REG - Grit Real Estate Inc - Annual Results 2022
28/10/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221028:nRSb4665Ea&default-theme=true
RNS Number : 4665E Grit Real Estate Income Group 28 October 2022
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")
FULL YEAR AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2022
The board of Directors (the "Board") of Grit Real Estate Income Group Limited,
a leading pan-African real estate company focused on investing in and actively
managing a diversified portfolio of assets underpinned by predominantly US$
and Euro denominated long-term leases with high quality multi-national
tenants, today announces its audited results for the financial year ended 30
June 2022.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group
Limited, commented:
Grit has weathered the challenges over the Covid-19 period and, despite recent
global uncertainty, is producing a robust underlying portfolio performance
supported by Grit's family of strong partnerships across the African
continent. Grit 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, achieving contractual rent escalations, reducing debt levels and
with the potential for progressive dividends and stronger NAV growth going
forward.
Furthermore, Grit's targeted acquisition of a controlling interest in Gateway
Real Estate Africa 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.
Grit has recently delivered its long-term sustainability-linked refinance of
existing debt into a single facility, bringing with it a more streamlined and
efficient Group loan management process and has made good progress on its
asset recycling programme.
The Grit Group is committed to, and passionate about, developing smart
business solutions through impact real estate that goes beyond buildings. No
matter what the challenges we encounter in Africa, as a team of spirited
warriors we always find the way.
Financial & Portfolio highlights as at 30 June 2022(1)
30 June 2022 30 June 2021 Increase/ (Decrease)
IFRS diluted earnings / (loss) per share US$2.62 cps (US$16.54 cps)
Adjusted EPRA earnings per share(2) US$3.13 cps US$4.91 cps (36.3%)
Distributable earnings per share(3) US$5.08 cps US$5.97 cps (14.9%)
Dividend per share US$4.50 cps US$1.50 cps +200%
Contractual rental collected 92.8% 92.5% +0.3%
EPRA NRV per share(2) US$79.4 cps US$102.4 cps (22.5%)
Total Income Producing Assets(4) US$856.7m US$801.9m +6.8%
Group LTV 46.7% 53.1% (6.4%)
Weighted average cost of debt 7.1% 5.7% +1.4%
Portfolio highlights at 30 June 2022
Property portfolio net operating income(5) US$57.3m US$55.3m +3.5%
EPRA cost ratio (including associates)(6) 13.0% 13.2% (0.2%)
EPRA portfolio occupancy rate(7) 95.3% 94.7% +0.6%
WALE(8) 4.8 yrs. 4.8 yrs. 0.0%
Revenue earned from multinational tenants(9) 85.6% 90.9% (5.3%)
Income in hard currency(10) 91.5% 92.7% (1.2%)
Grit proportionately owned lettable area ("GLA") 366,926m(2) 342,281m(2) +7.2%
Weighted average annual contracted rent escalations 5.4% 3.8% +1.5%
Notes
(1) Various alternative performance measures (APMs) are used by management and
investors, including a number of European Public Real Estate Association
("EPRA") metrics, Distributable Earnings, Total Income Producing Assets and
Property portfolio net operating income. APMs are not a substitute, and not
necessarily a better for measuring performance than statutory IFRS results and
where used, full reconciliations are provided.
(2) Explanations of how EPRA figures are derived from IFRS are shown in notes 7
and 9 (unaudited).
(3) Distributable earnings per share is an APM derived from IFRS and shown in note
8 (unaudited).
(4) Includes controlled Investment properties with Subsidiaries, Investment
Property owned by Associates and Joint Ventures, Deposits paid on Investment
properties and other investments, property plant and equipment, intangibles
and related party loans - Refer to Chief Financial Officer's Statement for
reconciliation.
(5) Property portfolio net operating income ("NOI") is an APM and is derived from
IFRS NOI adjusted for the results of associates and joint ventures. A full
reconciliation is provided in the Chief Financial Officers Statement
(6) Based on EPRA cost to income ratio calculation methodology shown in note 9.
(7) Property occupancy rate based on EPRA calculation methodology (Includes
associates and excludes direct vacancy cost). Please see calculation
methodology shown in note 9.
(8) Weighted average lease expiry ("WALE").
(9) Forbes 2000, Other Global and pan African tenants.
(10) Hard (US$ and EUR) or pegged currency rental income.
Summarised results commentary:
• The Group produced a robust underlying portfolio performance, with the 21.6%
EPRA net reinstatement value ("NRV") per share reduction predominantly
relating to the dilutive impacts of the Company's equity issuance in December
2021 and increased impairment charges.
• Total dividends per share declared for the year ended 30 June 2022 total
US$4.50cps (2021: US$1.50cps), representing an 89.8% pay-out ratio and a
12.67% dividend yield on the current share price. Distributions comprise the
interim dividend declared in February 2022 and final dividend declared today
of US$2.00cps. The Board additionally today announces that it is complementing
second half distribution with a limited share buyback programme, as it looks
to support liquidity in the shares on both LSE and SEM with the share
currently presenting compelling inherent value.
• The portfolio was independently valued at 30 June 2022, with like-for-like
property valuations increasing 6.9% in functional currencies. Moves in EUR:USD
exchange rates have however resulted in 0.3% like for like valuation declines
in the reported USD values. Acquisitions and capex additions amounted to
US$59.2m in the period.
• Group LTV meaningfully decreased to 46.7% (2021: 53.1%) in the financial year
to 30 June 2022. The Company issued shares worth US$76.3m in December 2021,
the net cash proceeds of which were utilised to decrease overall levels of
debt. Additionally, and as a direct result of the equity placement being lower
than targeted at that time, the acquisition of a controlling interest in GREA
was restructured, settled in cash from revolving debt facilities, and the
further direct LTV benefits of financial consolidation delayed. LTV is
expected to fall by 3.9% upon consolidation of GREA.
The Board remains committed to reducing LTV levels to below its near-term
target of 45% and then to its medium term target of between 35% to 40%.
Capital recycling initiatives to support this target in the financial year
included the sale of 100% of ABSA house and part sales of the Orbit
manufacturing facility and the Group's holdings in LLR.
Corporate highlights
• The Company acquired a 77.95% stake in APDM, the external asset manager over GREA, giving it operational control over GREA by virtue of the management alignment from that date (note that neither APDM or GREA are currently consolidated in these results as
the definition of control per IFRS10 has not yet been met). Additionally, a further 6.31% in GREA was acquired taking Grit's stake to 26.29% by the year end 30 June 2022 (and was further increased to 35.01% post year-end).
• GREA notably delivered several completed projects including a US embassy accommodation compound in Ethiopia, a data centre in Nigeria and an office park in Ghana and has made good progress on further projects, with the Kenyan US embassy accommodation
compound completed on 31 August 2022, and two further projects targeted for completion by March 2023.
• The Orbit Africa sale and leaseback transaction was completed in March 2022 at an accretive net acquisition yield of 9.60% under a 25-year US Dollar denominated triple net lease and cash cost of US$37.7m (inclusive of VAT). An additional redevelopment and
expansion of the facility at a contractual development yield of 16.0% is expected to commence in late 2022. The total expected investment across the sale and leaseback and redevelopment and expansion is expected to be US$53.6m and is funded
through US$25m senior debt financing from the IFC, a division of the World Bank, and a preference note issued to Ethos Mezzanine Partners GP Proprietary Limited and BluePeak Private Capital GP.
Notable Post balance sheet events
• On 18 July 2022, Grit introduced a 30% co-investor (Letlole La Rona ("LLR"))
to the Orbit Africa asset for an investment of US$7.23m. LLR's shareholders
have approved a "Go-to-Africa" strategy and have aligned with Grit as their
recognised specialist real estate partner.
• Upon the completion of phase 2 of the GREA acquisition on 31 August 2022, the
Company increased its stake in GREA to 35.01% and has an option to acquire
Gateway Partner's remaining 1% in APDM and 13.61% stake in GREA.
• On 19 October 2022, the Group concluded a syndicated sustainability linked
cross-collateralised debt refinancing facility of up to US$306m, refinancing
seven existing debt facilities of US$279.1m of existing debt facilities across
Mozambique, Zambia, Ghana and Senegal, agreed a corporate revolving credit
facility, and secured additional funding for the future redevelopment of Club
Med, Senegal. The landmark transaction, the largest sustainability-linked real
estate largest debt transaction in Sub-Saharan Africa (ex-South Africa)
creates for Grit increased diversification and tenor in its debt, with optimal
funding costs and a scalable long term debt solution.
• On 20 October 2022, the Group additionally entered into a further US$100m of
notional interest rate hedges, minimising the impact of expected global
interest rate movements on the Group's weighted average cost of debt. The
Group now has 26.7% of its USD denominated debt exposed to floating rate
exposure.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Investor Relations +44 779 512 3402
H/Advisors Maitland - Communications Advisor
James Benjamin +44 7747 113 930 / +44 20 7379 5151
Alistair de Kare-Silver Grit-maitland@h-advisors.global
finnCap Ltd - UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld/Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd - Mauritian Sponsoring Broker
Elodie Lan Hun Kuen +230 402 0280
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned by
predominantly US$ 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 http://grit.group/
Directors:
Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive Officer)*, Leon van de
Moortele (Chief Financial Officer)*, David Love+, Sir Samuel Esson Jonah+,
Nomzamo Radebe, Catherine McIlraith+, Jonathan Crichton+, Cross Kgosidiile and
Bright Laaka (Permanent Alternate Director to Nomzamo Radebe).
(* 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 Ltd
UK Transfer secretary: Link Assets Services Limited
Mauritian Sponsoring Broker: Capital Markets Brokers Ltd
This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule
15.24 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 on Friday, 28 October 2022 at 12:00pm
Mauritius / 09:00am UK / 10:00am South Africa. Pre-registration for the
Company's live webcast of the full year results is required at the following
link:
https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor
(https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor)
A playback of the webcast will be accessible on-demand within 48 hours via the
Company website: https://grit.group/financial-results/
(https://grit.group/financial-results/)
CHAIRMAN'S STATEMENT
Grit is a prominent, woman led real estate platform providing property
investment and associated real estate services across the African continent.
The Group recognises its role in transforming the design of buildings and
developments for long-term sustainability, especially with Africa rapidly
urbanising, and focuses on impact, energy efficiency and carbon reduction in
its activities. In addition to environmental responsibility, the Group prides
itself on achieving more than 40% of women in leadership positions at Grit
and significant support to the numerous communities in the countries where we
operate through extensive CSR and upliftment programmes.
The financial year ended 30 June 2022 provided encouraging signs of recovery
in the property sectors worst affected by the Covid-19 pandemic and the
lifting of international travel restrictions buoyed an improvement in
especially the hospitality and retail asset classes. Global inflationary
pressures, exacerbated by the Russia-Ukraine war, have resulted in upward
pressures on interest rates and availability of debt funding both globally,
but especially in Africa. These financial results have also been impacted by
the material corporate actions, the residual effects of the Covid pandemic and
more recently, rising interest rates and significant volatility in exchange
rates to the US dollar, specifically the Euro.
However, the Group is increasingly well positioned, backed by strong cash
collection, increased leasing activity, resilient assets and with the
potential for stronger NAV growth going forward. The Group's contractual lease
escalations are also predominantly inflation-linked and are helping to offset
the impacts of rising interest rates in the portfolio, whilst also helping to
underpin our growing dividend.
The Group has seen a growth of 3.5% in Net Operating Income from properties in
the financial year to 30 June 2022 and notably has collected 92.8% (FY21:
92.5%) of the value of its contracted revenue in the year. Management's
continued focus on counterparty relationships and active tenant and asset
management resulted in a higher occupancy rate of 95.3% (FY21: 94.7%)
predominantly due to new leases concluded in the corporate offices and retail
portfolios. The retail sector across Africa appears to have stabilised and
when combined with acquisitions and investments in the period, the reported
value of investment properties has increased 6.9% in the financial year.
Decisive, course correcting action taken
During the year under review, the Board implemented a decisive course
correcting strategy that enabled Grit to reduce its overall debt exposure to
more acceptable levels and place it on a robust growth path. The Company
issued new shares worth US$76m in December 2021, and in combination with the
targeted asset recycling strategy, has positioned the Company well for
sustained recovery. During the period, the Group acquired an increased stake
in Gateway Real Estate Africa ("GREA"), the leading African focused real
estate developer, combined with operational control over GREA's external asset
manager, Africa Property Development Managers ("APDM") during the period, are
expected to contribute meaningfully to Grit's ability to deliver enhanced
profitable growth through GREA's extensive and attractive pipeline of
accretive development opportunities.
Grit has also agreed a pathway to securing a controlling interest in GREA. The
potential optimisation of Grit and GREA's balance sheets upon gaining control,
which are expected to deliver further additional value to Grit's shareholders
and reduce the overall LTV for the Group given GREA's low gearing levels.
In March 2022, Grit concluded the fully funded US$37.7m (including VAT)
acquisition of the Orbit Complex in Kenya. The Orbit transaction is accretive
to Grit's net asset value and earnings from inception, with further
redevelopment and expansion opportunities expected to enhance the yield and
average lease term. The upgrade is in line with Grit's strategy to increase
its exposure to Kenya and the broader light industrial sector and its
proximity to Grit's Imperial Warehouse logistics facility strengthens the node
as a prime supply chain hub. The total expected investment across the sale and
leaseback and redevelopment and expansion is expected to be US$53.6m and is
funded through US$25.0m senior debt financing from the IFC, a division of
the World Bank, and a preference note issued to Ethos Mezzanine Partners GP
Proprietary Limited and BluePeak Private Capital GP. This transaction is
expected to be the first in several strategic collaborations with the IFC
across Africa and positions Grit to execute on its focus of increasing its
exposure to industrial sector assets through the establishment of an
industrial asset platform.
In July 2022, Botswana Stock Exchange listed diversified real estate company,
Letlole La Rona Limited ("LLR") co-invested in the Orbit Complex by way of a
US$7.2m investment and positioned itself as a co-investment partner for
further industrial sector investments.
Capital recycling
In the prior financial year, the Board set an asset recycling target of 20% of
the value of the property portfolio, equivalent to approximately US$160m worth
of property assets, by 31 December 2023. As at today's date, we have achieved
gross property disposals of US$28.2m. The Group has continued to make further
good progress on its targeted asset disposal strategy post financial year end
and will update shareholders in due course.
During the period under review, Grit successfully sold ABSA House in Ebene,
Mauritius and sold a 4.9% stake in LLR. Following the year end, the Group sold
a 30% stake in the Orbit Complex to the Group's listed associate LLR.
Proceeds from asset recycling will principally be applied towards Group debt
reduction and replenishment of liquidity reserves over the short term, with
redeployment into higher-yielding secured strategic pipeline projects over the
medium and longer term that are expected to further enhance the resilience of
the Group's portfolio and result in increased distributable income and
improved capital value to Grit's shareholders.
Financial results
The financial results to 30 June 2022 have been impacted by the material
corporate actions, the residual effects of the Covid-19 pandemic and more
recently, rising interest rates and significant volatility in exchange rates
to the US dollar, specifically the Euro. The Group's contractual lease
escalations are predominantly inflation linked and are providing some offset
to rising interest rates in the portfolio.
EPRA NRV per share declined 22.5% to US$79.4cps (versus prior year NRV of
US$102.4cps) predominantly due to the dilutive equity issuance in December
2021 and non-property related impairments.
The Company issued shares worth US$76.3m in an equity placement in December
2021, which was lower than targeted at that time. As a direct result, the
acquisition of a controlling interest in GREA was restructured and the direct
LTV benefits of financial consolidation delayed. Grit's LTV improved from
53.1% in the prior financial year to 46.7%, predominantly as a result of the
proceeds raised in the capital raise but also complemented by the improvement
in portfolio valuations and improved cash collections. LTV is expected to fall
by a further 3.9% upon the consolidation of GREA should the Company
successfully conclude the acquisition of a controlling interest in GREA.
Dividends
The Board remains committed to reducing LTV levels to below its near-term
target of 45% and then to its medium term target of between 35% to 40% with
capital recycling initiatives providing further impetus. Considering the
success of the Group's corrective actions, in particular the reduction of
Group LTV to 46.7%, I am pleased to announce that a final dividend of US$2.0
cents per share has been declared. This brings the total dividend for the year
to US$4.50cps, following the interim dividend of US$2.50cps declared for the
six months ended 31 December 2021. The full year distribution represents an
89.8% pay-out of distributable earnings.
The Board additionally today announces that it is complementing second half
distribution with a limited share buyback programme given the current
compelling inherent value, as it looks to support liquidity in the shares on
both LSE and SEM.
Changes to the Board
Other than formally acknowledging that Cross Kgosidiile was no longer an
Independent NED, in February 2022, there were no changes to the Board during
the year under review.
Climate change, sustainability and diversity
Grit is a leading impact real estate solutions platform providing property
investment and associated real estate services across the African continent.
Grit recognises the importance of climate change and continues to focus on
ensuring that the Group and our portfolio remains resilient. We continue to
make significant inroads in reducing our carbon footprint across operations
through initiatives to reduce electricity consumption and we are embarking on
our journey to define its pathway to net zero carbon based on global best
practice.
In addition to recognising its leadership role in environmental responsibility
for the long term, the Group prides itself on achieving more than 40% of women
in leadership positions at Grit and significant support to the numerous
communities in the countries where we operate through extensive CSR and
upliftment programmes.
More information on Grit's Environmental, Social and Governance initiatives is
available in the Responsible Business Committee's report.
Updated Group strategy
Post the targeted acquisition of a controlling interest in GREA, the Group
will continue to deploy its resources within the following principal strategic
areas:
1. Owning and managing a diversified portfolio of high-quality real estate assets
across the African continent (excluding South Africa) - with strong valuation
recovery potential post Covid-19 disruptions.
2. Pursuing limited risk-mitigated real estate developments for existing and
target tenants, predominantly focused on the industrial, embassy accommodation
and data centres sectors, driving accelerated NAV growth into the future.
Development exposure will not exceed more than 20% of Group gross asset value,
and upon completion, will be included in the income producing portfolio of the
Group thereby underpinning future income growth - leading to an expectation of
enhanced yield and income upon completion of the developments.
3. Generation of additional fee income from real estate, facilities and
development management services to both internal clients and to third party
clients and co-investors - expected to result in an expectation of enhanced
income.
Outlook
The decisive course correcting action by the Board and management has yielded
encouraging signs of growth, with many of the benefits initiated during the
year under review expected to flow through in the current year and sustained
over the long term. Notwithstanding these early signs of recovery, the Board
recognises the increased global instability, driven by higher interest rates,
inflation and shortages of staple foods and fuel, largely due to the
Ukraine/Russia conflict.
A higher inflationary environment supports revenue growth as a result of
Grit's inflation-linked contractual escalations, although real increases will
be done in collaboration with tenants to ensure long-term sustainability. The
Group is however well positioned for recovery in a post-pandemic environment,
backed by strong cash collection, increased leasing activity, resilient assets
and the potential for stronger NAV growth going forward. Upon the expected
final completion of the acquisition of a controlling interest in GREA, the
Board's total return target will increase from the current 12% to a range of
between 13% and 15% per annum.
Management and the Board will continue to focus on ongoing reduction in LTV,
the asset recycling programme as well as the expansion of Grit's investment in
GREA.
Peter Todd
Chairman
CHIEF EXECUTIVE'S STATEMENT
Grit has evolved into a real estate solutions provider across Africa, from
being a property investor. In addition to sound property fundamentals, a
significant catalyst for Grit's growth - and evolution - continues to be our
focus on people and relationships. From the outset, we built our business on
strong, transparent counterparty and stakeholder relationships. This ability
and know-how are what differentiates Grit - no other company delivers what
Grit delivers on the African continent through the expertise of its people.
The Grit Group are people-centred pioneers, proudly African and woman led,
driven by delivering positive impact through authentic partnerships. We
recognise our role in transforming the design of buildings and developments
and creating smart business solutions for long-term sustainability, especially
with the African landscape rapidly urbanising.
During the Covid-19 period, Grit's management and Board committed to key
initiatives to ensure the stabilisation of operations, balance sheet
enhancement and improved liquidity. This focus has resulted in the delivery of
the following key highlights over the financial period.
• Portfolio valuation recovery;
• Improved retail leasing and valuation recovery;
• Hospitality assets fully trading once again;
• Successful asset recycling and progress towards the Board's 31 December 2023
target;
• Significantly reduced loan to value;
• Robust operational performance including strong cash collections and growth in
operational earnings;
• Resumption of dividends; and
• Pursuit of a sustainability linked debt restructure.
Key operational trends
Balance sheet improving
Initiatives during the year that supported a stronger balance sheet include
the placing of 146m new ordinary shares in December 2021 (further detail in
the Chairman's statement and Financial Review of this report), improved
collections and asset recycling initiatives. The issue of US$31.5m in equity
classified perpetual preference notes to BluePeak Capital and Ethos Private
Equity on the Orbit acquisition not only provided additional balance sheet
headroom but introduced new strategic funding partners to Grit.
Improved liquidity
Strong cash collections of 92.8% (FY21: 92.5%) and minimal rental deferrals
and tenant rental assistance supported improved liquidity positions.
Proceeds from the successful disposal of ABSA House in Ebene, Mauritius and
the part disposals of Orbit Complex and shares in LLR have been applied
towards the Company's revolving credit facilities and debt reduction. The
Group has continued to make further progress on its targeted US$160m asset
disposal strategy post financial year end.
Offsetting this improved liquidity position was cash utilised in phase one
GREA and APDM acquisitions of US$21.5m during the financial year, with a
further US$19.4m deployed for phase two in August 2022.
Stabilised operations
Grit's current portfolio consists of 59 assets located across 12 countries and
8 asset classes. The Group's portfolio has a 4.7% EPRA vacancy rate (FY2021:
5.3%) and a weighted average lease expiry (WALE) of 4.8 years (FY2021: 4.8
years). More than 85% (FY2021:90.9%) of income is underpinned by a wide range
of blue-chip multinational tenants across a variety of sectors and has a
weighted average contracted lease escalation of 5.4% per annum (FY2021: 3.8%
per annum). Most rents are collected monthly, of which 91.5% (FY2021: 92.7%)
are collected in USD, Euro or pegged currencies.
Operations have largely stabilised, with hospitality and retail, the two
sectors worst affected by Covid-19, showing signs of recovery. Property
valuations in these two sectors have also started improving, suggesting
valuation growth potential in the medium term.
Office, corporate accommodation, and light industrial assets
Grit's office and corporate accommodation assets continued to perform well
with little change in occupation levels and ongoing strong demand. Lack of
consistent internet connection and stable power supply have made the global
work-from-home phenomenon less relevant in Africa and resulted in limited
impact on our office tenants. Office sector valuations in Mozambique remained
resilient. The Ghanaian office market is showing signs of additional
re-leasing risks and tenant rotations, although Grit has successfully filled
vacated space through pleasing new leasing activity in the financial year.
In the corporate accommodation portfolio, the valuation of the VDE Housing
Estate in Mozambique stabilised at US$55.2m as at 30 June 2022 (FY2021:
US$57.7m), following significant devaluations in the preceding two financial
years. Grit continues to work with the new owner of Vale's mine in relation to
their corporate accommodation needs and expects valuation recovery upon
renewal of the current lease, which still has 1.9 years until expiry.
The continent remains undersupplied for good-quality industrial property.
Grit's asset values in the sector enjoyed strong year on year increase upon
the completion of the Bollore Warehouse upgrade and growth through
acquisition.
Grit concluded the acquisition of the Orbit Complex in Nairobi, Kenya in March
2022, which represented a key step forward in geographically and sectorally
balancing the portfolio into an undersupplied and futureproof asset class. The
strategic unlocking of a long-term partnership with the IFC also brings with
it further opportunities for collaboration as the Group continues to see
further investment opportunities in this sector. On 18 July 2022 Grit
introduced a 30% co-investor, Letlole La Rona ("LLR") to the Orbit asset for
an investment of US$7.23m. LLR's shareholders have approved a "Go-to-Africa"
strategy and have aligned with Grit as their recognised real estate specialist
partner, positioning them as preferred co-funder for further investment
opportunities in the sector.
We remain confident that the supply/demand imbalance for superior logistics
assets should lead to rental and capital value growth and we intend to
establish an industrial asset platform to capitalise on this in the near
future, providing co-investment opportunities to our real estate partners and
funders.
Retail assets
The occupancy rates of our retail assets have steadily improved since the
height of the pandemic at the end of 2021. Our strategy of focusing mainly on
smaller strip malls with non-discretionary food and service retailers
supported this positive trend. Vacancies in the retail sector have stabilised
with encouraging new tenant activity, including LC Waikiki in Zambia, Colin's
in Morocco and Foodplus by Chandarana in Kenya.
Vacancies at AnfaPlace Mall still account for a material portion of the
Group's vacancies. The timing of the redevelopment of the AnfaPlace Mall in
2019 left large parts of the mall vacant as the pandemic struck. Improved
tenant activity, and our ongoing leasing efforts that saw the introduction of
Colin's and ICHTAH, have resulted in reported vacancy rates falling from
19.26% in June 2021 to 18.1% as at 30 June 2022. Grit is currently completing
fit out for the Hudson Group which will further reduce vacancy in Q4 2022. The
Mall has enjoyed high and rising levels of footfall, significantly surpassing
both pre Covid-19 and pre redevelopment levels, which bodes well for the
outlook for the predominantly turnover linked leases currently in place. The
asset is still being targeted for disposal although formal negotiations with a
previously interested buyer have not materialised as expected.
Hospitality assets
Our hospitality portfolio comprises five hotels - four in Mauritius and one
recently refurbished scheme in Senegal. Mauritius' borders opened from 1
October 2021, with final travel restrictions being lifted in January 2022.
Hospitality operators are experiencing strong forward bookings at Grit owned
assets and evidence of robust tourist demand has provided strong support to
asset valuations, which rebounded in Euros by 5.3% in the financial year to 30
June 2022.
Grit's hotel tenants are up to date on their tenant obligations and The Lux
Group has repaid all amounts owing from 2021 deferred rentals. Beachcomber
resorts have fully settled their lease deferrals post year end (Grit had
previously granted a 48-month period within which to repay 2021 deferred
rents). Club Med Cap Skirring Resort opened on 5 December 2021 and are current
on all their rental obligations.
Update on acquisitions and pipeline
As elaborated in the Chairman's Statement, Grit has a clear strategy for
delivering attractive, secure and growing income and enhanced and sustainable
shareholder returns.
The targeted acquisition of a majority stake in Gateway Real Estate Africa
("GREA") - a company founded by Grit in 2018 - and operational control of its
asset manager, Africa Property Development Managers ("APDM") is pivotal to the
execution of this strategy, considering Grit's ambitions to diversify its
asset base into defensive, high-growth real estate sub-sectors including
consular accommodation, data centres, healthcare and industrial assets.
GREA is a private real estate development company specialising in the risk
mitigated turnkey construction of real estate in Africa. GREA develops assets
on the strength of USD-denominated or USD-linked long-term lease contracts
signed with multinational tenants, who are predominantly either current or
target clients of Grit. GREA's current approved project pipeline is fully
funded, and debt financing is secured and in place.
Acquiring control of GREA will provide Grit with control of its own
significant pipeline of accretive developments whilst creating positive and
sustainable impacts and value to the local people and communities we serve
across Africa.
We further anticipate that Grit will capitalise on new fee income streams
through APDM's substantial development and asset management fees and creates
synergies with Grit's existing asset management initiatives.
In late 2021 Grit indicated its intentions to raise US$215m of fresh equity,
of which US$80.6m was to be issued or allocated to sellers of stakes in GREA
and APDM, implying a targeted cash equity raise of US$134.4m. However, as a
result in large part of Omicron concerns at the time, the Group only issued
shares worth US$76m at an issue price of US$52cps in December 2021. Although
the equity raised was less than the targeted amount, we consider the process a
success notwithstanding the market conditions at that time.
Net proceeds from the capital raise were allocated to reducing overall levels
of debt, and the acquisition of a controlling interest in GREA was
restructured into three subsequent phases that provided a clear path to
achieving a controlling shareholding in GREA.
Phase I saw Grit driving further expansion in its core business via an
increased interest in GREA from 19.98% to 26.29% in addition to a newly
acquired 77.95% interest in APDM, the external asset manager to GREA. Through
the APDM investment Grit currently exercises operational control over all
material business activities of GREA (including development of properties, day
to day management of the completed assets, leasing activity and operational
cost management), governed by the terms of the asset management agreement and
the GREA Investment Charter. GREA management remuneration policies have also
been aligned with Grit's, and senior management of APDM have now been included
in the Grit long term incentive plan, which are specifically linked to value
creation at the Grit equity holder level.
Phase II of the GREA acquisition, concluded in August 2022, saw Grit acquiring
a further 8.72% interest in GREA for a cash consideration of US$19.4m,
increasing the Group's interest in GREA to 35.01%.
For Grit to obtain a majority at the GREA Board (and thereby control GREA),
any of the following events would need to occur in phase three:
• Grit exercises and concludes its option to acquire the remaining 13.61%
interest owned by Gateway Partners thereby acquiring all the rights of Gateway
Partners under the shareholder agreement; or
• Gateway Partners sell their remaining shares to a third party; or
• GREA makes changes to the shareholders agreement to remove certain protective
rights granted to the founding shareholders.
GREA has had a successful 12 months to 30 June 2022, and specifically
delivered several key projects that have supported both valuation growth and
the outlook for operating income growth in subsequent financial years. On
average GREA has developed at a development yield of over 10.5% and its
assets, on average, enjoy post completion yield compression to levels of
c.8.5%.
Summary of GREA developments and projects
Name Completion date Anchor tenant
OBO Ethiopia (embassy accommodation) November 2021 US embassy
ADC Nigeria (data centre) November 2021 Liquid Telecom
Adumah Place, Ghana (office) March 2022 Appolonia City
OBO Kenya (embassy accommodation) August 2022 US embassy
The Precinct, Mauritius (office) January 2023 Grit, Dentons, W17
Falcon Hospital, Curepipe, Mauritius January 2023 Artemis
Eneo, Tatu City, Ghana December 2023 CCI
Coromandel Hospital, Mauritius August 2024 Artemis
OBO Mali (embassy accommodation) Q3 2024 US embassy
Drive-in trading
Ahead of the debt facility maturity in August 2022, both Grit and the Public
Investment Corporation ("PIC") assessed a sustainable long-term restructure of
the DiT financing but with Grit's share price continuing to trade at a
significant discount to its Net Asset Value, such ability was deemed
limited.
Consequently, the parties have agreed a collapsing of both Grit's guarantee
exposure and the broader DiT structure which will involve Grit cash funding
its US$17.5m guarantee and both parties taking ownership of their respective
security resulting in no overhang of Grit ordinary shares on the market. Upon
final implementation, expected in December 2022, Grit's obligations under the
Guarantee Agreement to the PIC will be fulfilled and the Guarantee Agreement
terminated. Grit's has currently provided US$14.5m for the DiT facility
resolution as at 30 June 2022 balance sheet, being the net exposure less the
expected value of security to be received.
Debt levels and maturity
Debt restructuring remained a key focus for the financial year under review.
The Group's multi-bank approach continues to be an effective strategy
especially given the current global market uncertainty, and I am pleased to
report that both during the financial year and after balance sheet date, the
Group has successfully refinanced or extended almost all its debt, and has
moved weighted average debt expiry up to over 3.7 years as at end October
2022. The US$306m multi-jurisdictional sustainability linked syndicated debt
facility across Mozambique, Zambia, Kenya, Ghana and Senegal in October 2022
was a landmark transaction, the largest of its kind in the real estate sector
in Sub Sahara Africa (ex-South Africa), and positions the Group well amidst
current financial market volatility. Further details are contained in the
Chief Financial Officer's review.
ESG strategy
The Grit Group are people centred pioneers, proudly African and woman
led, powered by purposeful impact through authentic partnerships. We
recognise our role in transforming the design of buildings and developments
and creating smart business solutions for long-term sustainability,
prioritising impact driven Real Estate and creating value for local
communities. The Group's sustainability efforts focus on community impact, the
empowerment of women, energy efficiency and carbon reduction.
The Board remains committed to a five-year target of a 25% reduction in carbon
emissions and a 25% improvement in our building efficiency against the 2019
base figures. Grit continues to make significant progress and is ahead of plan
in the achievement of these targets and we are embarking on our journey to
define its pathway to net zero carbon based on global best practice.
In addition to environmental responsibility, the Group prides itself on
achieving more than 40% of women in leadership positions at Grit, more than
65% localised employees and significant support to the numerous communities
in the countries where we operate through extensive CSR and upliftment
programmes.
The Group integrated report provides more details on our strategy and
achievements against these targets.
Prospects
My team's focus will remain on impact investing, sustainably growing dividends
and enhancing capital growth for more attractive, sustainable returns. We will
continue to focus on key portfolio metrics such as lowering the LTV, vacancy
and cost factors whilst improving collections and further strengthening the
balance sheet and liquidity through focused asset recycling initiatives.
Considering the global rise in interest rates, the long-term sustainable debt
strategy and managing the weighted average cost of debt alongside achieving
our contractual lease escalations remains a key focus area, as is the
conclusion of the GREA acquisition which is imperative to maintaining the
positive momentum gathered during the year under review.
Bronwyn Knight
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S STATEMENT
Presentation of financial statements
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 notes 7 and 9. 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 Income statement to distribution reconciliation Audited Extracted from Associates Unaudited Unaudited Unaudited
Audited IFRS (30 June 2022) Grit Proportionate Income statement Unaudited Grit Economic Interest Income Statement Distributable
30 June 2022 30 June 2022 Non-Controlling Interest 30 June 22 30 June 2022
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross property income 50,766 16,613 67,379 (7,030) 60,349 57,592
Property operating expenses (8,656) (1,432) (10,088) 2,267 (7,821) (7,967)
Net property income 42,110 15,181 57,291 (4,763) 52,528 49,625
Other income 80 5,503 5,583 (577) 5,006 3,531
Administrative expenses (16,944) (1,896) (18,840) 992 (17,848) (12,275)
Net impairment charge on financial assets (4,217) (41) (4,258) 679 (3,579) -
Profit from operations 21,029 18,747 39,776 (3,669) 36,107 40,881
Fair value adjustment on investment properties 19,870 7,039 26,909 (4,632) 22,277 (297)
Fair value adjustment on other financial liability (11,315) (1,371) (12,686) - (12,686) -
Fair value adjustment on other financial asset (371) (407) (778) - (778) -
Fair value adjustment on derivative financial instruments 4,501 - 4,501 4,501 -
Impairment of loans and other receivables (3,101) (980) (4,081) 1,494 (2,587) -
Share-based payment (1,238) - (1,238) - (1,238) -
Loss on disposal of investment in subsidiary (2,051) - (2,051) - (2,051) -
Loss on disposal of interest in associate (573) (2) (575) - (575) -
Share of profits from associates and joint ventures 20,611 (20,611) - - - -
Foreign currency (losses) / gains (5,412) 774 (4,638) 387 (4,251) -
Profit before interest and taxation 41,950 3,189 45,139 (6,420) 38,719 40,584
Interest income 1,935 3,415 5,350 12 5,362 5,362
Finance charges (26,151) (6,082) (32,233) 4,321 (27,912) (25,473)
Profit before taxation 17,734 522 18,256 (2,087) 16,169 20,473
Taxation (6,621) (522) (7,143) 1,417 (5,726) (2,294)
Profit after taxation 11,113 - 11,113 (670) 10,443 18,179
VAT 1,965
Distributable earnings 20,144
Financial and Portfolio summary
The Grit Proportionate Income Statement is further split to produce a Grit
Property Portfolio Revenue(2), Operating expenses(2) and NOI(2) analysis by
sector. Grit's Property Portfolio revenue has risen 3.3% from prior year on
annual contractual lease escalations and asset acquisitions annualising in the
period. Net operating income has increased by 3.5% over the twelve-month
period to 30 June 2022.
Unaudited
Sector Revenue FY2022 Revenue FY2021 Change Opex FY2022 Opex FY2021 Change NOI FY2022 NOI FY2021 Change Rental Collection FY2022
US$'000 US$'000 % US$'000 US$'000 % US$'000 US$'000 % %
Retail 17,789 15,770 12.8% (6,358) (6,341) (0.27%) 11,431 9,429 21.2% 88.1%
Hospitality 12,435 12,728 (2.3%) - - - 12,435 12,728 (2.3%) 90.6%
Office 16,540 18,408 (10.2%) (1,913) (1,835) (4.3%) 14,627 16,573 (11.7%) 101.1%
Industrial 3,797 2,174 74.7% (105) (74) (41.9%) 3,692 2,100 75.9% 66.7%
Corp Accommodation 12,277 13,117 (6.4%) (2,002) (1,978) (1.2%) 10,275 11,139 (7.8%) 97.6%
Data Centre 364 - 100% (40) - - 324 - - 100%
LLR portfolio 2,788 2,811 (0.8%) (281) (335) 16.1% 2,507 2,476 1.3% n/a
Corporate 1,389 224 520.0% 611 (675) 190.5% 2,000 649 208.2% n/a
TOTAL 67,379 65,232 3.3% (10,088) (9,888) -2.0% 57,291 55,344 3.5% 92.8%
Subsidiaries 50,766 49,217 3.2% (8,656) (8,543) -1.3% 42,110 40,674 3.5%
Associates 16,613 16,015 3.7% (1,432) (1,345) -6.5% 15,181 14,670 3.5%
Notes
(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) Grit adjusted property portfolio Revenue, Operating expenses and Net Operating
Income are unaudited alternative performance measurements
The retail sector benefitted from strong leasing activity and recovery in
performance in Mukuba and Kafubu Malls (Zambia), which are now largely fully
let, while Cosmopolitan Mall (Lusaka) has also seen good leasing activity and
reduced vacancies. Buffalo Mall introduced Chandarana as a new significant
anchor tenant. Further improved leasing activity is expected in the new
financial year. A cautious recovery off a low base in AnfaPlace Mall has
become evident over the recent months.
Hospitality sector tenants are all open and operational and the Lux Group has
also repaid all amounts owing from 2021 deferred rentals. NOI has increased by
4.1% in functional currency but EUR:USD devaluation for the period has offset
these positive trends and resulted in reported NOI reducing by 2.3% in the
period.
Office sector assets remained resilient in Mozambique while the Ghanaian
office market is showing signs of additional re-leasing risks and tenant
rotations. Revenue and NOI decline in the financial year relates to a
non-repeating tenant exit fee in 2021 and increased Covid-19 re-opening
operational expenditure costs in the Ghanaian portfolio.
The Light Industrial sector enjoyed strong year on year increase upon the
completion of the Bollore Warehouse upgrade and return to income production,
while the acquisition of the Orbit Complex in Nairobi, Kenya in March 2022
will continue to support revenue and net operating growth into the new
financial year.
Corporate accommodation assets revenue decreased 6.4%, attributable to the
amortisation of the lease premiums associated with the Tsebo lease, which are
non-cash items. The sector experienced increased operational costs in 2022 as
assets required Covid-19 related delayed repairs and maintenance in the
current year.
Corporate sector predominantly relates to the acquired income streams in APDM,
effective from March 2022. This is expected to grow in subsequent years as the
full year impact of the acquisition is reflected and the anticipated further
growth in fee income is realised.
Cost control
Ongoing administrative costs increased 7.4% in the year as salary reduction
applied during the Covid-19 period reversed, current year remuneration
increases were implemented, and normalised travel costs resumed.
Administrative costs as at 30 June 2022 as at 30 June 2021 Movement Movement
US$'000 US$'000 US$'000 %
Total Administrative costs 16,944 13,867 3,077 21.2%
Less: Transaction costs 2,071 79 1,992 2521.5%
Ongoing administrative expenses 14,873 13,788 1,085 7.9%
Portfolio performance
Income producing assets grew in the period under review largely as a result of
additions in the light industrial sector within Investment properties, being
the acquisition of Orbit Africa and the completion of the Bollore Warehouse
upgrade. Increases in associates largely related to the increased ownership in
GREA (from 19.98% to 26.29%) and the acquisition of a 77.95% interest in APDM.
The total movement in income producing assets includes the impact of the
foreign currency revaluations of assets not denominated in US Dollars
amounting to a total of US$30.9m. The EUR depreciation impact amounted to
US$20.3m and the Moroccan Dirham (a currency linked to the Euro) amounting to
US$9.4m.
Composition of income producing assets 2022 2021
US$'m US$'m
Investment properties 604.5 549.5
Investment property included within 'Investment in associates' 203.8 193.8
Properties under development within 'Investment in associates' 12.6
808.3 755.9
Deposits paid on investment properties 8.2 5.7
Other investments, Property, plant & equipment, Intangibles & related 40.2 40.3
party loans
Total income producing assets 856.7 801.9
Property valuations
Reported property values increased by 6.9% driven by investment and
acquisitions and strong functional currency portfolio performance. On a like
for like basis (pre acquisitions), property values increased 4.1% in
functional currencies. However, movement in EUR:USD exchange rates resulted in
like for like valuation declines in the reported USD values by 0.3%. Further
detail of valuations per property are provided in note 2 of the financial
statements.
Sector Opening Property Value Forex movement Development assets completed in the year Additions Change in ownership Other Fair value movements Closing Property Value Total Valuation Movement
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 %
Retail 191,402 (6,706) - 2,698 1,049 1,001 7,973 197,417 3.2%
Hospitality 174,420 (20,247) - 99 - 1,120 9,211 164,603 (5.6%)
Office 191,472 (893) 476 337 (2,748) 578 6,601 195,823 2.1%
Industrial 36,232 - - 43,675 - 373 134 80,414 121.9%
Data Centres - - 5,348 - 1,108 15 368 6,839 100.0%
Corporate Accommodation 127,899 - - 259 - 28 802 128,988 0.9%
LLR portfolio 26,999 (6,132) - 3,563 (4,089) (59) 664 20,946 (22.4%)
GREA under construction 7,450 - (5,824) 7,992 2,141 - 1,455 13,214 77.4%
Total 755,874 (33,978) - 58,623 (2,539) 3,056 27,208 808,244 6.9%
Subsidiaries 549,491 (19,433) - 44,996 6,790 2,462 20,168 604,474 10.0%
Associates 206,383 (14,545) - 13,627 (9,329) 594 7,040 203,770 (1.3%)
Interest bearing borrowings movements
As at 30 June 2022, the Group had a total of US$425.4m in interest bearing
borrowings outstanding. In the period under review, the Group added US$16.1m
from the IFC and US$4.7m from private equity, being debt funding instruments
related to the Orbit acquisition and US$16.4m of bridge funding (which was
utilised to settle a portion of the Bank of China loan immediately following
year end). The Group had reduced absolute levels of interest bearing
borrowings as at 31 December 2021 by US$47.7m to US$362.9m (30 June 2021:
US$410.6m) but has subsequently part drawn these facilities to fund the
acquisitions of APDM, GREA, CCI land and capital expenditure related to the
Bollore redevelopment. The sale of ABSA house, and associated reduction of its
interest bearing borrowings, has been offset by the impacts of Capital Place
office building becoming a subsidiary (and therefore consolidated) in the
period under review.
Movement in reported interest bearing borrowings for the year (subsidiaries) as at 30 June 2022 as at 30 June 2021
US$'000 US$'000
Balance at the beginning of the year 410,588 392,999
Proceeds of interest bearing-borrowings 58,513 43,562
Overdraft converted to term loan - 7,203
Loan reduced through disposal of subsidiary (6,624) -
Loan acquired through asset acquisition 6,011 -
Loan issue costs incurred (4,386) (1,520)
Amortisation of loan issue costs 2,765 2,974
Foreign currency translation differences (14,836) 7,548
Interest accrued 751 (1,173)
Debt settled during the year (27,716) (41,005)
As at 30 June 425,066 410,588
For more meaningful analysis, a further breakdown is provided below to better
reflect debt related to non-consolidated associates. At 30 June 2022, the
Group had a total of US$471.5m in interest bearing borrowings outstanding,
comprised of US$425.4m in subsidiaries (as reported in IFRS balance sheet and
discussed above) and US$46.1m proportionately consolidated and held within its
associates.
Debt in Subsidiaries Debt in associates Total Debt in Subsidiaries Debt in associates Total
USD'000 USD'000 USD'000 % USD'000 USD'000 USD'000 %
Standard Bank Group 183,496 6,516 190,012 40.30% 170,676 - 170,676 37.5%
Bank of China 76,405 - 76,405 16.21% 84,960 - 84,960 18.6%
State Bank of Mauritius 57,659 16,375 74,034 15.70% 62,480 8,830 61,670 15.7%
Investec Group 36,129 - 36,129 7.66% 47,023 8,830 55,853 12.3%
Absa Group 7,913 3,057 10,970 2.33% 16,178 7,500 23,679 5.2%
ABC Banking Corporation 7,121 - 7,121 1.51% 14,918 - 14,918 3.3%
Nedbank CIB 21,820 286 22,106 4.69% 7,000 3,100 10,100 2.2%
Mauritius Commercial Bank - 7,774 7,774 1.65% - 8,830 8,830 1.9%
Maubank 3,345 - 3,345 0.71% 6,470 - 6,469 1.4%
First National Bank - 9,013 9,013 1.91% - 5,294 5,294 1.2%
Housing Finance Corporation - 2,316 2,316 0.49% - 2,209 2,209 0.5%
Bank of Gaborone - 727 727 0.15% - 1,077 1,077 0.2%
NCBA Bank Kenya 10,700 - 10,700 2.27% - - - 0.0%
Private Equity 4,725 - 4,725 1.00% - - - 0.0%
International Finance Corporation 16,100 - 16,100 3.41% - - - -
TOTAL BANK DEBT 425,413 46,064 471,477 100.0% 410,065 45,670 455,735 100.0%
Interest accrued 4,927 - - - 4,176 - - -
Unamortised loan issue costs (5,274) - - - (3,653) - - -
As at 30 June 425,066 - - - 410,588 - - -
Capital commitments
Upcoming capital commitments in the current financial year include:
• Club Med Senegal redevelopment: EUR25m over the next 28 months.
• Orbit Africa phase 2 development: expected to be US$16m (inclusive of VAT) to
be completed by April 2024.
• Drive in Trading guarantee settlement: US$17.5m (pending approvals).
• 8.17% increased interest in Gateway Real Estate Africa Ltd acquired in August
2022 for US$19.4m
Net Asset Value and EPRA Net Realisable Value
Further reconciliations and details of EPRA earnings per share and other
metrics are provided in notes 7 and 9.
Net asset value evolution Unaudited Unaudited
US$'000 US$'cps
IFRS NAV as reported 270,853 84.4
Derivative financial instruments 2,628 0.8
Deferred Tax on Properties 55,377 17.2
EPRA NRV at 30 Jun 2021 328,858 102.4
Dividend paid FY 2022
Portfolio valuations 27,206 8.5
Other fair value adjustments (8,556) (2.7)
Other non-Cash items (including Non-controlling interest) (33,154) (10.3)
Dividend attributable to NCI (1,165) (0.4)
Cash profits 18,238 5.7
Movement through FCTR (6,686) (2.1)
Dividend paid (7,903) (2.5)
Coupon through retained earnings (5,914) (1.8)
EPRA NRV Before Dilution 310,924 96.8
Issue of shares 68,194 (17.9)
Effect of treasury shares 2,194 0.5
EPRA NRV at 30 Jun 2022 381,312 79.4
Deferred Tax on Properties (46,873) (9.7)
Derivatives 1,862 0.4
IFRS NRV at 30 Jun 2022 336,862 69.7
Going Concern
The Directors' assessment of the Group's and Company's ability to continue as
a going concern is required when approving the financial statements. As such
the Directors have modelled a 'base case' and a 'severe but plausible
downside' of the Group's and Company's expected liquidity and covenant
position for a going concern assessment period through to March 2024, a period
of at least 12 months following the approval of these accounts.
The process involved a thorough review of the Group's and Company's risk
register, an analysis of the trading information both pre and post year end,
extensive discussions with the independent property valuers, a review of the
operational indicators within the Group and economic data available in the
countries of operations. All of this has been done in the context of the
Covid-19 pandemic recovery, recent global markets instability, previous
experience of the African real estate sector and best estimates of
expectations in the future.
Base Case model
The base case reflects the Directors' best expectations of the position going
forward. It was modelled on board approved forecasts over the relevant period.
The base case scenario includes the Group's and Company's financial
projections and the following key assumptions:
1. Modelling of the Company's contractual lease contracts, which at 30 June 2021
had a weighted average lease expiry of 4.8 years, and associated contractual
lease escalations which equate to 5.4% per annum on a weighted average basis
across the portfolio. The Group's revenue was adjusted for tenant support
already provided and expectation for potential further concessions in specific
sectors;
2. Expected take up of vacant space through the ordinary letting activities of
the Group and current leasing negotiations;
3. Debt facilities falling due during the period being refinanced in the ordinary
course of business, specifically the US$306m sustainability linked syndicated
loan facility and the extension of the Investec Bank facility relating to
AnfaPlace Mall (both concluded prior to signature date);
4. A further US$100m of notional interest rate hedges by way of fixed for
floating interest rate swaps and interest rate collar and caps. Fixed for
floating interest swaps amounts to a notional value of US$25m, swapping US$
SOFR floating rates for fixed Euro rates of between 2.84% and 3.04% over a
period of 18 to 24 months. Interest rate collar and cap transactions for a
notional value of US$75m places a cap of 3.5% and collar of 2.2% to US$ SOFR
floating rates over 3 equal tranches for period of 2, 3 and 4 years. The above
hedges are settled quarterly in arrear (with the above being concluded prior
to signature date);
5. Base interest rates increases up to 2.06% (in the case of US Dollar base
rates) and 3.09% (in the case of Euro base rates) from June 2022;
6. Depreciation of the various currencies versus the USD, most notably the Euro
depreciating by up to 9% over the period;
7. Contractual maturity of debt facilities, which at 30 June 2022 had a weighted
average maturity profile of 1.8 years and associated weighted average cost of
debt of 7.1%, adjusted for committed refinance transactions per 3 above;
8. Drive in Trading guarantee assumed to be paid up in December 2022, followed by
the security being realised; and
9. As a result of removal of the material uncertainty clauses included in the
independent valuers reports over the Covid-19 period, it was deemed
appropriate to remove any valuation risk premiums to the portfolio, with the
exception of the Retail sector, where the Directors' maintained the discount
and exit capitalisation rates risk premiums until June 2023.
Severe but plausible downside model
A summary of the key assumptions over lays to the Base Case made in the severe
but plausible scenario are as follows:
1. Debt facilities that have not been refinanced by signature date are assumed to
be settled at maturity date over the assessment period;
2. Base interest rates increases up to 4.26% (in the case of US Dollar base
rates) and 4.55% (in the case of Euro base rates) from June 2022;
3. Depreciation of the various currencies versus the USD, most notably the:
a. Euro depreciating by up to 15% over the period (net income currency);
b. Moroccan Dirham depreciating by up to 15% over the period (net income
currency);
c. Zambian Kwacha depreciating by up to 9% over the period (net income currency);
and
d. Mauritian Rupees appreciating by up to 2% over the period (net cost currency).
4. Increased inflation rates across the portfolio with the most material rates
applied being as follows:
a. US CPI: 8.5% for the balance of 2022, 5.25% for 2023 and 3.25% for 2024;
b. Euro harmonised CPI: 7.0% for the balance of 2022, 6.0% for 2023 and 3.15% for
2024;
c. Mauritian inflation: 7.5% for the balance of 2022, 6.5% for 2023 and 3.5% for
2024;
d. Zambian inflation: 13.7% for the balance of 2022, 6.7% for 2023 and 5.6% for
2024;
5. Receivables amounting to US$8.5m not being recovered over the assessment
period;
6. No dividends assumed on ordinary shares over the assessment period (other than
those declared to date); and
7. The Retail sector valuation discount and exit capitalisation rates risk
premiums where extended to June 2024.
Under both the base case and the severe but plausible scenario, along with
certain remedies within management's control, which include actions like cuts
in dividends, the Company is able to meet its liquidity and covenant positions
through to March 2024. The Board has therefore concluded that it is
appropriate to prepare the financial statements on the going concern basis.
Leon van de Moortele
Chief Financial Officer
28 October 2022
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 25 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 categories and existing mitigating
actions and are satisfied that they remain appropriate to manage the relevant
risks.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing financial statements for each
financial year which give a true and fair view, in accordance with applicable
Guernsey law and International Financial Reporting Standards, of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing those financial statements, the directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with
The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
So far as the directors are aware, there is no relevant audit information of
which the Company's auditors are unaware, and each director has taken all the
steps that he or she ought to have taken as a director in order to make
himself or herself aware of any relevant audit information and to establish
that the Company's auditors are aware of that information.
Directors' confirmations
The Directors consider that the Integrated Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position, performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in pages 80 to 83
confirm that, to the best of their knowledge:
• the Group and Company financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board; the Financial Pronouncements as
issued by Financial Reporting Standards Council, the LSE and SEM Listings
Requirements and the requirements of the Companies (Guernsey) Law 2008, give a
true and fair view of the assets, liabilities, financial position and loss of
the Group and profit of the Company; and
• the Strategic report includes a fair review of the development and performance
of the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that it faces.
The financial statements on pages 138 to 239 were approved by the Board of
Directors and signed on its behalf by:
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF INCOME
Audited for the year ended Audited for the year ended
30 June 2022 30 June 2021
Notes US$'000 US$'000
Gross property income 50,766 49,217
Property operating expenses (8,656) (8,543)
Net property income 42,110 40,674
Other income 80 169
Administrative expenses (16,944) (13,867)
Net impairment charge on financial assets (4,217) (7,119)
Profit from operations 21,029 19,857
Fair value adjustment on investment properties 20,167 (51,441)
Contractual receipts from vendors of investment properties 2 (297) 144
Total fair value adjustment on investment properties 19,870 (51,297)
Corporate restructure costs - (3,467)
Fair value adjustment on other financial liability (11,315) (5,230)
Fair value adjustment on other financial asset (371) (1,106)
Fair value adjustment on derivative financial instruments 4,501 1,378
Share-based payment expense (1,238) (127)
Share of profits from associates and joint ventures 3 20,611 583
Loss on disposal of investment in subsidiary (2,051) -
Loss on disposal of interest in associate (573) -
Impairment of loans and other receivables (3,101) (1,113)
Foreign currency losses (5,412) 2,343
Profit/(Loss) before interest and taxation 41,950 (38,179)
Interest income 1,935 2,690
Finance costs (26,151) (25,442)
Profit/(Loss) for the year before taxation 17,734 (60,931)
Taxation (6,621) (445)
Profit/(Loss) for the year after taxation 11,113 (61,376)
Loss attributable to:
Equity shareholders 10,443 (51,927)
Non-controlling interests 670 (9,449)
11,113 (61,376)
Basic and diluted earnings/(losses) per ordinary share (cents) 6 2.62 (16.54)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited for the year ended Audited for the year ended
30 June 2022 30 June 2021
US$'000 US$'000
Profit/(Loss) for the year 11,113 (61,376)
Retirement benefit obligation 154 42
(Loss)/Profit on translation of functional currency (9,618) 7,005
Other comprehensive (expense)/income that may be reclassified to profit or (9,464) 7,047
loss
Total comprehensive income/(expense) relating to the year 1,649 (54,329)
Attributable to:
Equity shareholders 2,587 (46,511)
Non-controlling interests (938) (7,818)
1,649 (54,329)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited as at Audited as at
30 June 2022 30 June 2021
Notes US$'000 US$'000
Assets
Non-current assets
Investment properties 2 604,474 549,491
Deposits paid on investment properties 2 8,309 5,698
Property, plant and equipment 2,087 2,448
Intangible assets 670 480
Investments in associates and joint ventures 3 206,997 167,492
Other investments 1 1
Related party loans receivable 515 -
Trade and other receivables 4,615 2,166
Deferred tax 12,544 20,067
Total non-current assets 840,212 747,843
Current assets
Trade and other receivables 29,055 18,946
Current tax receivable 1,881 1,440
Related party loans receivable 298 197
Other loans receivable 37,908 37,303
Derivative financial instruments 1,862 87
Cash and cash equivalents 26,002 4,890
Total current assets 97,006 62,863
Total assets 937,218 810,706
Equity and liabilities
Total equity attributable to ordinary shareholders
Ordinary share capital 535,694 463,842
Treasury shares reserve (16,212) (18,406)
Foreign currency translation reserve (5,191) 1,495
Accumulated losses (177,990) (176,073)
Equity attributable to owners of the Company 336,301 270,858
Preference share capital 29,558 25,481
Perpetual preference notes 25,741 -
Non-Controlling interests (22,224) (17,935)
Total equity 369,376 278,404
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840
Proportional shareholder loans 26,716 17,582
Interest-bearing borrowings 4 242,091 215,565
Lease liabilities 545 750
Related party loans payable 1,205 648
Deferred tax liability 49,592 51,720
Total non-current liabilities 332,989 299,105
Current liabilities
Interest-bearing borrowings 4 182,975 195,023
Lease liabilities 864 205
Trade and other payables 31,411 24,843
Current tax payable 763 1,438
Derivative financial instruments - 2,714
Related party loans payable 1 91
Other financial liabilities 16,983 6,307
Bank overdrafts 1,856 2,576
Total current liabilities 234,853 233,197
Total liabilities 567,842 532,302
Total equity and liabilities 937,218 810,706
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited as at Audited as at
30 June 2022 30 June 2021
Notes US$'000 US$'000
Cash generated from operations 11,293 19,885
Acquisition of, and additions to investment properties (38,996) (10,068)
Deposits paid on investment properties (2,500) (550)
Additions to property, plant and equipment (117) (92)
Additions to intangible assets - (88)
Acquisition of interests in associates and joint ventures (39,613) (8,493)
Proceeds from disposal of interest in associates and joint ventures 3,347 -
Acquisition of subsidiary, net of cash acquired 1,121 -
Dividends and interest received from associates and joint ventures 3,985 6,361
Proportional shareholder loans received from associates 10,031 1,560
Interest received 668 1,488
Proceeds from partial disposal of investment in subsidiaries - 5,358
Proceeds from disposal of property, plant and equipment 49 122
Related party loans repaid (765) (61)
Settlement of other financial liabilities (639) -
Related party loans payables received/(repaid) 467 (4,857)
Proportional loans repaid (1,967) -
Deposits received 6,500 -
Proceeds from proportional shareholder loans 5,576 7,726
Other loans repaid - 64
Net cash utilised in investing activities (52,853) (1,530)
Proceeds from the issue of ordinary shares 54,488 9,810
Proceeds from the issue of perpetual preference note 31,500 -
Perpetual preference note issue expenses (1,606) -
Perpetual note dividend paid (1,265)
Share issue expenses (7,943) (113)
Dividends paid to non-controlling shareholders - (419)
Ordinary dividends paid (10,535) (4,778)
Proceeds from interest-bearing borrowings 53,788 50,765
Settlement of interest-bearing borrowings (27,716) (41,005)
Finance costs (26,497) (23,906)
Payments of leases (429) (274)
Net cash generated from / (utilised in) financing activities 63,785 (9,920)
Net movement in cash and cash equivalents 22,225 8,435
Cash at the beginning of the year 2,314 (5,629)
Effect of foreign exchange rates (393) (492)
Total cash and cash equivalents (including overdrafts) at the end of the year 24,146 2,314
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary Share capital Treasury shares reserve Foreign currency translation reserve Antecedent dividend reserve Accumulated losses Preference share capital Non-controlling interest Total
Perpetual preference notes equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 July 2020 454,145 (18,406) (4,072) - (133,784) - - (614) 297,269
Loss for the year - - - - (51,927) - - (9,449) (61,376)
Other comprehensive income for the year - - 5,374 - 42 - - 1,631 7,047
Total comprehensive expense - - 5,374 - (51,885) - - (7,818) (54,329)
Share based payments - - - - 127 - - - 127
Ordinary dividends declared - - - - (4,780) - - - (4,780)
Ordinary shares issued 9,810 - - - - - - - 9,810
Preference shares issued - - - - - 25,481 - - 25,481
Share issue expenses (113) - - - - - - - (113)
Transaction with non-controlling interests without change in control - - 193 - 14,249 - - (9,084) 5,358
Dividends paid to non-controlling shareholders - - - - - - - (419) (419)
Balance as at 30 June 2021 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Balance as at 1 July 2021 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Profit for the year - - - - 10,443 - - 670 11,113
Other comprehensive (expense) / income for the year - - (8,010) - 154 - - (1,608) (9,464)
Total comprehensive income / (expense) - - (8,010) - 11,597 - - (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 535,694 (16,212) (5,191) - (177,990) 29,558 25,741 (22,224) 369,376
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these separate
and consolidated financial statements are set out below. Grit was incorporated
in Mauritius and redomiciled to Guernsey as a PLC, while the place of
effective management remains in Mauritius.
1.1 Basis of preparation
The Group and Company financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board; the Financial Pronouncements as
issued by Financial Reporting Standards Council, the LSE and SEM Listings
Requirements and the requirements of the Companies (Guernsey) Law 2008. This
approach is consistent to prior years and no applicable new standards or
amendments were applied to the Company during the current financial year. The
financial statements have been prepared on the going-concern basis and were
approved for issue by the board on 28 October 2022.
Going Concern
The Directors' assessment of the Group's and Company's ability to continue as
a going concern is required when approving the financial statements. As such
the Directors have modelled a 'base case' and a 'severe but plausible
downside' of the Group's and Company's expected liquidity and covenant
position for a going concern assessment period through to March 2024, a period
of at least 12 months following the approval of these accounts.
The process involved a thorough review of the Group's and Company's risk
register, an analysis of the trading information both pre and post year end,
extensive discussions with the independent property valuers, a review of the
operational indicators within the Group and economic data available in the
countries of operations. All of this has been done in the context of the
Covid-19 pandemic recovery, recent global markets instability, previous
experience of the African real estate sector and best estimates of
expectations in the future.
Base Case model
The base case reflects the Directors' best expectations of the position going
forward. It was modelled on board approved forecasts over the relevant period.
The base case scenario includes the Group's and Company's financial
projections and the following key assumptions:
1. Modelling of the Company's contractual lease contracts, which at 30 June 2021
had a weighted average lease expiry of 4.8 years, and associated contractual
lease escalations which equate to 5.4% per annum on a weighted average basis
across the portfolio. The Group's revenue was adjusted for tenant support
already provided and expectation for potential further concessions in specific
sectors;
2. Expected take up of vacant space through the ordinary letting activities of
the Group and current leasing negotiations;
3. Debt facilities falling due during the period being refinanced in the ordinary
course of business, specifically the US$306m sustainability linked syndicated
loan facility and the extension of the Investec Bank facility relating to
AnfaPlace Mall (both concluded prior to signature date);
4. A further US$100m of notional interest rate hedges by way of fixed for
floating interest rate swaps and interest rate collar and caps. Fixed for
floating interest swaps amounts to a notional value of US$25m, swapping US$
SOFR floating rates for fixed Euro rates of between 2.84% and 3.04% over a
period of 18 to 24 months. Interest rate collar and cap transactions for a
notional value of US$75m places a cap of 3.5% and collar of 2.2% to US$ SOFR
floating rates over 3 equal tranches for period of 2, 3 and 4 years. The above
hedges are settled quarterly in arrear (with the above being concluded prior
to signature date);
5. Base interest rates increases up to 2.06% (in the case of US Dollar base
rates) and 3.09% (in the case of Euro base rates) from June 2022;
6. Depreciation of the various currencies versus the USD, most notably the Euro
depreciating by up to 9% over the period;
7. Contractual maturity of debt facilities, which at 30 June 2022 had a weighted
average maturity profile of 1.8 years and associated weighted average cost of
debt of 7.1%, adjusted for committed refinance transactions per 3 above;
8. Drive in Trading guarantee assumed to be paid up in December 2022, followed by
the security being realised; and
9. As a result of removal of the material uncertainty clauses included in the
independent valuers reports over the Covid-19 period, it was deemed
appropriate to remove any valuation risk premiums to the portfolio, with the
exception of the Retail sector, where the Directors' maintained the discount
and exit capitalisation rates risk premiums until June 2023.
Severe but plausible downside model
A summary of the key assumptions over lays to the Base Case made in the severe
but plausible scenario are as follows:
1. Debt facilities that have not been refinanced by signature date are assumed to
be settled at maturity date over the assessment period;
2. Base interest rates increases up to 4.26% (in the case of US Dollar base
rates) and 4.55% (in the case of Euro base rates) from June 2022;
3. Depreciation of the various currencies versus the USD, most notably the:
a. Euro depreciating by up to 15% over the period (net income currency);
b. Moroccan Dirham depreciating by up to 15% over the period (net income
currency);
c. Zambian Kwacha depreciating by up to 9% over the period (net income currency);
and
d. Mauritian Rupees appreciating by up to 2% over the period (net cost currency).
4. Increased inflation rates across the portfolio with the most material rates
applied being as follows:
a. US CPI: 8.5% for the balance of 2022, 5.25% for 2023 and 3.25% for 2024;
b. Euro harmonised CPI: 7.0% for the balance of 2022, 6.0% for 2023 and 3.15% for
2024;
c. Mauritian inflation: 7.5% for the balance of 2022, 6.5% for 2023 and 3.5% for
2024;
d. Zambian inflation: 13.7% for the balance of 2022, 6.7% for 2023 and 5.6% for
2024;
5. Receivables amounting to US$8.5m not being recovered over the assessment
period;
6. No dividends assumed on ordinary shares over the assessment period (other than
those declared to date); and
7. The Retail sector valuation discount and exit capitalisation rates risk
premiums where extended to June 2024.
Under both the base case and the severe but plausible scenario, along with
certain remedies within management's control, which include actions like cuts
in dividends, the Company is able to meet its liquidity and covenant positions
through to March 2024. The Board has therefore concluded that it is
appropriate to prepare the financial statements on the going concern basis.
Functional and presentation currency
The consolidated financial statements are prepared and are presented in United
States Dollars (US$) which is also the functional and presentational currency
of the company. Amounts are rounded to the nearest thousand, unless otherwise
stated. Some of the underlying subsidiaries and associates have different
functional currencies other than the US$ which is predominantly determined in
the country 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,
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. Alternative Performance Measures are not a
substitute for, nor necessarily superior to, statutory measures.
1.2 Critical Judgements and estimates
The preparation of financial statements in conformity with IFRS requires the
use of accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies. The
estimates and assumptions relating to the fair value of investment properties
in particular, have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities in the subsequent financial year.
Fair value adjustments do not affect the determination of distributable
earnings but have an effect on the net asset value per share presented on the
statement of financial position to the extent that such adjustments are made
to the carrying values of assets and liabilities.
Judgements
Amongst others, some principal areas where such judgements have been applied
are:
African Property Development Managers Ltd ("APDM)" as a joint venture
The Group has acquired an equity interests of 77.95% in APDM. The Group has
concluded that even though it holds a majority shareholding in APDM, it does
not have control of the latter because it is currently not satisfying the
power criteria of control. The design of APDM 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 favour of the decision. Currently the Group has the
right to appoint two members to the investment committee. The Public
Investment Corporation SOC holds 21.05% of APDM 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 The Public Investment
Corporation SOC will have to unanimously agree to any decision before those
are formally enacted by management. Therefore neither the Group nor The
Public Investment Corporation SOC on their own control APDM. Because of the
unanimous consent required by both the significant shareholders of APDM, the
Group concluded that it has joint control of APDM. Therefore the investment in
APDM has been classified as an investment in joint venture.
Gateway Real Estate Africa Ltd ("GREA") as an associate
The Group has considered GREA to be its associate for the purpose of its
consolidated financial statements as the Group has significant influence over
the latter. During the financial year, the Group has increased its stake in
GREA by acquiring an additional 6.31% equity holding which brings the total
shareholding of Grit in GREA to 26.29%. However, the increase in shareholding
has not changed the entitlement of Grit with regards to the number of
directors that Grit can appoint on GREA's board of directors. The design of
GREA is such that its relevant activities are directed by the board of
directors. The Group has the right to appoint one director on GREA's board
which is not enough to give it control but is enough to give Grit the ability
to participate in the financial and operating policy decisions of GREA.
Estimates
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
relevant reporting date. Further details of the valuation method are included
in note 2.
2. INVESTMENT PROPERTIES
The following movements in the portfolio occurred in the year
1. Acquisition through subsidiary other than business combination - The Group
acquired Stellar Warehousing and Logistics Limited (Orbit) during the year.
The acquisition was accounted for as an asset acquisition.
2 Transfer from associate on step up to subsidiary - The Group acquired an
additional 20% equity shareholding in Capital Place Limited during the year
which has now stepped up from an associate to a subsidiary.
3 Disposal of subsidiary - The Group fully disposed of its equity shareholding
in BH Property Investments Limited (ABSA House).
4 Lease of land - During the year, the Group through its newly incorporated
indirect subsidiary Ubertas Tatu Investments Sez Limited has entered into two
land lease agreements with Tatu City Limited for two parcels of land (Copia
land) situated in the West of Ruiru Municipality in the Thika Area of the
Republic of Kenya for a total agreed lease payment of US$ 5.8m. The land
leases will originally be for a period of twenty years with an option to
extend to 99 years subject to the options being exercised and further a total
payment of US$0.8m being made. The Group believes that the exercise of the
options are virtually certain and therefore have considered the extended
period of 99 years to be the lease term. Further the US$0.8m has been included
in the lease payment in determining the lease liability and eventually the
right of use of land carrying amount. The right of use of land is currently
being held for capital appreciation and therefore has been classified as
investment property.
Summary of valuations by reporting date Most recent independent valuation date Valuer (for the most recent valuation) Sector Country Audited Audited
as at as at
30 June 2022 30 June 2021
US$'000 US$'000
Commodity House Phase I 30-Jun-22 REC Office Mozambique 52,346 47,214
Commodity House Phase II 30-Jun-22 REC Office Mozambique 19,264 19,047
Hollard Building 30-Jun-22 REC Office Mozambique 21,012 20,816
Vodacom Building 30-Jun-22 REC Office Mozambique 51,906 49,624
Zimpeto Square 30-Jun-22 REC Retail Mozambique 3,395 4,587
Bollore Warehouse 30-Jun-22 REC Light industrial Mozambique 10,410 9,012
ABSA House 30-Jun-22 Knight Frank Office Mauritius - 13,109
Anfa Place Mall 30-Jun-22 Knight Frank Retail Morocco 71,532 79,535
Tamassa Resort 30-Jun-22 Knight Frank Hospitality Mauritius 48,827 52,232
VDE Housing Compound 30-Jun-22 REC Accommodation Mozambique 55,180 57,546
Imperial Distribution Centre 30-Jun-22 Knight Frank Light industrial Kenya 21,620 24,170
Mara Viwandani 30-Jun-22 Knight Frank Light industrial Kenya 2,792 3,050
Mall de Tete 30-Jun-22 REC Retail Mozambique 13,804 15,952
Acacia Estate 30-Jun-22 REC Accommodation Mozambique 73,809 70,353
5th Avenue 30-Jun-22 Knight Frank Office Ghana 16,010 16,440
Capital Place 30-Jun-22 Knight Frank Office Ghana 19,320 -
Mukuba Mall 30-Jun-22 Knight Frank Retail Zambia 56,933 46,210
Orbit Complex 30-Jun-22 Knight Frank Light industrial Kenya 38,926 -
Copia Land 30-Jun-22 Knight Frank Light industrial Kenya 6,666 -
Club Med Cap Skirring Resort 30-Jun-22 Knight Frank Hospitality Senegal 20,722 20,594
Total valuation of investment properties directly held by the Group 604,474 549,491
Deposits paid on Imperial Distribution Centre Phase 2 2,259 2,148
Deposits paid on Capital Place 3,550 3,550
Deposits paid on Gateway Real Estate Africa Ltd 2,500 -
Total deposits paid on investment properties 8,309 5,698
Total carrying value of investment properties including deposits paid 612,783 555,189
Investment properties held within associates and joint ventures - Group share
Buffalo Mall - Buffalo Mall Naivasha Limited (50%) 30-Jun-22 Knight Frank Retail Kenya 6,116 5,441
Kafubu Mall - Kafubu Mall Limited (50%) 30-Jun-22 Knight Frank Retail Zambia 11,965 9,623
CADS II Building - CADS Developers Limited (50%) 30-Jun-22 Knight Frank Office Ghana 15,100 15,075
Cosmopolitan Shopping Centre - Cosmopolitan Shopping Centre Limited (50%) 30-Jun-22 Knight Frank Retail Zambia 27,199 24,945
Canonniers, Mauricia and Victoria Resorts and Spas - Beachcomber Hospitality 30-Jun-22 Knight Frank Hospitality Mauritius 95,055 101,594
(44.42%)
Capital Place - Capital Place Limited (50%) 30-Jun-22 Knight Frank Office Ghana - 10,150
Letlole La Rona Limited (25.1%) - 19 Investment properties 30-Jun-22 Knight Frank Light industrial Botswana 14,662 18,647
Letlole La Rona Limited (25.1%) - 1 Investment property 30-Jun-22 Knight Frank Hospitality Botswana 155 209
Letlole La Rona Limited (25.1%) - 2 Investment properties 30-Jun-22 Knight Frank Retail Botswana 4,160 5,325
Letlole La Rona Limited (25.1%) - 1 Investment property 30-Jun-22 Knight Frank Office Botswana 1,003 1,517
Letlole La Rona Limited (25.1%) - 1 Investment property 30-Jun-22 Knight Frank Accommodation Botswana 966 1,300
Gateway Real Estate Africa Ltd (26.29%) 30-Jun-22 Directors Valuation Other Investments Mauritius 27,389 12,557
Total of investment properties acquired through associates and joint ventures 203,770 206,383
Total portfolio 816,553 761,572
Valuation policy and methodology for investment properties held by the Group,
associates and joint ventures
Investment properties are valued at each reporting date with independent
valuations performed every year by independent professional reputable
valuation experts who have sufficient expertise in the jurisdictions where the
properties are located. All valuations that are performed in the functional
currency of a group entity that is not United States Dollars are converted to
United States Dollars at the effective closing rate of exchange. All
valuations have been undertaken by the Royal Institute of Chartered Surveyors'
("RICS"), accredited and registered valuers, in accordance with the version of
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.
In respect of the majority of the Mozambican investment properties,
independent valuations were performed at 30 June 2022 by REC Chartered
Surveyors (2021: REC Chartered Surveyors) using the discounted cash flow
method (2021: discounted cash flow method).
The remainder of the portfolio including investment properties held by
associates was independently valued at 30 June 2022 by Knight Frank Chartered
Surveyors (2021: Knight Frank Chartered Surveyors), using the discounted cash
flow method with the exception of freehold land which is valued by comparable
method.
These methodologies are based on estimated rental values with consideration
given to the future earnings potential and applying an appropriate
capitalisation rate and/or discount rate to the property and country. The
capitalisation rates (equivalent yield) applied to the Group's valuations of
investment properties at 30 June 2022 ranged between 6.00% and 12.50%. The
discount rates applied to the Group valuations that were performed at 30 June
2022 using the discounted cash flow method ranged between 8.25% and 16.00%.
In the current year the valuations includes the right of use of land, lease
incentives and certain furniture and fittings.
There have been no material changes to the information used and assumptions
applied by the registered valuer.
The fair value adjustments on investment property are included in the income
statement.
The Directors consider that the deposit payments and capital expenditure which
are carried at cost approximate their fair value at the relevant reporting
date.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Audited as at Audited as at
30 June 2022 30 June 2021
US$'000 US$'000
The following entities have been accounted for using the equity method:
Name of joint venture Country of incorporation and operation % held
Kafubu Mall Limited(1) Zambia 50.00% 11,761 9,502
Cosmopolitan Shopping Centre Limited(1) Zambia 50.00% 27,173 25,076
CADS Developers Limited(1) Ghana 50.00% 6,974 7,607
Africa Property Development Managers Ltd(2) Mauritius 77.95% 14,247 -
Carrying value of joint ventures 60,155 42,185
Name of associate Country of incorporation and operation % held
Letlole La Rona Limited(3) Botswana 25.10% 17,353 21,672
Buffalo Mall Naivasha Limited(1) Kenya 50.00% 3,753 3,402
Gateway Real Estate Africa Ltd(4) Mauritius 26.29% 55,866 20,706
Capital Place Limited(5) Ghana 50.00% - 7,471
Beachcomber Hospitality Investments(1,6) Limited Mauritius 44.42% 69,870 72,056
Carrying value of associates 146,842 125,307
Joint ventures 60,155 42,185
Associates 146,842 125,307
Total carrying value of associates and joint ventures 206,997 167,492
(1) The percentage of ownership interest for 2022 did not change.
(2) The Company and the Group have acquired an equity interest of 77.95% in the
joint venture during the year.
(3) The Group interests in the associate has decreased from 30% to 25.1% following
part disposal made during the year.
(4) The Company and the Group interests in the associate have increased from
19.98% to 26.29% following acquisition made during the year.
(5) Associate status has changed to a subsidiary. Figures included in the
associate note for comparative purpose. The group previously owed 50% of
Capital Place Limited.
(6) The carrying value of Beachcomber Hospitality Investments at 30 June 2022
includes an unsecured loan of €37.5m (30 June 2021: €37.5m), from the
Group to the associate, which bears interest at 6.25% (30 June 2021: 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.
Set out below is the summarised financial information of each of the Group's
associates together with a reconciliation of the financial information to the
carrying amount of the Group's interests in each associate. Where an interest
in an associate has been acquired in a reporting period the results are shown
for the period from the date of such an acquisition.
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.
Where associates and joint ventures have non-coterminous financial reporting
dates, the Group uses management accounts to incorporate their results into
the consolidated financial statements.
Reconciliation to carrying value in associates and joint ventures
Letlole La Rona Limited Kafubu Mall Limited Beachcomber Hospitality Investments Limited Capital Place Limited Africa Property Development Managers Ltd Gateway Real Estate Africa Ltd CADS Developers Limited Cosmo-politan 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 US$'000
Opening Balance 1 July 2021 21,672 9,502 72,056 7,471 - 20,706 7,607 25,076 3,402 167,492
(Sold)/Acquired during the period (3,502) - - - 14,768 32,201 - - - 43,467
Profit / (losses) from associates and joint ventures 2,917 1,186 9,234 (318) (521) 2,959 1,013 3,790 351 20,611
- Revenue 2,788 994 7,480 1,001 - 346 1,559 2,032 294 16,494
- Property operating expenses and construction costs (281) (171) - (195) - (274) (27) (299) (184) (1,431)
- Admin expenses and recoveries 106 (14) (39) (127) (519) 4,507 (9) (17) (16) 3,872
- Net impairment charge on financial assets 1 18 - (62) - - - - - (43)
- Fair value adjustment on other investments - - - - - (407) - - - (407)
- Unrealised foreign exchange gains/(losses) 10 1,257 (13) (264) 1 (158) 16 (52) (24) 773
- Impairments - - - - - (980) - - - (980)
- Transaction costs - - - - - (263) - - - (263)
-Interest income/ (costs) 90 - - - - 413 - 3 - 506
- Finance charges (547) (5) (1,191) (296) (3) (307) (437) - (270) (3,056)
- Fair value movement on investment property 664 (829) 5,057 (496) - (40) (89) 2,222 551 7,040
-Fair value adjustment on other financial asset - - (1,641) - - 270 - - - (1,371)
- Current tax 86 (64) (484) - - (223) - (99) - (784)
- Deferred tax - - 65 121 - 75 - - - 261
Dividends and interest paid to Group (1,076) - (2,694) - - - (215) - - (3,985)
Repayment of proportionate shareholders loan - (766) (5,273) (868) - - (1,431) (1,693) - (10,031)
Dividend adjustment (99) - - - - - - - - (99)
Foreign currency translation differences (2,559) 1,839 (3,453) - - - - - - (4,173)
Associate step up to subsidiary - - - (6,285) - - - - - (6,285)
Carrying value of associates and joint ventures 17,353 11,761 69,870 - 14,247 55,866 6,974 27,173 3,753 206,997
Investments in the year ended 30 June 2022
Acquisition of equity interest in Africa Property Development Managers Ltd
On 31(st) March 2022, the Group has acquired 77.95% equity interest in African
Property Development Managers Ltd ("APDM"), a non-listed private company based
in Mauritius and specialising in the development and management of real estate
property in Africa. The Group acquired APDM because it gives the latter
exposure to substantial development and asset management fees from developing
and managing the assets of Gateway Real Estate Africa Ltd ("GREA"). GREA has
an attractive pipeline of net asset value accretive development projects, most
notably diplomatic residences across Africa let to the US government and data
centres. In the future, the Group also wishes to expand the service offering
of APDM to third party clients. The investment in APDM has been classified as
an investment in joint venture and further accounted under the equity method.
Included in the judgement section of the financial statements is the rationale
why the directors believe the Group has joint control over APDM.
As part of the acquisition and initial application of the equity method, the
Group has undertaken a notional purchase price allocation which includes the
process of identifying and valuing assets and liabilities of APDM as if the
Group has acquired a business.
The Group has identified and recorded at fair value an asset and development
contract intangible asset which was not previously recorded by APDM. The
contract that exists between APDM and GREA entitles the latter to act as
manager on behalf of the former. In return, APDM is entitled to fees in the
form of asset management fees and development fees. Any future economic
benefit expected to be derived from the contract arises from contractual
rights and therefore the contract meets the contractual-legal criterion and is
therefore identifiable.
The asset and development contract has been valued independently by EY
Mauritius and the fair value of the contract was determined to be US$13m at
the date of acquisition.
The purchase consideration comprised of cash and the Company own equity
shares. The purchase consideration for the acquisition was as follows:
- US$7.6m paid in cash to Gateway Africa Real Estate Limited for their 30.58%
equity stake in APDM.
- Issuance of the Company own equity shares to Dorado 1 Ltd amounting to US$4.2m
for their 21.05% holding in APDM.
- Issuance of the Company own equity shares to Gateway Delta Executive Share
Trust amounting to US$3.0m for their 26.32% holding in APDM.
Additional equity interest acquired in Gateway Real Estate Africa Ltd
During the year, the Group has acquired an additional equity interest of 6.31%
in Gateway Real Estate Africa Ltd ("GREA") from two selling shareholders
Dorado 1 Ltd and GREA. The shareholding of the Group in GREA has increased
from 19.98% to 26.29%. The consideration transferred consisted of a
combination of cash and Grit own shares. The number of Grit shares issued to
Dorado 1 Ltd was 423,616 at an issue price of US$0.52 per share for its 0.10%
shareholding in GREA. A cash consideration of US$13.9m was paid to Gateway
Africa Real Estate Limited for its 6.21% shareholding in GREA. Following the
transaction, the Group kept exercising significant influence over GREA and
therefore continues to account for the latter using the equity method. The
Group has used the accumulated cost approach to account for the transaction
since there has been no change to the classification of the investment. The
purchase price paid for the additional interest has been added to the existing
carrying amount of the associate pre-transaction and further the existing
interest has not been remeasured. The fair value of the net identifiable
assets for the additional interests of 6.31% acquired in GREA amounted to
US$12.4m at the date of acquisition. The total purchase consideration which
includes both Grit shares and the cash consideration amounted to US$14.7m.
Further directly attributable costs relating to the acquisition amounted to
US$0.7m. The increase in the investment has been split notionally between
goodwill and the additional interest in the fair value of the net identifiable
assets of the associate. The notional goodwill element amounted to US$2.3m
which is equal to the difference between the total purchase consideration
including transaction costs of US$14.7m and the fair value of the net
identifiable assets of the additional shareholding of 6.31% acquired of
US$12.4m. The notional goodwill amount has been included in the carrying value
of the associate.
Disposal of equity interest in Letlole La Rona Limited
During the year, Grit Services Limited has disposed of 4.90% equity interests
in Letlole La Rona Limited ("LLR") on the Botswana Stock Exchange. The trading
price as at the date of disposal was BWP 3 per share. The total number of
shares disposed was 13,720,000 shares. Following the disposal transaction, the
equity interests of the Group in LLR have been reduced to 25.10%.
4. INTEREST-BEARING BORROWINGS
Audited as at Audited as at
30 June 2022 30 June 2021
US$'000 US$'000
Non-current liabilities 242,091 215,565
Current liabilities 182,975 195,023
Total as at 30 June 425,066 410,588
Currency of the interest-bearing borrowings (stated gross of unamortised loan
issue costs)
United States Dollars 319,687 276,947
Euros 104,357 131,420
Mauritian Rupees 1,369 1,698
425,413 410,065
Interest accrued 4,927 4,176
Unamortised loan issue costs (5,274) (3,653)
Total as at 30 June 425,066 410,588
Movement for the year
Balance at the beginning of the year 410,588 392,999
Proceeds of interest bearing-borrowings 58,513 50,765
Loan reduced through disposal of subsidiary (6,624) -
Loan acquired through asset acquisition 6,011 -
Loan issue costs incurred (4,386) (1,520)
Amortisation of loan issue costs 2,765 2,974
Foreign currency translation differences (14,836) 7,548
Interest accrued 751 (1,173)
Debt settled during the year (27,716) (41,005)
Total as at 30 June 425,066 410,588
Analysis of facilities and loans in issue
Audited as at Audited as at
30 June 2022 30 June 2021
Lender Borrower Initial facility US$'000 US$'000
Standard Bank South Africa Commotor Limitada US$140.0m 140,000 140,000
Standard Bank South Africa Zambia Property Holdings Limited US$16.4m 16,405 -
Standard Bank South Africa Grit Services Limited RCF - €26.5m 27,091 30,676
Total Standard Bank Group 183,496 170,676
Bank of China Warehousely Limited US$8.5m - 8,555
Bank of China Zambian Property Holdings Limited US$77.0m 76,405 76,405
Total Bank of China 76,405 84,960
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €9.0m 9,467 10,733
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €3.2m 3,366 3,816
State Bank of Mauritius Mara Delta (Mauritius) Properties Limited €22.3m 23,457 26,593
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 1,369 -
State Bank of Mauritius Grit Real Estate Income Group Limited RCF MUR72.0m - 1,698
Total State Bank of Mauritius 57,659 62,840
Investec South Africa Freedom Property Fund SARL €36.0m 32,950 37,974
Investec South Africa Freedom Property Fund SARL US$15.7m 2,722 8,722
Investec Mauritius Grit Real Estate Income Group Limited US$0.5m 457 327
Total Investec Group 36,129 47,023
ABSA Bank Mauritius BH Property Investment Limited €7.4m - 7,526
ABSA Bank Ghana Limited Grit Accra Limited US$9.0m 7,913 8,652
Total ABSA Group 7,913 16,178
Maubank Mauritius Grit Real Estate Income Group Limited €3.2m 1,837 3,871
Maubank Mauritius Freedom Asset Management €4.0m 1,508 2,599
Total Maubank 3,345 6,470
ABC Banking Corporation Grit Services Limited Equity bridge US$8.5m 2,440 7,286
ABC Banking Corporation Casamance Holdings Limited €6.4m 4,681 7,632
Total ABC Banking Corporation 7,121 14,918
Nedbank South Africa Warehously Limited US$8.6m 8,635 -
Nedbank South Africa Capital Place Limited US$6.2m 6,200 -
Nedbank South Africa Grit Real Estate Income Group Limited US$7.0m 6,985 7,000
Total Nedbank South Africa 21,820 7,000
NCBA Bank Kenya Grit Services Limited US$6.5m 6,542 -
NCBA Bank Kenya Grit Services Limited US$4.1m 4,158 -
Total NCBA Bank Kenya 10,700 -
Ethos Mezzanine Partners GP Proprietary Limited Grit Services Limited US$2.4m 2,475 -
Blue Peak Holdings S.A.R.L Grit Services Limited US$2.2m 2,250 -
Total Private Equity 4,725 -
International Finance Corporation Stellar Warehousing and Logistics Limited US$16.1m 16,100 -
Total International Finance Corporation 16,100 -
Total loans in issue 425,413 410,065
plus: interest accrued 4,927 4,177
less: unamortised loan issue costs (5,274) (3,654)
As at year end 425,066 410,588
Fair value of borrowings are 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.
5. Subsequent events
• On 18 July 2022 Grit introduced a 30% co-investor, Letlole La Rona ("LLR") to
the Orbit Africa asset for an investment of US$7.23m, being the acquisition
value of the sale and lease back asset, and a commitment to fund their
proportionate share of the capital expenditure related to the redevelopment
and expansion.
• On 31 August 2022, upon the completion of phase 2 of the GREA acquisition, the
Company increased its stake in GREA to 35.01%. Grit has an option to acquire
Gateway Partner's remaining 1% in APDM and 13.61% stake in GREA
• On 19 October 2022, the Group concluded a syndicated sustainability linked
debt refinancing facility for $306m, refinancing US$279.1m of existing debt
facilities across Mozambique, Zambia, Ghana, Senegal and a corporate revolving
credit facility and securing additional funding for the future redevelopment
of Club Med, Senegal.
• On 20 October 2022 the Group entered into a further US$100m of notional
interest rate hedges by way of fixed for floating swaps and interest rate cap
and collars. Basis swaps amounts to a notional value of US$25m, swapping US$
SOFR rates for fixed Euro rates of between 2.84% and 3.04% over a period of 18
to 24 months. Interest rate collar a cap transactions for a notional value of
US$75m places a cap of 3.5% and collar of 2.2% to US Dollar SOFR over 3 equal
tranches for period of 2, 3 and 4 years. The above hedges are settled
quarterly in arrears.
6. EARNINGS PER SHARE
Audited as at Audited as at
30 June 2022 30 June 2021
US$'000 US$'000
Basic and diluted (losses) / earnings 10,443 (51,927)
Reconciliation of weighted average number of shares in issue (net of unvested
treasury shares)
30 June 2022 30 June 2021
Shares Shares
'000 '000
Ordinary shares in issue at start of year 331,236 316,236
Unvested treasury shares at start of year (10,114) (10,114)
Total shares issue at start of year 321,122 306,122
Effect of shares issued in the year 79,986 7,849
Effect of treasury shares acquired in the year (2,924) -
Effect of treasury shares disposed in the year 879 -
Weighted average number of shares at end of year - basic 399,063 313,971
Dilutive effect of awards issued 276 -
Weighted average number of shares at end of year - diluted 399,339 313,971
Basic & diluted earnings per share (cents) 2.62 (16.54)
7. EPRA FINANCIAL METRICS - UNAUDITED
Non-IFRS measures
Basis of Preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors")
have chosen to disclose additional non-IFRS measures, these include EPRA
earnings, adjusted net asset value, EPRA net realisable value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS Financial
Information").
Unaudited Unaudited Unaudited Unaudited
30 June 2022
30 June 2022
30 June 2021
30 June 2021
US$'000 Per Share (Diluted) US$'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA Earnings 6,332 1.59 8,080 2.57
Total Company Specific Adjustments 6,150 1.54 7,351 2.34
Adjusted EPRA Earnings 12,482 3.13 15,431 4.91
Total company specific distribution adjustments 7,662 1.95 3,162 1.06
Total distributable earnings 20,144 5.08 18,593 5.97
EPRA NRV 381,312 79.4 328,863 102.4
EPRA NTA 366,783 76.3 319,907 99.6
EPRA NDV 336,301 70.0 270,858 84.3
Unaudited
30 June 2022
EPRA EARNINGS Notes US$'000
Basic Earnings attributable to the owners of the parent 10,443
Add Back:
Fair value adjustment on investment properties (27,206)
Fair value adjustment on other investments 408
Fair value adjustment on other financial asset 13,057
Fair value adjustment on derivative financial instruments (4,501)
Profit on sale of Subsidiary (9)
Loss of sale of Buildings 2,051
Loss of sale of Associates 573
Impairment of loan 4,081
Goodwill Written off 1
Deferred tax in relation to the above 3,100
Acquisition costs not capitalised 2,284
Non-controlling interest above 2,050
EPRA EARNINGS 6,332
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 1.59
Company specific adjustments
Unrealised foreign exchange gains or losses (non-cash) 1 4,638
Straight-line leasing and amortisation of lease premiums (non-cash rental) 2 (1,131)
Amortisation of right of use of land (non-cash) 3 33
Impairment of loan and other receivables 4 3,651
Profit on sale of PPE 5 (11)
Non-controlling interest included above 6 (1,090)
Deferred tax in relation to the above 7 60
Total Company specific adjustments 6,150
ADJUSTED EPRA EARNINGS 12,482
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 3.13
Shares
'000
Weighted average shares in issue 411,222
Less: Weighted average treasury shares for the year (14,722)
Add: Weighted average share awards and vested shares in long term incentive 1,968
scheme
EPRA SHARES 398,468
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 in order to provide a better reflection of underlying property
performance. The add back excludes specific provisions against tenant
accounts.
5 Corporate restructure costs
Corporate restructure costs are one off in nature related to corporate actions
by the company and not underlying performance of the portfolio.
6 Non-Controlling interest
Any Non-Controlling interest related to the company specific adjustments.
7. Other deferred tax (non-cash)
Any deferred tax directly related to the company specific adjustments.
8. COMPANY DISTRIBUTION CALCULATION - UNAUDITED
Unaudited
30 June 2022
Notes US$'000
Adjusted EPRA Earnings 12,482
Company specific distribution adjustments:
VAT credits utilised on rentals 1 1,965
Listing and set up costs under administrative expenses 2 (137)
Depreciation and amortisation 3 719
Share based payments 4 1,238
Dividends (not consolidated out) (126)
Right of use imputed leases 73
Amortisation of capital funded debt structure fees 2,853
Deferred tax in relation to the above 1,632
Non-controlling interest non distributable (555)
Total Company Specific distribution adjustments 7,662
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHHELD) 20,144
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 5.08
FULL YEAR DIVIDEND PER SHARE (cents) 4.50
Reconciliation to amount payable
Total distributable earnings to Grit shareholders before profits withheld 5.08
(cents)
Profits withheld (cents) (0.58)
Interim dividends already paid (cents) (2.50)
FINAL DIVIDEND PROPOSED (cents) 2.00
Shares
'000
Weighted average shares in issue 411,222
Less: Weighted average treasury shares for the year (14,722)
Add: Weighted average shares vested in long term incentive scheme 1,968
EPRA SHARES 398,468
Less Non-entitled shares -
Less Vested shares in consolidated entities (1,968)
DISTRIBUTION SHARES 396,500
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 obtained 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.
9. EPRA FINANCIAL METRICS - UNAUDITED
Glossary Measure Rationale
EPRA EARNINGS Earnings from operational activities. A key measure of a company's underlying operating results and an indication of
the extent to which current dividend payments are supported by earnings.
EPRA NAV / NRV Net Asset Value adjusted to include properties and other investment interests Makes adjustments to IFRS NAV to provide stakeholders with the most relevant
at fair value and to exclude certain items not expected to crystallise in a information on the fair value of the assets and liabilities within a true real
long-term investment property business model. estate investment company with a long-term investment strategy.
EPRA NET INITIAL YIELD (NIY) Annualised rental income based on the cash rents passing at the balance sheet A comparable measure for portfolio valuations. This measure should make it
date, less non-recoverable property operating expenses, divided by the easier for investors to judge themselves, how the valuation of portfolio X
market value of the property, increased with (estimated) purchasers' costs. compares with portfolio Y.
EPRA 'TOPPED-UP' NIY This measure incorporates an adjustment to the EPRA NIY in respect of the A comparable measure for portfolio valuations. This measure should make it
expiration of rent-free periods (or other unexpired lease incentives such as easier for investors to judge themselves, how the valuation of portfolio X
discounted rent periods and step rents). compares with portfolio Y.
EPRA VACANCY RATE Estimated Market Rental Value (ERV) of vacant space divided by ERV of the A 'pure' (%) measure of investment property space that is vacant, based on
whole portfolio. ERV.
EPRA COST RATIOS Administrative & operating costs (including & excluding costs of A key measure to enable meaningful measurement of the changes in a company's
direct vacancy) divided by gross rental income. operating costs.
The EPRA NAV metrics are EPRA Net Reinstatement Value (NRV), EPRA Net Tangible
Assets (NTA) and EPRA Net Disposal Value (NDV)
EPRA NRV EPRA NTA EPRA NDV
Unaudited Unaudited Unaudited
30 Jun 2022 30 Jun 2022 30 Jun 2022
US$'000 US$'000 US$'000
IFRS Equity attributable to shareholders 336,301 336,301 336,301
i) Hybrid instruments
Preference shares - - -
Diluted NAV 336,301 336,301 336,301
Add
Revaluation of IP (if IAS 40 cost option is used) - - -
Revaluation of IPUC (if IAS 40 cost option is used) - - -
Revaluation of other non-current investments - - -
Revaluation of tenant leases held as leases - - -
Revaluation of trading properties - - -
Diluted NAV at fair value 336,301 336,301 336,301
Exclude*:
Deferred tax in relation to fair value gains of Investment properties 46,873 42,993 -
Fair value of financial instruments (1,862) (1,862) -
Goodwill as a result of deferred tax - - -
Goodwill as per the IFRS balance sheet - - -
Intangibles as per the IFRS balance sheet - (10,649) -
Include*:
Fair value of fixed interest rate debt - - -
Revaluation of intangibles to fair value
Real estate transfer tax
NAV 381,312 366,783 336,301
Fully diluted number of shares 480,530 480,530 480,530
NAV per share (cents per share) 79.4 76.3 70.0
Shares '000 Shares '000 Shares '000
Total shares in issue 495,092 495,092 495,092
Less: Treasury shares for the period (15,134) (15,134) (15,134)
Add: Share awards and shares vested shares in Long term incentive scheme 572 572 572
EPRA SHARES 480,530 480,530 480,530
EPRA cost ratio UNAUDITED
30 June 2022
US$'000
Operating expense line per IFRS income statement - subsidiaries (8,656)
Share of operating expenses - associates (1,431)
Total proportionate operating expenses (10,087)
Share of operating expenses - associates of associates (64)
Total operating expenses including associates of associates (10,151)
Less: unrecoverable property expenses 1,358
Total operating costs including direct vacancy costs A (8,793)
Less: direct vacancy costs 625
Total operating costs excluding direct vacancy costs B (8,168)
Gross rental income line per IFRS income statement - subsidiaries 50,766
Share of gross rental income - associates 16,613
Total proportionate gross rental income 67,379
Share of gross rental income - associates of associates 658
Total gross rental income including associates of associates 68,037
Less: gross rental income exclusions3 (4,997)
Gross rental income C 63,040
EPRA cost ratio including direct vacancy costs (%) - (A/C) 13.9%
EPRA cost ratio excluding direct vacancy costs (%) - (B/C) 13.0%
OTHER NOTES
The audited consolidated financial statements for the year ended 30 June 2022
have been prepared in accordance with the Disclosure and Transparency Rules of
the Financial Conduct Authority, International Financial Reporting Standards
("IFRS"), the LSE and SEM Listing Rules, the Financial Pronouncements as
issued by Financial Reporting Standards Council. The accounting policies are
consistent with those of the previous annual financial statements with the
exception of the change in accounting policy and the significant judgment
disclosed in note 1.
The Group is required to publish financial results for the year ended 30 June
2022 in terms of Listing Rule 12.14 of the SEM and the LSE Listing Rules. The
Directors are not aware of any matters or circumstances arising subsequent to
the year ended 30 June 2022 that require any additional disclosure or
adjustment to the financial statements. These audited consolidated financial
statements were approved by the Board on 28 October 2022.
PricewaterhouseCoopers have issued their unqualified audit opinion on the
Group's financial statements for the year ended 30 June 2022. Copies of the
audited consolidated financial statements for the year ended 30 June 2022, 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 Company's registered address. Contact Person: Ali Jhoomun.
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR EALEPADEAFEARecent news on Grit Real Estate Income
See all newsREG-Grit Real Estate Income Group Availability of results
AnnouncementREG-Grit Real Estate Income Group Abridged Unaudited consolidated results for six months ended 31 December 2024
AnnouncementREG-Grit Real Estate Income Group NOTICE OF HALF YEAR RESULTS AND INVESTOR PRESENTATION
AnnouncementREG-Grit Real Estate Income Group Mandatory Audit firm rotation
AnnouncementREG-Grit Real Estate Income Group RESULTS OF THE ANNUAL GENERAL MEETING
Announcement