Gross Profit Up by 13.8% in 2024 at Shopper Park Plus

The Shopper Park Plus Group's profit after tax for 2024 was EUR 24.9 million, significantly higher than the profit of EUR 11.4 million in the same period of the previous year. The SPP Group's gross profit improved by 13.8% in 2024 compared to the previous year, driven by both an increase in rental income and a decrease in operating loss, according to an executive summary published on the website of the Budapest Stock Exchange this Tuesday.

The focus of the Shopper Park Plus Group's business in 2024 was to capitalise on the business opportunities opened up by the exercise of the option to take back areas leased by Tesco. Of the 30,000 m2 of leasable area covered by the option, 21,000 m2 have been leased until December 31, 2024. The applications for change of use of the areas covered by the option have already been accepted by the competent authority in six locations, the application has been submitted in one location and planning and preparation is ongoing in one location.

Signing of contracts with new major tenants, which has been instrumental in shaping the tenant mix, has been largely completed. New leases have been signed in 2024: with Praktiker for 5,500 m2 at the Debrecen Kishegyesi location, with Sinsay for six locations, with Jysk for two locations and with Koton for six locations.

Most of the amounts payable under the purchase price retention agreement for the acquisition of the properties have been paid, the Group has a related liability of EUR 1.4 million under current liabilities. The fit-out of the leased areas taken over with the call option involves additional significant expenses due to development costs, which the Group is realising on a scheduled basis.

Shopper Park Plus Plc.’s 60% owned subsidiary Shopping Malls SVK s.r.o. (the Slovakian subsidiary) concluded a sale and purchase agreement on December 18, 2024 for the acquisition of four retail parks operated by Tesco in Slovakia. The total leasable area of the four retail parks amounts to 72,000 m2.

The Group raised the necessary funds partly through a private placement. The Slovakian subsidiary has entered into a loan agreement with Unicredit Bank Czech Republic and Slovakia, a.s. to secure the purchase of the real estate. A subsidiary of the Group and minority shareholders of the Slovakian subsidiary also provided a member loan to the Slovakian subsidiary.

Financing opportunities: a possible revolving credit facility of up to EUR 30 million under the existing bank loan agreement or a possible private or public capital increase could support the regional acquisitions outlined in the strategy, if retail parks matching the existing real estate portfolio become available at a suitable price in the future.

Significant variables in the market environment that affect the SPP Group's performance and plans include retail sales trends, tenant expectations, yield levels, inflation and energy price changes. With a moderate increase in retail sales, tenants remain cautious in their store opening decisions. Yield levels
that are significant to the Group's operations: the 3-month Euribor, the 5-year interest rate swap have declined over the course of 2024, improving the operating environment. The fall in inflation is a negative impact for SPP Group as it reduces inflation-indexed rental growth. Energy prices decreased
on average in 2024 compared to the previous year, improving the operating environment for tenants in addition to the SPP Group.

The SPP Group's operational strategic objective is to reduce operating losses, which it plans to achieve through the development of real estate infrastructure and the rationalisation of operations. The operating loss to rental income ratio has been reduced from 13.1% in 2023 to 9.2% in 2024. The SPP
Group's operational strategy remains unchanged: to reduce the operating loss to a level at or below the industry average of 5-10% of rental income.