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Condensed consolidated financial results for the year ended 31 December 2020
NEPI Rockcastle plc
Incorporated and registered in the Isle of Man
Registered number 014178V
JSE and Euronext share code: NRP
ISIN: IM00BDD7WV31
("NEPI Rockcastle" or "the Company" or "the Group")
SHORT-FORM ANNOUNCEMENT: CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020
"The Group went through the most challenging period in its history in 2020. The COVID-19 pandemic took the world
by surprise and upended the way people everywhere live, work, learn, travel, socialise and shop. The business of running
shopping and entertainment centres has been one of the most affected by the restrictions implemented to combat the
pandemic. Most of the tenants in our properties had to close their shops to the public for long periods of time, first
during the spring and then (to a lesser extent) again in Q4. Faced with a sudden drop in business, our tenants sought
and received our support to get them through lockdowns. This naturally had a strong impact on the results we are now
reporting for 2020.
The past year also confirmed the robustness of our business model, its resilience and flexibility in highly demanding
circumstances. We managed to continue the smooth and safe running of our operations with adequate levels of liquidity
and capital throughout. Our team adapted quickly to new ways of working, stepped up to unprecedented challenges
(such as over 6,000 negotiations successfully completed with tenants in about seven months) and, most importantly,
kept themselves and others safe in the process.
Beyond the immediate impact on results, we managed to keep our income-generating capacity intact through difficult,
but temporary, conditions. Occupancy held strong at 95.7% across our portfolio. The collection rate for the year, thanks
to the quality of our tenant mix and the efforts of our team, was 95% as at year end and grew higher since. We also
managed to improve and extend our tenant mix with the addition of new brands and categories. Properties were well-
maintained and secure, as evidenced by the certifications received and the absence of any health incidents. We continued
to invest in the refurbishment and extension of existing properties and in the development of new ones.
We managed to preserve and enhance our capital and liquidity. In July we completed a EUR500 million green bond issue,
significantly extending the average maturity of our debt in the process. We extended revolving credit facilities with new
terms and conditions tied to achieving our ESG objectives, which we are fully committed to. Credit rating agencies
reconfirmed NEPI Rockcastle's investment grade status. In two strategic transactions, we sold in August the Romanian
office portfolio (at the same commercial terms negotiated in 2019) and in Q4 completed the disposal of the listed
securities portfolio (reallocating the capital to a share repurchase, with accretive results on EPRA NRV and
Distributable earnings per share). As a result, we concluded 2020 with a very comfortable LTV ratio of 31.5% and
liquidity resources of EUR1.2 billion, which positions us strongly for the coming period.
Still, the shopping environment is changing. Some effects of the pandemic will be short lived, but some longer-term
trends were accelerated. People have already started returning to more communal forms of leisure, entertainment and
shopping where possible (and we strive to ensure that they do so safely) and continue to enjoy visiting our centres. As
retail is changing, we are working on adapting our business model to capitalise on these changes. The future of retail
is omnichannel, with more digital engagement, and we are taking steps to adjust our offering in that direction.
We expect that 2021 will be a better year for NEPI Rockcastle. The pandemic in CEE countries has recently started to
abate and the ongoing vaccination programme will accelerate over the next few months. The European Union approved
a significant support plan that will start producing effects in 2021. National governments in CEE indicated that they
will continue fiscal and monetary stimulus. There are no signs that monetary conditions will tighten soon. All these make
a strong economic rebound likely, with a particularly pronounced effect on personal consumption. In the physical retail
sector, the CEE region is not blighted by the overcapacity affecting Western European real estate and still has lower
e-commerce penetration rates. Our Group is well-positioned to benefit from improving economic conditions and return
to a steady and sustainable growth path." Alex Morar, CEO
DISTRIBUTABLE EARNINGS
The Group achieved 18.76 euro cents in distributable earnings per share for the six months ended 2020, which combined
with the 19.66 euro cents in distributable earnings per share for the six months ended 30 June 2020 resulted in a total
distributable earnings per share of 38.42 euro cents, 31.8% lower than for the year ended 31 December 2019 (56.33 euro
cents) and in line with the latest guidance.
2020 EARNINGS DISTRIBUTION
The Board has declared a dividend of 16.88 euro cents per share for the second half of 2020, corresponding to 90%
of the distributable earnings per share for the period. This decision is in line with the NEPI Rockcastle's policy of
distributing at least 90% of its distributable earnings and allows the Company to retain some capital as reserve, given
the challenging macroeconomic environment. The dividend will be paid in cash during March 2021, and further detailed
announcements will follow.
As previously announced, the Company did not declare a dividend for the six-month period ended 30 June 2020. The Company
has instead allotted and issued fully paid ordinary shares as a capitalisation issue to the Company's shareholders,
pro-rata to their shareholding, at a ratio of 4.2920 ordinary shares for every 100 ordinary shares held.
KEY FINANCIAL INFORMATION
31 December 2020 31 December 2019 % Change
Net rental and related income (EUR thousand) 322,964 400,738 (19.4%)
Distributable earnings (EUR thousand) 232,415 333,811 (30.4%)
EPRA Earnings (EUR thousand) 240,770 330,623 (27.2%)
Distributable earnings per share (EUR cents) 38.42 56.33 (31.8%)
EPRA Earnings per share (EUR cents) 39.81 55.79 (28.6%)
Headline earnings per share (EUR cents)* 18.12 49.25 (63.2%)
Basic/diluted (loss)/earnings per share (EUR cents)* (27.99) 68.09 (141.1%)
Net asset value (NAV) per share (EUR) 6.05 6.83 (11.4%)
EPRA Net Reinstatement Value (NRV) (EUR) 6.45 7.32 (11.9%)
EPRA Net Tangible Assets (NTA) (EUR) 6.42 7.25 (11.4%)
EPRA Net Disposal Value (NDV) (EUR) 5.79 6.61 (12.4%)
EPRA Net Initial Yield (NIY) 6.70% 6.65% 0.75%
EPRA 'topped-up' NIY 6.75% 6.71% 0.60%
EPRA vacancy rate 4.30% 2.10% 104.8%
* Weighted average number of shares adjusted for each period presented in respect of the capitalisation issue on
21 September 2020, as required by IAS 33 Earnings per Share
EXTERNAL AUDIT AND KEY AUDIT MATTERS
The audit report on the Group's consolidated financial statements has been issued by PwC Isle of Man, after having
audited and obtained the necessary documentation from PwC local offices in jurisdictions where the Group operates
through subsidiaries. The local PwC offices audit the separate financial statements of the relevant subsidiaries prepared
under IFRS and issue their interoffice audit reports to PwC Isle of Man. The audit opinion is unmodified. Also, the emphasis
of matter present in the June review report is no longer applicable, as the material valuation uncertainty clause was
removed from all valuation reports. A copy of the audit opinion, together with the underlying audited annual financial statements
is available on the Company's website at https://nepirockcastle.com/wp-content/uploads/2021/02/Financial_Statements_2020.pdf.
Key audit matters are those matters that, in the auditor's professional judgement, were of most significance in the audit
of the financial statements. The key audit matters identified in relation to the 2020 audit were the valuation of investment
property and the impact of COVID-19 on the Group.
For detailed information on the key audit matters, reference is made to the full text of the Independent Auditor's opinion,
contained in the 2020 consolidated financial statements.
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the board of directors of NEPI Rockcastle. This short-form
announcement is only a summary of the information in the full announcement and does not contain complete details.
Any investment decision should be based on consideration of the consolidated financial statements published on the
Company's website at:
https://nepirockcastle.com/wp-content/uploads/2021/02/Financial_Statements_2020.pdf
and on the long-form announcement (condensed consolidated financial results) available on the Company's website at:
https://nepirockcastle.com/wp-content/uploads/2021/02/Condensed_Consolidated_Financial_Results_H2_2020.pdf
and on the JSE's website at: https://senspdf.jse.co.za/documents/2021/jse/isse/NRPE/H22020.pdf
The full announcement is also available for inspection at the registered offices of the Company (2nd Floor, 30 Athol
Street Douglas, Isle of Man, IM1 1JB) and at the offices of the JSE sponsor, Java Capital (6th Floor, 1 Park Lane,
Wierda Valley, Sandton, 2196) at no charge during normal business hours from Thursday, 25 February 2021 to Friday,
5 March 2021.
For further information please contact:
NEPI Rockcastle plc
Alex Morar +40 21 232 1398
JSE sponsor
Java Capital +2711 722 3050
Euronext Listing Agent
ING Bank +31 20 563 6799
Media relations mediarelations@nepirockcastle.com
25 February 2021
Date: 25-02-2021 07:20:00
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