. The secure 2009 EUR 50.0 EUR 3.9 Million.
In line with its strategy, the Group continued in 2009 the The selling process is being conducted either unit by unit or as a portfolio deal only 21 units remaining to be sold in Vinohrady portfolio in Prague 2. Since the beginning of disposal program in 2008, 111 units (10.5 thousand with disposal of its residential portfolio deal. As at December 2009, t sqm) have been sold, generating CZK 955.8 Million revenue. in Prague and Berlin. there were
In 2009, the Group completed several price of EUR 60.8 Million generating a loss EUR portfolio completed in 2009 are summarized below: rental asset disposals (including the Vinohrady -1.9 Million. The largest transactions Vinohrady portfolio) for a total sale on the investment property
In 2009, the Group completed several Residential development total sale price of EUR 11.3 Million generating a loss of EUR 0.7 Million. (Vinohrady Portfolio) in Prague) of Million. Prague) disposals for a
As of December 2009, the hospitality portfolios comprised a total number of operated rooms of 1 average occupancy rate of 53.1% and an ADR of this difference is mainly due external factors explained below f of of EUR 99.88. Fair values have been estimated to decrease by for each portfolio. 1,734 with an by 27%,
In JV with AIG, the Company owns a portfolio of boutique hotels and extended stay residences across Central and Eastern Europe capital cities which are managed and operated by a subsidiary of the Company under the MaMaison brand, Starlight and Courtyard by Marriott. As at 31 December 2009, the 50 indirectly 44% as being associated with a small institutional partner) owned 12 hotels and extended stay residences (and, together valued at EUR 126.6 Million (vs. 170.1 in 2008). the hospitality market trends. The portfolio is consolidated at 50%. are associated partner) extended stay The variance in the portfolio value is in line with 50%. stay 50-50 JV (Orco owning stay 50
In addition, the Company also has 100% ownership over Pachtuv Palace, a small boutique hotel with apartments, located in central Prague. This asset was valued at 14.3 Million in 2008). located Prague. EUR 14 .68 Million as of 31 December 2009 (vs.
The properties are overall of a very good quality with no need of cap The decrease in values is a consequence of the global decrease in travel which had a direct impact on revenue and EBITDA. of capital expenditures alues penditures investment.
| CEE hotels | Number of assets |
Number of rooms |
Occupancy % |
2009 revenues EUR Million |
market value 09 EUR Million |
change in market value vs 2008 EUR Million |
|---|---|---|---|---|---|---|
| Czech Republic | 5 | 484 | 54.2 | 11.6 | 62 .5 | -7.1 |
| Poland | 3 | 220 | 48.1 | 5.2 | 24 .0 | -3 .8 |
| Slovakia | 1 | 32 | 59.3 | 0.7 | 0.9 | -2.6 |
| Russia | 1 | 84 | 68.6 | 6.0 | 37.0 | -7.0 |
| Hungary | 3 | 161 | 58.9 | 2.5 | 16.2 | -5.4 |
| Total CEE hotels | 13 | 981 | 54.8 | 26.0 | 140.6 | -25.7 |
| *Starlight is excluded for Occupancy and Revenue as it is a lease contract | it |
The table above shows occupancy and revenue of EUR 26.0 Million, Russia being the largest revenue generator producing 22.7% of the total revenue. Although 2009 has been a challenging year for the overall hospitality market there is according to JLL Hotels Research. revenues for each property. In 2009, the portfolio generated a total revenue a a positive prospect for the C revenue CEE country
The value of this portfolio has decreased from 2008 to 2009 by decrease of 15.4%. This number includes all hotels in the joint venture and the Pac difference is mainly due to the volatilit CEE hospitality portfolio has suffer from softer yields which has a direct impact on values, this, coupled with the impact of the overall economical slowdown, particularly with c negative impact on our CEE hospitality portfolio. otels EUR 25.7 million which is equivalent to a volatility of the market and the prudent forecasted numbers. As all type of assets our companies cutting cost for business travels, has a and Pachtchuv Palace in Prague. This y forecasted type our ompanies business travels, has
The Group also owns a 55 %interest in Suncani Hvar, a company listed on the Zagreb fully consolidated into the Company. Suncani Hvar owns 11 hotels on the Hvar island off the coast of Split, Croatia, that together have over 1,000 Hvar City. These hotels are also managed and operated by (which also includes other land and assets) amounted to 2008). This decrease is directly due to the volatility of the market, yields have been softe incomes depreciated. Hvar is an Island and as such the impact of the macro and micro economic environment is amplified. listed the rooms which is approximately 90 per cent of the total hotel capacity of the Hvar City. the Group. The overall portfolio value of Suncani Hvar EUR 122.0 Million as of December 2009 vs. due . an and micro Stock Exchange, which is the the portfolio 194.3 in softened and projected the is
| Suncani Hvar hotels | Number of assets |
Number of rooms |
Occupancy | 2009 revenues EUR Million |
Market value 09 EUR Million |
Change in market value vs 2008 EUR Million |
|---|---|---|---|---|---|---|
| Four star category | 3 | 437 | 48.78 | 10.4 | 82.4 | -48 .7 |
| Two - three star category | 4 | 316 | 52.44 | 2 | 16 | -11.8 |
| Total Suncani Hvar hotels | 7 | 753 | 50.32 | 12.4 | 98 .4 | -60.6 |
| *Sirena, Bodul, Galeb were not operated in 2009 | and as such are not include in the numbers above. |
No major capital expenditure was of complete refurbishment. Some of the hotels were closed or used as staff undertaken in the hotels in 2009 as hotels are either fully refurbished or in need the accommodation.
The fully refurbished assets, operated in the high end segment are the Amfora resort, with its neighbouring Bonj les Bains centre, (the Small Leading Hotel' Adriana and the 'Small Luxury Hotel' Riva), total revenue and 83.7% of the value of the operated hotels. The occupancy of the hotels is based on opened days, as the business is seasonal, most of the hotels being opened from mid nd mid- May to September or for private events. in in Riva), represent in 85.3% of operated events.
The other operated hotels are the Dalmacja 3 stars hotel , and the Pharos, the Dalmajia 2 and the Delfin, young people. All together they represent 316 bedrooms with occu 2.0 Million. operated hotels and the Palace hotel, which was partly renovated in 2007, operating as operating as 2 stars, attract tour operators, family and occupancy of 52.44% and partly operating pancy revenue of almost EUR
The Sirena hotel, the Bodul hotel and the Galeb property did not open to business in 2009. did not open
The calculation of the Loan To Value (LTV) as of December 2009 is shown in the table below:
| December | June | December | |
|---|---|---|---|
| 2009 | 2009 | 2008 | |
| Non current liabilities | |||
| Financial debts | 484,634 | 626,340 | 826,483 |
| Current liabilities | |||
| Financial debts | 595,776 | 522,040 | 298,761 |
| Current assets | |||
| Current financial assets Liabilities held for sale |
-488 51,451 |
-1,754 10,715 |
-2,190 |
| Cash and cash equivalents | -57,040 | -66,813 | -83,799 |
| Net debt | 1,074,333 | 1,090,528 | 1,039,256 |
| Investment property | 1,072,304 | 1,125,522 | 1,211,718 |
| Hotels and own-occupied buildings | 215,393 | 224,701 | 245,273 |
| Properties under development Financial assets |
- 32,353 |
9,117 60,093 |
99,673 70,681 |
| Inventories | 482,605 | 460,507 | 529,827 |
| Assets held for sale | 48,930 | 21,380 | |
| Revaluation gains on projects and properties | -3,095 | 25,967 | 44,010 |
| Fair value of portfolio | 1,848,490 | 1,927,287 | 2,201,182 |
| Loan to value before bonds | 58.1% | 56.6% | 47.2% |
| Bonds | 468,616 | 442,826 | 440,512 |
| Accrued interests on bonds | 16,860 | 11,293 | 7,757 |
| Loan to value | 84.4% | 80.1% | 67.6% |
| As at December 31st 2009, the LTV stands at 84.4% compared to 80. 2008. The sharp increase of the LTV ratio over 2009 stems from the down market value or of the management plans to restructure the bonds debt. This LTV level before bonds is deemed as sustainable by the manageme |
stream of Orco's portfolio on one hand, and the debt restructuring plan | downward | |
| Management expects the LTV ratio to decrease in the future with the debt restruc to |
ratio in order to assure the long term amortization of the bond debts. | debts | |
| Cash and cash equivalents have decreased by EUR 26.8 Million compared to December 2 note 17 of the consolidated financial statements on restricted cash) finalization |
, | downs |
As at December 31st 2009, the LTV stands at 84.4% compared to 80. 2008. The sharp increase of the LTV ratio over 2009 stems from the down reported above, while liabilities slightly increased in nominal terms and were not revalued irrespective of their market value or of the management plans to restructure the bonds debt. 80.1% in June 2009 and 67.6% as at December downward % reevaluation of assets values
This LTV level before bonds is deemed as sustainable by the manageme valuation and the relatively good revenue on other hand. management, given the market stabilization of assets stream of Orco's portfolio on one hand, and the debt restructuring plan of nt, plan turing value
Management expects the LTV ratio to decrease in the future with the debt restruc rebound, and will closely monitor this restructuring and possibly asset value ratio in order to assure the long term amortization of the bond debts. to debts..
Cash and cash equivalents have decreased by EUR 26.8 Million compared to December 2 note 17 of the consolidated financial statements on restricted cash) investments for finalization of developments were carried on with loan to construction draw downs of around 75%. cash), only decreased by EUR 7.0 Million while December 2008. Available cash (see
The slight increase in financial debt is the consequence of both the development works mainly on Sky Office, H2 Office, Palac Archa and Vaci European currencies towards the Euro. both further draw downs for the finalization of 1 and the the increase of the Central
62% relate to the income producing commercial portfolio, which despite the downwards valuations show both growing rental revenues and growing EBITDA ds the commercial EBITDA.
38% of the bank loans relate to non income the Group, as developed in the Business Plan, to reduce that ratio by completing development projects and initiating land developments or land sales. producing land bank and projects under construc construction. It is a priority of
Analysis of maturities
| In EUR Million | Less than one year |
1 to 2 years | 2 to 5 years | More than 5 years |
Total |
|---|---|---|---|---|---|
| As as 31 December 2009 | 706.4 | 18.5 | 650.8 | 224.7 | 1600.4 |
| As as 31 December 2008 | 309.8 | 221.4 | 649.7 | 384.9 | 1565.8 |
| in EUR Million | Less than one year |
1 to 2 years | 2 to 5 years | More than 5 years |
Total |
| As as 31 December 2009 | 706.4 | 18.5 | 650.8 | 224.7 | 1600.4 |
| As as 31 December 2008 | 309.8 | 221.4 | 649.7 | 384.9 | 1565.8 |
The total amount of debts to be refinanced or repaid upon sale of the assets (See note 20.3 of the consolidated financial statements Million of bonds that are propo financing assets that are held for sale and in the short term. The management is confident in its abilities to 329 Million of debt, in line with its 2009 achievements where upon in 2010 amounts to EUR on borrowings maturity). This amount includes EUR proposed to be termed out within the Safeguard plan, EUR 259 Million of assets and developments The further refinance or prolong the remaining 35% of the bank debt was refinanced EUR 706.4 Million maturity). 59.2 sed plan, EUR 51.4 Million of loans that are planned to be sold EUR refinanced.
Bond liabilities (including accrued interests and embedded derivatives not classified as equity) consolidated financial statements bonds are traded on the markets. at EUR 510.6 Million, and not at fair value, at the discounted value at which are recorded in the , ty 2014. Small sized
To the Company's knowledge, there is no deals have occurred for the Bonds 2010 and 2013 since March 2010 for a volume of EUR 2 Million. The weighted average trading price of the Bond 2013 stands at 25.67% of nominal value observed for the bond 2010 at value is the price at which OPG Company has not been provided with pany's or very little liquidity on OPG bonds 2011, 2012 and 2014. of 25.67% nominal value, whereas 25% of nominal value. Nevertheless, it cannot be concluded that 25% bonds are traded on average as traded volume on the market over the counter data. March for volume whereas only one deal has been value. 25% of nominal n is very low. The
As a result of rejection by the bondholders of all proposals from the Group management intending to convert totally or partially the bond debt into equity, a Plan de Sauvegarde has been circulated proposing the term out with an amortization over ten years. lt he debt net present value over the period, has will
Should the expected debt restructuring be adopted by the Paris Commercial Court by June 2010 the bonds debt be accounted for in accordance to the rescheduling plan at their significantly reduce the expected recorded value of bonds bonds and, as a result improve significantly alue that may the global LTV.
Using similar calculation methodologies as in previous years, the 2009 is at EUR 8.2 compared t mainly the result of the change in the real estate portfolio valuation and the deferred taxes recognized in the balance sheet thereon. The variation in the the bank loans financing the projects under construction. the Group Net Asset Value per share ompared to EUR 42.5 as at December 2008 and EUR 15 at June 2009 the other balance sheet items is mainly the consequence of the increase of as of December 2009. The evolution is
Most publicly traded property investors how recommendations. The Company therefore share" methodology described below. but intends to give the elements for the readers to make their own opinion. bonds issued by the Group, the however do not use Orco's historic methodology and follow the EPRA plans to introduce in 2010 the EPRA "Triple Net Asset Value per The Management does not make any assessment of the bonds' market value to With a di he Triple Net asset value is estimated between EUR 11 and EUR the s ver not discount to nominal value of the 18 per share.
| December 2009 |
June 2009 |
December 2008 |
|
|---|---|---|---|
| Consolidated equity | 56,578 | 97,618 | 304,633 |
| Fair value adjustments on investment portfolio | 0 | 0 | 784 |
| Fair value adjustments on hotels and own occupied buildings | 10,562 | 15,457 | 46,242 |
| Fair value adjustments on properties under development | 0 | 0 | -18,631 |
| Fair value adjustments on inventories | -13,657 | 10,516 | 15,615 |
| Deferred taxes on revaluations | 58,438 | 64,539 | 141,356 |
| Goodwills | -22,748 | -24,759 | -29,305 |
| Own equity instruments | 82 | 649 | 4,190 |
| Net asset value | 89,255 | 164,020 | 464,884 |
| Net asset value per share | 8.16 | 14.99 | 42.48 |
| Existing shares | 10,944 | 10,944 | 10,944 |
| Net asset value | 89,255 | ||
| Effect of dilutive instruments | 169,547 | ||
| Market value of bonds (50% discount) | 221,819 | ||
| Triple Net asset value | 480,621 | ||
| Triple net asset value per share | 13.67 | ||
| Fully diluted shares | 35,165 |
| Bond discount of nominal | 30% | 40% | 50% | 60% | 70% | 80% |
|---|---|---|---|---|---|---|
| Triple NAV | 11.01 | 12.34 | 13.67 | 15.00 | 16.33 | 17.66 |
The debt rescheduling to be adopted under the period of the plan, is expected to translate into a lower gap between the two NAV calculations methodologies. the Safeguard plan, which shall imply a carrying amount of bonds' a discount of the annuities over s' debts, therefore reducing the
Orco historic NAV Methodology:
The net asset value as a consequence of the definition below is calculated as follows:
The Net Asset Value is calculated on a group share basis starting from the IFRS consolidated balance sheet values (see the balance sheet and the variation thereon reported in the IFRS consolidated financial statements) with Company: adjustments as detailed below Equity attributable to owners of the the as the balance,
• Fair value adjustments: as for real estate assets and developments, only investment properties are at fair value on the IFRS the fair value adjustments are the differen value. estate difference between their carrying value in the consolidated balance sheet and their fair market
• Deferred taxes on revaluations: Group share in the deferred taxes recognized in the IFRS balance sheet on the valuation adjustments on real estate assets and deferred developments. ce taxes not the shares in
• Goodwill: IFRS goodwill is not recognized in the real estate net asset value calculation.
• Own equity instruments: as they are not recognized in the IFRS balance sheet and the net asset value estimate uses all the sh circulation for the calculation of the per share data, own equity instruments are added at their fair market value. the asset of et consideration:
Triple net NAV Methodology:
The triple net NAV is an EPRA recommended performance indicator.
Starting from the NAV following adjustments are taken into
Effect to dilutive instruments: financial instruments issued by company are taken into account. When they have a dilutive im meaning when the exercise price is lower than from the NAV added to the number of existing shares to obtain the fully diluted number of shares. dilutive e NAV. The number of shares resulting from the e instruments: impact on NAV, exercise of the dilutive instruments is
Derivative instruments: the calculation includes the surplus or deficit arising from the mark to market of financial instrume economically effective hedges but do not qualify for hedge accounting under IFRS, including related foreign exchange differen instruments which are accounting IFRS, including differences.
Market value of bonds: an estimate of the market of the bonds issued by the group. It is the difference between gro carrying value of the bonds and their market value. As at December 31 2009 the amount to EUR 455.9 Million. accounting n at the Group share of the bonds It group share in the IFRS bonds' carrying value and accrued interests
Throughout the year 2009, Orco Property Group has pursued its strategic and financial restructuring plan within the framework of the "Procédure de Sauvegarde" markets. The revenues as of December 20 December 2008. plan Sauvegarde" amongst a challenging environment in its Central European 2009 reached EUR 251.5 Million compared to EUR strategic within EUR 299.9 Million as of
As part of the strategic review of the Group's assets, some development programs were put on hold during negotiations with financial partners impairments for the year ending December 31, 2009. which has led to large investment properties devaluations and development led 250.6 Million compared to a loss
Consequently, the Group recognized a loss for its Group share amounting of EUR 390.6 Million in 2008. The restructuring and cost efficiency plan to EUR 250.6 n cost implemented in 2009 has led to an
increase of adjusted EBITDA by 57.0 Million in cash and cash equivalents 34% to EUR 29.9 Million. Orco Property Group ends the year . . year 2009 with EUR
Orco Property Group reports EUR 25 year on year. Development Revenues decreased by EUR 27.6 Million representing a decrease of Commercial Investment properties 251.5 Million of revenues as of December 2009, representing properties revenues by EUR 31.5 Million, a decrease of 19.1 of 2009, a 16.1% decrease Million representing 17.6% and 19.1% compared to 2008.
The table below illustrates the revenue breakdown by business segment:
| in EUR m illion | Development | Commercial Investment Properties |
Intersegment activities |
TOTAL |
|---|---|---|---|---|
| 2009 | 129,4 | 133,8 | -11,7 | 251,5 |
| 2008 | 157,1 | 165,3 | -22,4 | 299,9 |
| Variation | -27,6 | -31,5 | 10,7 | -48,4 |
Revenues for the Development business line decreased by absence of commercial sales while construction of two abandoned projects (Fehrbelliner business line turnover amounted to EUR works on some properties were finalized in 2009. Fehrbelliner Hofe and City Gate amounting to EUR 28. EUR 101.1 Million. sales and the 2009. Excluding sales EUR 28.3 million), the development
In 2009, the residential development activity generated almost 69% realized in the Czech Republic. Main contri (EUR 8.1 Million) and Kosic 3A ( Million) Mokotowska (EUR 4 Million) and Szafirowa Aleja ( (EUR 4.4 Million) EUR 81.2 Million (EUR 128.5 Million in 2008) Main contributors were Nove Dvory ( (EUR 6.9 Million) in Czech Republic, last German residential units (EUR 5.9 (EUR 3.5 Million) in Poland and Parkvill 2008), of which butors Nove (EUR 10 Million), Plachta III units Parkville in Slovakia
Despite the completion over H2 2009 of Benice 1A ( 8 units), Nove Dvory (100 units) and Kosic 3A ( the 50% integrated), the Group has registered a 34% decrease in its units delivered and recognized in revenues in 2009, to 437 units compared to under construction amounts to or a reservation contract and to 587 units in Poland out of which 223 are covered by a future purchase or a reservation contract. In Germany, there are only few units left to sell on the residenti ), 764 in 2008 (excluding Germany). The backlog on projects either finalized or 484 units in The Czech Republic out of which 58 are covered by a future purchase 223 covered contract. residential developments. 1A units) 3A (117 units for in purchase
Given the drop in market demand across CEE countries, the Group decided to put on hold several residential projects that were planned to start construction in 2009 (such as Praga, V Czech Republic; Drawska 2, Krakow and Szczecin in Poland; sold / planned to be sold). the put planned Mezihori, Vavrenova and U Hranic in the and City Gate and Stein in Slovakia a al Slovakia, which were
Among the new projects for 2010 units), and Americka 11 (14 units). Other projects ready to start construction include Mezihori (142 units), Kosik 3b (100 units for the 50% integrated Investment Committee over the coming months depend financing availability. - 2011 validated by the Investment Committee in 2009 14 integrated), Vavrenova (86 units) and U Hranic (140 units). They will be depending on demand, rescheduling of specifications and are Mostecka project (56 ranic (140 presented to the ing as soon
The Group continues preparing permits demands for new developments to be launched in 2011 and 2012 as the market demand rebounds. Projects include Benice 3, U Hranic, Krakow etc. works on the Zlota 44 tower in Warsaw as soon as the building permit is re Projects Hranic, is re-validated. Krakow etc. It is also expected to restart
In Germany, there are only few units left to sell on the res residences and office buildings should generate development revenues in the coming 18 months. residential developments, while the completion of senior validated.idential in n EUR 11.6 Million in
Non-residential revenues include sales of commercial buildings (EUR 2008, in Germany for both years), management fees and rents on buildings that are to be redeveloped or on projects where construction works have been finalized and tenants moved in while the building The Group is currently finalizing constructions works and tenant fit H2 Office in Duisburg, one office building in Berlin building in Prague. They are planned t EUR 200 Million. residential (EUR 2.0 Million in 2009 and EUR years), tenants fit out requirements on Sky Office in Dusseldorf, Berlin, healthcare projects in Germany and Hradcan to be sold in 2010 for potential with commercial development revenues above redeveloped is planned for sale. , Hradcanska office
The Commercial Investment Properties business line EUR 165.3 Million in 2008. This decrease of EUR revenues from Group assets excluding hotels Endurance Fund management fees. achieved revenues of EUR 133.8 Million compared to 31.5 Million is the result of a decrease hotels, of EUR 9.3 Million in hospitality revenues, of EUR o compared of EUR 19.7 Million in , hospitality EUR 2.5 Million in
The revenues decreased by 13% to EUR 105.4 rental assets or nominal rent. The drop in rrevenues of EUR from assets sold over the last 18 months and the negative impact of the devaluation of the Ruble on Molcom revenues. % Million despite no major change in the occupancy rate of the Group . rrevenues 19.7 Million is mostly due to the absence of revenues Ruble generated 40.9 Million
In the GSG portfolio in 2009, there were more than 2,000 lease contracts in place which gener EUR plus 6.7 Million EUR of service charges reinvoiced to clients, showing an increase of 5,1% YoY 2008 ( a 0.7% increase compared to H1 2009) and 15,9% YoY 2006. 76,2%, up by 6 points since takeover in June 07 last the n EUR showing ( 15,9% In the meantime, the e (Net take up 50,000 sqm). ). an 5,1% portfolio occupancy reached
Molcom generated a yearly revenue contribution of negative impact of the devaluation of the Ruble logistic services provided to tenants. of EUR 18.8 Million, in decrease of 11.7% partly due to of Ruble ( -4.5% over 2009) and not only include rental tenants. the income but also
Developments for the rental portfolio have been finalized with the deliveries of Hradcanska and Palac Archa in these assets contributed only with EUR contribution for 2010 to reach EUR 4.4 of 3 The Czech Republic, Paris Department Store in Budapest. D 1.8 Million revenue in 2009, the Group estimates their revenue Million as progress is made on leasing. commercial projects in 2009: Despite the fact that
CEE portfolio's performance i ADR was down 24% to EUR 93.1. Operating profit was affected by the Plan introduced by the Asset Manager in February 2009. in 2009 was below 2008 results, with occupancy down by 4.6% to 54.8%, while 93.1. Full year results for 2009 were disappointing due to macroeconomic conditions. rofit decrease of of revenues, however, partly protected by the Cost Containment n results, protected same 2008, bearing good for
Although the overall portfolio results considera considerably dropped, there were regional disparities:
• In Moscow, Pokrovka had a strong 2010 prospects. okrovka maintained a high ADR (almost EUR 200) and achieved an occupancy above expectations. It recorded a 9% RevPAR growth in Q4 (in local currency) when the competition dropped by 14%. fourth quarter 2009 compared to thye same period in EUR were heavily hit by the economic downturn.
• In Prague and Budapest, hotels were
Despite a noticeable drop in demand vs 2008, almost all hotels in the portfolio were ahead of their competit ahead their competitors.
• In Croatia, Suncani Hvar revenues decreased by 20% compared to 2008 affected as Hvar is reliant on foreign tourism t operating hotels increased compared to 2008 by 2 percentage point percentage points. Also costs This strategy has led to a decline in revenues but a better operational result before amortization and impairments (EUR -3.1 Million compared to overall cost management. We believe that EBITDA could continue to improve in the next 5 years with on effective cost and yield management to that slumped globally during 2009. , Occupancy and rates in 2009 2 points but decreased compared to 2007 by 2 were slashed by closing some of the non profitable hotels to EUR -5.0 Million in 2008). This is the result of improvement in believe with management. by the global economic crisis, ccupancy for 2007 hotels, even during the season. . strong focus
The Endurance Fund management the previous year revenues due to the absence of any acquisition or fund raising activities, leaving mainly the base management fees. These revenues are expected to be stable over 2010. fees amounting to EUR 3.9 Million (EUR 6.4 Million in 2008) absence Employee benefits line and the Other operating expenses line of are lower than in
Operating expenses correspond to the sum of the the income statement. Excluding the non cash to EUR 3.5 Million as per the independent valuation at 'fair value') Million compared to EUR 158.6 restructuring plan implemented in 2009 and accelerated under the Safeguard protection. The been sharper without all the legal and consulting costs specific to the Safeguard procedure amounting to EUR 3.7 Million.. cost of warrants allocation as restated in the chart below , the operating expenses Million in 2008, a decrease of 23%. This decrease is the consequence of the 2009 sharper Safeguard ther line of below (amounting expenses amount to EUR 122.1 ecrease is the protection. decrease would have
Further decreases are expected in 2010 and 2011 with the restructuring of Orco Germany to be completed by the end of June 2010, and the restructuring of the group management in two business lines (Development and Commercial Investment Properti Properties) also to be completed by the end of June 2010.
In 2009 the context was not favorable for disposal of assets at non distressed prices. The Company has been trying to limit the sale of assets to non strategic assets ie those non fitting the business or geographical strategy of the Group, or those with reduced profitability outlook.
Over 2009, assets have been sold for a total consideration of EUR Million and net cash inflow of EUR residential projects Fehrbelliner total of asset sales amounts to EUR total asset sales were done in G management service activities ha duced Over for 66.6 Million generating a net loss of EUR EUR 30.0 Million. Including the sale of two high risk profile projects (the luxury Fehrbelliner Hofe in Berlin and City Gate in Bratislava) that have been abandoned and sold, EUR 95.1 Million and net cash inflow of EUR 35.1 Million Germany. Also, as part of the restructuring and cost control plan the property have been sold and externalized for a consideration of EUR EUR 0.6 . (the luxury abandoned Million. EUR 46, 6 Million of s EUR 0.4 Million.
The Group continues its shift towards profitability and more than compensated by the decrease in operating expenses and cost of goods sold. amounts to EUR 29.9 Million December 2008 and EUR 11.4 Million Adjusted EBITDA loss of the suffered from the decrease in revenues of the Endurance Fu incoming investment properties that are not stabilized yet cash flow generation, the decrease in revenues has been than as at December 2009 showing an increase of 34% compared to EUR 22.3 Million in June 2009. The main contributor to this increase is the Development business line. The Commercial Investment Properties line has more n Fund management fees and reduced profitability of properties yet. The adjusted EBITDA 22.3 Million . sharp reduction of Commercial more nd
Overall, the decrease in revenues (excluding the sales of Fehrbelliner Hofe and City Gate) is more than compensated by the cost reduction plan with by 17% and other operating expenses its shift from a growth oriented model to a profitability oriented one. reduction of costs of good sold, lower expenses decreasing by 23% despite the restructuring costs good employee benefits decreasing costs. The Company continues
| Adjusted EBITDA - FY 2008 Adjusted EBITDA - FY 2009 |
-18,061 -4,813 |
40,392 34,668 |
22,330 29,855 |
| Variation | 13,248 | -5,724 | 7,525 |
The net result from fair value adjustments on investment properties a Million (EUR -217.0 Million in 2008). as at December 2009 amounts to EUR s -177.6
The amortization, impairments and provisions amounting to EUR EUR -188.5 Million in 2008 include EUR -154.9 Million in 2008). Impairments on buildings under construction are mainly the consequence of the increase of the expected developers margin taken into account in the valuation EUR -89.4 Million as at December 2009 compared to EUR -74.4 Million impairments on properties and development projects (EUR 2008). the model. as to and development construction the the 249.7 Million compared to EUR
The total of impairments and amortization on real estate assets amount to EUR 371.8Million in 2008. The amount of amortization and impairments recognized on real estate assets over the second half of 2009 were slightly positive with t decrease in rental assets values have been more than compensated by lower impairments on developments with constructions finalized and units sold over the second half of 2009. -249.7 slightly the net amount improving by EUR real over he EUR 2.5 Million. Mainly further
| December 09 | June 09 | December 08 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| In EUR Million | Revaluation Impairment | Total Revaluation Impairment | Total Revaluation | Impairment | Total | ||||
| Development | -81,288 | -33,243 | -114,531 | -66,768 | -66,824 | -133,593 | -119,613 | -73,953 | -193,565 |
| Asset Management | -96,309 | -38,895 | -135,204 | -86,513 | -32,053 | -118,566 | -97,338 | -80,937 | -178,275 |
| Total The changes in value are detailed in |
-177,598 | -72,138 | -249,736 | -153,282 | -98,878 chapter 7, real estate portfolio valuation and net asset value. |
-252,159 | -216,951 | -154,890 | -371,841 |
| Financial result | |||||||||
| The financial result shows a loss of EUR total interest charge of EUR 86,8 |
EUR | 110.2 Million compared to a loss of EUR 127.6 Million, interests on bonds account for EUR 37.1 |
The financial result shows a loss of EUR total interest charge of EUR 86,8 2008) out of which EUR 3.3 Million the "Procédure de Sauvegarde", the accrued EUR 8.2 Million as of December 2008. with the expected adoption of the 110.2 Million compared to a loss of EUR 127.6 EUR Million, interests on bonds account for EUR 37.1 Million relates to Orco Germany OBSAR (EUR 2.7 Million interests on OPG bonds amount to EUR 16.3 Million compared to 2008. Bonds' intererests accounting should be significantly modified in 2010 Safeguard Plan. Million in 2008. Out of a Million (EUR 33.9 Million in Million in 2008). As a result of
The financial loss has decreased as a result of the Million to a gain of EUR 4.7 Million, the decrease in the other net financial results, partially compensated by the higher net interest expenses increasing by EUR 13.5 Million. This last increase is lower capitalization of interest expenses commercial project constructions works being finalized or development being put on hold while global debt on developments increased. improved foreign exchange result from a loss of EUR 21. of expenses (EUR 10.5 Million compared to EUR 22.1 Million in 2008) loss 21.2 the is mainly the consequence of a with debt 8.1 Million of current income tax
The income taxes have a positive impact of EUR 48.9 expenses and EUR 57.0 Million liabilities after real estate assets of Million composed of EUR 8.1 of deferred income taxes gain arising essentially from reversal of deferred tax fter valuation adjustments and impairments of rco Property Group S.A amount to EUR
As of December 2009 the total assets of 568.3 million compared to EUR 790 The net equity amounts as of December 2009 to EUR million vs EUR 249.4 million as of December 2008 the Group mother company, Orco Property Group 790.2 million as of December 2008. as 31.7 million including a loss brought forward of EUR 200.1 2008. brought illion valuation adjustments as
The Company reports a loss of EUR of December 2009, compared to EUR also due to the gain on disposal on investment securities amounting to EUR 3.5 million and to the decrease of the realized and unrealized loss on foreign exchange related to the interests payable of EUR 17 million compared to the prior year. 217.7 Million mainly due to EUR 199.5 Million of valuation 240.5 million as of December 2008.The improvement of the net result is ealized unrealized EUR 44.9 Million of million is considered as the corporate
The subscribed shares capital of the Company which amounts to capital of the Company. The losses of the Company which amounts to the corporate capital of the Company. Therefore, the requirements of Article 100 of the Luxembourg law dated 19 August 1915 as amended are not fulfilled and there is of the Company to convene a general meeting of the shareholders of the Company to resolve on the continuation of the Company. pany. the EUR 13.1 Million corporate the no legal or statutory requirement for the Million does represent 29.25% of Therefore, Board of Directors the on 2,151 as of December
As a result of the Group restructuring, the h 2009 vs. 2741 in December 2008, companies (-31%), followed by logistics ( 18%. headcount decreased across all countries, reaching 2008, (- 22%). The most significant year over year drop was %), (22%). The employees for the hospitality operations have decreased by . over in achieved in the service by
The headcount is expected to fall further to by during 2010 to take the total overhead costs from perimeter excluding Molcom, Hospitality and Orco Germany. Specific cost align the overheads of Orco Germany to its new business model. the end of 2010. Further restructuring of overheads is anticipated EUR 19 Million to EUR 15 Million cost-saving plans are being prepared to anticipated by the end of 2010 for the saving plans to
The Group has closed down its offices in all Czech and Ge has been fundamentally scaling back Bratislava or Budapest. German cities except Prague, Berlin and Dusseldorf and rman cities and and
Lastly, Suncani Hvar will also be the subject of a restructuring plan in 2010 affecting headcounts.
In order to ensure enhanced transparency and shareholder control, the group implemented several changes to its corporate governance structure.
The Board of Directors represents collectively the shareholders and acts in the best interests of the member, whatever his/hers designation, represents the Company's shareholders. The Board of Directors meetings are held as often as deemed necessary or appropriate at the request of the Chairman. All members, and in particular the independent and non-executive members, are guided by the interests of the Company and its business, such interests including but not limited to the interests of the Company's shareholders and employees. Each member attends to improve his/hers knowledge of the Company vigilance, circumspection and confidentiality duty. represents acts represents the executive knowledge the and its activity sector and subjects him/herself to a meeting 55 8 * 4 best the Company. Each of and of and its a period not
The members of the Board of Directors are elected by the general meeting of shareholders for a period not exceeding six years. They are eligible for resolution adopted by the simple majority of votes of the general meeting of shareholders. The Directors may be for re-election and may be removed at any time, with or without cause, by a election be without be
either natural persons or legal entities. A legal entity that is appoin natural person as its representative. A appointed to the Board of Directors shall designate a
During the general meeting of shareholders held on 8 July 2009, the mandate of seven members of the Board of Directors was renewed and another seven members were newly enlarged and enriched with the expertise members of the Board of Directors have a mandate until the general meeting of shareholders approving accounts for the financial year ended on 31 December, 2009. The general meeting of shareholders held on 8 July 2009 appointed the following members of the Board of Directors: 2009, the Board were appointed. The new Board of Directors has been of new members, mostly independent and non year 31 François member ted of July been non-executive members. All approving the of held 8 François "CEREM") Jean-
Mr. Pierre Cornet resigned from the Board of Directors, such resignation being effective CEREM is in voluntarily liquidation since 18 December 2009 and is expected to resign from the Board of Directors. since 21 October 2009.
As of December 2009 the Board of Directors consists of:
Mr. Jean-François Ott was appointed as Chairman of the Board of Directors and Mr. Nicolas Tommasini was appointed as Secretary of the Board of Directors. executive François September resolved create the following committees: investicni Directors te
The Board of Directors held on 7 September 2009 resolved to crea
The Board of Directors appointed members of these committees, whereas the inde directors prevail among the members of the committees. independent and non – executive
Members of the Audit Committee are Mr. Bernard Kleiner (chairman), Mr. Silvano Pedretti, Mr. Alexis Juan and Mr. Nicolas Tommasini. The Audit Committee re financial information. Since the appointment of the current Audit Committee, there were Mr. Tommasini. reviews the Company's accounting policies and communication of Juan views and two meetings in 2009.
Members of the Remuneration, Appointment and Related Party Transaction Committee ("Remuneration Committee") are Mr. Guy Wallier (chairman), Mr. Committee presents proposals to the Board of Directors about remunera offered to the management and the Directors of the Company. Remuneration Committee also deals with related parties transactions. Since the appointment of the current Remuneration Committee, there were two meetings in 2009. current Mr. Robert Coucke and Mr. Jean-François Ott. The Remuneration to of remuneration and incentive programmes to be of Company. Remuneration appointment are Mr. Alexis Juan (chairman), Prosperita investicni spolecnost a.s. François Remuneration tion the Committee, there were (chairman), a.s.
Members of the Restructuring Committee represented by Mr. Miroslav Kurka, Mr. Ales Vobruba and Mr. Jean focuses on restructuring, cost cutting and other saving efforts within the Company. Since the appointment of the current Restructuring Committee, there was one meeting in 2009. Jean-François Ott. The Restructuring Committee within Director's Investment and Development Committee are Mr. Silvano Pedretti (chairman), François The saving the ment are Mr. there was no meeting of the
Members of the Board of Director's Mr. Robert Coucke, Mr. Ales Vobruba and Mr. Nicolas Tommasini. Investment and Development Committee since its appointment in September In 2009, t and September.
As of December 2009, the Company's Executive Committee consists of the following members:
The members of the Executive Committee the business lines and the containment of the operating expenses. permanent members of the management investment committee whic decisions or preparation of committes asset. A new procedure has been established on the basis of the business lines' management formaliz decision chain and triggers. ve are meeting on a regular basis to review the operating performances of business The Executive Committee members are also the which is the governing body for all management analysis concerning the acquisition, sale or development of any real estate the h governing the formalizing the
The Company's management team went through a thorough restructuring in 2009, with Mr. Steven Davis, Mr. Luc Leroi, Mr. Arnoud Bricout, Mr. Douglas Noble, and Mr. Keith Lindsay leaving the Company and Mr. Ogi Jaksic joining. of Douglas Jaksic , paid-up capital of EUR 44 869 850.60 (EUR 44 with Davis, Company up 869 44 869 850.60 in
As at 31 December 2009, the subscribed and fully paid 2008) is represented by 10 943 866 shares (10 ) (10 943 866 in 2008) with a par value of EUR 4.10 per share.
To the best of Orco knowledge, the following table sets out information regarding the ownership of the Company's shares as of 31st of December 2009. information 2009.
| < = < = |
9 | 9 , |
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|---|---|---|---|
>2 = = |
#&0\$"\$ | =& 9 | =& 9 |
| ?* | !0 | ='9 | ='967 |
| 0#& 0" 0" |
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| ? | !"\$'&& | 9 | 9 |
On the 24th of March 2010, a group of shareholders hold voting rights. They asked the OPG board of directors to conven end of April 2010. They are composed of holding 10.09% of the Orco Property Group's shares and OPG convene an extraordinary General assembly before the
Millenius Investments S.A., a « whose directors are Gaël Paclot, a French National residning in Switzerland, Jean Van den Esche and Mario Brero and which economic beneficiary is Gaël Paclot , « société anonyme » located 37 rue d'Anvers, L-1130 Luxembourg, RCS B 149.601, Paclot, 44 rue Berard, CH-1936 Verbier (Switzerland
None of the Company's principal shareholders has voting rights different from any other holders of the Company's Shares. rights Company's not owns, directly or indirectly, or
To the Company's knowledge, the Company is not aware of any person who exercises control of the Company.
The information collected is based on the notifications received by the Company from any shareholder exceeding either up or down the thresholds of 2,5%, 5%, 10%, 15%, 20%, 33%, 50% and 66% in the Company. collected notifications obligation to the has S.A. L-1130 Luxembourg, registered with the Luxembourg Trade and the any of the aggregate rights of vote
Any shareholder crossing down the threshold of 2.5% has been withdrawn from the chart, as no obligation exists under Luxembourg law to inform the Company when the 0% threshold has been reached.
Post closing event: On 19 March 2010, the Company has been notified by Millenius S.A. a Luxembourg company having its registered office at 37 rue d'Anvers, L Companies Register under number B149.601 that Company on 16 March 2010 and holds 7.744% of the rights of vote in the Company. it has crossed the threshold of 5% of the voting rights of the
In reference to the Luxembourg law of May19th, 2006 the board especially states on the following points:
o To the Company's knowledge, the Company is not aware of any person who owns, directly or indirectly, or exercises control of the Company.
o The information collected is based on the notifications received by the Company from any shareholder exceeding either up or down the thresholds of 2,5%, 5%, 10%, 15%, 20%, 33%, 50% and 66% of the aggregate rights of vote i threshold of 2.5% has been withdrawn from the chart, as no obligation exists under Luxembourg law to inform the 5%, in the Company. Any shareholder crossing down the chart, the Company when the 0% threshold has been reached. by from 2,5%, 10%, n the the 0% any S.A. L-1130 Luxembourg,
According to article 23 of the articles of association of the Company, the extraordinary general meeting debating as defined below, may modify the Articles of nationality of the Company and the increase in the commitments of the shareholders however may only be decided with the unanimous approval of the shareholders and of the bondholders. Amendment Association in all their provisions. A change in the ectors Articles Association of articles Company, meeting
The General Meeting may deliberate validly only if one half at least of the corporate capital is represented and if the agenda of the meeting includes the statutory changes considered, and as the case may be the wording of those bearing on the corporate purpose or legal form of the above conditions is not fulfilled, a new meeting may be convened in accordance with statutory requirements, by way of notices inserted twice with a fifteen day interval at least and fifteen days prior to the date set for the meeting, in the Mémorial and in two Luxembourg newspapers. Such convening notice shall give the agenda of the meeting, inclusive of the date and outcome of the previous meeting. The second meeting shall deliberate validly whatever the p shareholders of the Company. In the event that the first above accordance with fifteen he date notice agenda of part of the corporate capital represented thereat. In of the includes case In first of art In
order to be valid, resolutions as adopted must at both meetings be approved by two thirds at least of those shareholders present or represented thereat. valid, must at bearing or legal form of the Company must be approved by two thirds of by
Any modification bearing on the corporate purpose the General Meeting of bondholders. Such meeting shall deliberate validly only if one half at least of the securities outstanding are represented and if the agenda of the meeting includes the modifications considered. In the event that the first of the above conditions is not fulfilled, a new meeting may be convened in accordance with the same conditions as are provided for in the preceding paragraph. of onsidered. the neither present nor represented shall be least represented the Directors.
At the time of the second meeting, bondholders who are considered as attending thereat and voting the proposals put forward by the Board of Directors. thereat proposals put by meeting,
Under penalty of nullity however:
At the time of both meetings, resolutions shall be validly adopted if approved by two third of the votes. Convening notices to General be necessary whenever all shareholders are present or represented and declare having had foreknowledge of the agenda of the meeting. Meetings shall be issued in accordance with legal provisions. They shall not forward issued They er attend the meeting may and shall not
The Board of Directors may decide that in ord shares must deposit such hares five clear days prior to the date set for the meeting ; any shareholder may vote in person or through a proxy, who need not be a shareholder of the Company. Each share entitles to one vote. order to be able to attend the General Meeting, the owner of hares in
o Under the SECURITIES NOTES DATED 17 MAY 2006 convertible Bond in a nominal amount of In case of change of control the bondholders are entitled to ask for an early redemption in case of change of control as further described under clause 4.1.8.1.3.2. of the securities notes. with respect to the issue of a a € 149 999 928 without preferential subscription rights. case year upon 4.1.8.1.2.1 of in quire the further issue ut are entitled under
Any agreements between the they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid. company and its board members or employees providing for compensation if a
During 2009, the stock option plan voted by the Board of Directors on 21 January 2008 was not allocated due to the financial conditions. , the of allocated 2009. As at 31 December 2009, 60,000 options at EUR 75.6 are outstanding.
No options were exercised in 200
The Extraordinary Shareholders' Meeting of 8 July 2008 renewed the authorisation granted by shareholders to the Board of Directors on 18 May 2000, in accordance with article 32 addition enhanced the limit of the aut with the capital increases within the revised authorised capital of EUR 300 000 001.20 under the terms and conditions it will set, with the option of eliminating or limiting the sha to the issuance of new shares within the authorised capital. in 32-3 (5) of Luxembourg corporate law and in authorised capital. The Board of Directors was granted full powers to proceed within the shareholders' preferential subscription rights as horised of proceed reholders' out single cash, in-kind,
The Board of Directors has been authorised and empowered to carry out capital increases, in a single operation or in successive tranches, through transformation of trade receivables, the conversion of convertible bonds into shares or, upon approval of the Annual General Shareholders' Meeting, through the capitalisation of ear and place for the launching of one or a succession of issues, the issuance price, terms and conditions of subscription and payment of new shares. This authorisation is valid for a five within the issuance of new shares paid up in cash, capital contributions in of through earnings or reserves, as well as to set the time the is valid five-year period ending on 8 J of convertible or, upon nings set terms year July 2013.
A total of EUR 44 869 850.60 has been used to date under this authorisation. As such, the Board of Directors still has a potential of EUR 255 130 150.60 at its disposal. Considering that all new shares minimum at the par value price of EUR 4.10, a alue maximum total of 62 226 866 new shares may still be created. at shares shall be issued at the created.
As at 31st December 2009, the Group owns 9 owned 125,866 treasury shares representing 1.1 % of total shares. 9,101 treasury shares (0.08% of total shares). In 2008, the of 101 total Group
Holders of the Shares are entitled to the annual dividend proposed by the Board of Directors of the Company in respect of the Company's fiscal year. The declaration, payment and amo to the approval of the Shareholders at the annual shareholders' meeting. payment amount of dividends on the Shares are subject unt dividends are For
The Company has paid dividends between the fiscal years 2005, 2006 and 2007, Orco offered its shareholders the possibility to have their dividends paid in cash or in new shares. between 2004 (for the fiscal year 2003) and 2008 (for the fiscal year 2007). For and
Given the economic crisis and the newly implemented cash be paid out in 2009 (for the fisc flow policy, no divided was proposed & approved to fiscal year 2008) and no dividend will be proposed to be paid out in 2010 was approved 2010.
Orco Property Group shares (ISIN LU0122624777) are listed on Paris Stock Exchange (Euronext) since 2000, on the main market of Prague Stock Exchange since 2005 and on the main markets of Warsaw Stock Exchange and Budapest Stock Exchange since 2007. (Euronext) in and Warsaw markets traded are
| Low | High | Volume | |
|---|---|---|---|
| 200 2009 |
|||
| Jan Jan-09 |
6.57 | 8.65 | 2 513 113 |
| Feb Feb-09 |
3.55 | 8.34 | 2 441 377 |
| Mar Mar-09 |
2.95 | 4.76 | 3 061 749 |
| Apr Apr-09 |
4.07 | 7.53 | 4 724 909 |
| May May-09 |
6.55 | 7.75 | 2 258 235 |
| Jun Jun-09 |
5.76 | 6.88 | 780 692 |
| Jul Jul-09 |
5.45 | 7.02 | 740 297 |
| Aug Aug-09 |
7.52 | 11.67 | 3 885 522 |
| Sep Sep-09 |
7.58 | 9.57 | 3 405 135 |
| Oct Oct-09 |
6.75 | 9.2 | 3 732 544 |
| Nov Nov-09 |
6.83 | 8.23 | 1 842 522 |
| Dec Dec-09 |
5.97 | 7.43 | 1 287 059 |
| Lowest/highest of the year |
2.95 | 11.67 | |
| Total annual transactions transactions |
30 691 154 |
Changes in share price (COB) and volume traded in 2009 on Euronext are listed below:
The table below sets forth the list of financial instruments of Orco Property Group financial Group.
| Name | Type | ISIN | |
|---|---|---|---|
| Orco Property Group shares | Equity | LU0122624777 | |
| Bond 2007 - 2014 | Fixed income | XS0291838992 | |
| Warrant 2007 - 2014 | Equity | XS0290764728 | |
| Convertible bond 2006 - 2013 | Fixed income | FR0010333302 | |
| Variable rate bond 2005-2011 | Fixed income | CZ0000000195 | |
| Bond 2005 - 2010 | Fixed income | FR0010249599 | |
| Warrant 2005-2012 Note: Exchange offer against 2014 warrants, closed in November 2007 2007 |
Equity | LU0234878881 | |
| Exchangeable bond into Hvar shares 2012 | Fixed income | XS0223586420 |
The Orco Foundation is making a difference in people's lives in Central Europe via three areas of activity:
The Orco Foundation is active in the Czech Republic, Germany, Slovakia, Hungary, Poland, and Croatia with a team of 15 dedicated board members. Created in January 2008, the Orco Foundation chooses local associations for its social programs, working with transparency and diligent follow ated programs, follow-up on the projects it supports. faced with of ting constructing buildings Poland, up example, concert choir, and well-
The Orco Foundation also organizes and funds its own events (Deti pro Deti) which mobilizes children and families to help children with cancer. For example, on March 25th 2010 in Ostrava, Czech Republic, a benefit concert with the Janacek Philharmonic, a children's known lyric artists, will raise money for the children's leukemia and hematology wing of local Poruba hospital, raising funds to employ a psychologist for families whose children have been diagnosed. that occur annually such as Children for Children and raise in Europe, Orco Property Group has not only brought architecturally innovative
In 19 years of presence in Central Eur and esthetic buildings to cities in Central Europe, the company has actively supported charities that improve the quality of life of people in the region. The board of Orco Property G charitable activities in six countries under one roof improve Orco Group voted in 2007 to unite the company's – hence the creation of the Orco Foundation. families , actively improve roup company's notes
For detailed information on the Orco Foundation visit the following website: www.orco -- its missions, guiding principles, its team and actions, please www.orco-foundation.com
14.1. Subsequent closing event: See note 34 of the consolidated financial statements
14.2. Financial Risks Exposure: For a thorough description of the principal risks 4 to the consolidated financial statements). thorough and uncertainties (see notes 3 and
14.3. Director's compensation: see note : 31 of the consolidated financial statements
12.4. Other information: The Group does not provide any activities in research and developm provide and in development.
The following section provides selected information on the real estate markets in Central and Eastern Europe, focusing on selected countries where the Company is active. The summary is provided for information purposes only and neither purports to cover al discussed below. Central Eastern all relevant issues nor to be a comprehensive description of all the topics and l all
Year-on-year real GDP decrease registered unemployment rate went up to 7.98% on average in 2009, vs. 5.45% in 2008 (Czech Statistical Office decrease for the Czech Republic was -4.4 % in 2009, versus 2.5 % growth in 4.4 2008. The on Office)
In 2009, investment turnover in the Czech Republic reached EUR 400 CB Richard Ellis. On the positive side, Q4 2009 investment turnover was the highest since Q3 2008. With the largest deals in terms of value being closed at the end of 2009, investment volume for Q4 2009 amounted to EUR 280 Million due to five transactions, re accounted for 72% of total investment volume, with German investors being the most active. Million in 2009, down 64 %, according to Q3 deals the to representing 80 % of the 6 year quarterly average. Foreign purchasers the investment presenting Foreign as vacancy the of third quarter of
• Out of the EU countries only Poland managed to sustain positive GDP growth over the course of 2009 managed
• JLL estimates the prime YoY yields at 4.7% for Berlin retail space, meaning a decrease of more than 50 bp
• Prime rents in Berlin's shopping 2008 (JLL) 's remained at EUR 220/ monthly per sq m as of Q4 2009, same as in Q4
• Prime industrial rents in Berlin were at EUR 4.5/ sqm/ monthly as of Q4 2009, while prime yields reached 7.75% (vs. 7.45% in Q4 2008) (JLL). Q4 Q4 same as of 2009, after calendar adjustment)
Year-on-year real GDP decrease 12.1% on average in 2009, representing a 25.9% YoY increase. (Source: Slovak Statistical Office decrease for Slovakia was -4.7 % in 2009. The registered unemployment rate went up to presenting 25.9%
• Prime office yields in Moscow were at 12% in Q4 2009 (vs. 11 % in Q4 2008) (JLL) (JLL)
.
This sections provides a detailed description of the ten commercial projects that wer were completed in 2009:
Sky Office is a 89-metre-high way from city-center to the airport, well connected to public transportation. The building offers a flexible leasable area of approx. 33 K sqm across 23 floors. Its occupancy as of December 2009 reached 65%, with tenants such as McKinsey, Lovells, EssArt, Dutch Consulate, etc. The project was financed through a maturing in 30.12.2010 plus a EUR office tower located on Kennedydamm street in Düsseldorf, Germany. It is on the center well public f of , was EUR 14 Million bridge loan which is expected to be refinanced in spring 2010.. e on the flexible 2009 such EUR 100 Million loan
H2 Office is located in the inner harbour project (phase 1 was finished in 2004 by Viterra and was sold reached 23%, with tenants such as ERR European Rail Rent, VaPiano, and Chillies. harbour of Duisburg. H2-Office comprises the second phase of the complete H2 sold). Occupancy in H2 Office as of December 2009 in Office comprises H2- 2 Rent, Chillies. Helaba has provided a 25m
EUR senior credit line maturing in Dec 2010 and a 3m EUR bridge facility maturing in March 2010. is expected to be sold in spring 2010. EUR 3m d EUR 2010. The building
The Kursana Nursinghome in Gütersloh construction was started in July 2008 and completed in September 2009. nursing home consists of approx 6,6 nursing home possesses 135 rentable beds overall. The property is financed by a loan of approx. 8.450.000 maturing at 31.12.2011. is a new nursing home with an integrated commercial unit. The was The building is completely let. The ts 6,6 sqm net area and commercial-space of about 541 sqm rentable area. 135 The EUR
The estate "Louise-Henriette von O one part as a nursing home with 3 integrated commercial units and in a second part as a facility for assisted living with an ambulant care center. The construction was started in June 2 home, the integrated commercial units and the assisted living is operated by Michael Bethke Seniorenresidenzen GmbH. The ambulant care center is rented by the Ambulanter Krankenpflegedienst Michael Bethke. The building is fully let. The nursing home offers 123 beds overall. The senior assisted living houses offers 27 apartments. The property is financed by a loan of approx. 7.800.000 Henriette Oranien" in Oranienburg is a newly constructed building complex used in 2008 and completed in July 2009. assisted EUR maturing at 30.12.2013. integrated second part a assisted 008 The nursing Michael 123 houses The
The estate Kervita Nursinghome June 2008 and was completed in July 2009. The nursing home is operated by KerVita Betriebs GmbH. The building is fully let. The property offers approx. 5.7K The property is financed by a loan of approx. 6.900.000 in Rostock is a newly constructed nursing home. The c in is sqm rentable space on four levels with 139 nursing beds. nanced EUR maturing at 30.12.2012. newly construction started in
Those 3 above nursing homes are expected to be sold in spring 2010.
Hradcanska is a refurbished office building located on Hradcanska street in Prague 6, Czech Republic. It is on the way from the city center to the airport, with very good connections to public transportation (located directly on top of a metro station). Hradcanska was acquired in 2007 as a destabilized asset and it has been refurbished by Orco as a prime asset. Construction works began in Q1 2008 and were finalized in Q1 2009. The asset offers a total leasable area of 10K sqm,. Occupancy as of December 2009 reached 36% (office) and EUR 33/sqm (retail) Million loan maturing in June 2010 rom a Q1 36%, with (retail), main tenants being KB and DM Drogerie. The asset is financed 2010. Hradcanska street It 2007 Q1 2009. a average rent of EUR 14/sqm he financed with EUR 13
Palac Archa (Na Porici) is a refurbished block of buildings located on Na Porici street, downtown Prague, Czech Republic. The asset benefits from excellent transport links with trams and refurbished it in two phases since 2007 until Q1 2009. The property now offers approx. 24 K sqm of prime leasable area (16.5K sqm office, 5K retail, 1.5 storage, 120 parking spaces). As of December 2009, the occupancy o Archa reached 48.5%, with all the retail space being rented out. The asset is financed development loan maturing in Dec metro stops in close proximity.Orco reached all December 2010. it of of Palac with EUR 36,5 Million
Vysocany Gate (Vysoanská Brána) is a a mixed use building located and Sokolovska roadways in Prague, Czech Republic. the city centre. The Metro B stations of Palmovka and and there are several tram lines located at the front of commercial developments in the nearby area, as well as the to high specifications (inclusive of Gate offers a total leasable area of approx. 16.8 K sqm.The building is financed by the contractor. The building is expected to be sold in spring 2010. a on the main junction of the The two routes provide the main exit roads eastwards from Ceskomoravska are within walking distance from the site the property. There are several new residential and Sazka Arena. The Property inclusive of suspended ceilings and raised floors) between Q3 2007 and Q2 2009 is sold junction the Ceskomoravska from was constructed according ) Q2 2009. Vysocany The building
Paris Department Store is located on in Budapest, Hungary. The Property comprises a six storey historical building, originally built in 1885, as a department store that has been classified as a national monument. It was the first building i to be a modern department store. office building with retail units on the ground works were finished in May 2009 boasts a total of 5.9K sqm leasablea area, out of which 1,7K sqm of retail space and 3.7 sqm Occupancy as of 2009 year end reached 35%, w financed by EUR 16,6 Million loan maturing in 2011; yearly extension till 2016 if no breach Andrássy út, which is the most important and prestigious road Property 1885, store. In 2007, Orco undertook to refurbish the building and transform it to a modern ground & first floor and office space on the top floors s and the grand opening took place in November 2009 space with Alexandra Bookstore being the main tenant. The asset is and road originally built as in Hungary purpose built undertook modern space on floors. The refurbishment grand 2009. Paris Department Store of office space. ith asset breach.
Radischevskaya office building is located in downtown Moscow, Russia on Verkhnyaya Radischevskaya Str. office building is situated in the Central Administrative District (CAD) of Moscow between the Boulevard Ring and the Garden Ring, in close proximity to Taganskaya metro station (5 minutes walk). Therefore the property benefits from good transport lin Property is over 4 levels: lower ground floor, two upper floors and an attic. The building was constructed at the beginning of the 19th Century. In 2008, Orco started refurbishmen Reconstruction works included facade restoration and beautification of internal courtyard. The Property is constructed on a corner site, with the main entrance to the rear, leading into a courtyard. There is surface the courtyard of the building for 4 cars. The Property offers a total leasable area of approx. 1.7 K sqm, mainly office space. The building was still vacant as of December 2009. The property is financed by equity. breachin situated Administrative in station transport links both for pedestrians and private car owners. The accommodation within the is at refurbishment works which were concluded in Q3 2009. and site, courtyard. and repair centre of 4,030 sqm in a prime Warsaw location Str. The to Therefore ks t 2009. Property to a surface parking in a of of location. More precisely, it is
Peugeot is a car showroom and located on Radzyminska Street leased to Peugeot Polska, for a fixed term of rental revenue of PLN 1.8 Million which is the main road leading to the west of Poland and national road no.7. fixed 10 years with possibility to extend for a further 10 years Million (EUR 0.44 Million) with all service charges paid by the Tenant. no.7. It is bility further years. The annual
During 2009 the Company completed constrction works i in 6 residential projects, which are listed below:
Plachta 3 is located in Hradec Kralove, Czech Republic app is a large residential development located approximately 2.5 km to the south close proximity to the residential area of Malsovice. 2004 and 2009. Phase 3 was completed in parking spaces and 78 cellar/storage approximately 120 km east of Prague. The Plachta scheme south-east of the town Construction works were completed in three phases between in Q4 2009 and offers 89 apartment units. The scheme also incorporate ces cellar/storage areas. The project was financed through group's equity. ll n residential projects, roximately of east centre. It is also in incorporates 48 equity.
Michle (Tyršv Vrch) is located on the Magistru road, in the north of the Michle district, in Prague 4 Republic. The site is approximately 3km from Prague city centr predominantly residential. The property is accessible by tram and road links which lead to the city centre. Q1 2008 and Q2 2009, the building has undergone redevelopment. It comprises 49 apartme spaces. The total net area of the scheme (incl equity. centre. The land use in the surrounding area is he scheme (including cellar space) is 3954 sqm. The project was financed by group' 4, Czech e. lead centre. Between apartments and 58 car parking
Kosik 3A (Slunecni Vrsek) is situated approximately 7.5 km south east of Prague city centre, near to the Hostivar district in Prague 10, Czech Republic to Chodov. The nearest public transport is a bus services with Opatov. This is a large & phased residential development for a capacity of approximately 1000 units. Construction east to , Republic. The site has good access links via K Horkam and a road connecting Hostivar metro stops located to the south in Chodov and south and road to of
works on phase 1 started in 2005. The latest phase, with a capacity of 233 units, was developed between Q2 2008 and Q3 2009. The project was financed by in a units, developed Q2 EUR 9 Million loan, maturing in 2011.
Nove Dvory is located approximately 4/5 km from Prague city centre, in the predominantly residential area of Prague 4. Construction commenced in Q3 2007 sq m of sellable area inclusive of The project was financed by EUR located 2007 and lasted until Q2 2009. The completed scheme comprise le 100 apartments and 100 car parking spaces, as well as terrace and cellar space. 10 Million loan, maturing in 2011 and has already been fully repaid . comprises 8,700 spaces, repaid.
Benice 1A is situated between the villages of Benice, approximately 13 km from the city centre. The site can be accessed fairly easily from Exit 6 of Highway D1. Construction works on phase 1 8 completed residential houses of total area of 2,112 sq m. Phase 1B shell and core specification. Phase 1B also comprises an element of was financed by EUR 9 Million remaining units within maturity in 2010. Cestlice and Pitkovice in the south east of Prague, commenced in 2007. Phase 1 is divided into phase 1A and 1B. Phase comprises residential units constructed to a commercial and apartments units. Million loan, EUR 4 Million have been repaid in 2009, the rest will be repaid from sale of Exit D1. Phase 1A comprises a units. The project , . multi-
Feliz Residence/ Drawska is located in Ochota district of Warsaw family residential scheme inclusive of 40 apartments (4,417 sq m sellable area) and basement car parking for 44 parking spaces. The 4 storey buildings are finished to a high specification and incorporate intelligent and energy saving solutions. The project was dev Million loan, maturing in 2010. in is district Warsaw, Poland. The development comprises a multi developed between Q2 2008 and Q3 2009. The project was financed by 40 apartments 44 and eloped EUR 4
Mokotowska comprises a site of 722 sq one of the City's most prestigious and prominent locations. refurbishment, which was concluded in Q2 2009 with 14 covered car park places and 2 retail units on th 1837 sqm. The project was financed with the bank sqm, located on Mokotowska 59 street in the ródmie Orco extended the building , 2009. The accommodation within the building comprises 14 apartments places the ground floor. The total net area of t bank loan, fully repaid in 2009. cie district of Warsaw, he and put it through general the 14 apartments total the building amounts to
Vaci 1 (former Budapest stock Exchange) is located Vörösmarty tér in downtown Budapest, Hungary. comprises nine floors including a level, and four upper floors. Orco purchased this building in 2005 into a luxury department store with a restaurant estimated to conclude in Q2 2011. available. Vaci 1 is already 19% pre in 2012; yearly extension till 2017 if no breach at the corner of the busiest shopping street, Váci utca and The building was constructed between 1911 and 1915 and it a lower basement, a basement, a lower and an upper ground floor, a mezzanine purchased and is currently refurbishing and convert luxury restaurant on the roof. The works began in the spring of 2008 and are After refurbishment, 11000 sqm. of net lettable retail % pre-leased a. The project is financed through EUR 46 breach. Its market value as of December 2009 reached EUR 40.1 Million. Váci utca 1911 lower converting it ks 2008 are retail accommodation will be 46 Million loan limit maturing . as of Million.
Molcom warehouse extension east of Moscow Region, within 14 km from MKAD via Yaroslavskoeshosse, close comprises a green-field land plot warehouse/ logistics complex (which is almost completed). The completed development will extend to a gross build area of approximately 205 completed in 2010. The new space is to be occupied by existing tenants of Molcom warehouse financed through USD16 Million reached EUR 7.5 Million. . The project is an extension of the current warehouse, which is located in close to Pushkino town. field plot of approximately 4 hectares. The land was designated for the development of a complex approximately 20500 sq m of light industrial/ logistics accommodation. Million loan maturing in 2015. The property's market value as of December 2009 which is located in the north-Pushkino town. The Property completed logistics This phase should be warehouse. The project is .
The here below table gathers income in 2009: valuation information about every asset which has produced a rental
| All values are in million euros | Number of assets |
DTZ Market Value Euros |
Valuation movement in the year Euros |
Net Initial Yield | Reversionary Yield |
Reverionary Potential |
|---|---|---|---|---|---|---|
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This spreadsheet also includes the assets that are classified in the "inventories" "" categor category; i.e.:
@ Vysocanska Brana in the "Office Czech Republic" category;
@ Rudna II in the " Industrial Czech Republic" category;
Peugeot in the "Industrial Poland category ( sold in 2009 but "Office Germany" category.The reversionary potential, which is difference between the Net initial yield expressed as a percentage stands at 27.65%, which reflect the fact that t reached its potential. By excluding in the not yet transferred)Sky Office and Helberger in the the here below assets, it falls at 12.19%. Reversionary yield and the the the rental portfolio has not
The cumulated DTZ market value as of end of 2009 of these 5 assets is EUR 175.3 Million (Vs. 94.6 in 2008).
Within the DTZ valuation scope, market at EUR 985.6 Million as a whole. By excluding from the scope Sky Office and Vysocanska Brana, market value falls to EUR 829.4 Million; i.e. value stands at EUR 932.6 Million ( Vs EUR 921.9 Million in 2008) and a -74.1 Million EUR compared to 2009. 921.9 in value EUR (-7.4 Million
The main variations are found in: ariations
@
@
The Net initial yield is defined by the EPRA as the "annualized rent from a property or portfolio, at the balance sheet date, less non recoverable property operating expenses such as insurance, real estate taxes and other relevant costs" mainly real due to quite high vacancy rate in some assets (20.73%). Excluding
Within DTZ valuation scope, it stands at 5.56% du Sky Office, Helberger, Peugeot, Rudna II , and Vysocanska Brana, the initial yield reaches 6. e in some 6.42%
The Reversionary yield is defined by the EPRA as the "ERV of the property less property operatin expressed as a percentage of the market value of the property plus estimated purchaser's transaction costs" is defined of property of Reversionary operating expense,
Within DTZ valuation scope, it stands at 7.09%
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