TIDMGR1T
RNS Number : 0256P
Grit Real Estate Income Group
15 February 2021
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" and, together with its subsidiaries,
the "Group")
HALF YEAR ABRIDGED UNAUDITED CONSOLIDATED RESULTS
FOR THE SIX MONTHSED 31 DECEMBER 2020
Grit Real Estate Income Group Limited, a leading pan-African
real estate company focused on investing in and actively managing a
diversified portfolio of assets underpinned by predominantly US
Dollar and Euro denominated long-term leases with high quality
multi national tenants, today announces its results for the six
months ended 31 December 2020.
Financial highlights
6 Months ended 6 Months ended Increase/
31 Dec 2020 31 Dec 2019 Decrease
Dividend per share USD1.50 cps USD5.25 cps -71.4%
--------------- --------------- ----------
Gross Rental income (including associates) USD31.6m USD31.7m -0.1%
--------------- --------------- ----------
Profit from operations(1) USD12.9m USD10.7m +19.7%
--------------- --------------- ----------
Adjusted EPRA earnings per share(2) USD3.16 cps USD5.67 cps -44.2%
--------------- --------------- ----------
Distributable earnings USD 3.88 cps USD 5.48 cps -29.2%
--------------- --------------- ----------
EPRA cost ratio (incl associates and joint ventures) (7) 14.3% 18.6% -4.3 pts
--------------- --------------- ----------
As at 31 Dec 2020 As at 30 Jun 2020 Increase/
Decrease
EPRA Net reinstatement value ("NAV") per share(3) USD124.4 cps USD117.1 cps +6.3%
------------------ ------------------ ----------
Total Income Producing Assets(4) USD849.2m USD823.5m +3.1%
------------------ ------------------ ----------
Weighted average lease expiry ("WALE") 5.2 yrs 5.0 yrs +0.2 yrs
------------------ ------------------ ----------
EPRA portfolio occupancy rate(8) 92.0% 94.1% -2.1%
------------------ ------------------ ----------
Group Loan to Value ("LTV") 49.3% 50.2% -0.9%
------------------ ------------------ ----------
Property LTV 46.5% 46.5% +0.0%
------------------ ------------------ ----------
-- Dividends per share declared for the six months ended 31
December 2020 of USD1.50cps (December 2019: USD5.25cps), reflecting
recent strong rent collection trends and the Group's early progress
towards its near term LTV target of 45%. Extra-ordinarily, the
Board will consider a further one off quarter end dividend in 2021
dependent on continued progress towards near term LTV targets ,
sustained strong cash collections, specifically in the hospitality
sector, and the restructure of the Drive in Trading guarantee.
-- LTV reduced to 49.3% as a result of part disposals of Acacia
Estates and reductions in revolving credit facility balances.
Movements in EUR foreign exchange rates, although supportive of
NAV, had a negative impact on reported LTV as a result of the
Group's higher proportion of EUR debt to EUR asset value (which
hedges the balance sheet exposure to EUR fluctuations to the USD).
The Board remains committed to reducing LTV levels over the
medium-term to between 35%-40%, and additionally has a near term
focus of reducing its LTV to below 45% by the end of the c urrent
financial year.
-- In December 2020, Grit raised gross proceeds of approximately
GBP7.2 million/USD9.8 million from high calibre investors,
underpinned by the support of its shareholder M&G, through a
successful placing of 15,000,000 ordinary shares at a price of
GBP0.481/USD0.65 per share.
-- EPRA NAV per share grew 6.3% in the six months to 31 December
2020 to USD1.244 (June 2020: USD1.171). EPRA NAV growth was
positively impacted by FX moves and operational earnings offsetting
negative valuation impacts on retail assets.
-- c.80% of the portfolio was independently valued at 31
December 2020. T otal income producing asset value increased to
USD849.2 million (June 2020: USD823.5 million) and like for like
property valuations (including FX movements) increased 2.2%.
-- Profit from operations increased 19.7% to USD12.9 million
(December 19: USD10.7 million), as a result of strong operating
cost control and robust portfolio revenue performance that offset
revenue weakness in the retail sector.
-- Adjusted EPRA earnings per share fell 44% predominantly as a
result of one off items in the base that did not repeat in the
current year. In the prior year development profit of USD2.5
million relating to the VDE development and USD3.6 million of non
recurring profits in associates were recognised.
-- Weighted average cost of debt declined to 5.8% (June 2020:
5.9%) as a result of active treasury management activities and
downward movements in LIBOR over the reporting period.
Operational highlights
-- Property portfolio now comprises a total of 54 investments
across eight countries and five property sectors.
-- Strong rent collection which has averaged 91.4% of Grit
attributable contracted rental over the six month period to 31
December 2020, increasing from 86.0% in the 4 months to 30 June
2020.
-- 88.7% of revenue is earned from multinational tenant s(5)
(June 2020: 90.2%; December 2019: 92.8%).
-- 93.0% of revenue is produced in hard currency (6) (June 2020:
89.1%; December 2019: 94.1 %).
-- EPRA portfolio occupancy rate declined to 92.0% as at 31
December 2020 (June 2020: 94.1%) as a result of increasing
vacancies in retail assets, predominantly AnfaPlace Mall and
Buffalo Mall, which contributed 1.3% and 0.5% to the increase
respectively. Leasing activity is improving and management are
confident that vacancies will be materially filled once Covid
restrictions are lifted in each of the countries of operation.
-- Weighted average annual contracted rent escalations at 2.9% (June 2020: 2.8%).
-- Weighted average property capitalisation rate 8.1% (June 2020: 8.1%).
Post balance sheet activity
-- Proposed an interim dividend in respect of the six months to
31 December 2020 of USD1.50 cps.
The Board extraordinarily will consider an additional one-off
dividend declaration prior to the financial year-end dependent on
the further progress of LTV reduction strategies, the finalisation
of the Drive in Trading guarantee restructure and continued strong
cash collections, specifically in the hospitality sector.
-- On 5 February 2021, the Company announced that it had
successfully migrated its corporate domicile to Guernsey from
Mauritius on 4 February 2021. This Migration, coupled with its
recent transfer to the Premium Segment of the Official List of the
FCA on 22 January 2021, is expected to facilitate Grit's inclusion
in the FTSE Indices. This, in turn, is anticipated to help raise
Grit's profile with investors, improve liquidity in Grit's shares
and place Grit in an enhanced position to fund its accretive
pipeline of investments.
Notes
(1) % move based on actuals versus rounded numbers on face of
highlights table.
(2) Adjustments to make earnings better representative of what
the Directors believe is the underlying company performance and
includes adjustments for non-cash item such as unrealised foreign
exchange movements, straight-line leasing and amortisation of lease
premiums, amortisation of right of use land, impairment of loan and
deferred tax adjustments - refer to note 16 for further details on
adjustments made.
(3) Explanations of how European Public Real Estate Association
("EPRA") figures are derived from IFRS are shown in note 16. The
Company has historically provided EPRA NAV which has been replaced
by 3 new EPRA metrics of which Net Reinstatement Value is the most
applicable to the Company.
(4) Includes properties, investments and property loan
receivables - Refer to Financial Review.
(5) Forbes 2000, Other Global and Pan-African tenants.
(6) Hard (USD and EUR) or pegged currency rental income.
(7) Based on EPRA cost to income ratio calculation methodology
which includes the proportionately consolidated effects of LLR and
other associates.
(8) Property occupancy rate based on EPRA calculation
methodology - Includes associates.
Bronwyn Knight, Chief Executive Officer of GRIT Real Estate
Income Group Limited, commented:
" Whilst we are maintaining an appropriately cautious stance in
light of potential longer-term effects from COVID-19 on our tenants
and the wider economy, we remain confident in our strategy of
unlocking superior total returns for our shareholders in the medium
to longer term.
With our expertise in African real estate, and our team's
experience, knowledge, skill sets and relationships in various
regions, we will continue to optimise assets and create value
through proactive asset management and risk-mitigated pre-funding
models to support NAV growth. In addition, we will continue to
selectively pursue potential investments from our high-quality,
diversified and yield accretive acquisition pipeline, supported by
a strong tenant base and possible co-investment opportunities.
The Company aims to return to paying an attractive income
distribution and generating total annual return growth and is well
positioned to capitalise on significant recovery potential of the
African continent from its unique high-quality portfolio of
properties. We are assessing a wide number of options to fund our
refocused investment pipeline of high-quality accretive assets
leased to multinational corporates and attracting hard currency
rental streams, including further asset recycling and hybrid
instruments.
The recent transfer to the Premium Segment of the Official List
of the FCA, and the migration of our corporate seat to Guernsey is
expected to facilitate Grit's inclusion in the FTSE Indices. This,
in turn, is anticipated to help raise Grit's profile with
investors, improve liquidity in Grit's shares and place Grit in an
enhanced position to fund its accretive pipeline of
investments."
FOR FURTHER INFORMATION PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer IR@Grit.group
Darren Veenhuis, Chief Strategy Officer
Maitland/AMO - Communications Adviser
James Benjamin +44 7747 113 930
Jason Ochere Grit-maitland@maitland.co.uk
finnCap Ltd - UK Financial Adviser & Broker
William Marle / Giles Rolls / 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
NOTES:
Grit Real Estate Income Group Limited is a leading pan-African
real estate company focused on investing in 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 Dollar 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 is targeting a net total shareholder return
inclusive of net asset value growth of 12.0%+ per annum.*
The Company currently holds a primary listing on the Premium
segment of the Main Market of the London Stock Exchange (LSE:
GR1T)), and a secondary listing on the Official Market of the Stock
Exchange of Mauritius Ltd (SEM: DEL.N0000).Further information on
the Company is available at http://grit.group/
* This is a target only and not a profit forecast and there can
be no assurance that it will be met. 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.
Directors:
Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive
Officer)*, Leon van de Moortele (Chief Financial Officer)*,
Jonathan Crichton+, Nomzamo Radebe, Catherine McIlraith+, David
Love+, Sir Samuel Esson Jonah+, 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
c/o Intercontinental Fund Services Limited, Level 5, Alexander
House, 35 Cybercity, Ebene, 72201, Mauritius
Registrar and transfer agent (Mauritius) : Intercontinental
Secretarial Services Limited
Sponsoring broker : Capital Markets Brokers Ltd
SEM authorised representative and sponsor: Perigeum Capital
Ltd
UK Transfer secretary : Link Assets Services Limited
This notice is issued pursuant to the FCA Listing Rules, SEM
Listing Rule 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.
CHIEF EXECUTIVE OFFICER'S STATEMENT
In what remains a very challenging market, the Board and
management team have taken decisive, proactive action to defend and
grow our position and safeguard the business to deliver enhanced
value over the short and long term. People and economies across the
world are coming to grips with the impact of COVID-19, and while
the pandemic continues to test the resilience of our portfolio, the
high and strengthening rent collection performance will continue to
underpin the Group's focus on further improving its financial
strength.
To optimise the Company's access to capital markets, and by
adhering to the highest levels of corporate governance, Grit
successfully completed its step up to the Premium listing segment
of the Main Market of the London Stock Exchange ("LSE") and has
also redomiciled its corporate seat to Guernsey in February 2021.
These are both significant milestones, and along with the Company's
de-listing from the Johannesburg Stock Exchange ("JSE") in July
2020, positions the Group well for FTSE All Share index series
inclusion in due course. Grit is now primary listed on the LSE and
has a secondary listing on the Stock Exchange of Mauritius Ltd
("SEM").
In the first half of this financial year, despite enforced
lockdowns, our team delivered a number of operational, financial
and corporate actions that position the Group well for a recovery
in the economies where we operate, including:
-- Strong operational performance whereby, on a like for like
basis, Covid-19 induced revenue weakness was offset with strong
cost control, which resulted in a net operating income (inclusive
of associates) growth of 0.9% in the period. Full year impacts of
acquisitions drove further gains and resulted in total net
operating income growth (inclusive of associates) of 8.1% versus
the prior period.
-- Strong rent collection, which has averaged 91.4% of Grit
attributable contracted rental over the six month period to 31
December 2020, increasing from 86.0% in the 4 months to 30 June
2020.
-- Weighted average lease expiry increased to 5.2 years (June
2020: 5.0 years) through focused leasing activity despite travel
restrictions and heightened uncertainty created by the Covid
pandemic.
-- The capital recycling programme performed well; the Group
disposed of minority interests in AnfaPlace Mall and Acacia Estate
raising net cash (after settling the construction costs of the
AnfaPlace Mall refurbishment which was embodied in the sale
contract of US$25.4 million) of c.USD11.9 million in liquidity and
is currently in advanced discussions on the sale of other non-core
assets.
-- As a precautionary measure, Grit engaged with all of its
lenders on extending LTV and interest covenants during the six
months and lifted the lowest applied Group LTV covenant to 55%,
providing further liquidity headroom.
-- The Group extended maturities on several Group facilities and
secured an additional USD7 million revolving credit facility from
Nedbank.
From the onset of the pandemic, management implemented a strong
cost control programme and prioritised liquidity and cash
collection. Rent collections continued to improve and have averaged
91.4% in the six months to 31 December 2020 (from 86% in March to
June 2020), with hospitality sector collections accelerating over
the last three months.
Light Total July to Total Mar to
Office Retail Corp Accom Hospitality Industrial Dec 2020 June 2020
------------------ ------- -------- ----------- ------------ ---------------- ---------------- ----------------
Contracted Rent 100% 100% 100% 100% 100% 100% 100%
Rent deferrals 0% (0.5%) 0% (13.8%) 0% (2.9%) (14.4%)
Rent Concessions 0% (14.4%) 0% 0% 0% (4.4%) (8.7%)
Expected
collection rate 100% 85.1% 100% 86.2% 100% 92.7% 76.9%
Collections (% of
contracted rent) 101.2% 84.1% 98.7% 80.2% 101.5% 91.4% 86.0%
Movement in
debtors balances
(excl. agreed
deferrals) (1.2%) 1% 1.3% 6% (1.5%) 1.3% (9.1%)
------------------ ------- -------- ----------- ------------ ---------------- ---------------- ----------------
The Group had in excess of 80% of its properties, by value,
independently valued at 31 December 2020 which showed modest growth
in asset values for the six-month period. Like for like property
valuations (inclusive of FX moves) grew 2.2%, with upward moves
largely resulting from foreign exchange translation moves,
predominantly in the EUR exchange rate, which offset further
weakness in retail asset valuations. The office, light industrial,
corporate accommodation sector assets and other investments, which
collectively represent 52.4%, by value, of the Group's economic
interest in its property portfolio, remain relatively unaffected by
the pandemic and continue to trade well.
Grit does not assume direct hospitality operating risk by virtue
of its triple net lease contracts with large hotel operators.
Hospitality assets constitute 24.7% by value, of the Group's
economic interest in property assets. The credit quality of our
hospitality tenant operators are underpinned by the financial
strength of their conglomerate owners and support being received
from various governments' COVID-19 programmes. Both Lux Hotel group
and Beachcomber have received local wage subsidy, land rent support
and more recently have qualified for liquidity support from the
Mauritian government programme under the auspices of the Mauritian
Investment Corporation ("MIC"). Hospitality operators have resumed
rental payments to Grit, and although collection rates have not yet
fully stabilised, we expect these to normalise in the coming
months, and to collect 100% of the rents outstanding over the lease
term. The deeper than expected Covid second wave, currently being
experienced globally, is likely to impact the sustainability of the
rental collections in the Mauritius hospitality sector until such
time as the proceeds of the MIC support program are deployed to
both Lux and Beachcomber and/or the borders are once again
re-opened. The Board will continue to closely monitor collection
trends in the coming months as part of its assessment of further
dividend distribution recommendations.
Although t he pandemic has accelerated structural challenges in
the retail sector, convenience centres, which typically have a
higher proportion of rental income from grocery anchor tenants and
essential service offerings, are expected to recover over the
medium term. Grit has actively reduced its economic interest to the
retail sector, which now makes up 22.9% (2019: 27.2%) of the
Group's economic interest in its property portfolio , and will
continue to recycle and/or re-purpose or redevelop assets where
there are opportunities to do so. Over the six months to 31
December 2020 retail sector property valuations (inclusive of forex
translation movements) dropped a further USD7.3 million impacted by
lease rates, re-tenanting disruptions and further requests for
concessions which continue to pressurise their near term
performance.
The Group's Portfolio's EPRA vacancy rate rose to 8.0% at 31
December 2020 (5.9% at 30 June 2020) as a result of material near
term vacancy increases in retail sector assets, predominantly
AnfaPlace Mall and Buffalo Mall, which contributed 1.3% and 0.5% to
the increase respectively. Leasing activity is improving and
management are confident that vacancies will be materially filled
once Covid restrictions are lifted in each of the countries of
operation.
The weighted average lease expiry of 5.2 years at December 2020
(5.0 years at 30 June 2020) was impacted by the re-releasing
activity in Mukuba Mall, where the asset passed its initial five
years anniversary in March 2020. The Vodacom Building also passed
its first renewal period, after 10 years, with commercial terms
having now been agreed on the lease extension. Other notable leases
in the period included:
Building Sector New Tenant GLA (m2) Duration (years)
-------------------- ------------------------- ----------------- --------- -----------------
Mukuba Mall Retail Game 5060 5
Mukuba Mall Retail Shoprite 4262 5
VDE Housing Estate Corporate Accommodation Tsebo 3600 3
AnfaPlace Mall Retail Label Vie 3573 12
Cosmopolitan Mall Retail Cress Motors 2539 5
Bollore Light Industrial Bollore 2511 5
Mukuba Mall Retail Pick and Pay 2240 5
Mukuba Mall Retail Home Essentials 1510 2
-------------------- ------------------------- ----------------- --------- -----------------
PIPELINE AND INVESTMENT UPDATE
Grit's investment strategy is clearly defined, and even more so
in today's terms, and the Company will continue to be selective in
its approach to further growing the portfolio. The Company will
focus on the asset classes that have proven to be resilient, and in
particular, is excited about the prospects and opportunities in the
light industrial and healthcare sectors in Africa. In light of this
renewed focus, and as a result of the Board's commitment to
strengthening the balance sheet, today the Group announces an
updated and refined set of pipeline opportunities. The focused list
of pipeline transactions to be progressed either have funding
earmarked through proceeds from asset recycling initiatives or have
high visibility of funding through alternative sources.
Concluded transactions
The Company recently announced the disposal of a 39.50% stake in
AnfaPlace Mall (on 18 September 2020) and 26.65% of the stake which
it holds in Acacia Estate (on 16 October 2020). Final conclusion of
both transactions has been achieved and the proceeds realised by
Grit.
Transactions in progress
Grit's re-development of its Bollore light industrial facility
in Mozambique is progressing towards the targeted completion dates
under the programme, as announced on 18 September 2020. Phase 1
sectional completion has been successfully achieved while the
remaining phase is progressing within budget and ahead of programme
in relation to its final completion date in December 2021.
The phase 1 Cap Skirring, Senegal re-development programme,
which formed part of the initial acquisition of the resort in
January 2020, is by mutual agreement being subjected to a reduced
capex programme of EUR6 million in 2021, aligning with Club Med's
intended re-opening of the resort in October 2021.
Transactions no longer being progressed
As a result of constrained funding options, impacts of Covid-19
and pursuant to the Board's strategy to improve the strength of the
Group's balance sheet, the following transactions contained in the
"Pipeline Acquisitions Update" announced on 25 October 2019 (and a
further update to the market circulated on 28 January 2020) and the
"Acquisitions of new REIT and assets in Morocco" announced on 12
February 2020 will no longer be pursued:
Property Name Country Sector Type
------------------- -------- ------------------ ------------------
PwC Head Office Ghana Corporate offices Asset Acquisition
Huawei Head Office Ghana Corporate offices Asset Acquisition
Massira Corner ** Morocco Mixed use Asset Acquisition
------------------- -------- ------------------ ------------------
** The Massira Corner acquisition included a Moroccan authorised
OPCI vehicle, and although Grit will no longer pursue this specific
asset acquisition, it still continues to target the launch of an
OPCI vehicle in Morocco. The Company will initially prioritise the
contribution of its Casablanca based retail asset (AnfaPlace Mall)
into this vehicle, and will additionally introduce other Moroccan
pipeline opportunities. Further announcements in this regard will
be made in due course.
Transactions being progressed
Further to the "Pipeline Acquisitions Update" announced on 25
October 2019, the following projects continue to be progressed,
albeit under revised funding models with development funding
institutions ("DFI"). Further detail on these to be announced in
due course:
Property / Investment Country Sector Revised Type
------------------------ ---------- ----------------- -------------------
St Helene Hospital Mauritius Healthcare Development
Coromandel Hospital Mauritius Healthcare Development
Orbit Africa (Ph 1 & 2) Kenya Light industrial Sale and leaseback
------------------------ ---------- ----------------- -------------------
Committed investment in Gateway Real Estate Africa ("GREA")
GREA is a private company funded by equity commitments totalling
USD175 million from four large shareholders and is staffed by an
experienced team of professionals with an established track record
in African property development and project delivery. The company
was founded and co-sponsored by Grit in 2017, and through its
19.98% equity interest in GREA, Grit has minority exposure to its
development projects, assets and returns and has access to a source
of attractive completed assets.
Grit's capital commitments in relation to its 19.98% equity
interest are staggered and correlate to development projects and
associated timelines. GREA has recently been successful in securing
significant projects in the diplomatic housing sector, most notably
the DH1 project in Ethiopia and the DH3 project in Kenya, both
secured by 10-year leases with the United States Government OBO
Department, the former of which is nearing completion. Attractive
further diplomatic housing and data centre development
opportunities are currently being considered.
Grit is additionally finalising a funding framework with GREA on
development projects whereby Grit will be provided "buy-in" options
on approved GREA transactions. The contemplated framework will not
create any liability on Grit, but will provide it with the ability
to partake in development prefunding transactions, subject to
formal Investment committee approval and future funding. Further
announcements will be made in due course.
** GREA is considered a related party by virtue of their large
common shareholders, being the Public Investment Corporation of
South Africa, who manage pensions on behalf of the Government
Employee Pension Fund.
Drive in Trading Guarantee
On 22 January 2018, shareholders approved a related party
transaction between the Public Investment Corporation SOC Limited
("PIC") and the Company whereby the Company guarantees PIC for
50.00% of any losses suffered by the PIC (up to a maximum of
USD17.5 million) resulting from PIC's potential liability under its
Contingent Repurchase Obligation ("CRO"). In 2017, the Company
facilitated a transformation initiative jointly with the PIC on
behalf of South Africa's Government Employment Pension Fund (GEPF).
The transformation initiative was to jointly provide guarantees in
order to allow Drive in Trading Proprietary Limited ("DiT") to
raise cost effective debt facilities in order to subscribe for
shares in the Company. The primary security for DiT's financier was
a CRO for an amount of USD35.0 million between the PIC and DiT's
financier whereby, in the event of default, the PIC would be
obliged to purchase the loan from the financier at cost, up to a
maximum amount of USD35.0 million. In terms of the guarantee
agreement between the PIC and the Company, in the event the CRO is
triggered, the PIC has the right to call for cash collateral up to
a maximum of 50% of the loan balance or USD17.5 million (with 4
days notice to the Company) in order to cover 50% of any potential
losses which the PIC may suffer after realising the underlying
security (subject to a maximum of USD17.5 million).
On 14 August 2020, DiT failed to refinance the facility with
Bank of America N.A (UK Branch) ("BoAML") after its initial three
year term, which has resulted in BoAML enforcing its rights under
the terms of the CRO on 17 August 2020. On 24 August 2020, PIC
acquired the Loan from BoAML for USD33.8 million, and effectively
stepped into BoAML's role as lender to DiT.
On 19 August 2020, PIC's Investment Committee ("IC") approved a
5-year loan to DiT. A number of aspects of the proposed long term
structure are still being negotiated with the PIC, specifically the
interest rate applicable to the loan, Grit's interest top-up
mechanism and PIC's notice period to call for cash collateral on
the guarantee which currently remains at four days' notice. Due to
the related party nature of the transaction, shareholder approval
is likely to be required.
ESG and sustainability
With Africa rapidly urbanising, we are cognisant of our role in
transforming the design of buildings and developments for long-term
sustainability. Our sustainability efforts, under the guidance of
the Eco Grit team, focus on energy efficiency and carbon reduction
and the Group has committed to a five year target of a 25%
reduction in carbon emissions and a 25% improvement in our building
efficiency. We have made significant progress over the last 12
months and are ahead of plan in the achievement of our targets. We
continue to focus on f urther develop ing our carbon offset
strategy and plan in order to reach our target of net zero carbon
by 2040. We are d eploy ing and embedding our Environmental
Sustainability Management and Reporting Policy across all our
assets in Africa , whilst we continue to d evelop and implement our
strategy to support life on land.
In addition to environmental responsibility, we pride ourselves
on achieving in excess of 40% of women in leadership positions at
Grit, and more than 6 5% localised employees, adding to the Group's
diversity. The Company is proud to report that it is already
achieving these targets and will therefore aim to maintain and even
improve on its current achievements.
Dividend resumption
The Group LTV reduced upon the part disposal of Acacia Estates
and reductions in the revolving credit facility outstanding
balances. Underlying progress towards the near term target was
encouraging, however the retail portfolio valuations and the effect
of movements in EUR foreign exchange rates (which although
supportive of NAV has a negative impact on reported LTV due to the
Group's EUR net open position), limited the reduction in LTV to
49.3% from 50.2%. LTV is expected to reduce towards the targeted
45% by the end of the year.
The Board remains committed to reducing LTV levels over the
medium-term to between 35%-40%, and additionally has a near term
focus of reducing its LTV to below 45%. Today, we announce progress
toward that goal, reporting a Group LTV of 49.3%. As a result of
encouraging early results of these further LTV strategies and
recent strong rent collections, the Board has declared a modest
resumption of dividends.
The Board will consider recommending an additional declaration
prior to financial year-end but this decision will be dependent on
the further progress of LTV reduction strategies, the finalisation
of the Drive in Trading guarantee restructure and continued strong
cash collections, specifically in the hospitality sector.
Outlook
Whilst we are maintaining an appropriately cautious stance in
light of potential longer-term effects from COVID-19 on our tenants
and the wider economy, we remain confident in our strategy of
unlocking superior total returns for our shareholders in the medium
to longer term.
With our expertise in African real estate, and our team's
experience, knowledge, skill sets and relationships in various
regions, we will continue to optimise assets and create value
through proactive asset management and risk-mitigated pre-funding
models to support NAV growth. In addition, we will continue to
selectively pursue potential investments from our high-quality,
diversified and yield accretive acquisition pipeline, supported by
a strong tenant base and possible co-investment opportunities.
The Company aims to return to paying an attractive income
distribution and generating total annual return growth and is well
positioned to capitalise on significant recovery potential of the
African continent from its unique high-quality portfolio of
properties. We are assessing a number of financing options to fund
our refocused investment pipeline of high-quality accretive assets
leased to multinational corporates and attracting hard currency
rental streams.
Bronwyn Knight
Chief Executive Officer
FINANCIAL REVIEW
Gross rental income (including associates and joint ventures)
remained relatively flat at USD31.62 million (six months ending
December 2019: USD31.65 million), with the retail sector's decline
of 19.1% in revenue amounting to USD1.91 million being offset by
acquisitions and additions of USD1.93 million. Revenue in retail,
office and corporate accommodation sectors were impacted by lower
operating costs which are recovered from tenants. The Light
industrial sector revenue reduced marginally as a result of the
redevelopment of units within the Bollore complex. Property
operating expenses (including associates and joint ventures)
decreased by USD2.17 million on a like for like basis. These
savings have been achieved through tight cost control measures and
savings achieved of variable operating costs during the various
lockdowns and reduced operating hours on some properties.
Consequently, net operating income on a like for like basis
increased marginally by USD0.21 million. New acquisitions in the
current period and the full period impact of acquisitions in the
comparative period increase the total net operating income by
USD2.01 million.
Year on
Six months ended 31 December 2020 Six months ended 31 December 2019 Year movement
-------------------------------------- -------------------------------------- ---------------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Subsidiaries Associates Total Subsidiaries Associates Total
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
REVENUE (incl lease incentives)
-------------------------------------------------- --------- -------------- ----------- --------- ---------------
Like for Like
comparison
Retail 6,551 1,571 8,121 7,668 2,366 10,034 -19.1%
Office 7,368 1,228 8,595 7,339 1,329 8,668 -0.8%
Corporate
Accommodation 6,450 - 6,450 6,513 6,513 -1.0%
Light Industrial 976 - 976 1,036 1,036 -5.8%
Hospitality 1,733 3,475 5,208 1,720 3,363 5,083 2.4%
Other 126 126 106 106 19.3%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
23,078 6,400 29,478 24,276 7,164 31,440 -6.2%
Acquisitions in
periods
LLR - 1,344 1,344 - 210 210 540.0%
Hospitality -
Clubmed 799 - 799 - - - 100.0%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
TOTAL PORTFOLIO 23,877 7,744 31,621 24,276 7,374 31,650 -0.1%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
PROPERTY OPERATING COSTS
Like for Like
comparison
Retail (2,693) (434) (3,127) (4,650) (478) (5,128) -39.0%
Office (454) (136) (590) (599) (104) (703) -16.1%
Corporate
Accommodation (944) (944) (1,001) (1,001) -5.7%
Light Industrial (40) (40) (32) (32) 23.9%
Hospitality - (12) (12) -100.0%
Other (1) (1) (2) (2) -56.9%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
(4,132) (570) (4,702) (6,284) (594) (6,878) -31.6%
Acquisitions in
periods
LLR (176) (176) (41) (41) 329.3%
Hospitality -
Clubmed - - 0.0%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
TOTAL PORTFOLIO (4,132) (746) (4,878) (6,284) (635) (6,919) -29.5%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
Operating cost ratio 17.3% 9.6% 15.4% 25.9% 8.6% 21.9% -6.4%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
Year on
Six months ended 31 December 2020 Six months ended 31 December 2019 Year movement
-------------------------------------- -------------------------------------- ---------------
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Subsidiaries Associates Total Subsidiaries Associates Total
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
NET OPERATING INCOME
-------------------------------------------------- --------- -------------- ----------- --------- ---------------
Like for Like
comparison
Retail 3,857 1,137 4,994 3,018 1,888 4,906 +1.8%
Office 6,914 1,092 8,005 6,739 1,225 7,964 0.5%
Corporate
Accommodation 5,507 - 5,507 5,512 - 5,512 -0.1%
Light Industrial 936 - 936 1,004 - 1,004 -6.7%
Hospitality 1,733 3,475 5,208 1,720 3,351 5,071 2.7%
Other (1) 126 125 (2) 106 104 21.0%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
18,946 5,830 24,775 17,992 6,570 24,562 0.9%
Acquisitions in
periods
LLR - 1,168 1,168 - 169 169 591.2%
Hospitality -
Clubmed 799 - 799 - - - 100.0%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
TOTAL PORTFOLIO 19,745 6,998 26,742 17,992 6,739 24,731 8.1%
--------------------- -------------- ----------- --------- -------------- ----------- --------- ---------------
The Group's cost control measures in the administrative cost
resulted in a 33.2% comparable decrease in administration expenses
during the period from USD10.0million in 2019 to USD6.7 million.
Savings achieved as a result of employee cost savings during the
period from voluntary salary reductions and limited travel costs
are temporary savings over the COVID-19 period, while the remaining
strong cost control measures representing c35% of the cost savings
will have enduring benefits. Transactional cost savings of USD1.0
million (or c33% of the cost savings) are a function of the volume
of completed transactions and corporate structuring costs which
remain variable to the volume of transactions.
Fair value movements in property values of subsidiaries and
associates and joint ventures
Foreign
BALANCE AS Exchange and TOTAL LIKE BALANCE AS
AT 30 JUN Fair value other FOR LIKE AT 31 DEC Like for Like
2020 movements * movements MOVEMENT Additions 2020 movement
---------------
SECTOR USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
--------------- ------------- ------------- ------------- ------------- ---------- ------------- --------------
Retail 217,760 (14,847) 6,038 (8,810) 330 210,091 -3.7%
Office 199,378 3,769 275 4,044 30 203,449 2.0%
Hospitality 162,290 2,999 14,995 17,994 1,225 181,509 11.1%
Corp Accom 138,194 118 655 773 13 138,980 0.6%
Light
Industrial 30,235 1,266 107 1,373 1,431 33,039 4.5%
LLR 23,223 232 588 820 3,302 27,345 3.5%
GREA 5,009 135 - 135 2,335 7,479 2.7%
TOTAL* 776,090 (6,329) 22,658 16,329 8,666 801,893 2.2%
--------------- ------------- ------------- ------------- ------------- ---------- ------------- --------------
* Total of fair value gains of properties including associates
and joint ventures, excluding fair value adjustment from
contractual receipts from vendors
Retail
The retail sector in general continued to experienced pressure,
with the Zambian portfolio and AnfaPlace Mall experiencing downward
valuation on increased vacancies, new lease rates and increased
discount rates (for Zambia) but offset by movements by the foreign
exchange movements.
Office
The Mozambique assets have benefited from secured long term
global tenancies. The offices in the other regions, Ghana and
Mauritius, had marginal movements impacted by recent lease renewals
and contractual lease escalations.
Hospitality
The Mauritian hospitality assets remained broadly flat in local
currency terms, however benefitted from the Euro's performance
against the USD. The Club Med asset benefitted from capex spend and
the removal of an uncertainty clause in the lease agreement.
Distributable earnings and dividends
The financial results for the six months ended 31 December 2020
produced distributable earnings per share of USD3.88 cps (December
2019: USD5.48 cps), and the Board has declared a dividend of
USD1.5cps, implying a 38.7% payout ratio.
Net asset value
EPRA NRV per share increased by 6.3%, or USD7.4 cps in the six
months to 30 June 2020, from USD117.1 cps to USD124.4 cps).
The movement in net asset value per share for the period is
shown below:
NET ASSET VALUE MOVEMENT IFRS EPRA NRV
USD cps USD cps
----------------------------------------------------------------------------------- -------- ---------
Opening Balance 1 July 2020 97.3 117.1
Like of Like movement in Property Values (including impact of forex revaluations)
Retail (4.8) (4.8)
Office 1.2 1.2
Corporate accommodation 0.0 0.0
Hospitality 1.0 1.0
Light Industrial 0.5 0.5
Distributable Earnings 3.2 3.2
Non-cash items (0.6) 2.1
Foreign exchange revaluations 2.5 2.5
Sale of Minority Interest in assets 4.5 4.5
Issue of Share (1.9) (2.9)
Closing Balance 31 December 2020 102.9 124.4
----------------------------------------------------------------------------------- -------- ---------
Total investment in income generating assets has increased 3.1%
from USD823.5 million in June 2020 to USD849.2 million in December
2020.
COMPOSITION OF INCOME PRODUCING ASSETS 31 Dec 2020 30 Jun 2020
-----------------------------------------------------------------------------------
USD'm USD'm
----------------------------------------------------------------------------------- ------------ ------------
Investment properties 591.3 577.2
Deposits paid on investment properties 5.1 4.5
Investment property included within 'Investment of associates and joint ventures' 210.5 198.9
----------------------------------------------------------------------------------- ------------ ------------
806.9 780.6
Other investments, PPE, Intangibles and related party loans 42.3 42.9
----------------------------------------------------------------------------------- ------------ ------------
TOTAL INCOME PRODUCING ASSETS 849.2 823.5
----------------------------------------------------------------------------------- ------------ ------------
* Includes receivable balances from partners in Zambia relating to the back-to-back loan from
Bank of China of USD77 million used to fund the acquisition and loans advanced to Gateway
Real Estate Africa.
Net debt, cash flow and financing
As financing is integral to our business model, the Group has
continued to develop strong relationships with financiers. The
multi-bank approach adopted by Grit has continued, with the main
banking partners being Bank of China, Standard Bank, ABSA Bank and
SBM (Mauritius) Ltd. During the period a new Nedbank facility was
secured at a corporate level of USD7 million and also concluded the
refinancing of Capital Place in Ghana subsequent to the reporting
period. A detailed breakdown of the interest-bearing borrowings is
listed in note 9 of the results announcement.
Debt expiry profile USD '000 %
---------------------- --------- -------
Yr1 - Up to Dec 2021 4,335 1.1%
Yr2 - Up to Dec 2022 243,327 59.4%
Yr3 - Up to Dec 2023 158,296 38.6%
Yr4 - Up to Dec 2024 1,960 0.5%
Yr5 - Up to Dec 2025 1,960 0.5%
---------------------- --------- -------
Total 409,877 100.0%
---------------------- --------- -------
As at 31 December 2020 the group had undrawn liquidity
facilities available of USD8.2 million.
The group extended maturity dates for the corporate term loan of
USD20 million from SBM and EUR26.5 million RCF facility from SBSA
to October 2022 and June 2022 respectively as well as a USD15
million capital repayment to Investec SA to February 2022.
This has contributed to the marginal increase in the debt expiry
profile and the decrease of the current portion of the
interest-bearing borrowings.
The average 3-month USD LIBOR rates decreased from 1.20% for the
6 months to June 2020 to 0.25% for the 6 months to 31 December
2020. The 0.95% decrease in USD LIBOR rates in the period resulted
in the Group's weighted average cost of debt ("WACD") decreasing to
an average of 5.77% (December 2019: 5.91%) for the six month
period. The Group do not expect any material changes to the WACD up
to 30 June 2021.
The Group's LTV ("LTV") has decreased to 49.3% in six months
ended 31 December 2020 (30 June 2020: 50.2%). The Group is still
targeting the near-term LTV to be below 45% following active
liquidity preservation initiatives and asset valuations expected to
recover gradually.
The Group has entered into a number of interest rate fixing
mechanism to minimise the risk of USD LIBOR rate volatility.
The Group has not entered into any further interest rate fixing
mechanism since 30 June 2020. Details of the existing fixed rate
contracts are as follows:
Financial
institution Notional Amount Type Rate Effective date Termination date
-------------------- ----------------- -------------------- ------------------- --------------- -----------------
Standard Bank of USD 20.0 million Interest rate swap 1.58% fixed rate 11-Oct-19 16-Oct-23
South Africa versus 3m USD
LIBOR floating
rate
Standard Bank of USD 40.0 million Interest rate Cap of 1.75%, 24-Oct-19 16-Oct-23
South Africa collar floor of 1.50%
versus 3m USD
LIBOR floating
rate
Standard Bank of USD 40.0 million Interest rate Cap of 1.85%, 25-Nov-19 16-Oct-23
South Africa collar floor of 1.30%
versus 3m USD
LIBOR floating
rate
-------------------- ----------------- -------------------- ------------------- --------------- -----------------
Currently 69.9% of debt is fixed in nature.
Going concern
The directors are required to consider an assessment of the
Group's ability to continue as a going concern when producing the
financial statements. As such they have modelled a 'base case' and
a 'severe but plausible downside' of the Group's expected liquidity
and covenant position for a going concern period of at least twelve
months forward.
The base case reflects management's best expectations of the
position going forward. It was modelled on board approved forecasts
over the relevant period. For details regarding the assumptions
utilised, please refer the 2020 Integrated Annual Report published
on 15 December 2020.
The Group's external valuers inserted a COVID-19 material
uncertainty clause for the 30 June 2020 independent valuations,
which introduced inherent uncertainty to future property
valuations. As part of the external valuation process for 31
December 2020, the independent valuers have maintained this clause,
in accordance with the RICS Global Standard guidance.
While the base case and severe but plausible models show that
the Group have adequate financing facilities and maintains its
covenants throughout the going concern period, the inherent
uncertainty in future property valuations as a result of the
COVID-19 pandemic are such that, in the event that property
valuations across the portfolio decrease more severely or quickly
than expected in the severe scenario, then it may indicate a
material uncertainty that may cast significant doubt on the Group's
ability to continue as a going concern as referenced in the
external auditors' Independent Audit Opinion in the 2020 Integrated
Annual Report published on 15 December 2020. The Group financial
statements do not include the adjustments that would result if they
were unable to continue as a going concern.
Presentation of financial results
The 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 16.
Leon van de Moortele
Chief Financial Officer
PRINCIPAL RISKS AND UNCERTAINTIES
Grit maintain a Key Risk Register which is shared with the Risk
Committee on a quarterly basis. The key risks are well managed and
monitored regularly as the risks could change with changes in the
industry, economy and stakeholders, amongst others.
The principal risks of the business are set out on pages 42 - 44
of the 2020 Integrated Annual Report alongside their potential
impact and related mitigations. These risks fall into four
categories: compliance; strategic; financial and operational.
The Board has reviewed the principal risks 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 outlined in the
2020 Integrated Annual Report of the Group and that the existing
mitigation actions remain appropriate to manage them.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
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 financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial
year;
-- 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 Mauritius governing the preparation and
dissemination of financial statements may differ from legislations
in other jurisdictions. The directors of the Group are listed in
its Annual Report for the year ended 30 June 2020. A list of
current directors is maintained on the Grit website:
www.grit.group.
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
ABRIDGED INTERIM FINANCIAL STATEMENTS
Unaudited Unaudited
six months six months
ended ended
31 Dec 31 Dec 2019
2020
Abridged consolidated statement of comprehensive income Notes US$'000 US$'000
----------------------------------------------------------------- ------ ----------- ------------
Gross rental income 10 23,877 24,276
Straight-line rental income accrual (268) (171)
----------------------------------------------------------------- ------ ----------- ------------
Revenue 23,609 24,105
Property operating expenses (4,132) (6,284)
----------------------------------------------------------------- ------ ----------- ------------
Net property income 19,477 17,821
Other income 91 2,958
Administrative expenses (including corporate structuring costs) (6,698) (10,030)
----------------------------------------------------------------- ------ ----------- ------------
Profit from operations 12,870 10,749
----------------------------------------------------------------- ------ ----------- ------------
Fair value adjustment on investment properties (4,327) 486
Contractual receipts from vendors of investment properties 3 98 2,525
----------------------------------------------------------------- ------ ----------- ------------
Total fair value adjustment on investment properties (4,229) 3,011
Fair value adjustment on other investments - 591
Fair value adjustment on other financial liability 353 (552)
Impairment of loans and other receivables 825 (904)
Net impairment credit / (charge) on financial assets 738 (218)
Fair value adjustment on derivative financial instruments 428 136
Share-based payment expense (64) (90)
Share of profits from associates and joint ventures 4 1,557 12,590
Foreign currency gains 1,331 8
----------------------------------------------------------------- ------ ----------- ------------
Profit before interest and taxation 13,809 25,321
Interest income 11 1,293 2,366
Finance costs 12 (12,470) (12,605)
----------------------------------------------------------------- ------ ----------- ------------
Profit for the period before taxation 2,632 15,082
Taxation (4,909) (3,381)
----------------------------------------------------------------- ------ ----------- ------------
(Loss)/Profit for the period after taxation (2,277) 11,701
----------------------------------------------------------------- ------ ----------- ------------
Gain / (Loss) on translation of functional currency 8,649 (1,406)
Retirement benefit obligation - -
Total comprehensive income 6,372 10,295
------------------------------------------------------------------------- ----------- ------------
(Loss)/Profit attributable to:
Owners of the parent 1,732 13,130
Non-controlling interests (4,009) (1,429)
------------------------------------------------------------------------- ----------- ------------
(2,277) 11,701
------------------------------------------------------------------------- ----------- ------------
Total comprehensive income / (loss) attributable to:
Owners of the parent 8,751 11,724
Non-controlling interests (2,379) (1,429)
------------------------------------------------------------------------- ----------- ------------
6,372 10,295
------------------------------------------------------------------------- ----------- ------------
Basic and diluted earnings per share (cents) 0.55 4.26
------------------------------------------------------------------------- ----------- ------------
Unaudited as at Audited as at Unaudited
as at
31 Dec 2020 30 Jun 2020 31 Dec
2019
Abridged consolidated statement of financial position Notes US$'000 US$'000 US$'000
------------------------------------------------------- ------ ---------------- -------------- ----------
Assets
Non-current assets
Investment properties 3 584,811 572,086 595,965
Deposits paid on investment properties 3 5,050 4,500 8,500
Property, plant and equipment 3,044 3,363 2,122
Intangible assets 543 568 1,625
Investments in associates and joint ventures 4 168,293 161,301 171,407
Other investments 5 1 1 1
Related party loans receivable 2,636 3 12,477
Other loans receivable 6 29,540 39,575 29,290
Trade and other receivables 7 1,966 2,858 -
Deferred tax 27,993 24,471 22,901
------------------------------------------------------- ------ ---------------- -------------- ----------
Total non-current assets 823,877 808,726 844,288
------------------------------------------------------- ------ ---------------- -------------- ----------
Current assets
Trade and other receivables 7 39,242 29,673 39,258
Related party loans receivable 171 138 2,693
Other loans receivable 6 11,794 2,846 -
Current tax refundable 641 697 769
Derivative financial instruments 79 39 127
Cash and cash equivalents 10,183 3,578 25,545
------------------------------------------------------- ------ ---------------- -------------- ----------
Total current assets 62,110 36,971 68,392
------------------------------------------------------- ------ ---------------- -------------- ----------
Total assets 885,987 845,697 912,680
------------------------------------------------------- ------ ---------------- -------------- ----------
Equity and liabilities
Total equity attributable to equity holders
Ordinary share capital 463,842 454,145 454,147
Treasury shares reserve (18,406) (18,406) (18,406)
Preference share capital 8 25,481 - -
Foreign currency translation reserve 3,140 (4,072) (1,442)
Antecedent dividend reserve - - 418
Retained loss (118,206) (133,784) (42,301)
------------------------------------------------------- ------ ---------------- -------------- ----------
Equity attributable to owners of the Company 355,851 297,883 392,416
------------------------------------------------------- ------ ---------------- -------------- ----------
Non-Controlling interests (12,028) (614) 2,571
--------------------------------------------------------------- ---------------- -------------- ----------
Total equity 343,823 297,269 394,987
--------------------------------------------------------------- ---------------- -------------- ----------
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840 12,840
Proportional shareholder loans 16,116 9,615 9,615
Interest-bearing borrowings 9 400,538 337,620 369,069
Obligations under leases 905 905 969
Related party loans payable - 3,918 -
Deferred tax 65,594 57,419 48,951
------------------------------------------------------- ------ ---------------- -------------- ----------
Total non-current liabilities 495,993 422,317 441,444
--------------------------------------------------------------- ---------------- -------------- ----------
Current liabilities
Interest-bearing borrowings 9 4,335 50,030 15,043
Interest-bearing borrowings - Accrued interest 9 3,613 5,349 -
Obligations under leases 179 254 226
Trade and other payables 26,129 23,220 33,106
Current tax payable 1,926 2,002 556
Derivative financial instruments 3,653 4,043 34
Related party loans payable 78 27,138 26,088
Other financial liability 4,515 4,868 1,196
Bank overdrafts 1,743 9,207 -
------------------------------------------------------- ------ ---------------- -------------- ----------
Total current liabilities 46,171 126,111 76,249
------------------------------------------------------- ------ ---------------- -------------- ----------
Total liabilities 542,164 548,428 517,693
------------------------------------------------------- ------ ---------------- -------------- ----------
Total equity and liabilities 885,987 845,697 912,680
------------------------------------------------------- ------ ---------------- -------------- ----------
Unaudited Unaudited
six months six months
ended ended
31 Dec 2020 31 Dec
2019
Abridged consolidated statement of cashflows Notes USD'000 USD'000
------------------------------------------------------------------ ------- ------------ -----------
Cash generated from operations
Profit before taxation for the period 2,632 15,082
Adjusted for:
Depreciation and amortisation 309 261
Interest income 11 (1,293) (2,366)
Share of profits from associates and joint ventures 4 (1,557) (12,590)
Finance costs 12 12,470 12,605
IFRS 9 (reversals) / charges (2,260) 2,462
Foreign currency gains (1,331) (8)
Straight-line rental income accrual 268 171
Amortisation of lease premium 1,254 1,696
Share based payment expense 64 90
Fair value adjustment on investment properties 3 4,229 (3,011)
Fair value adjustment on other investments - (591)
Fair value adjustment on other financial liability (353) 552
Fair value adjustment on derivative financial instruments (428) (136)
--------------------------------------------------------------------------- ------------ -----------
14,004 14,217
--------------------------------------------------------------------------- ------------ -----------
Changes to working capital
Movement in trade and other receivables (10,206) (7,313)
Movement in trade and other payables 2,285 1,422
--------------------------------------------------------------------------- ------------ -----------
Cash generated from operations 6,083 8,326
--------------------------------------------------------------------------- ------------ -----------
Taxation paid (365) (1,701)
--------------------------------------------------------------------------- ------------ -----------
Net cash generated from operating activities 5,718 6,625
--------------------------------------------------------------------------- ------------ -----------
Cash utilised on investing activities
Acquisition of, and additions to investment properties 3 (3,423) (20,978)
Deposits paid on investment properties (550) -
Acquisition of property, plant and equipment (14) (91)
Acquisition of intangible assets (62) (84)
Acquisition of other investments 5 - (1)
Acquisition of associates and joint ventures 4 (1,998) -
Dividends and interest received from associates and joint ventures 2,879 4,091
Interest received 916 1,911
Proceeds from partial disposal of investment in subsidiaries 5,357 -
Proceeds from disposal of property, plant and equipment 93 -
Related party loans (paid) / received (32,883) 11,582
Other loans repayment (paid) / received (31) 9,387
Proportional shareholder loans received from associates 1,143 1,110
Proceeds from proportional shareholders loans 6,501 -
Other loans repaid 1,089 -
--------------------------------------------------------------------------- ------------ -----------
Net cash (utilised in) / generated from investing activities (20,983) 6,927
--------------------------------------------------------------------------- ------------ -----------
Cash generated from financing activities
Proceeds from the issue of ordinary shares 9,811 -
Share issue expenses (114) (404)
Dividends paid to non-controlling shareholders (417) (581)
Ordinary dividends paid 1 (20,547)
Proceeds from issue of preference shares 25,481 -
Proceeds from interest bearing borrowings 32,517 154,500
Settlement of interest-bearing borrowings (24,669) (112,039)
Finance costs and debt initiation fees paid (13,441) (15,003)
Payment of leases (75) (123)
--------------------------------------------------------------------------- ------------ -----------
Net cash generated from financing activities 29,094 5,803
--------------------------------------------------------------------------- ------------ -----------
Net movement in cash and cash equivalents 13,829 19,355
Cash at the beginning of the period (5,629) 6,674
Effect of foreign exchange rates 240 (484)
--------------------------------------------------------------------------- ------------ -----------
Total cash and cash equivalents at the end of the period 8,440 25,545
--------------------------------------------------------------------------- ------------ -----------
Foreign
Preference currency Antecedent Non-
Share Treasury share translation dividend Retained controlling Total
Capital Shares Capital reserve reserv earnings interest Equity
Consolidated US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
statement of
changes in equity
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Balance as at 1
July 2019 443,259 (18,406) - (36) - (34,868) 4,581 394,530
Adoption of IFRS 16 - - - - - (154) - (154)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Restated balance as
at 1 July 2019 443,259 (18,406) - (36) - (35,022) 4,581 394,376
Loss for the year - - - - - (63,115) (4,133) (67,248)
Other comprehensive
income /(expense)
for the year - - - (4,036) - 209 - (3,827)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Total comprehensive
expense - - - (4,036) - (62,906) (4,133) (71,075)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Share based
payments - - - - - 109 - 109
Ordinary dividends
paid - - - - - (35,965) - (35,965)
Dividends paid to
non-controlling
shareholders - - - - - - (1,062) (1,062)
Ordinary shares
issued 11,292 - - - - - - 11,292
Share issue
expenses (406) - - - - - - (406)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Balance as at 30
June 2020
(audited) 454,145 (18,406) - (4,072) - (133,784) (614) 297,269
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Balance as at 1
July 2019 443,259 (18,406) - (36) - (34,868) 4,581 394,530
Adoption of IFRS 16 - - - - - (53) - (53)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Restated balance as
at 1 July 2019 443,259 (18,406) - (36) - (34,921) 4,581 394,477
Profit/(loss) for
the period - - - - - 13,130 (1,429) 11,701
Other comprehensive
expense for the
period - - (1,406) - - - (1,406)
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Total comprehensive
income/(expense) - - (1,406) - 13,130 (1,429) 10,295
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Share based
payments - - - - 90 - 90
Ordinary dividends
paid - - - - (20,600) - (20,600)
Dividends paid to
non-controlling
shareholders - - - - - (581) (581)
Ordinary shares
issued 11,710 - - - - - 11,710
Antecedent dividend
reserve (418) - - 418 - - -
Share issue
expenses (404) - - - - - (404)
Balance as at 31
December 2019
(unaudited) 454,147 (18,406) (1,442) 418 (42,301) 2,571 394,987
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Balance as at 1
July 2020 454,145 (18,406) - (4,072) - (133,784) (614) 297,269
Profit/(loss) for
the period - - - - - 1,732 (4,009) (2,277)
Other comprehensive
income for the
period - - - 7,019 - - 1,630 8,649
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
Total comprehensive
income/(expense) - - - 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) 25,481 3,140 - (118,206) (12,028) 343,823
-------------------- -------- --------- ----------- ------------ ----------- ---------- ------------ ---------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
This abridged consolidated interim financial information
(financial statements) for the six months ended 31 December 2020
has been prepared on a going concern basis and in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and IAS 34 'Interim Financial Reporting' as issued by the
IASB, LSE and SEM Listings Requirements; the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards
Council and the Securities Act of Mauritius 2005.
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 financial statements. As such they have modelled a 'base
case' and a 'severe but plausible downside' of the Group's expected
liquidity and covenant position for a going concern period of at
least twelve months forward. The process involved a thorough review
of the Group's risk register, an analysis of the trading
information both pre and post period end, extensive discussions
with the independent property valuers, a review of the operational
indicators within the Group and economic data available in the
countries of operations. All of this has been done in the context
of what has occurred through the COVID-19 pandemic, recent
collection statistics, previous experience of African real estate
valuations and best estimates of expectations in the future.
The base case reflects management's best expectations of the
position going forward. It was modelled on board approved forecasts
over the relevant period. For details regarding the detailed
assumptions utilized, please refer the 2020 Integrated Annual
Report published on 15 December 2020, pages 188 to 189.
The Group's external valuers inserted a COVID-19 material
uncertainty clause for the 30 June 2020 independent valuations,
which introduced inherent uncertainty to future property
valuations. As part of the external valuation process for 31
December 2020, the independent valuers have maintained this clause,
in accordance with the RICS Global Standard guidance.
While the base case and severe but plausible models show that
the Group have adequate financing facilities and maintains its
covenants throughout the going concern period, the inherent
uncertainty in future property valuations as a result of the
COVID-19 pandemic are such that, in the event that property
valuations across the portfolio decrease more severely or quickly
than expected, then it may indicate a material uncertainty that may
cast significant doubt on the Group's ability to continue as a
going concern as referenced in the external auditors' Independent
Audit Opinion in the 2020 Integrated Annual Report published on 15
December 2020, page 170. The Group financial statements do not
include the adjustments that would result if they were unable to
continue as a going concern.
The abridged consolidated interim financial information does not
comprise statutory accounts. Statutory accounts for the year ended
30 June 2020, presented in accordance with International Financial
Reporting Standards ("IFRS"), were approved by the Board of
Directors on 14 December 2020 and delivered to the Registrar of
Companies in Mauritius. The report of the auditor on those accounts
was unqualified. The abridged consolidated interim financial
information should be read in conjunction with the Group's annual
financial statements for the year ended 30 June 2020. This abridged
consolidated interim financial information was approved Board of
Directors on 13 February 2021. The abridged consolidated interim
financial information has not been reviewed or reported on by the
Group's auditors.
Significant Judgements
The preparation of these financial statements requires the Board
to make judgements, assumptions and estimates that affect amounts
reported in the Statement of Comprehensive Income and Balance
Sheet. The directors consider the valuation of investment property
to be a critical estimate because of the level of complexity,
judgement or estimation involved and its impact on the financial
statements. This is consistent with the financial statements for
the previous year end. Full disclosure of the critical judgements,
assumptions and estimates is included in the 2020 financial
statements and there has been no change in the judgements,
assumptions and estimates as per the 2020 financial statements with
the exception of the accounting treatment for the part disposal of
Acacia and AnfaPlace Mall.
The principal areas where such judgements have been made
are:
Partial Disposals during the period
On 01 July 2020, the group disposed of an indirect interest of
39.60% in AnfaPlace Mall by disposing of 40% interest in Delta
International Bahrain (DIB), the beneficial owner of AnfaPlace Mall
("Anfa"). The total consideration for the transaction amounted to $
7,571. On 1 November 2020, the group disposed of an indirect
interest of 26.66% in Acacia through the disposal of 49% interest
in Moz Delta and 25.60% interest in TC Maputo (which together owns
95% of Cognis 1 Limitada, the company in Mozambique that owns the
Acacia Estate). The consideration for the share disposal
transactions amounted to $ 5,350,128. Prior to the disposal of
interests, the carrying amount of existing non-controlling
interests which have been disposed was ($8,617,896). The group
recognised a decrease in non-controlling interests of $8,617,896
and an increase in equity attributable to owners of the parent of
$13,782,273. The effect on the equity attributable to the owners of
Grit during the financial period 31 December 2020 is summarised as
follows:
Total
31 Dec 2020
US$'000
------------------------------------------------------- ------------
Carrying amount of non-controlling interests disposed (8,618)
Consideration received from non-controlling interests 5,358
------------------------------------------------------- ------------
Increase in equity attributable to owners 13,976
------------------------------------------------------- ------------
The increase in equity attributable to owners comprised of:
- an increase of USD13.8 million in retained earnings
- an increase in foreign currency translation reserve of USD0.2
million
Judgements in respect of new accounting standards have been
considered further below:
2. Changes in accounting policies
The abridged consolidated interim financial information has been
prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out in the notes
to the Group's annual financial statements for the year ended 30
June 2020, as amended where relevant to reflect the new standards,
amendments and interpretations which became effective in the period
which are detailed below.
New accounting standards and interpretations
The following amendment to an existing Standard was relevant to
the Group and mandatory for the first time for the financial year
beginning 1 July 2020:
Standard or Interpretation Effective from
Amendment to References to the Conceptual Framework in IFRS Standards 01-Jan-2020
----------------
Amendment to IFRS 3 'Business Combinations' 01-Jan-2020
----------------
Amendments to IAS 1 and IAS 8: Definition of Material 01-Jan-2020
----------------
Amendments to IFRS 9, IAS 39, and IFRS 7: Interest Rate Benchmark Reform 01-Jan-2020
----------------
Amendment to IFRS 16: COVID-19 Related Rent Concessions 01-Jan-2020
----------------
Segmental information
IFRS 8 requires operating segments to be reported in a manner
consistent with the internal financial reporting reviewed by the
chief operating decision maker. The chief operating decision maker
of the Group is the Board. The Board is responsible for reviewing
the Group's internal reporting in order to assess performance. The
information reviewed by the Board is prepared on a basis consistent
with these financial statements. That is, the information is
provided at a Group level and includes both the IFRS reported
results and EPRA measures. Refer to note 13 for segmental
reporting.
As at As at
31 Dec 2020 30 Jun 2020
3. Investment properties US$'000 US$'000
------------------------------------------------------------------------------------------ ------------ ------------
Net carrying value of properties excluding straight-line rental income accrual 584,811 572,086
------------------------------------------------------------------------------------------ ------------ ------------
Movement for the period excluding straight-line rental income accrual
Investment property at the beginning of the period 565,773 567,731
Acquisitions of investment properties - 18,848
Transfer to right of use asset - (88)
Other capital expenditure and construction 3,348 27,030
Foreign currency translation differences 13,799 (3,225)
Revaluation of properties at end of period (4,229) (41,218)
Contractual receipts from vendors of investment properties (reduction in purchase price) (98) (3,305)
------------------------------------------------------------------------------------------ ------------ ------------
As at period end 578,593 565,773
------------------------------------------------------------------------------------------ ------------ ------------
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 578,593 565,773
Straight-line rental income accrual 6,218 6,313
------------------------------------------------------------------------------------------ ------------ ------------
Total valuation of properties 584,811 572,086
------------------------------------------------------------------------------------------ ------------ ------------
Reconciliation to property valuation
Investment property (disclosed on Balance sheet) 584,811 572,086
Lease incentives (disclosed under Current assets) 6,070 4,680
Right of use of land (disclosed under Property, plant and equipment) 453 456
Furniture and fittings (disclosed under Property, plant and equipment) - -
------------------------------------------------------------------------------------------ ------------ ------------
Total valuation of investment properties directly held by the Group 591,334 577,222
------------------------------------------------------------------------------------------ ------------ ------------
Investment property pledged as security
Mozambican investment properties with a market value of USD313.9
million are mortgaged to Standard Bank of South Africa to secure
debt facilities amounting to USD140.0 million (June 2020:
Mozambican investment properties with a market value of USD308.0
million were mortgaged to Standard Bank of South Africa to secure
debt facilities amounting to USD140.0 million).
Moroccan investment properties with a market value of USD93.7
million (June 2020: USD89.4 million) are mortgaged to Investec
South Africa to secure debt facilities amounting to USD48.7 million
(June 2020: USD45.7 million).
Mauritian investment properties with a market value of USD68.1
million (June 2020: USD63.6 million) are mortgaged to ABSA Bank
Mauritius to secure debt facilities amounting to USD7.7 million
(June 2020: USD7.1million) and State Bank of Mauritius to secure
debt facilities amounting to USD27.3 million (June 2020: USD25.0
million).
Kenyan investment properties with a market value of USD25.0
million (June 2020: USD24.4 million) are mortgaged to Bank of China
to secure debt facilities amounting to USD8.6 million (June 2020:
USD8.6 million).
Zambian investment properties with a gross market value of
USD122.1 million (June 2020: USD163.9 million) are mortgaged to
Bank of China to secure debt facilities amounting to USD76.4
million (June 2020: USD76.4 million). This includes the properties
of Cosmopolitan Shopping Centre and Kafubu Mall that is disclosed
within Investments in associates and joint ventures. The Group's
share of these properties is disclosed within note 4 as well as in
the table below.
As at As at
Valuer (for the 31 Dec 2020 30 Jun 2020
most
Summary of valuation date recent valuation) Sector Country US$'000 US$'000
valuations by
reporting date
------------------ ---------------- ------------------ ------------------ ------------ ------------ ------------
Commodity House
Phase I building 31-Dec-20 REC Office Mozambique 49,686 48,095
Commodity House
Phase II Directors'
building 31-Dec-20 valuation Office Mozambique 20,451 19,348
Directors'
Hollard Building 31-Dec-20 valuation Office Mozambique 21,878 21,332
Directors'
Vodacom Building 31-Dec-20 valuation Office Mozambique 49,437 49,438
Directors'
Zimpeto Square 31-Dec-20 valuation Retail Mozambique 6,175 5,848
Directors'
Bollore Warehouse 31-Dec-20 valuation Light industrial Mozambique 8,044 5,795
ABSA House 31-Dec-20 Knight Frank Office Mauritius 14,229 13,825
AnfaPlace Mall 31-Dec-20 Knight Frank Retail Morocco 93,679 89,363
Tamassa Resort 31-Dec-20 Knight Frank Hospitality Mauritius 53,896 49,734
Vale Housing
Compound 31-Dec-20 REC Accom Mozambique 70,662 70,654
Imperial
Distribution
Centre 31-Dec-20 Knight Frank Light industrial Kenya 21,995 21,370
Mara Viwandani 31-Dec-20 Knight Frank Light industrial Kenya 3,000 3,070
Directors'
Mall de Tete 31-Dec-20 valuation Retail Mozambique 19,251 19,991
Acacia Estate 31-Dec-20 REC Accom Mozambique 68,318 67,540
5th Avenue
Building 31-Dec-20 Knight Frank Office Ghana 18,623 19,210
Mukuba Mall 31-Dec-20 Knight Frank Retail Zambia 48,148 55,130
Club Med Cap
Skirring Resort 31-Dec-20 Knight Frank Hospitality Senegal 23,862 17,479
------------------ ---------------- ------------------ ------------------ ------------ ------------ ------------
Total valuation of investment properties directly held
by the Group 591,334 577,222
Deposits paid on Imperial Distribution Centre Phase 2 1,500 1,500
Deposits paid on Capital Place Limited 3,550 3,000
-------------------------------------------------------- -------------------------------- ------------ ------------
Total deposits paid on investment properties 5,050 4,500
-------------------------------------------------------- -------------------------------- ------------ ------------
Total carrying value of investment properties including
deposits paid 596,384 581,722
-------------------------------------------------------- -------------------------------- ------------ ------------
Investment properties held within associates and joint
ventures - Group share
Buffalo Mall -
Buffalo Mall
Naivasha Limited
(50%) 31-Dec-20 Knight Frank Retail Kenya 5,869 6,395
Kafubu Mall -
Kafubu Mall
Limited (50%) 31-Dec-20 Knight Frank Retail Zambia 10,122 9,658
CADS II Building
- CADS
Developers Directors'
Limited (50%) 31-Dec-20 valuation Office Ghana 17,771 16,920
Cosmopolitan
Shopping Centre
- Cosmopolitan
Shopping Centre
Limited (50%) 31-Dec-20 Knight Frank Retail Zambia 26,848 31,375
Canonniers,
Mauricia and
Victoria Resorts
and Spas -
Beachcomber
Hospitality
(44.42%) 31-Dec-20 Knight Frank Hospitality Mauritius 103,739 95,066
Capital Place -
Capital Place Directors'
Limited (50,0%) 31-Dec-20 valuation Office Ghana 11,372 11,210
Letlole La Rona
Limited (30%) -
21 Investment Directors'
properties 31-Dec-20 valuation Light industrial Botswana 19,030 15,536
Letlole La Rona
Limited (30%) -
1 Investment Directors'
property 31-Dec-20 valuation Hospitality Botswana 211 193
Letlole La Rona
Limited (30%) -
2 Investment Directors'
properties 31-Dec-20 valuation Retail Botswana 5,344 4,957
Letlole La Rona
Limited (30%) -
1 Investment Directors'
property 31-Dec-20 valuation Office Botswana 1,429 1,316
Letlole La Rona
Limited (30%) -
1 Investment Directors'
property 31-Dec-20 valuation Accommodation Botswana 1,331 1,221
Gateway Real
Estate Africa Directors'
Ltd (19,98%) 31-Dec-20 valuation Other investments Mauritius 7,479 5,009
------------------ ---------------- ------------------ ------------------ ------------ ------------ ------------
Total of investment properties acquired through associates and joint ventures 210,545 198,856
------------------------------------------------------------------------------------------ ------------ ------------
Total portfolio 806,929 780,578
------------------------------------------------------------------------------------------ ------------ ------------
Functional currency of total investment property portfolio
United States Dollars 477,057 479,160
Euros 181,497 162,279
Mauritian Rupees 14,229 13,825
Moroccan Dirham 93,679 89,363
Botswana Pula 27,345 23,223
Kenyan Shilling 3,000 3,070
Zambian Kwacha 10,122 9,658
------------------------------------------------------------------------------------------ ------------ ------------
Total portfolio 806,929 780,578
------------------------------------------------------------------------------------------ ------------ ------------
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. For the following properties, a directors' valuation was
used:
Mall de Tete
Commodity House Phase II building
Hollard Building
Vodacom Building
Zimpeto Square
Bollore Warehouse
Gateway Real Estate Africa Ltd
Letlole La Rona Limited
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 2020 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.
As at As at
31 Dec 30 Jun 2020
2020
4. Investments in associates and joint ventures 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 Zambia 50.00% 10,072 9,552
Cosmopolitan Shopping Centre Limited Zambia 50.00% 26,871 31,495
CADS Developers Limited Ghana 50.00% 9,948 9,504
----------------------------------------------------- ------------- -------- --------- --------------
Carrying value of joint ventures 46,891 50,551
------------------------------------------------------------------------------ --------- --------------
Name of associate Country % held
Letlole La Rona Limited Botswana 30.00% 21,728 19,676
Buffalo Mall Naivasha Limited Kenya 50.00% 3,935 4,612
Gateway Real Estate Africa Ltd Mauritius 19.98% 12,968 11,404
Capital Place Limited Ghana 50.00% 8,544 8,038
Beachcomber Hospitality Investments Limited Mauritius 44.42% 74,227 67,020
----------------------------------------------------- ------------- -------- --------- --------------
Carrying value of associates 121,402 110,750
------------------------------------------------------------------------------ --------- --------------
Joint ventures 46,891 50,551
Associates 121,402 110,750
-------------------------------------------------------------------- -------- --------- --------------
Total carrying value of associates and joint ventures 168,293 161,301
------------------------------------------------------------------------------ --------- --------------
Gateway
Beachcomber Real Cosmopolitan Buffalo
Letlole Kafubu Hospitality Capital Estate CADS Shopping Mall
La Rona Mall Investments Place Africa Developers Centre Naivasha
Limited Limited Limited Limited Limited Limited Limited 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 2020 19,676 9,552 67,020 8,038 11,404 9,504 31,495 4,612 161,301
Acquired during
the period - - - - 1,998 - - - 1,998
Profit /
(losses) from
associates and
joint ventures
Gross rental
income 1,344 439 3,491 512 126 715 913 204 7,744
Straight-line
rental income
accrual - - 119 - - - - - 119
- Property
operating
expenses (176) (91) - (96) - (40) (117) (226) (746)
- Admin
expenses and
recoveries (328) (5) (14) (10) (713) (3) 30 (4) (1,047)
- Fair value
adjustment on
other
investments - - - - (15) - - - (15)
- Unrealised
foreign
exchange
gains/(losses) - (818) (30) - - 4 (81) (8) (933)
- Investment at
fair value - - - - (1) - - - (1)
- Interest
income 31 2 - - - - 3 - 36
- Finance
charges (207) (1) (587) (63) (16) (226) - (117) (1,217)
- Fair value
movement on
investment
property 232 1,817 (150) 163 135 851 (4,527) (526) (2,005)
- Current tax 24 (9) (327) - (1) - - - (313)
- Deferred tax - - (65) - - - - - (65)
----------------- -------- -------- ------------ -------- -------- ----------- ------------- --------- --------
Total profits
from associates
and joint
ventures 920 1,334 2,437 506 (485) 1,301 (3,779) (677) 1,557
Dividends
received and
interest
received (614) - (1,420) - - - (845) - (2,879)
Profit in
Gateway Real
Estate Africa - - - - 38 - - - 38
Repayment of
proportionate
shareholders
loan - (286) - - - (857) - - (1,143)
Foreign currency
translation
differences 1,746 (528) 6,190 - 13 - - - 7,421
----------------- -------- -------- ------------ -------- -------- ----------- ------------- --------- --------
Carrying value
of associates
and joint
ventures 21,728 10,072 74,227 8,544 12,968 9,948 26,871 3,935 168,293
----------------- -------- -------- ------------ -------- -------- ----------- ------------- --------- --------
As at As at
31 Dec 2020 30 Jun 2020
5. Other investments US$'000 US$'000
------------------------------------------------------------------ ------------ ------------
Balance at the beginning of the period 1 3,024
Additions - 1
Reclassification to Investments in associates and joint ventures - (3,615)
Fair value adjustments recognised in profit or loss - 591
------------------------------------------------------------------ ------------ ------------
Total 1 1
------------------------------------------------------------------ ------------ ------------
Level 1 investment comprise listed equity investment valued at
market prices. If all significant inputs required to fair value an
investment are observable, the investment is included in level 2.
If one or more of the significant inputs are not based on
observable market data, the investment is included in level 3.
As at As at
31 Dec 2020 30 Jun 2020
6. Other loans receivable US$'000 US$'000
----------------------------------------------- ------------ ------------
Ndola Investments Limited(1) 5,073 5,073
Kitwe Copperbelt Limited(1) 5,577 5,577
Syngenta Limited(1) 18,690 18,690
Healthcare assets 266 303
Drift (Mauritius) Limited(2) 10,000 10,000
Drift (Mauritius) Limited(3) 1,794 2,846
IFRS 9 - Impairment on financial assets (ECL) (66) (68)
----------------------------------------------- ------------ ------------
As at period endAs at 31 December 41,334 42,421
----------------------------------------------- ------------ ------------
Classification of other loans receivable
Non-current assets 29,540 39,575
Current assets 11,794 2,846
----------------------------------------------- ------------ ------------
As at period end 41,334 42,421
----------------------------------------------- ------------ ------------
1 In April 2017 Bank of China provided the Group with a term loan credit facility of $77.0 million
for 5 years. This facility has been fully drawn by the Group as at 30 June 2020 (note 9).
The Group has advanced loans amounting in total to 50.00% of the $77.0 million facility to
the other investors in the Zambian investments referred to in note 4. Each of these loans
has a 5 year term, is secured by a suretyship under the terms of the respective loan agreement
and has interest charged at a rate of 6 month LIBOR plus 4.00%. The party has provided their
share of the property as security to Bank of China.
2 Project pre-funding 1 - Maputo Housing Project
Loan bears interest at 3 month Libor plus 6.50%, repayable within 24 months or such other
time as agreed in writing between the parties.
3 Project pre-funding 2 - Tete Housing Project
Loan bears interest at 3 month Libor plus 6.50%, repayable within 24 months or such other
time as agreed in writing between the parties.
As at As at
31 Dec 2020 30 Jun 2020
7. Trade and other receivables US$'000 US$'000
------------------------------------------------------------------------------- ------------ ------------
Trade receivables 17,173 13,785
Total allowance for credit losses and provisions (6,389) (6,947)
IFRS 9 - Impairment on financial assets (ECL) (1,854) (1,715)
IFRS 9 - Provision for bad debts (Management overlay on specific receivables) (4,535) (5,232)
------------------------------------------------------------------------------- ------------ ------------
Trade receivables - net 10,784 6,838
------------------------------------------------------------------------------- ------------ ------------
Accrued Income 1,006 1,118
Lease incentives 6,070 4,680
Loan interest receivable 3,122 2,721
Deposits paid 63 62
VAT recoverable 7,528 8,658
Purchase price adjustment account 1,178 1,227
Deferred expenses and prepayments 7,659 3,500
IFRS 9 - Impairment on other financial assets (ECL) (1,117) (1,117)
Deferred rental 1,186 1,009
Rental guarantees receivable 955 858
Dividends receivable 614 641
Sundry debtors 2,160 2,336
------------------------------------------------------------------------------- ------------ ------------
Other receivables 30,424 25,693
------------------------------------------------------------------------------- ------------ ------------
As at period end 41,208 32,531
------------------------------------------------------------------------------- ------------ ------------
Classification of trade and other receivables
Non-current assets 1,966 2,858
Current assets 39,242 29,673
------------------------------------------------------------------------------- ------------ ------------
As at period end 41,208 32,531
------------------------------------------------------------------------------- ------------ ------------
Trade and other receivables - past due:
Trade and other receivables are generally collected within 30
days of invoice, once an investment property has been fully
integrated within the Group's portfolio. This represents the
Group's normal payment terms. A provision is made for all debtors
where legal action has commenced. All other debtors older than 30
days are considered past due but, not impaired. These debts are
considered collectable based on a review of historic payment
behavior and extensive analysis of the circumstances in respect of
each amount. Security deposits are held for a number of the Group's
tenants.
Other classes of financial assets included within trade and
other receivables do not contain impaired assets.
The carrying value of trade and other receivables are considered
by the directors to approximate their fair values.
As at As at
31 Dec 2020 30 Jun 2020
8. Preference share capital US$'000 US$'000
----------------------------------------- ------------ ------------
Opening balance - -
Proceeds from issue of preference shares 25,481 -
----------------------------------------- ------------ ------------
Closing balance 25,481 -
----------------------------------------- ------------ ------------
During the period the group issued 25,481,240 class B preference
shares through Dif 1 Co. Limited to Gateway Real Estate Africa
Limited, an associate to the group. The class B preference shares
will earn a coupon at a rate of 8% per annum. The preference share
has an off balance sheet accrued dividend of $1,027,627.
As at As at
31-Dec-20 30-Jun-20
9. Interest-bearing borrowings US$'000 US$'000
---------------------------------------------------- ----------- -----------
Non-current liabilities
At amortised cost 400,538 337,620
Current liabilities
At amortised cost 4,335 50,030
Accrued interest 3,613 5,349
---------------------------------------------------- ----------- -----------
408,486 392,999
---------------------------------------------------- ----------- -----------
Currency of the interest-bearing borrowings (stated gross of unamortised
loan issue costs)
United States Dollars 273,035 271,560
Euros 135,017 119,419
Mauritian Rupees 1,825 1,778
409,877 392,757
Interest accrued 3,613 5,349
Unamortised loan issue costs (5,006) (5,107)
---------------------------------------------------- ----------- -----------
As at period end 408,484 392,999
---------------------------------------------------- ----------- -----------
Movement for the period
Balance at the beginning of the period 392,999 346,097
Proceeds of interest bearing-borrowings 32,517 170,278
Loan issue costs incurred (1,225) (4,639)
Amortisation of loan issue costs 1,326 1,999
Foreign currency translation differences 9,231 (1,165)
Interest accrued (1,736) 5,349
Debt settled during the period (24,628) (124,920)
---------------------------------------------------- ----------- -----------
As at period end 408,484 392,999
---------------------------------------------------- ----------- -----------
Amount undrawn on Revolving Credit Facilities 7,902 -
Analysis of facilities and loans in issue
As at As at
Initial 31 Dec 2020 30 Jun 2020
Lender Borrower Facility US$'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 - EUR26.5m 29,969 29,730
Total Standard Bank Group 169,969 169,730
Bank of China Warehously Limited $8.5m 8,555 8,555
Zambian Property Holdings
Bank of China Limited $77.0m 76,405 76,405
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total Bank of China 84,960 84,960
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR 9.0m 11,024 10,097
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR 3.2m 3,920 3,590
Mara Delta Properties Mauritius
State Bank of Mauritius Limited EUR 22.3m 27,315 25,018
Grit Real Estate Income Group
State Bank of Mauritius Limited Equity Bridge $20.0m 20,000 20,000
Grit Real Estate Income Group
State Bank of Mauritius Limited RCF Mur 72m 1,825 1,778
Total State Bank of Mauritius 64,084 60,483
Investec South Africa Freedom Property Fund SARL EUR 36.0m 39,929 37,027
Investec South Africa Freedom Property Fund SARL $15.7m 8,722 8,722
Grit Real Estate Income Group
Investec Mauritius Limited $ 0.5m 353 378
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total Investec Group 49,004 46,127
ABSA Bank Mauritius BH Property Investment Limited EUR 7.4m 7,731 7,081
ABSA Bank Ghana Limited Grit Accra Limited $ 9.0m 9,000 9,000
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total ABSA Group 16,731 16,081
Grit Real Estate Income Group
Maubank Mauritius Limited EUR 3.2m 3,976 3,642
Maubank Mauritius Freedom Asset Management EUR 4.0m 3,314 3,234
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total Maubank 7,290 6,876
ABC Banking Corporation Grit Services Limited Equity bridge $8.5m 8,500 8,500
--------------------------------- -------------------------------- --------------------- ------------ ------------
ABC Banking Corporation Casamance Holdings Limited EUR 6.4m 7,839 -
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total ABC Banking Corporation 16,339 8,500
Grit Real Estate Income Group
Nedbank South Africa Limited $7m 1,500 -
--------------------------------- -------------------------------- --------------------- ------------ ------------
Total loans in issue 409,877 392,757
Plus: interest accrued 3,613 5,349
less: unamortised loan issue costs (5,006) (5,107)
------------------------------------------------------------------- --------------------- ------------ ------------
As at period end 408,484 392,999
------------------------------------------------------------------------------------------ ------------ ------------
As financing is integral to our business model, the Group has
continued to develop strong relationships with financiers. The
multi-bank approach adopted by Grit has continued, with the main
banking partners being Standard Bank, Bank of China, State Bank
Mauritius and ABSA Bank. During the period a new Nedbank facility
was secured at a corporate level of USD7 million and also concluded
the refinancing of Capital Place in Ghana subsequent to the
reporting period.
The Group raised USD32.5 million of debt in the period to fund
development projects and refinance debt facilities.
The average 3-month USD LIBOR rates decreased from 1.20% for the
6 months to June 2020 to 0.25% for the 6 months to 31 December
2020. The 0.95% decrease in USD LIBOR rates in the period resulted
in the Group's WACD decreasing to an average of 5.77% (December
2019: 5.91%) for the six month period. The Group do not expect any
material changes to the WACD up 30 June 2021.
The Group's loan-to-value ("LTV") has decreased to 49.3% in six
months ended December 2020 (30 June 2020: 50.2%).
The group extended maturity dates for the corporate term loan of
USD20 million from SBM and EUR26.5 million RCF facility from SBSA
to October 2022 and June 2022 respectively as well as a USD15
million capital repayment to Investec SA to February 2022.
This has contributed to the increase in the debt expiry profile
and the decrease of the current portion of the interest-bearing
borrowings.
The Group has not entered into any further interest rate fixing
mechanism since 30 June 2020.
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
10. Revenue US$'000 US$'000
---------------------------------------- ------------ ------------
Contractual rental income 19,264 19,802
Retail parking income 836 809
Other rental income (Lease incentives) 1,074 -
Recoverable property expenses 2,703 3,665
---------------------------------------- ------------ ------------
Total revenue 23,877 24,276
---------------------------------------- ------------ ------------
None of the revenue recognised in the current reporting period
relates to carried forward contract liabilities and to performance
obligations that were satisfied in a prior period.
The recoverable property expenses were recognised in the group
income statement in accordance with the delivery of services.
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
11. Interest income US$'000 US$'000
-------------------------------------------------------- ------------ ------------
Bank interest receivable 1 12
Interest on loans to partners 698 969
Interest on loans to related parties 469 1,001
Interest on property deposits paid 96 278
Interest on tenant rental arrears and penalty interest 29 106
-------------------------------------------------------- ------------ ------------
1,293 2,366
-------------------------------------------------------- ------------ ------------
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
12. Finance costs US$'000 US$'000
------------------------------------------------------ ------------ ------------
Interest-bearing borrowings - financial institutions 10,527 11,268
Amortisation of loan issue costs 1,326 835
Preference share dividends 410 402
Interest on obligations under leases 41 37
Interest on loans to related parties 33 -
Finance costs expensed related to capital projects - 53
Interest on bank overdraft 133 10
12,470 12,605
------------------------------------------------------ ------------ ------------
13. Segmental reporting
Consolidated Senegal
segmental analysis Botswana Morocco Mozambique Zambia Kenya Ghana Mauritius Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Geographical location
31 December 2020 -
US$'000
Gross rental income - 799 3,324 13,458 2,185 842 996 2,273 23,877
Straight-line rental
income accrual - - (469) 13 - 107 14 67 (268)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Revenue - 799 2,855 13,471 2,185 949 1,010 2,340 23,609
Property operating
expenses - - (2,001) (1,509) (370) (20) (168) (64) (4,132)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Net property income - 799 854 11,962 1,815 929 842 2,276 19,477
Other income - - - 17 19 - 5 50 91
Administrative
expenses (including
corporate
structuring costs) - (40) (333) (483) (22) (63) (193) (5,564) (6,698)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) from
operations - 759 521 11,496 1,812 866 654 (3,238) 12,870
Fair value adjustment
on investment
properties - 3,553 (4,185) 3,852 (6,982) 442 (573) (336) (4,229)
Fair value adjustment
on other financial
liability - - - - - - - 353 353
Fair value adjustment
on derivatives
financial
instruments - - - - - - - 428 428
Share based payment
expense - - - - - - - (64) (64)
Share of profits from
associates and joint
ventures 920 - - - (2,445) (677) 1,807 1,952 1,557
Impairment of loans
and other
receivables - - - - - - - 825 825
ECL Provision - 6 31 (18) - - 3 716 738
Foreign currency
(losses) / gains - (14) 813 (200) (17) (48) (32) 829 1,331
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) before
interest and
taxation 920 4,304 (2,820) 15,130 (7,632) 583 1,859 1,465 13,809
Interest income - - - 9 7 - - 1,277 1,293
Finance costs - - (1,593) (4,136) - (249) (300) (6,192) (12,470)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) for the
period before tax 920 4,304 (4,413) 11,003 (7,625) 334 1,559 (3,450) 2,632
Taxation - 2 (145) (4,194) - (268) (59) (245) (4,909)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) for the
period 920 4,306 (4,558) 6,809 (7,625) 66 1,500 (3,695) (2,277)
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Reportable segment
assets and
liabilities
Non-current assets
Investment properties - 23,862 89,226 312,530 48,148 24,995 18,403 67,647 584,811
Deposits paid on
investment
properties - - - - - - - 5,050 5,050
Property, plant and
equipment - 38 32 277 - - 26 2,671 3,044
Intangible assets - - 16 - - - - 527 543
Other investments - - - 1 - - - - 1
Investment in
associates and joint
ventures 21,728 - - - 36,943 3,935 18,492 87,195 168,293
Related party loans
receivable - - - - - - - 2,636 2,636
Other loans
receivable - - - - - - - 29,540 29,540
Trade and other
receivables - - 1,966 - - - - - 1,966
Deferred tax - - 8,379 16,493 - 415 827 1,879 27,993
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Total non-current
assets 21,728 23,900 99,619 329,301 85,091 29,345 37,748 197,145 823,877
Current assets
Trade and other
receivables - 1,304 11,456 6,648 123 2,320 800 16,591 39,242
Current tax
refundable - - - 641 - - - - 641
Related party loans
receivable - - - - - - - 171 171
Other loans
receivable - - - - - - - 11,794 11,794
Derivative financial
instruments - - - - - - - 79 79
Cash and cash
equivalents - 1,312 608 1,342 265 49 77 6,530 10,183
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Total assets 21,728 26,516 111,683 337,932 85,479 31,714 38,625 232,310 885,987
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Liabilities
Total liabilities - 1,062 79,852 216,753 83,842 10,877 10,434 139,344 542,164
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Net assets 21,728 25,454 31,831 121,179 1,637 20,837 28,191 92,966 343,823
---------------------- --------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Consolidated Other Light
segmental analysis investments Hospitality Retail Office industrial Accommodation Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Type of property 31
December 2020 -
US$'000
Gross rental income - 2,532 6,565 7,352 976 6,452 - 23,877
Straight-line rental
income accrual - - (483) (41) 107 149 - (268)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Revenue - 2,532 6,082 7,311 1,083 6,601 - 23,609
Property operating
expenses - - (2,693) (809) (41) (944) 355 (4,132)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Net property income - 2,532 3,389 6,502 1,042 5,657 355 19,477
Other income - - 19 17 - - 55 91
Administrative
expenses (including
corporate
structuring costs) - (185) (403) (544) (94) (382) (5,090) (6,698)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Profit/(loss) from
operations - 2,347 3,005 5,975 948 5,275 (4,680) 12,870
Fair value adjustment
on investment
properties - 3,149 (11,612) 2,758 1,260 118 98 (4,229)
Fair value adjustment
on other financial
liability - (33) - - - - 386 353
Fair value adjustment
on derivatives
financial liability - - - - - - 428 428
Share based payment
expense - - - - - - (64) (64)
Share of profits from
associates and joint
ventures (485) 2,444 (2,942) 1,855 640 45 - 1,557
Impairment of loans
and other
receivables - - - - - - 825 825
ECL Provision - (11) 24 - (5) (3) 733 738
Foreign currency
(losses) / gains - 1,920 866 (331) (131) (168) (825) 1,331
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Profit/(loss) before
interest and
taxation (485) 9,816 (10,659) 10,257 2,712 5,267 (3,099) 13,809
Interest income - (1,193) (1,049) 1,723 (198) (2,092) 4,102 1,293
Finance costs - (1,415) (1,662) (4,310) (249) (228) (4,606) (12,470)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Profit/(loss) for the
period before tax (485) 7,208 (13,370) 7,670 2,265 2,947 (3,603) 2,632
Taxation - (59) (325) (2,247) (533) (1,575) (170) (4,909)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Profit/(loss) for the
period (485) 7,149 (13,695) 5,423 1,732 1,372 (3,773) (2,277)
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Reportable segment
assets and
liabilities
Non-current assets
Investment properties - 77,758 162,750 173,111 33,039 138,153 - 584,811
Deposits paid on
investment
properties - - - - - - 5,050 5,050
Property, plant and
equipment - 38 30 489 - 181 2,306 3,044
Intangible assets - - 16 - - - 527 543
Other investments - - - - - - 1 1
Investment in
associates and joint
ventures 12,968 74,395 45,124 19,627 15,121 1,058 - 168,293
Related party loans
receivable - - - - - - 2,636 2,636
Other loans
receivable - - - - - - 29,540 29,540
Trade and other
receivables - - 1,966 - - - - 1,966
Deferred tax - 1,462 11,271 8,230 673 6,357 - 27,993
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Total non-current
assets 12,968 153,653 221,157 201,457 48,833 145,749 40,060 823,877
Current assets
Trade and other
receivables - 3,609 12,137 2,391 2,626 4,276 14,203 39,242
Current tax
refundable - - 27 461 109 36 8 641
Related party loans
receivable - - - - - - 171 171
Derivative financial
instruments - - - - - - 11,794 11,794
Other loans
receivable - - - 79 - - - 79
Cash and cash
equivalents - 1,454 1,096 1,007 90 39 6,497 10,183
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Total assets 12,968 158,716 234,417 205,395 51,658 150,100 72,733 885,987
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Liabilities
Total liabilities - 70,606 170,793 142,621 10,473 80,089 67,582 542,164
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
Net assets 12,968 88,110 63,624 62,774 41,185 70,011 5,151 343,823
---------------------- ------------ ------------ --------- -------- ----------- -------------- ---------- ---------
14. Subsequent events
On 22 January 2021, Grit Real Estate Income Group Limited
obtained approval by the United Kingdom Financial Conduct Authority
(the "FCA") of the transfer of the listing category of all of its
ordinary shares of no par value from a standard listing (shares) to
a premium listing (commercial company) on the Official List of the
FCA in accordance with Rule 5.4A of the Listing Rules issued by the
FCA (the "Transfer").
On 5 February 2021, in conjunction with the Premium Listing, the
Company also migrated its domicile from Mauritius to Guernsey (the
"Migration"). A key driver for the migration, in addition to the
Premium Listing, is a key eligibility requirement for inclusion in
the FTSE Indices relating to the nationality of a company. Ordinary
shares in limited companies registered in Guernsey are eligible for
inclusion in the FTSE Indices.
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
15. Company distribution calculation (1) US$'000 US$'000
----------------------------------------------------------------------------------- ------------ ------------
Adjusted EPRA Earnings 9,706 16,874
Company specific distribution adjustments
- VAT Credits utilised on rentals 1,132 304
- Interest related to AnfaPlace Mall areas under construction - 53
- Listing and set-up costs under Administrative expenses 121 -
- Depreciation and amortisation 306 259
- Share based payments 64 90
- Antecedent dividend - 418
- Retirement fund & PRGF 55 -
- LLR initial day one gain - (2,066)
- Amortisation of capital funded debt structure fees 425 -
- Operating costs related to AnfaPlace Mall refurbishment costs - 271
----------------------------------------------------------------------------------- ------------ ------------
Total company specific distribution adjustments 2,103 (671)
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS RELEASED) 11,809 16,203
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 3.88 5.48
----------------------------------------------------------------------------------- ------------ ------------
- Profits withheld (7,241) (678)
----------------------------------------------------------------------------------- ------------ ------------
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 4,568 15525
----------------------------------------------------------------------------------- ------------ ------------
DIVID PER SHARE (cents) 1.50 5.25
Reconciliation to amount payable
Total distributable earnings to Grit shareholders before profits withheld (cents) 3.88 5.48
Profits released / (withheld) - cents (2.38) (0.23)
----------------------------------------------------------------------------------- ------------ ------------
INTERIM DIVID PROPOSED (cents) 1.50 5.25
----------------------------------------------------------------------------------- ------------ ------------
Shares '000 Shares '000
------------ ------------
Weighted average shares in issue 317,051 308,268
Less: Weighted average treasury shares for the period (12,546) (12,546)
Add: Weighted average shares vested in Long term incentive scheme 2,432 1,859
----------------------------------------------------------------------------------- ------------ ------------
EPRA SHARES 306,937 297,581
----------------------------------------------------------------------------------- ------------ ------------
Less: Non-entitled shares - -
----------------------------------------------------------------------------------- ------------ ------------
Less: Vested shares in consolidated entities (2,432) (1,859)
----------------------------------------------------------------------------------- ------------ ------------
DISTRIBUTION SHARES 304,505 295,722
----------------------------------------------------------------------------------- ------------ ------------
Distribution declared:
Interim
1 The distribution calculation is disclosed to provide clarity
regarding the interim dividend distribution of USD1.50 cents per
share and to reconcile 'Distributable earnings' to 'Basic Earnings
attributable to the owner of the parent'
16. EPRA financial metrics
Non-IFRS Measures
Basis of preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT")
("Directors") have chosen to disclose additional non-IFRS measures,
these include EPRA earnings, adjusted net asset value, EPRA net
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 and joint ventures, 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 has released an update to the EPRA Net Asset Valuation
(NAV) metrics. These changes will allow the metrics to remain
aligned with both International Financial Reporting Standards
(IFRS) developments and the evolution of property companies'
businesses.
There are now three new features of the NAV metrics, namely EPRA
Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and
EPRA Net Disposal Value (NDV), replacing the EPRA NAV and EPRA
NNNAV. These changes are effective for accounting periods starting
on January 1st, 2020.
-- 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, rental concessions for capital projects/
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 and considered pro forma financial information.
The pro forma financial information has been compiled for
illustrative purposes only and is the responsibility of the
Directors. Due to the nature of this information, it may not fairly
present the Grit's financial position, changes in equity and
results of operations or cash flows going forward.
16a. EPRA earnings
Six months Six months
Ended Ended
31 Dec 2020 31 Dec 2019
EPRA earnings US$'000 US$'000
------------------------------------------------------------------------------------ ------------ ------------
Basic (losses) / Earnings per above (2,277) 11,701
Add Back:
- Fair value adjustment on investment properties 4,327 (486)
- Fair value adjustments included under income from associates 2,005 (2,535)
- ECL Provision (738) 218
- Fair value adjustment on other investments 15 (591)
- Fair value adjustment on other financial asset (353) 552
- Fair value adjustment on derivative financial instruments (428) (136)
- Deferred tax in relation to the above 5,932 1,041
- Acquisition costs not capitalised 130 1,131
- Non-controlling interest included in basic earnings 885 1,427
------------------------------------------------------------------------------------ ------------ ------------
EPRA EARNINGS 9,498 12,322
------------------------------------------------------------------------------------ ------------ ------------
EPRA EARNINGS PER SHARE (DILUTED)(cent per share) 3.09 4.14
Company specific adjustments
- Unrealised foreign exchange gains or losses (non-cash) (399) 403
- Straight-line leasing and amortisation of lease premiums (non-cash rental) 1,428 1,867
- Provision for future Covid concessions 1,295 -
- Amortisation of Right of use of land (non-cash) 12 -
- Impairment of loan (825) 904
- Deferred tax in relation to the above (1,303) 1,378
------------------------------------------------------------------------------------ ------------ ------------
Total Company Specific adjustments 208 4,552
------------------------------------------------------------------------------------ ------------ ------------
ADJUSTED EPRA EARNINGS 9,706 16,874
------------------------------------------------------------------------------------ ------------ ------------
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 3.16 5.67
Shares '000 Shares '000
------------------------------------------------------------------------------------ ------------ ------------
Weighted average shares in issue 317,051 308,224
Less: Weighted average treasury shares for the period (12,546) (12,546)
Add: Weighted average share awards and vested shares in Long term incentive scheme 2,432 1,859
------------------------------------------------------------------------------------ ------------ ------------
Weighted average shares in issue 306,937 297,537
------------------------------------------------------------------------------------ ------------ ------------
EPRA NRV EPRA NTA EPRA NDV
-------------------------- -------------------------- --------------------------
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
As at As at As at As at As at As at
31 Dec 2020 30 Jun 2020 31 Dec 2020 30 Jun 2020 31 Dec 2020 30 Jun 2020
16b. EPRA NAV US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
IFRS Equity attributable to
shareholders 330,370 296,948 330,370 296,948 330,370 296,948
i) Hybrid instruments
Preference shares - - - - - -
Diluted NAV 330,370 296,948 330,370 296,948 330,370 296,948
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Add
Revaluation of IP (if IAS 40 cost - - - - - -
option is used)
Revaluation of IPUC (if IAS 40 - - - - - -
cost option is used)
Revaluation of other non-current - - - - - -
investments
Revaluation of tenant leases held - - - - - -
as finance leases
Revaluation of trading properties - - - - - -
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Diluted NAV at Fair Value 330,370 296,948 330,370 296,948 330,370 296,948
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Exclude
Deferred tax in relation to fair
value gains of IP 65,594 57,418 56,824 48,984 - -
Fair value of financial
instruments 3,575 4,004 3,575 4,004 - -
Goodwill as a result of deferred - - - - - -
tax
Goodwill as per the IFRS balance - - - - - -
sheet
Intangibles as per the IFRS
balance sheet - - (1,804) (1,929) - -
Include
Fair value of fixed interest rate - - - - - -
debt
Revaluation of intangibles to - - - - - -
fair value
Real estate transfer tax - - - - - -
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
NAV 399,539 358,370 388,965 348,007 330,370 296,948
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Fully diluted number of shares 321,122 306,112 321,122 306,112 321,122 306,112
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
NAV cents per share 124.4 117.1 121.1 113.7 102.9 97.0
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Shares '000 Shares '000 Shares '000 Shares '000 Shares '000 Shares '000
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Total shares in issue 331,236 316,236 331,236 316,236 331,236 316,236
Less: Treasury shares for the
period (12,546) (12,546) (12,546) (12,546) (12,546) (12,546)
Add: Share awards and shares
vested shares in Long term
incentive scheme 2,432 2,432 2,432 2,432 2,432 2,432
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
EPRA Shares 321,122 306,112 321,122 306,112 321,122 306,112
---------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Six months Six months
ended Ended
17. Earnings per share 31 Dec 2020 31 Dec 2019
---------------------------------------------------- ------------ ------------
Earnings attributable - basic - US$'000 1,732 13,130
Earnings attributable - diluted - US$'000 1,732 13,130
Weighted average number of shares - basic - '000 317,051 308,268
Weighted average number of shares - diluted - '000 317,051 308,268
Cents per share - basic 0.55 4.26
Cents per share - diluted 0.55 4.26
----------------------------------------------------- ------------ ------------
OTHER NOTES
The abridged unaudited consolidated financial statements for the
six months period ended 31 December 2020 ("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, the SEM Listing Rules and the requirements of the
Mauritian Companies Act 2001. 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 2 and 1 respectively.
The Group is required to publish financial results for the six
months ended on 31 December 2020 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 2020 that require any additional disclosure or
adjustment to the financial statements. These abridged unaudited
consolidated financial statements were approved by the Board on 13
February 2021.
Copies of the abridged unaudited consolidated financial
statements, and the statement of direct and indirect interests of
each officer of the Company pursuant to rule 8(2)(m) of the
Mauritian Securities (Disclosure Obligations of Reporting Issuers)
Rules 2007, are available free of charge, upon request at the
Company's registered address. Contact Person: Mrs. Smitha
Algoo-Bissonauth.
Top five shareholders for Grit as at 31 December 2020 are as
follows:
Anchor shareholders (>5%) %
----------------------------------------- --------
Government Employees Pension Fund (PIC) 25.54%
M&G Investment Management Ltd UK 10.64%
Drive In Trading Proprietary Limited 7.02%
Management & Staff 4.74%
Delta Property Fund 4.58%
----------------------------------------- --------
The Grit shareholders base is made up of LSE investors holding
34.8% and SEM investors holding 65.2%.
Forward-looking statements
This document may contain certain forward-looking statements. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Actual outcomes and results may differ materially from any outcomes
or results expressed or implied by such forward-looking
statements.
Any forward-looking statements made by, or on behalf of, Grit
speak only as of the date they are made and no representation or
warranty is given in relation to them, including as to their
completeness or accuracy or the basis on which they were prepared.
Grit does not undertake to update forward-looking statements to
reflect any changes in its expectations with regard thereto or any
changes in events, conditions or circumstances on which any such
statement is based.
Information contained in this document relating to Grit or its
share price, or the yield on its shares, should not be relied upon
as an indicator of future performance.
Any forward-looking statements and the assumptions underlying
such statements are the responsibility of the Board of directors
and have not been reviewed or reported on by the Company's external
auditors.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
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contained in this communication, and to share such analysis on an
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use the personal data you provide us, please see our Privacy
Policy.
END
IR KZLFFFLLEBBX
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