REG - Grit Real Estate Inc - Abridged Unaudited Interim results ended 31/12/22
24/02/2023 07:00
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RNS Number : 9194Q Grit Real Estate Income Group 24 February 2023
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered in Guernsey)
(Registration number: 68739)
LSE share code: GR1T
SEM share code: DEL.N0000
ISIN: GG00BMDHST63
LEI: 21380084LCGHJRS8CN05
("Grit" or the "Company" or the "Group")
ABRIDGED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2022
Strong cash collection, Group LTV reduced to 45.5% and
substantial progress on asset disposal strategy`
Grit Real Estate Income Group Limited, a leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets underpinned by predominantly US Dollar and
Euro denominated long-term leases with high quality multi-national tenants,
today announces its results for the six months ended 31 December 2022.
Financial and Portfolio highlights
6 Months ended 6 Months ended Increase/ Decrease
31 Dec 2022 31 Dec 2021
Contractual rental collected (10) 108.4% 94.9% +13.5ppt
Gross property income (proportionate(9)) US$35.0m US$32.6m +7.52%
Property portfolio net operating income (IFRS) US$22.1m US$19.2m +15.10%
Property portfolio net operating income (proportionate(9)) US$29.6m US$27.1m +9.14%
EPRA cost ratio (including associates) (3) 12.7% 13.5% -0.8ppt
Finance costs US$18.2m US$12.5m +45.60%
Adjusted EPRA earnings(2) US$4.94m US$5.92m -16.55%
Distributable earnings per share(1) US$2.56 cps US$3.08 cps -16.88%
Dividend per share US$2.00 cps US$2.50 cps -20.00%
Adjusted EPRA earnings per share(2) US$1.02 cps US$1.80 cps -43.33%
As at 31 Dec 2022 As at 30 June 2022 Increase/ Decrease
EPRA NRV per share(2) US$78.8 cps US$79.4 cps -0.75%
Total Income Producing Assets(4) US$832.8m US$856.7m -2.79%
WALE(5) 4.6 yrs 4.8 yrs -0.2 yrs
EPRA portfolio occupancy rate(6) 95.7% 95.3% +0.4 ppt
Group LTV 45.5% 46.7% -1.2 ppt
On 22 August 2022, Grit increased its stake in Gateway Real Estate Africa
Limited ("GREA") to 35.01% and in conjunction with its interest in Africa
Property Development Managers Limited ("APDM"), is expected to materially
accelerate the Group's ability to access development returns from risk
mitigated development projects and introduce the potential for new revenue and
fee income streams. Grit has the option to acquire a further 13.61% interest
in GREA and an additional 1% of APDM by 15 May 2023, giving it control over
both entities at that date.
The Group also made substantial progress on further asset sales in support of
its 20% recycling target by 31 December 2023, disposing of interest in assets
amounting to US$53.3m in the period and a further US$56.7m announced after the
Balance sheet date. Aggregate announced asset disposals (including the
potential Beachcomber Hospitality Investment ("BHI") exit) are now in excess
of US$126.3m which represents 15.8% of the targeted 20% by 31 December 2023.
Key commentary
• EPRA net reinstatement value ("NRV") per share of US$78.8 cents per share (30
June 2022: US$79.4 cents per share).
• The Group independently values all its assets at the financial year-end and at
least 50%, by value, at the interim reporting date. For the six months ended
31 December 2022, 60% of the portfolio was independently valued with total
income producing assets valued at US$832.8m (30 June 2022: US$856.7m),
including positive local currency like-for-like fair value gains of US$3.0m,
net disposals of US$27.6m and additions and capital expenditure of US$13.7m.
• On 20 December 2022, the Group finalised its US$306 million sustainability
linked debt refinance, the largest of its kind in sub-Saharan real estate
sector, which significantly reduces Grit's refinance risk amidst turbulent
global financial markets. Group LTV decreased to 45.5% at 31 December 2022 and
WADE is 3.6 years. The Board remains committed to reducing LTV to its
medium-term target of between 35% to 40% through capital recycling
initiatives, select NAV accretive acquisitions and through the consolidation
of GREA upon gaining control.
• Rising global interest rates have resulted in the Group WACD increasing from
5.7% in December 2021 to 8.1% currently, which resulted in a US$5.7m increase
(+45.6%) in finance costs. The impact has been offset by good leasing activity
and inflation linked lease escalations which drove growth in net operating
income during the period. The Group has interest rates hedges over c.US$200
million worth of notional debt, which has now materially reduced Grit's
exposure to further movements in base rates.
• Earnings and distribution per share calculations were impacted by the weighted
average share count that increased to 482.4m at 31 December 2022 (31 December
2021: 328.8m) because of the new ordinary share issuance in December 2021 and
April 2022.
• Cash collection as a percentage of contractual revenue, improved by 13.5
percentage points from 94.9% to 108.4%, specifically impacted by improved
collections from hospitality sector assets in the six months.
Operational highlights
• The property portfolio now comprises a total of 60 investments, across twelve
countries and seven asset classes.
• Net operating income in the six months to 31 December 2022 grew 9.1% versus
the comparable period, positively impacted by leasing activity and rent
escalations achieved.
• 85.9% (30 June 2022: 85.6%) of revenue is earned from multinational
tenants(7).
• 92.4% (30 June 2022: 91.5%) of income is produced in hard currency(8).
• EPRA portfolio occupancy rate of 95.4% (30 June 2022: 95.3%).
• Total Grit proportionately owned lettable area ("GLA") is 343,038m(2).
• Weighted average contracted annual rent escalations at 4.1% (30 June 2022:
5.4%).
ESG and Sustainability highlights
• Remains on track to achieve sustainability targets of a 25% reduction in
carbon emissions and a 25% improvement in its building efficiency by 2025 (11)
• 40% of women in leadership positions.
• 79% localised employees.
• 80% employee satisfaction.
Post period end
• The Board today declares an interim dividend, out of operating profits, of
US$2.0 cents per share ("cps") for the six months ended 31 December 2022 (31
December 2021: US$2.50 cps). The Board continues to target paying a dividend
in the current financial year of between US$ 4.5 cps to US$ 5.0 cps
distributing out of net operating income generated from its existing property
assets, in line with its stated policy of paying out at least 80 per cent. of
distributable earnings.
• In January 2023, in anticipation of potentially acquiring the remaining 13.61%
of GREA from Gateway Africa Real Estate Limited, the Group has paid a deposit
of US$ 10 million, with a further deposit of US$10 million to be paid in March
2023. On final execution of the option on the GREA shares, a final payment of
US$14.1 million will be paid in May 2023.
• The BHI board has approved a merger agreement which includes a listed
preference share issuance that will facilitate an exit of Grit's remaining
27.1% interest in BHI for an expected net cash payment of EUR 25.8 million
(US$27.5 million).
Notes
(1) Various alternative performance measures (APMs) are used by management and
investors, including a number of European Public Real Estate Association
("EPRA") metrics, Distributable Earnings, Total Income Producing Assets and
Property portfolio net operating income. APMs are not a substitute, and not
necessarily better for measuring performance than statutory IFRS results and
where used, full reconciliations are provided.
(2) Explanations of how EPRA figures and Distributable earnings per share are
derived from IFRS are shown in note 17 (unaudited).
(3) Based on EPRA cost to income ratio calculation methodology which includes the
proportionately consolidated effects of LLR and other associates.
(4) Includes controlled Investment properties with Subsidiaries, Investment
Property owned by Associates and Joint Ventures, Deposits paid on Investment
properties and other investments, property plant and equipment, intangibles,
and related party loans - Refer to Chief Financial Officer's Statement for
reconciliation and analysis.
(5) Weighted average lease expiry ("WALE").
(6) Property occupancy rate based on EPRA calculation methodology - Includes
associates.
(7) Forbes 2000, Other Global and pan African tenants.
(8) Hard (US$ and EUR) or pegged currency rental income.
(9) Property portfolio revenue and net operating income ("NOI") are APM's and is
derived from IFRS revenue and NOI adjusted for the results of associates and
joint ventures and further includes the results of the GREA associates. A full
reconciliation is provided in the Chief Financial Officers Statement.
(10) Contractual rental collection was positively impacted by the recovery of
COVID-19 back-rentals, that was recovered from tenants in the hospitality
sector.
(11) Sustainability targets use 2019 as the base year.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group
Limited, commented:
"Grit produced a robust operating performance, including strong cash
collections of 108.4% of contracted revenue, and is increasingly well placed
to deliver further positive sustainable value for our shareholders and
positive impact for the people of Africa. Our resilient and defensive business
and investment potential is backed by our high-quality assets, strong cash
collection, increasing leasing activity, successful delivery of development
projects and the potential for progressive dividends and stronger NAV growth
going forward.
The Group made substantial progress towards its stated strategy of asset
recycling 20% of the value of its portfolio by 31 December 2023 with the
announced disposals in the hospitality and industrial asset sectors.
Furthermore, Grit's targeted acquisition of a controlling interest in Gateway
Real Estate Africa in May 2023 is expected to be a key milestone for the
Group, reinforcing our solid growth and positive impact strategy with a
high-quality team and attractive accretive pipeline of developments, whilst
also further reducing Grit's LTV.
The Grit Group is committed to, and passionate about, developing smart
business solutions through impact real estate that goes beyond buildings. Our
team have made great strides in achieving our target of reducing carbon
emission across our portfolio by 25% by 2025 and we're proud of continuing to
exceed our gender equality targets. As a team of spirited warriors we always
find the way."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Investor Relations +44 779 512 3402
Maitland/AMO - Communications Adviser
James Benjamin +44 7747 113 930 / +44 20 7379 5151
Alistair de Kare-silver Grit-maitland@h-advisors.global
finnCap Ltd - UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld/Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd - Mauritian Sponsoring Broker
Elodie Lan Hun Kuen +230 402 0280
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned by
predominantly US$ and Euro denominated long-term leases with a wide range of
blue-chip multi-national tenant covenants across a diverse range of robust
property sectors.
The Company is committed to delivering strong and sustainable income for
shareholders, with the potential for income and capital growth.
The Company holds its primary listing on the Main Market of the London Stock
Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius
(SEM: DEL.N0000).
Further information on the Company is available at www.grit.group
Directors:
Peter Todd (Chairman), Bronwyn Knight (Chief Executive Officer) *, Leon van de
Moortele (Chief Financial Officer) *, David Love+, Sir Samuel Esson Jonah+,
Catherine McIlraith+, Jonathan Crichton+ and Cross Kgosidiile.
(* Executive Director) ((+) independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Registered office address: PO Box 186, Royal Chambers, St Julian's Avenue, St
Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius): Intercontinental Secretarial
Services Limited
SEM authorised representative and sponsor: Perigeum Capital Limited
UK Transfer secretary: Link Assets Services Limited
Mauritian Sponsoring Broker: Capital Markets Brokers Limited
This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule
15.24 and 15.36A and the Mauritian Securities Act 2005. The Board of the
Company accepts full responsibility for the accuracy of the information
contained in this communiqué.
A Company presentation for all investors and analysts via live webcast and
conference call
The Company will host a live webcast and conference call on Friday, 24
February 2023 at 13:00 Mauritius time / 09:00 UK time / 11:00 SA time via the
Investor Meet Company platform, with the presentation being open to all
existing and potential shareholders.
Pre-registration is advised via:
https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor
(https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor)
Investors who already follow Grit Real Estate Income Group Limited on the
Investor Meet Company platform will automatically be invited.
A playback will be accessible on-demand within 48 hours via the Company
website: https://grit.group/financial-results/
(https://grit.group/financial-results/)
CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
Grit was in a transitionary phase in 2022, characterised by a continuing
recovery of the Group's property portfolio and strong cash collections while
we made substantial strides in refinancing the Group's debt facilities,
managing interest rate risk, and securing the Group's long-term growth with
the phased acquisitions of controlling interests in GREA and APDM. These
actions have collectively laid the foundations of the Grit 2.0 growth
strategy, which will be further discussed at our upcoming capital markets day
to be held at our new corporate head office in Mauritius on 10 & 11 May
2023.
In the six months to 31 December 2022, Grit's portfolio in the office, light
industrial and corporate accommodation sectors remained resilient, whilst
recovery in the hospitality and retail sector (which benefitted from strong
leasing activity) and net acquisitions in the period, contributed to Net
operating income growth of 9.1%. Highlights included:
• Cash collections improved to 108% of contracted lease income, up from 94.9% in
the corresponding 6-month period ended 31 December 2021, driven in part by the
collection of Covid period back-rents on hospitality assets;
• The weighted average EPRA portfolio occupancy rate increased from 95.7% in
June 2022 to 95.4% with encouraging leasing in the retail sector and lease
renewals over the office and corporate accommodation assets;
• Property fair value increased a modest 0.4% (or US$3.0 million) indicative of
stabilising valuations as the impacts of the pandemic reside, although
headwinds because of rising interest rates continued in this period;
• GREA completed the Rosslyn Grove development in Nairobi, Kenya, an asset fully
leased as diplomatic housing to the US government. The project was awarded the
"Best High-end residential development of 2022" at the recent African Property
Investment Awards; and
• 92.4% of lease income for the period was produced in US$, Euro or pegged
currencies (30 June 2022: 91.5%).
Performance against strategy
The ongoing recovery of our portfolio contributes to the Board's target of
reducing Group LTV, which reached 45.5% as at 31 December 2022 (from 46.7% in
June 2022) with the US$15.2 million reduction in Group debt in the period.
In October 2022 Grit successfully refinanced up to US$306 million in a
syndicated sustainability-linked term loan and revolving credit facility
aligned to its ESG goals. The transaction represents the largest real estate
refinance agreement of its kind to date in sub-Saharan Africa (excluding South
Africa) and cross-collateralises assets in multiple jurisdictions whilst
significantly streamlining Grit's loan management processes. This, and detail
on our interest rate risk management actions, are further covered in the CFO's
commentary below.
Grit is also furthering its ongoing capital recycling strategies out of
non-core assets, including large-format metropolitan retail, hospitality and
other assets and is making steady progress towards the Board's target of 20%
portfolio recycling (equivalent to US$160 million worth of property asset
sales) by 31 December 2023. Aggregate announced asset disposals (including the
potential BHI exit) are now more than US$126.3m, which represents 15.8% of the
targeted 20% by 31 December 2023 and include the following:
• Sale of 100% interest in ABSA house in June 2022, for US$12.2 million property
value, a discount of 6.9% to book value;
• Sale of a 4.9% interest Letlole La Rona ("LLR") in June 2022 with an implied
property valuation of US$4.1 million, at an 8% premium to NAV;
• Sale of 30% interest in Orbit warehouse project in July 2022, at a US$38.9
million property value, which was the book value at that time, resulting in a
deemed disposal amounting to US$11.7 million;
• A disposal of a further 6.79% interest in LLR in December 2022, representing
an implied property valuation of US$5.2 million, at a 15% premium to NAV at
that time;
• Deemed disposal of a portion of the Group's minority interest in Beachcomber
Hospitality Investments ("BHI"), the owner of three luxury resorts in the
north of Mauritius, which reduced Grit's stake from 44.42% to 27.1% through
receipt of a cash dividend of EUR19.3 million (US$19.7 million). The implied
property valuation of the deemed disposal is US$36.4 million; and
• Post balance sheet date, the Board has approved a merger agreement, which
provides for a preference note issuance in BHI that will facilitate the
possible exit of Grit's remaining 27.1% interest for an expected net cash
payment of EUR 25.8 million (US$ 27.51 million), representing a 1.7% discount
to the property value within the BHI associate. The implied property valuation
of the deemed disposal is US$56.7 million.
The asset recycling strategy not only underpins the Group's independent
property valuations but also positions Grit for its ongoing re-investment
towards infrastructure and impact assets (comprising light industrial &
logistics, corporate & consular accommodation, healthcare, and data
centres). Recycled capital is being deployed into completing the acquisitions
of GREA and APDM and to funding new Grit projects and initiatives. These Grit
2.0 initiatives will not only have an immediate positive impact on Grit's
balance sheet but will further bolster the Group's growth in net asset value
(NAV), net operating income (NOI), and provide opportunities to generate fee
income into the future.
GREA & APDM acquisition update
In August 2022, Grit increased its holdings in GREA to 35.01% and retains an
option to acquire a further 13.61% by 15 May 2023, which is in addition to the
option to acquire a further 1% of APDM at that same date, for a combined value
of US$ 34.1 million. Through the exercise of its option and with the APDM
management incentive, Grit has a clear pathway to a controlling interest in
GREA before the end of the financial year ending 30 June 2023, and whose
consolidation will bring a wide range of benefits to Grit, including:
• A fully funded existing pipeline which is further expected to deliver strong
NAV growth as projects complete over the next 24 to 36 months;
• Access to GREA's further extensive pipeline of resilient, income producing and
NAV accretive US Bureau of Overseas Building Operations ("OBO") diplomatic
housing and data centre development opportunities;
• Immediate balance sheet improvement for Grit, materially reducing the Group's
loan-to-value (LTV) by up to 3 percentage points because of the consolidation
of GREA's current low leverage; and
• Opportunities for the Group to leverage its deep African real estate insights
and in-country expertise to offer unique real estate solutions in property
development, asset, and property management as well as selected co-investment
opportunities for qualifying counterparties, generating additional fee income.
Environmental, Social and Governance (ESG)
We continue to advance in our sustainability journey and remain convinced that
our strength remains our employees, without whom, progress and value creation
would not be possible. We have consistently improved and built on our
sustainability agenda to deliver meaningful value to the society. In October
2022, we released our first Sustainability Report, which is a testament to our
commitment to increased transparency and accountability towards our
stakeholders.
Climate change is a critical topic for businesses in the real estate sector.
We are acutely aware of how we contribute to climate change and are actively
looking for ways to mitigate same. At the same time, we also understand the
need to future-proof our portfolio and assets. In this vein we are committed
to the Task Force on Climate Related Financial Disclosures and have released
our first report covering our climate related risks and opportunities, which
can be found in our Sustainability Report 2022.
We are proud of the progress made against our ESG targets of a 25% reduction
in carbon emissions and a 25% improvement in building efficiencies by 2025,
using 2019 as a base year. The Group aims to accelerate its carbon emission
reduction performance with the installation of solar generated power to
several of our assets in the coming year.
Grit remains well diversified from a gender and employee perspective, with
more than 40% of women in leadership positions and 65% localised employees.
Drive in Trading ("DiT") guarantee update
The DiT structure and related guarantee is currently being wound up. Grit's
obligations under the Guarantee Agreement to the PIC are expected to be
fulfilled and the Guarantee Agreement terminated upon the expected completion
in the second quarter of calendar year 2023.
Distributions
The Board declared an interim dividend of US$2.0 cents per share, distributing
out of net operating income generated from its existing property assets, in
line with its stated policy of paying out at least 80 per cent. of
distributable earnings. The Board anticipates paying a total dividend in the
current financial year of between US$4.5 and 5 cents per share.
In addition to the interim dividend, the Board anticipates further
complementing the return of cash to shareholders with the ongoing buyback of
shares equivalent to US$0.05cps over the second half of the financial year.
Change to the Board of Directors
On 6 February 2023, Nomzamo Radebe stepped down from the Board following her
appointment as Chief Operating Officer for a listed South African real estate
business. The Board would like to express its gratitude to Nomzamo for her
meaningful contribution to Grit over the years and wishes her well for the
future.
Outlook
As outlined in the strategic review above, we will continue to pursue the
Board's mandated target of reducing LTV, recycling 20% of the value of Grit's
portfolio by 31 December 2023 and transitioning the Group towards a more
resilient, higher-growth asset base. Grit will increasingly focus on
co-investment opportunities within selected high-growth asset classes where it
is able to leverage its considerable experience in asset, property, and
development management to generate additional fee income.
The expected conclusion of the GREA acquisition is seen as a significant
catalyst for immediate balance sheet optimisation and ongoing NAV and NOI
growth in the medium to longer term.
We want to thank our shareholders for their ongoing support as we transition
to an even more resilient portfolio with near- and longer-term growth
opportunities in Net asset value and income which will benefit all our
stakeholders, including the people of Africa.
Bronwyn Knight
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S STATEMENT
Presentation of financial results
The consolidated financial statements have been prepared in accordance with
IFRS as issued by the IASB. Alternative performance measures (APMs) have also
been provided to supplement the IFRS financial statements as the Directors
believe that this adds meaningful insight into the operations of the Group and
how the Group is managed. European Public Real Estate Association ("EPRA")
Best Practice Recommendations have been adopted widely throughout this report
and are used within the business when considering the operational performance
of our properties. Full reconciliations between IFRS and EPRA figures are
provided in note 17. Other APMs used are also reconciled below.
"Grit Proportionate Interest" income statement, presented below, is a
management measure to assess business performance and is considered meaningful
in the interpretation of the financial results. The IFRS statement of
comprehensive income is adjusted for the component income statement line items
of properties held in joint ventures and associates.
This measure, in conjunction with adjustments for non-controlling interests
(for properties consolidated by Grit, but part-owned by minority partners),
form the basis of the Group's distributable earnings build up, which is
alternatively shown in Note 8 "Distributable earnings".
IFRS YTD Extracted from Associates GRIT Proportionate Income statement Split NCI GRIT Economic IS YTD Distributable earnings
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross rental income 26,914 7,340 34,254 (4,397) 29,857 30,373
Property operating expenses (4,797) (578) (5,375) 1,080 (4,295) (4,240)
Net operating profit 22,117 6,762 28,879 (3,317) 25,562 26,133
Other income 120 9,017 9,137 (386) 8,751 8,874
Administration expenses (9,408) (3,177) (12,585) 621 (11,964) (11,184)
Net impairment charge on financial assets 903 - 903 (180) 723 -
Profit from operations 13,732 12,602 26,334 (3,262) 23,072 23,823
Fair value adjustment on investment properties 3,139 775 3,914 79 3,993 -
Transaction costs - 272 272 9 281 -
Fair value adjustment on other financial asset 47 1,948 1,995 (23) 1,972 -
Fair value adjustment on investment in subsidiary - 1 1 - 1 -
Fair value adjustment on derivative financial instruments (1,007) - (1,007) - (1,007) -
Impairment of loans - (12) (12) (657) (669) -
Loss on extinguishment of loans (1,166) (25) (1,191) 41 (1,150) -
Share-based payment (413) (2,620) (3,033) - (3,033) -
Share of profits from associates 12,008 (12,008) - - - -
Loss on partial disposal of associate (295) - (295) - (295) -
Foreign currency (losses) / gains (3,381) (396) (3,777) 882 (2,895) -
Profit before interest and taxation 22,664 537 23,201 (2,931) 20,270 23,823
Interest income 1,738 3,596 5,334 (13) 5,321 5,321
Finance costs - Intercompany - (19) (19) 1,829 1,810 1,810
Finance charges (18,210) (3,823) (22,033) 1,330 (20,703) (18,543)
Profit before taxation 6,192 291 6,483 215 6,698 12,411
Current tax (880) (510) (1,390) 271 (1,119) (1,118)
Deferred tax (1,707) 219 (1,488) 441 (1,047) -
Profit after taxation 3,605 - 3,605 927 4,532 11,293
RBO OCI - - - - - -
Total comprehensive income 3,605 - 3,605 927 4,532 11,293
VAT credits - - - - - 1,046
Distributable earnings 3,605 - 3,605 927 4,532 12,339
Portfolio financial performance
Sector Revenue HY2023 Revenue HY2022 Movement Opex HY2023 Opex HY2022 Movement NOI HY2023 NOI HY2022 Movement Rental Collections(1) HY2023
US$'000 US$'000 % US$'000 USD'000 % US$'000 US$'000 % %
Retail 8,981 8,870 1.3% (3,205) (3,825) -16.2% 5,776 5,045 14.5% 96.2%
Hospitality 5,192 6,125 -15.2% - - 0.0% 5,192 6,125 -15.2% 167.0%
Office 8,903 8,170 9.0% (1,046) (922) 13.5% 7,857 7,248 8.4% 105.6%
Industrial 3,141 1,289 143.7% (119) (41) 190.2% 3,022 1,248 142.1% 93.0%
Data Centres 383 89 330.3% - (40) 100% 383 49 681.6% 27.2%
Corporate Accommodation 6,719 6,618 1.5% (1,249) (998) 25.2% 5,470 5,620 -2.7% 97.0%
LLR portfolio 1,090 1,417 -23.1% (93) (140) -33.6% 997 1,277 -21.9% n/a
Corporate(3) 626 8 7,700.0% 237 464 -48.5% 863 472 82.8% n/a
TOTAL 35,035 32,586 7.5% (5,475) (5,502) -0.5% 29,560 27,084 9.1% 108.4%
Subsidiaries 26,914 24,147 11.5% (4,797) (4,950) -3.1% 22,117 19,197 15.2%
Associates 7,340 8,097 -9.3% (578) (544) 6.3% 6,762 7,553 -10.5%
SUBTOTAL 34,254 32,244 6.2% (5,375) (5,494) -2.2% 28,879 26,750 8.0%
GREA Associates(2) 781 342 128.4% (100) (8) 1,150.0% 681 334 104.2%
TOTAL 35,035 32,586 7.5% (5,475) (5,502) -0.5% 29,560 27,084 9.1% 108.4%
(1) Rental collections represents the amount of cash received as a percentage of
contractual income. Contractual income is stated before the effects of any
rental deferment and concessions provided to tenants.
(2) GREA Associates represents legal entities in which GREA does not have control.
(3) Includes consolidation entries and property management fees.
The year-on year movement in revenue generated is made up by the following:
Sector Revenue HY2022 Foreign exchange movement Capital movements (1) Other income Non-cash movements (2) Recoveries movements Leasing activities Revenue HY2023
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Retail 8,870 (19) 36 (22) (445) 26 535 8,981
Hospitality 6,125 (687) (212) - (721) - 687 5,192
Office 8,170 - (48) 650 (552) 248 435 8,903
Industrial 1,289 - 1,548 23 283 (118) 116 3,141
Data Centres 89 - 294 - - - - 383
Corporate Accommodation 6,618 - 278 - (521) 151 193 6,719
LLR portfolio 1,417 (176) (218) - 7 (11) 71 1,090
Corporate 8 - - 618 - - - 626
TOTAL 32,586 (882) 1,678 1,269 (1,949) 296 2,037 35,035
Subsidiaries 24,147 26,914
Associates 8,097 7,340
SUBTOTAL 32,244 34,254
GREA Associates (3) 342 781
TOTAL 32,586 (882) 1,678 1,269 (1,949) 296 2,037 35,035
(1) Capital movements include changes in ownership, disposals, acquisitions and
completed projects.
(2) Non-cash movements include straight-line adjustments and lease incentives.
(3) GREA Associates represents legal entities in which GREA does not have control.
Property valuations
Sector Property Value Foreign exchange movement Additions / Completed projects Change in ownership Other movements Fair value movement Property Value Total Valuation Movement
30 June 2022 31 Dec 2022
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 %
Retail 197,417 (3,565) 2,005 2,151 111 540 198,659 0.6%
Hospitality 164,603 659 540 (36,436) 68 (261) 129,173 -21.5%
Office 195,823 - 24 - (97) 2,372 198,122 1.2%
Industrial 80,414 - 641 - 340 (506) 80,889 0.6%
Data Centres 6,839 - 2,140 - - 208 9,187 34.3%
Corporate Accommodation 145,883 (182) 933 5,651 (99) (381) 151,805 4.1%
LLR portfolio 20,946 (3,374) 1,224 (4,064) 9 150 14,891 -28.9%
GREA under construction 13,214 - 5,838 5,070 - 917 25,039 89.5%
TOTAL 825,139 (6,462) 13,345 (27,628) 332 3,039 807,765 -2.1%
Subsidiaries 604,474 (1,309) 2,527 - 184 3,140 609,016 0.8%
Associates 203,770 (4,973) 9,776 (33,280) 62 774 176,129 -13.6%
SUBTOTAL 808,244 (6,282) 12,303 (33,280) 246 3,914 785,145 -2.9%
GREA Associates 16,895 (180) 1,042 5,652 86 (875) 22,620 33.9%
TOTAL 825,139 (6,462) 13,345 (27,628) 332 3,039 807,765 -2.1%
Movements in Property valuations in the period were principally impacted by
"Changes in ownership" related to the disposal of stakes in BHI and LLR (both
accounted for as associates) against increased stakes in the GREA assets
(reflected in their various sectors) because of Grit's increased interest in
GREA that moved from 26.29% to 35.01%. Additions predominantly related to
capex deployed to various development projects in GREA. Like-for-like local
currency fair value movements of US$3.0m. This measure, in conjunction with
adjustments for non-controlling interests (for properties consolidated by
Grit, but part-owned by minority partners), form the basis of the Group's
distributable earnings build up, which is alternatively shown in Note 17b
"Company distribution calculation".
Income producing assets
Composition of income producing assets 31 Dec 2022 30 June 2022
US$'m US$'m
Investment properties 609.0 604.5
Investment properties included within 'Investment in associates and joint 149.6 190.6
ventures'
Properties under development within 'Investment in associates and joint 26.5 13.2
ventures'
785.1 808.3
Deposits paid on investment properties 10.9 8.2
Other investments, Property, plant & equipment, Intangibles & related 36.8 40.2
party loans
Total income producing assets 832.8 856.7
Cost control
Administrative costs 31 December 2022 31 December 2021 Movement Movement
US$'000 US$'000 US$'000 %
Ongoing administrative costs 9,377 6,542 2,835 43.34%
Transaction costs 31 32 (1) (3.1%)
Total administrative expenses 9,408 6,574 2,834 43.11%
Administrative expenses increased 43.3% on the comparative period year. During
the period Grit has established a full operational office in Kenya (to service
the increased portfolio in the East Africa region as well as a representative
office in Dubai). In line with the above and to continue servicing the growth
initiatives of the Group, the Group increased headcount from 84 to 105 staff
over the comparative period. The combination of high inflationary pressures,
which has impacted costs across the globe, and the full resumption of travel
and pre-covid business practices during the six months to December 2022 also
contributed to the increased administrative expenses. During the period the
Group earned fees amounting to US$0.7 million to offset these addition costs,
with such fees expected to increase as the operational base increases. On an
annualised basis, administrative expenses amount to 2.2% of the total incoming
producing asset value as compared to 1.5% in the comparative period, with the
increase due to the factors described above.
Material finance cost increases
Rising global interest rates have driven the Group's weighted average cost of
debt up from 5.7% in December 2021 to 8.1% at 31 December 2022 and resulted in
45.6% increase in finance charges for the six-month period. Included in this
charge however are a number of non-recurring items, most notably loan write
off fees of US$1.0 million. The reported WACD of 8.1% also includes
amortisation of loan issuance costs related to the debt refinance concluded in
the period, which if excluded, reflects an ongoing cash WACD of 7.5%.
The increase in ongoing funding costs is somewhat shielded by annual
contractual lease escalations over the property portfolio, which are
predominantly linked to US consumer price inflation. Additionally, during the
period under review, Grit entered into US$100m notional new interest rate
hedges to complement the existing US$100 million of hedging in place at the
beginning of the financial period. The hedges have become increasingly more
effective as base interest rates have risen and are now largely shielding Grit
from further material increases in base rates. A sensitivity of Grit's
expected WACD to further moves in base rates as well as impact of non-cash
elements (cash WACD) included in reported WACD is shown below:
All debt WACD Movement vs current WACD Cash WACD
Current 8.1% 0.0% 7.5%
+200bps 9.0% 0.9% 8.4%
+100bps 8.5% 0.5% 7.9%
+50bps 8.3% 0.2% 7.6%
-100bps 7.0% -1.1% 6.4%
-200bps 6.5% -1.5% 5.9%
US$ denominated debt WACD Movement vs current WACD Cash WACD
Current 8.3% 0.0% 7.8%
+200bps 8.8% 0.5% 8.3%
+100bps 8.5% 0.2% 8.0%
+50bps 8.4% 0.1% 7.9%
-100bps 7.2% -1.1% 6.7%
-200bps 6.9% -1.4% 6.4%
Net Asset Value and EPRA earnings per share
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
31 December 2022
31 December 2022
31 December 2021
31 December 2021
US$'000 Per Share (Diluted) US$'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA Earnings 2,202 0.46 8,413 2.56
Total Company Specific Adjustments 2,737 0.56 (2,493) (0.76)
Adjusted EPRA Earnings 4,939 1.02 5,920 1.80
Total Company Specific Distribution Adjustments 7,400 1.54 4,122 1.28
TOTAL DISTRIBUTABLE EARNINGS 12,339 2.56 10,042 3.08
DIVIDEND DECLARED OUT OF PROFITS 9,902 2.00 8,158 2.50
UNAUDITED UNAUDITED AUDITED AUDITED
31 December 2022
31 December 2022
30 June 2022
30 June 2022
US$'000 Per Share (Diluted) US$'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA NRV 380,865 78.77 381,307 79.35
EPRA NTA 366,736 75.84 366,805 76.33
EPRA NDV 333,297 68.93 336,296 69.98
Net asset value evolution
NET ASSET VALUE EVOLUTION US$'000 US$ cps
June 2022 as reported - IFRS 336,296 69.98
Derivative financial instruments (1,863) (0.39)
Deferred Tax on Properties 46,873 9.75
EPRA NRV at 30 Jun 2022 381,306 79.34
Cash Profits 11,293 2.34
Fair Value - Retail Assets 540 0.11
Fair Value - Office 2,372 0.49
Fair Value - Corporate Accommodation (381) (0.08)
Fair Value - Hospitality (261) (0.05)
Fair Value - Light Industrial (506) (0.10)
Fair Value - Data centres 208 0.04
Fair Value - LLR portfolio 150 0.03
Fair Value - GREA under construction 917 0.19
Fair Value - Non-controlling interests (180) (0.04)
Fair value of financial Assets 1,135 0.23
Other non-cash profits and movements (8,199) (2.19)
Movement in Foreign Currency Translation reserve (475) (0.10)
Dividend attributable to NCI 2,397 0.50
Dividends paid (9,599) (1.99)
Preference share capital (1,019) (0.21)
Perpetual preference notes (1,779) (0.37)
Share based payment via equity 3,033 0.63
Transfers to non-controlling interests (87) (0.02)
EPRA NRV before dilution 380,865 78.75
Issue of shares / Treasury shares - 0.02
EPRA NRV at 31 Dec 2022 380,865 78.77
Deferred Tax on Properties (47,592) (9.84)
Derivative financial instruments 28 0.01
IFRS NRV at 31 Dec 2022 333,301 68.94
Interest-bearing borrowings
The Group has successfully refinanced the bulk of its short-dated debt, and
with the SBSA syndication has increased the Group's Weighted Average Debt
Expiry (WADE) from 1.8 years as at June 2022 to 3.6 years as at December 2022.
The Board continues to target a Group LTV of 35% to 40% and has defined
actions to achieve this target including the consolidation of GREA and further
reductions in absolute levels of debt. In the six-month period to 31 December
2022, the Group decreased total reported interest-bearing borrowings from
US$425.0m to US$409.8m.
Movement in Debt for the period As at 31 December 2022 As at 30 June 2022
US$'000 US$'000
Balance at the beginning of the period 425,066 410,588
Proceeds of interest bearing-borrowings 280,707 58,513
Loan reduced through disposal of subsidiary - (6,624)
Loan acquired through asset acquisition - 6,011
Loan issue costs incurred (7,939) (4,386)
Amortisation of loan issue costs 2,532 2,765
Costs associated with extinguishment of loans 1,166 -
Foreign currency translation differences 1,389 (14,836)
Interest accrued 221 751
Debt settled during the year (293,325) (27,716)
As at period end 409,817 425,066
The following debt transactions were concluded during the period under review:
• The refinance of the Bank ABC Club Med Facility in Casamance Holdings Limited
by Nedbank, this facility was then wrapped up within the SBSA Syndication.
Pushing out the maturity date to June 2027. Additionally, an Asset
Refurbishment facility was secured as part of the syndication.
• The Zambia (US$76.4m), Ghana (US$14.1m), Mozambique (US$140m) and Senegal
Facilities (EUR 6.6m) with the addition of the SBSA Mauritian RCF (EUR 26.5)
were refinanced through the Standard Bank lead Syndication. Participant banks
were SBSA, ABSA and Nedbank. Refer - Note 8.
• The remaining Maubank (US$1.8m) and ABC (US$2.4m) Bridge / Term Loan
facilities at Grit Real Estate Income Group Limited and Grit Services Limited
were fully repaid.
• A US$6.5m Bridging loan was availed from SBM to partially fund the increase in
shareholding of GREA.
• Amortization of $1.5m of the Investec Anfa Loan, which extended the maturity
date of the facility to April 2024.
The total capital exposure to debt providers (net of interest accrued and
unamortised loan issue costs) as at 31 December 2022 is as follows:
31 December 2022 30 June 2022
Debt in Subsidiaries Debt in associates Total Debt in Subsidiaries Debt in Total
associates
US$'000 US$'000 US$'000 % US$'000 US$'000 US$'000 %
Standard Bank Group 267,640 14,859 282,499 59.7% 183,496 6,516 190,012 40.3%
Bank of China - - - 0.0% 76,405 - 76,405 16.2%
State Bank of Mauritius 64,497 2,701 67,198 14.2% 57,659 16,375 74,034 15.7%
Investec Group 34,254 - 34,254 7.2% 36,129 - 36,129 7.7%
Absa Group - - - 0.0% 7,913 3,057 10,970 2.3%
ABC Banking Corporation - - - 0.0% 7,121 - 7,121 1.5%
Nedbank CIB 15,620 3,544 19,164 4.1% 21,820 286 22,106 4.7%
Mauritius Commercial Bank - - - 0.0% - 7,774 7,774 1.7%
Maubank 648 - 648 0.1% 3,345 - 3,345 0.7%
First National Bank - 35,104 35,104 7.4% - 9,013 9,013 1.9%
Housing finance corporation - - - 0.0% - 2,316 2,316 0.5%
Bank of Gaborone - 2,676 2,676 0.6% - 727 727 0.2%
NCBA Bank Kenya 10,700 - 10,700 2.3% 10,700 - 10,700 2.2%
Private Equity 4,725 - 4,725 1.0% 4,725 - 4,725 1.0%
International Finance Corporation 16,100 - 16,100 3.4% 16,100 - 16,100 3.4%
TOTAL BANK DEBT 414,184 58,884 473,068 100.0% 425,413 46,064 471,477 100.0%
Interest accrued 5,148 4,927
Unamortised loan issue costs (9,515) (5,274)
TOTAL DEBT 409,817 425,066
Dividend
An interim dividend per share has been declared for the six-month period ended
31 December 2022 of US$2.0 cents per share, paying out at least 80 percent of
distributable earnings.
Leon van de Moortele
Chief Financial Officer
24 February 2023
PRINCIPAL RISKS AND UNCERTAINTIES
Grit has a detailed risk management framework in place that is reviewed
annually and duly approved by the Risk Committee and the Board. Through this
risk management framework, the Company has developed and implemented
appropriate frameworks and effective processes for the sound management of
risk.
The principal risks and uncertainties facing the Group as at 30 June 2022 are
set out on pages 24 to 29 of the 2022 Integrated Annual Report together with
the respective mitigating actions and potential consequences to the Group's
performance in terms of achieving its objectives. These principal risks are
not an exhaustive list of all risks facing the Group but are a snapshot of the
Company's main risk profile as at year end.
The Board has reviewed the principal risks and existing mitigating actions in
the context of the second half of the current financial year. The Board
believes there has been no material change to the risk categories and are
satisfied that the existing mitigation actions remain appropriate to manage
them.
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The directors confirm that the abridged consolidated half year financial
statements have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as issued by the International Accounting Standards Board ("IASB")
and that the half year management report includes a fair review of the
information required by the Disclosure Guidance and Transparency Rules ("DTR")
4.2.7R and DTR 4.2.8R, namely:
• Important events that have occurred during the first six months and their
impact on the abridged set of half year unaudited financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• Material related party transactions in the first six months and a fair review
of any material changes in the related party transactions described in the
last Annual Report.
The maintenance and integrity of the Grit website is the responsibility of the
directors.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from the legislation in other jurisdictions.
The directors of the Group are listed in its Annual Report for the year ended
30 June 2022. A list of current directors is maintained on the Grit website:
www.grit.group. (http://www.grit.group/)
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
ABRIDGED CONSOLIDATED STATEMENT OF INCOME STATEMENT
Unaudited Unaudited
six months ended six months ended
31 Dec 2022 31 Dec 2021
Notes US$'000 US$'000
Gross property income 9 26,914 24,147
Property operating expenses (4,797) (4,950)
Net property income 22,117 19,197
Other income 120 568
Administrative expenses (9,408) (6,542)
Net impairment charge on financial assets 903 1,100
Profit from operations 13,732 14,323
Fair value adjustment on investment properties 3,139 3,256
Corporate restructure costs - (32)
Fair value adjustment on other financial liability - (6,716)
Fair value adjustment on other financial asset 47 -
Fair value adjustment on derivative financial instruments (1,007) 1,252
Share-based payment expense (413) (1,162)
Loss on extinguishment of loans (1,166) -
Share of profits from associates and joint ventures 3 12,008 10,286
Loss on disposal of interest in associate 3a (295) -
Foreign currency losses (3,381) (1,132)
Profit before interest and taxation 22,664 20,075
Interest income 10 1,738 923
Finance costs 11 (18,210) (12,536)
Profit for the period before taxation 6,192 8,462
Taxation (2,587) (3,615)
Profit for the period after taxation 3,605 4,847
Profit / (loss) attributable to:
Owners of the parent 4,741 4,278
Non-controlling interests (1,136) 569
3,605 4,847
Basic and diluted earnings per share (cents) 14 0.98 1.30
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
six months ended six months ended
31 Dec 2022 31 Dec 2021
US$'000 US$'000
Profit for the year 3,605 4,847
Retirement benefit obligation - -
Loss on translation of functional currency (1,464) (2,626)
Other comprehensive expense that may be reclassified to profit or loss (1,464) (2,626)
Total comprehensive income relating to the period 2,141 2,221
Total comprehensive income/ (expense) attributable to:
Owners of the parent 3,495 2,133
Non-controlling interests (1,354) 88
2,141 2,221
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited as at Audited as at Unaudited as at
31 Dec 2022 30 June 2022 31 Dec 2021
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Investment properties 2 609,016 604,474 549,887
Deposits paid on investment properties 2 10,867 8,309 5,753
Property, plant and equipment 2,095 2,087 2,260
Intangible assets 561 670 770
Other investments 1 1 1
Investments in associates and joint ventures 3 212,317 206,997 188,079
Related party loans receivable 1,313 515 92
Trade and other receivables 5 1,829 4,615 1,246
Deferred tax 12,698 12,544 21,042
Total non-current assets 850,697 840,212 769,130
Current assets
Trade and other receivables 5 31,760 29,055 36,058
Current tax receivable 2,070 1,881 1,397
Related party loans receivable 988 298 248
Other loans receivable 4 34,477 37,908 37,050
Derivative financial instruments 3,003 1,862 46
Cash and cash equivalents 12,580 26,002 34,949
Total current assets 84,878 97,006 109,748
Total assets 935,575 937,218 878,878
Equity and liabilities
Total equity attributable to ordinary shareholders
Ordinary share capital 535,694 535,694 528,670
Treasury shares reserve (16,212) (16,212) (21,312)
Foreign currency translation reserve (5,666) (5,191) (650)
Antecedent dividend reserve - - 3,659
Accumulated losses (180,515) (177,990) (170,568)
Equity attributable to owners of the Company 333,301 336,301 339,799
Preference share capital 6 30,577 29,558 25,481
Perpetual preference notes 7 26,289 25,741 25,169
Non-controlling interests (25,675) (22,224) (19,012)
Total equity 364,492 369,376 371,437
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840 12,840
Proportional shareholder loans 40,989 26,716 17,725
Interest-bearing borrowings 8 371,549 242,091 259,904
Derivative financial instruments 2,976 - -
Lease liabilities 750 545 750
Related party loans payable 1,454 1,205 848
Deferred tax liability 51,480 49,592 55,535
Total non-current liabilities 482,038 332,989 347,602
Current liabilities
Interest-bearing borrowings 8 38,268 182,975 103,016
Lease liabilities 589 864 57
Trade and other payables 31,269 31,411 23,305
Current tax payable 1 763 1,215
Derivative financial instruments - - 1,424
Related party loans payable 1 1 17,799
Other financial liabilities 16,983 16,983 13,023
Bank overdrafts 1,934 1,856 -
Total current liabilities 89,045 234,853 159,839
Total liabilities 571,083 567,842 507,441
Total equity and liabilities 935,575 937,218 878,878
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
six months ended six months ended
31 Dec 2022 31 Dec 2021
Notes US$'000 US$'000
Cash generated from operations
Profit before taxation for the period 6,192 8,462
Adjusted for:
Depreciation and amortisation 282 320
Interest income 10 (1,738) (923)
Share of profits from associates and joint ventures 3 (12,008) (10,286)
Finance costs 11 18,210 12,536
IFRS 9 charges (481) (1,100)
Foreign currency gains 3,381 1,132
Straight-line rental income accrual (186) (352)
Amortisation of lease premium 708 (1,000)
Share based payment expense 413 1,162
Loss on disposal of interest in associate 3a 295 -
Loss on extinguishment on loan 1,166 -
Fair value adjustment on investment properties 2 (3,139) (3,256)
Fair value adjustment on other financial liability (47) 6,716
Fair value adjustment on derivative financial instruments 1,007 (1,252)
14,055 12,159
Changes to working capital
Movement in trade and other receivables (1,815) 870
Movement in trade and other payables 248 (2,596)
Cash generated from operations 12,488 10,433
Taxation paid (1,814) (887)
Net cash generated from operating activities 10,674 9,546
Cash utilised on investing activities
Acquisition of, and additions to investment properties 2 (2,875) (2,542)
Deposits paid on investment properties 2 (2,558) -
Additions to property, plant and equipment (184) (36)
Additions to intangible assets - (378)
Acquisition of associates and joint ventures 3b (19,440) -
Proceeds from partial disposal of associates and joint ventures 3a 5,102 -
Dividends and interest received from associates and joint ventures 3 21,337 2,093
Interest received 1,739 1,047
Proceeds from partial disposal of investment in subsidiaries 12 1 -
Related party loans advanced - (226)
Related party loans received 1,488 456
Other loans advanced (2,189) -
Proportional shareholder loans received from associates 3 1,507 2,002
Proportional shareholder loans repaid - (472)
Proceeds from proportional shareholder loans 14,273 393
Other loans repayment received 4,378 -
Net cash generated in investing activities 22,579 2,337
Proceeds from the issue of equity instruments - 83,767
Equity issuance costs - (9,217)
Dividends paid to non-controlling shareholders - (1)
Ordinary dividends paid (7,377) -
Perpetual preferences note dividend paid (1,228) -
Proceeds from interest bearing borrowings 8 280,707 6,522
Settlement of interest-bearing borrowings 8 (293,325) (47,024)
Finance costs (17,137) (12,942)
Loan issue costs incurred (7,939) -
Payments of leases (70) (173)
Net cash (utilised in) / generated from financing activities (46,369) 20,932
Net movement in cash and cash equivalents (13,116) 32,815
Cash at the beginning of the year 24,146 2,314
Effect of foreign exchange rates (384) (180)
Total cash and cash equivalents at the end of the period 10,646 34,949
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share capital Treasury shares reserve Foreign currency translation reserve Antecedent Dividend reserve Accumulated losses Preference share capital Perpetual preference notes Non-controlling interests Total
Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 July 2021 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Profit / (loss) for the year - - - - 10,443 - - 670 11,113
Other comprehensive income for the year - - (8,010) - 154 - - (1,608) (9,464)
Total comprehensive income / (expense) - - (8,010) - 10,597 - - (938) 1,649
Share based payments - - - - 138 - - - 138
Antecedent dividend reserve (3,659) - - 3,659 - - - - -
Ordinary dividends declared - - - (3,659) (7,903) - - - (11,562)
Treasury shares - (2,906) - - - - - - (2,906)
Disposal of treasury shares - 5,100 - - - - - (3,600) 1,500
Ordinary shares issued 83,454 - - - - - - - 83,454
Perpetual preference notes issued - - - - - - 26,775 - 26,775
Preferred dividend accrued on perpetual notes - - - - (1,837) - 572 - (1,265)
Share issue expenses relating to issue of perpetual notes - - - - - - (1,606) - (1,606)
Preferred dividend accrued on preference shares - - - - (4,077) 4,077 - - -
Share issue expenses (7,943) - - - - - - - (7,943)
Non-controlling interests on acquisition of subsidiary other than business - - - - - - - 1,414 1,414
combination
Reclassification of foreign currency translation reserve on sale of subsidiary - - 906 - - - - - 906
Reclassification of foreign currency translation reserve on part sale of - - 418 - - - - - 418
interests in associate
Dividends distributable to non-controlling shareholders - - - - 1,165 - - (1,165) -
Balance as at 30 June 2022 (audited) 535,694 (16,212) (5,191) - (177,990) 29,558 25,741 (22,224) 369,376
Balance as at 1 July 2021 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Profit for the period - - - - 4,278 - - 569 4,847
Other comprehensive expense for the period - - (2,145) - - - - (481) (2,626)
Total comprehensive income - - (2,145) - 4,278 - - 88 2,221
Share based payments - - - - 62 - - - 62
Treasury shares - (2,906) - - - - - - (2,906)
Ordinary shares issued 76,098 - - - - - - - 76,098
Transfer to antecedent dividend reserve (3,659) - - 3,659 - - - - -
Perpetual preference note issued - - - - - - 26,775 - 26,775
Perpetual preference notes issue expenses - - - - - - (1,606) - (1,606)
Share issue expenses (7,611) - - - - - - - (7,611)
Dividends distributable to non-controlling shareholders - - - - 1,165 - - (1,165) -
Balance as at 31 December 2021 (unaudited) 528,670 (21,312) (650) 3,659 (170,568) 25,481 25,169 (19,012) 371,437
Balance as at 1 July 2022 535,694 (16,212) (5,191) - (177,990) 29,558 25,741 (22,224) 369,376
Profit / (Loss) for the period - - - - 4,741 - - (1,136) 3,605
Other comprehensive expense for the period - - (1,246) - - - - (218) (1,464)
Total comprehensive (expense) / income - - (1,246) - 4,741 - - (1,354) 2,141
Share based payments - - - - 413 - - - 413
Share of other changes in equity of associate - - - - 2,620 - - - 2,620
Reclassification of foreign currency translation reserve on part sale of - - 771 - - - - - 771
interests in associate
Preferred dividend accrued on preference shares - - - - (1,019) 1,019 - - -
Preferred dividend accrued on perpetual notes - - - - (1,779) - 548 - (1,231)
Ordinary dividends paid - - - - (9,599) - - - (9,599)
Transaction with non-controlling interests without change in control - - - - (299) - - 300 1
Dividends distributable to non-controlling shareholders - - - - 2,397 - - (2,397) -
Balance as at 31 December 2022 (unaudited) 535,694 (16,212) (5,666) - (180,515) 30,577 26,289 (25,675) 364,492
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of this abridged
consolidated financial statements are set out below.
1.1 Basis of preparation
The unaudited abridged consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the IASB, interpretations issued by the IFRS Interpretations Committee
(IFRIC); the Financial Pronouncements as issued by Financial Reporting
Standards Council and the LSE and SEM Listings Rules. The unaudited abridged
consolidated financial statements have been prepared on the going-concern
basis and were approved for issue by the Board on 23 February 2023.
Going Concern
The directors are required to consider an assessment of the Group's ability to
continue as a going concern when producing the interim abridged unaudited
consolidated financial statements.
The Directors are of the opinion that after reconsideration of the items
highlighted in the Integrated Annual Report published on 28 October 2022 (see
pages 152 to 153), the risks assessed are being managed and the Group
continues to perform within the parameters of the going concern models
prepared. The directors therefore concluded that it remains appropriate to
prepare the financial statements on a going concern basis.
Functional and presentation currency
The abridged unaudited consolidated half year financial statements are
prepared and are presented in United States Dollars (US$). Amounts are rounded
to the nearest thousand, unless otherwise stated. Some of the underlying
subsidiaries and associates have functional currencies other than the US$. The
functional currency of those entities reflects the primary economic
environment in which they operate.
Presentation of alternative performance measures
The Group presents certain alternative performance measures on the face of the
income statement. Revenue is shown on a disaggregated basis, split between
gross rental income and the straight-line rental income accrual. Additionally,
if applicable, the total fair value adjustment on investment properties is
presented on a disaggregated basis to show the impact of contractual receipts
from vendors separately from other fair value movements. These are non IFRS
measures and supplement the IFRS information presented. The directors believe
that the presentation of this information provides useful insight to users of
the financial statements and assists in reconciling the IFRS information to
industry wide EPRA metrics.
1.2 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is a person or group that is responsible for allocating
resources and assessing performance of the operating segments. The Group has
determined the board as its chief operating decision-maker as it is the board
that makes the Group's strategic decisions. Each operating entity has its own
segmental and geographical allocation, and it is not allocated to more than
one sector. Depreciation and amortization are not shown separately due to the
immaterial nature thereof.
1.3 Critical Judgements and estimates
The preparation of these abridged consolidated half year financial statements
in conformity with IFRS requires the use of accounting estimates. It also
requires management to exercise its judgement in applying the Group's
accounting policies. Estimates and judgements are continually evaluated. They
are based on historical experience and other factors, including expectation of
future events that may have a financial impact on the entity and that are
believed to be reasonable under the circumstances.
Judgements
In the process of applying the Group's accounting policies, management has
made the following judgements.
Unconsolidated structured entity
Drive in Trading (DiT), a B-BBEE consortium, secured a facility of US$33.4
million from the Bank of America N.A (UK Branch) ("BoAML") to finance its
investment in Grit. The BoAML facility was granted to DiT after South Africa's
Government Employees Pension Fund (GEPF), represented by Public Investment
Corporation SOC Limited ("PIC"), provided a guarantee to BoAML in the form of
a Contingent Repurchase Obligation ("CRO") for up to US$35 million. The terms
of the CRO obligate PIC to acquire the loan granted to DiT should DiT default
under the BoAML facility.
In order to facilitate the above, the Group agreed to de-risk 50% of PIC's
US$35 million exposure to the CRO, by granting PIC a guarantee whereby should
BoAML enforce the CRO, the Group would indemnify PIC for up to 50% of the
losses, capped at US$17.5 million, following the sale of the underlying
securities, being the shares held by DiT in Grit.
Given the unusual structure of the transaction, the Group has determined that
DiT has limited and predetermined activities and can be considered a
structured entity under IFRS 12 as the design and purpose of DiT was to fund
Grit rights issue and at the same time enable Grit to obtain B-BBEE
credentials.
As the Group does not have both, power to direct the activities of DiT and an
exposure to variable returns, the Group has exercised judgement on not to
consolidate DiT but instead treat it as an unconsolidated structured entity
due to DiT being a related party.
Freedom Asset Management (FAM) as a subsidiary
The Group has considered Freedom Asset Management (FAM) to be its subsidiary
for consolidation purposes due to the Group's implied control of FAM, as the
Group has ability to control the variability of returns of FAM and has the
ability to affect returns through its power to direct the relevant activities
of FAM. The Group does not own any interest in FAM however it has exposure to
returns from its involvement in directing the activities of FAM.
Grit Executive Share Trust (GEST) as a subsidiary
The Group has considered Grit Executive Share Trust (GEST) to be its
subsidiary for consolidation purposes due to the Group's implied control of
GEST, as the Group's ability to appoint the majority of the trustees and to
control the variability of returns of GEST. The Group does not own any
interest in GEST but is exposed to the credit risk and losses of (GEST) as the
Group shall bear any losses sustained by GEST and shall be entitled to receive
and be paid any profits made in respect of the purchase, acquisition, sale or
disposal of unawarded shares in the instance where shares revert back to GEST.
No non-controlling interest has been accounted for in the current year.
Grit Executive Share Trust II (GEST II) as a subsidiary
During the financial year 2022, Grit Executive Share Trust II has been
incorporated to act as trust for the new long term incentive plan of the
Group. The trust will hold Grit shares to service the new scheme when the
shares will vest to the employees in the future. The corporate set-up of GEST
II is like GEST and the Group has considered GEST II to be a subsidiary the
Group's implied control on GEST II.
African Development Managers Ltd (APDM) as a joint venture
The Group has acquired an equity interest of 77.95% in African Development
Managers Ltd. The Group has concluded that even though it holds a majority
shareholding in African Development Managers Ltd, it does not have control of
the latter because it is currently not satisfying the power criteria of
control. The design of African Development Managers Ltd is such that decisions
about the relevant activities need to be approved by the investment committee
of the company. For a decision to be approved, seventy five percent of the
members present need to vote in favor of the decision. Currently the Group has
the right to appoint two members to the investment committee. Prudential
Impact Investments Private Equity LLC who holds 21.05% of African Development
Managers Ltd also has the right to appoint two members and Gateway Africa Real
Estate Limited with a current shareholding of 1% can appoint one member. Given
the seventy five percent threshold requirement to pass any resolution, the
Group and Prudential Impact Investments Private Equity LLC will have to
unanimously agree to any decision before those are formally enacted by
management. Therefore, neither the Group nor Prudential Impact Investments
Private Equity LLC on their own control African Development Managers Ltd.
Because of the unanimous consent required by both the significant shareholders
of African Development Managers Ltd, the Group has classified the investment
in African Development Managers Ltd as an investment in joint venture.
Gateway Real Estate Africa Ltd (GREA) as an associate
The Group has considered Gateway Real Estate Africa Ltd (GREA) to be its
associate for consolidation purposes due to the Group's significant influence
over the latter. During the six months period ended 31 December 2022, the
Group has acquired an additional 8.72% equity interests in GREA which brings
the total shareholding of Grit in GREA to 35.01%. However, the increase in
shareholding has not resulted in Grit being able to exercise control over
GREA. As at 31 December 2022, the Group has accounted GREA as an associate.
Estimates
The principal areas where such estimations have been made are:
Fair value of investment properties
The fair value of investment properties is determined using a combination of
the discounted cash flows method and the income capitalisation valuation
method, using assumptions that are based on market conditions existing at the
end of the relevant reporting date. For further details on the valuation
method, judgements and assumptions made, refer to note 2.
Taxation
Judgements and estimates are required in determining the provision for income
taxes due to the complexity of legislation. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated
tax inspection issues in the jurisdictions in which it operates based on
estimates of whether additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax provisions in the
year in which such determination is made.
The Group recognises the net future tax benefit related to deferred income tax
assets to the extent that it is probable that the deductible temporary
differences will reverse in the foreseeable future. Assessing the
recoverability of deferred tax assets requires the Group to make significant
estimates related to expectations of future taxable income. Estimates of
future taxable income are based on forecast cash flows from operations and the
application of existing tax laws in each relevant jurisdiction. To the extent
that future cash flows and taxable income differ significantly from estimates,
the ability of the Group to realise the net deferred tax assets recorded at
the end of the reporting period could be impacted.
2. INVESTMENT PROPERTIES
As at As at
31 Dec 2022 30 June 2022
US$'000 US$'000
Net carrying value of properties 609,016 604,474
Movement for the year excluding straight-line rental income accrual, lease
incentive and right of use of land
Investment property at the beginning of the year 584,768 535,433
Acquisition through subsidiary other than business combination - 33,050
Transfer from associate on step up to subsidiary - 19,343
Disposal of subsidiary - (10,975)
Other capital expenditure and construction 2,875 5,946
Foreign currency translation differences (1,173) (18,196)
Revaluation of properties at end of period 3,139 19,870
Contractual receipts from vendors of investment properties (reduction in - 297
purchase price)
As at period end 589,609 584,768
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 589,609 584,768
Right of use of land 6,633 6,666
Lease incentive 6,635 7,053
Straight-line rental income accrual 6,139 5,987
Total valuation of properties 609,016 604,474
Lease incentive asset included in investment property
In accordance with IFRS 16, rental income is recognised in the Group income
statement on a straight-line basis over the lease term. This includes the
effect of lease incentives given to tenants. The Group has granted lease
incentives to tenants (in the form of rent-free periods). The result is a
receivable balance included within investment property in the balance sheet as
those are balances that must be considered when reconciling to valuation
figures to prevent double counting of assets. This balance is subject to
impairment testing under IFRS 9 using the simplified approach to expected
credit loss of IFRS 9.
As at As at
31 Dec 2022 30 June 2022
US$'000 US$'000
Lease incentive receivables before impairment 7,158 7,993
Impairment of lease incentive receivables (523) (940)
Net lease incentive included within investment property 6,635 7,053
Investment property pledged as security
Certain of the Group's investment property has been pledged as security for
interest-bearing borrowings (note 8) as follows:
• Mozambican investment properties with a market value of US$305.1 million are
mortgaged to Standard Bank of South Africa to secure debt facilities amounting
to US$140.0 million (June 2022: Mozambican investment properties with a market
value of US$301.1 million are mortgaged to Standard Bank of South Africa to
secure debt facilities amounting to US$140.0 million).
• Moroccan investment property with a market value of US$67.5 million (June
2022: US$71.5 million) is mortgaged to Investec Bank South Africa to secure
debt facilities amounting to US$33.8 million (June 2022: US$35.7 million).
• Mauritian investment property with a market value of US$48.3 million (June
2022: US$48.8 million) is mortgaged to State Bank of Mauritius to secure debt
facilities amounting to US$25.0 million (June 2022: US$24.8 million).
• Kenyan investment properties with a market value of US$60.6 million (June
2022: US$60.5 million) are mortgaged to Nedbank South Africa to secure debt
facilities amounting to US$8.6 million (June 2022: US$8.6 million) and
International Finance Corporation to secure debt facilities amounting to US$
16.1 million (June 2022: US$16.1 million).
• Zambian investment property with a market value of US$57.2 million (June 2022:
US$56.9 million) is mortgaged to Standard Bank of South Africa to secure debt
facilities amounting to US$28.1 million (June 2022: Bank of China US$34.8
million).
• Senegalese investment property with a market value of US$24.1 million (June
2022: US$20.7 million) is mortgaged to Standard Bank of South Africa to secure
debt facilities amounting to US$7.0 million (June 2022: ABC Banking
Corporation: US$4.6 million).
• Ghanaian investment properties with a market value of US$36.6 million (June
2022: US$35.3 million) are mortgaged to Standard Bank of South Africa to
secure debt facilities amounting to US$14.6 million (June 2022- Nedbank South
Africa: US$6.2million and ABSA Bank Ghana Limited: US$7.9 million).
Summary of valuations by reporting date Most recent independent valuation date Valuer (for the most recent valuation) Sector Country As at As at
31 Dec 2022 30 June 2022
US$'000 US$'000
Commodity House Phase I 31-Dec-22 REC Office Mozambique 52,513 52,346
Commodity House Phase II 31-Dec-22 Directors' valuation Office Mozambique 20,008 19,264
Hollard Building 31-Dec-22 Directors' valuation Office Mozambique 21,179 21,012
Vodacom Building 31-Dec-22 REC Office Mozambique 52,497 51,906
Zimpeto Square 31-Dec-22 Directors' valuation Retail Mozambique 4,038 3,395
Bollore Warehouse 31-Dec-22 Directors' valuation Light industrial Mozambique 10,791 10,410
Anfa Place Mall 31-Dec-22 Knight Frank Retail Morocco 67,473 71,532
Tamassa Resort 31-Dec-22 Knight Frank Hospitality Mauritius 48,262 48,827
VDE Housing Compound 31-Dec-22 REC Accommodation Mozambique 54,177 55,180
Imperial Distribution Centre 31-Dec-22 Knight Frank Light industrial Kenya 20,140 21,620
Mara Viwandani 31-Dec-22 Directors' valuation Light industrial Kenya 2,792 2,792
Mall de Tete 31-Dec-22 Directors' valuation Retail Mozambique 14,940 13,804
Acacia Estate 31-Dec-22 REC Accommodation Mozambique 75,008 73,809
5th Avenue 31-Dec-22 Directors' valuation Office Ghana 17,099 16,010
Capital Place 31-Dec-22 Directors' valuation Office Ghana 19,540 19,320
Mukuba Mall 31-Dec-22 Knight Frank Retail Zambia 57,270 56,933
Orbit Complex 31-Dec-22 Directors' valuation Light industrial Kenya 40,534 38,926
Copia Land 31-Dec-22 Directors' valuation Light industrial Kenya 6,633 6,666
Club Med Cap Skirring Resort 31-Dec-22 Directors' valuation Hospitality Senegal 24,122 20,722
Total valuation of investment properties directly held by the Group 609,016 604,474
Deposits paid on Imperial Distribution Centre Phase 2 2,317 2,259
Deposits paid on Capital Place Limited 3,550 3,550
Deposit paid on Gateway Real Estate Africa Limited 5,000 2,500
Total deposits paid on investment properties 10,867 8,309
Total carrying value of investment properties including deposits paid 619,883 612,783
Investment properties held within associates and joint ventures - Group share
Buffalo Mall - Buffalo Mall Naivasha Limited (50%) 31-Dec-22 Knight Frank Retail Kenya 5,805 6,116
Kafubu Mall - Kafubu Mall Limited (50%) 31-Dec-22 Directors' valuation Retail Zambia 12,398 11,965
CADS II Building - CADS Developers Limited (50%) 31-Dec-22 Directors' valuation Office Ghana 14,420 15,100
Cosmopolitan Shopping Centre - Cosmopolitan Shopping Centre Limited (50%) 31-Dec-22 Directors' valuation Retail Zambia 28,113 27,199
Canonniers, Mauricia and Victoria Resorts and Spas - Beachcomber Hospitality 31-Dec-22 Directors' valuation Hospitality Mauritius 56,789 95,055
(27.1%) (30 June 2022 - 44.42%)
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%)- 20 Investment 31-Dec-22 Knight Frank Light industrial Botswana 10,432 14,662
properties
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment 31-Dec-22 Knight Frank Hospitality Botswana 107 155
property
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 2 Investment 31-Dec-22 Knight Frank Retail Botswana 2,969 4,160
properties
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment 31-Dec-22 Knight Frank Office Botswana 706 1,003
property
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment 31-Dec-22 Knight Frank Accommodation Botswana 676 966
property
Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) consisting of:
- DH4 Bamako 31-Dec-22 Directors' valuation Corporate accommodation Mali 5,460 5,733
- ADC - Phase 1 31-Dec-22 Knight Frank Data Centre Nigeria SEZ 9,187 6,839
- St Helene 31-Dec-22 Knight Frank Medical Mauritius 5,753 3,076
- The Precinct 31-Dec-22 Knight Frank Office Mauritius 9,868 4,390
- Appolonia Ph1 31-Dec-22 Directors' valuation Office Ghana 1,202 873
- CCI House 31-Dec-22 Directors' valuation Office Kenya 3,614 -
- Metroplex 31-Dec-22 Directors' valuation Retail Uganda 8,630 6,478
Total of investment properties acquired through associates and joint ventures 176,129 203,770
Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) - Associates - 31-Dec-22
consisting of:
- DH1 Elevation 31-Dec-22 Knight Frank Corporate accommodation Ethiopia 12,800 9,806
- DH3 Roslyn Grove 31-Dec-22 Knight Frank Corporate accommodation Kenya 9,820 7,089
Total of investment properties acquired through GREA Associates 22,620 16,895
Total portfolio 818,632 833,448
Functional currency of total investment property portfolio
United States Dollars 586,153 558,533
Euros 134,927 167,680
Moroccan Dirham 67,473 71,532
Botswanan Pula 14,890 20,946
Kenyan Shilling 2,792 2,792
Zambian Kwacha 12,397 11,965
Total portfolio 818,632 833,448
Valuation policy and methodology for investment properties held by the Group
and by associates and joint ventures
For this interim reporting period, investment properties have been valued by
reputable RICS accredited valuation experts who have sufficient expertise in
the jurisdictions where the properties are located. As per the valuation
policy, external valuations are obtained for the top 50% of the portfolio or
where any property specific changes may have affected the property valuation.
For December 2022, a total of 60% of the property portfolio was externally
valued and directors' valuation were utilized for the following properties:
• CADS II Building
• Capital Place
• 5(th) Avenue Building
• Orbit Complex
• Mara Viwandani
• Copia Land
• BHI- Cannonier, Victoria, Mauritia Hotels
• Hollard Building
• Commodity House Phase II building
• Mall de Tete
• Bollore Warehouse
• Zimpeto Square
• Club Med Cap Skirring Resort
• Kafubu Mall
Investment Properties under the GREA Portfolio
• Appolonia Ph1
• DH4 Bamako
• CCI House
• Metroplex Shopping Mall
All valuations that are performed in the functional currency of the relevant
property company are converted to United States Dollars at the effective
closing rate of exchange. All independent valuations have been undertaken in
accordance with the RICS Valuation Standards that were in effect at the
relevant valuation date and are further compliant with International Valuation
Standards. Market values presented by valuers have also been confirmed by the
respective valuers to be fair value in terms of IFRS.
Independent valuations were performed at 31 December 2022 by REC, Chartered
Surveyors and Knight Frank, Chartered Surveyors, using the discounted cash
flow method for all building valuations and using the comparable method for
all land parcel valuations.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The following entities have been accounted for as associates and joint
ventures in the current and comparative consolidated financial statements
using the equity method:
As at As at
31 Dec 2022 30 June 2022
Name of joint venture Country % Held US$'000 US$'000
Kafubu Mall Limited (1) Zambia 50.00% 12,222 11,761
Cosmopolitan Shopping Centre Limited (1) Zambia 50.00% 28,101 27,173
CADS Developers Limited (1) Ghana 50.00% 6,521 6,974
Africa Property Development Managers Ltd (1) Mauritius 77.95% 19,762 14,247
Carrying value of joint ventures 66,606 60,155
As at As at
31 Dec 2022 30 June 2022
Name of associate Country of incorporation and operation % Held US$'000 US$'000
Buffalo Mall Naivasha Limited (1) Kenya 50.00% 12,390 3,753
Letlole La Rona Limited (2) Botswana 18.31% 3,354 17,353
Gateway Real Estate Africa Ltd (3) Mauritius 35.01% 79,116 55,866
Beachcomber Hospitality Investments Limited (4,5) Mauritius 27.10% 50,851 69,870
Carrying value of associates 145,711 146,842
Joint ventures 66,606 60,155
Associates 145,711 146,842
Total carrying value of associates and joint ventures 212,317 206,997
(1) The percentage ownership of the Group during the six months period ended
31(st) December 2022 did not change.
(2) The Group interests in the associate has decreased from 25.10% to 18.31%
following the part disposal made during the six months period ended 31(st)
December 2022.
(3) The Group interests in the associate has increased from 26.29% to 35.01%
following acquisition made during the six months period ended 31(st) December
2022.
(4) Beachcomber Hospitality Investments Limited ("BHI") has declared dividend
amounting to €32.6 million towards the end of the reporting period. The
dividends declared were scrip dividend where the shareholders had the option
to elect to receive the dividend in cash or additional shares in BHI in
proportion to their current shareholding. The Group has elected for a cash
payout whereas New Mauritius Hotel ("NMH"), the other shareholder of BHI has
elected to convert the dividend payout into additional BHI shares. Following
the increase in shareholding of NMH in BHI, the Group interests in the
associate has decreased from 44.42% to 27.10%.
(5) The carrying value of Beachcomber Hospitality Investments at 31 December 2022
includes an unsecured loan of €37.5 million (30 June 2022: €37.5 million),
from the Group to the associate, which bears interest at 6.25% (30 June 2022:
6.25%).
All investments in associates are private entities and do not have quoted
prices available with the exception of Letlole La Rona Limited who is a listed
entity on the Botswana Stock Exchange.
3a. Disposal of equity interest in Letlole La Rona Limited
During the six months period ended 31(st) December 2022, Grit Services Limited
a wholly owned subsidiary of the Group has disposed of 6.79% equity interests
in Letlole La Rona Limited on the Botswana Stock Exchange. The trading price
as at the date of disposal was BWP 3.48. The total number of shares disposed
was 19 million shares. Following the disposal transaction, the equity
interests of the Group in Letlole La Rona Limited has been reduced to 18.31%.
US$'000
Fair value of consideration received 5,102
Less: Carrying amount of investment in associate disposed (4,626)
Gain on part disposal of interest in associate 476
Reclassification of cumulated foreign currency translation reserve to profit (771)
or loss
Total loss on part disposal of investment in associate (295)
Note: the reclassification of cumulated foreign currency translation reserve
to profit or loss has no impact on the NAV.
3b. Additional equity interest acquired in Gateway Real Estate Africa Ltd
During the six-months period ended 31(st) December 2022, the Group has
continued its announced plan to acquire a controlling stake in Gateway Real
Estate Africa Ltd ("GREA"). The Group has acquired an additional equity
interest of 8.72% in GREA. The shareholding of the Group has increased from
26.29% to 35.01%. A cash consideration of US$19.4million has been paid to the
selling shareholder Gateway Africa Real Estate Limited. Following the
transaction, the Group kept exercising significant influence over GREA and
therefore continues to account for GREA using the equity method. The increase
of the investment in GREA has been split notionally between goodwill and the
additional interest in the fair value of the net identifiable assets of the
associate acquired. The notional goodwill on the acquisition of the additional
8.72% in GREA amounted to US$1.75 million. The notional goodwill element has
been included in the carrying amount of the associate. The total notional
goodwill element embedded in the carrying amount of the associate as at 31(st)
December 2022 is US$4.04 million which is made up of US$2.29 million goodwill
on acquisition of the additional 6.31% in GREA in the financial year 2022 and
US$1.75 million arising on the acquisition of the 8.72% in GREA during the
period ended 31(st) December 2022.
US$'000
Fair value of net identifiable assets acquired (8.72% additional interests in 17,683
GREA)
Notional goodwill 1,757
Fair value of consideration paid (in cash) 19,440
Each of the acquisitions referred to below have given the Group access to high
quality African real estate in line with the Group's strategy.
In circumstances where an associate or joint venture has the same reporting
date as the Group, the Group will use the IFRS financial statements of the
associate or joint venture. However, if the associate or joint venture has a
different reporting date to the Group, the latter will use the IFRS reporting
pack of the associate or joint venture to incorporate their results in the
consolidated financial statements. Where necessary, the financial information
has been amended to reflect adjustments made by the Group when using the
equity method due to the differences in accounting policies.
Included below is a reconciliation of the carrying amount of the Group's
interests in each associate and joint venture to the Group share of net assets
of the associate and joint venture.
Reconciliation to carrying value in associates and joint ventures
Letlole La Rona Limited Kafubu Mall Limited Beachcomber Hospitality Investments Limited Africa Property Development Managers Ltd Gateway Real Estate Africa Ltd CADS Developers Limited Cosmopolitan Shopping Centre Limited Buffalo Mall Naivasha Limited Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Opening Balance 1 July 2022 17,353 11,761 69,870 14,247 55,866 6,974 27,173 3,753 206,997
(Disposed) / acquired during the period (4,626) - - - 19,440 - - - 14,814
Profit / (losses) from associates and joint ventures
Revenue 1,090 553 2,879 - 617 732 1,195 149 7,215
Asset and development fees - - - 1,705 - - - - 1,705
Property operating expenses (93) (96) - - (100) (14) (192) (83) (578)
Admin expenses and recoveries (23) (6) (15) (2,021) (562) - (6) (5) (2,638)
Other income - - - 5,834 1,215 - - - 7,049
Net impairment charge on financial assets - - - - (16) - - - (16)
Unrealised foreign exchange gains/(losses) 92 46 (261) - (33) 12 - (19) (163)
Share based payment expense - - - - (2,620) - - - (2,620)
Interest income 144 - - - 2,046 - 2 - 2,192
Loss on extinguishment of loans - - - - - (25) - - (25)
Finance charges (301) (3) (805) (3) (812) (497) - (127) (2,548)
Fair value movement on investment property 150 1,090 (1,523) - 1,135 (666) 903 (314) 775
Fair value adjustment on other financial asset - - 1,948 - - - - - 1,948
Current tax (197) (25) (199) - (52) - (35) - (508)
Deferred tax - - (322) - 372 170 - - 220
Total profits/(losses) from associates and joint ventures 862 1,559 1,702 5,515 1,190 (288) 1,867 (399) 12,008
Dividends and interest paid to Group (356) - (20,981) - - - - - (21,337)
Other equity movement - - - - 2,620 - - - 2,620
Repayment of proportionate shareholders loan - (403) - - - (165) (939) - (1,507)
Effect of dilution - - (71) - - - - - (71)
Foreign currency translation differences (843) (695) 331 - - - - (1,207)
Carrying value of associates and joint ventures- 31 December 2022 12,390 12,222 50,851 19,762 79,116 6,521 28,101 3,354 212,317
4. OTHER LOANS RECEIVABLE
As at As at
31 Dec 2022 30 Jun 2022
US$'000 US$'000
Ndola Investments Limited 5,073 5,130
Kitwe Copperbelt Limited 5,404 5,640
Syngenta Limited 18,265 19,133
Healthcare assets 239 231
Drift (Mauritius) Limited 6,210 8,211
Drift (Mauritius) Limited 1,794 2,071
Pangea 2 Limited 6 6
IFRS 9 - Impairment on financial assets (ECL) (2,514) (2,514)
As at period end 34,477 37,908
Classification of other loans:
Non-current assets - -
Current assets 34,477 37,908
As at period end 34,477 37,908
5. TRADE AND OTHER RECEIVABLES
As at As at
31 Dec 2022 30 Jun 2022
US$'000 US$'000
Trade receivables 8,952 10,298
Total allowance for credit losses and provisions (4,201) (4,782)
IFRS 9 - Impairment on financial assets (ECL) (1,527) (1,965)
IFRS 9 - Impairment on financial assets (ECL) Management overlay on specific (2,674) (2,817)
provisions
Trade receivables - net 4,751 5,516
Accrued Income 2,386 1,934
Loan interest receivable 2,869 -
Deposits paid 56 57
VAT recoverable 11,530 12,186
Deferred expenses and prepayments 3,976 1,781
Sundry debtors 13,570 13,660
Cash balance held in escrow account 346 4,548
Other receivables 34,733 34,166
IFRS 9 - Impairment on other financial assets (ECL) (5,895) (6,012)
Other receivables - net 28,838 28,154
As at period end 33,589 33,670
Classification of trade and other receivables:
Non-current assets 1,829 4,615
Current assets 31,760 29,055
As at period end 33,589 33,670
6. PREFERENCE SHARE CAPITAL
As at As at
31 Dec 2022 30 Jun 2022
US$'000 US$'000
Opening balance 29,558 25,481
Preference shares dividend accrued 1,019 4,077
As at period end 30,577 29,558
7. PERPETUAL PREFERENCE NOTES
As at As at
31 Dec 2022 30 Jun 2022
US$'000 US$'000
Opening balance 25,741 -
Issue of perpetual preference note classified as equity - 26,775
Preferred dividend accrued 1,779 1,837
Preferred dividend paid (1,231) (1,265)
Less: Incremental costs of issuing the perpetual preference note - (1,606)
As at period end 26,289 25,741
Perpetual Preference Note
The Group through its wholly-owned subsidiary, Grit Services Limited has
issued perpetual preference note to two investors Ethos Mezzanine Partners GP
Proprietary Limited and Blue Peak Private Capital GP. The total cash proceeds
received from the two investors for the issuance of the perpetual note
amounted to US$31.5million.
Included below are salient features of the notes:
• The Note has a cash coupon of 9% per annum and a 4% per annum redemption
premium. The Group at its sole discretion may elect to capitalise cash
coupons.
• Although perpetual in tenor, the note carries a material coupon step-up
provision after the fifth anniversary that is expected to result in economic
maturity and redemption by the Group on or before that date.
• The Note may be voluntarily redeemed by the Group at any time, although there
would be call-protection costs associated with doing so before the third
anniversary.
• The Note, if redeemed in cash by the Group, can offer the noteholders an
additional return of not more than 3% per annum, linked to the performance of
Grit ordinary shares over the duration of the Note.
• The noteholders have the option to convert the outstanding balance of the note
into Grit equity shares. If such option is exercised by the noteholders, the
number of shares to be issued shall be calculated based on a pre-defined
formula as agreed between both parties in the note subscription agreement.
The Group has classified eighty-five percent of the instrument as equity
because for this portion of the instrument, the Group always will have an
unconditional right to avoid delivery of cash to the noteholders. The
remaining fifteen percent of the instrument has been classified as debt and
included as part of interest-bearing borrowings. The debt portion arises
because the note contains terms that can give the noteholders the right to ask
for repayment of fifteen percent of the outstanding amount of the notes on the
occurrence of some future events that are not wholly within the control of the
Group. The directors believe that the probability that those events will
happen are remote but for classification purposes, because the Group does not
have an unconditional right to avoid delivering cash to the noteholders on
fifteen percent of the notes, this portion of the instrument has been
classified as liability.
The accrued dividend on the equity portion of the note has been recognised as
a deduction into equity i.e., reduction of retained earnings.
8. INTEREST-BEARING BORROWINGS
The following debt transactions were concluded during the period under review
During the period under review the Group completed a sustainability-linked
term loan and revolving credit facility amounting to US$ 306 million, making
it the largest real estate sector transaction to date in Sub-Saharan Africa
(excluding South Africa). Standard Bank of South Africa acted as sole lead
arranger and bookrunner for the multi-jurisdictional debt syndication covering
Grit's assets and debt facilities in Mozambique, Zambia, Ghana and Senegal and
a corporate level revolving credit facility. The facility refinanced debt
amounting to c. US$ 280 million and pushed out the average debt expiry profile
to approximately 3.6 years as of December 2022 as well as securing a
development facility of US$23 million for the refurbishment and extension of
its Club Med Cap Skirring Resort in Senegal. The main benefits of this loan
syndication are the increase in loan tenor, locking a competitive interest
margin despite the market's upward pricing pressure, and 7 different
facilities being consolidated streamlining the management process and creating
scalable solutions for the future.
During the period the Nedbank RCF facility held at Grit Real Estate Income
Group Limited was increased from an US$ 7 million facility to an US$ 7 million
plus Euro 6.6 million facility. This loan was used to refinance the Bank ABC
Casamance Holdings Limited debt while the syndication was being completed.
An SBM bridging facility of US$ 6.5 million was implemented that was used to
fund Phase 2 of the acquisition of GREA.
The following facilities were settled during the period under review:
• The Bank ABC facility held by Casamance Holdings of US$ 4.7 million.
• The Bank ABC facility held by Grit Services Limited of US$ 2.4 million.
• The Maubank facility held by Grit Real Estate Income Group Limited of EUR 1.7
million
As at As at
31 Dec 2022 30 Jun 2022
US$'000 US$'000
Non-current liabilities 371,549 242,091
Current liabilities 38,268 182,975
409,817 425,066
Currency of the interest-bearing borrowings (stated gross of unamortised loan
issue costs)
United States Dollars 337,418 319,687
Euros 75,549 104,357
Mauritian Rupees 1,217 1,369
414,184 425,413
Interest accrued 5,148 4,927
Unamortised loan issue costs (9,515) (5,274)
As at period end 409,817 425,066
Movement for the period
Balance at the beginning of the year 425,066 410,588
Proceeds of interest bearing-borrowings 280,707 58,513
Loan reduced through disposal of subsidiary - (6,624)
Loan acquired through asset acquisition - 6,011
Loan issue costs incurred (7,939) (4,386)
Amortisation of loan issue costs 2,532 2,765
Costs associated with extinguishment of loan 1,166
Foreign currency translation differences 1,389 (14,836)
Interest accrued 221 751
Debt settled during the period (293,325) (27,716)
As at period end 409,817 425,066
Analysis of facilities and loans in issue
As at As at
31 Dec 2022 30 Jun 2022
Lender Borrower Initial facility US$'000 US$'000
Financial institutions
Standard Bank South Africa Commotor Limitada US$140.0m 140,000 140,000
Standard Bank South Africa Zambian Property Holdings Limited US$70.4m 70,400 -
Standard Bank South Africa Grit Services Limited €33m 35,609 -
Standard Bank South Africa Capital Place Limited US$6.2m 6,200 -
Standard Bank South Africa Casamance Holdings Limited €6.5m 7,031 -
Standard Bank South Africa Grit Accra Limited US$8.4m 8,400 -
Standard Bank South Africa Zambian Property Holdings Limited US$16.4m - 16,405
Standard Bank South Africa Grit Services Limited RCF - €26.5m - 27,091
Total Standard Bank Group 267,640 183,496
Bank of China Zambian Property Holdings Limited US$77.0m - 76,405
Total Bank of China - 76,405
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €9.0m 9,595 9,467
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €3.2m 3,412 3,366
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited US$6.5m 6,500 -
State Bank of Mauritius Mara Delta Properties Mauritius Limited €22.3m 23,774 23,457
State Bank of Mauritius Grit Real Estate Income Group Limited Equity Bridge US$20.0m 20,000 20,000
State Bank of Mauritius Mara Delta Properties Mauritius Limited RCF Mur 72m 1,217 1,369
Total State Bank of Mauritius 64,498 57,659
Investec South Africa Freedom Property Fund SARL €36.0m 31,089 32,950
Investec South Africa Freedom Property Fund SARL US$8.7m 2,722 2,722
Investec Mauritius Grit Real Estate Income Group Limited US$0.5m 442 457
Total Investec Group 34,253 36,129
ABSA Bank Ghana Limited Grit Accra Limited US$9.0m 7,913
Total ABSA Group - 7,913
Maubank Mauritius Grit Real Estate Income Group Limited €3.2m - 1,837
Maubank Mauritius Freedom Asset Management €4.0m 648 1,508
Total Maubank 648 3,345
ABC Banking Corporation Grit Services Limited Equity bridge US$ 8.5m - 2,440
ABC Banking Corporation Casamance Holdings Limited €6.4m - 4,681
Total ABC Banking Corporation - 7,121
Nedbank South Africa Warehously Limited US$8.5m 8,635 8,635
Nedbank South Africa Grit Real Estate Income Group Limited US$7m 6,985 6,985
Nedbank South Africa Capital Place Limited US$6.2m - 6,200
Total Nedbank South Africa 15,620 21,820
NCBA Bank Kenya Grit Services Limited US$6.5m 6,542 6,542
NCBA Bank Kenya Grit Services Limited US$4.1m 4,158 4,158
Total NCBA Bank Kenya 10,700 10,700
Ethos Private Equity Grit Services Limited US$2.4m 2,475 2,475
Blue Peak Private Equity Grit Services Limited US$2.2m 2,250 2,250
Total Private Equity 4,725 4,725
International Finance Corporation Stellar Warehousing and Logistics Limited US$16.1m 16,100 16,100
Total International Finance Corporation 16,100 16,100
Total loans in issue 414,184 425,413
plus: interest accrued 5,148 4,927
less: unamortised loan issue costs (9,515) (5,274)
As at period end 409,817 425,066
Fair value of borrowings is not materially different to their carrying value
amounts since interest payable on those borrowings are either close to their
current market rates or the borrowings are of short-term in nature.
9. GROSS PROPERTY INCOME
Six months ended Six months ended
31 Dec 2022 31 Dec 2021
US$'000 US$'000
Contractual rental income 22,600 19,270
Retail parking income 856 809
Straight-line rental income accrual 186 352
Other rental income (Lease incentives) (58) 1,008
Gross rental income 23,584 21,439
Asset management fees 526 -
Recoverable property expenses 2,804 2,708
Total revenue 26,914 24,147
10. INTEREST INCOME
Six months ended Six months ended
31 Dec 2022 31 Dec 2021
US$'000 US$'000
Interest on loans to partners 1,653 890
Interest on loans to related parties 7 28
Other Interest 78 5
Total interest income 1,738 923
11. FINANCE COSTS
Six months ended Six months ended
31 Dec 2022 31 Dec 2021
US$'000 US$'000
Interest-bearing borrowings - financial institutions 15,061 10,499
Early settlement charges 46 36
Amortisation of loan issue costs 2,307 1,318
Preference share dividends 462 410
Interest on obligations under leases 16 27
Interest on loans to proportional shareholders 275 222
Interest on bank overdraft 43 24
Total finance costs 18,210 12,536
12. Part disposal of subsidairy
On 18(th) July 2022, Grit disposed of an indirect interest of 30% in its Orbit
Africa asset ("Orbit") located in Kenya by disposing of 30% equity interest in
Orbit Africa Logistics ("OAL"), the beneficial owner of Orbit to Letlole La
Rona Limited ("LLR"). The total acquisition value was US$7.23 million split
between an equity subscription of US$1,000 and shareholder loan of US$7.23
million. For the portion of the shareholder loan received by LLR of US$7.23
million, the Group has recorded a corresponding liability of the same amount
which is being presented as part of proportional shareholder loans on the face
of the Group statement of financial position.
The consideration received by the Group for the actual share disposal
transactions amounted to US$ 1,000. Prior to the disposal of interests, the
carrying amount of existing non-controlling interests which have been disposed
of was US$0.30 million. The Group recognized an increase in non-controlling
interest of US$0.30 million and a decrease in equity attributable to owners of
the parent of US$ 0.299 million. The effect on the equity attributable to the
owners of Grit during the financial period ended 31 December 2022 is
summarized as follows:
US$'000
Carrying amount of non-controlling interests disposed (300)
Consideration received from non-controlling interests 1
Decrease in equity attributable to owner (299)
13. Segmental reporting
Consolidated segmental analysis
The Group reports on a segmental basis in terms of geographical location and
type of property. Geographical location is split between Botswana, Senegal,
Morocco, Mozambique, Zambia, Kenya, Ghana, and Mauritius, as relevant to each
reporting period. In terms of type of property, the Group has investments in
the hospitality, retail, office, and various other sectors.
Botswana Senegal Morocco Mozambique Zambia Kenya Ghana Mauritius Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Geographical location 31 Dec 2022
Gross property income - 807 3,220 13,768 2,815 2,680 1,594 2,030 26,914
Property operating expenses - - (1,846) (1,918) (383) (80) (257) (313) (4,797)
Net property income - 807 1,374 11,850 2,432 2,600 1,337 1,717 22,117
Other income - - - (5,011) - - (8) 5,139 120
Administrative expenses - (75) (425) (796) (13) (249) (233) (7,617) (9,408)
Net impairment (charge) / credit on financial assets - - 486 (162) - 218 (31) 392 903
Profit/(loss) from operations - 732 1,435 5,881 2,419 2,569 1,065 (369) 13,732
Fair value adjustment on investment properties - 2,485 (3,183) 3,956 314 (657) 1,448 (1,224) 3,139
Fair value adjustment on other financial asset - - - - - 47 - - 47
Fair value adjustment on derivatives financial instruments - - - - - - - (1,007) (1,007)
Share based payment expense - - - - - - - (413) (413)
Loss on extinguishment of loans - - - (813) - - (176) (177) (1,166)
Share of profits / (losses) from associates and joint ventures 862 - - - 3,426 (399) (288) 8,407 12,008
Loss on disposal of interest in associate - - - - - - - (295) (295)
Impairment of loans and other receivables - - - 93 - - - (93) -
Foreign currency gains / (losses) - (8) (1,925) 88 13 (290) (325) (934) (3,381)
Profit/(loss) before interest and taxation 862 3,209 (3,673) 9,205 6,172 1,270 1,724 3,895 22,664
Interest income - - (610) (24) 3 (421) - 2,790 1,738
Finance costs - - (1,155) (6,109) - (1,211) (911) (8,824) (18,210)
Profit / (loss) for the year before taxation 862 3,209 (5,438) 3,072 6,175 (362) 813 (2,139) 6,192
Taxation - - (124) (1,859) (82) 154 (73) (603) (2,587)
Profit / (loss) for the year after taxation 862 3,209 (5,562) 1,213 6,093 (208) 740 (2,742) 3,605
Reportable segment assets and liabilities
Non-current assets
Investment properties - 24,122 67,473 305,151 57,270 70,099 36,639 48,262 609,016
Deposits paid on investment properties - - - - - - - 10,867 10,867
Property, plant and equipment - 2 9 245 - 151 26 1,662 2,095
Intangible assets - - 25 - - - - 536 561
Other investments - - - 1 - - - - 1
Investment in associates and joint ventures 12,390 - - - 40,323 3,354 6,521 149,729 212,317
Derivative financial instruments - - - - - - - - -
Related party loans receivable - - - - - - - 1,313 1,313
Trade and other receivables - - 1,348 - - 481 - - 1,829
Deferred tax - - 1,389 7,289 - 187 2,272 1,561 12,698
Total non-current assets 12,390 24,124 70,244 312,686 97,593 74,272 45,458 213,930 850,697
Current assets
Trade and other receivables - 107 4,835 6,071 (130) 5,573 592 14,712 31,760
Current tax receivable - - (16) 609 - 472 747 258 2,070
Related party loans receivable - - - - - - - 988 988
Other loans receivable - - - - - - - 34,477 34,477
Derivative financial instruments - - - - - - - 3,003 3,003
Cash and cash equivalents - 47 383 3,633 288 370 134 7,725 12,580
Total assets 12,390 24,278 75,446 322,999 97,751 80,687 46,931 275,093 935,575
Liabilities
Total liabilities - 199 58,201 208,425 4,444 31,644 21,334 246,836 571,083
Net assets 12,390 24,079 17,245 114,574 93,307 49,043 25,597 28,257 364,492
Type of property Other investments Hospitality Retail Office Light industrial Accommodation Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
31 Dec 2022
Gross property income - 2,313 6,885 8,135 3,117 5,939 525 26,914
Property operating expenses - - (2,600) (1,029) (112) (1,150) 94 (4,797)
Net property income - 2,313 4,285 7,106 3,005 4,789 619 22,117
Other income - - - (135) - (4,421) 4,676 120
Administrative expenses - (211) (660) (524) (113) (435) (7,465) (9,408)
Net impairment (charge) / credit on financial assets - - 430 (144) 218 7 392 903
Profit/(loss) from operations - 2,102 4,055 6,303 3,110 (60) (1,778) 13,732
Fair value adjustment on investment properties - 1,262 (1,147) 3,038 (506) 492 - 3,139
Fair value adjustment on other financial asset - - - - 47 - - 47
Fair value adjustment on derivatives financial instruments - - - - - - (1,007) (1,007)
Share based payment expense - - - - - - (413) (413)
Loss on extinguishment of loans - - (62) (665) - (261) (178) (1,166)
Share of profits / (losses) from associates and joint ventures 7,567 1,702 3,027 (288) - - - 12,008
Loss on disposal of interest in associate - - - - - - (295) (295)
Impairment of loans and other receivables - - 93 - - - (93) -
Foreign currency gains / (losses) - 919 (1,904) (309) (293) 83 (1,877) (3,381)
Profit/(loss) before interest and taxation 7,567 5,985 4,062 8,079 2,358 254 (5,641) 22,664
Interest income - (1,126) (769) 2,102 (775) (1,610) 3,916 1,738
Finance costs - (1,651) (1,191) (6,907) (1,211) (78) (7,172) (18,210)
Profit / (loss) for the year before taxation 7,567 3,208 2,102 3,274 372 (1,434) (8,897) 6,192
Taxation - (74) (206) (957) 164 (917) (597) (2,587)
Profit / (loss) for the year after taxation 7,567 3,134 1,896 2,317 536 (2,351) (9,494) 3,605
Reportable segment assets and liabilities
Non-current assets
Investment properties - 72,384 143,721 182,836 80,890 129,185 - 609,016
Deposits paid on investment properties - - - - - - 10,867 10,867
Property, plant and equipment - 2 9 17 - 157 1,910 2,095
Intangible assets - - 25 - - - 536 561
Other investments - - - 1 - - - 1
Investment in associates and joint ventures 111,268 50,851 43,677 6,521 - - - 212,317
Derivative financial instruments - - - - - - - -
Related party loans receivable - - - - - - 1,313 1,313
Other loans receivable - - - - - - - -
Trade and other receivables - - 1,348 - 481 - - 1,829
Deferred tax - 1,560 4,041 3,993 452 2,638 14 12,698
Total non-current assets 111,268 124,797 192,821 193,368 81,823 131,980 14,640 850,697
Current assets
Trade and other receivables - 638 4,615 1,300 6,334 4,551 14,322 31,760
Current tax refundable - 190 275 1,270 609 (306) 32 2,070
Related party loans receivable - - - - - - 988 988
Other loans receivable - - - - - - 34,477 34,477
Derivative financial instruments - - - - - - 3,003 3,003
Cash and cash equivalents - 221 875 2,157 464 1,159 7,704 12,580
Total assets 111,268 125,846 198,586 198,095 89,230 137,384 75,166 935,575
Liabilities
Total liabilities - 64,446 59,999 194,194 32,398 30,910 189,136 571,083
Net assets 111,268 61,400 138,587 3,901 56,832 106,474 (113,970) 364,492
Major customers
Rental income stemming from Vulcan represented approximately 9.4% of the
Group's total contractual rental income for the period, with Total 9.4%, US
Embassy 8.7%, Vodacom Mozambique 6.5%, and Beachcomber 6.5% of the Group's
total contractual rental income for the period, making up the top 5 tenants of
the Group.
14. Basic and diluted earnings per ordinary share
Attributable earnings Weighted average number of shares Cents per share
Six months ended Six months ended Six months ended Six months ended Six months ended Six months ended
31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
US$'000 US$'000 Shares '000 Shares '000 US Cents US Cents
Earnings per share - Basic 4,741 4,278 482,373 328,771 0.98 1.30
Earnings per share - Diluted 4,741 4,278 482,373 328,771 0.98 1.30
15. sUBSEQUENT EVENTS
• In January 2023, as part of acquiring the remaining 13.61% of Gateway Real
Estate Africa from Gateway Africa Real Estate, the Group has made a deposit of
US$ 10 million. The remaining cash commitment of the group to complete the
transaction has been disclosed in note 16.
• Post balance sheet date, the Board has approved a merger agreement, which
provides for a preference note issuance in BHI that will facilitate the
possible exit of Grit's remaining 27.1% interest for an expected net cash
payment of EUR 25.8 million (US$ 27.51 million),
16. CAPITAL COMMITMENTS
• Club Med Senegal: Euro 24.4 million (US$26.01 million) over the next 22
months.
• Acquisition of an additional 50% stake in Buffalo Mall amounting to c. US$2
million.
• Acquisition of remaining 13.61% in Gateway Real Estate Africa and 1% in
African Development Managers Limited- US$ 34.1 million, out of which a US$10
million deposit has been paid in January 2023, an additional US$10 million
deposit is to be paid in March 2023 and the balance of US$ 14.1 million is to
be paid in May 2023.
• Orbit Africa phase 2 redevelopment: expected to be US$15.5 million (inclusive
of VAT) to be completed by April 2024.
17. EPRA financial metrics
17a. EPRA earnings
Basis of Preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors")
have chosen to disclose additional non-IFRS measures, these include EPRA
earnings, adjusted net asset value, EPRA net asset value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS Financial
Information").
The Directors have chosen to disclose:
• EPRA earnings to assist in comparisons with similar businesses in the real
estate sector. EPRA earnings is a definition of earnings as set out by the
European Public Real Estate Association. EPRA earnings represents earnings
after adjusting for fair value adjustments on investment properties, gain from
bargain purchase on associates, fair value adjustments included under income
from associates, ECL provisions, fair value adjustments on other investments,
fair value adjustments on other financial assets, fair value adjustments on
derivative financial instruments, and non-controlling interest included in
basic earnings (collectively the "EPRA earnings adjustments") and deferred tax
in respect of these EPRA earnings adjustments. The reconciliation between
basic and diluted earnings and EPRA earnings is detailed in the table below;
• EPRA net asset value to assist in comparisons with similar businesses in the
real estate sector. EPRA net asset value is a definition of net asset value as
set out by the European Public Real Estate Association. EPRA net asset value
represents net asset value after adjusting for net impairment on financial
assets (ECL), fair value of financial instruments, and deferred tax relating
to revaluation of properties (collectively the "EPRA net asset value
adjustments"). The reconciliation for EPRA net asset value is detailed in the
table below;
• adjusted EPRA earnings to provide an alternative indication of GRIT and its
subsidiaries' (the "Group") underlying business performance. Accordingly, it
excludes the effect of non-cash items such as unrealised foreign exchange
gains or losses, straight-line leasing adjustments, amortisation of right of
use land, impairment of loans and deferred tax relating to the adjustments.
The reconciliation for adjusted EPRA earnings is detailed in the table below;
and
• total distributable earnings to assist in comparisons with similar businesses
and to facilitate the Group's dividend policy which is derived from total
distributable earnings. Accordingly, it excludes VAT credit utilised on
rentals, Listing and set-up costs, depreciation, and amortisation, share based
payments, antecedent dividends, operating costs relating to AnfaPlace Mall's
refurbishment costs, amortisation of lease premiums and profits
withheld/released. The reconciliation for total distributable earnings is
detailed in the table below.
In this note, Grit presents European Real Estate Association (EPRA) earnings
and other metrics which is non-IFRS financial information.
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
31 Dec 2022
31 Dec 2022
31 Dec 2021
31 Dec 2021
$'000 Per Share (Diluted) $'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA Earnings 2,202 0.46 8,413 2.56
Total Company Specific Adjustments 2,737 0.56 (2,493) (0.76)
Adjusted EPRA Earnings 4,939 1.02 5,920 1.80
Total Company Specific Distribution Adjustments 7,400 1.54 4,122 1.28
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) 12,339 2.56 10,042 3.08
Profits Withheld (2,437) (0.56) (1,884) (0.58)
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 9,902 2.00 8,158 2.50
UNAUDITED UNAUDITED AUDITED AUDITED
31 Dec 2022
31 Dec 2022
30 June 2022
30 June 2022
$'000 Per Share (Diluted) $'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA NRV 380,865 78.77 381,307 79.35
EPRA NTA 366,736 75.84 366,805 76.33
EPRA NDV 333,297 68.93 336,296 69.98
Distribution shares UNAUDITED
31 Dec 2022
Shares '000
Weighted average shares in issue 495,092
Less: Weighted average treasury shares for the year (12,719)
Add: Weighted average shares vested shares in long term incentive scheme 573
EPRA SHARES 482,946
Less: Vested shares in consolidated entities (573)
DISTRIBUTION SHARES 482,373
In this note, Grit presents European Real Estate Association (EPRA) earnings
and other metrics which is non-IFRS financial information.
UNAUDITED
31 Dec 2022
US$'000
EPRA Earnings Calculated as follows:
Basic Earnings attributable to the owners of the parent 4,535
Add Back:
- Fair value adjustment on investment properties (3,139)
- Fair value adjustments included under income from associates (775)
- Change in value on other investments (1)
- Change in value on other financial asset (1,994)
- Change in value on derivative financial instruments 1,007
- Impairment of loan 11
- Profit on partial disposal of associate 295
- Acquisition costs not capitalized 912
- Deferred tax in relation to the above 1,365
- Non-controlling interest included in basic earnings (14)
EPRA EARNINGS 2,202
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 0.46
Company specific adjustments
- Unrealised foreign exchange gains or losses (non-cash) 3,777
- Straight-line leasing and amortisation of lease premiums (non-cash rental) 443
- Profit or loss on disposal of property, plant and equipment (9)
- Amortisation of right of use of land (non-cash) 34
- Impairment of loan and other receivables (889)
- Non-controlling interest included above (659)
- Deferred tax in relation to the above 40
Total Company Specific adjustments 2,737
ADJUSTED EPRA EARNINGS 4,939
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 1.02
COMPANY SPECIFIC ADJUSTMENTS TO EPRA EARNINGS
1. Unrealised foreign exchange gains or losses
The foreign currency revaluation of assets and liabilities in subsidiaries
gives rise to non-cash gains and losses that are non-cash in nature. These
adjustments (similar to those adjustments that are recorded to the foreign
currency translation reserve) are added back to provide a true reflection of
the operating results of the Group.
2. Straight-line leasing (non-cash rental)
Straight-line leasing adjustment and amortised lease incentives under IFRS
relate to non-cash rentals over the period of the lease. This inclusion of
such rental does not provide a true reflection of the operational performance
of the underlying property and are therefore removed from earnings.
3. Amortisation of intangible asset (right of use of land)
Where a value is attached to the right of use of land for leasehold
properties, the amount is amortised over the period of the leasehold rights.
This represents a non-cash item and is adjusted to earnings.
4 Impairment on loans and other receivables
Provisions for expected credit loss are non-cash items related to potential
future credit loss on non- property operational provisions and is therefore
added back to provide a better reflection of underlying property performance.
The add back excludes and specific provisions for against tenant accounts.
5 Non-Controlling interest
Any Non-Controlling interest related to the company specific adjustments.
6. Other deferred tax (non-cash)
Any deferred tax directly related to the company specific adjustments.
17b. Company distribution calculation
UNAUDITED
31 Dec 2022
US$'000
Adjusted EPRA Earnings 4,939
Company specific distribution adjustments
- VAT Credits utilised on rentals 1,046
- Listing and set-up costs under administrative expenses 40
- Depreciation and amortisation 758
- Share based payments 3,033
- Dividends 132
- Retirement fund & PRGF -
- Right of use imputed leases 40
- Amortisation of capital funded debt structure fees 2,414
- Deferred tax in relation to the above 82
- Non-controlling interest included above (145)
Total company specific distribution adjustments 7,400
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) 12,339
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 2.56
- Profits withheld (2,437)
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 9,902
DIVIDEND PER SHARE (cents) 2.00
Reconciliation to amount payable
Total distributable earnings to Grit shareholders before profits withheld 2.56
(cents)
Profits withheld (cents) (0.56)
INTERIM DIVIDEND PROPOSED (cents) 2.00
COMPANY DISTRIBUTION NOTES IN TERMS OF THE DISTRIBUTION POLICY
1. VAT credits utilised on rentals
In certain African countries, there is no mechanism to obtain refunds for VAT
paid on the purchase price of the property. VAT is recouped through the
collection of rentals on a VAT inclusive basis. The cash generation through
the utilisation of the VAT credit obtain on the acquisition of the underlying
property is thus included in the operational results of the property.
2. Listing and set-up costs under administrative expenses
Costs associated with the new listing of shares, setup on new companies and
structures are capital in nature and is added back for distribution purposes.
3. Depreciation and amortisation
Non-cash items added back to determine the distributable income.
4. Share based payments
Non-cash items added back to determine the distributable income.
5. Retirement fund & PRGF
Non- cash item held as a provision.
6. Amortisation of capital funded debt structure fees
Amortisation of upfront debt structuring fees.
OTHER NOTES
The abridged unaudited consolidated financial statements for the six months
period ended 31 December 2022 ("abridged unaudited consolidated financial
statements") have been prepared in accordance with the measurement and
recognition requirements of International Financial Reporting Standards
("IFRS"), the FCA Listing Rules and the SEM Listing Rules. The accounting
policies are consistent with those of the previous annual financial statements
except for the change in accounting policy and the significant judgement
disclosed in note 1.
The Group is required to publish financial results for the six months ended 31
December 2022 in terms of SEM Listing Rule 15.36A and the FCA Listing Rules.
The Directors are not aware of any matters or circumstances arising subsequent
to the period ended 31 December 2022 that require any additional disclosure or
adjustment to the financial statements. These abridged unaudited consolidated
financial statements were approved by the Board on 23 February 2023.
Copies of the abridged unaudited consolidated financial statements, and the
statement of direct and indirect interests of each officer of the Company
pursuant to rule 8(2)(m) of the Mauritian Securities (Disclosure Obligations
of Reporting Issuers) Rules 2007, are available free of charge, upon request
at the Mauritian office of the Company at 3(rd) Floor, Unity Building, The
Precinct, Grand Baie, Mauritius. Contact Person: Leon van de Moortele.
Forward-looking statements
This document may contain certain forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Actual outcomes and results may differ
materially from any outcomes or results expressed or implied by such
forward-looking statements.
Any forward-looking statements made by, or on behalf of, Grit speak only as of
the date they are made, and no representation or warranty is given in relation
to them, including as to their completeness or accuracy or the basis on which
they were prepared. Grit does not undertake to update forward-looking
statements to reflect any changes in its expectations with regard thereto or
any changes in events, conditions, or circumstances on which any such
statement is based.
Information contained in this document relating to Grit or its share price, or
the yield on its shares, should not be relied upon as an indicator of future
performance.
Any forward-looking statements and the assumptions underlying such statements
are the responsibility of the Board of directors and have not been reviewed or
reported on by the Company's external auditors.
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