Plaza Centres plc - Full-Year Results

On 28 April 2021, Plaza Centres plc published the Annual Report and Financial Statements for the year ended 31 December 2020.

Performance Overview

During 2020, revenues dropped by 22.4% to €2.76 million (2019: €3.55 million) reflecting the impact of COVID-19 as Plaza provided rental discounts to its tenants and also saw a reduction in the average occupancy level to 89% compared to 93% in 2019. Moreover, the 2020 financial statements only include an eight-and-a-half-month contribution from Tigné Place after this commercial building was sold in mid-September 2020 for a total consideration of €14 million. In fact, the reduction in revenue in 2020 came about solely from the Plaza Shopping Complex as the financial statements indicate a drop in revenue at ‘company level’ of €0.6 million (-21.7%). On the other hand, the annualised revenue of €0.84 million from Tigné Place was 6.5% higher than the comparable figure of €0.79 million in 2019.

On the expenditure side, operating costs increased by 20.3% to €0.83 million as Plaza took on an additional impairment charge of €0.11 million whilst it also absorbed a higher percentage of the common area costs. As a result, EBITDA contracted by 32.6% to €1.93 million compared to €2.86 million in 2019. In addition, Plaza’s financial performance was further dented by an increase of almost 19% in the depreciation charge to €0.69 million (2019: €0.58 million). This was solely related to the revision of the estimated useful life of certain assets within property, plant and equipment which resulted in an increase of €0.22 million in the amount of depreciation charged in 2020.

After taking into account net finance costs of €0.48 million (2019: €0.42 million), Plaza reported a near 60% drop in pre-tax profits to €0.76 million. The tax charge amounted to €0.29 million, thus leading to a net profit of €0.47 million which, in turn, translates into a return on average equity of 1.6% (2019: 4.6%).

The Statement of Financial Position shows a 20.4% decrease in total assets to €38.9 million reflecting the impact of the sale of Tigné Place in mid-September 2020. Similarly, total liabilities contracted by almost 30% to €12.2 million as Plaza reduced its total borrowings by €3.84 million following the sale of Tigné Place. Moreover, given the substantial cash balance of €4.55 million as at end of 2020, Plaza’s net debt position dropped markedly to €3.2 million compared to €11.2 million as at 31 December 2019. Overall, Plaza’s equity base dropped by 15.3% to €26.7 million which, in turn, translates into a net asset value per share of €1.0465 (31 December 2019: €1.1147).

Dividend

The Directors are recommending a 38.5% increase in the final net dividend to €0.0157 per share (2019: €0.0113 per share). Shareholders as at the close of trading on Thursday 20 May 2021 will be eligible to receive the dividend on Wednesday 30 June subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held virtually on Wednesday 23 June 2021.

Outlook

In their commentary, the Directors explained that Plaza’s diverse tenant mix composed of retail and commercial leases contributed to mitigate the negative impact of the pandemic. Despite the adverse economic scenario, Plaza is cautiously optimistic that as the vaccine roll-out programme gathers further momentum, the hardest hit sectors will start to recover in a more meaningful manner. However, the return to pre-COVID-19 normality will, to a large extent, depend on the successful vaccination across Malta and abroad as this should lead to a gradual lifting of the various restrictive measures. Once these measures are lifted, economic sentiment and consumer confidence should improve as these are crucial for Malta to generate sustainable economic growth.

The Directors also added that they are cognisant that the operating models adopted by a number of companies to face the challenges of the pandemic could become part of the new normal. This means that the commercial leasing market could go through a period of realignment to the new paradigm. In this context, Plaza believes that 2021 will continue to pose important challenges. Accordingly, the Directors will continue to adopt a prudent approach to business whereby adequate financial muscle is maintained to implement the necessary mitigating measures as the situation evolves. The Directors also reiterated that they are confident that with Plaza’s strong financial fundamentals together with its prudent and timely measures, it will continue to withstand the prevailing uncertain times and be in a position to continue creating value for its stakeholders.

Download

Plaza Centres plc – Annual Report and Financial Statements for the year ended 31 December 2020.

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