29 March, 2023
PLAZA CENTERS N.V.
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Plaza Centers N.V. (“Plaza” / “Company” / “Group”) today announces its results for the year ended 31
December 2022.
Financial highlights:
• Reduction in total assets by €1.5 million to €8.3 million mainly as a result of the decrease in equity
accounted investees as detailed below, administrative expenses and costs of operations.
• Consolidated cash position as of December 31, 2022 increased by circa €3.1 million to app. € 8.7 million
(December 31, 2021: €4.7 million) as result of received consideration after the sale of plot in Bangalore,
India.
• €0.4 million gain recorded at an operating level (December 31, 2021: €2.9 million loss) mainly due to share
in results of equity accounted investees and administrative expenses.
• Recorded loss of €8.5 million (December 31, 2021: €27.1 million), mainly due to finance expenses on
bonds.
• Basic and diluted loss per share of €1.24 (31 December 2021: loss per share of €3.95).
Material events during the period:
Sale agreement of plot in Bangalore, India:
On September 2, 2022 the Company announced that on September 1, 2022 the transaction for the sale of
EPI's whole rights in the Asset was completed for a total of INR 117 crores (approximately EUR 14.3 million)
and that EPI received the full consideration as mentioned.
The total amount that the Company received from the transaction is about EUR 7.2 million and included the
Company's share of the advances that the Purchaser has transferred in the months preceding the completion
of the transaction.
Update regarding a change in Elbit Imaging Ltd holdings
On January 13, 2022, the Company announced that Elbit Imaging Ltd. ("Elbit Imaging") sold about 77 thousand
shares of the Company, which are held in escrow account, for a total consideration of approximately NIS 150
thousand. Following, the last announcement date till November 2, 2022 Elbit Imaging sold about 34 thousand
shares of the Company thus, Elbit Imaging holdings in the Company have diminished to 20.06% of the
Company's issued and paid-up capital.
Deferral of payment of Debentures and partial interests’ payment:
Refer to the below in Liquidity & Financing.
Dutch statutory auditor:
Refer to Note 16 (b)(6) in the annual consolidated financial statements.
Annual General Meeting:
Annual general meeting of the Shareholders of the Company was held on July 20, 2022, all the proposed
resolutions were passed.
Information regarding proposal from G.C. Hevron Capital Ltd:
In the period since July 9, 2021 till August 10, 2021, the Company received proposals from G.C. Hevron Capital
Ltd (“Hevron Capital”). According to revised proposal received on August 10, 2021 the Company's assets will
be transferred to a trustee and/or will be managed exclusively for the benefit of the bondholders, in order to
create a mechanism according to which the bondholders will exclusively benefit from any expected income
from the existing assets.
On August 11, 2021, the bondholders decided to approve that the Company's Board of Directors can conduct
a negotiation with G.C. Hevron Capital Ltd regarding the sale of the Company's public structure and to grant
a no shop for a period of 60 days during which due diligence will be carried out by G.C. Hevron Capital Ltd
and its advisor.
On October 4
th
, 2021 the Company received a request from G.C Hevron Capital Ltd. to extend the "NO-SHOP"
period, as Hevron Capital and its attorneys might not succeed to submit the agreement within the designated
time schedules, due to the holiday’s period and the complexity of the transaction.
The Company's Board of Directors has discussed Hevron Capital's request, as stated above, and decided to
approve an extension of the "NO-SHOP" period by an additional 30 days, until November 12, 2021.
On March 30, 2022 the Company announced that Hevron Capital submitted to the Company a request to
extend the No-Shop period, due to the complexity and the vast amount of data that needs to be procced in
order to evaluate the proposed settlement (“Hevron Capital’ Request”). Following the above, the Company's
Board of Directors approved Hevron Capital’s Request to extend the "No-Shop" which expired as of May 20,
2022.
Update regarding an Engagement letter with a law firm in London in connection with the legal
proceedings in the “Casa Radio” project:
On January 14, 2022 the Company announced, that further to the Company's bondholders meeting dated
November 25, 2021 and the Company's bondholders' approval to initiate legal procedures in connection with
the "Casa Radio" project (the "Project"); that on January 13, 2022, the Company signed an engagement letter
with a law firm in London in order to take any relevant actions in connection with the Project. For details in
connection with the legal proceedings in the “Casa Radio” project please refer to Note 5 in the annual
consolidated financial statements.
Update regarding the issuance of a notice of dispute and acceptance of offer and consent to arbitrate
to Romania with respect to the “Casa Radio” project:
On February 15, 2022 the Company announced, further to the Company's bondholders meeting dated
November 25, 2021 and the Company's bondholders' approval to initiate legal procedures in connection with
the "Casa Radio" project (the "Project"); that on January 13, 2022, the Company signed an engagement letter
with a law firm in London in order to take any relevant actions in connection with the Project. For details in
connection with the legal proceedings in the “Casa Radio” project please refer to Note 5 in the annual
consolidated financial statements.
Taskforce on Climate-related Financial Disclosures (“TCFD”):
The Company notes the TCFD recommendations on climate-related financial disclosures.
(1) BACKGROUND
Released in 2017, the TCFD recommendations set out eleven recommended disclosures around four core
areas for companies to report material climate-related information to the market via the mainstream financial
report, as shown in Figure 1, below. In focusing on these four core areas of business practice and disclosure,
the TCFD sought to ensure that consideration for climate-related matters were adequately embedded
throughout the organization’s governance, strategy, and risk management processes and transparently
reflected for both preparers and users alike. In doing so, this addresses the demand for information that is
consistent, comparable, reliable and clear. The TCFD recommendations also promoted the use of climate
scenario analysis for the assessment of corporate strategic resilience. Climate scenario analysis is offered as
a means to inform users about a company’s strategic resilience, and enable companies to prepare and respond
to the uncertainties of climate change and decarbonization efforts over different time horizons, both in terms
of the timings of potential impacts as well as their magnitudes. By exploring a range of plausible and coherent
climate futures and assessing the potential corporate risks and opportunities of each, companies can test their
thinking and strategies, better understand the key drivers that will likely affect their business going forward,
and adapt their strategies and ambitions accordingly. Whilst potentially challenging, scenario analysis is an
essential component to TCFD reporting. It brings considerations of the short-, medium-, and long-term impacts
of climate change into the present day, enabling companies and investors can act in a more informed and
effective manner
The UK took the pioneer status and local firms will be required to disclose climate-related financial information,
ensuring they consider the risks and opportunities they face as a result of climate change.
• The UK is the first G20 country to make it mandatory for Britain’s largest businesses to disclose their
climate-related risks and opportunities, in line with TCFD recommendations
• new legislation will require firms to disclose climate-related financial information, with rules set to come
into force from April 2022
• follows publication of UK’s landmark Net Zero Strategy and forms part of the government’s commitment
to making the UK financial system the greenest in the world
The UK is becoming the first G20 country to enshrine in law mandatory TCFD-aligned requirements for Britain’s
largest companies and financial institutions to report on climate-related risks and opportunities.
From 6 April 2022, over 1,300 of the largest UK-registered companies and financial institutions will have to
disclose climate-related financial information on a mandatory basis – in line with recommendations from the
Task Force on Climate-Related Financial Disclosures. This will include many of the UK’s largest traded
companies, banks and insurers, as well as private companies with over 500 employees and £500 million in
turnover.
The TCFD is an industry-led group which helps investors understand their financial exposure to climate risk
and works with companies to disclose this information in a clear and consistent way. It was launched at the
Paris COP21 in 2015 by the Financial Stability Board (FSB) and Mark Carney, the UN Special Envoy on
Climate Action and Finance and UK Finance Adviser for COP26, and has since published a clear and
achievable set of recommendations on climate-related financial disclosures.
TCFD Recommendations
The TCFD Recommendations, first launched in 2017, are designed to encourage consistent and comparable
reporting on climate-related risks and opportunities by companies to their stakeholders. The TCFD
Recommendations are structured around four content pillars: (i) Governance; (ii) Strategy; (iii) Risk
Management; and (iv) Metrics & Targets; and eleven recommendations to support effective disclosure under
each pillar.
Why it is important to respond to the TCFD recommendations now?
The UK’s Green Finance Strategy sets out the Government’s expectations for all listed companies to disclose
in line with the TCFD recommendations by 2022.
CDP has already amended its disclosures to include a section related to the risks and opportunities arising
from climate change, which is based on the TCFD recommendations.
According to a 2019 TCFD status report, 340 investors with nearly $34 trillion in assets under management
are asking companies to report under the recommendations.
(2) CORPORATE INFORMATION
For the details please refer to the Note 1 in the annual consolidated financial statements.
(3) GOVERNANCE
In relation to the above trend and legislation, the Company finds itself, as a premium traded firm, in the
reporting category. However, the intention was to regulate the way the largest firms in the UK are reporting in
relation to the climate change. The legislation clearly specifies “companies with over 500 employees and £500
million in turnover”.
The Company with its five employees, directors and the 1 land it holds, clearly falls far behind the regulator’s
criteria for reporting firms. The Company does not have its own offices, but sharing two offices in business
hubs.
The Company is a very small company and cannot be compared with the above-mentioned giant scales. In
fact, we are under the impression, the Company has by far an insignificant impact over the climate change,
compared even with a micro company.
Just like the rest of the western world, the Company takes climate changes very seriously and is taking
measures in order to increase its climate change orientation and to decrees negative effect on it in areas that
are in the company’s control.
Previously, the Company, was not very active on the topic of global warming, mainly due to is type and limited
operations. Due to new reporting requirements and world trends, the Company is much more aware of the
topic and is taking a proactive approach.
The Company is carefully looking into its own operation and constantly strives to reduce carbon footprint and
improve the impact of its operations have on the environment, even though, that impact is negligible.
The Company has written an environmental sustainability policy that is being reviewed and adopted in Q4 of
2022. That policy creates a commitment of the Company to global climate change and will influence the
company’s operations in favor of minimalizing carbon footprint.
(4) STRATEGY
As the board of the Company is made aware of the climate change issues and the TFCD reporting, it starts to
embed climate changing considerations into board daily decisions.
The first challenge was to study the issue and the board empowered the Chairman to study the issue and
educate the Board.
The second challenge, was to create an environmental sustainability policy that will set the company in the
right direction in terms of climate change countering.
Despite of the very limited current level of operations the company experiences, a provisional environmental
policy was drafted and will be adopted by the Board on next Board meeting.
This policy will add the environmental consideration to every business decision the company takes in the
future.
As the Company is in a runoff mode, climate related risks are potentially relevant in the short and maybe
medium time frame.
In both terms, the company sees a small risk of higher level of maintenance attributed to the four plots it has,
due to extreme weather events. These are included but not limited to: cleaning, evacuating and maintaining
the plots.
The first impact of environmental study and climate change, was on the company’s Board. After the adoption
of the environmental policy by the Board, the Company will observe the management taking actions
accordingly and having the environment in mind in daily operations, according to the new policy.
In light if the above mentioned, resilience, is very limited to absence, when taking into account the current
operations of the Company.
(5) RISK MANAGEMENT
Risks analysis requires a sufficient amount of data in order to produce an accurate analysis.
In the Company case, there is only so much data that can be used for such a study. While the company does
not build, develop or produce anything, the risks study is very limited.
Physical risks
As long as the Company is not developing its lands, there is no value chain that might be affected by storms,
extreme weather or weather changes. Not even whether related disasters.
The Company does not see how changes such as floods, extreme waves or droughts can have a major impact
on its office related work.
The consequences of the above phenomena are limited to an increase in either cooling or warming expenses.
One low factor risk is identified in an extreme weather condition, when any of a Company’s plot is damaged
due to such weather. That will lead to some expenses of cleaning, evacuating and restoring expenses.
A further related risk study is advised to the BOD to be performed in the current lands where the Company
have the four plots. Any new risk identified locally, will be imbedded to the financial planning ahead.
Transition risks
Just like Physical risks, transitional risks are minimized when dealing with a five office n]based people, rather
than a productive firm with mage processes and output.
Figure 1 – non-exhaustive list of climate-related risks and opportunities:
Risk type
Risk example
Opportunity example
Technology
Technology related risks are considered
very limited in affecting the Company
operations at the moment.
The Company does not see any
opportunity in technology in relations to
current operations.
Policy
Regulatory changes can only have an
impact of the way the Company reports at
the moment.
Local regulatory changes may affect to
some effect, some of the plots the
Company holds.
Currently, the Company does not identify
any opportunity in weather related policy
change.
Market
In current situation, where the Company
operates as B to B, rather than B to C, it
does not recognize a market relevant risk.
The Company is not operating in B to C
markets and therefore the market
opportunity is irrelevant.
Legal and
reputational
A climate-related incident affecting
an industry can and might affect a more
comprehensive look into the plots the
Company has.
The Company does not recognize an
opportunity in this section.
(6) METRIC AND TARGETS
Taking into account the limited scope of company’s operations, it is clear that the metrics and targets are
somewhat irrelevant for these operations. So is the disclosing of scopes 1-3 and the GHG emission. One
needs sufficient operations in order to be able to produce, analyse and counter measures. The Company is by
far not having significant operations in order to demonstrate the study and the cure. The Company’s impact
on climate change is negligible.
Key highlights since the period end:
Tax authority investigation
On March 27, 2023 the Company announced that the Tax Authority of the state of India initiated certain actions
at the office of Elbit Plaza India Management Services Private Limited (which is a private company wholly
owned by Elbit Plaza India Real Estate Holdings Limited) (hereinafter: "EPM") including a search and seizer
of certain documents relating to EPM's activities/transactions in India in recent years. At this stage it is not yet
clear what the purpose of the investigation is, including whether EPM is the purpose of the investigation or
whether the investigation is related to any third party.
Commenting on the results, executive director Ron Hadassi said:
“Our active focus has continued to centre on asset disposals, accordingly we have managed to execute the
sale of our project in Bangalore, India following which the company received an amount of approximately EUR
7.2 million. In connection with Casa Radio Project, the Company has submitted with the International Centre
for Settlement of Investment Disputes (“ICSID”) a Request for Arbitration (the “Request”) against Romania for
compensation of losses incurred due to failure of the Romanian authorities to cooperate, negotiate and adjust
the PPP agreement.”
For further details, please contact:
Plaza
Ron Hadassi, Executive Director 972-526-076-236
Notes to Editors
Plaza Centers N.V. (www.plazacenters.com) is listed on the Main Board of the London Stock Exchange, on
the Warsaw Stock Exchange (LSE: “PLAZ”, WSE: “PLZ/PLAZACNTR”) and, on the Tel Aviv Stock Exchange.
Forward-looking statements
This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial)
performance and position. Such statements are based on current expectations, estimates and projections of
Plaza Centers N.V. and information currently available to the Company. Plaza Centers N.V. cautions readers
that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should
be understood that many factors can cause actual performance and position to differ materially from these
statements.
MANAGEMENT STATEMENT
During 2022 the management’s focus has been on executing of the transaction for the sale of Bangalore
project in India. The Company also continued cost reductions and partial repayments to its bondholders.
In connection with Casa Radio Project, as stated above, the Company submitted the Request and we hope
this will help us to unblock the current status of the Project. In addition, on December 13, 2022 the Company
and AFI Europe N.V. (“AFI Europe”) agreed to extend the Long Stop Date, which is the date on which the
parties will execute a share purchase agreement, subject to the satisfaction of conditions precedent (the
"SPA"), until December 31, 2023.
Due to the board and management estimation that the Company is unable to serve its entire debt according
to the current redemption date (July 1, 2023) in its current liquidity position, the Company intends to request
from the bondholders of both series (Series A and Series B) postponement of the repayment of the remaining
balance of the bonds.
Results
During the year, Plaza recorded a €8.5 million loss attributable to the shareholders of the Company. This is a
decrease compared to the losses reported in 2021 (loss of €27.1 million). The losses were mainly from the Net
Finance Costs which were decreased to €8.9 million in 2022, from €24.2 million in 2021 mainly due to foreign
currency losses on bonds (including inflation) and interests’ expenses accrued on the debentures (partly due
to penalty interest calculated on the deferred principal); and from administrative expenses and share in results
of equity-accounted investees.
Total result of operations excluding finance income and finance cost was a gain of €0.4 million in 2022
compared to the reported loss of €2.8 million in 2021.
The consolidated cash position (cash on standalone basis as well as fully owned subsidiaries) as of 31
December 2022 was €7.8 million (31 December 2021: €4.7 million).
Liquidity & Financing
Plaza ended the period with a consolidated cash position of circa €7.8 million, compared to €4.7 million at the
end of 2021.
As of December 31, 2022, the Group’s outstanding obligation to bondholders (including accrued interests) are
app. €128.6 million.
As disclosed by the Company in Note 8 in the annual consolidated financial statements, the Company was not
able to meet its final redemption obligation to its (Series A and Series B) bondholders, due on July 1, 2022.
On June 16, 2022 the bondholders of Series A and Series B approved to postpone the final redemption date
to January 1, 2023.
On November 8, 2022, the bondholders of Series A and Series B approved: (i) to postpone the final redemption
date to July 1, 2023; (ii) that on January 1, 2023 the Company will pay to its bondholders a partial interest
payment in the total amount of EUR 2,000,000 and to deferral all other unpaid interest. The amount reflected
6.08% of accrued interest as of that date.
Due to the board and management estimation that the Company is unable to serve its entire debt according
to the current bonds repayment schedule in its current liquidity position, the Company intends to request the
bondholders of both series for postponement of the repayment of the remaining balance of the bonds.
However, there is an uncertainty if the bondholders will approve the request. In the case that the bondholders
would declare their remaining claims to become immediately due and payable, the Company would not be in
a position to settle those claims and would need to enter to an additional debt restructuring or might cease to
be a going concern.
Strategy and Outlook
The Company’s priorities are focused on efforts to unblock the current status of the Casa Radio project. The
Company also intends to seek for bondholders’ approval for postponement of the repayment of the bonds.
OPERATIONAL REVIEW
Over the course of the year to date, Plaza has continued to make progress against its operational and strategic
objectives. The Company’s current assets are summarized in the table below (as of balance sheet date):
Asset/
Project
Location
Nature of asset
Plaza’s
effective
ownership
%
Status
Casa Radio
Bucharest,
Romania
Mixed-use retail, hotel
and leisure plus office
scheme
75
for further information refer to note 5 (2) in
the annual consolidated financial
statements )
FINANCIAL REVIEW
Results
Finance income of €2.8 million in 2022 was mainly due to foreign exchange movements on the debentures,
which did not occur in the end of December 31, 2021.
Finance costs decreased from €24.2 million in 2021 to €11.7 million in 2022. The main components of finance
costs were foreign currency losses on bonds (including inflation) and interests’ expenses accrued on the
debentures which includes also penalty interest calculated on the deferred principal.
As a result, the loss for the period amounted to circa €8.5 million in 2022, representing a basic and diluted loss
per share for the period of €1.24 (2021: €3.95 loss).
Balance sheet and cash flow
The balance sheet as of 31 December 2022 showed total assets of €8.3 million compared to total assets of
€9.8 million at the end of 2021, mainly as a result of the decrease in Equity accounted investees and
administrative expenses and costs of operations.
The consolidated cash position (cash on standalone basis as well as fully owned subsidiaries) as of 31
December 2022 increased to €7.8 million (31 December 2021: €4.7 million).
Investments in equity accounted investee companies has decreased by €5.05 million to circa €0.06 million (31
December 2021: €5.11 million) mainly as a result of cash distribution and a result on sale of Bangalore project.
As of 31 December 2022, Plaza has a balance sheet liability of app. €98.7 million from issuing bonds on the
Tel Aviv Stock Exchange. Additionally, Plaza recorded provision for interests on bonds as of December 31,
2022, in amount of €29.9 million (31 December 2021: €21.7 million).
Disclosure in accordance with Regulation 10(B)14 of the Israeli Securities Regulations (periodic and
immediate reports), 5730-1970
1. General Background
According to the abovementioned regulation, upon existence of warning signs as defined in the regulation, the
Company is obliged to attach its report’s projected cash flow for a period of two years, commencing with the
date of approval of the report ("Projected Cash Flow").
The material uncertainty related to going concern was included in the independent auditors’ report and in Note
1(b) in the consolidated financial statements as of December 31, 2022. In light of the material uncertainty that
the SPA between the Company and AFI Europe N.V. will eventually be executed and/or that the transaction
will be consummated as presented above or at all (refer to Note 5 in the consolidated financial statements as
of December 31, 2022), the board and management estimates that the Company is unable to serve its entire
debt according to the due date the bond holders approved to postpone the final redemption date. Accordingly,
it is expected that the Company will not be able to meet its entire contractual obligations in the following 12
months.
With such warning signs, the Company is providing projected cash flow for the period of 24 months following
for the coming two years.
2. Projected cash flow
The Company has implemented the restructuring plan that was approved by the Dutch Court on July 9, 2014
(the “Restructuring Plan”). Under the Restructuring Plan, principal payments under the bonds issued by the
Company and originally due in the years 2013 to 2015 were deferred for a period of four and a half years, and
principal payments originally due in 2016 and 2017 were deferred for a period of one year. During first three
months 2017, the Company paid to its bondholders a total amount of NIS 191.7 million (EUR 49.2 million) as
an early redemption. Upon such payments, the Company complied with the Early Prepayment Term (early
redemption at the total sum of at least NIS 382 million) and thus obtained a deferral of one year for the
remaining contractual obligations of the bonds.
In January 2018, a settlement agreement was signed by and among the Company and the two Israeli Series
of Bonds.
On November 22, 2018 the Company announced based on its current forecasts, that the Company expected
to pay the accrued interest on Series A and Series B Bonds on December 31, 2018, in accordance with the
repayment schedule determined in the Company's Restructuring Plan and Settlement Agreement with Series
A and Series B Bondholders from 11 January 2018 (the “Settlement Agreement”). The Company noted that it
will not meet its principal repayment due on December 31, 2018 as provided for in the Settlement Agreement.
On February 18, 2019 the Company paid principal of circa EUR 250,000 and Penalty interest on arrears of
EUR 150,000 following the bondholder’s approval to defer principal repayment to July 1, 2019.
In addition, during June 2019 the bondholders approved the deferral of the full payment of principal due on
July 1, 2019 and of 58% ("deferred interest amount") of the sum of interest (consisting of the total interest
accrued for the outstanding balance of the principal, including interest for part of the principal payment which
was deferred as of February 18, 2019, plus interest arrears for part of the principal which was fixed on February
18, 2019 and was not paid by the Company and all in accordance with the provisions of the trust deed; "the
full amount of interest"), the effective date of which is June 19, 2019, and the payment date was fixed as of
July 1, 2019. The company paid on the said date a total amount of circa EUR 1.17 million, which is only 42%
of the full amount of interest.
On July 11, 2019, the Company announced that its Romanian subsidiary had signed a binding agreement to
sell a land in Romania, and that the Company would use part of the proceeds now received by it EUR 0.75
million (hereinafter: "the amount payable"), in order to make a partial interest payment to the bondholders
(Series A) and (Series B) issued by the Company. The payment required changes in the repayment schedule
and amendments of the trust deeds which was approved unanimously by the Bondholders. The amount
payable was paid on August 14, 2019 and reflects 30% of accrued interest as of that date.
On November 17, 2019, the bondholders of Series A and Series B approved a deferral of all the scheduled
Principal payment and app. 87% of deferral of the scheduled Interest payment, both, as of December 31, 2019
to July 1, 2020.
On May 4, 2020, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date
to January 1, 2021 of all the scheduled Principal; (ii) that on July 1, 2020 the Company will pay to its
bondholders a partial interest payment in the total amount of EUR 250,000 and to deferral all other unpaid
scheduled Interest payment.
Following receiving the Settlement Amount related to the final price adjustment of the sale of Belgrade Plaza
and in light of the potential negative impact of the Covid-19 on the possibility to receive future proceeds from
the Company's plots in India, the Company decided to increase the amount to be paid to the bondholders on
July 1, 2020, from EUR 250,000 to EUR 500,000. The amount reflected 6.74% of accrued interest as of that
date.
On November 12, 2020, the bondholders of Series A and Series B approved: (i) to postpone the final
redemption date to July 1, 2021 of all the scheduled Principal; that on January 1, 2021 the Company will pay
to its bondholders a partial interest payment in the total amount of EUR 200,000 and to deferral all other unpaid
scheduled Interest payment. The amount reflected 1.84% of accrued interest as of that date.
On April 12, 2021, the bondholders of Series A and Series B approved: (i) to postpone the final redemption
date to January 1, 2022; (ii) that on July 1, 2021 the Company will pay to its bondholders a partial interest
payment in the total amount of EUR 125,000 and to deferral all other unpaid interest. The amount reflected
0.84% of accrued interest as of that date.
On November 25, 2021, the bondholders of Series A and Series B approved: (i) to postpone the final
redemption date to July 1, 2022; (ii) that on January 1, 2022 the Company will pay to its bondholders a partial
interest payment in the total amount of EUR 200,000 and to deferral all other unpaid interest. The amount
reflected 0.92% of accrued interest as of that date.
On June 16, 2022, the bondholders of Series A and Series B approved to postpone the final redemption date
to January 1, 2023.
On November 8, 2022, the bondholders of Series A and Series B approved: (i) to postpone the final redemption
date to July 1, 2023; (ii) that on January 1, 2023 the Company will pay to its bondholders a partial interest
payment in the total amount of EUR 2,000,000 and to deferral all other unpaid interest. The amount reflected
6.08% of accrued interest as of that date.
The materialization, occurrence consummation and execution of the events and transactions and of the
assumptions on which the projected cash flow is based, including with respect to the proceeds and timing
thereof, although probable, are not certain and are subject to factors beyond the Company's control as well as
to the consents and approvals of third parties and certain risks factors. Therefore, delays in the realization of
the Company's assets and investments or realization at a lower price than expected by the Company, as well
as any other deviation from the Company's Assumptions (such as additional expenses due to suspension of
trading, delay in submitting the statutory reports etc.), could have an adverse effect on the Company's cash
flow and the Company's ability to service its indebtedness in a timely manner.
In € millions
2023
2024
Cash - Opening Balance
(2)
7.77
4.62
Proceeds from sales transactions, price adjustments
(6)
-
-
Proceeds from other income
(7)
0.15
-
Total Sources
7.92
4.62
Debentures – principal
-
-
Debentures - interest
(3)
1.0
-
Other operational costs
(4)
1.5
1.5
G&A expenses (including property maintenance)
(5)
0.8
0.8
Total Uses
3.3
2.3
Cash - Closing Balance
(2)
4.62
2.32
(1) The above cash flow is subject to the approval of the bondholders of both series to postponement of the repayment of the remaining
balance of the bonds which are due on July 1, 2023.
(2) Total cash on standalone basis as well as fully owned subsidiaries.
(3) The amount includes the payment the Company forecasts to distribute in 2023, which is subject to the approval of the bondholders
of both series.
(4) Includes provision for legal costs/Arbitrations.
(5) Total general and administrative expenses includes both cost of the Company and of all the subsidiaries.
(6) The Company did not include any proceeds from pre-sale agreement signed with AFI, due to the uncertainty as to the fulfilment of
the conditions set out in the preliminary agreement as mentioned in Note 5(1)(e) of the consolidated financial statements as of
31.12.2022, thus there can be no certainty an SPA will eventually be executed and/or that the Transaction will be completed.
(7) Proceeds in amount of EUR 0.15 million from expected settlement agreement which is expected to be conducted with two Directors
who are the defendants in the lawsuit described in Note 16(b)(5) of the consolidated financial statements.
Ron Hadassi
Executive Director
29 March 2023
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
IN 000 EUR
CONTENTS
Page
Independent Auditors' report
2 - 6
Consolidated statement of financial position
7
Consolidated statement of profit or loss
8
Consolidated statement of comprehensive income
9
Consolidated statement of changes in equity
10
Consolidated statement of cash flows
11
Notes to the consolidated financial statements
12 - 55
- - - - - - - - - - - - - - - - - - - - - -
Report on the Audit of the Consolidated Financial Statements
Independent Auditors' Report
To the shareholders of Plaza Centers N.V.
Opinion
We have audited the consolidated financial statements of Plaza Centers N.V. and its subsidiaries ("the
Company"), which comprise the consolidated statement of financial position as at December 31, 2022 and the
consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at December 31, 2022, and its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union.
Basis for Opinion
As mentioned in note 2(a) in the consolidated financial statements, these consolidated financial statements,
with our report included, are not intended for Netherlands statutory filing purposes.
We conducted our audit in accordance with International Standards on Auditing. Our responsibilities under
those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Company in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) ("IESBA Code"), and we have fulfilled our
other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw your attention to Note 1(b) in the consolidated financial statements which discloses the Company's
financial position and board and management's future plans to meet its financial liabilities.
The board and management estimate that the Company is unable to serve its entire debt to bondholders
according to the current repayment schedule in total amount of EURO 128.6 million as of December 31, 2022
which is due on July 1, 2023). The Company is dependent on the bondholders' approval for any postponement
of payments. In addition, the Company is not in compliance with the main Covenants as defined in the
restructuring plan (for more details refer also to Note 8), hence in default which could trigger early repayment
by the bondholders.
The abovementioned conditions indicates the existence of a material uncertainty that casts significant doubt
about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
Emphasis of Matter
We draw your attention to Note 5(3)(c) which discloses the risk that the public authorities may seek to
terminate the Public Private Partnership Agreement ("PPP Agreement") and/or relevant permits and/or could
seek to impose delay penalties on the basis of perceived breaches of the Company's commitments under the
PPP Agreement.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the consolidated financial statements for the year ended December 31, 2022. Except for the matter described
in the Material Uncertainty Related to Going Concern section, we have determined that there are no other
matters to communicate in our report.
Other information included in The Company’s 2022 Annual Report
Other information consists of the information included in the Annual Report, other than the financial
statements and our auditor’s report thereon. Management is responsible for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with International Financial Reporting Standards, as adopted by the European Union, and for
such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
The board of directors is responsible for overseeing the Company's financial reporting process.
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with International Standards on Auditing will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with International Standards on Auditing, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors' report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
We also provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the board of directors, we determine those matters that were of most
significance in the audit of the consolidated financial statements for the year ended December 31, 2022 and
are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The partner in charge of the audit resulting in this independent report is Mr. Itay Bar-Haim.
March 28, 2023
KOST FORER GABBAY & KASIERER
Tel Aviv, Israel
A member of Ernst & Young Global
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN '000 EUR
December 31,
Note
2022
1202
ASSETS
Cash and cash equivalents
3
Restricted bank deposits
Prepayments and other receivables
Total current assets
Equity - accounted investees
6
Total non-current assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Bonds at amortized cost
8
Accrued interests on bonds
8
Trade payables
Other liabilities
7
Total current liabilities
Share capital
10
Translation reserve
10
(30,742 )
(30,838 )
Other reserves
(19,983 )
(19,983 )
Share based payment reserve
10
Share premium
10
Accumulated deficit
(394,891 )
(386,394 )
Total equity
(120,788 )
(112,387 )
Total equity and liabilities
The notes are an integral part of the consolidated financial statements.
March 28, 2023
Ron Hadassi
David Dekel
Date of approval of the
financial statements
Executive Officer
Chairman of the Board of
Directors
CONSOLIDATED STATEMENT OF PROFIT OR LOSS IN '000 EUR
Year ended
December 31,
Note
2022
2021
Gains and other
Other income
4
Total gains
Total revenues and gains
Expenses and losses
Cost of operations
(81 )
(77 )
Share in results of equity-accounted investees
6
(1,903 )
Administrative expenses
13
(1,454 )
(1,243 )
Other expenses
(14 )
Expenses and losses
(3,237 )
Finance income
14
Finance costs
14
(11,724 )
(24,238 )
Finance income (costs), expenses and losses
(8,678 )
(27,475 )
Loss before income tax
(8,497 )
(27,089 )
Loss for the year
(8,497 )
(27,089 )
Loss attributable to:
Equity holders of the Company
(8,497 )
(27,089 )
Earnings per share
Basic and diluted loss per share (EUR)
11
(1.24
(3.95
The notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IN '000 EUR
Year ended
December 31,
2022
2021
Loss for the year
(8,497 )
(27,089 )
Other comprehensive income
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences - foreign operations (Equity accounted
investees)
Other comprehensive profit for the year, net of income tax
Total comprehensive loss for the year
(8,401 )
(26,635 )
The notes are an integral part of the consolidated financial statements.
- 10 -
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN '000 EUR
Share
capital
Share
Premium
Share based
payment
reserves
Translation
Reserve
Capital
reserve from
acquisition of
non-
controlling
interests
Accumulated
deficit
Total
Balance on January 1, 2021
(31,292 )
(19,983 )
(359,305 )
(85,752 )
Comprehensive income for the year
Net loss for the year
(27,089 )
(27,089 )
Foreign currency translation differences
Total comprehensive loss for the year
(27,089 )
(26,635 )
Balance on December 31, 2021
(30,838 )
(19,983 )
(386,394 )
(112,387 )
Comprehensive income for the year
Net loss for the year
(8,497 )
(8,497 )
Foreign currency translation differences
Total comprehensive loss for the year
(8,497 )
(8,401 )
Balance on December 31, 2022
(30,742 )
(19,983 )
(394,891 )
(120,788 )
The notes are an integral part of the consolidated financial statements.
PLAZA CENTERS N.V.
- 11 -
CONSOLIDATED STATEMENT OF CASH FLOWS IN '000 EUR
Year ended
December 31,
2022
2021
Cash flows from operating activities
Loss for the year
(8,497 )
(27,089 )
Adjustments necessary to reflect cash flows used in operating activities
Net finance costs
Share of loss/gain of equity-accounted investees, net of tax
(1,786 )
Cash flow from operations before changes in working capital
(1,354 )
(948 )
Changes in:
Trade receivables
(10 )
Other receivables
(12 )
Trade payables
(82 )
Other liabilities, related parties' liabilities and provisions
Cash flow from operations
(85 )
Interest paid
(2,000 )
(325 )
Net cash used in operating activities
(3,439 )
(1,154 )
Cash from investing activities
Distribution received from Equity Accounted Investees
Investment in restricted deposit
(422 )
Net cash provided by investing activities
Net cash used in financing activities
Increase in cash and cash equivalents during the year
Effect of movement in exchange rate fluctuations on cash held
(42 )
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
The notes are an integral part of the consolidated financial statements.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 12 - -
NOTE 1: - CORPORATE INFORMATION
a. Plaza Centers N.V. ("the Company" and together with its subsidiaries, "the Group") was
incorporated and is registered in the Netherlands. The Company's registered office is at
Pietersbergweg 283, 1105 BM, Amsterdam, the Netherlands. In past the Company
The consolidated financial statements for each of the periods presented comprise the
Company and its subsidiaries (together referred to as the "Group") and the Group's interest
in jointly controlled entities.
The Company is listed on the premium segment of the Official List of the UK Listing
Authority and to trading on the main market of the London Stock Exchange ("LSE"), the
Warsaw Stock Exchange ("WSE") and on the Tel Aviv Stock Exchange ("TASE").
Until December 19, 2018 the Company's immediate parent company was Elbit Ultrasound
(Luxemburg) B.V./ s.a.r.l ("EUL"), which held 44.9% of the Company's shares. At that
date EUL informed the Company that it had signed a trust agreement according to which
EUL will deposit all of its outstanding investment with a trustee and no longer consider
itself to be the controlling shareholder of the Company. As of December 31, 2022 EUL
holds 20.06% of the Company’s shares (please refer to note 17 regarding the sale of app.
0.5% of the Company’s shares held by EUL).
b. Going concern and liquidity position of the Company:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 13 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation of these financial statements:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 14 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The consolidated financial statements were authorized to be issued by the Board of
Directors on March 28, 2023.
b. Functional and presentation currency:
c. Investment property vs. trading property classification:
The Group has designated all its properties for sale. The Company is actively seeking
buyers and does not hold the properties with the intention to gain from capital
appreciation. Therefore, management also believes that these are appropriately classified
as trading properties.
d. Functional and presentation currency
e. Operating cycle determination:
The Group is unable to clearly identify its actual operating cycle with respect to trading
properties. As such, the Group's operating cycle relating to trading properties and
corresponding liabilities is 12 months. Trading properties and liabilities associated
therewith are presented as non-current assets and non-current liabilities, respectively.
f. Use of estimates and judgments:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 15 - -
g. Basis of consolidation:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 16 - -
h. Foreign currency:
1. Foreign currency transactions:
2. Foreign operations:
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated into euro at the exchange rates at
the reporting date. The income and expenses of foreign operations are translated into
euro at the exchange rates at the dates of the transactions. Foreign currency
differences are recognised in other comprehensive income, and accumulated in the
translation reserve, except to the extent that the translation difference is allocated to
non-controlling interest.
When a foreign operation is disposed of in its entirety or partially such that control,
significant influence or joint control is lost, the cumulative amount in the translation
reserve related to that foreign operation is reclassified to profit or loss as part of the
gain or loss on disposal.
If the Group disposes of part of its interest in a subsidiary but retains control, then
the relevant proportion of the cumulative amount is reattributed to non-controlling
interest.
When the Group disposes of only part of an associate or joint venture while retaining
significant influence or joint control, the relevant proportion of the cumulative
amount is reclassified to profit or loss.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 17 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
If the settlement of a monetary item receivable from or payable to a foreign operation
is neither planned nor likely to occur in the foreseeable future, then foreign currency
differences arising from such item form part of the net investment in the foreign
operation. Accordingly, such differences are recognised in other comprehensive
income and accumulated in the translation reserve.
3. Index-linked monetary items:
Monetary assets and liabilities linked to the changes in the Israeli Consumer Price
Index ("Israeli CPI") are adjusted at the relevant index at each reporting date
according to the terms of the agreement.
i. Cash equivalents:
Cash equivalents are considered as highly liquid investments, including unrestricted short-
term bank deposits with an original maturity of three months or less from the date of
investment or with a maturity of more than three months, but which are redeemable on
demand without penalty and which form part of the Group's cash management.
j. Financial instruments:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 18 - -
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 19 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
k. Fair value measurement
l. Share capital:
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of
ordinary shares and share options are recognized as a deduction from equity. Income tax
relating to transaction costs of an equity transaction is accounted for in accordance with
IAS 12. Costs attributable to listing existing shares are expensed as incurred.
m. Trading properties:
Trading properties are being designated for sale in the ordinary course of business and as
such are classified as trading properties (inventory) and measured at the lower of cost and
net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs to complete construction and selling expenses. If net realizable value is less
than the cost, the trading property is written down to net realizable value.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 20 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
In each subsequent period, a new assessment is made of net realizable value. When the
circumstances that previously caused trading properties to be written down below cost no
longer exist or when there is clear evidence of an increase in net realizable value because
of changed economic circumstances, the amount of the write-down is reversed so that the
new carrying amount is the lower of the cost and the revised net realizable value.
The amount of any write-down of trading properties to net realisable value and all losses
of trading properties are recognised as a write-down of trading properties expense in the
period the write-down or loss occurs. The amount of any reversal of such write-down
arising from an increase in net realizable value is recognized as a reduction in the expense
in the period in which the reversal occurs.
Costs comprise all costs of purchase, direct materials, direct labor costs, subcontracting
costs and other direct overhead costs incurred in bringing the properties to their present
condition.
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset
are capitalized as part of the costs of the asset. A qualifying asset is an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale. Other borrowing
costs are recognized as an expense in the period in which they incurred.
n. Impairment of non-financial assets:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 21 - -
o. Provisions:
p. Revenue recognition:
Revenue from contracts with customers is recognized when the control over the goods or
services is transferred to the customer. Revenues from trading properties are taken into
account at the moment the trading property is sold. The company considers the moment of
sale being the latest of a) receiving the payment for the trading property; or b) the transfer
of the deed at the public notary. The transaction price is the amount of the consideration
that is expected to be received based on the contract terms, excluding amounts collected on
behalf of third parties (such as taxes).
In determining the amount of revenue from contracts with customers, the Company
evaluates whether it is a principal or an agent in the arrangement. The Company is a
principal when the Company controls the promised goods or services before transferring
them to the customer.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 22 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
In these circumstances, the Company recognizes revenue for the gross amount of the
consideration. When the Company is an agent, it recognizes revenue for the net amount of
the consideration, after deducting the amount due to the principal.
Variable consideration:
The Company determines the transaction price separately for each contract with a
customer. When exercising this judgment, the Company evaluates the effect of each
variable amount in the contract, taking into consideration discounts, penalties, variations,
claims, and non-cash consideration. In determining the effect of the variable consideration,
the Company normally uses the "most likely amount" method described in the Standard.
Pursuant to this method, the amount of the consideration is determined as the single most
likely amount in the range of possible consideration amounts in the contract.
Variable consideration is included in the transaction price only to the extent that it is highly
probable that a significant reversal in the amount of revenue recognized will not occur
when the uncertainty associated with the variable consideration is subsequently resolved.
q. Finance income and cost:
Interest income and expense which are not capitalized are recognized in the income
statement as they accrue, using the effective interest method.
r. Income tax:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 23 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
s. Employee benefits:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 24 - -
t. Disclosure of new standards in the period prior to their adoption:
1. Amendment to IAS 1, "Presentation of Financial Statements":
In January 2020, the IASB issued an amendment to IAS 1, "Presentation of Financial
Statements" regarding the criteria for determining the classification of liabilities as
current or non-current ("the Original Amendment"). In October 2022, the IASB
issued a subsequent amendment ("the Subsequent Amendment").
According to the Subsequent Amendment:
• Only covenants with which an entity must comply on or before the reporting
date will affect a liability's classification as current or non-current;
• An entity should provide disclosure when a liability arising from a loan
agreement is classified as non-current and the entity's right to defer settlement is
contingent on compliance with future covenants within twelve months from the
reporting date. This disclosure is required to include information about the covenants
and the related liabilities. The disclosures must include information about the nature
of the future covenants and when compliance is applicable, as well as the carrying
amount of the related liabilities. The purpose of this information is to allow users to
understand the nature of the future covenants and to assess the risk that a liability
classified as non-current could become repayable within twelve months.
Furthermore, if facts and circumstances indicate that an entity may have difficulty in
complying with such covenants, those facts and circumstances should be disclosed.
According to the Original Amendment, the conversion option of a liability affects
the classification of the entire liability as current or non-current unless the conversion
component is an equity instrument.
The Original Amendment and Subsequent Amendment are both effective for annual
periods beginning on or after January 1, 2024 and must be applied retrospectively.
Early application is permitted.
The Company is evaluating the possible impact of the Amendment on its current
loan agreements.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 25 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2. Amendment to IAS 8, "Accounting Policies, Changes to Accounting Estimates and
Errors":
In February 2021, the IASB issued an amendment to IAS 8, "Accounting Policies,
Changes to Accounting Estimates and Errors" ("the Amendment"), in which it
introduces a new definition of "accounting estimates".
Accounting estimates are defined as "monetary amounts in financial statements that
are subject to measurement uncertainty". The Amendment clarifies the distinction
between changes in accounting estimates and changes in accounting policies and the
correction of errors.
The Amendment is to be applied prospectively for annual reporting periods
beginning on or after January 1, 2023 and is applicable to changes in accounting
policies and changes in accounting estimates that occur on or after the start of that
period. Early application is permitted.
The Company is evaluating the effects of the Amendment on its financial statements.
3. Amendment to IAS 12, "Income Taxes":
In May 2021, the IASB issued an amendment to IAS 12, "Income Taxes" ("IAS 12"),
which narrows the scope of the initial recognition exception under IAS 12.15 and
IAS 12.24 ("the Amendment").
According to the recognition guidelines of deferred tax assets and liabilities, IAS 12
excludes recognition of deferred tax assets and liabilities in respect of certain
temporary differences arising from the initial recognition of certain transactions.
This exception is referred to as the "initial recognition exception". The Amendment
narrows the scope of the initial recognition exception and clarifies that it does not
apply to the recognition of deferred tax assets and liabilities arising from transactions
that are not a business combination and that give rise to equal taxable and deductible
temporary differences, even if they meet the other criteria of the initial recognition
exception.
The Amendment applies for annual reporting periods beginning on or after January
1, 2023, with earlier application permitted. In relation to leases and decommissioning
obligations, the Amendment is to be applied commencing from the earliest reporting
period presented in the financial statements in which the Amendment is initially
applied. The cumulative effect of the initial application of the Amendment should be
recognized as an adjustment to the opening balance of retained earnings (or another
component of equity, as appropriate) at that date.
The Company estimates that the initial application of the Amendment is not expected
to have a material impact on its financial statements.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 26 - -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
4. Amendment to IAS 1 - Disclosure of Accounting Policies:
In February 2021, the IASB issued an amendment to IAS 1, "Presentation of
Financial Statements" ("the Amendment"), which replaces the requirement to
disclose 'significant' accounting policies with a requirement to disclose 'material'
accounting policies. One of the main reasons for the Amendment is the absence of a
definition of the term 'significant' in IFRS whereas the term 'material' is defined in
several standards and particularly in IAS 1.
The Amendment is applicable for annual periods beginning on or after January 1,
2023. Early application is permitted.
The Company is evaluating the effects of the Amendment on its financial statements.
5. Amendment to IFRS 16, "Leases":
In September 2022, the IASB issued an amendment to IFRS 16, "Leases" ("the
Amendment"), which provides guidance on how a seller-lessee should measure the
lease liability arising in a sale and leaseback transaction with variable lease payments
that do not depend on an index or rate. The seller-lessee has to choose between two
accounting policies for measuring the lease liability on the inception date of the
lease. The accounting policy chosen must be applied consistently.
The Amendment is applicable for annual periods beginning on or after January 1,
2024. Early application is permitted. The Amendment is to be applied
retrospectively.
The Company is evaluating the effects of the Amendment on its financial statements.
NOTE 3:- CASH AND CASH EQUIVALENTS
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 27 - -
NOTE 4:- OTHER INCOME
NOTE 5:- TRADING PROPERTIES
(1) Casa Radio:
(a) General:
In 2006 the Company entered into a PPP agreement with the Government of
Romania to develop the Casa Radio site in the city center of Bucharest ("Project")
and acquired 75% interest in the joint venture company developing the Project
("Project SPV"). After signing the PPP agreement, the Company holds indirectly
75% of the shares in the Project SPV, the remaining shares are held by the Romanian
authorities (through CNI, a Romanian company ultimately owned by the Romania
authorities)(15%) and a third-party private investor (10%).
Pursuant to the PPP agreement, the Project SPV was granted development and
exploitation rights in relation to the site for a period of 49 years, starting December
2006 (34 years remaining at the end of the reporting period). As part of its obligations
under the PPP agreement, the Project SPV has committed to construct a public
authority building ("PAB") measuring approximately 11.000 square meters for the
Romanian Government at its own cost.
Large scale demolition, design and foundation works were financed by loans given
to the Project SPV by the Company. These works were performed on site until 2010.
Construction and development were put on hold due to difficulties procuring further
financing because of the global financial crisis and later, as well as, the lack of
progress in the renegotiation of the PPP agreement with the Romanian authorities,
as detailed in subsection (c) below. These circumstances (and mainly the
bureaucratic deadlock with the Romanian authorities to deal with the issues specified
below) caused the Project SPV not to meet the development timeline of the Project
as specified in the PPP agreement. However, management believes that it had
legitimate reasons for the delays in this timeline, as discussed in subsection (c)
below.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 28 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
(b) Obtaining of the Detailed Urban Plan ("PUD") permit:
The Project SPV obtained the PUD for the Project in September 2012. On December
13, 2012, the Court took note of the waiver of the claim submitted by certain
plaintiffs and rejected the litigation aiming to cancel the approval of the Zonal Urban
Plan ("PUZ") for the Project. The Court decision is irrevocable.
(c) Discussions with the Romanian authorities:
Following the Court decision with respect to the PUZ, the Project SPV was required
to submit a request for building permits within 60 days from the approval date of the
PUZ/PUD and commence development of the Project within 60 days after obtaining
the building permits. The building permits have not been obtained.
Due to substantial differences between the approved PUD and stipulations in the PPP
agreement and changes in EU law concerning environmental considerations in
buildings used by public bodies, the Project SPV attempted to renegotiate the future
development of the Project with the Romanian authorities on items such as timetable,
structure, milestones and adaptation of the PAB development to the current EU
requirements. Despite many notifications sent to the Romanian authorities,
expressing a wish to renegotiate the existing PPP agreement, no major breakthrough
has been achieved. The Company may be subject to significant delay penalties under
the terms of the PPP agreement if it is determined that the Company was at fault in
causing the delays.
Because of the failure of the Romanian authorities to cooperate, negotiate and adjust
the PPP agreement, the Project SPV was not able to meet its obligations under the
PPP agreement. This resulted in a situation where the Project SPV could not "de
facto" continue the execution of the Project and created a risk that the Romanian
authorities could attempt to terminate the PPP agreement and/or to impose penalties
on the Company and the Project SPV. As of the date of approval of these
consolidated financial statements, the Project SPV has not received any termination
notification from the Romanian authorities.
Still, in the case of termination of the PPP agreement, any disputes regarding the
relationship and compensation between the parties is to be determined by way of
arbitration. Management, believes that, in the case of termination, the Company has
a good case to claim compensation for damages.
The Romanian authorities undertook to discuss in good faith the restructuring of the
Project and the PPP agreement in situations where significant unexpected
circumstances arise. Further, the unresponsiveness of the Romanian authorities is a
violation of the general undertaking to support the Project SPV in the execution of
the Project as agreed in the PPP agreement.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 29 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
Management has taken a number of steps in order to unblock the development of the
project and mitigate the risk of termination of the PPP agreement, including
commencing a process to identify third party investors willing and capable to join in
the development of the Project and/or potential buyers of the Company’s interest in
the Project. Management believes that reputable investors with considerable
financial strength can enhance negotiation position vis-à-vis the Romanian
authorities and assist in advancing an amicable agreement with the relevant
authorities with respect to the development of the Project. As a result of the
Company’s ongoing efforts, a pre-sale agreement for the sale of its shareholding in
the Project SPV and its interests in the Project was signed on 3 July 2019 (see
subsection (e) below).
(d) Provision in respect of PAB:
As mentioned in point (a) above, when the Company entered into an agreement to
acquire 75% interest in the Project SPV it assumed a commitment to construct the
PAB at its own costs for the benefit of the Romanian Government. As detailed in
note 5(2) below, the carrying amount of the trading property was fully written off as
of December 31, 2020. Accordingly, the Company also fully reduced the provision
in respect of the construction of the PAB as of December 31, 2020.
(e) On 3 July 2019 the Company’s wholly owned subsidiary Dambovita Center Holding
B.V (“Dambovita NL”) as seller, the Company as guarantor and AFI Europe N.V.
as buyer entered into a pre-sale agreement for the sale of the shareholding in
Dambovita Center S.R.L (“Dambovita RO”) (the "Pre-Sale Agreement"). Pursuant
to the terms of the Pre-Sale Agreement, AFI Europe N.V. shall carry out a due
diligence review which shall be completed no later than 5 September 2019 following
which, subject to the satisfaction of the other Conditions precedent in the Pre-Sale
Agreement, the parties to the Pre-Sale Agreement will execute a share purchase
agreement in the short form being Annex 3 to the Pre-Sale Agreement (the "SPA")
and an intragroup loan assignment/novation agreement.
Conditions precedent in the Pre-Sale Agreement comprise inter alia (i) the
satisfactory completion of a due diligence investigation by AFI Europe N.V. by the
latest on 5 September 2019; (ii) the Romanian competition council having issued
competition approval for the transaction; (iii) publication of the contemplated sale
of the shares in Dambovita RO by Dambovita NL in the Official Gazette of the
Romanian Government and the lapse of a 30-day objection period with no opposition
being lodged; (iv) no pending or imminent material adverse change (which includes
insolvency of Dambovita RO, termination of the PPP Agreement or a significant
amendment of the terms and conditions of the PPP Agreement rendering the
fulfilment thereof more onerous; (v) issuance of a Government Decision confirming
that Dambovita NL may transfer the shares to AFI Europe N.V.(or any of its
affiliates) and that the Company and Elbit Imaging Ltd. may transfer their rights and
obligations under the PPP Agreement to AFI Europe N.V.(vi); amendment of the
PPP Agreement in order to transfer the rights of Elbit Imaging Limited and the
Company to AFI Europe N.V.; (vii) obtaining a written confirmation that the 49
years term of the PPP Agreement shall be calculated, the earliest, starting from 2012,
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 30 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
however, in case the 49 years concession term is calculated from any other previous
date, the parties to the Pre-Sale Agreement will try to find an amicable compromise,
discounting the Purchase Price (as defined below) to reflect the shorter concession
term; in case of such parties’ failure to reach an agreement with respect to the
discounted Purchase Price, AFI Europe N.V. has the right to consider this condition
precedent as not being fulfilled; and (viii) the receipt of approval of the General
Meeting and the Company’s bondholders for the Transaction.
Upon satisfactory completion of the due diligence to be carried out by AFI Europe,
there will be a down payment of EUR 200,000, which shall be repaid upon the
occurrence of (i) cancellation of the PPP Agreement; (ii) initiation of Dambovita
RO’s dissolution due to negative equity requirements; (iii) the existence of elements
of criminal investigation against Dambovita RO, beyond the information as
disclosed to AFI Europe or, if such investigation would be held against Dambovita
RO’s directors of employees, in case this would trigger a significant impact on the
Dambovita Project or (iv) Dambovita NL refuses to proceed to closing or is not
present at the closing date, although all the conditions precedent were fulfilled or
waived. The fulfilment of the Conditions precedent relating to the approval of the
Company’s shareholders and bondholders as referred to above must occur no later
than 5 September 2019. On 30 July 2019, the bondholders of Bonds series A and
Bonds Series B decided to authorize the Company to enter into the agreement and
execute the transaction contained therein. In addition, an extraordinary general
meeting of Shareholders of the Company held on 29 August 2019 approved the
transaction as detailed in the Notice of EGM.
On 5 September 2019 in accordance with the pre-sale agreement, AFI has paid the
down payment of EUR 200,000.
PRE-SALE AGREEMENT – SPECIFIC PROVISIONS
The long stop date as referred to in the Pre-Sale Agreement (i.e. the date on which
all conditions precedent must be fulfilled and closing of the Transaction must occur)
is 15 months after the lapse of the due diligence period (5 September 2019).
Pursuant to the Pre-Sale Agreement, Dambovita NL will transfer its interest in
Dambovita RO and will assign the Intragroup Loans to AFI Europe N.V. for the
maximum consideration of EUR 60 million, subject to the fulfilment of certain
conditions (the "Purchase Price").
The Purchase Price is defined in the Pre-Sale Agreement as EUR 60 million minus
75% of Dambovita RO’s liabilities computed based on the closing accounts (being
the financial statements of Dambovita RO for the period from 1 January of the year
in which the closing of the Transaction will occur) and excluding the Intragroup
Loan, plus 75% of Dambovita RO’s available cash and other current assets as shown
in the closing accounts (as referred to above) and minus (insofar applicable) an
amount agreed upon by the parties to the Pre-Sale Agreement to be reduced from the
Purchase Price if the 49-year PPP-rights period will be calculated from any date prior
to the year 2012. The loan assignment amount (as part of the Purchase Price) will be
calculated on the Closing Date as the balance between the Purchase Price and the
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 31 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
price for the shares sold (being the nominal value of these shares RON 44,050,380,
which is the equivalent of USD 14,778,862).
Subject to fulfilment of the conditions precedent in the Pre-Sale Agreement as
detailed above which includes, among others, the execution of the SPA, AFI Europe
N.V. is bound to make a payment of EUR 20 million to Dambovita NL. A further
EUR 22 million is to be paid later upon the issuance by the competent authorities of
a building permit for the first stage of the Dambovita Project (the development of
the shopping mall or the office building, excluding the public authority building as
referred to above). The balance between the Purchase Price and the payments already
made, will be paid out to Dambovita NL upon all permits required for the operation
of any of the components (office building or shopping mall) of the first stage of the
Dambovita Project including a fire permit and the operation permit having been
obtained. In addition the Company and Dambovita NL, granted the AFI Europe N.V.
indemnification, jointly and severally, for some warranties under the Pre-Sale
Agreement, which customary in such transactions.
On November 2, 2020, the Company, Dambovita NL and AFI Europe N.V. ("AFI",
and together with the Company, the "Parties") entered into an addendum to the pre-
sale pursuant to which the Parties agreed to extend the Long Stop Date, which is the
date on which the parties will execute a share purchase agreement, subject to the
satisfaction of conditions precedent, until December 31, 2021.
The Parties have further agreed that in case of any litigation and/or arbitration
process to which the Company is a party, will result in the loss of any of their rights
under the PPP Agreement with the Government of Romania to develop the Casa
Radio site in the city center of Bucharest, AFI shall no longer be bound by its
obligations under the Agreement and the Company shall reimburse AFI with the
entire advance payment of EUR 200,000 already paid by AFI. The prepayment of
EUR 200,000 is included in Other Liabilities in the consolidate statement of financial
position. The Addendum was subject to the approval of the Company’s bondholders
which was obtained on 12 November 2020.
On December 20, 2021 the Company, Dambovita NL and AFI have signed an
additional addendum to the Agreement (the "Addendum 2") which pursuant to the
Addendum 2 the Parties agreed to extend the Long Stop Date until December 31,
2022.
Further to the above, on December 13, 2022 the Company, Dambovita NL and AFI
have signed an additional addendum to the Agreement (the "Addendum 3") which
pursuant to the Addendum 3 the Parties agreed to extend the Long Stop Date until
December 31, 2023.
As of the date hereof, there can be no certainty that either the conditions precedent
in the Pre-Sale Agreement as detailed above will be met, that the Sale Agreement
will be executed and/or that the Transaction will be consummated as presented above
or at all.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 32 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
(2) Write-down of trading properties:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 33 - -
NOTE 5:- TRADING PROPERTIES (Cont.)
In light of the above the Company is exploring all its options in order to obtain progress,
including among others its legal options. Accordingly, as of May 16, 2022 the Company
has submitted with the International Centre for Settlement of Investment Disputes
(“ICSID”) a Request for Arbitration (the “Request”) against Romania. In the Request the
Company seeks full compensation of the losses it incurred due to failure of the Romanian
authorities to cooperate, negotiate and adjust the PPP agreement as described in the note
5(1)(c) which include but not limited to the Company’s investment in the Project SPV, loss
of potential profit, and costs and expenses of the arbitration. The Request was registered
by ICSID on June 3, 2022. The Tribunal was constituted on November 1, 2022. The parties
confirmed that the Tribunal was properly constituted and that no party has any objection to
the appointment of any Member of the Tribunal. The first session of the Tribunal was held
on December 7, 2022
At the current stage, the Company is in the process of preparation for the Claimant’s
Memorial which is set to be filed in April 2023.
NOTE 6:- EQUITY ACCOUNTED INVESTEES
a. The Group has the following interest in the below joint ventures.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 34 - -
(1) Bangalore:
In March, 2008 Elbit Plaza India Real Estate Holdings Limited (a subsidiary held by
the Company (50%) and Elbit Imaging ltd.(50%)) ("EPI") entered into a share
subscription and framework agreement (the "Agreement"), with a third-party local
developer (the "Partner"), and a wholly owned Indian subsidiary of EPI which was
designated for this purpose ("SPV"), to acquire together with the Partner, through
the SPV, up to 440 acres of land in Bangalore, India (the "Project") in certain phases
as set forth in the Agreement.
As a result of the failure of the Partner to complete the transaction under the
Agreement and in accordance with the provisions thereto, EPI has 100% control over
the SPV and the partner is no longer entitled to receive the 50% shareholding.
The Partner has surrendered sale deeds to the SPV for approximately 54 acres (the
"Plot"). The Plot is registered in the name of a third party land owner who transferred
100% ownership right in the Plot to the Partner ( 90% ownership rights acquired
through Joint Development Agreement & Power of Attorney and balance 10%
ownership rights acquired through sale). The Partner in turn transferred 100%
Development rights and 90% rights in the Plot and constructed area therein to the
SPV through Joint Development Agreement & Power of Attorney while the balance
10% rights in the Plot and constructed area held by the Partner.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 35 - -
NOTE 6:- EQUITY ACCOUNTED INVESTEES (Cont.)
On December 2, 2015 EPI has signed an agreement to sell 100% of its interest in the
SPV to the Partner (the "Sale Agreement"). The total consideration upon completion
of the transaction was INR 321 crores (approximately EUR 44 million) which should
have been paid no later than September 30, 2016 ("Long Stop Date"). On November
15, 2016, the Partner informed EPI that it will not be able to execute the aforesaid
payment.
As a result of the foregoing, the SPV has received from the escrow agent the sale
deeds in respect of additional 8.7 acres (the "Additional Property") which has been
mortgaged by the Partner in favor of the SPV in order to secure the completion of
the transaction on the Long Stop Date. The Additional Property has not yet been
registered in favor of the SPV for cost-benefit reasons. In addition, as per the Sale
Agreement, the Company took actions in order to get full separation from the Partner
with respect to the Plot and specifically the execution of the sale deed with respect
of the 10% undivided interest, all as agreed in the Sale Agreement.
In light of the above, and after lengthy negotiations between the parties, new
understandings were formulated and the parties signed a revised agreement that
substantially altered the outline of the original transaction (and this agreement was
amended several more times, the last of which in April 2019), and concluded that:
(i) the closing date for the transaction will be extended to November 2019, and may
be further extended to August 2020 (the "Closing Date"). It should be clarified that
the postponement of the closing date to November 2019 and August 2020 was
subject to receipt of payments as agreed in the Sale Agreement and subject to
mutually agreed payment terms; and (ii) the consideration was increased to INR 356
crores (approximately EUR 49 million) (Plaza part approximately EUR 24.5 million)
(the "Consideration").
After August 2019, the Partner was unable to pay any further amounts nor was able
to give firm commitment on payment of the remaining amount. In the absence of
clarity on payment of the remaining amount and failure of the Partner to give full
separation with respect to the Plot, on January 10, 2020, the Company announced
that a notice has been issued to the Partner to file its response in the insolvency
proceedings initiated for the recovery of the amounts due.
On May 18, 2021, the Company announced that the insolvency proceedings initiated
against the Purchaser for the recovery of the due amounts has been dismissed by the
National Company Law Tribunal in Bangalore since the case is not maintainable
before it and therefore the SPV should claim for the recovery of its debt or for the
resolution of its dispute in any other forum.
In addition, criminal cases for dishonor of the cheques aggregating INR 15 crores
which were given as security for payment of certain installments, the Court had
issued arrest warrants and the local police were on the lookout for the accused
persons. On May 18, 2021, the Company announced that all the accused persons
appeared before the court and were granted bail. In addition, all further proceedings
continue in the matter.
On July 29, 2021 the Company announced that the SPV has submitted an appeal
before the National Company Law Appellate Tribunal, Chennai, India against the
decision of the National Company Law Tribunal, Bengaluru, India, which dismissed
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 36 - -
NOTE 6:- EQUITY ACCOUNTED INVESTEES (Cont.)
the insolvency proceedings initiated against the Partner for the recovery of the
amounts due.
On April 13, 2022 the Partner submitted to EPI an unformal non-binding proposal
to purchase 100% of EPI’s interest in the Project and the completion of the
transaction in exchange for a payment of INR 112-117 crores (approximately EUR
13.6-14.2 million) in lieu of the remain amount of consideration according to the
Sale Agreement (INR 269 crores (approximately EUR 32.6 million)).
In the period since May 19, 2022 till August 24, 2022 the Partner deposited in the
SPV INR 22.5 crores (approximately EUR 2.77 million).
On September 1, 2022 the transaction for the sale of EPI's whole rights in the Asset
was completed for a total of INR 117 crores (approximately EUR 14.3 million) and
EPI received the full consideration as mentioned.
NOTE 7:- OTHER LIABILITIES
NOTE 8:- BONDS
a. Composition:
Effective
interest rate
Contractual
interest rate
Principal
final
maturity
Carrying
amounts
as at
December 31
2022
Series A Bonds
11.58%
CPI+8%
(*)
2023
40,755
Series B Bonds
13.83%
CPI+8.9%
(*)
2023
57,983
98,738
(*) Including 2% interest on arrears
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 37 - -
NOTE 8:- BONDS (Cont.)
b. Mandatory repayments subsequent to the reporting date (without early repayments):
2023
98,738
98,738
(1) Pursuant to the Company's Restructuring Plan, the Company will assign 78% of the
net proceeds received from the sale or refinancing of any of its assets as early
repayment.
(2) Approved amendment to an early prepayment term under the Restructuring Plan
The Company has implemented the restructuring plan that was approved by the
Dutch Court on July 9, 2014 (the "Restructuring Plan"). Under the Restructuring
Plan, principal payments under the bonds issued by the Company and originally due
in the years 2013 to 2015 were deferred for a period of four and a half years, and
principal payments originally due in 2016 and 2017 were deferred for a period of
one year.
During the first three months of 2017, the Company paid to its bondholders a total
amount of NIS 191.7 million (EUR 49.2 million) as an early redemption. Upon such
payments, the Company complied with the Early Prepayment Term (early
redemption at the total sum of at least NIS 382,000,000 (approximately EUR 98
million)) and thus obtained a deferral of one year for the remaining contractual
obligations of the bonds.
In addition to the above, the following terms were approved by the bondholders:
(a) Casa Radio proceeds - If the Company shall sell the Casa Radio project
located in Romania (hereinafter: the "Project") to a third party, including by
way of selling its holdings in any of the entities through which the Company
holds the project (and said sale shall be carried out before the full repayment
of the
bonds and until no later than December 31, 2019, and for an amount which
exceeds EUR 45 million net (i.e. after brokerage fees (if any), taxes, fees,
levies or any other obligatory payment due to any authority in respect to the
said sale) which shall actually be received by the Company, then the holders
of bonds shall be eligible for a one-time payment (which shall come in
addition to the principal and interest payments in accordance with the
repayment schedule), in certain amounts specified in tranches.
(b) Registering of Polish bonds for trade - the Company has committed to
undertake best efforts to admit the Polish bonds for trading on the Warsaw
Stock Exchanges and proceeding in this respect are ongoing.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 38 - -
NOTE 8:- BONDS (Cont.)
(c) Deferred debt ratio of Series B bonds - were reduced to 68.24% from 70.44%
following the cancellation of the treasury bonds. The ratio has been changed
for Series B bonds in order to maintain a distribution ratio between the three
series.
(c) Settlement agreement with Bondholders of Israeli Series of Bonds:
In January 2018, a settlement agreement was signed by and among the Company and the
two Israeli Series of Bonds ("Settlement Agreement"). In the Settlement Agreement it was
agreed, inter alia, to approve:
- New repayment ratios between the two Israeli Series of Bonds (new ratio: Bond A-
39% Bond B- 61%);
- An increase in the level of the mandatory early repayments from 75% to 78% of the
relevant net income;
- New repayment schedule;
- An increase in the compensation to be paid to the Bondholders in the event of
successful disposal of Casa Radio Project;
- A waiver of claims to the Company and its directors and officers; and
- To waive the request for publication of quarterly financial reports by the Company.
As a result of settlement agreement signing, Series A Bondholders withdraw their request
for immediate repayment.
It is clarified that the Settlement Agreement is a separate agreement among the parties
thereto with respect to the Company's restructuring plan, and as such has no effect on the
Polish Bondholders.
On January 31, 2018 the Company paid the bondholders a total amount of principal and
interest of EUR 38,487 thousand.
(1) The net cash flow received by the Company following an exit or raising new
financial indebtedness (except if taken for the purpose of purchase, investment
or development of real estate asset) or refinancing of real estate assets after
the full repayment of the asset's related debt that was realized or in respect of
a loan paid in case of debt recycling (and in case where the exit occurred in
the subsidiary - amounts required to repay liabilities to the creditors of that
subsidiary) and direct expenses in respect of the asset (any sale and tax costs,
as incurred), will be used for repayment of the accumulated interest till that
date in all of the series (in case of an exit which is not one of the four shopping
centres only 50% of the interest) and 78% of the remaining cash (following
the interest payment) will be used for an early repayment of the close principal
payments for each of the series (A, B, Polish) each in accordance with its
relative share in the deferred debt. Such prepayment will be real repayment
and not in bond purchase.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 39 - -
NOTE 8:- BONDS (Cont.)
(2) On November 22, 2018 the Company announced based on its current
forecasts, the Company expected to pay the accrued interest on Series A and
Series B Bonds on December 31, 2018, in accordance with the repayment
schedule determined in the Company's Restructuring Plan and Settlement
Agreement with Series A and Series B Bondholders from 11 January 2018
(the "Settlement Agreement"). The Company noted that it will not meet its
principal repayment due on December 31, 2018 as provided for in the
Settlement Agreement. The Company may be able to partially pay the said
principal depending, among other things, on the actual sale of assets and
taking into consideration the cash needs in accordance with the scope of the
forecasted activity.
2019
Following the announcement of the Company from January 2019, the Company repaid in
February 2019 circa EUR 400,000 (principal of circa EUR 250,000 and penalty interests
of circa EUR 150,000) to its Series A and Series B. As provided for in the Settlement
Agreement, the bondholders approved the deferral of payment to July 1, 2019.
In addition, during June 2019 the bondholders approved the deferral of the full payment of
principal due on July 1, 2019 and of 58% ("deferred interest amount") of the sum of interest
(consisting of the total interest accrued for the outstanding balance of the principal,
including interest for part of the principal payment which was deferred as of February 18,
2019, plus interest arrears for part of the principal which was fixed on 18.2.2019 and was
not paid by the Company and all in accordance with the provisions of the trust deed; "the
full amount of interest"), the effective date of which is 19.06.2019, and the payment date
was fixed as of 01.07.2019. The Company paid on the said date a total amount of circa
EUR 1.17 million of which is only 42% of the full amount of interest.
On July 11, 2019, the Company announced that its Romanian subsidiary had signed a
binding agreement to sell land in Miercurea Ciuc, Romania, and that the Company would
use part of the proceeds now received by it EUR 0.75 million (hereinafter: "the amount
payable"), in order to make a partial interest payment to the bondholders (Series A) and
(Series B) issued by the Company. The payment required changes in the repayment
schedule and amendments of the trust deeds which was approved unanimously by the
Bondholders. The amount payable was paid on August 14, 2019 and reflects 30% of
accrued interest as of that date.
On November 17, 2019 the bondholders of Series A and Series B approved a deferral of
all the scheduled Principal payment and app. 87% of deferral of the scheduled Interest
payment, both, as of December 31, 2019 to July 1, 2020.
Accordingly, in December 2019, Company made a partial interest payment in amount of
circa EUR 0.6 million of which is only 13% of the full amount of interest.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 40 - -
NOTE 8:- BONDS (Cont.)
2020
On May 4, 2020, the bondholders of Series A and Series B approved: (i) to postpone the
final redemption date to January 1, 2021 of all the scheduled Principal; (ii) that on July 1,
2020 the Company will pay to its bondholders a partial interest payment in the total amount
of EUR 0.25 million and to defer all other unpaid scheduled Interest payment.
Following receiving the Settlement Amount related to the final price adjustment of the sale
of Belgrade Plaza and in light of the potential negative impact of the Covid-19 on the
possibility to receive future proceeds from the Company's plots in India, the Company
decided to increase the amount to be paid to the bondholders on July 1, 2020, from EUR
0.25 million to EUR 0.5 million. The amount reflected 6.74% of accrued interest as of that
date.
On November 12, 2020, the bondholders of Series A and Series B approved: (i) to postpone
the final redemption date to July 1, 2021 of all the scheduled Principal; that on January 1,
2021 the Company will pay to its bondholders a partial interest payment in the total amount
of EUR 0.2 million and to defer all other unpaid scheduled Interest payment. The amount
reflected 1.84% of accrued interest as of that date.
2021
On April 12, 2021, the bondholders of Series A and Series B approved: (i) to postpone the
final redemption date to January 1, 2022; (ii) that on July 1, 2021 the Company will pay to
its bondholders a partial interest payment in the total amount of EUR 125,000 and to defer
all other unpaid interest. The amount reflected 0.84% of accrued interest as of that date.
On November 25, 2021, the bondholders of Series A and Series B approved: (i) to postpone
the final redemption date to July 1, 2022; (ii) that on January 1, 2022 the Company will
pay to its bondholders a partial interest payment in the total amount of EUR 200,000 and
to defer all other unpaid interest. The amount reflected 0.92% of accrued interest as of that
date.
2022
On June 16, 2022, the bondholders of Series A and Series B approved to postpone the final
redemption date to January 1, 2023.
On November 8, 2022, the bondholders of Series A and Series B approved: (i) to postpone
the final redemption date to July 1, 2023; (ii) that on January 1, 2023 the Company will
pay to its bondholders a partial interest payment in the total amount of EUR 2,000,000 and
to defer all other unpaid interest. The amount reflected 6.08% of accrued interest as of that
date.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 41 - -
NOTE 8:- BONDS (Cont.)
As detailed in Note 1(b) the Company expects that it will not be able to meet its entire
contractual obligations in the following 12 months.
Accordingly, it intends to request the bondholders of both series to postponement of the
repayment of the remaining balance of the Bonds.
d. Covenants:
The bonds’ covenants are detailed in Note 16(b)(1).
In respect of the Coverage Ratio Covenant ("CRC"), as defined in the restructuring plan,
as at December 31, 2022 the CRC is not in compliance with 118% minimum ratio required.
e. Credit rating:
In January 2018, Standard & Poor's Maalot, the Israeli credit rating agency which is a
division of International Standard & Poor's has discontinued tracking Plaza's rating at the
Company's request.
NOTE 9:- INCOME TAXES
a. Unrecognized deferred tax assets:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 42 - -
NOTE 9:- INCOME TAXES (Cont.)
d. The main tax laws imposed on the Group companies in their countries of residence:
The Netherlands:
a. Companies resident in the Netherlands are subject to corporate income tax at
the general rate of 25.8% (2021 – 25%). The first EUR 395,000 of profits is
taxed at a rate of 15%. In 2021, 2020, and 2019 tax losses may be carried back
for one year and carried forward for six years (for 2018 and before – nine
years). From January 1, 2022 onwards, an indefinite loss carry forward
applies. For the carry forward of losses, losses incurred in financial years that
started on or after 1 January 2013 also fall under the new scheme that comes
into effect on 1 January 2022, so these losses will be indefinite.
b. Starting January 1, 2022 losses will be offset (forward or backward) in
accordance with the following restrictions:
1. Up to 1 million EUR - unlimited
2. Over 1 million EUR - against 50% of the remaining profit in that year
b. The Dutch participation exemption gives a full exemption from corporation
tax applies to benefits such as dividends and capital gains derived from a
qualifying participation. The participation exemption generally applies if the
parent Company holds at least 5 percent of the shares in the participation. The
requirements to meet the participation exemption are as follows:
1. The parent Company has an interest of at least 5 percent in the
participation; and
2. At least one of the following three tests is met:
a) The parent Company's objective with respect to its participation is
to obtain a return that is higher than a return that may be expected
from normal active asset management ("Motive Test"); or
b) The participation is subject to a "reasonable taxation" according to
Dutch tax standards ("Subject-to-Tax Test"); or
c) The direct and indirect assets of the participation generally consist
of less than 50 percent of 'low taxed free passive investments'
("Asset Test").
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 43 - -
NOTE 10:- EQUITY
December 31,
2022
2021
Remarks
Number of shares
Authorized ordinary shares of par value EUR 1 each
10,000,000
10,000,000
Issued and fully paid
6,855,603
6,855,603
Translation reserve
The translation reserve comprises, as of December 31, 2022, all foreign currency differences
arising from the translation of the financial statements of foreign operations in India.
Restriction of dividend
The Company shall not make any dividend distributions, unless (i) at least 75% of the Unpaid
Principal Balance of the Bonds has been repaid
and the Coverage Ratio on the last Examination
Date prior to such Distribution is not less than 150% following such Distribution, or (ii) a Majority
of the Plan Creditors consents to the proposed Distribution.
Notwithstanding the aforesaid, in the event an additional capital injection of at least EUR 20
million occurs, then after one year following the date of the additional capital injection, no
restrictions other than those under the applicable law shall apply to dividend distributions in an
aggregate amount of up to 50% of such additional capital injection.
NOTE 11:- EARNINGS PER SHARE
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 44 - -
NOTE 12:- EMPLOYEE SHARE OPTION PLAN
NOTE 13:- ADMINISTRATIVE EXPENSES
NOTE 14:- FINANCE INCOME AND FINANCE COSTS
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 45 - -
NOTE 15:- FINANCIAL INSTRUMENTS
a. Credit risk:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 46 - -
NOTE 15:- FINANCIAL INSTRUMENTS (Cont.)
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated
interest payments and excluding the impact of netting agreements:
December 31, 2022
Non-derivative
financial
liabilities
Carrying
amount
Contractual
cash flow
6 months or
less
6-12
months (*)
Bonds issued (*)
(128,631)
(134,106)
-
(134,106)
Trade and other
payables
(144)
(144)
(144)
-
128,775
(134,250)
(144)
(134,106)
December 31, 2021
Non-derivative
financial
liabilities
Carrying
amount
Contractual
cash flow
6
months
or less
6-12
months
(*)
Bonds issued (*)
(121,692)
(126,870)
-
(126,870)
Trade and
other payables
(202)
(202)
(202)
-
121,894
(127,072)
(202)
(126,870)
(*) Refer to Note 8.
c. Market risk:
Currency risk:
Currency risk is the risk that the Group will incur significant fluctuations in its profit or
loss as a result of utilizing currencies other than the functional currency of the respective
Group Company.
The Group is exposed to currency risk mainly on borrowings (Bonds issued in Israel) that
are denominated in NIS.
The following exchange rate of EUR/NIS applied during the year:
Reporting date
Average rate
Spot rate
EUR
2021
2021
2022
2021
NIS 1
0,283
0,262
0,266
0,284
NIS denominated bonds – a change of 5 percent in EUR/NIS rates at the reporting date
would increase/decrease loss by circa EUR 4.8 million, as a result of having issued NIS
linked Bonds.
This effect assumes that all other variables, in particular CPI index, remain constant.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 47 - -
NOTE 15:- FINANCIAL INSTRUMENTS (Cont.)
Interest Rate Risk (including inflation):
The Group's interest rate risk arises mainly from Bonds issued at fixed interest rate expose
the Group to changes in fair value, if the interest is changing. Pursuant to the Company's
Restructuring Plan, as described in note 8, the Company executes only partial interests
payments based on current sources and subject to approval of bondholders of both series.
Sensitivity analysis - effect of changes in Israeli CPI on carrying amount of NIS bonds
A change of 3 percent in Israeli Consumer Price Index ("CPI") at the reporting date (and in
2021) would have increased (decreased) profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular foreign currency rates, remain
constant.
Profit (loss) effect
For the year ended
December 31,
Carrying amount
of bonds
CPI increase
effect
CPI
decrease effect
2022
98,738
(2,962)
2,962
2021
99,999
(3,000)
3,000
Shareholders' equity management:
Refer to Note 10 in respect of shareholders equity components in the restructuring plan
including dividend policy. The Company's Board of Directors is updated on any possible
equity issuance, in order to assure (among other things) that any changes in the shareholders
equity (due to issuance of shares, options or any other equity instrument) is to the benefit
of both the Company's bondholders and shareholders.
Fair values:
The table below is a comparison between the carrying amount and fair value of the
Company's financial instruments that are presented in the financial statements not at fair
value:
Carrying amount
Fair value (*)
2022
2021
2022
2021
Bonds A at amortized cost - Israeli
bonds
40,755
41,275
4,007
6,025
Bonds B at amortized cost - Israeli
bonds
57,983
58,724
6,154
8,849
(*) The fair value is based on Level 1 in fair value hierarchy and measured based on
market quote.
Management believes that the carrying amount of cash, receivables and trade payables
approximate their fair value due to the short-term maturities of these instruments.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 48 - -
NOTE 16:- CONTINGENT LIABILITIES AND COMMITMENTS
a. Contingent liabilities and commitments to related parties:
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 49 - -
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 50 - -
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 51 - -
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 52 - -
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 53 - -
NOTE 17:- RELATED PARTY TRANSACTIONS
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 54 - -
NOTE 18:- DISCLOSURE OF MATERIAL EVENTS DURING AND AFTER THE REPORTING
PERIOD
a. Taskforce on Climate-related Financial Disclosures (“TCFD”)
The Financial Conduct Authority listing rules require premium-listed and standard-listed
companies to make disclosures under the TCFD framework. Such companies are required to
include a statement in their annual report stating whether they have made disclosures consistent
with the TCFD framework on a ‘comply or explain’ basis. For premium-listed companies this
requirement has been in effective since 1 January 2021 while for standard-listed companies it
came into effect from 1 January 2022.
PLAZA CENTERS N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ‘000 EUR
- - 55 - -
NOTE 18:- DISCLOSURE OF MATERIAL EVENTS DURING AND AFTER THE REPORTING
PERIOD (Cont.)
The Company notes the TCFD recommendations on climate-related financial disclosures.
Company’s disclosure regarding above mentioned is included in non-financial information.
b. Tax authority investigation
NOTE 19:- LIST OF GROUP ENTITIES
- - - - - - - - - - - - - - - - - - -