Secure Property Development & Invest : - RNS Final Results 2018

Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI / Sector: Real Estate

28 June 2019

Secure Property Development & Investment PLC ('SPDI' or 'the Company')

2018 Audited Annual Results

Secure Property Development & Investment PLC, the AIM quoted South Eastern European focused property company, is pleased to announce its full year audited financial results for the year ended 31 December 2018.

Full year Net Equity standing at a 100%+ premium to SPDI's market valuation, similar to last year's premium, while operating results and EBITDA remain positive at €0,4m and €1,8m respectively, despite sale of the fully let BigBlueBox in Romania

Full Year Financial Highlights

Second successive annual positive operating result after finance and tax expenses:

• Operating result after finance and tax expenses of €0.414m (31 Dec 2017: €1,5m)
• EBITDA of €1,8m compared to €3,7m in 2017 - year on year reduction largely due to the sale of the fully let BigBlueBox in Romania

Significant asset backing behind the Company:

• Net Equity of €35,6 million as at 31 December 2018 (31 Dec 2017: €36,3 million)
• NAV per share stood at GBP 0.25 as at 31 December 2018 - current share price trading at a ca. 72% discount to NAV per share

Ongoing successful management of cost base:

• 14% reduction in business costs to €2,021 million (2017: €2,35 million) - builds on 10% reduction in costs in 2017
• 41% reduction in interest costs to ~€1,2m compared to ~€2,0m in 2017 - builds on 36% reduction in interest costs in 2017

Operational Highlights

Successfully executing strategy to realise value of South Eastern European property portfolio:

• €2.5m cash generated net to SPDI following profitable sale of BigBlueBox in Romania at a
  Gross Asset Value of ~€6,5m
• Sale of nine residential units in Romania and Bulgaria for a total gross consideration of
  ~€980,000 resulting in €0.7m reduction in SPDI's residential property asset debt to €11.5m and ~€280,000 free cash

• Conditional Sale of Non-Greek assets at a deemed €29.25 million valuation, a 95% premium to SPDI's total current market capitalisation
  o Three stage completion process - Stage 1 covers assets in Ukraine and Bulgaria; Stages 2 and 3 include assets in Romania as well as the remaining assets in Ukraine o Subject to, inter alia, shareholder and regulatory approval, SPDI to receive ca. 2.1m shares in and ca. 0.5m warrants over Arcona Property Fund N.V. an Amsterdam-listed
  company focused on Central Eastern European commercial property
  o Signing of the various transaction documents and Closing of Stage 1, subject to any necessary approvals being obtained, expected within July 2019
• Following receipt of a number of expressions of interest, SPDI is in the final stages of negotiations with one particular party with regards to signing an agreement, subject to a number of conditions precedent, including all necessary approvals being granted, to sell Victini Logistics in Greece - finalisation of the agreement expected to occur in July 2019, which will then be followed by negotiations on definitive documentation.

Corporate Highlights

• Appointment of Mr Michael Beys as Non-Executive Chairman
• Post period end - formation of a smaller and more efficient Board comprised of Michael Beys (Chairman), Harin Thaker (Vice-Chairman), Ian Domaille (Non-executive Director), Tony Kaffas (Non-executive) and Lambros Anagnostopoulos (Chief Executive Officer)
• Post period end - formation of an Advisory Council to provide strategic advice and support to the Board

Lambros G. Anagnostopoulos, Chief Executive Officer, said, "Representing 15% of our current market capitalisation, our €1.8m EBITDA for the full year validates what we have been saying for a long time, specifically a huge disconnect has opened up between how the industry and how the stock market value our portfolio of South Eastern European properties. We continue to focus on closing this valuation gap which still stands at >70%.

"The December 2018 announcement on the conditional sale of our non-Greek portfolio for €29,25m, a 95% premium to our then market cap, to Amsterdam-listed Arcona Property Fund N.V. will go some way to achieving this. Not only does the sale value equate to a more realistic valuation of our properties, the all share transaction exposes our shareholders to a dividend-paying fund with a diversified portfolio of income producing properties in Central Eastern Europe valued after closing at ca. €161 million. We are working hard to close the transaction in 2019, at which point we would have taken a major step towards delivering on our objective to build a leading property company focused on the fast-growing economies and strategic intercontinental trade routes of South Eastern Europe."

Copies of the Annual report and Accounts are being posted to Shareholders today and are available on the Company's website at www.secure-property.eu.

Note to readers: Following the conditional agreement signed in December 2018 with Arcona Property Fund N.V for the sale of Company's non-Greek portfolio of assets, as well as plans and discussions regarding the Greek asset, the Company has classified its assets in 2018 as discontinued operations (Note 4.3) and has restated accordingly 2017 figures for comparative purposes.

* * ENDS * *

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

For further information please visit www.secure-property.euor contact:

Lambros Anagnostopoulos

SPDI

Tel: [phone]

Rory Murphy

Strand Hanson Limited

Tel: [phone]

Ritchie Balmer

Jack Botros

Jon Belliss

Novum Securities Limited

Tel: [phone]

Cosima Akerman

St Brides Partners Ltd

Tel: [phone]

Frank Buhagiar

Notes to Editors

Secure Property Development and Investment plc is an AIM listed property development and investment company focused on the South East European markets. The Company's strategy is focused on generating healthy investment returns principally derived from: the operation of income generating commercial properties and capital appreciation through investment in high yield real estate assets. The Company is focused primarily on commercial and industrial property in populous locations with blue chip tenants on long term rental contracts. The Company's senior management consists of a team of executives that possess extensive experience in managing real estate companies both in the private and the publicly listed sector, in various European countries.

1. Chairman Statement

During 2018, the favorable fundamentals of our target markets continued to prevail, with Romania continuing its leading growth within the EU, and Greece finally and firmly on a path to recovery. In general, property markets in our region have continued to experience steady yield compression, as the global search for yield has compelled new investors to allocate funds to these markets. During the period, SPDI continued to pursue opportunities to implement its strategic objective of growing while simultaneously disposing of non-core assets, in order to generate value for its shareholders. Indeed, in 2018 we sold our Praktiker asset in Craiova, the only Romanian property that was not located in Bucharest, and also examined a number of partnership opportunities to grow our asset base.

During the current year, we have intensified such efforts, aiming to consummate a merger-like transaction with Arcona, which we hope and expect to close by year's end.

Michael Beys

Chairman of the Board

2. Letter to Shareholders

Dear Shareholders,

2018 has been a year when SPDI's vision, strategy and asset portfolio attracted a number of third parties interested in joining forces with our Company. In fact, our long standing diligent effort to establish SPDI as the regional property company of reference in South Eastern Europe, proved key to SPDI attracting such interest and most of the year was taken up evaluating various options in order to capitalize on such efforts and generate value for our shareholders.

As the regional economies and related property markets SPDI is present in continued their respective growth trends, SPDI was not only able to sell one of its non-core assets in a substantial cash generating transaction in Q3, but was able to choose among the various options of value-add opportunities available to it. Specifically, as announced in December (with further updates being provided during 2019), we commenced a potential merger like transaction with the Amsterdam and Prague listed Arcona Property Fund N.V. (APF) with assets in Poland, Czech Republic and Slovakia. The closing of the transaction, should we be able to bring it to fruition and subject to the necessary approvals being obtained as expected within 2019, will see our non-Greek assets moving under the corporate umbrella of APF and our shareholders gaining relative exposure to a much larger and broader East European regional property company, as per our original plan. The value that the Arcona transaction places on SPDI is its real Net Asset Value (NAV). Our shareholders will benefit from owning shares and warrants of APF equivalent to NAV, confirming our age old argument that the market has not reflected SPDI's true potential by applying a >50% discount to such value.

In 2018, Romania continued being the fastest growing economy of the European Union and saw property prices continue rising across all sectors, facilitating our residential sales and confirming our choice not to have gone all out on selling such assets the years before. At the same time Bulgarian

property market prices, especially in the residential sector, saw a substantial increase allowing us to prepare the ground for the sale of further residential units in Boyana. Finally, Greece turned the corner and experienced for the first time in years increased output for the year, with its own property market showing signs of strengthening. This led to numerous expressions of interest for our Athens logistics terminal, a property not included in the APF potential deal.

The combination of higher values and sales prices, as well as increased interest in our assets and our platform as a whole, gives us the ability to generate more cash through the sale of non-core assets but also the confidence that one way or another we will be able to reach our objective of generating value for our shareholders through our well placed and efficiently run asset portfolio. The consolidation of our Board of Directors to an active, leaner unit and a strong advisory council we can tap on, offers management the necessary support to continue its all-out efforts and effect the moves needed to achieve SPDI's objectives and ensure that the exercises under way will result in transforming the Company.

Best regards,

Lambros G. Anagnostopoulos, Chief Executive Officer

3. Management Report

3.1 Corporate Overview & Financial Performance

SPDI's core property asset portfolio consists of South Eastern European prime commercial and industrial real estate, the majority of which is let to blue chip tenants on long leases. During 2018, management continued to focus on its strategy to dispose of non-core assets, while at the same time continued to source partnerships which are able to effectively set the grounds for further value creation.

With this in mind, during the period the Company sold the BlueBigBox asset fully let to Praktiker, a regional DIY retailer in Craiova, Romania, generating more than €2,5m in cash.

Most importantly, in 2018 the Company, in line with its strategy to maximise value for shareholders, entered into a conditional implementation agreement for the sale of its property portfolio, excluding its Greek logistics property, in an all-share transaction to Arcona Property Fund N.V, an Amsterdam and Prague listed company that invests in commercial property in Central Europe. Arcona currently holds high yielding real estate investments in Czech Republic, Poland and Slovakia. The transaction values the SPDI assets at ~ €29m, or 225% higher than the current market value of the Company as a whole. If one takes into consideration and assumes the warrants that will be issued together with the ARCONA shares, the transaction values the SPDI assets at their Net Asset Value.

Such sale of the Company's non-Greek portfolio, together with existing debt, is to be settled through the issuance of new Arcona Property Fund N.V. shares which will be distributed eventually to existing SPDI shareholders pro-rata to their shareholding in the Company's shares.