OPG - Exceptional impairments and provisions result in heavy loss Q3 2013 financial information

Q3 2013 financial highlights

• Revenue YTD has increased by EUR 4 Million to EUR 108 Million year-on-year driven by increase of revenues in Berlin and in Hvar and the sale of the Unibail Rodamco JV plot in Bubny.
• EBITDA increased by EUR 1 Million year-on-year due to improving performance of Berlin rental assets, operational successes of Suncani Hvar and decreasing corporate operating expenses compensating the disappearing Endurance Fund management fees.
• The improved operational performance is undermined by risks accumulating on major projects and assets. The Board of Directors decided to recognize EUR 146 Million of additional impairments (out of which EUR 26 Million of impairment on long term receivables) and negative changes in values compared to the June 2013 valuation review. Main amounts have been recorded on Zlota 44 for EUR 74 Million (in order to reflect the construction and financing costs risks) and on the Sunčani Hvar portfolio for EUR 44 Million (EUR 24 Million group share, in order to reflect risks on the going concern on these activities). Additionally to the impairment on inventories and negative changes in value, provisions of EUR 16 M have been recognized in order to cover the risks estimated by the Board of directors linked to the potential call of corporate guarantees and approved restructuring.
• Those losses have not materialized but the valuation reflects the cumulating risks about which the Board of Directors is currently implementing mitigating measures. In particular, an increase in capital of its subsidiary Orco Germany S.A. ('OG') of up to EUR 100 Million has been decided, out of which EUR 54 Million have been committed. Such funds are to be used to reimburse OG debt to the Company amounting to EUR 12 Million and possibly realise investments into some of the Company assets.
• The Operating result (a loss of EUR 106 Million compared to a loss of EUR 12 Million over the first 9 months of 2012) is significantly impacted by impairments of inventories (Zlota, Benice), valuation losses on Suncani Hvar premises and provisions for risks of guarantee call and restructuring. Other operating losses improved by EUR 6 Million thanks to improvements operational efficiency and control of operational expenses. The decrease is resulting also from the Sky Office disposal in 2012 (EUR 2.9 Million).
• In order to reflect longer than expected collection of receivables related to past sales of Molcom and Leipziger Platz higher credit and litigation risk margin have been integrated into the net present value inducing impairments of EUR 26 Million.
• Interest expenses significantly decreased mainly as a result of GSG refinancing and the capitalization of the Safeguard bonds end of 2012.
• Financial result is also negatively influenced by the losses on foreign exchanges differences and impairments on receivables partially compensated by the result on the buy-back of the loans financing the Vaci 188 and Vaci 190 office buildings in Budapest at a fraction of their nominal value for EUR 1 Million, generating a EUR 15 Million financial gain.

More information in attached file