Plaza Regulatory News (PLAZ)

19 March 2015

PLAZA CENTERS N.V.

Full Year results for the year ended 31 December 2014

Continued OPERATIONAL IMPROVEMENT, PROGRESS IN PORTFOLIO REPOSITIONING AND completion of THE RESTRUCTURING PROCESS

Plaza Centers N.V. ("Plaza" / the "Company" / the "Group"), a leading property developer and investor with operations in Central and Eastern Europe ("CEE") and India, today announces its full year results for the year ended 31 December 2014.

Financial highlights:

· Reduction in total assets to €466 million (31 December 2013: €586 million), primarily due to the impairment of trading properties and equity accounted investees, and to the strategic disposal of Kragujevac Plaza, Serbia.

o 25% (€124 million) reduction in the book value of the Company's trading properties, largely due to impairments recorded.

· A 3.5% increase in 2014 in NOI from the operation of shopping centres (from €17 million to €17.6 million, including company share in NOI from commercial centre of Riga, Latvia). Excluding the impact of the commercial centre Kragujevac, which was sold in the summer of 2014, the Group recorded a 13% increase in NOI from the operation of shopping centres (from €13.2 million to €14.9 million).

· Net Asset Value decreased by 44% to €153 million (31 December 2013: €274 million) primarily as a result of the impairment of assets, mainly in Romania, Greece and India.

o Net Asset Value per share of £0.17 (31 December 2013: £0.79), a decline of 78%, attributable to dilution (increase in the number of shares by 130%) and the abovementioned impairments.

· Losses in the period of €120 million (31 December 2013: Loss of €218 million), stemming from a non-cash €89 million impairment of trading properties and equity accounted investees (31 December 2013: €186 million of impairments), and an overall net finance cost of €36 million (2013: €39 million).

o Basic and diluted loss per share of €0.39 (31 December 2013: loss per share of €0.73).

· Consolidated cash position at year end (including restricted bank deposits, short term deposits and held for trading financial assets) of €41.7 million (31 December 2012: €33.7 million) and current cash position of circa €39.5 million (€7 million restricted).

· Gearing increased to 74% (31 December 2013: 64%) as a result of impairment losses and finance costs incurred during the year.

Asset and operational highlights:

· During the period, Plaza made significant headway in the repositioning of its portfolio, disposing of a number of non-core assets:

o In the fourth quarter of 2014, 18 months ahead of schedule, Plaza successfully completed the disposal of Kragujevac Plaza in Serbia for €38.6 million, in line with the asset's last reported book value. Following the repayment of related bank debt of c. €28.2 million, 75% of the net cash proceeds (c. €12.4 million, including the released restricted cash deposit of c. €2 million) were distributed to the Company's bondholders as an early repayment of the bonds, in line with the Company's stated restructuring plan.

o Successful disposals of non-core sites in Romania, at Targu Mures (September 2014) and Hunedoara (December 2014), for €3.5 million and €1.2 million respectively, consistent with the assets' last reported book values.

· Improved occupancy and turnover were recorded across the Company's existing shopping and entertainment centres in the CEE, with the overall portfolio occupancy level increasing to 94% as of 31 December 2014.

o At Torun Plaza, Poland, occupancy increased to 92.5% (2013: 89%). An additional 4,100 sqm of GLA was opened during the year, and asset management initiatives contributed to a 21.2% increase in turnover and 6.3% increase in footfall compared to 2013.

o In Latvia, Riga Plaza's occupancy level increased to 99.5% (2013: 97%) and the shopping centre recorded the second highest increase in turnover in the portfolio (15.6%) along with a 7.2% increase in footfall.

o Occupancy at Suwalki Plaza, Poland increased to 97.7% (2013: 91%) and it continues to perform well, with a 7% increase in turnover in 2014.

o Zgorzelec Plaza, Poland also experienced strong occupancy growth, reaching 95.2% (2013: 91%), attributable to the opening of a 547 sqm store for Carry and a number of smaller fashion and service stores. The centre reported a 14.1% increase in turnover and 8.4% in footfall.

o Liberec Plaza, Czech Republic reported a 7.5% increase in turnover in 2014. Occupancy remains steady at 84% (2013: 86%), the slight decrease due to lease agreement expiries, which were in part offset by the opening of a 1,611 sqm Sports Direct store in April.

· Considerable letting success was achieved and contracts with a number of significant new tenants improved the overall tenant strength and mix in the portfolio, including TK Maxx, Sports Direct and Carry. In April, H&M opened its largest store in Latvia (2,700 sqm) at Riga Plaza, where a further 1,060 sqm was leased to Elkor Kids. At Suwalki Plaza, more than 87% of the existing tenants signed lease options or renewals during the year and leases for new premises were secured with KIK and several fashion stores.

Key highlights since the period end:

· On 24 February 2015, the Israeli credit rating agency which is a division of International Standard & Poor's, updated the credit rating of Plaza's two series of Notes traded on Tel Aviv Stock Exchange from "D" to "BBB-", on a local Israeli scale, with a stable outlook.

· On March 13, 2015, one of the Company's subsidiaries in Romania, which has a 49 year leasehold on a plot in Bucharest, Romania (Cina), signed a pre-agreement to waive its leasehold rights for a certain consideration to be agreed with the owner of the property (a subsidiary of EI) and approved by the relevant stakeholders of these entities. The mentioned pre-agreement is subject to the fulfilment of certain conditions and approval by the relevant stakeholders of the Company.

· After almost 10 years at the helm, Plaza's CEO, Ran Shtarkman has informed the Board of Directors that he intends to leave the Company to pursue other opportunities. The Board of Directors has accepted Mr. Shtarkman's resignation and he has agreed to continue in the role until the end of July, to ensure an orderly succession.

Commenting on the results, Ran Shtarkman, the President and CEO of Plaza Centers, said:

"During 2014 we successfully completed the restructuring process midway through the year, with resounding support from our creditors. This was followed by the completion of a successful rights offering in the last quarter, which provided Plaza with a €20 million capital injection and marked an important final step in the restructuring process. A third listing on the Tel Aviv Stock Exchange and the recent upgrade in our credit rating from the Israeli division of Standard & Poor's have further underlined the achievements of the year and put us in a strengthened position going into 2015.

"In terms of the portfolio, we have continued our efforts to dispose of non-core assets and we are pleased to report considerable operational improvements across our CEE shopping centre portfolio. Of particular note was the sale of Kragujevac Plaza in Serbia, which was completed a year and a half ahead of schedule, with 75% of proceeds being returned to our bondholders as per our restructuring agreement, as well as sales of two non-core sites in Romania. These disposals have been in line with our strategy to shed the portfolio of non-core assets in order to deleverage the balance sheet and pay down debt.

"Alongside this activity, operational and asset management initiatives have been continuing with strength. Occupancy has risen to 94% across the portfolio and our centres continued to attract high profile, international brands including TK Maxx, Sports Direct and H&M, contributing to higher footfall and turnover across our core CEE portfolio.

"We have been working closely with our reconfigured Board and its continued confidence in the management's ability to deliver value and repay the Company's creditors is supportive of our strategy going forward. The economic landscape in our core markets is improving slightly and we have entered 2015 with renewed focus.

"In light of this, after 13 years with Plaza and following the recent successful completion of the debt arrangement, I have decided to embark on a new journey, confident in the knowledge that Plaza is now a stronger and more resilient business.

"While Plaza Centers is a real estate company, one of its best assets is its people. I wish to thank all of my colleagues, especially the founder of the company Motti Zisser, who gave me my first major role at Plaza, and the current and former shareholders and Directors. Most importantly I would like to pay tribute to the hard work of the Company's employees across seven countries who are at the heart of the day to day running of this international real estate development company. I hope that in the next chapter of my career I can achieve the same level of satisfaction and fulfilment as I have experienced in the growth and management of Plaza Centers."

For further details please contact:

Notes to Editors

Plaza Centers N.V. (www.plazacenters.com) is a leading property developer and investor with a significant presence across Central and Eastern Europe and operations in India. It focuses on constructing new shopping and entertainment centres and, where there is significant potential, redeveloping existing centres in both capital cities and important regional centres. The Company is listed on the Main Board of the London Stock Exchange, the Warsaw Stock Exchange and, as of 27 November 2014, the Tel Aviv Stock Exchange (LSE:"PLAZ", WSE: "PLZ/PLAZACNTR"; TASE: "PLAZ"). Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. ("EIL"), an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and the NASDAQ Global Market in the United States. It has been active in real estate development in emerging markets for over 19 years.

Forward-looking statements

This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial) performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. Plaza Centers N.V. has no obligation to update the statements contained in this press release, unless required by law.

RESIGNATION OF CEO

After almost 10 years at the helm, Plaza's CEO, Ran Shtarkman has informed the Board of Directors that he intends to leave the Company to pursue other opportunities. The Board of Directors has accepted Mr. Shtarkman's resignation and he has agreed to continue in the role until the end of July, to ensure an orderly succession.

Mr. Shtarkman has served as the CEO of Plaza Centers since 2006 and has been employed by the Company since 2002.

Ron Hadasi, the chairman of Plaza Centers said: "On behalf of the Board of Directors and our shareholders, I would like to thank Ran Shtarkman sincerely for his many years of hard work and dedication to the Company.

"Ran has played a central role in Plaza's growth and its establishment as one of the leading shopping centre owners and developers in Eastern Europe. Furthermore, Ran successfully steered the Company through a complex restructuring process, resulting from the severe economic crisis which hit Eastern Europe, including the conclusion of a debt arrangement which took just eight months to complete and was approved by 92% of the Company's creditors. While we will be sorry to see him go, we wish him the very best of luck in his future endeavours."

The Company will commence the recruitment process for a new CEO soon and an announcement will be made in due course.

PRESIDENT AND CHIEF EXECUTIVE OFFICER'S STATEMENT

2014 has been another significant year for the business as we completed our restructuring process efficiently, within an eight month period and with the resounding support of 92% of our creditors. We finished the year with a successful rights offering, which provided the Company with a €20 million capital injection, and a third listing on the Tel Aviv stock exchange, and we have started 2015 with the news of an upgrade to our credit rating from Standard & Poor's from "D" to "BBB-" on a local Israeli scale with a stable outlook.

We have continued to make strides in restructuring our portfolio by disposing of non-core assets, using the proceeds to repay our debts and allowing us to focus more on operational improvements within the core portfolio. Notably, the sale of Kragujevac Plaza in Serbia was completed 18 months ahead of schedule and 75% of the net cash proceeds from the transaction was returned to bondholders as an early repayment, in line with our restructuring plan.

Alongside this activity, we are seeing signs of economic improvement in our core geographies.

Against this background, I am pleased to report that Plaza has achieved notable progress at asset level, with increases in footfall, occupancy and turnover reported across our core portfolio of CEE shopping centres. During the year we secured a number of significant lettings with high profile anchor tenants including H&M, which opened its largest store in Latvia at Riga Plaza in April, TK Maxx and Sports Direct, and turnover at these core assets is also up considerably thanks to our asset management activity. Torun Plaza alone achieved a 21.2% uplift in turnover, compared to 2013.

After a busy 2014, we are entering 2015 with renewed vigour and we are looking forward to the year ahead.

Key Events

During the first half of 2014, the Company focused its efforts on ensuring a successful and efficient conclusion to the debt restructuring process, which was completed in July. Subsequent to these events, the Company announced a Rights Offering, which formed part of the Restructuring Plan and which provided the Company with a €20 million cash injection.

· On 26 June 2014, Plaza announced that its amended Dutch restructuring plan, filed with the Dutch Court on 27 May 2014, had been approved with 92% of creditors voting in favour.

· On 21 July, following the Plan's approval by the Dutch Court on 9 July 2014, Plaza was in a position to announce the formal completion of the debt restructuring process and that management had resumed control of the full business.

· On 20 November 2014, the Company published a Listing Document in Israel announcing its intention to list all of its ordinary shares on the Tel Aviv Stock Exchange ("TASE"). With effect from 27 November 2014 Plaza's ordinary shares have been traded on the TASE under the ticker "Plaz".

· On 28 November, an EGM was held at which shareholders approved the proposed Rights Offering, which formed part of the Company's Restructuring Plan, enabling the Company to raise €20 million.

· On 19 December 2014, the Company announced the successful completion of the Rights Offering.

In addition, in line with its stated strategy, Plaza made a number of significant disposals of its non-core assets during the year, including:

· On 2 October 2014, Plaza successfully completed the disposal of its shopping and entertainment centre, Kragujevac Plaza in Serbia for €38.6 million, in line with the asset's last reported book value. Following the repayment of related bank debt of c. €28.2 million, the Company received net cash from the disposal of c. €10.4 million. Restricted cash linked to the bank debt and other working capital balances of circa €2 million were also released following the transaction. 75% of the net cash proceeds (including the released restricted cash deposit) was distributed to the Company's bondholders in the fourth quarter of the year as an early repayment of the bonds, in line with the Company's stated restructuring plan.

· On 4 September 2014, Plaza reached an agreement to sell its 31,500 sqm site in Targu Mures, Romania to a third party developer for €3.5 million, consistent with the asset's last reported book value.

· On 2 December 2014, Plaza reached an agreement to sell its 41,000 sqm site in Hunedoara, Romania to a third party developer for €1.2 million, consistent with the asset's last reported book value.

75% of the net cash proceeds of the above two transactions was distributed to the Company's bondholders in the December as an early repayment of the bonds.

Alongside this Substantial activity, Plaza continued to make significant progress in its operational and asset management initiatives, with a focus on delivering positive uplifts in key performance indicators at our income-generating centres.

Results

Due to a circa €89 million non-cash impairment charged against the Company's trading properties and equity accounted investees, Plaza ended the year with a loss attributable to the owners of the Company of €120 million. A €89 million impairment charge related to the reduction in the value of our assets across the portfolio in the following main geographic areas:Romania (€51 million); India (€12 million); Greece (€11 million); Serbia (€6 million); Poland (€6 million); Czech Republic (€2 million); and Bulgaria (€1 million). There was a €0.4 million increase in the value of Riga Plaza Latvia. The write downs are a reflection of the ongoing economic uncertainty in many of the countries in which we operate.

As at 31 December 2014, Plaza had a consolidated cash position (including restricted bank deposits, and held for trading financial assets) of approximately €41.7 million, of which circa €7 million of cash was held as restricted cash on a consolidated basis. Working capital stood at negative €6 million (including €33 million of debt expected to be revolved). Following the successful completion of the debt restructuring, part of the liabilities were reclassified to non-current. As at the date of this report, the Company has a current cash position of circa €39.5 million (inclusive of the €7 million of restricted cash).

Debt restructuring plan

Background

Due to reasons previously reported, by the end of 2013 the Company was faced with significant liquidity challenges.

Notwithstanding the liquidity issues, the Company continued to have a strong balance sheet, with a significant positive net asset value, and it had assets and development opportunities under ownership that offered significant potential to deliver returns over the medium to long term. Accordingly, the Board believed that, on a going concern basis, the Company retained substantial value for its stakeholders and would be able to repay its creditors in full, and that a forced liquidation or a bankruptcy would cause creditors and shareholders to incur significant losses.

Suspension of payment procedure

Therefore, on 18 November 2013, the Company applied for suspension of payment proceedings under Dutch law and simultaneously filed a draft restructuring plan (the "Restructuring Plan") with the district court of Amsterdam, The Netherlands (the "Court"). The Restructuring Plan was adopted by the Plan Creditors on 26 June 2014. On 9 July 2014, the Court approved the Restructuring Plan which became final and definitive on 18 July 2014.

One of the terms of the approved Restructuring Plan was that at least €20 million should be injected into the Company against the issuance of New Ordinary Shares by means of a Rights Offering (the "Rights Offering"). The Rights Offering was concluded on 28 November 2014 and consequently the Restructuring Plan became effective on the same day. In addition to the trading on the Tel Aviv Stock Exchange of Plaza's Series A and Series B Bonds, the listing of the Company' Shares on the Tel Aviv Stock Exchange also took place.

Summary of the Restructuring Plan

A summary of the main terms of the Restructuring Plan are set out below:

• A deferral of principal payment obligations to Bondholders for a period of between 3.5-4.5 years;

• Deferral of obligations under guarantees issued as security for liabilities of subsidiaries for a period of four years and the claims will only be enforceable after the collateral granted as security for the underlying loan has been realised. The amount of the guarantee claim will be reduced to the extent that the collateral is sold at a price below 90% of the fair market value as determined by a reputable appraiser;

• 1.5% per annum interest to be paid to Bondholders in addition to regular interest;

• Early repayment of the Company's outstanding bonds in certain events upon the realisation or refinancing of certain assets with 75% of the net cash flows (subject to certain adjustments);

• An issue to Bondholders of Ordinary Shares representing 13.21% of the outstanding share capital of the Company following any capital injection;

• Agreement to a "negative pledge", "no new financial indebtedness" and "coverage ratio" covenants (subject to certain exceptions) in favour of all creditors bound by the Restructuring Plan and certain limitations on distributions (including dividends) to Shareholders. In addition, the Restructuring Plan includes certain financial covenants with respect to the realisation of certain real estate assets of the Group and with respect to the purchase and development of real estate assets. The subsidiaries of Plaza Centers have issued an undertaking to be bound by certain of these covenants and restrictions;

• A mutual "waiver from claims" provision, in favour of the Company, the direct and indirect shareholders of the Group, and their respective directors and officers, the Bondholders, the trustees under the Trust Deeds, and other affiliated parties.

NAV

The Company's property portfolio (CEE and India) was valued by Cushman and Wakefield as at 31 December 2014 and their summary valuation is shown below.

Net Asset Value per share decreased to 0.22 €/share from 0.92 €/share at year end 2013, mainly as a result of further impairments and new shares issued during 2014 (basic NAV/share 0.52 €/share).

The writedown in value reflects uncertainties in respect of the development of projects, depressed rental levels in the above mentioned countries and low transaction volumes resulting from a constrained supply of debt. The majority of written down assets comprise land with associated planning consent, which management continues to value at the lower of cost or net realisable value. Management will continue to evaluate the local economic context before any development programme commences, as well as looking at other alternatives to monetise the land bank if development is not economically viable.

The Company's NAV was calculated as follows:

(1) excluding book value of assets which were valued by Cushman and Wakefield

Portfolio progress

The Company is currently engaged in 18 development projects and owns six operational shopping and entertainment centre assets and two office schemes, located across the CEE and in India. The location of the projects, as at 19 March 2015, is summarised as follows:

Liquidity & Financing

Plaza ended the year with a consolidated cash position (including restricted bank deposits, short term deposits and available for sale financial assets) of approximately €41.7 million, of which circa €7 million of cash is held as restricted cash on a consolidated basis. Working capital as at 31 December 2015 totalled negative €7 million, and, as mentioned above, the Company's current cash position is circa €39.5 million (of which €7 million is restricted).

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 74% in 2014.

Strategy and Outlook

2014 marked a year of progress for Plaza as the Company successfully completed the Dutch restructuring plan, with 92% of creditors approving the plan in June and the Dutch court's formal and irrevocable approval being granted in July, just seven months after the Company made its initial announcement. The successful Rights Offering, which concluded in November, provided the Company with a welcome €20 million cash injection and the completion of this considerable activity provided us with a strengthened platform to start the new year.

Going into 2015, the economic outlook is relatively positive in the Company's core geographies. This trend is expected to continue and the effect of lower oil prices, together with the knock-on impact of Quantitative Easing and the wider Eurozone recovery, should prove beneficial.

Transactional activity has been strong, as evidenced by the sales of Kragujevac in Serbia and non-core land in Romania, reflecting the improvement in investor sentiment. In the year ahead, the Company will continue to drive the reshaping of the portfolio with the disposal of further non-core assets in order to deleverage the balance sheet and advance key development projects in core geographies including Timisoara in Romania, Belgrade in Serbia and Lodz in Poland. In Poland, the Company expects to deliver a master plan for the planned retail and entertainment scheme, Lodz Plaza, by the end of this year and has secured a number of pre-lets for Timisoara Plaza in Romania and Belgrade Plaza (Visnjicka) in Serbia, where construction is planned to commence later this year, subject to securing bank financing and sufficient levels of pre-lets.

Day to day, we will continue to pursue our intensive asset management strategy which has seen clear success at our income-generating centres in the CEE, where our focus remains on initiatives that will drive occupancy levels, footfall and turnover to maximise income and deliver value.

While there remains a lot to do in the short and medium term, we have confidence in the long term future growth of the Company and the management is resolute in its belief that, with the ongoing support of our bondholders and shareholders, the delivery of the strategy, together with the brightening economic outlook, will result in the delivery of value and growth to our investors.

Ran Shtarkman

President and Chief Executive Officer

19 March 2015

OPERATIONAL REVIEW

During the reporting period, Plaza made significant progress against its operational and strategic objectives, by delivering improved fundamentals at the portfolio level and realising value through the sale of a number of its non-core assets.

Highlights for the financial year included:

§ Operations:Improving performance of its operating shopping and entertainment centres located in four countries in the CEE.

§ Disposals: In 2014, the Company received net cash of circa €17.1 million (including restricted cash released) through the disposal of three assets out of which 75% was repaid to the bondholders as early repayment.

§ Financial position: Plaza's current consolidated cash position stands at circa €40 million (out of which €7 million is restricted).

As of the reporting date, Plaza has 26 assets in nine countries, of which 18 are under various stages of development across the CEE region and India. Of these, seven are located in Romania, two in India, four in Poland, two in Serbia, and single assets in Bulgaria, Greece and Hungary. In addition to these developments, Plaza retains the ownership of and operates six shopping and entertainment centres in Poland, Czech Republic, India and Latvia and two office buildings in Budapest and Bucharest.

The development projects are at various stages of the development cycle, from the landholdings through to the planning and permits.

The Company's current assets and pipeline projects are summarised in the table below:

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

Project that are classified as "Under planning and feasibility examination " - potential also to be sold as land.

Details of these activities by country are as follows:

Poland

Plaza owns and operates three completed shopping and entertainment centres across Poland. During the year, each of the centres has delivered notable asset management successes, improving the overall occupancy of the Polish portfolio to above 95%.

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 92.5% at year end. A total of 4,100 sqm of additional retail space was opened at the centre in 2014, increasing the total lettable area of the shopping centre by more than 10%. Among the most notable openings were of TK Maxx, Sports Direct, Carry (replacing a previously underperforming tenant), Sinsay and various smaller fashion stores. As a result of these asset management initiatives and other marketing activities, the shopping centre reported a significant increase in turnover (+21.2%) compared to 2013 and footfall also increased by 6% during the year.

Suwalki Plaza, comprising approximately 20,000 sqm of GLA with tenants such as H&M, Rossmann, New Yorker, KappAhl and Cinema Lumiere, continues to perform well. Occupancy increased to 97.7% (2013: 91%) and turnover increased by 7% during the year. Contracts with KIK, and several fashion stores were signed for new premises during the year and to date, more than 87% of the existing tenants have signed lease options or renewals, with the fifth anniversary of the opening of the centre approaching in May.

Significant operational improvement was also achieved at Zgorzelec Plaza. The 13,000 sqm shopping and entertainment centre experienced strong occupancy growth in reaching 95.2% (2013: 91%), with the opening of a 547 sqm Carry and a number of small fashion and service stores contributing. The centre had an increase of 14.1% in turnover and 8.4% in footfall.

Feasibility and planning studies were also progressed at Lodz Plaza (comprising approximately 35,000 sqm of GLA) and construction is now scheduled to begin in late 2016, with completion expected in 2017.

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, is the Company will hold off on the commencement of any construction on the project 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 Budapest, remains under the Company's ownership.

Czech Republic

Turnover at Liberec Plaza shopping and entertainment centre (approximately 17,000 sqm GLA), owned and managed by the Company since it opened in March 2009, improved by 8%, while occupancy remained steady at 85%.

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 and completion of the first phase is scheduled for 2017.

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.

The Company has progressed the feasibility and planning studies and permitting of Timisoara Plaza (comprising approximately 40,000 sqm of GLA) and construction is scheduled to begin in 2015, with completion expected in 2016.

Latvia

At Riga Plaza, which is 50% owned by Plaza, occupancy increased to 99.49% (2013: 97%). H&M opened its largest store in Latvia (2,700 sqm) at Riga Plaza in April 2014, and another 1,060 sqm was leased to Elkor Kids. The shopping centre had the second highest increase in turnover in the portfolio, with 15.6% increase in sales compared to the previous year, and a 7.2% increase in footfall.

The Latvian economy has continued to grow over 2014, despite the geopolitical turbulence in the region between the Ukraine and Russia. Unemployment has decreased and average salaries have increased, having a positive effect on the purchasing power of consumers and on the country's wider retail market.

Serbia

Plaza's most prominent investment in Serbia is a building in the central administrative district of Belgrade, which Plaza secured in a competitive tender and 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 63,000 sqm. Construction is planned to commence in 2016 and scheduled for completion in 2017. Processes to secure the relevant local planning and permitting approvals are underway.

Planning permission has been granted for Belgrade Plaza (Visnjicka) (previously known by the project name Sport Star Plaza), with construction on the 32,000 sqm shopping and entertainment centre set to commence this year and completion anticipated in 2017.

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 complete and operate the assets to benefit from an anticipated growth in investor interest.

Greece

Plaza owns a development site in Athens, with plans intended for a 38,660 sqm mixed-use office and retail development, including 700 car parking spaces. While the project is currently under planning and feasibility examination, Plaza will wait until it is fully satisfied that the recovery in the office market and a general rise in both occupancy rates and rental levels is underway before beginning construction, in line with its cautious approach to development.

India

The Company has signed a preliminary non-binding agreement with an Indian based developer for the sale of Koregaon Park shopping and entertainment centre in Pune, and it collected €2.6 million (INR 200 million) of advances in 2014 and 2015. The agreement is subject to certain conditions and discussions to complete the disposal are currently at advance stage.

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. With a total built area of over 310,000 sqm, it will comprise over 1,100 luxury residential units when completed. In July 2010, the JV signed a new framework agreement with the local developer which, inter alia, decreased the scope of the project to 165 acres. Currently the project is in a planning and permitting phase. As at 31 December 2013, due to uncertainty around the Group's ability to progress the project in the foreseeable future, the Group recorded a €31 million writedown in expenses for the year.

Chennai - A residential development, which is 80% owned by the JV and 20% by a prominent local developer. The scheme will be developed into a residential project consisting of approximately 110,000 sqm of plotted area for development and approximately 62,000 sqm for high quality villas. Chennai is India's fourth largest city with a population of more than eight million inhabitants. The JV signed a Memorandum of Understanding (the "MOU") with a reputable local developer for the joint development of the project. On the basis of the MOU, the parties to the transaction have finalised the terms and conditions of the definitive Joint Development Agreement, and they intend to execute the Joint Development Transaction upon fulfilment of a certain conditions.

FINANCIAL REVIEW

Results

During 2014, Plaza remained focused on the execution of its strategy to dispose of the non-core assets in its portfolio in order 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

· Projects scheduled for construction

· Plots in the planning phase.

In respect of its completed trading properties projects, the Company still faces material uncertainties in respect of the time needed 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.

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 to gain 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 2014, the trading properties were classified as non-current assets in the Statement of Financial Position.

Income comprised rental income from operating shopping centres. In 2014, Plaza generated €22.1 million of income compared to €23.7 million in 2013. This includes rental income and service charges collected from the tenants. The rental income in 2014 was €15.4 million while in 2013 it was €16.6 million. The decrease is a result of the strategic sale of Kragujevac Plaza in mid-2014 (c. €1.1 million of income) and also by the sale of other undeveloped projects. A 3.5% increase in 2014 in NOI from the operation of shopping centers (from €17 million to €17.6 million, including company share in NOI from commercial center of Riga, Latvia). Excluding the impact of the commercial center Kragujevac, which was sold in the summer of 2014, the Group recorded a 13% increase in NOI from the operation of shopping centers (from €13.2 million to €14.9 million). Income from the Group's Fantasy Park operation, which provides gaming and entertainment services in Plaza's active shopping centres, decreased to €1.7 million from €3.3 million in 2013 following the operational closure of some units in the Group's shopping centres.

The disposal of Kragujevac Plaza also led to a decrease in operating costs from €9.4 million 2013 to €8.5 million in 2014. The cost of the Fantasy Park operations also decreased from €4 million in 2013 to €2.2 million in 2014 after the closures.

A writedown of trading properties amounted to €87 million in 2014 (€118 million in 2013), comprising projects in Romania (€51.3 million); India (€10 million); Greece (€11 million); Serbia (€6 million); Poland (€6 million); Czech Republic (€2 million); and Bulgaria (€1 million).

The writedown in relation to joint ventures classified as equity accounted investments amounted to €1.7 million in 2014 and €56 million in 2013. The writedown relates to Plaza's Indian project (Chennai) and was slightly offset by the €0.4 million increase in the value of Riga Plaza (Latvia).

The Company's active efforts to reduce costs bore fruit as administrative costs fell by 20% to €7.4 million (2013: €9.4 million), comprising a decrease in payroll and employee related expenses (€1 million) and a decrease in the expense of professional service providers (€0.8 million).

Other expenses net a reduction from €11 million in 2013 to Nil (where a change in the fair value of the Prague 3 investment property and an impairment of advances received in connection with the Kochi project in India were recorded). The net result in 2014 is attributable to the €2.3 million insurance pay out received in connection with the Koregaon Park fire incident, the 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.

A net finance loss of €35.6 million was recorded in 2014, compared to a net finance cost of €39.3 million in 2013.

Finance income remained at the same level (€1.3 million) attributable to the settlement of the airplane loan (with a gain recorded of €0.6 million).

Finance expenses decreased from €40.6 million to €36.8 million (in 2013 borrowing costs of €6.5 million were capitalised). The main components of the expenses were:

· Interest expense on debentures (€5.3 million compared to €9.6 million in 2013)

· €9.6 million interest expense on bank borrowings compared to €10.7 million in 2013

· Change in the fair value of debentures measured at fair value due to the successful conclusion of the restructuring process and the changes in the exchange rate of EUR/NIS (€21.3 million in 2014 while €13.2 million in 2013).

A tax benefit of €1.3 million recorded in the consolidated income statement largely represents the creation of deferred tax assets attributed to the Polish operations.

As a result of the above, the loss for the year amounted to c. €120 million in 2014, compared to €218 million in 2013. Basic and diluted loss per share for 2014 was €0.39 (2013: €0.73)

.

Balance sheet and cash flow

The balance sheet as at 31 December 2014 showed total assets of €466 million, compared to total assets of €586 million at the end of 2013. The decrease was mainly driven by the writedown 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) increased to €41.7 million (31 December 2013: €33.7 million) after the sale of assets and capital raised during the rights issuance. Gearing increased to 74% (31 December 2013: 64%) as a result of impairment losses and finance costs incurred during the year.

Trading property values decreased from €495 million in 2013 to €371 million in 2014 as result of writedowns booked in the period and the selling of assets. 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 €42 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 million since 2013, as a result of various factors. It has increased by €1.6 million by the share in results and by €2.7 million due to exchange rate movements, while it has decreased by €2.7 million due to disposals and impairments.

Total bank borrowings (long and short term) amounted to €150.8 million (31 December 2013: €175.5 million). This decrease is primarily the result of loans repaid during the year, largely through the proceeds of the Kragujevac Plaza disposal.

Apart from bank financing, Plaza has a balance sheet liability of €162.9 million (with an adjusted par value of circa €191.5 million) from issuing debentures on the Tel Aviv Stock Exchange and to Polish institutional investors. These debentures are presented at amortised cost.

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

As at 31 December 2014, the net balance of the Company, with its controlling shareholders, is a liability of approximately €1.2 million, in the main related to projects in India.

Other current liabilities have increased from €11.2 million to €13.2 million in 2014. The increase is attributable to the advance payment received in respect of a potential sale of Koregaon Park in India and the disposal of land in Romania.

The total equity decreased from €210 million in 2013 to €120 million in 2014 due to a €119.6 million loss suffered mainly from writedowns, the result of rights issuances (net of issuance costs) and allocation of shares to bondholders under the debt arrangement (€24.7 million addition) and from a €4 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.

Roy Linden

Chief Financial Officer

19 March 2015

Valuation Summary by Cushman and Wakefield as at 31 December 2014 (in EUR) - 2013 comparatives are based on a Jones Lang LaSalle report

(*) Assets were valued with the comparative sales price method; no value at completion was estimated

(**) Rounded to nearest thousand

Notes

· 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.

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), India (from 2006), and, between 2010 and 2012, also in the USA. 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, 2013 - 62.5%). Refer to note 19 for the issuance of shares in the course of 2014. The Company regards Elbit Imaging Limited ("EI") as the ultimate parent company (refer to note 31 for more details.

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, 2014 in accordance with the Netherlands Civil Code.

The consolidated financial statements were authorized for issue by the Board of Directors on March 19, 2015.

b. Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the statement of the financial position:

· Liabilities for cash-settled share-based payment arrangements are measured at fair value

· Held for trading financial assets are measured at fair value

· Derivative financial instruments are measured at fair value

· Non-Derivative financial instruments at fair value through profit or loss were measured in 2013 at fair value. No such assets exist in 2014.

c. 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.

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 Company still faces material uncertainties in respect of the time needed to sell the properties. However 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.

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 we 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 7 - Suspension of borrowing costs capitalization

· Note 7 - Classification of trading properties as current vs. non-current

· Note 2(e) - Trading property vs. Investment property

· Note 9 - Classification of the joint arrangement

· Note 16 - Measurement of fair value of new debentures 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 7 - key assumptions used in determining the net realisable value of trading properties

· Note 7 - provisions and contingencies

· Note 25 - 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 as background, the level of uncertainty of the actual amount of time needed to complete all steps in the process has become much higher 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 these uncertainties and abnormalities, the Company has taken in 2013 (and reassured this position in 2014) a position of reclassifying its entire trading properties to long term, with the exception of a property where a sale and purchase agreement exists, until the abnormal level of uncertainty is reduced.

NOTE 3 - CASH AND CASH EQUIVALENTS

 (1) Main EUR deposits as of December 31, 2014 are held on corporate level and bear money market interest rates which are mainly 0%.

NOTE 4 - RESTRICTED BANK DEPOSITS

(1) As of December 31, 2014, EUR 3.8 million is restricted mainly in respect of bank facilities agreements signed to finance Projects in Poland and the Czech Republic. These amounts carry an annual interest rate of mainly Overnight rates. Additional EUR 1.3 is a secured deposit due to hedging activities through sell of currency options, and carrying no interest.

(2) As of December 31, 2014, EUR 1.0 million is a secured deposit bearing no interest due to hedging activities through sell of currency options.

NOTE 5 - TRADE RECEIVABLES

NOTE 6 - OTHER RECEIVABLES, PREPAYMENTS AND ADVANCES

a. Other receivables

b. Prepayments and advances

NOTE 7 - TRADING PROPERTIES

 (*) As of December 31, 2013, the Koregaon Park trading property was the only trading property presented as short term, owing to the existence of a sale and purchase agreement on the trading property. Following the continuous delay in the selling process it was decided in 2014 to reclassify the abovementioned property to long term. All other trading properties are classified as long term.

(1) Including EUR 5 million acquired following the termination of the BAS joint venture (refer to note 26(J) for more details).

(2) 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 crisis.

(3) Breakdown of write -down of trading properties:

The 2014 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.

Also affecting the valuations (in respect of plots under development) are delays in the execution and commencement of construction of projects by the Company, increase in the risks inherited with 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 to schemes of projects (e.g Casaradio, please see (4) below) which triggered additional significant impairments.

In the operational projects (Koregaon Park in India and Zgorzelec in Poland) impairment was performed due to delays in executing a sale transaction for the project and that current transaction is in lower prices (in case of Koregaon Park), and also a decrease in the performance of both commercial centres.

· The disposal, or contracted disposal, of certain properties at a selling price below their carrying amount triggered write down of these properties to their contractual selling price (refer to note 26(E))

(4) Including carrying amount of Casaradio project in Romania in a total amount of EUR 116 million (2013 - EUR 153 million). The 2014 impairment is attributed to the change of scheme of the project, mainly by excluding a residential component.

(5) The 2013 value of the Casaradio project in Romania includes two non-operative gas turbines with a total carrying amount of EUR 3 million (following write down). These turbines were purchased in the past with the purpose of supplying energy to the completed project due to lack of sufficient energy infrastructure capabilities in Bucharest at the time. Following an improvement in the energy infrastructure in recent years the turbines became redundant and efforts were made to dispose of them. In the course of 2013 the turbines were written down (EUR 6.3 million) to their Net Realizable Values based on most recent offering prices received from potential buyers. Refer to note 26 (F) for the selling of the turbines.

NOTE 8 - PROPERTY AND EQUIPMENT

(*) Restated in 2013 due to Retrospective application. A net amount of EUR 0.7 million was transferred to investment in Equity accounted investee Ercorner, as part of implementation of IFRS 11.

(**)2014 depreciation - including impairment of EUR 0.7 million due to office building in Romania.

(1) For the selling of the airplane refer to note 26(F).

NOTE 9 - 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, 2014 and 2013:

(1) Refer also to note 26(J) for the transaction with joint venture partner.

None of the joint ventures are publicly listed.

The movement in equity accounted investees (in aggregation) was as follows:

(1) EPUS was the top holding company of the US operations, holding all the discontinued operations in the US. Upon the disposal of all US assets, EPUS remained with undistributed cash amounts, and had no activity, therefore the EPUS remaining asset was deemed not to be part of the discontinued operations, and therefore reclassified to equity accounted investees. EPUS was dissolved in March 2013, and all of the remaining cash in it was distributed as liquidation dividend to the owners.

(2) 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:

(3) Refer also to note 26(J) in respect of the termination of the BAS joint venture.

(4) As of December 31, 2014, the loan to equity accounted investee Diksna totalled EUR 6.1 million bearing interest of 3 months EURIBOR +2.5% per annum (December 31, 2013 - EUR 7.04 million). Other investment in equity accounted investees is either through various equity instruments, or by loans to cover negative equity position considered part of the Group's net investment in the investee.

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:

(*) Including cash and cash equivalents in the amount of EUR 0.8 million (2013 - EUR 1.1 million).

(**) 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.

Immaterial joint ventures information

With the exception of EPI and Diksna, all other December 31, 2014 and 2013 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):

NOTE 10 - DERIVATIVES

The table below summarizes the results of the 2014 and 2013 derivatives activity, as well as the outstanding derivatives as of December 31, 2014 and 2013:

(1) Selling options strategy (by writing call and put options through Israeli banks) 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 wrote call option on an amount of EUR 25 million with a strike exchange rate of 4.92 NIS per EUR, and collected EUR 0.3 million in cash premium. In respect of collaterals to this transaction refer to note 4 above. In respect of post balance sheet activity refer to note 29(B).

(2) The Company was paying a fixed interest of 6.98% based on a nominal EUR amount of EUR 15.1 million and receiving an interest of six months WIBOR + 4.5% with the same amortization schedule as the Polish bonds (refer to note 16). The swap was settled in March 2013 for a cash payment of EUR 0.8 million, in order to release EUR 2.7 million restricted cash served as guarantee in respect of the SWAP.

(3) 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.

(4) 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.

(5) 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.

None of the abovementioned activities qualified for hedge accounting.

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 dates.

NOTE 10 - 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 28. All interest bearing loans from banks are secured. Terms and conditions of outstanding loans were as follows:

 Below is the breakdown of all outstanding bank loans: