REG - Grit Real Estate Inc - Results for the six months ended 31 December 2021
28/02/2022 07:00
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RNS Number : 9466C Grit Real Estate Income Group 28 February 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")
ABRIDGED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2021
Group LTV reduced to 41.4%, resumption of dividends and continuing strong and
improving cash collection of contractual revenue
Encouraging early signs of recovery in leisure and retail
Grit Real Estate Income Group Limited, a leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets underpinned by predominantly US Dollar and
Euro denominated long-term leases with high quality multi-national tenants,
today announces its results for the six months ended 31 December 2021.
Financial highlights
6 Months ended 6 Months ended Increase/ Decrease
31 Dec 2021 31 Dec 2020
Distributable earnings per share(1) US$3.08 cps US$3.88 cps -20.6%
Dividend per share US$2.50 cps US$1.50 cps +66.7%
EPRA earnings per share(2) US$2.56 cps US$3.09 cps -17.2%
Property portfolio net operating income US$26.8m US$26.6m +0.8%
Gross property income US$31.9m US$31.6m +0.9%
EPRA cost ratio (including associates) (3) 13.5% 14.3% -0.8ppt
Contractual rental collected 94.9% 91.4% +3.5ppt
As at 31 Dec 2021 As at 30 June 2021 Increase/ Decrease
EPRA NRV per share(2) US$86.7 cps US$102.4 cps -15.3%
Total Income Producing Assets(4) US$802.3m US$801.9m +0.1%
WALE(5) 4.4 yrs 4.8 yrs -0.4 yrs
EPRA portfolio occupancy rate(6) 94.3% 94.7% -0.4ppt
Group LTV 41.4% 53.1% -11.7ppt
Property LTV 45.1% 46.6% -1.5ppt
On 22 November 2021, Grit announced its Proposed Open Offer and Placing of New
Ordinary Shares at US$0.52 per New Ordinary Share to reduce Grit's overall
indebtedness, provide future capital for further expansion in its core and
expanded business, acquiring majority stakes in Gateway Real Estate Africa
Limited ("GREA") and Africa Property Development Managers Limited
("APDM") and the expected resumption of dividend payments, distributing out
of net operating income generated from its existing property assets, in line
with its stated policy of paying out at least 80 per cent. of distributable
earnings.
On 20 December 2021, the Company issued 146,342,312 New Ordinary Shares at a
price of US$ 0.52 per share. The issue of an additional 155,027,444 New
Ordinary Shares at an issue price per New Ordinary Share of US$ 0.52 to the
Selling Shareholders of GREA and APDM will be effected upon the fulfilment or
waiver (as applicable) of the conditions precedent. The conditions must be
fulfilled or waived by no later than 31 March 2022. The proposed acquisition
is expected to materially accelerate Grit's ability to access development
returns from risk mitigated development projects from GREA's attractive
pipeline of development opportunities, give Grit the additional management
resources and offers Grit the potential for new revenue and fee income
streams.
Key commentary
· EPRA net reinstatement value ("NRV") per share of US$0.867 (30
June 2021: US$1.024). The 15.3% reduction was principally due to the
dilutionary effect of the issuance of the new ordinary shares which reduced
NRV by US$0.175 per share. Distributable earnings per share and EPRA earnings
per share were similarly principally impacted by dilutionary impacts of new
share issuances and fair value adjustments on financial obligations.
· Cash collection as a percentage of contractual revenue, improved
by 3.5 percentage points from 91.4% to 94.9%, specifically impacted by
improved collections from hospitality sector assets in the six months.
· Significant action taken to strengthen balance sheet. Group LTV
decreased to 41.4% (30 June 2021: 53.1%) predominantly as a result of US$47.0m
reduction in Group debt. The Board remains committed to reducing LTV levels to
its medium term target of between 35% to 40% through capital recycling
initiatives and select NAV accretive acquisitions.
· Concerns arising from the COVID-19 Omicron strain peaked in
December 2021 and impacted both travel and confidence in Southern Africa and
worldwide over that period, which in turn impacted our portfolio.
Notwithstanding this, the Board is increasingly encouraged by the early signs
of recovery in leisure, office and retail since the period end, which have the
potential to deliver enhanced income and capital growth to our shareholders
from our portfolio.
· The Group independently values all of its assets at the financial
year end and at least 50%, by value, at the interim reporting date. For the
six months ended 31 December 2021, 77.2% of the portfolio was independently
valued with total income producing assets valued at US$802.3m (30 June 2021:
US$801.9m), including acquisitions and capex additions amounting to US$3.1m.
This represents a like-for-like property valuation increase of US$5.3m or 0.7%
over the six month period, while the impact of the Euro vs the USD over the
period negatively impacted valuations by US$9.9m which collectively result in
reported property valuations (in US$) growing by 0.1%.
Operational highlights
· The Group continues to make significant progress on its ESG and
sustainability commitments and is ahead of its targets. The Group remains
committed to its five-year target of a 25% reduction in carbon emissions and a
25% improvement in its building efficiency. The Group has more than 40% of
women in leadership positions at Grit, and more than 65% localised employees,
adding to the Group's diversity.
· Property portfolio now comprises a total of 54 investments,
across eight countries and five asset classes.
· 90.0% (30 June 2021: 90.9%) of revenue is earned from
multinational tenants7.
· 91.6% (30 June 2021: 92.7%) of income is produced in hard
currency8.
· EPRA portfolio occupancy rate of 94.3% (30 June 2021: 94.7%).
· Total Grit proportionately-owned lettable area ("GLA") is
342,209m2.
· Weighted average contracted annual rent escalations at 4.7% (30
June 2021: 3.8%).
· Property valuations show modest growth of 0.1% (or US$ 5.2m)
indicating signs of stabilisation of valuations as the COVID-19 impacts
reside.
· Weighted average cost of debt remained stable at 5.7% (30 June
2021: 5.7%).
Post period end and outlook
· The Board today resumes the declaration of dividends, out of
operating profits, having satisfied its LTV target of below 45%. An interim
dividend of US$2.50 cents per share ("cps") for the 6 months ended 31 December
2021 (31 December 2020: US$1.50 cps) has been declared today. The Board
continues to target paying a dividend in the current financial year of between
US$ 5 to 6 cps distributing out of net operating income generated from its
existing property assets, in line with its stated policy of paying out at
least 80 per cent. of distributable earnings.
· Many European countries have now resumed and are resuming trade
and travel links, and demand, specifically in our hospitality sector assets,
is showing strong signs of recovery. The Board is encouraged by positive
trends such as falling vacancies and increasing footfall in the Group's retail
assets and the re-opening of the African borders to overseas tourists.
· The Company continues to pursue its asset recycling target of 20
per cent. of the value of the Group's property portfolio by 31 December 2023
at, or close to, reported book value to free up equity capital and reduce
levels of indebtedness. To this end, Grit has recently announced on 26 January
2022 the sale of its 100% interest in ABSA House, Mauritius. Inclusive of
transaction costs, the net sale proceeds to Grit are expected to be
approximately MUR 180 million, or US Dollar 4.1 million, which will be applied
towards the Company's revolving credit facilities and further debt reduction.
Notes
(1) Refer to note 14b (unaudited).
(2) Explanations of how European Public Real Estate Association ("EPRA") figures
are derived from IFRS are shown in note 14 (unaudited).
(3) Based on EPRA cost to income ratio calculation methodology which includes the
proportionately consolidated effects of LLR and other associates.
(4) Includes properties, investments, and property loan receivables - Refer to
Chief Financial Officer's Statement for reconciliation and analysis.
(5) Weighted average lease expiry ("WALE").
(6) Property occupancy rate based on EPRA calculation methodology - Includes
associates.
(7) Forbes 2000, Other Global and pan African tenants.
(8) Hard (US$ and EUR) or pegged currency rental income.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group
Limited, commented:
"Notwithstanding the concerns arising from the Covid-19 Omicron strain in
December 2021, the Board is increasingly encouraged by the early signs of
recovery in the leisure, office and retail sectors since the period end, which
has the potential to deliver enhanced income and capital growth to our
shareholders from our portfolio. Many European countries have now resumed
trade and travel links resulting in strong and improving hospitality sector
demand, while increasing footfall and falling vacancies in the Group's retail
assets further add to our confidence.
We are pleased by the success of the Group's equity issue in December 2021,
the proceeds of which were largely utilised to reduce debt, and the enhanced
financial flexibility positions the Company well for post Covid recovery
opportunities.
Having satisfied our LTV target of below 45%, we are pleased to resume
dividends, today declaring an interim dividend of US$2.50 cents per share for
the 6 months ended 31 December 2021. The Board continues to target paying a
dividend in the current financial year of between US$ 5 to 6 cents per share
distributing out of net operating income generated from our existing property
assets, in line with our stated policy of paying out at least 80 per cent. of
distributable earnings."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Chief Strategy Officer and Investor Relations +44 779 512 3402
Maitland/AMO - Communications Adviser
James Benjamin +44 7747 113 930 / +44 20 7379 5151
Alistair de Kare-silver Grit-maitland@maitland.co.uk
finnCap Ltd - UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld/Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd - Mauritian Sponsoring Broker
Elodie Lan Hun Kuen +230 402 0280
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned by
predominantly US$ and Euro denominated long-term leases with a wide range of
blue-chip multi-national tenant covenants across a diverse range of robust
property sectors.
The Company is committed to delivering strong and sustainable income for
shareholders, with the potential for income and capital growth.
The Company holds its primary listing on the Main Market of the London Stock
Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius
(SEM: DEL.N0000).
Further information on the Company is available at www.grit.group
Directors:
Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive Officer)*, Leon van de
Moortele (Chief Financial Officer)*, David Love+, Sir Samuel Esson Jonah+,
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 15.36A and the Mauritian Securities Act 2005. The Board of the
Company accepts full responsibility for the accuracy of the information
contained in this communiqué.
A Company presentation for all investors and analysts via live webcast and
conference call
The Company will host a live Zoom webcast and conference call on Monday, 28
February 2022 at 13:00 Mauritius time / 09:00 UK time.
The webcast and conference can be accessed directly at the following link:
https://us06web.zoom.us/j/84335421487 (https://us06web.zoom.us/j/84335421487)
A playback will be accessible on-demand within 48 hours via the Company
website: https://grit.group/financial-results/
(https://grit.group/financial-results/)
Terms not otherwise defined in this announcement have the meanings given to
them in the Prospectus issued by Grit on 22 November 2021.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Grit's office, light industrial and corporate accommodation sector assets,
that collectively account for more than 50 per cent. by value of the Grit
Group's property portfolio, remain robust and resilient and relatively
unaffected by the pandemic. In the prior financial period, travel and economic
disruptions across Africa led to weakness and depressed property valuations in
retail and, to a lesser extent, in hospitality sector assets, and while early
recovery signs were evident throughout this latest 6 months, concerns over the
Omicron variant restricted travel activity in December 2021 amidst renewed
restrictions and travel bans, impacted the Group's portfolio valuations.
Many European countries have now resumed and are resuming trade and travel
links, while demand, specifically in our hospitality sector assets, is showing
strong signs of recovery. The Board is encouraged by these positive trends,
and also falling vacancies and increasing footfall in the Group's retail
assets and the re-opening of the Mauritian borders to overseas tourists.
Throughout the pandemic, the Company has focused on revenue stabilisation,
diligent cost control and the effective management of rent collections and
vacancies, all of which the Group is continuing to focus on. In the first half
of this financial year, our team has once again delivered a strong operational
performance that positions the Group well for a recovery in the economies
where we operate. These included:
· Grit Group's cash collections showed further improvement in the
six months to 31 December 2021 growing to 94.9% of contracted lease income
(from 92.5% for the 12 months to 30 June 2021 and 91.4% in the corresponding
six-month period in 2020). Grit's hospitality sector tenants have now all
resumed lease payments in full as from December 2021. While Grit has agreed a
48-month period for Beachcomber to repay EUR5.3m in cash concessions granted
in 2021, the LUX Group has now repaid all outstanding contractual lease
amounts.
· The weighted average occupancy rate increased to 94.3% (December
2020: 92.0%) through focused leasing activity especially in the retail and
office sectors.
· Net Operating Income grew 0.6% for the six-month period to 31
December 2021, with a 10.8% increase from Grit's retail sector assets, which
offset the slight weakness in Grit's office and corporate accommodation
sectors.
Grit's portfolio valuations were impacted over the period, as valuers
increased discount rates and capitalisation rates and gave more conservative
re-let assumptions. Over the six months to 31 December 2021, the property
portfolio valuation increased by 0.1% and the early signs of stabilisation and
recovery are becoming increasingly evident across those assets in sectors
hardest hit by the pandemic, which could lead to an earlier than expected
rebound in retail sector asset valuations. Since the onset of the pandemic,
reported property values dropped by over US$114 million, representing a 14.2
per cent. like-for-like reduction compared to 31 December 2019.
For the six-month period to 31 December 2021, supported by the Company's
successful fundraise and increasingly robust operational performance, the
Group has reported a reduced LTV of 41.4% (from 53.1% at 30 June 2021), which
is below the Board's target of 45% required for the resumption of dividends.
COVID-19 period valuation declines and the increasing use of short-term
working capital facilities for the provision of liquidity support to
hospitality tenants resulted in Grit's reported LTV increasing to 53.1 per
cent. as at 30 June 2021. This prompted management and the Board to take
action to enhance the position of the Company for the expected post-pandemic
recovery opportunities rather than wait for the natural recovery of
valuations. These actions included:
· Suspending the payment of cash dividends in the second half of
the 2021 financial year.
· Accelerating an asset recycling target of 20 per cent. of the
value of the Group's property portfolio by 31 December 2023 at, or close to,
reported book value to free up equity capital and reduce absolute levels of
indebtedness. To this end, Grit has recently announced the sale of ABSA House
in Mauritius and continues to be in discussions for the disposal of AnfaPlace
Mall, the Grit Group's largest retail asset. These disposals would
collectively represent in excess of 10% of the Group's property portfolio as
at 31 December 2021.
· Extensive engagement with finance providers and successfully
agreed increases to the lowest applied LTV and interest service cover ratio
covenants, whilst also securing maturity extensions for most of the Grit
Group's US$410 million outstanding debt to beyond April 2023. Grit reduced its
debt balances by US$47.0m over the period. Management continues to investigate
opportunities in relation to a further substantial debt restructure, which are
supported by the recently improved credit metrics and new debt funding
relationships established with the development funding institutions like the
IFC and Proparco.
· In November 2021, the Company embarked on an Open Offer and
placing of new ordinary shares to reduce its overall indebtedness and to
provide for further expansion in its core and expanded business. The proceeds
of the Issue are additionally intended to enable Grit to acquire a controlling
shareholding in GREA and a majority shareholding in APDM, GREA's external
management company. The proposed acquisitions will provide Grit with access to
GREA's attractive pipeline of accretive development opportunities, and the
Board believes the medium-term NAV growth prospects of the Grit Group will be
significantly improved upon completion. The acquisition of a controlling
interest in APDM is expected to further allow Grit to earn substantial
development and asset management fees into the future from internal and
third-party clients and joint venture partners.
Dividend resumption
The Board is pleased to declare a dividend for the 6-month period of US$2.5
cents per share, distributing out of net operating income generated from its
existing property assets, in line with its stated policy of paying out at
least 80 per cent. of distributable earnings. The Board continues to target
paying a dividend in the current financial year of between US$ 5 to 6 cents
per share.
Drive in Trading ("DiT") guarantee update
In 2017, Grit provided an indemnity of up US$17.5 million to its largest
shareholder, the Public Investment Corporation ("PIC"), for actual losses
incurred by the PIC in the provision of funding to the Group's Black Economic
Empowerment consortium, DiT, for the acquisition of an equity interest in
Grit, as required under the South African listing requirements applicable at
that time. The debt facility was fully secured by the 23.25 million ordinary
Grit shares acquired by DiT in June 2017.
Ahead of the debt facility maturity in August 2022, both Grit and the PIC, who
is the current lender to DiT, have been assessing 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 is now
deemed limited. Consequently, the parties are in the process of collapsing
both Grit's guarantee exposure and the broader DIT structure. The resolution
is not expected to result in any overhang of Grit ordinary shares to the
market and further announcements will be made in due course.
As at 31 December 2021, the Company increased the provision against its
guarantee exposure to US$12.5 million (30 June 2021: US$ 5.4 million) being
the full net exposure of the Company under the current Guarantee Agreement.
Investment update
· Grit's re-development of its Bollore light industrial facility
in Mozambique was completed in December 2021 which modernises the facility
and positions it for increasing activity in the gas industry of northern
Mozambique. Bollore remain the anchor tenant, on the strength of a 5-year
lease, with the remaining vacant space expected to be let within the current
financial year.
· The phase 1 Cap Skirring, Senegal re-development programme,
which formed part of the initial acquisition of the resort in January 2020,
has by mutual agreement, being subjected to a reduced capex programme of
EUR1.225 million by August 2022, which was aligned with Club Med's re-opening
of the resort in December 2021.
· The Orbit Africa transaction, being the sale and leaseback of an
existing warehouse and manufacturing facility with a gross lettable area of
29,243 sqm at an accretive net acquisition yield of 9.60% under a 25-year US
Dollar denominated triple net lease and a redevelopment and expansion of the
facility at a contractual development yield of 16.0%, is expected to transfer
in March 2021. The total investment is expected to be US$53.6 million and is
funded through US$25 million senior debt financing from the IFC, a division
of the World Bank, and the balance through a preference note issuance to Ethos
Mezzanine Partners GP Proprietary Limited and BluePeak Private Capital GP.
The transaction, which will further increase Grit's exposure to Kenya and the
broader light industrial sector, is expected to be accretive to both NAV and
earnings, delivering further sustainable value to our shareholders
immediately. The Orbit Africa Facility upgrades are expected to create long
lasting positive social, economic and environmental benefits for local
communities and help to further strengthen the broader precinct as a prime
logistics and supply chain hub, whilst the property will additionally benefit
from being significantly improved to today's modern FMCG industry standards
and achieving an IFC EDGE green building certification.
Gateway Real Estate Africa update
GREA is a private company staffed by an experienced team of professionals with
an established track record in African property development and project
delivery. Grit is in the process of finalising the conditions precedent in
relation to the acquisition of a controlling interest in GREA and APDM, as
contemplated in the Circular issued to shareholders in November 2021. Further
announcements will be made ahead of the long stop date of 31 March 2022.
An update on the key projects being undertaken by GREA are included below:
· Elevation Diplomatic Residences, Addis Ababa Ethiopia, a 112-unit
diplomatic residential tower conforming to US and other diplomatic agency
structural and security requirements, predominantly tenanted to OBO, a
division of the US State Department, was completed and handed over in
November 2021.
· Phase one of a Tier 3 data centre in Lagos, Nigeria comprising
994 sqm GLA and tenanted to African Data Centres, part of the Liquid
Intelligent Technologies Group, was handed over for beneficial occupation in
December 2021.
· The construction of a 90-unit diplomatic apartment and town house
community in Kenya fully tenanted by OBO, a division of the US State
Department, is making good progress and is expected to be delivered by May
2022.
· The Precinct, Mauritius: Commencement of a landmark 8,594 sqm GLA
premium grade office development in Grand Baie in Q2 2021. Targeted
completion November 2022.
· St Helene Artemis Hospital, Mauritius, comprising of a 5,368 sqm
multi-speciality hospital commenced construction in 4Q2021. The anticipated
completion date is January 2023.
ESG and sustainability
We recognise our role in transforming the design of buildings and developments
for long-term sustainability, especially with Africa rapidly urbanising. Our
sustainability efforts focus on energy efficiency and carbon reduction and the
Group remains committed to a five-year target of a 25% reduction in carbon
emissions and a 25% improvement in our building efficiency. We continue to
make significant progress and are ahead of plan in the achievement of our
targets.
In addition to environmental responsibility, we pride ourselves on achieving
more than 40% of women in leadership positions at Grit, and more than
65% localised employees, adding to the Group's diversity. The Company further
supports the numerous communities in the countries where we operate through
our extensive CSR initiatives. The Company is proud to report that it is
already achieving these targets and will aim to maintain and improve on its
current achievements.
Outlook
The Board and management team have taken decisive, proactive action to defend
and best position the Group's portfolio and business to deliver enhanced value
to our shareholders over the short and long term. With our expertise in
African real estate, and our team's experience, knowledge, skill sets and
established relationships, we will continue to optimise and recycle assets and
create value through proactive asset management and risk-mitigated development
opportunities to support NAV growth.
In addition, we will continue to selectively pursue potential investments from
our high-quality, diversified and yield accretive pipeline, supported by a
strong tenant base and possible co-investment opportunities, as we have
recently done. The recent strengthening of our funding relationships with
development finance institutions and banks positions us well to pursue further
investment in industrial sector assets, where we see significant opportunities
The Board is encouraged by positive trends such as falling vacancies and
increasing footfall in the Group's retail assets.
Finally, we are pleased by the success of the Issue in December 2021, and, on
behalf of the Board, would like to thank existing and new Shareholders for
their support in re-positioning the Company for the post COVID-19 recovery
opportunities. Having satisfied our LTV target of below 45%, we are pleased
to resume dividends today and the Board continues to target paying a dividend
in the current financial year of between US$ 5 to 6 cents per share
distributing out of net operating income generated from our existing property
assets, in line with our stated policy of paying out at least 80 per cent. of
distributable earnings.
We are increasingly confident both in further reducing our overall levels of
debt as well as driving expansion in our core and expanded business, to
deliver enhanced sustainable value to our shareholders.
Bronwyn Knight
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S STATEMENT
Presentation of financial results
The abridged consolidated financial statements have been prepared in
accordance with IFRS, in accordance with best practice in the sector,
alternative performance measures have also been provided to supplement IFRS,
based on the recommendations of European Public Real Estate Association
("EPRA"). EPRA's Best Practice Recommendations have been adopted widely
throughout this report and are used within the business when considering our
operational performance of the properties. Full reconciliations between IFRS
and EPRA figures are provided in note 14.
Financial and Portfolio summary
The Group has maintained its focus on tightly managing aspects which are
within its direct control while monitoring and reacting to those factors that
are not. Cost optimisation, debtor's collections and re-letting activities
continue to be the key elements of daily focus of the operations team, while
the treasury team has made great strides in securing extensions to debt tenors
and obtaining additional covenant headroom as required.
Gross IFRS rental income has increased marginally to US$24.1m from US$23.6m
for the six months ended 31 December 2021.
6 Months ended 6 Months ended
31 Dec 2021 31 Dec 2020
US$'000 US$'000
Contractual rental income 19,270 19,264
Retail parking income 809 836
Other rental income (lease incentives) 1,008 1,074
Recoverable property expenses 2,708 2,703
Straight-line rental income accrual 352 (268)
Gross rental income 24,147 23,609
For meaningful comparison, assets accounted for as associates and joint
ventures have been proportionately presented in the relevant sectors to
produce a "Grit Property Portfolio" revenue, operating expenses and NOI
analysis below. Grit Property Portfolio revenue has risen 2.5% from prior year
on annual contractual lease escalations and asset acquisitions annualising in
the period, resulting in a 0.6% increase in net operating income over the
six-month period to 31 December 2021.
Sector Revenue HY2022 Revenue HY2021 Movement Opex HY2022 Opex HY2021 Movement NOI HY2022 NOI HY2021 Movement Rental Collection HY2022
USD'000 USD'000 % USD'000 USD'000 % USD'000 USD'000 % %
Retail 8,787 7,640 15.0% (3,788) (3,128) 21.1% 4,999 4,512 10.8% 88.5%
Hospitality 6,125 6,142 (0.3%) - - 0.0% 6,125 6,142 (0.3%) 83.2%
Office 8,170 8,538 (4.3%) (922) (945) (2.4%) 7,248 7,593 (4.6%) 108.0%
Industrial 1,289 1,083 19.0% (41) (41) 2.4% 1,248 1,042 19.8% 89.4%
Corporate Accommodation 6,276 6,599 (4.9%) (990) (944) 5.0% 5,286 5,655 (6.5%) 99.3%
LLR portfolio 1,417 1,344 5.4% (140) (176) (20.5%) 1,277 1,168 9.3% n/a
GREA portfolio 207 126 64.3% - - 0.0% 207 126 64.3% n/a
Corporate (27) - 0.0% 387 355 9.0% 360 355 1.4% n/a
TOTAL 32,244 31,472 2.5% (5,494) (4,879) 12.6% 26,750 26,593 0.6% 94.9%
Subsidiaries 24,147 23,609 2.3% (4,950) (4,132) 19.8% 19,197 19,477 (1.4%)
Associates 8,097 7,863 3.0% (544) (747) (27.1%) 7,553 7,116 6.1%
Note 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.
Property valuations
Investment properties are valued at each reporting date with valuations
performed every year by independent professional valuation experts accredited
by the Royal Institute of Chartered Surveyors' ("RICS") and compliant with
International Valuation Standards.
The table below show the movement of the property values from 30 June 2021 to
31 December 2021.
Sector Property Value Forex movement Additions Other Fair value movements Property Value Total Valuation Movement Fair Value Movement
30 June 2021 31 Dec 2021
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 % %
Retail 186,295 589 389 418 1,285 188,976 1.4% 0.7%
Hospitality 174,420 (8,190) 153 510 2,394 169,287 (2.9%) 1.4%
Office 191,472 (362) 128 186 1,549 192,973 0.8% 0.8%
Industrial 36,232 - 1,821 57 (365) 37,745 4.2% (1.0%)
Corporate Accommodation 127,899 - 176 140 78 128,293 0.3% 0.1%
LLR portfolio 26,999 (1,941) 106 - 332 25,496 (5.6%) 1.2%
GREA portfolio 12,557 - 1,060 - - 13,617 8.4% -
TOTAL 755,874 (9,904) 3,833 1,311 5,273 756,387 0.1% 0.7%
Subsidiaries 549,491 (6,740) 2,751 1,129 3,256 549,887 0.1% 0.6%
Associates 206,383 (3,164) 1,082 182 2,017 206,500 0.0% 1.0%
Total investment in income generating assets has remained relatively flat from
USD801.9 million in June 2021 to USD802.3 million in December 2021.
COMPOSITION OF INCOME PRODUCING ASSETS 31 Dec 2021 30 June 2021
USD'm USD'm
Investment properties 549.9 549.5
Investment properties included within 'Investment in associates and joint 192.6 193.8
ventures'
Properties under development within 'Investment in associates and joint 13.8 12.6
ventures'
756.3 755.9
Deposits paid on investment properties 5.8 5.7
Other investments, Property, plant & equipment, Intangibles & related 40.2 40.3
party loans
TOTAL INCOME PRODUCING ASSETS 802.3 801.9
Cost control
Administrative costs 31 December 2021 31 December 2020 Movement Movement
USD'000 USD'000 USD'000 %
Ongoing administrative costs 6,542 6,447 (95) -1.47%
Transaction costs 32 251 219 87.42%
Total administrative expenses 6,574 6,698 124 1.85%
A metric by which the Group measures its operating efficiency is the ongoing
administrative cost to assets ratio. The Group continues to target a
medium-term admin cost to assets ratio of under 1.0%. For the six months to 31
December 2021, the annualised ratio is 1.6% as compared to 1.7% for the year
ended 30 June 2021.
Net Asset Value and EPRA earnings per share
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
31 December 2021
31 December 2021
31 December 2020
31 December 2020
US$'000 Per Share (Diluted) US$'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA Earnings 8,413 2.56 9,498 3.09
Total Company Specific Adjustments (2,493) (0.76) 208 0.07
Adjusted EPRA Earnings 5,920 1.80 9,706 3.16
Total Company Specific Distribution Adjustments 4,122 1.28 2,103 0.72
TOTAL DISTRIBUTABLE EARNINGS 10,042 3.08 11,809 3.88
DIVIDEND DECLARED OUT OF PROFITS 8,158 2.50 4,568 1.50
EPRA NRV 400,242 86.66 399,539 124.40
EPRA NTA 390,702 84.60 388,965 121.10
EPRA NDV 339,799 73.57 330,370 102.90
As at 31 December 2021, EPRA NRV per share decreased by 15.3% from US$102.4cps
(June 2021) to US$86.7cps, while IFRS NAV per share dropped 12.7% to
US$73.6cps. In total, dilution of shares accounted for the drop in both EPRA
NRV and IFRS NAV per share.
NET ASSET VALUE EVOLUTION USD'000 US$ cps
June 2021 as reported - IFRS 270,858 84.3
Derivative financial instruments 2,628 0.8
Deferred Tax on Properties 55,372 17.3
EPRA NRV at 30 Jun 2021 328,858 102.4
Fair Value - Retail Assets 1,285 0.4
Fair Value - Office 1,549 0.5
Fair Value - Corporate Accommodation 78 0.0
Fair Value - Hospitality 2,394 0.7
Fair Value - Light Industrial (33) (0.0)
Fair value of financial Assets (7,327) (2.3)
Fair value of derivatives 1,252 0.4
Non-cash profits 828 0.3
Cash Profits 6,756 2.1
Movement in Foreign Currency Translation reserve (2,145) (0.7)
Dividend attributable to NCI 1,166 0.4
EPRA NRV before dilution 334,661 104.2
Issue of shares 65,581 (17.5)
EPRA NRV at 31 Dec 2021 400,242 86.7
Deferred Tax on Properties (59,065) (12.8)
Derivative financial instruments (1,378) (0.3)
IFRS NRV at 31 Dec 2021 339,799 73.6
Treasury
In line with our policy, the Group has successfully refinanced the majority of
the short-dated debt. Although the Group's weighted average debt expiry as at
30 June 2021 was 1.48 years, these actions have resulted in a temporary
increase to 1.68 years six months later as at 31 December 2021 until a more
suitable solution is concluded for the current year.
The impact of the global inflationary increases is expected to result in
interest rate hikes. This would be shielded by our contractual lease
escalations that are in place and the Group expects a favorable cumulative
impact to our service cover ratios. To further take advantage of this the
Group is looking at fixing a large component of variable rates in the
anticipating debt solution mentioned below.
One of the Group's major strategic goals is achieving an LTV of between 35% to
40%. The recent capital raise and perpetual note resulted in the Group meeting
the Board's near-term target of a 41.4% LTV.
Movement in Debt for the period As at 31 December 2021 As at 30 June 2021
USD'000 USD'000
Balance at the beginning of the period 410,588 392,999
Proceeds of interest bearing-borrowings 6,522 43,562
Overdraft converted to term loan - 7,203
Loan issue costs incurred (2,202) (1,520)
Amortisation of loan issue costs 1,318 2,974
Foreign currency translation differences (6,511) 7,548
Interest accrued 229 (1,173)
Debt settled during the year (47,024) (41,005)
As at period end 362,920 410,588
Our multi-bank approach has once again proven to be an effective approach to
funding and banking in general. The following debt transactions were concluded
during the period under review as a short-term measure to create a platform
for a more strategic and suitable balance sheet solution.
Subsidiaries
· The Group has extended all its State Bank of Mauritius facilities
to 31 March 2025.
· The Investec Bank facility on the AnfaPlace Mall held by Freedom
Property Fund SARL in Morocco has been extended to April 2023, as part of the
terms of the refinance, an amount of US$6 million will be repayable over the
period of which US$3.6 million have been paid as at 31 December 2021 and
US$2.4 million during January 2022. The balance of the loan at 31 December
2021 was US$41.2 million.
· The Group's RCF facilities of US$ 7.0 million held with Nedbank
and EUR26.5 million held with SBSA have been extended to April 2023. These
facilities were settled by the capital raise and are fully committed and
undrawn as at 31 December 2021.
Associates and Joint Ventures
· The BHI syndicated loan of EUR 50.0 million has been extended to
May 2023 with State Bank of Mauritius taking over the Investec exposure.
· Upcoming Debt - Bank of China facility in Zambia of US$76.4
million (US$ 47.1 million net after back-to-back loans of US$29.3 million from
Zambian partners - refer Note 4).
· The Group is actively engaging with its leading financiers to
incorporate the facility into a larger debt syndication covering multiple
jurisdictions and sectors. The target solution will bring scale,
diversification, tenor, and optimal funding costs to the Group's debt
portfolio.
The total capital exposure to debt providers (net of interest accrued and
unamortised loan issue costs) as at 31 December 2021 is as follows:
Debt in Subsidiaries Debt in associates Total Debt in Subsidiaries Debt in Total
associates
USD'000 USD'000 USD'000 % USD'000 USD'000 USD'000 %
Standard Bank Group 140,000 - 140,000 34.2% 170,676 - 170,676 37.5%
Bank of China 84,960 - 84,960 20.8% 84,960 - 84,960 18.6%
State Bank of Mauritius 60,804 16,805 77,609 19.0% 62,840 8,830 71,670 15.7%
Investec Group 41,246 - 41,246 10.1% 47,023 8,830 55,853 12.3%
Absa Group 15,092 7,500 22,592 5.5% 16,179 7,500 23,679 5.2%
ABC Banking Corporation 10,913 - 10,913 2.7% 14,918 - 14,918 3.3%
Nedbank CIB - 3,100 3,100 0.8% 7,000 3,100 10,100 2.2%
Mauritius Commercial Bank - 8,403 8,403 2.1% - 8,830 8,830 1.9%
Maubank 5,312 - 5,312 1.3% 6,469 - 6,469 1.4%
First National Bank - 6,708 6,708 1.5% - 5,294 5,294 1.2%
Housing finance corporation - 2,332 2,332 0.6% - 2,209 2,209 0.5%
Bank of Gaborone - 1,400 1,400 0.3% - 1,077 1,077 0.2%
Ethos Private Equity 2,475 - 2,475 0.6% - - - -
Blue Peak Private Equity 2,250 - 2,250 0.5% - - - -
TOTAL BANK DEBT 363,052 46,248 409,300 100% 410,065 45,670 455,735 100%
Interest accrued 4,405 - 4,405 4,176 - 4,176
Unamortised loan issue costs (4,537) - (4,537) (3,653) - (3,653)
TOTAL DEBT 362,920 46,248 409,168 410,588 45,670 456,258
Dividend
An interim dividend per share has been declared for the six-month period ended
31 December 2021 of US$2.5 cents per share, paying out at least 80 percent of
distributable earnings.
The below reconciliation provides further details of the IFRS statement of
comprehensive income and the adjustments made to provide additional insight
into the components of properties held in joint ventures and associates, as
well as the portion attributable to non-controlling interests (for properties
consolidated by Grit, but part-owned by minority partners.
IFRS YTD Split from Associate Split NCI GRIT Economic IS YTD Distributable earnings PY Distributable earnings Movement
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross rental income 24,147 8,097 (3,583) 28,661 27,280 31,824 (4,544)
Property operating expenses (4, 950) (544) 1,307 (4,187) (4,173) (3,851) (322)
Net operating profit 19,197 7,553 (2,276) 24,474 23,107 27,973 (4,866)
Other income 568 2,553 (146) 2,975 2,976 191 2,785
Administration expenses (6,542) (923) 420 (7,045) (6,696) (7,221) 525
Net impairment charge on financial assets 1,100 6 (91) 1,015 - - -
Profit from operations 14,323 9,189 (2,093) 21,419 19,387 20,943 (1,556)
Fair value adjustment on investment properties 3,256 2,017 (1,121) 4,152 - 98 (98)
Transaction costs (32) - - - - - -
Fair value adjustment on other investments - (461) - (461) - - -
Fair value adjustment on other financial asset (6,716) (150) - (6,866) - - -
Fair value adjustment on derivative financial instruments 1,252 - - 1,252 - - -
Impairment of loans - - (5) (5) - - -
Share-based payment (1,162) - - (1,162) - - -
Share of profits from associates 10,286 (10,286) - - - - -
Gain from bargain purchase on associates - 2 - 2 - - -
Foreign currency (losses) / gains (1,132) 1,478 (109) 237 - - -
Profit before interest and taxation 20,075 1,789 (3,328) 18,536 19,387 21,041 (1,654)
Interest income 923 1,539 (1) 2,461 2,461 2,740 (279)
Finance costs - Intercompany - - 1,427 1,427 1,427 1,281 146
Finance charges (12,536) (3,052) 919 (14,669) (13,560) (13,786) 226
Profit before taxation 8,462 276 (983) 7,755 9,715 11,276 (1,561)
Current tax (713) (211) 167 (757) (757) (597) (160)
Deferred tax (2,902) (67) 247 (2,722) - - -
Profit after taxation 4,847 - (569) 4,278 8,958 10,679 (1,721)
RBO OCI - - - - - - -
Total comprehensive income 4,847 - (569) 4,278 8,958 10,679 (1,721)
VAT - - - - 1,084 1,130 (46)
Distributable earnings - - - - 10,042 11,809 (1,767)
Profit Withheld - - - - (1,884) (7,241) 5,357
Dividend - - - - 8,158 4,568 3,590
Leon van de Moortele
Chief Financial Officer
28 February 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 2021 are
set out on pages 24 to 31 of the 2021 Integrated Annual Report together with
the respective mitigating actions and potential consequences to the Group's
performance in terms of achieving its objectives. These principal risks are
not an exhaustive list of all risks facing the Group but are a snapshot of the
Company's main risk profile as at year end.
The Board has reviewed the principal risks and existing mitigating actions in
the context of the second half of the current financial year. The Board
believes there has been no material change to the risk categories and are
satisfied that the existing mitigation actions remain appropriate to manage
them.
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The directors confirm that the abridged consolidated half year financial
statements have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as issued by the International Accounting Standards Board ("IASB")
and that the half year management report includes a fair review of the
information required by the Disclosure Guidance and Transparency Rules ("DTR")
4.2.7R and DTR 4.2.8R, namely:
· Important events that have occurred during the first six months
and their impact on the abridged set of half year unaudited financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions in the first six months and a
fair review of any material changes in the related party transactions
described in the last Annual Report.
The maintenance and integrity of the Grit website is the responsibility of the
directors.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from the legislations in other jurisdictions.
The directors of the Group are listed in its Annual Report for the year ended
30 June 2021. A list of current directors is maintained on the Grit website:
www.grit.group. (http://www.grit.group/)
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
ABRIDGED CONSOLIDATED STATEMENT OF INCOME STATEMENT
Unaudited Unaudited
six months ended six months ended
31 Dec 2021 31 Dec 2020
Notes US$'000 US$'000
Gross property income 9 24,147 23,609
Property operating expenses (4,950) (4,037)
Net property income 19,197 19,572
Other income 568 91
Administrative expenses (6,542) (6,698)
Net impairment charge on financial assets 1,100 643
Profit from operations 14,323 13,608
Fair value adjustment on investment properties 3,256 (4,327)
Contractual receipts from vendors of investment properties 2 - 98
Total fair value adjustment on investment properties 3,256 (4,229)
Corporate restructure costs (32) -
Fair value adjustment on other financial liability (6,716) 353
Fair value adjustment on derivative financial instruments 1,252 428
Share-based payment expense (1,162) (64)
Share of profits / (loss) from associates and joint ventures 3 10,286 1,557
Impairment of loans and other receivables - 825
Foreign currency (losses) / gains (1,132) 1,331
Profit before interest and taxation 20,075 13,809
Interest income 10 923 1,293
Finance costs 11 (12,536) (12,470)
Profit for the period before taxation 8,462 2,632
Taxation (3,615) (4,909)
Profit / (loss) for the period after taxation 4,847 (2,277)
Profit / (loss) attributable to:
Owners of the parent 4,278 1,732
Non-controlling interests 569 (4,009)
4,847 (2,277)
Basic and diluted earnings per share (cents) 13 1.30 0.55
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
six months ended six months ended
31 Dec 2021 31 Dec 2020
US$'000 US$'000
Profit / (loss) for the year 4,847 (2,277)
Retirement benefit obligation - -
(Loss) / profit on translation of functional currency (2,626) 8,649
Other comprehensive expense that may be reclassified to profit or loss (2,626) 8,649
Total comprehensive income relating to the year 2,221 6,372
Total comprehensive income/ (expense) attributable to:
Owners of the parent 2,133 8,751
Non-controlling interests 88 (2,379)
2,221 6,372
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited as at Audited as at Unaudited as at
31 Dec 2021 30 June 2021 31 Dec 2020
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Investment properties 2 549,887 549,491 591,334
Deposits paid on investment properties 2 5,753 5,698 5,050
Property, plant and equipment 2,260 2,448 2,591
Intangible assets 770 480 543
Other investments 1 1 1
Investments in associates and joint ventures 3 188,079 167,492 168,293
Related party loans receivable 92 - 2,636
Other loans receivable 4 - - 29,540
Trade and other receivables 5 1,246 2,166 1,966
Deferred tax 21,042 20,067 27,993
Total non-current assets 769,130 747,843 829,947
Current assets
Trade and other receivables 5 36,058 18,946 33,172
Current tax receivable 1,397 1,440 641
Related party loans receivable 248 197 171
Other loans receivable 4 37,050 37,303 11,794
Derivative financial instruments 46 87 79
Cash and cash equivalents 34,949 4,890 10,183
Total current assets 109,748 62,863 56,040
Total assets 878,878 810,706 885,987
Equity and liabilities
Total equity attributable to ordinary shareholders
Ordinary share capital 528,670 463,842 463,842
Treasury shares reserve (21,312) (18,406) (18,406)
Foreign currency translation reserve (650) 1,495 3,140
Antecedent dividend reserve 3,659 - -
Accumulated losses (170,568) (176,073) (118,206)
Equity attributable to owners of the Company 339,799 270,858 330,370
Preference share capital 6 25,481 25,481 25,481
Perpetual preference note 7 25,169 - -
Non-controlling interests (19,012) (17,935) (12,028)
Total equity 371,437 278,404 343,823
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840 12,840
Proportional shareholder loans 17,725 17,582 16,116
Interest-bearing borrowings 8 259,904 215,565 400,538
Lease liabilities 750 750 905
Related party loans payable 848 648 -
Deferred tax liability 55,535 51,720 65,594
Total non-current liabilities 347,602 299,105 495,993
Current liabilities
Interest-bearing borrowings 8 103,016 195,023 7,948
Lease liabilities 57 205 179
Trade and other payables 23,305 24,843 26,129
Current tax payable 1,215 1,438 1,926
Derivative financial instruments 1,424 2,714 3,653
Related party loans payable 17,799 91 78
Other financial liability 13,023 6,307 4,515
Bank overdrafts - 2,576 1,743
Total current liabilities 159,839 233,197 46,171
Total liabilities 507,441 532,302 542,164
Total equity and liabilities 878,878 810,706 885,987
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
six months ended six months ended
31 Dec 2021 31 Dec 2020
Notes US$'000 US$'000
Cash generated from operations
Profit before taxation for the period 8,462 2,632
Adjusted for:
Depreciation and amortisation 320 309
Interest income 10 (923) (1,293)
Share of profits from associates and joint ventures 3 (10,286) (1,557)
Finance costs 11 12,536 12,470
IFRS 9 charges (1,100) (2,260)
Foreign currency losses / (gains) 1,132 (1,331)
Straight-line rental income accrual (352) 268
Amortisation of lease premium (1,000) 1,254
Share based payment expense 1,162 64
Fair value adjustment on investment properties 2 (3,256) 4,229
Fair value adjustment on other financial liability 6,716 (353)
Fair value adjustment on derivative financial instruments (1,252) (428)
12,159 14,004
Changes to working capital
Movement in trade and other receivables 870 (10,206)
Movement in trade and other payables (2,596) 2,285
Cash generated from operations 10,433 6,083
Taxation paid (887) (365)
Net cash generated from operating activities 9,546 5,718
Cash utilised on investing activities
Acquisition of, and additions to investment properties 2 (2,542) (3,423)
Deposits (paid) / refunded on investment properties - (550)
Additions to property, plant and equipment (36) (14)
Additions to intangible assets (378) (62)
Acquisition of associates and joint ventures - (1,998)
Dividends and interest received from associates and joint ventures 2,093 2,879
Interest received 1,047 916
Proceeds from partial disposal of investment in subsidiaries - 5,357
Related party loans receivable (226) -
Proceeds from disposal of property, plant and equipment - 93
Related party loans payable 456 (32,883)
Other loans advanced - (31)
Proportional shareholder loans received from associates 2,002 1,143
Proportional shareholder loans repaid (472) -
Proceeds from proportional shareholder loans 393 6,501
Other loans repayment received - 1,089
Net cash generated / (utilised) in investing activities 2,337 (20,983)
Proceeds from the issue of equity instruments 83,767 9,811
Equity issuance costs (9,217) (114)
Dividends paid to non-controlling shareholders (1) (417)
Ordinary dividends paid - 1
Proceeds from issue of preference shares 6 - 25,481
Proceeds from interest bearing borrowings 8 6,522 32,517
Settlement of interest-bearing borrowings 8 (47,024) (24,669)
Finance costs (12,942) (13,441)
Payments of leases (173) (75)
Net cash generated from financing activities 20,932 29,094
Net movement in cash and cash equivalents 32,815 13,829
Cash at the beginning of the year 2,314 (5,629)
Effect of foreign exchange rates (180) 240
Total cash and cash equivalents at the end of the period 34,949 8,440
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share capital Treasury shares Foreign currency translation reserve Antecedent Dividend reserve Accumulated losses Preference share capital Perpetual preference note Non-controlling interests Total
equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 July 2020 454,145 (18,406) (4,072) - (133,784) - - (614) 297,269
Profit / (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 income / (expense) - - 5,374 - (51,885) - - (7,818) (54,329)
Share based payments - - - - 127 - - - 127
Ordinary dividends paid - - - - (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 (audited) 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Balance as at 1 July 2020 454,145 (18,406) (4,072) - (133,784) - - (614) 297,269
Profit for the period - - - - 1,732 - - (4,009) (2,277)
Other comprehensive expense for the period - - 7,019 - - - - 1,630 8,649
Total comprehensive income - - 7,019 - 1,732 - - (2,379) 6,372
Share based payments - - - - 64 - - - 64
Dividends paid to non-controlling shareholders - - - - - - - (417) (417)
Ordinary shares issued 9,811 - - - - - - - 9,811
Preference shares issued - - - - - 25,481 - - 25,481
Share issue expenses (114) - - - - - - - (114)
Transaction with non-controlling interests without change in control - - 193 - 13,782 - - (8,618) 5,357
Balance as at 31 December 2020 (unaudited) 463,842 (18,406) 3,140 - (118,206) 25,481 - (12,028) 343,823
Balance as at 1 July 2021 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
Profit for the period - - - - 4,278 - - 569 4,847
Other comprehensive expense for the period - - (2,145) - - - - (481) (2,626)
Total comprehensive income - - (2,145) - 4,278 - - 88 2,221
Share based payments - - - - 62 - - - 62
Treasury shares - (2,906) - - - - - - (2,906)
Ordinary shares issued 76,098 - - - - - - - 76,098
Transfer to antecedent dividend reserve (3,659) - - 3,659 - - - - -
Perpetual preference note issued - - - - - - 26,775 - 26,775
Perpetual preference note issue expenses - - - - - - (1,606) - (1,606)
Share issue expenses (7,611) - - - - - - - (7,611)
Dividends distributable to non-controlling shareholders - - - - 1,165 - - (1,165) -
Balance as at 31 December 2021 (unaudited) 528,670 (21,312) (650) 3,659 (170,568) 25,481 25,169 (19,012) 371,437
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of this abridged
consolidated financial statements are set out below.
1.1 Basis of preparation
The unaudited abridged consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the IASB; the Financial Pronouncements as issued by Financial Reporting
Standards Council and the LSE and SEM Listings Rules. The unaudited abridged
consolidated financial statements have been prepared on the going-concern
basis and were approved for issue by the Board on 28 February 2022.
Going Concern
The directors are required to consider an assessment of the Group's ability to
continue as a going concern when producing the interim abridged consolidated
financial statements.
The Directors are of the opinion that after reconsideration of the items
highlighted in the Integrated Annual Report published on 29 October 2021 (see
pages 134 to 135), the risks assessed have substantially reduced. The Issue in
December 2021 (and resultant drop in LTV from 53% to 41.4%) and the
stabilisation of the property portfolio valuations have contributed to this
reduction, however the directors have concluded that there remains a material
uncertainty that may cast significant doubt on the Group's and Company's
ability to continue to operate as a going concern.
The following factor remains a consideration in assessing going concern:
1. One of the debt facilities (for a net amount of US$47.1 million, being
the total loan amount of US$76.4 million, less the back-to-back loan to the
property partners of US$29.3 million) is required to be refinanced by April
2022. Whilst the Directors have no reason to believe that this will not be
refinanced, should this not occur, the Group and Company would need to secure
additional financing to avoid being in default. Three related properties
(valued at US$123.9 million) as well as a group guarantee are currently
pledged as security for the facility.
Notwithstanding the outstanding material uncertainty on the facility detailed
above and taking into account the results of the analysis and the various
mitigating actions available to the Company and the Group, the Board has
concluded that it is appropriate to prepare the financial statements on the
going concern basis. The financial statements do not contain the adjustments
that would be necessary if the Company and the Group were unable to continue
as a going concern.
Functional and presentation currency
The consolidated financial statements are prepared and are presented in United
States Dollars (US$). Amounts are rounded to the nearest thousand, unless
otherwise stated. Some of the underlying subsidiaries and associates have
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.
1.2 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is a person or group that is responsible for allocating
resources and assessing performance of the operating segments. The Group has
determined the board as its chief operating decision-maker as it is the board
that makes the Group's strategic decisions. Each operating entity has its own
Segmental and Geographical allocation, and it is not allocated to more than
one sector.
1.3 Critical Judgements and estimates
The preparation of these abridged consolidated 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
The principal areas where such judgements have been applied are:
Unconsolidated structured entity
Drive in Trading (DiT), a B-BBEE consortium, secured a facility of US$33.4
million from the Bank of America N.A (UK Branch) ("BoAML") to finance its
investment in Grit. The BoAML facility was granted to DiT after South Africa's
Government Employees Pension Fund (GEPF), represented by Public Investment
Corporation SOC Limited ("PIC"), provided a guarantee to BoAML in the form of
a Contingent Repurchase Obligation ("CRO") for up to US$35 million. The terms
of the CRO obligate PIC to acquire the loan granted to DiT should DiT default
under the BoAML facility.
In order to facilitate the above, the Group agreed to de-risk 50% of PIC's
US$35 million exposure to the CRO, by granting PIC a guarantee whereby should
BoAML enforce the CRO, the Group would indemnify PIC for up to 50% of the
losses, capped at US$17.5 million, following the sale of the underlying
securities, being the shares held by DiT in Grit.
Given the unusual structure of the transaction, the Group has determined that
DiT has limited and predetermined activities and can be considered a
"structured entity" under IFRS 12 as the "design and purpose" of DiT was to
fund Grit rights issue and at the same time enable Grit to obtain B-BBEE
credentials.
As the Group does not have both, power to direct the activities of DiT and an
exposure to variable returns, the Group has exercised judgment on not to
consolidate DiT but disclose it as an unconsolidated structured entity due to
DiT being a related party.
Freedom Asset Management (FAM) as a subsidiary
The Group has considered Freedom Asset Management (FAM) to be its subsidiary
for consolidation purposes due to the Group's implied control of FAM, as the
Group has ability to control the variability of returns of FAM and has the
ability to affect returns through its power to direct the relevant activities
of FAM. The Group does not own any interest in FAM however it has exposure to
returns from its involvement in directing the activities of FAM.
Grit Executive Share Trust (GEST) as a subsidiary
The Group has considered Grit Executive Share Trust (GEST) to be its
subsidiary for consolidation purposes due to the Group's implied control of
GEST, as the Group's ability to appoint the majority of the trustees and to
control the variability of returns of GEST. The Group does not own any
interest in GEST but is exposed to the credit risk and losses of (GEST) as the
Group shall bear any losses sustained by GEST and shall be entitled to receive
and be paid any profits made in respect of the purchase, acquisition, sale or
disposal of unawarded shares in the instance where shares revert back to GEST.
No non-controlling interest has been accounted for in the current year.
Gateway Real Estate Africa Ltd (GREA) as an associate
The Group has considered Gateway Real Estate Africa Ltd (GREA) to be its
associate for consolidation purposes due to the Group's significant influence
of GREA, as the Group has a direct and indirect ability to appoint some
members to the Board. The Group owns 19.98% of GREA and benefit from profits
of GREA. The group also has the ability to exercise significant influence to
participate in the financial and operating policy decisions of GREA but do not
control or jointly control this policy as the CEO of the Group is also on the
investment committee of GREA and has a close working relationship and history
with Mr Pearson (MD of GREA).
Acquisition of investment properties
Where investment properties are acquired through the acquisition of corporate
interests, the directors have regard to the substance of the assets and
activities of the acquired entity in determining whether the acquisition
represents the acquisition of a business.
Where such acquisitions are not judged to be an acquisition of a business
under IFRS 3, the transactions are accounted for as if the Group had acquired
the underlying investment property directly, together with any associated
assets and liabilities. Accordingly, no goodwill arises, rather the cost of
acquiring the corporate entity is allocated between the identifiable assets
and liabilities of the entity, based on their relative fair values at the
acquisition date.
Investments, associates and joint ventures
Where investment properties are acquired through the acquisition of corporate
interests, the directors have regard to the substance of the assets and
activities of the acquired entity in determining whether the acquisition
represents the acquisition of a business.
Where such acquisitions are not judged to be an acquisition of a business
under IFRS 3, the transactions are accounted for as if the Group had acquired
the underlying investment property directly, together with any associated
assets and liabilities. Accordingly, no goodwill arises, rather the cost of
acquiring the corporate entity is allocated between the identifiable assets
and liabilities of the entity, based on their relative fair values at the
acquisition date.
Estimates
The principal areas where such estimations have been made are:
Fair value of investment properties
The fair value of investment properties is determined using a combination of
the discounted cash flows method and the income capitalisation valuation
method, using assumptions that are based on market conditions existing at the
end of the relevant reporting year.
Material valuation uncertainty due to Novel Corona virus (" COVID-19")
The outbreak of COVID-19, declared by the World Health Organisation as a
"Global Pandemic" on the 11th March 2020, has and continues to impact many
aspects of daily life and the global economy - with some real estate markets
having experienced lower levels of transactional activity and liquidity.
Travel, movement and operational restrictions have been implemented by many
countries.
In some cases, "lockdowns" have been applied to varying degrees and to reflect
further "waves" of COVID-19; although these may imply a new stage of the
crisis, they are not unprecedented in the same way as the initial impact. The
pandemic and the measures taken to tackle COVID-19 continue to affect
economies and real estate markets globally. Nevertheless, as at the valuation
date property markets are mostly functioning again, with transaction volumes
and other relevant evidence at levels where an adequate quantum of market
evidence exists upon which to base opinions of value. For the avoidance of
doubt this explanatory note has been included to ensure transparency and to
provide further insight as to the market context under which the valuation
opinion was prepared. In recognition of the potential for market conditions to
move rapidly in response to changes in the control or future spread of
COVID-19, we highlight the importance of the valuation date. There has been no
change in the valuation methodology used for investment property as a result
of COVID-19.
Fair value of financial instruments
The Group has estimated the value of its obligation arising from its guarantee
to de-risk 50% of PIC's exposure to the BoAML CRO. The Group's obligation is
based on the occurrence or non-occurrence of uncertain future events (the
probability of DiT defaulting on the BoAML facility). Therefore, the fair
value of the obligation was based on the probability of DiT defaulting on the
facility (management has assessed the risk of default as low for the periods
ending 31 December 2021, 30 June 2021 and 31 December 2020).
Taxation
Judgments and estimates are required in determining the provision for income
taxes due to the complexity of legislation. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated
tax inspection issues in the jurisdictions in which it operates based on
estimates of whether additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax provisions in the
year in which such determination is made.
The Group recognises the net future tax benefit related to deferred income tax
assets to the extent that it is probable that the deductible temporary
differences will reverse in the foreseeable future. Assessing the
recoverability of deferred tax assets requires the Group to make significant
estimates related to expectations of future taxable income. Estimates of
future taxable income are based on forecast cash flows from operations and the
application of existing tax laws in each relevant jurisdiction. To the extent
that future cash flows and taxable income differ significantly from estimates,
the ability of the Group to realise the net deferred tax assets recorded at
the end of the reporting year could be impacted.
COVID-19
Certain estimates have been made taking into the consideration of the COVID-19
pandemic. Refer to the Going Concern under Note 1.1.
2. INVESTMENT PROPERTIES
As at As at
31 Dec 2021 30 June 2021
US$'000 US$'000
Net carrying value of properties 549,887 549,491
Movement for the year excluding straight-line rental income accrual, lease
incentive and right of use of land
Investment property at the beginning of the year 535,433 565,773
Other capital expenditure and construction 2,634 10,130
Foreign currency translation differences (6,532) 10,971
Revaluation of properties at end of year 3,256 (51,297)
Contractual receipts from vendors of investment properties (reduction in - (144)
purchase price)
As at period end 534,791 535,433
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 534,791 535,433
Right of use of land 384 409
Lease incentive 7,823 7,027
Straight-line rental income accrual 6,889 6,622
Total valuation of properties 549,887 549,491
Investment property pledged as security
Certain of the Group's investment property has been pledged as security for
interest-bearing borrowings (note 8) as follows:
• Mozambican investment properties with a market value of US$296.2 million are
mortgaged to Standard Bank of South Africa to secure debt facilities amounting
to US$140.0 million (June 2021: Mozambican investment properties with a market
value of US$294.2 million are mortgaged to Standard Bank of South Africa to
secure debt facilities amounting to US$140.0 million.)
• Moroccan investment properties with a market value of US$77.8 million (June
2021: US$79.5 million) are mortgaged to Investec Bank South Africa to secure
debt facilities amounting to US$40.8 million (June 2021: US$46.7 million).
• Mauritian investment properties with a market value of US$62.3 million (June
2021: US$65.3 million) are mortgaged to ABSA Bank Mauritius to secure debt
facilities amounting to US$7.2 million (June 2021: US$7.5 million) and State
Bank of Mauritius to secure debt facilities amounting to US$26.6 million (June
2021: US$27.0 million).
• Kenyan investment properties with a market value of US$27.5 million (June
2021: US$27.2 million) are mortgaged to Bank of China to secure debt
facilities amounting to US$8.6 million (June 2021: US$8.6 million).
• Zambian investment properties with a market value of US$49.4 million (June
2021: US$46.2 million) are mortgaged to Bank of China to secure debt
facilities amounting to US$28.7 million (June 2021: US$28.7 million).
• Ghanaian investment properties with a market value of US$15.6 million (June
2021: US$16.4 million) are mortgaged to ABSA Bank Ghana Limited to secure debt
facilities amounting to US$7.9 million (June 2021: US$8.7 million).
Summary of valuations by reporting date Most recent independent valuation date Valuer (for the most recent valuation) Sector Country As at As at
31 Dec 2021 30 June 2021
US$'000 US$'000
Commodity House Phase I building 31-Dec-21 REC Office Mozambique 47,687 47,214
Commodity House Phase II building 31-Dec-21 REC Office Mozambique 19,176 19,047
Hollard Building 31-Dec-21 Directors' valuation Office Mozambique 21,408 20,816
Vodacom Building 31-Dec-21 REC Office Mozambique 50,416 49,624
Zimpeto Square 31-Dec-21 Directors' valuation Retail Mozambique 4,435 4,587
Bollore Warehouse 31-Dec-21 Directors' valuation Light industrial Mozambique 10,247 9,012
ABSA House 31-Dec-21 Directors' valuation Office Mauritius 12,406 13,109
Anfa Place Mall 31-Dec-21 Knight Frank Retail Morocco 77,807 79,535
Tamassa Resort 31-Dec-21 Knight Frank Hospitality Mauritius 49,936 52,232
Vale Housing Compound 31-Dec-21 REC Accommodation Mozambique 57,675 57,546
Imperial Distribution Centre 31-Dec-21 Directors' valuation Light industrial Kenya 24,448 24,170
Mara Viwandani 31-Dec-21 Directors' valuation Light industrial Kenya 3,050 3,050
Mall de Tete 31-Dec-21 Directors' valuation Retail Mozambique 14,531 15,952
Acacia Estate 31-Dec-21 REC Accommodation Mozambique 70,618 70,353
5th Avenue Building 31-Dec-21 Knight Frank Office Ghana 15,597 16,440
Mukuba Mall 31-Dec-21 Knight Frank Retail Zambia 49,409 46,210
Club Med Cap Skirring Resort 31-Dec-21 Directors' valuation Hospitality Senegal 21,041 20,594
Total valuation of investment properties directly held by the Group 549,887 549,491
Deposits paid on Imperial Distribution Centre Phase 2 2,203 2,148
Deposits paid on Capital Place Limited 3,550 3,550
Total deposits paid on investment properties 5,753 5,698
Total carrying value of investment properties including deposits paid 555,640 555,189
Investment properties held within associates and joint ventures - Group share
Buffalo Mall - Buffalo Mall Naivasha Limited (50%) 31-Dec-21 Directors' valuation Retail Kenya 5,567 5,441
Kafubu Mall - Kafubu Mall Limited (50%) 31-Dec-21 Knight Frank Retail Zambia 11,092 9,623
CADS II Building - CADS Developers Limited (50%) 31-Dec-21 Directors' valuation Office Ghana 15,116 15,075
Cosmopolitan Shopping Centre - Cosmopolitan Shopping Centre Limited (50%) 31-Dec-21 Directors' valuation Retail Zambia 26,136 24,945
Canonniers, Mauricia and Victoria Resorts and Spas - Beachcomber Hospitality 31-Dec-21 Knight Frank Hospitality Mauritius 98,310 101,594
(44.42%)
Capital Place - Capital Place Limited (50.0%) 31-Dec-21 Directors' valuation Office Ghana 11,167 10,150
Letlole La Rona Limited (30%) - 21 Investment properties 31-Dec-21 Knight Frank Light industrial Botswana 17,629 18,647
Letlole La Rona Limited (30%) - 1 Investment property 31-Dec-21 Knight Frank Hospitality Botswana 194 209
Letlole La Rona Limited (30%) - 2 Investment properties 31-Dec-21 Knight Frank Retail Botswana 5,048 5,325
Letlole La Rona Limited (30%) - 1 Investment property 31-Dec-21 Knight Frank Office Botswana 1,418 1,517
Letlole La Rona Limited (30%) - 1 Investment property 31-Dec-21 Knight Frank Accommodation Botswana 1,206 1,300
Gateway Real Estate Africa Ltd (19.98%) 31-Dec-21 Various Other Investments Mauritius 13,617 12,557
Total of investment properties acquired through associates and joint ventures 206,500 206,383
Total portfolio 762,140 761,572
Functional currency of total investment property portfolio
United States Dollars 463,003 454,837
Euros 169,287 174,420
Mauritian Rupees 12,406 13,109
Moroccan Dirham 77,807 79,535
Botswanan Pula 25,495 26,998
Kenyan Shilling 3,050 3,050
Zambian Kwacha 11,092 9,623
Total portfolio 762,140 761,572
Valuation policy and methodology for investment properties held by the Group
and by associates and joint ventures
For this interim reporting period, investment properties have been valued by
reputable RICS accredited valuation experts who have sufficient expertise in
the jurisdictions where the properties are located. As per the valuation
policy, external valuations are obtained for the top 50 % of the portfolio or
where any property specific changes may have affected the property valuation.
For December 2021, a total of 77.2% of the property portfolio was externally
valued and a directors' valuation were utilised for the following properties:
• Mall de Tete
• Imperial Distribution Centre
• Mara Viwandani
• Club Med Cap Skirring Resort
• Hollard Building
• Zimpeto Square
• Bollore Warehouse
• ABSA House
• Buffalo Mall
• Gateway Real Estate Africa Ltd (various)
• Cosmopolitan Shopping Centre
• CADS II Building
• Capital Place
All valuations that are performed in the functional currency of the relevant
property company are converted to United States Dollars at the effective
closing rate of exchange. All independent valuations have been undertaken in
accordance with the RICS Valuation Standards that were in effect at the
relevant valuation date and are further compliant with International Valuation
Standards. Market values presented by valuers have also been confirmed by the
respective valuers to be fair value in terms of IFRS.
Independent valuations were performed at 31 December 2021 by REC, Chartered
Surveyors and Knight Frank, Chartered Surveyors, using the discounted cash
flow method for all building valuations and using the comparable method for
all land parcel valuations.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at As at
31 Dec 2021 30 June 2021
US$'000 US$'000
The following entities have been accounted for as associates and joint
ventures in the current
and comparative consolidated financial statements using the equity method:
Name of joint venture Country % held
Kafubu Mall Limited(3) Zambia 50.00% 10,897 9,502
Cosmopolitan Shopping Centre Limited(3) Zambia 50.00% 26,202 25,076
CADS Developers Limited(3) Ghana 50.00% 7,019 7,607
Carrying value of joint ventures 44,118 42,185
Name of associate Country of incorporation and operation % held
Letlole La Rona Limited Botswana 30.00% 20,788 21,672
Buffalo Mall Naivasha Limited Kenya 50.00% 3,312 3,402
Gateway Real Estate Africa Ltd Mauritius 19.98% 40,079 20,706
Capital Place Limited Ghana 50.00% 7,721 7,471
Beachcomber Hospitality Investments Limited Mauritius 44.42% 72,061 72,056
Carrying value of associates 143,961 125,307
Joint ventures 44,118 42,185
Associates 143,961 125,307
Total carrying value of associates and joint ventures 188,079 167,492
Set out below is the summarised financial information of each of the Group's
associates and joint ventures for each reporting period together with a
reconciliation of this financial information to the carrying amount of the
Group's interests in each associate and joint venture. Where an interest in an
associate or joint venture 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 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
Reconciliation to carrying
value in associates and joint ventures
Opening Balance 1 July 2021 21,672 9,502 72,056 7,471 20,706 7,607 25,076 3,402 167,492
Acquired during the period - - - - 17,452 - - - 17,452
Profit / (losses) from associates and joint ventures
- Revenue 1,417 471 3,598 512 207 791 974 127 8,097
- Property operating expenses (140) (87) - (89) - (11) (149) (68) (544)
- Admin expenses, recoveries and other income (40) (4) (13) (50) 1,701 (1) (7) (7) 1,579
- Net impairment charge on financial assets - 12 - (5) - - - - 7
- Fair value adjustment on other investments - - - - (461) - - - (461)
- Unrealised foreign exchange gains/(losses) - 1,455 - (65) 134 11 (47) (10) 1,478
- Interest income / (costs) 44 - - - - - 1 - 45
- Finance charges (230) (3) (606) (146) (165) (212) - (143) (1,505)
- Fair value movement on investment property 332 (2,019) 1,540 993 - (21) 1,181 11 2,017
- Fair value movement on other financial asset - - (467) - 317 - - - (150)
- Current tax (51) (21) (234) - 125 - (31) - (212)
- Deferred tax - - (65) - - - - - (65)
Total profits from associates and joint ventures 1,332 (196) 3,753 1,150 1,858 557 1,922 (90) 10,286
Dividends received and interest received (600) - (1,392) - - (101) - - (2,093)
Profit in Gateway Delta - - - - 55 - - - 55
Repayment of proportionate shareholders loan - (415) 1,153 (900) - (1,044) (796) - (2,002)
Foreign currency translation differences (1,616) 2,006 (3,509) - 8 - - - (3,111)
Carrying value of associates and joint ventures 20,788 10,897 72,061 7,721 40,079 7,019 26,202 3,312 188,079
Investments in the period ended 31 December 2021
Through its 19.98% equity interest in GREA, the private African property
development company that Grit co-founded, Grit has an interest in the
developer's accretive pipeline assets and development returns GREA has made
strong progress on securing an attractive risk-mitigated pipeline in the
office, embassy corporate accommodation and data centre sectors including:
• A 112 unit diplomatic residential tower in Ethiopia
predominantly tenanted to OBO, a division of the US State Department, was
completed in November 2021. Estimated total project cost c.US$54 million.
• The construction of a 90 unit diplomatic apartment and
town house community in Kenya fully tenanted by OBO, a division of the US
State Department, with expected completion date in Q1 Q2 2022.
• Construction of a 1078sqm GLA data centre in Lagos,
Nigeria tenanted to African Data Centres, part of the Liquid Intelligent
Technologies Group was completed in November 2021.
• Construction of the St Helene Hospital started on 1
June 2021 in Mauritius.
• The Precinct, Mauritius: Commencement of a landmark
8,594sqm GLA premium grade office development in Grand Baie in Q2 2021.
Targeted completion November 2022.
The Group sees significant further potential value creation from the assets
and development pipeline within GREA going forward, which are expected to
result in strong NAV growth to Grit shareholders from exposure to risk
mitigated developments tenanted to current and target multinational clients.
4. OTHER LOANS RECEIVABLE
As at As at
31 Dec 2021 30 Jun 2021
US$'000 US$'000
Ndola Investments Limited 5,073 5,115
Kitwe Copperbelt Limited 5,577 5,624
Syngenta Limited 18,690 19,081
Healthcare assets 239 239
Drift (Mauritius) Limited 10,004 9,731
IFRS 9 - Impairment on financial assets (ECL) (2,533) (2,487)
As at period end 37,050 37,303
Classification of other loans:
Non-current assets - -
Current assets 37,050 37,303
As at period end 37,050 37,303
5. Trade and other receivables
As at As at
31 Dec 2021 30 Jun 2021
US$'000 US$'000
Trade receivables 13,446 15,367
Total allowance for credit losses and provisions (7,106) (8,616)
IFRS 9 - Impairment on financial assets (ECL) (764) (1,997)
IFRS 9 - Impairment on financial assets (ECL) Management overlay on specific (6,342) (6,619)
provisions
Trade receivables - net 6,340 6,751
Accrued Income 1,670 1,762
Loan interest receivable 679 603
Deposits paid 62 65
VAT recoverable 8,058 8,207
Purchase price adjustment account 1,977 1,198
Deferred expenses and prepayments 3,344 3,553
Listing receivables 16,201 -
IFRS 9 - Impairment on other financial assets (ECL) (3,881) (3,815)
Deferred rental (6) 531
Rental guarantees receivable 947 947
Dividends receivable 528 642
Sundry debtors 1,385 668
Other receivables 30,964 14,361
As at period end 37,304 21,112
Classification of trade and other receivables:
Non-current assets 1,246 2,166
Current assets 36,058 18,946
As at period end 37,304 21,112
6. Preference share capital
As at As at
31 Dec 2021 30 Jun 2021
US$'000 US$'000
Opening balance 25,481 -
Issue of preference shares (non-cash) - 25,481
As at period end 25,481 25,481
7. Perpetual preference note
As at As at
31 Dec 2021 30 Jun 2021
US$'000 US$'000
Opening balance - -
Issue of perpetual preference note 26,775 -
Perpetual preference note issue cost (1,606) -
As at period end 25,169 -
Perpetual Preference Note
Grit Services Limited has entered into a Subscription Agreement with Ethos
Mezzanine Partners GP Proprietary Limited and Blue Peak Private Capital GP
for the issuance by Grit of a perpetual note that will raise up to
US$31,500,000 ("the Note") and will be applied towards:
· the acquisition and redevelopment of the Orbit Africa warehousing
and manufacturing facility in Nairobi, Kenya; and
· the St Helene Private Hospital development in Mauritius.
Salient features of the Note
· The Note is treated as a hybrid instrument with 85% of the note
treated as equity for IFRS accounting purposes and will reduce the Group's
reported LTV.
· The Note has a cash coupon of 9% per annum and a 4% per annum
redemption premium. The Group may elect to capitalise cash coupons.
· The Note, although perpetual in tenor, carries a material coupon
step-up provision after the fifth anniversary that is expected to result in an
economic maturity and redemption by the Group on or before that date.
· The Note may be voluntarily redeemed by the Group at any time,
although there would be call-protection costs associated with doing so before
the third anniversary.
· The Note is subordinated to permitted indebtedness in the Group
but ranks ahead of shareholder claims.
· The Note potentially offers noteholders an additional return of
not more than 3% per annum, linked to the performance of Grit ordinary shares
over the duration of the Note.
8. INTEREST-BEARING BORROWINGS
Interest bearing borrowings
The following debt transactions were concluded during the period under review
as a short-term measure to create a platform for a more strategic and
suitable balance sheet solution.
Subsidiaries
· The Group has extended all its State Bank of Mauritius facilities
to 31 March 2025.
· The Investec Bank facility on the AnfaPlace Mall held by Freedom
Property Fund SARL in Morocco has been extended to April 2023, as part of the
terms of the refinance, an amount of US$6 million will be repayable over the
period of which US$3.6 million have been paid as at 31 December 2021 and the
balance during January 2022. The balance of the loan at 31 December 2021 was
US$41.2 million.
Associates and Joint Ventures
· The BHI syndicated loan of EUR 50.0 million has been extended to
May 2023 with State Bank of Mauritius taking over the Investec exposure.
· Upcoming Debt - Bank of China facility in Zambia of US$76.4 million
(US$ 47.1 million net after back-to-back loans of US$29.3 million from Zambian
partners Ndola Investments Limited, Kitwe Copperbelt Limited and Syngenta
Limited refer Note 4).
· The Group is actively engaging with its leading financiers to
incorporate the facility into a larger debt syndication covering multiple
jurisdictions and sectors. The target solution will bring scale,
diversification, tenor, and optimal funding costs to the Group's debt
portfolio.
As at As at
31 Dec 2021 30 June 2021
US$'000 US$'000
Non-current liabilities 259,904 215,565
Current liabilities 103,016 195,023
362,920 410,588
Currency of the interest-bearing borrowings (stated gross of unamortised loan
issue costs)
United States Dollars 266,838 276,947
Euros 94,564 131,420
Mauritian Rupees 1,650 1,698
363,052 410,065
Interest accrued 4,405 4,176
Unamortised loan issue costs (4,537) (3,653)
As at period end 362,920 410,588
Movement for the period
Balance at the beginning of the year 410,588 392,999
Proceeds of interest bearing-borrowings 6,522 50,765
Loan issue costs incurred (2,202) (1,520)
Amortisation of loan issue costs 1,318 2,974
Foreign currency translation differences (6,511) 7,548
Interest accrued 229 (1,173)
Debt settled during the year (47,024) (41,005)
As at period end 362,920 410,588
Analysis of facilities and loans in issue
As at As at
31 Dec 2021 30 June 2021
Lender Borrower Initial facility US$'000 US$'000
Financial institutions
Standard Bank South Africa Commotor Limitada $140.0m 140,000 140,000
Standard Bank South Africa Grit Services Limited RCF - €26.5m - 30,676
Total Standard Bank Group 140,000 170,676
Bank of China Warehousely Limited $8.5m 8,555 8,555
Bank of China Zambian Property Holdings Limited $77.0m 76,405 76,405
Total Bank of China 84,960 84,960
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €9.0m 10,214 10,733
State Bank of Mauritius Leisure Property Northern (Mauritius) Limited €3.2m 3,632 3,816
State Bank of Mauritius Mara Delta Properties Mauritius Limited €22.3m 25,308 26,593
State Bank of Mauritius Grit Real Estate Income Group Limited Equity Bridge $20.0m 20,000 20,000
State Bank of Mauritius Mara Delta Properties Mauritius Limited RCF Mur 72m 1,650 -
State Bank of Mauritius Grit Real Estate Income Group Limited RCF Mur 72m - 1,698
Total State Bank of Mauritius 60,804 62,840
Investec South Africa Freedom Property Fund SARL €36.0m 35,671 37,974
Investec South Africa Freedom Property Fund SARL $15.7m 5,092 8,722
Investec Mauritius Grit Real Estate Income Group Limited $0.5m 483 327
Total Investec Group 41,246 47,023
ABSA Bank Mauritius BH Property Investment Limited €7.4m 7,163 7,526
ABSA Bank Ghana Limited Grit Accra Limited $9.0m 7,928 8,652
Total ABSA Group 15,091 16,178
Maubank Mauritius Grit Real Estate Income Group Limited €3.2m 3,684 3,871
Maubank Mauritius Freedom Asset Management €4.0m 1,629 2,599
Total Maubank 5,313 6,470
ABC Banking Corporation Grit Services Limited Equity bridge $ 8.5m 3,650 7,286
ABC Banking Corporation Casamance Holdings Limited €6.4m 7,263 7,632
Total ABC Banking Corporation 10,913 14,918
Nedbank South Africa Grit Real Estate Income Group Limited $7m - 7,000
Total Nedbank South Africa - 7,000
Ethos Private Equity Grit Services Limited $2.4m 2,475 -
Blue Peak Private Equity Grit Services Limited $2.2m 2,250 -
Total Private Equity 4,725 -
Total loans in issue 363,052 410,065
plus: interest accrued 4,404 4,177
less: unamortised loan issue costs (4,536) (3,654)
As at period end 362,920 410,588
Fair value of borrowings are not materially different to their carrying value
amounts since interest payable on those borrowings are either close to their
current market rates or the borrowings are of short-term in nature.
9. GROSS PROPERTY INCOME
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020
US$'000 US$'000
Contractual rental income 19,270 19,264
Retail parking income 809 836
Straight-line rental income accrual 352 (268)
Other rental income (Lease incentives) 1,008 1,074
Gross rental income 21,439 20,906
Recoverable property expenses 2,708 2,703
Total revenue 24,147 23,609
10. INTEREST INCOME
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020
US$'000 US$'000
Bank interest receivable - 1
Interest on loans to partners 890 698
Interest on loans to related parties 28 469
Other Interest 5 125
923 1,293
11. FINANCE COSTS
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020
US$'000 US$'000
Interest-bearing borrowings - financial institutions 10,499 10,527
Early settlement charges 36 -
Amortisation of loan issue costs 1,318 1,326
Preference share dividends 410 410
Interest on obligations under leases 27 41
Interest on loans to proportional shareholders 222 -
Interest on loans to related parties - 33
Interest on bank overdraft 24 133
12,536 12,470
12. Segmental reporting
Consolidated segmental analysis
The Group reports on a segmental basis in terms of geographical location and
type of property. Geographical location is split between Botswana, Senegal,
Morocco, Mozambique, Zambia, Kenya, Ghana and Mauritius, as relevant to each
reporting period. In terms of type of property, the Group has investments in
the hospitality, retail, office and various other sectors.
In US$'000
Botswana Senegal Morocco Mozambique Zambia Kenya Ghana Mauritius Total
Geographical location 31 Dec 2021
Gross property income - 800 3,938 13,298 2,332 1,056 447 2,276 24,147
Property operating expenses - - (2,644) (1,583) (330) (21) (164) (208) (4,950)
Net property income - 800 1,294 11,715 2,002 1,035 283 2,068 19,197
Other income - - - - - - 138 430 568
Administrative expenses - (45) (312) (652) (11) (47) (264) (5,211) (6,542)
Net impairment (charge) / credit on financial assets - - 340 908 - - (6) (142) 1,100
Profit/(loss) from operations - 755 1,322 11,971 1,991 988 151 (2,855) 14,323
Fair value adjustment on investment properties - 627 590 (299) 3,096 221 (859) (120) 3,256
Corporate restructure costs - - - - - - - (32) (32)
Fair value adjustment on other financial liability - - - - - - - (6,716) (6,716)
Fair value adjustment on derivatives financial instruments - - - - - - - 1,252 1,252
Share based payment expense - - - - - - - (1,162) (1,162)
Share of profits / (losses) from associates and joint ventures 1,332 - - - 1,726 (90) 1,707 5,611 10,286
Foreign currency gains / (losses) - (21) (14) (33) (98) (81) (47) (838) (1,132)
Profit/(loss) before interest and taxation 1,332 1,361 1,898 11,639 6,715 1,038 952 (4,860) 20,075
Interest income - - - - - - - 923 923
Finance costs - - (1,539) (4,115) - (218) (285) (6,379) (12,536)
Profit / (loss) for the year before taxation 1,332 1,361 359 7,524 6,715 820 667 (10,316) 8,462
Taxation - 253 (147) (2,806) (101) (280) - (534) (3,615)
Profit / (loss) for the year after taxation 1,332 1,614 212 4,718 6,614 540 667 (10,850) 4,847
Reportable segment assets and liabilities
Non-current assets
Investment properties - 21,041 77,807 296,192 49,409 27,498 15,597 62,343 549,887
Deposits paid on investment properties - - - - - - - 5,753 5,753
Property, plant and equipment - 13 28 287 - - 21 1,911 2,260
Intangible assets - - - - - - - 770 770
Other investments - - - 1 - - - - 1
Investment in associates and joint ventures 20,788 - - - 37,099 3,312 14,740 112,140 188,079
Related party loans receivable - - - - - - - 92 92
Trade and other receivables - - 1,246 - - - - - 1,246
Deferred tax - - 7,884 10,249 - 413 533 1,963 21,042
Total non-current assets 20,788 21,054 86,965 306,729 86,508 31,223 30,891 184,972 769,130
Current assets
Trade and other receivables - 384 4,859 6,170 (103) 2,171 190 22,387 36,058
Current tax refundable - - - 798 - 58 326 215 1,397
Related party loans receivable - - - - - - - 248 248
Other loans receivable - - - - - - - 37,050 37,050
Derivative financial instruments - - - - - - - 46 46
Cash and cash equivalents - 312 698 2,615 222 69 118 30,915 34,949
Total assets 20,788 21,750 92,522 316,312 86,627 33,521 31,525 275,833 878,878
Liabilities
Total liabilities - 1,285 71,365 210,374 80,007 10,771 9,598 124,041 507,441
Net assets 20,788 20,465 21,157 105,938 6,620 22,750 21,927 151,792 371,437
In US$'000
Type of property Other investments Hospitality Retail Office Light industrial Accommodation Corporate Total
31 Dec 2021
Gross property income - 2,527 7,216 6,866 1,289 6,249 - 24,147
Property operating expenses - - (3,326) (821) (42) (991) 230 (4,950)
Net property income - 2,527 3,890 6,045 1,247 5,258 230 19,197
Other income - - - 8 - - 560 568
Administrative expenses - (209) (431) (817) (93) (570) (4,422) (6,542)
Net impairment (charge) / credit on financial assets - 34 624 659 7 (47) (177) 1,100
Profit/(loss) from operations - 2,352 4,083 5,895 1,161 4,641 (3,809) 14,323
Fair value adjustment on investment properties - 854 2,112 577 (365) 78 - 3,256
Corporate restructure costs - - - - - - (32) (32)
Fair value adjustment on other financial liability - 2 - - - - (6,718) (6,716)
Fair value adjustment on derivatives financial instruments - - - - - - 1,252 1,252
Share based payment expense - - - - - - (1,162) (1,162)
Share of profits / (losses) from associates and joint ventures 1,858 3,763 1,900 1,781 921 63 - 10,286
Foreign currency gains / (losses) - (1,172) (97) (51) (72) (45) 305 (1,132)
Profit/(loss) before interest and taxation 1,858 5,799 7,998 8,202 1,645 4,737 (10,164) 20,075
Interest income - - - - - - 923 923
Finance costs - (1,319) (1,585) (4,395) (218) (127) (4,892) (12,536)
Profit / (loss) for the year before taxation 1,858 4,480 6,413 3,807 1,427 4,610 (14,133) 8,462
Taxation - 111 (198) (1,910) (280) (968) (370) (3,615)
Profit / (loss) for the year after taxation 1,858 4,591 6,215 1,897 1,147 3,642 (14,503) 4,847
Reportable segment assets and liabilities
Non-current assets
Investment properties - 70,977 146,182 166,690 37,745 128,293 - 549,887
Deposits paid on investment properties - - - - - - 5,753 5,753
Property, plant and equipment - 13 28 29 - 182 2,008 2,260
Intangible assets - - - - - - 770 770
Other investments - - - - - - 1 1
Investment in associates and joint ventures 40,080 72,219 44,527 15,896 14,374 983 - 188,079
Related party loans receivable - - - - - - 92 92
Trade and other receivables - - 1,246 - - - - 1,246
Deferred tax - 1,558 10,669 3,371 632 4,812 - 21,042
Total non-current assets 40,080 144,767 202,652 185,986 52,751 134,270 8,624 769,130
Current assets
Trade and other receivables - (217) 5,078 944 2,922 4,200 23,131 36,058
Current tax refundable - 166 306 675 187 43 20 1,397
Related party loans receivable - - - - - - 248 248
Derivative financial instruments - - - - - - 37,050 37,050
Other loans receivable - - - 46 - - - 46
Cash and cash equivalents - 399 990 2,603 100 557 30,300 34,949
Total assets 40,080 145,115 209,026 190,254 55,960 139,070 99,373 878,878
Liabilities
Total liabilities - 88,461 167,081 177,419 11,599 30,697 32,184 507,441
Net assets 40,080 56,654 41,945 12,835 44,361 108,373 67,189 371,437
Major customers
Rental income stemming from Beachcomber represented approximately 11.1% of the
Group's total contractual rental income for the period and Total 10.1%, Vale
9.9%, Vodacom Mozambique 6.8% and Tamassa Resort 5.4% of the Group's total
contractual rental income for the period.
13. Basic and diluted earnings per ordinary share
Attributable earnings Weighted average number of shares Cents per share
Six months Six months Six months ended Six months Six months Six months
ended
ended
ended
ended
ended
31 Dec 2021
31 Dec 2020 31 Dec 2020 31 Dec 2021 31 Dec 2020
31 Dec 2021
US$'000 US$'000 Shares '000 Shares '000 US Cents US Cents
Earnings per share - Basic 4,278 1,732 328,771 317,051 1.30 0.55
Earnings per share - Diluted 4,278 1,732 328,771 317,051 1.30 0.55
14. EPRA financial metrics
14a. EPRA earnings
Basis of Preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors")
have chosen to disclose additional non-IFRS measures, these include EPRA
earnings, adjusted net asset value, EPRA net asset value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS Financial
Information").
The Directors have chosen to disclose:
• EPRA earnings in order to assist in comparisons with similar businesses in the
real estate sector. EPRA earnings is a definition of earnings as set out by
the European Public Real Estate Association. EPRA earnings represents earnings
after adjusting for fair value adjustments on investment properties, gain from
bargain purchase on associates, fair value adjustments included under income
from associates, ECL provisions, fair value adjustments on other investments,
fair value adjustments on other financial assets, fair value adjustments on
derivative financial instruments, and non-controlling interest included in
basic earnings (collectively the "EPRA earnings adjustments") and deferred tax
in respect of these EPRA earnings adjustments. The reconciliation between
basic and diluted earnings and EPRA earnings is detailed in the table below;
• EPRA net asset value in order to assist in comparisons with similar businesses
in the real estate sector. EPRA net asset value is a definition of net asset
value as set out by the European Public Real Estate Association. EPRA net
asset value represents net asset value after adjusting for net impairment on
financial assets (ECL), fair value of financial instruments, and deferred tax
relating to revaluation of properties (collectively the "EPRA net asset value
adjustments"). The reconciliation for EPRA net asset value is detailed in the
table below;
• adjusted EPRA earnings in order to provide an alternative indication of GRIT
and its subsidiaries' (the "Group") underlying business performance.
Accordingly, it excludes the effect of non-cash items such as unrealised
foreign exchange gains or losses, straight-line leasing adjustments,
amortisation of right of use land, impairment of loans and deferred tax
relating to the aforementioned adjustments. The reconciliation for adjusted
EPRA earnings is detailed in the table below; and
• total distributable earnings in order to assist in comparisons with similar
businesses and to facilitate the Group's dividend policy which is derived from
total distributable earnings. Accordingly, it excludes VAT credit utilised on
rentals, interest related to AnfaPlace Mall's areas under construction,
Listing and set-up costs, depreciation and amortisation, share based payments,
antecedent dividends, operating costs relating to AnfaPlace Mall's
refurbishment costs, amortisation of lease premiums and profits
withheld/released. The reconciliation for total distributable earnings is
detailed in the table below.
In this note, Grit presents European Real Estate Association (EPRA) earnings
and other metrics which is non-IFRS financial information.
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
$'000 Per Share (Diluted) $'000 Per Share (Diluted)
(Cents Per Share)
(Cents Per Share)
EPRA Earnings 8,413 2.56 9,498 3.09
Total Company Specific Adjustments (2,493) (0.76) 208 0.07
Adjusted EPRA Earnings 5,920 1.80 9,706 3.16
Total Company Specific Distribution Adjustments 4,122 1.28 2,103 0.72
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) 10,042 3.08 11,809 3.88
Profits Withheld (1,884) (0.58) (7,241) (2.38)
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 8,158 2.50 4,568 1.50
EPRA NRV 400,242 86.66 399,539 124.40
EPRA NTA 390,702 84.60 388,965 121.10
EPRA NDV 339,799 73.57 330,370 102.90
Distribution shares UNAUDITED
31 Dec 2021
Shares '000
Weighted average shares in issue 339,189
Less: Weighted average treasury shares for the year (12,850)
Add: Weighted average shares vested shares in Long term incentive scheme 2,432
EPRA SHARES 328,771
Less: Non-entitled shares -
Less : Vested shares in consolidated entities (2,432)
DISTRIBUTION SHARES 326,339
In this note, Grit presents European Real Estate Association (EPRA) earnings
and other metrics which is non-IFRS financial information.
UNAUDITED
31 Dec 2021
US$'000
EPRA Earnings Calculated as follows:
Basic Earnings attributable to the owners of the parent 4,278
Add Back:
- Fair value adjustment on investment properties (3,256)
- Fair value adjustments included under income from associates (2,017)
- Change in value on other investments 461
- Change in value on other financial asset 6,866
- Change in value on derivative financial instruments (1,252)
- Deferred tax in relation to the above 3,103
- Non-controlling interest included in basic earnings 230
EPRA EARNINGS 8,413
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 2.56
Company specific adjustments
- Unrealised foreign exchange gains or losses (non-cash) (346)
- Straight-line leasing and amortisation of lease premiums (non-cash rental) (1,533)
- Amortisation of right of use of land (non-cash) 14
- Impairment of loan and other receivables (1,107)
- Corporate restructure costs 24
- Non-controlling interest included above 591
- Deferred tax in relation to the above (136)
Total Company Specific adjustments (2,493)
ADJUSTED EPRA EARNINGS 5,920
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 1.80
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 and specific provisions for against tenant
accounts.
5 Corporate restructure costs
Corporate restructure costs are once 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.
14b. Company distribution calculation
UNAUDITED
31 Dec 2021
US$'000
Adjusted EPRA Earnings 5,920
Company specific distribution adjustments
- VAT Credits utilised on rentals 1,084
- Listing and set-up costs under administrative expenses 8
- Depreciation and amortisation 326
- Share based payments 1,162
- Retirement fund & PRGF 38
- Amortisation of capital funded debt structure fees 1,360
- Non-controlling interest included above 144
Total company specific distribution adjustments 4,122
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) 10,042
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 3.08
- Profits withheld (1,884)
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 8,158
DIVIDEND PER SHARE (cents) 2.50
Reconciliation to amount payable
Total distributable earnings to Grit shareholders before profits withheld
(cents) 3.08
Profits withheld (cents) (0.58)
INTERIM DIVIDEND PROPOSED (cents) 2.50
COMPANY DISTRIBUTION NOTES IN TERMS OF THE DISTRIBUTION POLICY
1. VAT credits utilised on rentals
In certain African countries, there is no mechanism to obtain refunds for VAT
paid on the purchase price of the property. VAT is recouped through the
collection of rentals on a VAT inclusive basis. The cash generation through
the utilisation of the VAT credit obtain on the acquisition of the underlying
property is thus included in the operational results of the property.
2. Listing and set-up costs under administrative expenses
Costs associated with the new listing of shares, setup on new companies and
structures are capital in nature and is added back for distribution purposes.
3. Depreciation and amortisation
Non-cash items added back to determine the distributable income.
4. Share based payments
Non-cash items added back to determine the distributable income.
5. Retirement fund & PRGF
Non- cash item held as a provision.
6. Amortisation of capital funded debt structure fees
Amortisation of upfront debt structuring fees.
15. Prior period representations
It is noted that both on the abridged unaudited consolidated income statement
and abridged unaudited consolidated statement of financial position that there
have been reclassifications for the 31 December 2020 financial period figures.
The reclassifications have been made to each of the affected financial
statements line items for the prior period as follows:
Abridged unaudited consolidated statement of financial position (extract)
As reported Increase / (decrease) Represented
31 Dec 2020
31 Dec 2020 31 Dec 2020
US$'000 US$'000 US$'000
Investment properties 584,811 6,523 591,334
Property, plant and equipment 3,044 (453) 2,591
Trade and other receivables - current 39,242 (6,070) 33,172
627,097 - 627,097
Investment properties disclosed in the abridged consolidated statement of
financial position in the prior period did not include right of use of land or
lease incentive. Right of use of land was separately disclosed under property,
plant and equipment while lease incentive was disclosed under trade and other
receivables. The full value of the investment properties was previously
disclosed separately within investment property, intangible assets (right of
use of land) and trade and other receivables (lease incentives) on the
statement of financial position. Management has considered that is more
appropriate to include these various components under Investment Property. The
comparatives have therefore been updated to reflect this treatment. There is
no resulting impact on the net assets of the Group.
Abridged unaudited consolidated statement of financial position (extract)
As reported Increase / (decrease) Represented
31 Dec 2020
31 Dec 2020 31 Dec 2020
US$'000 US$'000 US$'000
Current Liabilities Interest-bearing borrowings 4,335 3,613 7,948
Current Liabilities Interest-bearing borrowings - Accrued interest 3,613 (3,613) -
7,948 - 7,948
The presentation of interest-bearing borrowings at amortised cost has been
represented as the Board view this as a better presentation of the instruments
in line with IFRS 9. The comparatives have therefore been updated to reflect
this treatment. There is no resulting impact on the net assets of the Group.
Abridged consolidated statement of income statement (extract)
As Reported Increase / (decrease) Represented
six months ended six months ended
31 Dec 2020 31 Dec 2020 31 Dec 2020
US$'000 US$'000 US$'000
Gross property income 23,609 - 23,609
Property operating expenses (4,132) 95 (4,037)
Net property income 19,477 95 19,572
Other income 91 - 91
Administrative expenses (6,698) - (6,698)
Net impairment charge on financial assets - 643 643
Profit from operations 12,870 738 13,608
Fair value adjustment on investment properties (4,327) - (4,327)
Contractual receipts from vendors of investment properties 98 - 98
Total fair value adjustment on investment properties (4,229) - (4,229)
Fair value adjustment on other financial liability 353 - 353
Fair value adjustment on derivative financial instruments 428 - 428
Share-based payment expense (64) - (64)
Share of profits / (loss) from associates and joint ventures 1,557 - 1,557
Impairment of loans and other receivables 825 - 825
Net impairment charge on financial assets 738 (738) -
Foreign currency (losses) / gains 1,331 - 1,331
Profit before interest and taxation 13,809 - 13,809
OTHER NOTES
The abridged unaudited consolidated financial statements for the six months
period ended 31 December 2021 ("abridged unaudited consolidated financial
statements") have been prepared in accordance with the measurement and
recognition requirements of International Financial Reporting Standards
("IFRS"), the FCA Listing Rules and the SEM Listing Rules. The accounting
policies are consistent with those of the previous annual financial statements
with the exception of the change in accounting policy and the significant
judgement disclosed in note 1.
The Group is required to publish financial results for the six months ended on
31 December 2021 in terms of SEM Listing Rule 15.36A and the FCA Listing
Rules. The Directors are not aware of any matters or circumstances arising
subsequent to the period ended 31 December 2021 that require any additional
disclosure or adjustment to the financial statements. These abridged unaudited
consolidated financial statements were approved by the Board on 25 February
2022.
Copies of the abridged unaudited consolidated financial statements, and the
statement of direct and indirect interests of each officer of the Company
pursuant to rule 8(2)(m) of the Mauritian Securities (Disclosure Obligations
of Reporting Issuers) Rules 2007, are available free of charge, upon request
at at the Mauritian office of the Company at 3(rd) Floor, La Croisette
Shopping Centre, Grand Baie, Mauritius. Contact Person: Moira van der
Westhuizen.
Forward-looking statements
This document may contain certain forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Actual outcomes and results may differ
materially from any outcomes or results expressed or implied by such
forward-looking statements.
Any forward-looking statements made by, or on behalf of, Grit speak only as of
the date they are made and no representation or warranty is given in relation
to them, including as to their completeness or accuracy or the basis on which
they were prepared. Grit does not undertake to update forward-looking
statements to reflect any changes in its expectations with regard thereto or
any changes in events, conditions or circumstances on which any such statement
is based.
Information contained in this document relating to Grit or its share price, or
the yield on its shares, should not be relied upon as an indicator of future
performance.
Any forward-looking statements and the assumptions underlying such statements
are the responsibility of the Board of directors and have not been reviewed or
reported on by the Company's external auditors.
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