REG - Globalworth Real Est - Interim Results for 6 months ended 30 June 2021
21/09/2021 07:00
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RNS Number : 3831M Globalworth Real Estate Inv Ltd 21 September 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
21 September 2021
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Interim Results for the six months ended 30 June 2021
Globalworth, the leading office investor in Central and Eastern Europe,
announces the release of its Interim Report and Unaudited Consolidated
Financial Results for the six-month period ended 30 June 2021 (the "Interim
Report").
The Interim Report is also available on Globalworth's website at:
https://www.globalworth.com/investor-relations/reports-presentations/
(https://www.globalworth.com/investor-relations/reports-presentations/)
For further information visit www.globalworth.com (http://www.globalworth.com)
or contact:
Enquiries
Stamatis Sapkas
Tel: +40 732 800 000
Deputy Chief Investment Officer
Jefferies (Joint Broker)
Tel: +44 20 7029 8000
Stuart Klein
Panmure Gordon (Nominated Adviser and Joint Broker)
Tel: +44 20 7886 2500
Alina Vaskina
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central and Eastern
Europe, quoted on the AIM-segment of the London Stock Exchange. It has become
the pre-eminent office investor in the CEE real estate market through its
market-leading positions both in Poland and Romania. Globalworth acquires,
develops and directly manages high-quality office and industrial real estate
assets in prime locations, generating rental income from high quality tenants
from around the globe. Managed by over 230 professionals across Cyprus,
Guernsey, Poland and Romania, a combined value of its portfolio is €3.1
billion, as at 30 June 2021. Approximately 95.1% of the portfolio is in
income-producing assets, predominately in the office sector, and leased to a
diversified array of over 650 national and multinational corporates. In Poland
Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Timisoara, Constanta and Pitesti.
For more information, please visit www.globalworth.com
(http://www.globalworth.com) and follow us on Facebook, Instagram and
LinkedIn.
IMPORTANT NOTICE: This announcement has been prepared for the purposes of
complying with the applicable laws and regulations of the United Kingdom and
the information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the laws
and regulations of any jurisdiction outside of the United Kingdom. This
announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"targets", "believes", "estimates", "plans", "projects", "anticipates",
"expects", "intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions. These forward
looking statements include all matters that are not historical facts and
involve predictions. Forward-looking statements may and often do differ
materially from actual results. Any forward-looking statements reflect the
Company's current view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and assumptions
relating to the Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in which it
operates. Forward-looking statements speak only as of the date they are made
and cannot be relied upon as a guide to future performance. Save as required
by law or regulation, the Company disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements in
this announcement that may occur due to any change in its expectations or to
reflect events or circumstances after the date of this announcement.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
INTERIM REPORT AND UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
30 JUNE 2021
FINANCIAL HIGHLIGHTS: H1-2021
Combined portfolio open market value Shareholders' equity EPRA NRV per share
€3.1bn €1.7bn €8.61
+1.3(%) on YE-20 -1.1(%) on YE-20 -0.8(%) on YE-20
IFRS Earnings before tax Adjusted normalised EBITDA Net Operating Income
€18.9m €64.8m €72.2m
-€46.1m in H1-20 -9.4(%) on H1-20 -9.4(%) on H1-20
IFRS Earnings per share EPRA Earnings per share Dividends paid in H1-21
6 cents 13 cents 15 cents
-22 cents in H1-20 -38.1(%) on H1-20 -50.0(%) on H1-20
CHIEF EXECUTIVE'S REVIEW
Dear readers,
The first half of 2021 has been one of contradictions for Globalworth as,
despite the continuing very challenging market due to the COVID-19 pandemic,
we have experienced operating successes and business growth which has,
nonetheless, not been reflected in our results for this six-month period.
Having said this, we firmly believe that we have been implementing the right
strategy to address the present challenges, which we anticipate will persist
for the remainder of 2021, and reinforce our position as THE landlord of
choice in our home markets of Poland and Romania.
Our Market
Overall, the uncertainty caused by the COVID-19 global pandemic has had an
impact on demand for office space in the second half of 2020, which has
persisted in the first half of 2021 in both Poland and Romania.
Market conditions are expected to remain challenging for the remainder of 2021
as new COVID-19 variants are emerging, further forcing a number of companies
to keep reassessing their occupational plans (extensions, expansions,
relocations, release of spaces etc), as well as the duration of the leases
signed, and delaying many of them from allowing their employees to return to
the office as originally planned.
Having said the above, although challenges remain ahead in the near term, we
continue to be optimistic about the medium and long-term prospects of the
office market. Economic activity has rebounded significantly globally and in
our home markets in H1-2021, with year-on-year GDP growing by 10.9% and 13.0%
in Poland and Romania respectively, and we expect that multinationals sooner
rather than later will start implementing the expansion plans that were halted
as a result of the pandemic. In addition, we have seen a significant reduction
in future planned office development projects which should translate into less
supply in the next 18-24 months, thereby easing the competitive pressure from
new stock in the medium term.
Our Leasing
Despite the current challenging market environment, we achieved our best ever
half year in terms of leasing transactions, with 122 tenants signing contracts
for 194.4k sqm (+68.2% increase compared to H1-2020) of commercial space to be
taken-up or extended, at an average WALL of 4.7 years, which we expect to
generate future rental income of €132.5 million.
As was the case in 2020, most of our leasing success was in contract renewals,
accounting for 57.3% of our total leasing activity, followed by new take-up
(34.3%), while 27 tenants chose to expand their operations, taking up
additional space to house their operations.
Investment in Our Portfolio
The footprint of our combined standing portfolio (net) increased by 31.7k sqm
to 1.3 million sqm of GLA on 30 June 2021. In the period, we have successfully
delivered our class "A" Globalworth Square office in Bucharest and completed
our first purchases of standing properties since our decision to suspend new
acquisitions due to COVID-19 as part of our initiatives to safeguard our
business and liquidity in a period of increased uncertainty. These two
high-quality logistic / light-industrial facilities, which are located in the
western part of Romania, offer a total area of 27.0k sqm, were acquired for
€17.9 million and are 100% let to two multinational tenants on 15-year lease
agreements.
We prioritised the development of other new high-quality logistic /
light-industrial facilities in Romania (99.7k sqm) and the refurbishment /
repositioning of two mixed-use properties in Poland aiming at increasing their
class "A" office space and improving their retail/commercial offering, in
response to current market conditions.
In addition, in our efforts to improve the quality of our services to our
partners, we continued to internalise the property management of our
portfolio, kept (re)investing in our properties, maintained and, where
required, improved the quality of our buildings. Overall, we internally manage
962.4k sqm of high-quality office and mixed-use space in Poland and Romania
with an appraised value of €2.5 billion, accounting for 96.8% of office and
mixed-use standing properties (90.7% by total standing portfolio by value). In
addition, we invested €7.7 million in our standing portfolio and the two
mixed-use properties which are under refurbishment / repositioning.
Occupancy, Rent and Valuation
Our successful efforts in leasing in the first half of the year were not fully
reflected in the average occupancy of our combined standing commercial
portfolio, which decreased by 2.4% compared to year-end 2020 to 88.7% (89.7%
including tenant options), due to average occupancy of three new standing
properties lower than the Group average, and the 1.3% decrease in
like-for-like occupancy due to very challenging market conditions.
However, total annualised contracted rent increased by 1.0% to €185.2
million compared to year-end 2020, with 94.7% in active leases and the
remainder being pre-let. The benefits of our longstanding strategy to
establish long-term partnerships with high-quality national and multinational
tenants, thus ensuring sustainable cash-flow generation, allowed us to
maintain a high rate of collection with c.98.9% of the rents invoiced being
received in line with their customary cycle.
As a result, the total combined portfolio value increased by 1.3% to €3.1
billion, with the like-for-like appraised value of standing commercial
properties remaining effectively unchanged at €2.7 billion (0.1% lower
compared to 31 December 2020).
Our Results and Corporate Activity
The lower occupancy in our portfolio, has impacted our Net Operating Income
for the first six months of 2021, decreasing by 9.4% to €72.2 million
compared to the first half of 2020, including the 1.3% impact due to
restrictions addressing COVID-19.
Our initiatives to improve operational efficiency where somewhat offset by the
one-off costs associated with the cash offer by the consortium of CPI Property
Group S.A. and Aroundtown SA (via Zakiono Enterprises Limited "(Zakiono")) to
acquire the entire issued and to be issued share capital (not already held, or
agreed to be acquired, by Zakiono) of Globalworth in May 2021, thus resulting
in EPRA earnings decreasing by 37.5% to €29.0 million, as compared to the
same period in 2020. Adjusted normalised EBITDA decreased by a lower
percentage (9.4% decrease) to €64.8 million, due to the effect of lower NOI
(9.4% lower than in H1-2020) and despite the decrease in recurring
administrative expenses of €0.8 million.
During the period we paid the second interim dividend for 2020 of €0.15 per
share, while on 31 August 2021, we announced the first interim dividend for
2021 of €0.15 per share. Both dividends represented an amount of at least
90% of the EPRA Earnings of the respective period they relate to, as
stipulated by our articles of incorporation.
Liquidity has always been a key area of focus and, especially since the COVID
-19 pandemic outbreak, we have taken several steps to ensure that we have
sufficient cash in this period while investing in our portfolio, with our
liquidity being c.€459.9 million (vs c.€527.8 million at 2020 year-end)
and our LTV at 39.2% at 30 June 2021 (vs 37.8% at 2020 year-end).
In addition, all three major rating agencies, following their year-end 2020
review of Globalworth, maintained their investment grade status for the Group,
with S&P and Fitch ratings of "BBB -" rating and "Stable" outlook and
Moody's of "Baa3" rating and "Negative" outlook mainly due to their house view
on the Romanian economy.
As mentioned above, CPI Property Group S.A. and Aroundtown SA formed a
consortium, and, via Zakiono, made a cash offer for the entire issued and to
be issued share capital in the Company at €7.00 / share which was initiated
by way of a formal offer first announced on 12 May 2021. The offer was
successfully completed, with the consortium now holding 60.6% of the share
capital, via Zakiono, thus becoming the largest and controlling shareholder of
Globalworth. The fact that Globalworth is now controlled by two very sizeable,
financially strong, and reputable European real estate institutional investors
is not only a vote of confidence by them in the quality of the company and its
portfolio but also on its future growth prospects. We are confident that
with their support and closer cooperation, Globalworth will be even more
successful in the future.
Sustainable Development
We maintained our strong focus of giving back to our community, with
Globalworth and the Globalworth Foundation contributing c.€445k in more than
10 initiatives in Romania and Poland.
Furthermore, consistent with our commitment to energy efficient properties, we
certified or recertified 22 properties with BREEAM Very Good or higher
certifications, and at the end of the first half of 2021 we owned 57 green
certified properties valued at €2.7 billion.
Most of our standing combined portfolio is environmentally certified, with 55
properties awarded BREEAM Very Good and LEED Gold or higher, and EDGE
accreditation, accounting for 92.3% of our standing commercial portfolio by
value.
In addition, the Renoma and Supersam mixed-use properties in Poland which are
currently under refurbishment / repositioning have maintained their BREEAM
Excellent accreditations, as the works performed are in accordance with a
strict set of guidelines which do not impact their green certification status.
Furthermore, in the first half we were able to secure 100% of the energy used
in our Polish properties to be generated from renewable sources and in the
third quarter of the year we increased the use of energy generated from
renewable sources in our Romanian properties from 49% to 97%.
Outlook
For the second half of 2021, our primary focus will continue to be the active
management of our portfolio of high-quality properties. At the same time,
investing in our high-quality developments will remain a priority and we are
also ready to act quickly if new attractive opportunities become available.
Although the office of the future may need to be adjusted to potentially offer
greater flexibility or alternative space planning arrangements, I strongly
believe that its importance will not diminish. Many companies are also
publicly confirming the view that the office environment increases
productivity, promotes creativity, innovation, consistency, and fosters
relationships and corporate culture, which are essential for the long-term
sustainability and growth of their businesses.
We are very well-placed to continue to successfully address ongoing challenges
and I firmly believe that we can achieve new levels of success in the future.
Stay safe and healthy!
Dimitris Raptis
Chief Executive Officer
20 September 2021
MANAGEMENT REVIEW
REAL ESTATE INVESTMENT ACTIVITY
· Completed the development of Globalworth Square in Bucharest in
June 2021, adding 29.1k sqm class "A" office space to our portfolio.
· Prioritised the development of new high-quality logistic /
light-industrial facilities in Romania, in response to current market
conditions.
· Continued (and continuing) to monitor market trends for the
development of office properties in the future.
· Acquired two high-quality logistic / light-industrial facilities
in the western part of Romania with a total area of 27.0k sqm for €17.9
million which are let to two multinational tenants on 15-year lease
agreements.
Developments
The COVID-19 pandemic outbreak resulted in us focusing our development
programme on projects with significant pre-lets or at advanced levels of
construction - thus, following a very active 2020 where, in Romania, we
delivered four properties with 95.8k sqm, at the beginning of 2021 we had one
class "A" office under construction in Bucharest and several other industrial
projects at various stages of development across the country.
New Deliveries
In June 2021, we delivered the Globalworth Square development in the New CBD
of Bucharest. This class "A" office features several new technologies, such as
ice storage and geothermal energy systems which target the lowering of
energy/occupational costs and the improving of efficiencies in the property,
aiming at becoming the first property in our portfolio in Romania with BREEAM
Outstanding green accreditation (currently under certification process).
Globalworth Square is located between our own Globalworth Plaza and Green
Court B class "A" offices, extending over 15 floors above ground and three
underground levels, offering 29.1k sqm of high-quality GLA and c.450 parking
spaces. The property, as at 30 June 2021, was 36.8% leased to Wipro, a leading
multinational company delivering innovation-led strategy, technology and
business consulting services. Furthermore, to allow for the highest level of
"customisation" of the available spaces for future tenants in the property,
the available spaces have remained in a core and shell design.
Review of Development Projects
In the first half of 2021, we prioritised the development of new logistic /
light-industrial facilities in our portfolio, and in this period, we
progressed with select preparatory activities, including planning and/or
permitting, of the subsequent phases in four of our projects in Romania. We
expect that together these facilities will, on completion, further increase
our footprint by 99.7k sqm of high-quality GLA.
In addition, we own, directly or through JV partnerships, other land plots in
prime locations in Bucharest, regional cities in Romania and Poland, covering
a total land surface of 1.2 million sqm (comprising 2.3% of the Group's
combined GAV), for future developments of office, industrial or mixed-use
properties. When fully developed, these land plots have the potential to add
in total a further 785.1k sqm of high-quality GLA to our standing portfolio
footprint.
These projects, which are classified for "Future Development", continue to be
reviewed by the Group, albeit periodically, with the pace at which they will
be developed being subject to tenant demand and general market conditions.
Developments - Prioritised
Timisoara Industrial Chitila Logistics Hub Pitesti Industrial Park Phase B Constanta Business Park (Phase B)*
Park II (Phase B) (Phases B and C)*
Location Timisoara Bucharest Pitesti Constanta
Status Under construction Under construction Under permitting Dev. prioritised
Expected Delivery 2022 2021-2022 2021 2022
GLA (k sqm) 19.0 54.1 6.7 19.8
CAPEX to 30 Jun 20 (€ m) 0.6 6.1 1.9 0.5
GAV (€ m) 1.1 5.8 1.4 0.9
Estimated CAPEX to Go (€ m) 7.7 23.4 3.4 8.5
ERV (€ m) 0.8 2.3 0.5 0.9
Estimated Yield on Development Cost 9.2% 8.0% 9.6% 9.7%
(*) 50:50 Joint Venture; figures shown on 100% basis.
Future Developments
Podium Globalworth Constanta Timisoara Luterana Green
Park III West Business Industrial Court D
Park (Phased)* Park I & II
(Phased)
Location Krakow Bucharest Constanta Timisoara Bucharest Bucharest
Status Constr. Postponed Constr. Postponed Planned Planned Planned Planned
GLA (k sqm) 17.7 33.4 526.2 165.2 26.4 16.2
CAPEX to 30 Jun 20 (€ m) 8.5 5.2 11.5 6.43 7.4 2.5
GAV (€ m) 9.6 7.8 21.5 10.4 14.0 6.1
Estimated CAPEX to Go (€ m) 29.7 38.5 243.6 63.5 39.7 23.9
ERV (€ m) 3.1 5.1 27.8 6.7 5.8 3.0
Estimated Yield on Development Cost 8.1% 11.5% 10.9% 9.6% 12.3% 11.4%
(*) 50:50 Joint Venture; figures shown on 100% basis.
New Acquisitions
During the period, we completed the acquisition of two high-quality logistic /
light-industrial facilities in the western part of Romania with a total area
of 27.0k sqm for €17.9 million and acquired additional land adjacent to one
of our existing mixed-use developments in Constanta improving the visibility
and access of our existing investment.
The facilities in Arad and Oradea represent the first purchases of standing
properties for the Group since our decision in 2020 to suspend the acquisition
of new standing properties, as part of our initiatives to safeguard our
business and liquidity in a period of increased uncertainty due to COVID-19.
Industrial Park West - Arad ("IPW Arad")
Industrial Park West - Arad is a 20.1k sqm facility in the North-West part of
the city and part of the industrial zone of Arad. IPW Arad was developed in
two phases between 2012 and 2020.
· Phase 1 was delivered in 2012, and comprises of light-production,
warehouse, office and technical areas
· Phase 2 was delivered in 2020, further increasing the production
and office areas in the property
IPW Arad is strategically located only a few kilometres from the A1 motorway,
the Arad International Airport and the city centre, to which has excellent
connectivity, while the park has the necessary infrastructure within the park
to be able to support high-quality international corporates.
The park is 100% leased, and on a 15 year lease (13.6 years remaining) to Huf
Romania, the Romanian subsidiary of the global automotive supplier Huf Group,
the leading specialist for secure car access and authorisation.
Industrial Park West - Oradea ("IPW Oradea")
Industrial Park West - Oradea comprises of 6.9k sqm facility delivered in the
second half of 2020, and 100% leased on a 15-year lease (14.2 years remaining)
to Iwis, the world leader in innovative, cost-effective timing drive systems
based on precision chains.
IPW Oradea is located within the industrial zone of Oradea, and strategically
located in the European Road E60 and c.4 km from the Romanian / Hungarian
border.
The park could potentially increase its floor space by up to 9.9k sqm in the
future.
Select Land Acquisition
In order to facilitate further the success and the development of the future
phases of the Constanta Business Park project, we acquired a small parcel of
land (1.5k sqm) which increases its visibility from the main road and also
improves access.
Industrial Park West - Arad & Oradea Overview
City Acquisition Price (€m) GLA Occupancy 100% Occupancy Yield ((*))
(k sqm) (%)
IPW - Arad Arad / Romania 13.3 20.1 100% 8.5%
IPW - Oradea Oradea / Romania 4.6 6.9 100% 8.6%
Total 17.9 27.0 100% 8.5%
*100% Occupancy Yield based on acquisition data, divided by acquisition price.
ASSET MANAGEMENT REVIEW
· 194.4k sqm of commercial space taken-up or extended at an average
WALL of 4.7 years despite challenging market conditions, representing a +68.2%
increase compared to H1-2020.
· Leases renewed accounted for the majority of our activity, at
57.3%, improving our WALL over the period (4.8 years as at 30 June 2021 vs 4.5
years as at 31 December 2020).
· Average standing occupancy of our combined commercial portfolio
of 88.7% (89.7% including tenant options), decreasing from 90.9% (91.7%
including tenant options) at year-end 2020. Like-for-like occupancy decreased
by 1.3%.
· Most of our contracted rent is from office and industrial spaces
(91.4% of annualised contracted rent) which have remained largely unaffected
by measures taken by the authorities against COVID-19.
· Moderate impact from COVID-19 with:
o Rate of collections for rents invoiced and due remaining high at 98.9%
during the first half of 2021
o Net Operating Income 1.3% lower due to pandemic
· Total combined value of our real estate portfolio in Poland and
Romania, marginally increased to €3.1 billion (+1.3%), mainly due to new
acquisitions and the net positive impact from our developments (delivered, in
progress or under refurbishment).
o Like-for-like appraised value of our standing commercial properties
remained effectively unchanged at €2.7 billion as at 30 June 2021, 0.1%
lower compared to 31 December 2020.
Leasing Review
Despite the current challenging environment and drop on demand for office
space in our home markets, our total leasing activity in the first half of
2021 was 68.2% higher compared to the same period last year.
New Leases
In the first six months of 2021, the Group successfully negotiated the take-up
(including expansions) or extension of 194.4k sqm of commercial spaces in
Poland (60.9% of transacted GLA) and Romania (39.1% of transacted GLA), with
an average WALL of 4.7 years. Our principal focus continued to be the
prolongation of leases with existing tenants in our portfolio and take-up of
available spaces in standing properties and developments as, in the current
market environment, companies in general are taking a much more conservative
approach to leasing (relocation or expansion of their operations), while in
several cases they were forced to downsize or even close-down their
operations. As such, signing of new leases, typically for large multinational
and national corporates, takes longer in the current market environment as
potential tenants are re-assessing their future occupational plans.
Leases were renewed for a total of 111.3k sqm of GLA with 68 of our tenants,
at a WALL of 3.8 years, with the most notable extensions involving Infosys
(25.5k sqm) in Green Horizon, Rockwell (12.9k sqm renewal plus 6.7k sqm
expansion) in A4 Business Park and EY (6.0k sqm) in TCI, while c.74.7% of the
renewals by GLA signed were for leases that were expiring in 2022 or later.
New leases were signed with 40 tenants for 66.7k sqm of GLA at a WALL of 6.5
years. The majority were for logistic / light-industrial spaces which
accounted for 52.8% with the remainder involving office and retail/commercial
spaces.
The largest new leases in this period were with HAVI Logistics, for a total of
20.6k sqm in two logistic / light-industrial facilities in Bucharest, Heineken
(8.6k sqm) in Podium Park II and Wipro (6.0k sqm plus 4.7k sqm expansion) in
the newly delivered Globalworth Square. In H1-2021 we have signed 16.3k sqm of
expansions with 27 tenants, at an average WALL of 5.7 years.
Summary Leasing Activity for Combined Portfolio in H1-2020
GLA (k sqm) No. of Tenants* WALL (yrs)
New Leases / New Contracts 66.7 40 6.5
New Leases / Expansion 16.3 27 5.7
Renewals / Extensions 111.3 68 3.8
Total 194.4 122 4.7
*Number of individual tenants.
Occupancy
The average occupancy of our combined standing commercial portfolio as at 30
June 2021 was 88.7% (89.7% including tenant options), representing a 2.4%
decrease over the past 6 months (90.9% as at 31 December 2020 / 91.7%
including tenant options).
Standing occupancy has been affected by the addition of three properties with
an average occupancy (67.2%) lower than the Group average, and the negative
net uptake of space despite the signing of new contracts, resulting in a lower
average standing commercial occupancy rate across our portfolio.
On a like-for-like basis, following the reclassification of our Supersam
mixed-used property in Poland to a property under refurbishment /
redevelopment, occupancy decreased by 1.3% to 89.6% at the end of the first
half 2021. This decrease is considered modest and is mainly attributable to
the office properties in our portfolio, due to the very challenging market
conditions - however, we remain confident that we will be able to lease the
available spaces in our portfolio in the future as business conditions return
to a more normalised state.
Occupancy in our Renoma and Supersam mixed-use assets in Wroclaw and Katowice,
respectively, has also decreased by 7.4% in this six-month period to 67.9% (30
June 2021), however, this is due to the properties undergoing a partial
refurbishment / repositioning and are not included in our occupancy metrics.
Across the portfolio, at the end of the first half of 2021, we had 1,126.9k
sqm of commercial GLA leased to approximately 560 tenants in our standing
properties (98.3% of the total leased GLA in our standing assets), at an
average WALL of 4.7 years, the majority of which is let to national and
multinational corporates that are well-known within their respective markets.
In addition, we had 44.2k sqm leased in the two mixed-use properties which are
currently under refurbishment / repositioning and not included in our standing
portfolio.
Occupancy Evolution H1-2021 (GLA 'k sqm) - Commercial Portfolio
Poland Occupancy Romania Occupancy Group Occupancy
Rate (%) Rate (%) Rate (%)
Standing Available GLA - 31 Dec. 20 566.2 672.7 1,238.9
Acquired GLA - 27.0 27.0
New Built GLA - 29.1 29.1
Remeasurements, reclassifications* (24.3) 0.3 (24.0)
Standing Available GLA - 30 Jun. 21 541.9 729.1 1,271.0
Occupied Standing GLA - 31 Dec. 20 506.4 89.4% 619.2 92.0% 1,125.6 90.9%
Acquired/Developed Occupied GLA - 37.7 37.7
Expiries & Breaks (33.2) (29.1) (62.3)
Renewals** 84.0 21.6 105.6
New Take-up 25.9 22.4 48.3
Other Adj.*** (relocations, remeasurements, etc) (22.4) (0.0) (22.4)
Occupied Standing GLA - 30 Jun. 21 476.7 88.0% 650.2 89.2% 1,126.9 88.7%
* Includes the reclassification of Supersam mixed-use property (Katowice) from
standing to under refurbishment (24.3k sqm of GLA).
** Renewals are neutral to the occupancy calculation.
*** Includes the reclassification of occupied GLA in Supersam from standing to
under refurbishment (22.6k sqm of occupied GLA). Other lease expirations,
renewals, or new take-up in relation to Supersam are excluded from the table.
Rental Levels
Headline market rental levels have remained relatively stable in our
portfolio, despite the uncertainty in the market and the cautious approach of
tenants, reflecting the quality of our properties, our active asset management
initiatives since the outbreak of the pandemic, our approach to sustainability
as well as the lower high-quality supply of spaces in Poland and Romania. . At
the end of June 2021 our average headline rent in our standing properties for
office, retail/commercial and industrial spaces were €14.2/sqm/month
(€14.2 at YE-2020), €12.0/sqm/month (€12.1 at YE-2020) and
€3.8/sqm/month (€3.7 at YE-2020) respectively.
In the first half of the year, although rental levels vary significantly
between type of spaces, buildings and submarkets, new leases and leases
extended were signed at 3.4% lower rents compared to the previously prevailing
averages.
Our overall commercial GLA take-up during the first six months of 2021 was
agreed at an average rent of €11.1/sqm/month (€10.9/sqm/month for FY2020),
with office leases signed at an average rent of €13.5/sqm/month, industrial
spaces at €3.9/sqm/month, driving the average rate down for the period as
such leases accounted for 22.9% of the total leasing activity, while retail
spaces were leased at €11.7/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent in our portfolio in Poland and Romania
increased by 1.0% to €185.2 million compared to year-end 2020 mainly due to
new additions and leases signed on properties under refurbishment /
repositioning or being developed.
Total annualised contracted rents in our standing commercial portfolio were
€176.0 million at 30 June 2021, lower by 1.0% compared to 31 December 2020,
increasing to €177.0 million when including rental income generated by
renting 153 residential units and other auxiliary spaces in Upground, the
residential complex in Bucharest which we partially own.
Like-for-like annualised commercial contracted rents in our standing
commercial portfolio decreased by 1.5% to €171.8 million at the end of the
first half of 2021 compared to 31 December 2020, as the increase in rents
(0.5% on average) due to indexation was outweighed primarily by the lower
occupancy.
Annualised Contracted Rent Evolution H1-2021 (€m)
Poland Romania Group
Rent from Standing Commercial Properties ("SCP") 31 Dec 2020 97.0 80.7 177.7
Less: Properties reclassified((*)) (3.4) - (3.4)
Rent from SCP Adj. for Properties Reclassified 31 Dec 2020 93.6 80.7 174.3
Less: Space Returned (5.9) (2.6) (8.6)
Plus: Rent Indexation 0.3 0.5 0.8
Plus/Less: Lease Renewals (net impact) & Other (1.0) (0.1) (1.1)
Plus: New Take-up 4.7 1.6 6.3
Total L-f-L Rent from SCP 30 Jun 2021 91.7 80.1 171.8
Plus: Standing Commercial Properties Acquired During the Period - 1.5 1.5
Plus: Developments Completed During the Period - 2.7 2.7
Total Rent from Standing Commercial Properties 91.7 84.3 176.0
Plus: Residential Rent - 1.0 1.0
Total Rent from Standing Properties 91.7 85.3 177.0
Plus: Active and Pre-lets of Space on Projects Under Development / 7.0 1.2 8.2
Refurbishment
Total Contracted Rent as at 30 Jun 2021 98.7 86.5 185.2
*Supersam mixed-use asset (Katowice) was reclassified under redevelopment
during H1-2021
Combined Annualised Commercial Portfolio Contracted Rent Profile as at 30 June
2021
Poland Romania Group
Contracted Rent (€ m) 98.7 85.5 184.2
Tenant origin - %
Multinational 68.4% 91.6% 79.1%
National 30.1% 7.2% 19.5%
State Owned 1.5% 1.2% 1.4%
Note: Commercial Contracted Rent excludes c.€1.0 million from residential
spaces as at 30 June 2021
Annualised Contracted Rent by Period of Commencement Date as at 30 Jun 2021
(€m)
Active Leases H2-2021 H1-2022 H2-2022 >2022 Total
Standing Properties 168.7 6.1 1.9 0.0 0.3 177.0
Developments 6.7 1.5 - - - 8.2
Total 175.4 7.6 1.9 0.0 0.3 185.2
Annualised Commercial Portfolio Lease Expiration Profile as at 30 Jun 2021
(€m)
Year H2-2021 2022 2023 2024 2025 2026 2027 2028 2029 ≥2030
Total 12.2 17.2 18.7 29.6 17.3 19.9 16.3 10.5 8.4 34.1
% of total 6.6% 9.4% 10.2% 16.1% 9.4% 10.8% 8.9% 5.7% 4.6% 18.5%
The Group's rent roll across its combined portfolio is well diversified, with
the largest tenant accounting for 5.0% of contracted rents, while the top
three tenants account for 10.6% and the top 10 account for 27.1%. We expect
this diversity to grow further as the portfolio continues to expand.
Cost of Renting Spaces
The headline (base) rent presents the reference point which is typically
communicated in the real estate market when a new lease is signed. However,
renting spaces typically involves certain costs, such as rent-free periods,
fitouts for the space leased, and brokerage fees, which are incurred by the
landlord. These incentives can vary significantly between leases, and depend
on market conditions, type of lease (new take-up or lease extension), space
leased (office, other commercial, etc), duration of the contract and other
factors.
In calculating our effective rent, we account for the costs incurred over the
lifetime of the lease, which we deduct from the headline (base) rent, thus
allowing us to assess the profitability of a rental agreement.
Overall, in the first half of 2021, we successfully negotiated the take-up
(including expansions) or extension of 194.4k sqm of commercial spaces in our
portfolio. The overall weighted average effective rent for these new leases
was €7.8/sqm/month with a weighted average lease term of 4.7 years.
Industrial leases completed in the period, which accounted for 22.9% of the
total leasing activity, resulted in lower average headline and effective rent
achieved.
The difference between headline (base) and effective rents in the first half
of 2021 was on average c.29.3%, a discount higher compared to the FY2020
(average of c.21%) due to the continuing challenging market conditions and the
type of leases signed.
In total, new leases signed in the first six months of the year will generate
a future rental income of €132.5 million.
Weighted Average Effective Rent (€ / sqm / m) - H1-2021
Poland Romania Group
Headline Commercial Rent 13.1 7.8 11.1
Less: Rent Free Concessions (2.8) (0.6) (2.0)
Less: Tenant Fitouts (1.4) (0.4) (1.0)
Less: Broker Fees (0.4) (0.2) (0.3)
Effective Commercial Rent 8.5 6.7 7.8
WALL (in years) 4.2 6.1 4.7
Note: Certain casting differences in subtotals / totals are due to figures
presented in 1 decimal place.
Tenant Demands / Claims Review
Tenant demands / claims decreased in 2021 as the business community has been
absorbing the initial shock from the COVID-19 pandemic outbreak, and
restrictions imposed by the authorities that directly and/or indirectly
impacted certain businesses and industries have been easing in Poland and
Romania since the beginning of the year.
The majority of our portfolio comprises office premises and industrial
properties or essential retail businesses (supermarkets, pharmacies,
convenience stores etc), none of which were impacted by measures taken by the
authorities since the beginning of the pandemic in our countries of focus. In
February 2021, restrictions on non-essential or stationary retail were
significantly eased in Poland, limited only by the number of customers in
stores.
Of our €185.2 million of total contracted rent on the last day of June,
office rent accounted for 85.1% (including parking rent), with retail /
commercial, industrial and other spaces accounting for 6.3%, 6.3% and 2.3%,
respectively.
Overall, for the first six months of 2021 we have estimated the value of the
tenant demands / claims received at c.€3.6 million, reflecting c.1.9% of our
contracted annual rent, with the majority of them mainly awarded to tenants of
retail / commercial spaces in our properties which were impacted by
restrictive measures / closures in the first part of the year.
Our approach towards these tenant demands / claims, was to continue to
consider each case separately, rather than applying a horizontal or vertical
approach, aiming at identifying the optimal solution for our tenants and
Globalworth. Some of the solutions implemented have been to award rent free
months or to replace fixed rent with turnover rent for retail tenants for
certain periods of tenant leases which in certain cases resulted in lease
extensions.
For us, however, the most important measure is the impact on our Net Operating
Income due to COVID-19 which was limited to 1.3%, with the majority related to
tenants affected directly or indirectly by restrictions imposed on the
operation of non-essential retail/commercial spaces by the authorities.
We expect the level of claims to decrease in the future, as restrictive
measures continue to ease and increasing number of people return to the
office.
Collections Review
The ability to collect contracted rents is a key determinant for the success
of a real estate company.
Our rate of collections of rents invoiced and due in the first half of 2021
remained high at 98.9%(1) (99.0% for 2020FY), due to the long-term
partnerships we established with high-quality national and multinational
tenants since inception of the Group and continue to cultivate since, which
have helped us minimise the impact on rent collections in this period of
higher economic uncertainty and ensure sustainable cash flow generation.
More specifically, considering the current market environment, rent to be
collected in the first six months of 2021 was classified as:
‒ Rent eligible for invoicing: Includes rents to be invoiced
to tenants in accordance with the terms of their lease agreements. Such rents
were either collected or subject to collection; and
‒ Rent impacted by measures imposed by the authorities: Such
rent was to be collected based on the contractual agreements in place, however
due to measures taken by the authorities in Poland and Romania, tenants were
excluded from paying, and as such no invoices were issued by the Group.
Under normal conditions, the Group during the period would have had €77.5
million of rent be invoiced and due, however €1.0 million was not invoiced
due to measures taken by the authorities.
Portfolio Valuation
Our entire portfolio in Poland and Romania was revalued, by independent
appraisers, two times in the first half of 2021.
· The first valuation was performed for the benefit of the
independent committee of the Group responsible for assessing the cash offer
for the entire issued and to be issued share capital of Globalworth, with
effective date the 31 March 2021;
· The second valuation was performed, as at 30 June 2021, in
accordance with our policy of revaluing our properties twice a year, at the
end of June and December respectively.
The valuations were performed by CBRE and Knight Frank for our properties in
Poland, with Colliers and Cushman and Wakefield valuing our properties in
Romania (more information is available under note 4 of the unaudited interim
condensed consolidated financial statements as of and for the period ended 30
June 2021).
Our portfolio since inception of the Group has been growing due to new
additions through acquisition or development of high-quality properties in
Poland and Romania, our asset management initiatives, and the performance of
the real estate markets in which we operate resulting in healthy investor
interest and contracting yields, as well as healthy tenant demand leading to
stable or growing rental levels and lowering tenant incentives.
Overall, our total combined portfolio value increased from €0.1 billion in
2013 to €3.0 billion in 2019, remaining effectively unchanged in 2020 as the
impact of the COVID-19 pandemic was reflected at our year-end independent
valuation appraisal of our properties, and marginally increasing (+1.3%) at
the end June 2021 to €3.1 billion.
Portfolio growth in the first half of 2021, is mainly attributed to the
addition through acquisition of two high-quality logistic / light- industrial
properties in Romania and the net positive impact from our developments
(delivered, in progress or under refurbishment). Like-for-like appraised value
of our standing commercial properties was €2.7 billion at the end of the
period, 0.1% lower compared to 31 December 2020.
(1)Information as at 10 September 2021.
In valuing our properties, the key market indicators used by the four
independent appraisers although vary, considering factors such as the
commercial profile of the property, its location and the country in which it
is situated, have remained consistent with those of year-end 2020, with ERVs,
yields and/or discount rates remaining stable with only few exceptions, where
positive adjustments were made to reflect improvements in operating
performance.
It has to be noted that since 30 June 2020 independent valuations, yields
and/or discount rates used by appraisers have remained stable, which for the
majority of our office and mixed-use properties, were 10 - 50bps wider
compared to December 2019.
Combined Portfolio Value Evolution 30 Jun 2021 (€m)
Poland Romania Group
Total Portfolio Value at 31 Dec 2020 1,610.1 1,422.8 3,032.9
Less: Properties Held in Joint Venture (*) - (51.2) (51.2)
Total Investment Properties at 31 Dec 2020 1,610.1 1,371.6 2,981.7
Plus: Transactions - 17.2 17.2
o/w New Acquisitions - 17.9 17.9
o/w Disposals - (0.7) (0.7)
Plus: Capital Expenditure 1.1 15.8 16.9
o/w Developments - 15.8 16.9
o/w Standing Properties - - -
o/w Future Developments - - -
Plus: Net Revaluations Adjustments (7.8) 11.0 3.2
o/w Developments (3.6) 5.5 1.8
o/w Standing Properties (4.1) 2.2 (2.0)
o/w Lands, Future Developments & Acquisitions - 3.4 3.4
Total Investment Properties at 30 Jun 2021 1,603.4 1,415.5 3,018.9
Plus: Properties Held in Joint Venture (*) - 53.7 53.7
o/w Capital Expenditure & Acquisitions - 4.4 4.4
o/w Net Revaluation Adjustments - (1.9) (1.9)
Total Portfolio Value at 30 Jun 2021 1,603.4 1,469.2 3,072.6
(*) Properties held through joint ventures are shown at 100%, Globalworth owns
50% stake in the respective joint ventures
Note: Certain casting differences in subtotals / totals are due to figures
presented in 1 decimal place.
Combined Portfolio Value Overview 30 Jun 2021 (€m)
Poland Romania Group % of Total YoY LfL
Portfolio % Change % Change
Office 1,334.3 1,186.5 2,520.8 82.0% 0.8% (0.1%)
o/w Standing Properties 1,324.7 1,158.6 2,483.3 80.8% 2.5% (0.1%)
o/w Future Developments 9.6 27.9 37.5 1.2% 0.5% 0.5%
Mixed-Use 269.2 - 269.2 8.8% (1.3%) (1.2%)
o/w Standing Properties 120.1 - 120.1 3.9% (29.2%) (0.9%)
o/w Re-developments 149.0 - 149.0 4.9% 44.5% (1.6%)
Industrial - 206.4 206.4 6.7% 13.8% 0.9%
o/w Standing Properties - 165.3 165.3 5.4% 14.2% 0.8%
o/w Developments in progress - 5.5 5.5 0.2% n.m. n.m.
o/w Future Developments - 35.6 35.6 1.2% (3.0%) 3.1%
Other - 76.3 76.3 2.5% (1.3%) (0.4%)
o/w Standing Properties - 68.4 68.4 2.2% (1.4%) (0.5%)
o/w Lands - 7.9 7.9 0.3% (0.0%) -
Total Portfolio at 30 Jun 2021 1,603.4 1,469.2 3,072.6 100.0% 1.3% (0.1%)
(*) Properties held through joint ventures are shown at 100%, Globalworth owns
50% stake in the respective joint ventures.
STANDING PORTFOLIO REVIEW
· Standing portfolio footprint increased by 31.7k sqm mainly
attributed to the addition of three new high-quality office and industrial
properties in Romania, to 1,303.0k sqm of GLA.
o Supersam, the mixed-use property in Katowice has been reclassified due to
partial refurbishment / repositioning
· Total combined standing GLA of over 1.3 million sqm, with total
standing portfolio value remaining effectively unchanged at €2.8 billion
· Total contracted rent of €185.2 million (over 99% of rent from
office, industrial or other commercial spaces) in our standing properties
· Standing WALL remaining high at 4.7 years (versus 4.4 years at
year-end 2020)
· All our properties in Poland are now internally managed,
resulting in 90.7% of our combined standing commercial portfolio by value
(96.8% of office and mixed-use standing properties) being internally managed
by the Group
· €7.7 million were invested in our renovation and upgrade
programme in the first half of 2021
o Repositioning / renovation of two mixed use properties in Poland, our
landmark Renoma and Supersam in progress and expected to be completed in 2022
Standing Portfolio Evolution
Our combined portfolio of high-quality standing properties as at 30 June 2021,
comprised 39 standing investments (37 at 31 December 2020) with 66 buildings
(64 at 31 December 2020) in Poland and Romania.
In the first half of the year, two high-quality logistic / light-industrial
facilities in regional Romania and a new Class-A office in Bucharest were
added to our standing portfolio, with Supersam our mixed-use property in
Katowice (Poland) being reclassified as it is going through partial
refurbishment / repositioning.
Overall, our standing portfolio comprised 30 Class "A" offices (50 properties
in total) and a mixed-use investment (with five properties in total) in
central locations in Bucharest (Romania), Warsaw (Poland) and five of the
largest office markets/cities of Poland (Krakow, Wroclaw, Katowice, Gdansk and
Lodz).
In addition, we fully own in Romania two logistic / light-industrial parks
with five facilities in Timisoara and three modern warehouses in Pitesti, Arad
and Oradea, and have a 50% ownership through a Joint Venture in two other
industrial parks (with two standing facilities) in Bucharest and Constanta. We
also own part of a residential complex in Bucharest.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 30 Jun. 2020 31 Dec. 2020 30 Jun. 2021
Number of Investments 37 37 39
Number of Assets 62 64 66
GLA (k sqm) 1,248.5 1,271.3 1,303.0
GAV (€ m) 2,844.1 2,805.5 2,837.2
Contracted Rent (€ m) 187.0 178.7 177.0
Of which Commercial Properties 30 Jun. 2020 31 Dec. 2020 30 Jun. 2021
Number of Investments 36 36 38
Number of Assets 61 63 65
GLA (k sqm) 1,215.5 1,238.9 1,271.0
GAV (€ m) 2,783.5 2,745.9 2,778.6
Occupancy (%) 93.3% (94.2%) 90.9% (91.7%*) 88.7% (89.7%*)
Contracted Rent (€ m) 186.1 177.7 176.0
Potential rent at 100% occupancy (€ m) 202.7 199.2 202.5
WALL (years) 4.4 4.5 4.7
(*) Including tenant options
The total gross leasable area of our combined standing commercial portfolio
increased by 32.1k sqm or 2.6% over the first six months of 2021 to reach
1,271.0k sqm, with the overall combined standing portfolio GLA increasing 2.4%
to 1,303.0k sqm.
The net increase in the size of our portfolio was attributed to the addition
of 29.1k sqm of class "A" office space following the delivery of Globalworth
Square in Bucharest and of 27.0k sqm from the two newly acquired high-quality
logistic / light-industrial facilities in Arad and Oradea, partially offset by
the reclassification of our mixed-use Supersam (24.3k sqm) property, the
remeasurement of certain of our properties ((0.1)k sqm), and the sale of
certain units in our Upground residential complex.
The appraised value of our combined standing portfolio as at 30 June 2021 was
€2.8 billion, with the overall increase mainly attributed to the addition of
new properties, through acquisition and completion, which was offset by the
revaluations of properties held throughout the period (like-for-like), and the
sale of certain units in our Upground residential complex. Value of
like-for-like properties remained effectively unchanged, and 0.1% lower at the
end of June 2021 compared to 31 December 2020 (additional information can be
found in the "Asset Management Review").
Evolution of Combined Standing Portfolio over 2021
31 Dec. 2020 LfL Change* New Acq. Reclass. New Deliv. Sales 30 Jun. 2021
(& Other Adj**)
GLA (k sqm) 1,271.3 0.0 27.0 (24.3) 29.1 (0.1) 1,303.0
GAV (€ m) 2,805.5 (2.3) 20.8 (48.4) 63.6 (2.0) 2,837.2
(*) Like-for-Like change represents the changes in GLA or GAV of standing
properties owned by the Group at 31 December 2020 and 30 June 2021.
(**) Includes impact in areas (sqm) from the remeasurement of certain
properties and other GAV adjustments (redevelopment capex, reclassification).
Standing Properties Operation, Renovation and Upgrade Programme
Offering best-in-class real estate space to our business partners is a key
component of our strategy at Globalworth.
We believe that through a "hands-on" approach with continuous active
management and investment in our portfolio we can preserve and enhance the
value of our properties, generate long-term income, as well as offering
best-in-class real estate space to our business partners.
Over the past few years, real estate has been gradually moving away from
"static" bricks and mortar buildings to more vibrant environments where people
and businesses can flourish, and as such the ability to quickly adapt to
trends and customise spaces is becoming an increasingly important factor for
success, which has been accelerated by COVID-19 pandemic and the shifting
format towards a more flexible / hybrid-ecosystem with less desk space and
more collaborative areas.
In order to be able to provide spaces for our current and future business
partners requirements, we continue to internalise the asset management of our
portfolio, keep (re)investing in our properties, maintain and, where required,
improve the quality of our buildings and of our services.
We are pleased that all our properties in Poland are now internally managed by
the Group, with the latest addition being the Green Horizon class "A" office
in Lodz, and in Romania, almost all our offices (with the exception of one)
are internally managed. Overall, we internally manage 962.4k sqm of
high-quality office and mixed-use space in Poland and Romania with an
appraised value of €2.5 billion. Of our total standing commercial portfolio,
our internally managed properties account for 90.7% by value (96.8% of office
and mixed-use standing properties) as at 30 June 2021.
Our Renovation and Upgrade Programme has resumed at a more normalised state in
2021, following its scaling back for part of 2020 due to COVID-19. Overall, in
the first half of 2021, €7.7 million were invested in our standing portfolio
and the two mixed-use properties which are under refurbishment /
repositioning. As a result of our ongoing in-house initiatives and properties
additions, we consider holding a modern portfolio with 47 of our standing
commercial properties, accounting for 71.8% by GLA and 73.9% by commercial
portfolio value, which has been delivered or significantly refurbished in or
after 2014.
In 2021 we commenced the refurbishment / repositioning project of our Renoma
landmark mixed-use property in Wroclaw which involves the conversion of
certain retail / commercial spaces to office, as well as the reallocation of
certain commercial uses. Works for Renoma are in progress and are expected to
be completed by the end of H2-2022.
In addition, similar works will be performed to our Supersam mixed-use
property in Katowice, focusing on the redevelopment of the entire first level
from commercial / retail space to class "A" office and reconfiguring part of
the first underground level to high-quality retail & commercial spaces
(food court and entertainment). Works are estimated to cost €3.6 million and
are expected to be completed in H2-2022.
Finally, we are pleased that tenant fitout works have not been affected during
this period.
Supersam Refurbishment / Repositioning - Overview on Completion
Total Gross Leasable Area 26.2k sqm (+7.7%)
Total Office Leasable Area 13.4k sqm (+2x)
Retail & Other Leasable Area 12.7k sqm (-27.5%)
Total Investment €3.6m
Est. Completion Q3-2022
Properties Under Refurbishment / Repositioning
Renoma Supersam
Location Wroclaw Katowice
Status Refurbishment / Repositioning Refurbishment / Repositioning
Expected Delivery H2-2022 H2-2022
GLA - on Completion (k sqm) 48.4 26.2
CAPEX to 30 Jun 21 (€ m) 2.5 0.5
GAV (€ m) 101.5 47.5
Estimated CAPEX to Go (€ m)* 22.1 5.1
ERV (€ m) 9.4 4.3
Estimated Yield on Completion of Project** 9.7% 10.1%
* Estimated CAPEX to Go partially excludes tenant contributions which are
subject to tenant negotiation and may impact the final yield on Completion of
the Project.
** Estimated Rental Value increase versus current Contracted rent + ERV on
vacant spaces divided by total Development Capex.
SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES
· 22 properties were certified or recertified with BREEAM Very Good
or higher certifications to our portfolio in H1-2021
· Newly certified and recertified properties included Skylight
& Lumen (Warsaw), Silesia Star (Katowice), Rondo Business Park and Quattro
A and B (Krakow)
· Overall, 57 green certified properties in our portfolio valued at
€2.7bn
· Issued the third sustainable development report for the Group for
the FY 2020, and our inaugural Green Bond Report
· Globalworth maintained its low-risk rating by Sustainalitics and
BBB by MSCI
· c.€445k donated to over 10 initiatives in Romania and Poland.
Green Buildings
Consistent with our commitment to energy efficient properties, we certified or
recertified 22 properties with BREEAM Very Good or higher certifications to
our portfolio.
Five properties in Poland were environmentally certified for the first time in
2021, with Silesia Star (Katowice - 2 buildings) and Rondo Business Park
(Krakow - 3 buildings) accredited with BREEAM Excellent certifications.
In addition, 17 other properties had their certifications updated in this
period and we are pleased that we were able to improve the level of
certification, from BREEAM Very Good to Excellent, for three buildings part of
the Quattro Business Park in Krakow, for the A4 Business Park (3 buildings) in
Katowice and for West Link in Wroclaw. All other properties, including
Skylight & Lumen (Warsaw), maintained their original level of
accreditation.
Overall, as at 30 June 2021, our combined standing portfolio comprised 55
green certified properties, accounting for 92.3% of our standing commercial
portfolio by value. BREEAM accredited properties account for 72.1% of our
green certified standing portfolio by value, with the remainder of properties
being holders of other certifications (LEED Gold or Platinum, Edge).
In addition, the Renoma and Supersam mixed-use properties in Poland which are
currently under refurbishment / repositioning have maintained their BREEAM
Excellent accreditations, as the works performed are in accordance with a
strict set of guidelines which do not impact their green certification status.
At Globalworth we aim for 100% of our portfolio to be green accredited and are
currently in the process of certifying or recertifying 11 other properties in
our portfolio, principally targeting BREEAM certifications.
Furthermore, as part of our overall green initiatives in the first half of the
year we were able to secure 100% of the energy used in our Polish properties
to be generated from renewable sources, and in the third quarter were able to
increase the same ratio from 49% to 97% for our Romanian properties. This
represents a significant increase from 2020 and 2019 where 56% and 40%,
respectively, of the energy used in our properties, in Poland and Romania
together, was generated from renewable sources.
Globalworth Foundation Initiatives
In the first half of 2021, the Globalworth Foundation continued with its very
active social programme, and together with the entire Globalworth team, it has
been working to ensure the safety and wellbeing of our people, communities,
and wider stakeholder universe.
Participation in programmes such as "Nesting a brighter future for children"
(United Ways Foundation), the "Visits of Hope" (Hospice "Casa Sperantei"
Foundation), and bringing the first digital solution for virtual sports to
children and teenagers with physical and intellectual disabilities in
placement and residential centres in Romania, the Globalworth Foundation aims
at contributing to the communities in Romania and Poland in which we live and
work.
Overall, in the first six months of 2021 the Globalworth Foundation has
contributed c.€445k to over 10 initiatives in Romania and Poland.
Reporting
As part of our effort to improve disclosure in relation to our sustainable
development strategy, initiatives and performance, we published Globalworth's
"2020 Sustainable Development Report".
This is the third report published by the Group and has been prepared in
accordance with the GRI Standards: Core option and with the European Public
Real Estate Association's Sustainability Best Practice Reporting
Recommendations (EPRA sBPR).
In addition, in July and in line with our commitment as part of the issue of
our inaugural €400 million Green Bond financing, we issued our (first) "2020
Green Bond Report" which has received independent limited assurance from EY on
the allocations of the net proceeds.
Finally, the Globalworth Foundation published it inaugural report, "2020
Globalworth Foundation Annual Report", focusing on the social initiatives in
which it is involved.
PORTFOLIO SNAPSHOT
Our real estate investments are in Poland and Romania, the two largest markets
in the CEE. As at 30 June 2021, our portfolio was spread across 12 cities,
with Poland accounting for 52.2% by value and Romania 47.8%.
Combined Portfolio Snapshot (as at 30 June 2021)
Poland Romania Combined Portfolio
Standing Investments((1)) 19 20 39
GAV((2)) / Standing GAV (€m) €1,603m / €1,445m €1,469m / €1,392m €3,073m / €2,837m
Occupancy((3)) 88.0% 89.2% 88.7%
(91.0% including tenant options) (89.7% including tenant options)
WALL((4)) 4.0 years 5.7 years 4.8 years
Standing GLA (k sqm)((5)) 542.0k sqm 761.0k sqm 1,303.0k sqm
Contracted Rent (€m)((6)) €98.7m €86.5m €185.2m
GAV Split by Asset Usage
Office 83.2% 79.4% 81.4%
Mixed-Use 16.8% 0.0% 8.8%
Industrial 0.0% 11.6% 5.6%
Others 0.0% 9.0% 4.3%
GAV Split by City
Bucharest 0.0% 87.2% 41.7%
Timisoara 0.0% 5.5% 2.7%
Pitesti 0.0% 3.4% 1.6%
Constanta 0.0% 2.4% 1.1%
Arad 0.0% 1.1% 0.5%
Oradea 0.0% 0.4% 0.2%
Warsaw 44.4% 0.0% 23.2%
Wroclaw 21.4% 0.0% 11.2%
Katowice 15.5% 0.0% 8.1%
Lodz 10.8% 0.0% 5.7%
Krakow 4.3% 0.0% 2.2%
Gdansk 3.5% 0.0% 1.8%
GAV as % of Total 52.2% 47.8% 100.0%
1. Standing Investments representing income producing properties. One
investment can comprise multiple buildings. e.g. Green
Court Complex comprises three buildings or one investment
2. Includes all property assets, land and development projects valued at 30
June 2021
3. Occupancy of standing commercial properties, and in the case of Poland,
including office rental guarantees
4. Includes pre-let commercial standing and development assets. WALL of
standing commercial properties in Romania, Poland and the Combined portfolio
are 5.6 years, 3.9 years and 4.7 years, respectively.
5. Including 32.0k sqm of residential assets in Romania
6. Total rent comprises commercial (€176.0 million) and residential (€1.0
million in Romania) standing properties, which includes contracted rent under
master lease agreement, rent in assets under redevelopment (€7.0 million in
Poland) and development pre-lets (€1.2 million in Romania).
CAPITAL MARKETS UPDATE
· On 12 May 2021, CPI Property Group and Aroundtown formed a
consortium ("CPI/AT Consortium") and launched a cash offer, via Zakiono
Enterprises Limited, for the acquisition of the entire issued and to be issued
share capital (not already held, or agreed to be acquired, by Zakiono)
(effectively 48.8% of Globalworth shares) at € 7.00 / share
· Following the completion of the tender offer in July 2021, the
CPI/AT Consortium holds 60.6% of Globalworth's share capital
· Share price performance impacted by the COVID-19 pandemic and the
Offer by the CPI/AT Consortium, closing 3.0% lower at 30 June 2021 compared to
year-end 2020
· Globalworth maintained its investment grade rating by all three
major agencies post their 2020 year-end review of the Group
Equity Capital Markets and Shareholder Structure Update
On 14 April 2021, CPI Property Group S.A. ("CPI") and Aroundtown SA
("Aroundtown" and, together with CPI, the "CPI/AT Consortium") announced a
unilateral cash offer for the shares of Globalworth (the "Offer") through
Zakiono. The Offer was for the acquisition of Globalworth shares at € 7.00 /
share, with the transaction being subject to certain conditions which were
either fulfilled or waived between the date of announcement and 23 July 2021,
when the offer closed.
The independent committee of the Board (the "Independent Committee")
responsible for evaluating the Offer, following advice from J.P. Morgan and
Panmure Gordon, considered that it undervalued the Group and recommended to
shareholders not to accept it. Subsequently the Offer was accepted by holders
of 9.24% of the issued share capital of Globalworth, thus resulting for the
CPI/AT Consortium increasing through Zakiono their controlling share in
Globalworth from 51.39% to 60.63% of the share capital following the
completion of the transaction.
Globalworth's share price has been impacted by the COVID -19 pandemic and the
Offer in the first half of 2021, trading consistently below its 31 December
2020 EPRA NAV level of € 8.68 / share, reaching its lowest closing price on
18 March at €5.70 per share and its highest price on 20 April at €7.48 per
share.
Following the formal announcement of the Offer, the share price of Globalworth
ranged between €6.74 and €7.48 per share, closing at €6.91 per share on
30 June 2021, representing a 3.0% decrease since the beginning of the year.
Including dividends paid, the total return for the first half of 2021 was
(0.9)%.
The Globalworth share price underperformed both FTSE EPRA Developed Europe and
the FTSE EPRA Global indices in the first six months of 2021.
Globalworth Shareholding
30 June 21 23 August 21
CPI Property Group Together: Zakiono Enterprises 29.5% 60.6%
Aroundtown 22.0%
Growthpoint Properties 29.5% 29.4%
Oak Hill Advisors 5.3% 5.3%
EBRD 5.0% -
Other 8.7% 4.7%
Basic Data on Globalworth Shares
(Information as at 30 June 2021)
Number of Shares 221.1m plus 1.3m shares held in treasury
(22.6m plus 0.8m shares in treasury at 23 Aug. 21)
Share Capital €1.7bn
WKN / ISIN GG 00B979FD04
Symbol GWI
Free Float 18.6%
(9.9% at 23 Aug. 21)
Exchange London AIM
Globalworth Share Performance
H1-2021 H1-2020
Market Capitalisation (€ million) - 30 June 1,528 1,369
30-June Closing Price (€) 6.91 6.18
52-week high (€) 7.48 10.10
52-week low (€) 5.70 5.55
Dividend per share 0.15 0.19
Bonds Update
Globalworth in the first half of 2021 had three Eurobonds outstanding for a
total of €1.3 billion. The Eurobonds issued in June 2017, March 2018 and
July 2020 (inaugural green bond), are expiring in 2022, 2025 and 2026,
respectively, and have a weighted average maturity of 3.5 years.
These three facilities, which account for 78.0% of our total outstanding debt
financing, provide us with a simplified capital structure and improve the
efficiency of our capital allocation.
In addition, to be able to issue Eurobonds in an efficient and quick way,
potentially benefiting from favourable market opportunities, in 2018 we
established a Euro Medium Term Notes (EMTN) programme allowing the Group to
issue €1.5 billion of bonds. Currently, the Group has raised €950 million
as part of its EMTN programme, allowing a further €550 million of bonds to
be issued in the future.
Globalworth is rated from all three major agencies, with each of S&P,
Fitch and Moody's maintaining their investment credit rating following their
2020 year-end review of the Group, which is testament to the nature and
quality of our portfolio, the resilience of our cash flows, and the protective
measures we have taken to protect the business and its assets amidst very
challenging but improving market conditions.
We maintained our "BBB -" rating and "Stable" outlook from S&P and Fitch,
and from Moody's our "Baa3" rating and "Negative" outlook mainly due to their
house view on the Romanian economy.
In 2021, all our bonds continued performing well, resulting in further
compression in the yield to maturity, with 17/22 bond trading negatively for
the majority of the second quarter of the year.
Basic Data on the Globalworth Bonds
GWI bond 17/22 GWI bond 18/25 GWI bond 20/26
ISIN XS1577957837 XS1799975922 XS2208868914
SEDOL BD8Q3P6 BD9MPV -
Segment Euronext Dublin, BVB Euronext Dublin, BVB Euronext Dublin
Minimum investment amount €100,000 €100,000 and €1,000 thereafter €100,000 and €1,000 thereafter
Coupon 2.875% 3.000% 2.950%
Issuance volume €550 million €550 million €400 million
Outstanding 30 Jun. 2021 €323 million €550 million €400 million
Maturity 20 June 2022 29 March 2025 29 July 2026
Performance of the Globalworth Bonds
H1-2021 H1-2020
GWI bond 17/22
30 June closing price 102.76 100.31
Yield to maturity at 30 June 0.02% 2.71%
GWI bond 18/25
30 June closing price 107.72 100.82
Yield to maturity at 30 June 0.89% 2.81%
GWI bond 20/26
30 June closing price 108.46 -
Yield to maturity at 30 June 1.14% -
FINANCIAL REVIEW
1. Highlights
Globalworth had a relatively small negative impact on its operational
profitability in H1-2021, compared to its best performing half year in
H1-2020, as a result of the significant efforts made by Management in
minimising the negative impact of the COVID-19 pandemic on its business and
results.
Revenues NOI1
€108.1m €72.2m
-5.2% on H1-20 -9.4% on H1-20
IFRS Earnings per share2 Combined Portfolio Value (OMV)1
6 cents €3.1bn
-22 cents in H1-20 +1.3% on 31 Dec. 2020
EPRA NRV1,3 EPRA NRV per share1,3
€1,903.4m €8.61
-1.0% on 31 Dec. 2020 -0.8% on 31 Dec. 2020
Adjusted normalised EBITDA1,4 EPRA Earnings per share1,2
€64.8m 13 cents
-9.4% on H1-20 -38.1% on H1-20
LTV1,5 Dividends paid in H1- 21 per share
39.2% 15 cents
37.8% at 31 Dec. 2020 -50.0% on H1-20
1. See Glossary (pages 72-74) for definitions.
2. See note 12 of the unaudited condensed consolidated financial statements
for calculation.
3. See note 19 of the unaudited condensed consolidated financial statements
for calculation.
4. See page 22 for further details.
5. See note 21 of the unaudited condensed consolidated financial statements
for calculation.
2. Revenues and Profitability
Following the best performing six-month period from an operating profitability
point of view in H1-2020, consolidated revenues decreased by 5.2% in H1-2021
(compared to H1-2020) due to the effects of COVID-19 and our efforts to extend
as many of our existing leases and secure new ones for our available spaces in
our properties in Poland and Romania.
Lower consolidated revenues resulted from a 7.2% decline in rental income to
€75.4 million (H1-2020: €81.2 million), with the overall reduction in
consolidated revenues of €5.8 million driven by:
· a €6.0 million or 7.4% reduction in rental income from standing
properties owned throughout both periods (5.3% reduction in Poland and 2.1%
reduction in Romania);
· a €0.8 million or 1.0% reduction in rental income from the Renoma
mixed-use property in Poland which is currently undergoing refurbishment /
repositioning, which started in December 2020;
· a €0.5 million or 0.6% reduction in additional rental income from
surrender premia charged to tenants; and
· an increase of €1.5 million or 1.8% in rental income in H1-2021
from the completion of a property under development in Poland (Podium Park B)
in Q4-2020 (1.5% increase) and the acquisition of two industrial Properties in
Romania (IPW Arad and IPW Oradea) in May 2021 (0.3% increase).
The Group revenues in H1-2021 were split 54% Poland / 46% Romania, compared to
56% Poland / 44% Romania in H1-2020.
Net Operating Income declined to €72.2 million, lower by 9.4% compared to
H1-2020 (€79.6 million), which was largely in line with the decrease in
overall Group revenues. The decrease in NOI reflected a drop of €5.4 million
in Poland and an additional €2.0 million in Romania.
· NOI was split 56% Poland / 44% Romania, compared to 57% Poland / 43%
Romania in H1-2020.
Adjusted normalised EBITDA(1) was €64.8 million for the period, a decrease
of 9.4% over H1-2020 (€71.5 million), resulting from the net effect of the
decrease of NOI (by €7.4 million) and the decrease in recurring
administrative expenses (by €0.8 million).
(1)Earnings before finance cost, tax, depreciation, amortisation of other
non-current assets (H1-2021: €47.1 million positive; H1-2020: €24.8
million negative), plus: net fair value loss on investment property and
financial instruments (H1-2021: €15.0 million loss; H1-2020: €91.8 million
loss), less: other income (H1-2021: €0.5 million; H1-2020: €0.3 million);
plus: acquisition costs (H1-2021: €0.0 million; H1-2020: €2.3 million);
plus: non-recurring administration and other expense items (H1-2021: €3.2
million, including €1.9 million related to professional advisory fees in
connection with the cash offer for Globalworth shares made by CPI Property
Group S.A. and Aroundtown SA through Zakiono Enterprises Limited in May 2021;
H1-2020: €2.5 million).
Net finance costs were €26.7 million for the period, representing a 19.5%
increase (or €4.4 million higher) over H1-2020 (€22.3 million), due to:
· higher (by €3.0 million) coupon on Bonds from the additional net
€173.3 million outstanding Eurobonds starting from the end of July 2020 with
the issuance of a new €400 million green Bond maturing in 2026, which was
partly used to repay €226.7 million of the Bond maturing in 2022;
· higher (by €0.7 million) debt amortisation costs resulting from the
issuance of the new green Bond and part repayment of the 2022 Bond;
· higher (by €0.4 million) interest on new secured bank loans drawn
down in H1-2020, higher (by €0.5 million) negative interest charged on Euro
deposits and current accounts balances, as well as on Polish Zloty current
accounts balances, higher (by €0.2 million) lease liability, as well as less
(by €0.3 million) interest income on cash deposits; and
· a partly offsetting reduction in interest expenses (by €0.7
million) resulting from the fact that no RCF balance was outstanding during
H1-2021, whereas during Q2-2020 €200 million was outstanding.
Joint ventures, including two light industrial properties under development in
Romania, generated net losses during H1-2021 and our share of these amounted
to €1.3 million, whereas in H1-2020 they contributed €1.3 million profit
to the Group's result. The negative result from joint ventures resulted from
our share of the net valuation losses (net of the related deferred tax effect)
of €2.7 million. In H1-2020 our share of valuation gains (net of the related
deferred tax effect) was €1.4 million.
Earnings before tax were positive (€18.9 million) in H1-2021 compared to
H1-2020 where a loss was generated (€46.1 million), mainly as a result of
the €77.3 million lower revaluation loss recorded in H1-2021 (€14.7
million) compared to H1-2020 (€92.0 million). EPRA earnings, however, were
€29.0 million (or 13 cents per share), 37.5% lower compared to H1-2020
(€46.4 million, or 21 cents per share) as a result of the reduction in
operational profitability, as indicated by the decrease in NOI and adjusted
normalised EBITDA. EPRA Earnings per share for H1-2021 also followed the same
trend as EPRA earnings as the weighted average number of shares during H1-2021
(221.2 million) and H1-2020 (221.5 million) has not differed significantly.
Reconciliation of IFRS Earnings to EPRA Earnings
€m cents/share
IFRS Earnings 12.5 6
Add/(subtract):
Fair value loss on properties 14.7 7
Deferred Tax 0.4 0
JVs and others 1.4 0
EPRA Earnings 29.0 13
Following the trend in earnings before tax, which turned to a profit in
H1-2021 from a loss in H1-2020 due to the more significant valuation loss
recorded in the prior year's comparative period, IFRS earnings per share was 6
cents positive compared to 22 cents negative in H1-2020. The IFRS earnings
were €12.5 million positive compared to €48.6 million negative in H1-2020.
3. Balance Sheet
The combined portfolio open market value increased by €39 million, an
increase of 1.3% compared to 31 December 2020, to €3,103 million (31 Dec.
20: €3,064 million). This comprises €3,049 million of investment property
held on our balance sheet as at 30 June 2021, and a further €54 million
representing the 100% value of joint venture properties comprising two light
industrial properties under development, in phases, in Romania (Chitila
Logistics Hub and Constanta Business Park).
The balance sheet value of our investment property (freehold) portfolio at 30
June 2021 amounted to €3,019 million (31 December 2020: €2,982 million).
The small increase is mainly due to the acquisition of two standing industrial
properties (€18 million), CAPEX investments made on a property under
development in Romania and other value accretive CAPEX on standing properties
(€25.2 million), as offset by the net fair value losses on freehold
properties of €14.7 million (€20.8 million net fair value loss in Poland
and a €6.1 million net fair value gain in Romania).
Total assets as at 30 June 2021 were €3,606 million, marginally lower by
0.7% compared to 31 December 2020 (€3,630 million), primarily due to the net
fair value loss on freehold investment property, as well as our Group's share
of net fair value loss on properties held through joint ventures.
EPRA NAV(2) Bridge from 31 December 2020 to 30 June 2021 (€ million)
€m
EPRA NAV 31 Dec 2020 1,923.5
EPRA Earnings 29.0
Fair value loss on properties (14.7)
Non-EPRA Earnings 0.2
Dividends (33.1)
Others (1.5)
EPRA NAV 30 June 2021 1,903.4
(2)From 2021 onwards the Group is using the EPRA NRV matric as its primary NAV
metric, which is equivalent to the EPRA NAV metric used in prior years /
periods.
EPRA NRV decreased to €1,903.4 million as at 30 June 2021, a decrease of
1.0% compared to 31 December 2020 (€1,923.5 million). As a result, EPRA NRV
per share also decreased to €8.61 per share (31 December 2020: €8.68 per
share).
The main factors driving the change in EPRA NRV during H1-2021 were:
· The effect of the fair value loss on properties of €14.7
million on the positive net profit for the period; and
· The dividends of €33.1 million paid in March 2021 in respect of
the six months ended 31 December 2020.
Evolution of EPRA NAV(3)/share and OMV by semester
Jun-19 Dec-19 Jun-20 Dec-20 Jun-21
EPRA NAV per share € 9.05 9.30 8.80 8.68 8.61
EPRA NRV (NAV) €bn 1.8 2.1 2.0 1.9 1.9
Combined Portfolio OMV €bn 2.7 3.0 3.0 3.0 3.1
(3)Reference to the EPRA NAV metric i refers to year or period end dates prior
to 31 December 2020 and are presented as equivalent to the EPRA NRV metric.
4. Results and dividends
The results for the period are set out in the consolidated statement of
comprehensive income on page 30.
In March 2021, the Company made an interim dividend distribution of 15 cents
per share in respect of the six-month period ended 31 December 2020. Post the
period end, on 31 August 2021, the Company declared its first interim dividend
in respect of the six-month period ended 30 June 2021 of 15 cents per share.
5. Financing & Liquidity Review
In the context of the ongoing COVID-19 pandemic, the Group's main focus
during the first half of 2021 was to preserve the available cash position and
available undrawn RCF and minimise the negative impact of the COVID-19
pandemic over its operations and results.
Dividends
As stated above, in March 2021 the Company paid an interim dividend of 15
cents per share (c.€33.1 million) in respect of the six-month period ended
31 December 2020, while on 31 August 2021 it announced the payment of an
interim dividend of 15 cents per share (c.€33.2 million) in respect of the
six-month period ended 30 June 2021.
Debt Summary
The Group's outstanding debt remained largely unchanged at 30 June 2021
compared to 31 December 2020.
The total outstanding debt portfolio of the Group at 30 June 2021 of €1.63
billion (31 December 2020: €1.63 billion) comprises medium to long-term
debt, denominated entirely in Euro and no debt maturity until 20 June 2022,
when our 2022 Bond is maturing (€323.1 million).
The Group has continued in 2021 its strategy over the last few years of
maintaining a relatively low weighted average interest rate on debt financing.
At 30 June 2021, our weighted average interest rate on debt remained at 2.73%
(same as at 31 December 2020), while the average period to maturity of 4.0
years (4.5 years at 31 December 2020) followed an anticipated trend, as the
Group has not entered into any new financing arrangements nor extended the
term of existing debt, as presented in the table below:
Weighted average interest rate versus debt duration to maturity
Dec.18 Jun.19 Dec.19 Jun.20 Dec.20 Jun.21
Weighted average interest rate 2.91% 2.85% 2.83% 2.52% 2.73% 2.73%
Weighted average duration to maturity 5.1 4.9 4.3 4.2 4.5 4.0
Servicing of Debt During H1-2021
In the first half of 2021, we repaid in total €1.4 million of loan capital
and €29.4 million of accrued interest on the Group's drawn debt facilities,
including €25.8 million in relation to the full annual coupon for two of the
three Eurobonds of the Company.
Liquidity & Loan to value ratio
The Group's aim is to maintain at all times sufficient liquidity also in order
to have the flexibility to react quickly at the moment when attractive new
investment opportunities may arise.
As at 30 June 2021, the Group had cash and cash equivalents of €459.9
million (31 December 2020: €527.8 million) available to use. In addition,
the Group had available liquidity from committed undrawn loan facilities (RCF)
amounting to €215 million.
The Group's loan to value ratio at 30 June 2021 was 39.2%, compared to 37.8%
at 31 December 2020. This is consistent with the Group's strategy to manage
its long-term target LTV of below 40%.
Debt Structure as at 30 June 2021
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt at 30 June 2021 is unsecured: 77.8% (31
December 2020: 77.7%), with the remainder secured with real estate mortgages,
pledges on shares of the underlying ring-fenced financing subsidiaries, trade
receivables and intra-group loan subordination agreements in favour of the
financing parties.
Loans and borrowings maturity and short-term / long-term debt structure mix
The Group had at 30 June 2021 credit facilities and Eurobonds with different
maturities, all on medium and long-term (similar to 31 December 2020), as
presented in the below table:
Maturity by year of the principal balance outstanding at 30 June 2021 (€
million)
2021 2022 2023 2024 2025 2026 2027 2028 2029-2035
1.4 326.0 2.9 35.8 662.3 402.6 64.8 2.6 137.9
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear interest based
either on one month's or three months' Euribor plus a fixed margin (8.6% of
the outstanding balance at 30 June 2021, compared to 8.7% at 31 December
2020), or at a fixed interest rate (91.4% of the outstanding balance at 30
June 2021, compared to 91.3% at 31 December 2020).
The high degree of fixed interest rate debt ensures a natural hedging to the
Euro, the currency in which the most significant part of our liquid assets
(cash and cash equivalents and rental receivables) is originally denominated
and the currency for the fair market value of our investment property.
Debt Covenants
The Group's financial indebtedness is arranged with standard terms and
financial covenants, the most notable as at 30 June 2021 being the following:
Unsecured Eurobonds and Revolving Credit Facility
· the Consolidated Coverage Ratio, with minimum value of 200%;
· the Consolidated Leverage Ratio, with maximum value of 60%;
· the Consolidated Secured Leverage Ratio with a maximum value of
30%; and
· the Total Unencumbered Assets Ratio, with minimum value of 125%
(applicable only for the RCF).
Secured Bank Loans
· the debt service cover ratio ('DSCR') / interest cover ratio
('ICR'), with values ranging from 120% to 350% (be it either historic or
projected); and
· the LTV ratio, with contractual values ranging from 60% to 83%.
There have been no breaches of the aforementioned covenants occurring during
the period ended 30 June 2021.
Cash flows
· Cash flows from operating activities decreased to €18.8
million, compared to €24.7 million in H1-2020, reflecting the decline in
operating profitability.
· Acquisition of two industrial properties in Romania in May 2021
for €18.0 million.
· Cash used on capital expenditure on a property under development
in Romania of €11.9 million, on an asset under refurbishment in Poland of
€1.3 million, on standing assets of €11.3 million, and €1.2 million on
land preparation costs.
· Extended €5.8 million funding to joint ventures for use in
advancing two industrial development projects.
· Dividends paid in H1-2021 of €33.1 million in respect of the
six-month period ended 31 December 2020, compared to €66.4 million in
H1-2020 in respect of the six-month period ended 31 December 2019.
· Cash and cash equivalents as at 30 June 2021 reached €459.9
million, compared to €527.8 million at 31 December 2020.
6. Principal Risks and Uncertainties
The key risks which may have a material impact on the Group's performance,
together with the corresponding mitigating actions, are presented on pages 98
to 102 of the Annual Report for the year ended 31 December 2020, which is
available at www.globalworth.com (http://www.globalworth.com) .
These risks comprise the following:
· Exposure to the economic environment in Romania and Poland;
· Changes in the political or regulatory framework in Romania,
Poland or the European Union;
· Inability to execute planned acquisitions and timely completion
of development of properties;
· Risk of negative changes in the valuation of the portfolio;
· Inability to lease space and renew expiring leases;
· Counterparty credit risk;
· Sustainable portfolio risk and Response to Climate Change;
· Lack of available financing and refinancing;
· Risk of breach of loan covenants;
· Risk of changes in interest rates and exchange rates; and
· Compliance with fire, structural, health and safety, or other
regulations.
There has been no significant change in these risks during the six month
period ended 30 June 2021, and these risks are expected to continue to remain
relevant during the second half of 2021.
7. Going Concern
The Directors have considered the Company's ability to continue to operate as
a going concern based on the Management's cash flow projections for the 15
months subsequent to the date of approval of the unaudited interim condensed
consolidated financial statements. The Directors believe that the Company
would have sufficient cash resources to meet its obligations as they fall due
and continue to adopt the going concern basis in preparing the unaudited
interim condensed consolidated financial statements as of and for the six
months ended 30 June 2021.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021
30 June 2021 30 June 2020
Note €'000 €'000
Revenue 7 108,110 114,039
Operating expenses 8 (35,957) (34,392)
Net operating income 72,153 79,647
Administrative expenses 9 (9,323) (8,824)
Acquisition costs - (2,302)
Fair value loss on investment property 3 (14,703) (91,977)
Share-based payment expense 20.3 (432) (194)
Depreciation on other long-term assets (259) (203)
Other expenses (795) (1,444)
Other income 476 285
Foreign exchange loss (50) (167)
(Loss)/gain from fair value of financial instruments at fair value through 14 (243) 151
profit or loss
(25,329) (104,675)
Profit/(loss) before net financing cost 46,824 (25,028)
Net financing cost
Finance cost 10 (27,523) (23,528)
Finance income 839 1,203
(26,684) (22,325)
Share of (loss)/profit of equity-accounted investments in joint ventures 22 (1,273) 1,258
Profit/(loss) before tax 18,867 (46,095)
Income tax expense 11 (6,333) (2,487)
Profit/(loss) for the period 12,534 (48,582)
Other comprehensive income - -
Total comprehensive income 12,534 (48,582)
Profit/(loss) attributable to equity holders of the Company 12,534 (48,582)
Cents Cents
Earnings per share
- Basic 12 6 (22)
- Diluted 12 6 (22)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Note 30 June 2021 31 December 2020
Unaudited Audited
€'000 €'000
ASSETS
Non-current assets
Investment property 3 3,049,467 3,013,014
Goodwill 12,349 12,349
Advances for investment property 5 4,128 4,215
Investments in joint ventures 22 33,190 28,358
Equity investments 10,589 10,369
Other long-term assets 1,957 2,148
Prepayments 387 432
Deferred tax asset 11 137 786
3,112,204 3,071,671
Current assets
Financial assets at fair value through profit or loss 14 7,510 7,695
Trade and other receivables 15 17,354 16,025
Contract assets 1,840 2,819
Guarantees retained by tenants 887 894
Income tax receivable 846 931
Prepayments 5,614 2,227
Cash and cash equivalents 16 459,893 527,801
493,944 558,392
Total assets 3,606,148 3,630,063
EQUITY AND LIABILITIES
Issued share capital 1,704,374 1,704,374
Treasury shares 20.5 (9,592) (12,977)
Share-based payment reserve 20 3,557 6,184
Retained earnings 37,187 57,783
Equity attributable to ordinary equity holders of the Company 1,735,526 1,755,364
Non-current liabilities
Interest-bearing loans and borrowings 13 1,284,655 1,604,043
Deferred tax liability 11 149,713 144,843
Lease liabilities 3.2 26,965 27,324
Guarantees retained from contractors 2,307 2,235
Deposits from tenants 3,558 3,449
Trade and other payables 1,012 692
1,468,210 1,782,586
Current liabilities
Interest-bearing loans and borrowings 13 340,211 26,051
Guarantees retained from contractors 3,417 4,032
Trade and other payables 37,835 40,209
Contract liability 3.2 2,488 2,088
Other current financial liabilities 552 875
Current portion of lease liabilities 2,096 1,765
Deposits from tenants 15,575 16,245
Provision for tenant lease incentives - 46
Income tax payable 238 802
402,412 92,113
Total equity and liabilities 3,606,148 3,630,063
The financial statements were approved by the Board of Directors on 20
September 2021 and were signed on its behalf by:
John Whittle
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021
Issued share capital Treasury shares Share-based payment reserve Retained earnings Total Equity
Note €'000 €'000 €'000 €'000 €'000
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
Shares issued to the Executive Directors and other senior management employees - 392 (392) - -
Interim dividends - 271 (72) (108,523) (108,324)
Share based payment expense under the subsidiaries' employees share award plan - - 1,071 - 1,071
Shares vested under the subsidiaries' employees share award plan - 540 (540) - -
Shares purchased with cash by the Company - (8,345) - - (8,345)
Cash-based portion of deferred annual bonus plan converted to deferred shares - - 1,025 - 1,025
settlement
Deferred annual bonus plan reserve for the year - - 2,065 - 2,065
Shares vested under the deferred annual bonus incentive plan - 2,544 (2,544) - -
Total comprehensive income for the year - - - (46,795) (46,795)
As at 31 December 2020 1,704,374 (12,977) 6,184 57,783 1,755,364
Shares issued to the Executive Directors and other senior management employees 20.2 - 180 (180) - -
Interim dividends 18, 20 - 9 2 (33,130) (33,119)
Share based payment expense under the subsidiaries' employees share award plan 20.3 - - 432 - 432
Shares vested under the subsidiaries' employees share award plan 20.3 - 823 (823) - -
Deferred annual bonus plan settled in cash 20.4 - - (79) - (79)
Shares vested under the deferred annual bonus incentive plan 20 - 2,373 (1,979) - 394
Total comprehensive income for the period - - - 12,534 12,534
As at 30 June 2021 1,704,374 (9,592) 3,557 37,187 1,735,526
Issued share capital Share-based payment reserve Retained earnings Total Equity
Treasury shares
€'000 €'000 €'000 €'000 €'000
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
Interim dividends - - 129 (66,572) (66,443)
Share based payment expense under the subsidiaries' employees share award plan - - 194 - 194
Shares vested under the subsidiaries' employees share award plan - 14 (14) - -
Shares purchased with cash by the Company - (1,624) - - (1,624)
Cash-based portion of deferred annual bonus plan converted to deferred shares - - 1,025 - 1,025
settlement
Total comprehensive income for the period - - - (48,582) (48,582)
As at 30 June 2020 1,704,374 (9,989) 6,905 97,947 1,799,237
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021
30 June 2021 30 June 2020
Note €'000 €'000
Profit/(loss) before tax 18,867 (46,095)
Adjustments to reconcile profit before tax to net cash flows
Fair value loss on investment property 3 14,703 91,977
Loss on sale of investment property 162 107
Share-based payment expense 20 432 194
Depreciation on other long-term assets 259 203
Net increase in allowance for doubtful debts 17.2 563 991
Foreign exchange loss/(gain) 50 (1,396)
Loss/(gain) from fair valuation of financial instrument 14 243 (151)
Share of loss/(profit) of equity-accounted joint ventures 22 1,273 (1,258)
Net financing costs 26,685 22,325
Operating profit before changes in working capital 63,237 66,897
(Increase)/decrease in trade and other receivables (4,560) 2
Decrease in trade and other payables (9,309) (3,844)
Interest paid (29,436) (35,470)
Interest received 178 663
Income tax paid (1,315) (3,533)
Cash flows from operating activities 18,795 24,715
Investing activities
Expenditure on investment property completed and under development or (25,715) (31,392)
refurbishment
Refund of advances given for property acquisition - 10,000
Payment for acquisition of investment property (18,011) -
Proceeds from sale of investment property 524 1,518
Investment in financial assets at fair value through profit or loss 14 (143) (1,003)
Proceeds from sale of financial assets through profit and loss 85 16,186
Payments for equity investments (220) (177)
Investment in and loans given to joint ventures 22 (5,770) (13,656)
Payment for the acquisition of remaining 50% stake in joint venture - (2,000)
Payment for purchase of other long-term assets (68) (230)
Cash flows used in investing activities (49,318) (20,754)
Financing activities
Purchase of own shares 20.5 - (1,624)
Proceeds from interest-bearing loans and borrowings 13 - 346,577
Payments of interest-bearing loans and borrowings 13 (1,398) (2,104)
Payment of interim dividend to equity holders of the Company 18 (33,130) (66,443)
Payment for lease liability obligations 3.2 (1,463) (1,595)
Payment of bank loan arrangement fees and other financing costs (1,208) (2,197)
Cash flows from financing activities (37,199) 272,614
Net increase in cash and cash equivalents (67,722) 276,575
Effect of exchange rate fluctuations on cash and bank deposits held (186) (1,217)
Cash and cash equivalents at the beginning of the period 16 527,801 290,694
Cash and cash equivalents at the end of the period1 16 459,893 566,052
(1)Nil restricted cash reserve (30 June 2020: €1.0 million), see note 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION I: BASIS OF PREPARATION
1 Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited ('the Company' or 'Globalworth')
is a company with liability limited by shares and incorporated in Guernsey on
14 February 2013, with registered number 56250. The registered office of the
Company is at Anson Court, La Route des Camps, St Martin, Guernsey GY4 6AD.
Globalworth, being a real estate Company, has had its ordinary shares admitted
to trading on AIM (Alternative Investment Market of the London Stock Exchange)
under the ticker "GWI" since 2013.
The Company's Eurobonds have been admitted to trading on the official List of
the Irish Stock Exchange in June 2017, March 2018 and July 2020, respectively.
In addition, the Company's Eurobonds maturing in June 2022 and March 2025 have
been admitted to trading on the Bucharest Stock Exchange in July 2017 and May
2018, respectively. The Group's principal activities and nature of its
operations are set out in the strategic report section of the 2020 Annual
Report.
Directors
The Directors of the Company are:
• Dimitris Raptis, Executive, Chief Executive Officer, Member of
the Investment Committee
• Geoff Miller, Independent Non-executive, Chair of the Board,
Investment and Nomination Committees, Member of the Remuneration Committee
• John Whittle, Independent Non-executive, Chair of the Audit
Committee, Member of the Remuneration Committee
• Andreea Petreanu, Independent Non-executive Director, Chair of
the Risk Committee, Member of the Audit and Nomination Committees
• Richard van Vliet, Independent Non-executive, Member of the
Audit, Risk and Nomination Committees
• Norbert Sasse, Non-executive, Member of Investment Committee
• Martin Bartyzal, Non-executive, Chair of the Remuneration
Committee, Member of the Risk Committee
• David Maimon, Non-executive, Member of the Risk and Investment
Committees
Basis of Preparation and Compliance
The condensed consolidated financial statements of the Group (or 'financial
statements' or 'consolidated financial statements') as of and for the
six-month period ended 30 June 2021 have been prepared in accordance with
International Accounting Standard (IAS) 34 "Interim Financial Reporting".
These consolidated financial statements are prepared in Euro ("EUR" or "€"),
rounded to the nearest thousand, being the functional currency and
presentation currency of the Company. These financial statements have been
prepared on a historical cost basis, except for investment property, financial
assets at fair value through profit or loss and financial assets at fair value
through other comprehensive income which are measured at fair value.
These financial statements are prepared on a going concern basis. The
Directors believe that it is appropriate to adopt the going concern basis in
preparing the financial statements. The Directors based their assessment on
the Group's detailed cash flow projections for the period up to 31 December
2022. These projections take into account the very significant available cash
resources of the Group (as at 30 June 2021 these amounted to c.€460
million), the latest contracted rental income, anticipated additional rental
income from new possible lease agreements during the period covered by the
projections, modification of existing lease contracts due to COVID-19 as well
as repayment of contracted debt financing, CAPEX, and other commitments. The
projections show that, in the period up to 31 December 2022, the Company
anticipates having sufficient liquid resources to continue to fund ongoing
operations and asset development without the need to raise any additional debt
or equity financing, or the need to reschedule existing debt facilities or
other commitments. Further details on the Company's response to the COVID-19
pandemic can be found in other sections of the Interim Report.
Accounting policies
These consolidated financial statements apply the same accounting policies,
presentation and methods of calculation as those followed in the preparation
of the Group's consolidated financial statements for the year ended 31
December 2020, which were prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union ('EU') and the
Companies (Guernsey) Law 2008, as amended. The consolidated financial
statements included in this Interim Report should be read in conjunction with
the consolidated financial statements for the year ended 31 December 2020. On
1 January 2021, the Group adopted certain new accounting policies where
necessary to comply with amendments to IFRS, refer to note 26 for more
details.
Basis of Consolidation
These condensed consolidated financial statements comprise the financial
statements of the Company and its subsidiaries ('the Group') as of and for the
period ended 30 June. Subsidiaries are fully consolidated (refer to note 23)
from the date of acquisition, being the date on which the Group obtains
control, and continues to be consolidated until the date when such control
ceases. The financial statements of the subsidiaries are prepared for the
period from the date of obtaining control to 30 June, using consistent
accounting policies. All intra-group balances, transactions and unrealised
gains and losses resulting from intra-group transactions are eliminated in
full.
Foreign Currency transactions and balances
Foreign currency transactions during the period are initially recorded in the
functional currency at the exchange rates approximating those ruling on the
date of the transaction. Monetary assets and liabilities denominated in
foreign currencies other than functional currency of the Company and its
subsidiaries are retranslated at the rates of exchange prevailing on the
statement of financial position date. Gains and losses on translation are
taken to profit and loss. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined.
2 Critical Accounting Judgements, Estimates and Assumptions
The preparation of consolidated financial statements in conformity with IFRS
requires management to make certain judgements, estimates and assumptions that
affect reported amounts of revenue, expenses, assets and liabilities, and the
accompanying disclosures and the disclosures of contingent liabilities.
Selection of Functional Currency
The Company and its subsidiaries used their judgment, based on the criteria
outlined in IAS 21 "The Effects of Changes in Foreign Exchanges Rates", and
determined that the functional currency of all the entities is the EUR. In
determining the functional currency consideration is given to the denomination
of the major cash flows of the entity e.g., revenues and financing.
As a consequence, the Company uses EURO (€) as the functional currency,
rather than the local currency Romanian Lei (RON) for the subsidiaries
incorporated in Romania, Polish Zloty (PLN) for the subsidiaries in Poland and
Pounds Sterling (GBP) for the Company and the subsidiary incorporated in
Guernsey.
Further additional critical accounting judgements, estimates and assumptions
are disclosed in the following notes to the financial statements.
· Investment Property, see note 3 and Fair value measurement and
related estimates and judgements, see note 4;
· Commitments (operating leases commitments - Group as lessor), see
note 6;
· Taxation, see note 11;
· Financial assets at fair value through profit or loss, see note 14;
· Trade and other receivables, see note 15;
· Share-based payment reserve, see note 20;
· Investment in Joint Ventures, see note 22; and
· Investment in Subsidiaries, see note 23.
SECTION II: INVESTMENT PROPERTY
This section focuses on the assets on the balance sheet of the Group which
form the core of the Group's business activities. This includes investment
property (both 100% owned by the Group and by the Joint Ventures), related
disclosures on fair valuation inputs, commitments for future property
developments and investment property-leasehold and related lease liability
recognised for the right of perpetual usufruct of the land.
Further information about the property portfolio is described in the
Management Review section of the Interim Report.
3 Investment Property
Investment property - freehold
Completed investment property Investment property under refurbishment Investment property under development Land for further development Sub-total Investment property leasehold- Right of usufruct of the land TOTAL
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000
1 January 2020 2,845,958 - 131,720 39,200 3,016,878 32,077 3,048,955
Subsequent expenditure 13,968 681 40,077 706 55,432 - 55,432
Net lease incentive movement 24,594 696 1,809 - 27,099 - 27,099
Other operating lease commitment (1,353) - - - (1,353) - (1,353)
Capitalised borrowing costs - - 1,452 - 1,452 - 1,452
Transfer to completed investment property 116,375 - (116,375) - - - -
Transfer to land for further development (1,350) - - 1,350 - - -
Transfer to investment property under refurbishment (104,935) 104,935 - - - - -
Disposal during the period (2,131) - - (287) (2,418) - (2,418)
Fair value gain/(loss) on investment property (112,806) (3,182) 1,067 (519) (115,440) (713) (116,153)
31 December 2020 2,778,320 103,130 59,750 40,450 2,981,650 31,364 3,013,014
Asset acquisition 3.1 18,011 - - - 18,011 - 18,011
Subsequent expenditure 6,165 1,550 16,336 1,181 25,232 - 25,232
Net lease incentive movement 7,482 (271) 902 - 8,113 - 8,113
Capitalised borrowing costs 10 - - 479 - 479 - 479
Transfer to completed investment property 63,600 - (63,600) - - - -
Transfer to investment property under development - - 2,500 (2,500) - - -
Transfer to investment property under refurbishment (47,520) 47,520 - - - - -
Disposal during the period (679) - - - (679) - (679)
Fair value gain/(loss) on investment property (13,729) (2,899) 3,483 (731) (13,876) (827) (14,703)
30 June 2021 2,811,650 149,030 19,850 38,400 3,018,930 30,537 3,049,467
3.1 Investment Property - Freehold
Judgements
Classification of Investment Property
Investment property comprises completed property, property under construction
or refurbishment and land bank for further development which are not occupied
substantially for use by, or in the operations of, the Group, nor for sale in
the ordinary course of business, but are held primarily to earn rental income
and for capital appreciation. The Group considers that, when the property is
in a condition which will allow the generation of cash flows from its rental,
the property is no longer a property under development or refurbishment but an
investment property. If the property is kept for sale in the ordinary course
of the business, then it is classified as inventory property.
Asset acquisition
On 27 April 2021, the Group acquired through its wholly owned subsidiary
Industrial Park West SRL, two standing industrial investment properties
located in the west side of Romania, namely IPW Arad and IPW Oradea.
Disposal of Investment Property not in the Ordinary Course of Business
The Group enters into contracts with customers to sell properties that are
complete. The sale of completed property is generally expected to be the only
performance obligation and the Group has determined that it will be satisfied
at the point in time when control transfers. For unconditional exchange of
contracts, this is generally expected to be when legal title transfers to the
customer. For conditional exchanges, this is expected to be when all
significant conditions are satisfied. The recognition and measurement
requirements in IFRS 15 are applicable for determining the timing of
derecognition and the measurement of consideration (including applying the
requirements for variable consideration) when determining any gains or losses
on disposal of non-financial assets when that disposal is not in the ordinary
course of business.
Other Disclosures Related to Investment Property
Interest-bearing loans and borrowings are secured on investment property
freehold, see note 13 for details. Further information about individual
properties is disclosed in the asset management review section in the Interim
Report.
3.2 Investment property - Leasehold
Right of Perpetual Usufruct of the Land (the "RPU")
Under IFRS 16, right-of-use assets that meet the definition of investment
property are required to be presented in the statement of financial position
as investment property. The Group has the right of perpetual usufruct of the
land (the "RPU" or "right-of-use assets") contracts for the property portfolio
in Poland which meet the definition of investment property under IFRS 16.
Therefore, the Group has presented its 'Right-of-use assets' in the statement
of financial position under the line item "Investment property". The
corresponding lease liabilities are presented under the line item 'Lease
liabilities' as non-current and the related short-term portion are presented
in the line item "Current portion of lease liability".
4 Fair Value Measurement and Related Estimates and Judgements
Investment Property Measured at Fair Value
The Group's investment property portfolio for Romania was valued by Colliers
Valuation and Advisory SRL and Cushman & Wakefield LLP and for Poland by
Knight Frank Sp. z o.o. and CBRE Sp. z o.o. All independent professionally
qualified valuers hold a recognised relevant professional qualification and
have recent experience in the locations and segments of the investment
properties valued using recognised valuation techniques.
Our Property Valuation Approach and Process
The Group's investment department includes a team that reviews twice in a
financial year the valuations performed by the independent valuers for
financial reporting purposes. For each independent valuation performed, the
investment team along with the finance team:
· verifies all major inputs to the independent valuation report;
· assesses property valuation movements when compared to the initial
valuation report at acquisition or latest period end valuation report; and
· holds discussions with the independent valuer.
The fair value hierarchy levels are specified in accordance with IFRS 13 Fair
Value Measurement. Some of the inputs to the valuations are defined as
"unobservable" by IFRS 13 and these are analysed in the tables below. Any
change in valuation technique or fair value hierarchy (between level 1, level
2 and level 3) is analysed at each reporting date or as of the date of the
event or variation in the circumstances that caused the change. As of 30 June
2021 (2020: same) the values of all investment properties were classified as
level 3 fair value hierarchy under IFRS 13 and there were no transfers from or
to level 3 from level 1 and level 2.
Valuation Techniques, Key Inputs and Underlying Management's Estimations and
Assumptions
Property valuations are inherently subjective as they are made on the basis of
assumptions made by the valuer. Valuation techniques comprise the discounted
cash flows, the sales comparison approach and the residual value method.
The Group has based its assumptions and estimates on the parameters available
when the consolidated financial statements were prepared, including the
amendments or possible amendments of the current lease contracts due to
COVID-19, delays to non-committed capital expenditure, cost-cutting
initiatives and delays in construction activity. Consideration was also given
to the possible impact of the stay at home and social distancing measures
imposed by governments in countries in which it operates. The key assumptions
concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial
year. However, all such assumptions or estimates are sensitive to change due
to the current market environment in light of COVID-19. Such uncertainty is
reflected in the assumptions used for the valuation and the Group disclosed
below the sensitivity to different key inputs to overall valuation.
Key information about fair value measurements, valuation technique and
significant unobservable inputs (Level 3) used in arriving at the fair value
under IFRS 13 are disclosed below:
Carrying value
Class of property 30 June 2021 31 December 2020 Valuation Country Input 30 June 2021 31 December 2020
Technique
€'000 €'000
Completed Investment 1,444,850 1,497,420 DCF Poland Rent per sqm €11.5-€24 €11.5-€24
property
Discount rate 4.56%-10.81% 4.18%-10.87%
Exit yield 5.37%-8.50% 5.34%-8.50%
1,287,900 1,119,000 DCF Romania Rent per sqm €3.25-€35.00 €3.40-€35.00
Discount rate 7.50%-8.75% 7.50%-8.75%
Exit yield 6.25%-8.00% 6.25%-8.00%
20,300 102,300 DC Romania Rent per sqm €2.91-€5.87 €2.90-€9.95
Exit yield 7.75% 6.85%-7.75%
Sub-total 2,753,050 2,718,720
58,600 59,600 SC Romania Sales value (sqm) €1,866 €1,843
2,811,650 2,778,320
Investment 9,550 9,550 RM Poland Rent per sqm €13.50 €13.50
property
under development
Discount rate 6.50%-7.53% 6.50%-7.64%
Exit yield 6.50% 6.50%
Capex (€m) €27.98 €27.98
10,300 50,200 RM Romania Rent per sqm €3.80-€15.00 €11.00-€15.00
Discount rate 7.75%-9.00% 9.00%
Exit yield 7.00%-7.75% 7.00%-7.75%
Capex (€m) €53.40 €57.40
Investment property under refurbishment 149,030 103,130 RM Poland Rent per sqm €13.25 -€14.00 €14.00
Discount rate 6.76%-7.94% 4.53%-9.18%
Exit yield 6.87%-7.62% 6.88%
Capex (€m) €37.71 €29.14
Land bank - 15,000 17,050 SC Romania Sales value (sqm) €25.00-€2,500 €25.00-€2,500
for further development
Rent per sqm €2.75-€16.50 €2.75-€16.50
23,400 23,400 RM Romania Exit yield 7.00%-8.25% 7.00%-8.25%
TOTAL 3,018,930 2,981,650
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales Comparison,
RM: Residual Method
Sensitivity Analysis on significant estimates used in the valuation
The assumptions on which the property valuations have been based include, but
are not limited to, rent per sqm (per month), discount rate, exit yield, cost
to complete, comparable market transactions for land bank for further
development, tenant profile for the rented properties, and the present
condition of the properties. These assumptions are market standard and in line
with the International Valuation Standards ('IVS'). Generally, a change in the
assumption made for the rent per sqm (per month) is accompanied by a similar
change in the rent growth per annum and discount rate (and exit yield) and an
opposite change in the other inputs.
A quantitative sensitivity analysis, in isolation, of the most sensitive
inputs used in the independent valuations performed, as of the statement of
financial position date, are set out below:
€0.5 change in rental value per month, per sqm1 25 bps change in market yield 5% change in Capex €50 change in sales prices per sqm2 2.5% change in vacancy in Perpetuity3
Investment property Year Country Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Completed 2021 Poland 39,080 (39,080) (63,970) 69,700 - - - - - -
2021 Romania 34,000 (34,400) (33,100) 35,000 - - 1,800 (1,800) (15,200) 11,700
2020 Poland 41,020 (41,140) (64,510) 70,160 - - - - - -
2020 Romania 33,700 (34,000) (30,900) 33,600 - - 1,900 (1,800) (13,600) 10,200
Under 2021 Poland 1,450 (1,450) (1,670) 1,810 (1,320) 1,320 - - - -
development 2021 Romania 2,400 (2,400) (1,300) 1,400 (2,500) 2,400 - - - -
2020 Poland 1,450 (1,450) (1,670) 1,810 (1,530) 1,530 - - - -
2020 Romania 3,600 (3,600) 1,400 (1,100) (2,700) 2,600 - - - -
Under 2021 Poland 5,400 (5,380) (6,490) 6,990 (990) 1,000 - - - -
refurbishment 2020 Poland 3,620 (3,610) (4,720) 5,090 (1,750) 1,750 - - - -
Further 2021 Poland - - - - - - - - - -
development 2021 Romania 2,000 (2,000) (1,800) 2,000 (2,200) 2,200 1,300 (1,400) - -
2020 Poland - - - - - - - - - -
2020 Romania 2,000 (2,000) (1,800) 2,000 (2,200) 2,200 1,450 (1,600) - -
1. The quantitative sensitivity analysis was computed as €0.25 change
in rental value per month, per sqm for four industrial properties (2020:
two industrial properties at €0.25 change in rental value per month, per
sqm).
2. The quantitative sensitivity analysis was computed as €1.5 change
in sales price per sqm for industrial properties portfolio.
3. The vacancy in perpetuity sensitivity analysis is not followed for
the Polish properties portfolio as this factor is considered in the valuation
methodology as part of yields and not a variable in isolation.
4.1 Investment properties owned by Joint Ventures
Completed investment property Investment property under development Land for further development TOTAL
Note €'000 €'000 €'000 €'000
1 January 2020 - 6,400 23,100 29,500
Subsequent expenditure 965 14,600 522 16,087
Net lease incentive movement 223 102 - 325
Capitalised borrowing costs - 311 - 311
Transfer to investment property under development 24,976 (24,976) - -
Fair value gain/(loss) on investment property (364) 3,563 1,778 4,977
31 December 2020 25,800 - 25,400 51,200
Land acquired during the period - - 130 130
Subsequent expenditure 339 4,284 844 5,467
Net lease incentive movement 50 - - 50
Capitalised borrowing costs - 20 - 20
Transfer to investment property under development - 1,200 (1,200) -
Fair value gain/(loss) on investment property 22.3 (689) (2,504) 26 (3,167)
30 June 2021 22.2 25,500 3,000 25,200 53,700
Sensitivity analysis on significant estimates used in the valuation of
investment properties owned by the joint venture
As disclosed in note 22, the Group also has investments in two joint ventures
where investment properties were valued at fair value under the similar Group
accounting policies by Colliers Valuation and Advisory SRL, an independent
qualified professional valuer.
The table below describes key information about the fair value measurements,
valuation technique and significant unobservable inputs (Level 3) used in
arriving at the fair value under IFRS 13.
Carrying value Range
Class of Joint venture property 30 June 2021 31 December 2020 Valuation technique Country Input 30 June 31 December 2020
2021
€'000 €'000
Completed Investment Property 25,500 13,800 DCF Romania Rent per sqm €2.00-€8.50 €3.00-€7.35
Discount rate 8.50% 8.50%
Exit yield 7.75% 7.75%
- 12,000 DC Rent per sqm - €3.12-€8.50
Discount rate - 8.75%
Exit yield - 7.75%
Investment property under development 3,000 - RM Romania Discount rate 8.50% -
Exit yield 7.75% -
Capex (€m) €4.26 -
Land bank - for further development 25,200 25,400 SC Romania Sales value sqm €24.00-€42.00 €23.00-€42.00
TOTAL 53,700 51,200
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales Comparison,
RM: Residual Method
A quantitative sensitivity analysis (for properties owned by joint ventures),
in isolation, of the most sensitive inputs used in the independent valuations
performed, as of the statement of financial position date, are set out below:
Joint Ventures €0.25 change in rental value per month, per sqm 25 bps change in market yield 5% change in capex €1.5 change in sales prices per sqm 2.5% change in vacancy in perpetuity
Investment Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Property Year Country €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
- Completed 2021 Romania 1,200 (1,100) (400) 500 - - - - (300) 400
2020 Romania 1,200 (1,100) (400) 400 - - - - (400) 400
- Under 2021 Romania 500 (500) (200) 200 (300) 200 - - - -
development 2020 Romania - - - - - - - - - -
- Further 2021 Romania - - - - - - 1,500 (1,500) - -
development 2020 Romania - - - - - - 1,600 (1,500) - -
5 Advances for investment Property
30 June 2021 31 December 2020
€'000 €'000
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for investment properties under development 2,128 2,215
4,128 4,215
6 Commitments
Commitments for Investment Property
As at 30 June 2021 the Group had agreed construction contracts with third
parties and is consequently committed to future capital expenditure in respect
of completed investment property of €7.3 million (2020: €11.3 million),
investment property under development of €3.2 million (2020: €21.0
million) and had committed with tenants to incur incentives (such as fit-out
works, leasing fees and other lease incentives) of €24.0 million (2020:
€15.9 million).
The Group's Joint Ventures were committed to the construction of investment
property for the amount of €29.8 million at 30 June 2021 (2020: €0.1
million).
Judgements Made for Properties Under Operating Leases, being the lessor
The Group has determined, based on an evaluation of the terms and conditions
of the arrangements, that it retains all the significant risks and rewards of
ownership of the investment properties leased to third parties and, therefore,
being the lessor accounts for these leases as operating leases.
The duration of these leases is one year or more (2020: one year or more) and
rentals are subject to annual upward revisions based on the consumer price
index. The future aggregate minimum rentals receivable under non-cancellable
operating leases for investment properties - freehold are as follows:
30 June 31 December
2021 2020
€'000 €'000
Not later than 1 year 167,265 171,841
Later than 1 year and not later than 5 years 438,557 433,228
Later than 5 years 193,706 186,307
799,528 791,376
SECTION III: FINANCIAL RESULTS
This section quantifies the financial impact of the operations for the period;
further analysis on operations is presented in the Financial Review section of
the Interim Report. This section includes the results and performance of the
Group, including earnings per share and EPRA Earnings. This section also
includes details about the Group's tax position in the period and deferred tax
assets and liabilities held at the period end.
7 Revenue
Revenue from asset management fees, marketing and other income are recognised
at the time the service is provided.
30 June 2021 30 June 2020
€'000 €'000
Rental income 75,378 81,246
Revenue from contracts with customers
Service charge income 28,795 29,513
Fit-out services income 3,884 2,799
Asset management fees 24 -
Marketing and other income 29 481
32,732 32,793
108,110 114,039
The total contingent rents and surrender premia recognised as rental income
during the period amount to €0.8 million (30 June 2020: €0.1 million) and
€0.4 million (30 June 2020: €0.9 million), respectively.
8 Operating Expenses
30 June 2021 30 June 2020
€'000 €'000
Property management, utilities and insurance 31,304 30,730
Property maintenance costs and other non-recoverable costs 791 886
Property expenses arising from investment property that generate rental income 32,095 31,616
Property expenses arising from investment property that did not generate 10 75
rental income
Fit-out services costs 3,852 2,701
35,957 34,392
9 Administrative expenses
30 June 2021 30 June 2020
€'000 €'000
Directors' emoluments 579 759
Employment related costs 4,141 3,402
Accounting, secretarial and administration costs 404 374
Legal and other advisory services 829 1,066
Audit and non-audit services 54 80
Corporate social responsibility 546 1,342
Travel and accommodation 74 220
Marketing and advertising services 237 200
Post, telecommunication, and office supplies 232 366
Stock exchange expenses 294 380
Exceptional and non-recurring expenses 1,933 635
9,323 8,824
During the period ended 30 June 2021, exceptional and non-recurring expenses
include mainly professional advisory fees in connection with the cash offer
for Globalworth shares, made by CPI Property Group S.A. and Aroundtown SA
through Zakiono Enterprises Limited in May 2021. During the period ended 30
June 2020, exceptional and non-recurring costs included restructuring costs of
€0.4 million and COVID-19 related expenses of €0.2 million.
10 Finance Cost
30 June 2021 30 June 2020
Note €'000 €'000
Interest on secured loans 3,548 3,154
Interest on unsecured revolving facility - 721
Interest on fixed rate bonds 18,640 16,024
Debt cost amortisation and other finance costs 10.1 4,178 3,587
Other financial expenses - 16
Interest on lease liability 3.2 905 712
Bank charges 731 214
Gross finance cost 28,002 24,428
Less borrowing costs capitalised in investment property under development (479) (900)
27,523 23,528
The capitalisation rate used to determine the borrowings eligible for
capitalisation was 3.33% (30 June 2020: 3.33%).
10.1 Debt cost amortisation and other finance costs
30 June 2021 €'000 30 June 2020 €'000
Debt issue cost amortisation - secured bank loans 256 153
Debt issue cost amortisation - unsecured revolving facility 738 817
Debt issue cost amortisation - fixed rate bonds 3,184 2,617
4,178 3,587
11 Taxation
30 June 2021 30 June 2020
€'000 €'000
Current income tax expense 814 2,191
- Related to current period 793 2,083
- Related to prior period 21 108
Deferred income tax expense 5,519 296
6,333 2,487
Current income tax expense
The Corporate income tax rate "CIT" applicable to the Company in Guernsey is
nil. The subsidiaries in Romania, Poland and Cyprus are subject to tax on
local sources of income. The current income tax expense of €0.8 million (30
June 2020: €2.2 million) represents the profit tax for the Group. The
taxable income arising in each jurisdiction is subject to the following
standard corporate income tax rates: Romania at 16%, Cyprus at 12.5% and
Poland at 19% (however for small entities with revenue up to €2 million
(2020: €1.2 million) in the given tax year and entities starting a new
business for their first tax year of operation, under certain conditions, are
charged a reduced rate of 9%).
The Group's subsidiaries in Poland are subject to the minimum tax, which is
applied to income from ownership of certain high-value fixed assets having an
initial value of the asset exceeding PLN 10 million at a rate of 0.035% per
month. From 2019, the taxpayer has a right to apply for the refund of
previously paid minimum tax which was not deducted from the advance corporate
income tax. This minimum tax can be set-off against CIT if CIT is higher. The
tax is applied only to leased buildings while no tax applies on vacant
buildings or on vacant space in partially occupied buildings. Due to the
COVID-19 pandemic, the minimum tax scheme was suspended since 1 March 2020
(until such a future date when the authorities would resume its effect) and
the Group's subsidiaries are subject to corporate income tax.
The Group's subsidiaries registered in Cyprus need to comply with the National
tax regulations; however, the Group does not expect to generate significant
taxable income, other than dividend and interest income, these being the most
significant future sources of income of the Group subsidiaries registered in
Cyprus. Dividend income is tax exempt under certain conditions and interest
income, however, is subject to corporate income tax at the rate of 12.5% in
Cyprus.
Judgements and Assumptions Used in the Computation of Current Income Tax
Liability
There are uncertainties in Romania and Poland where the Group has significant
operations and this is due to the interpretation of complex tax regulations,
changes in tax laws, and the amount and timing of future taxable income.
Differences arising between the actual results and the assumptions made, or
future changes to such assumptions, could necessitate future adjustments to
tax income and expense already recorded. Such differences of interpretation
may arise on a wide variety of issues depending on the conditions prevailing
in the respective company's domicile. In Romania and Poland, the tax position
is open to further verification for five years and no subsidiary in Romania
has had a corporate income tax audit in the last five years while in Poland
some entities are currently under tax audit with respect to the corporate
income tax settlement for the fiscal years 2016 and 2017.
Deferred tax (asset)/liabilities
30 June 31 December 2020
2021 €'000
€'000
Deferred tax asset (137) (786)
Deferred tax liabilities 149,713 144,843
149,576 144,057
Deferred income tax expense Consolidated statement of financial position Consolidated statement of comprehensive income
30 June 31 December 2020 30 June 30 June
2021 2021 2020
Net Deferred Tax €'000 €'000 €'000 €'000
Acquired through asset acquisition - - - 330
Valuation of investment property at fair value 171,571 171,197 374 3,500
Deductible temporary differences (2,391) (3,657) 1,266 (247)
Interest expense and foreign exchange loss on intra-group loans (15,954) (20,017) 4,063 (4,097)
Discounting of tenant deposits and long-term deferred costs 75 63 12 (14)
Share issue cost recognised in equity (7) (7) - -
Valuation of financial instruments at fair value 117 112 5 (1,067)
Recognised unused tax losses (3,835) (3,634) (201) 1,891
149,576 144,057 5,519 296
The Group has unused assessed tax losses carried forward of €66.8 million
(2020: €63.4 million) in Romania and €20.7 million (2020: €20.2 million)
in Poland that are available for offsetting against future taxable profits of
the entity which has the tax losses. The tax losses in Romania and Poland can
be carried forward over seven and five consecutive tax years from the year of
origination, respectively. In Poland, in any particular tax year, the taxpayer
may not deduct more than 50% of the loss incurred in the year for which it was
reported. Additionally, starting from 2020, the taxpayer may utilise one-time
tax losses generated after 31 December 2018 in the amount of being the greater
of PLN 5 million or 50% of tax loss of any given fiscal year in the following
five fiscal years.
As of the statement of financial position date the Group had recognised
deferred tax assets of €3.8 million (2020: €3.6 million) in Romania and
Poland for which deferred tax asset recognition criteria were met under IAS
12, out of the total available deferred tax assets of €14.7 million (2020:
€14.0 million), calculated at the corporate income tax rates of 16% in
Romania and 19% (9% for small entities) in Poland, respectively. Thus, the
deferred tax asset of €10.9 million (2020: €10.4 million) was not
recognised in Romania and Poland out of total available deferred tax assets,
presented in the table below, in the absence of conditions necessary for the
recognition of asset as per the criteria under IAS 12.
Expiry year 2021 2022 2023 2024 2025 2026 2027 2028 Total
Total available deferred tax assets (€m) 1.7 2.3 2.7 4.7 0.7 1.3 0.3 1.0 14.7
Furthermore, in addition to the above, there are also temporary non-deductible
interest expenses and net foreign exchange losses of €213.7 million, €37.0
million in Romania and €176.7 million in Poland (2020: €192.2 million,
€32.8 million in Romania and €159.4 million in Poland) related to
intercompany and bank loans. Such amounts can be carried forward indefinitely
and each year an amount up to 30% of tax EBITDA (but not less than PLN 3
million in Poland) would become tax deductible for each respective subsidiary,
for which €15.9 million (€0.7 million in Romania and €15.2 million in
Poland) deferred tax asset was recorded (2020: €20.0 million, €1.5 million
in Romania and €18.5 million in Poland).
12 Earnings Per Share
The following table reflects the data used in the calculation of basic and
diluted earnings per share per IFRS and EPRA guidelines:
Number of shares issued Weighted average
% of the
Date Event Note ('000) ('000)
year
1 Jan 2020 At the beginning of the year 221,479 221,479
- Shares purchased with cash by the Company (271) 7 (20)
30 June 2020 Shares in issue at period-end (basic) 221,208 221,459
Jan-June 2020 Effect of dilutive shares 1,160 92 1,064
30 June 2020 Shares in issue at period-end (diluted) 222,368 222,523
1 Jan 2021 At the beginning of the year 220,297 220,297
Jan 2021 - Treasury shares allotted under the Executive share option plan (vested and 20.2 26 89 23
exercised)
Jan-Feb 2021 - Treasury shares allotted under deferred annual bonus plan (vested and 20.4 303 68 206
exercised)
March 2021 - Shares allotted under Subsidiaries' Employees Share Award plan (vested and 20.3 97 51 49
exercised)
30 June 2021 Shares in issue at period-end (basic) 220,723 220,575
Dilutive shares:
Jan 2021 - at the beginning of the year 895 100 895
Jan-March 2021 - vested and exercised under share-based plans during the period 20 (426) 65 (278)
Jan- March 2021 - assigned as unvested under share-based plans during the period 20 5 86 4
30 June 2021 Shares in issue at period-end (diluted) 221,197 221,196
Unvested share option warrants of 2.85 million were not included in basic or
diluted number of shares being unvested and anti-dilutive on issue date (refer
to note 25.1 for further information). However, 20,000 share option warrants
which were vested and exercisable at 30 June 2021 were included in the
dilutive number of shares outstanding at 30 June 2021 (2020: same). Subsequent
to 30 June 2021, the Company issued 20,000 new shares to two non-Executive
Directors under the share option warrants plan.
30 June 2021 30 June 2020
€'000 €'000
Profit/(loss) attributable to equity holders of the Company for the basic and 12,534 (48,582)
diluted earnings per share
IFRS earnings per share Cents Cents
- Basic 6 (22)
- Diluted 6 (22)
EPRA Earnings Per Share
The following table reflects the reconciliation between IFRS earnings as per
the statement of comprehensive income and EPRA earnings (non-IFRS measure):
Note 30 June 2021 30 June 2020
€'000 €'000
Earnings attributable to equity holders of the Company (IFRS) 12,534 (48,582)
Changes in fair value of financial instruments and associated close-out costs (325) (277)
Fair value loss on investment property 3 14,703 91,977
Losses on disposal of investment properties 162 107
Changes in value of financial assets at fair value through profit or loss 14 243 (151)
Acquisition costs - 2,302
Deferred tax charge in respect of above adjustments 379 2,433
Adjustments in respect of joint ventures and other items 1,337 (1,420)
EPRA earnings attributable to equity holders of the Company 29,033 46,389
EPRA earnings per share Cents Cents
- Basic 13 21
- Diluted 13 21
SECTION IV: FINANCIAL ASSETS AND LIABILITIES
This section focuses on financial instruments, together with the working
capital position of the Group and financial risk management of the risks that
the Group is exposed to at period end.
13 Interest-Bearing Loans and Borrowings
This note describes information on the material contractual terms of the
Group's interest-bearing loans and borrowings. For more information about the
Group's exposure to market risk, currency risk and liquidity risks, see note
17.
30 June 2021 31 December 2020
€'000 €'000
Current
Secured loans and accrued interest 3,497 3,580
Unsecured fixed rate Bonds, including accrued interest 336,714 22,471
Sub-total 340,211 26,051
Non-current
Secured loans 357,607 358,836
Unsecured fixed rate Bonds 927,048 1,245,207
Sub-total 1,284,655 1,604,043
TOTAL 1,624,866 1,630,094
13.1 Key terms and conditions of outstanding debt
30 June 2021 31 December 2020
Face value Carrying Face value Carrying
value value
Facility Currency Nominal interest rate Maturity date €'000 €'000 €'000 €'000
Loan 16 EUR EURIBOR 1 month + margin May 2025 14,102 14,099 14,724 14,721
Loan 25 EUR Fixed rate Bond June 2022 323,383 321,648 328,066 325,460
Loan 37 EUR Fixed rate Bond March 2025 554,204 547,886 562,522 555,324
Loan 381 EUR Fixed rate & Floating rate EURIBOR 3 months + margin May 2025 100,105 99,475 100,111 99,405
Loan 41 EUR EURIBOR 3 month + margin March 2029 85,309 84,555 85,313 84,505
Loan 43 EUR EURIBOR 3 month + margin December 2024 36,814 36,669 37,599 37,438
Loan 44/45 EUR Fixed rate February 2027 62,293 61,964 62,295 61,935
Loan 46 EUR Fixed rate November 2029 65,043 64,342 65,105 64,412
Loan 48 EUR Fixed rate Bond July 2026 410,862 394,228 405,011 386,894
Total 1,652,115 1,624,866 1,660,746 1,630,094
1 Loan 38 was drawn down in two tranches - 95% of the facility carries a fixed
interest rate and 5% carries a floating EURIBOR 3-month rate.
Unsecured corporate Bonds
In June 2017, the Company issued a €550 million unsecured Eurobond (Loan
25). The five-year Euro-denominated Bond matures on
20 June 2022 and carries a fixed interest rate of 2.875%. In March 2018, the Group issued a €550 million unsecured Eurobond (Loan
37). The seven-year Euro-denominated Bond matures on 29 March 2025 and carries a fixed interest rate of 3.0%.
In July 2020 the Company successfully completed under its €1.5 billion Euro
Medium Term Notes Programme the issuance of €400 million new Notes, due in
2026, by exchanging €226.9 million of the €550 million Notes due in June
2022 (loan 25) and the remaining amount €158.7 million, after deduction of
buy-back premium and issuance fees, was received in cash which further
enhanced the liquidity position of the Group.
The redemption of the June 2022 notes and the issuance of the July 2026 notes
were negotiated in contemplation of one another and therefore the transaction
constituted an exchange of old for new debt instead of a separate
extinguishment of part of the June 2022 notes and separate issuance of the
July 2026 notes as per IFRS 9. Therefore, unamortised finance costs of €1.5
million and the 2% buy-back premium on the exchanged €226.9 million June
2022 notes were added to the issuance cost of July 2026 notes and are
amortised over the term of the July 2026 notes.
Financial covenants
Financial covenants on unsecured fixed rate bonds are calculated on a
semi-annual basis at 30 June and 31 December each year and include the
Consolidated Coverage Ratio, with minimum value of 200%, the Consolidated
Leverage Ratio, with maximum value of 60%, and the Consolidated Secured
Leverage Ratio with a maximum value of 30%.
Unsecured Revolving Credit Facility
At the end of October 2019, the Group entered into a €200 million unsecured
Revolving Credit Facility ("RCF") with a syndicate of local and international
banks. On 18 March 2020, the full amount was drawn down in order to further
strengthen the liquidity during the pandemic period, however, following the
successful Bond issuance, the €200 million outstanding balance on the RCF
was repaid in full on 13 August 2020.
In July 2020, the Group exercised its option to increase the RCF credit line
by €15 million under a pre-existing commitment from the syndicate of Banks,
thus as at 30 June 2021 and 31 December 2020, the entire RCF facility of
€215 million was available for utilisation until 31 March 2024, with
maturity date 30 April 2024.
The RCF terms have been structured to, generally, align with the Company's
existing Euro Medium Term Note (EMTN) programme for fixed rate Bonds. In
addition to the financial covenants applicable for unsecured fixed rate bonds,
the RCF facility contains a supplementary financial covenant of the Total
Unencumbered Assets Ratio with minimum value of 125%.
13.2 Secured facilities
Financial covenants
Financial covenants on secured loans are calculated based on the individual
financial statements of the respective subsidiaries and subject to the
following ratios:
· gross loan-to-value ratio ("LTV") with maximum values ranging from
60%-83% (2020: 60%-83%). LTV is calculated as the loan value divided by the
market value of the relevant property (for a calculation date);
· the debt service cover ratio ("DSCR") minimum values of 120% (2020:
120%). DSCR is calculated, depending on the respective credit facility, on the
preceding 12-months historical ratio or projected future 12-months period
ratio; and
· minimum interest cover ratio ("ICR"), historic with minimum values
from 350% and projected with minimum values from 250% (2020: 250%), which was
applicable to two properties as at 30 June 2021 (31 December 2020: same).
Historic ICR is calculated, as Actual Net Rental Income as a percentage of the
Actual Interest Costs for the twelve preceding months period from the
calculation date. Projected ICR is calculated as Projected Net Rental Income
as a percentage of the Projected Interest Costs for the twelve months period
commencing immediately after the date of the calculation.
Secured bank loans are secured by investment properties which were recognised
in the statement of financial position at fair value of €798.3 million at 30
June 2021 (2020: €796.7 million) and also carry pledges on rent and other
receivable balances of €3.4 million (2020: €2.5 million), VAT receivable
balances of €0.8 million (2020: €0.7 million) and a movable charge on the
respective bank accounts with a total balances of €37.3 million at 30 June
2021 (2020: €30.0 million).
The Group is in compliance with all financial covenants and there were no
payment defaults during the period ended 30 June 2021 (2020: same). As of 30
June 2021, the Group had undrawn borrowing facilities of €215 million (2020:
€215 million).
14 Financial assets at fair value through profit or loss
Interest rate Maturity date 31 December 2020 Additions Disposal Valuation loss 30 June 2021
Project name
€'000 €'000 €'000 €'000 €'000
Browary Stage J fixed December 2021 43 - - - 43
My Place I (formerly: Beethovena I) fixed December 2021 4,229 143 - (112) 4,260
My Place II (formerly: Beethovena II) fixed December 2021 3,423 - (85) (131) 3,207
TOTAL 7,695 143 (85) (243) 7,510
Right of First Offer Agreements ('ROFO' bonds)
The fair value of the financial assets (ROFO bonds) is individually determined
by taking into account a number of factors. The significant key factors are
fair value of underlying investment properties, outstanding cost to complete
the construction and leasing progress. Any significant change in inputs may
result in significant change in the fair value of ROFO especially considering
current COVID-19 environment. For example, as at 30 June 2021 a 5% change in
outstanding cost to complete or the fair value of underlying investment
property would have increased or decreased the ROFO fair value by €0.9
million and €1.0 million (2020: €0.9 million and €0.9 million),
respectively.
The maturity dates presented in the table above are stated in the agreements,
however, the planned repayment dates of debentures would take place upon
completion of each ROFO project. The fair value of debentures is calculated
based on percentage of completion of each ROFO projects and developer margin
of the project which is calculated as a difference between each ROFO Project
value upon completion and the project's construction budget. As at 30 June
2021, a loss of €0.24 million (2020: gain of €0.15 million) from the fair
valuation of the above financial instruments was recognised in the statement
of comprehensive income, categorised Level 3 within the fair value hierarchy.
The Group is committed to invest in each of the ROFO Assets at least 25% of
the funds required by each of the ROFO SPVs (less the external construction
bank financing at a loan to construction ratio of 60%) to complete the
development of each respective ROFO Asset. As of 30 June 2021, the cumulative
investment made by the Group under the ROFO Agreement amounts to €16.6
million (2020: €16.6 million) out of which €0.1 million was invested
during the current period (during 2020 the Group sold ROFO bonds for an amount
of €16.5 million). During 2020 the Group sold ROFO bonds related to Browary
Stage J for an amount of €16.5 million to Echo Investment S.A., the majority
stake holder. Due to COVID-19 the completion date of the My Place development
project was deferred to December 2021.
15 Trade and Other receivables
30 June 31 December
2021 2020
€'000 €'000
Current
Rent and service charges receivable 10,755 10,785
VAT and other taxes receivable 6,102 5,028
Advances to suppliers for services 288 90
Sundry debtors 209 122
17,354 16,025
Rent and Service Charges receivable
Rent and service charges receivable are presented in the above table net of an
allowance for bad or doubtful debts of €5.5 million (2020: €4.9 million).
Rent and service charges receivable are non-interest-bearing and are typically
due within 30-90 days (see more information on credit risk and currency
profile in note 17.2). For the terms and conditions for related party
receivables, see note 25.
16 Cash and Cash Equivalents
30 June 2021 31 December 2020
€'000 €'000
Cash at bank and in hand 200,119 300,704
Short-term deposits 259,774 226,097
Cash and cash equivalents as per statement of cash flows 459,893 526,801
Guarantee deposits - cash reserve - 1,000
Cash and cash equivalents as per statement of financial position 459,893 527,801
Cash at bank and in hand includes restricted cash balances of €9.4 million
(2020: €6.4 million) and short-term deposits include restricted deposits of
€0.1 million (2020: €3.2 million). The restricted cash balance can be used
to repay the outstanding debts and repayment of deposits to tenants. The cash
balance of €0.4 million (2020: €0.2 million) held by the Globalworth
Foundations (Fundatia Globalworth in Romania and Fundacja Globalworth in
Poland) is restricted only for charity purposes.
Short-term deposits are made for varying periods depending on the immediate
cash requirements of the Group and earn interest at rates on Euro deposits
ranging from minus 0.17% to 0.20% (2020: minus 0.60% to 0.35%) per annum and
for RON deposits from 0.40% to 1.38% (2020: 0.62% to 2.55%) per annum. For RON
deposits highest interest rate was earned on overnight deposits.
Details of cash and cash equivalents denominated in foreign currencies are
disclosed in note 17.
17 Financial Risk Management - Objective and Policies
The Group is exposed to the following risks from its use of financial
instruments:
• Market risk (including currency risk, interest rate risk);
• Credit risk; and
• Liquidity risk.
17.1 Market Risk
Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices.
The Group's market risks arise from open positions in: (a) foreign currencies;
and (b) interest-bearing assets and liabilities, to the extent that these are
exposed to general and specific market movements.
17.1 a) Foreign currency risk
The Group has entities registered in several EU countries, with the majority
of the operating transactions arising from its activities in Romania and
Poland.
Therefore, the Group is exposed to foreign exchange risk, primarily with
respect to the Romanian Lei (RON) and Polish Zloty (PLN). Foreign exchange
risk arises in respect of those recognised monetary financial assets and
liabilities that are not in the functional currency of the Group.
The Group's exposure to foreign currency risk was as follows (based on nominal
amounts):
30 June 2021 31 December 2020
Denominated in Denominated in
Amounts in €'000 equivalent value RON PLN GBP USD RON PLN GBP USD
ASSETS
Cash and cash equivalents 17,305 15,496 48 6 27,672 16,136 71 18
Trade and other receivables 8,508 7,102 - - 7,573 8,219 - -
Contract assets 860 980 - - 1,506 1,311 - -
Income tax receivable 42 806 - - 192 725 - -
Total 26,715 24,384 48 6 36,943 26,391 71 18
LIABILITIES
Trade and other payables 12,016 9,799 - - 10,418 9,909 - -
Lease liability - 29,061 - - - 29,089 - -
Income tax payable 160 86 - - 632 170 - -
Guarantees from subcontractors 137 1,846 - - - 2,165 - -
Deposits from tenants 2,799 6,598 - 5 3,271 5,954 - -
Total 15,112 47,390 - 5 14,321 47,287 - -
Net exposure 11,603 (23,006) 48 1 22,622 (20,896) 71 18
Foreign Currency Sensitivity Analysis
As of the statement of financial position date, the Group is mainly exposed to
foreign exchange risk in respect of the exchange rate fluctuations of the RON
and PLN. The following table details the Group's sensitivity (impact on income
statement before tax and equity) to a 5% devaluation in RON, PLN and GBP
exchange rates against the Euro, on the basis that all other variables
remain constant.
The 5% sensitivity rate represents management's assessment of the reasonably
possible change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and adjusts their
translation at the reporting date for a 5% appreciation in the Euro against
other currencies.
30 June 2021 30 December 2020
Profit or (loss) Profit or (loss)
All amounts in €'000 Equity Equity
RON (580) (580) (1,131) (1,131)
PLN 1,150 1,150 1,045 1,045
USD - - (1) (1)
GBP (2) (2) (4) (4)
A 5% devaluation of the Euro against the above currencies would have had an
equal but opposite impact on the above currencies to the amounts shown above,
on the basis that all other variables remain constant.
17.1 b) Interest Rate Risk
Interest rate price risk is the risk that the value of a financial instrument
will fluctuate due to changes in market interest rates relative to the
interest rate that applies to the financial instrument. Interest rate cash
flows risk is the risk that the interest cost will fluctuate over time.
The Group's interest rate risk principally arises from interest-bearing loans
and borrowings. As at 30 June 2021, the total outstanding balance of
interest-bearing loans and borrowing 91.4% (2020: 91.3%) carry fixed rate
interest, as a consequence, the Group is exposed to fair value interest rate
risk, which has been disclosed under IFRS. As of 30 June 2021, the fair value
of such fixed rate debt was higher by €94 million (2020: higher with €93
million) than the carrying value as disclosed below in fair value hierarchy
table.
Furthermore, as at 30 June 2021, from the total outstanding interest-bearing
loans and borrowing balance 8.6% (2020: 8.7%) carry variable interest rate,
which range from EURIBOR 1-month to EURIBOR 3-month rates, see note 13 for
details on each individual loan. These loans expose the Group to cash flow
interest rate risk and in order to minimise this risk, the Group hedged 10.0%
(2020: 10.3%) of such variable interest rate exposure with fixed-variable
interest rate swap instrument and further 43.4% (2020: 30.0%) hedged with
interest rate cap instruments.
Based on the Group's debt balances at 30 June 2021, an increase or decrease of
25 basis points in the EURIBOR will result in an increase or decrease (net of
tax) of interest expense by €2.1 million (2020: €2.3 million), with a
corresponding impact on equity for the same amount, respectively. This
analysis assumes that all other variables, in particular foreign currency
rates, remain constant.
17.2 Credit Risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group's
policy is to trade with recognised and creditworthy third parties. The Group's
exposure is continuously monitored and spread amongst approved counterparties.
The Group's maximum exposure to credit risk, by class of financial asset, is
equal to their carrying values at the statement of financial position date.
30 June 2021 31 December 2020
Note €'000 €'000
Financial assets measured at fair value through profit or loss 14 7,510 7,695
Loan receivable from joint venture 22 22,556 16,451
Trade receivables - net of provision 15 10,755 10,785
Contract assets 1,840 2,819
Sundry debtors 209 122
Guarantees retained by tenants 887 894
VAT and other taxes receivable 15 6,102 5,028
Income tax receivable 846 931
Cash and cash equivalents 16 459,893 527,801
510,598 572,526
Financial assets at fair value through profit or loss and other comprehensive
income
The Group places funds in financial instruments issued by reputable real
estate companies with high credit worthiness.
Contract assets and Trade Receivables
A trade receivable is recognised if an amount of consideration that is
unconditional is due from the customer (only the passage of time is required
before payment of the consideration is due).
There is no significant concentration of credit risk with respect to contract
assets and trade receivables, as the Group has a large number of tenants, most
of which are part of multinational groups, internationally dispersed, as
disclosed in the Interim Report. For related parties, including the joint
ventures, it is assessed that there is no significant risk of non-recovery.
Estimates and assumptions used for impairment of trade receivables and contract assets
The Group's trade receivables do not contain any financing component and
mainly represent lease receivables. Therefore, the Group applied the
simplified approach under IFRS 9 and measured the loss allowance based on a
provision matrix that is based on historical collection and default experience
adjusted for forward looking factors in order to estimate the provision on
initial recognition and throughout the life of the receivables at an amount
equal to lifetime ECL (Expected Credit Losses). The assessment is performed on
a six-month basis and any change in original allowance will be recorded as
gain or loss in the income statement.
The COVID-19 pandemic and work from home policies have created a challenging
environment for many industries and businesses and, in particular, for some of
our retail tenants. We are in close contact with our tenants and we are
communicating on a regular basis in order to understand and respond to their
challenges, including the amendment of lease terms and also rescheduling of
outstanding receivables on a few occasions. We continue to monitor the cash
collections of rents daily throughout the entire portfolio. As of financial
statements approval date, we have observed insignificant instances, primarily
in our retail portfolio in the mixed-use segment, where invoices were not
collected from tenants within due date or tenants requested rescheduling of
outstanding invoices. This indicates, as per instances observed until the end
of July 2021, a lower likelihood of possible business failures, though we
continue to monitor closely all customers especially tenants who are facing
financial difficulties due to COVID-19. We expect to see low to moderate risk
delays in rent collection or low risk of non-payment of rent in the future,
considering the current conditions and the availability of vaccines or other
solutions against the COVID-19 pandemic. Refer to the Collection Review in the
Interim Report for further details.
The movements in the provision for impairment of receivables during the
respective periods were as follows:
30 June 31 December 2020
2021 €'000
€'000
Opening balance 4,976 4,030
Provision for specific doubtful debts 783 1,370
Reversal of provision for doubtful debts (220) (218)
Utilised - (62)
Foreign currency translation income (43) (144)
Closing balance 5,496 4,976
The analysis by credit quality of financial assets, cumulated for rent,
service charge and property management, is as follows:
30 June 2021 (€'000) Neither past due nor impaired due but not impaired
<90 days <120 days <365 days >365 days TOTAL
Trade and other receivables - gross 4,445 4,590 597 2,471 4,147 16,250
Less: Specific provision - 290 110 588 4,147 5,135
Less: Expected credit loss 3 131 7 219 - 360
Carrying amount 4,442 4,169 480 1,664 - 10,755
Expected credit loss rate 0.1% 3.2% 1.5% 13.2% -
31 December 2020 (€'000) Neither past due nor impaired due but not impaired
<90 days <120 days <365 days >365 days TOTAL
Trade and other receivables - gross 5,905 3,481 478 2,139 3,758 15,761
Less: Specific provision - 51 46 761 3,758 4,616
Less: Expected credit loss 6 266 20 68 - 360
Carrying amount 5,899 3,164 412 1,310 - 10,785
Expected credit loss rate 0.1% 8.4% 4.8% 5.2% -
The customer balances which were overdue but not provisioned are due to the
fact that the related customers committed and started to pay the outstanding
balances subsequent to the period end. Further deposits payable to tenants may
be withheld by the Group in part or in whole if receivables due from the
tenant are not settled or in case of other breaches of contractual terms.
VAT and other taxes receivable
This balance relates to corporate income tax paid in advance, VAT and other
taxes receivable from the tax authorities in Romania and Poland. The balances
are not considered to be subject to significant credit risk as all the amounts
receivable from Government authorities are secured under sovereign warranty.
Cash and cash equivalents
The credit risk on cash and cash equivalents is very small, since the cash and
cash equivalents are held at reputable banks in different countries. The most
significant part of the cash and cash equivalents balance is kept at the
company level with international banks having credit rating profile (assigned
by S&P, Moody's or Fitch) in upper medium grade range (i.e. A+ to A- for
long-term and P-2, P2, F-1, F-2 for short-term) for 54% (2020: 70%) of the
cash and cash equivalents balance of the Group, in lower medium grade range
(BBBs) for 45% (2020: 29%) of the cash and cash equivalents balance of the
Group and only 1% (2020: 1%) in non-investment grade. Surplus funds from
operating activities are deposited only for short-term period, which are
highly liquid with reputable institutions.
Loans receivable from joint ventures
The outstanding loan balance is neither past due nor impaired. Loans
receivable from joint ventures are considered to be low credit risk where they
have a low risk of default and the issuer has a strong capacity to meet its
contractual cash flow obligations.
Financial instruments for which Fair values are disclosed
Set out below is a comparison by class of the carrying amounts and fair values
of the Group's financial instruments, other than those with carrying amounts
that are reasonable approximations of their fair values.
Fair value hierarchy
Carrying amount Level 1 Level 2 Level 3 Total
Year €000 €000 €000 €000 €000
Interest-bearing loans and borrowings 2021 1,624,866 1,358,335 - 374,690 1,733,025
(note 13)
2020 1,630,094 1,342,184 - 384,887 1,727,071
Other current financial liabilities 2021 552 - 552 - 552
2020 875 - 875 - 875
Financial asset at fair value through profit or loss 2021 7,510 - - 7,510 7,510
2020 7,695 - - 7,695 7,695
Lease liabilities (note 3) 2021 29,061 - - 29,061 29,061
2020 29,089 - - 29,089 29,089
The fair value of financial liabilities is included at the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. When determining the fair
values of interest- bearing loans and borrowings and lease liabilities the
Group used the DCF method with inputs such as discount rate that reflects the
issuer's borrowing rate as at the statement financial position date.
Specifically, for the Eurobonds, their fair value is calculated on the basis
of their quoted market price. The own non-performance risk at the statement of
financial position date was assessed to be insignificant.
17.3 Liquidity Risk
The Group's policy on liquidity is to maintain sufficient liquid resources to
meet its obligations as they fall due. Ultimate responsibility for liquidity
risk management rests with management. The Group manages liquidity risk by
maintaining adequate cash reserves and planning and close monitoring of cash
flows. The Group expects to meet its financial liabilities through the various
available liquidity sources, including a secure rental income profile, further
equity raises and in the medium term, debt refinancing. The table below
summarises the maturity profile of the Group's financial liabilities based on
contractual undiscounted payments.
The below table presents the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay and
includes both interest and principal cash flows. As the amount of contractual
undiscounted cash flows related to bank borrowings is based on variable rather
than fixed interest rates, the amount disclosed is determined by reference to
the conditions existing at the year end, that is, the actual spot interest
rates effective at the end of the year are used for determining the related
undiscounted cash flows.
Contractual payment term Difference from carrying amount
All amounts in €'000 <3 months 3 months- 1 year 1-5 years >5 years Total Carrying amount
30 June 2021
Interest-bearing loans and borrowings 14,118 355,869 822,357 626,141 1,818,485 (193,619) 1,624,866
Lease liability - 2,096 8,885 118,375 129,356 (100,295) 29,061
Trade payables and guarantee retained from
contracts (excluding advances from customers) 19,830 15,001 2,057 1,455 38,343 (162) 38,181
Other payables 17 - - - 17 - 17
Deposits from tenants 15,445 130 3,323 810 19,708 (575) 19,133
Income tax payable 238 - - - 238 - 238
Total 49,648 373,096 836,622 746,781 2,006,147 (294,651) 1,711,496
Contractual payment term Difference from carrying amount
All amounts in €'000 <3 months 3 months- 1 year 1-5 years >5 years Total Carrying amount
31 December 2020
Interest-bearing loans and borrowings 18,823 28,029 1,172,979 628,991 1,848,822 (218,728) 1,630,094
Lease liability - 1,766 8,708 117,705 128,179 (99,090) 29,089
Trade payables and guarantee retained from
contracts (excluding advances from customers) 27,305 10,515 2,827 22 40,669 (186) 40,483
Other payables - 255 - - 255 - 255
Provision for tenant lease incentives 46 - - - 46 - 46
Deposits from tenants 15,990 107 3,579 417 20,093 (399) 19,694
Income tax payable 802 - - - 802 - 802
Total 62,966 40,672 1,188,093 747,135 2,038,866 (318,403) 1,720,463
Other current financial liabilities
Other current financial liabilities represent the mark-to-market value of an
interest rate swap, obtained from the counterparty financial institution, at
€0.6 million at 30 June 2021 (2020: €0.9 million). The fair value of
derivative was developed in accordance with the requirements of IFRS 13. Under
the terms of the swap agreement, the Group is entitled to receive a floating
rate of 1-month EURIBOR at a notional amount of €14.85 million (2020:
€15.51 million) and is required to pay a fixed rate of interest of 3.62%
p.a. on the said notional amount in monthly instalments, with maturity date of
June 2022. A financial income of €0.3 million (30 June 2020: €0.3 million)
was recognised in the income statement for the period ended 30 June 2021 for
the change in the fair value.
The Group assessed that the fair values of other financial assets and
financial liabilities, such as trade and other receivables, guarantees
retained by tenants, cash and cash equivalents, income tax receivable and
payables, trade and other payables, guarantees retained from contractors and
deposits from tenants, approximate their carrying amounts largely due to
short-term maturities and low transaction costs of these instruments as of the
statement of financial position date.
SECTION V: SHARE CAPITAL AND RESERVES
The disclosures in this section focus on dividend distributions, the share
schemes in operation and the associated share-based payment charge to profit
or loss. Other mandatory disclosures, such as details of capital management,
are also disclosed in this section.
18 Dividends
30 June 2021 30 June 2020
€'000 €'000
Declared and paid during the period
Interim cash dividend: €0.15 per share (2020: €0.30 per share) 33,130 66,443
On 19 February 2021, the Board of Directors of the Company approved the
payment of an interim dividend in respect of the six-month financial period
ended 31 December 2020 of €0.15 per ordinary share, which was paid on 19
March 2021 to the eligible shareholders.
19 Financial Position Key Performance Measures
The net assets value ("NAV"), EPRA Net Reinstatement Value ("EPRA NRV") and
the numbers of shares used for the calculation of each key performance measure
on the financial position of the Group and the reconciliation between IFRS and
EPRA measures are shown below.
30 June 2021 31 December 2020
€'000 €'000
Note
Net assets attributable to equity holders of the Company 1,735,526 1,755,364
Number of ordinary shares used for the calculation of: Number ('000) Number ('000)
- NAV per share 12 220,723 220,297
- Diluted NAV and EPRA NRV per share 12 221,197 221,486
€ €
NAV per share 7.86 7.97
Diluted NAV per share 7.85 7.93
30 June 2021 31 December 2020
EPRA NRV Per Share €'000 €'000
Note
Net assets attributable to equity holders of the Company 1,735,526 1,755,364
Exclude:
Deferred tax liability on investment property 11 171,571 171,197
Fair value of interest rate swap instrument 17 547 872
Goodwill as a result of deferred tax (5,697) (5,697)
Adjustment in respect of the joint venture for above items 1,495 1,742
EPRA NRV attributable to equity holders of the Company 1,903,442 1,923,478
€ €
EPRA NRV per share 8.61 8.68
20 Share-Based Payment Reserve
30 June 2021 31 December 2020
Share-based payments reserve Note €'000 €'000
Executive share option plan 20.1 158 158
Shares granted to Executive Directors and other senior management employees - 20.2 175 353
not transferred
Subsidiaries' Employees Share Award Plan 20.3 140 531
Performance Incentive Scheme - -
Deferred annual bonus plan 20.4.1 2,941 4,999
Long-term incentive plan 20.4.2 143 143
3,557 6,184
Share-based payments expense 30 June 2021 30 June 2020
€'000 €'000
Subsidiaries' Employees Share Award Plan 20.3 432 1,071
Total expense during the period 432 1,071
20.1 Executive Share Option Plan
Under the plan, the Directors of the Group were awarded share option warrants
as remuneration for services performed. The share options granted to the
Directors of the Group are equity settled.
In 2013, the Group granted warrants to the Founder (at 30 June 2021 the
unvested warrants were held by Zakiono Enterprises Limited, a company owned on
30 June 2021 by CPI Property Group) and the Directors which entitle each
holder to subscribe for ordinary shares in the Company at an exercise price of
€5.00 per share if the market price of an ordinary share, on a weighted
average basis over 60 consecutive days, exceeds a specific target price and
the holder is employed on such date. The contractual term of each warrant
granted is 10 years. There are no cash settlement alternatives, and the Group
does not have the intention to offer cash settlement for these warrants.
As of 30 June 2021, under the share option warrants scheme Zakiono Enterprises
Limited had the right to subscribe in two tranches of 2.85 million ordinary
shares in total (1.425 million for each tranche) at an exercise price of
€5.00 per share if the market price of an ordinary share, on a weighted
average basis over 60 consecutive days, exceeds €10.00 per share and
€12.50 per share for each tranche respectively. As defined per IAS 33
"Earnings per share" ordinary shares to be issued for each unvested share
option warrants were not included in basic or diluted number of shares as
disclosed in note 12. The fair value of the warrants was estimated at the
grant date (i.e. July 2013) at €0.073 per share. There have been no
cancellations or modifications to any of the plans during the period ended 30
June 2021.
The following table analyses the total cost of the executive share option plan
(Warrants), together with the number of options outstanding:
30 June 2021 31 December 2020
Cost Number Cost Number
€'000 ('000) €'000 ('000)
Closing balance 158 2,850 158 2,850
Weighted average remaining contractual life (years) 3.08 3.33
Warrants vested and exercisable 20 20
20.2 Shares granted to Executive Directors and other senior
management employees
30 June 31 December
2021 2020
€'000 €'000
Opening balance 353 838
Vested shares transferred to the Executive Directors and other senior (180) (392)
management employees during the period
Dividend equivalent amount on vested shares paid in cash (4) (26)
Unpaid dividend equivalent on unvested shares 6 34
Unallocated dividend transferred to treasury shares - (101)
Closing balance 175 353
Shares Issued to the Executive Directors and Other Senior Management Employees
In January 2021, Globalworth Investment Advisers Limited's ("GIAL") delivered
0.026 million ordinary shares (ordinary shares of no par value), out of
treasury shares held by it, to one of its preference shareholders as
settlement for the share-based payment reserve, in order to settle the second
tranche of 0.026 million ordinary shares, comprising part of the ordinary
shares that were allotted to GIAL in part settlement of the fee due to GIAL by
the Company for the year ended 31 December 2018. As at 30 June 2021, 0.017
million shares (2020: 0.04 million shares) held by GIAL and not transferred by
that date are accounted for as treasury shares. The shares rank pari passu
with the existing shares of the Company.
20.3 Subsidiaries' Employees Share Award Plan
30 June 2021 31 December 2020
€'000 €'000
Opening balance 531 -
Share-based payment expense during the period/year 432 1,071
Shares vested and exercised during the period/year (823) (540)
Closing balance 140 531
Weighted average remaining unvested period (years) 0.75 0.25
Weighted average price per share - vested and exercised shares 7.00 7.00
Weighted average price per share - unvested shares 7.00 7.00
During 2021, the Company recorded €0.43 million (2020: €1.1 million) as
share-based payment expense in the income statement for the lapsed vesting
period. Furthermore, during the current period, the Group allotted 0.097
million ordinary shares to employees (vested shares) in order to settle the
share-based reserve under this scheme.
Under the share award plan, the subsidiaries' employees are required to remain
in service for a one-year period after the date of acceptance of the share
offer letter. The Company anticipates that all employees will remain in
service until the expiry of the unvested period.
20.4 Current Group remuneration policy
20.4.1 Deferred annual bonus plan ("DABP")
The Investment Manager and selected senior employees are eligible to
participate in an annual bonus plan. The current annual bonus plan for
participants in the scheme is paid through a combination of maximum 50% cash
and the balance in deferred shares. The maximum award for each participant
cannot exceed 150% of annual salary, target performance cannot exceed 75% of
annual salary and threshold performance cannot exceed 37.5% of annual salary.
Awards under the DABP vest in three instalments on the first, second and third
anniversaries of the date of grant, unless otherwise approved by the Company's
Remuneration Committee and the Board of Directors. Participants are entitled
to receive dividend equivalents on the unvested shares until, and payable on
or shortly after, they vest.
The Remuneration Committee sets performance targets for the annual bonus at
the start of each financial year to ensure performance measures and weightings
are appropriate and support the business strategy. The performance targets are
primarily based upon Key Performance Indicators, although there may also be elements subject to other measures and factors.
30 June 2021 31 December 2020
€'000 €'000
Deferred annual bonus plan - equity settlement
At the beginning of the period 4,999 1,888
Shares transferred during the year (1,979) -
Share based incentive bonus for the period - 2,065
Unpaid dividend equivalent on unvested shares - 21
Share based portion of annual incentive plan settled in cash (79) -
Cash-based portion of annual incentive plan converted to equity settled plan - 1,025
Closing balance 2,941 4,999
Following the assessment performed of the current year's achievements for the
specific key performance indicators compared to the target amounts set for the
year, the Group has provisioned €4.0 million for the benefit of DABP
participants as of 31 December 2020. Out of the total incentive amount, €3.8
million was capitalised as cost of new lease addendum signed during the year
and would be amortised on such lease term in the income statement and a
corresponding credit was made under trade and other payables, representing the
48% cash element, for an amount of €1.9 million. In addition, a share-based
payment reserve was set up, representing the 52% of deferred shares element,
for an amount of €2.1 million. Dividend equivalents are paid in relation to
shares which vest until the normal vesting date or, if there is one, until the
end of the holding period.
20.4.2 Long-term Incentive Plan
The LTIP provides the long-term incentive arrangement for the Investment
Manager and selected senior employees (the "LTIP Participants"). Under the
LTIP, it is intended that performance share awards will be granted on an
annual basis either in the form of Company shares without cost to the LTIP
participant or nil (or nominal) cost options to subscribe to Company shares.
Annual awards will be determined by reference to that number of shares which
equals in value to a maximum of 100% of salary for employees who are not a
director of the Company and 150% of salary for the Executive Director of the
Company. Awards vest three years from the date of grant of the award (or upon
the assessment of performance conditions if later) subject to the LTIP
participant's continued service and the extent to which the performance
conditions specified for the awards are satisfied.
Performance conditions applying to the first awards will be based 50% on
relative Total Shareholder Return ("TSR") and 50% on growth in Total
Accounting Return per share ("TAR") (defined as the growth in the Company's
EPRA Net Assets Value per share and dividend distributions per share paid over
the three-year LTIP performance period). The achievement of a threshold level
of performance will result in vesting of 25% of the maximum award. Full
vesting will occur for equalling or exceeding the maximum performance target.
A target level of performance may also be set between the threshold and
maximum performance targets. The level of vesting for the achievement of
target performance would take account of the difficulty of achieving target
performance. Straight-line vesting will take place for performance between
threshold, target, and maximum. Dividend equivalents will be paid in relation
to shares which vest until the normal vesting date or, if there is one, until
the end of the holding period.
As at 30 June 2020 the Group continued to have a €0.14 million provisional
expense recorded in connection with the Company's TAR performance for the year
ended 31 December 2019.
20.5 Treasury shares
30 June 2021 31 December 2020
Amount Number Amount Number
Note €'000 ('000) €'000 ('000)
Opening balance (12,977) (2,109) (8,379) (929)
Shares purchased with cash by the Company - - (8,345) (1,562)
Shares for Executive Directors and other senior management employees 20.2 180 26 392 43
Shares for subsidiaries' employee share award plan 20.3 823 97 540 62
Shares vested under the deferred annual bonus incentive plan 2,373 303 - -
Transfer of vested shares for performance incentive scheme termination - - 2,544 277
Dividend on treasury shares held by subsidiary 9 - 271
Closing balance (9,592) (1,683) (12,977) (2,109)
21 Capital Management
The Company has no legal capital regulatory requirement. The Group's policy is
to maintain a strong equity capital base so as to maintain investor, creditor
and market confidence and to sustain the continuous development of its
business. The Board considers from time to time whether it may be appropriate
to raise new capital by a further issue of shares. The Group monitors capital
primarily using an LTV ratio and manages its gearing strategy to a long-term
target LTV of less than 40%.
The LTV is calculated as the amount of outstanding debt (Group's debt balance
plus 50% of joint ventures' debt balance), less cash and cash equivalents
(Group cash balance plus 50% of joint ventures' cash balance), divided by the
open market value of its investment property portfolio (Group's investment
property- freehold portfolio plus 50% of joint ventures' investment property -
freehold value) as certified by external valuers. The future share capital
raise or debit issuance are influenced, in addition to other factors, by the
prevailing LTV ratio.
30 June 2021 31 December 2020
Note €'000 €'000
Interest-bearing loans and borrowings (face value) 13 1,652,115 1,660,746
Less:
Cash and cash equivalents 16 459,893 527,801
Group Interest-bearing loans and borrowings (net of cash) 1,192,222 1,132,945
Add: 3,514 3,514
50% Share of Joint Ventures interest-bearing loans and borrowings
50% Share of Joint Ventures cash and cash equivalents (1,699) (311)
Combined Interest-bearing loans and borrowings (net of cash) 1,194,037 1,136,148
Less:
Group Investment property- freehold value as of financial position date 3 3,018,930 2,981,650
Add:
50% Share of Joint Ventures Investment property value as of financial position 22 26,850 25,600
date
Open market value as of financial position date 3,045,780 3,007,250
Loan-to-value ratio ("LTV") 39.2% 37.8%
Since the carrying value of lease liability closely matches with fair value of
the investment property - leasehold under the applicable accounting policy as
per IFRS 16 therefore both lease asset and liability, related to the right of
perpetual usufruct of the lands, are excluded from the above calculation for
the current and prior periods.
SECTION VI: INVESTMENT IN SUBSIDIARIES, JOINT VENTURES AND RELATED DISCLOSURE
This section includes details about Globalworth's subsidiaries, if any new
business and /or new properties acquired, investment in joint ventures and
related impact on the statement of comprehensive income and cash flows.
22 Investment in Joint ventures
30 June 2021 31 December 2020
Investments Note €'000 €'000
Opening balance 11,907 10,010
Share of (loss)/profit during the period 22.4 (1,273) 1,897
Sub-total 10,634 11,907
Loans receivable from joint ventures
Opening balance 16,451 7,847
Loan provided to the joint ventures 5,770 16,555
Loan repayments from the joint ventures - (8,485)
Interest repayment from the joint ventures - (199)
Interest income on the loans to joint ventures 335 733
Sub-total 22,556 16,451
TOTAL 33,190 28,358
22.1 Investments in the Joint Ventures
In April 2019, the Group's subsidiary, Globalworth Holdings Cyprus Limited,
entered into a joint venture agreement with Bucharest Logistic Park SRL,
through which it acquired a 50% shareholding interest (€0.09 million
investment) in Global Logistics Chitila SRL ("Chitila Logistics Hub"), an
unlisted company in Romania, owning land for further development, at
acquisition date, in Chitila, Romania. As at 30 June 2021 and 31 December
2020, the investment properties were classified under the industrial segment
for the Group.
In June 2019, the Group's subsidiary, Globalworth Holdings Cyprus Limited,
entered into a joint venture agreement with Mr. Sorin Preda through which it
acquired a 50% shareholding interest (€6.36 million investment) in Black Sea
Vision SRL ("Constanta Business Park"), an unlisted company in Romania, owning
land for further development, at acquisition date, in Constanta, Romania. As
at 30 June 2021 and 31 December 2020, the investment properties were
classified as industrial segment for the Group.
Judgements and assumptions used for Joint Ventures
Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control. The
considerations made in determining significant influence or joint control are
similar to those necessary to determine control over subsidiaries. Following
such assessment, the Group's investment was classified as a joint venture.
Until the disposal date, the carrying amount of the investment in the joint
venture was recorded at cost plus the change in the Group's share of net
assets of the joint venture until the disposal date.
As at 30 June 2021, the Group determined that there is no objective evidence
that the investments in the joint venture are impaired. The financial
statements of the joint ventures are prepared for the same reporting period as
the Group. The joint ventures had no other contingent liabilities or
commitments as at 30 June 2021 (2020: €nil), except construction commitments
disclosed in note 6.
22.2 Summarised Statements of Financial Position of the Joint
Ventures as at reporting date
The summarised statements of financial position of the joint ventures are
disclosed below, which represents the assets and liabilities recognised in the
financial statements of each joint venture without adjusting of the balance
payable to or receivable from the Group. Transactions and balances receivable
or payable between the Group and the individual joint ventures are disclosed
in note 25.
30 June 2021 30 June 2021 30 June 2021 31 December 2020 31 December 2020 31 December 2020
€'000 €'000 €'000 €'000 €'000 €'000
Constanta Business Park Chitila Logistics Hub Combined Constanta Business Park Chitila Logistics Hub Combined
Completed investment property 12,300 13,200 25,500 12,000 13,800 25,800
Land bank - for further development 22,400 5,800 28,200 21,400 4,000 25,400
Other non-current assets 1 1,263 1,264 29 96 125
Total non-current assets 34,701 20,263 54,964 33,429 17,896 51,325
Other current assets 274 963 1,237 403 345 748
Cash and cash equivalents 89 3,309 3,398 420 203 623
Total assets 35,064 24,535 59,599 34,252 18,444 52,696
Loans payable to the Group 11,273 11,283 22,556 11,060 5,391 16,451
Bank loans (at amortised cost) - 6,978 6,978 - 6,976 6,976
Loan from Joint venture partner 150 2,797 2,947 150 2,670 2,820
Other non-current liabilities 3,073 - 3,073 3,009 534 3,543
Total non-current liabilities 14,496 21,058 35,554 14,219 15,571 29,790
Loan from Joint venture partner 11 205 216 9 276 285
Other current liabilities 432 4,299 4,731 356 313 669
Total liabilities 14,939 25,562 40,501 14,584 16,160 30,744
Net assets 20,125 (1,027) 19,098 19,668 2,284 21,952
The Group has signed loan facilities amounting to €53.3 million (2020: €23
million) with Chitila Logistics Hub and Constanta Business Park joint ventures
to fund the development costs of the projects, out of which €31.6 million
was available for future drawdown as of 30 June 2021 (2020: €7.2 million).
Further details about the fair valuation of investment property owned by the
Joint Ventures are disclosed in note 4.1.
22.3 Summarised Statements of Financial Performance of the Joint
Ventures
The table below includes individual and combined income statements of the
joint venture extracted from the individual financial statements of each joint
venture without adjusting for the transactions with the Group.
30 June 2021 30 June 2021 30 June 2021 30 June 2020 30 June 2020 30 June 2020
€'000 €'000 €'000 €'000 €'000 €'000
Constanta Business Park Chitila Logistics Hub Combined Constanta Business Park Chitila Logistics Hub Combined
Revenue 428 343 771 - - -
Operating expenses (187) (234) (421) - (9) (9)
Administrative expenses (33) (22) (55) (15) (21) (36)
Fair value gain/(loss) on investment property 508 (3,675) (3,167) 1,975 1,448 3,423
Foreign exchange loss (5) (13) (18) (21) (25) (46)
Profit/(loss) before net financing cost 711 (3,601) (2,890) 1,939 1,393 3,332
Finance expense (217) (249) (466) 4 (91) (87)
Finance income 1 1 2 - - -
Income tax (expense)/income (48) 541 493 (335) (248) (583)
Total comprehensive income for the period 447 (3,308) (2,861) 1,608 1,054 2,662
Income tax expense mainly represents deferred tax (expense)/income on the
valuation of investment property.
22.4 Share of profit/(loss) of equity-accounted investments in
joint ventures
The following table presents a reconciliation between the profit/(loss) for
the period ended 30 June 2021 and 30 June 2020 recorded in the individual
financial statements of the joint ventures with the Share of profit recognised
in the Group's financial statements under the equity method.
30 June 2021 30 June 2021 30 June 2021 30 June 2020 30 June 2020 30 June 2020
€'000 €'000 €'000 €'000 €'000 €'000
Constanta Business Park Chitila Logistics Hub Combined Constanta Business Park Chitila Logistics Hub Combined
Profit/(loss) for the period 447 (3,308) (2,861) 1,608 1,054 2,662
Group 50% share of profit/(loss) for the period 224 (1,654) (1,430) 804 527 1,331
Adjustments for transaction with the Group 114 43 157 (56) (17) (73)
Share of profit/ (loss) of equity-accounted investments in joint ventures 338 (1,611) (1,273) 748 510 1,258
23 Investment in Subsidiaries
Details on all direct and indirect subsidiaries of the Company, over which the
Group has control and consolidated as of 30 June 2021 and 31 December 2020,
are disclosed in the table below. The Group did not have any restrictions
(statutory, contractual or regulatory) on its ability to transfer cash or
other assets (or settle liabilities) between the entities within the Group.
As of 30 June 2021, the Group consolidated the following subsidiaries, being
holding companies as principal activities.
30 June 2021 31 December 2020 Place of incorporation
Subsidiary Note Shareholding interest (%) Shareholding interest (%)
Globalworth Investment Advisers Limited 100 100 Guernsey,
Channel Islands
Elgan Automotive Kft. 23.2 - 100 Hungary
Globalworth Holdings Cyprus Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited 23.1
Kusanda Holdings Limited
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Dunvant Holding Limited
Oystermouth Holding Limited
Kinolta Investments Limited
Minory Investments Limited
Globalworth Tech Limited 100 100 Cyprus
IB 14 Fundusz Inwestycyjny Zamkniety Aktywow Niepublicznych
Lima Sp. z o.o.
Luapele Sp. z o.o. w likwidacji 23.1 100 100 Poland
West Gate Wroclaw Sp. z o.o.
West Gate Investments Sp. z o.o 23.2 - 100 Poland
As of 30 June 2021, the Group consolidated the following subsidiaries, which
own real estate assets in Romania and Poland, being asset holding companies as
their principal activities, except for Globalworth Building Management SRL,
GPRE Property Management Sp. z o.o. and GPRE Management Sp. z o.o. with
building management activities in Romania and Poland, and Fundatia Globalworth
in Romania and Fundacja Globalworth in Poland, non-profit organisations with
corporate social responsibility activities.
30 June 2021 Shareholding interest (%) 31 December 2020 Shareholding interest (%) Place of incorporation
Subsidiary
Note
Aserat Properties SRL 100 100 Romania
BOB Development SRL
BOC Real Property SRL
Corinthian Five SRL
Corinthian Tower SRL
Corinthian Twin Tower SRL
Elgan Automotive SRL
Elgan Offices SRL
Globalworth Asset Managers SRL
Globalworth Building Management SRL
Globalworth EXPO SRL
SPC Beta Property Development Company SRL
SPC Epsilon Property Development Company SRL
SPC Gamma Property Development Company SRL
Netron Investment SRL
SEE Exclusive Development SRL
Tower Center International SRL
Upground Estates SRL
Fundatia Globalworth
Industrial Park West SRL* 100 - Romania
DH Supersam Katowice Sp. z o.o. 100 100 Poland
Hala Koszyki Sp. z o.o.
Dolfia Sp. z o.o.
Ebgaron Sp. z o.o.
Bakalion Sp. z o.o.
Centren Sp. z o.o.
Tryton Business Park Sp. z o.o.
GPRE Property Management Sp. z o.o.
GPRE Management Sp. z o.o.
A4 Business Park Sp. z o.o.
West Link Sp. z o.o.
Lamantia Sp. z o.o.
Dom Handlowy Renoma Sp. z o.o.
Nordic Park Offices Sp. z o.o.
Warta Tower Sp. z o.o.
Quattro Business Park Sp. z o.o.
West Gate Sp. z o.o. (formerly: Wagstaff Investments Sp. z o.o.)
Gold Project Sp. z o.o.
Spektrum Tower Sp. z o.o.
Warsaw Trade Tower 2 Sp. z o.o.
Rondo Business Park Sp. z o.o.
Artigo Sp. z o.o.
Ingadi Sp. z o.o.
Imbali Sp. z o.o.
Kusini Sp. z o.o.
Podium Park Sp. z o.o.
Fundacja Globalworth
* This subsidiary was set up in April 2021.
23.1 Subsidiaries under liquidation process
As of 30 June 2021 the following companies, who transferred all assets to
Globalworth Holdings Cyprus Limited as settlement for the equity investment
and shareholder loans from Globalworth Holdings Cyprus Limited during the
year 2020, are still under the liquidation process, namely: Casalia Holdings
Limited, Dunvant Holding Limited, Kifeni Investments Limited, Oystermouth
Holding Limited, Pieranu Enterprises Limited, Ramoro Limited, Vaniasa Holdings
Limited, and Zaggatti Holdings Limited.
At 30 June 2021, the Polish entity Luapele Sp. z o.o. w likwidacji was under a
liquidation process, following which it will be stricken off from the Register
of Companies in Poland during 2021.
23.2 Mergers during the period
On 19 February 2021, Kinolta Investments Limited has absorbed Elgan Automotive
Kft. as a result of the cross-border merger process that started during the
year 2020.
During the six-month period ended 30 June 2021, Wagstaff Investments Sp. z
o.o. absorbed West Gate Wroclaw Sp. z o.o and West Gate Investments Sp. z o.o,
each one of them being registered in Poland. As part of the merger process
Wagstaff Investments Sp. z o.o. was renamed to West Gate Sp. z o.o. West Gate
Investments Sp. z o.o. was the owner of West Gate investment property and the
other companies were holding companies.
SECTION VII: OTHER DISCLOSURES
This section includes segmental disclosures highlighting the core areas of
Globalworth's operations in the Office, Mixed-use, residential, and other
(industrial and corporate segments). There were no significant transactions
between segments except for management services provided by the offices
segment to the residential, mixed-use and other (industrial) segments. This
section also includes the transactions with related parties, new standards and
amendments, contingencies that existed at the period end and details on
significant events which occurred subsequent to the period end.
24 Segmental Information
The Group earns revenue and holds non-current assets (investment properties)
in Romania and Poland, the geographical area of its operations. For investment
property, discrete financial information is provided on a property-by-property
basis (including those under construction or refurbishment) to members of
executive management, which collectively comprise the Executive Directors of
the Group. The information provided is Net Operating Income ('NOI' i.e. gross
rental income less property expenses) and valuation gains/losses from property
valuation at each semi-annual basis. The individual properties are aggregated
into Office, Mixed-use, Industrial and Residential segments. Industrial
property segment and head office segments are presented on collective basis as
Others in the table below since their
individual assets, revenue and absolute profit (or loss) are below 10% of all combined total asset, total revenue and total absolute
profit (or loss) of all segments. All other segments disclosed separately as these meets quantitative threshold of IFRS 8.
Consequently, the Group is considered to have four reportable operating
segments: the Offices segment (acquires, develops, leases and manages offices
and spaces), the Residential segment (builds, acquires, develops and leases
apartments), Mixed-use and the Other segment (acquires, develops, leases and
manages industrial spaces and corporate office). Share-based payments expense
is not allocated to individual segments as underlying instruments are managed
at Group basis. Segment assets and liabilities reported to executive
management on a segmental basis are set out below:
30 June 2021
Office Mixed-use Residential Other Inter- segment eliminations Total
€'000 €'000 €'000 €'000 €'000 €'000
Rental income - Total 65,374 5,168 786 4,273 (223) 75,378
Romania 28,491 - 786 4,273 (141) 33,409
Poland 36,883 5,168 - - (82) 41,969
Revenue from contract with customers - Total 28,231 2,571 253 3,035 (1,358) 32,732
Romania 13,459 - 253 3,035 (256) 16,491
Poland 14,772 2,571 - - (1,102) 16,241
Revenue-total 93,605 7,739 1,039 7,308 (1,581) 108,110
Operating expenses (29,740) (3,276) (419) (2,947) 425 (35,957)
Segment NOI 63,865 4,463 620 4,361 (1,156) 72,153
NOI - Romania 27,152 - 620 4,361 (350) 31,783
NOI - Poland 36,713 4,463 - - (806) 40,370
Administrative expenses (5,790) (336) (107) (3,702) 612 (9,323)
Acquisition costs - - - - - -
Fair value (loss)/gain on investment property (11,475) (6,181) (576) 3,529 - (14,703)
Depreciation on other long-term assets (213) - (27) (19) - (259)
Other expenses (649) 18 * (164) - - (795)
Other income 220 15 - 255 (14) 476
Foreign exchange loss 39 (48) (13) (28) - (50)
Finance cost (26,863) (250) (1) (409) - (27,523)
Finance income 488 - 9 342 - 839
Segment result 19,622 (2,319) (259) 4,329 (558) 20,815
Share-based payment expense - - - (432) - (432)
Gain from fair value of financial instruments (243) - - - - (243)
Share of (loss)/profit of equity-accounted investments in joint ventures - - - (1,273) - (1,273)
Profit/(loss) before tax 19,379 (2,319) (259) 2,624 (558) 18,867
30 June 2020
Office Mixed-use Residential Other Inter-segment eliminations Total
€'000 €'000 €'000 €'000 €'000 €'000
Rental income - Total 69,236 6,515 872 4,845 (222) 81,246
Romania 29,446 - 872 4,845 (137) 35,026
Poland 39,790 6,515 - - (85) 46,220
Revenue from contract with customers - Total 27,655 2,789 294 2,260 (205) 32,793
Romania 13,334 - 294 2,260 (180) 15,708
Poland 14,321 2,789 - - (25) 17,085
Revenue-total 96,891 9,304 1,166 7,105 (427) 114,039
Operating expenses (28,223) (3,410) (502) (2,361) 104 (34,392)
Segment NOI 68,668 5,894 664 4,744 (323) 79,647
NOI - Romania 28,789 - 664 4,744 (238) 33,959
NOI - Poland 39,879 5,894 - - (85) 45,688
Administrative expenses (6,557) (1,413) (85) (3,967) 3,198 (8,824)
Acquisition costs (1,903) - - (399) - (2,302)
Fair value (loss)/gain on investment property (71,301) (20,427) (567) 318 - (91,977)
Depreciation on other long-term assets (50) (1) (32) (120) - (203)
Other expenses (766) (583) (129) 34 - (1,444)
Other income 74 220 - (9) - 285
Foreign exchange loss (339) 225 (10) (43) - (167)
Finance cost (22,914) (490) (2) (122) - (23,528)
Finance income 773 22 30 378 - 1,203
Segment result (34,315) (16,553) (131) 814 2,875 (47,310)
Share-based payment expense - - - (194) - (194)
Gain from fair value of financial instruments 151 - - - - 151
Share of (loss)/profit of equity-accounted investments in joint ventures - - - 1,258 - 1,258
Profit/(loss) before tax (34,164) (16,553) (131) 1,878 2,875 (46,095)
* Other expenses include a loss on sale of non-core investment property
(residential apartments) of €162 thousand (30 June 2020: €107 thousand)
and other one-off expenses.
Revenues are derived from a large number of tenants and no tenant contributes
more than 10% of the Group's rental revenues for the period ended 30 June 2021
(30 June 2020: €nil).
30 June 2021
Office Mixed-use Residential Other Inter segment eliminations Total
Segments €'000 €'000 €'000 €'000 €'000 €'000
Segment non-current assets 2,551,004 278,465 68,463 152,830 (1,295) 3,049,467
Romania 1,194,400 - 68,463 152,830 (193) 1,415,500
Poland 1,356,604 278,465 - - (1,102) 1,633,967
Total assets 3,088,726 287,919 68,798 162,719 (2,014) 3,606,148
Total liabilities 1,832,235 21,697 4,697 12,638 (645) 1,870,622
Additions to non-current assets
- Romania 19,281 - 257 18,995 - 38,533
- Poland 10,899 2,403 - - - 13,302
31 December 2020
Office Mixed-use Residential Other Inter segment eliminations Total
Segments €'000 €'000 €'000 €'000 €'000 €'000
Segment non-current assets 2,585,332 281,260 66,909 138,577 (407) 3,071,671
Romania 1,222,364 - 66,909 138,577 (200) 1,427,650
Poland 1,362,968 281,260 - - (207) 1,644,021
Total assets 3,016,712 287,463 69,516 257,078 (706) 3,630,063
Total liabilities 1,834,889 22,243 4,582 13,914 (929) 1,874,699
Additions to non-current assets
- Romania 29,440 - 512 3,162 - 33,114
- Poland 45,032 4,484 - - - 49,516
None of the Group's non-current assets are located in Guernsey except for
goodwill (there are no employment benefit plan assets, deferred tax assets or
rights arising under insurance contracts) recognised on business combination.
25 Transactions with Related Parties
The Group's related parties are Joint ventures, the Company's Executive and
Non-Executive Directors, key other Executives, as well as all the companies
controlled by them or under their joint control, or under significant
influence. The related party transactions are set out in the table below:
Income statement Statement of financial position
Income/(expense) Amounts owing (to)/from
Nature of transaction/balances 30 June 2021 30 June 2020 30 June 2021 31 December 2020
Name Amounts €'000 €'000 €'000 €'000
Mindspace Ltd.(1) Revenue - 665(1) n/a(1) n/a(1)
Global Logistics Chitila SRL (50% Joint Venture) Shareholder loan receivable - - 11,283 5,391
Trade and other receivables 11 - - -
Finance income 122 146 - -
Office rent 6 6 - -
Asset management fees 9 - - -
Black Sea Vision SRL Shareholder loan receivable - - 11,273 11,060
(50% Joint Venture)
Trade and other receivables 12 - - -
Finance income - 117 - -
Office rent 6 6 - -
Asset management fees 9 - - -
Mr. Ioannis Papalekas (Chief Executive Officer - until 16 December 2020) Donation made to Fundatia Globalworth n/a 200 n/a -
1. A key Executive of Mindspace Ltd. is a close family member of a former
Non-Executive Director of the Company. The former non-Executive Director of
the Company resigned from the Board of the Company on 30 March 2020,
therefore, the above table only includes the transactions entered between the
subsidiaries of Mindspace Limited (namely Mindspace Co-working SRL and
Mindspace Poland S.A.) and certain subsidiaries of the Company until the end
of his term in office as a non-Executive Director of the Company.
26 New and Amended Standards
Starting from 1 January 2021 the Group adopted the following new and amended
standards and interpretations. The new standards and amendments had no
significant impact on the Group's financial position and performance.
Narrow scope amendments and new Standards Effective Date (EU endorsement)
Interest Rate Benchmark Reform - Phase 2 Jan-21
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Amendments to IFRS 4 Insurance Contracts - deferral of IFRS19 Jan-21
For other standards issued but not yet effective and not early adopted by the
Group, the management believes that there will be no significant impact on the
Group's consolidated financial statements.
Narrow scope amendments and new Standards Effective Date (EU endorsement)
IFRS 17 Insurance Contracts Jan-23
Amendments to IAS 1 Presentation of Financial Statements: Classification of Jan-23
Liabilities as Current or Non-current
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Jan-23
Statement 2: Disclosure of Accounting policies
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Jan-23
Errors: Definition of Accounting Estimates
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Jan-23
Liabilities arising from a Single Transaction
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Jan-22
Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets;
and Annual Improvements 2018-2020
Amendments to IFRS 16 Leases: COVID-19-Related Rent Concessions beyond 30 June Apr-21
2021
27 Contingencies
Taxation
All amounts due to State authorities for taxes have been paid or accrued at
the balance sheet date. The tax system in Romania and Poland undergoes a
consolidation process and is being harmonised with the European legislation.
Different interpretations may exist at the level of the tax authorities in
relation to the tax legislation that may result in additional taxes and
penalties payable. Where the State authorities have findings from reviews
relating to breaches of tax laws, and related regulations these may result in
confiscation of the amounts in case; additional tax liabilities being payable;
fines and penalties (that are applied on the total outstanding amount). As a
result, the fiscal penalties resulting from breaches of the legal provisions
may result in a significant amount payable to the State. The Group believes
that it has paid in due time and in full all applicable taxes, penalties and
penalty interest to the extent applicable.
Transfer Pricing
According to the applicable relevant tax legislation in Romania and Poland,
the tax assessment of related party transactions is based on the concept of
market value for the respective transfers. Following this concept, the
transfer prices should be adjusted so that they reflect the market prices that
would have been set between unrelated companies acting independently (i.e.
based on the "arm's length principle"). It is likely that transfer pricing
reviews will be undertaken in the future in order to assess whether the
transfer pricing policy observes the "arm's length principle" and therefore no
distortion exists that may affect the taxable base of the taxpayer in Romania
and Poland.
Legal Proceedings
In recent years the Romanian State Authorities initiated reviews of real
estate restitution processes and in some cases commenced legal procedures
where it has considered that the restitution was not performed in accordance
with the applicable legislation. The Group is involved in one such case, which
is currently at a very early stage and may take a very long time to be
concluded, and management believes that the risk of any significant loss
occurring in future is remote.
28 Subsequent events
On 31 August 2021, the Company announced that its Board of Directors had
approved the payment of an interim dividend in respect of the six-month
financial period ended 30 June 2021 of €0.15 per ordinary share, which will
be paid on 1 October 2021 to shareholders on the register as at close of
business on 10 September 2021 with a corresponding ex-dividend date of 9
September 2021.
ADDITIONAL INFORMATION
EPRA NAV Metrics
EPRA NRV EPRA NRV EPRA NTA EPRA NTA EPRA NDV EPRA NDV
30-Jun-21 31-Dec-20 30-Jun-21 31-Dec-20 30-Jun-21 31-Dec-20
€'000 €'000 €'000 €'000 €'000 €'000
Net assets attributable to equity holders of the parent 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Include / exclude
I) Hybrid instruments − − − − − −
Diluted NAV 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Include:
II. a) Revaluation of IP (if IAS 40 cost option is used) − − − − − −
II. b) Revaluation of IPUC (if IAS 40 cost option is used) − − − − − −
II. c) Revaluation of other non-current investments − − − − − −
III.) Revaluation of tenant leases held as finance leases − − − − − −
IV.) Revaluation of trading properties − − − − − −
Diluted NAV at fair value 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Exclude:
V) Deferred tax in relation to fair value gains of IP 171,571 171,197 85,786 85,599 n/a n/a
VI) Fair value of financial instruments 547 872 547 872 547 872
VII) Goodwill as a result of deferred tax (5,697) (5,697) (5,697) (5,697) (5,697) (5,697)
VIII. a) Goodwill as per the IFRS balance sheet n/a n/a (6,652) (6,652) (6,652) (6,652)
VIII. b) Intangibles as per the IFRS balance sheet n/a n/a (18) (49) (18) (49)
IX) Adjustment in respect of joint venture for above items 1,495 1,742 1,495 1,742 n/a n/a
Include:
IX) Fair value of fixed interest rate debt n/a n/a n/a n/a (108,159) (93,441)
X) Revaluation of intangibles to fair value n/a n/a n/a n/a n/a n/a
XI) Real estate transfer tax / acquisition costs − − − − n/a n/a
NAV 1,903,442 1,923,478 1,810,986 1,831,179 1,615,547 1,650,397
Fully diluted number of shares 221,197 221,486 221,197 221,486 221,197 221,486
NAV per share (EUR) 8.61 8.68 8.19 8.27 7.30 7.45
STANDING PORTFOLIO - BREAKDOWN BY LOCATION TYPE (30 JUNE 2021)
Number of Value Area Occupancy Rate Rent Contracted Headline Rent / Sqm or Unit
Investments Properties GAV GLA by GLA Contracted WALL 100% Rent Office Commercial Logistics / L.I.
(#) (#) (€m) (k sqm) (%) Rent (€m) Years (€m) (€/sqm/m) (€/sqm/m) (€/sqm/m)
Office & Mixed-Use Portfolio
Bucharest New CBD 8 12 876.4 344.5 82.6% 53.2 4.8 64.1 14.1 14.1 --
Bucharest Other 4 6 282.2 118.2 92.3% 18.4 6.2 20.4 13.5 13.2 --
Romania: Office 12 18 1,158.6 462.7 85.1% 71.7 5.2 84.5 14.0 13.8 --
Warsaw 9 14 712.3 210.9 86.5% 42.5 3.5 49.2 17.5 17.6 --
Krakow 4 12 333.7 150.1 82.0% 21.5 3.4 26.3 13.2 13.2 --
Wroclaw 2 3 147.3 56.6 97.8% 9.2 6.6 9.4 12.8 12.8 --
Lodz 1 2 68.5 35.5 87.1% 4.6 5.9 5.4 11.6 11.8 --
Katowice 2 5 126.2 63.3 94.3% 9.7 3.9 10.2 12.7 12.5 --
Gdansk 1 1 56.8 25.6 98.9% 4.2 3.3 4.3 12.9 12.8 --
Poland: Office & Mixed-Use 19 37 1,444.9 542.0 88.0% 91.7 3.9 104.8 14.6 14.6 --
Total Office & Mixed-Use Portfolio 31 55 2,603.5 1,004.7 86.6% 163.4 4.5 189.3 14.3 14.3 --
Logistic / light-industrial
Timisoara 2 5 70.0 121.3 100.0% 5.5 5.8 5.5 6.3 3.8 3.5
Arad 1 1 15.5 20.1 100.0% 1.1 13.6 1.1 6.3 4.7 4.4
Oradea 1 1 5.3 6.9 100.0% 0.4 14.2 0.4 5.0 4.8 4.7
Pitesti 1 1 49.0 68.4 100.0% 3.4 9.4 3.4 4.2 4.2 4.2
Constanta 1 1 12.3 20.7 89.2% 0.8 6.2 0.9 6.8 3.5 3.3
Bucharest 1 1 13.2 23.0 67.6% 0.7 8.4 1.1 7.3 3.8 3.7
Total Logistics / Light-Ind. Portfolio 7 10 165.3 260.4 96.3% 12.0 8.0 12.4 6.0 4.0 3.8
Other Portfolio
Bucharest New CBD 1 1 58.6 32.0 nm 1.0 0.8 1.0 -- -- --
Upground Complex - Residential
Bucharest New CBD -- -- 9.8 6.0 95.6% 0.7 10.8 0.7 -- 9.7 --
Upground Complex - Commercial
Total Other Portfolio 68.4 38.0 nm 1.6 4.9 1.7 -- 9.7 --
Total Standing Commercial Portfolio 38 65 2,778.6 1,271.0 88.7% 176.0 4.7 202.5 14.2 12.0 3.8
Of which Romania 19 28 1,333.7 729.1 89.2% 84.3 5.6 97.6 13.6 10.0 3.8
Of which Poland 19 37 1,444.9 542.0 88.0% 91.7 3.9 104.8 14.6 14.6 --
GLOSSARY
Asset or Property
Represent the individual land plot or building under development or standing
building which forms part or the entirety of an investment.
Bargain Purchase Gain
Any excess between the fair value of net assets acquired and consideration
paid, in accordance with IFRS 3 "Business Combination".
BREEAM
Building Research Establishment Assessment Method, which assesses the
sustainability of the buildings against a range of criteria.
CAPEX
Represents the estimated Capital Expenditure to be incurred for the completion
of the development projects.
Capitalisation Rates
Based on actual location, size and quality of the properties and taking into
account market data at the valuation date.
CBD
Central Business District
CEE
Central and Eastern Europe
CIT
Corporate income tax
Commercial Properties
Comprises the office, light-industrial and retail properties or areas of the
portfolio.
Combined Portfolio
Includes the Group's property investments consolidated on the balance sheet
under Investment Property- Freehold as at 30 June 2021, plus those properties
held as Joint Ventures (currently the lands relating to Chitila Logistics Hub
and Constanta Business Park projects) presented at 100%.
Completed Investment Property
Completed developments consist of those properties that are in a condition
which will allow the generation of cash flows from its rental.
Completion Dates
The date when the properties under development will be completed and ready to
generate rental income after obtaining all necessary permits and approvals.
Contracted Rent
The annualised headline rent as at 30 June 2021 that is contracted on leases
(including pre-leases) before any customary tenant incentive packages.
Debt Service Cover Ratio ("DSCR")
It is calculated as net operating income for the year as defined in specific
loan agreements with the respective lenders, divided by the principal plus
interest due over the same year or period.
Discount Rates
The discount rate is the interest rate used to discount a stream of future
cash flows to their present value.
Discounted Cash Flow Analysis ("DCF")
Valuation method that implies income projections of the property for a
discrete period of time, usually between 5-10 years. The DCF method involves
the projection of a series of periodic cash flows either to an operating
property or a development property. Discounted cash flow projections based on
significant unobservable inputs taking into account the costs to complete and
completion date.
Earnings Per Share ("EPS")
Profit after tax divided by the basic/diluted weighted average number of
shares in issue during the year or period.
Adjusted EBITDA (normalised)
Earnings before finance cost, tax, depreciation, amortisation of other
non-current assets, purchase gain on acquisition of subsidiaries, fair value
movement, and other non-operational and/or non-recurring income and expense
items.
EDGE
Excellence in Design for Greater Efficiencies ("EDGE"). An innovation of the
International Finance Corporation ("IFC"), member of the World Bank Group,
EDGE is a green building standard and a certification system for more than 160
countries.
EPRA
The European Public Real Estate Association is a non-profit association
representing Europe's publicly listed property companies.
EPRA Earnings
Profit after tax attributable to the equity holders of the Company, excluding
investment property revaluation, gains, losses on investment property
disposals and related tax adjustment for losses on disposals, bargain purchase
gain on acquisition of subsidiaries, acquisition costs, changes in the fair
value of financial instruments and associated close-out costs and the related
deferred tax impact of adjustments made to profit after tax.
EPRA Earnings Per Share
EPRA Earnings divided by the basic or diluted number of shares outstanding at
the year or period end.
EPRA Net Assets Value ("EPRA NAV")
Net assets per the statement of financial position, excluding the
mark-to-market on effective cash flow hedges and related debt adjustments and
deferred taxation on revaluations excluding goodwill. This metric was used at
year or period ends up to 31 December 2020.
EPRA Net Reinstatement Value ("EPRA NRV")
The objective of the EPRA Net Reinstatement Value measure is to highlight the
value of net assets on a long-term basis. Assets and liabilities that are not
expected to crystallise in normal circumstances such as the fair value
movements on financial derivatives and deferred taxes on property valuation
surpluses are therefore excluded. Since the aim of the metric is to also
reflect what would be needed to recreate the company through the investment
markets based on its current capital and financing structure, related costs
such as real estate transfer taxes are included, as applicable. This metric is
used by the Group from 2021 onwards as an equivalent to the previously used
EPRA NAV metric.
EPRA Net Tangible Assets ("EPRA NTA")
The underlying assumption behind the EPRA Net Tangible Assets calculation
assumes entities buy and sell assets, thereby crystallising certain levels of
deferred tax liability.
EPRA Net Disposal Value ("EPRA NDV")
The EPRA Net Disposal Value provides the reader with a scenario where deferred
tax, financial instruments, and certain other adjustments are calculated as to
the full extent of their liability, including tax exposure not reflected in
the Balance Sheet, net of any resulting tax. This measure should not be viewed
as a "liquidation NAV" because, in many cases, fair values do not represent
liquidation values.
EPRA NAV, EPRA NRV, EPRA NTA, EPRA NDV Per Share
EPRA NAV, or EPRA NRV, or EPRA NTA, or EPRA NDV divided by the diluted number
of shares outstanding at the year or period end.
Estimated Rental Value ("ERV")
ERV is the external valuers' opinion as to the open market rent which, on the
date of valuations, could reasonably be expected to be obtained on a new
letting or rent review of a property.
Estimated Vacancy Rates
Represent vacancy rates computed based on current and expected future market
conditions after expiry of any current lease.
EURIBOR
The Euro Interbank Offered Rate: the interest rate charged by one bank to
another for lending money, often used as a reference rate in bank facilities.
Financial Year
Period from 1 January to 31 December.
FFO
Free funds from operations, estimated as the EPRA Earnings for the relevant
period.
GLA
Gross leasable area.
IFRS
International Financial Reporting Standards as adopted by the European Union.
Interest Cover Ratio ("ICR")
Calculated as net operating income divided by the debt service / interest.
Investment
Represent a location in which the Company owns / has interests in.
Land Bank for Further Development
Land bought for further development but for which the Group did not obtain all
the legal documentations and authorisation permits in order to start the
development process.
LEED
Leadership in Energy & Environmental Design, a green building
certification programme that recognises best-in-class building strategies and
practices.
Loan-to-Cost Ratio ("LTC")
Calculated by dividing the value of loan drawdowns by the total project cost.
Loan to Value ("LTV")
Calculated as the total outstanding debt excluding amortised cost, less cash
and cash equivalents as of financial position date, divided by the appraised
value of owned assets as of the financial position date. both outstanding debt
and the
appraised value of owned assets include our share of these figures for joint
ventures, which are accounted for in the consolidated financial statements
under the equity method.
Maintenance Costs
Including necessary investments to maintain functionality of the property for
its expected useful life.
Master Lease
Master lease, includes various rental guarantees, which range between 3 and 5
years, covering certain vacant spaces in certain properties owned in Poland.
MSCI
MSCI is an international finance company headquartered in New York City and
listed on New York Stock Exchange and serves as a global provider of equity,
fixed income, hedge fund stock market indexes, multi-asset portfolio analysis
tools and ESG products. An MSCI ESG Rating is designed to measure a company's
resilience to long-term, industry material environmental, social and
governance (ESG) risks.
NBP
National bank of Poland.
Net Assets Value ("NAV")
Equity attributable to shareholders of the Company and/or net assets value.
Net Asset Value ("NAV") Per Share
Equity attributable to owners of the Company divided by the number of Ordinary
shares in issue at the period end.
Net Operating Income ("NOI")
Net operating income (being the gross operating income less operating expenses
that are not paid by or rechargeable to tenants, excluding funding costs,
depreciation and capital expenditure).
Occupancy Rate
The estimated let sqm (GLA) as a percentage of the total estimated total sqm
(GLA) of the portfolio, excluding development properties and in certain cases
(where applicable) spaces subject to asset management (where they have been
taken back for refurbishment and are not available to let as of the financial
position date).
Passing Rent
It is the gross rent, less any ground rent payable under the head leases.
Open Market Value ("OMV" or "GAV")
Open market value means the fair value of the Group's investment properties
and the joint ventures (where the Group owns 50%) determined by Colliers
Valuation and Advisory SRL ("Colliers"), Cushman & Wakefield LLP
(C&W), Knight Frank Sp. z o.o. ("Knight Frank") and CBRE Sp. z o.o.
("CBRE") independent professionally qualified valuers who hold a recognised
relevant professional qualification and have recent experience in the
locations and segments of the investment properties valued, using recognised
valuation techniques.
Property Under Development
Properties that are in development process that do not meet all the
requirements to be transferred to completed investment property.
Residual Value Method
Valuation method that estimated the difference between the market value of the
building upon completion that can be built on the plot of land and all the
building's construction costs, as well as the developer's profit. This method
relies on the contribution concept by estimating from the future income of the
building, the amount that can be distributed to the land.
ROBOR
Romanian Interbank Offer Rate.
Sales Comparison Approach
Valuation method that compares the subject property with quoted prices of
similar properties in the same or similar location.
SPA
Share sale purchase agreement.
SQM
Square metres.
The Company or the Group
Globalworth Real Estate Investments Limited and its subsidiaries.
The Investment Adviser
Globalworth Investment Advisers Limited, a wholly owned holding subsidiary
incorporated in Guernsey.
Total Unencumbered Assets Ratio
Calculated as the Unsecured Consolidated Total Assets divided by Unsecured
Consolidated Total Indebtedness.
Unsecured Consolidated Total Assets
Means such amount of Consolidated Total Assets that is not subject to any
Security granted by any subsidiary of the Group.
WALL
Represents the remaining weighted average lease length of the contracted
leases as of the financial position date, until the lease contracts full
expiration.
Weighted Average Interest Rate
The average of the interest rate charged on the Group's loans, weighted by the
relative outstanding balance of each loan at the year or period end.
WIBOR
Warsaw Interbank Offered Rate.
COMPANY DIRECTORY
Registered Office
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Nominated Adviser and Joint Broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
United Kingdom
Investment Adviser*
Globalworth Investment Advisers Limited
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Auditors
Ernst & Young Cyprus Limited
Jean Nouvel Tower
6 Stasinos Avenue
1511 Nicosia
Cyprus
* Wholly owned subsidiary of the Company.
Administrator
IQ EQ (Guernsey) Limited
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Company Secretary
Nicola Marrin
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Joint Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
United Kingdom
Registrar
Link Market Services (Guernsey) Limited
Mont Crevalt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Globalworth Real Estate Investments Limited
Anson Court,
La Route des Camps, St Martin,
Guernsey, GY4 6AD
Email: enquiries@globalworth.com (mailto:enquiries@globalworth.com)
www.globalworth.com (http://www.globalworth.com)
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