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GTC - Globe Trade Centre S.A. — Interim / Quarterly Report 2020
Aug 20, 2020
5627_rns_2020-08-20_ff2d41ef-5f7a-40cc-9a7a-5b4d3edb4d40.pdf
Interim / Quarterly Report
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GLOBE TRADE CENTRE S.A.
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD
ENDED 30 JUNE 2020
TOGETHER WITH INDEPENDENT AUDITORS` REVIEW
REPORT
Globe Trade Centre S.A.
Interim Condensed Consolidated Statement of Financial Position
as of 30 June 2020
(in thousands of Euro)
| Note | 30 June 2020 | 31 December 2019 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investment property | 8 | 2,144,414 | 2,247,030 |
| Residential landbank | 13,060 | 13,388 | |
| Property, plant and equipment | 7,907 | 8,159 | |
| Blocked deposits | 10 | 11,020 | 11,137 |
| Derivatives | - | 265 | |
| Other non-current assets | 121 | 109 | |
| 2,176,522 | 2,280,088 | ||
| Loan granted to non-controlling interest partner | 9 | 11,113 | 10,976 |
| Total non-current assets | 2,187,635 | 2,291,064 | |
| Assets held for sale | 8 | 63,281 | - |
| Current assets | |||
| Accounts receivables | 12,004 | 10,269 | |
| Accrued income | 1,557 | 2,180 | |
| VAT receivable | 12 | 2,164 | 3,296 |
| Income tax receivable | 12 | 846 | 1,079 |
| Prepayments and deferred expenses | 4,298 | 2,187 | |
| Short-term blocked deposits | 10 | 28,775 | 33,031 |
| Cash and cash equivalents | 141,781 | 179,636 | |
| 191,425 | 231,678 | ||
| TOTAL ASSETS | 2,442,341 | 2,522,742 |
Globe Trade Centre S.A.
Interim Condensed Consolidated Statement of Financial Position
as of 30 June 2020
(in thousands of Euro)
| Note | 30 June 2020 | 31 December 2019 | |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity attributable to equity holders of the Company | |||
| Share capital | 18 | 11,007 | 11,007 |
| Share premium | 550,522 | 550,522 | |
| Capital reserve | (43,098) | (43,098) | |
| Hedge reserve | (6,924) | (4,994) | |
| Foreign currency translation | (2,064) | 943 | |
| Accumulated profit | 496,623 | 530,242 | |
| 1,006,066 | 1,044,622 | ||
| Non-controlling interest | 9 | 13,835 | 14,040 |
| Total Equity | 1,019,901 | 1,058,662 | |
| Non-current liabilities | |||
| Long-term portion of long-term borrowing | 14 | 871,083 | 980,872 |
| Deposits from tenants | 11,020 | 11,137 | |
| Long term payable | 2,630 | 2,648 | |
| Provision for share based payment | 385 | 1,446 | |
| Lease liability | 15 | 44,225 | 46,222 |
| Derivatives | 11 | 7,056 | 2,611 |
| Provision for deferred tax liability | 142,865 | 147,232 | |
| 1,079,264 | 1,192,168 | ||
| Current liabilities | |||
| Investment and trade payables and provisions | 13 | 20,822 | 37,290 |
| Deposits from tenants | 1,804 | 1,605 | |
| Current portion of long-term borrowing | 14 | 312,174 | 225,350 |
| VAT and other taxes payable | 1,950 | 1,817 | |
| Income tax payable | 1,173 | 1,542 | |
| Derivatives | 11 | 3,658 | 3,739 |
| Current portion of lease liabilities | 15 | 301 | 208 |
| Advances received | 1,294 | 361 | |
| 343,176 | 271,912 | ||
| TOTAL EQUITY AND LIABILITIES | 2,442,341 | 2,522,742 |
Globe Trade Centre S.A.
Interim Condensed Consolidated Income Statement
for the six-month period ended 30 June 2020
(in thousands of Euro)
| Note | Six-month period ended 30 June 2020 (unaudited) | Six-month period ended 30 June 2019 (unaudited) | Three-month period ended 30 June 2020 (unaudited) | Three-month period ended 30 June 2019 (unaudited) | |
|---|---|---|---|---|---|
| Rental revenue | 59,038 | 60,963 | 28,040 | 31,689 | |
| Service revenue | 19,652 | 20,319 | 9,625 | 10,133 | |
| Residential revenue | - | - | - | - | |
| Service costs | (20,055) | (20,171) | (8,897) | (10,262) | |
| Residential costs | - | - | - | - | |
| Gross margin from operations | 58,635 | 61,111 | 28,768 | 31,560 | |
| Selling expenses | (707) | (735) | (384) | (367) | |
| Administration expenses | 6 | (4,554) | (8,767) | (3,133) | (4,244) |
| Profit from revaluation/impairment of assets | 8 | (67,832) | 16,482 | (62,051) | 9,763 |
| Other income | 55 | 287 | 41 | 4 | |
| Other expenses | (549) | (585) | (261) | (194) | |
| Profit (loss) from continuing operations before tax and finance income / (expense) | (14,952) | 67,793 | (37,020) | 36,522 | |
| Foreign exchange differences gain/(loss), net | (3,236) | (429) | 2,095 | (350) | |
| Finance income | 173 | 181 | 83 | 99 | |
| Finance cost | 7 | (17,051) | (16,236) | (8,318) | (8,250) |
| Profit before tax | (35,066) | 51,309 | (43,160) | 28,021 | |
| Taxation | 17 | 1,242 | (8,462) | 6,550 | (4,923) |
| Profit (loss) for the period | (33,824) | 42,847 | (36,610) | 23,098 | |
| Attributable to: | |||||
| Equity holders of the Company | (33,619) | 42,682 | (36,196) | 23,099 | |
| Non-controlling interest | (205) | 165 | (414) | (1) | |
| Basic earnings per share (in Euro) | 19 | (0.07) | 0.09 | (0.07) | 0.05 |
Globe Trade Centre S.A.
Interim Condensed Consolidated Statement of Comprehensive Income
for the six-month period ended 30 June 2020
(in thousands of Euro)
| Six-month period ended 30 June 2020 (unaudited) | Six-month period ended 30 June 2019 (unaudited) | Three-month period ended 30 June 2020 (unaudited) | Three-month period ended 30 June 2019 (unaudited) | |
|---|---|---|---|---|
| Profit (loss) for the period | (33,824) | 42,847 | (36,610) | 23,098 |
| Gain (loss) on hedge transactions | (2,229) | (2,999) | (1,911) | (1,887) |
| Income tax | 299 | 401 | 304 | 263 |
| Net gain (loss) on hedge transactions | (1,930) | (2,598) | (1,607) | (1,624) |
| Foreign currency translation | (3,007) | (240) | 182 | (351) |
| Net other comprehensive income for the period, net of tax to be reclassified to profit or loss in subsequent periods | (4,937) | (2,838) | (1,425) | (1,975) |
| Total comprehensive income for the period, net of tax | (38,761) | 40,009 | (38,035) | 21,123 |
| Attributable to: | ||||
| Equity holders of the Company | (38,556) | 39,844 | (37,621) | 21,124 |
| Non-controlling interest | (205) | 165 | (414) | (1) |
5
Globe Trade Centre S.A.
Interim Condensed Consolidated Statement of Changes in Equity
for the six-month period ended 30 June 2020
(in thousands of Euro)
| Share Capital | Share premium | Capital reserve | Hedge reserve | Foreign currency translation reserve | Accumulated profit | Total | Non-controlling interest | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2020 | 11,007 | 550,522 | (43,098) | (4,994) | 943 | 530,242 | 1,044,622 | 14,040 | 1,058,662 |
| Other comprehensive income | - | - | - | (1,930) | (3,007) | - | (4,937) | - | (4,937) |
| Profit / (loss) for the period ended 30 June 2020 | - | - | - | - | - | (33,619) | (33,619) | (205) | (33,824) |
| Total comprehensive income / (loss) for the period | - | - | - | (1,930) | (3,007) | (33,619) | (38,556) | (205) | (38,761) |
| Balance as of 30 June 2020 | 11,007 | 550,522 | (43,098) | (6,924) | (2,064) | 496,623 | 1,006,066 | 13,835 | 1,019,901 |
| Share Capital | Share premium | Capital reserve | Hedge reserve | Foreign currency translation reserve | Accumulated profit | Total | Non-controlling interest | Total | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance as of 1 January 2019 | 10,960 | 546,711 | (36,054) | (4,542) | 1,680 | 496,996 | 1,015,751 | 5,044 | 1,020,795 |
| Other comprehensive income | - | - | - | (452) | (737) | - | (1,189) | - | (1,189) |
| Profit / (loss) for the year ended 31 December 2019 | - | - | - | - | - | 74,825 | 74,825 | 596 | 75,421 |
| Total comprehensive income / (loss) for the period | - | - | - | (452) | (737) | 74,825 | 73,636 | 596 | 74,232 |
| Acquisition of non-controlling interest | - | - | (7,044) | - | - | - | (7,044) | 8,829 | 1,785 |
| Dividend distribution of non-controlling interest | - | - | - | - | - | - | - | (429) | (429) |
| Distribution of dividend | 47 | 3811 | - | - | - | (41,579) | (37,721) | - | (37,721) |
| Balance as of 31 December 2019 | 11,007 | 550,522 | (43,098) | (4,994) | 943 | 530,242 | 1,044,622 | 14,040 | 1,058,662 |
Globe Trade Centre S.A.
Interim Condensed Consolidated Statement of Cash Flows
for the six-month period ended 30 June 2020
(in thousands of Euro)
| Six-month period ended 30 June 2020 | Six-month period ended 30 June 2019 | ||
|---|---|---|---|
| (unaudited) | (unaudited) | ||
| CASH FLOWS FROM OPERATING ACTIVITIES: | Note | ||
| Profit before tax | (35,066) | 51,309 | |
| Adjustments for: | |||
| Loss/(profit) from revaluation/impairment of assets | 67,832 | (16,482) | |
| Profit on disposal of assets | |||
| Foreign exchange differences loss/(gain), net | 3,235 | 429 | |
| Finance income | (169) | (181) | |
| Finance cost | 17,051 | 16,236 | |
| Share based payment (income) / expenses | (1,061) | 2,619 | |
| Depreciation and amortization | 328 | 302 | |
| Operating cash before working capital changes | 52,150 | 54,232 | |
| Increase in trade receivables, prepayments and other current assets | (5,340) | (1,551) | |
| Increase/(decrease) in advances received | 933 | (620) | |
| Increase in deposits from tenants | 82 | 1,985 | |
| Increase/(decrease) in trade and other payables | (2,420) | 1,020 | |
| Cash generated from operations | 45,405 | 55,066 | |
| Tax paid in the period | (3,131) | (3,162) | |
| Net cash flows from operating activities | 42,274 | 51,904 | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||
| Expenditure on investment property | (45,305) | (71,215) | |
| Decrease in short term deposits | 6,030 | 2,157 | |
| Proceeds related to expropriation of land | 17 | 4,917 | |
| Sale of investment property | 11 | 2,630 | |
| VAT on purchase/sale of investment property | 1,132 | (660) | |
| Interest received | 32 | 49 | |
| Net cash flows from/(used in) investing activities | (38,111) | (62,122) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from long-term borrowings | 14 | 144,898 | 125,951 |
| Repayment of long-term borrowings | 14 | (163,680) | (60,995) |
| Repayment of lease liabilities | (90) | (1,660) | |
| Dividends paid | - | (37,927) | |
| Dividends paid to non-controlling interest | - | (429) | |
| Interest paid | (15,955) | (13,993) | |
| Loans origination cost | (953) | (775) | |
| Decrease/(increase) in blocked deposits | 10 | (1,657) | (11,588) |
| Net cash from/(used in) financing activities | (37,437) | (1,416) | |
| Effect of foreign currency translation | (4,581) | 258 | |
| Net increase / (decrease) in cash and cash equivalents | (37,855) | (11,376) | |
| Cash and cash equivalents at the beginning of the period | 179,636 | 80,456 | |
| Cash and cash equivalents at the end of the period | 141,781 | 69,080 |
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
1. Principal activities
Globe Trade Centre S.A. (the "Company" or "GTC") and its subsidiaries ("GTC Group" or "the Group") are an international real-estate corporation. The Company was registered in Warsaw on 19 December 1996. The Company's registered office is in Warsaw, Poland at Komitetu Obrony Robotników 45a Street. The Company owns through subsidiaries commercial and residential real estate companies with a focus on Poland, Budapest, Bucharest, Belgrade, Zagreb and Sofia. There is no seasonality in the business of the Group companies.
The major shareholder of the Company is GTC Dutch Holdings B.V. ("LSREF III"), controlled by GTC Holding Zmr, an Hungarian firm controlled by the Hungarian national bank, which held 298,575,091 shares 61.49% of total share as of 30 June 2020.
Events in the period
In February 2020, GTC CTWA signed with Erste Group Bank AG and Raiffeisenlandesbank Niederosterreich-Wien AG a loan agreement, which refinanced the existing loan of Galeria Jurajska with a top-up of Euro 46 million, to a total of Euro 130 million.
In March 2020, GTC Group has completed the construction of office building (Green Heart N3) in Belgrade.
On 16 April 2020, Mr. Yovav Carmi was appointed as member of the Management Board of the Company.
On June 23 2020 the Company received a notification from GTC HOLDING ZÁRTKÖRÜEN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG ("GTC Holding Zmr") registered in Budapest, Hungary, and LSREF III GTC INVESTMENTS B.V. with its registered office in Amsterdam, the Netherlands of 100% of shares of GTC Dutch Holdings B.V. (the "Majority Shareholder") whereby the Majority Shareholder has sold all its shares, 298,575,091, representing 61.49% of the shares in the share capital of the Company to GTC Holding Zmr. After the abovementioned acquisition, GTC Holding Zmr (i.e. through the Majority Shareholder) holds indirectly 298,575,091 shares of the Company, representing 61.49% of the shares.
On 23 June 2020, Mr. Robert Snow was appointed as member of the Management Board of the Company.
On 23 June 2020, Mr. Thomas Kurzmann was dismissed from the Management Board of the Company.
Covid-19 Panademia
From mid-March 2020 it became apparent that the economic disruptions caused by the Covid-19 virus and the increased market uncertainty combined with an increased volatility in the financial markets might lead to a potential decrease in the Company assets' values, as well as impact on the Company's compliance with financial covenants. While the exact effect of the coronavirus is still to be determined, it is clear that it poses substantial risks (for further information please see note 16).
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
2. Basis of preparation
The Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by EU.
At the date of authorisation of these consolidated financial statements, taking into account the EU's ongoing process of IFRS endorsement and the nature of the Group's activities, there is no difference between International Financial Reporting Standards applying to these consolidated financial statements and International Financial Reporting Standards endorsed by the European Union.
The Interim Condensed Consolidated Financial Statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's consolidated financial statements and the notes thereto for the year ended 31 December 2019, which were authorized for issue on 18 March 2020. The interim financial results are not necessarily indicative of the full year results.
The functional currency of GTC S.A. and most of its subsidiaries is Euro. The functional currency of some of GTC's subsidiaries is other than Euro.
The financial statements of those companies prepared in their functional currencies are included in the consolidated financial statements by translation into Euro using appropriate exchange rates outlined in IAS 21. Assets and liabilities are translated at the period end exchange rate, while income and expenses are translated at average exchange rates for the period. All resulting exchange differences are classified in equity as "Foreign currency translation" without effecting earnings for the period.
As of 30 June 2020, the Group's net working capital (defined as current assets less current liabilities) was negative and amounted to Euro 151.8 million, as a loan amounted to Euro 187.4 million was in breach of covenants and presented within current liabilities (see note 16).
The management has analysed the timing, nature and scale of potential financing needs of particular subsidiaries and believes that cash on hand, as well as, expected operating cashflows will be sufficient to fund the Group's anticipated cash requirements for working capital purposes, for at least the next twelve months from the balance sheet date. Consequently, the consolidated financial statements have been prepared on the assumption that the Group companies will continue as a going concern in the foreseeable future, for at least 12 months from the balance sheet date.
3. Significant accounting policies and new standards, interpretations amendments adopted by the Group
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019 (see Note 7 to the consolidated financial statements for 2019). The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. No changes to comparative data or error corrections were made.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
4. Investment in Subsidiaries, Associates and Joint Ventures
The interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries listed below together with direct and indirect ownership of these entities as at the end of each period (the table presents the effective stake):
Subsidiaries
| Name | Holding Company | Country of incorporation | 30 June 2020 | 31 December 2019 |
|---|---|---|---|---|
| GTC Konstancja Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Korona S.A. | GTC S.A. | Poland | 100% | 100% |
| Globis Poznań Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Aeropark Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Globis Wrocław Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Satellite Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Sterlinga Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Karkonoska Sp. z o.o.(2) | GTC S.A. | Poland | 100% | 100% |
| GTC Ortal Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Diego Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Francuska Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC UBP Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Pixel Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Moderna Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Centrum Handlowe Wilanow Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Management Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| GTC Corius Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Centrum Światowida Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Glorine investments Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Glorine investments Sp. z o.o. s.k.a. | GTC S.A. | Poland | 100% | 100% |
| GTC Galeria CTWA Sp. z o.o. | GTC S.A. | Poland | 100% | 100% |
| Artico Sp. z o.o | GTC S.A. | Poland | 100% | 100% |
| Julesberg Sp. z o.o. (1) | GTC S.A. | Poland | - | 100% |
| Jowett Sp. z o.o. (1) | GTC S.A. | Poland | - | 100% |
| GTC Hungary Real Estate Development Company Ltd. ("GTC Hungary") | GTC S.A. | Hungary | 100% | 100% |
| GTC Duna Kft. | GTC Hungary | Hungary | 100% | 100% |
| Vaci Ut 81-85 Kft. | GTC Hungary | Hungary | 100% | 100% |
| Riverside Apartmanok Kft. ("Riverside") (2) | GTC Hungary | Hungary | 100% | 100% |
| Centre Point I. Kft. ("Centre Point I") | GTC Hungary | Hungary | 100% | 100% |
| Centre Point II. Kft. | GTC Hungary | Hungary | 100% | 100% |
| Spiral I.Kft. | GTC Hungary | Hungary | 100% | 100% |
| SASAD Resort Kft. ("Sasad") | GTC Hungary | Hungary | 100% | 100% |
| Albertfalva Üzletközpont Kft. ("formerly Szeremi Gate") | GTC Hungary | Hungary | 100% | 100% |
| GTC Metro Kft. | GTC Hungary | Hungary | 100% | 100% |
| Kompakt Land Kft | GTC Hungary | Hungary | 100% | 100% |
| GTC White House Kft. ("formerly GTC Renaissance Plaza Kft.") | GTC Hungary | Hungary | 100% | 100% |
| VRK Tower Kft | GTC Hungary | Hungary | 100% | 100% |
| Amarantan Ltd. | GTC Hungary | Hungary | 100% | 100% |
(1) Liquidated
(2) Under liquidation
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
- Investment in Subsidiaries, Associates and Joint Ventures (continued)
| Name | Holding Company | Country of incorporation | 30 June 2020 | 31 December 2019 |
|---|---|---|---|---|
| GTC Nekretnine Zagreb d.o.o. ("GTC Zagreb") | GTC S.A. | Croatia | 100% | 100% |
| Euro Structor d.o.o. | GTC S.A. | Croatia | 70% | 70% |
| Marlera Golf LD d.o.o. | GTC S.A. | Croatia | 80% | 80% |
| Nova Istra Idaeus d.o.o. | Marlera Golf LD d.o.o | Croatia | 80% | 80% |
| GTC Matrix d.o.o. | GTC S.A. | Croatia | 100% | 100% |
| GTC Seven Gardens d.o.o. | GTC S.A. | Croatia | 100% | 100% |
| Towers International Property S.R.L. | GTC S.A. | Romania | 100% | 100% |
| Green Dream S.R.L. | GTC S.A. | Romania | 100% | 100% |
| Aurora Business Complex S.R.L | GTC S.A. | Romania | 100% | 100% |
| Cascade Building S.R.L | GTC S.A. | Romania | 100% | 100% |
| City Gate Bucharest S.R.L. | GTC S.A. | Romania | 100% | 100% |
| Venus Commercial Center S.R.L. | GTC S.A. | Romania | 100% | 100% |
| Beaufort Invest S.R.L. | GTC S.A. | Romania | 100% | 100% |
| Fajos S.R.L. | GTC S.A. | Romania | 100% | 100% |
| City Gate S.R.L. | GTC S.A. | Romania | 100% | 100% |
| City Rose Park SRL | GTC S.A. | Romania | 100% | 100% |
| Deco Intermed S.R.L. | GTC S.A. | Romania | 66.7% | 66.7% |
| GML American Regency Pipera S.R.L. | GTC S.A. | Romania | 66.7% | 66.7% |
| NRL EAD | GTC S.A. | Bulgaria | 100% | 100% |
| Advance Business Center EAD | GTC S.A. | Bulgaria | 100% | 100% |
| GTC Yuzhen Park EAD ("GTC Yuzhen") | GTC S.A. | Bulgaria | 100% | 100% |
| Dorado 1 EOOD | GTC S.A. | Bulgaria | 100% | 100% |
| GTC Medj Razvoj Nekretnina d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| GTC Business Park d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| Commercial and Residential Ventures d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| Demo Invest d.o.o. Novi Beograd | GTC S.A. | Serbia | 100% | 100% |
| Atlas Centar d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| Commercial Development d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| Glamp d.o.o. Beograd | GTC S.A. | Serbia | 100% | 100% |
| GTC BBC d.o.o | GTC S.A. | Serbia | 100% | 100% |
| Europort Investment (Cyprus) 1 Limited | GTC S.A. | Cyprus | 100% | 100% |
| Europort Ukraine Holdings 1 LLC | Europort Investment (Cyprus) 1 Limited | Ukraine | 100% | 100% |
| Europort Ukraine LLC | Europort Investment (Cyprus) 1 Limited | Ukraine | 100% | 100% |
| Europort Project Ukraine 1 LLC | Europort Investment (Cyprus) 1 Limited | Ukraine | 100% | 100% |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
5. Segmental analysis
The operating segments are aggregated into reportable segments, taking into consideration the nature of the business, operating markets and other factors. GTC operates in four core markets: Poland, Budapest, Bucharest and Belgrade. Additionally, GTC operates in Zagreb and starting from September 2017 its operation in Bulgaria is solely in Sofia.
Operating segments are divided into geographical zones, which have common characteristics and reflect the nature of management reporting structure:
a. Poland
b. Belgrade
c. Budapest
d. Bucharest
e. Zagreb
f. Sofia
Segment analysis of rental income and costs for the six month period ended 30 June 2020 and 30 June 2019 is presented below:
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Portfolio | Revenues | Costs | Gross margin | Revenues | Costs | Gross margin |
| Poland | 31,776 | (9,357) | 22,419 | 38,223 | (10,116) | 28,107 |
| Belgrade | 16,569 | (4,122) | 12,447 | 11,705 | (2,720) | 8,985 |
| Budapest | 11,126 | (2,504) | 8,622 | 12,398 | (3,046) | 9,352 |
| Bucharest | 8,405 | (1,389) | 7,016 | 8,580 | (1,586) | 6,994 |
| Zagreb | 5,324 | (1,689) | 3,635 | 5,369 | (1,846) | 3,523 |
| Sofia | 5,490 | (994) | 4,496 | 5,007 | (857) | 4,150 |
| Total | 78,690 | (20,055) | 58,635 | 81,282 | (20,171) | 61,111 |
Segment analysis of rental income and costs for the three month period ended 30 June 2020 and 30 June 2019 is presented below:
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Portfolio | Revenues | Costs | Gross margin | Revenues | Costs | Gross margin |
| Poland | 14,982 | (4,064) | 10,918 | 19,253 | (5,187) | 14,066 |
| Belgrade | 8,048 | (1,863) | 6,185 | 6,799 | (1,436) | 5,363 |
| Budapest | 5,526 | (1,151) | 4,375 | 6,211 | (1,527) | 4,684 |
| Bucharest | 4,144 | (622) | 3,522 | 4,330 | (783) | 3,547 |
| Zagreb | 2,480 | (733) | 1,747 | 2,731 | (949) | 1,782 |
| Sofia | 2,485 | (464) | 2,021 | 2,498 | (380) | 2,118 |
| Total | 37,665 | (8,897) | 28,768 | 41,822 | (10,262) | 31,560 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
- Segmental analysis (continued)
Segment analysis of assets and liabilities for the years ended 30 June 2020 is presented below:
| Real estate | Cash and deposits | Other | Total assets | Loans, bonds and lease liability | Deferred tax liability | Other | Total liabilities | |
|---|---|---|---|---|---|---|---|---|
| Poland | 941,928 | 41,307 | 9,067 | 992,302 | 552,818 | 64,807 | 10,959 | 628,584 |
| Belgrade | 395,000 | 17,574 | 5,417 | 417,991 | 216,809 | 11,846 | 10,550 | 239,205 |
| Budapest | 283,343 | 15,184 | 64,862 | 363,389 | 122,161 | 15,832 | 4,782 | 142,775 |
| Bucharest | 212,338 | 11,599 | 1,031 | 224,968 | 107,529 | 12,746 | 3,662 | 123,937 |
| Zagreb | 160,005 | 5,442 | 12,882 | 178,329 | 60,382 | 17,236 | 4,656 | 82,274 |
| Sofia | 159,611 | 7,862 | 3,080 | 170,553 | 84,880 | 7,666 | 5,237 | 97,783 |
| Other | 11,876 | 16 | 19 | 11,911 | - | - | 1,184 | 1,184 |
| Non allocated | - | 82,592 | 306 | 82,898 | 90,024 | 12,732 | 3,942 | 106,698 |
| 2,164,101 | 181,576 | 96,664 | 2,442,341 | 1,234,603 | 142,865 | 44,972 | 1,422,440 |
Segment analysis of assets and liabilities for the years ended 31 December 2019 is presented below:
| Real estate | Cash and deposits | Other | Total assets | Loans, bonds and leases | Deferred tax liability | Other | Total liabilities | |
|---|---|---|---|---|---|---|---|---|
| Poland | 978,398 | 38,399 | 5,062 | 1,021,859 | 516,539 | 70,600 | 10,506 | 597,645 |
| Belgrade | 404,219 | 18,427 | 5,625 | 428,271 | 216,805 | 13,570 | 19,545 | 249,920 |
| Budapest | 326,832 | 20,364 | 4,705 | 351,901 | 126,524 | 14,090 | 5,756 | 146,370 |
| Bucharest | 219,271 | 10,578 | 1,941 | 231,790 | 110,272 | 12,844 | 4,793 | 127,909 |
| Zagreb | 160,366 | 4,305 | 12,326 | 176,997 | 58,710 | 17,538 | 7,161 | 83,409 |
| Sofia | 166,070 | 8,825 | 1,733 | 176,628 | 79,321 | 8,940 | 5,360 | 93,621 |
| Other | 12,029 | 20 | 15 | 12,064 | - | - | 1,184 | 1,184 |
| Non allocated | - | 122,886 | 346 | 123,232 | 151,249 | 9,650 | 3,123 | 164,022 |
| Total | 2,267,185 | 223,804 | 31,753 | 2,522,742 | 1,259,420 | 147,232 | 57,428 | 1,464,080 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
6. Administrative expenses
Administrative expenses for the period of six-months ended 30 June 2020 and 30 June 2019 comprises the following amounts:
| Six-month period ended 30 June 2020 | Six-month period ended 30 June 2019 | Three-month period ended 30 June 2020 | Three-month period ended 30 June 2019 | |
|---|---|---|---|---|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Administration expenses | 5,615 | 6,148 | 3,076 | 3,016 |
| Expenses /(income) arising from share based payments (*) | (1,061) | 2,619 | 57 | 1,228 |
| 4,554 | 8,767 | 3,133 | 4,244 |
(*) Non-cash fair value adjustment, influenced by the change of share price
7. Finance costs
Finance costs for the period of six-months ended 30 June 2020 and 30 June 2019 comprises the following amounts:
| Six-month period ended 30 June 2020 | Six-month period ended 30 June 2019 | Three-month period ended 30 June 2020 | Three-month period ended 30 June 2019 | |
|---|---|---|---|---|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Finance costs related to loans and bonds | 16,077 | 15,181 | 7,860 | 7,724 |
| Finance costs related to lease liability | 974 | 1,055 | 458 | 526 |
| 17,051 | 16,236 | 8,318 | 8,250 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
8. Investment Property
The investment properties that are owned by the Group are office and shopping centre space, including property under construction. (Please refer to note 16 regarding the uncertainty related to the assets' values due to Covid-19 impact):
Investment property can be split up as follows:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| (unaudited) | (audited) | |
| Completed investment property | 1,887,682 | 2,003,188 |
| Investment property under construction | 87,730 | 84,080 |
| Investment property landbank at cost | 125,399 | 115,277 |
| Right of use of lands under perpetual usufruct | 43,603 | 44,485 |
| Total | 2,144,414 | 2,247,030 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
8. Investment Property (continued)
The movement in investment property for the periods ended 30 June 2020 (unaudited) and 31 December 2019 (audited) was as follows:
| Right of Use of land | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| Carrying amount as of 1 January 2019 | - | 1,377,317 | 735,751 | 2,113,068 |
| Capitalised subsequent expenditure | - | 13,745 | 113,445 | 127,190 |
| Recognition of right of use of lands under perpetual usufruct | 45,362 | - | - | 45,362 |
| Adjustment to fair value / (impairment) | - | 1,246 | 14,559 | 15,805 |
| Amortization of right of use of lands under perpetual usufruct | (441) | - | - | (441) |
| Classified to assets for own use, net | - | (899) | (301) | (1,200) |
| Disposals | (712) | (43,973) | (7,050) | (51,735) |
| Foreign exchange differences | 276 | (1,339) | 44 | (1,019) |
| Carrying amount as of 31 December 2019 | 44,485 | 1,346,097 | 856,448 | 2,247,030 |
| Reclassification | - | (6,799) | 6,799 | - |
| Capitalised subsequent expenditure | - | 4,465 | 28,504 | 32,969 |
| Adjustment to fair value / (impairment) | - | (32,959) | (34,240) | (67,199) |
| Prepaid right of use of lands under perpetual usufruct | (250) | (250) | ||
| Amortization of right of use of lands under perpetual usufruct | (212) | (212) | ||
| Increase | 96 | 96 | ||
| Reclassified to assets held for sale (*) | - | (62,781) | (500) | (63,281) |
| Foreign exchange differences | (516) | (4,232) | 9 | (4,739) |
| Carrying amount as of 30 June 2020 | 43,603 | 1,243,791 | 857,020 | 2,144,414 |
(*) Amount includes Spiral office building in Hungary (Euro 62.8 million), and Russe land in Bulgaria (Euro 0.5 million).
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
8. Investment Property (continued)
Fair value and impairment adjustments consist of the following:
| Six-month period ended 30 June 2020 | Six-month period ended 30 June 2019 | Three-month period ended 30 June 2020 | Three-month period ended 30 June 2019 | |
|---|---|---|---|---|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Adjustment to fair value of completed investment properties | (62,204) | 6,966 | (56,490) | 5,593 |
| Adjustment to fair value of Investment properties under construction | (4,080) | 8,675 | (4,221) | 4,355 |
| Reversal of impairment/(Impairment) adjustment | (915) | 439 | (915) | 439 |
| Total adjustment to fair value / (impairment) of investment property | (67,199) | 16,079 | (61,626) | 10,386 |
| Impairment of residential landbank | (307) | (541) | (297) | (541) |
| Adjustment of assets held for sale (*) | (94) | 1,145 | (10) | - |
| Amortization of right of use of lands under perpetual usufruct (including on residential landbank) | (232) | (202) | (118) | (83) |
| Total | (67,832) | 16,482 | (62,051) | 9,763 |
Assumptions used in the valuations of completed assets as of 30 June 2020 (unaudited) are presented below:
| Portfolio | Book value | GLA thousand | Average Occupancy | Actual Average rent | Average ERV | Fair Value Hierarchy Level |
|---|---|---|---|---|---|---|
| ‘000 Euro | sqm | % | Euro/ sqm/m | Euro/ sqm/m | ||
| Poland retail | 465,600 | 113 | 90% | 21.4 | 21.2 | 2 |
| Poland office | 394,139 | 196 | 92% | 14.5 | 14.3 | 2 |
| Belgrade office | 276,678 | 122 | 98% | 16.7 | 16.7 | 3 |
| Belgrade retail | 103,800 | 35 | 90% | 20.7 | 21.2 | 3 |
| Budapest office | 200,238 | 88 | 97% | 13.8 | 13.8 | 2 |
| Bucharest office | 183,815 | 67 | 94% | 19.3 | 17.5 | 2 |
| Zagreb retail | 102,612 | 35 | 98% | 20.6 | 20.0 | 3 |
| Zagreb office | 24,500 | 11 | 92% | 13.4 | 14.9 | 3 |
| Sofia office | 34,000 | 16 | 100% | 14.1 | 14.1 | 3 |
| Sofia retail | 102,300 | 33 | 96% | 21.7 | 20.8 | 3 |
| Total | 1,887,682 | 716 | 94% | 17.1 | 16.9 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
8. Investment Property (continued)
Assumptions used in the valuations of completed assets as of 31 December 2019 (audited) are presented below:
| Portfolio | Book value | GLA thousand | Average Occupancy | Actual Average rent | Average ERV | Fair Value Hierarchy Level |
|---|---|---|---|---|---|---|
| '000 Euro | sqm | % | Euro/ sqm/m | Euro/ sqm/m | ||
| Poland retail | 497,370 | 113 | 94% | 21.7 | 21.7 | 2 |
| Poland office | 398,888 | 196 | 92% | 14.4 | 14.1 | 2 |
| Belgrade office | 263,081 | 117 | 98% | 16.9 | 16.6 | 3 |
| Belgrade retail | 119,300 | 35 | 97% | 20.8 | 21.5 | 3 |
| Budapest office | 259,419 | 125 | 97% | 12.9 | 13.9 | 2 |
| Bucharest office | 190,418 | 67 | 96% | 19.0 | 19.4 | 2 |
| Zagreb retail | 104,812 | 35 | 99% | 20.7 | 20.1 | 3 |
| Zagreb office | 24,500 | 11 | 89% | 13.3 | 14.6 | 3 |
| Sofia office | 36,800 | 16 | 99% | 14.0 | 14.1 | 3 |
| Sofia retail | 108,600 | 33 | 98% | 21.3 | 20.8 | 3 |
| Total | 2,003,188 | 748 | 95% | 17.0 | 17.0 |
Information regarding investment properties under construction as of 30 June 2020 (unaudited) is presented below:
| Book value | Estimated area (GLA) | |
|---|---|---|
| '000 Euro | thousand sqm | |
| Sofia (ABC II) | 24,600 | 18 |
| Budapest (Pillar) | 45,200 | 29 |
| Zagreb (Matrix II) | 17,930 | 11 |
| Total | 87,730 | 58 |
Information regarding investment properties under construction as of 31 December 2019 is presented below:
| Book value | Estimated area (GLA) | |
|---|---|---|
| '000 Euro | thousand sqm | |
| Belgrade (Green Heart N3) | 10,310 | 5 |
| Sofia (ABC II) | 20,670 | 18 |
| Budapest (Pillar) | 36,600 | 29 |
| Zagreb (Matrix II) | 16,500 | 11 |
| Total | 84,080 | 63 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
8. Investment Property (continued)
Information regarding book value of investment property landbank for construction as of 30 June 2020 and 31 December 2019 is presented below:
| | 30 June 2020 | 31 December 2019
(audited) |
| --- | --- | --- |
| Poland | 37,892 | 38,148 |
| Serbia | 10,032 | 7,052 |
| Hungary | 32,511 | 25,398 |
| Romania | 15,459 | 15,256 |
| Croatia | 14,611 | 14,097 |
| Bulgaria | 610 | - |
| Total | 111,115 | 99,951 |
Information regarding book value of investment property landbank (long term pipeline) as of 30 June 2020 and 31 December 2019 is presented below:
| | 30 June 2020 | 31 December 2019
(audited) |
| --- | --- | --- |
| Poland | 8,969 | 7,969 |
| Hungary | 3,400 | 3,400 |
| Bulgaria (*) | - | 1,900 |
| Ukraine | 1,915 | 2,057 |
| Total | 14,284 | 15,326 |
| Grand Total | 125,399 | 115,277 |
(*) Reclassified to assets held for sale.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
9. Non-controlling interest
The Company's subsidiary that holds Avenue Mall (Euro Structor d.o.o.) has granted in year 2018 its shareholders a loan, pro-rata to their stake in the subsidiary. The loan principle and interest shall be repaid by 30 November 2022. In the event that Euro Structor renders a resolution for the distribution of dividend, Euro Structor has the right to set-off the dividend against the loan. In case a shareholder will sell its stake in Euro Structor, the loan shall be due for repayment upon the sale.
Summarised financial information of the material non-controlling interest as of 30 June 2020 (unaudited) is presented below:
| Avenue Mall | Non-core projects | Total | |
|---|---|---|---|
| NCI share in equity | 24,355 | (10,520) | 13,835 |
| Loans received from NCI | - | 8,411 | 8,411 |
| Loans granted to NCI | (11,113) | - | (11,113) |
| Total as of 30 June 2020 | 13,242 | (2,109) | 11,133 |
| NCI share in profit / (loss) | 45 | (250)) | (205) |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
10. Short term deposits
Short-term deposits include deposits related to loan agreements, derivatives, and other contractual commitments and can be used only for certain operating activities as determined by underlying agreements.
11. Derivatives
The Group holds instruments (IRS, Cap and currency forward, SWAP currency) that hedge the risk involved in fluctuations of interest rate and currencies rates. The instruments hedge interest on loans for a period of 2-5 years.
The movement in derivatives for the years ended 30 June 2020 and 31 December 2019 was as follows:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Fair value as of beginning of the year | (6,085) | (5,623) |
| Charged to other comprehensive income | (2,229) | (462) |
| Charged to income statements (*) | (2,400) | - |
| Fair value as of end of the year | (10,714) | (6,085) |
(*) This loss offset a foreign exchange differences profit in an amount of Euro 2.4 million on bonds nominated in PLN.
12. VAT and other tax receivable
VAT and other tax receivable represent VAT receivable on the purchase of assets, and due to development activity.
13. Investment and trade and other payables
The balance of trade and other payables decrease from Euro 37.3 million to Euro 20.8 million in the period ended 30 June 2020.
The majority of the payables relates to development activity payables in Ada Mall, Green Heart, ABC, Pillar and Matrix. Amount is planned to be financed mostly by long term loans.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
14. Long-term loans and bonds
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Bonds mature in 2022-2023 | 49,718 | 52,140 |
| Bonds 0320 | - | 18,671 |
| Bonds 0620 | - | 40,070 |
| Bonds 1220 | 10,116 | 10,117 |
| Bonds 0321 | 20,737 | 20,737 |
| Bonds 0422 | 9,452 | 9,515 |
| Loan from Santander (Globis Poznan) | 17,265 | 17,579 |
| Loan from Santander (Korona Business Park) | 42,664 | 43,361 |
| Loan from PKO BP (Pixel) | 19,562 | 19,901 |
| Loan from Santander (Globis Wroclaw) | 21,714 | 22,061 |
| Loan from Berlin Hyp (Corius) | 10,207 | 10,378 |
| Loan from Pekao (Sterlinga) | 15,400 | 15,663 |
| Loan from Pekao (Galeria Polnocna) | 187,404 | 189,904 |
| Loan from PKO BP (Artico) | 14,104 | 14,359 |
| Loan from Erste and Raiffeisen (Galeria Jurajska) | 127,563 | - |
| Loan from Pekao (Galeria Jurajska) | - | 84,136 |
| Loan from Berlin Hyp (UBP) | 42,848 | 43,283 |
| Loan from ING (Francuska) | 21,307 | 21,577 |
| Loan from OTP (Centre Point) | 50,573 | 51,476 |
| Loan from CIB (Metro) | 13,863 | 14,437 |
| Loan from Erste (Spiral) | 18,427 | 20,593 |
| Loan from OTP (Duna) | 39,218 | 39,919 |
| Loan from Erste (GTC House) | 15,132 | 15,444 |
| Loan from Erste (19 Avenue) | 22,007 | 22,504 |
| Loan from OTP (BBC) | 21,388 | 21,790 |
| Loan from Intesa Bank (Green Heart) | 57,344 | 53,642 |
| Loan from Raiffeisen Bank (Forty one) | 37,221 | 38,148 |
| Loan from Intesa Bank (Ada) | 59,992 | 61,571 |
| Loan from Erste (City Gate) | 73,537 | 75,113 |
| Loan from Banca Transilvania (Cascade) | 3,957 | 4,118 |
| Loan from Alpha Bank (Premium) | 14,999 | 15,873 |
| Loan from OTP (Mall of Sofia) | 55,898 | 57,125 |
| Loan from UniCredit (ABC I) | 19,309 | 19,800 |
| Loan from UniCredit (ABC II) | 9,530 | 2,217 |
| Loan from Erste (Matrix) | 14,210 | 11,485 |
| Loan from Zagrabecka Banka (Avenue Mall Zagreb) | 45,000 | 46,000 |
| Loans from NCI | 8,411 | 8,283 |
| Deferred issuance debt expenses | (6,820) | (6,768) |
| 1,183,257 | 1,206,222 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
14. Long-term loans and bonds (continued)
Long-term loans and bonds have been separated into the current portion and the long-term portion as disclosed below:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Current portion of long term loans and bonds: | ||
| Bonds mature in 2022-2023 | 457 | 479 |
| Bonds 0320 | - | 18,671 |
| Bonds 0620 | - | 40,070 |
| Bonds 1220 | 10,116 | 10,117 |
| Bonds 0321 | 20,737 | 243 |
| Bonds 0422 | 12 | 75 |
| Loan from Santander (Globis Poznan) | 629 | 449 |
| Loan from Santander (Korona Business Park) | 1,395 | 1,395 |
| Loan from PKO BP (Pixel) | 19,562 | 677 |
| Loan from Berlin Hyp (UBP) | 870 | 870 |
| Loan from Erste and Raiffeisen (Galeria Jurajska) | 4,875 | - |
| Loan from Pekao (Galeria Jurajska) (*) | - | 84,136 |
| Loan from Santander (Globis Wroclaw) | 693 | 693 |
| Loan from Berlin Hyp (Corius) | 342 | 342 |
| Loan from Pekao (Sterlinga) | 15,400 | 525 |
| Loan from PKO BP (Artico) | 510 | 510 |
| Loan from Pekao (Galeria Polnocna) | 187,404 | 5,000 |
| Loan from ING (Francuska) | 21,307 | 21,577 |
| Loan from OTP (Centre Point) | 1,807 | 1,807 |
| Loan from OTP (Duna) | 1,401 | 1,401 |
| Loan from CIB (Metro) | 1,172 | 14,437 |
| Loan from Erste (Spiral) | 1,374 | 1,446 |
| Loan from Erste (GTC House) | 624 | 624 |
| Loan from Erste (19 Avenue) | 994 | 994 |
| Loan from Intesa Bank (Green Heart) | 2,873 | 2,367 |
| Loan from OTP (BBC) | 805 | 805 |
| Loan from Raiffeisen Bank (Forty one) | 1,853 | 1,853 |
| Loan from Intesa Bank (Ada) | 3,473 | 3,315 |
| Loan from OTP (Mall of Sofia) | 2,458 | 2,457 |
| Loan from UniCredit (ABC I) | 909 | 1,000 |
| Loan from UniCredit (ABC II) | 1,055 | 58 |
| Loan from Zagrabecka Banka (Avenue Mall Zagreb) | 2,000 | 2,000 |
| Loan from Erste (Matrix) | 580 | 524 |
| Loan from Alpha Bank (Premium) | 1,025 | 1,025 |
| Loan from Banca Transilvania (Cascade) | 240 | 240 |
| Loan from Erste (City Gate) | 3,222 | 3,168 |
| 312,174 | 225,350 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
- Long-term loans and bonds (continued)
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Long term portion of long term loans and bonds: | ||
| Bonds mature in 2022-2023 | 49,261 | 51,661 |
| Bonds 0422 | 9,440 | 9,440 |
| Bonds 0321 | - | 20,494 |
| Loan from Santander (Globis Poznan) | 16,636 | 17,130 |
| Loan from Santander (Korona Business Park) | 41,269 | 41,966 |
| Loan from PKO BP (Pixel) | - | 19,224 |
| Loan from Santander (Globis Wroclaw) | 21,021 | 21,368 |
| Loan from Berlin Hyp (Corius) | 9,865 | 10,036 |
| Loan from Pekao (Sterlinga) | - | 15,138 |
| Loan from Pekao (Galeria Polnocna) | - | 184,904 |
| Loan from PKO BP (Artico) | 13,594 | 13,849 |
| Loan from Erste and Raiffeisen (Galeria Jurajska) | 122,688 | - |
| Loan from Berlin Hyp (UBP) | 41,978 | 42,413 |
| Loan from OTP (Centre Point) | 48,766 | 49,669 |
| Loan from CIB (Metro) | 12,691 | - |
| Loan from OTP (Duna) | 37,817 | 38,518 |
| Loan from Erste (Spiral) | 17,053 | 19,147 |
| Loan from Erste (GTC House) | 14,508 | 14,820 |
| Loan from Erste (19 Avenue) | 21,013 | 21,510 |
| Loan from Intesa Bank (Green Heart) | 54,471 | 51,275 |
| Loan from Intesa Bank (Ada) | 56,519 | 58,256 |
| Loan from OTP (BBC) | 20,583 | 20,985 |
| Loan from Raiffeisen Bank (Forty one) | 35,368 | 36,295 |
| Loan from Erste (City Gate) | 70,315 | 71,945 |
| Loan from Banca Transilvania (Cascade) | 3,717 | 3,878 |
| Loan from Alpha Bank (Premium) | 13,974 | 14,848 |
| Loan from OTP (Mall of Sofia) | 53,440 | 54,668 |
| Loan from UniCredit (ABC I) | 18,400 | 18,800 |
| Loan from UniCredit (ABC II) | 8,475 | 2,159 |
| Loan from Zagrabecka Banka (Avenue Mall Zagreb) | 43,000 | 44,000 |
| Loan from Erste (Matrix) | 13,630 | 10,961 |
| Loans from NCI | 8,411 | 8,283 |
| Deferred issuance debt expenses | (6,820) | (6,768) |
| 871,083 | 980,872 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
14. Long-term loans and bonds (continued)
As securities for the bank loans, the banks have mortgage over the assets and security deposits together with assignment of the associated receivables and insurance rights.
In its financing agreements with banks, the Group undertakes to comply with certain financial covenants that are listed in those agreements. The main covenants are: maintaining a Loan-to-Value and Debt Service Coverage ratios in the company that holds the project.
In addition, substantially, all investment properties and IPUC that were financed by a lender have been pledged to secure the long-term loans from banks. Unless otherwise stated, fair value of the pledged assets exceeds the carrying value of the related loans.
Loan received by Spiral is nominated in Hungarian Forint (HUF).
Bonds (series matures in 2022-2023) are nominated in PLN. All other bank loans and bonds are denominated in Euro.
For information regarding breach of loans as of 30 June 2020, please see note 16.
The movement in long term loans and bonds for the years ended 30 June 2020 and 31 December 2019 was as follows:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Balance as of the beginning of the year (excluding deferred debt expenses) | 1,212,990 | 1,121,718 |
| Drawdowns | 144,898 | 264,520 |
| Repayments | (163,680) | (152,561) |
| Transactions with of non-controlling interest | - | (1,785) |
| Change in accrued interest | (226) | 394 |
| Deconsolidation of Neptune | - | (19,915) |
| Capitalization of interest | - | 1,205 |
| Foreign exchange differences | (3,905) | (586) |
| Balance as of end of the year (excluding deferred debt expenses) | 1,190,077 | 1,212,990 |
Repayments of long-term debt and interest are scheduled as follows (Euro million):
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| (unaudited) | (audited) | |
| First year | 334 | 251 |
| Second year | 142 | 189 |
| Third year | 271 | 199 |
| Fourth year | 140 | 198 |
| Fifth year | 194 | 270 |
| Thereafter | 185 | 196 |
| 1,266 | 1,303 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
15. Lease liability and Right of Use of land
Lease liabilities includes lease payments for land under perpetual usufruct for land under investment property and residential landbank.
The balance of Right of Use of land as of 30 June 2020 was as follows:
| Completed investment property | Investment property landbank at cost | Residential landbank | Fixed assets | Total | |
|---|---|---|---|---|---|
| Country | |||||
| Poland | 11,077 | 22,173 | - | - | 33,250 |
| Romania | 6,625 | - | - | - | 6,625 |
| Serbia | 3,728 | - | - | - | 3,728 |
| Croatia | - | - | 1,161 | 1,161 | |
| Bulgaria | - | - | - | 143 | 143 |
| Hungary | 54 | 54 | |||
| Balance as of 30 June 2020 | 21,430 | 22,173 | 1,161 | 197 | 44,961 |
The balance of Right of Use as of 31 December 2019 was as follows:
| Completed investment property | Investment property under construction | Investment property landbank at cost | Residential landbank | Property, plant and equipment | Total | |
|---|---|---|---|---|---|---|
| Country | ||||||
| Poland | 11,648 | - | 22,247 | - | - | 33,895 |
| Romania | 6,884 | - | - | - | - | 6,884 |
| Serbia | 3,606 | 100 | - | - | - | 3,706 |
| Croatia | - | - | - | 1,197 | - | 1,197 |
| Bulgaria | - | - | - | - | 179 | 179 |
| Hungary | - | - | - | - | 70 | 70 |
| Balance as of 31 December 2019 | 22,138 | 100 | 22,247 | 1,197 | 249 | 45,931 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
15. Lease liability and Right of Use of land (continued)
The balance of lease liability as of 30 June 2020 was as follows:
| Completed investment property | Investment property landbank at cost | Residential landbank | Fixed assets | Total | Discount rate | |
|---|---|---|---|---|---|---|
| Country | ||||||
| Poland | 11,077 | 21,730 | - | - | 32,807 | 4.2% |
| Romania | 6,625 | - | - | - | 6,625 | 5.7% |
| Serbia | 3,728 | - | - | - | 3,728 | 7.6% |
| Croatia | - | - | 1,192 | - | 1,192 | 4.4% |
| Bulgaria | - | - | - | 124 | 124 | 4.5% |
| Hungary | - | - | - | 50 | 50 | 3.9% |
| Balance as of 30 June 2020 | 21,430 | 21,730 | 1,192 | 175 | 44,526 |
The balance of lease liability as of 31 December 2019 was as follows:
| Completed investment property | Investment property under construction | Investment property landbank at cost | Residential landbank | Property, plant and equipment | Total | Discount rate | |
|---|---|---|---|---|---|---|---|
| Country | |||||||
| Poland | 11,648 | - | 22,726 | - | - | 34,374 | 4.2% |
| Romania | 6,884 | - | - | - | - | 6,884 | 5.7% |
| Serbia | 3,606 | 100 | - | - | - | 3,706 | 7.6% |
| Croatia | - | - | - | 1,225 | - | 1,225 | 4.4% |
| Bulgaria | 179 | 179 | 4.5% | ||||
| Hungary | - | - | - | - | 62 | 62 | 3.9% |
| Balance as of 31 December 2019 | 22,138 | 100 | 22,726 | 1,225 | 241 | 46,430 |
The lease liabilities were discounted using discount rates applicable to long term borrowing in local currencies in the countries of where the assets are located.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A. Notes to the Interim Condensed Consolidated Financial Statements for the six-month period ended 30 June 2020 (in thousands of Euro)
15. Lease liability and Right of Use of land (continued)
The movement in Right of Use of land for the years ended 30 June 2020 and 31 December 2019 was as follows:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Balance as of beginning of the year | 45,931 | - |
| Recognition of Right of Use asset for lands under perpetual usufruct | 96 | 46,580 |
| Recognition of Right of Use during the year | - | 273 |
| Amortization of right of use | (291) | (498) |
| Prepaid right of use of lands under perpetual usufruct | (250) | - |
| Disposals | - | (712) |
| Foreign exchange differences | (525) | 288 |
| Balance as of the end of the period | 44,961 | 45,931 |
The movement in lease liability for the years ended 30 June 2020 and 31 December 2019 was as follows:
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| Balance as of beginning of the year | 46,430 | - |
| Recognition of lease liability for lands under perpetual usufruct | 96 | 46,580 |
| Recognition of Right of Use during the year | - | 273 |
| Payments of leases | (136) | (1,739) |
| Change in provision for disputable amounts of perpetual usufruct | (680) | (352) |
| Change in accrued interest | 421 | 1,817 |
| Disposals | - | (712) |
| Foreign exchange differences | (1,605) | 563 |
| Balance as of the end of the period | 44,526 | 46,430 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
16. Covid-19
Since mid-March 2020 until mid-May 2020, local governments in the six countries of our operations have implemented rigorous measures to contain the spread of COVID-19, including, among others, the closure of all stores except those selling essential goods (such as groceries, other food stores and pharmacies). Such measures were prompt and efficient, leading to a low rate of COVID-19 infections and fatalities in the CEE.
Starting from mid-May 2020 gradual easing of restrictions has commenced. Governments are adopting different plans for ending the lockdowns, mostly focused on a phased approach.
Governments across the Group's CEE region have adopted laws implementing measures to assist tenants, ranging from allowing the ability to defer rental payments for businesses impacted by COVID-19, to providing state financial aid covering part of their costs for the duration of the restrictions.
The Company, just as many other landlords in the market, has an ongoing active dialogue with its tenants regarding their business performance and ability to pay.
As of the balance sheet date, the loss of rent and service income related to the COVID-19 amounted to Euro 8 million.
The asset management team is committed to working together with tenants to maintain sustainable, long-term relationships. Any discounts will be agreed on case-by-case basis, based on a thorough analysis of the tenants' financial situation, occupancy cost ratio and other factors, and will be focused on maintaining a functioning retail environment for the long term.
The Group is committed to its prudent financial policy, focused on a conservative gearing ratio of (45.8% as at 30 June 2020) and robust liquidity. In response to the recent events, the Company actively implemented various measures focused on optimizing the costs, including:
- reducing non-critical operating expenses, especially for the period in which most of the retailers in the shopping centres were not trading and allocating capital;
- deferring non-committed development projects;
- deferring non-essential capital expenditure;
- retaining all the profits earned by the Company in 2019, and proposed not to distribute dividend for 2019
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
16. Covid-19 (continued)
The Group plans to be compliant with debt-service obligation. As of 30 June 2020 the Company holds cash in the amount of Euro 141.8 million.
Valuations
Notwithstanding the above, as of 30 June 2020 the Company received valuations from its valuers. The values are subject to material uncertainty as regarding their value. The loss from revaluation related mostly to the shopping centres assets.
The increased uncertainty and increased volatility in the financial markets might have an effect in the future asset valuations, as well as impact on the Company's compliance with financial covenants. While the exact effect of the coronavirus is unknown and unknowable, it is clear that it poses substantial risks of reduction of income, increasing yields, increasing collection costs, and FX volatility.
The Company run stress tests which indicated that the going concern assumption remains valid for at least 12 months from the financial statement publication date.
In its financing agreements with banks, the Company undertakes to comply with certain financial covenants that are listed in those agreements; the main covenants are: maintaining a Loan-to-Value and Debt Service Coverage ratios in the company that holds the project.
With respect to a EUR 187.4 million loan from Bank Pekao SA granted to a subsidiary of GTC operating the Galeria Północna project, the LtV (loan-to-value) and DSCR (debt service coverage ratio) covenants were not met as of 30 June 2020. Accordingly, the loan was reclassified as a current liability due to the non-compliance with the respective loan covenants. In parallel, the Company has initiated negotiations with the financing bank in order to obtain a waiver in respect to such covenants or to reach a common understanding to relax the present financial covenants.
With respect to a EUR 60.0 million loan from Banka Intesa ad Beograd, Vseobecna Uverova Banka a.s. and Privredna Banka Zagreb d.d. granted to a subsidiary of GTC operating the Ada Mall project, the DSCR covenant which would not have been met was waived by the banks as of 30 June 2020 until the end of June 2021.
With respect to a EUR 127.6 million loan from Erste Group Bank AG and Raiffeisenlandesbank Niederosterreich-Wien AG granted to a subsidiary (Galeria Jurajska), the DSCR covenant was waived as of 30 June 2020 until the end of June 2021.
The Group is continuously assessing the situation and undertakes mitigating steps to reduce the impact that may be caused by the adverse market situation.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
17. Taxation
Regulations regarding VAT, corporate income tax and social security contributions are subject to frequent changes. These frequent changes result in there being little point of reference, inconsistent interpretations not consistent and few established precedents that may be followed. The binding regulations also contain uncertainties, resulting in differences in opinion regarding the legal interpretation of tax regulations both between government bodies, and between government bodies and companies. Tax settlements and other areas of activity (e.g. customs or foreign currency related issues) may be subject to inspection by administrative bodies authorised to impose high penalties and fines, and any additional taxation liabilities calculated as a result must be paid together with high interest. The above circumstances mean that tax exposure is greater in Group's countries than in countries that have a more established taxation system.
Effective 15 July 2016, the Polish Tax Code was amended for the General Anti-Abuse Rule (GAAR) provisions. The new regulation will require significantly more judgement in assessment of the tax consequences of particular transactions.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
18. Capital and Reserves
Shareholders who as at 30 June 2020 held above 5% of the Company shares were as follows:
- GTC Dutch Holdings B.V
- OFE PZU Zlota Jesien
- OFE AVIVA Santander
Phantom shares
Certain key management personnel of the Company are entitled to specific payments resulting from phantom shares in the Company (the "Phantom Shares").
The Phantom shares (as presented in below mentioned table) have been accounted for based on future cash settlement.
As at 30 June 2020, phantom shares issued were as follows:
| Strike (PLN) | Blocked | Vested | Total | |
|---|---|---|---|---|
| 6.11 | 450,000 | 1,101,200 | 1,551,200 | |
| 8.96 | 10,000 | 20,000 | 30,000 | |
| Total | 460,000 | 1,121,200 | 1,581,200 |
The Phantom shares (as presented in above mentioned table) have been provided for assuming cash payments will be materialized, as the Company assesses that it is more likely to be settled in cash.
| Last year of exercise date | Number of phantom shares |
|---|---|
| 2020 | 600,000 |
| 2021 | 551,200 |
| 2022 | 330,000 |
| 2023 | 100,000 |
| Total | 1,581,200 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
19. Earnings per share
Basic and diluted earnings per share were calculated as follows:
| Six-month period ended 30 June 2020 | Six-month period ended 30 June 2019 | Three-month period ended 30 June 2020 | Three-month period ended 30 June 2019 | |
|---|---|---|---|---|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Profit for the period attributable to equity holders (euro) | (33,619,000) | 42,682,000 | (36,196,000) | 23,099,000 |
| Weighted average number of shares for calculating basic earnings per share | 485,555,122 | 483,748,843 | 485,555,122 | 483,958,363 |
| Basic earnings per share (euro) | (0.07) | 0.09 | (0.07) | 0.05 |
There have been no potentially dilutive instruments as at 30 June 2020, 30 June 2019.
The accompanying notes are an integral part of these Consolidated Financial Statements
Globe Trade Centre S.A.
Notes to the Interim Condensed Consolidated Financial Statements
for the six-month period ended 30 June 2020
(in thousands of Euro)
20. Subsequent events
On 1 July 2020, Mr. Gyula Nagy was appointed as member of the Management Board of the Company.
On 28 July 2020, Mr. Ariel Alejandro Ferstman was appointed as member of the Management Board of the Company.
On 28 July 2020, the Company and Mr. Erez Boniel have mutually agreed to terminate his appointment as a member to the Management Board of the Company.
In July 2020, the Group signed a letter of intent to sale of Spiral office building in Budapest. Accordingly, as of 30 June 2020, the asset is presented within the assets held for sale, with a total fair value of Euro 62.8 million.
21. Release date
The interim condensed consolidated financial statements were authorised for the issue by the Management Board on 18 August 2020.
The accompanying notes are an integral part of these Consolidated Financial Statements
BDO
BDO spółka z ograniczoną odpowiedzialnością sp.k.
ul. Postępu 12
02-676 Warszawa
Polska
tel.: +48 22 543 16 00
fax: +48 22 543 16 01
e-mail: [email protected]
www.bdo.pl
INDEPENDENT AUDITOR'S REVIEW REPORT
ON THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE SHAREHOLDERS AND SUPERVISORY BOARD OF GLOBE TRADE CENTRE S.A.
Introduction
We have reviewed the accompanying interim condensed consolidated financial statements of the Globe Trade Centre S.A. Group (“the Group”), where the parent company is Globe Trade Centre S.A. with its registered office in Warsaw at Komitetu Obrony Robotników 45A (“the Company”, “the Parent Company”), comprising the consolidated statement of financial position prepared as at 30 June 2020, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the period from 1 January 2020 to 30 June 2020, as well as notes and explanatory information (“interim condensed consolidated financial statements”).
The Parent Company’s Management is responsible for the preparation and presentation of the interim condensed consolidated financial statements in accordance with the requirements of International Accounting Standard 34 Interim Financial Reporting, announced in the form of European Commission regulations.
Our responsibility is to form a conclusion on the interim condensed consolidated financial statements based on our review.
Scope of Review
We performed the review in accordance with National Standard on Review Engagements 2410 in the wording of International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted in a resolution passed by the National Council of Certified Auditors.
A review of financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with National Standards on Auditing in the wording of International Standards on Auditing. As a result, a review is not sufficient to obtain assurance that all significant matters that might be identified in an audit, have been identified. Accordingly, we do not express an audit opinion on the accompanying interim condensed consolidated financial statements.
BDO spółka z ograniczoną odpowiedzialnością sp.k., Sąd Rejonowy dla m. st. Warszawy, XIII Wydział Gospodarczy, KRS: 0000729684, REGON: 141222257, NIP: 108-000-42-12. Biura BDO w Polsce: Katowice 40-007, ul. Uniwersytecka 13, tel.: +48 32 661 06 00, [email protected]; Kraków 31-548, al. Pokoju 1, tel.: +48 12 378 69 00, [email protected]; Poznań 60-650, ul. Piątkowska 165, tel.: +48 61 622 57 00, [email protected]; Wrocław 53-332, ul. Powstańców Śląskich 7a, tel.: +48 71 734 28 00, [email protected]
BDO spółka z ograniczoną odpowiedzialnością sp.k. jest członkiem BDO International Limited, brytyjskiej spółki i częścią międzynarodowej sieci BDO, złożonej z niezależnych spółek członkowskich
BDO
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements have not been prepared, in all material respects, in accordance with the requirements of International Accounting Standard 34 Interim Financial Reporting, announced in the form of European Commission regulations.
Explanatory Paragraph - significant uncertainty relating to the valuation of investment property
We draw your attention to Note 16 "Covid-19" to the interim condensed consolidated financial statements, in which the Company presents among others the uncertainties related to the valuation of Group's investment property. In particular, the Company received the valuations of investment property as of 30 June 2020 that in accordance with the external valuers are subject to material uncertainty. Our conclusion has not been modified in this respect.
BDO spółka z ograniczoną odpowiedzialnością sp.k. with its registered office in Warsaw entered on the list of audit firms in number 3355
on behalf of which the review of financial statements was performed by
Krzysztof Maksymik
Certified Auditor No. 11380
Dr. André Helin
President of the General Partner's Management Board
Certified Auditor No. 90004
Warsaw, 18 August 2020