Platzer Fastigheter Annual Report 2015

FY2015 Annual Report · Platzer Fastigheter

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PLAZA CENTERS 2015

ANNUAL

REPORT

PLAZA CENTERSContents

Who we are

Overview
Who we are . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2015 highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Our strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Feature developments . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Debt restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Competitive strengths . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Our markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Our portfolio at a glance . . . . . . . . . . . . . . . . . . . . . . . . 15
Development focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Current portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

This annual report

is not intended for Dutch

statutory filing purposes.

The Company is required to

file an annual report containing

consolidated and Company

financial statements prepared

in accordance with the

Netherlands Civil Code – such

a report will be submitted

in due course to the Dutch

authorities and will be available

for shareholders’ inspection

at the Company’s offices

in Amsterdam.

Business review
Executive Officer’s statement . . . . . . . . . . . . . . . . . . . . . 28
Operational review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Financial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Valuation summary by Cushman and Wakefield . . . . . . . 40

Management and governance
Management structure . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Board of Directors and Senior management . . . . . . . . . 42
Directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Remuneration report . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Statement of the directors . . . . . . . . . . . . . . . . . . . . . . . 67

Financial statements
Independent auditors’ report . . . . . . . . . . . . . . . . . . . . . 68
Consolidated statement of financial position . . . . . . . . . 69
Consolidated statement of profit or loss . . . . . . . . . . . . 70
Consolidated statement of comprehensive income . . . . 71
Consolidated statement of changes in equity . . . . . . . . . 72
Consolidated statement of cash flows . . . . . . . . . . . . . . 73
Notes to the consolidated financial statements . . . . . . . 75

Additional information
Company’s offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

OVERVIEW

Who we are

We are a leading Central and Eastern
European property developer focusing on western-

style shopping and entertainment centers.

The Plaza Centers Group is a leading emerging markets developer

Market in the United States. (For more information visit

of shopping and entertainment centers, focusing on developing

www.elbitimaging.com.)

new centers and, where there is significant redevelopment potential,

redeveloping existing centers, in both capital cities and important

The Group has been present in real estate development in emerging

regional centers. The Group has been present in the Central and

markets for more than 20 years, initially pursuing shopping

Eastern Europe region (“CEE”) since 1996 and was the first to develop

and entertainment center development projects in Hungary and

western-style shopping and entertainment centers in Hungary.

subsequently expanding into Poland, the Czech Republic, Romania,

The Group has pioneered this concept throughout the CEE whilst

Latvia, Greece, Serbia, Bulgaria and India. To date, the Group has

building a strong track record of successfully developing, letting and

developed and let 33 shopping and entertainment centers in the

selling shopping and entertainment centers. Since 2006, the Group

CEE region and India, of which 29 were sold with an aggregate

has extended its area of operations beyond the CEE into India. In

gross value of circa €1.25 billion. 21 of these centers were acquired

2012, Plaza identified, with its joint venture partners, a window of

by Klepierre, a leading player in the continental European shopping

opportunity for investment in the US as a result of the dislocation

center property market, which owns circa 180 shopping centers in

of the property market, specifically within the retail sector. In 2010,

16 countries in continental Europe, with a property portfolio value

taking advantage of its qualities and experience in identifying

of €21 billion as of the year ending 2014. Four additional shopping

opportunities, managing and exiting assets, gained over the years,

and entertainment centers were sold to the Dawnay Day Group.

the Group completed another significant sale of 49 US-based assets,

One shopping center was sold in 2007 to Active Asset Investment

mainly to a joint venture between Blackstone Real Estate and DDR

Management (“AAIM”), a UK commercial property investment group.

Corp. in a transaction valued at US$1.47 billion, which reflects a

The transaction had a completion value totaling approximately

ROE for the Group of nearly 50% in a period of little over 18 months.

€387 million, representing circa 20% of all real estate transactions

completed in Hungary in 2007. Kragujevac Plaza was sold in 2014

During 2014, Plaza successfully completed the restructuring process

to New Europe Property Investments plc (“NEPI”), a publicly traded

midway through the year, with resounding support from its creditors.

commercial property investor and developer in Eastern Europe.

This was followed by the completion of a successful rights offering,

In 2015, Koregaon Plaza mall in India was sold and currently, Plaza is

which provided Plaza with a €20 million capital injection and marked

focusing on the development of two new shopping centers – one in

an important final step in the restructuring process. A third listing

Belgrade, Serbia and in Timisoara, Romania.

on the Tel Aviv Stock Exchange and the recent upgrade in Plaza’s

credit rating from the Israeli division of Standard & Poor’s (from

“D” to “BBB-”, on a local Israeli scale, with a stable outlook), have

further underlined the achievements of the year and strengthened

the Company’s position.

Throughout 2014, Plaza continued operational improvement

and portfolio repositioning. These are clearly illustrated by

significant headway made with the disposal of Kragujevac Plaza

for €38.6 million and successful disposal of non-core sites in

Romania (Targu Mures and Hunedoara) for €4.7 million in line with

the Company’s strategy to pay down debt and shed the portfolio of

non-core assets. At the same time Plaza improved occupancy and

turnover across the Company’s existing shopping and entertainment

centers in CEE, with the overall portfolio occupancy level increasing

Serbia

to 94% as of the year end, reflecting successful asset management

Since 1 November 2006, Plaza Centers N.V.’s shares have been traded

initiatives at Torun Plaza, Riga Plaza, Suwalki Plaza

on the main board of the London Stock Exchange under the ticker

and Zgorzelec Plaza. During 2014 NOI increased by 3.5%.

“PLAZ”. From 19 October 2007, Plaza Centers N.V.’s shares are also

The Company is an indirect subsidiary of Elbit Imaging Ltd. (“EI”), an

ticker “PLZ”, making it the first property company to achieve this dual

Israeli public company whose shares are registered for trade on the

listing, and as of 27 November 2014, Plaza Centers N.V.’s shares are

Tel Aviv Stock Exchange in Israel and on the NASDAQ Global Select

also traded on the Tel Aviv Stock Exchange under the ticker “PLAZ”.

traded on the main list of the Warsaw Stock Exchange under the

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

2015 highlights

Create a more streamlined, better performing business.

Successful sale of non-core assets and subsequent deli-
very of proceeds to bond-holders, a stronger operational
performance across the portfolio and several development

and asset management milestones achieved.

• While disposals resulted in an 8% decrease in Group NOI,

2007

2008

2009

2010

2011

2012

2013

2014

2015

Financial highlights

• Reduction in total portfolio value to €392 million (31 December
2014: €466 million), following strategic disposals (mainly of
Koregaon Park Plaza and the Iasi plot of land) and write-down
and uplift changes at trading properties and equity accounted
investees (related to assets in the Czech Republic (€6.2 million),
Romania (€9.2 million), Poland (€6 million), other regions
(€3.7 million) and an uplift in Serbia (€4.8 million)).
Cash proceeds from disposals were used to repay liabilities from
bonds issued, in line with the restructuring plan.

excluding the impact of the sale of Kragujevac Plaza in 2014, the
Group recorded a 10% increase in NOI (from €14.9 million to
€16.4 million) from the operation of its other shopping centres
including equity accounted investee.

• Net Asset Value decreased to €114 million (31 December 2014:
€153 million) primarily as a result of an increased NIS against
the EUR, as well as the write-down of assets, mainly in the Czech
Republic, Romania and Poland.
- Net Asset Value per share of £0.12 (31 December 2014: £0.17),

attributable to the abovementioned factors.

• Losses in the period reduced significantly to €46 million

(31 December 2014: loss of €120 million), stemming from a
non-cash €19.4 million impairment of trading properties and
equity accounted investee (31 December 2014: €87.5 million of
impairments), and an overall mostly non-cash net finance cost of
€31 million (2014: €36 million).
- Basic and diluted loss per share of €0.07 (31 December 2014

loss per share of €0.39).

• Consolidated cash position at year end (including restricted bank

deposits, short term deposits and held for trading financial assets)
of €20.4 million (31 December 2014: €41.7 million) and current
cash position of circa €18 million (€5.5 million restricted).

• Gearing increased to 79% (31 December 2014: 74%) as a result of

write-down and finance costs incurred during the year.

Operational and Group highlights:

• On 13 May 2015, Plaza announced the agreement to sell its Indian
shopping mall located in Pune, India, for c. €35 million. The net
cash proceeds (after repayment of the related bank loan, other
liabilities and transaction costs) from the sale were c. €7.4 million
(525 million INR), which are being put towards Plaza’s future
investments and used for general corporate purposes.

Total assets
2015: €392 million

2014: €466 million

€m

1500

1200

900

600

300

270

240

210

180

150

120

Consolidated cash position*
2015: €20.4 million

2014: €41.7 million

€m

2007

2008

2009

2010

2011

2012

2013

2014

2015

* Including restricted bank deposits, short term deposits and held for trading financial assets

sqm), for a gross consideration of €7.3 million. There was no
bank debt secured against the property. In line with the Company’s
stated restructuring plan, 75% of the net cash proceeds from the
transactions were distributed to the Company’s bondholders at the
end of September 2015 as an early principal repayment.

• Plaza’s subsidiary, Elbit Plaza India Real Estate Holdings

Limited (in which Plaza holds a 50% stake with its joint venture
partner, Elbit Imaging Ltd.) (“EPI”), on 2 December 2015 signed
an agreement to sell 100% of its interest in a special purpose
vehicle which holds a site in Bangalore to a local investor.
The total consideration for the sale is INR 321 Crores (circa
€45.4 million) which will be paid when the transaction closes.
Following this closing, 50% of the proceeds will go to Plaza, of
which 75% will be repaid to the Company’s bondholders in line
with the Company’s stated restructuring plan. The transaction is
subject to certain conditions precedent, and closing will take place
once these conditions are met and no later than 30 September
2016. The investor is providing certain security in order to
guarantee this deadline.

• On 24 June 2015, Plaza reached an agreement to sell its 46,500 sqm
development site in Iasi, Romania, in two separate transactions
(one for the sale of 37,334 sqm and the other for the sale of 9,166

• A stable occupancy level was recorded across the Company’s

existing shopping and entertainment centres in the CEE, with the
overall portfolio occupancy level at 94.96% as of 31 December
2015 (31 December 2014: 95.34%).

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

2015 highlights

Net Asset Value (NAV)
2015: €114 million

2014: €153 million

2007

2008

2009

2010

2011

2012

2013

2014

2015

Profit (Loss) after tax
2015: €(46) million

2014: €(120) million

- A 10.6% turnover increase was recorded at Liberec Plaza,

compared to 2014, while occupancy remained stable at 83.67%
(2014: 84%).

€m

1200

1000

800

600

400

200

• Considerable letting success was achieved across the portfolio
and contracts were agreed with a number of significant new
tenants. This improved the overall tenant strength and mix in the
portfolio, and included agreements with KIK, Kinder Planeta, Pink
and Cliff Sport. In the second half of the year, Adidas, Drogas,
Calzedonia, Subway and other well-known brands opened stores
in Latvia at Riga Plaza. Both Suwalki Plaza and Zgorzelec Plaza
successfully agreed to extend their first five-year lease agreements
which helped to keep a high occupancy level and will deliver a
more resilient, higher quality income over the coming years.

• On 21 December 2015 Mr. Ron Hadassi was reappointed as

Chairman of the Board of Directors following a meeting of the
Board.

€m

250

200

150

100

-50

-100

-150

-200

-250

2007

2008

2010

2011

2009

2015

2012

2014

2013

- At Torun Plaza, Poland, occupancy increased to 96.08% (2014:
92.5%) and turnover remained stable despite a slight decrease
of 3.2% in footfall.

- Riga Plaza in Latvia recorded an 8.6% increase in turnover
along with a 2.2% increase in footfall, compared to 2014.
A small decrease in the occupancy level to 97% (2014: 99.5%)
was a direct result of a small number of retailers exiting the
Latvian market altogether.

- Suwalki Plaza, Poland, continued to perform well, with a 2.5%
increase in turnover in 2015 and 5.7% increase in footfall,
compared to the same period in 2014. Occupancy decreased
very slightly to 96.5% compared to the same period in 2014
(97.7%).

- Zgorzelec Plaza delivered a 2.8% increase in turnover compared

to the same period in 2014, while footfall remained stable.
The increase was despite a reduction in occupancy from 95.2%
to 88.91% after the closure of the Stokrotka supermarket,
following which successful discussions with tenants resulted in
most of them agreeing to remain at the centre.

Key highlights since the period end

• Since the year end, on 28 January 2016 Plaza announced the

appointment of Dori Keren and Yitshak (Izzie) Elias to the roles
of Acting Chief Executive Officer and Chief Financial Officer,
respectively. Both roles will become effective on 1 April 2016 while
Dori Keren became Chief Executive Officer on 1 January 2017.

• On 4 March 2016, Plaza agreed to sell its subsidiary holding

Liberec Plaza, a shopping and entertainment centre in the Czech
Republic, for €9.5 million. In line with the terms of the agreement,
the buyer deposited 15% of the consideration in escrow. The
due diligence process, final closing and settlement is expected to
conclude by the end of March. The disposal follows an agreement
announced by Plaza on 29 September 2015 whereby a wholly
owned subsidiary of Plaza (”PCE”) won a tender to buy the loan
to the holding and operating company for Liberec Plaza for €8.5
million. Upon completion of the Liberec Plaza disposal, PCE will
receive €8.5 million on account of the bank loan it previously
purchased. Out of the remaining proceeds, 75% will be distributed
to the Company’s bondholders by the end of June this year.

• On 24 March 2016 Plaza completed the sale of its 23,880 sqm
site in Slatina, Romania, to a third party developer for €0.66
million, consistent with the asset’s last reported book value. In line
with the Company’s stated restructuring plan, 75% of the cash
proceeds will be distributed to the Company’s bondholders by the
end of June this year as an early repayment.

• Today, 29 March 2016, Plaza announces that Sarig Shalhav,
a Non-Executive Director of the Company, has indicated his
intention to retire from the Board in June 2016 to allow him to
focus on other interests. The Board wishes to thank Mr Shalhav
for his contribution over previous years, and will confirm any
changes to the Board if and as required in due course.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Our strategy

Develop

Plaza develops modern, western-style shopping and entertainment

centers in capital and regional cities, primarily in Central and Eastern

Europe.

Acquire

Plaza may acquire operating shopping centers that have significant

redevelopment or growth potential.

Flexibility

Depending on market yields, Plaza either pre-sells or holds and

manages its assets until the exit yields are sufficiently attractive.

Maintain liquidity and debt management

2015 was an important year for Plaza as we progressed our plans

to create a more streamlined, better performing business. Our

focus on the disposal of non-core assets continued as we reduced

each of the series of Notes (A, B, Polish) each in accordance

with its deferred debt ratio. Such prepayment will be actual cash

repayment and not in bond purchases. In 2015, Plaza paid

€19.3 million to bondholders and, since the restructuring plan

was approved in 2014, a total of €47 million (of which €19 million

for principal and rest for interest) has been distributed as well as

13.21% of shares in the Company.

Plaza will continuing to reduce corporate level debts by early

repayments following sale of assets according to the Company’s debt

restructuring agreement, and achieving a one year deferral period on

bond principal repayments per the restructuring plan.

Plaza shall not make any dividend distributions, unless at least 75%

of the unpaid principal balance of the debentures (€199 million)

has been repaid and the coverage ratio on the last examination date

prior to such distribution is not less than 150% following such

distribution.

Plaza continued to focus on deleveraging its balance sheet during the
period but, as a result of impairment losses recorded in the period and

total assets. This approach has been allowing us to concentrate on

finance costs incurred, the gearing level increased to 79% in 2015.

superior assets in our prime areas of focus within CEE, whilst at the

same time delivering proceeds to bondholders.

Objectives

Plaza ended the year with a consolidated cash position (including

1 To concentrate on existing projects and target new development

restricted bank deposits) of approximately €20.4 million, of which

opportunities in the strongest countries in Central and Eastern

circa €4.8 million of cash is held as restricted cash on a consolidated

Europe that have the potential to generate returns of 40% to 60%

basis. Working capital as at 31 December 2015 totalled negative €98

on equity invested.

million chiefly due to the reclassification of €80 million mentioned

above and as trading properties were classified as non-current assets

2 To fund 50% to 65% of total project construction costs through

in the Financial Statements, The Company’s current cash position is

competitively priced bank finance.

circa €18 million (of which €5.5 million is restricted).

At the start of 2016, Plaza’s credit rating by Standard & Poor’s

meet two major criteria, namely intensive demand from tenants

Maalot, the Israeli credit rating agency which is a division of

and those which are backed by external bank financing to ensure

International S&P, was maintained on “BBB-” on a local Israeli

minimal equity investment.

3 To limit the commencement of construction projects to those that

scale with a negative outlook.

4 Plaza will continue to pursue its intensive asset management

Pursuant to the restructuring plan, the net cash flow to be received

strategy which has seen clear success at the Company’s income-

by Plaza following an exit or the raising of new financial indebtedness

generating centers in the CEE, where Plaza’s focus remains on

(except if taken for the purpose of purchase, investment or

initiatives that will drive occupancy levels, footfall and turnover to

development of real estate assets (“REA”) or the refinancing of REAs

maximise income and deliver value.

after the full repayment of the asset’s related debt that was realised

or in respect of a loan paid in case of debt recycling and direct

expenses in respect of the asset) will be used for the repayment of

5 Plaza will continue to drive the reshaping of the portfolio with the
disposal of further non-core assets and matured assets in order

the accumulated interest until that date for all of the series of Notes

to deleverage the balance sheet and advance key development

and 75% of the remaining cash (following the interest payment) will

projects in core geographies including Timisoara in Romania,

be used for an early repayment of the near principal payments for

Belgrade in Serbia.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Our strategy

6 Continue with efficiency measures and cost reduction where

Project development

possible. At the end of 2015 G&A expenses phase was reduced to

Once the Company has approved a site, Plaza manages its

below €6 million following stringent cost control initiatives, e.g.

development from inception to completion, incorporating

the Board was reduced from seven to five members.

engineering, marketing, financial and legal stages, designs,

Development criteria

Selection of target countries

architects, market forecasts and feasibility studies.

Emerging markets

Plaza’s primary focus is on countries in emerging markets and

Plaza has a strong track record in developing real estate projects

the Company is currently present in CEE. In order to determine a

such as shopping and entertainment centers in emerging markets.

favourable investment climate, Plaza takes into account country risk,

The Group has been present in the CEE region since 1996 and was

GDP per capita and economic growth, ratio of retail sales per capita,

a pioneer in bringing western-style shopping malls to Hungary.

political stability, sophistication of banking systems, land ownership

The concept continued throughout the CEE on the fantastic

restrictions, ease of obtaining building and operating permits, busi-

opportunities that emerging markets have offered. Plaza carefully

ness risks, existing competition and market saturation levels.

investigates the benefits and challenges inherent in every proposed

project, adhering to its development criteria.

Site evaluation

Plaza looks to develop its first project in the capital city of a new

The Company is currently focusing its development efforts on

country, and thereafter in regional cities with a minimum catchment

Romania and Serbia. Plaza will continue to advance remaining

area of 50,000 residents. Site evaluation includes site area,

projects within its land bank, through obtaining planning consents

catchment area, local zoning and town planning schemes, proximity

and construction permits with its main focus on advancing related

to transportation and vehicular routes and legal issues. A carefully

permits and approvals for the Casa Radio project in Bucharest,

structured, internally developed evaluation process is in place

Romania and continuing processes to secure relevant local planning

involving each of the relevant disciplines (economics, engineering,

and permitting approvals for the Belgrade (“MUP”) project in Serbia

marketing, etc.).

and Lodz Plaza project in Poland.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Feature developments

Since its creation, the Group has developed and let 32 shopping and entertainment centers
in the CEE region and one in India of which 29 have been sold with an aggregate gross value
of €1.25 billion.

Plaza currently owns and manages four shopping and entertainment centers. The overall occupancy level of Plaza’s shopping and entertainment

centers was 95%. Liberec Plaza, the Company’s center in the Czech Republic, was sold in March 2016.

Riga Plaza
(Latvia)

Opened March 2009

Plaza share 50%

49,000
sqm GLA

Riga Plaza shopping and entertainment center is located

on the western bank of the Daugava river by the Sala Bridge.

The two-floor mall includes an eight screen multiplex cinema

and 2,000 sqm of Fantasy Park. The center continues to deliver

significant operational success, seeing occupancy levels at

97%.The shopping center recorded an 8.6% increase in turnover

along with 2.2% increase in footfall compared to last year.

In the second half of 2015, well known brands such as Adidas,

Drogas, Calzedonia and Subway opened stores in the shopping

center. The group is in negotiations for the sale of the center.

Opened March 2010

Plaza share 100%

Zgorzelec Plaza
(Poland)

13,000
sqm GLA

Zgorzelec Plaza reported a 2.8% increase in turnover while

footfall remained steady compared to 2014. The increase was

despite a decrease in the occupancy from 95.2% in 2014 to

88.9% in 2015 due to the colsure of Stokrotka supermarket.

New openings in 2015 include Lee Wrangler, Diverse, Rossmann

(additional space), Pink and Monnari.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Suwalki Plaza
(Poland)

Opened May 2010

Plaza share 100%

20,000
sqm GLA

Suwalki Plaza, the three-floor shopping and entertainment centre

which includes a three-screen cinema and a bowling center as

well, continues to perform well with a 2.5% increase in turnover

in 2015 and 5.7% increase in footfal compared to last year.

Occupancy decreased very slightly to 96.5% from 97.7% in 2014.

New stores such as KIK, Kinderplaneta and Pink opened during

2015, while most existing tenants have signed lease renewals

with the fifth anniversary of the shopping center.

Liberec Plaza
(Czech Republic)

Opened March 2009

Plaza share 100%

17,000
sqm GLA

Liberec Plaza shopping and entertainment center reported a

10.6% increase in turnover in 2015, with occupancy remaining

steady at 84%. The shopping center was sold in March 2016.

Opened November 2011

Plaza share 100%

Torun Plaza
(Poland)

40,000
sqm GLA

Torun Plaza, which comprises approximately 40,000 sqm of

GLA, is Plaza’s tenth completed center in Poland. The center’s

occupancy has increased to 96% in 2015 (2014: 92.5%).

New leases were signed with tenants such as LPP brands,

Resto Design, Phramaland and Sizeer, and openings are

expected in 2016.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Debt restructuring

General

On 14 November 2013, Plaza Centers announced that its Board of

Directors had concluded that the Company would withhold payment

on the upcoming maturities of its bonds and approach its creditors

with a restructuring plan. The restructuring plan was approved on

26 June 2014 by the vast majority of the Company’s creditors and,

subsequently, approved by the Court on 9 July 2014, becoming an

irrevocable decision on 21 July 2014. The Company announced

the publication of a prospectus in respect of a rights offering on

16 October 2014. The shareholders approved the rights offering on

28 November 2014 which was followed on that date by the capital

injection of €20 million by the existing shareholders. All conditions

precedent of the restructuring plan were fulfilled.

The creditors included in the debt restructuring were the bondholders

in Israel, the bondholders in Poland and the banks at asset level with

a right of recourse to the parent company.

Plaza’s ordinary shares were listed for trade on the Tel Aviv Stock

Exchange with effect from 27 November 2014.

Summary

A summary of the main terms of the restructuring plan are set

out below:

• An injection of €20 million into the Company at a price per share

of €0.0675 (the “equity contribution”).

• The Company issued to the holders of unsecured debt (i.e.

outstanding debt under the Israeli Series A and B Notes and

the Polish Notes) (“unsecured debt”) 13.21% of the Company’s

shares (“post equity contribution”). Such shares issuance was

distributed among the holders of unsecured debt pro rata to

the relative share of each relevant creditor in the deferred debt

(“deferred debt ratio”).

• Each principal payment under the debentures due in the years

2013, 2014 and 2015, pursuant to the original terms of the

debentures, shall be deferred by exactly four and a half years

and each principal payment due pursuant to the original terms

of the debentures in subsequent years (i.e. 2016 and 2017) will

be deferred by exactly one year. In the event that the Company

does not succeed in prepaying an aggregate amount of at least

€92 million (NIS 434 million) of the principal of the debentures,

excluding linkage differentials within a period of two years

ending 1 December 2016, then all principal payments under the

debentures deferred in accordance with above, shall be advanced

by one year (i.e. shall become due one year earlier).

• All unpaid interest accrued on the Israeli debentures and Polish

debentures up to and including 31 December 2013 will be added

to the principal and paid together with it.

• As of 1 January 2014, the annual interest rate of the unsecured

debt increased by 1.5%.

• The Company paid to the holders of the unsecured debt an

amount of €13.8 million in 2014 interest payments.

• The Company and all other companies of the Group, the current

and former directors and officers of the Group, all direct and

indirect shareholders of the Group from any and all liability under

any applicable law other than with respect to claims or demands

regarding which the grounds are fraud or malice or other ground

for which a release is not permitted by law.

• The net cash flow to be received by the Company following an exit

or the raising of new financial indebtedness, except if taken for

the purpose of purchase, investment or development of real estate

assets (“REA”) or refinancing of REAs after the full repayment of

the asset’s related debt that was realised 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 the

repayment of the accumulated interest until that date for all of the

series (in the case of an exit which is not one of the four shopping

centers, only 50% of the interest) and 75% of the remaining

cash (following the interest payment) will be used for an early

repayment of the near principal payments for each of the series

of Notes (A, B, Polish) each in accordance with its deferred debt

ratio. Such prepayment will be actual cash repayment and not in

bond purchases.

• Permitted disposals (provisions with respect to the four shopping
malls) – The Company will be allowed to sell the four shopping
malls (Torun, Suwalki, Kragujevac and Riga) or to undertake a

refinancing for any of these (hereinafter “disposal event”), subject

to the cumulative net cash flow in the disposal event in respect of

these four shopping malls being no less than €70 million. Should

no disposal event occur for the four shopping malls together, the

Company will be allowed to perform a special purpose disposal

event only if, after execution of the special purpose disposal event,

the surplus value of the shopping malls not sold (according to

the valuation deducting the specific debt to banks) is no less than

€70 million, deducting the net cash flows received from previous

disposal events and deducting the net cash flow from the special

purpose disposal event.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Debt restructuring

• Restrictions on issuance of additional debentures – The Company
undertakes not to issue any additional debentures other than is

expressly provided for in the restructuring plan.

• Restrictions on amendments to the terms of the debentures –
The Company shall not be entitled to amend the terms of the

• Limitations on incurring new FI by the Company and the

subsidiaries – The Company undertakes not to incur any new FI
(including by way of refinancing an existing FI with new FI) until

the outstanding debentures debt (as of 30 November 2014) has

been repaid in full, except in certain events, mainly:

debentures, with the exception of purely technical changes, unless

- the new FI is incurred for the purpose of investing in the

such amendment is approved under the terms of the relevant

development of a real estate asset;

series and the applicable law and the Company also obtains

- the new FI is incurred by a subsidiary for the purpose of

the approval of the debentures holders of all other series of

purchasing a new REA by such a subsidiary, provided that

debentures issued by the Company by ordinary majority.

following such a purchase the cash reserve is not less than the

• Coverage ratio covenant (“CRC”) – CRC is equal to asset value
plus cash and cash equivalents less the Group’s bank liabilities

secured by an encumbrance over any of the Group’s rights or

MCRC;

- at least 75% of the net cash flow resulting from the incurrence
of new FI is used for a mandatory early repayment of the Notes.

assets or otherwise rank in priority ahead of the plan claims;

• Dividend policy – Plaza shall not make any dividend distributions,

and divided by the aggregate amount of remaining plan claims

unless (i) at least 75% of the unpaid principal balance of the

plus all other liabilities of the Group that rank pari passu with the

debentures (€199 million) has been repaid and the coverage ratio

plan claims and that are not subordinated debt. The calculation

on the last examination date prior to such distribution is not less

is based on known Group valuations reports and consolidated

than 150% following such distribution, or (ii) a majority of the

financial information available at each reporting period. Minimum

plan creditors consents to the proposed distribution.

CRC deemed to be complied with by the Group is 118% in each

reporting period.

• Minimum cash reserve covenant (“MCRC”) – The cash reserves
of the Company have to be greater than the amount estimated

by the Company’s management required to pay all administrative

and general expenses and interest payments to the debentures

holders falling due in the following six months, minus sums of

proceeds from transactions that have already been signed (by

the Company or a subsidiary) and closed and, to the expectation

of the Company’s management, have a high probability of being

received during the following six months. Investments in new or

existing REA of the group shall not be permitted if following such

investment the cash reserves are less than the minimum cash

reserve and minimum CRC is not met.

• Negative pledge on REA of the Company – The Company

undertakes that until the debentures have been repaid in full,

it shall not create any encumbrance on any of the REA, held,

directly or indirectly, by the Company except in the event that

the encumbrance is created over the Company’s interests in a

subsidiary as additional security for financial indebtedness (“FI”)

incurred by such subsidiary which is secured by encumbrances on

assets owned by that subsidiary.

• Negative pledge on the REA of subsidiaries – The subsidiaries

shall undertake that until the debentures has been repaid in full,

none of them will create any encumbrance on any of REA except

certain cases.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Debt restructuring

History of corporate debt raisings and bond repayments by the Company

The Company raised debt in Israel by issuing marketable bonds and in Poland by private issuance

Bond raising

Series A

Series B

Polish Bonds

Israeli Bonds, NIS

EURO

401,850,451

1,483,126,346

15,085,058*

Interest accrued and capitalised 31/12/2013

6,652,927

16,055,759

665,575

Directly purchased by Plaza - Removed from the cycle

(8,253,378)

(96,443,579)

Bond raising, net

400,249,999

1,402,738,526

15,750,633

Principal payments over the years (until 31/03/2016)

(187,773,030)

(1,101,533,108)

Interest payments over the years (until 31/03/2016)

(132,683,985)

(415,051,754)

Total payments

(320,457,015)

(1,516,584,862)

Total payments over the years as percentage of total raising, net (%)

80.06%

108.12%

(1,791,519)

(5,430,726)

(7,222,245)

45.9%

* 60,000,000 PLN

Activities Following Approval of Restructuring Plan

Sales of assets since approval of the Restructuring Plan

September 2014: Completed the sale of a 31,500 sqm plot in Targu Mures, Romania, generating cash proceeds of €3.5 million.

Completed the sale of Kragujevac Plaza Shopping and Entertainment centre in Kragujevac, Serbia for a total consideration of

€38.6 million. The net cash proceeds from the sale were €12.2 million.

December 2014: Completed the sale of a 41,000 sqm plot in Hunedoara, Romania generating cash proceeds of €1.2 million.

February 2015: Completed the sale of part of a plot in Lodz, Poland for €0.5 million.

May 2015:

Completed the sale of a 17,000 sqm plot in Brasov, Romania generating cash proceeds of €0.33 million.

Completed the sale of Koregaon Park Plaza Shopping and Entertainment Centre located in Pune, India for circa €35 million.

The net cash proceeds from the sale, circa €7.4million, were put towards Plaza’s future investments and used for general

corporate purposes. The mall was underperforming and created negative NOI, and circa €14 million of its bank loan was

recourse to the parent company.

June 2015:

Completed the sale of a 46,500 sqm plot in Iasi, Romania generating cash proceeds of €7.3 million.

September 2015: Completed the sale of an office building in Bucharest, Romania (823 sqm GLA) for €1.1 million.

December 2015: Completed the transaction to waive the Company’s leasing rights to the Cina property in Bucharest, Romania, which has

been sold by its owner. The gross proceeds from the transaction were circa €2.7 million.

March 2016:

Completed the sale of Liberec Plaza Shopping and Entertainment Centre in Liberec, Czech Republic for €9.5 million

(the Company received €8.5 million (out of the €9.5 million) on account of the Liberec bank loan it purchased in 2015).

March 2016:

Completed the sale of a 23,880 sqm plot in Slatina, Romania generating cash proceeds of €0.66 million

March 2016:

Signed a binding pre-agreement to sell its development land in Piraeus, near Athens, Greece, for €4.7 million.

The sale agreement with a third party developer is subject to certain conditions being met, including due diligence which has

up to six months to complete.

Improving Performance: Continuing improvement of the occupancy levels and NOI of the malls, extending leases and stabilising performance.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Debt restructuring

Bank Loans- Refinancing and Discounts

February 2014: Following the sale of its airplane for US$1.9 million, the Company reached a settlement with the airplane financing bank for a

reduced repayment of US$1.1 million (out of the outstanding balance of US$1.9 million). The settlement generated a gain of

US$0.81 million (€0.6 million) in the Company’s books.

May 2015:

The Company concluded the sale of Koregaon Park Plaza in Pune, India, which eliminated a recourse component of the loan

of circa €14 million (the recourse would have matured four years from the restructuring approval - July 2018).

June 2015:

The Company concluded the sale of an SPV holding a plot comprising a c. 1,200 sqm plot in Ploiesti, Romania for a total

consideration of €240,000. The proceeds were used to repay an outstanding bank loan and no proceeds were obtained by

the Group. A waiver was obtained for the remainder of the unpaid bank loan facility, totaling €1.4 million, and the Company

therefore recorded a gain, included as finance income in its consolidated financial statements.

September 2015: A subsidiary of the Company has won a tender to buy the loan of the wholly owned holding and operating company for

Liberec Plaza shopping and entertainment centre in the Czech Republic. Plaza has agreed to buy the €20.4 million bank loan

(which was provided by two commercial banks) for €8.5 million, reflecting a discount of 58%. The Company recorded a

profit on the discount (circa €12 million) in its financial statements for the second half of 2015. The Liberec loan was a full

recourse loan (the recourse would have matured four years from the restructuring approval - July 2018).

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Competitive strengths

Com petitive strengths

2015 was an important year for Plaza as we progressed our

plans to create a more streamlined, better performing business.

Our focus on the disposal of non-core assets continued as we

reduced total assets. This approach has been allowing us to

concentrate on superior assets in our prime areas of focus within

Central and Eastern Europe, whilst at the same time delivering

proceeds to bondholders and creating a stronger business for our

shareholders.

Performance across our shopping centres has been stable during

the year, with an overall portfolio occupancy level of 94.96% as of

31 December 2015 (31 December 2014: 95.34%).

Rental income fell during the year compared with previous year.

This reduction reflects the fewer properties managed by Plaza

however, importantly, the quality of the income is now higher and

more resilient, reflecting the superior portfolio of assets. To that end,

taken on a like for like basis, rental income of the assets Plaza owns

actually increased during the period.

Over the course of 2015, in line with the restructuring plan agreed

in 2014, we repaid 75% of proceeds from disposals to bondholders.

Since the restructuring plan was approved, Plaza has now returned

€47 million (of which €19 million is principal and the remainder

interest) to bondholders, in addition to 13.21% of shares in the

Company. Pleasingly, at the start of 2015, Plaza’s credit rating by

Standard & Poor’s also improved from “D” to “BBB-” on a local

Israeli scale with a stable outlook.

More generally, we have been seeing economic improvement

across our core geographies but the Board remains vigilant to

wider macro-economic factors. Without doubt, 2015 was a year of

significant progress and we look ahead towards further improving

performance across our assets in 2016, with construction starting on

key developments, and taking action to reduce leverage and provide

proceeds to bondholders through the ongoing disposal of non-core

and mature assets.

The Directors believe that the Group has a number of strengths that

enable it to compete effectively in the industry in which it operates.

These strengths include the following:

Proven track record and Geographical reach

Plaza has been active in the CEE for 20 years and together with its

regional teams has developed projects in eight countries.

The Company’s strong track record in successfully selling (and

sometimes pre-selling) its centers is demonstrated by the sale of

developments between 2004-2008 to Klépierre, a major player in

continental Europe’s retail property market, Dawnay Day, then one

of the UK’s leading institutional property investors and aAIM. The

Group also has continuing relationships with leading institutional

property developers and strategic buyers. Monitoring the economic

and financial developments in the CEE markets since the financial

turmoil of 2008, the Group has positioned its development program

to ensure that it can deliver shopping centers into markets with the

highest retail demand. Between 2009-2012, the Group has opened

seven shopping centers and currently operates them using its

management experience, while benefiting from their rental income,

until sufficient sale prices are achieved. Despite the challenging

economic conditions in the CEE, the Group has managed to conclude

some significant transactions between 2012-2015.

In 2012, Plaza has managed to utilize its experience and “know-how”

in the shopping center field to enter the US commercial real estate

market in 2010, resulting in the acquisition of 49 US-based shopping

centres, which were later sold in a transaction valued at USD 1.47M,

representing a 50% return on equity for Plaza in a period of 18

months. In addition, during 2013-2015, in line with its disposal prog-

ram, the Company has managed to successfully sell some of its

assets—Kharadi and Trivandrum projects and Koregaon park Plaza

shopping and entertainment centre in India, Prague 3 and a plot in

Roztoky in the Czech Republic, Dream Island and existing shopping

center Uj Udvar in Hungary, as well as the sale of certain plots in

Targu Mures, Brasov, Iasi in Romania and sale of its office buil-

ding and transaction to waive its leasing rights of cina property both

located in Bucharest, the sale of part of a plot in Lodz, Poland and

the sale of Kragujevac shopping center in Serbia.

Highly skilled management team

In its 20 years of operation, the Group’s highly qualified real estate

professionals and local management teams have accumulated

extensive knowledge of local markets and demonstrated a proven

ability to source strategic development sites, design attractive and

innovative projects that meet the demands of the local market and

obtain planning and building permissions expeditiously. The Group

runs a highly efficient construction process in order to minimize

costs- the Group has completed many of its developments within a

construction timeframe of between twelve and twenty-four months

and without budget overruns.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Com petitive strengths

The Directors believe that it is this efficiency and quality of execution

together with the Company’s local knowledge and infrastructure that

has given the Group its competitive advantage in each of its principal

Flexibility and ability to anticipate and
adapt to market trends

Plaza is well positioned to satisfy the significant retail demand

resulting from rapidly growing household incomes, as well as the

increasingly westernised tastes and habits of emerging market

populations. Decisions to dispose of portfolio properties are based

on in-depth analysis of market conditions.

During the years 1996-2004, when exit yields (yields of realization)

were high, the Group retained and operated shopping centers

on completion and gained rental income. Once property yields

decreased, starting 2004, the Group started selling its shopping

centers in line with the commercial decision to focus its busi-

ness more on development and sale rather than operating. While

yields are high, the Group has the management skills to operate

the assets and benefit from their rental income, as done in the

past, until the next low yields cycle. Plaza continues to focus on

improving the performance of the shopping centre portfolio, applying

the Company’s strong asset management capabilities and specific

emphasis on reducing leverage as well as the further rationalisation

and strengthening of the portfolio by disposing of non-core

properties

markets.

Extensive network

The Company has strong relationships with the banks accompanying

the projects in the operational regions, as well as with international

and local retail brands – such as H&M, Inditex, C&A, TKMaxx,

New Yorker, Peek & Cloppenburg and Reserved, which rent space

in the shopping centers, and also with international real estate

funds, which invest in assets in different countries. The strength of

such relationships is demonstrated by the Company’s track record

of signing up tenants, with 80% to 100% of each shopping and

entertainment center developed by the Group having been let within

the first two years after opening and at least 70% of each shopping

center having been pre-let during the construction period.

Plaza is also able to benefit from Elbit’s knowledge and experience in

the hotel field for future development opportunities

Strong brand name

Plaza Centers has become a widely recognised brand name for

successful property development in CEE, which is beneficial at

all stages of project execution (e.g. following portfolio sales to

Klépierre, Dawnay Day and aAIM, the purchasers continue to use

the “Plaza Centers” brand name under license).

Thorough project evaluation

Prior to each project, Plaza goes through a carefully developed,

structured evaluation process involving each of the relevant

disciplines (economics, engineering, marketing, etc).

Successful project management

Almost all projects to date completed on time and within budget.

Capital Markets

Plaza’s shares are traded in the London Stock Exchange (“LSE”), the

Warsaw Stock Exchange (“WSE”) and in the Tel-Aviv Stock Exchange

(“TASE”), providing platform needed for raising funds for new

projects and operations.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Our markets

Europe

Poland

Serbia

Romania

Latvia

Czech Republic

Greece

Bulgaria

Hungary

India

Population (m)*

Poland

Serbia

Romania

Latvia

38.6

7.2

21.7

Czech Republic

10.6

GDP per capita*

Greece

Bulgaria

Hungary

India

10.8

7.2

9.9

1,252

US$ ’000

Poland

Serbia

Romania

Latvia

Czech
Republic

Greece

Bulgaria Hungary

India

Unemployment*

Poland

Serbia

Romania

Latvia

Czech
Republic

Greece

Bulgaria Hungary

India

CPI - Change in 2015*

* Source: CIA – The World Factbook

Poland

Serbia

Romania

Latvia

Czech
Republic

Greece

Bulgaria Hungary

India

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Our portfolio at a glance

Total of 21 assets located across CEE region and in India.
Estimated value of €1,733 million on completion.

Portfolio composition – by country

Market value of the land and project (€m)

€m

200

Active

Under development/planning

Offices

Poland

Serbia Romania

Latvia

Czech
Republic

Hungary Greece

Bulgaria

India

Project

Complete and active projects

Current developments

Pipeline projects

Total as at 31 December 2015

164

Serbia Romania

Latvia

111

Greece

Bulgaria Hungary

India

Czech
Republic

160

120

Market value on
completion (€m)1

Market value of the land
and the project (€m)1

210

894

6292

1,733

210

134

399

1 Value of Plaza Centers’ stake by Cushman and Wakefield as of 31 December 2015.

2 Chennai project was valued with the comparative sales price method, no value at completion was estimated.

Group NAV at 31 December 2015

Net Financial Debt

Asset values*

Operating assets

Development Assets**

Pipeline assets

Office Building

Total

Other assets and liabilites

NAV

* Based on Cushman and Wakefield valuation.

** Including 100% of Casa Radio due to the material owners loan.

EUR Million (314)

210

162

427

114

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Development focus

The Company took the strategic decision to scale back on starting new projects and
acquisitions, and to focus on projects with availability of external financing or strong
tenant demand. In 2016 the Group plans to progress the development of Belgrade Plaza
(Visnjicka) in Serbia and Timisoara Plaza in Romania. In addition, in the near future the
Group intends to focus on the developments of Casa Radio project (first phase) in Romania
and Belgrade Plaza (MUP) in Serbia.

Timisoara Plaza

Romania
40,000 sqm GLA

Plaza owns a plot of land with an area of 32,000 sqm in Timisoara,

Romania, on which it is intending to develop a shopping and enter-

tainment center. The planned center will have a GLA of approximately

40,000 sqm and includes a hypermarket, fashion retailers, and

restaurants. Construction is expected to commence in 2016 and

the center is expected to open during the second half of 2017.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Belgrade Plaza
(Visnjicka) Serbia
32,000 sqm GLA

Plaza owns a 31,000 sqm plot of land in Belgrade, the capital of Serbia.

The Belgrade market offers potential with its large populated catchment

area of approximately 1.7 million people. Plaza intends to develop a

new shopping and entertainment center with a GLA of approximately

32,000 sqm. Construction commenced in 2015 and the center is

scheduled to open in 2017.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Current portfolio

Poland

Project

City

Ownership

GLA (sqm)

Market value Market value of the

Expected

on completion

land and project

completion

31 December

2015 (€)

97,725,000

97,725,000 Opened in Q4 2011*

43,250,000

43,250,000 Opened in Q2 2010*

12,050,000

12,050,000 Opened in Q1 2010*

70,911,000

60,533,000

n/a1

7,400,000

3,325,000

n/a1

n/a1 Under sale process

40,000

20,000

13,000

35,000

33,000

16,000

24,7002

100%

Torun Plaza

Suwalki Plaza

Zgorzelec Plaza

Lodz Plaza

Kielce Plaza

Leszno Plaza

Lodz (Residential)

* Operating

Torun

Sulwalki

Zgorzelec

Lodz

Kielce

Leszno

Lodz

** Under planning and feasibility examination

1 External valuation was not conducted.

2 Gross area of the plot.

Plaza has completed 10 shopping and entertainment

centers in Poland of which seven have already been sold.

Currently the Group owns and operates three shopping and

entertainment centers across Poland. During the year, the

centers have continued to perform successfully, with an average

occupancy level of 93.8% as at the reporting date.

Zgorzelec Plaza

Torun Plaza: complete and active project

Zgorzelec Plaza: complete and active project

Torun Plaza is located in Torun, an almost 800-year-old city of

Zgorzelec Plaza is located in Zgorzelec in south west Poland, near the

approximately 200,000 inhabitants. Torun is one of the most

German border. Thanks to two roads border crossing (including one

beautiful cities of Poland located at the intersection of ancient

of the largest in Poland), a railway border crossing and the restored

trade routes. The gothic buildings of Torun’s old town were

old town bridge which connects the old towns of Zgorzelec and

designated as a world heritage site by UNESCO in 1997.

Goerlitz (55,000 citizens on the German side), Zgorzelec is a gateway

Torun Plaza, which opened in November 2011, is the Group’s tenth

between Germany and Poland. The shopping and entertainment

completed development in Poland. The two-floor shopping and

center is situated less than five minutes walking distance from the

entertainment center with approximately 40,000 sqm of GLA, is

railway station. Zgorzelec Plaza comprises approximately 13,000

anchored by Zara, Reserved, Home & You, New Yorker, H&M,

sqm of GLA anchored by H&M, KappAhl, Douglas, Carry, a fitness

Media Expert, Carry, Sport Direct, Martes Sport, C&A, TK Maxx, a

center, a cinema and 300 parking spaces. In 2015, occupancy

multi-screen Cinema City, bowling center and Pure fitness center.

decreased to 89% from 95% in 2014 as a result of the closing of the

In 2015, occupancy of the mall increased to 96% compared to

supermarket unit. New openings in the center in 2015 include Lee

93% in 2014 and turnover remained stable.

Wrangler, Diverse, Pink, Monnari and an extension to the existing

Rossmann unit.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Suwalki Plaza

Torun Plaza

Suwalki Plaza: complete and active project

Kielce Plaza: pipeline project

Suwalki Plaza is located in Suwalki, a city crossed by expressway

Plaza has won a competitive tender and acquired a 25,000 sqm

E67(8), which links Augustow with the Lithuanian border. Suwalki

plot from PKS Kielce S.A. (the local branch of the Polish National

is a city with approximately 70,000 inhabitants and is located

Bus Company) for the development of a major new shopping and

45km from the Polish-Lithuanian border. Suwalki Plaza, which

entertainment center in Kielce. The plot is located alongside a major

was opened in May 2010, is located in the main commercial and

road and two km from the heart of Kielce. Kielce has over 200,000

residential district of the city and is fronted by an important arterial

inhabitants and an estimated catchment area of approximately

route to the east. It is also located on a junction of a street which

350,000 people, and is located in Central Poland on the main

links directly into the city center. The PKS bus terminal and main

motorway linking Warsaw and Krakow. On completion, the scheme is

railway station are located approximately one km from the shopping

planned to have a GLA of 33,000 sqm, and approximately 1,000 car

and entertainment center. Suwalki Plaza is a three-floor shopping

parking spaces. The Company will be targeting a mixture of domestic

and entertainment center with approximately 20,000 sqm of GLA

and high-profile international retailers and entertainment operators

anchored by Stokrotka Supermarket, H&M, KappAhl, Deichmann,

as potential tenants for the center. The project is under planning and

Carry, HeBe, Douglas, Empik and a three-screen cinema. The

feasibility examination.

occupancy of the shopping center is at 96.5% (2014: 97.7%). New

stores such as KIK, Kinderplaneta and Pink opened during 2015

Leszno Plaza: pipeline project

and most existing tenants have signed lease renewals, with the fifth

anniversary of the shopping center.

Lodz Plaza: pipeline project

Plaza has a perpetual usufruct over a 18,000 sqm site in Leszno,

for the development of a new shopping and entertainment

center. The site is ideally located in the center of Leszno, a city

with 65,000 inhabitants, situated in western Poland between the

Lodz Plaza is located in Lodz , the second largest city in Poland

two big economic centers of Poznan and Wroclaw, and is close to

with over 720,000 inhabitants. Lodz is recognized as an important

the central railway and bus station. On completion, the shopping

academic and cultural center in Poland, hosting well-known

and entertainment center is intended to have a GLA of 16,000 sqm

cultural events. Lodz Plaza is planned to be a two-floor shopping

providing space for over 70 shops and 450 car parking spaces.

and entertainment center with approximately 35,000 sqm of GLA

The project is under planning and feasibility examination.

anchored by a supermarket, a department store as well as a multi-

screen cinema and bowling and entertainment center. The project is

Lodz (Residential): pipeline project

under feasibility and planning examination and amendment of the

local master plan is underway.

Plaza owns part of a development site and has a perpetual usufruct

over the remaining part of the site, located in the center of Lodz,

which is suitable for use as a residential and offices area. The site

is located in the central university district, within 500 meters of the

popular Piotrkowska pedestrian street. The site is also located in close

proximity to large high density housing estates. The plot is being sold

in stages.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Current portfolio

Serbia

Project

City

Ownership

GLA (sqm)

Market value Market value of the

Expected

on completion

land and project

completion

31 December

2015 (€)

20145(€)

Belgrade Plaza (Visnjicka)

Belgrade

Belgrade Plaza (MUP)

Belgrade

100%

32,000

63,0001

91,299,000

29,625,000

153,831,000

13,625,000

2017

1 GBA

** Under planning and feasibility examination

On 1 March 2013, Serbia was granted candidate status to the

European Union. The Company believes this will significantly

increase the flow of international capital into the country, enabling

its carefully selected Serbian development pipeline. Operational

the assets to benefit from the anticipated growth in investor inte-

rest as demonstrated by a joint venture between two international

investors who bought the two biggest shopping centres in Belgrade

in March 2016.

In 2014, Plaza completed the disposal of its first shopping

and entertainment center in Serbia, Kragujevac Plaza for €38.6

million. It was the first western-style shopping and entertainment

center to be opened outside the capital, Belgrade. Currently

the Group is focusing on the development of Belgrade Plaza

Belgrade Plaza (Visnjicka)

(Visnjicka) shopping and entertainment center - construction has

Belgrade Plaza (MUP): current development project

commenced in 2015 and building permit was granted.

Plaza won a competitive tender announced by the Government of

Belgrade Plaza (Visnjicka): current development project

Serbia for a site located in the center of Belgrade, which it plans to

develop into an office space together with a hotel and retail gallery.

Plaza owns a 31,000 sqm plot of land in Belgrade, the capital of

The development is expected to comprise a total of 63,000 sqm of

Serbia. The Belgrade market offers potential, with its large catchment

GBA including an apartment hotel, business center and shopping

area of approximately 1.7 million people. In 2015, Plaza announced

gallery as well as 700 car parking spaces.

that it had recieved the building permit to develop Belgrade Plaza,

a 32,000 sqm of GLA shopping and entertainment center. Located

The new complex will be located on the prominent site of the former

on Visnjicka Street, adjacent to the Danube River in old Belgrade,

Federal Ministry of Internal Affairs, situated on the main street which

the new development will include international and domestic retail

runs through the center of Belgrade. The area is home to foreign

units, a supermarket and an entertainment component. Construction

embassies, the Serbian Government, the Serbian Ministry of Finance,

begun in 2015 and completion is targeted for the first half of 2017.

the Belgrade Chamber of Commerce and Belgrade’s largest public

The Company has witnessed great interest from tenants and has

hospital as well as the city fair and the future railway station.

pre-let circa 45% of the GLA. The Company has also recieved a bank

The project is under planning and feasibility examination.

financing offer for approximately 55% of the project cost.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW

Belgrade Plaza
(MUP) Serbia
63,000 sqm GLA

The building is located in the center of Belgrade in a neighborhood of

government offices and foreign embassies. On completion, Belgrade

Plaza (MUP) will comprise a shopping gallery, an apartment hotel and

business center.

OVERVIEW

OVERVIEW
OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Current portfolio

Romania

Project

City

Ownership

GLA (sqm)

Market value Market value of the

Expected

on completion

land and project

completion

31 December

2015 (€)

40,000

70,329,000

9,400,000

2017

467,0001

578,711,000

81,450,000

14,000

17,000

18,000

14,831,000

30,151,000

2,400,000

1,000,000 Sold in March 2016

2,150,000

Timisoara Plaza

Casa Radio

Csiki Plaza

Slatina Plaza

Constanta Plaza

Timisoara

Bucharest

Miercurea Ciuc

Slatina

Constanta

* Under planning and feasibility examination

1 GBA including parking

2 First phase

100%

75%

100%

Plaza is currently focusing on the development of Timisoara Plaza

as it recieved the building permit and a binding financing offer

from a bank. In 2015, the Company successfuly disposed two of its

non-core assets in Romania - Cina in Bucharest and Iasi, as well

as the Palazzo Ducale office building in Bucharest for a total of

€10.6 million. The Company continues checking the feasibility and

planning of the projects, including obtaining permits.

Timisoara Plaza

Timisoara Plaza: current development

Casa Radio (Bucharest): current development

Plaza owns a plot of land with an area of 32,000 sqm in Timisoara,

In February 2007, the Company closed a transaction for the

on which it is intending to develop a shopping and entertainment

acquisition of a 75% interest in a company (the “Project Company”),

center. The site is situated in the north east of Timisoara, a city in

which under a public-private partnership agreement with the

western Romania, close to the border with Hungary with a population

Government of Romania is expected to develop the Casa Radio

of 320,000 inhabitants and a catchment area of approximately

(Dambovita) site in central Bucharest. The property comprises a site

700,000 inhabitants. The site is situated on a three-way junction

covering an approximate area of 92,000 sqm (97,000 sqm including

and enjoys excellent visibility. In 2015 Plaza announced that it had

5,000 sqm for Public Authority Building (“PAB”)). The proposed

recieved the building permit to develop Timisoara Plaza, a circa

scheme will comprise the refurbishment of the existing building as

40,000 sqm GLA shopping and entertainment center. A binding

well as the development of additional space annexed to the building

financing offer was also agreed with a bank for circa 65% of the

and on adjoining land. The development of Casa Radio comprises

project cost. Construction is expected to commence in 2016 and the

approximately 467,000 sqm of built area, including a 90,000 sqm

opening of the center is targeted at the end of 2017.

GLA shopping mall and indoor leisure center, approximately 127,000

sqm GBA of offices, hotel complex with conference center and

underground car parking spaces. The Company has obtained the

“PUD” (Detailed Urban Permit) and the “PUZ” (Zonal Urban Permit)

tor the site. The Company is currently discussing the future of the

project with the Romanian authorities.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Casa Radio
Romania
467,000 sqm GBA

Casa Radio will include a 90,000 sqm GLA shopping mall and indoor

leisure center, approximately 127,000 sqm GBA of offices, hotel complex

with conference center, Public Authority Building and underground

car parking spaces.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Csiki Plaza: pipeline project

Constanta: pipeline project

Plaza purchased a plot of land with an area of 36,500 sqm in

Plaza has acquired a 26,500 sqm plot in Constanta. The plot is

Miercurea Ciuc, for the development of a shopping and entertainment

conveniently located on one of the two main entrance roads to the

center. Csiki Plaza is situated in the center of Miercurea Ciuc, a city

city and consists of an existing shopping center and an open park-

in Romania, with a population of 50,000 inhabitants and a catchment

ing lot of 8,500 sqm. Constanta is located on the Black Sea bank and

area of approximately 300,000 inhabitants. The site is situated

is one of Romania’s main industrial, commercial and tourist centers.

400 meters from the city hall. The shopping center is planned to

The Group is investigating the option of adapting the existing

have a GLA of approximately 14,000 sqm, and is intended to include

shopping center to create approximately 18,000 sqm of GLA which

a supermarket, fashion retailers, a food court and restaurants.

will be suitable for one big anchor such as a leading supermarket

Construction commenced in late 2008 and stopped during 2009

and/or a DIY store together with some smaller retail units.

due to lack of interest from tenants because of the economic crisis.

The Group intends to sell the project or alternatively lease-up the

project in parallel to the development of other sites in Romania –

subject to leasing progress and financing.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Current portfolio

India

Project

City

Ownership

Plot Size (sqm)

Market value Market value of the

Expected

on completion

land and project

completion

31 December

2015 (€)

Chennai

Bangalore

Chennai

Bangalore

40%

25%

302,400

218,500

***

10,742,000

116,457,000

15,089,000

* Under planning and feasibility examination.

*** Under Sale

In 2015 the Group sold Koregaon Park Plaza shopping and

entertainment center, which was completed and opened to the

public in March 2012 located in the upmerket area of Pune,

Maharashta State. It was the Group’s first completed project

in India.

Currently the Group has interest (through a joint venture with

Elbit Imaging) in two sites for residential developments located

in the cities of Chennai and Bangalore.

Bangalore

Chennai: pipeline project

Bangalore: pipeline project

The Indian JV Vehicle (in which Plaza’s share is 50%) has an 80%

The Indian JV Vehicle currently has a 50% stake in a company which

stake in a company which holds a 75 acres plot (and paid advances

has rights on a 54 acre plot in Bangalore. The site located on the

in order to secure acquisition of an additional 8.4 acres) in Chennai,

eastern side of Bangalore, India’s fifth largest city, with a population

India’s fourth largest city with a population of over eight million

of over eight million people. The site can be developed into a mega

people. The site can be developed into a residential project consisting

mixed-use project with a total built area of 310,000 sqm with over

of approximately 110,000 sqm of plotted area for development and

1,100 luxury residential units. In December 2015, the JV signed

approximately 62,000 sqm for high quality villas. The project is

an agreement to sell its interest in the project to its Partner. the

under planning and feasibility examination. Alternatively the Group is

transaction is subject to certain conditions precedent and closing

negotiating sale of the plot.

will take place once these conditions are met and no later than

30 September, 2016.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Current portfolio

Latvia, Czech Republic, Hungary, Greece, Bulgaria

Project

City

Ownership

GLA (sqm)

Market value Market value of the

Expected

on completion

land and project

completion

31 December

2015 (€)

Latvia

Riga Plaza

Czech Republic

Liberec Plaza

Hungary

Riga

50%

49,000

47,463,000

47,463,000 Opened in Q1 2009*

Liberec

100%

17,000

9,700,000

9,700,000 Opened in Q1 2009***

David House

Budapest

Arena Plaza Extension

Budapest

100%

2,000

40,000

2,625,000

Operating

87,718,000

3,400,000

Greece

Pireas Plaza

Bulgaria

Athens

100%

38,000

60,038,000

4,050,000

****

Shumen Plaza

Shumen

100%

20,000

37,048,000

975,000

* Operating

*** Sold in March 2016

** Under planning and feasibility examination

**** Under sale process.

Plaza owns a shopping and entertainment center in Riga,

Latvia, and in March 2016 sold it’s shopping center in Liberec,

Czech Republic. In addition the Group owns three developments in

Hungary, Greece and Bulgaria, and one office building in

Hungary.

Latvia

Riga Plaza: complete and active project

Riga Plaza, Latvia

Riga Plaza is located on the west coast of the Daugava river,

south west of Riga’s city center. Riga, the capital of Latvia and the

largest city in the Baltic States, has a population of approximately

700,000 inhabitants. Riga Plaza has excellent connections to the

Czech Republic

city center (a three to five-minute drive), as well as outstanding

Liberec Plaza: complete and active project

connections to the nearby main roads. There are several public

transport stops (trolleybus and bus) located nearby, with the nearest

Liberec Plaza is located in the center of Liberec, a city in the north of the

public transport stop located directly in front of Riga Plaza. Riga

Czech Republic, close to the border with Germany and Poland, with a

Plaza is a two-floor shopping and entertainment center with a GLA

population of 101,000 inhabitants and catchment area of approximately

of approximately 49,000 sqm, anchored by a hypermarket, an

350,000 inhabitants. The site is situated 20 meters from the main square.

eight-screen multiplex cinema and 2,000 sqm of Fantasy Park.

The entire center comprises approximately 17,000 sqm of GLA, and

In 2015, the shopping center continued to perform well with an

includes an anchor supermarket, fashion retailers, a squash and sports

occupancy of 97%. New openings during the year include Adidas,

center, a Dinopark, a food court and restaurants. The center also comprises a

Drogas, Calzedonia, Intimissimi, Aldo, Levis and Subway. The Group

residential area of 514 sqm (five apartments) and 1,100 sqm of office space.

is in negotiation to sell its 50% share in the center to a third party.

The center was opened to the public in March 2009. Occupancy of the mall

The expected sale price approximates the asset book value.

in 2015 was 84%. The center was sold in March 2016.

PLAZA CENTERS N.V. ANNUAL REPORT 2015

OVERVIEW
OVERVIEW

OVERVIEW

Liberec Plaza, Czech Republic

Arena Plaza Extension, Hungary

David House, Hungary

Shumen Plaza, Bulgaria

Hungary

Greece

David House (Budapest): operational office

Pireas Plaza (Athens): pipeline project

The Company owns an office building located on Andrassy

Plaza currently owns a plot of approximately 15,000 sqm in the city

Boulevard, a prestigious location and one of the most sought after

of Piraeus, a commercial-industrial center 10km from the heart of

streets in the center of Budapest. Several foreign embassies are

Athens. The site has an ideal highly visible and commercial position

situated nearby. The building facades of all buildings on the Andrassy

at the junction of two of the biggest arteries in Attica National

Boulevard, including David House, are listed in the „World Heritage”

Highway, running from the north to the south of Greece and Piraeus

list. The building was reconstructed / refurbished by Plaza during

Avenue, connecting the center of Athens with the port of Piraeus.

2000-2001 in cooperation with the local monument preservation

Conveniently located in front of the ISAP metro line, bus stations and

authority. Many of the original features have been retained, including

in a walking distance from Europe’s largest passenger port, the pro-

the inner courtyard, staircases, stucco, ornate metalwork and fine

ject will be easily accessed by a large catchment of more than one

wood carvings. The building is located on a 800 sqm plot and

million people. Plaza has signed a binding pre-agreement to sell its

consists of four floors, an atrium and a basement, with a total

development land in Piraeus for €4.7 million. The sale agreement

constructed area of approximately 2,000 sqm.

with a third party developer is subject to certain conditions being

met, including due diligence which has up to six months to complete.

Arena Plaza Extension (Budapest): pipeline project

The Arena Plaza Extension is a planned office addition to Arena

Plaza that is intended to comprise approximately 40,000 sqm GLA of

„class A” offices. The Arena Plaza Extension will occupy part of the

former historic Kerepesi trotting track in the 8th district of Budapest.

The project is under planning and feasibility examination.

Bulgaria

Shumen Plaza: pipeline project

Plaza has purchased a 26,000 sqm plot of land in Shumen, one of the

largest cities in north-eastern Bulgaria, 80km from Varna. The site is

ideally situated at the crossroads of the two major traffic arteries in

Shumen, within a short walking distance to the city center, railway

station and university. Shumen Plaza is planned to be a three-floor

commercial and entertainment center with 20,000 sqm GLA and 650

parking spaces, serving the city population of approximately 100,000

people and a larger catchment of 205,000 people. The project is

under planning and feasibility examination.

OVERVIEW

PLAZA CENTERS N.V. ANNUAL REPORT 2015

Executive Officer’s

statement

2015 was an important year for Plaza as we progressed our plans to
create a more streamlined, better performing business. Our focus on
the disposal of non-core assets continued as we reduced total assets
to €392 million (31 December 2014: €466 million). This approach
has been allowing us to concentrate on superior assets in our prime
areas of focus within Central and Eastern Europe, whilst at the same
time delivering proceeds to bondholders and creating a stronger bu-
siness for our shareholders.

Performance across our shopping centres has been stable during
the year, with an overall portfolio occupancy level of 94.96% as of
31 December 2015 (31 December 2014: 95.34%)

Rental income fell during the year to €18.7 million compared with
€22.1 million at the end of December 2014. This reduction reflects
the fewer properties managed by Plaza (reduction of €3.1 million)
however, importantly, the quality of the income is now higher and
more resilient, reflecting the superior portfolio of assets. To that end,
taken on a like for like basis, rental income of the assets Plaza owns
increased during the period.

Our total loss for the year reduced significantly to €46 million,
compared with €120 million at the end of December 2014. This was
helped by a reduction in our net finance costs, a decrease in the
operating costs of our shopping centres, as well as lower central
administration costs. Crucially, it was also supported by considerably
reduced property write-down costs compared with the previous year.

Over the course of 2015, in line with the restructuring plan agreed
in 2014, we repaid 75% of proceeds from disposals to bondholders,
totalling €19.3 million. Since the restructuring plan was approved,
Plaza has now returned €47 million (of which €19 milion is principal
and the remainder interest) to bondholders, in addition to 13.21% of
shares in the Company. Pleasingly, at the start of 2015, Plaza’s credit
rating by Standard & Poor’s also improved from “D” to “BBB-” on a
local Israeli scale with a stable outlook.

More generally, we have been seeing economic improvement across
our core geographies but the Board remains vigilant to wider macro
economic factors. Without doubt, 2015 was a year of significant
progress and we look ahead towards further improving performance
across our assets in 2016, with construction starting on key
developments, and taking action to reduce leverage and provide
proceeds to bondholders through the ongoing disposal of non-core

and matured assets.

Key Events

Plaza undertook the disposal of the following non-core assets during

the year:

• On 13 May 2015, Plaza announced the agreement to sell its Indian

shopping mall located in Pune, India, for c. €35 million. The net

cash proceeds (after repayment of the related bank loan, other

liabilities and transaction costs) from the sale were c. €7.4 million

(525 million INR).

• On 24 June 2015, Plaza reached an agreement to sell its 46,500 sqm

development site in Iasi, Romania, in two separate transactions

(one for the sale of 37,334 sqm and the other for the sale of

9,166 sqm), for a gross consideration of €7.3 million. There was no

bank debt secured against the property. In line with the Company’s

stated restructuring plan, 75% of the net cash proceeds from the

transactions were distributed to the Company’s bondholders at the

end of September 2015 as an early principal repayment.

• On 10 September 2015, Plaza announced that it has reached an

agreement to sell Palazzo Ducale, an office building of 823 sqm

GLA in the centre of Bucharest, Romania, for €1.085 million,

consistent with the asset’s reported book value. In line with

the Company’s stated restructuring plan, 75% of the net cash

proceeds from the transaction were distributed to the Company’s

bondholders at the end of September 2015 as an early principal

repayment.

• Plaza’s subsidiary, Elbit Plaza India Real Estate Holdings

Limited (in which Plaza holds a 50% stake with its joint venture

partner, Elbit Imaging Ltd.) (“EPI”), on 2 December 2015 signed

an agreement to sell 100% of its interest in a special purpose

vehicle which holds a site in Bangalore to a local investor.

The total consideration for the sale is INR 321 Crores (circa

€45.4 million) which will be paid when the transaction closes.

Following this closing, 50% of the proceeds will go to Plaza, of

which 75% will be repaid to the Company’s bondholders in line

with the Company’s stated restructuring plan. The transaction is

subject to certain conditions precedent, and closing will take place

once these conditions are met and no later than 30 September

2016. The investor is providing certain security in order to

guarantee this deadline.

• On 14 December 2015, Plaza provided an update on the sale of the

Cina property in Bucharest as its Romanian subsidiary concluded

the transaction to waive its leasing rights in the asset which

has been sold by the owner. The expected gross cash proceeds

due to Plaza’s subsidiary is circa €2.7 million (out of a total

consideration of €4 million) and the expected net proceeds, after

related taxes and transaction costs, are circa €2.26 million. In line

with the Company’s stated restructuring plan, 75% of the net cash

proceeds from the transaction will be distributed to the Company’s

bondholders by the end of March 2016 as an early principal

repayment.

• During 2015, Plaza took the strategic decision to dispose of the

Chennai, India asset, rather than to proceed with the development

project. On 16 September 2015, EPI (an Indian joint venture of

PLAZA CenTers n.v. AnnuAL rePOrT 2015

business review
business review

business review

Roy Linden
CFO and Acting CEO

Plaza) obtained a backstop commitment for the purchase of the

and skeleton construction underway, the completion is targeted

Chennai scheme. EPI, which had been in discussions regarding

for the first half of 2017. To date, the Company has agreed

the sale of the Chennai Project SPV, obtained a commitment that,

pre-let terms for circa 45% of the lettable area demonstrating

subject to the fulfilment of certain conditions precedent, the sale

the significant tenant demand that exists for space in the new

transaction would be completed by 15 January 2016 (the “Long

centre. The Company has received a bank financing offer for

Stop Date”) for the consideration of approximately €21.6 million

approximately 55% of the construction cost and expects to finalise

(INR 1,617 millions), net of all transaction related costs. However,

in the next quarter.

it was agreed that, should completion not take place by the Long

Stop Date, then EPI’s stake in the Chennai Project SPV would be

Plaza has also continued to make operational and asset management

increased to 100%. In line with the Sale Transaction agreement,

progress across its shopping centre portfolio.

since the local Indian partner (the “Partner”) failed to complete the

transaction by the Long Stop Date, EPI has exercised its right to

Group management update

the Partner’s 20% holding in the Indian company, Kadavanthara

• Since the year-end, on 28 January 2016, the Board of Plaza took

Builders Private Limited.

the decision to appoint Dori Keren and Yitshak (Izzie) Elias to the

roles of Acting Chief Executive Officer and Chief Financial Officer,

Plaza also achieved a number of development milestones during year:

respectively. Both roles will become effective on 1 April 2016 while

• On 29 September 2015, Plaza announced that a wholly owned

Dori Keren will become Chief Executive Officer on 1 January 2017.

subsidiary of the Company won a tender to buy the loan to the

• On 21 December 2015, Plaza announced the reappointment of

wholly owned holding and operating company for Liberec Plaza

Mr. Ron Hadassi as Chairman of the Board of Directors following

shopping and entertainment centre in the Czech Republic. The

a meeting of the Board.

€20.4 million bank loan was provided by two commercial banks

and which Plaza has agreed to buy for €8.5 million, reflecting a

discount of 58%. Subsequently, the Company [recorded] a pro-

Results

fit on the discount (circa €12 million) in its financial statements

As stated, Plaza’s total comprehensive loss for the year narrowed

for the second half of 2015. Liberec Plaza also recorded a net

to €37 million compared with €116 million at the end of December

operating income of circa €850,000 in 2015, which reflects a

2014 or a €46 million loss attributable to the owners of the Company

yield of approximately 10% on the loan purchase price.

(€120 million: 2014). The most significant factor in this was a large

On 4 March 2016, after the reporting date, Plaza sold the shares

reduction in property net write-down costs of €19 million compared

of the SPV holding the shopping and entertainment centre to a

to €89 million in 2014. These write-down costs are ascribed mainly

local investment group for a consideration of €9.5 million.

to the revaluation of Liberec Plaza, Czech Republic (€6 million) and

• The Company is in negotiations to sell its 50% share in its Riga

Casa Radio in Romania, while the remaining write-down and loss

Plaza (Latvia) project to a third party. The sale price is expected

from disposals is mainly due to the sale of Koregaon Plaza in India

to be close to the asset’s book value. More information will be

(realisation on foreign currency translation adjustments).

provided upon the closing of the transaction.

• On 21 July 2015, Plaza announced that it had received the

Plaza successfully reduced net finance costs, shopping centre

building permit to develop Timisoara Plaza, a circa 40,000 sqm

operating costs and central administration costs during the period.

GLA shopping and entertainment centre in Timisoara, western

As at 31 December 2015, Plaza had cash and cash equivalents of

Romania. A binding financing offer was also agreed with the

€20.4 million, including €4.8 million of cash held as restricted cash

Hungarian Export-Import Bank Plc (Exim bank) for circa 65% of

deposits.

the project cost. A tender process is now underway to select a

general contractor for the project, which is expected to

complete during the second half of 2017.

• On 9 July 2015, Plaza announced that it had received the buil-

ding permit to develop Belgrade (Visnjicka) Plaza, a 32,000 sqm

GLA shopping and entertainment centre. Located on Visnjicka

Street, adjacent to the Danube River in old Belgrade, the new

development will include approximately 110 retail units, a

supermarket and a multi-screen cinema complex. Construction

began in 2015, with demolition works and pile works completed

Debt restructuring plan

In line with the debt restructuring plan agreed in 2014, Plaza repays

75% of proceeds from disposals to bondholders. In 2015, Plaza

paid €19.3m to bondholders and, since the restructuring plan was

approved in 2014, a total of €47m (of which €19 million for principal

and rest for interest) has been distributed as well as 13.21% of

shares in the Company. For background on this restructuring, please

refer to the Company announcement of 10 July 2014.

business review

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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Executive Officers’ statetement

Cash flow projection

Following the closing of the Company’s restructuring plan, the

The remaining NIS 345 million (€81 million) of debentures

Company’s consolidated financial statements include liabilities to

(achieved through the sale of assets), together with the interest of

bondholders for the aggregate principal amount of €203 million.

approximately €13 million, is still to be paid by 31 December 2016,

if the Company strives to achieve the above mentioned condition in

The following table sets out the cash flow forecast of the Company

the Plan.

until mid-2017 in order to achieve the abovementioned repayments,

as they fall due.

Since parts of series B debentures are held in treasury, the total

required net principal repayment in 2016 is NIS 338 million

According to the Plan, if by 1 December 2016 the Company manages

(€79 million) and has reclassified accordingly this amount as an

to repay the principal debentures of NIS 434 million (€102 million),

amount payable within the next 12 months.

then the remaining principal payments shall be deferred for an

additional year (“the Deferral”). Since the Plan came into effect, up

The Company regards the below scenario as the most probable,

until 31 December 2015, the Company has repaid circa NIS

although these repayments are not falling due, unless the below

89 million (€19 million) of the debentures.

mentioned assets in this scenario are disposed of.

Opening balance of consolidated cash1

Sources of cash during the period

Net proceeds from disposal of operating shopping centres2

Proceeds from disposal of plots held3

Net operating income from shopping centres4

Total sources expected

Items added

Principal repayment of debentures, net5

Interest repayment of debentures, net

Investment in projects under construction6

Repayment of bank facilities in subsidiaries (principal+interest)

General and administrative expenses

Total uses expected

Closing balance of consolidated cash7

Forecasted cash flow

In the year ending

In the six months ending

December 31, 2016

€’000

186

(108)

(13)

(15)

(7)

(6)

(149)

June 30, 2017

€’000

(11)

(3)

(1)

(3)

(19)

1 Opening balance – as appeared in the consolidated statement of financial position, including restricted cash (which will be released upon the disposal of the operating shopping centres).

2 2016 – Expected net payment from the sale of four shopping centres (Riga, Liberec, Suwalki and Torun).

3 2016 – The Company expects extensive disposals of plots held in CEE and in India. The main 2016 disposals are expected in India and Serbia. In 2017, the main disposals are due in India.

4 As the operating shopping and entertainment centres are to be disposed of in 2016, in 2017 Net Operating Income is generated from the Belgrade Plaza (Visnjicka) shopping centre to be

opened in the first half of 2017.

5 2016 – Due to be paid by 1 December 2016. The gross amount is expected at €110 million, less the expected repayment due to treasury series B bonds held in the amount of €2 million.

6 2016 – Main investment in Belgrade Plaza (Visnjicka project) and in Timisoara project (Romania).

7 2016 – Immaterial restricted cash amounts. 2017 – Including restricted cash in Visnjicka of €3 million.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

business review
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Executive Officers’ statetement

NAV

Liquidity & Financing

The Company’s property portfolio (CEE and India) was valued by

For a detailed liquidity analysis refer to the debt restructuring section

Cushman and Wakefield as at 31 December 2015 and a summary

above. Plaza ended the year with a consolidated cash position

valuation is shown below.

(including restricted bank deposits) of approximately €20.4 million,

of which circa €4.8 million of cash is held as restricted cash on a

Net Asset Value per share decreased to 0.17 €/share from 0.22 €/

consolidated basis. Working capital as at 31 December 2015 totalled

share at the year-end in 2014.

negative €98 million chiefly due to the reclassification of €80 million

mentioned above and as trading properties were classified as non-

The Company’s NAV was calculated as follows:

current assets in the Financial Statements, The Company’s current

EUR MILLION (314)

cash position is circa €18 million (of which €5.5 million is restricted).

Plaza continued to focus on deleveraging its balance sheet during

Net Financial Debt

Asset values*

Operating assets

Development Assets**

Pipeline assets

Office Building

Total

Other assets and liabilites

NAV

210

162

427

114

the period but, as a result of impairment losses recorded in the

period and finance costs incurred, the gearing level increased

to 79% in 2015. At the start of 2016, Plaza’s credit rating by

Standard & Poor’s was maintained on “BBB-” on a local Israeli

scale with a negative outlook.

Strategy & Outlook

In 2016, Plaza will continue to focus on improving the performance

of the shopping centre portfolio, applying the Company’s strong

asset management capabilities.

There will be additional emphasis on reducing leverage as well as the

further rationalisation and strengthening of the portfolio by disposing

of non-core properties.

Focus on Central and Eastern Europe will continue, creating a strong-

performing portfolio. Plaza will also look to make progress on its

developments, including Timisoara Plaza and Belgrade (Visnjicka)

Plaza, and will explore partnership and financing opportunities for

the Casa Radio project as well as to advance permits for the Belgrade

Plaza (MUP) and Lodz projects.

While the markets in which Plaza operates showed positive economic

signs during 2015, the Company remains vigilant towards wider

macro-economic impacts.

Plaza’s focus remains on building a strong portfolio, unlocking the

value of land through developments where possible, reducing debt

levels and delivering on behalf of bondholders and shareholders.

Roy Linden

CFO and Acting CEO

29 March 2016

* Based on Cushman and Wakefield valuation.

** Including 100% of Casa Radio due to the material owners loan.

Portfolio progress

The Company currently has a land bank of 15 plots, which are

under development or awaiting planning decisions, and owns five

operational shopping and entertainment centre assets and one office

scheme across the CEE and in India. The location of the projects, as

at 29 March 2016, is summarised as follows:

Location

Active

Under development/

Offices

planning

Romania

India

Poland

Hungary

Serbia

Czech Republic

Bulgaria

Greece

Latvia

Total

business review

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Operational review

Plaza recorded a number of important operational and strategic

As of the reporting date, Plaza has 21 assets in nine countries,

achievements during 2015 and took action to improve the

of which 15 are under various stages of development or under

performance of its portfolio as well as the wider business.

feasibility study across the CEE region as well as India. Of these

developments, five are located in Romania, two in India, four in

Highlights for the financial year included:

Poland, two in Serbia, and single assets in Bulgaria, Greece and

• Operations: Improving performance of its operating shopping

Hungary. In addition to these developments, Plaza retains the

and entertainment centres focused on Central and Eastern Europe,

ownership of and operates five shopping and entertainment centres

and achieving key development milestones at Timisoara Plaza and

in Poland, Czech Republic (agreed to be sold) and Latvia, as well as

Belgrade (Visnjicka) Plaza.

an office building in Hungary.

• Disposals: focus remained on disposing of non-core assets to

The development projects are at various stages of the development

reduce leverage and provide payments to bondholders in line with

cycle, from land holdings through to those with planning and

the restructuring plan. Since the approval of the restructuring

permits.

plan, circa €47 million has now been paid to bondholders..

• Financial position: As at 31 December 2015, Plaza had cash and

in the table below:

The Company’s current assets and pipeline projects are summarised

cash equivalents of €20.4 million including €4.8 million of cash

held as restricted cash deposits.

Asset/Project

Location

Nature of asset

Size

sqm

(GLA)

Status *

Plaza’s

effective

ownership %

Operating Shopping and Entertainment Centers

Suwalki Plaza

Suwalki,

Poland

Retail &

20,000

100

Operating, opened in

entertainment scheme

May 2010

Zgorzelec Plaza

Zgorzelec,

Retail &

13,000

100

Operating, opened in

Poland

entertainment scheme

March 2010

Torun Plaza

Torun,

Poland

Retail &

40,000

100

Operating, opened in

entertainment scheme

November 2011

Liberec Plaza

Liberec,

Retail &

17,000

100

Operating, opened in

Czech Rep.

entertainment scheme

March 2009

Riga Plaza

Riga,
Latvia

Retail &
entertainment scheme

49,000

Operating; opened in
March, 2009

Development Assets

Casa Radio

Bucharest,
Romania

Mixed-use retail
and leisure plus
office scheme

Timisoara Plaza

Timisoara,
Romania

Retail &
entertainment scheme

467,000
(GBA including
parking spaces)

40,000

100

* all completion dates of the projects are subject to securing external financing and securing sufficient tenant’s demand.

Projects that are classified as “Under planning and feasibility examination” also have potential to be sold as land.

** Following year-end, effective ownership increased to 50%

In planning and
permitting phase

Construction scheduled to
commence in 2016; completion
scheduled for H2 2017

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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Operational review

Asset/Project

Location

Nature of asset

Size

sqm

(GLA)

Status *

Plaza’s

effective

ownership %

Development Assets (Cont.)

Belgrade Plaza
(MUP)

Belgrade,
Serbia

Apartment-hotel and
business center with
a shopping gallery

72,000
(GBA)

100

In planning and
permitting phase

Belgrade Plaza
(Visnjicka )

Belgrade,
Serbia

Retail &
entertainment scheme

32,000

100

Construction scheduled
commence in 2015; completion
scheduled for H1 2017

Office

2,000

100

Operational office

Operational Office Buildings

David House

Budapest,
Hungary

Pipeline Projects

Kielce Plaza

Lodz Plaza

Leszno Plaza

Lodz (Residential)

Kielce,
Poland

Lodz,
Poland

Leszno,
Poland

Lodz,
Poland

Plot size (sqm)

25,000

100

61,500

100

24,700

100

Retail &
entertainment scheme

Residential scheme

33,000

100

Arena Plaza
Extension

Csíki Plaza

Budapest,
Hungary

Office scheme

Miercurea Ciuc, Retail &
Romania

entertainment scheme

22,000
(land use right)

100

36,500

100

Constanta Plaza

Constanta,
Romania

Retail &
entertainment scheme

26,500

100

Shumen Plaza

Pireas Plaza

Bangalore

Chennai**

Shumen,
Bulgaria

Athens,
Greece

Bangalore,
India

Chennai,
India

Retail &
entertainment scheme

26,000

100

Retail/Offices

15,000

100

Residential scheme

218,500

Residential scheme

302,400

Planning and feasibility
examination

In planning and
feasibility phase

Planning and feasibility
examination

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PLAZA CenTers n.v. AnnuAL rePOrT 2015

Operational review

Details of these activities by country are as follows:

Czech Republic

Poland

Plaza owns and operates three completed shopping and entertain-
ment centres across Poland, with an average occupancy of 93.8%.

Torun Plaza, which was completed and opened in late 2011,
comprises approximately 40,000 sqm of GLA and is Plaza’s tenth
completed centre in Poland. Occupancy level increased to 96.08%
at year end. The centre reported a slight decrease in footfall (3.2%),
while the turnover remained stable compared to 2014.

Suwalki Plaza, comprising approximately 20,000 sqm of GLA
with tenants such as H&M, Rossmann, New Yorker, Reserved and
Cinema Lumiere, continues to perform well. Occupancy decreased
slightly to 96.5% (2014: 97.7%) and turnover increased by 2.5%
during the year. New stores KIK, Kinderplaneta and Pink opened
during 2015 and most existing tenants have signed lease renewals,
with the fifth anniversary of the opening of the centre having taken
place in May.

In Zgorzelec Plaza, the 13,000 sqm shopping and entertainment
centre has experienced an occupancy decrease, reaching 88.91%
(2014: 95.2%), attributable mainly to the closing of the supermarket
unit (Stokrotka). Despite that, after successful discussions with
tenants, most of them chose to stay in the centre. Positively,
turnover has increased by 2.8% compared to 2014 while footfall
remained stable.

Feasibility and planning studies were also progressed at
Lodz Plaza (comprising approximately 35,000 sqm of GLA) and
amendment of the local master plan is underway.

Plaza also owns a residential plot in Lodz, Poland, which is being
sold in stages: 3,340 sqm was sold in 2015 and another 5,200 sqm
has been sold since the end of the period, at the beginning of 2016.
The rest of the plot (approximately 24,700 sqm) is expected to be
sold in 2016.

Hungary

Plaza has a transferable land use right to a site adjacent to the
Arena Plaza, on which it plans to develop a 40,000 sqm office
complex extension to the existing shopping centre. In line with
Plaza’s cautious approach to development, the Company will hold off
on the commencement of any construction until it is satisfied that
a recovery in the Budapest office market and a general rise in both
occupancy rates and rental levels is underway.

David House, an office building on Andrassy Boulevard, in Buda-
pest, remains under the Company’s ownership.

Turnover at Liberec Plaza shopping and entertainment
centre (approximately 17,000 sqm GLA), owned and managed by the
Company, improved by 10.6% compared to 2014, while occupancy
slightly decreased to 83.7% (2014: 84%).

In September 2015, one of Plaza’s wholly owned subsidiaries
won a tender to buy the bank loan to the wholly owned SPV of
Liberec Plaza. The €20.4 million bank facility was provided by two
commercial banks to which the Company agreed to pay and paid an
amount of €8.5 million, reflecting a discount of 58%. The Company
recorded a €11.9 million profit on the discount in these consolidated
financial statements, included as finance income.

In March 2016, Plaza agreed to sell its subsidiary holding in Liberec
Plaza for €9.5 million. In line with the terms of the agreement,
the buyer has deposited 15% of the consideration in escrow. The
due diligence process, final closing and settlement is expected to
conclude by the end of March 2016. Upon completion of the Liberec
Plaza disposal, Plaza will receive €8.5 million on account of the bank
loan it previously purchased. Out of the remaining proceeds, at least
75% will be distributed to the Company’s bondholders by the end of
June this year, in line with the Company’s stated restructuring plan.

Romania

Plaza holds a 75% interest in a joint venture with the Government
of Romania to develop Casa Radio (Dambovita), the largest
development plot in central Bucharest. The 467,000 sqm complex,
including a 90,000 sqm GLA shopping mall and leisure centre,
offices, a hotel and a convention and conference hall, is planned
for the site. The Company has obtained the PUD (Detailed Urban
Permit) and the PUZ (Zonal Urban Plan) for the Dambovita Centre
Multifunctional Complex.

In light of the financial crisis, and in order to ensure a construction
process that is aligned to current market conditions, the Company
initiated preliminary discussions with the Authorities (which
are shareholders in the SPV and a party to the Public Private
Partnership) regarding the future of the project. The Company
has also officially notified the Authorities that it will be seeking to
redefine some of the terms in the existing PPP contract, including
the timetable, structure and project milestones. Please see note 8 (d)
of the Financial Statements for further information on the project.

In July 2015, the Company received the building permit to
develop Timisoara Plaza, a circa 40,000 sqm GLA shopping and
entertainment centre in Timisoara, western Romania. A binding
financing offer has also been agreed with a commercial bank for
circa 65% of the project cost. The construction is expected to

commence in 2016, and completion is expected in late 2017.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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business review

business review

Operational review

Latvia

In Riga Plaza, which is 50% owned by Plaza, while occupancy
decreased slightly to 97.02% (2014: 99.5%), turnover increased by
8.6% compared to the previous year, and footfall increased by 7.2%.
The Company is in negotiations for the sale of its share in the
project. The transaction is expected to be executed close to book
value of the asset.

Serbia

In July 2015, the Company received the building permit to develop
Belgrade Plaza (Visnjicka) (previously known by the project name
Sport Star Plaza), a 32,000 sqm of GLA shopping and entertainment
centre. Construction commenced in 2015 and completion is antici-
pated in 2017. The demolition, excavation and piling works have been
completed. Reflecting a strong demand for modern retail space, 45%
of the centre’s available retail space was pre-let as of the reporting
date. Based on the successful letting progress the Company has
received a financing offer for 55% of the construction cost.

Plaza owns a building in the central administrative district of
Belgrade, which housed the former Yugoslavian Government’s
Federal Ministry of Internal Affairs. Development plans for the
building comprise a shopping gallery, an apartment-hotel and a
business centre, totalling circa 72,000 sqm of gross building area.
Processes to secure the relevant local planning and permitting
approvals are underway.

On 1 March 2013, Serbia was granted candidate status to the
European Union. The Company believes this will significantly
increase the flow of international capital into the country, enabling its
carefully selected Serbian development pipeline, and the assets as
they are complete, to benefit from an anticipated growth in investor
interest. In March 2016, a joint venture between two international
investors bought the two biggest shopping centres in Belgrade,
demonstrating strong interest in the investment market there.

India

In May 2015, the Company signed an agreement to sell the SPV
holding Koregaon Park Plaza, the retail, entertainment and office
scheme located in Pune, India, for circa €35 million (2,500 million
INR). The net cash proceeds received (after repayment of the related
bank loan, which was reclassified to short term, other liabilities and
transaction costs) from the sale totalled €7.4 million (525 million
INR). In line with the Company’s stated restructuring plan, all the
net cash proceeds from the transaction were retained within the
Company.

In 2008, Plaza formed a 50:50 joint venture with Elbit Imaging (the
“JV”) to develop mega mixed-use projects in Bangalore, Chennai

and Kochi. Under the terms of the agreement, Plaza acquired a
47.5% stake in Elbit India Real Estate Holdings Limited, which had
existing stakes in mixed-use projects in India, in conjunction with
local Indian partners.

The JV projects are as follows:

Bangalore - This residential project, owned in an equal share
between the JV and a prominent local developer, is located on the
eastern side of Bangalore, India’s fifth largest city with a population
of more than eight million inhabitants. In March 2008 the JV entered
into an amended and reinstated share subscription and framework
agreement, with a third party, and a wholly owned Indian subsidiary
of the JV which was designated for this purpose (“SPV”), to acquire,
through the SPV, up to 440 acres of the plot in certain phases as set
forth in the Amended Framework Agreement.

As of 31 December 2015, the SPV holds joint development rights in
approximately 54 acres of the plot for a total aggregate consideration
of approximately INR 2,843 million (€40 million). In addition, the
SPV has paid to the Partner advances of approximately INR 2,536
million (€35 million) on account of future acquisitions by the SPV of
a further 51.6 acres.

In December 2015, the JV signed an agreement to sell 100% of
its interest in the SPV to the Partner. The total consideration for
the sale upon completion of the transaction is INR 321 Crores
(approximately €45.4 million) which will be paid at transaction
closing. The transaction is subject to certain conditions precedent,
and closing will take place once these conditions are met and no
later than 30 September 2016. The Investor has provided certain
security in order to guarantee the aforementioned deadline.

Chennai - A residential development, which is 80% owned by the JV
and 20% by a prominent local developer. The Chennai Project was
designated at the end of 2014 as a project for development. During
2015, due to changes in the Group’s activities and objectives, the
Company decided not to develop the Chennai project but rather to
dispose of it in its current form. In this respect, on 16 September
2015, the JV obtained a backstop commitment for the purchase of
the Chennai, India Scheme.

The JV, which has been in discussions regarding the sale of the
Chennai Project, has obtained a commitment that, subject to the
fulfilment of certain conditions precedent, the sale transaction will
be completed by 15 January 2016 (the “Long Stop Date”) for the
consideration of approximately €21.6 million (INR 1,617 millions),
net of all transaction related costs. If completion does not take place
by the Long Stop Date, then the JV’s stake in the Chennai Project will
be increased to 100%. In line with the Sale Transaction agreement,
since the local Indian partner (the “Partner”) failed to complete the
transaction by the Long Stop Date, the JV had exercised its right to
the Partner’s 20% holdings in the Indian company.

business review

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Financial review

Results

During 2015, Plaza remained focused on the execution of its strategy
to dispose of the non-core and mature assets in its portfolio, to
reallocate capital to its core yielding assets and to reduce debt levels.

The Company has designated its properties into three types:

• Completed trading properties;
• Projects scheduled for construction; and
• Plots in the planning phase.

A write down of trading properties amounted to €20 million in 2015
(€87 million in 2014), comprising projects in Romania (€9.2 million);
India (€1.5 million); Poland (€6 million); the Czech Republic
(€6.2 million); Hungary (€1 million) and others. This was partly
offset by an uplift in the value of Belgrade Plaza of (€6 million).

The uplift in relation to joint ventures classified as equity accounted
investments amounted to €0.9 million in 2015, related to Riga Plaza
(Latvia), compared to a net €1.7 million write down in 2014 (related
to Plaza’s Indian project (Chennai) slightly offset by the €0.4 million
increase in the value of Riga Plaza (Latvia).

In respect of its completed trading property projects, the Company
still faces material uncertainties in respect of the time required
to sell the properties. However, the Company has not changed its
business model and it is actively seeking buyers at appropriate
pricing. Therefore, it is clear from the Company’s perspective that
these completed properties are trading properties, rather than
investment properties.

The Company’s active efforts to further reduce costs resulted in
administrative costs decreasing by 6% to €7 million (2014:
€7.4 million), comprising a lower scale expense for professional
service providers and a lower head count. With the elimination of
circa €0.5 million severance payments for the two resigning CEOs
during the year, administrative costs amounted to €6.5 million.
Expenses for 2016 are expected to be in the region of €6 million.

In respect of the sites held, which are not intended to be developed
in the near future, the Company is actively looking for buyers and
does not hold the land passively with the intention of gaining from
a potential value increase. Sites scheduled for construction are
intended to be developed and sold in the normal course of business
once circumstances allow. For this reason we also believe that these
are appropriately classified as trading properties. As at 31 December
2015, as in previous years, the trading properties were classified as
non-current assets in the Statement of Financial Position.

Income comprised rental income from the operating shopping centres.
In 2015, Plaza generated €18.7 million of income compared to
€22.1 million in 2014. This includes rental income and service
charges collected from the tenants. The rental income in 2015 was
€13.1 million while in 2014 it was €15.4 million. The decrease is a
result of the strategic sale of Kragujevac Plaza in mid-2014
(c. €2.3 million of income recorded in 2014) and also the sale
of other undeveloped projects. A 10% increase in NOI was recor-
ded across the shopping centre portfolio (from €14.9 million to
€16.4 million), including company share in NOI from the commercial
centre of Riga, Latvia, but excluding the impact of the 2014 sale of
Kragujevac Plaza. Income from the Group’s Fantasy Park operation,
which provides gaming and entertainment services in Plaza’s active
shopping centres, decreased to €0.7 million (from €1.7 million in
2014) following the operational closure of some units in the Group’s
shopping centres. Before the reporting date the last unit was sold as
part of the non-core business disposal process.

The disposal of Kragujevac Plaza also led to a reduction in operating
costs from €8.5 million in 2014 to €6.5 million in 2015, while the
Fantasy Park operating costs decreased from €2.2 million in 2014 to
€1 million in 2015 following the closures.

Other net income increase to €5.5 million from Nil in 2014, chiefly
as a result of a one-time gain recognised due to the Kochi project
in India (€4.7 million) and a settlement with the potential buyer of
Koregaon Park (€0.7 million) (2014 - €2.3 million insurance pay out
received in connection with the Koregaon Park fire incident, offset
mainly by expenses resulting from the impairment of other assets
(mainly Palazzo Du Calle office in Romania €0.7 million) and a loss
on the disposal of other assets (€1.5 million)).

Restructuring costs were incurred in connection with the Company’s
debt restructuring process in 2014.

A net finance loss of €31 million was recorded in 2015, compared to
a net finance cost of €35.6 million in 2014.

Finance income increased to €14.3 million (2014 €2 million), largely
attributable to the settlement of bank loan debt at a discount (€13.5
million) related to projects in the Czech Republic and Romania.

Finance expenses increased from €36.8 million to €45.2 million,
mainly comprising:

• Interest expense on debentures (€13.9 million compared to

€4.6 million in 2014 where most debentures were presented at
Fair Value Through Profit or Loss), and non-cash amortisation of
the discount (the difference between fair value and adjusted par
value) of €10.6 million (€0.8 million in 2014).

• €5.1 million interest expense on bank borrowings compared to

€9.6 million in 2014.

• Foreign exchange losses on debentures €14.8 million (€0.5 million

in 2014).

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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business review

business review

A tax expense of €1 million recorded in the consolidated income
statement against the tax benefit of €1.3 million in 2014 that largely
represented the creation of deferred tax assets attributed to the
Polish operations.

Other current liabilities have decreased from €13.2 million to
€7 million in 2015. The decrease is mainly attributable to the
execution of sale of Koregaon Park in India.

As a result of the above, the loss for the year amounted to c.
€46 million in 2015, compared to €120 million in 2014. Basic and
diluted loss per share for 2015 was €0.07 (2014: €0.39).

Balance sheet

The balance sheet as at 31 December 2015 showed total assets of
€392 million, compared to total assets of €466 million at the end of
2014. The decrease was mainly driven by the write down of trading
properties and equity accounted investees, as well as the disposal of
assets and cash used for repayment of debt.

The Company’s consolidated cash position (including restricted bank
deposits, short term deposits and held for trading financial assets)
decreased to €20.4 million (31 December 2014: €41.7 million) after
the repayment of bond principal and interest, and the buy out of the
bank loan. Gearing increased to 79% (31 December 2014: 74%) as a
result of impairment losses and finance costs incurred during the year.

Trading property values decreased from €371 million in 2014 to
€318 million in 2015 as result of strategic asset disposals (mainly
Koregaon Park India) and the write downs booked in the period.
At the end of the year, trading properties were classified as non-
current assets due to uncertainties around the development and
commencement dates.

Plaza has on its balance sheet a €45 million investment in equity
accounted investees which includes joint venture projects. The only
operating asset currently classified under this heading is Riga Plaza.
The remainder are the two development sites in India (Bangalore
and Chennai). The value has increased by €2.7 million since 2014,
comprising a €1 million uplift value and by €1.7 million due to
exchange rate movements.

Total bank borrowings (long and short term) amounted to
€102.5 million (31 December 2014: €150.8 million). This decrease
is the result of loans repaid during the year, hair cuts achieved in the
Czech Republic and Romania and the disposal of the Koregaon Park
Plaza shopping centre.

Apart from bank financing, Plaza has a balance sheet liability of
€181.6 million (with an adjusted par value of circa €203 million) from
issuing debentures on the Tel Aviv Stock Exchange and to Polish insti-
tutional investors. These debentures are presented at amortised cost.

Provisions are booked in connection with the Company’s Casa Radio
project in Bucharest Romania.

The total equity decreased from €120 million in 2014 to €83 million
in 2015 due to a €46 million loss suffered mainly from write downs,
NIS strengthening against the EUR, bonds discount amortisation and
from a net €9 million increase in the translation reserve connected
to the Indian operations of the Company, stemming from the
strengthening of the Indian Rupee against the Euro.

Cash flow (including cash flow disclosures
as required by Israeli Securites Regulations)

Cash flow provided from (and used in) operational activities in 2015
was negative at €2.6 million (2014: positive cash flow of €8.3 million)
mainly due to repayment of other liabilities associated with the Koregaon
Park shopping centre, and the sale of a shopping centre in Serbia.

Cash flow provided from investment activities in 2015 remained low
and totalled €2.6 million (2014 negative €1.4 million) owing to the
disposal of the office building in Romania and net sale of held for
trading marketable debt securities.

Cash flow used in financing activities in 2015 totalled €17.9 million
(2014: €2.4 million) owing to the payment of €8.5 million and
obtaining the discount of 58% over the bank loan purchased in the
Czech Republic. In addition,2014 activities included rights issuance
net proceeds of €18.8 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 to its reports projected cash flow for a period of two years,
commencing with the date of approval of the reports (“Projected
Cash Flow”).

One of the warning signs emphasise is a matter included in the audit
opinion issued by the auditor. The emphasis of matter was included
in view of management plans for asset disposals and also in respect
of the Casa Radio project, as described in Notes 2(c), 16 and 27(c) to
the Financial Statements in this press release.

Upon such warning signs, the Company is required to provide
projected cash flow for the period of 24 months since the reporting
period, and also to provide explanations on differences between
previously disclosed estimated projected cash flows with actual

cash flows.

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PLAZA CenTers n.v. AnnuAL rePOrT 2015

Financial review

2. Projected cash flow

According to the Restructuring Plan, a three and a half year
period deferral of payment was granted. If by 1 December 2016
the Company manages to repay NIS 434 (circa €102 million) of
debentures, then the remaining principal payments shall be deferred
for an additional one year. Since the Plan entered into effect, until 31
December 2015, the Company has repaid circa NIS 89 million (€19
million) out of the debentures. The remaining NIS 345 million (circa
€81 million) of the principal bonds (through the sale of assets),
together with the interest of approximately €13 million are still to be
paid up to 1 December 2016, if the Company strives to achieve the
abovementioned condition in the Plan.

accordingly reclassified €79.6 million of its debentures as short term,
although these repayments are not falling due, unless the below
mentioned assets in this scenario are disposed.

The materialisation, occurrence consummation and execution of the
events and transactions and of the Assumptions on which the pro-
jected 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 realisation of the Company’s assets and investments or
realisation at a lower price than expected by the Company, as well as
any other deviation from the Company’s Assumptions, could have an
adverse effect on the Company’s cash flow and the Company’s ability

The Company regards this scenario as the most probable, and has

to service its indebtedness in a timely manner.

Description

Footnote

January 1, 2016

January 1, 2017

(details and

till December 31, 2016

till December 31, 2017

Cash and Cash equivalents - Opening balance

Solo resources:

Cash inflow from operating activity:

proceeds from selling trading and investment properties

Cash inflow from finance activity:

Distributions from operating subsidiaries (through loan repayments)

Release of restricted cash due to disposal of subsidiaries

Total sources:

Expected use

Cash outflow from operating activity:

Administrative expenses

Cash outflow from investment activity:

Investment in equity in projects

Cash outflow from finance activity:

Principal repayment to Noteholders

Interest repayment to Noteholders

Total uses:

Cash and cash equivalents - Closing balance:

Restricted deposit

Total cash, including restricted deposit

assumptions)

(MEUR)

12.1

(MEUR)

36.6

152.4

7.6

7.2

179.3

5.8

16.9

107.5

12.5

142.7

36.6

0.5

37.1

20.0

56.6

5.0

1.0

14.7

5.7

26.4

30.2

3.6

33.8

1 Consolidated cash position, without restricted cash in subsidiaries in a total amount of
€8 million, due to bank facilities restrictions. The Company is expected to be able to
collect all remaining cash in subsidiaries upon exit.

2 2016: Comprised from the exercise of four out of the five shopping centres in CEE the
Company owns, and also plots, mainly in Serbia and India. 2017: Mainly from plot
disposals in India and Poland.

3 Based on expected Net Operating Income (“NOI”) from subsidiaries, less expected

payment to bank financing in subsidiaries. The Company expects to retrieve the funds
through repayment of existing intercompany loans. The vast amount of the retrieve is
from Polish operating shopping malls.

4 Management estimation based on last year’s actual cash restriction balances.

5 2016: Comprised mainly from investment in the schemes of Visnjicka Belgarde (Serbia)

and Timisoara (Romania)

6 Assuming EUR/NIS rate of 4.40 and EUR/PLN rate of 4.20. The repayment schedule takes
into consideration also that in case of disposal of a subsidiary, 75% of the proceeds are
used for the early prepayment of the Unsecured Debt in accordance with the terms of the
Restructuring Plan.

7 Refer to remark 6 in respect of exchange rates.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

business review
business review

business review

Financial review

3. Projected solo cash flow

In its prospectus dated 27 May 2014, the Company published its

expected cash flow for the following 24 months. Below is a summary

table of comparison between forecasted and actual cash flow, with

explanations on the differences on cash flow published for the

18 months period ending December 31, 2015.

Description

Cash and Cash equivalents - Opening balance

Solo resources:

Cash inflow from operating activity:

Proceeds from selling trading and investment properties

Cash inflow from finance activity:

Distributions from operating subsidiaries (through loan repayments)

Right issuance

Other financial income

Total sources:

Expected use

Cash outflow from operating activity:

Administrative expenses

Cash outflow from investment activity:

Investment in equity in projects

Cash outflow from finance activity:

Principal repayment to Noteholders

Interest repayment to Noteholders

Principal repayment to Noteholders

Total uses:

Cash and cash equivalents - Closing balance (Solo):

Restricted deposit

Total cash, including restricted deposit (Consolidated)

Footnote

July 1, 2014

(details and

till December 31, 2015

assumptions)

Forecasted (MEUR)

Actual (MEUR)

9.6

123.3

26.5

20.0

2.5

181.9

10.5

29.3

79.5

13.6

22.0

154.9

27.0

7.0

34.0

23.2

39.0

21.6

15.5

99.3

10.5

10.0

18.6

26.0

22.1

87.2

12.1

8.3

20.4

The below explains the main reasons for deviation between expected cash flow projections and actual cash flows:

1 Opening balance was calculated assuming repayment of interest on bonds before 30

5 Main investment slowed down as a result of low level of sales, and mainly in projects in

June 2014, while actual payment was performed in December 2014 (of €12.1 million).

Serbia and Romania.

2 Disposal of the CEE shopping centres did not materialise, and the Company instead has
improved the tenant mix and the overall performance of the shopping malls, in order to
benefit from upon sale.

6 Decreased as a result of low level of sales.

7 Refer to remark 1 above.

3 Lower due to tenant improvements cost incurred in operating shopping centres in the

8 Actual amount includes repayment of Liberec loan (€8.5) million with a discount of €12

period.

million.

4 Actual right issuance – net of total restructuring plan costs of circa €4.5 million.

Roy Linden

Chief Financial Officer

29 March 2016

business review

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Valuation Summary
by Cushman and

Wakefield

as at 31 December 2015 (in EUR)

Country

Project name

Market value of

Market value

the land and project

upon completion

31 December 2014

31 December 2015

31 December 2014

31 December 2015

Hungary

Arena Plaza Extension

David House

Poland

Torun Plaza

Zgorzelec Plaza

Suwalki Plaza

Lodz Plaza

Kielce Plaza

6,650,000

2,625,000

96,300,000

13,450,000

43,075,000

7,400,000

3,600,000

3,400,000

2,625,000

97,725,000

12,050,000

43,250,000

7,400,000

3,325,000

87,353,000

2,625,000

96,300,000

13,450,000

43,075,000

70,911,000

70,158,000

86,718,000

2,625,000

97,725,000

12,050,000

43,250,000

70,911,000

60,533,000

Czech Republic Liberec Plaza

15,725,000

9,700,000

15,725,000

9,700,000

Romania

Casa Radio Plaza

87,075,000

81,450,000

555,138,000

578,711,000

Timisoara Plaza

Miercurea Ciuc Plaza

Slatina Plaza

Constanta Plaza

Brasov

8,940,000

2,460,000

1,000,000

3,300,000

1,990,000

9,400,000

2,400,000

1,000,000

2,150,000

1,990,000

72,283,000

14,276,000

30,151,000

3,300,000

70,329,000

14,831,000

30,151,000

2,150,000

147,039,000

Latvia

Riga Plaza

45,000,000

47,463,000

45,000,000

47,463,000

Greece

Pireas Plaza

4,475,000

4,050,000

73,141,000

60,038,000

India

Bangalore

Chennai

14,206,000

10,031,000

15,089,000

10,742,000

109,646,000

18,710,000

116,457,000

Comparable*

Bulgaria

Shumen Plaza

1,025,000

975,000

29,176,000

37,048,000

Serbia

Belgrade Plaza (MUP)

13,650,000

Belgrade (Visnjicka) Plaza

18,850,000

13,625,000

29,625,000

153,831,000

91,299,000

153,831,000

91,299,000

TOTAL**

400,827,000

399,434,000

1,742,587,000

1,732,859,000

* Asset was valued with the comparative sales price method; no value at completion was

Notes:

estimated

** Rounded to nearest thousand

• All values of land and project assume full planning consent for the proposed use.

• Plaza Centers has a 50% interest in the Riga Plaza shopping centre development.

• Plaza Centers has a 75% share of Casa Radio Plaza.

• Plaza Centers has a 25% share of Bangalore.

• Plaza Centers has a 40% share of Chennai.

• All the figures reflect Plaza’s share.

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business review

mAnAgemenT And gOvernAnCe

Management structure

Plaza Centers’ Board

Ron Hadassi
Chairman
Non-executive Director

Nadav Livni
Executive Director

David Dekel
Independent
Non-executive Director

Marco Wichers
Independent
Non-executive Director

Sarig Shalhav
Non-executive
Director

Senior Management

Dori Keren
Acting CEO*

Yitshak Izzie Elias
CFO*

Guy Lavan
Chief Engineer

Uzi Eli
General Counsel

Gabor Lattmann
Leasing Director

Local Country Management

Dori Keren
Country Director
Poland and Latvia

Rabia Shihab
Country Director
Serbia

Luc Ronsmans
Country Director
The Netherlands, Romania,
Bulgaria and Greece

Yitshak Izzie Elias
Country Director
India

* Both roles effective on 1 April, 2016 while Dori Keren will become CEO on 1 January, 2017.

• Oversight of company

strategy and all project

development decisions

• Wide-ranging property

development expertise

• Review and approval

of business plan and

budgets

• Active management

and monitoring of

development risks

• Experienced

property development
professionals with global

property development

expertise

• Responsible for sourcing
development projects

• Development of

business plans

• Overseeing the

management of

development projects

• Extensive local

experience

• Cultivating connections

within market to source

opportunities

• Day-to-day management

of local operations and

developments

business review

mAnAgemenT And gOvernAnCe

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Board of Directors

and Senior management

Board of Directors and

Senior management

Chairman

Independent non-executive directors

Mr. Ron Hadassi, Non-executive director (male, 51, Israeli)

Mr. Ron Hadassi has broad experience in leading real estate firms.

Mr. Hadassi currently is the senior manager of Bronfman-Fisher

Group, engaged in industry, real estate, finance and retail and holds

various positions within the Bronfman-Fisher Group. He also serves

on the Board of Directors of the controlling shareholder and Carmel

Winery and he is the chairman of Elbit Medical Technologies Ltd.

Mr. Hadassi holds a BA in economics, political science, an LLB and

an MBA from the Tel Aviv University. Mr. Hadassi was appointed as

an executive director on 8 July 2014 and elected as chairman and

non-executive director on 28 November 2014. Mr. Hadassi may
periodically be re-elected by the Annual General Meeting pursuant to
article 23.6 of the Articles, provided that Mr. Hadassi has expressed
his availability for a subsequent term of office.

Executive director

Mr. Nadav Livni, (male, 42, British)

Mr. Nadav Livni is the founder of The Hillview Group, an

independent privately owned merchant bank based in London.

Since 2006, The Hillview Group has expertly managed over $3.5

billion of strategic capital market transactions across Central and

Eastern Europe, Russia, Africa and USA. Mr. Livni previously worked

at Deutsche Bank, Goldman Sachs and KPMG. He also serves

on the board of EI. Mr. Livni is a qualified chartered accountant,

holds a Bachelor of Commerce (honours in economics), a Master

of Science (finance), and is a guest speaker on the topics of private

equity and real estate investment at London Business School.

Mr. Livni was appointed as a non-executive director on 8 July 2014

and elected as an executive director on 28 November 2014.

Mr. Livni may periodically be re-elected by the Annual General

Meeting pursuant to article 23.6 of the Articles, provided that

Mr. Livni has expressed his availability for a subsequent

term of office.

* Mr. Shalhav resigned his position as a non-executive director on 8 March,

Mr. Marco Habib Wichers (male, 57, Dutch)
Mr. Marco Habib Wichers is currently the chief executive officer of
Branco Europe B.V. Between 1994 and 2013 he acted as the CEO of
AMGEA Holding B.V. Between 1988 and 1995, he acted as the CEO of
Branco International Inc. New York (a manufacturing company) and
between 1983 and 1995 he acted as the CEO and owner of Cravat
Club, Inc. New York (a manufacturing company). Mr. Wichers holds a
degree in economics and marketing from the International University
of Hospitality Management. Mr. Wichers was appointed as non-
executive director on 1 November 2006. In November 2011, he was
appointed as chairman of the Board. The General Meeting appointed
Mr. Wichers as non-executive director, in accordance with the Dutch
Act on Management and Supervision (Wet bestuur en toezicht) on
20 November 2012. Mr. Wichers has been re-elected in accordance
with article 23.6 of the Articles, by the General Meeting on 8 July 2014.
Mr. Wichers may periodically be re-elected by the Annual General Meeting
pursuant to article 23.6 of the Articles, provided that Mr. Wichers has
expressed his availability for a subsequent term of office.

Mr. Sarig Shalhav (male, 42, Dutch)*
Mr. Sarig Shalhav is a lawyer and tax counsel and has extensive
experience on commercial real estate and real estate finance
transactions and advises multinational businesses, government
agencies, private equity houses and banks on a wide range of real
estate and real estate finance related matters. In addition he acts as
a counsel in restructuring and enforcement scenarios, buyout and
venture capital transactions. Mr. Shalhav holds an LLB degree in law
from Manchester University, an LLM degree in international business
law and a PhD in international taxation from Amsterdam University.
He has been working with leading law firms and major audit & tax
corporations. Mr. Shalhav was appointed as a non-executive director
by the General Meeting on 19 December 2013. Mr. Shalhav may
periodically be re-elected by the Annual General Meeting pursuant to
article 23.6 of the Articles, provided that Mr. Shalhav has expressed
his availability for a subsequent term of office.

Mr. David Dekel (male, 51, Dutch)
Mr. David Dekel is currently a non-executive director at Nanette
Real Estate Group N.V., a residential developer, operating in Central
Europe. He is the founder and chief executive officer of Endeavour
Enterprises N.V. from Amsterdam, the Netherlands and has several
other managerial functions. Mr. Dekel holds a BBA from the Delta
University in Utrecht, the Netherlands and an MBA from the University
of Teesside (the Hague extension) in the Hague, the Netherlands.
Mr. Dekel was appointed as a non-executive director on 8 July 2014.
Mr. Dekel may periodically be re-elected by the Annual General Meeting
pursuant to article 23.6 of the Articles, provided that Mr. Dekel has

2016 becoming effective on 8 June, 2016.

expressed his availability for a subsequent term of office.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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mAnAgemenT And gOvernAnCe

mAnAgemenT And gOvernAnCe

Board of Directors
and Senior management

Senior management

Mr. Dori Keren (46) BA, MBA, BB in Accounting
Acting Chief Executive Officer
Mr. Dori Keren joined Plaza Centers in 2006 as financial director
of Poland and Latvia and was appointed Poland country director
in 2013. From April 2016 Mr. Keren serves as Acting CEO of the
Company. Prior joining to Plaza Centers Mr. Keren worked in Israel
for 10 years in variety of financial jobs in positions which accompany
business activity as economist, financial controller and CFO.
Mr. Keren holds BA in Economics and Political Sciences from the
Tel Aviv University, an MBA degree from the Ben-Gurion University,
and BB Post Degree in Accounting from College of Management
Academic Studies.

Mr. Roy Linden (39) BBA, CPA (USA, Isr), Former Chief
Financial Officer, Former Acting CEO
Mr. Roy Linden joined the Company in November 2006 and has
acted as chief financial officer since then and acting CEO in 2015
until 31 March, 2016. Prior to joining the Company, he served as
manager in the real estate desk of KPMG in Hungary for nearly
four years, specialising in auditing, business advisory, local and
international taxation for companies operating throughout the CEE
region. He also served as a senior member of an audit team of Ernst
and Young in Israel for three years and specialised in high-tech
companies. Mr. Linden holds a BBA degree in accounting from the
College of Management Academic Studies and he is a certified public
accountant in Israel and in the United States.

Mr. Yitchak (Izzie) Elias (40) CPA, MBA, Chief Financial Officer
Mr. Elias joined the Group in 2009 as the financial director of
India, and was appointed as a country director in 2013. From April
2016 Mr. Elias serves as the chief financial officer of the Company.
Prior joining to Plaza Centers he worked as a senior member of
the audit team of PWC and advised multinational and distressed
companies. Mr. Elias holds a BBA degree in accounting and business
administration from the College of Management and an MBA from
Tel Aviv University and he is a certified public accountant in Israel.

Mr. Uzi Eli (40) LLB, Attorney at Law (Isr), MBA
General Counsel and Compliance Officer
Mr. Uzi Eli joined the Company as general counsel and compliance
officer in 2007. Prior to joining the Company, he practised law in two
leading commercial law firms in Israel. His main practice concentrated
in commercial and corporate law, providing ongoing legal services
to corporate clients (mainly hi-tech and bio-tech companies and
venture capital funds) in all aspects of corporate governance, and
representation in various transactions, such as financing and M&A
transactions and other wide varieties of licensing and technology
transactions. Mr. Eli holds a LLB degree and an MBA degree from the
College of Management Academic Studies and he is an attorney at law.

Mr. Guy Lavan (38) BSc, Chief Engineer

Mr. Guy Lavan joined the Company in 2007, he acted as Dambovita

Center Deputy Execution Manager. Since 2013 he was acting as

Deputy Chief Engineer and as of April 2015 he was appointed as the

Group Chief Engineer and head of construction. Prior to joining the

Company Mr. Lavan was advising to major multinational developers

and contractors in construction of shopping centers in Romania,

the Israeli international airport and Intel Factory in Israel. Mr. Lavan

holds BSc Degree from the Technical University of Budapest.

Mr. Luc Ronsmans (65) MBA, The Netherlands and Romania

Country Director

Mr. Luc Ronsmans joined the Europe Israel Group in 1999. Located

in Amsterdam and Bucharest, he acts as manager for European

operations for both the company and its group affiliates. Prior to

joining the Europe Israel Group, Mr. Ronsmans was active in the

banking sector, holding managerial positions with Manufacturers

Hanover Bank, Continental Bank (Chigaco), AnHyp Bank and Bank

Naggelmachers in Belgium.

Mr. Rabia Shihab (37) BA, CPA, Czech Republic, Serbia

Country Director

Mr. Rabia Shihab joined Plaza Centers in June 2008 as financial

director of Romania and Bulgaria. From November 2011, he has been

serving as the financial director of Serbia and the Czech Republic.

On March 2014, he was additionally appointed as the country

manager. Prior joining Plaza Centers, he served as financial controller

for Tefron Ltd. Mr. Shihab holds Bachelor degree of economics from

the Hebrew University of Jerusalem.

Mr. Gabor Latmann (36) BSc, CEE Leasing Director

Mr. Gabor Lattmann joined the Company in 2002, he acted in

various positions in the company. Since 2005 he was acting as

Chief Analyst and as of April 2015 he was appointed as the Group

Leasing Director. Mr. Lattmann holds BSc Degree from the

Budapest Business University.

* Mr. Shalhav resigned his position as a non-executive director on 8 March,

2016 becoming effective on 8 June, 2016.

mAnAgemenT And gOvernAnCe

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Directors’ report

Directors’ report*

Principal activities and review of business

Going concern

Plaza Centers N.V. is a leading developer of shopping and

The consolidated financial statements have been prepared on a

entertainment centers with a focus on the emerging markets of

going concern basis, which assumes that the Group will be able to

Central and Eastern Europe (“CEE”), where it has operated since

meet the mandatory repayment terms of the banking facilities and

1996 when it became the first company to develop western-style

debentures, as disclosed in notes 2c and 16 of the consolidated

shopping and entertainment centers in Hungary. This followed

financial statements.

its early recognition of the growing middle class and increasingly

affluent consumer base in such markets.

The Board of Directors has analysed the following two major risks

associated with the preparation of the financial statements included

Since then, it has expanded its CEE operations into Poland, the

in the annual report:

Czech Republic, Latvia, Romania, Serbia, Bulgaria and Greece.

In addition, the Group has extended its area of operations beyond the

CEE into India and the US. The Group has been present in real estate

1 Extensive review and assessment of the real estate valuation
process, together with senior management and the external

development in emerging markets for over 20 years. To date, the

valuators of the Company as of 31 December 2015, which is the

Group has developed, let and opened 33 shopping and entertainment

base for important disclosures included in the Company’s 2015

centers and one office building. 21 of these centers were acquired

financial reports.

by Klepierre, one of the largest shopping center owners/operators

in Europe. Four additional shopping and entertainment centers were

2 Extensive review and assessment of the features of the debt

sold to the Dawnay Day Group, one of the UK’s leading institutional

restructuring plan details, including prospective cash outflow,

property investors at that time. One shopping center (Arena

covenants and comply with these elements, and especially the

Plaza in Budapest, Hungary) was sold to Active Asset Investment
Management (“AAIM”), a UK commercial property investment group
and one shopping center (Kragujevac Plaza in Serbia) was sold in

planned repayment up until December 1, 2016.

Based on and considering the above assessments, done for the

2014 to New Europe Property Investments plc (“NEPI”), a publicly

period of 14 months following the signature of these reports, the

traded commercial property investor and developer in Eastern

Board of Directors has a reasonable expectation that the Company

Europe, holding 26 income producing assets. In 2015 Plaza sold its

will be able to continue in operation and meet its liabilities as they

Indian mall located in Pune and in March 2016 its mall in Liberec,

fall due.

Czech Republic. The remaining four centers, which were completed

during 2009 - 2012 are being held and managed by the Company,

while utilising the Company’s extensive experience in managing retail

Dividends

assets.

The Company shall not make any dividend distributions, unless

(i) at least 75% of the unpaid principal balance of the debentures

For a more detailed status of Plaza’s main focus in 2016 and

(€199 million) has been repaid and the coverage ratio on the last

current activities and projects, the directors refer to the Executive

examination date prior to such distribution is not less than 150%

Officer’s statement on pages 28 to 31 as well as to the following

following such distribution, or (ii) a majority of the plan creditors

chapters: Overview, Business Review and Management and

consents to the proposed distribution.

Governance.

For an overview of subsequent events refer to note 32 to the

injection of at least €20 million occurs, then after one year following

Notwithstanding the aforesaid, in the event an additional capital

consolidated financial statements.

Pipeline projects

the date of the additional capital injection, no restrictions other

than those under restructuring plan as specified on page 9 and the

applicable law shall apply to dividend distributions in an aggregate

amount up to 50% of such additional capital injection.

The Company is active in seeking new sites and development

opportunities in countries in which the Company is currently

operating. The Company is also analysing and contemplating

Directors’ interests

investment in further countries that meet its development

The directors have no interests in the shares of the Company, other

parameters and investment criteria.

than the directors’ share options as given on page 64 of this report.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

mAnAgemenT And gOvernAnCe
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Directors’ report

Directors and appointments

Employee involvement

The following served as directors of the Company at

The Company has 83 employees and other persons providing

31 December 2015:

Ron Hadassi – Chairman, Non-executive director

Nadav Livni – Executive director

Shlomi Kelsi* – Non-executive director

Yoav Kfir* – Non-executive director

Marco Wichers – Independent non-executive director

Sarig Shalhav – Independent non-executive director

David Dekel – Independent non-executive director

The General Meeting of Shareholders is the corporate body

authorised to appoint and dismiss the directors. All directors, unless

they are retiring, submit themselves for re-election every three

years, pursuant to the rotation scheme for directors as laid down in

Article 15.3 of the Articles of Association. The General Meeting of

Shareholders is entitled to suspend and dismiss

directors by a simple majority vote.

Substantial shareholdings

As of the balance sheet date, Davidson Kempner Capital LLC

held approximately 26.3% and York Capital Management Global

Advisors held approximately 3.64% of the entire issued share

capital of the Company. Other than that and except as disclosed

under “directors’ interests” above, the Company is not aware of

any additional interests amounting to 3% or more in the Company’s

shares besides that of its parent company Elbit Imaging Ltd.

Issue of shares

Pursuant to the Articles of Association, the General Meeting of

Shareholders is the corporate body authorised to issue shares and

to disapply pre-emption rights. In each Annual General Meeting,

the General Meeting of Shareholders is requested to delegate these

powers to the Board. The scope of this power of the Board shall be

determined by the resolution of the General Meeting of Shareholders

to give the authorisation. Typically, the Company requests in each

Annual General Meeting of Shareholders the authorisation for the

Board to issue shares up to an aggregate nominal value of 33%

of the then issued share capital and an authorisation for the Board

to disapply pre-emption rights which is limited to the allotment of

shares up to a maximum aggregate nominal amount of 10% of the

then issued share capital. The authorisation is valid for a period

ending on the date of the next Annual General Meeting. In 2015 the

Board has not received such authorisation.

* Mr. Kelsi and Mr. Kfir was dismissed from its position on 17 December, 2015.

See the reference on page 46

similar services. In 2014 the Group had 120 employees and other

persons providing similar services. The management does not expect

significant changes in the development of the number of employees,

following the reorganisation process in recent years. The Company’s

employees are vital to its ongoing success. It is therefore important

that all levels of staff are involved in its decision-making processes.

To this end, the Company has an open culture and flexible structure,

and staff are encouraged formally and informally to become involved

in discussions on the Company’s future strategy and developments.

Employee share option schemes were adopted on 26 October 2006

(as was amended in October 2008 and November 2011) and on

22 November 2011, which enable employees to share directly in

the success of the Company.

Annual General Meeting (AGM)

The Annual General Meeting of Shareholders is held every year within

six months from the end of the financial year in order to discuss

and approve the annual report and adopt (vaststellen) the Dutch

statutory annual accounts, discharge of the directors from their

liability for the conduct of business in the preceding year and any

other issues mentioned below.

The main powers of the General Meeting of Shareholders relate

to the appointment of members of the Board, the adoption of the

annual financial statements, declaration of dividend, release the

Board’s members from liability and amendments to the Articles of

Association.

The annual general meeting of shareholders was held at Park Plaza
Victoria Hotel Amsterdam, Damrak 1-5, 1012 LG Amsterdam, the
Netherlands on 30 June 2015 at 10.30 am (CET).

In this AGM, inter alia, the following resolutions were proposed

to the shareholders: (i) to adopt and approve the Company’s

Dutch statutory annual accounts and annual report for the 2014

financial year being drawn up in the English language; (ii) not

to distribute any dividend to the holders of ordinary shares in

respect of the year ended 31 December 2014; (iii) to discharge the

directors of the Company from their liability for the conduct of

business for the year ended 31 December 2014; (iv) to appoint Grant

Thornton Accountants en Adviseurs B.V. as the external auditor

for the 2015 financial year; (v) to authorize the Board generally

and unconditionally to exercise all powers of the Company to allot

** As of 19 December 2014, based on the latest disclosed positions made by Davidson

Kempner Capital Management LLC (“DK”). Burlington Loan Management Limited holds
23.89%. and DK holds 2.4% directly.

mAnAgemenT And gOvernAnCe

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Directors’ report

equity securities in the Company up to 226,234,891 (two hundred

and twenty six million, two hundred and thirty four thousand, eight

hundred and ninety-one) ordinary shares, being 33 per cent. of the

Company’s issued ordinary share capital as at the date of the notice

for the annual general meeting, provided that such authority shall

expire on the conclusion of the Annual general meeting to be held in

2016, save that the Company may, before such expiry, make an offer

or agreement which would or might require equity securities to be

allotted after such expiry and the Board may allot equity securities in

pursuance of such an offer or agreement as if the authority conferred

hereby had not expired; (vi) to designate the Board, generally

and unconditionally, as the competent body to restrict or exclude

pre-emptive rights upon issuing ordinary shares set out in article

6 of the Company’s Articles of Association, such power to expire

at the conclusion of the next Annual general meeting to be held in

2016, and the Board may allot equity securities following an offer

or agreement made before the expiry of the authority and provided

that the authority is limited to the allotment of the equity securities

up to the percentage of 10% of the issued capital of the Company

at the date of the notice for this Annual general meeting, being

68,556,028 (sixty eight million, five hundred and fifty six thousand

and twenty eight) ordinary shares in the capital of the Company;

(vii) to authorize the Company, generally and unconditionally, for the

purpose of Article 8 of the Articles of Association of the Company to

make market purchases of the ordinary shares in the capital of the

Company on such terms and in such manner as the directors may

from time to time determine, subject to certain conditions (viii) to

re - elect Mr. Sarig Shalhav as non executive director; and (ix) to re

–elect Mr. David Dekel as non executive director.

Article 10 of Directive 2004/25

With regard to the information referred to in the resolution of Article

10 of the EC Directive pertaining to a takeover bid which is required

to be provided according to the Dutch law, the following can be

reported:

• There are no special restrictions on the transfer of the shares of

the Company.

• There are no special statutory rights related to the shares of the

Company.

• There are no restrictions on the voting rights on the Company’s

shares.

• Information on significant shareholding can be found above.
• There are no agreements between the shareholders which are
known to the Company and may result in restrictions on the
transfer of securities and/or voting rights.

• The applicable provisions regarding the appointment and

dismissal of members of the Board and amendments to the
Articles of Association are set forth above.

• The power of the Board regarding the issue of shares and the

exclusion of pre-emption rights and the repurchase of shares in
the Company can be found above.

• There are no significant agreements to which the Company is a
party and which take effect alter or terminate upon a change of
control of the Company following a takeover bid.

• There are no agreements between the Company and its Board

members or employees providing for compensation if they resign
or are made redundant without valid reason or if their employment

ceases because of a takeover bid.

The proposed resolutions of items No. (i) – (iv) and items No. (viii) –

(ix) of the agenda were passed and items No (v) – (vii) of the agenda

• Other information can be found in the notes to the financial

statements (please see note 19 - Equity).

were voted against.

Extraordinary General Meeting (EGM)

An extraordinary general meeting of shareholders was held at

Park Plaza Victoria Hotel Amsterdam, Damrak 1-5, 1012 LG

Amsterdam, the Netherlands on 19 December, 2015 at 10am (CET).

On 30 October 2015, the Company received a written requisition

within the meaning of article 27.3 of the Articles of Association, from

Elbit Ultrasound (Luxembourg) B.V./S.à r.l. “Elbit”), a shareholder

holding 44.9 per cent of the Company’s ordinary shares, to convene

an extraordinary general meeting of shareholders. The requisition

contained the following proposals: (i) to dismiss Mr. Shlomi Kelsi

from his position as non-executive director, in accordance with

article 23 of the Articles of Association, and (ii) to dismiss Mr. Yoav

Kfir from his position as non-executive director, in accordance

with article 23 of the Articles of Association.
All proposed resolutions were passed.

Forecast

Plaza continues to evaluate its development pipeline, which

it believes offers significant opportunities. Plaza remains

prudent and pragmatic in its approach to deploying significant

levels of equity to commence new projects. This being said, Plaza

continues to progress a limited number of projects in the most

resilient countries in CEE, such as Poland, Romania and Serbia,

and, as such, continuing construction of Belgrade Plaza (“Visnjicka”)

in Belgrade, Serbia for which a building permit was received in

July 2015 and bank financing is expected to be agreed shortly.

In addition, commencing construction of Timisoara Plaza in

Timisoara, Romania for which a building permit was received in

July 2015 and a binding financing offer has also been agreed for

circa 65% of the project cost.

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Advancing related permits and approvals for the Casa Radio

project in Bucharest, Romania and exploring opportunities for

financing and/or partnerships for the development; and, continuing

processes to secure relevant local planning and permitting approvals

for the Belgrade (“MUP”) project in Serbia and Lodz Plaza project in

Poland, remain a priority.

Plaza intends to sell yielding assets where value potential is or is

close to being established and where sale prices are appealing, and

to sell plots which are not part of the Company’s core business or

not suitable for development in the short/medium term.

Following the successful completion of the restructuring plan, Plaza

has confidence in the long term future growth of the Company

and the management is resolute in its belief that, with the ongoing

support of the Group’s bondholders and shareholders, the delivery

of the strategy, together with the brightening economic outlook, will

result in the delivery of value and growth to the Company’s investors.

Plaza will continue to reduce corporate debt by early repayments

following the sale of assets according to the Company’s debt

restructuring agreement, and achieving a one year deferral period on

bond principal repayments (NIS 434 Million) per the restructuring

plan. For important information in regards to Plaza’s cash flow

projections please refer to Note 2(c) in the consolidated financial

statements.

Plaza is in various stages of negotiation for the strategic sale of

some assets in the portfolio (e.g. negotiation to sell its 50% share

in Riga Plaza (Latvia) project to a third party), but currently there

are no signed agreements or head of terms in place, except a signed

binding pre-agreement to sell development plot in Piraeus, near

Athens, Greece.

The number of the Group’s employees changed significantly over

recent years, however, following the approval of the

restructuring plan, no material change is expected for 2016

following the nomination of Dori Keren and Yitshak (Izzie) Elias to

the roles of Acting Chief Executive Officer and Chief Financial Officer,

respectively.

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Corporate governance

Cor porate governance

The Company was incorporated in The Netherlands on May 17,
1993 as a private limited liability company (besloten vennootschap
met beperkte aansprakelijkheid). The Company was converted into
a public limited liability company (naamloze vennootschap) on
October 12, 2006, with the name “Plaza Centers N.V.”. The principal
applicable legislation and the legislation under which the Company
and the Ordinary Shares in the Company have been created is book 2
of the Dutch Civil Code (Burgerlijk Wetboek).

Compliance

The Board is committed to high standards of Corporate Governance,
in order to maintain the trust of the Company’s shareholders and
other stakeholders. The Company has a one-tier board (as provided
for in the Dutch Civil Code) whereas the Dutch Corporate Governance
Code is based on a separate management Board and supervisory
Board. Where possible, taking the aforesaid into consideration, the
Company complies with the Dutch Corporate Governance Code and
the UK Corporate Governance Code, with the exception of a limited
number of best practice provisions which it does not consider to be
in the interests of the Company and its stakeholders or which are not
practically feasible to implement.

Share Option Schemes were drafted in accordance with Elbit’s

Share Option Scheme, in order to maintain the incentive for all

employees of Elbit a group based upon the same principles. It

should be noted however that, in 2015, no options were granted

or exercised.

• Best Practice Provision II.2.12 and Best Practice Provision II.2.13

stipulate inter alia that the remuneration report of the supervisory

board shall include account of the manner in which the

remuneration policy has been implemented in the past financial

year as well as an overview of the remuneration policy planned by

the supervisory board for the next financial year and subsequent

years and should contain the information specified in these

provisions. The current remuneration policy of the Company has

remained unchanged from 2006 at the moment the Company’s

shares were admitted to listing and is fairly straight forward, as

such that „implementation” is not an issue. Furthermore, pursuant

to the Articles of Association, the general meeting of shareholders

determines the remuneration policy, and not the non-executive

directors. When the remuneration policy needs changing, approval

will be sought from the general meeting of shareholders of the

Company.

The Deviations from the Dutch Code in 2015

• Best Practice Provision II.3.3 and Best Practice Provision III.6.2

• Best Practice Provision II.1.3 stipulates inter alia that the Company

should have an internal risk management and control system
which should in any event employ as instruments of the internal
risk management and control system a code of conduct which
should be published on the Company’s website. Such code of
conduct has not been available during 2015.

• Best Practice Provision II.1.4 (b) stipulates that the management
board shall provide a description of the design and effectiveness
of the internal risk management and control system for the main
risks. Since the Company has no such code, it cannot refer its
design and effectiveness.

stipulate that both executive directors and non-executive directors

shall not take part in any discussion or decision-making that

involves a subject or transaction in relation to which they have a

conflict of interest with the Company. Section 17.1 of the Articles

of Association provides for this. Section 17.2 of the Articles of

Association further stipulates that if as a consequence of the

provision of Section 17.1. of the Articles of Association, no board

resolution can be passed, then despite the conflict of interest,

such resolution can be resolved by the Board provided that the

resolution is adopted unanimously and in a meeting where all

Board members are present or represented.

• Best Practice Provision II.1.6 stipulates that the management

stipulate, inter alios, that decisions to enter into transactions

• Best Practice Provision II.3.4 and Best Practice Provision III.6.3

board shall describe the sensitivity of the results of the Company
to external factors and variables. Since the Company has no
streaming/fixed annual revenue from operation of properties, it
does not perform such analysis.

• Best Practice Provision II.2.4 stipulates that granted options
shall not be exercised in the first three years after the date of
granting. The current share incentive schemes of the Company
do not restrict the exercise of options to a lockup period of three
years. The reason therefore is that the Company and the Elbit

in which there are conflicts of interest with management board

members that are of material significance to the Company and/

or to the relevant board members require the approval of the non-

executive directors. Pursuant to the Articles of Association, each

board member is obliged to notify all direct and indirect conflicts

of interest and may not join the discussion and decision-making.

Therefore, the Articles of Association do not contain a specific

approval clause.

• Best Practice Provision III.1.7 stipulates that the supervisory

Group share the same remuneration policy and the Company’s

board shall discuss at least once a year on its own, both its

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own functioning and that of its individual members, and the

the Company has had four non-executive directors (Messrs. Ron

conclusions that must be drawn on the basis thereof. The desired

Hadassi, Marco Wichers, David Dekel and Sarig Shalhav) out of

profile, composition and competence of the supervisory board

whom three are considered to be independent. See also page 42

shall also be discussed. Moreover, the supervisory board shall

– “Additional Information for an overview of the directors’ former

discuss at least once a year without the management board be-

and current functions”. Consequently, three out of the six non-

ing present, the functioning of the management board as an organ

executive directors in 2015 were considered to be independent.

of the company and the performance of its individual members,

and the conclusions that must be drawn on the basis thereof. In

• Best Practice Provision III.3.3 and Best Practice Provision III.4.1

2015 the non-executive directors have not specifically discussed

(a) stipulate that all supervisory board members shall follow an

the items that appear in this Best Practice Provision on separate

induction program. The Company has no formal induction prog-

occasions. The Board, however, feels it important to notify the

ram in place. New directors typically follow an ad hoc introduction

shareholders that as a rule, every Board meeting includes an

to the Company which makes them familiar with the Company and

assessment by all Board members of their own functioning and

its business and which enabled them to perform their tasks.

that of their fellow Board members. The Board is of the view that,

given the fact that the Company has a one-tier board rather than a

• Best Practice Provision III.3.5 stipulates that a non-executive

separate management board and supervisory board, this course of

director (in terms of the Dutch Corporate Governance Code a

action appropriately meets the requirements as laid down in this

supervisory director (commissaris)) may be appointed to the

Best Practice Provision.

board for a maximum of three four-year terms. Section 23 of

the Articles of Association provides for a retirement schedule

• Best Practice Provision III.1.8 stipulates that the supervisory

whereby directors who have been in office for not less than three

board shall discuss at least once a year the corporate strategy

consecutive annual general meetings shall retire from office.

and the risks of business and the results of assessment by the

Pursuant to section 23.9 of the Articles, such a director may be

management board of the structure and operation of the internal

reappointed, which could result in a term of office which is longer

risks management and control systems, as well as any significant

than three four-year terms.

changes thereto. In 2015, there have not been separate meetings

of the non-executive directors to discuss the items mentioned

• Best Practice Provision V.3 stipulates inter alia that the Company

in this Best Practice Provision. The reason therefore is that

should have an internal auditor. Though in fact the Company does

risk management at the Company is, pursuant to the internally

not have an internal auditor itself, as part of the Elbit Imaging

applicable corporate governance regulations, a matter specifically

Group the Company has a Quality Control Regulator, who, in

reserved for decision by the full Board. Board meetings in 2015

practice, functions as an internal auditor.

have included discussions in respect of corporate strategy and

risk management and periodically throughout the year, the internal

system of risk management has been assessed by the full Board.

Deviations from the UK Code on
Corporate Governance

* Best Practice Provisions III.2.1 and III.8.4 stipulate that the

The Company did not comply with the following provisions of the UK

majority of the members of the Board shall be independent

Code on Corporate Governance in the year ended 31 December 2015:

non-executives within the meaning of Best Practice Provision

III.2.2. From 1 January 2015 until 17 December 2015, the

• Code Provision A.2.1 states that the division of responsibilities

Company had one executive director, Mr Nadav Livni and six

between the Chairman and Chief Executive should be clearly

non-executive directors out of whom three non-executive directors

established, set out in writing and agreed by the Board. Whilst

were considered to be independent, applying the criteria of Best

the Company does not possess such a document, it believes that

Practice Provision III.2.2. The non-executive directors, in function

the division of responsibilities between the Chairman and Chief

in 2015 considered to be non-independent were Messrs Ron

Executive is sufficiently clear.

Hadassi, Yoav Kfir and Shlomi Kelsi. Messrs. Yoav Kfir and Shlomi

Kelsi stepped down from their functions at the occasion of the

• Code Provision A.4.2 states that the Chairman should hold

extraordinary general meeting of shareholders of the Company

meetings with the non-executive directors without the executive

that was held on 17 December 2015. The independent non-

directors present and, led by the Senior Independent Director, the

executive directors in 2015 were Messrs Marco Wichers, Sarig

non-executive directors should meet without the Chairman present

Shalhav and David Dekel. From 17 December 2015 onwards,

at least annually to appraise the Chairman’s performance and on

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such other occasions as are deemed appropriate.

• Code Provision B.6.1 states that the Board should refer in the

annual report as to how performance evaluation of the Board, its

committees and its individual directors has been conducted.

• Code Provision B.6.3 states that the non-executive directors,

led by the Senior Independent Director, should be responsible

for performance evaluation of the Chairman, taking into account

the views of executive directors. In 2015, the Chairman and the

non-executive directors did not meet separately. However, at every

Board meeting, an assessment is made by each Board member of

his/her own performance and that of other members. The Board

is of the view that this course of action provides an appropriate

mechanism for the evaluation of the performance of Board

members.

• Code Provision C.2.3 states that the Board should, at least

annually, should conduct a review of the effectiveness of the

Company’s risk management and internal control systems and

should report to shareholders that they have done so. The Board

did not conduct a review of the effectiveness of the Company’s

risk management and internal control systems in the year

under review. However, the Board has established a process for

identifying and managing the risks faced by the Company and

both the Audit Committee and the executive director regularly

consider the effectiveness of the Company’s internal controls and

risk management procedures as part of the on-going management

of the Company. The Board confirms that any appropriate actions

either have been or are being taken to address any weaknesses in

these areas.

• Code Provision C.3.6 states (amongst other things) that, where

there is no internal audit function, the Audit Committee should

consider annually whether there is a need for an internal audit

function and make a recommendation to the Board, and the

reasons for the absence of such a function should be explained in

the relevant section of the annual report. Although the Company

does not have an internal auditor, the Company has access to a

quality control regulator who, in practice, functions as an internal

auditor.

• Code Provision E.2.3 states that the Chairman should arrange

for the Chairmen of the Audit, Remuneration and Nomination

Committees to be available to answer questions at the Annual

General Meeting of Shareholders and for all directors to attend.

In the year under review only Mr. Dekel attended at the general

meetings of the shareholders.

Compliance with WSE Corporate
Governance Rules

The Code of Best Practice for WSE-Listed Companies (the “WSE
Corporate Governance Rules”) applies to companies listed on the
WSE, irrespective of whether such companies are incorporated in
Poland. The WSE Corporate Governance Rules consist of general
recommendations related to best practice for listed companies
(Part I) and best practice provisions relating to management boards,
supervisory board members and shareholders (Parts II to IV).
The WSE Corporate Governance Rules impose upon the companies
listed on the WSE an obligation to disclose in their current reports
continuous or incidental non-compliance with best practice
provisions (with the exception of the rules set forth in Part I).
Moreover, every year each WSE-listed company is required to
publish a detailed statement on any non-compliance with the WSE
Corporate Governance Rules (including the rules set forth in Part I)
by way of a statement submitted with a listed company’s annual
report. Companies listed on the WSE are required to justify non-
compliance or partial compliance with any of the WSE Corporate
Governance Rules and to present possible ways of eliminating the
potential consequences of such non-compliance or the steps such
company intends to take to mitigate the risk of non-compliance
with such rule in the future. The Company complies, to the extent
practicable, with all the principles of the WSE Corporate Governance
Rules. However, the Company will only be in the position to comply
with certain principles insofar such is permitted by Dutch law.
Detailed information regarding non-compliance as well as additional
explanations regarding partial compliance with certain Corporate
Governance Rules of the WSE due to incompatibilities with Dutch
law, will be included in the aforementioned reports, which will be
available on the Company’s website and published by way of a
current report.

Board practices

In the Netherlands, statutory law provides for both a one-tier
governance (monistisch bestuursmodel) and a two-tier governance
(dualistisch bestuursmodel, having a separate management board
and a separate supervisory board). It is well established practice
for international active companies in the Netherlands to have a
one-tier structure in the management board (bestuur). Although all
members of the management board are formally managing directors
(bestuurders), the articles of association will provide that certain
directors have executive tasks and obligations (executive directors,
uitvoerend bestuurders) and certain directors have supervisory
duties (non-executive directors, niet-uitvoerend bestuurders).
In case of the Company, the Articles of Association provide that
some directors are responsible for the day-to-day management of

the Company and other directors are responsible for supervising

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the day-to-day management of the Company. All responsibilities

are subject to the overall responsibility of the Board. All statutory

provisions relating to the members of the management board apply

in principle to all members of a one-tier board.

The Board is accountable to the General Meeting of Shareholders.

Composition and operation of the Board

From 8 July, 2014 until 17 December 2015, the Company had seven

directors – one executive director and six non-executive directors,

of whom three were independent. At the EGM Mr. Kelsi and Mr.

Kfir were dismissed. See page 46. Since the dismissal of the above

directors the Company has five directors – one executive director and

four non-executive directors, of whom three are independent.

The appointment of Board members is done by the General Meeting.

The current Articles of Association contain (section 23A) an

arrangement for the appointment/re-appointment of independent

directors, if and for so long as the ordinary shares are admitted to

the Official List of the London Stock Exchange, which in essence

provides for a regulation pursuant to which the appointment is

made by separate resolutions of the General Meeting and the meeting

of independent shareholders (an independent shareholder not

being a person who exercises or controls on its own or together

acting in concert thirty percent (30%) or more of the votes in a

General Meeting).

The Board meets regularly throughout the year, when each

director has full access to all relevant information. Non-executive

directors may if necessary take independent professional advice

at the Company’s expense. The Company has established three

committees, in line with the UK Combined Code and the Dutch

Corporate Governance Code. These are the Audit Committee, the

Remuneration Committee and the Nomination Committee, and a

brief description of each may be found below.

Audit Committee

The Audit Committee meets at least three times each financial year.

The Audit Committee has the general task of evaluating and advising

the Board on matters concerning the financial administrative control,

the financial reporting and the internal and external auditing. Among

other matters, it must consider the integrity of the Company’s

financial statements, the effectiveness of its internal controls and

Remuneration Committee

The Remuneration Committee meets at least twice each financial year
to prepare the Board’s decisions on the remuneration of directors
and other senior employees and the Company’s share incentive
plans (Under Dutch law and the Articles of Association, the principal
guidelines for directors’ remuneration and approval for directors’
options and share incentive schemes must be determined by a
general meeting of shareholders). The Committee also prepares an
annual remuneration report on the Company’s remuneration policy.
The remuneration report may be found on pages 64-66 of this

document.

Composition**: Mr. Wichers, Mr. Dekel and Mr. Shalhav
Chairman: Mr. Wichers.

Nomination Committee

Meeting at least twice a year, the main tasks of the Nomination
Committee are to prepare selection criteria and appointment
procedures for Board members and to review the Board’s structure,
size and composition.

Composition***: Mr. Wichers, Mr. Dekel, Mr. Shalhav
Chairman: Mr. Wichers

Internal control/risk management

The Board has established a continuous process for identifying
and managing the risks faced by the Company, and confirms that
any appropriate actions have been or are being taken to address
any weaknesses. It is the responsibility of the Audit Committee
to consider the effectiveness of the Company’s internal controls,
risk management procedures, and risks associated with individual
development projects.

The Board and Management of Plaza and the Company have become
aware of certain issues with respect to certain agreements that were
executed in the past in connection with the Casa Radio. In order to
address this matter, the Board has appointed the chairman of the
Audit Committee to investigate the matters internally. The Board of
Plaza has also appointed independent law firms to perform an
independent review of the issues raised. The Company has
approached and is co-operating fully with the relevant Romanian
Authorities regarding the matters that have come to its attention
in this respect and it has submitted its findings to the Romanian
Authorities. There is a risk that the outcome of the investigation will

risk management systems, auditors’ reports and the terms of

affect the outcome of the project.

appointment and remuneration of the auditor.

Composition*: Mr. Wichers, Mr. Dekel and Mr. Shalhav.

Chairman: Mr. Dekel.

* Until 17 December, 2015 Mr. Kfir was a member of the Audit Committee.

**/*** Until 17 December, 2015 Mr. Kelsi was a member of the Remuneration and

Nomination Committees.

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Share Dealing Code

The Company operates a share dealing code, which limits the

freedom of directors and certain employees of the Company to

deal in the Company’s shares. The share dealing code imposes

restrictions beyond those that are imposed by law. The Company

takes all reasonable steps to ensure compliance by those parties

affected. The Company operates a share dealing code, particularly

relating to dealing during close periods, for all Board members

and certain employees, as is appropriate for a listed company.

The Company takes all reasonable steps to ensure compliance

by those parties affected. The share dealing code meets the

requirements of both the Model Code set out in the Listing Rules

To ensure that all its communications are factually correct, it is

furnished with full information before every meeting on the state

and performance of the business. It also has ultimate responsibility

for reviewing and approving all information contained in its annual,

interim and other reports, ensuring that they present a balanced

assessment of the Company’s position.

The main channels of communication with shareholders are the

senior independent director, Chairman, CEO, CFO and our financial

PR advisers, although all directors are open to dialogue with

shareholders as appropriate. The Board encourages communication

with all shareholders at any time other than during close periods,

and is willing to enter dialogue with both institutional and private

and the Market Abuse chapter of the Netherlands Act on the financial

shareholders.

supervision.

Controlling shareholder and conflicts
of interest

The Board also actively encourages participation at the AGM,

which is the principal forum for dialogue with private shareholders.

As well as presentations outlining the progress of the business, it

includes an open question and answer session in which individual

At the date of this document, the Company is aware of the following

interests and concerns may be addressed. Resolutions put to vote

persons who are interested directly or indirectly in 3% or more of the

and their results will be published following the meeting.

issued share capital of the Company:

Number of

Percentage of

ordinary

issued share

capital/voting

Elbit Imaging Limited

307,847,376

Davidson Kempner Capital

180,282,196

Management LLC

rights

44.90%

26.30%

York Capital Management

24,936,483

3.64%

Global Advisors LLC

The Company’s website (www.plazacenters.com) contains

comprehensive information about the business, and there is

a dedicated investor relations section where detailed financial

information on the Company may be found.

Corporate, social and ethical policies

The Company is responsible not only to its shareholders, but also

to a range of other stakeholders including employees, customers,

suppliers and the communities upon whom its operations have an

impact.

It is 2.06% therefore the responsibility of the Board to ensure that

The Board is satisfied that the Company is capable of carrying on

the Company, its directors and its employees act at all time in an

its business independently of Elbit Imaging Limited, with whom it

ethical manner. As a result, the Company seeks to be honest and

has a relationship agreement to ensure that all transactions and

fair in its relations with all stakeholders and to respect the laws and

relationships it has with the Elbit Imaging Group are conducted at

sensitivities of all the countries in which it operates.

arm’s length and on a normal commercial basis.

Shareholder communication

Environment

The Company regards compliance with environmental legislation

The Board meets with shareholders each year at the Annual General

in every country where it operates as its minimum standard, and

Meeting (AGM) to discuss matters relating to the business.
Details of AGM’s held in 2015 can be found on pages 45 and 46.
The Board is committed to maintaining an open, honest and positive
dialogue with shareholders.

significant levels of management attention are focused on ensuring

that all employees and contractors achieve and surpass both

regulatory and internal environmental standards.

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The Company undertakes a detailed environmental impact study

of every project it undertakes, including an audit of its waste

management, water and energy usage, emissions to air and water,

ozone depletion and more.

Health and safety

The Company regards compliance with environmental legislation

in every country where it operates as its minimum standard, and

significant levels of management attention are focused on ensuring

that all employees and contractors achieve and surpass both

regulatory and internal environmental standards.

The Company undertakes a detailed environmental impact study

of every project it undertakes, including an audit of its waste

management, water and energy usage, emissions to air and water,

ozone depletion and more.

Corporate governance declaration

This declaration is included pursuant to Article 2a of the Decree

further stipulations regarding the content of annual reports

(Vaststellingsbesluit nadere voorschriften inhoud jaarverslag) of

23 December 2004 (as amended) (hereafter the “Decree”).

For the statements in this declaration as understood in Articles 3, 3a

and 3b of the Decree, please see the relevant sections of this Annual

Report. The following should be understood to be inserts to and

repetitions of these statements:

• Compliance with the provisions and best practice principles of the

Code (pages 48 to 50);

• The functioning of the general meeting of shareholders, its

primary authorities, the rights of shareholders and how they can

be exercised (page 45);

• The composition and functioning of the Board and its Committees

(starting on pages 50 and 51);

• The regulations regarding the appointment and replacement of

members of the Board (page 51);

• The authorisations of the members of the Board in respect of the

possibility to issue or purchase shares (page 45).

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Risk management

Plaza mainly operates its business in emerging markets and therefore

it is exposed to a relatively high degree of inherent risk in such

activities. The Management Board is responsible for setting strategic,

financial, and operational objectives as well as for implementing risk

management according to these objectives.

The Group’s risk management policies are established to identify and

analyse the risks faced by the Group, to set appropriate risk limits

and controls, and to monitor risks and adherence to limits. Risk

management policies are reviewed regularly to reflect changes in

market conditions and the Group’s activities.

The strategic risks largely pertain to the real estate projects

and geographical allocation, and to the timing of purchases,

development, investments and sales and the corresponding financing

arrangements. Operational risks include, amongst other things,

the selection of properties and lessees, the technical condition of

properties, tax-related risks, as well as the performance of Plaza’s

organisation and its systems. The financial risks concern interest

rate, liquidity and counterparty credit risks, foreign currency

exchange rates, level of gearing, debt arrangements cross-defaults

as well as secure finance or refinancing risks and compliance with

its debt restructuring plan.

Plaza has an adequate risk management and internal control system.

An important element of the internal control system is a management

structure that can take decisions effectively and on the basis of consu-

ltation. Strict procedures are followed for the regular preparation

of monthly, quarterly and annual figures based on the Company’s

accounting principles. Monthly meetings or conference calls are

held between the Management Board and local managers to discuss

the results per country versus budgets and the long term financial

planning. The internal management reporting system is designed

to follow developments in rental income, the value of investments,

rent arrears, vacancies, the progress of (re)development projects

and disposal of further non-core assets and assets not suitable for

development in the short-medium term, and the preparation of the

financial results for period in comparison with the budget. There

In 2016, Plaza will continue to focus on improving the performance
of the shopping centre portfolio, applying the Company’s strong
asset management capabilities. There will be additional emphasis
on reducing leverage as well as the further rationalisation and
strengthening of the portfolio by disposing of non-core properties.
Focus on Central and Eastern Europe will continue, creating a strong-
performing portfolio. Plaza will also look to make progress on its
developments, including Timisoara Plaza and Belgrade (Visnjicka)
Plaza, and will explore partnership and financing opportunities for
the Casa Radio project as well as to advance permits for the Belgrade
Plaza (MUP) and Lodz projects. While the markets in which Plaza
operates showed positive economic signs during 2015, the Company
remains vigilant towards wider macro-economic impacts.

Plaza’s focus remains on building a strong portfolio, unlocking the
value of land through developments where possible, reducing debt
levels and delivering on behalf of bondholders and shareholders.
Asset sales will be considered for yielding assets where value
potential is or is close to being established and where prices are
appealing or the sale of plots which are not part of the company’s
core business nor suitable for development in the short-medium
term. Furthermore, continuing to reduce corporate debt by early
repayments following sale of assets according to the Company’s debt
restructuring agreement, and achieving a one year deferral period on
bond principal repayments (NIS 434 Million) as per the restructuring
plan, will remain a priority.

The strategy is evaluated by the Management Board each year,
reformulated as necessary and established in a business plan and a
cash flow forecast. The strategy considers a period of five years, with
detailed budget proposals elaborated in the first year. The strategy is
then translated into concrete tasks and actions. During this process,
opportunities and important business risks are identified, and the
Company’s objectives and strategy are evaluated and adjusted if
appropriate. The strategy is discussed with and approved by the
Management Board pursuant to the restructuring plan restrictions.
Following the approval of the restructuring plan, it is vital that Plaza
continues to look to the long term objectives of the business.

are internal information systems regulations which contain inter alia

back-up, recovery back up and management of disasters plan to

ensure that data will not be lost in case of emergencies.

In addition, to ensure knowledge and understanding of its business
environments, Plaza employs local employees and consultants; and
in some cases has entered into local partnerships.

Business strategy and restructuring plan

Capital management

Plaza is focused on its businesses in CEE region and India (emerging

markets). By nature, various aspects of the emerging markets are

relatively underdeveloped and unstable and therefore are often

exposed to risks arising from unforeseen changes, such as legal,

The Board’s policy is to maintain a strong capital base so as to
maintain investors, creditors and market confidence and to sustain
future development of the business. The basis of the Company’s
stated dividend policy at the time of its IPO was to reflect the long

political, tax, regulatory, and economic changes.

term earnings and cash flow potential of the Group, taking into

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account its capital requirements, whilst at the same time maintaining
an appropriate level of dividend cover.

paid €19.3 million to bondholders and, since the restructuring

plan was approved in 2014, a total of €47 million (of which €19

However, pursuant to the approved restructuring plan, the Company
will be allowed to distribute dividends to its shareholders only
if at least 75% of the unpaid balance of the bonds (excluding
bonds that are sold by a Company’s subsidiary) following the
date the restructuring plan will come into effect and shall bind all
creditors which are subject to it, have been repaid in full prior to
such distribution and provided that following such distribution a
certain financial coverage ratio is met, unless such distribution
has been approved in a meeting of the creditors that are subject to
the restructuring plan by a majority of at least 67% of the debt’s
balance which is being held by the creditors participating in such
meeting and voting. Notwithstanding the aforesaid, in case of an
additional equity investment in the Company of at least €20 million
that occurs following the date the restructuring plan came into force,
the Company will be allowed (subject to applicable law) to distribute
a dividend to its shareholders in an amount equal to 50% of the said
additional equity investment and such distribution will not be subject
to the said limitations.

The Board seeks to maintain a balance between the higher returns
that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position.

million for principal and rest for interest) has been distributed as

well as 13.21% of shares in the Company. For background on this

restructuring, please refer to pages 8-10.

Following the closing of the Company’s restructuring plan, the

consolidated financial statements include liabilities to bondholders

for the aggregate principal amount of €203 million. The company

published cash flow forecast (as described on page 30) until

mid-2017 in order to achieve the abovementioned repayments, as

they fall due and to achieve 1 year deferral of the bonds principal

repayments (NIS 434 million). The Company regards this scenario

as the most probable, although these repayments are not falling due,

unless the mentioned assets in this scenario are disposed of.

As Plaza depends on external financing and has a high exposure to

CEE and India, Plaza bears the risks due to fluctuations in selling

yield, interest rates, exchange rates, and other indices, its financial

assets and debt value, cash flow, covenants and cost of capital will

be impacted, thereby affecting its ability to raise capital. At the start

of 2016, Plaza’s credit rating by Standard & Poor’s was maintained

on “BBB-” on a local Israeli scale with a negative outlook which put

Plaza in a stronger position but vigilant going into 2016.

Plaza will continue with efficiency measures and cost reduction
where possible. At the end of 2015, G&A expenses were reduced
to below €6 million per annum following stringent cost control
initiatives, e.g. the Board was reduced from 7 to 5 members.

Plaza continued to focus on deleveraging its balance sheet during the

period but, as a result of impairment losses recorded in the period

and finance costs incurred, the gearing level increased to 79% in

2015.

Management regularly reviews compliance with specified minimum
cash reserve covenants which have to be greater than the amount
estimated to pay all administrative and general expenses and
interest payments to the debentures holders falling due in the
following six months, minus sums of proceeds from transactions
that have already been signed (by the Company or a subsidiary)
and closed and, to the expectation of the Company’s management,
have a high probability of being received during the following six
months. Investments in new or existing REA of the group shall not
be permitted if following such investment the cash reserves are
less than the minimum cash reserve and minimum coverage ratio
covenant (as defined in the restructuring plan) is not met, namely
below the threshold of 118%.

Financing risk management

As part of the Company’s plan to reduce leverage, the following

action took place in respect of bank loans – refinancing and discount

during 2015:

• Sale of Koregaon Park Plaza in Pune, India, which eliminated a

recourse component of the loan of circa €14 million (the recourse

would have matured four years from the restructuring approval -

July 2018).

• The sale of an SPV holding a plot in Ploiesti, Romania for a total

consideration of €240,000 while proceeds were used to repay

an outstanding bank loan and no proceeds were obtained by the

Group. A waiver was obtained for the remainder of the unpaid

bank loan facility, totaling €1.4 million.

Liquidity risk
In line with the debt restructuring plan agreed in 2014, Plaza repays

• A subsidiary of Plaza has won a tender to buy the loan of the

wholly owned holding and operating company for Liberec Plaza

75% of proceeds from disposals to bondholders. In 2015, Plaza

shopping and entertainment centre in the Czech Republic.

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Plaza has agreed to buy the €20.4 million bank loan (which was

Furthermore, Plaza is monitoring its currency exposure on a

provided by two commercial banks) for €8.5 million, reflecting a

continuous basis and acts accordingly by investing in foreign

discount of 58%. The Company recorded a profit on the discount

currencies in certain cases when cash flows denominated in foreign

(circa €12 million) in its financial statements for the second half

currency are needed according to project construction budget. As a

of 2015. The Liberec loan was a full recourse loan (the recourse

policy, the Group does not invest in foreign currencies for speculative

would have matured four years from the restructuring approval -

purposes. The consolidated financial statements include additional

July 2018).

information about and disclosure on Plaza’s use of financial

As a basis for and contribution to effective risk management and

to ensure that Plaza will be able to pursue its strategy even during

periods of economic downturn, Plaza limits its financial risks by

instruments.

The Company’s top risks

hedging these risks if and when expedient.

The following risks and related key mitigants, where applicable, are

Interest rate risks

In view of Plaza’s policy to hold investments for the long term

while exit yields are high, the loans used to fund this are also taken

with long maturities. Plaza uses interest-rate swaps to manage its

interest-rate risk. This policy regarding the hedging of interest-rate

risk is defensive in nature, with the objective of protecting itself

against rising interest rates. The Group incurs certain floating rate

indebtedness and changes in interest rates may increase its cost

of borrowing, impacting on its profitability. On a project by project

basis, the Group considers hedging against interest rate fluctuations

or as sometimes required to hedge by the lending bank.

Foreign currency exchange rates

As Plaza’s functional currency is Euro, it is exposed to risk deriving

from changes in foreign currency exchange rates as some of its

purchases of services and construction agreements are conducted in

local currencies, or are affected by them. Its rental revenues may also

be denominated in local currencies. The Group seeks to minimise

these risks by ensuring that its principal liabilities (financing and

construction) and its principal sources of revenue (sale proceeds

and rentals) are all denominated in the same currency (namely

Euro), or are linked to the rate of exchange of the local currency

and the Euro. In order to limit the foreign currency exchange risk

in connection with the Notes, the Company has hedged in previous

years, the future payments to correlate with the Euro under certain

swap arrangements, forward transactions and currency options sale

in respect of the Notes previously issued, and may enter into similar

hedging arrangements (as necessary) in respect of each of the series

of Notes, subject to market conditions.

If the Company is not successful in fully hedging its foreign

exchange rate exposure, changes in currency exchange rates relative

to the Euro may adversely affect the Group’s profit or loss, cash

flows and certain covenants. A devaluation of the local currencies in

relation to the Euro, or vice versa, may adversely affect the Group’s

profitability.

described below:

• Our business is subject to general business and macro and

microeconomic risks

Risk description: In addition to risks that are relevant to a specific

activity or relate to a specific territory, certain conditions and

changes in the economic environment in the countries in which we

operate may have an adverse effect on our business performance.

Changes in the global economy, in real estate and/or the busi-

ness environment in which we operate, and/or a negative trends

in the capital markets and/or a decrease in our capital and/or

impairments in our real estate assets may be harmed by certain

factors that may entail impairment losses not previously recorded,

which would affect our financial results and the satisfaction of

financial covenants, may have an adverse effect on our ability

to raise funds. Macroeconomic or microeconomic changes as

described above may influence our compliance with financial

covenants under certain bank loans and credit agreements,

including but not limited to, as a result of the decrease in the LTV

or Debt Service Cover Ratio (“DSCR”) and/or a decrease in our

capital.

Risk mitigation: In reaction to slow economic recovery Plaza

will continue with efficiency measures and cost reduction where

possible (e.g G&A expenses were reduced materially following

stringent cost control initiatives), and focus on commitments

to reposition the business by raising EUR 7.4 million net cash

proceed from the sale of under-performing Koregaon Park Mall

which were put towards Plaza’s future investments and general

corporate purposes, and disposals of non-core sites or not

suitable for development in the short term/medium term such

as in Romania and Poland and restrict its commencement of

construction projects to only the very best opportunities focusing

on projects with tenant demand and availability of external bank

financing which require minimal equity investments focusing

on Serbia and Romania. These measures have been and will be

pursued with vigor. Market developments will be closely watched

and additional measures will be taken if necessary.

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Risk management

• Events of default under the Group’s debt arrangements may

bank loans refinancing and discounts or waivers are being

result in cross-defaults being triggered under other debt

discussed as evidenced in the case of Liberec plaza loan tender

arrangements that the Group has in place

which bought in 58% discount and material discount paying back

If an event of default were to subsist under one or more of

SPV loan holding plot in Poliesti, Romania.

the Group’s debt arrangements, that event of default may, in

accordance with the cross-default provisions, constitute an event

• The Group’s financial performance is dependent on local

of default under the Group’s other debt arrangements. Upon an

realestate prices and rental levels

event of default (whether due to cross-default or otherwise), the

Risk description: There can be no guarantee that the real estate

relevant lenders would have the right, subject to the terms of the

markets in CEE region and India will continue to develop, or

relevant facility arrangements to, amongst other things, declare

develop at the rate anticipated by the Group, or that the market

the borrower’s outstanding debts under the relevant facilities to

trends anticipated by the Group will materialise. Where yields

be due and payable and/or cancel their respective commitments

are high, such as some of the current market yields, the Group

under the facilities, enforce their security, take control of certain

will not be able to achieve substantial capital gains by selling the

assets or make a demand on any guarantees given in respect

commercial centers.

of the relevant facility. In respect of the bonds, the trustees

representing holders of bonds (or a resolution of the holders of

Risk mitigation: Once assets are developed, and given the

bonds) may be able to claim, under circumstances where the

Company’s financial strength, Plaza is able to hold developments

Company does not fulfil its obligations under the bonds (including

on its balance sheet as yielding assets. Sales of assets will not be

but not limited to payment obligations) an immediate settlement,

undertaken if offered yields are high and Plaza will capitalise upon

and declare all or any part of the unsettled balance of the bonds

its extensive experience gained over eight years of managing and

immediately due and payable. In respect of the Polish bonds,

running shopping malls efficiently to hold and manage these as

each holder of the Polish bonds has the right to ask for an early

income-generating investments in its portfolio, and continue to

redemption of the Polish bonds on the occurrence of an event

drive occupancy at these centers until sufficient offered yields are

of default by the Company (including but not limited to payment

in place, subject to the restructuring plan and achieving the one

obligations). A default and/or acceleration of repayment of debt

year deferral period of the binds principal repayments.

under the debt arrangements may affect the ability of the Group to

obtain alternative financing in the longer term, either on a timely

• Real estate valuation is inherently subjective and uncertain

basis or on terms favourable to the Group, and the Group’s ability

Risk description: The valuation of property is inherently subjective

to pursue its strategic business plans. This may have an adverse

due to, amongst other things, the individual nature of each

effect on the Group’s business, results of operations, financial

property, and furthermore valuations are sensitive to change in

condition and/or prospects. Whilst the use of borrowings is

market sentiment. As such, valuations are subject to uncertainty

intended to enhance the returns on the Group’s invested capital

and cash generated on disposals may be different from the value

when the value of the Group’s underlying assets is rising, it may

of assets previously carried on the Group’s balance sheet. There is

have the opposite effect where the value of underlying assets

no assurance that valuations of properties, when made, will reflect

is falling. Any fall in the value of any of the Group’s properties

the actual sale prices even where those sales occur shortly after

may have significantly reduce the value of the Group’s equity

the valuation date. This may mean that the value ascribed by the

investment in the member of the Group which holds such

Group to the properties held by it may not reflect the value realised

property, meaning that the Group may not make a profit, may

on sale, and that the returns generated by the Group on disposals

incur a loss on the sale or revaluation of any such property and/or

of properties may be less than anticipated. In addition, the value of

increase the likelihood of a member of the Group breaching certain

the Group’s properties may fluctuate as a result of factors such as

financial covenants in its existing debt arrangements resulting in

changes in regulatory requirements and applicable laws (including

an event of default under such arrangements. The occurrence of

taxation and planning), political conditions, the availability of cre-

one or more of these factors may have a material adverse effect

dit finance and the condition of financial markets, interest and

on the Group’s business, financial condition and/or results of

inflation fluctuations and local factors such as competition. Each

operations.

of these factors may have an adverse effect on the Group’s busi-

ness, result of operations, financial condition and/or prospects.

Risk mitigation: Continuous negotiation with financing banks

The Company may from time to time publish such valuations. Any

in order to improve credit facilities’ terms, or disposal of

decreases in the published value of the Group’s properties may

subsidiaries, in which facility agreement is in place. In addition

adversely affect the price of the ordinary shares.

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Risk mitigation: Plaza will rely on its extensive experience and

• Plaza may be subject to risk relating to its co-investments,

knowledge of managing retails assets and strong relationships

because ownership and control of such investments are shared

with local and international retailers while using estimates

with third parties

and associated assumptions. These estimates and underlying

Risk description: Some of the Group’s projects (Riga Plaza, Plaza

assumptions are closely reviewed on an ongoing basis by the

Bas projects, the Casa Radio development and two projects in

Board members.

India (Bangalore and Chennai)) are held through joint venture

arrangements with third parties meaning that ownership and

• The Group’s borrowing costs and access to capital markets

control of such assets is shared with third parties. As a result,

depend significantly on the Company’s credit ratings and market

these arrangements involve risks that are not present with projects

perception of the Company’s and the controlling shareholder’s

in which the Group owns a controlling interest,

financial resilience

including:

Risk description: During 2015, the Israeli credit rating agency,

which is a division of International Standard & Poor’s, upgraded

- the possibility that the Group’s joint venture partner might at

the credit rating of Plaza’s two series of Notes traded on Tel Aviv

any time have economic or other business interests that are

Stock Exchange from “D” to “BBB-”, on a local Israeli scale, with

inconsistent with the Group’s business interests;

a stable outlook and at the start of 2016 Plaza’s credit rating was

- the possibility that the Group’s joint venture partner may be in

maintained on “BBB-“ with a negative outlook. Reduction in the

a position to take action contrary to the Group’s instructions or

credit ratings of the Group or deterioration in the capital market

requests, or contrary to the Group’s policies or objectives, or

perception of the Group’s financial resilience, could significantly

frustrate the execution of acts which the Group believes to be in

increase its borrowing costs, limit its access to the capital

the interests of any particular project;

markets and trigger additional collateral requirements in derivative

- the possibility that the Group’s joint venture partner may have

contracts and other secured funding arrangements. Therefore,

different objectives from the Group, including with respect to

any further reduction in credit ratings or deterioration of market

the appropriate timing and pricing of any sale or refinancing of a

perception could materially adversely affect the Group’s access

development and whether to enter into agreements with potential

to liquidity and competitive position and, hence, have a material

contractors, tenants or purchasers;

adverse effect on the Group’s business, financial position and/or

- the possibility that the Group’s joint venture partners may engage

results of operations. These material adverse effects could also

in, or be perceived to engage in, disreputable conduct;

follow from a reduction in the credit ratings of the controlling

- the possibility that the Group’s joint venture partner might become

shareholder.

bankrupt or insolvent; and

- the possibility that the Group may be required to provide finance

Risk mitigation: Implementing the restructuring plan will resolve

to make up any shortfall due to the Group’s joint venture partner

the Company’s liquidity situation. Plaza is working hard to raise

failing to provide such equity finance or to furnish collaterals to

external financing for capital needs and continues reviewing

the financing banks.

financing options available to the Company to achieve the most

effective debt profile.

Disputes or disagreements with any of the Group’s joint venture

partners could result in significant delays and increased costs

Plaza is actively pursuing sales opportunities to generate cash

associated with the development of the Group’s properties.

which will contribute to the Company’s liquidity and reduce debt

Even when the Group has a controlling interest, certain major

levels. The amended maturity schedule of debentures and loans

decisions (such as whether to sell, refinance or enter into a lease

is detailed in the restructuring plan on page 8 and 9. In addition,

or contractor agreement and the terms on which to do so) may

the Group maintains good relations with the financing banks who

require joint venture partner or other third party approval. If the

remain supportive of companies with strong track records and

Group is unable to reach or maintain agreement with the joint

few debt facilities are under negotiation as evidenced by a binding

venture partner or other third party on the matters relating to the

financing offer for Timisoara project which was agreed with the

operation of its business, this may have a material adverse effect

Hungarian Export-Import Bank Plc (Exim bank) for circa 65%

on the Group’s reputation, business, financial condition and/or

of the project cost and the bank financing offer for the Belgrade

results of operations.

Plaza project for circa 55% of the construction cost. The financing

agreement is expected to be finalised in the next quarter.

Risk mitigation: Plaza has very detailed agreements with all of its

partners that contain provisions that are supposed to limit the

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risks and exposures mentioned above (e.g. deadlock provisions,

Although the real estate sector in India is experiencing a

information and visitation rights provisions, etc.). In respect of

challenging downturn, our strategy with respect to our plots

the Bangalore project in India, Plaza has signed an agreement

in India is to dispose of such assets under the most optimal

to sell its interest in the SPV holding the project to its local part-

market conditions. Our plots in India are partially owned by our

ner subject to certain conditions precedent and not later than

subsidiary, Elbit Plaza India Real Estate Holdings Limited, or EPI,

30 September 2016. With respect to Chennai project, India

and by local Indian partners. Due to regulatory, physical and

following the local partner failure to complete the sale transaction

other limitations to develop our project in Bangalore, India, on

agreement Plaza will exercise its right to get the Partner’s 20%

December 2, 2015 we announced that EPI signed an agreement to

holdings in the SPV holding the project. In addition, Plaza is in

sell 100% of its interest in a special purpose vehicle which holds

negotiations to sell its 50% share in Riga Plaza (Latvia) to a third

a site in Bangalore, India to a local Investor. The transaction is

party.

• Casa Radio Project

subject to certain conditions precedent, and closing will take place

once these conditions are met and no later than 30 September

2016. In the event the closing conditions aren’t met by this date,

Risk description: In March 2016 Plaza announced that its board

the local investor would be subject to the terms of an agreed upon

had become aware of certain issues with respect to certain

separation mechanism under which EPI will be entitled, under

agreements that were executed in the past by Plaza in connection

certain circumstances, to exercise guarantees placed by the local

with the Casa Radio Project in Romania.

investor. In the event the separation mechanism isn’t properly

executed and we are unable to enforce the terms of the separation

Risk mitigation: In order to address this matter, Plaza’s Board

mechanism on the local investor, we may face regulatory, judicial,

appointed the chairman of its Audit Committee to investigate the

and/or legal difficulties in exercising the guarantees placed by

matters internally. Plaza’s Board also appointed independent law

the local investor due to, among other things, injunctive relief

firms to perform an independent review of the issues raised.

requested by the local investor or third parties which may

Plaza has approached and is co-operating fully with relevant

materially adversely affect our ability to dispose of the land to third

Romanian authorities regarding the matters that have come to its

parties which may jeopardise our business strategy, planning and

attention in this respect, and it has submitted its findings to the

operations, and could cause severe delays in disposition of the

Romanian authorities. As the investigation is ongoing, Plaza is

plots and could have a material adverse effect on our operations,

unable to comment on any details related to this matter.

cash flow and in turn, our ability to repay our debts in timely

In addition, our Casa Radio project in Romania may be subject to

manner.

governmental expropriation or monetary sanctions. The nature

Even if we are able to properly execute the separation mechanism

of the development and exploitation rights granted to the joint

and/or exercise the guarantees placed by the local investor, there

venture company in relation to the Casa Radio site in Bucharest

is no guarantee that we will be able to dispose of the land in the

are for a period of only 49 years, and in the event that this term

Bangalore project due to third party proprietary claims to certain

is not extended, the rights in relation to the site would revert to

parts of the Bangalore project, and third party holdings on parts

the Government of Romania. Additionally, there may be other

of the land within the Bangalore project thus making the holdings

regulatory risks relating to the Romanian government’s right to

in the land a non-contiguous property. In addition, legal and

expropriate the rights to the Casa Radio Site in Bucharest or that

regulatory restrictions placed by local authorities can materially

they will impose sanctions on the Company with respect to the

impede our ability to dispose of the land on optimal commercial

property. Furthermore, these rights are subject to termination

terms.

under certain circumstances by the Romanian government,

such as in the event a delay in the project timetable, and any

• We may have difficulties disposing our project in Chennai,

termination prior to the expiration of such rights may have a

India which may significantly affect our ability to complete

material adverse effect on our business.

our strategy relating to our plots in India

Due to regulatory and legal restrictions in India which make it

• We may have difficulties exercising mortgages/guarantees

difficult to register a transfer of ownership rights in our Indian

given in connection with our project in Bangalore, India which

projects, our ability to secure full title to our projects in India

may significantly affect our ability to dispose of such assets and

may be significantly restricted. For example, in September 2015

complete our strategy relating to our plots in India

we announced that EPI obtained a backstop commitment for

the purchase of our Chennai, India project. The project was

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Risk management

80% owned by EPI and 20% by a local Indian partner through

failure to remediate such substances properly, may also adversely

Kadavanthara Builders Private Limited, a special purpose vehicle.

affect the Group’s ability to sell or lease the development or to

Since the transaction did not close by January 15, 2016, EPI

borrow using the real estate as security. Additionally, any future sale

exercised its right to the local Indian partner’s 20% holdings in

of the development will be generally subject to indemnities to be

Kadavanthara Builders Private Limited and now contractually owns

provided by the Group to the purchaser against such environmental

100% of the Chennai, India project. Due to local regulatory and

liabilities. Accordingly, the Group may continue to face potential

legal restrictions and a lack of cooperation from our local Indian

environmental liabilities with respect to a particular property even

partners, the newly acquired 20% holding may be difficult to

after such property has been sold. Laws and regulations, as may

be amended over time, may also impose liability for the release of

certain materials into the air or water from a property, including

In addition, there are ongoing court cases with respect to third

asbestos, and such release can form the basis for liability to third

party proprietary claims to certain parcels of land within the

persons for personal injury or other damages. Other laws and

Chennai, India project which may further impede our ability to

regulations can limit the development of, and impose liability for, the

dispose of the asset. Physical and geographical limitations such as

disturbance of wetlands or the habitats of threatened or endangered

the lack of an access road leading to the Chennai project territory,

species. Any environmental issue may significantly increase the cost

theft of sand and destruction of property, and third party holdings

of a development and/or cause delays, which may have a material

throughout the Chennai project territory (which we are unable to

adverse effect on the profitability of that development and the results

purchase from such third parties at all or on reasonable market

of operations of the Group.

terms) may also impede our ability to dispose of the Chennai

project on optimal commercial terms. Even in the event we are

There is an increasing awareness of environmental issues in

successful in obtaining full title to the Chennai India project, the

Central and Eastern Europe. This may be of critical importance in

presence of other limitations described above means that there

areas previously occupied by the Soviet Army, where soil pollution

is no assurance that we will be able to sell such project to third

may be prevalent. The Group generally insists upon receiving an

parties which may harm our business strategy and our cash flow.

environmental report as a condition for purchase, or alternatively,

Legal and regulatory risk

conducts environmental tests during its due diligence investigations.

Also, some countries such as Poland, Hungary, Romania and the

Czech Republic require that a developer carries out an environmental

Like all international companies, the Company is exposed to the

report on the land before building permit applications are considered.

changing regulatory environment in the countries and regions where

Nevertheless, the Group cannot be certain that all sites acquired

it conducts business. Many of the CEE countries in which the Group

will be free of environmental pollution. If a property that the Group

operates or intends to operate are countries that until the last two

acquires turns out to be polluted, such a finding will adversely affect

decades were allied with the former Soviet Union under a communist

the Group’s ability to construct, develop and operate a shopping and

economic system, and they are still subject to various risks, which

entertainment center on such property, and may cause the Group to

may include instability or changes in national or local government

suffer expenses incurred in cleaning up the polluted site which may

authorities, land expropriation, changes in taxation legislation or

be significant.

regulation, changes to business practices or customs, changes to

laws and regulations relating to currency repatriation and limitations

While the Group makes every effort to conduct thorough and reliable

on the level of foreign investment or development. The Group will be

due diligence investigations, in some countries where former

affected by the rules and regulations regarding foreign ownership of

communist regimes carried out extensive land expropriations in

real estate and personal property.

the past, the Group may be faced with restitution claims by former

land owners in respect of project sites acquired by it. If upheld,

The Group may be liable for the costs of removal, investigation

these claims would jeopardise the integrity of its title to the land and

or remediation of hazardous or toxic substances located on or in

its ability to develop the land, which may have a material adverse

a site owned or leased by it, regardless of whether a member of

effect on the Group’s business, financial condition and/or results of

the Group was responsible for the presence of such hazardous or

operations.

toxic substances. The costs of any required removal, investigation

or remediation of such substances may be substantial and/or

Relief from taxation available to the Group may not be in accordance

may result in significant budget overruns and critical delays in

with the assumptions made by the Company and/or may change.

construction schedules. The presence of such substances, or the

Changes to the tax laws or practice in the countries in which the

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Risk management

Company operates or any other tax jurisdiction affecting the Group

could be relevant. Such changes could affect the value of the

investments held by the Company or affect the Company’s ability

to achieve its investment objective or alter the post-tax returns to

shareholders. The tax positions taken by the Group, including the tax

effect of transfer pricing and the availability of tax relief provisions,

are also subject to review by various tax authorities.

Under the Dutch participation exemption rules, income including

dividends and capital gains derived by Dutch companies in respect

of qualifying investments in the nominal paid up share capital of

resident or non-resident investee companies, are exempt from Dutch

corporate income tax provided the conditions as set under these

rules have been satisfied. The participation exemption rules and more

particularly the statutory conditions thereunder have most recently

been amended with effect from 1 January 2010. Such amended

conditions require, among others, a minimum percentage of the

share capital in the investee company requires that the investee

company is not held as a passive investment (the ‘motive test’). If

the motive test is not met, the participation exemption nevertheless

applies provided that either the subject-to-tax-test or asset test is

met. To benefit from the participation exemption regime during the

entire holding period, the requirements must be met throughout the

entire holding period. The participation exemption also applies to

qualifying hybrid loans. Should the Company not be in compliance

with all participation exemption requirements or should the partici-

pation exemption rules be amended, this will affect its tax relief

which could have an adverse effect on its cash flow position and net

profits.

The Company has provided substantial amounts of loans to its

subsidiaries which are treated as hybrid loans and exempt under the

participation exemption. Most of these loans are not covered by a tax

If the Company were to be treated as having a permanent
establishment, or as otherwise being engaged in a trade or busi-
ness (including owning real estate outside the Netherlands), in any
country in which it develops shopping and entertainment centers or
in which its centers are managed, income (positive and negative)
attributable to or effectively connected with such permanent estab-
lishment or trade or business, is generally excluded from the Dutch
tax base. Specific conditions may apply based on the relevant double
taxation treaty and Dutch domestic law. The occurrence of one or
more of these factors may have a material adverse effect on the
Group’s business, financial condition and/or results of operations.

Financial reporting

Plaza prepares an annual budget for each country, which is
compared with the actual results. Investment budgets and cash flow
forecasts are also prepared. The quarterly figures are reviewed by
the external auditor prior to their publication by means of a press
release. The financial statements are audited by the external auditor,
and the quarterly and half year figures are subjected to a limited
review by the external auditor.

Internal control and risk management
procedures

I) Definition and objectives
Internal control is the structure within which resources, behavior,
procedures and actions are implemented by the Management Board
and throughout the Company to ensure that activities and risks are
fully controlled and to obtain the reasonable assurance that the
Company’s strategic objectives have been met.

Plaza’s internal control procedures aim to ensure:

ruling confirming the treatment for Dutch tax purposes. Therefore,

• the optimisation of operations and the smooth functioning of the

there is a risk that a discussion arises with the Dutch tax authorities

Groups internal processes;

on the treatment thereof.

• compliance with current laws and regulations;
• the application of instructions and directions given by the

Tax losses may be carried forward and set off against income of the

Management Board; and

immediately preceding tax year and the nine subsequent tax years

• the reliability of financial information.

and may be offset against any income of the companies currently

included in the fiscal unity as long as these remain part of the fiscal

The system is based on the following three key principles:

unity. If losses are considered so-called “holding and/or financing

losses”, they may only be offset against income that is derived in

years that the Company also qualifies as “holding and/or financing

company” within the meaning of art. 20 (4) of the Dutch Corporate

Income Tax Act 1969, provided that the net balance of intragroup

receivables has not increased compared to the relevant loss making

year (unless there are sufficient business reasons for such increase).

• the involvement of and taking responsibility by all personnel: all
Group employees contribute to internal control procedures; each
employee, at his or her level, should exercise effective control over
the activities for which he or she is responsible;

• the full extent of the scope covered by the procedures: the

procedures should apply to all entities (operational and legal); and

• separation of tasks: control functions should be independent of

operating functions.

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Risk management

The internal control procedures designed to address the objectives

c) Control activities to meet these risks

described above cannot, however, ensure with certainty that these

The internal control and risk management system is based on two

objectives will be achieved in full, since all procedures have inherent

levels of control as follows:

limitations. However, they aim to make a very significant contribution

in this direction.

First level – First degree – Permanent control

The first level and first degree of control is exercised by every

II) Four components of internal control procedures

employee as part of his or her job-related tasks with reference to

a) Organisation and environment

the applicable procedures. Control is ensured on an ongoing basis

Plaza’s internal control procedures distinguish permanent control

by the initiation of a task by operating employees themselves or by

from periodic control, which are independent but complementary.

automatic systems for carrying out operations.

Permanent control is the responsibility of all Group employees. It is

linked directly to the business sectors, functions and subsidiaries.

First level – Second degree – Permanent control

Managers of the business functions, country directors, aim to ensure

function. Controls are carried out in the framework of operating

The second level is exercised by the management of the business

compliance with the Group’s internal control procedures, whose

procedures.

tasks are:

Second level – Permanent control

• to ensure the methods chosen at Group level are coordinated and

The second level of control is intended to ensure that the first level

implemented by their teams;

controls have been carried out and respected correctly. It is under-

• to design and adapt the reporting procedures on a regular basis,

taken by separate functions, specially dedicated to permanent control.

giving the most appropriate indicators to obtain clear visibility of

their permanent control; and

Internal accounting control

• to regularly transmit this reporting to their superiors and indicate

A dedicated function within the Accounting Department is charged

problems and incoherences in order to enable appropriate

with checking the smooth functioning of first level accounting

decisions to be taken regarding changes to the controls.

controls. See section below “Internal control procedures relating to

the preparation and processing of the accounting and financial

The powers of the Group companies’ legal representatives are limi-

information”.

ted and subject to controls. Functional departments provide expertise

to operational departments. Permanent control procedures require

d) Management and supervision of internal control systems

several participants. The involvement of many players necessitates

Under the direction of the Management Board, the activities and

tight coordination of actions and methods. At Group level, the

functions managers carry out the supervision of the internal control

coordination of permanent control is carried out under the authority

system with the support of the permanent control coordination

of the head of accounting and CFO, whose tasks are:

function. The Audit Committee meets at least twice per year.

• to ensure the design and implementation of actions to improve

Its work and conclusions are reported to the Management

permanent control in the Group’s business functions;

Board. The supervision is also supported by the comments and

• to coordinate the choice of methodologies and tools; and

recommendations of the statutory auditors and by any regulatory

• to monitor the development of the procedures in the business

supervision which may take place.

functions and subsidiaries.

b) Risk management

The main bodies involved in managing the internal control system are:

III) Risk management and internal control bodies

The Group is careful to anticipate and manage major risks likely to

affect the achievement of its goals and to compromise its compliance

a) Management Board

with current laws and regulations. These risks are identified above

The Management Board has overall responsibility for the Group’s

in this section. The identification and evaluation of risks is used as

internal control systems. The Management Board is tasked with

a reference to determine procedures and controls which, in their

defining the general principles of the internal control system,

turn, influence the level of residual risk. The procedures provide a

creating and implementing an appropriate internal control system

framework for the activity, in a more precise way where risks have

and associated roles and responsibilities, and monitoring its smooth

been identified, and their application provides a control mechanism.

functioning in order to make any necessary improvements.

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Risk management

b) Audit Committee
The Audit Committee is informed at least once a year of the status
of the Group’s entire internal control system, any changes made to
the system and the findings of the work carried out by the various
participants working in the system.

c) Functional management
Business unit management defines the orientation and procedures
and provides guidance to employees in their business unit.

d) Group employees
Operating supervisors and line managers are responsible for
controlling risks and are the principal actors in permanent control.

They exercise first level controls.

Internal control procedures relating
to the preparation and processing of the
accounting and financial information

I) Definition and objectives
The aim of accounting controls is to ensure adequate coverage of
the main accounting risks. They rely on understanding operational
processes and the way they are translated into the Company
accounts, and on defining the responsibilities of the individuals
responsible for accounting scopes and information system security.
Internal accounting controls aim to ensure:
• that published accounting and financial information complies with

accounting regulations;

• that the accounting principles and instructions issued by the

Group are applied by all its subsidiary companies; and

• that the information distributed and used internally is sufficiently

reliable to contribute to processing accounting information.

II) Management process for accounting and financial organisation
a) Accounting organisation
The production of accounting information and the application of the
controls implemented to ensure the reliability of said information are
primarily the responsibility of the Company’s Financial & Accounting
Department that submit information to the Group, and which
certify its compliance with the internal certification procedure. The
corporate and consolidated financial statements are prepared by the
Financial & Accounting Department, which reports directly to the
Management Board. The department is charged with:
• updating accounting rules in view of changes in accounting

regulations;

• defining the various levels of accounting control to be applied to

the financial statement preparation process;

• ensuring correct operation of the internal accounting control

environment within the Group, with particular reference to the
internal certification procedure described below;

• preparing and updating the procedures, validation rules and

authorisation rules applying to the department; and

• monitoring the implementation of recommendations made by

external auditors.

b) Financial risk management
The management of financial risks, and in particular the financial
structure of the Group, its financing needs and interest rate and
exchange rate risk management procedures, is provided by the Fi-
nancial & Accounting Department, which reports directly to the
Management Board. At the end of each year, the Board validates
the provisional financing plan for the following year, which sets out
the broad outlines in terms of the balance and choice of resources,
as well as interest rate and exchange rate hedges. During the year,
key financial transaction decisions are submitted individually for
approval by the Board and Audit Committee, which also receives a
summary of these transactions once they have been completed. The
processing and centralisation of cash flows, together with interest
rate and exchange rate hedging, are the responsibility of the Financi-
al & Accounting Department, which keeps a record of commitments
and ensures that they are reflected in the accounting system.

III) Processes contributing to the preparation of accounting
and financial information
a) Operational processes used to generate accounting information
Plaza’s financial statements are prepared centrally at Plaza’s
corporate headquarters. The country departments are responsible
for collecting information from the local bookkeepers and applying
a series of appropriate controls to their job functions, as defined in
the corresponding procedures. The Accounting Department has set
up a system of internal collection and verification of country data and
controls carried out. This system of control covers all Group entities.

b) Processes used to prepare the corporate and consolidated
financial statements
The financial statements for the entire scope of consolidation are
consolidated by the Accounting Department. At the end of each year,
the Management Board validates the provisional financing plan for
the following year, which sets out the broad outlines in terms of the
balance and choice of resources, as well as interest rate hedges. During
the year, key financial transaction decisions are submitted individually
for approval. The processing and centralisation of cash flows, together
with interest rate and exchange rate hedging, are the responsibility of
the Investment Committee, which keeps a record of commitments and
ensures that they are reflected in the accounting system.

c) The Audit Committee
The clarity of financial information and the relevance of the
accounting principles used are monitored by the Audit Committee

(whose role has already been specified).

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Remuneration report

Re muneration report

Remuneration Committee

Remuneration policy

As stated in the Corporate governance report on pages 48 to 53 of

Plaza Centers’ remuneration policy is designed to attract,

this document, the Remuneration Committee meets at least twice

motivate and retain the high-calibre individuals who will enable the

each financial year to prepare, among other matters, the decision

Company to serve the best interests of shareholders over the long

of the Board relating to the remuneration of directors and any

term, through delivering a high level of corporate performance.

share incentive plans. It is also responsible for preparing an annual

Remuneration packages are aimed at balancing both short term and

report on the Company’s remuneration policies and for giving full

long term rewards, as well as performance and non-performance

consideration in all its deliberations to the principles set out in the

related pay.

Combined Code.

Under Dutch corporate law and the Articles of the Company, a General

Increases for all employees are recommended by reference to cost

Meeting of Shareholders must determine the principal guidelines

of living, responsibilities and market rates, and are performed at the

The Remuneration Committee reviews base salaries annually.

governing the remuneration both of executive and non-executive

same time of year.

directors. In addition, such a meeting also has to approve the granting

to them of options and share incentive plans.

The Remuneration Committee believes that senior management’s

total remuneration should aim to recognise his or her worth on

The Board may only determine the remuneration of directors within

the open market and to this end pays base salaries in line with the

such guidelines, and no director or manager may be involved in any

market median supplemented by a performance-related element

decisions relating to his or her own remuneration.

with the capacity to provide more than 50% of total potential

remuneration.

2015

Executive directors

Mr. Nadav Livni3

Subtotal

Non-executive directors

Mr. Sarig Shalhav

Mr. Ron Hadassi2

Mr. David Dekel

Mr. Shlomi Kelsi3

Mr. Yoav Kfir3

Mr. Marco Wichers

Subtotal

Total – All directors

Salary and fees

€’000

Share
option plan1
€’000

Total remuneration

for the year 2015

€’000

180

515

582

180

515

582

There were no performance related remuneration in 2015.

1 Accounting non-cash expenses recorded in the Company’s consolidated income statement in connection with the share option plan.

2 Mr. Hadassi serves also as the chairman of the Board.

3 Until December 2015.

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Re muneration report

Service arrangements

Bonuses

The directors have specific terms of reference. Their letters of

The Company has the authority to award discretionary bonuses for

appointment state an initial 12-month period, terminable by either

senior executives and employees up to certain level based on general

party on three months’ written notice. Save for payment during

achievements.

respective notice periods, these agreements do not provide for

payment on termination.

The shareholder returns performance 2015*

(P)

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Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

* Source: Bloomberg, as of 31 December 2015. Past performance is not an indication of future returns.

Remuneration rep ort

Share options

The Company adopted its share option schemes (“first ESOP”)

on 26 October 2006 (which was amended on 25 November 2008,

22 November 2011 and 20 November 2012) and on 22 November

2011 (“second ESOP”) (refer to note 20 to the consolidated financial

statements) the terms and conditions of which (except for the

exercise price) are regulated by the share option schemes.

Options will vest in three equal annual portions and have a

contractual life of fifteen and ten years following grant date for first

ESOP and second ESOP, respectively. In the course of 2014,

no options were granted under ESOP. For the exercise and forfeit of

options refer to the table below.

For further detailed information about share option schemes refer to

note 20 in the consolidated financial statements.

Number

Number exercisable

of options granted

as at 31 December,

and unexercised

2014 and 2015

3,907,895

7,089,151

1,794,361

3,907,895

7,089,151

1,794,361

Exercise

price of

options £

0.43

0,43

Remaining

maturity

(years)

6.82

Number of options

as at 31 December

2015

47,834,586

47,195,174

8,420,598

(14,977,203)

15,616,615

Mr. Mordechay Zisser

Mr. Ran Shtarkman

Mr. Shimon Yitzchaki

Mr. Marius van Eibergen Santhagens

Mr. Sarig Shalhav

Mr. Ron Hadassi

Mr. David Dekel

Mr. Shlomi Kelsi

Mr. Yoav Kfir

Mr. Nadav Livni

Mr. Marco Wichers

Total pool

Granted

Exercised

Forfeited

Left for future grant

Amsterdam, 28 April 2016

The Board of Directors:

Ron Hadassi

Marco Wichers

Nadav Livni

Sarig Shalhav

David Dekel

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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Remuneration rep ort

Statement
of the directors

The responsibilities of the directors are determined by applicable law

maintaining the accuracy of corporate and financial information on

and International Financial Reporting Standards (IFRSs) as adopted

the website, where a failure to update or amend information may

by the European Union.

cause inappropriate decision making.

The directors are responsible for preparing the annual report and the

On the basis of the above and in accordance with Best Practice

annual financial statements in accordance with applicable law and

Provision II.1.4. of the Netherlands Corporate Governance Code,

regulations.

the directors confirm that internal controls over financial reporting

within the Company provide a reasonable level of assurance that the

Netherlands law requires the directors to prepare financial

financial reporting does not contain any material inaccuracies, and

statements for each financial year that give, according to generally

confirm that these controls functioned properly in the year under

acceptable standards, a true and fair view of the assets, liabilities,

review and that there are no indications that they will not continue

financial position and profit or loss of the Company and the

to do so.

companies that are included in its consolidated accounts for that

period.

The financial statements fairly represent the Company’s financial

condition and the results of the Company’s operations and provide

Netherlands law requires the directors to prepare an annual report

the required disclosures.

that gives a true and fair view of the position as per the balance sheet

date, the course of business during the past financial year of the

It should be noted that the above does not imply that these

Company and its affiliated companies included in the annual financial

systems and procedures provide absolute assurance as to the

statements, and that the annual report contains a proper description

realisation of operational and strategic business objectives, or that

of the principal risks the company faces.

they can prevent all misstatements, inaccuracies, errors, fraud and

Directors are required to abide by certain guidelines in undertaking

these tasks.

non-compliance with legislation, rules and regulations.

In view of all of the above, hereby following the requirements of

Article 5:25c Paragraph 2 under c. of the Netherlands Act on the

The directors need to select appropriate accounting policies and

Financial Supervision (Wet op het financieel toezicht), the directors

apply them consistently in their reports. They must state whether

hereby confirm that (i) the annual financial statements 2015, as

they have followed applicable accounting standards, disclosing and

included herein, give a true and fair view of the assets, liabilities,

explaining any material departures in the financial statements.

financial position and profit or loss of the Company and its affiliated

Any judgments and estimates that directors make must be both

companies that are included in the consolidated financial statements;

reasonable and prudent. The directors must also prepare financial

and (ii) the annual report includes a fair review of the position at the

statements on a “going concern” basis, unless it is inappropriate to

balance sheet date and the development and performance of the bu-

presume that the Company will continue in business.

siness of the Company and its affiliated companies that are included

The directors confirm that they have complied with the above

in the consolidated annual financial statements and that the principal

requirements in preparing the financial statements.

risks and uncertainties that the company faces are described.

Throughout the financial year, the directors are responsible for

keeping proper accounting records which disclose at any time and

The Board of Managing Directors

with reasonable accuracy the financial position of the Company. They

are also responsible for ensuring that these statements comply with

Ron Hadassi

David Dekel

applicable company law.

In addition, they are responsible for internal control systems

that help identify and address the commercial risks of being in

business, and so safeguard the assets of the Company. They are

also responsible for taking reasonable steps to enable the detection

and prevention of fraud and other irregularities.

Non-executive Director,

Independent Non-executive

Chairman

Director

Nadav Livni
Executive Director

Sarig Shalhav

Independent Non-executive

Marco Habib Wichers

Independent Non-executive

Director, Chairman

The Company’s website may be accessed in many countries, which

Director

have different legal requirements. The directors are responsible for

28 April 2016

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Independent
auditors’ report

The Board of Directors and Stockholders

Plaza Centers N.V.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Plaza Centers N.V. (“the Company”), which comprise the consolidated

statement of financial position as at December 31, 2015, the consolidated statement of profit or loss and the consolidated statements of

comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting

policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with

International Financial Reporting Standards as adopted by the EU 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in

accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform

the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation

and fair presentation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the

overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company

as at December 31, 2015 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance

with International Financial Reporting Standards adopted by the EU.

Emphasis of matter

Without qualifying our opinion, we draw attention to Notes 2(c), 16 and 27(c) in the consolidated financial statements which disclose, among

other matters, important information regarding the Company’s cash flow projections for 18 months from the end of the reporting period.

Without qualifying our opinion, we draw attention to Note 8(5) (d) which discloses that the Board and Management have become aware of

potential irregularities concerning the Casaradio Project in Romania and Note 8(5) (f) which discloses possible outcomes also related to the

Casaradio Project.

Budapest, Hungary

March 29, 2016

KPMG Hungária Kft.

Michael Carlson

Partner

PLAZA CenTers n.v. AnnuAL rePOrT 2015

finAnCiAL sTATemenTs
finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Consolidated
statement of
financial position

Note

December 31, 2015
€’000

December 31, 2014
€’000

ASSETS

Cash and cash equivalents
Restricted bank deposits
Held for trading financial assets
Trade receivables
Other accounts receivable
Prepayments

Total current assets

Trading properties
Equity accounted investees
Loan to equity accounted investee
Property and equipment
Related parties receivables
Deferred taxes
Other non-current assets

Total non-current assets

Total assets

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing loans from banks
Debentures at amortized cost
Trade payables
Related parties liabilities
Derivatives
Other liabilities

Total current liabilities

Interest bearing loans from banks
Debentures at amortized cost
Provisions
Derivatives

Total non-current liabilities

Share capital
Translation reserve
Capital reserve due to transaction with Non-controlling interests
Other reserves
Share premium
Retained losses

Equity attributable to equity holders of the Company

Non-controlling interests

Total equity

Total equity and liabilities

March 29, 2016
Date of approval of the
financial statements

4
5

6
7a
7b

8
10
10
9
29(h)
17

12
2(c),16
13
14
11
15

12
16
8
11

18
18

15,659
4,774
-
1,654
1,350
196

23,633

317,758
40,608
4,298
2,480
2,828
406
-

368,378

392,011

31,891
79,564
2,223
109
436
7,045

121,268

70,621
102,025
14,911
318

187,875

6,856
(27,418)
(20,706)
35,376
282,596
(194,602)

82,102

766

82,868

392,011

33,363
6,886
1,434
2,719
2,963
767

48,132

370,761
36,108
6,121
4,029
-
921
25

417,965

466,097

37,885
-
1,893
1,161
430
13,175

54,544

112,962
162,862
15,597
559

291,980

6,856
(36,699)
(20,706)
35,340
282,596
(148,486)

118,901

672

119,573

466,097

Roy Linden
Chief Financial
Officer

David Dekel
Director and Chairman of the
Audit Committee

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

finAnCiAL sTATemenTs

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Consolidated

statement of

profit or loss

Continuing operations

Revenue from disposal of trading property

Rental income

Revenues from entertainment centers

Total revenues

Cost of trading property disposed

Cost of operations

Cost of operations – entertainment centers

Loss from disposal of trading property SPV

Gross profit

Loss from disposal of trading property plots

Gain from sale of leasehold rights

Write-down of trading properties

Uplift (write-down) of equity-accounted investees, net

Loss from disposal of equity accounted investees (holding undeveloped trading properties)

Share in results of equity-accounted investees, net of tax

Administrative expenses, excluding restructuring costs

Restructuring costs

Other income

Other expenses

Loss from operating activities

Gain from restructuring plan

Finance income

Finance costs

Net finance costs

Loss before income tax

Tax benefit (income tax expense)

Loss for the year

Loss attributable to:

Equity holders of the Company

Earnings per share

Note

29(a)

21(a)

21(b)

29(a)

22(a)

22(b)

29(a)

29(i)

23a

23b

Year ended

December 31, 2015

December 31, 2014

€’000

34,684

18,676

728

54,088

(34,684)

(6,481)

(1,019)

(8,802)

3,102

2,589

(20,322)

939

1,043

(6,999)

7,307

(1,851)

(14,192)

14,292

(45,195)

(30,903)

(45,095)

(1,021)

38,600

22,112

1,713

62,425

(38,600)

(8,491)

(2,169)

13,165

(573)

(87,489)

(1,687)

(4,048)

1,641

(7,434)

(2,388)

2,484

(2,507)

(88,836)

3,443

1,263

(36,839)

(35,576)

(120,969)

1,282

(46,116)

(119,687)

(46,116)

(119,687)

Basic and diluted loss per share (in EURO)

(0.07)

(0.39)

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

finAnCiAL sTATemenTs
finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Consolidated
statement of
comprehensive income

Loss for the year

Other comprehensive income

Items that are or may be reclassified to profit or loss:

Foreign currency translation differences - foreign operations (trading properties) – reclassified to profit or loss

Foreign currency translation differences - foreign operations (Equity accounted investees)

Foreign currency translation differences - foreign operations (trading properties)

Other comprehensive income (loss) for the year, net of income tax

Total comprehensive loss for the year

Total comprehensive income (loss) attributable to:

Equity holders of the Company:

Non-controlling interests

Year ended

December 31, 2015

December 31, 2014

€’000

(46,116)

(119,687)

6,516

1,738

1,121

9,375

(36,741)

(36,835)

2,740

1,278

4,018

(115,669)

(115,735)

Total comprehensive loss for the year

(36,741)

(115,669)

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

finAnCiAL sTATemenTs

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Consolidated
statement of
changes in equity

Attributable to the equity holders of the Company

Capital

reserve from

acquisition of

non-controlling

interests

without

Retained

based

payment

Translation

a change

earnings

capital

premium

reserves

reserve

in control

(losses)

€’000

Non-

controlling

interests

€’000

Total

€’000

Total

€’000

Balance at December 31, 2013 2,972

261,773

35,133

(40,651)

(20,706)

(28,799)

209,722

606

210,328

Right issuance (refer to note 18) 3,884

20,823

Share based payment

(refer to note 20)

Comprehensive income for the year

Net loss for the year

Foreign currency translation

differences

Total comprehensive loss

for the year

207

3,952

24,707

207

(119,687)

24,707

207

(119,687)

3,952

4,018

3,952

(119,687)

(115,735)

(115,669)

Balance at December 31, 2014 6,856

282,596

35,340

(36,699)

(20,706)

(148,486)

118,901

672

119,573

Share based payment

(refer to note 20)

Comprehensive income for the year

Net loss for the year

Foreign currency translation

differences

Total comprehensive loss

for the year

9,281

(46,116)

9,281

9,375

(46,116)

(36,835)

(36,741)

Balance at December 31, 2015 6,856

282,596

35,376

(27,418)

(20,706)

(194,602)

82,102

766

82,868

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

finAnCiAL sTATemenTs
finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Consolidated
statement of cash flow

Year ended

December 31, 2015

December 31, 2014

Note

€’000

Restated* €’000

Cash flows from operating activities

Loss for the year

Adjustments necessary to reflect cash flows used in operating activities:

Depreciation and impairment of property and equipment

Net finance costs

Equity-settled share-based payment transaction

Gain from restructuring plan

Loss on sale of property and equipment

Share of gain of equity-accounted investees, net of tax

Income tax expense (tax benefit)

Subtotal

Changes in:

Trade receivables

Other accounts receivable

Trading properties

Equity Accounted Investees

Trade payables

Other liabilities, related parties liabilities and provisions

Subtotal

Interest received

Interest paid

Taxes paid

Net cash provided by (used in) operating activities

Cash from investing activities

Purchase of property and equipment

Proceeds from sale of property and equipment

Sale of held for trading marketable debt securities

Purchase of held for trading marketable debt securities

Net cash provided by investing activities

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

29(d)

(46,116)

(119,687)

200

30,903

(1,043)

1,021

982

35,576

207

(3,443)

232

(1,641)

(1,282)

(14,999)

(89,056)

644

(2,810)

36,640

105

346

(5,680)

29,245

290

(17,053)

(118)

(2,635)

1,190

2,227

(825)

2,592

222

2,566

106,176

5,122

(64)

3,964

117,986

(20,664)

(18)

8,341

(12)

1,375

1,363

finAnCiAL sTATemenTs

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Consolidated
statement of cash flow

Cash from financing activities

Proceeds (payments) from hedging activities through sale of options

Changes in restricted cash

Proceeds from right issuance, net of right issuance costs

Repayment of debentures

Repayment of interest bearing loans from banks

Net cash used in financing activities

Increase (decrease) in cash and cash equivalents during the year

Effect of movement in exchange rate fluctuations on cash held

Cash and cash equivalents as at January 1st

Cash and cash equivalents as at December 31st

The notes on pages 75 – 134 are an integral part of these consolidated financial statements.

Note

29(c)

Year ended

December 31, 2015

December 31, 2014

€’000

(373)

1,945

(6,585)

(12,921)

(17,934)

(17,977)

273

33,363

15,659

313

(2,019)

18,836

(12,057)

(7,527)

(2,454)

7,250

(44)

26,157

33,363

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Consolidated

statement of cash flow

Notes to the
consolidated financial
statements

NOTE 1 - PRINCIPAL ACTIVITIES AND OWNERSHIP

Plaza Centers N.V. (“the Group” or “the Company”) was incorporated and is registered in the Netherlands. The Company’s registered office is at Prins Hendrikkade
48-S, 1012 AC, Amsterdam, the Netherlands. The Company conducts its activities in the field of establishing, operating and selling of shopping and entertainment
centers, as well as other mixed-use projects (retail, office, residential) in Central and Eastern Europe (starting 1996) and India (from 2006).

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 associates and jointly controlled entities.

The Company is listed on the Main Board of the London Stock Exchange (“LSE”), the Warsaw Stock Exchange (“WSE”) and, starting November 2014, on the Tel
Aviv Stock Exchange (“TASE”).

The Company’s immediate parent company is Elbit Ultrasound (Luxembourg) B.V. / S.à r.l. (“EUL”), which holds 44.9% of the Company’s shares, as at the end of
the reporting period (December 31, 2014 – 44.9%). The Company regards Elbit Imaging Limited (“EI”) as the ultimate parent company (refer to note 30 for more
details). For the list of the Group entities, refer to note 35.

NOTE 2 - BASIS OF PREPARATION

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the European
Union (“EU”).

These consolidated financial statements are not intended for statutory filing purposes. The Company is required to file consolidated financial statements prepared
in accordance with The Netherlands Civil Code. At the date of approving these financial statements the Company had not yet prepared consolidated financial
statements for the year ended December 31, 2015 in accordance with the Netherlands Civil Code.

The consolidated financial statements were authorized for issue by the Board of Directors on March 29, 2016.

b. Functional and presentation currency

These consolidated financial statements are presented in EURO (“EUR”), which is the Company’s functional currency. All financial information presented in EUR
has been rounded to the nearest thousand, unless otherwise indicated.

c. Financial position of the Company

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet the mandatory repayment
terms of the banking facilities and debentures, as disclosed in notes 12 and 16.

Following the closing of the Company’s restructuring plan (as mentioned in note 29(e), “the Plan” in this note), the Company’s consolidated financial statements
include liabilities to bondholder’s in the aggregate principal amount of EUR 203 million.

The following table sets forth the cash flow forecast of the Company until mid-2017 in order to achieve the abovementioned repayments, as they fall due.

According to the Plan, if until December 1, 2016 the Company manages to repay its principal of debentures in the amount of NIS 434 million (EUR 102 million),
then the remaining principal payments shall be deferred for an additional year (“the Deferral”). Since the Plan entered into effect, until December 31, 2015, the
Company has repaid circa NIS 89 million (EUR 19 million) out of the debentures. The remaining NIS 345 million (EUR 81 million) of the bonds principal (through
selling of its assets), together with the interest of approximately EUR 13 million are still to be paid up to December 1, 2016, if the Company is to achieve the
abovementioned condition in the Plan.

Since parts of series B debentures are held in treasury (refer to note 29(l)), the total required net principal repayment in 2016 in order to achieve the Deferral is
NIS 338 million (EUR 80 million). As the Company’s primary objective is to obtain the Deferral, it has therefore reclassified this minimum net amount to current.

finAnCiAL sTATemenTs

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Financial statemen ts
Financial statemen ts

The scenario below reflects the Company’s approved business plan until June 30, 2017:

In the year ending
December 31, 2016

Expected cash flow (in MEUR)
In the six months ending
June 30, 2017

Opening balance of consolidated cash1
Sources of cash during the period
Net proceeds from disposal of operating shopping centers2
Proceeds from disposal of plots held3
Net operating income from shopping centers4

Total sources expected

Items added
Principal repayment of debentures, net5
Interest repayment of debentures, net
Investment in projects under construction6
Repayment of bank facilities in subsidiaries (principal +interest)
General and administrative expenses

Total uses expected

Closing balance of consolidated cash7

98
54
14

186

(108)
(13)
(15)
(7)
(6)

(149)

-
15
1

(11)
(3)
(1)
(1)
(3)

(19)

1 Opening balance – as appeared in this consolidated statement of financial position, including restricted cash (which will be released upon the disposal of the operating shopping centers).

2 2016 – Expected net payment from the selling of four shopping centers (Riga, Liberec, Suwalki and Torun).

3 2016 – The Company expects extensive disposal of it plots held in CEE and in India. Main 2016 disposal are expected in India and Serbia. 2017 – Main disposal is due to India.

4 As the operating shopping centers are to be disposed of in 2016, in 2017 Net Operating Income is generated from the Belgrade Plaza (Visnijcka) shopping center to be opened in the first

half of 2017.

5 2016 – This reflects the gross amount of EUR 110 million to be paid based on forecast disposal proceeds, net of the expected repayment on treasury bonds held in the amount of EUR 2

million.

6 2016 – Main investment in Belgrade Plaza (Visnijcka project) and in Timisoara project (Romania).

7 2016 – Immaterial restricted cash amounts. 2017 – Including restricted cash in Visnjicka of EUR 3 million.

It should be noted, that the projected cash flow is based on the Company’s forward-looking plans, assumptions, estimations, predictions and evaluations which
rely on the information known to the Company at the time of the approval of these financial statements (collectively, the “Assumptions”).

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 lower price than expected by the Company’s, as well as any other deviation from the Company’s Assumptions, could have an adverse effect on the Company’s
cash flow and the Company’s ability to service its indebtedness in a timely manner.

If the Company is unable to repay cumulative NIS 434 million (EUR 108 million) by December 1, 2016, then the minimum required principal repayment due
December 31, 2016 is NIS 57 million (EUR 13.5 million) (refer to Note 16), plus 75% of the net proceeds from sales of trading properties, which will be paid
through the net cash generated out of the disposal program summarized above

d. Investment property vs. trading property classification

The Company has designated its properties into three types (completed trading property projects, plots scheduled for construction and plots under planning
stage). In respect of its completed trading property projects, and as written above, the Group has not changed its business model and is actively seeking buyers.
Therefore it is clear from the Company’s perspective that these completed properties are trading properties, rather than investment properties.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Financial statemen ts
Financial statemen ts

NOTE 2

In respect of plots under planning stage held, which are not intended to be constructed in the near future, the Company is actively looking for buyers and does
not hold the plots passively with the intention to gain from a potential value increase. Plots scheduled for construction are intended to be developed and sold
as a completed project in the normal course of business once circumstances allow. Therefore management also believe that these are appropriately classified as
trading properties.

e. Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS as adopted by the EU requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Information
about other critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial
statements is included in the following notes:

• Note 8 – Suspension of borrowing costs capitalisation
• Note 8 – Classification of trading properties as current vs. non-current
• Note 2(d) – Trading property vs. Investment property
• Note 10 – Classification of the joint arrangement
• Note 16 – Measurement of fair value of new debenture series

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are
included in the following notes:

• Notes 8 – Key assumptions used in determining the net realisable value of trading properties
• Note 8, 28 – Provisions and contingencies
• Note 20 – Measurement of share-based payments
• Note 26 – Recognition of deferred tax assets and availability of future taxable profits against which carry-forward tax loss can be used

Functional currency

The EUR is the functional currency for Group companies (with the exception of Indian companies – in which the functional currency is the Indian Rupee – INR)
since it is the currency of the economic environment in which the Group operates. This is because the EUR (and in India the INR) is the main currency in which
management, determines its pricing with tenants, potential buyers and suppliers, determine its financing activities and budgets and assesses its currency
exposures.

Operating cycle determination

The Normal Operating Cycle (“NOC”) of the Group is driven by its business model to buy, develop and sell, primarily shopping centers, and comprises the
estimated amount of time required to complete the process from the acquisition of undeveloped land through its development, preparation for sale and ultimate
disposal. Based on the Group’s experience, mainly from the period from 1996-2008, this period of time was three to five years (and in respect of large scale,
multi-phase/mixed-use projects, up to eight years). For example, for completed shopping centres, these steps include achieving a stabilized tenants list, improving
the tenant mix, increasing occupancy rates, completion of certain tenant improvements and finding the qualified buyers. For plots, this includes obtaining permits,
finance and construction.

The Company maintains its existing business model; however following the financial crisis, the level of uncertainty of the actual amount of time needed to
complete all steps in the process has become much longer than what the Company believes is a normal level. Over the period 2009 – 2012, the Company has had
difficulty selling completed properties at prices reflecting management’s view of reasonable estimated values, as well as experienced a lack of available finance for
development of plots. The return to what management considers more normal conditions, primarily in the CEE markets where it has properties, have been longer
than expected.

In view of the above uncertainties and abnormalities, the Company has taken in 2013 (and reassured this position in both 2014 and 2015) a position of
reclassifying its entire trading properties to long term.

Despite of the above, where a sale and purchase agreement exists as of the end of the reporting period, the asset and related liabilities will be reclassified as short term.

finAnCiAL sTATemenTs

PLAZA CenTers n.v. AnnuAL rePOrT 2015

Financial statemen ts
Financial statemen ts

NOTE 3 - MEASUREMENT OF FAIR VALUES

A number of the Group’s accounting policies and disclosures require the measurement of fair value, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. The Company’s finance department reviews
significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes, is used to measure fair values, then the finance
department assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the
level in the fair value hierarchy in which such valuations should be classified. Fair values are categorised into different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly

(i.e. derived from prices)

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
• Note 11 – Derivatives
• Note 20 – Employee share option plan
• Note 27 – Financial instruments

NOTE 4 - CASH AND CASH EQUIVALENTS

Interest rate as of

December 31, 2015

December 31, 2014

Bank deposits and cash denominated in

December 31, 2015

EUR – bank balances

Romanian Lei (RON)

United States Dollar (USD) – bank balances

New Israeli Shekel (NIS)

Polish Zlotys (PLN)

Other currencies

Cash and cash equivalents in the statement of financial position

Mainly 0.4%

€’000

6,595

2,739

2,069

2,017

1,576

663

15,659

€’000

26,954

2,203

505

554

2,248

899

33,363

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 27.

NOTE 5 - RESTRICTED BANK DEPOSITS

Short-term restricted bank deposits

In EUR

In USD

In other currencies (2015 - PLN)

Total short-term

Interest rate as of

December 31, 2015

December 31, 2014

December 31, 2015

€’000

See below1

3,972

298

504

4,774

5,232

1,037

617

6,886

1 As of December 31, 2015, EUR 4.5 million is restricted mainly in respect of bank facilities agreements signed to finance projects in poland. These amounts carry an annual interest rate of

mainly overnight rates.

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 27.

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Financial statemen ts
Financial statemen ts

NOTE 3,4,5,6,7,8

NOTE 6 - TRADE RECEIVABLES

Trade receivables

Less – Allowance for doubtful debts

Total

December 31, 2015

December 31, 2014

€’000

3,064

(1,410)

1,654

€’000

4,255

(1,536)

2,719

NOTE 7 - OTHER ACCOUNTS RECEIVABLE, PREPAYMENTS AND ADVANCES

a. Other receivables

December 31, 2015

December 31, 2014

VAT and tax receivables

Others

Total

b. Prepayments and advances

Advance payments to suppliers

Prepaid expenses

Total

NOTE 8 - TRADING PROPERTIES

Balance as at 1 January

Acquisition and construction costs1

Write-down of trading properties, net3

Effect of movements in exchange rates

Trading properties disposed (refer to note 29(a) and 29(b))

Balance as at 31 December

Completed trading properties (operating shopping centers)

Plots scheduled for construction4,5

Plots under planning stage

Total

€’000

1,061

289

1,350

€’000

2,502

461

2,963

December 31, 2015

December 31, 2014

€’000

137

196

275

492

767

December 31, 2015

December 31, 2014

€’000

370,761

6,649

(20,322)

4,756

(44,086)

317,758

129,483

161,183

27,092

317,758

€’000

495,174

7,520

(87,489)

3,713

(48,157)

370,761

170,189

164,930

35,642

370,761

1. 2015 - Including EUR 6 million due to construction activities in Serbia and Romania.

2. Regarding accounting policy of capitalizing borrowing costs refer to note 34 (e). The Company temporarily suspended capitalization of borrowing costs starting July 1, 2013, following

temporary suspension of active development of the majority of its trading properties due to the Group’s liquidity position.

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PLAZA CenTers n.v. AnnuAL rePOrT 2015

Financial statemen ts
Financial statemen ts

3. Breakdown of write -down (uplift) of trading properties:

The year ended

December 31, 2015

December 31, 2014

Project name (location)

Koregaon Park (Pune, India)

Helios Plaza (Athens, Greece)

Liberec (Liberec, Czech Republic)

Belgrade Plaza Visnjicka (Belgrade, Serbia)

Lodz Plaza (Lodz, Poland)

Lodz residential (Lodz, Poland)

Casa radio (Bucharest, Romania)

Zgorzelec (Zgorzelec, Poland)

Constanta (Constanta, Romania)

Arena Plaza extension (Budapest, Hungary)

Krusevac (Krusevac, Serbia)

Ciuc (Ciuc, Romania)

Kragujevac (Kragujevac, Serbia)

Timisoara (Timisoara, Romania)

Iasi (Iasi, Romania)

Belgrade Plaza (Belgrade, Serbia)

Kielce (Kielce, Poland)

Other, aggregated

Total

€’000

1,540

450

6,225

(5,601)

2,225

2,133

8,500

1,466

400

1,111

800

261

170

642

€’000

10,059

10,901

2,080

175

829

664

33,583

3,868

3,813

3,653

3,395

2,027

4,280

2,500

(323)

5,985

20,322

87,489

The 2015 write downs were caused mainly by the following factors:

• There were significant decreases in Net Realizable Values of certain projects below the carrying amount due to deteriorating market condition in certain countries in which the Group

operates.

Moreover, affecting the valuations (in respect of plots under planning stage) are delays in the execution and commencement of construction of projects by the Company, increase in

the risks inherent in the Company’s developments projects which cause an increase in the discounts rate and the exit yields of the undeveloped projects. In certain cases, changes

were performed according to schemes of projects (e.g Casa radio, below mentioned) which triggered additional significant impairments.

Koregaon Park write-down (refer to note 29(a)) was performed due to delays in executing a sale transaction of the shopping center.

In case of Liberec Plaza in Czech Republic, write-down was recorded as a result of a decrease in the NOI of the shopping center (mainly due to an increase of the non-recoverable

expenses) and an increase of 0.5% in the exit yield compared to last year.

In the case of Belgrade Plaza (Visnjicka) project an appreciation was performed as the development of the project has already started, and the project is expected to start generating

income within 15 months following year-end.

In the case of Casa Radio project in Romania write-down was performed due to a significant change in the estimated date of construction commencement of the project (construction

commencement is now scheduled to mid-2018), triggered mainly by permitting issues as described in the note below.

4. Including carrying amount of Casa Radio and Timisoara projects in Romania, and also the Belgrade Plaza (Visnjicka) and Belgrade Plaza (both in Serbia).

PLAZA CenTers n.v. AnnuAL rePOrT 2015

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finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Financial statemen ts
Financial statemen ts

NOTE 8

5. Casa Radio note

a) General

In 2006 the Company entered into an agreement according to which it acquired 75% interest in a company (“Project SPV”) which under a Public-Private Partnership
agreement (“PPP”) with the Government of Romania is to develop the Casa radio site in central Bucharest (“Project”). After signing the PPP agreement, the Company
holds indirectly 75% of the shares in the Project SPV, the remaining 25% are held by the Romanian authorities (15%) and another third party (10%).

As part of the PPP, the Project SPV was granted with development and exploitation rights in relation to the site for a period of 49 years, starting December 2006. As
part of its obligations under the PPP, 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 performed on the construction site which amounted to circa EUR 85 million until 2010, when current
construction and development were put on hold due to lack of progress in the renegotiation of the PPP Contract with the Authorities (refer to point c below) and the
Global financial crisis. These circumstances (and mainly the avoidance of the Romanian Authorities to deal with the issues specified below) caused the Project SPV to
not meet the development timeline of the Project, as specified in the PPP. However, the Company is in the opinion that it has sufficient justifications for the delays in
this timeline, as generally described below.

b) Obtaining of the Detailed Urban Plan (“PUD”) permit

The Project SPV obtained the PUD related to this project in September 2012. Furthermore, on 13 December 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”) related to the Project. The court decision is
irrevocable.

As the PUD is based on the PUZ, the risk that the PUD would be cancelled as a result of the cancellation of the PUZ was removed following the date when the PUZ
was cleared in court on December 13, 2012.

c) Discussions with Authorities on construction time table deferral

As a result of point b above, following the Court decision, 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 its project within 60 days after obtaining the building permit.

However, due to substantial differences between the approved PUD and stipulations in the PPP Contract as well as changes in the EU directives concerning
buildings used by Public Authorities, and in order to ensure a construction process that will be adjusted to current market conditions, the Project SPV started
preliminary discussions with the Romanian Authorities (which are both shareholders of the Project SPV and a party to the PPP) regarding the future development
of the project.

The Project SPV also officially notified the Romanian Authorities its wish to renegotiate the existing PPP contract on items such as time table, structure and
milestones (e.g., the construction of the Public Authority Building (“PAB”), whose’ estimated costs are provisioned for in these financial statement – refer to
paragraph e below). The Company estimates that although there is no formal obligation from the Romanian Authorities to renegotiate the PPP agreement, such
obligation is expressly provided for the situation when extraordinary economic circumstances arise.

d) Co-operation with the Romanian Authorities regarding potential irregularities

The Board and Management have become aware of certain issues with respect to certain agreements that were executed in the past in connection with the Pro-
ject. In order to address this matter, the Board has appointed the chairman of the Audit Committee to investigate the matters internally and have also appointed
independent law firms to perform an independent review of the matters raised.

The Company has approached and is co-operating fully with the relevant Romanian Authorities regarding the matters that have come to its attention and it has
submitted its findings to the Romanian Authorities. As this process is still on-going, the Company in unable to comment on any details related to this matter.
Management is currently unable to estimate (based on legal advice received) any impact on the carrying value of the Project potentially resulting from this matter.

e) 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. Consequently, the Company had recorded a provision in the amount of EUR 17.1 million in
respect of the construction of the PAB.

The Company utilized the amount of EUR 1.5 million out of this provision, and in 2015 a reduction in the provision in the amount of EUR 0.6 million (recorded as
other income) was performed in order to reflect updated budget changes in respect of the PAB.

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Management believes that the current level of provision is an appropriate estimation in the current circumstances. Upon reaching concrete agreements with
Authorities, the Company will be able to further update the provision.

f) The circumstances described in subsection a through e above might lead to future claims, penalties, sanctions and/or, in extreme circumstances, termination of
the PPP and annulment of the Company’s rights in the Project by the Authorities.

6. Security over trading properties

As of December 31, 2015, a total carrying amount of EUR 123 million (December 31, 2014 – EUR 170 million) which represents mainly operating shopping
centres is pledged against secured bank loans of approximately EUR 103 million.

7. Writedown of trading properties

Trading properties are measured at the lower of cost and net realizable value. Determining net realizable value is inherently subjective as it requires estimates of
future events and takes into account special assumptions in the valuations, many of which are difficult to predict.

Actual results could be significantly different than the Company’s estimates and could have a material effect on the Company’s financial results. Trading Properties
accumulated write-downs from cost as of December 31, 2015, amounted to EUR 230 million or 42% percent of outstanding trading properties original cost
(December 31, 2014 – EUR 274 million or 42% of gross trading property balance). These valuations become increasingly difficult as they relate to estimates and
assumptions for projects in the preliminary stage of development.

Management is responsible for determining the net realizable value of the Group’s Trading Properties. In determining net realizable value of the vast majority of
Trading Properties, management utilizes the services of an independent third party recognized as a specialist in valuation of properties (As at December 31, 2015,
98% of the value of trading properties was based on valuations done by the independent third party valuation service (2014 - 98%).

The remaining properties were valued internally. On an annual basis (and in certain cases during the year), the Company reviews the valuation methodologies
utilized by the independent third party valuator service for each property. The main features included in each valuation are:

a) Completed trading properties (operating shopping centers)

The Net Realizable Value of operating shopping centers reflects rental income from current leases and assumptions about rental income from future leases in the
light of current market conditions.

The Net Realizable Value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. The Group uses professional
appraisers for determining the Net Realizable Value of the operating shopping centers. Independent valuation reports are prepared by Cushman & Wakefield by
using discounted cash flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at the reporting date.

The principal assumptions underlying management’s estimation of Net Realizable Values are those related to the receipt of contractual rentals, expected future
market rentals, void periods, maintenance requirements and appropriate discount rates. These valuations are regularly compared to actual market yield data and
actual transactions made by the Group and those reported by the market, if available. Expected future rentals are determined on the basis of current market rentals
for similar properties in the same location and condition.

b) Incomplete trading properties (undeveloped plots of lands)

The net realizable value in case of an undeveloped project is determined by either:

• comparison with the sale price of land for comparable development ; or
• Assessment of the value of the project as completed and deduction of the costs of development (including developer’s profit and financing costs), and applying

an estimated discount rate, to arrive at the underlying land value. This is known as the residual method.

b1 – Comparative method

Valuation by comparison is essentially objective in that it is based on an analysis of the price achieved for sites with broadly similar development characteristics.
Valuation by comparison is generally used if evidence of actual sales can be found and analysed on a common unit basis, such as site area, developable area or
habitable room.

Where comparable development cannot be identified in the immediate area of the subject site or when sales information is not clearly available through common
channels of information (internet, newspapers, trade journals, periodic market research) it is necessary to look further out for suitable comparable and to make
necessary adjustments to the price in order to account for dissimilarities between the comparable development and the subject site. Such adjustments include, but
not limited to:

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NOTE 8

• Adjustment due to the time of the transaction. Market conditions at the time of the sales transaction of a comparable property may differ from those on the

valuation date of the property being valued. Factors that impact market conditions include rapidly appreciating or depreciating property values, changes in tax
laws, building restrictions or moratoriums, fluctuations in supply and demand, or any combination or forces working in concert to alter market conditions from
one date to another.

• Adjustment due to asking price and condition of payment. The special motivations of the parties to the transaction in many situations can affect the prices

paid and even render some transactions as non-market. Examples of special conditions of sale include a higher price paid by a buyer because the parcel has
synergistic, or marriage value; a lower price paid because a seller was in a hurry to conclude the sale; a financial, business, or family relationship between
the parties involved in the transaction, unusual tax considerations; lack of exposure of the property in the (open) market; or the prospect of lengthy litigation
proceedings.

• Adjustment because of size, shape and surface area. Where the physical characteristics of a comparable property vary from those of the subject property, each

of the differences is considered, and the adjustment is made for the impact of each of these differences on value.

• Adjustment because of location. The locations of the comparable sale properties and the subject property are compared to ascertain whether location and

the immediate environment are influencing the prices paid. The better location a property is located in the more it is worth per square meter; and conversely
the worse location a property is in the less it is worth per square meter. An adjustment is made to reflect such differences based on the valuers’ professional
experience. Extreme location differences may indicate that a transaction is not truly comparable and are disqualified.

b2 – Residual method

The residual method, in contrast, relies on an approach that is a combination of comparison and cost and it requires making a number of assumptions – any of
which can affect the outcome in varying degrees. Having established the development potential a residual valuation can be expressed as a simple equation: (value
of completed development) – (development costs + developers profit + financing cost) = land value. Each element of this equation is discussed in the following
paragraphs.

8. Value of completed development

The value of the completed development is the market value of the proposed development assessed on the special assumption that the development is complete
as at the date of valuation in the market conditions prevailing at that date.

9. Development costs

The development costs include planning and design costs, construction costs, site related costs, holding costs, finance costs and contingencies.

Some larger schemes such as Casa Radio in Romania and Bangalore in India are phased over time. Is such case the phasing is reflected in the cash flows as
deferral of some of costs to a date when it might be reasonable to expect them to be incurred. Similarly, not all proceeds occur simultaneously.

10. Developer’s profit

The nature of the development determines the selection of the profit margin, or rate of return and the percentage to be adopted varies for each case.
The developers profit is expressed as a percentage of the cost of the completed development.

All of the trading properties were valued using the Residual technique (or the Discounted Cash Flows technique for operating shopping centres) except the one
project in a value of EUR 10.7 million. In 2014: the same with the exception of one project with a total amount of EUR 0.8 million using the comparative method.

All the trading properties carrying amounts equals their net realizable values with the exception of Torun and Suwalki in Poland (2014: Torun and Suwalki in
Poland and Arena extension in Hungary), where the carrying amount reflects the cost.

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11. Significant estimates

The following table shows the valuation techniques used in measuring the net realizable values of trading properties, including those held by

joint ventures which are recorded as equity accounted investees:

Group of assets

Valuation technique

Significant unobservable inputs

Inter-relationship between key
unobservable inputs and fair value
measurement

Operating shopping centers –
Poland

Plots in CEE
(except Casaradio)

Discounted cash flows: The valuation
model considers the present value
of the net cash flows expected to be
generated by the shopping centers. The
cash flow projections include specific
estimates for 10 years. The expected
net cash flows are discounted using a
risk-adjusted discount rate.

• Estimated rental prices per SQM
(EUR 3–47.0, weighted average
EUR 10.5).

The estimated fair value would increase
(decrease) if:
• the estimated rental prices per sqm were

• Estimated exit yield is between

higher (lower);

7.15% and 9.4%.

• the estimated yield rates were lower

• Discount rate is between 8.85%

(higher);

to11.1%.

• the estimated discount rates were lower

• Based on 100% occupancy rate to be

(higher);

achieved within 2 years.

• The occupancy of the mall was higher

(lower).

Residual method: The valuation
model considers the net present value
(based on an NPV factor) based on
the estimated value of the project
upon completion less the estimated
development cost including a
provision for the profit for the potential
development.

• Estimated weighted average rental

prices per SQM is between EUR 6.00
to EUR 30.00.

The estimated fair value would increase
(decrease) if:
• the estimated rental prices per sqm were

• The Estimated Exit Yield for the

higher (lower);

projects are between 7.75% and 11%.

• the estimated yield rates were lower

• The construction cost of the projects
are between 275 EUR/sqm to 1,200
EUR /sqm for the malls.

(higher);

• the estimated discount rates were lower

(higher);

• The development finance rate is

• the construction cost of the project were

between 5.00% to 10%.

lower (higher);

• The occupancy rate of the projects at

• the developer’s profit provision for the

opening are estimated at 95%.
• Developers profit – 17%-25%.

project were lower (higher);

• the development finance provision for

the project were lower (higher);

• the estimated completion of the project

were shorter (longer);

• the occupancy of the mall were higher

(lower);

• the land prices for comparable

transactions on the market would be
higher (lower);

• the characteristics of the project would

be changed.

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NOTE 8

Group of assets

Valuation technique

Significant unobservable inputs

Inter-relationship between key
unobservable inputs and fair value
measurement

Casa Radio

• Estimated weighted average rental

prices per SQM is EUR 27.00 for the
mall and EUR 16.50 for offices.
• The estimated Exit Yield is 7.50%

for the mall and 8.00% for the office
component.

• The construction cost of the project is
850 EUR/sqm for the mall; 1000 EUR/
sqm for the offices; 500 EUR/sqm for
the parking.

The estimated fair value would increase
(decrease) if:
• the estimated rental prices per sqm were

higher (lower);

• the estimated yield rates were lower

(higher);

• the construction cost of the project were

lower (higher);

• the developer’s profit provision for the

project were lower (higher);

• The development finance rate is

• the development finance provision for

7.50%.

the project were lower (higher);

• The occupancy rate of the project at

• the estimated completion of the project

opening is estimated at 95%.
• The scheme would compose the

following components: (i) retail; (ii)
offices.

were shorter (longer);

• the occupancy of the mall were higher

(lower);

• the characteristics of the project would

• Developers profit – 20%.

be changed.

Bangalore and Chennai
(Joint Ventures)

Bangalore - Residual method was
used as well as follows: The valuation
model considers the net present value
(based on an NPV factor) based on
the estimated value of the project
upon completion less the estimated
development cost including a
provision for the profit for the potential
development Chennai - Comperable.

For residual approach:
• The sales price/sqm for the

development is between INR 100,000
and INR 138,000 subject to the size,
location and the quality of the asset
class.

• The construction cost per sqm for the
development is INR 34,000 to INR
41,000 subject to location and the
quality of the asset class.
• Developers profit – 20%.

The estimated residual fair value would
increase (decrease) if:
• the estimated sales prices per sqm were

higher (lower);

• the estimated construction cost were

lower (higher);

• the development finance provision for

the project were lower (higher);

• the estimated completion of the project

were shorter (longer);

• the characteristics of the project would

be changed;

• the developer’s profit provision for the

project were lower (higher).

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The following table provides sensitivity analysis on value of certain projects (in thousands of EUR), assuming the following changes in key inputs used in
valuations:

Operating Property

Exit Yield

-50bps

-25bps

+25bps

+50bps

Polish operating

shopping centers

164,050

158,350

153,025

148,100

143,425

Increase in exit yields

(base points)

Delay in construction

commencement day (months)

+15bps

+25bps

+40bps

+50bps

+12

+18

+24

Belgrade Plaza

visnjicka

Belgrade Plaza

(MUP)

29,630

28,480

27,730

26,650

25,490

29,630

28,450

27,310

26,220

25,170

13,630

12,090

11,100

9,660

8,740

13,630

12,880

12,160

11,480

10,830

Timisoara Plaza

9,410

8,710

8,250

7,580

7,150

9,410

9,050

8,690

8,360

8,030

Casa Radio

108,590

101,410

96,780

90,040

85,680

108,590

104,730

101,010

97,430

93,970

Construction costs

for all phases

Rental income

for all the phases

-10%

-5%

+10%

+5%

-10%

-5%

+10%

+5%

Belgrade Plaza

visnjicka

Belgrade Plaza

(MUP)

32,680

31,160

29,630

28,100

26,580

23,530

26,580

29,630

32,680

35,730

20,020

16,820

13,630

10,430

7,230

5,870

9,750

13,630

17,510

21,390

Timisoara Plaza

13,060

11,240

9,410

7,590

5,760

4,720

7,060

9,410

11,760

14,110

Casa Radio

135,010

121,800

108,590

95,380

82,170

71,310

89,950

108,590

127,230

145,870

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NOTE 8

12. Summary table for main projects status:

Purchase

Holding

Planned

Carrying

Gross

amount

Lettable December 31, December 31,

Project

Location

year Rate (%) Nature of rights

Permit status

Area (sqm)

2015 (MEUR)

2014 (MEUR)

Suwalki Plaza

Poland

2006

100

Ownership

Operating shopping center

20,000

39.7

(starting Q2 2010)

Zgorzelec Plaza

Poland

2006

100

Ownership

Operating shopping center

13,000

12.1

(starting Q1 2010)

Torun Plaza

Poland

2007

100

Ownership

Operating shopping center

40,000

68.1

Lodz residential

Poland

2001

100

Ownership/

Planning permit valid

24,700*

(starting Q4 2011)

Perpetual usufruct

Lodz Plaza

Kielce Plaza

Leszno Plaza

Liberec Plaza

Poland

Czech Republic

2009

2008

2006

100

Perpetual usufruct

Planning permit pending

Perpetual usufruct

Planning permit valid

Perpetual usufruct

Planning permit valid

Ownership

Operating shopping center

35,000

33,000

16,000

17,000

(starting Q1 2009)

2.1

5.5

3.3

0.8

9.6

Koregaon Park

India

2006

100

Ownership

Operating shopping center

41,000

Sold

(starting Q1 2012)

39.2

13.5

68.0

4.8

7.4

3.5

0.8

15.7

33.8

Casa Radio

Romania

2007

Leased for 49 years

Detailed Zoning Plan

467,000**

108.6

116.1

100

Ownership

100

Land use rights

Ownership

(“PUD”) valid

Zoning Plan (“PUZ”) valid

Detailed Zoning Plan

(“PUD”) valid

Zoning Plan (“PUZ”) valid

Existing building

No valid permit

(Building Permit expired)

58,000

17,000

40,000

18,000

14,000

Building Permit obtained

32,000

Approval of DRP pending

63,000**

Planning permit valid

20,000

40,000

38,270

Sold

0.6

9.4

2.2

2.0

29.6

13.5

0.8

2.5

4.0

3.4

7.3

1.1

8.9

2.5

2.0

18.9

13.7

1.0

3.4

4.4

4.8

317.8

370.8

2007

2009

2007

2005

2002

Iasi Plaza

Slatina Plaza

Timisoara Plaza

Constanta Plaza

Romania

Miercurea Ciuc Plaza

Romania

Belgrade Plaza visnjicka Serbia

Belgrade Plaza

Shumen Plaza

Serbia

Bulgaria

Arena Plaza Extension

Hungary

Piraeus Plaza

Greece

Other small plots, grouped

Total

* Gross area of the plot

** GBA (sqm)

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NOTE 9 - PROPERTY AND EQUIPMENT

Land and

buildings

€’000

Equipment

€’000

Fixtures

and fittings

€’000

Cost

Balance at January 1, 2014

Additions

Disposals

Exchange rate effect

Balance at December 31, 2014

Additions

Reclassification

Disposals*

Balance at December 31, 2015

Accumulated depreciation and impairment

Balance at January 1, 2014

Depreciation

Impairment**

Disposals

Exchange rate effect

Balance at December 31, 2014

Depreciation

Disposals*

Balance at December 31, 2015

Net carrying amounts

At December 31, 2015

At December 31, 2014

At January 1, 2014

7,181

(3,079)

4,102

2,776

700

3,561

170

(1,881)

1,850

2,252

3,620

4,405

3,542

(208)

3,400

202

(306)

3,327

3,220

197

(66)

(34)

3,317

(124)

3,223

104

322

1,397

(202)

1,195

1,071

124

326

* Disposal of Palazzo duCale building in Romania – refer to note 29 (d).

** 2014 depreciation – includes impairment of EUR 0.7 million due to office building in Romania.

Airplane

€’000

4,737

(4,737)

3,270

(3,270)

1,467

Total

€’000

16,8572

(4,945)

11,978

(3,385)

8,624

10,337

282

700

(3,336)

(34)

7,949

200

(2,005)

6,144

2,480

4,029

6,520

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NOTE 9,10

NOTE 10 - EQUITY ACCOUNTED INVESTEES

The Group has the following interest (directly and indirectly) in the below joint ventures (the Group has no investment in associates), as at December 31, 2015
and 2014:

Company name

Country

Activity

December 31, 2015

December 31, 2014

Elbit Plaza USA II LP

Elbit Plaza India Real Estate Holdings Ltd. (“EPI”)*

Elbit Kochin Ltd.

SIA Diksna (“Diksna”)

USA

Cyprus

Inactive

Mixed-use

large scale projects

Inactive

Latvia

Operating shopping center

50%

47.5%

40%

50%

47.5%

40%

50%

Interest of holding

(percentage) as at

Interest of holding

(percentage) as at

None of the joint ventures are publicly listed.

* Though EPI is 47.5% held by the Company, the Company is accounted for 50% of the results, as the third party holding 5% in EPI is deemed not to participate in accumulated losses,

hence EI and the Company, the holders of the remaining 95% each account for 50% of the results of EPI.

The movement in equity accounted investees (in aggregation) was as follows:

Balance as at 1 January

Investments in (repayment from) equity-accounted investees, net

Share in results of equity-accounted investees, net of tax

Uplift (write-down) of Equity-accounted investees1

Effect of movements in exchange rates

Equity-accounted investees disposed

Balance as at 31 December2

2015

€’000

42,229

(1,043)

1,043

939

1,738

44,906

2014

€’000

40,141

463

1,641

(1,687)

2,740

(1,069)

42,229

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1 Breakdown of the Group’s share of write-downs (reversals of write-downs) of trading properties projects held by equity accounted investees is as follows:

Project name (holding company name)

Bangalore (held by EPI)

Chennai (held by EPI)

Riga Plaza (held by Diksna)

Elbit Kochin Ltd.

Total

The year ended

December 31, 2015

December 31, 2014

€’000

939

€’000

557

(2,463)

420

(201)

(1,687)

2 As of December 31, 2015, the loan to equity accounted investee Diksna totalled circa EUR 4.3 million bearing interest of 3 months EURIBOR +2.5% per annum (December 31, 2014 –

EUR 6.1 million). Other investment in equity accounted investees is through certain equity instruments to cover negative equity position considered part of the Group’s net investment in

the investees.

Material joint ventures

Within the joint ventures, two joint ventures were deemed as material, and these are EPI (due to holding of major schemes in Bangalore and Chennai) and Diksna
(being the only active shopping center held through a joint venture). The summarized financial information of the material joint ventures is as follows:

December 31, 2015

December 31, 2014

Current assets*

Trading properties -non current

Other current liabilities

Interest bearing loans from banks

Group loan to Diksna

Net assets (100%)

Group share of net asset (50%)**

Carrying amount of interest in joint venture

EPI

€’0000

338

51,661

(187)

51,812

25,906

Diksna

€’000

2,408

93,400

(1,930)

(55,990)

(8,596)

29,292

14,646

EPI

€’000

3,168

48,475

(709)

50,934

25,467

Diksna
€’000

2,696

90,000

(2,414)

(56,884)

(12,242)

21,156

10,578

* Including cash and cash equivalents in Diksna the amount of EUR 0.4 million (2014 - EUR 0.8 million).

** Refer to remark on EPI holding rate.

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NOTE 10

The year ended

December 31, 2015

December 31, 2014

Revenue

Cost of operations

Interest expenses

Uplift (write-downs)

EPI

€’000

Total net profit (loss) and comprehensive income (100%)

(3,510)

Group share of profit (loss) and comprehensive income (50%)

(1,755)

Interest income on Diksna loan

Total results from investees

(1,755)

Diksna

€’0000

11,762

(4,412)

(1,908)

1,878

7,320

3,660

3,737

EPI

€’000

(3,812)

(4,730)

(2,365)

Diksna
€’000

11,244

(4,291)

(2,018)

840

5,092

2,546

2,628

Immaterial joint ventures information

With the exception of EPI and Diksna, all other December 31, 2015 and 2014 outstanding joint ventures were considered immaterial.
The aggregation of the information in respect of these immaterial joint ventures was as follows (the Group’s part):

Current assets

Carrying amount of interest in joint venture

Revenues

Write-downs (refer to impairment table above)

Loss and comprehensive income

December 31, 2015

December 31, 2014

€’000

The year ended

December 31, 2015

December 31, 2014

€’000

(201)

(309)

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NOTE 11 - DERIVATIVES

The table below summarizes the results of the 2015 and 2014 derivatives activity (none of the abovementioned activities qualified for hedge accounting), as well
as the outstanding derivatives as of December 31, 2015 and 2014:

Derivative type

Nominal

Fair value of

amount as of

derivatives at

December 31,

2015

N/A

EUR 35.5 million

(754)

Currency options1

N/A

Interest Rate

Swap (“IRS”) 12

IRS 23

IRS 34

Total

(754)

(586)

Gain

(loss)

2015

(586)

N/A

Fair value of

derivatives at

December 31,

2014

(95)

N/A

(894)

(989)

Gain

(loss)

2014

217

220

(689)

(232)

Maturity

date of

derivative

N/A

December 2017

1 Selling options strategy (by writing call and put currency option) in order to manage its foreign currency risk (EUR-NIS) inherent in its long term debentures series A and series B issued

in NIS. The Company ceased using this strategy effective October 2015.

2 In respect of Suwalki project loan. The project company paid EUR fixed interest rate of 2.13% and receives three months EURIBOR on a quarterly basis, until June 30, 2014.

3 In respect of Kragujevac project loan. The project company paid EUR fixed interest rate of 1.85% and receives three months EURIBOR on a quarterly basis, until December 31, 2014.

4 In respect of Torun project loan. The project company pays fixed interest rate of 1% and receives three months EURIBOR on a quarterly basis, until December 31, 2017.

Regarding pledges in respect of derivative activity refer to note 28(d)(2).

Fair value measurement

Fair values of the SWAP may be determined in whole or in part using valuation techniques based on assumptions that are not supported by prices from current
market transactions or observable market data, where current prices or observable market data are not available.

Factors such as bid-offer spread, credit profile, collateral requirements and model uncertainty are taken into account, as appropriate, when fair values are
calculated using valuation techniques. Valuation techniques incorporate assumptions that other market participants would use in their valuations, including
assumptions about interest rate yield curves, and middle exchange rates, as determined by relevant central banks at each cut-off dates.

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NOTE 11,12

NOTE 12 - INTEREST BEARING LOANS FROM BANKS

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. For more
information about the Group’s exposure to interest rate, foreign currency and liquidity risk, refer to note 27. All interest bearing loans from banks are secured.

Breakdown, terms and conditions of outstanding loans were as follows:

Nominal interest rate

Currency

Torun project secured bank loan1,6

3M EURIBOR+3%

Liberec project secured bank loan2

Suwalki project secured bank loan6

Zgorzelec project secured bank loan3

Koregaon Park project secured bank loan4

3M EURIBOR+1.65%

3M EURIBOR+2.75%

Valley View (bas) project secured bank loan5

3M EURIBOR+5.5%

EUR

INR

EUR

December 31,

2015

€’000

45,516

27,571

21,225

8,200

2014

Carrying amoung

€’000

46,735

20,468

29,886

21,993

22,065

9,700

Year of

maturity

2017

2018

2020

2014

2021

2014

Total interest bearing liabilities

102,512

150,847

1 IRS on bank loans – refer to note 11.

2 Refer to note 29(c) for the purchase of the loan.

3 Zgorzelec loan – mostly non-recourse loan (except a component of a EUR 1.2 million which is recourse). The loan has expired during 2014 – the Company is negotiating with the

financing bank on signing new facility. The Company has also pledged its plot in Leszno, Poland (valued at EUR 0.8 million, refer also to note 10) in favour of the financing bank. In March

2016 the Company received a debt repayment call for the outstanding loan balance and the accrued interest due to it (refer also to note 15) in a total amount of EUR 22.9 million, and

currently reclassifies the loan as short termed. If the bank would exercise its rights and take over the asset (valued at EUR 12 million, refer also to note 10), the management expects the

procedure to result in an accounting gain of circa EUR 9 million. Management believes that the company still controls the Polish SPV and therefore continues to consolidate it.

4 Koregaon Park loan – refer to note 29(a) regarding the sold project.

5 The outstanding loan as of December 31, 2015 has expired, and the Company is currently negotiates with the financing bank new terms and conditions for the loan. The loan is with

recourse on interest payments (not principal) and was reclassified as short term.

6 2015 – Including EUR 2.7 of current maturities of long term loans.

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Covenants on loan

The below table summarise the main covenants (Loan to Value (“LTV”) and Debt Service Coverage Ratio (“DSCR”)) on group loans:

Bank facility

Actual LTV

Torun project secured bank loan

Suwalki project secured bank loan

Zgorzelec project secured bank loan1

47%

64%

N/A

Contractual

LTV

70%

N/A

Actual DSCR

1.93

1.76

N/A

Contractual

DSCR

1.25

1.20

N/A

1 The Zgorzelec loan has expired, without new covenants established; therefore no DSCR and LTV comparative figures are available.

NOTE 13 - TRADE PAYABLES

Construction related payables

Other trade payables

Total

Currency

Mainly in PLN, EUR

December 31, 2015

December 31, 2014

€’000

776

1,447

2,223

€’000

1,893

NOTE 14 - RELATED PARTIES PAYABLES

EI Group- ultimate parent company – expenses recharged

Other related parties in EI Group

Total

Currency

EUR, USD

EUR

December 31, 2015

December 31, 2014

€’000

109

€’000

457

704

1,161

For payments (including share based payments) to related parties refer to note 30. In respect of the related party receivables refer to note 29(h).

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NOTE 13,14,15,16

NOTE 15 - OTHER LIABILITIES

Short-term

Advanced payment in respect of selling of trading property

Obligations to tenants

Accrued bank interest1

Obligation in respect of plot purchase

Government institutions and fees

Loan from non-controlling interest

Salaries and related expenses

Accrued expenses and commissions

Other

Total

Currency

INR, RON

EUR

Mainly EUR

EUR

December 31, 2015

December 31, 2014

€’000

1,385

2,807

1,380

974

264

191

7,045

€’000

5,868

2,401

2,265

1,380

529

215

180

287

13,175

1 Mainly due to bank facilities in Zgorzelec (EUR 1.5 million) and valley view BAS (EUR 1.2 million) which are currently in default (refer also to note 12).

NOTE 16 - DEBENTURES AT AMORTISED COST

New debentures following the conclusion of the restructuring plan in 2014

In 2014, in view of the significant change in the terms of the Debentures, the Company de-recognized all of its outstanding debentures, and recognized new
debentures at fair value (with subsequent measurement at amortized cost) determined based on the market quote at the end of the trade date of December 10,
2014.

Table 1

Following the above, a value of EUR 170.2 million was deemed to be the fair value of the principal of new debentures upon restructuring date
(December 10, 2014).

Short-term

Series A Debentures*

Series B Debentures*

Polish Debentures**

Total

Principal fair value

determined

Effective

interest rate

Quote deemed as fair

Value of Debenture
(in NIS or PLN cents)

54,119

101,476

14,562

170,157

12.6%

15.2%

13.8%

112

105.34

96.5

* In respect of Israeli bonds, market quote of December 10, 2014 was inclusive of accrued interest due to the year 2014, therefore, and in order to reach a clean quote of the principal,

accrued interest in the amount of EUR 3.5 million and EUR 7.9 million had to be deducted from the fair value derived from the quote of debentures A, and B, respectively.

** See below in respect of general information on Polish bonds. Fair value of Polish debentures (untraded) was determined using the known effective interest rates determined for Israeli

debentures, and the value of the Polish debentures was derived from it.

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Gain from de-recognition and re-recognition (restructuring plan gain)

Table 2

As a result of the above, the Company recorded a gain of EUR 3.4 million from eliminating the old debentures and recording of the new debentures. The gain is
calculated as follows:

Items de-recognised

Total Israeli debentures at fair value through profit or loss (refer to note 16)

Total Israeli debentures at amortised costs (refer to table 1 above)

Total Polish debentures

Old accrued interest due debentures at amortised cost as of December 10, 2014

Total amounts de-recognised

Items added

Fair value of new bonds (refer to table 2 above)

New accrued interest due debentures at amortised cost as of December 10, 2014

Value of new shares issued to bondholders (share premium – refer to note 19)

Total amounts recognised

Gain recorded at December 10, 2014

Carrying amount recognised

(de-recognised) €’000

(116,671)

(55,175)

(14,425)

(6,097)

(192,368)

170,157

12,614

6,154

188,925

3,443

As part of the restructuring plan (refer to note 29(e)), and as interest due up and until December 31, 2013 was added to the principal of the debentures, an
additional NIS 5.5 million par value debentures series A and net NIS 13.3 million par value debentures series B were issued. Also additional PLN 2.8 million were
added to the original principal.

Table 3

Following the additional issuance, the total par value and adjusted par value (in EUR thousands) outstanding were as follows:

Series A Debentures

Series B Debentures (Net of treasury bonds)

Polish Bonds

Total

Par Value

Adjusted par value

Fair value determined

Discount Created*

€’000

51,447

103,813

15,090

€’000

62,108

121,535

15,090

198,733

€’000

54,119

101,476

14,562

170,157

€’000

7,989

20,059

528

28,576

* The discount created is recognized as finance cost across the remaining maturity of the debentures, using the effective interest rate method, subject to asset disposals.

Following the disposal of several assets by the Company in 2015 (refer to notes 29(b) and 29(d)), the Company made principal repayment to Bondholders a total
amount of EUR 6.6 million (2014 – EUR 12.1 million due to 2014 disposals), representing 75% of the total proceeds obtained from asset disposal (except the
Koregaon Park disposal (refer to note (29(a)). The table below describes the movement in the carrying amount of the debentures between December 10, 2014 and
December 31, 2015:

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NOTE 16

Fair value Amortization

Repayment

Forex

Carrying Amortization

Repayment

Forex

Carrying

As at

of discount

and Amount as at

of discount

and Amount as at

December 10,

principal

inflation December 31.

principal

inflation December 31.

2014

€’000

2014

€’000

2014

€’000

2014

€’000

2014*

€’000

2015

€’000

2015

€’000

2015

€’000

20151,2

€’000

Series A Debentures

54,119

216

(2,615)

1,537

53,257

1,923

(1,428)

5,320

59,072

Series B Debentures

(net of treasury bonds held) 101,476

Polish Debentures

14,562

488

(8,406)

(1,036)

2,820

(354)

96,378

13,227

8,399

294

(4,588)

(569)

9,371

109,560

12,957

Total

170,157

759

(12,057)

4,003

162,862

10,616

(6,585)

14,696

181,589

1 Carrying amount (net of treasury bonds) as at December 31, 2015 is composed of EUR 203,047 thousand net debentures obligation and EUR 21,458 thousand of discount outstanding

(2014 - Carrying amount as at December 31, 2014 is composed of EUR 191,545 thousand net debentures obligation and EUR 28,683 thousand of discount outstanding).

2 In view of the probable planned selling of the four shopping centres (refer to note 2(c), and see also below), the Company is planning to generate sufficient cash flow which will enable

it to repay by December 1, 2016 a cumulative amount of NIS 434 million (EUR 102 million) of the Unsecured Debt, and by that the remaining principal payments shall be deferred for an

additional year. The Company has repaid circa NIS 88 million (EUR 19 million) during 2015 and therefore has reclassified accordingly EUR 79.6 million (EUR 81.3 million, less treasury

bonds expected repayment of EUR 1.6 million) of its unsecured debt as short term. Refer to note 2(c) for further information.

Debentures covenants are included in note 28 (b).

As a result of the restructuring plan, new interest rates and maturities were applied to the debentures as follows:

Series A Debentures

Series B Debentures

Polish Debentures

Interest rate

Principal final maturity

Interest rate

Before

4.5%+ CPI

5.4%+ CPI

After

6%+ CPI

6.9%+ CPI

4.5%+ 6M WIBOR

6%+ 6M WIBOR

Before

2017

2015

2013

After*

2019

2018

2017

* Principal repayments are subject to 75% mandatory prepayment (refer to notes 2(c) and 29(e)). Also, if until December 1, 2016 the Company succeeds to repay NIS 434 million (EUR

102 million) of the Unsecured Debt, then the remaining principal payments shall be deferred for an additional year.

The below is a summary table of contractually required net principal repayments of all debentures, assuming the deferral of payment is obtained, and in
comparison when such deferral is not obtained. This table does not consider the impact of timing of disposals.

Year falling due

2016

2017

2018

2019

2020

Total

Principal repayment

With Deferral €’000

Without Deferral €’000

79,564

26,976

82,409

14,098

203,047

13,220

101,475

75,132

13,220

203,047

Both NIS series of debentures have credit rating of “ilBBB-“ on a local Israeli scale with negative outlook as of the date of approval of these financial statements by S&P Maalot.

Bonds issued in Poland

In November 2010, the Company completed a bond offering to Polish institutional investors. The Company raised a total of PLN 60 million (approximately EUR 15.2
million). Following the completion of the restructuring plan (refer also to note 29(e)), the terms and conditions of the bonds were changed, as described above.

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NOTE 17 - RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES

Deferred taxes recognized are attributable to the following items:

Assets/(liabilities) 2014

Property, equipment and other assets

Debentures

Tax value of loss carry-forwards recognized*

Deferred tax liability, net

Assets/(liabilities) 2014

Property, equipment and other assets

Debentures

Tax value of loss carry-forwards recognized*

Deferred tax liability, net

* Due to tax losses created on the Company level.

Unrecognised deferred tax assets

December 31,

Recognised in

December 31,

2014

€’000

921

(7,334)

7,334

921

profit or loss 2015

€’000

(515)

3,540

(3,540)

(515)

2015

€’000

406

(3,794)

3,794

406

December 31,

Recognised in

December 31,

2013

€’000

(379)

(9,248)

9,248

(379)

Profit or loss 2014

€’000

1,300

1,914

(1,914)

1,300

2014

€’000

921

(7,334)

7,334

921

Deferred tax assets have not been recognized in respect of tax losses in a total amount of EUR 151,845 thousand (2014: EUR 135,580 thousand).

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the
Group can utilize the benefits there from. As of December 31, 2015 the expiry date status of tax losses to be carried forward is as follows:

Total tax losses carried forward

2016

2017

2018

2019

2020

After 2020

167,021

6,541

7,521

10,308

18,352

10,951

113,384

Tax losses are mainly generated from operations in the Netherlands. Tax settlements may be subjected to inspections by tax authorities. Accordingly, the amounts
shown in the financial statements may change at a later date as a result of the final decision of the tax authorities.

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NOTE 17,18

NOTE 18 - EQUITY

December 31, 2015

Remarks

Number of shares

December 31, 2014
Number of shares

Authorised ordinary shares of par value EUR 0.01 each

1,000,000,000

Issued and fully paid:

At the beginning of the year

Issuance of shares in respect of right issuance

Issuance of shares to Bondholders

See below1

See below2

685,560,275

297,186,138

282,326,830

106,047,307

At the end of the year

685,560,275

1 Right issuance - as part of the implementation of the restructuring plan, certain shareholders participated in a right issuance process, following of which EUR 20 million were injected to

the Company, and the Company has issued a total of 282,326,830 shares to these shareholders for a share price 0.0675 EUR per share. The premium resulted from the share issuance in

a total amount of EUR 16.2 million was attributed to share premium. Legal, prospectus related, and other expenses associated with the issuance of shares in a total amount of EUR 1.6

million was also attributed to share premium. For more details on the right issuance process refer to note 29(e).

2 Issuance of shares to Bondholders - as part of the implementation of the restructuring plan, a total of 106,047,307 shares were issued to the debentures holders, for which the

Bondholders have paid the par value of the shares. As a result of the above, a total deemed premium of EUR 6.2 million was contributed to the share premium of the entity, based on the

market value of the shares granted at the closing of the day of trading December 10, 2014.

As a result of the abovementioned two processes, the holding rate of EI in the Company was reduced from 62.25% to 44.9%.

Share based payment reserve

Other capital reserve is in respect of Employee Share Option Plans (“ESOP”) in the total amount of EUR 35,556 thousand as of December 31, 2015
(2014 – EUR 35,520 thousand).

Translation reserve

The translation reserve comprises, as of December 31, 2015, all foreign currency differences arising from the translation of the financial statements of foreign
operations in India. Refer to note 29(A) in respect of realization of foreign exchange differences due to transaction 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 Debentures (EUR 199 million) 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.

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NOTE 19 - EARNINGS PER SHARE

The calculation of basic earnings per share (“EPS”) at December 31, 2015 was based on the loss attributable to ordinary shareholders of EUR 46,116 thousand
(2014: loss of EUR 119,687 thousand) and a weighted average number of ordinary shares outstanding of 685,560 thousand (2014: 309,955 thousand).

Weighted average number of ordinary shares (for both EPS and EPS from continuing operations)

In thousands of shares with a EUR 0.01 par value

Issued ordinary shares at 1 January

Issuance of shares due to restructuring plan

Weighted average number of ordinary shares at 31 December

December 31, 2015

December 31, 2014

€’000

685,560

€’000

297,186

12,769

309,955

The calculation of diluted earnings per share from continuing operations for comparative figures is calculated as follows:

Weighted average number of ordinary shares (diluted)

In thousands of shares with a EUR 0.01 par value

Weighted average number of ordinary shares (basic)

Effect of share options on issue

Weighted average number of ordinary shares (diluted) at 31 December

December 31, 2015

December 31, 2014

€’000

685,560

€’000

309,955

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the
period that the options were outstanding.

NOTE 20 - EMPLOYEE SHARE OPTION PLAN

On October 26, 2006 the Company’s Board of Directors approved the grant of up to 33,834,586 non-negotiable options for the Company’s ordinary shares to the
Company’s board members, employees in the company and other persons who provide services to the Company including employees of the Group (”Offerees”).

The options were granted to the Offerees for no consideration. Furthermore, 2nd ESOP plan was adopted on November 22, 2011 which is based on the terms of
the 1st ESOP as amended in accordance with the terms as referred to above, with a couple of amendments, the most important of which is the total number of
options to be granted under the 2nd ESOP is fourteen million (14) and a cap of GBP 2. Exercise of the options is subject to the following mechanism:

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NOTE 19,20

Grant date / employees entitled

ESOP No.13

Option grant to key management at October 27, 2006

Option grant to employees at October 27, 2006

Total granted in 2006

Total granted in 20072

Total granted in 20082

Total granted in 20092

Total granted in 20112

ESOP No.23

Total granted in 20112

Total granted in 20122

Total granted in 20132

Total share options Granted

Number

of options

Contractual life

of options1

13,218,073

1,858,589

15,076,662

1,016,156

763,887

391,668

120,000

4,584,000

860,000

985,000

23,797,373

15 years

10 years

1 Following the 4th amendment of ESOP1, the contractual life for stock options granted changed from 10 years to 15 years

2 Share options granted to key management: 2007 – 100,000 share options; 2008 – 260,000 share options; 2009 - 73,334 share options; 2011- 3,225,000 share options (ESOP No. 2);

2012 – 450,000 share options; 2013 – 150,000 share options.

3 Vesting conditions – three years of service.

On the exercise date the Company shall allot, in respect of each option so exercised, shares equal to the difference between (A) the opening price of the Company’s
shares on the LSE (or WSE under certain conditions) on the exercise date, provided that if the opening price exceeds GBP 3.24, the opening price shall be set at
GBP 3.24 (Except 2nd ESOP as stated above); less (B) the Exercise Price of the Options; and such difference (A minus B) will be divided by the opening price of
the Company’s Shares on the LSE (or WSE under certain conditions) on the exercise date:

Outstanding at the beginning of the year

Forfeited during the period - back to pool**

Outstanding at the end of the year

Exercisable at the end of the year

Weighted average

exercise price* 2015

GBP

0.43

0.36

0.43

Number of

Weighted average

exercise price* 2014

GBP

0.43

0.42

0.43

options

2015

24,442,373

(645,000)

23,797,373

23,469,040

Number of

options
2014

25,061,138

(618,765)

24,442,373

23,115,706

* The options outstanding at 31 December 2015 have an exercise price in the range of GBP 0.28 to GBP 0.54 (app. EUR 0.38 - EUR 0.74), and have weighted average remaining contractual

life of five years.

** The total accumulated share based payment costs due to options exercise and forfeiture were 13,284 thousand as of December 31, 2015 (December 31, 2014 – EUR 13,216 thousand,

December 31, 2013 – 13,073 thousand).

The maximum number of shares issuable upon exercise of all outstanding options as of the end of the reporting period is 35,460,414. The estimated fair value of
the services received is measured based on a binomial lattice model.

During 2015 the total employee costs for the share options granted was EUR 36 thousand (2014 - EUR 207 thousand).

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NOTE 21 - RENTAL INCOME

a. Shopping malls and plots

Rental income from operating shopping centers1

Other rental income2

Total

Year ended

December 31, 2015

December 31, 2014

€’000

18,085

591

18,676

€’000

21,343

769

22,112

1 2015 – four operating shopping centers presented as part of trading properties, 2014 – five, following the sale of Koregaon shopping center in May 2015 (refer to note 29(a)).

2 2015 and 2014 – Small scale rental fees charged on plots held by the Group.

b. Entertainment centers

Revenue from operation of entertainment centers is attributed to a subsidiary of the Company known as “Fantasy Park” which provided gaming and entertainment
services in operating shopping centers. As of December 31, 2015, this subsidiary operate in one shopping centre held by the group (December 31, 2014 – in one
shopping center).

NOTE 22 - COST OF OPERATIONS

a. Shopping malls and plots

Operating shopping centers1

Other cost of operations2

Total

1 Refer to note 21 above.

2 2015 and 2014 - Attributed to small scale costs on plots held by the Group.

b. Entertainment centers

Year ended

December 31, 2015

December 31, 2014

€’000

5,353

1,128

6,481

€’000

7,669

822

8,491

Refer also to note 21 (b) above. The costs are inclusive of management of the operation of the entertainment center, as well as utility, rent and spent material
associated with the operation of the entertainment center.

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NOTE 21,22,23,24

NOTE 23 - ADMINISTRATIVE EXPENSES AND RESTRUCTURING COSTS

a. Administrative expenses, excluding restructuring costs

Salaries and related expenses*

Professional services

Offices and office rent

Travelling and accommodation

Depreciation and amortization

Others

Total

Year ended

December 31, 2015

December 31, 2014

€’000

3,842

2,433

260

102

6,999

€’000

3,594

2,961

281

266

133

199

7,434

* 2015 – including retirement payments to two former CEO’s in a total amount of EUR 0.5 million (refer to note 29(M).

b. Restructuring costs

The Company incurred restructuring costs in 2014 as a result of the restructuring process completion during 2014 (refer to note 29(e)).

NOTE 24 - OTHER INCOME AND OTHER EXPENSES

Insurance indemnity payment – Koregaon Park Plaza

Gain from equity accounted investee EPI – credit balances waiver

Waiver of advanced payments obtained from potential buyer in India

Changes in provision PAB (refer to note 8)

Kochi advanced payment (refer to note 29(h))

Other income

Total other income

Impairments of other receivables and assets1

Loss from selling turbines, airplane and other2

Other expenses

Total other expenses

Other expense, net

1 2015 – Includes impairment of receivables associated with abandoned projects in a total amount of EUR 0.9 million.

2014 – Including impairment of Palazzo Du Calle office building in Romania in the amount of EUR 0.7 million.

2 2015 – Including loss from selling Palazzo Du Calle office building (refer to note 29(d) – EUR 0.2 million.

Year ended

December 31, 2015

December 31, 2014

€’000

Restated* €’000

1,174

725

686

4,653

7,307

(892)

(631)

(328)

(1,851)

5,456

2,287

197

2,484

(1,014)

(852)

(641)

(2,507)

(23)

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NOTE 25 - NET FINANCE COSTS

Recognised in profit or loss

Gain from settlement of bank debt (refer to note 29 (b) and (c))

Finance income from hedging activities through sale of options

Foreign currency gain on bank deposits and bank loans

Interest income on bank deposits

Finance income from held for trading financial assets

Interest from loans to related parties

Finance income

Interest expense on debentures

Amortization of discount*

Loss from early repayment of bonds

Interest expense on bank loans

Changes of fair value in debentures measured at fair value through profit or loss**

Finance costs from hedging activities through currency options sale

Foreign currency losses on debentures

Other finance expenses

Finance costs

Net finance costs

Year ended

December 31, 2015

December 31, 2014

€’000

13,481

366

104

315

14,292

(13,910)

(9,720)

(896)

(5,102)

(586)

(14,696)

(285)

(45,195)

(30,903)

€’000

622

217

202

1,263

(4,566)

(759)

(9,557)

(21,290)

(469)

(198)

(36,839)

(35,576)

* As the Company’s primary objective is to obtain the Deferral, the amortization of the discount is taking into account the repayment in 2016 of the minimum net amount, as mentioned in

note 2(c).

** Credit risk of the entity could not be reliably measure in 2014, as the Company started the year at a state of default in its payments, and no reliable cash flow projection could have been

measured.

NOTE 26 - INCOME TAXES

Amounts recognized in profit or loss

Current year tax expenses

Tax benefit (deferred tax expense) (refer to note 17)

Total

Deferred tax (expense) benefit

Origination and reversal of temporary differences

Year ended

December 31, 2015

December 31, 2014

€’000

(506)

(515)

(1,021)

€’000

(18)

1,300

1,282

Year ended

December 31, 2015

December 31, 2014

€’000

(515)

€’000

1,300

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NOTE 25,26

Reconciliation of effective tax rate:

Dutch statutory income tax rate

Loss from continuing operations before income taxes

Tax benefit at the Dutch statutory income tax rate

Recognition of previously unrecognized tax losses

Effect of tax rates in foreign jurisdictions

Current year tax loss for which no deferred tax asset is provided1

Non-deductible expenses (exempt income)

Tax Expense (Tax benefit)

1 2015 and 2014 – Mainly due to write-down of Trading property not recognized for tax purposes.

The main tax laws imposed on the Group companies in their countries of residence:

The Netherlands

25%

Year ended

December 31, 2015

December 31, 2014

€’000

25%

(45,095)

(11,274)

(1,021)

(995)

12,775

1,536

1,021

€’000

25%

(120,969)

(30,242)

(981)

6,356

18,695

4,890

(1,282)

a. Companies resident in the Netherlands are subject to corporate income tax at the general rate of 25%. The first EUR 200,000 of profits is taxed at a rate of

20%. Tax losses may be carried back for one year and carried forward for nine years.

b. Under the participation exemption rules income, including dividends and capital gains, derived by Netherlands companies in respect of qualifying investments
in the nominal paid up share capital of resident or non-resident investee companies, is exempt from Netherlands corporate income tax provided the conditions
as set under these rules have been satisfied. Such conditions require, among others, a minimum percentage ownership interest in the investee company and
require the investee company to satisfy at least one of the following tests:

- Motive Test, the investee company is not held as passive investment;
- Tax Test, the investee company is taxed locally at an effective rate of at least 10% (calculated based on Dutch tax accounting standards);
- Asset Test, the investee company owns (directly and indirectly) less than 50% low taxed passive assets.

Poland

Companies resident in Poland are subject to corporate income tax at the general rate of 19%. (capital gains bears the same tax rate). Tax losses may be carried
forward for five years, with only 50% of the loss is deductible in each tax year. Withholding tax on Dividend is at a rate of 19%, subject to European Union
regulations or Double Tax Treaties outstanding.

Czech Republic

Companies resident in the Czech Republic are subject to corporate income tax at the general rate of 19% (possible exemption in certain cases). Tax losses may
be carried forward for five years, subject to certain limitations. Dividends and interest paid to non-residents are subject to 15% withholding tax unless the rate is
reduced under an applicable treaty. Dividend paid to EU member state is exempt upon fulfilling certain criteria. 4% transfer tax is levied on real estate transfers.

Latvia

Companies resident in Latvia are subject to corporate income tax at the general rate of 15%. (capital gains bears the same tax rate). Tax losses may be carried
forward indefinitely (with exception for losses prior to 2008). There is no withholding tax on Dividend.

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NOTE 27 - FINANCIAL INSTRUMENTS

FINANCIAL RISK MANAGEMENT

Overview

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk
• Liquidity risk
• Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing
risk, and the Group’s management of capital.

The Board of Directors has established a continuous process for identifying and managing the risks faced by the Group (on a consolidated basis), and confirms
that it is responsible for taking appropriate actions to address any weaknesses identified.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to moni-
tor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Company’s Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to the risks faced by the Group.

a. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises
principally from the Group’s financial instruments held in banks and from other receivables.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount. The Group requires collateral in the form of mainly deposit equal to three months of rent from tenants of shopping centers
(collected deposits from tenants totalled EUR 1.4 million and EUR 2.4 million as at December 31, 2015 and 2014, respectively).

Cash and deposits and other financial assets.

The Group limits its exposure to credit risk in respect to cash and deposits, including held for sale financial assets (debt instruments) by investing mostly in
deposits and other financial instruments with counterparties that have a credit rating of at least investment grade from international rating agencies. Given these
credit ratings, management does not expect any counterparty to fail to meet its obligations.

b. Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. For detailed information refer to note 2(c).

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 (debentures issued in Israel and in Poland) that are denominated in a currency other than the
functional currency of the respective Group companies. The currencies in which these transactions primarily are denominated are the NIS or PLN.

The Company ceased the using of currency options and forwards effective October 2015 in order to maintain liquidity. Regarding currency and risk hedging of the
debentures refer also to note 11.

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NOTE 27

Interest Rate Risk (including inflation)

The Group’s interest rate risk arises mainly from short and long term borrowing (as well as debentures). Borrowings issued at variable interest rates expose the
Group to variability in cash flows. Borrowings issued at fixed interest rate (but are presented at their fair value) expose the Group to changes in fair value, if the in-
terest is changing. In certain cases, the Group uses IRS to minimize the exposure to interest risk by fixing the interest rate. Regarding interest rate risk hedging
of the debentures and bank facilities, refer to note 11. As the Israeli inflation risk is diminishing to a level that management believes is acceptable (Israeli CPI 2015
-1%; 2014 -0.2%), the Company stopped using hedging of CPI risk in 2012.

Shareholders’ equity management

Refer to note 18 in respect of shareholders’ equity components in the restructuring plan. 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. Refer also to note 18 on Dividend policy.

Credit risk

The carrying amount of financial assets represents the maximum credit exposure. The vast majority of financial assets are not passed due, and the management
believes that the unimpaired amounts that are past due by more than 60 days are still collectible in full, based on historic payment behavior and extensive analysis
of customer credit risk. The maximum exposure to credit risk at the reporting date was:

Cash and cash equivalents

Restricted bank deposits – short term

Held for trading financial assets

Trade receivables, net

Other accounts receivable

Loan to Diksna

Restricted bank deposits – long term

Total

Note

Credit quality

Mainly Baa3

Mainly BBB+

Mostly BB+

N/A

Carrying amount as

at December 31, 2015

at December 31, 2014

€’000

15,659

4,774

1,654

1,350

4,298

27,735

€’000

33,363

6,886

1,434

2,719

2,963

6,121

53,511

As of December 31, 2015 and 2014, all debtors without credit quality had a relationship of less than five years with the Group. At 31 December 2015, the aging of
trade and other receivables that were not impaired was as follows:

Neither past due nor impaired

Past due 1–90 days

Past due 91–120 days

Total

Carrying amount

December 31, 2015

December 31, 2014

€’000

1,151

578

1,275

3,004

€’000

1,160

1,130

3,392

5,682

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The maximum exposure to credit risk for the abovementioned table at the reporting date by type of debtor was as follows:

Banks and financial institutions

Tenants

Governmental institutions

Loan to Diksna

Related parties and other

Total

Liquidity risk*,***

Carrying amount

December 31, 2015

December 31, 2014

€’000

20,433

1,654

1,061

4,298

289

27,735

€’000

41,683

2,719

2,502

6,121

486

53,511

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

December 31, 2015

Derivative financial liabilities

IRS Derivatives

Non-derivative financial liabilities

Secured bank loans

Debentures issued

Trade and other payables

Related parties

Carrying Contractual

6 months

6-12

amount

cash flows

or less**

months**

1-2

years

2-5

More than

years

5 years

754

(790)

(230)

(227)

(333)

102,512

(107,644)

181,589

(238,347)

9,268

109

(9,268)

(109)

(32,432)

(33,034)

(9,268)

(109)

(2,822)

(48,267)

(24,123)

(60,472)

(18,115)

(116,667)

(10,059)

Total

293,478

(355,368)

(74,843)

(63,294)

(66,382)

(140,790)

(10,059)

* Refer also to note 2(c) for more information. This note assumes the minimum contractual payments on the debentures to achieve the Deferral.

** Refer also to note 2(c) for more information on debentures issued. Out of the total remaining amount of EUR 44.6 million expected for the next six months, the Company expects

contractual cash flows due to secured bank loans in the amount of EUR 29.4 million and trade and other payables in the amount of EUR 5.4 million to be revolved.

*** As the Company’s primary objective is to obtain the Deferral, this liquidity risk note is taking into account the repayment in 2016 of the minimum net amount, as mentioned in note 2(c).

December 31, 2014

Derivative financial liabilities

IRS Derivatives

Non-derivative financial liabilities

Secured bank loans

Debentures issued

Trade and other payables

Related parties

Carrying Contractual

6 months

6-12

amount

cash flows

or less**

months**

1-2

years

2-5

More than

years

5 years

989

(1,053)

(263)

(163)

(319)

(308)

150,847

(173,058)

(39,616)

162,862

(238,451)

(6,228)

15,068

1,161

(15,068)

(1,161)

(5,697)

(6,602)

(10,202)

(86,362)

(31,181)

(25,466)

(200,155)

Total

329,938

(427,738)

(62,073)

(12,299)

(35,668)

(286,517)

(31,181)

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NOTE 27

Currency risk

The Company’s main currency risk is in respect of its NIS denominated debentures. Following the discontinuance and full settlement of all currency options
effective October 2015, the Company is exposed to changes in EUR/NIS rate.

The following exchange rate of EUR/NIS applied during the year:

EUR

NIS 1

Reporting date

Average rate

2015

0.232

2014

0.211

Spot rate

2015

0.235

Spot rate

2014

0.212

PLN denominated debentures – A change of 6 percent in EUR/PLN rates at the reporting date would have increased/(decreased) profit or loss by EUR 0.8 million,
as a result of having issued PLN linked bonds.

NIS denominated debentures – A change of 11 percent in EUR/NIS rates at the reporting date would have increased/(decreased) profit or loss by EUR 18.5 million
(2014: EUR 14.8 million), as a result of having issued NIS linked bonds.

This effect assumes that all other variables, in particular CPI index, remain constant.

Interest rate risk

Profile
As of the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

Fixed rate instruments

Financial assets

Variable rate instruments
Debentures

Other financial liabilities

Total

Carrying amount

2015

€’000

2014

€’000

20,433

41,683

(181,589)

(102,512)

(162,862)

(150,847)

(284,101)

(313,709)

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Cash flow sensitivity analysis for variable rate instruments

A change of 53 basis points in Euribor interest rates (2014 – 5 basis points) at the reporting date 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. The analysis is performed on the same basis for
2014.

Variable Interest rate effect (excluding debentures)

December 31, 2015

December 31, 2014

NIS Debentures

Profit or Loss

Increase

Profit or Loss

Decrease

(500)

(75)

500

Sensitivity analysis – effect of changes in Israeli CPI on carrying amount of NIS debentures

A change of 3 percent in Israeli Consumer Price Index (“CPI”) at the reporting date (and in 2014) 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.

For the year ended

December 31,

2015

2014

Fair values

Carrying

amount of

debentures

168,632

149,635

Profit or loss effect

CPI

increase

effect

(5,059)

(4,489)

CPI

increase

effect

5,059

4,489

Fair values measurement versus carrying amounts

In respect to the Company’s financial asset instruments not presented at fair value, being mostly short term market interest bearing liquid balances, the Company
believes that the carrying amount approximates fair value. In respect the Company’s financial instruments liabilities:

For the Israeli debentures presented at amortized cost, the fair value would be the market quote of the relevant Israeli debenture, had they been measured at fair
value.

Debentures at amortized cost – Polish bonds

Debentures A at amortized cost – Israeli bonds

Debentures B at amortized cost – Israeli bonds

Carrying

amount

2015

12,957

59,072

109,560

Carrying

amount

2014

13,227

53,257

96,378

Fair

value

2015

11,569

50,172

91,614

Fair

value

2014

12,699

47,148

92,666

In respect of most of other non-listed borrowings, the Group was not asked to raise interest rates or to bring forward maturities as a result of the restructuring
procedure, as most financing banks do not expect the restructuring procedure to have a material effect on the security the banks hold under non-recourse loans,
and therefore the Company has a basis to believe that the fair value of non-listed borrowings approximates the carrying amount.

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NOTE 27

Fair value Hierarchy

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does
not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair
value:

Financial assets not measured at fair value

Cash and cash equivalents

Restricted bank deposits – short term

Held for trading financial assets

Trade receivables, net

Other receivables

Loan to Diksna

Restricted bank deposits – long term

Total

Financial liabilities not measured at fair value

Interest bearing loans from banks

Debentures at amortized cost

Trade and other payables

Related parties

Total

Financial liabilities measured at fair value

Derivatives

Total

Note

Fair value

hierarchy

Carrying amount as

at December 31, 2015

at December 31, 2014

€’000

Level 1

15,659

4,774

1,654

1,350

4,298

27,735

33,363

6,886

1,434

2,719

2,963

6,121

53,511

Fair value

hierarchy

Carrying amount as

at December 31, 2015

at December 31, 2014

€’000

Level 2

Fair value

hierarchy

Level 3

102,513

181,589

9,268

109

293,479

150,847

162,862

15,068

1,161

329,938

Carrying amount as

at December 31, 2015

at December 31, 2014

€’000

754

989

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NOTE 28 - CONTINGENT LIABILITIES AND COMMITMENTS

a. Contingent liabilities and commitments to related parties

1. In October 2006, the Company and EI entered into an agreement, pursuant to which with effect from 1 January 2006 the Company will pay commissions to EI
in respect of all and any outstanding corporate and first demand guarantees which have been issued by EI in favour of the Company up to 0.5% of the amount
or value of the guarantee, per annum. As of the end of the reporting period the Group has no outstanding guarantees from EI and no consideration was paid in
this respect.

2. On November 28, 2014 the Company entered into an indemnity agreement with all of the Company’s newly appointed directors and on June 20, 2011 with
part of the Company’s senior management – the maximum indemnification amount to be granted by the Company to the directors shall not exceed 25% of
the shareholders’ equity of the Company based on the shareholders’ equity set forth in the Company’s last consolidated financial statements prior to such
payment. No consideration was paid by the Company in this respect since the agreement was signed.

3. The Company maintains Directors’ and Officers’ liability cover, presently at the maximum amount of USD 60 million for a term of 12 months commencing on

29 April 2015. Pursuant to the terms of this policy, all the Directors and senior manager are insured. The new policy does not exclude past public offerings and
covers the risk that may be incurred by the Directors through future public offerings of equity up to the amount of USD 50 million.

b. Contingent liabilities and Commitments to others

1. As part of the completion of the restructuring plan (refer also to note 29 (e)), the Group has taken the following commitments and collaterals towards the

creditors:

a. Restrictions on issuance of additional debentures – The Company undertakes not to issue any additional debentures other than as expressly provided for

in the Restructuring Plan.

b. Restrictions on amendments to the terms of the debentures – The Company shall not be entitled to amend the terms of the debentures, with the

exception of purely technical changes, unless such amendment is approved under the terms of the relevant series and the applicable law and the Company
also obtains the approval of the holders of all other series of debentures issued by the Company by ordinary majority.

c. Coverage Ratio Covenant (“CRC”) – The CRC is a fraction calculation based on known Group valuations reports and consolidated financial information

available at each reporting period. Minimum CRC deemed to be complied with by the Group is 118% in each reporting period. For the December 31, 2015
calculated CRC refer to note 29 (k). In the event that the CRC is lower than the Minimum CRC, then as from the first cut-off date on which a breach of the
CRC has been established and for as long as the breach is continuing, the Company shall not perform any of the following: (a) a sale, directly or indirectly,
of a Real Estate Asset (“REA”) owned by the Company or a subsidiary, with the exception that it shall be permitted to transfer REA’s in performance of an
obligation to do so that was entered into prior to the said cut-off date, (b) investments in new REA’s; or (c) an investments that regards an existing project
of the Company or of a subsidiary, unless it does not exceed a level of 20% of the construction cost of such project (as approved by the lending bank of
these projects) and the certain loan to cost ratio of the projects are met.

If a breach of the Minimum CRC has occurred and continued throughout a period comprising two consecutive quarterly reports following the first
quarterly/year end report on which such breach has been established, then such breach shall constitute an event of default under the trust deeds and Polish
debentures terms, and the group of (i) Series A Debentures holders, (ii) Series B Debentures holders, (iii) Polish Debentures holders, and (iv) guarantee
and other creditors shall, each as a separate group acting by majority vote, be entitled to declare by written notice to the Company that all or a part of their
respective (remaining) claims become immediately due and payable.

d. Minimum Cash Reserve Covenant (“MCRC”) – The cash reserve of the Company has to be greater than the amount estimated by the Company’s

management required to pay all administrative and general expenses and interest payments to the debenture holders falling due in the following six
months, minus sums of proceeds from transactions that have already been signed (by the Company or a subsidiary) and closed and to the expectation of
the Company’s management have a high probability of being received during the following six months. MCRC is maintained as of December 31, 2015.

e. Negative Pledge on REA of the Company – The Company undertakes that until the debentures has been repaid in full, it shall not create any encumbrance

on any of the REA, held, directly or indirectly, by the Company except in the event that the encumbrance is created over the Company’s interests in a
subsidiary as additional security for financial indebtedness (“FI”) incurred by such subsidiary which is secured by encumbrances on assets owned by that
subsidiary.

f. Negative Pledge on the REA of Subsidiaries – The subsidiaries shall undertake that until the debentures have been repaid in full, none of them will create

any encumbrance on any of REA except in the event that:

(i) the subsidiary creates an encumbrance over a REA owned by such subsidiary exclusively as security for new FI incurred for the purpose of purchasing,
investing in or developing such REA; Notwithstanding the aforesaid, subsidiaries shall be entitled to create an encumbrance on land as security for

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NOTE 28

FI incurred for the purpose of investing in and developing, but not for purchasing, an REA held by a different Group company (hereinafter: a “Cross
Pledge”), provided the total value of the lands owned by the Group charged with Cross Pledges after the commencement date of the plan does not
exceed EUR 35 million, calculated on the basis of book value (the “Sum of Cross Pledges“). When calculating the Sum of Cross Pledges, lands that
were charged with Cross Pledges created prior to the commencement date of the plan or created solely for the purpose of refinancing an existing FI
shall be excluded. The Group did not have cross-default as of December 31, 2015.

(ii) The encumbrance is created over an asset as security for new FI that replaces existing FI and such asset was already encumbered prior to the

refinancing. Any excess net cash flow generated from such refinancing, shall be subject to the mandatory early prepayment of 75%.

(iii) The encumbrance is created over interests in a Subsidiary as additional security for FI incurred by such subsidiary which is secured by encumbrances

on assets owned by that subsidiary as permitted by sub-section (i) above. The encumbrance is created as security for new FI that is incurred for
purposes other than the purchase of and/or investment in and development of an REA, provided that at least 75% of the net cash flow generated from
such new FI is used for mandatory early prepayment.

g. Limitations on incurring new FI by the Company and the subsidiaries – The Company undertakes not to incur any new FI (including by way of refinancing
an existing FI with new FI) until the outstanding debentures debt (as of November 30, 2014) have been repaid in full, except in any of the following events:

(i) the new FI is incurred for the purpose of investing in the development of a REA, provided that: (a) the Loan To Cost (“LTC”) Ratio of the investment
is not less than 50% (or 40% in special cases); (b) the new FI is incurred by the subsidiary that owns the REA or, if the FI is incurred by a different
subsidiary, any encumbrance created as security for such new FI is permitted under the negative pledge stipulation above; and (c) following such
investment the consolidated cash is not less than the MCRC;

(ii) The new FI is incurred by a subsidiary for the purpose of purchasing a new REA by such Subsidiary, provided that following such purchase the cash

reserve is not less than the MCRC.

(iii) At least 75% of the net cash flow resulting from the incurrence of new FI is used for a 75% early prepayment of the debentures. Subject to the terms of

the plan, the Group may also refinance existing FI if this does not generate net cash flow.

h. No distribution policy – Refer to note 18 on Dividend Policy.

i. 75% mandatory early repayment – Refer to note 29(e) and to other sections in this note.

j. Permitted Disposals – provisions with respect to the four shopping malls – the Company will be allowed to sell the four shopping malls (Torun, Suwalki,
Kragujevac and Riga) or to perform refinancing for any of these (hereinafter: “Disposal Event”), subject to the cumulative net cash flow in the Disposal
Event in respect of these four shopping malls being no less than EUR 70 million. In case no Disposal Event occurs for the four shopping malls together,
the Company will be allowed to perform a special purpose Disposal Event only if after execution of the special purpose Disposal Event, the surplus value
of shopping malls not sold (according to the valuation deducting the specific debt to banks) is no less than EUR 70 million, deducting the net cash flows
received from previous Disposal Events and deducting the net cash flows from the special purpose Disposal Event.

2. General commitments and warranties in respect of trading property disposals.

In the framework of the transactions for the sale of the Group’s real estate assets, the Group has undertaken to indemnify the respective purchasers for any
losses and costs incurred in connection with the sale transactions. The indemnifications usually include: (i) Indemnifications in respect of completeness
of title on the assets and/or the shares sold (i.e that the assets and/or the shares sold are owned by the Group and are clean from any encumbrances and/
or mortgage and the like). Such indemnifications generally survived indefinitely and are capped to the purchase price in each respective transaction; and (ii)
Indemnifications in respect of other representation and warranties included in the sales agreements (such as: development of the project, responsibility to
defects in the development project, tax matter and others).

Such indemnifications are limited in time (generally 3 years from signing a closing agreement) and are generally capped to 25% to 50% of the purchase price.
No indemnifications were provided by the Group till the date of the statement of financial position.

The Hungarian tax authorities have challenged the applied tax treatment in two of the entities previously sold in Hungary by the Company to Klepierre in
the course of the Framework Agreement dated 30 July, 2004 (“Framework Agreement”). In respect of two of the former subsidiaries of the Company, the
tax authorities decision of reducing the tax base by and imposed a penalty in the sum of HUF 428.5 Million (circa EUR 1.4 million), were challenged by the
previously held entities at the competent courts.

Klepierre has submitted an indemnification request claiming that the tax assessed in the described procedures falls into the scope of the Framework
Agreement tax indemnification provisions and the Company in its response rejected such claims. Subsequently Klepierre has submitted a claim to the
International Chamber of Commerce in Brussels for arbitration procedure. As of the reporting date the procedure is still undergoing, the last hearing was held
on February 29, 2016, while the decision of the arbitrary court is expected in the third quarter of 2016.

The Company’s management estimates that no significant costs will be borne thereby, in respect of these indemnifications.

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3. Tesco - The Company is liable to the buyer of its previously owned shopping center in the Czech Republic (“NOVO”) – sold in June 2006 - in respect to one
of its tenants (“Tesco”). Tesco leased an area within the shopping center for a period of 30 years, with an option to extend the lease period for an additional
30 years, in consideration for EUR 6.9 million which was paid in advance. According to the lease agreement, the tenant has the right to terminate the lease
agreement subject to fulfilment of certain conditions as stipulated in the agreement. The Company’s management believes that it is not probable that this
commitment will result in any material amount being paid by the Company.

4. The Company is retaining a 100% holding in all its projects in Serbia after it was decided to discontinue the negotiations with a Serbian developer.

The Company has a contingent obligation to pay the developer in any case there is major progress in the projects. The total remaining potential obligation is
EUR 0.8 million.

5. Apart from point 4 above, the Company has contractual commitments in respect of its project in Serbia (Visnjicka) in a total amount of EUR 2 million in respect

of construction activities, to be paid during 2016 and 2017.

c. Contingent liabilities due to legal proceedings

The Company is involved in litigation arising in the ordinary course of its business. Although the final outcome of each of these cases cannot be estimated at
this time, the Company’s management believes, that the chances these litigations will result in any outflow of resources to settle them is remote, and therefore
no provision or disclosure is required.

d. Securities, guarantees and liens under bank finance agreements with subsidiaries

1. Certain companies within the Group which are engaged in the purchase, construction or operation of shopping centres (“Project Companies”) have secured

their respective credit facilities (with withdrawn facility amounts totalling EUR 130 million, as of December 31, 2015) awarded by financing banks (for projects
in Poland and Latvia), by providing first or second ranking (fixed or floating) charges on property owned thereby, including right in and to real estate property
as well as the financed projects, on rights pertaining to certain contracts (including lease, operation and management agreements), on rights arising from
insurance policies, and the like. Shares of certain Project Companies were also pledged in favour of the financing banks.

In respect of a corporate guarantee for the fulfilment of its subsidiaries obligations under loan agreements, refer to note 12.

Shareholders loans as well as any other rights and/or interests of shareholders in and to the Project Companies were subordinated to the respective credit

facilities.

Payment to the shareholders is permitted (including the distribution of dividends but excluding management fees) subject to fulfilling certain preconditions.

Certain loan agreements include an undertaking to fulfil certain financial and operational covenants throughout the duration of the credit, namely: complying
with “a minimum debt services cover ratio”, “loan outstanding amount” to secured assets value ratio; complying with certain restrictions on interest rates;
maintaining certain cash balances for current operations; maintaining equity to project cost ratio and net profit to current bank’s debt; occupancy percentage
and others. In respect of breach of covenants, refer to note 12.

The Project Companies undertook not to make any disposition in and to the secured assets, not to sell, transfer or lease any substantial part of their assets

without the prior consent of the financing bank.

In certain events the Project Companies undertook not to allow, without the prior consent of the financing bank:

(i) any changes in and to the holding structure of the Project Companies nor to allow for any change in their incorporation documents;
(ii) execution of any significant activities, including issuance of shares, related party transactions and significant transactions not in the ordinary course of

business;

(iii) certain changes to the scope of the project;
(iv) the assumption of certain liabilities by the Project Companies in favour of third parties;
(v) Receipt of loans by the Project Companies and/or the provision thereby of a guarantee to third parties; and the like.

2. Commitment in respect of derivative transaction

Within the framework of derivative transactions (refer to note 11), executed between the Group and commercial banks (the “Banks”), the Group agreed to

provide the Banks with collaterals or cash deposits.

Accordingly, and in respect of Torun IRS the project company also established a bail mortgage up to EUR 5.4 million encumbering the real estate project.

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NOTE 29

NOTE 29 - SIGNIFICANT EVENTS

A. Selling of the SPV holding Koregaon park shopping center in Pune, India

On May 13, 2015, the Company signed an agreement to sell the SPV holding Koregaon Park Plaza, the retail, entertainment and office scheme located in
Pune, India for circa EUR 35 million (2,500 million INR). The net cash proceeds received (after repayment of the related bank loan, other liabilities and
transaction costs) from the sale totalled EUR 7.4 million (525 million INR). In line with the Company stated restructuring plan, all the net cash proceeds
from the transaction were retained within the Company. The Company recorded a loss of EUR 6.5 million from this transaction due to realization of foreign
currency translation reserve accumulated relating to the SPV. An additional loss of EUR 2.3 million was recorded mainly due to the impairment of various
related receivables.

B. Selling of undeveloped plots in Romania

On June 24, 2015, the Company reached an agreement to sell its 46,500 sqm development site in Iasi, Romania in two separate transactions (one for the

sale of 37,334 sqm and the other for the sale of 9,166 sqm), for a gross consideration of EUR 7.3 million. There was neither bank debt secured against the
property, nor profit or loss recorded as a result of the transaction.

In May 2015, the Company concluded (through its 50.1% held subsidiary (“Plaza Bas”)) the sale of a circa 17,000 sqm plot in Brasov, Romania for a total
consideration of EUR 330,000. No profit or loss resulted from this transaction.

In June 2015 the Company concluded an additional sale (by Plaza Bas) of an SPV holding circa 1,200 sqm plot in Ploiesti, Romania for a total consideration
of EUR 240,000. The proceeds were used to repay an outstanding bank loan and no proceeds were obtained by the Group. A waiver was obtained for the
remaining of the unpaid bank loan facility in a total amount of EUR 1.4 million and the Company recorded accordingly a gain, included as finance income in
these reports.

In line with the Company’s stated restructuring plan, 75% of the net cash proceeds from the abovementioned transactions (where applicable) were distributed
to the Company’s bondholders as an early repayment in late September 2015.

C. Liberec Plaza – settlement with financing bank

On September 29, 2015, one of the Company’s wholly owned subsidiaries won a tender to buy the bank loan to the wholly owned SPV of Liberec Plaza

shopping and entertainment centre in the Czech Republic.

A EUR 20.4 million bank facility was provided by two commercial banks to which the Company agreed to pay and paid an amount of EUR 8.5 million, reflecting
a discount of 58%. The Company recorded a EUR 11.9 million profit on the discount in these financial statements, included as finance income.

D. Sale of an office building in Romania

In September 2015, the Company sold Palazzo Ducale, its wholly owned office building of 823 sqm GLA in Bucharest, Romania, for circa EUR 1.1 million, and
recorded a small impairment of EUR 0.2 million.

In line with the Company stated restructuring plan, 75% of the net cash proceeds from the abovementioned transaction were distributed to the Company’s
bondholders as an early repayment in late September 2015.

E. Restructuring plan

On November 14, 2013, the Company announced that its board of directors concluded that the Company would withhold payment on the upcoming

maturities of its bonds and approach its creditors with a restructuring plan. The restructuring plan was approved on June 26, 2014 by the vast majority of the
creditors, and subsequently approved by the Court on July 9, 2014, becoming an irrevocable decision on July 21, 2014. The Company announced publication
of a prospectus in respect of a Rights offering on October 16, 2014. The Shareholders approved the Rights offering on November 28, 2014 followed by a
capital injection of EUR 20 million by existing shareholders of the Company on that date. All conditions precedent of the restructuring plan were fulfilled until
November 30, 2014.

Actual first payment of both principal and interest to Debentures occurred on January 7, 2015, with the Company transferring all funds already effective
December 23, 2014 to governing authorities.

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The following are material commercial features of the restructuring plan:

• An injection of a EUR 20 million into the Company at a price per-share of EUR 0.0675, (“Equity Contribution”, refer also to note 18).

• The Company issued to the holders of unsecured debt (i.e., outstanding debt under the Israeli Series A and B Notes and the Polish Notes) (“Unsecured

Debt”) 13.21% of the Company’s shares (post Equity Contribution) for payment of par value of shares. Such shares issuance was distributed among the
holders of Unsecured Debt pro rata to the relative share of each relevant creditor in the Deferred Debt (“Deferred Debt Ratio”).

• Each principal payment under the debentures due in the years 2013, 2014 and 2015 pursuant to the original terms of the debentures shall be deferred by

exactly four and a half years and each principal payment due pursuant to the original terms of the debentures in subsequent years (i.e., 2016 and 2017) will
be deferred by exactly one year.

•

In the event that the Company does not succeed in prepaying an aggregate amount of at least NIS 434 million (EUR 102 million) of the principal of the
debentures, excluding linkage differentials within a period of two years before 1 December 2016, then all principal payments under the debentures deferred
in accordance with above, shall be advanced by one year (i.e., shall become due one year earlier).

• All unpaid interest accrued on the Israeli debentures and polish debentures until and including December 31, 2013 will be added to the principal and paid

together with it.

• As of 1 January 2014, the annual interest rate of the Unsecured Debt shall be increased by 1.5%.

• The Company paid to the holders of the Unsecured Debt an amount of EUR 13.8 million of 2014 interest payments.

• The Company, its directors and officers and its controlling shareholder are fully released from claims.

• The net cash flow received by the Company following an exit or raising new FI (except if taken for the purpose of purchase, investment or development
of real estate asset) or refinancing of REA’s 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 centers only 50% of the interest) and 75% 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.

• The restructuring plan also includes, inter alia: (i) certain limitations on distribution of dividends, actual investments and incurring of new indebtedness
(refer to note 18); (ii) negative pledge on direct and indirect holdings of the Company on real estate assets (refer also to note 28 (b)); (iii) financial
covenants and undertakings of the Company with respect to the sale and financing of certain projects and investment in new projects (refer also to note
28(b) and to note 29(k) below); (iv) compliance with financial covenants CRC and MCRC (refer to note 28(b) and (v) commitment to publish quarterly
financial statements as long as the Unsecured Debt is outstanding.

F. Update in respect of the Bangalore and Chennai projects

Bangalore

In March, 2008, EPI entered into an amended and reinstated share subscription and framework agreement (the “Amended Framework Agreement”), with a
third party (the “Partner”), and a wholly owned Indian subsidiary of EPI which was designated for this purpose (“SPV”), to acquire, through the SPV, up to 440
acres of land in Bangalore, India (the “Property”) in certain phases as set forth in the Amended Framework Agreement.

As of December 31, 2015, the SPV holds joint development rights in approximately 54 acres of the Property for a total aggregate consideration of
approximately INR 2,843 million (EUR 40 million). In addition, the SPV has paid to the Partner advances of approximately INR 2,536 million (EUR 35 million)
on account of future acquisitions by the SPV of a further 51.6 acres.

On December 2, 2015, EPI signed an agreement to sell 100% of its interest in the SPV to the Partner. The total consideration for the sale upon completion of

the transaction is INR 321 Crores (approximately EUR 45.4 million, the Company part is expected to be 50% of this amount, i.e EUR 22.7 million) which will be
paid at transaction closing.

The transaction is subject to certain conditions precedent, and closing will take place once these conditions are met and no later than 30 September 2016.
The Investor has provided certain security in order to guarantee the aforementioned deadline.

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NOTE 29

Chennai

In December 2007, EPI executed agreements for the establishment of a special purpose vehicle (“Chennai Project SPV”) together with a local developer in
Chennai (“Local Partner”). The Chennai Project SPV acquired 74.3 acres of land situated in the Sipcot Hi-Tech Park in Siruseri District in Chennai, India in
consideration of a total of INR 2,367 million (EUR 31 million) (EPI share). In addition, as of December 31, 2015, EPI paid advances in the amount of INR 564
million (EUR 7 million) in order to secure acquisition of an additional 8.4 acres.

EPI holds 80% of the equity and voting rights in the Chennai Project SPV, while the Local Partner holds the remaining 20%.

The Chennai Project was designated at the end of 2014 as project for development. During 2015, due to changes in the Group’s activities and objectives,
Management has decided not to develop the Chennai project but rather to dispose it in its current situation. In this respect, on September 16, 2015, EPI has
obtained a backstop commitment for the purchase of Chennai, India Scheme.

EPI, which has been in discussions regarding the sale of Chennai Project SPV, has obtained a commitment that, subject to the fulfilment of certain conditions
precedent, the sale transaction will be completed by 15th of January 2016 (the “Long Stop Date”) for the consideration of approximately EUR 21.6 million (INR
1,617 millions), net of all transaction related costs. If the completion did not take place by the Long Stop Date, then EPI’s stake in the Chennai Project SPV
would be increased to 100%. In line with the Sale Transaction agreement, since the local Indian partner (the “Partner”) failed to complete the transaction by
the Long Stop Date, EPI exercised its right to get the Partner’s 20% holdings in the Indian company, Kadavanthara Builders Private Limited.

G. Additional write-downs

For additional write-downs information refer to note 8.

H. Kochi project advanced payment settlement

In November 2013, the Company exercised the corporate guarantee in the amount of EUR 4.3 million including interest thereon up till such date
(the “Reimbursement Payment”) provided by EI to the Company in the framework of the Indian JV Agreement on the ground of EI’s default to finalize and
conclude the transfer of the Kochi Project Rights to the Indian JV Vehicle. Due to uncertainty concerning the recovery of the receivable, the Company has
impaired the Reimbursement payment in its 2013 financial statements.

In June 2015, the Company reached an agreement with EI, based on the mentioned JV Agreement and its ancillary documents (including corporate guarantee
issued by EI in favour of the Company), following which EI was obliged to repay the Reimbursement amount in few instalments until mid-2018.

As a result of the agreement reached, the Company recorded a gain of EUR 4.6 million, included as other income in the statement of profit or loss.
Group liabilities towards EI in the amount of EUR 0.8 million) were offset from this balance, with partial repayment of EUR 1 million performed in late
September 2015, thus balance as of December 31, 2015 is EUR 2.8 million (including accrued interest on remaining balance).

I. Sale of Cina property in Bucharest

On March 13, 2015, one of the Company’s subsidiaries in Romania, having a 49 years leasehold rights over a plot in Bucharest, Romania (“Property” and
“Rights”, respectively), signed a pre-agreement for waiving its Rights for a certain consideration to be further agreed with the owner of the Property (a
subsidiary of EI) and approved by the relevant organs of these entities.

On December 14, 2015 the Romanian subsidiary concluded the transaction to waive its leasing rights to the Cina property in Bucharest, which was sold by

the owner. The gross cash proceeds due to Plaza’s subsidiary was EUR 2.7 million (out of a total consideration of EUR 4 million) and the net proceeds, after
related taxes and transaction costs, was circa EUR 2.2 million. The Company recorded a gain of EUR 2.6 million in its income statement.

In line with the Company’s stated restructuring plan, 75% of the net cash proceeds from the transaction will be distributed to the Company’s bondholders by
the end of March 2016 as an early principal repayment.

J. Advance payment settlement in Koregaon park shopping center in Pune, India

In respect of one of the advances provided in 2013 and 2014 to the sold SPV in Pune (refer to note 29(a)) in the amount of INR 200 million (EUR 2.6 million),
the Company reached a settlement in February 2015 with the potential buyer to settle the liability, in view of the cancellation of the signed pre-agreements,
to refund the potential buyer with INR 150 (EUR 1.9 million) of advances received. The Company recorded a gain of INR 50 million (EUR 0.7 million) as a
result of this settlement, included as part of other income in the statement of profit or loss.

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K. Update on covenants

In respect of covenants update on bank facilities, refer to note 12. In respect of the CRC, as defined in the restructuring plan, as of December 31, 2015 the CRC
was 129%, in comparison with 118% minimum ratio required.

L. Treasury bond held

As of December 31, 2015, the Company holds through its wholly owned subsidiary 14.7 million NIS par value bonds in series B debentures (adjusted par value
of NIS 17.0 million (EUR 4.0 million).

M. Key management personnel compensation

As a result of the termination of the services of the Group’s CEO, the CEO received his retirement entitlement. Accordingly, the Group has recognised an
expense of EUR 400,000 for the year ended December 31, 2015 (2014: nil).

N. Building permits obtained

In July 2015, the Company received the building permit to develop Timisoara Plaza, a circa 40,000 sqm GLA shopping and entertainment centre in Timisoara,
western Romania. A binding financing offer has also been agreed with a commercial bank for circa 65% of the project cost.

Also in July 2015, the Company received the building permit to develop Belgrade Plaza (Visnjicka), a circa 32,000 sqm GLA shopping and entertainment centre
in Belgrade, Serbia.

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NOTE 30

NOTE 30 - RELATED PARTY TRANSACTIONS

Related party transactions

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between
the Group and other related parties are disclosed below.

The Company currently has five directors. The annual remuneration of the directors in 2015 amounted to EUR 0.6 million (2014 – EUR 1 million) and the annual
share based payments expenses was nil in 2015 (2014- EUR 20,000). There was no change in the number of Company share options granted to key personnel in
2015. There are no other benefits granted to directors. For information about related party balances as of December 31, 2015 and 2014 refer to notes 14 and in
respect of details of the Kochi transaction, refer to note 29(h). In respect of the CIna transaction, refer to note 29(i).

Trading transactions

During the year, Group entities had the following trading transactions with related parties that are not members of the Group:

Income

Interest on balances with EI

Costs and expenses

Recharges - EI

Previous executive director1

Compensation to key management personnel2

Lease agreement on plot in Bucharest3

Lease agreement for office in Bucharest

For the year ended

December 31, 2015

December 31, 2014

€’000

181

264

469

194

115

1 The Executive director, who is also the former controlling shareholder of the ultimate parent company, was receiving an annual salary of USD 300,000, until July 2014.

2 Due to termination of agreements with the former Chief Executive officers (refer also to note 29(m)).

3 The Company signed in 2007 a 49 year lease agreement with a subsidiary of EI for monthly fees of EUR 5,000 on a plot located in Bucharest, Romania. Refer also to note 29(i) regarding

the waiver of lease rights.

As of December 31, 2015, the Company identified York Capital Management Global Advisors, LLC (“York”) and Davidson Kempner Capital Management LLC
(“DK”) as the Company’s related parties.

DK holds 26.3% of the Company’s outstanding shares of the Company as of the reporting date, following the finalization of the Restructuring plan. DK has no
outstanding balance as of the reporting date with any of the Group companies. York is the main shareholder in EI, holding 19.8% of the outstanding shares of EI,
and also has a direct holding of 3.6% in the Company’s shares. There were no transactions with DK or York in the reporting period and there are no outstanding
balances with DK or York.

DK and York are holding, as of December 31, 2015, 22% out of the total Israeli debentures debt of the Company.

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NOTE 31 - OPERATING SEGMENTS

The Group comprises the following main reportable geographical segments: CEE and India. None of the Group’s tenants accounts for more than 10% of the
total revenue. Also, no revenue is derived in the Netherlands, where the Company is domiciled. The Group’s CEO reviews the internal management reports of
each segment at least quarterly. In presenting information on the basis of geographical segments, segment revenue is based on the revenue resulted from either
the selling or operating of assets geographically located in the relevant segment. Refer to note 8 for further detail by property on carrying amounts of Trading
Properties and note 12 for detail on project secured bank loans by property.

Year ended December 31, 2015

NOI1

Sale of properties (Koregaon Park/Cina)

Income from operation/selling

Net finance costs2

Net expenses from operation of other CEE assets (plots, Fantasy park)

Other expenses, net

Write-downs3

Share in results of equity-accounted investees

Central & Eastern Europe

€’000

16,420

2,589

19,009

(5,094)

(838)

(527)

(17,843)

India

€’000

(41)

(8,802)

(8,843)

(846)

1,330

(1,540)

(1,755)

Reportable segment loss before tax

(5,293)

(11,654)

Less - general and administrative

Other income – Dutch level (refer to note 29(h))

Unallocated finance costs (Dutch corporate level- mainly debentures finance cost)

Loss before income taxes

Income tax expense

Loss for the year

Assets and liabilities as at December 31, 2015

Total segment assets3

Unallocated assets (Mainly Cash and other financial instruments held on Dutch level)

341.849

25,779

Total assets

Segment liabilities

Unallocated liabilities (Mainly debentures)

Total liabilities

126,372

Total

€’000

16,379

(6,213)

10,166

(5,940)

(838)

803

(19,383)

(1,755)

(16,947)

(6,999)

4,653

(25,802)

(45,095)

(1,021)

(46,116)

367,628

24,383

392,011

126,426

182,717

309,143

1 NOI – net operating income earned by shopping malls, including Company’s part in equity accounted investee Diksna, which holds Riga Plaza (refer to note 10). NOI earned in Poland –

EUR 11.9 million.

2 CEE – Including net finance cost of EUR 0.8 due to equity accounted investee Diksna.

3 Refer to note 8 for the breakdown of trading properties impairments by location.

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NOTE 31

Year ended December 31, 2014

NOI1

Sale of properties (Bas)

Income from operation/selling

Net finance costs2

Net expenses from operation of other CEE assets (plots, Fantasy park)

Other expenses, net

Write-downs3

Share in results of equity-accounted investees

Central & Eastern Europe

€’000

18,903

(4,048)

14,855

(6,747)

(266)

(2,310)

(77,211)

India

€’000

(1,135)

(3,165)

2,287

(11,965)

(2,365)

Reportable segment loss before tax

(71,679)

(16,343)

Less – general and administrative

Other income/expenses – restructuring costs and gain

Unallocated finance costs (Dutch corporate level- mainly debentures finance cost)

Loss before income taxes

Income tax expense

Loss for the year

Assets and liabilities as at December 31, 2014

Total segment assets3

Unallocated assets (Mainly Cash and other financial instruments held on Dutch level)

362,910

62,584

Total assets

Segment liabilities

Unallocated liabilities (Mainly debentures)

Total liabilities

153,547

29,523

Total

€’000

17,768

(4,048)

13,720

(9,912)

(266)

(23)

(89,176)

(2,365)

(88,022)

(7,434)

1,055

(26,568)

(120,969)

1,282

(119,687)

425,494

40,603

466,097

183,070

163,454

346,524

1 NOI – net operating income earned by shopping malls, including Company’s part in equity accounted investee Diksna, which holds Riga Plaza (refer to note 10). NOI earned in Poland –

EUR 11.8 million

2 CEE – Including net finance cost of EUR 0.9 due to equity accounted investee Diksna.

3 Refer to note 8 for the breakdown of trading properties impairments by location.

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NOTE 32 - EVENTS AFTER THE REPORTING PERIOD

A. Disposal of a shopping center in the Czech Republic

On March 4, 2016 the Company agreed to sell its subsidiary holding Liberec Plaza, a shopping and entertainment centre in the Czech Republic,

for EUR 9.5 million. In line with the terms of the agreement, the buyer has deposited 15% of the consideration in escrow.

The due diligence process, final closing and settlement is expected to conclude by the end of March.

The disposal follows an agreement announced by the Company in September 2015 (refer to note 29(C)) whereby a wholly owned subsidiary of the Company
(”PCE”) won a tender to buy the loan to the holding and operating company for Liberec Plaza for EUR 8.5 million.

Upon completion of the Liberec Plaza disposal, PCE will receive EUR 8.5 million on account of the bank loan it previously purchased. Out of the remaining
proceeds, at least 75% will be distributed to the Company’s bondholders by the end of June this year, in line with the Company’s stated restructuring plan.

B. Disposal of a plot in Romania

On March 24, 2016 the Company sold its 23,880 sqm site in Slatina, Romania, to a third party developer for EUR 0.66 million, consistent with the asset’s last

reported book value.

In line with the Company’s stated restructuring plan, 75% of the cash proceeds will be distributed to the Company’s bondholders by the end of June 2016 as
an early repayment.

C. Change in remuneration of Chairman of the Board

Effective February 2016 the monthly remuneration of the Chairman of the Board of the Company was reduced from USD 20,000 to USD 18,000.

NOTE 33 - BASIS OF MEASUREMENT

The consolidated financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis
on each reporting date

Derivative financial instruments
Held for trading financial assets (2014)

Fair value
Fair value

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NOTE 34 - SIGNIFICANT ACCOUNTING POLICIES

The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements.

A. Basis of consolidation

1. Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control commences until the date on which control ceases.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group

in the consolidated financial statements.

2. Interests in equity-accounted investees

The Group’s interests in equity-accounted investees comprise interests in associates and joint ventures.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint
venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its
assets and obligations for its liabilities.

Interests in associates and the joint venture are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs.
Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of
equity-accounted investees, until the date on which significant influence or joint control ceases.

3. Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Changes in the Group’s

interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

4. Transactions eliminated on consolidation

Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are eliminated. Unrealised gains arising
from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

b. Foreign currency

1. Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group companies at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the
fair value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary items that are measured based on historical
cost in a foreign currency are not translated.

However, foreign currency differences arising from the translation of available-for-sale equity investments (except on impairment in which case foreign
currency differences that have been recognised in other comprehensive income are reclassified to profit or loss) are recognised in other comprehensive
income.

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.

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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.

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.

c. Financial instruments

1. Non-derivative financial assets and financial liabilities – recognition and de-recognition.

The Group initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial
liabilities are initially recognised on the trade date.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor
retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised
financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a
legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Refer to note 27
for the list of Non-derivative financial assets and financial liabilities.

2. Non-derivative financial assets – measurement

Cash and cash equivalents and restricted bank deposits

In the consolidated statement of cash flows, cash and cash equivalents includes bank deposits deposited for periods which do not exceed three months.
Restricted bank deposits are deposit restricted due to bank facilities and derivatives entered into.

Loans and receivables

These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured
at amortised cost using the effective interest method. The collectability of receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectable are written off in the period in which they are identified. Doubtful receivables are impaired when there is objective evidence that the Group will
not collect all amounts due. These types of assets are discussed in note 6, 7a and 7b.

Held for trading financial assets

These assets are initially recognised at fair value. Subsequent to initial recognition, they are measured at fair value and changes therein, are recognised in
statement of profit or loss.

3. Non-derivative financial liabilities

Financial assets at fair value through profit or loss

A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly
attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and
changes therein, including any interest or dividend income, are recognised in profit or loss.

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NOTE 34

Financial Liabilities at fair value through profit or loss

Financial Liabilities at fair value through profit or loss included in 2014 selected unsecured non-convertible Debentures series A and series B
(refer to note 16).

Upon initial recognition a financial liability may be designated by the Company at fair value through profit or loss. Financial instruments are designated at fair
value through profit or loss if the Group manages such instruments and makes purchase and sale decisions based on their fair value in accordance with the
Group’s documented risk management or investment strategy, or to eliminate or significantly reduce a measurement or recognition inconsistency. Upon initial
recognition attributable transaction costs are recognised in profit or loss when incurred. Financial liabilities at fair value through profit or loss are measured at
fair value, and changes therein are recognised in profit or loss.

Other non-derivative financial liabilities

Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these
liabilities are measured at amortised cost using the effective interest method. The Group has the following non-derivative financial liabilities: interest bearing
loans, debentures (refer to note 16), trade payables, related parties and other liabilities at amortized cost.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, when
appropriate, a shorter period to the net carrying amount of the financial liability.

When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial liability (for example,

prepayment, call and similar options). The calculation includes all fees and points paid or received between parties to the contract that are an integral part of
the effective interest rate, transaction costs, and all other premiums or discounts.

When the Group revises its estimates of payments, it adjusts the carrying amount of the financial liability to reflect actual and revised estimated cash flows.
The Group recalculates the carrying amount by computing the present value of estimated future cash flows at the financial liability’s original effective interest
rate. The adjustment is recognised in profit or loss as a financial expense.

4. Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the
host contract and accounted for separately if certain criteria are met. Derivatives are recognised initially at fair value; any directly attributable transaction costs
are recognised in profit or loss as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally
recognised in profit or loss.

d. 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, net of any tax effect. Costs attributable to listing existing shares are expensed as incurred.

e. Trading properties

Properties that are being constructed or developed for sale in the ordinary course of business and empty plots acquired to be developed for such a sale 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 realisable value is less than the cost, the trading property is written down to net realisable value.

In each subsequent period, a new assessment is made of net realisable 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 realisable 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 realisable 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 downs arising from an increase in net realisable
value is recognised as a reduction in the expense in the period in which the reversal occurs.

Costs comprise all costs of purchase, direct materials, direct labour costs, subcontracting costs and other direct overhead costs incurred in bringing the
properties to their present condition.

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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.

Capitalization of borrowing costs commences when the activities to prepare the asset are in progress and expenditure and borrowing costs are being incurred.
Capitalization of borrowing costs may continue until the asset is substantially ready for its intended use (i.e. upon issuance of certificate of occupancy).

In certain cases, where the construction phase is suspended for an unplanned period expected to exceed 25% of the total scheduled time for construction,
cessation of the capitalisation of borrowing cost will apply, until construction phase is resumed.

Non–specific borrowing costs are capitalised to such qualifying asset, by applying a capitalization rate to the expenditures on such asset. The capitalization rate
is the weighted average of the borrowing costs applicable to the borrowings of the Group that are outstanding during the period, other than borrowing made
specifically for the purpose of obtaining a qualifying asset.

The amount of borrowing costs capitalized during the period does not exceed the amount of borrowing costs incurred during that period.

f. Property and equipment

Items of property and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses (refer to accounting policy
34(g)). If significant parts of an item of property and equipment have different useful lives, then they are accounted for as separate items (major components)
of property, plant and equipment.

Any gain or loss on disposal of an item of property and equipment is recognised in profit or loss. Depreciation is calculated to write off the cost of items of
property and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in
profit or loss. Land is not depreciated.

The estimated useful lives of property for current and comparative periods and equipment are as follows:

Land – owned

Office buildings

Equipment, fixture and fittings

Other*

Years

25-50

10-15

3-18

* Consists mainly of motor vehicles, equipment, computers, peripheral equipment, etc.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

g. Impairment

1. Non-derivative financial assets

Financial assets not classified as at fair value through profit or loss, including interest on loan to equity accounted investee, are assessed at each reporting date
to determine whether there is objective evidence of impairment.

Objective evidence that financial assets are impaired includes:

• default or delinquency by a debtor;
• restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
• indications that a debtor or issuer will enter bankruptcy;
• adverse changes in the payment status of borrowers or issuers;
• the disappearance of an active market for a security; or
• observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets

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NOTE 34

Financial assets measured at amortized cost

The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually
assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually
identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets
with similar risk characteristics.

In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, and makes an
adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at
the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there
are no realistic prospects of recovery of the asset, the relevant amounts are written off.

If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was
recognised, then the previously recognised impairment loss is reversed through profit or loss.

2. Non – financial assets and interests in equity accounted investees

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than investment property, trading property and deferred tax
assets)) and interests in equity accounted investees to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or cash generating units (“CGU”).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future
cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to
reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is never reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

h. Provisions

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Construction costs

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement

is virtually certain.

The expense relating to any provision is presented in the income statement net of any reimbursement.

Warranties

A provision for warranties is recognised when the underlying products or services are sold, based on historical warranty data and a weighting of possible
outcomes against their associated probabilities.

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Restructuring plan

A provision for restructuring is recognised when a detailed and formal Restructuring plan was approved by all relevant bodies, and the restructuring either has
commenced or has been announced publicly. Future operating losses are not provided for.

i. Revenue

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates

and amounts collected on behalf of third parties.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity
and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each arrangement.

Rental income

The Group leases real estate to its customers under leases that are classified as operating leases. Rental income from trading property is recognized in profit
or loss on a straight-line basis over the term of the lease. Lease origination fees and internal direct lease origination costs are deferred and amortized over the
related lease term. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

The leases generally provide for rent escalations throughout the lease term. For these leases, the revenue is recognized on a straight line basis so as to
produce a constant periodic rent over the term of the lease. The leases may also provide for contingent rent based on a percentage of the lessee’s gross sales
or contingent rent indexed to further increases in the Consumer Price Index (“CPI”).

Where rentals that are contingent upon reaching a certain percentage of the lessee’s gross sales, the Group recognizes rental revenue when the factor on which
the contingent lease payment is based actually occurs. Rental revenues for lease escalations indexed to future increases in the CPI are recognized only after
the changes in the index have occurred.

Revenues from selling of trading property

Revenue from selling of trading property is measured at the fair value of the consideration received or receivable. Revenues are recognized when all the

following conditions are met:

a. the Group has transferred to the buyer the significant risks and rewards of ownership;
b. the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the property sold;
c. the amount of revenue can be measured reliably;
d. it is probable that the economic benefits associated with the transaction will flow to the Group (including the fact that the buyer’s initial and continuing

investment is adequate to demonstrate commitment to pay);
the costs incurred or to be incurred in respect of the transaction can be measured reliably; and
there are no remaining significant performance obligations.

e
f.

Determining whether these criteria have been met for each sale transaction, requires certain degree of judgment by the Group management. The judgment is
made in determination whether, at the end of the reporting period, the Group has transferred to the buyer the significant risks and rewards associated with the
real estate assets sold.

Such determination is based on an analysis of the terms included in the sale agreement executed with the buyer as well as an analysis of other commercial
understandings with the buyer in respect of the real estate sold. In certain cases, the sale agreement with the buyer is signed during the construction period
and the consummation of the transaction is subject to certain conditions precedents which have to be fulfilled prior to delivery. Revenues are, therefore,
recognized when all the significant condition precedent included in the agreement have been fulfilled by the Group and/or waived by the buyer prior to the end
of the reporting period.

Generally, the Group is provided with a bank guarantee from the buyer for the total estimated proceeds in order to secure the payment by the buyer at delivery.

Therefore, the Group is not exposed to any significant risks in respect of payment of the proceeds by the buyer.

j. Operating lease payments

Payments made under operating leases (in respect of plots of land under usufruct) are recognized in profit or loss on a straight line basis over the term of the
lease but are capitalized in relation to land used for the development of trading properties during the construction period (similar to borrowing costs).

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NOTE 34

k. Finance income and cost

For the composition of finance income and cost refer to note 25. For capitalisation of borrowing costs please refer to Note 8.

Interest income and expense which are not capitalized are recognized in the income statement as they accrue, using the effective interest method. For the
Group’s policy regarding capitalization of borrowing costs refer to note 34(e).

l. Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in
respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from
dividends. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for taxation purposes. Deferred tax is not recognised for:

•

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit or loss;

temporary differences related to investments in subsidiaries and joint arrangements to the extent that the Group is able to control the timing of the reversal
of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

•

taxable temporary differences arising on the initial recognition of goodwill

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future
taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be realised. Such reduction is reversed when the probability of future taxable profits improved.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will

be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively

enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria are met.

m. Segment reporting

Segment results that are reported to the Group’s Board of Directors (the chief operating decision makers) include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate debt, assets (primarily the Company’s headquarters),
head office expenses, and tax assets and liabilities.

n. Employee benefits

1. Bonuses

The Group recognizes a liability and an expense for bonuses, which are based on agreements with employees or according to management decisions based
on Group performance goals and on individual employee performance. The Group recognizes a liability where contractually obliged or where past practice has
created a constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

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2. Share-based payment transactions

The fair value of options granted to employees to acquire shares of the Company is recognized as an employee expense or capitalized if directly associated
with development of trading property, with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during
which the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the actual number of share
options that vest.

Where the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional
expense is recognized for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employees as measured at the date of modification. The fair value of the amount payable to employees in respect of share-based payments, which may be
settled in cash, at the option of the holder, is recognized as an expense, with a corresponding increase in liability, over the period in which the employees
become unconditionally entitled to payment. The fair value is re-measured at each reporting date and at settlement date. Any changes in the fair value of
the liability are recognized as an additional cost in salaries and related expenses in the income statement. As of the end of the reporting period share-based
payments which may be settled in cash are options granted to only one person and can be cash settled at the option of the holder.

q. New standards not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2015; however, the Group has not applied
the following new or amended standards in preparing these consolidated financial statements.

The following new or amended standards are not expected to have a significant impact of the Group’s consolidated financial statements:

• Amendments to IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations.
• Amendments to IAS 1.
• Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation.
• Amendments to IAS 16 Property Plant and Equipment and IAS 41 Agriculture.
• Amendments to IAS 19 – Defined Benefit Plans: Employee Contributions.

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NOTE 35

NOTE 35 - LIST OF GROUP ENTITIES

As of December 31, 2015, the Company owns the following companies (all are 100% held subsidiaries at the end of the reporting period

presented unless otherwise indicated):

HUNGARY

ACTIVITY

REMARKS

Directly wholly owned
HOM Ingatlanfejlesztesi es Vezetesi Kft.
Plaza House Ingatlanfejelsztesi Kft.
Plaza Centers Establishment B.V.
Szombathely 2002 Ingatlanhasznosito es Vagyonkezelo Kft.
Tatabanya Plaza Ingatlanfejlesztesi Kft.

Management company
Office building
Inactive
Inacitve
Inacitve

David House

Indirectly or jointly owned
Kerepesi 5 Irodaepulet Ingatlanfejleszto Kft.

Holder of land usage rights

100% held by Plaza Centers Establishment B.V.
Arena Plaza Extension project

POLAND

ACTIVITY

REMARKS

Directly wholly owned
Kielce Plaza Sp. z o.o.
Leszno Plaza Sp. z o.o.
Lodz Centrum Plaza Sp. z o.o.
Wloclawek Plaza Sp. z o.o.
O2 Fitness Club Sp. z o.o.
Plaza Centers Polish Operations B.V.
EDMC Sp. z o.o.
Plaza Centers (Poland) Sp. z o.o.
Bytom Plaza Sp. z o.o.
Bielsko-Biala Plaza Sp. z o.o.
Bydgoszcz Plaza Sp. z o.o.
Chorzow Plaza Sp. z o.o.
Gdansk Centrum Plaza Sp. z o.o.
Gliwice Plaza Sp. z o.o.
Gorzow Wielkopolski Plaza Sp. z o.o.
Jelenia Gora Plaza Sp. z o.o.
Katowice Plaza Sp. z o.o.
Legnica Plaza Sp. z o.o.
Opole Plaza Sp. z o.o.
Radom Plaza Sp. z o.o.
Rzeszow Plaza Sp. z o.o.
Szczecin Plaza Sp. z o.o.
Tarnow Plaza Sp. z o.o.
Tychy Plaza Sp. z o.o.

Indirectly or jointly owned
Legnica Plaza Spolka z ograniczona
odpowiedzialnoscia S.K.A.
Suwalki Plaza Sp. z o.o.

Owns plot of land
Owns plot of land
Owns plot of land
Mixed-use project
Fitness
Holding company
Management company
Management company
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive

Operating shopping center

Zgorzelec Plaza Sp. z o.o.

Operating shopping center

EDP Plaza Sp. z o.o.
Lublin Or Sp. z o.o.
P.L.A.Z.A B.V.

Inactive
Inactive
Inactive

Kielce Plaza project
Leszno Plaza project
Lodz (Residential) project
Lodz Plaza project
O2 Fitness Club project

100% held by Plaza Centers Polish Operations B.V.
Torun Plaza project
100% held by Plaza Centers Polish Operations B.V.
Suwalki Plaza project
100% held by Plaza Centers Polish Operations B.V.
Zgorzelec Plaza project
50% held by Plaza Centers N.V. with Israeli-based partner
50% held by Plaza Centers N.V. with Israeli-based partner
50% held by Plaza Centers N.V.
50% held by Mulan B.V.

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Financial statemen ts
Financial statemen ts

Hokus Pokus Rozrywka Sp. z o.o.

Fantasy Park Sp. z o.o.
Fantasy Park Suwalki Sp. z o.o.
Fantasy Park Torun Sp. z o.o.
Fantasy Park Zgorzelec Sp. z o.o.
Fantasy Park Bytom Sp. z o.o.
Fantasy Park Lodz Sp. z o.o.
Fantasy Park Warszawa Sp. z o.o.
Fantasy Park Investments Sp. z o.o.

Inactive

Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive

50% held by Plaza Centers N.V.
50% held by P.L.A.Z.A B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.
100% held by Mulan B.V.

LATVIA

ACTIVITY

REMARKS

Indirectly or jointly owned
Diksna SIA

Operating shopping center

Fantasy Park Latvia SIA

Entertainment

Equity accounted investee 50% held by Plaza Centers N.V.
50% held by JV partner Riga Plaza project.
100% held by Mulan B.V.

ROMANIA

ACTIVITY

REMARKS

Directly wholly owned
Dambovita Centers Holding B.V.
Plaza Centers Management B.V.
S.C. Elite Plaza S.R.L.
S.C. North Eastern Plaza S.R.L.
S.C. North Gate Plaza S.R.L.
S.C. Eastern Gate Plaza S.R.L.
S.C. South Gate Plaza S.R.L.
S.C. Palazzo Ducale S.R.L.
S.C. Plaza Centers Management Romania S.R.L.
S.C. Blue Plaza S.R.L.
S.C. South Eastern Plaza S.R.L.

Indirectly or jointly owned
S.C. Dambovita Center S.R.L.

Plaza Bas B.V.
Adams Invest S.R.L.

Holding company
Holding company
Shopping center project
Shopping center project
Shopping center project
Inactive
Shopping center project
Inactive
Management company
Inactive
Inactive

Mixed-use project

Holding company
Residential project

Sunny Invest S.R.L.

Residential project

100% held by Plaza Centers N.V.

Timisoara Plaza project
Constanta Plaza project
Csiki Plaza (Miercurea Ciuc) project

Slatina Plaza project

75% held by Dambovita Centers Holding B.V.
Casa Radio project
50.1% held by Plaza Centers N.V.
95% held by Plaza Bas B.V.
5% held by Plaza Centers Management B.V.
Valley View project
95% held by Plaza Bas B.V.
5% held by Plaza Centers Management B.V.
Green Land project

SERBIA

ACTIVITY

REMARKS

Directly wholly owned
Plaza Centers (Estates) B.V.
Plaza Centers (Ventures) B.V.
Plaza Centers Management D.O.O.
Plaza Centers Holding B.V.

Indirectly or jointly owned
Leisure Group D.O.O.

Holding company
Holding company
Management company
Inactive

Shopping center project

Orchid Group D.O.O.

Shopping center project

Accent D.O.O.

Inactive

100% held by Plaza Centers (Estates) B.V.
Belgrade Plaza (Visnjicka) project
Krusevac Plaza project
100% held by Plaza Centers (Ventures) B.V.
Belgrade Plaza (MUP) project
100% held by Plaza Centers Logistic B.V.

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finAnCiAL sTATemenTs

finAnCiAL sTATemenTs

Financial statemen ts
Financial statemen ts

NOTE 35

CZECH REPUBLIC

ACTIVITY

REMARKS

Directly wholly owned
P4 Plaza S.R.O.
Plaza Centers Czech Republic S.R.O.

Operating shopping center
Management company

Liberec Plaza project

BULGARIA

ACTIVITY

REMARKS

Directly wholly owned
Shumen Plaza EOOD
Plaza Centers Management Bulgaria EOOD
Plaza Centers Development EOOD

Shopping center project
Management company
Inactive

Shumen Plaza project

GREECE

ACTIVITY

REMARKS

Directly wholly owned
Helios Plaza S.A.

Indirectly or jointly owned
Elbit Cochin Island Ltd.

CYPRUS – UKRAINE

Directly wholly owned
Tanoli Enterprises Ltd.
PC Ukraine Holdings Ltd.
Plaza Centers Ukraine Ltd.
Nourolet Enterprises Ltd.

Shopping center project

Pireas Plaza project

Inactive

ACTIVITY

Finance activity
Inactive
Inactive
Inactive

40% held by Plaza Centers N.V.

REMARKS

100% held by PC Ukraine Holdings Ltd.
100% held by PC Ukraine Holdings Ltd.

THE NETHERLANDS

ACTIVITY

REMARKS

Directly wholly owned
Plaza Dambovita Complex B.V.
Plaza Centers Enterprises B.V.
Mulan B.V. (Fantasy Park Enterprises B.V.)
Plaza Centers Administrations B.V.
Plaza Centers Connections B.V.
Plaza Centers Engagements B.V.
Plaza Centers Foundations B.V.
Plaza Centers Logistic B.V.
S.S.S. Project Management B.V.
Obuda B.V

Holding company
Finance company
Holding company
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive
Inactive

100% held by Plaza Dambovita Complex B.V.
Holds Fantasy Park subsidiaries in CEE

CYPRUS – INDIA

ACTIVITY

REMARKS

Directly wholly owned
PC India Holdings Public Company Ltd.

Holding company

Indirectly or jointly owned
Permindo Ltd.
HOM India Management Services Pvt. Ltd.
Spiralco Holdings Ltd.
Rebeldora Ltd.
Rosesmart Ltd.
Xifius Services Ltd.
Dezimark Ltd.
Elbit Plaza India Real Estate Holdings Ltd.

Holding company
Management company
Inactive
Inactive
Inactive
Inactive
Inactive
Holding company

100% held by PC India Holdings Public Company Ltd.
99.99% held by PC India Holdings Public Company Ltd.
100% held by PC India Holdings Public Company Ltd.
100% held by PC India Holdings Public Company Ltd.
100% held by PC India Holdings Public Company Ltd.
100% held by PC India Holdings Public Company Ltd.
100% held by PC India Holdings Public Company Ltd.
Equity accounted investee
47.5% held by Plaza Centers N.V.

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Financial statemen

Polyvendo Ltd.
Elbit Plaza India Management Services Pvt. Ltd.
Kadavanthra Builders Pvt. Ltd.

Holding company
Management company
Mixed-use project

Aayas Trade Services Pvt. Ltd.

Mixed-use project

Elbit India Architectural Services Ltd.

UNITED STATES OF AMERICA

Indirectly or jointly owned
Elbit Plaza USA II LP (EPUS II)

Inactive

ACTIVITY

Holding company

EPN REIT II

Inactive

Entities disposed or dissolved in 2014 and 2015

HUNGARY

ACTIVITY

Szeged 2002 Ingatlanhasznosito es Vagyonkezelo Kft.

Inactive

ROMANIA

Primavera Invest S.R.L.

ACTIVITY

Ofﬁ ce project

Colorado Invest S.R.L.

Residential project

Malibu Invest S.R.L.

Residential project

Spring Invest S.R.L.

Ofﬁ ce project

Bas Developement S.R.L.

Residential project

100% held by Elbit Plaza India Real Estate Holdings Ltd.
99.99% held by Polyvendo Ltd.
80% held by Elbit Plaza India Real Estate Holdings Ltd.
Chennai (SipCot) project
99.9% held by Elbit Plaza India Real Estate Holdings Ltd.
Bangalore project
100% held by Elbit Plaza India Real Estate Holdings Ltd.

REMARKS

Equity accounted investee
50% held by Plaza Centers N.V.
50% held by Elbit Imaging Ltd.
100% held by Elbit Plaza USA II LP (EPUS II)

REMARKS

Liquidated

REMARKS

95% held by Plaza Bas B.V.
5% held by Plaza Centers Management B.V.
Primavera Tower Ploiesti project
95% held by Plaza Bas B.V.
5% held by Plaza Centers Management B.V.
Pine Tree project
Equity account investee
25%/75% held by Plaza Bas B.V. with partner
Fountain Park project
Equity accounted investee
50%/50% held by Plaza Bas B.V. with partner
Primavera Tower Brasov project
Equity accounted investee
50%/50% held by Plaza Bas B.V. with partner
Acacia Park project

THE DUTCH ANTILLES

Dreamland Entertainment N.V.

INDIA

ACTIVITY

Inactive

ACTIVITY

REMARKS

Anuttam Developers Pvt. Ltd.

Operating shopping center

99.99% held by Permindo Ltd.
Koregaon Park Plaza project

SERBIA

Sek D.O.O.

ACTIVITY

REMARKS

Operating shopping center

100% held by Plaza Centers Holding B.V.
Kragujevac Plaza project

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FINANCIAL STATEMENTS

NOTE 35

FINANCIAL STATEMENTS

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PLAZA CENTERS N.V. ANNUAL REPORT 2015

Company’s offices

Plaza Centers The Netherlands

Plaza Centers Serbia

Plaza Centers N.V.

Prins Hendrikkade 48-S

1012 AC Amsterdam

The Netherlands

Phone: +31 20 344 9560

Fax: +31 20 344 9561

E-mail: info@plazacenters.nl

www.plazacenters.com

Lazarevacka street no 1/5

11000 Senjak, Belgrade

Serbia

Phone: +381 11 715 1577

Fax: +381 11 715 1587

E-mail: office@plazacenters.rs

www.plazacenterserbia.rs

Plaza Centers Hungary

Plaza Centers Latvia

71 Mukusalas

LV-1004 Riga

Latvia

Phone: +371 67 633 734

Fax: +371 67 633 735

E-mail: office.latvia@cbre.com

www.rigaplaza.lv

Plaza Centers India

Prestige Towers

Unit No 106A, 1st Floor

99/100 (New no 100/31)

Residency road

560 025 Bangalore

India

Phone: +91 80 4041 4444

Fax: +91 80 4041 4408

www.plazacenters.in

David House

Andrassy ut 59.

1062 Budapest

Hungary

Phone: +36 1 462 7100

Fax: +36 1 462 7201

E-mail: info@plazacenters.com

Plaza Centers Poland

Al. Jana Pawła II 23

00-854 Warszawa

Poland

Phone: +48 22 231 9900

Fax: +48 22 231 9901

E-mail: headoffice@plazacenters.pl

www.plazacenters.com/pl

Plaza Centers Romania

63-81 Calea Victoriei

Building I1, Entrance B2, District 1

010065 Bucharest

Romania

Phone: +40 21 315 4646

Fax: +40 21 314 5660

E-mail: office@plazacenters.ro

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Investor relations

FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
United Kingdom
www.fticonsulting.com

UK sponsor

Spark Advisory Partners Limited
5 St John’s Lane
London EC1M 4BH
United Kingdom
www.sparkadvisorypartners.com

Principal auditor

KPMG Hungaria Kft.
H-1134 Budapest
Váci út 31.
Hungary
www.kpmg.hu

Advisors

Corporate solicitors in the UK

King & Wood Mallesons
10 Queen Street Place
London
EC4R 1BE
United Kingdom

Berwin Leighton Paisner LLP
Adelaide House
London Bridge
London EC4R 9HA
United Kingdom
www.blplaw.com

Corporate legal counsels in the Netherlands

Buren N.V.
World Trade Center, Tower A Level 10,
Strawinskylaan 1017
1077 XX Amsterdam
The Netherlands
www.burenlegal.com

Dutch statutory auditor

Corporate legal counsel in Poland

Grant Thornton Accountants en Adviseurs B.V.
Gedempte Zalmhaven 4 E
Postbus 23278
3001 KG Rotterdam
The Netherlands
www.gt.nl

Weil, Gotshal & Manges LLP
Warsaw Financial Center
ul. Emillii Plateer 53
Warsaw 00-113
Poland
www.weil.com/warsaw

Tax counsels in the Netherlands

Registrar

Loyens & Loeff N.V.
Fred. Roeskestraat 100
1076 ED Amsterdam
The Netherlands
Web: www.loyensloeff.com

Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
www.capitaassetservices.com

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PLAZA CENTERS N.V.

Prins Hendrikkade 48-S
1012 AC Amsterdam
The Netherlands
Phone: +31 20 344 9560
Fax: +31 20 344 9561
E-mail: info@plazacenters.nl
www.plazacenters.com