REG - Globalworth Real Est - Preliminary results FY23
11/03/2024 15:45
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RNS Number : 4001G Globalworth Real Estate Inv Ltd 11 March 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
11 March 2024
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Preliminary Unaudited Financial Results for the year ended 31 December 2023
Globalworth, the leading office investor in Central and Eastern Europe, is
pleased to provide a comprehensive update of its operations, along with a
preliminary release of its unaudited Consolidated Financial Statements for the
year ended 31 December 2023.
Dennis Selinas, Chief Executive Officer of Globalworth,
commented: "Globalworth's performance throughout the year remained resilient,
despite global challenges, as we continued to implement our "local landlord"
approach, with an increasing focus on sustainability."
Operational Highlights
· Record year in leasing with 314.4 k sqm taken-up or extended
at an average WALL of 6.0 years despite continued challenging market
conditions.
o Improved our average WALL in our standing commercial properties to 4.9
years (from 4.4 years as of December 2022).
· As of 31 December 2023, the average standing occupancy of our
combined commercial portfolio was 88.3% (88.7% including tenant options),
representing a 2.6% rebound compared to the previous year-end,
o Resilient performance of our capital cities standing commercial properties
at 92.0% average occupancy.
· The total annualised contracted rent of our combined
portfolio increased by 6.3% to €201.2 million, compared to year-end 2022,
o Like-for-like annualised commercial contracted rents in our combined
standing commercial portfolio increased by 4.9% to €190.0 million.
· Standing portfolio GLA stood at 1.4m sqm marginally
decreasing with 19.6k sqm compared to year-end 2022.
o Successfully finalised the sale of Warta Tower in Warsaw
o Delivered our first logistic/light industrial facility in Targu Mures,
Romania
· Total combined portfolio value decreased by 5.2% to €3.0
billion, mainly due to sales and negative revaluation adjustments.
o Like-for-like decrease of 4.0% in the appraised value of our standing
commercial properties compared to year-end 2022
· Developments activity scaled down and focused on high-quality
logistic / light-industrial facilities in Romania (19.3k sqm) and the
finalization of refurbishment/repositioning of two mixed-use properties in
Poland.
· Continued our active investment and upgrade program,
investing over €43.2 million during the year in our standing commercial
portfolio aiming at bringing all our buildings at the highest level of energy
efficiency, technology, and comfort.
· Sustainability:
o €2.5bn in 59 green-certified properties in our portfolio accounting for
92.5% of our standing commercial portfolio by value;
o 27 properties were certified or recertified with BREEAM Very Good or
higher certifications in the period
o Maintained our "low-risk" rating by Sustainalytics at 11.1 and "A" rating
by MSCI;
o SBTi approved our targets to reduce GHG emissions intensity by 46% by 2030
versus our baseline 2019 levels (for Scope 1 and 2) and commit to measuring
and reducing Scope 3
Financial Highlights
Combined Portfolio Value (OMV) Shareholders' equity EPRA NRV per share
€3.0bn €1.6bn €6.94
(5.3)% on 31 Dec. 2022 (0.03)% on 31 Dec. 2022 (16.2)% on 31 Dec. 2022
IFRS Earnings before tax Adjusted normalised EBITDA NOI
€(61.3)m €131.4m €147.0m
€(11.2)m in. 2022 4.3% on 2022 5.2% on 2022
IFRS Earnings per share EPRA Earnings per share Revenues
(23) cents 26 cents €240.4m
(8) cents in 2022 (19)% on 2022 0.5% on 2022
Outlook
For the year ahead of us, we expect that macroeconomic developments and the
financial market evolution, especially the response of monetary authorities to
the trajectory of inflation, among other variables, will have a significant
impact on the real estate market.
We remain focused on our goal of providing sustainable spaces where our
partners can grow and succeed while closely weighing various liquidity
initiatives to provide our group with resources for improving and simplifying
our capital structure.
For further information visit www.globalworth.com
(file:///C%3A/Users/ianagnos/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/X0KQ2AEY/www.globalworth.com)
or contact:
Enquiries
Rashid Mukhtar Tel: +40 732 800 000
Group CFO
Panmure Gordon (Nominated Adviser and Broker) Tel: +44 20 7886 2500
Dominic Morley
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 269 professionals across Cyprus,
Guernsey, Poland and Romania the combined value of its portfolio is €3.0
billion, as at 31 December 2023. Approximately 96.8% of the portfolio is in
income-producing assets, predominately in the office sector, and leased to a
diversified array of over 715 national and multinational corporates. In
Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and
Katowice, while in Romania it has assets in Bucharest and seven other
cities. For more information, please visit www.globalworth.com
(http://www.globalworth.com/) and follow us on Facebook, Instagram and
LinkedIn.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
PRELIMINARY RESULTS AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 2023
MANAGEMENT REVIEW
REVIEW OF DEVELOPMENTS
In 2023, we continued developing high-quality logistics / light-industrial
facilities in Romania. At the beginning of the year, we had two projects (with
three facilities) under construction (30.0k sqm) out of which we have
delivered the Targu Mures project with the other two facilities waiting to be
delivered in the first part of 2024.
In November 2023, we have started our first logistic project in Craiova, by
acquiring a plot of land, north of the city. The built to suite project is
aimed to deliver 6.0k sqm of high-quality GLA in the first part of 2024 and
was 100% pre-leased to Returo SGR as of 31 December 2023 through a 20-year
lease.
Delivery of Targu Mures Logistic Hub
In the first half of 2023, we delivered our first project in Targu Mures with
a leasable area of 18.3k sqm. At the end of December, the project, which is
held through a JV partnership, was 100% let to two large multinational
companies, Friesland Campina and EKR Elektrokontakt (Nexans Group) at an
average WALL of 10.1 years.
Delivery
Targu Mures Logistic Hub*
Location Targu Mures
GLA (k sqm) 18.3
Occupancy (%) 100.0%
Development Cost (€ m) 14.0
GAV (€ m) 15.5
Contracted Rent (€ m) 1.5
WALL (years) 10.1
Estimated Yield on Development Cost 10.4%
(*) Joint Venture in which Globalworth owns 50%; figures shown on 100% basis.
Developments in Progress
We currently have two projects under development (with three facilities)
expected to be delivered in 2024, further expanding our industrial footprint
by 19.3k sqm of high-quality GLA and at full occupancy are expected to
generate €1.3 million of annualised rent.
Developments
Business Park Stefanesti(1) (Phases B and C) Craiova Logistic Park
Location Bucharest Craiova
GLA (k sqm) 13.3 6.0
Occupancy (%) 34.7% 100%
Development Cost (€ m) 9.4 4.5
GAV (€ m) 11.7 1.8
Contracted Rent (€ m) 0.3 0.4
100% Rent (€ m) 1.0 0.4
Estimated Yield on Development Cost 10.4% 8.2%
(1) 75% owned by Globalworth; figures shown on 100% basis
Refurbishment / Repositioning of Mixed-Use Properties (Poland)
Following the review back in 2020 of our portfolio and in response to market
conditions, we commenced refurbishing/repositioning two of our three mixed-use
properties in Poland. Aiming to increase their class "A" office space and
improve their retail/commercial offering, work started in our Renoma landmark
property in Wroclaw in H2-2020 and our centrally located Supersam property in
Katowice in H2-2021.
· In Renoma, the refurbishment has increased the offer of Class "A"
office space on the higher floors. It had also repositioned the property's
retail offer towards a more attractive food court and a selected fashion mix
on the ground floor and convenience facilities, including a supermarket, gym
and drugstore located on the -1 level.
· In Supersam, we have redeveloped the entire level 1 into an office
function. On level -1, we have repositioned selected retail modules into
high-quality retail and commercial spaces with food and entertainment.
In 2022 and 2023 we invested €22.6 million in the two properties, and we
expect to deliver the properties in the coming months.
Properties Under Refurbishment / Repositioning
Renoma Supersam
Location Wroclaw Katowice
Status Refurbishment / Repositioning Refurbishment / Repositioning
Expected Delivery H1-2024 H1-2024
GLA - on Completion (k sqm) 48.3 26.7
CAPEX to 31 Dec 23 (€ m) 22.0 4.0
GAV (€ m) 111.8 51.3
Estimated CAPEX to Go (€ m)* 6.7 2.2
ERV (€ m) 9.5 4.5
Estimated Yield on Completion of Project** 9.3% 10.7%
* 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.
Ongoing Investment & Upgrade Programme of Our Standing Properties
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, and offer best-in-class
real estate space to our business partners.
To be able to provide spaces for our current and future business partners'
requirements, we keep (re)investing in our properties, maintaining and, where
required, improving the quality of our buildings and our services.
We manage all our properties in Poland internally, and in Romania, we manage
all but one of our offices in-house. This translates to 1,086.6k sqm of
high-quality commercial spaces with an appraised value of €2.4 billion
internally managed by our team.
Internally Managed Commercial Portfolio as at 31 Dec. 2023
Poland Romania Group
GLA (k sqm) 508.5 578.1 1,086.6
% of Commercial GLA 100% 67% 79%
% of Office and Mixed-Use GLA 100% 91% 96%
GAV (€ m) 1,304.7 1,137.3 2,442.0
% of Commercial GAV 100% 82% 90%
% of Office and Mixed-Use GAV 100% 93% 97%
In 2023, we invested €43.2 million in select improvement initiatives in our
standing commercial portfolio. As a result of our ongoing in-house initiatives
and property additions, we hold a modern portfolio with 54 of our standing
commercial properties, accounting for 79.3% by GLA and 78.3% by commercial
portfolio value, having been delivered or significantly refurbished in the
last 10 years.
Future Developments
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 2.7% 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 a total of a
further 785.7k sqm of high-quality GLA to our standing portfolio footprint.
These projects, which are classified as "Future Development", continue to be
reviewed by the Group, albeit periodically, with the pace at which they will
be developed subject to tenant demand and general market conditions.
Future Developments
Podium Green Court D Globalworth West Constanta Business Park (Phased)* Timisoara Industrial Park I and II (Phased) Luterana
Park III
Location Krakow Bucharest Bucharest Constanta Timisoara Bucharest
Status Constr. Postponed Constr. Postponed Constr. Postponed Planned Planned Planned
GLA (k sqm) 17.7 17.2 33.4 525.8 165.2 26.4
CAPEX to 31 Dec 23 (€ m) 8.5 2.5 5.2 12.3 7.0 7.4
GAV (€ m) 7.1 7.5 6.6 37.2 11.0 12.5
Estimated CAPEX to Go (€ m)** 29.7 23.9 38.5 243.6 63.5 39.7
ERV (€ m) 3.1 3.6 5.2 27.7 6.9 6.7
Estimated Yield on Development Cost 8.1% 13.6% 12.0% 10.8% 9.8% 14.1%
(*) 50:50 Joint Venture; figures shown on 100% basis.
(**) Initial preliminary development budgets on future projects; to be
revised prior to permitting.
Divestment of Warta Tower and other divestments
In July we have finalised the sale of Warta Tower office building in Warsaw to
a company from the Cornerstone Investment Management platform, the transaction
being initially agreed upon back in 2021 but was delayed as the buyer had to
reorganise the financing arrangement due to the start of the war in Ukraine in
the early 2022.
The value of the transaction has been set at over EUR €63 million, which is
above book value of the property, as valued in December 2022 and in June 2023
and this stands, once again, as a confirmation of the quality of our
properties.
Warta Tower was completed in 2000 and acquired by Globalworth in March 2018
and as of June 2023 the property was fully vacant, following the relocation of
its main tenant.
Also, in the course of the year we have sold a non-core plot of land in the
northern part of Bucharest to a local entrepreneur, and we have sold our 25%
share in My Place II, an office project in Warsaw, to a Czech real estate
fund.
ASSET MANAGEMENT REVIEW
New Leases
Our principal focus continued to be the prolongation of leases with existing
tenants in our portfolio and the take-up of available spaces in standing
properties and developments.
In the twelve months of 2023, the Group successfully negotiated the take-up
(including expansions) or extension of 314.4k sqm of commercial spaces in
Poland (29.7% of transacted GLA) and Romania (70.3% of transacted GLA), with
an average WALL of 6.0 years, making 2023 our best year in terms of leased GLA
since Globalworth was created.
Between 1 January and 31 December 2023, our leasing activity was almost
equally split between new take-up of available spaces, with such leases
accounting for 48.8% of our total leasing activity being signed at a WALL of
6.8 years and renewals accounting for 51.2% signed at a WALL of 5.4 years.
In total, we signed new leases for 153.5k sqm of GLA, with the majority
involving spaces (+90.0%) leased to new tenants, and the remaining areas being
taken up by existing tenants which were expanding their operations.
· New leases were signed with 83 new tenants for 138.3k sqm of GLA at a
WALL of 7.0 years. The majority were for office and industrial spaces,
accounting for 49.8% and 47.5% respectively, with the remainder involving
retail/other commercial spaces.
Selected New Leases Signed in 2023
City Property Use GLA
Mediapost Hit Mail Bucharest (RO) Chitila Logistic Hub III Industrial 18.1k
Banca Transilvania Bucharest (RO) Green Court Complex Office 10.1k
Dante International (eMAG) Bucharest (RO) Globalworth Square Office 9.6k
LeverX Poland Wroclaw (PL) Retro Office House Office 3.3k
Aramco Fuels Gdansk (PL) Tryton Office 2.6k
· In addition, 37 tenants signed new leases, expanding their operations
by 15.2k sqm at an average WALL of 5.9 years.
We also renewed leases for a total of 160.8 sqm of GLA with 101 of our tenants
at a WALL of 5.4 years. It is important to note that c.82% (by GLA) of these
renewals were for leases that were expiring in 2024 or later.
Selected Leases Extensions Signed in 2023
City Property Use GLA
Honeywell Romania Bucharest (RO) BOC Tower Office 24.4k
Unicredit Bank Bucharest (RO) Unicredit HQ Office 17.4k
Google Krakow (PL) Quattro Business Park Office 13.0k
Deutsche Bank Bucharest (RO) BOB Tower Office 12.9k
Huawei Bucharest (RO) Globalworth Tower Office 12.5k
Summary Leasing Activity for Combined Portfolio in 2023
GLA (k sqm) No. of Tenants* WALL (yrs)
New Leases (incl. expansions) 153.5 117 6.8
Renewals / Extensions 160.8 101 5.4
Total 314.4 201 6.0
*Number of individual tenants
Rental Levels
Headline market rental levels have shown an upward trend during last 12
months, mostly influenced by indexation, despite the challenges in the market
and a cautious approach of tenants related to the renewal of the expiring
leases, thus reflecting the quality of our properties, our active asset
management initiatives, and our approach to sustainable development.
Our leases typically adjust annually in the first quarter of the year, with
eligible leases indexed at an average of 8.5% in 2023. However, this positive
impact is not fully reflected in our averages, as the rates at which leases
were renewed or new leases signed were at their respective ERV rates.
Average Portfolio Headline Rents in Standing Portfolio (€ / sqm / m)
31 Dec. 2023 31 Dec. 2022 Change (%)
Office 15.0 14.2 5.5%
Industrial 4.3 4.0 7.0%
Retail/Commercial 16.7 14.2 17.1%
Rental levels can vary significantly between type of spaces, buildings and
submarkets. Leases signed in 2023 were at €12.9/sqm/m, 8.3% higher than the
previous year group averages.
Average Headline Rents of New Leases Signed (€ / sqm / m)
31 Dec. 2023 31 Dec. 2022 Change (%)
Office 14.8 14.8 0.2%
Industrial 4.4 3.7 17.2%
Retail/Commercial 16.2 14.1 14.9%
Average: 12.9 11.9 8.3%
Contracted Rents (on annualised basis)
Total annualised contracted rent across our portfolio in Poland and Romania
increased by 6.3% to €201.2 million compared to year-end 2022, driven by
active asset management, indexation, a new acquisition and lease-up in our
development projects (completed or in-progress).
Total annualised contracted rents in our standing commercial portfolio were
€191.5 million on 31 December 2023, up by 5.6% compared to 31 December 2022,
increasing to €192.0 million when including rental income generated by
renting 132 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 also increased by 4.9% to €190.0 million at the end of
December 2023 compared to the same period in 2022, mainly as an effect of rent
indexation.
Annualised Contracted Rent Evolution 2023 (€m)
Poland Romania Group
Rent from Standing Commercial Properties ("SCP") 31 Dec. 2022 86.6 94.7 181.3
Less: Assets Sold (Warta Tower) (0.1) - (0.1)
Rent from SCP Adj. for Properties Sold 31 Dec 2022 86.5 94.7 181.2
Less: Space Returned (11.3) (7.6) (18.9)
Plus: Rent Indexation 6.5 7.7 14.2
Plus/Less: Lease Renewals (net impact) & Other (0.6) (2.2) (2.8)
Plus: New Take-up 5.4 11.0 16.4
Total L-f-L Rent from SCP 31 Dec. 2023 86.4 103.6 190.0
Plus: Developments Completed During the Period - 1.5 1.5
Total Rent from Standing Commercial Properties 86.4 105.1 191.5
Plus: Residential Rent - 0.5 0.5
Total Rent from Standing Properties 86.4 105.6 192.0
Plus: Active and Pre-lets of Space on Projects Under Development / 8.4 0.7 9.1
Refurbishment
Total Contracted Rent as at 31 Dec 2023 94.9 106.3 201.2
Combined Annualised Commercial Portfolio Contracted Rent Profile as at 31 Dec.
2023
Poland Romania Group
Contracted Rent (€ m) 94.9 105.8 200.6
Tenant origin - %
Multinational 66.7% 83.1% 75.3%
National 32.1% 15.4% 23.3%
State Owned 1.3% 1.5% 1.4%
Note: Commercial Contracted Rent excludes c.€0.5 million from residential
spaces as at 31 December 2023
Annualised Contracted Rent by Period of Commencement Date as at 31 Dec. 2023
(€m)
Active Leases H1-2024 H2-2024 Total
Standing Properties 186.1 3.9 2.0 192.0
Developments 8.4 0.8 - 9.1
Total 194.5 4.7 2.0 201.2
Annualised Commercial Portfolio Lease Expiration Profile as at 31 Dec. 2023
(€m)
Year 2024 2025 2026 2027 2028 2029 3030 2031 2032 >2032
Total 18.6 12.1 21.4 27.3 25.5 26.3 31.6 15.7 5.8 16.4
% of total 9.3% 6.0% 10.7% 13.6% 12.7% 13.1% 15.8% 7.8% 2.9% 8.2%
The Group's rent roll across its combined portfolio is well diversified, with
the largest tenant accounting for 5.3% of contracted rents, while the top
three tenants account for 10.5% and the top 10 account for 24.1%.
Cost of Renting Spaces
Renting spaces typically involves certain costs, such as rent-free periods,
fitouts for the space leased, and brokerage fees, which the landlord incurs.
These incentives can vary significantly between leases and depend on market
conditions, type of lease signed (new take-up or lease extension), space
leased (office, industrial, other), contract duration and other factors.
Headline (base) rents present the reference point typically communicated in
the real estate market when referring to the level at which lease contracts
are expected to be signed or are signed. However, the effective rent is a more
useful indicator of a rental agreement's profitability.
In calculating our effective rent, we account for the costs incurred over the
lease's lifetime, which we deduct from the headline (base) rent, thus allowing
us to assess the profitability of a rental agreement. To analyse the effective
rent more accurately in this period we excluded short term leases and leases
signed and ended during the year.
Overall, in 2023, we successfully negotiated the take-up (including
expansions) or extension of 294.3k sqm of commercial spaces in our portfolio
(excluding short term leases). The weighted average effective rent for these
new leases was €9.5/sqm/month with a WALL of 6.1 years.
· Leases for industrial spaces signed in the period accounted for 18.0%
of the total leasing activity, resulting in the lower average headline and
effective rent.
The difference between headline (base) and effective rents in 2023 was, on
average, 26.2%, which is very close to the level recorded in FY2022 (average
of 26.1%) reflecting a stabilizing but still challenging market.
In total, new leases signed during the year will generate a future rental
income of €297.4 million (including auxiliary spaces), with leases from
office properties accounting for 78.9% of future rental income.
Weighted Average Effective Rent (€ / sqm / m) - 2023
Poland Romania Group
Headline Commercial Rent 16.4 11.3 12.9
Less: Rent Free Concessions (2.6) (1.2) (1.6)
Less: Tenant Fitouts (1.8) (1.3) (1.5)
Less: Broker Fees (0.6) (0.2) (0.3)
Effective Commercial Rent 11.5 8.6 9.5
WALL (in years) 4.7 7.1 6.1
Portfolio Valuation
In line with our practice of biannual valuations, we valued our entire
portfolio in Poland and Romania as of 30 June and 31 December 2023.
The valuations were performed by Knight Frank for our properties in Poland,
with Colliers and Cushman and Wakefield valuing our properties in Romania
(more information is available under note 3 of the audited annual condensed
consolidated financial statements as of and for the period ended 31 December
2023).
Assigning the appraisal of our portfolio to three independent and experienced
service providers makes the process of determining the value of our properties
transparent and impartial. Through our oversight, we ensure that a consistent
methodology, reporting, and timeframe are respected.
The main drivers in the evolution of our portfolio value since the inception
of the Group have been:
· Acquisition or development of high-quality properties in Poland and
Romania,
· Active asset management of the properties, and
· The performance of the real estate markets in which we operate.
Overall, our total combined portfolio value was €3.0 billion at the end of
2019, and remained effectively unchanged in 2020 due to the impact of the
COVID-19 pandemic, increasing to €3.2 billion at 31 December 2021 due to
additions and remained relatively constant in the year after.
In valuing our properties, key market indicators used by the four independent
appraisers, although they vary, consider factors such as the commercial
profile of the property, its location and the country in which it is situated.
As at 31 December 2023 and throughout the year, third-party appraisals
continued to be impacted by high inflation and interest rates, with market
volatility and outlook uncertainty remaining at high levels. This has led to
the application of moderate yield expansion and higher discount rates in
determining the valuations.
As such, the portfolio's third-party appraised value on 31 December 2023 was
estimated at €3.0 billion, impacted by the sale of assets worth €70.6
million and the like-for-like decrease (€110.6 million / 4.0%) in the
appraised value of our standing commercial properties, leading to an overall
decrease of 5.2% compared to the end of 2022.
Combined Portfolio Value Evolution 31 Dec. 2023 (€m)
Poland Romania Group
Total Portfolio Value at 31 Dec 2022 1,584.5 1,574.4 3,158.9
Less: Properties Held in Joint Venture (*) - (119.3) (119.3)
Total Investment Properties at 31 Dec 2022 1,584.5 1,455.1 3,039.6
Plus/Less: Transactions (55.1) (15.1) (70.2)
o/w New Acquisitions - 0.4 0.4
o/w Disposals (55.1) (15.5) (70.6)
Plus: Capital Expenditure 31.4 19.9 51.3
o/w Developments 8.6 2.3 10.9
o/w Standing Properties 22.8 17.6 40.4
o/w Future Developments - - -
Plus/Less: Net Revaluations Adjustments (86.0) (69.0) (154.9)
o/w Developments/Re-developments (0.4) 0.4 (0.1)
o/w Standing Properties (85.5) (68.3) (153.8)
o/w Lands, Future Developments & Acquisitions - (1.1) (1.1)
Total Investment Properties at 31 Dec. 2023 1,474.8 1,391.0 2,865.8
Plus: Properties Held in Joint Venture (*) - 129.0 129.0
o/w Capital Expenditure & Acquisitions - 6.8 6.8
o/w Net Revaluation Adjustments - 2.9 2.9
Total Portfolio Value at 31 Dec. 2023 1,474.8 1,520.0 2,994.8
(*) 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
REVIEW OF STANDING PORTFOLIO
Maintained our footprint at 1.4m sqm.
We provide our business partners with high-quality spaces in 13 major real
estate markets in Poland and Romania that are sustainable, technologically
advanced, and custom-fitted to their requirements, offering premium services
to allow the businesses to succeed.
Overall, our standing portfolio predominantly comprises 29 Class "A" offices
(49 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 in Poland (Krakow, Wroclaw, Katowice,
Gdansk and Lodz), which in total account for 88.2% of our standing portfolio
by value.
In addition, in Romania, we fully own five logistic / light-industrial parks
with ten facilities in Timisoara, Arad, Oradea and Pitesti and own the
majority stake in two small business units projects in Bucharest (with two
standing facilities). We also have 50% ownership through joint venture
agreements in three other logistics/business parks (with four standing
facilities) in Bucharest, Constanta and Targu Mures and own part of a
residential complex in Bucharest.
During the year, our standing commercial portfolio's total GLA slightly
decreased with 15.8k sqm or 1.1% to reach 1,367.4k sqm at the end of December
2023 whilst our overall standing portfolio (commercial and other) decreased in
GLA by 1.4% to 1,386.0k sqm after considering the sale of residential units in
our Upground residential project.
Globalworth Combined Standing Portfolio: 2023 Evolution
Total Standing YE 2022 1,405.6k sqm
of which Standing Commercial YE 2022 1,383.2k sqm
+ Mures Logistic Hub / logistics facility developed in Targu Mures (RO) +18.3k sqm
- Sale of Warta Tower / office property in Warsaw (PL) -33.7k sqm
+/- Net remeasurement adjustments & other (RO & PL) -0.4k sqm
Standing Commercial YE 2023 1,367.4k sqm
Upground residential in Bucharest (RO)((*)) 18.6k sqm
Total Standing YE 2023 1,386.0k sqm
* In 2023, units with 3.8k GLA were sold in our Upground residential complex.
Standing Portfolio Value at €2.7bn
The appraised value of our combined standing portfolio as of 31 December 2023
was €2.7 billion (more than 98% in commercial properties) which was 5.4%
lower compared to 31 December 2022. This overall decrease is mainly
attributable to the sale of Warta Tower (valued at €55.1m as of 31 December
2022) and negative revaluation differences which were partly offset by the
delivery of Targu Mures Logistic Hub in the first half of the year.
The value of like-for-like standing commercial properties decreased by 4.0% as
of 31 December 2023 compared to the prior year, as the reduction in value by
4.6% of our like-for-like standing office and mixed-use properties was offset
by the increase in value of our industrial properties.
Globalworth Combined Standing Portfolio: 2023 Evolution
GAV - 31 December 2022 €2,893.6m
Like for Like Change((*)) -€110.7m
Acquisitions of Properties -
Delivery of Properties +€15.5m
Sales -€61.9m
GAV - 31 December 2023 €2,736.4m
(*) Like-for-Like change represents the changes in GAV of standing properties
owned by the Group at 31 December 2022 and 31 December 2023.
Like-for-Like Occupancy Slightly Improving
Our standing commercial portfolio's average occupancy as of 31 December 2023
was 88.3% (88.7% including tenant options), representing a 2.6% increase over
the previous twelve months (85.6% as of 31 December 2022 / 85.9% including
tenant options).
This increase is mainly attributable to the positive net take-up recorded in
our standing commercial portfolio, the sale of Warta Tower in July (vacant at
the date of sale) and the addition of Mures Logistic Hub which was 100% leased
as of 31 December 2023.
On a like-for-like basis, occupancy increased by 0.7% to 88.1% at the end of
the year, as effect of positive net take-up in our capital cities office
properties and lease-up of our industrial portfolio during the year.
Across our standing portfolio, at 31 December 2023, we had 1,206.9k sqm of
commercial GLA leased to more than 600 tenants at an average WALL of 4.9
years, the majority of which is let to national and multinational corporates
that are well-known within their respective markets.
Occupancy Evolution 2023 (GLA 'k sqm) - Commercial Portfolio
Poland Occupancy Romania Occupancy Group Occupancy
Rate (%) Rate (%) Rate (%)
Standing Available GLA - 31 Dec. 22 542.1 841.0 1,383.2
Sold GLA (33.7) - (33.7)
New Built GLA - 18.3 18.3
Remeasurements, reclassifications (0.0) (0.4) (0.4)
Standing Available GLA - 31 Dec. 23 508.5 858.9 1,367.4
Occupied Standing GLA - 31 Dec. 22 440.6 81.3% 743.7 88.4% 1,184.3 85.6%
Sale of Occupied GLA (3.3) - (3.3)
Acquired/Developed Occupied GLA - 18.3 18.3
Expiries & Breaks (57.7) (58.6) (116.3)
Renewals 58.5 97.3 155.8
New Take-up 23.9 99.7 123.6
Other Adj. (relocations, remeasurements, etc) 0.1 0.3 0.5
Occupied Standing GLA - 31 Dec. 23 403.4 79.3% 803.5 93.5% 1,206.9 88.3%
Not included in our standing portfolio metrics are: 45.6k sqm leased in our
two mixed-use properties which are currently under
refurbishment/repositioning, and 10.6k sqm in our industrial properties which
are under development in Romania (Bucharest and Craiova).
Standing Portfolio Snapshot
As of 31 December 2023, our combined standing portfolio comprised 41
investments (41 on 31 December 2022) with 71 buildings (71 on 31 December
2021) in Poland and Romania. The appraised value of the portfolio was
€2,736.4 million, of which 91.3% was green-certified.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 31 Dec. 2021 31 Dec. 2022 31 Dec. 2023
Number of Investments 39 41 41
Number of Assets 66 71 71
GLA (k sqm) 1,302.3 1,405.6 1,386.0
GAV (€ m) 2,866.3 2,893.6 2,736.4
Contracted Rent (€ m) 175.4 182.0 192.0
Of which Commercial Properties 31 Dec. 2021 31 Dec. 2022 31 Dec. 2023
Number of Investments 38 40 40
Number of Assets 65 70 70
GLA (k sqm) 1,272.0 1,383.2 1,367.4
GAV (€ m) 2,810.3 2,850.6 2,700.0
Occupancy (%) 88.5% (88.7%(1)) 85.6% (86.0%(1)) 88.3% (88.7%(1))
Contracted Rent (€ m) 174.5 181.3 191.5
Potential rent at 100% occupancy (€ m) 201.2 211.4 217.7
WALL (years) 4.7 4.4 4.9
1) Including tenant options
CAPITAL MARKETS REVIEW
Equity Markets Review
In 2023 we have seen the return of high interest rates and an overall
tightening of credit conditions in a real estate world that was still
recovering from the impact of the 2020 pandemic. These evolutions have started
to ease down in the last several months as the inflation in European Union is
moderating and central banks are cautiously assessing the tempo for interest
cuts in their plans for the following period.
Direct real estate valuations have shown small adjustments during the year
impacted by the changes of valuation variables used by professional
appraisers. Equity investors have reassessed their risk premiums and
allocations considering higher interest rates environment resulting in higher
discount rates and exit yields for office and other real estate assets, thus
leading to slightly lower valuation figures by the end of the year.
Since 23 July 2021, Globalworth has been controlled by Zakiono Enterprises
Ltd, which is jointly and equally owned by CPI Property Group S.A. ("CPI") and
Aroundtown SA ("Aroundtown"), currently holding 60.8% of the share capital of
the Group. In addition, Growthpoint Properties Ltd has 29.5% and Oak Hill
Advisors 5.3%; thus, the effective trading free-float by the end of 2023 was
limited to 4.4% of the share capital of Globalworth.
As of 31 December 2023, it is essential to place Globalworth's share price
performance in the context of the prevailing macroeconomic landscape.
Throughout the year, the FTSE EPRA Developed Europe and the FTSE EPRA Global
indices demonstrated a positive performance of +10.7% and +10.8%,
respectively, for the twelve months starting on 1 January 2023.
In contrast, despite several favourable factors such as the high quality of
its portfolio, robust leasing activity, and the company's presence in
high-growth, low office stock markets, Globalworth's share price experienced a
notable decline of -30.5%. It is pertinent to acknowledge that this decline
can be attributed in part to the limited free float of the Group.
Globalworth's share price in this period has been trading consistently below
its latest reported 31 December 2022 and 30 June 2023 EPRA NRV levels of
€8.29 and €7.55 / share, respectively, reaching its lowest closing price
on 02 November at €2.05 per share and its highest price on 2 January at
€3.73 per share.
In the first part of the year, as a measure of safeguarding cash resources of
the company, the group has offered a scrip dividend alternative to the
shareholders, meaning that they could elect to receive newly issued shares at
a pre-determined price instead of cash in connection to dividends announced by
the company. As a result, at each of the two dividend payments during 2023,
shareholders representing more than 98% of the total issued share capital have
elected to receive the Scrip Dividend Alternative, emphasizing the strong
shareholder support for the company.
Globalworth Shareholding
31 Dec. 23 31 Dec. 22
CPI Together: Zakiono Enterprises 60.8% 60.6%
Aroundtown
Growthpoint Properties 29.5% 29.4%
Oak Hill Advisors 5.3% 5.3%
Other 4.7% 4.7%
Basic Data on Globalworth Shares
(Information as at 31 Dec 2023)
Number of Shares 252.2m plus 0.8m shares held in treasury
Share Capital €1.7bn
WKN / ISIN GG 00B979FD04
Symbol GWI
Free Float 7.7%
Exchange London AIM
Globalworth Share Performance
2023 2022
Market Capitalisation (€ million) - 31 Dec 653 914
31-Dec Closing Price (€) 2.59 4.13
52-week high (€) 3.73 6.68
52-week low (€) 2.05 3.90
Dividend paid per share 0.29 0.27
Globalworth FY-2023 Share Price Performance
Bonds Update
We finance ourselves through a combination of equity and debt, and we compete
with many other real estate companies for investor trust to support our
initiatives.
In order 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 up to €1.5 billion of bonds. Out of this amount the Group has raised
€950 million issued in March 2018 and July 2020 (inaugural green bond) and
expiring in 2025 and 2026.
At the beginning of 2023, our two Eurobonds outstanding in total of €950
million had a weighted average maturity of 2.8 years. In the first six months
of 2023, the bonds performance has been impacted by rising interest rates and
investor risk aversion leading our 18/25 and 20/26 bonds to be traded, by the
end of the period, at 14.9% and 13.2% yield to maturity. Considering the
context and looking to proactively manage the Company's debt maturity profile,
we have completed in June a cash tender offer for our outstanding notes due
2025 and 2026 and, as a result, we have purchased €100.0 million of the 2025
notes.
As a result, at 31 December 2023, our two Eurobonds outstanding amounted to
€850 million having a weighted average cost of 2.98%. Considering tightening
credit market conditions and looking to manage in advance our debt maturities
we have accessed, during the year, several secured financings both in Poland
and Romania with reputable credit institutions from the CEE.
Globalworth is rated by two of the three major agencies, with Fitch
maintaining their investment credit rating following their review of the Group
and changing the outlook to negative while S&P downgraded the group's
corporate credit rating to BB+ with a negative outlook considering the
volatile and challenging market environment.
In 2023, our bonds' performance has been impacted by the higher volatility in
the market and rising interest rates. On average, our 18/25 and 20/26 bonds
traded at 86.1% and 78.6% respectively, during the period. However, as the
inflation cooled down and with interest rate cuts on the horizon, by the end
of the year our yield to maturity has adapted, closing at 11.0% and 11.1% on
31 December 2023.
Rating
S&P Fitch
Rating BB+ BBB-
Outlook Negative Negative
(from Stable) (from Stable)
Basic Data on the Globalworth Bonds
GWI bond 18/25 GWI bond 20/26
ISIN XS1799975922 XS2208868914
SEDOL BD9MPV -
Segment Euronext Dublin, BVB Euronext Dublin
Minimum investment amount €100,000 and €1,000 thereafter €100,000 and €1,000 thereafter
Coupon 3.000% 2.950%
Issuance volume €550 million €400 million
Outstanding 31 Dec. 2023 €450 million €400 million
Maturity 29 March 2025 29 July 2026
Performance of the Globalworth Bonds
2023 2022
GWI bond 18/25
31 December closing price 91.2 87.7
Yield to maturity at 31 December 10.992% 9.317%
GWI bond 20/26
31 December closing price 82.6 79.4
Yield to maturity at 31 December 11.080% 10.085%
Globalworth FY-2023 Eurobond Yield Performance
ENVIRONMENTAL REVIEW
Our "Places"
Consistent with our commitment to energy-efficient properties, during 2023 we
certified or recertified 27 of the properties in our portfolio with BREEAM
Very Good or higher certifications.
In Romania, we were able to improve the level of certification, from BREEAM
Very Good to LEED Gold, for Tower Center International, our iconic office
building located in Bucharest CBD, while certifying for the first time five of
our industrial / light logistic properties in Bucharest, Constanta, Arad and
Oradea.
In total, 22 properties had their certifications updated during the year with
11 in Romania and 11 in Poland.
Overall, as of 31 December 2023, our combined standing portfolio comprised 59
green-certified properties, accounting for 92.5% of our standing commercial
portfolio by value. BREEAM accredited properties account for 82.0% of our
green-certified standing portfolio by value, with the remainder of properties
being holders of other certifications (LEED Platinum or LEED Gold).
We remain committed to our green goals, aiming for 100% of our commercial
portfolio to be green accredited. We are currently in the process of
certifying or recertifying 12 other properties in our portfolio, principally
targeting BREEAM certifications.
In addition, in 2023, we maintained our policy of securing 100% of the energy
used in our Polish properties and in our Romanian office portfolio from
renewable sources. The switch to green energy is part of our broader
preparatory actions for nZEB, which also involves other steps, including
introducing intelligent metering and implementing FORGE for monitoring.
In 2023, we successfully certified or recertified all our office and mixed-use
buildings in Poland and Romania with WELL Health-Safety Rating, which is an
evidence-based, third-party verified rating for all new and existing types of
building and space, focusing on operational policies, maintenance protocols,
stakeholder engagement and emergency plans to address a post-COVID-19
environment now and into the future.
As a result, by the end of 2023, all our standing office and mixed-use
properties had a WELL Health-Safety Rating, with a total value of €2.4
billion, standing as further evidence of the quality of our portfolio.
In September 2022, Globalworth obtained the European certification mark
"access4you" for 10 of the office buildings in Bucharest. These are the first
buildings to obtain such a certification in Romania.
As part of our ambitious ESG strategy, we are committed to contribute towards
the global efforts to limit global temperature rise by reducing our direct and
indirect greenhouse emissions in our operations and value chain. As such, in
2022, we performed a detailed review of how we can improve our footprint and
we set our environmental target to reduce GHG emissions intensity by +40% by
2030 versus our baseline 2019 levels (for Scope 1 and 2) and we committed to
measuring and reducing Scope 3 too. In setting this target, we used a
science-based approach to align with a 1.5(o)C trajectory.
These targets were approved and validated by the globally recognised Science
Based Targets initiative (SBTi), and will form key stepping blocks to enable
Globalworth to deliver on its long-term strategy and ambition to become the
first choice in sustainable real estate.
Social Review
"People": Our Team
Our most important asset is our team of dedicated professionals, who have been
selected by employing the best available candidate for each and every
position, regardless of gender, ethnic group This team has been offering
premium services to our partners, efficiently managing our high-quality
portfolio, facilitating growth and creating value for our shareholders and
stakeholders.
One of our key objectives is for our team to meet the highest standards, and
to achieve this (through our Human Resources teams in Romania and Poland), we
organise a series of in-house and third-party led training programs, designed
to improve our team's skillset, knowledge, operational experience, and
interaction with our stakeholders.
Our approach starts with transparent recruiting, an orientation program for
new employees, continuous staff support and consulting, training, regular
feedback sessions and annual performance appraisals.
All our team members also receive a wide array of benefits that include, inter
alia, private health insurance, and experience and sport activities vouchers.
At the end of 2023, our team comprised 269 professionals, most of which sit in
our two main offices in Warsaw and Bucharest. Team members are also located in
regional cities in Poland and Romania, Cyprus and the UK.
"People": Our Communities
We view our role as increasingly responsible towards the people who work at
and visit our properties and the broader community of which we consider
ourselves to be an integral part.
Our significant footprint in Poland and Romania creates this responsibility
for us. Our communities include more than 200k daily workers in / visitors to
our properties under normal conditions, with the lives of many more people in
the broader community also being touched.
In 2023, we maintained our strong focus on giving back to our community and,
together with the Globalworth Foundation, we contributed over €180k in more
than 13 initiatives in Romania and Poland, having over 29.000 beneficiaries.
FINANCIAL REVIEW
Rashid Mukhtar
Group Chief Financial Officer
1. Introduction and Highlights
To help explain our performance, we use a number of measures typically
observed in our sector. These include quoting several measures on a
consolidated basis (including our joint ventures), as it best describes how we
manage our portfolio and overall business, like-for-like measures and measures
prescribed by EPRA.
The measures defined by EPRA are designed to enhance transparency and
comparability across the European real estate sector.
Revenues NOI
€240.4m €147.0m
0.5% on 2022 5.2% on 2022
IFRS Earnings per share Combined Portfolio Value (OMV)1
(23) cents €3.0bn
(8) cents in 2022 (5.3)% on 31 Dec. 2022
EPRA NRV EPRA NRV per share
€1,750.6m €6.94
(4.6)% on 31 Dec. 2022 (16.2)% on 31 Dec. 2022
Adjusted normalised EBITDA EPRA Earnings per share
€131.4m 26 cents
4.3% on 2022 (19)% on 2022
LTV Dividends paid in 2023 per share
42.2% 29 cents
42.7% at 31 Dec. 2022 7.4% on 2022
2. Revenues and Profitability
Our primary income comes from rent paid by our partners who lease space in our
properties. We also generate additional income from service charges. These
charges cover the costs of maintaining common areas and providing shared
services within our properties. However, any income from service charges is
offset by the actual costs we incur in providing those services.
Total Revenue & Net Operating Income
2023 2022
Year ended December 31, €'m €'m
Contracted rent 191.9 180.9
Adjustment for lease incentives (31.5) (31.1)
Rental income 160.4 149.8
Service charge income 75.0 86.8
Other income 5.0 2.5
Operating Expenses (93.4) (99.6)
Net Operating expense (13.4) (10.1)
Net Operating Income (NOI) 147.0 139.7
Globalworth generated total consolidated revenue of €240.4 million during
2023, reflecting a modest 0.5% increase over 2022 revenue of €239.3 million.
Our core revenue stream, gross rental income, grew by a healthy 6.1% to
€191.9 million in 2023, compared to the previous year. This increase is
primarily due to a 7% rise in net rental income (10% increase in Romania and
2% increase in Poland), which climbed to €160.4 million in 2023 from
€149.8 million in 2022.
2023 2022
Year ended December 31, €'m €'m
Office 132.7 126.9
Bucharest 67.5 61.4
Regional 39.0 41.1
Warsaw 26.2 24.4
Mixed-Use 12.4 10.4
Industrial 13.9 11.1
Other 1.3 1.4
Rental Income by Segment 160.4 149.8
Rental income from our standing properties on like for like basis grew by a
solid 5.8% in 2023, reaching €153.5 million. This represents an increase of
€7.8 million year-over-year. Romania led the growth with rental income up
11.6% to €82.5 million, while Poland saw a modest increase of 0.8%, bringing
rental income to €71.0 million.
Rental Income received during the year from properties delivered or under
refurbishment in 2022 and 2023 was €6.9 million. This income was received
from Supersam and Renoma (refurbished) and two industrial facilities which
were delivered in 2023.
The Service Charge Income for 2023 was €75.0 million, 14% lower compared to
€86.8 million in 2022. Net service charge margin decreased with €3.3
million, due to void vacancy costs and increase in service charge rate per
square metre across our standing portfolio.
In addition, we received €5.0 million in 2023 (2022: €2.6 million) from
other services provided to tenants and partners which included fit-out
services, marketing fees and other.
Year ended December 31, 2023 2022
Revenue Share per Country €'m €'m
Poland 52.1% 51.0%
Romania 47.9% 49.0%
Our Net Operating Income ("NOI"), for the full year 2023 reached €147.0
million, this reflects a €7.3 million increase compared to 2022, after
accounting for property and fitout costs, marketing and other income that
contributed with €2.3 million more compared to prior year. Overall operating
expenses in our portfolio decreased by €6.1 million to €93.4 million with
84.5% were reinvoiced to tenants. The remaining portion typically relates to
vacant spaces that are currently available for lease.
Year ended December 31, YoY change
Net Operating Income Build Up €'m
NOI - 2022 139.7
NOI Change - Poland (1.2)
NOI Change - Romania 8.5
NOI - 2023 147.0
Year ended December 31, YoY change
Net Operating Income Build Up €'m
NOI - 2021 144.3
NOI Change - Poland (8.6)
NOI Change - Romania 4.0
NOI - 2022 139.7
Year ended December 31, 2023 2022
Net Operating Income Share per Country €'m €'m
Poland 53.0% 50.3%
Romania 47.0% 49.7%
Adjusted Normalised EBITDA
To assess the ongoing performance of our core operations, we focus on a key
metric called Adjusted Normalized EBITDA. This measure excludes non-recurring
or non-cash items that wouldn't reflect our typical business activity, as
revaluations, gains or losses from asset sales and unusual expenses.
Our adjusted normalised EBITDA was €131.4 million (excluding share of
minority interests, EBITDA was €131.1 million), higher by 4.3% compared to
2022 (€125.9 million), the improvement was driven primarily by higher NOI.
However, a slight rise in administrative and other expenses partially offset
this gain.
2023 2022
Year ended December 31, €'m €'m
(Loss)/Profit before net financing cost (29.7) 35.4
Plus: Fair value loss on investment property 164.9 89.5
Plus: Depreciation on other long-term assets 0.6 0.7
Plus: Other expenses 3.4 2.0
Plus: Other income (2.0) (0.5)
Plus: Foreign exchange (gain)/loss 1.5 (0.9)
Plus: Loss/(Gain) from fair valuation of financial instrument 1.4 (0.2)
Plus: Profit on disposal of investment property and subsidiary (9.1) -
Plus: Non-recurring expenses 0.4 -
Adjusted Normalised EBITDA 131.4 126.0
Share of minority interest (0.3) (0.1)
Adjusted Normalised EBITDA (excluding minority share) 131.1 125.9
Property Valuation
Recent economic and geopolitical headwinds have put downward pressure on
property values in our markets over the past year. This, combined with factors
impacting our operating performance, has resulted in a €164.9 million
revaluation decrease in our consolidated property portfolio as of December 31,
2023. The revaluation fully reflects current market conditions and portfolio
operations.
Properties located in Poland accounted for 56.4% of this net decrease, while
those in Romania comprised the remaining 43.6%. It's important to note that
there was a positive €3.4 million value increase in our industrial
portfolio, partially offsetting these losses.
Year ended December 31, 2023 2022
€'m €'m
Fair value loss on investment property 164.9 89.5
Finance Costs and Income
Year ended December 31, 2023 2022
Finance Cost & Income €'m €'m
Finance Cost 57.1 52.5
Gain from bond buy-back 15.8 -
Income from bank deposits 3.8 0.7
Other finance income 3.6 2.0
Net Finance Cost 33.9 49.8
Our financing activity mainly include interest on bonds, bank loans and other
under unsecured financing sources. In 2023, the total finance cost increased
by €4.6 million to €57.1 million compared to the prior year. The rise is
due to new secured facilities draw down in 2023, €6.8 million expense
recorded, and increase in Euribor base rates particularly in the latter half
of 2023 which also existing secured facilities (up by €2.0 million as
compared to 2022). Also, we recorded in 2023 expense for the entire year on
unsecured facilities, up with €3.0 million as compared to 2022 since those
were draw down in June 2022.
Interest in secured and unsecured facilities increased with €11.9 million,
however, this was partially offset by a decrease in other areas:
- Bond buyback, we repurchased €100 million of our Eurobond 18/25
bond and repayment of Eurobond 17/22 in prior year, resulting in €5.7
million less interest expense
- Reduced debt amortisation costs by €0.6 million and,
- Other finance costs decreased slightly up by €1.0 million
The bond buyback, at €83.2 million (nominal value €100 million) also
generated some positive cash flow resulting in €15.8 million in finance
income from this transaction after adjusting for the associated unamortised
debt costs.
We also received income from other sources:
- Joint Venture Loans: Interest earned on loans provided to our joint
ventures increased by €0.6 million to €2.1 million.
- Cash Deposits: Higher cash balances throughout the year led to
€3.1 million more interest income on deposits, reaching €3.8 million.
- Other Financial Income: This category saw a rise from €0.5 million
in 2022 to €1.5 million in 2023 mainly from charge on consideration
receivable on Warta sale that carries an interest of 13%.
Overall, net finance costs for the full 2023 came in at €33.9 million,
reflecting a 31.9% rise over 2022.
Share in Joint Venture
Our joint ventures in Romania focus on developing and managing industrial
parks. While our share of profit from these ventures decreased to €2.1
million in 2023 compared to €3.2 million in 2022, this is primarily due to
the effect from a property revaluation.
However, the ventures' underlying business performance is strong. This is
reflected in a significant 55% increase in EBITDA (earnings before interest,
taxes, depreciation, and amortization) by €1.2 million, on a like for like
basis, from €2.4 million in 2022 to €3.6 million, excluding €0.2 million
EBITDA in 2023 of Targu Mures joint venture property which was acquired in Q4
2022. This growth is a result of our continued investment in the facilities
and successful leasing activity as we fill available space. In other words,
even though there was a decline in profit sharing due to a non-cash accounting
adjustment, the core business of the joint ventures is performing well.
Income tax expense
During 2023, our current income tax expense on a like for like basis increased
with €1.8 million, following the increase in fiscal profits and withholding
tax has been paid in amount of €3.9 million. Moreover, following the sale of
Warta Tower, we recorded a capital gain tax of €3.3 million associated with
this transaction and there is €0.7 million one off tax for another entity.
IFRS and EPRA Earnings
We measure our performance using two key metrics: IFRS earnings and EPRA
earnings. IFRS Earnings being a standard accounting measure that reflects our
overall profit or loss. However, it can be impacted by non-cash or one-off
costs like property revaluations, gain on bond buy backs and gain/loss on
property disposals. EPRA Earnings adjust for such non-recurring and non-cash
items and reflect a relevant measure for real estate companies like ours
providing a clearer picture of our ongoing operational performance.
Our 2023 IFRS earnings were negative €53.8 million (or -23 cents per share),
reflecting a significant drop from 2022's negative €16.1 million (-8 cents
per share). This decline is primarily due to a much larger revaluation loss
recorded in 2023 (€164.9 million vs. €89.5 million in 2022). Revaluations
adjust the carrying value of our properties based on market changes, but they
don't affect actual cash flow.
However, when we adjust for revaluation losses, related deferred tax and other
non-recurring costs, our underlying profitability improved in 2023. Adjusted
IFRS profit after tax reached €82.7 million, an increase of €9.8 million
compared to 2022.
Our EPRA earnings for 2023 were €61.3 million (26 cents per share), down
14.4% from the previous year. This decrease is due to a combination of
factors, including increased administrative of €2.2million and other net
costs of €0.9 million, loss from foreign exchange fluctuations of €2.4
million, and higher income of €8.3 million and deferred tax expenses not
related to investment property valuation of €4.1 million.
Total Per Share
IFRS Earnings Vs EPRA Earnings €'m cents
IFRS Earnings (54.2) (23)
FV loss on properties 164.9 70
Profit on disposal of investment properties and related tax (5.5) (3)
FV gain on financial instrument (14.4) (6)
Deferred Tax on investment property (28.8) (12)
JVs & Others (0.7) 0
EPRA Earnings 61.3 26
3. Assets
31-Dec-23 31-Dec-22
Assets Note to the financial statements €'m €'m
NCA - Investment property 3 2,843.1 2,945.5
CA - Investment property held for sale 50.4 126.0
Total Investment Property 2,893.5 3,071.5
NCA - Investments in joint-ventures 21 70.1 68.0
Cash and cash equivalents 14 396.3 163.8
Other Assets 85.3 65.7
Total Assets 3,445.2 3,368.9
Our Assets: Primarily Real Estate
Real estate makes up the bulk of our assets, with investment properties and
cash equivalents exceeding 95% of our total value.
Investment Property Breakdown (as of December 31st): 2023: €3.0 billion
(compared to €3.1 billion in 2022), this includes both freehold properties
(land and buildings we own outright) and properties held for sale.
We actively manage our portfolio through sales and reinvestment in development
projects.
2023 Property Transactions: We successfully sold Warta Tower, a property held
for sale, for €63.4 million, exceeding its book value of €53.3 million.
Additionally, we sold a land plot and residential units for a combined total
of €13.7 million (€7.0 million and €6.8 million respectively).
Investing in the Future: Throughout 2023, we invested a significant amount
(€50.8 million) in capital expenditures (CAPEX) for properties under
development and improvements to existing properties, in Poland €30.8 million
and €20.0 million in Romania.
Capital expenditure €'m
HVAC 5.2
Automations 5.7
Electrical & Green Energy 0.6
Health & Safety 2.1
Operational/ Efficiency 6.3
Common & outdoor areas 13.1
Tenant improvements 17.8
50.8
Country Segment €'m
Poland Mixed - used (incl. refurbishment) 9.1
Regional 13.7
Warsaw 8.0
Total Poland 30.8
Romania Office 14.9
Residential 0.2
Industrial developments 4.9
Total Romania 20.0
50.8
Market Impact (2023): Due to market conditions and lower yields, we
experienced a net fair value loss on our freehold properties of €164.1
million. Additionally, there was a minor €0.8 million loss on leasehold
properties.
Romania Poland Total
OMV Dec 22 1,572.3 1,584.5 3,156.8
JV properties - Dec 22 119.0 - 119.0
Investment Property - Dec 22 1,453.3 1,584.5 3,037.8
CAPEX Standing(1) 20.2 25.1 45.3
CAPEX Under development(1) 2.6 10.7 13.3
Land acquisition 0.4 - 0.4
Fair value loss - standing (70.8) (89.7) (160.5)
Fair value gain/loss - dev/refurb. (1.1) (2.5) (3.6)
Apartment Disposals (6.8) - (6.8)
Land Disposal (7.0) - (7.0)
Investment Property disposal - (53.3) (53.3)
Investment Property - Dec 23 1,390.9 1,474.8 2,865.7
JV properties - Dec 23 129.0 - 129.0
OMV Dec 23 1,519.9 1,474.8 2,994.7
(1 Including net lease incentive movement, please refer to note 3) (of the
condensed consolidated financial statements for calculation.)
We ended the year with a significant increase in our cash and cash
equivalents, reaching €396.3 million on December 31, 2023, compared to
€163.8 million at the end of 2022. This positive change reflects strong cash
flow generation from our core operations together with successfully additional
secured debts raised in the second half of 2023. Our cash reserves grew
substantially in 2023, demonstrating the financial strength of our core
business and our ability to secure additional liquidity to address mid-term
debt maturities.
Our investment in joint ventures totalled €70.1 million at year-ended 31
December 2023, from €68.0 million, with €1.7 million invested during the
year and €2.1 million contributed from the share of profit for the year. In
terms of financing, we provided €10.8 million to support properties under
development and recorded €2.1 million interest income from loans provided.
After successfully drawing bank facilities, the joint ventures repaid to the
Group €14.5 million loans and interest.
Other assets mainly include trade and other receivables of €23.1 million,
equity investments of €7.8 million and consideration receivables from sale
of Warta Tower of €21.2 million with maturity date Q4 2025.
Total assets reached €3,445.2 million at the end of 2023, reflecting a
modest increase of 2.3% compared to €3,368.9 million at the end of 2022.
4. LIABILITIES
31-Dec-23 31-Dec-22
Liabilities Note to the financial statements €'m €'m
NCL - Interest-bearing loans and borrowings 14 1,574.8 1,433.6
CL - Interest-bearing loans and borrowings 14 28.6 21.6
Total Interest-bearing loans and borrowings 1,603.4 1,455.2
Deferred Tax Liabilities (including liabilities associated with the assets 11.1 139.3 154.9
held for sale)
Other Current Liabilities 72.7 74.6
Other Non-Current Liabilities 27.2 26.8
Total Liabilities 1,842.6 1,711.5
Total Liabilities for the Group increased by 8% to €1,842.6 million at
year-end 2023, compared to €1,711.5 million at the end of 2022. This rise is
mainly due to an increase in Interest-bearing loans and borrowings, which now
make up 87% of the Group's liabilities (up from 85% in 2022). However, a
decrease in Deferred Tax Liabilities helped offset this growth. These
liabilities went down by €15.5 million, primarily due to a loss on the
revaluation of investment properties.
Other Current and Non-Current Liabilities, such as tenant deposits, lease
obligations, and other debts, account for a smaller portion (5.4%) of the
total. These liabilities increased slightly by €1.4 million during the year.
5. Interest-bearing Loans and Borrowings
Overview and Select Initiatives
The total consolidated debt for the Group on 31 December 2023 was €1,603.4
million (31 December 2022: €1,455.2 million) comprising of long-term secured
debt and medium-term unsecured Eurobond, denominated entirely in Euro.
In 2023, we bought back €100m nominal value of our €550 million Eurobond
by paying a cash consideration of €83.2m thus reducing the debt maturing
March 2025.
In addition, during 2023 we:
· paid the annual coupon of the 2025 Eurobond,
· drew the €110 million ten-year term secured debt facility which was
signed with Erste Group Bank AG and Banca Comerciala Romana SA in December
2022 for refinancing of the Company's logistics / light industrial portfolio
in Romania. Out of the €110 million, €96.5 million was made available to
the Group and the difference to one of the Group's joint ventures companies,
· repaid the €60 million outstanding balance on the RCF,
· drew the €145 million seven-year term secured debt facility which
was signed with Aareal Bank AG secured with 2 properties in Warsaw,
· drew the €55 million ten-year term secured facility (€1 million
available for further drawdown until June 2024),
· drew the €45m 7-year term secured debt facility from BCR (out of
which €33m is refinancing of existing debt maturing in Dec 24),
· extended the €11 million bank facility held with Unicredit Bank
until March 2031.
It is important to note that there is no debt maturing within 12 months other
than normal amortisation of principal.
Interest-bearing Loans and Borrowings Profile
Most of the debt remained in unsecured facilities, which accounted for 58.4%
(31 December 2022: 75.4%) of the total debt outstanding. Unsecured facilities
included the two Eurobonds maturing in March 2025 and July 2026 accounting for
€850.0 million and the €85.0 million facility from the IFC. The remainder
debt (41.6%) is secured with real estate mortgages, pledges on shares,
receivables, and loan subordination agreements in favour of the financing
banks.
The weighted average interest rate cost for the Group increased marginally by
end of the year due to additional secured facilities from Q4 2023. However, as
of 31 December 2023 majority or our debt (76.1%) carry fixed interest rate and
5.6% of debt facilities are hedged through interest rates caps and swaps,
therefore the weighted average cost of debt on 31 December 2023 reached to
3.70% (from 2.89% in 2022).
The high level of fixed interest rate debt ensures 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. Based
on the Group's debt balances on 31 December 2023, an increase of 100 basis
points in the Euribor would result in a higher interest expense of €2.9
million per annum.
The average maturity period of our debt remained above 3.0 years reaching 3.7
years (2022: 3.3 years)
Interest charges for secured loans is based either on three months or six
months Euribor plus a margin. As of 31 December 2023, 18.3% of the outstanding
balance is exposed to changes in Euribor (compared to 19.3% at 31 December
2022).
30 Jun 21 31 Dec 21 30 Jun 22 31 Dec 22 30 Jun 23 31 Dec 23
Weighted average interest rate 2.73% 2.73% 2.55% 2.89% 3.29% 3.70%
Weighted average duration to maturity 4.0 3.5 3.8 3.3 3.4 3.7
During 2023, we repaid €5.5 million in bank debt principal amounts, we
bought back €100m nominal value of our €550 million bond by paying a cash
consideration of €83.2m, and €45.7 million of accrued interest on the
Group's outstanding debt facilities, including €37.6 million in relation to
the full annual coupon for the Eurobonds of the Company. Maturity Profile (by
year) of the Principal Loan Outstanding at 31 December 2023 (€ million)
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Total
Bonds 450.0 400.0 850.0
Unsecured 85.0 85.0
Bank Loans 10.3 111.5 12.0 75.0 13.1 148.3 190.1 9.0 65.8 4.9 25.2 665.3
Minority Shareholder Debt 0.6 0.6
Total 10.3 561.5 412.0 75.0 98.1 148.8 190.1 9.0 65.8 4.9 25.2 1,600.8
Debt Covenants
As of 31 December 2023, the Group was in compliance with all of its debt
covenants.
The Group's financial indebtedness is arranged with standard terms and
financial covenants, the most notable as at 31 December 2023 being the
following:
Unsecured Eurobonds, RCF and IFC loan
· the Consolidated Coverage Ratio, with minimum value of 200% (150%
applicable for the RCF and IFC loan);
· 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%
(additional covenant applicable for the RCF and IFC loan).
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 45% to 83%.
There have been no breaches of the aforementioned covenants occurring during
the period ended 31 December 2023.
6. Liquidity & Loan to value ratio (LTV")
Managing our liquidity has been a key area of focus for the Group, especially
since the COVID-19 pandemic outbreak, and medium-term debt maturities. This
careful management has carried on throughout this period of higher volatility.
As of 31 December, 2023, the Group had cash and cash equivalents of
€396.3.million (31 December 2021: €163.7 million), of which €20 million
was restricted due to various conditions imposed by the financing Banks.
In addition, the Group had undrawn borrowing facilities of €272 million, out
of which €50 million in available until December 2025. The RCF of €215
million is no longer available after March 2024.
The Group's loan-to-value ratio on 31 December 2023 was 42.2%, compared to
42.7% on 31 December 2022, mainly due to the impact of negative revaluations
in our standing properties, and positive effect from bond buy back at a
discounted price.
7. EPRA NRV
EPRA NRV is a metric that reflects the estimated long-term value of a
company's net assets, assuming the company keeps its properties and doesn't
sell them.
The EPRA Net Reinstatement Value ("NRV") is a metric that reflects the
estimated long-term value of a company's net assets, assuming the company
keeps its properties and doesn't sell them.
EPRA NRV reached €1,750.6 million at year ended 2023. This represents a 4.6%
decrease to €1,835.5 million at the end of 2022. EPRA NRV per share also
reflects this decline, going down to €6.94 per share at the end of 2023
(compared to €8.29 per share at the end of 2022). The main factor behind the
decrease in EPRA NRV was primarily due to negative revaluations that occurred
throughout 2023 of €164.9 million offset by EPRA Earnings and one off gain
on Eurobonds.
€m €
EPRA NRV Dec-22 1,835.5 8.29
EPRA Earnings 61.3 0.26
Bond gain 15.8 0.06
FV loss on Property portfolio (164.9) (0.70)
Scrip shares (1.0) (0.98)
Others 3.9 0.01
EPRA NRV Dec-23 1,750.6 6.94
8. Cash Flows
2023 2022
Year ended December 31, €'m €'m
Operating Profit before Changes in Working Capital 132.7 126.4
Changes in Working Capital (45.4) (63.3)
Cash Flows from Operating Activities 87.3 63.1
Cash Flows used in Investing Activities (11.0) (73.8)
Cash Flows from/(used) in Financing Activities 153.8 (243.9)
Net Increase in Cash and Cash Equivalents 235.0 (254.6)
Effect of foreign exchange fluctuations 2.5 0.0
Cash and Cash Equivalents at Year End 396.3 163.8
(Note: The total in the table do not add up due to roundings)
Our cash flow from operations before working capital changes increased by 5%
to €132.7 million in 2023, mirroring the rise in Net Operating Income (NOI)
for the year.
Overall, cash inflow from operations reached €87.3 million in 2023, a
significant €24.2 million improvement compared to 2022. This growth is
primarily due to increase in NOI of €7.3 million, €6.3 million from
improving collection of outstanding receivables, €3.9 million increase in
advances received for rent and service charges, €3.1 million interest
received on cash deposits and €3.6 million from other working capital
movements.
In 2023, our net cash used in investments was €11.0 million. This includes
€62.5 million spent on capital expenditures for our properties, netted off
by the €50.4 million proceeds from selling investment properties and €1.4
million from net investments and loans provided to joint ventures.
Cash generated from financing activities significantly improved in 2023,
reaching €153.8 million (compared to a net cash outflow of €243.9 million
in 2022). This positive change represents our focus to enhance the liquidity
by successfully drawing down funds from new credit facilities secured in 2023
(€344.8 million). Also, we repaid part of existing debts, including €83.2
million on the 18/25 Eurobond, €60 million on the RCF facility, and €39.5
million in amortizations and principal on other loans. Other financing
activities in 2023, such as interim dividend payments, lease liabilities and
loan arrangement fees, totalled €8.3 million.
9. Dividends
Year ended December 31, 2023 2022
€ m € m
Dividends declared 66.3 59.8
Share capital increase - scrip shares (65.2) -
Dividends paid 1.1 59.8
Dividends per Share - Cents 29 27
Globalworth distributes bi-annually at least 90% of its EPRA Earning to its
shareholders. During 2023, the distributions included the option to a scrip
dividend alternative so that qualifying shareholders can elect to receive new
ordinary shares in the Company instead of cash in respect of all or part of
their entitlement to the Dividend. Qualifying shareholders who validly elect
to receive the Scrip Dividend Alternative become entitled to a number of Scrip
Dividend Shares in respect of their entitlement to the Dividend that is based
on a price per Scrip Dividend Share calculated on the basis of a discount of
20% to the average of the middle market quotations for the Company's shares on
the five consecutive dealing days from and including the Ex-Dividend Date, the
"Reference Price".
The dividend declared for the six-month period ended 31 December 2022 was 15
cents per share and 14 cents per share for the six-month period ended 30 June
2023.
Following the election of scrip dividend 14.3 million new shares were issued
in Aprill and 16.3 million shares were issued in October 2023, while the Group
paid in total €1.1 million as cash dividend, resulting in 98.4% shareholders
opted to reinvest in the Company.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Consolidated statement of comprehensive income
For the year ended 31 December 2023
31 December 31 December
2023 2022
Note €'000 €'000
Revenue 7 240,429 239,251
Operating expenses 8 (93,471) (99,571)
Net operating income 146,958 139,680
Administrative expenses (15,948) (13,712)
Acquisition costs - (7)
Fair value loss on investment property 3 (164,908) (89,471)
Share-based payment expense 18 (502) -
Loss on disposal of subsidiary (474) -
Profit on disposal of investment property 3.5 9,579 -
Depreciation and amortisation expense (588) (673)
Other expenses (2,916) (2,013)
Other income 2,056 524
Foreign exchange (loss)/gain (1,533) 851
(Loss)/profit from fair value of financial instruments at fair value through (1,393) 222
profit or loss
(Loss)/Profit before net financing cost (29,669) 35,401
Finance cost 9 (57,146) (52,532)
Finance income 9.2 23,220 2,694
Share of profit of equity-accounted investments in joint ventures 21 2,063 3,219
Loss before tax (61,532) (11,218)
Income tax income/(expense) 1 0 7,692 (4,886)
Loss for the year (53,840) (16,104)
Items that will not be reclassified to profit or loss
Loss on equity instruments designated at fair value through other - (5,391)
comprehensive income
Total comprehensive income for the year (53,840) (21,495)
Loss attributable to: (53,840) (16,104)
- ordinary equity holders of the Company (54,152) (16,961)
- non-controlling interests 312 857
Total comprehensive income attributable to: (53,840) (21,495)
- ordinary equity holders of the Company (54,152) (22,352)
- non-controlling interests 312 857
Earnings per share (€ cents) Restated*
- Basic 11 (23) (7)
- Diluted 11 (23) (7)
*The IFRS earnings per share for the year 2022 have been restated following
the IAS 33 "Earnings per share" requirements regarding accounting for scrip
dividend shares issued in 2023.
Consolidated statement of financial position
As at 31 December 2023
2023 2022
Note €'000 €'000
ASSETS
Investment property 3 2,843,085 2,945,460
Goodwill 20 12,039 12,349
Advances for investment property 5 7,175 4,393
Investments in joint ventures 21 70,098 67,967
Equity investments 13 7,844 7,521
Other long-term assets 1,780 1,784
Other receivables 3.5 21,182 -
Prepayments 448 226
Deferred tax asset 10.1 1,423 161
Non-current assets 2,965,074 3,039,861
Financial assets at fair value through profit or loss 197 3,554
Trade and other receivables 23,122 22,337
Contract assets 6,985 9,967
Guarantees retained by tenants 99 98
Income tax receivable 1,084 840
Prepayments 2,002 2,430
Cash and cash equivalents 14 396,259 163,767
429,748 202,993
Investment property held for sale 3.3 50,352 126,009
Total current assets 480,100 329,002
Total assets 3,445,174 3,368,863
EQUITY AND LIABILITIES
Issued share capital 16 1,769,456 1,704,476
Treasury shares (4,797) (4,859)
Fair value reserve of financial assets at FVOCI (5,469) (5,469)
Share-based payment reserve - 156
Retained earnings (158,066) (37,798)
Equity attributable to ordinary equity holders of the Company 1,601,124 1,656,506
Non-controlling interests 1,411 862
Total equity 1,602,535 1,657,368
Interest-bearing loans and borrowings 12 1,574,771 1,433,631
Deferred tax liability 10.1 139,299 154,866
Lease liabilities 3.2 20,482 19,861
Deposits from tenants 3,774 3,897
Guarantees retained from contractors 2,902 1,995
Trade and other payables 78 1,034
Non-current liabilities 1,741,306 1,615,284
Interest-bearing loans and borrowings 12 28,609 21,600
Guarantees retained from contractors 5,594 3,652
Trade and other payables 36,051 35,679
Contract liability 3,289 1,743
Other current financial liabilities 1,311 67
Current portion of lease liabilities 3.2 1,956 1,669
Deposits from tenants 18,018 17,477
Income tax payable 807 382
95,635 82,269
Liabilities directly associated with the assets held for sale 3.3 5,698 13,942
Total current liabilities 101,333 96,211
Total equity and liabilities 3,445,174 3,368,863
Consolidated statement of cash flows
For the year ended 31 December 2023
2023 2022
Note €'000 €'000
Loss before tax (61,532) (11,218)
Adjustments to reconcile profit/(loss) before tax to cash flows from operating
activities
Fair value loss on investment property 3.4 164,908 89,471
Loss on sale of residential properties 269 1,851
Share-based payment expense 18 502 -
Depreciation and amortisation expense 588 673
Net increase in allowance for expected credit losses 2,283 44
Foreign exchange loss/(gain) 1,533 (851)
Loss/(gain) from fair valuation of financial instrument at fair value
through profit or loss 1,393 (222)
Loss on disposal of subsidiary 474 -
Profit on disposal of investment property 3.5 (9,579) -
Share of profit of equity-accounted joint ventures 21 (2,063) (3,219)
Finance income 9.2 (23,220) (2,694)
Financing cost 9 57,146 52,532
Operating profit before changes in working capital 132,702 126,367
Decrease/(Increase) in contract assets, trade and other receivables 5,418 (10,547)
Increase/(Decrease) in contract liabilities, trade and other payables 5,305 (6,435)
Interest paid (47,836) (45,662)
Interest received 3,801 723
Income tax paid (12,734) (2,168)
Interest received from joint ventures 614 797
Cash flows from operating activities 87,270 63,075
Investing activities
Expenditure on investment property completed and under development or (62,463) (71,235)
refurbishment
Payment for land acquisitions (435) (1,732)
Advances received for sale of investment property 1,200 4,100
Proceeds from sale of land 4,000 502
Payment for acquisition of investment property - (5,584)
Proceeds from sale of investment property 46,440 12,411
Investment in financial assets at fair value through profit or loss - (38)
Proceeds from sale of financial assets through profit and loss - 4,030
Payments for investment in equity investments 13 (323) (803)
Investment in and loans given to joint ventures 21 (12,500) (28,510)
Repayment of loan from joint ventures 21 13,893 13,429
Payment for purchase of other long-term assets (847) (371)
Cash flows used in investing activities (11,035) (73,801)
Financing activities
Payment of transaction costs on issuance of scrip dividend shares (154) -
Proceeds for issuance of new shares in subsidiary from non-controlling - 5
interest
Proceeds from interest-bearing loans and borrowings 12 344,794 146,825
Repayment of interest-bearing loans and borrowings 12 (182,727) (325,963)
Payment of interim dividend to equity holders of the Company 22 (1,076) (59,771)
Payment for lease liability obligations 3.2 (1,986) (2,289)
Payment of bank loan arrangement fees and other financing costs (5,081) (2,725)
Cash flows used in financing activities 153,770 (243,918)
Net increase/(decrease) in cash and cash equivalents 230,005 (254,644)
Effect of exchange rate fluctuations on cash and bank deposits held 2,487 (337)
Cash and cash equivalents at the beginning of the year 163,767 418,748
Cash and cash equivalents at the end of the year 396,259 163,767
Consolidated statement of changes in equity
For the year ended 31 December 2023
Issued share capital Treasury shares Share-based payment reserve Fair value reserve of financial assets at FVOCI Retained earnings Total Non-controlling interests Total Equity
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2022 1,704,476 (4,917) 156 - 38,914 1,738,629 - 1,738,629
Interim dividends 17 - 58 - - (59,829) (59,771) - (59,771)
Shares issued in a newly acquired subsidiary - - - - - - 5 5
Settlement of fair value reserve of equity instruments designated at FVOCI in - - - (78) 78 - - -
cash
Total comprehensive income for the year - - - (5,391) (16,961) (22,352) 857 (21,495)
As at 31 December 2022 1,704,476 (4,859) 156 (5,469) (37,798) 1,656,506 862 1,657,368
Interim dividends paid in cash and scrip dividend 17 65,134 62 - - (66,272) (1,076) - (1,076)
Transaction costs on issuance of shares for cash (154) - - - - (154) - (154)
Transfer from reserve to retained earnings - - (156) - 156 - - -
Shares issued in subsidiary with NCI - - - - - - 237 237
Total comprehensive income for the period - - - - (54,152) (54,152) 312 (53,840)
As at 31 December 2023 1,769,456 (4,797) - (5,469) (158,066) 1,601,124 1,411 1,602,535
1 Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited (the "Company" or "Globalworth")
is a company with liability limited by shares (domiciled in Guernsey) 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.
On 23 July 2021 Zakiono Enterprises Limited, a company wholly owned by Tevat
Limited, become a controlling shareholder by holding 60.6% share capital of
the company through public offer. Tevat Limited is a joint venture between CPI
Property Group S.A. and Aroundtown SA.
The Company's Eurobonds have been admitted to trading on the Official List of
the Irish Stock Exchange in March 2018 and July 2020, respectively. In
addition, the Company's Eurobonds maturing in March 2025 have been admitted to
trading on the Bucharest Stock Exchange in May 2018. The main country of
operation of the Company is Guernsey. The Group's principal activities and
nature of its operations are mainly investments in real estate properties,
through both acquisition and development, as set out in the Strategic Report
section of the Annual Report 2022.
Basis of Preparation and Compliance
These consolidated financial statements have been prepared in conformity with
the International Financial Reporting Standards ("IFRS"), as adopted by the
European Union ("EU"), give a true and fair view of the state of affairs as at
31 December 2023 and 2022 and of the profit or loss and other comprehensive
income for the year then ended 31 December 2023 and 31 December 2022, and are
in compliance with The Companies (Guernsey) Law, 2008, as amended.
These consolidated financial statements ("financial statements") have been
prepared on a historical cost basis, except for investment property, financial
assets at fair value through other comprehensive income and financial assets
at fair value through profit or loss which are measured at fair value.
The material accounting policies adopted are set out in the relevant notes to
the financial statements and consistently applied throughout the periods
presented except for the new and amended IFRS (see note 25), which were
adopted on 1 January 2023. These consolidated financial statements are
presented in Euro ("EUR" or "€"), rounded to the nearest thousand ('000)
unless otherwise indicated, being the functional currency and presentation
currency of the Company.
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 cash flow projections for the period up to 30 June 2025. These
projections consider available cash resources of the Group of c.€396
million, the undrawn financing facilities of €50 million, the latest
contracted rental income, anticipated additional rental income from new
possible lease agreements during the period covered by the projections,
secured bank financing and SPA signed subsequent to the year-end 2023 for the
disposal of investment property, as well as the repayment of debt financing
maturing within the projected period, CAPEX, and other commitments. The
projections and related sensitivity analysis carried out show that in the
period up to 30 June 2025, the Company anticipates having sufficient liquid
resources to continue to fund ongoing operations without the need to raise any
additional debt or equity financing.
Basis of Consolidation
These consolidated financial statements comprise the financial statements of
the Company and its subsidiaries (the "Group") as of and for the year ended 31
December 2023 and 31 December 2022. Subsidiaries are fully consolidated (refer
to note 22) from the date of acquisition, being the date on which the Group
obtains control, and continue 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 31 December, using consistent
accounting policies. All intra-group balances, transactions and unrealised
gains and losses resulting from intra-group transactions are eliminated in
full. Non-controlling interest represents the portion of profit or loss, other
comprehensive income and net assets not held by the Group and is presented
separately in the income statement and within equity in the consolidated
statement of financial position, separately from net assets and profit and
loss attributable to the equity holders of the Company.
Foreign Currency Transactions and Balances
Foreign currency transactions during the year 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 the 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 judgement, 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 material accounting judgements, estimates and assumptions
are disclosed in the following notes to the financial statements.
• Investment Property, see note 3;
• Commitments (operating leases commitments - Group as lessor), see note
6;
• Taxation, see note 10;
• Equity Investments, see note 13;
• Share-Based Payment Reserve, see note 18;
• Goodwill, see note 20;
• Investment in Joint Ventures, see note 21; and
• Investment in Subsidiaries, see note 22.
3 Investment Property
3.1 Investment property - freehold
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 land Total
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000
1 January 2022 2,718,260 156,001 30,850 39,300 2,944,411 21,669 2,966,080
Investment property acquisition 5,584 - - - 5,584 - 5,584
Land acquired during the year - - - 1,785 1,785 - 1,785
Subsequent expenditure 24,897 11,512 12,430 1,258 50,097 - 50,097
Net lease incentive movement 15,411 1,664 134 - 17,209 - 17,209
Capitalised borrowing costs - 119 46 - 165 - 165
Transfer to completed investment property 18,600 - (14,700) (3,900) - - -
Disposal during the year (14,120) - - - (14,120) - (14,120)
Additions to nominal lease liability - - - - - 2,814 2,814
Fair value gain/(loss) on investment property (69,078) (16,915) 690 1,757 (83,546) (608) (84,154)
31 December 2022 2,699,554 152,381 29,450 40,200 2,921,585 23,875 2,945,460
Land acquired during the year - - 435 - 435 - 435
Subsequent expenditure 40,618 8,584 1,569 33 50,804 - 50,804
Net lease incentive movement 4,886 3,035 (43) - 7,878 - 7,878
Capitalised borrowing costs 9.1 6 - 144 - 150 - 150
Transfer to completed investment property 15,740 - (4,000) - 11,740 - 11,740
Disposal during the year 3.5 (6,792) - - (7,000) (13,792) - (13,792)
Fair value loss on investment property (155,394) (1,000) (385) (2,233) (159,012) (578) (159,590)
31 December 2023 2,598,618 163,000 27,170 31,000 2,819,788 23,297 2,843,085
3.2 Investment Property - Leasehold
31 December 2023 31 December 2022
Key inputs to determine the present value
Gross operating lease commitments (€'000) 100,590 126,549
Remaining individual lease term (years) 67-83 67-84
Discount rate (%) 5.77 5.77
Note 31 December 2023 31 December 2022
Investment property - leasehold €'000 €'000
Opening balance 23,875 21,669
Additions to nominal lease liabilities - 2,814
Transferred to assets held for sale - -
Fair value loss on investment property 3.1 (578) (608)
Closing balance 23,297 23,875
The Group measures the lease liability at the present value of the lease
payments that are not paid until the statement of financial position date. The
lease payments are discounted at 5.77% after deducting from the opening
carrying value the annual rental payments and translating at the closing
exchange rate into Euro resulted in a foreign exchange loss. The interest
expense for the unwinding effect of the present value of the lease liability
for an amount of €1.8 million (2022: €2.4 million) was presented in the
statement of comprehensive income under the line "Finance expense".
Additions to nominal lease liabilities represents the parking spaces leased
from third-party lessor on a long-term basis. Considering the insignificant
nominal amount contributed by these parking leases, as compared to the
outstanding nominal lease liability amount, there was no significant change in
discount rate applied as compared to the prior year.
Lease liability 31 December 2023 31 December 2022
€'000 €'000
Opening balance 21,530 20,065
Additions to nominal lease liabilities - 2,814
Payment during the year (1,381) (1,684)
Interest expense on lease liability 1,366 1,819
Foreign exchange loss/(gain) 923 (1,484)
Closing balance 22,438 21,530
- Current portion 1,956 1,669
- Non-current portion 20,482 19,861
31 December 2023 31 December 2022
Lease liability - held for sale €'000 €'000
Opening balance 8,877 9,141
Liabilities directly associated with the assets held for sale (4,889) -
Payment during the year (605) (605)
Interest expense on lease liability 411 568
Foreign exchange loss/(gain) 525 (227)
Net movement (4,558) (264)
Closing balance 4,319 8,877
3.3 Assets Held for Sale
In 2021, the Group entered into a preliminary agreement to sell the properties
namely Batory Building I , Bliski Centrum, Philips House, Nordic Park and
Warta Tower (held by Dolfia sp. z o.o., Ebgaron sp. z o.o., Lamantia sp. z
o.o., Nordic Park Offices sp. z o.o. and Warta Tower sp. z o.o.), for a total
consideration of €125.2 million.
In July 2023 Warta Tower sale was concluded (please refer to note 3.5 for
further details) and terminated the original SPA for remaining four
properties.
In November 2023 the Group signed SPAs for the sale of properties namely
Philips House and Nordic Park with a new buyer for amount of €12.9 million
and €22.9 million, the sale is expected to be completed by end of March and
June 2024, respectively.
At 31 December 2023, the properties classified as held for sale were valued at
€45.9 million.
31 December 2022 CAPEX Fair value loss Disposal during the year Transfer to investment property Movement during the period 31 December 2023
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000
Completed investment property 3.1 116,199 (165) (5,124) (53,270) (11,740) (70,299) 45,900
Investment property - leasehold 3.2 9,810 - (194) (5,164) - (5,358) 4,452
Investment property held for sale 126,009 (165) (5,318) (58,434) (11,740) (75,657) 50,352
Lease liabilities 3.2 8,877 - - - - (4,558) 4,319
Deferred tax liability 10.1 5,065 - - - - (3,686) 1,379
Liabilities directly associated with the assets held for sale 13,942 - - - - (8,244) 5,698
Net assets held for sale 112,067 - - - - 67,413 44,654
3.4 Fair Value Loss on Investment Property
31 December 2023 31 December 2022
Note €'000 €'000
Fair value loss on investment property (164,908) (89,471)
- Related to investment property − freehold 3.1 (159,590) (84,154)
- Related to investment property − held for sale 3.3 (5,318) (5,317)
3.5 Sale of investment property
In March 2023, the Group sold a fully owned subsidiary, Nord 50 Herastrau
Premium SRL, owning a non-core plot of land of 3.2k sqm located in the
northern part of Bucharest for total consideration of €7.0 million out of
which €4.0 million was paid in cash on disposal date and remaining €3.0
million was collected on 7(th) March 2024. At the disposal date, the Group
derecognised net asset of €7.2 million and recorded €0.5 million net loss
(including €0.3 million for derecognition of goodwill recognised for
deferred tax liability at initial acquisition date (note 20).
In July 2023 the Company sold the Warta Tower office building, a fully vacant
building, in Warsaw to a company from the Cornerstone Investment Management
platform. The transaction was valued €63.4 million, out of which €20
million are deferred and will be received in October 2025. The receivable
carries an interest of 13% p.a., total interest receivables as of 31 December
2023 was €1.1 million. At the disposal date, the Group recognised in the
income statement €9.5 million profit after adjusting incidental costs.
4. Investment Properties Owned by Joint Ventures
Completed investment property Investment property under development Land for further development
TOTAL
€'000 €'000 €'000 €'000
1 January 2022 37,400 13,700 35,600 86,700
Land acquisition 8 1,592 802 2,402
Subsequent expenditure 964 22,167 92 23,223
Net lease incentive movement (17) 155 - 138
Capitalised borrowing costs 92 336 - 428
Transfer to completed investment property 34,700 (34,700) - -
Disposal during the year - - (28) (28)
Fair value gain on investment property 553 5,150 434 6,137
31 December 2022 73,700 8,400 36,900 119,000
Subsequent expenditure 7,037 - 382 7,419
Net lease incentive movement 251 - - 251
Transfer to completed investment property 8,400 (8,400) - -
Fair value gain/(loss) on investment property 2,412 - (35) 2,377
31 December 2023 91,800 - 37,247 129,047
5. Advances for Investment Property
2023 2022
€'000 €'000
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for completed and under development/refurbishment 5,175 2,393
properties
7,175 4,393
6. Commitments
Commitments for Investment Property
As at 31 December 2023 the Group had agreed to construction contracts with
third parties and is consequently committed to future capital expenditure in
respect of completed investment property of €8.2 million (2022: €10.9
million), investment property under development of nil (2022: €0.7 million)
and had committed with tenants to incur incentives (such as fit-out works and
other lease incentives) of €11.8 million (2022: €10.3 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 (2022: 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:
2023 2022
€'000 €'000
Not later than 1 year 181,839 169,880
Later than 1 year and not later than 5 years 507,919 426,748
Later than 5 years 175,006 152,843
864,764 749,471
7. Revenue
Rendering of Services
Revenue from asset management fees, marketing and other income which are
recognised at the time the service is provided.
2023 2022
€'000 €'000
Contracted rent 191,913 180,920
Adjustment for lease incentives (31,548) (31,093)
Rental income 160,365 149,827
Revenue from contracts with customers
Service charge income 75,056 86,809
Fit-out services income 4,185 2,374
Asset management fees 122 66
Marketing and other income 701 175
80,064 89,424
240,429 239,251
The adjustment for lease incentives includes no amortisation impact for
COVID-19-related rent concession given during the year-ended 2023 (2022:
€0.1 million).
The total contingent rents and surrender premia recognised as rental income
during the year amount to €2.3 million (2022: €1.9 million) and €1.1
million (2022: €0.2 million), respectively.
8. Operating Expenses
2023 2022
€'000 €'000
Property management, utilities and insurance 86,722 96,433
Property maintenance costs and other non-recoverable costs 2,087 746
Property expenses arising from investment property that generate rental income 88,809 97,179
Property expenses arising from investment property that did not generate 19 19
rental income
Fit-out services costs 4,643 2,373
93,471 99,571
9. Finance Cost
2023 2022
Note €'000 €'000
Interest on secured loans 15,929 7,054
Interest on the unsecured revolving facility 4,683 1,588
Interest on fixed-rate bonds 26,779 32,496
Debt cost amortisation and other finance costs 9.1 7,742 8,305
Interest on lease liability 3.2 1,777 2,387
Bank charges 236 702
57,146 52,532
9.1 Debt Cost Amortisation and Other Finance Costs
2023 2022
€'000 €'000
Debt issue cost amortisation - secured bank loans 712 930
Debt issue cost amortisation - unsecured revolving facility 1,856 1,461
Debt issue cost amortisation - fixed rate bonds 5,174 5,914
7,742 8,305
The Company capitalised borrowing costs in the value of investment property,
amounting to €0.2 million (2022: €0.2 million), using a capitalisation
weighted average rate of 3.33% (2022: 3.33%).
9.2 Finance income
Note 2023 2022
€'000 €'000
Gain on Bond buyback 15,809 -
Income from bank deposits 3,801 722
Interest income from joint venture loans 2,075 1,526
Interest income on other receivables 3.5 1,284 -
Other financial income 251 446
23,220 2,694
10. Taxation
2023 2022
€'000 €'000
Current income tax expense 12,908 1,264
- Related to the current year 13,554 3,253
- Related to the prior year (646) (1,989)
Deferred income tax expense (20,600) 3,622
(7,692) 4,886
Current Income Tax Expense
The subsidiaries in Romania, Poland and Cyprus are subject to tax on local
sources of income. The current income tax expense of €12.9 million (2022:
€1.3 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: Poland at 19% (however small entities with revenue up to
€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%), Romania at 16% and Cyprus at 12.5%.
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 vacant space in partially occupied buildings. Due to the COVID-19
pandemic, the minimum tax scheme was suspended from 1 March 2020 until 31 May
2022 and the Group's subsidiaries are subject to corporate income tax.
Starting 1 January 2024, there is a minimum tax on turnover introduced in
Romania and it applies to entities which have a turnover over certain limit.
Therefore, some Romanian entities which are part of the tax consolidation will
be captured by this new rule and they will be paying the higher amount between
corporate income tax or a minimum tax on turnover, which is 1% applicable on
certain adjusted elements of income.
The Group's subsidiaries incorporated and tax resident in Cyprus need to
comply with the tax regulations in their country of incorporation. The income
generated by subsidiaries located in Cyprus is represented by dividend and
interest income which are the most significant sources of income. Dividend
income is tax-exempt under certain conditions, while interest income 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,
frequent changes in tax laws and lack of predictability over these tax changes
with possible impact on the amount and timing of future taxable income.
Differences arising between the actual results and the assumptions made, or
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 and withholding tax settlements for the fiscal year 2018, 2019, 2020 and
2021.
10.1 Deferred Tax (asset)/liabilities
2023 2022
€'000 €'000
Deferred tax asset (1,423) (161)
Deferred tax liabilities directly associated with the assets held for sale 1,379 5,065
Deferred tax liabilities 139,299 154,866
139,255 159,770
Deferred Income Tax Expense Consolidated statement of financial position Consolidated statement of comprehensive income
2023 2022 2023 2022
Net Deferred Tax €'000 €'000 €'000 €'000
Valuation of investment property at fair value 152,280 181,070 (28,790) (472)
Deductible temporary differences (2,397) (1,247) (1,150) 1,340
Interest expense and foreign exchange loss
on intra-group loans (8,803) (18,743) 9,940 866
Discounting of tenant deposits and long-term
deferred costs 118 68 50 (4)
Share issue cost recognised in equity (7) (7) - -
Valuation of financial instruments at fair value 48 72 (24) (67)
Recognised unused tax losses (2,069) (1,443) (626) 1,959
Derecognised on subsidiary disposal 85 - - -
139,255 159,770 (20,600) 3,622
The Group has unused assessed tax losses carried forward of €32.3 million
(2022: €49.7 million) in Romania and €14.7 million (2022: €19.1 million)
in Poland that are available for offset against future taxable profits of the
entity which has the tax losses. The tax losses recorded by Romanian
subsidiaries before 1st January 2024 can be carried forward for seven years
from the year of generation. However, starting 2024, tax losses can be used up
to the 70% of the taxable income computed by the entity. Also, the tax losses
incurred starting with 1st January 2024 can be carried forward only for five
consecutive years and within the 70% limit mentioned above.
The tax losses in Poland can be carried forward for a period of five
consecutive tax years from the year of origination. 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 greater than PLN 5 million or 50% of tax loss of a given
fiscal year in the following five fiscal years.
As of the statement of financial position date the Group recognised deferred
tax assets of €1.9 million (2022: €1.4 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 €8.0million (2022: €10.7
million), calculated at the corporate income tax rates of 16% in Romania and
19% (9% for small entities) in Poland. Therefore, the available deferred tax
assets, €6.0 million (2022: €9.2 million) deferred tax asset was not
recognised (Romania and Poland) in the income statement of the Group as the
amount could not be utilised from the future taxable income as per the
criteria under IAS 12.
Expiry year 2024 2025 2026 2027 2028 2029 2030 TOTAL
Total available deferred tax assets (€m) 4.0 0.6 1.5 0.7 1.1 0.1 0.0 8.0
There are also temporary non-deductible interest expenses and net foreign
exchange losses of €215.6 million, of which €41.2 million in Romania and
€174.4 million in Poland (2022: €276.5 million, of which €38.9 million
in Romania and €237.6 million in Poland) related to intercompany and bank
loans. Each year an amount up to 30% of tax EBITDA (plus PLN 3 million in
Poland based on the recent Supreme Court sentence for the periods 2019-2021)
and for 2022 not less than PLN 3 million would become tax-deductible, for
which €8.8 million (€1.1 million in Romania and €7.7 million in Poland)
deferred tax asset was recorded (2022: €18.7 million, €1.1 million in
Romania and €17.7 million in Poland).
In Romania such temporary non-deductible interest expenses can be carried
forward indefinitely until it is tax deductible as per EBITDA threshold.
Nevertheless, starting 1st January 2024, the threshold for deductibility of
interest expense which will be subject to 30% of tax EBIDTA is decreased from
EUR 1 million to EUR 500 thousand. On the other hand in Poland, the interest
expense which was already paid prior to the financial position date (and
corresponding net foreign exchange loss on such interest expense) can only be
utilised over five consecutive tax years from the year of origination and
unpaid interest expense (and corresponding net foreign exchange loss on such
interest expense) is available for utilisation indefinitely. As of 31 December
2023, out of the total €7.7 million (2022: €17.7 million) deferred tax
asset on interest expense and foreign exchange loss recognised in Poland,
€1.5 million (2022: €2.6 million) is available for utilisation in five
years from the origination.
At each statement of financial position date, the Group assesses whether the
realisation of future tax benefits is sufficiently probable to recognise
deferred tax assets. This assessment requires the exercise of judgement on the
part of management with respect to, among other things, benefits that could be
realised from available tax strategies and future taxable income, as well as
other positive and negative factors. Based on the above assessment, the Group
recognised deferred tax expense related to deferred tax asset for fiscal
losses carried forward for an amount of €0.6 million (2022: deferred tax
expense of €2.0 million) representing derecognition of deferred tax assets
of nil (2022: derecognition of €1.5 million) in Romania, due to improved
actual tax results and transition of some subsidiaries to a taxable profit
position, and derecognition of deferred tax assets of €0.6 million (2022:
derecognition of €0.5 million) in Poland, due to improved actual tax
results.
The recorded amount of total deferred tax assets could be reduced if estimates
of projected future taxable income or if changes in current tax regulations
are enacted that impose restrictions on the timing or extent of the Group's
ability to utilise future tax benefits.
11. 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 ('000) year ('000)
01-Jan-2022 At the beginning of the year 221,373 221,373
Bonus effect of scrip dividend shares (Apr-23)(*) 2,861 2,861
Bonus effect of scrip dividend shares (Oct-23)(*) 3,252 3,252
2022 Shares in issue at year-end (basic) 227,486 227,486
Jan- Dec 2022 Effect of dilutive shares 97 77% 75
2022 Shares in issue at year-end (diluted) 227,583 227,561
Jan-2023 At the beginning and end of the year 227,486 227,486
Apr-23 Shares issued for scrip dividend (excluding bonus effect) 11,445 74% 8,521
Oct-23 Shares issued for scrip dividend (excluding bonus effect) 13,007 23% 2,930
2023 Shares in issue at year-end (basic) 251,937 238,936
Jan-Dec 2023 Effect of dilutive shares 150 91% 137
2023 Shares in issue at year-end (diluted) 252,087 239,073
2023 2022
€'000 €'000
Loss attributable to equity holders of the Company for the basic and diluted
earnings per share
(54,152) (16,961)
Restated*
IFRS earnings per share Cents Cents
- Basic (23) (7)
- Diluted (23) (7)
*The IFRS earnings per share for the year 2022 have been restated following
the IAS 33 "Earnings per share" requirements regarding accounting for scrip
dividend issued in 2023, the number of Scrip Dividend Share being calculated
based on a discount of 20%.
Key Alternative Performance Measures
The Company distributes on a semi-annual basis a dividend to its shareholders
of not less than 90% of the Company's funds from operations, estimated using
EPRA Earnings, subject to solvency and other legal requirements. EPRA Earnings
is a non-IFRS measure.
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):
2023 2022
Note €'000 €'000
Earnings attributable to equity holders of the Company (IFRS) (54,152) (16,961)
Changes in fair value of financial instruments and associated close-out costs - (429)
Fair value loss on investment property 3.4 164,908 89,471
Profit on disposal of investment property and related tax credit (5,794) -
Loss on sale of residential properties 269 1,851
Loan close-out costs (15,809) -
Changes in the value of financial assets at fair value through profit or loss 1,393 (222)
Acquisition costs - 7
Deferred tax charge in respect of above adjustments (28,814) (539)
Non-controlling interests share of above 284 783
Adjustments in respect of joint ventures (975) (2,376)
EPRA Earnings attributable to equity holders of the Company 61,310 71,585
EPRA Earnings per share cents cents
Basic 26 32
Diluted 26 32
12. Interest-Bearing Loans and Borrowings
2023 2022
€'000 €'000
Current portion of:
Secured loans and accrued interest 13,086 3,845
Unsecured fixed-rate bonds and accrued interest 15,523 17,755
Sub-total 28,609 21,600
Non-current
Secured loans 650,460 353,978
Unsecured fixed rate bonds 924,311 1,079,653
Sub-total 1,574,771 1,433,631
TOTAL 1,603,380 1,455,231
12.1 Key Terms and Conditions of Outstanding Debt
2023 2022
Carrying Carrying
Face value value Face value value
Facility Currency Nominal interest rate Maturity date €'000 €'000 €'000 €'000
Loan 16 EUR EURIBOR 3-month + margin March 2031 11,000 10,999 12,220 12,218
Loan 37 EUR Fixed rate Bond March 2025 460,247 458,649 562,522 558,569
Loan 38 EUR Fixed rate & Floating rate EURIBOR 3-month + margin May 2025 100,121 100,083 100,115 99,874
Loan 41 EUR EURIBOR 3-month + margin March 2029 85,991 85,503 85,552 84,959
Loan 43 EUR EURIBOR 3-month + margin December 2024 - - 34,522 34,423
Loan 44/45 EUR Fixed rate February 2027 62,295 62,122 62,295 62,062
Loan 46 EUR Fixed rate November 2029 65,043 64,542 65,045 64,462
Loan 47 EUR EURIBOR 3-month + margin April 2024 - - 60,060 60,060
Loan 48 EUR Fixed rate Bond July 2026 405,011 396,120 405,011 392,658
Loan 49 EUR Fixed rate March 2029 272 272 449 449
Loan 50 EUR Fixed rate March 2029 380 380 1,429 1,421
Loan 51 EUR EURIBOR 6-month + margin May 2028 85,217 84,413 85,162 84,076
Loan 53 EUR EURIBOR 3-month + margin December 2032 94,860 93,663 - -
Loan 54 EUR EURIBOR 3-month + margin September 2034 3,206 3,151 - -
Loan 55 EUR EURIBOR 3-month + margin October 2030 145,351 143,811 - -
Loan 56 EUR EURIBOR 3-month + margin December 2030 45,033 44,741 - -
Loan 57 EUR EURIBOR 3-month + margin June 2034 55,155 54,931 - -
Total 1,619,182 1,603,380 1,474,382 1,455,231
Unsecured Corporate Bonds
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 June 2023 a buyback of €100 million nominal
value was successfully completed, by paying a cash consideration of €83.2
million, resulting in a net gain of €15.8 million.
In July 2020 the Group 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
(subsequently repaid at maturity) and the remaining amount of €158.7
million, after deduction of buy-back premium and issuance fees, was received
in cash.
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 a minimum value of 200%, the Consolidated
Leverage Ratio, with a maximum value of 60%, and the Consolidated Secured
Leverage Ratio, with a maximum value of 30%.
Unsecured Revolving Credit Facility ("RCF")
On 16 June 2022, the amount of €60 million was drawn down to strengthen the
liquidity of the Group (Loan 47) until 27 March 2023 when it was repaid in
full. As of 31 December 2023, the amount of €215 million was available for
utilisation under the RCF. The facility is no longer available for drawdown
after March 2024.
At the end of December 2022, the Group entered a new three-year term unsecured
Revolving Credit Facility for €50 million with Erste Group Bank AG, the new
liquidity being available to be drawn until December 2025. The RCF loan 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
contains a supplementary financial covenant of the Total Unencumbered Assets
Ratio with a minimum value of 125%.
Unsecured International Finance Corporation ("IFC") Loan
At the end of May 2022, the Group entered into a six-year term unsecured loan
agreement for €85 million with IFC (loan 51). The IFC loan terms have been
aligned with the Company's Revolving Credit Facility terms including financial
covenants.
Secured Facilities
In December 2022, the Group entered into a ten-year term secured loan
agreement for €110 million with Erste Group Bank AG and Banca Comerciala
Romana for refinancing of the Company's logistics/light- industrial portfolio
in Romania. Out of the €110 million, €96.5 million was available to the
Group and the difference was available to Black Sea Vision SRL, one of the
Group's joint venture companies, to refinance the existing debt held with
Banca Comerciala Romana and to obtain additional liquidity. The loan was drawn
in full in March 2023 (Loan 53).
In October 2023, the Group:
• entered into a eleven-year term secured loan agreement of €9.5 million
with Banca Transilvania (Loan 54) for refinancing of industrial property. Out
of this facility, at 31 December 2023 €6.3 million was available for further
drawdown until October 2024.
• entered a seven-year bank financing of €145 million (Loan 55) with
Aareal Bank AG secured against two office properties in Poland.
In December 2023 the Group:
• entered a seven-year bank facility of €45 million (Loan 56) secured
against an office property in Romania. This facility was drawdown to refinance
the existing debt held with Banca Comerciala Romana (Loan 43) and to obtain
additional liquidity.
• entered a ten and a half-year facility (Loan 57) with Banca Transilvania
secured against three office properties in Romania.
• extended the €11 million bank facility held with Unicredit Bank (Loan
16) until March 2031.
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 45%-83%
(2022: 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% (2022: 120%).
DSCR is calculated, depending on the respective credit facility, on the
preceding 12-month historical ratio or projected future 12-month period ratio;
• minimum interest cover ratio ("ICR"), historic with minimum values from
350% and projected with minimum values from 140% (2022: 250%), which was
applicable to two properties as at 31 December 2023 (31 December 2022: two).
Historic ICR is calculated as Actual Net Rental Income as a percentage of the
Actual Interest Costs for the 12 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 12-month period commencing
immediately after the date of the calculation; and
• debt yield ratio ("DYR") with minimum values of 5%. DYR is calculated as
the 12-month projected Net Operating Income divided by the loan outstanding
value at a relevant calculation date.
Secured bank loans are secured by investment properties which were recognised
in the statement of financial position at the fair value of €1,427 million
at 31 December 2023 (2022: €794.4 million) and also carry pledges on rent
receivable balances of €8.5 million (2022: €7.4 million), VAT receivable
balances of €0.4 million (2022: €0.8 million) and a moveable charge on the
respective bank accounts (refer to note 12).
The Group is in compliance with all financial covenants and there were no
payment defaults during the year 2023 (2022: no). As of 31 December 2023, the
Group had undrawn borrowing facilities of €272 million (2022: €300
million), however the RCF of €215 million is no longer available to draw
after March 2024.
Loan from non-controlling interest holders to a subsidiary
In March 2022 and April 2022, North Logistics Hub SRL and Logistics Hub
Chitila SRL, two newly incorporated subsidiaries, received a loan from
minority shareholders for an amount of €0.4 million and €1.4 million
respectively, representing 25% of CAPEX investment in the projects which were
financed through shareholders' loans both from the Group and minority
shareholder in proportion to the equity interest in the Company. During 2023
the loan outstanding decreased to €0.2 million and respectively €0.4
million with keeping the proportion of the equity interest in the Company. The
loans are unsecured and carry a fixed interest of 4%.
13. Equity Investments
31-Dec-23 31-Dec-22
€'000 €'000
Name of investees
Mindspace Ltd 4,254 4,254
Early Game Venture Fund I Coöperatief U.A. 1,668 1,464
Gapminder Fund Coöperatief U.A. 1,922 1,803
Equity investments (unquoted) 7,844 7,521
Investment in Mindspace Ltd
In 2018, the Group entered into an agreement with Mindspace Ltd, receiving a
4.99% stake in Mindspace Ltd (which was subsequently decreased to 3.69%
following an equity raise in 2021) in return for investing €8.6 million in
the company's Preferred A-2 class shares. At 31 December 2023 the Group hold
3.77% of total equity.
Mindspace Ltd commenced its operations in 2013 with subsidiaries in Cyprus,
Poland, Germany, the UK, the USA, the Netherlands and Romania. The company
leases office spaces for long-term periods, renovates them and turns them into
modern shared offices/coworking spaces while providing its customers with
office spaces and additional services. The company is also a tenant of the
Group, in Poland and Romania.
Fair value measurement
The fair value of the Group's participation in Mindspace Ltd was calculated
based on a third-party valuation (Level 3 under IFRS 13) organised by the
investee.
The fair value of the Group's participation in Mindspace Ltd was calculated,
internally by the management (2022: based on third party valuation), based on
the net present value of estimated future cash flows, using a discounted cash
flows model. The valuation methodology requires to make certain assumptions
about the key inputs used, including forecasted discounted cash flows (which
were based on the investee's forecast earnings as per business plan, the
discount rate of 7.5% and EBITDA multiple of 13.4 (based on the 3-year EBITDA
multiple of a comparable quoted global company operating in a similar
industry). Based on the above analysis as at 31 December 2023, the fair value
amount was marginally higher than the carrying value therefore no fair value
gain or loss was recorded in the other comprehensive income (2022: €5.5
million fair value loss).
Furthermore, as at 31 December 2023, a 10% change in EBITDA multiple or 83 bps
change in the discount rate would have an insignificant impact on the carrying
value. Since, the capital gains or losses on the underlying investments are
subject to 0% capital gains taxes in Cyprus therefore no deferred tax asset
was recorded in other comprehensive income related to fair value loss.
As at 31 December 2022, a 1% increase or (decrease) in fair value of equity
share in the investee would have increased/(decreased) the fair value
loss/(gains) on the investment by €0.08 million (2022: €43 million).
Investment in Venture Funds
Early Game Venture Fund I Coöperatief U.A.
Early Game is a venture fund that invests in tech start-ups in Romania through
the Competitiveness Operational Program and is co-funded by the European
Regional Development Fund. Globalworth Tech Limited, a fully owned subsidiary
of the Group, is committed to investing in total €2.0 million in this fund.
Globalworth Tech Limited invested €1.4 million in Early Game Venture Fund I
Coöperatief U.A. ("Early Game") in the prior years. During 2023, the
subsidiary participated in further equity calls and invested another €0.2
million (2022: €0.3 million).
Gapminder Fund Coöperatief U.A.
In the prior years, Globalworth Tech Limited invested €1.8 million in
Gapminder Fund Coöperatief U.A. ("Gapminder") and participated in further
equity calls of €0.1 million during 2023 (2022: €0.6 million). Gapminder
is a venture fund that invests in tech start-ups in Romania through the
Entrepreneurship Accelerator and Seed Fund Financial Instrument in Romania and
is co-funded by the European Investment Fund. The Group is committed to
investing in total €2.4 million out of the fund's total planned investment
value of €50 million.
At 31 December 2023, the Group assessed the fair value of its investments
based on the latest available management accounts of both funds and the
underlying enterprise value of each tech start up and seed investments by
Early Game and Gapminder. The enterprise value of underlying investments is
based on last capital raises initiated by such seed investment and pre-seed
investment which is participated in by third parties.
Based on this analysis, no fair value gain was recognised in other
comprehensive income as the change in the value of both investments was
insignificant to the cost of the initial investment (2022: €0.07 million).
14. Cash and Cash Equivalents
2023 2022
€'000 €'000
Cash at bank 171,596 143,515
Short-term deposits 224,663 20,252
Cash and cash equivalents as per statement of financial position 396,259 163,767
Cash at bank and in hand includes restricted cash balances of €5.7 million
(2022: €7.8 million) and short-term deposits include restricted deposits of
€14.9 million (2022: €0.1 million). The restricted cash balance can be
used to repay the outstanding debts and repayment of deposits to tenants.
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 0.6% to positive 3.9% (2022: minus 0.60% to positive 0.01%)
per annum, for PLN deposits from 1.83% to 4.70% (2022: 0.24% to 4.56%) per
annum and for RON deposits from 5.3% to 5.8% (2022: 0.68% to 6.25%) per annum.
For RON deposits the highest interest rate was earned on overnight deposits.
15. 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 (the Group's debt
balance plus 50% of joint ventures' debt balance), less cash and cash
equivalents (the Group's cash balance plus 50% of joint ventures' cash
balance), divided by the open market value of its investment property
portfolio (the 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 debt issuance are influenced, in addition to other factors, by the
prevailing LTV ratio.
2023 2022
Note €'000 €'000
Interest-bearing loans and borrowings (face value) 12 1,619,182 1,474,382
Less:
Cash and cash equivalents 14 396,259 163,767
Group interest-bearing loans and borrowings (net of cash) 1,222,923 1,310,615
Add:
50% share of joint ventures' interest-bearing loans and borrowings 17,513 11,764
50% share of joint ventures' cash and cash equivalents (2,506) (1,524)
Combined interest-bearing loans and borrowings (net of cash) 1,237,931 1,320,855
Group open market value as of financial position date 2,865,688 3,037,784
Add:
50% share of joint ventures' open market value as of financial position date 21 64,524 59,500
Open market value as of financial position date 2,930,212 3,097,284
Loan-to-value ratio ("LTV") 42.2% 42.7%
16. Issued Share Capital
2023 2022
€'000 Number ('000) €'000 Number ('000)
Opening balance 1,704,476 222,427 1,704,476 222,427
Shares issued for scrip dividend 65,134 30,563 - -
Transaction costs on the issuance of shares (154) - - -
Balance at 31 December 1,769,456 252,990 1,704,476 222,427
17. Dividends
2023 2022
€'000 €'000
Declared and paid during the year
Interim dividend: €0.29 per share (2022: €0.27 per share) 66,272 59,771
On 8 March 2023, the Board of Directors of the Company approved the
distribution of an interim dividend in respect of the six-month financial
period ended 31 December 2022 of €0.15 per ordinary share.
On 30 August 2023, the Board of Directors of the Company approved the
distribution of an interim dividend in respect of the six-month financial
period ended 30 June 2023 of €0.14 per ordinary share.
18. Share-Based Payment Reserve
2023 Number ('000) 2022 Number ('000)
Share-based payments reserve €'000 €'000
Executive share option plan - - 156 -
Executive Share Option Plan
Under the plan, the Directors of the Group were awarded share option warrants
as remuneration for services performed.
In 2013, the Group granted warrants to the Founder 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 €10.00 per
share and €12.50 per share for each tranche respectively and the holder is
employed on such date. The fair value of the warrants was estimated at the
grant date (i.e. July 2013) at €0.073 per share. Under the share option
warrants scheme, Zakiono Enterprises Limited had the right to subscribe in two
tranches of 2.83 million ordinary shares in total (1.415 million for each
tranche) at an exercise price of €5.00 per share.
The contractual term of each warrant granted was 10 years. Therefore at 31
July 2023, subsequent to 10 years anniversary the share option warrants were
expired.
Share-based payments expense
2023 2022
Share-based payments expense €'000 €'000
Subsidiaries' employees share based payment expense 502 -
During 2023 the Group reward the performance of employees through an annual
performance bonus with a total amount of €2.0 million in the form of either
cash or shares. Out of this, the Group recorded salary expenses of €0.5
million, share based payment expense of €0.5 million and capitalised €0.8
million.
In Romania, the expense recorded in 2023 is €0.5 million, for shares
assigned to employees with a vested period of one year and a further €0.2
million will be expensed in 2024 until vesting date. Under the bonus letter
the employees have option to receive cash by selling the shares at a pre-
determined fixed price. The Company estimate that all employees will opt to
place the shares for cash once the vesting period ended.
19. Treasury Shares
2023 2022
Amount Number ('000) Amount Number ('000)
€'000 €'000
Opening balance (4,859) (1,053) (4,917) (1,053)
Dividend on treasury shares held by a subsidiary 62 - 58 -
Closing balance (4,797) (1,053) (4,859) (1,053)
The Company has 838,118 shares in treasury, and further 214,822 shares are
held by one of the subsidiaries.
20. Goodwill
2023 2022
€'000 €'000
Balance at 31 December 12,039 12,349
In 2023 the Group has derecognised of €0.3 million related to a sale of a
land plot during 2023 (note 3.5) related to deferred tax liability arise from
business combination at initial acquisition in 2014. The charge is recorded
within loss on disposal of subsidiary in the statement of profit or loss.
21. Investment in Joint Ventures
31-Dec-23 31-Dec-22
Investments €'000 €'000
Opening balance 20,643 16,917
Investments in the joint ventures 1,660 507
Share of profit during the year 2,063 3,219
Equity investment in joint venture 24,366 20,643
Opening balance 47,324 31,991
Loan provided to the joint ventures 10,840 28,033
Loan repayments from the joint ventures (13,893) (13,429)
Interest repayment from the joint ventures (614) (797)
Interest income on the loans to joint ventures 2,075 1,526
Loans receivable from joint ventures 45,732 47,324
TOTAL 70,098 67,967
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 the
acquisition date, in Chitila, Romania.
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.
In September 2022, the Group's subsidiary, Globalworth Holdings Cyprus
Limited, entered into a joint venture agreement with Global Vision Business
Development SRL through which it acquired a 50% shareholding interest (€0.07
million investment) in Targu Mures Logistics Hub SRL ("Targu Mures Logistics
Hub"), an unlisted company in Romania, owning land for further development, at
acquisition date, in Mures, Romania.
As at 31 December 2023 and 31 December 2022 the investment properties owned by
the joint ventures entities was classified as an industrial segment for the
Group.
22. Investment in Subsidiaries
Key Judgements and Assumptions Used in Determining the Control Over an Entity:
· Power over the investee (i.e. existing rights, directly or
indirectly, in the investee that gives it the current ability to direct the
relevant activities of the investee). If the Group has less than a majority of
the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee,
including the contractual arrangement with the other vote holders of the
investee, rights arising from other contractual arrangements and the Group's
voting rights and potential voting rights.
· Exposure, or rights, to variable returns from its involvement
with the investee.
· The ability to use its power over the investee to affect its
returns (such as the appointment of an administrator or director in the
subsidiary or investee).
Details on all direct and indirect subsidiaries of the Company, over which the
Group has control and consolidated as of 31 December 2023 and 31 December
2022, 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 31 December 2023, the Group consolidated the following subsidiaries,
being holding companies, as principal activities.
31 December 2023 31 December 2022
Subsidiary Note Shareholding interest (%) Shareholding interest (%) Place of incorporation
Globalworth Investment Advisers Limited 100 100 Guernsey, Channel Islands
Globalworth Holdings Cyprus Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited
Kusanda Holdings Limited 100 100 Cyprus
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Oystermouth Holding Limited
Minory Investments Limited
Globalworth Tech Limited
IB 14 Fundusz Inwestycyjny Zamkniety Aktywow Niepublicznych 100 100 Poland
Key Judgements and Assumptions Used in Determining the Control Over an Entity
continued
As of 31 December 2023, 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 non-profit organisations with corporate social
responsibility activities
31 December 2023 31 December 2022
Subsidiary Note Shareholding interest (%) Shareholding interest (%) Place of incorporation
Aserat Properties SRL
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 100 Romania
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
Otopeni Logistics Hub SRL
West Logistics Hub SRL
Nord 50 Herastrau Premium SRL 3.5 - 100 Romania
North Logistics Hub SRL 75 75 Romania
Logistics Hub Chitila SRL 75 75 Romania
DH Supersam Katowice Sp. z o.o.
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 Management Sp. z o.o.
GPRE Property Management Sp. z o.o.
Lima 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. 100 100 Poland
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
GW Tech sp. z o.o. 100 - Poland
22. Changes in Group Structure
22.1 Subsidiaries Under Liquidation Process
• The following companies are dormant and have applied
for voluntary liquation during 2020: Zaggatti Holdings Limited, Kifeni
Investments Limited, Casalia Holdings Limited, Oystermouth Holding Limited,
Pieranu Enterprises Limited, Ramoro Limited and Vaniasa Holdings Limited.
• Fundacja Globalworth w likwidacji was liquidated on 2
November 2023 and subsequently was struck off from the Registrar of Companies
in Poland on 12 February 2024.
22.2 New Subsidiaries
• GW Tech z o.o was incorporated on 7 September
2023, with 100% effective interest, having services as principal activity.
• In February 2024 Belfield sp. z o.o an empty SPV
bought for €3,000 as a new service company.
23. Segmental Information
The Board of Directors is of the opinion that the Group is engaged mainly in
real estate business, comprising offices, mixed-use, industrial and
residential investment properties segments and property management services,
in two geographical areas, Romania and Poland.
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-makers. The chief operating
decision-makers who are responsible for allocating resources and assessing the
performance of the operating segments have been identified as the Executive
Directors.
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) on a quarterly basis 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.
The industrial property segment and head office segments are presented on a
collective basis as Others in the table on the next page 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 are disclosed separately as these meet the
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 the Group level. Segment assets and
liabilities reported to Executive Management on a segmental basis are set out
below
2023
Inter- segment eliminations
Office Mixed-use Residential Other Total
€'000 €'000 €'000 €'000 €'000 €'000
Rental income - Total 132,932 12,387 1,472 13,861 (287) 160,365
Romania 67,675 - 1,472 13,861 (281) 82,727
Poland 65,257 12,387 - - (6) 77,638
Revenue from contract with customers - Total 68,844 8,104 760 5,668 (3,312) 80,064
Romania 37,046 - 760 5,668 (1,007) 42,467
Poland 31,798 8,104 - - (2,305) 37,597
Revenue - Total 201,776 20,491 2,232 19,529 (3,599) 240,429
Operating expenses (77,704) (9,660) (886) (6,247) 1,026 (93,471)
Segment NOI 124,072 10,831 1,346 13,282 (2,573) 146,958
NOI - Romania 64,086 - 1,346 13,503 (1,039) 77,896
NOI - Poland 59,765 10,831 - - (1,534) 69,062
Administrative expenses (11,275) (1,023) (45) (3,605) - (15,948)
Acquisition costs
Fair value loss on investment property (164,329) (3,025) 292 2,154 (164,908)
Depreciation and amortisation expense (546) (1) (15) (26) (588)
Other expenses* (2,511) (184) (107) (114) (2,916)
Other income 40 2,059 - - (43) 2,056
Loss on disposal of subsidiary - - - (474) (474)
Profit on disposal of investment property 9,579 - - - 9,579
Foreign exchange gain/(loss) (740) (393) (10) (390) (1,533)
Segment result (45,931) 8,264 1,461 11,048 (2,616) (27,774)
Finance cost (13,396) (855) (1) (42,894) - (57,146)
Finance income 3,339 122 66 19,693 - 23,220
Share-based payment expense - - - (502) (502)
Loss from fair value of financial instruments (85) - - (1,308) (1,393)
Share of profit of equity-accounted investments in joint ventures
- - - 2,063 2,063
Profit before tax (56,073) 7,531 1,526 (11,900) (2,616) (61,532)
* Other expenses include a loss on sale of non-core investment property
(apartments) and other one-off expenses.
2022
Inter- segment eliminations
Office Mixed-use Residential Other Total
€'000 €'000 €'000 €'000 €'000 €'000
Rental income - Total 127,028 10,503 1,623 11,137 (464) 149,827
Romania 61,459 - 1,623 11,137 (300) 73,919
Poland 65,569 10,503 - - (164) 75,908
Revenue from contract with customers - Total 73,455 7,747 764 10,405 (2,947) 89,424
Romania 32,891 - 764 10,405 (771) 43,289
Poland 40,564 7,747 - - (2,176) 46,135
Revenue - Total 200,483 18,250 2,387 21,542 (3,411) 239,251
Operating expenses (78,926) (9,529) (957) (10,991) 832 (99,571)
Segment NOI 121,557 8,721 1,430 10,551 (2,579) 139,680
NOI - Romania 58,390 - 1,430 10,551 (976) 69,395
NOI - Poland 63,167 8,721 - - (1,603) 70,285
Administrative expenses (9,329) (405) (53) (3,925) - (13,712)
Acquisition costs - - - (7) - (7)
Fair value loss on investment property (81,549) (21,379) 1,062 12,395 - (89,471)
Depreciation and amortisation expense (628) - (17) (28) - (673)
Other expenses(*) (198) 36 (1,851)* - - (2,013)
Other income 515 29 1 8 (29) 524
Loss on disposal of subsidiary
Profit on disposal of investment property
Foreign exchange gain/(loss) 755 85 24 (13) - 851
Segment result 31,123 (12,913) 596 18,981 (2,608) 35,179
Finance cost (9,923) (409) (3) (42,197) - (52,532)
Finance income 1,016 4 81 1,593 - 2,694
Share-based payment expense - - - - - -
Loss from fair value of financial instruments 222 - - - - 222
Share of profit of equity-accounted investments in joint ventures
- - - 3,219 - 3,219
Profit before tax 22,438 (13,318) 674 (18,404) (2,608) (11,218)
* Other expenses include a loss on sale of non-core investment property
(apartments) and other one-off expenses.
2023
Inter segment eliminations
Office Mixed-use Residential Other Total
Segments €'000 €'000 €'000 €'000 €'000 €'000
Segment non-current assets 2,301,312 288,822 46,493 208,974 (2,516) 2,843,085
Romania 1,136,100 - 46,493 208,974 (639) 1,390,928
Poland 1,165,212 288,822 - - (1,877) 1,452,157
Assets held for sale 50,352 - - - 50,352
Total assets 2,874,424 299,917 47,935 226,045 (3,147) 3,445,174
Total liabilities 705,685 79,421 3,793 1,054,244 (504) 1,842,639
Additions to non-current assets
- Romania 17,898 - (23) 5,396 23,271
- Poland 23,911 12,085 35,996
2022
Inter segment eliminations
Office Mixed-use Residential Other Total
Segments €'000 €'000 €'000 €'000 €'000 €'000
Segment non-current assets 2,414,875 279,612 53,067 199,930 (2,024) 2,945,460
Romania 1,200,703 - 53,067 199,930 (395) 1,453,305
Poland 1,214,172 279,612 - - (1,629) 1,492,155
Assets held for sale 126,009 - - - - 126,009
Total assets 2,812,401 289,743 56,821 212,445 (2,547) 3,368,863
Total liabilities 557,192 23,334 3,983 1,113,450 (406) 1,697,553
Additions to non-current assets
- Romania 15,377 - 74 21,204 - 36,655
- Poland 27,651 13,348 - - - 40,999
24. Transactions with Related Parties
The Group's immediate parent is Zakiono Enterprises Limited (2023: 60.8%), a
wholly owned subsidiary of Tevat Limited. Tevat Limited is jointly owned by
Aroundtown SA (indirectly) and CPI Property Group S.A. The Group's related
parties are Aroundtown SA and CPI Property Group S.A, the Company's 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
2023 2022 2023 2022
Name Nature of transactions/balances amounts €'000 €'000 €'000 €'000
Global Logistics Chitila SRL Shareholder loan receivable - - 26,383 25,138
(50% Joint Venture) Finance income 885 1,003 - -
Office rent 12 12 - -
Asset management fees 62 41 - -
Black Sea Vision SRL Shareholder loan receivable - - 11,346 14,209
(50% Joint Venture) Finance income 505 451 - -
Office rent 12 12 - -
Asset management fees 52 24 - -
Targu Mures Logistics Hub SRL Shareholder loan receivable - - 8,004 7,976
(50% Joint Venture) Finance income 700 77 - -
Office rent 6 1 - -
Asset management fees 9 - - -
Mr. Dimitris Raptis Rent revenue - 2 - -
(Chief Executive Officer until 31 Dec. 2022)
Mr. Adrian Danoiu (Chief Operating Officer until March 2024) Revenue from sale of residential property - 400 - -
25. New and Amended Standards
Starting from 1 January 2023 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.
Effective Date
Narrow scope amendments and new Standards (EU endorsement)
Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Jan-23
Rules (issued on 23 May 2023)
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and Jan-23
IFRS 9 - Comparative Information
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Jan-23
Liabilities arising from a Single Transaction
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
For other standards issued but not yet effective and not early adopted by the
Group, management believes that there will be no significant impact on the
Group's consolidated financial statements.
Effective Date
Narrow scope amendments and new Standards (EU endorsement)
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Jan-25
Exchangeability (issued on 15 August 2023)
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Jan-25
Disclosures: Supplier Finance Arrangements (issued on 25 May 2023)
Amendments to IAS 1 Presentation of Financial Statements: Jan-25
• Classification of Liabilities as Current or Non-current (issued on 23
January 2020);
• Classification of Liabilities as Current or Non-current - Deferral of
Effective Date (issued on
15 July 2020); and Non-current Liabilities with Covenants (issued on 31
October 2022)
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued Jan-25
on 22 September 2022)
26. Contingencies
Taxation
All amounts due to State authorities for taxes have been paid or accrued at
the balance sheet date. There might be inconsistent interpretations of the tax
law and frequent changes of tax law which creates unpredictability and may
trigger the risk of additional taxes and penalties. Where the State
authorities have findings from tax audits relating to misinterpretation of tax
laws, and related regulations, these may result in confiscation of the amounts
in case; additional tax liabilities are payable; fines and penalties (that are
applied on the total outstanding amount). As a result, the fiscal penalties
resulting from misinterpretation 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 interests
in the applicable extent.
Transfer Pricing
According to applicable relevant tax legislation in Cyprus, 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 prices applicable for intra-group transactions reflect the market value
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 to assess whether the
transfer pricing policy observes the "arm's length principle".
Legal Proceedings
In recent years the Romanian State Authorities have 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 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.
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