TIDMGWI
RNS Number : 8362M
Globalworth Real Estate Inv Ltd
19 September 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
19 September 2023
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Interim Results for the six months ended 30 June 2023
Globalworth, the leading office investor in Central and Eastern
Europe, announces the release of its Interim Report and Unaudited
Consolidated Financial Results for the six-month period ended 30
June 2023 (the "Interim Report").
The Interim Report is also available on Globalworth's website
at:
https://www.globalworth.com/investor-relations/reports-presentations/
For further information visit www.globalworth.com or contact:
Enquiries
Rashid Mukhtar Tel: +40 732 800 000
Deputy CFO
Panmure Gordon (Nominated Adviser and Tel: +44 20 7886 2500
Broker)
Dominic Morley
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central
and Eastern Europe, quoted on the AIM-segment of the London Stock
Exchange. It has become the pre-eminent office investor in the CEE
real estate market through its market-leading positions both in
Poland and Romania. Globalworth acquires, develops and directly
manages high-quality office and industrial real estate assets in
prime locations, generating rental income from high quality tenants
from around the globe. Managed by over 250 professionals across
Cyprus, Guernsey, Poland and Romania the combined value of its
portfolio is EUR3.1 billion, as at 30 June 2023. Approximately
96.9% of the portfolio is in income-producing assets, predominately
in the office sector, and leased to a diversified array of over 700
national and multinational corporates. In Poland Globalworth is
present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Timisoara, Constanta,
Pitesti, Arad, Oradea and Targu Mures.
For more information, please visit www.globalworth.com and
follow us on Facebook, Instagram and LinkedIn.
Excluded Territories
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable legal or regulatory
requirements. In particular, the ability of persons who are not
resident in the United Kingdom or who are subject to the laws of
another jurisdiction to elect to receive the Scrip Dividend
Alternative may be affected by the laws of the relevant
jurisdictions in which they are located or to which they are
subject. Any failure to comply with applicable legal or regulatory
requirements of any jurisdiction may constitute a violation of
securities laws in that jurisdiction.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
INTERIM REPORT AND UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
30 JUNE 2023
FINANCIAL HIGHLIGHTS: H1-2023
Combined portfolio open market value Shareholders' equity EPRA NRV per share
EUR3.1bn EUR1.6bn EUR7.55
------------------------------------ -------------------------- -----------------------
-2.4(%) on YE-22 -1.6(%) on YE-22 -8.9(%) on YE-22
------------------------------------ -------------------------- -----------------------
IFRS Earnings before tax Adjusted normalised EBITDA Net Operating Income
-EUR44.3m EUR66.0m EUR73.7m
------------------------------------ --------------------------
+EUR45.7m in H1-22 +4.1(%) on H1-22 +5.6(%) on H1-22
------------------------------------ -------------------------- -----------------------
IFRS Earnings per share EPRA Earnings per share Dividends paid in H1-23
-11 cents 15 cents 15 cents
------------------------------------ -------------------------- -----------------------
+15 cents in H1-22 -6.3(%) on H1-22 +15.4(%) on H1-22
------------------------------------ -------------------------- -----------------------
Dear Stakeholders,
We have started the year amid high inflation and continued
geopolitical uncertainties that have driven interest rates to their
highest levels in the last 10 years, which will in all likelihood
lead to subdued economic growth in CEE and EU, during the next two
years. Nevertheless, there are signs that inflation is abating and
in the absence of other shocks, we expect a gradual return to a
sustainable improvement of GDP growth and improving real estate
market conditions.
The European Commission has revised its EU GDP forecast upwards
to 1.0% in May, with Poland and Romania, expected to have GDP
growth of 0.7% and 3.2% respectively, in 2023.
Globalworth's performance throughout the business remained
resilient, despite global challenges, as we continued to implement
our "local landlord" approach, with an increasing focus on
sustainability.
Our initiatives encompassed investments in both existing and new
high-quality properties, the diligent management of our portfolio
to preserve and enhance our operational performance, and the
maintenance of an efficient and flexible capital structure,
resulting in a robust overall performance. All of this was achieved
while simultaneously providing a safe and healthy environment for
our people, tenants, and communities to work, visit, and engage
with.
At this point, I would like to express my gratitude to all our
team members for their positive attitude, dedication, and
commitment, as well as extend our appreciation to our shareholders,
partners, and communities for their unwavering support in helping
us achieve these results.
Investment in Our Portfolio
Our portfolio predominantly consists of Class "A" office spaces.
Nevertheless, during the first half of 2023, we directed our
development efforts towards high-quality logistics facilities in
Romania and the redevelopment of two mixed-use properties in
Poland.
Consequently, in H1-2023, we successfully completed the
construction of the Targu Mures Logistics Hub, encompassing a total
of 18.3k square meters of Gross Lettable Area (GLA), fully leased
to highly credible tenants. Simultaneously, progress continued on
the development of the two final phases within Stefanesti Business
Park, situated in the Bucharest Greater Area, which upon completion
will contribute an additional 13.3k square meters of GLA to our
industrial/light logistics portfolio in Romania.
In 2023, we anticipate the conclusion of refurbishment works on
two out of the three mixed-use properties in our Polish portfolio.
This will result in the enhancement and expansion of their office
space offerings. For our other existing properties, we remain
committed to ongoing investments aimed at preserving and, where
necessary, enhancing their quality.
Beyond the overall positive tone of our operational performance
and owing to the prevailing economic uncertainties and challenging
market conditions, the value of our like-for-like standing
commercial portfolio, as well as our total combined portfolio,
decreased during the first half of 2023 by 3.0% to EUR2.8 billion
and 2.5% to EUR3.1 billion, respectively. This decline is primarily
attributable to the effects of revaluations in June 2023.
Our Leasing and Occupancy
The leasing of spaces within our portfolio constitutes a pivotal
determinant of our business's success. It brings me satisfaction to
report that during the initial half of 2023, we adeptly managed the
leasing of 181.0k square meters of commercial spaces, with a
Weighted Average Lease Length (WALL) of 6.9 years. This achievement
is particularly noteworthy in light of the persistently demanding
market conditions.
As of June 30, 2023, the average occupancy rate across our
combined commercial portfolio stood at 85.5% (including tenant
options, this figure reached 85.7%), exhibiting marginal
fluctuation in comparison to the year-end 2022 statistics, which
indicated 85.6% (or 85.9% including tenant options). Following the
sale of Warta Tower in July 2023, a property that had become fully
vacant by the close of June, our standing commercial occupancy,
when adjusted, rose to 87.7%.
In both the Polish and Romanian markets, higher construction
costs and interest rates have led to a reduction in development
activity and significantly constrained new supply. Consequently,
the forthcoming years are anticipated to witness a diminished
availability of top-tier office spaces in central locations, below
the average levels witnessed in previous periods, potentially
driving higher tenant demand for existing properties.
Furthermore, the divergence between A-grade properties of robust
ESG credentials and B-grade properties has been growing, both from
an investment and leasing perspective. This development is poised
to generate benefits to our portfolio of high-quality properties in
the future.
Headline rental rates have remained stable, and the combination
of reduced supply and high inflation is anticipated to serve as a
strong buffer against the adverse impact of a decline in tenant
demand due to a weakening economic landscape.
Notably, total annualised contracted rent experienced a 6.8%
surge, reaching EUR202.2 million compared to the year-end 2022
figures. Like-for-like annualised commercial contracted rents
within our standing commercial portfolio exhibited a 5.4% upswing,
at EUR191.0 million by the close of the first half of 2023.
Our Financial Results
Gross rental income increased with EUR5.1 million compared to
the first half of last year as an effect of indexation of 8.8% that
partially offset by the reduced rates at which existing leases were
renewed for extended period or new leases were signed.
Furthermore, a decline in service charge income amounting to
EUR3.0 million, offset by a reduction in operating expenses of
EUR1.4 million, culminated in a Net Operating Income that surged by
5.6%, reaching EUR3.9 million, when compared to H1 2022.
Nonetheless, our adjusted normalised EBITDA exhibited a 4.1%
increase, reaching EUR66.0 million, attributable to the favourable
effects stemming from cost savings in recurring administrative and
other expenditure categories.
Regrettably, our net result for the initial half of 2023
amounted to a net loss of EUR25.1 million, in contrast to the net
profit of EUR32.6 million recorded in H1 2022. This transformation
was primarily precipitated by a fair value loss on investment
property, albeit partially offset by an augmented finance income
resulting from the buyback of EUR100 million in bonds.
Dividend
During the March 2023, we announced the second interim dividend
of EUR0.15 per share in respect of the six-month financial period
ended 31 December 2022 with a scrip dividend alternative at a
reference price of EUR2.28 per scrip to preserve liquidity.
Approximately 98.1% of the shareholders elected to receive scrip
dividend shares thus resulting in only EUR 0.6 million cash
dividend outflow.
Similarly, on 30 August 2023, we announced for the first
six-months of 2023 an interim dividend of EUR0.14 per share along
with a scrip dividend alternative at a reference price based on a
20% discount to five consecutive dealing days until the 13
September 2023. As communicated in the scrip circular, the Company
has received irrevocable undertakings from approximately 92% of its
shareholders to elect for the Scrip Dividend alternative shares in
respect of all of their full cash entitlement to the Interim
Dividend. Therefore, we expect the net cash outflow amount from the
cash dividend component to be minimal similarly to March 2023.
Balance Sheet
We are mostly focused on our liquidity initiatives, including
deploying extra cash resources in unsecured note buybacks by taking
advantage of short-term discount opportunities. We are also
executing our liability management strategy by extending near-term
secured facilities and progressively arranging new secured
facilities for 5 to 10 year terms with local and regional banks in
our markets. Our strong presence in the two capital cities,
Bucharest and Warsaw, with several commercial office buildings
having occupancy above 85% and high ESG credentials, provides us
with a unique strength in sourcing additional secured facilities in
the short term.
It is important to note that Globalworth has no material debt
maturing until March 2025. Additionally, as of 30 June 2023, we
have EUR130 million in cash and cash equivalents, which was further
strengthened by the additional sale proceeds from Warta Tower in
July. We also have a further EUR265 million in undrawn debt
facilities, out of which EUR50 million is available to draw until
December 31, 2025.
In addition , during the interim period, we repurchased 2025
notes with a face value of EUR100 million at a discounted price of
EUR83.17 from utilising our existing cash resources. This brought
down our leverage ratio to 42.7% LTV, which is the same as it was
on December 31, 2022, despite a 3% decline in the value of our
like-for-like standing commercial portfolio.
The EPRA Net Reinstatement Value (NRV) as of 30 June 2023 was
EUR1.8 billion, or EUR7.55 per share. This represents an 8.9%
decrease from EUR8.29 per share on December 31, 2022. The decrease
was primarily due to the issuance of a EUR14.3 million scrip
dividend shares in April 2023, which diluted the NRV per share as
well as a valuation loss on the property portfolio in H1-2023. This
was partially mitigated by higher rental growth from
indexation.
Fitch Ratings re-affirmed, in July 2023, Globalworth's
investment grade rating and changed the outlook to negative
following their 2023 annual review of Globalworth. S&P
downgraded Globalworth's credit rating to BB+ with a stable
outlook.
Environmental and social
We maintained our A-rating by MSCI and a low-risk rating by
Sustainalytics. We issued our fifth Sustainable Development Report
during the period.
We continued investing in our green portfolio and, during the
first six months of 2023, we certified or recertified 15
properties. At the end of June 2023, we had 52 green-certified
properties valued at EUR2.4 billion.
In addition, our environmental target to reduce GHG emissions
intensity by 46% by 2030 versus our baseline 2019 levels (for Scope
1 and 2) was validated by the globally recognised Science Based
Targets initiative (SBTi) .
Management change
Stamatis Sapkas, Group CFO, who has contributed significantly to
our financial leadership during their tenure decided to step down
in June, in order to pursue personal and professional
opportunities. Stamatis' responsibilities will be assumed by Mr.
Rashid Mukhtar, a dedicated member of our team since 2013, known
for his capable financial stewardship and deep understanding of our
company's financial landscape.
Outlook
Despite prevailing challenges such as inflation and heightened
stresses induced by higher nominal rates in the financing markets,
there are discernible signs of macroeconomic variables stabilising.
Barring the emergence of unforeseen disruptions, both financial and
real estate markets are anticipated to further solidify their
stability.
The limited supply of office spaces is expected to act as a
catalyst, propelling rents and occupancy rates upwards, thereby
fostering robust fundamentals for the office market. However, it is
imperative that risks associated with ESG-related capital
expenditures are diligently managed and addressed in a manner that
enhances overall value.
Over the past 12 months, our primary focal point has remained
unwavering - maintaining operational excellence and safeguarding a
level of liquidity that positions us to uphold a prudent capital
structure while seizing investment opportunities as they
materialise.
Dennis Selinas
Chief Executive Officer
18 September 2023
REAL ESTATE INVESTMENT ACTIVITY
* Focused on high-quality logistics / light-industrial
facilities in Romania and the refurbishment /
repositioning of two mixed-use properties in Poland
* Romania:
* Completed the development of Targu Mures Logistics
Hub, adding 18.3k sqm of spaces to our portfolio.
* Two high-quality logistics facilities under
construction expected to add 13.3k sqm of GLA on
completion
* Poland:
* Refurbishment / repositioning of the Renoma and
Supersam mixed-use properties in progress, where we
are aiming at increasing their class "A" office space
and improving their retail/commercial offering
Review of Developments
In H1-2023, we continued with our active development programme
focusing on high-quality logistics / light-industrial facilities in
Romania and the refurbishment / repositioning of two mixed-use
properties in Poland. At the beginning of the year, we had three
logistics facilities under construction, of which Targu Mures
Logistic Hub was delivered in the first half and the other two to
be delivered in the second half of the year, while the
refurbishment/repositioning works of two (of the three) mixed-use
properties continued throughout the period.
New Delivery
In the first half of 2023, we delivered our first project in
Targu Mures with a leasable area of 18.3k sqm. At the end of June,
the project, which is held through a JV partnership, was 100% let
to two large multinational companies, Friesland Campina and EKR
Elektrokontakt (Nexans Group).
Delivery
------------------------------------------------------------ -----------
Targu Mures
Logistic Hub*
------------------------------------------------------ -----------------
Location Targu Mures
====================================================== =================
GLA (k sqm) 18.3
====================================================== =================
Occupancy (%) 100.0%
====================================================== =================
Development Cost** (EUR m) 16.2
====================================================== =================
GAV (EUR m) 13.2
====================================================== =================
Contracted Rent (EUR m) 1.5
====================================================== =================
WALL (years) 10.2
====================================================== =================
Estimated Yield on Development Cost 9.0%
====================================================== =================
(*) Joint Venture in which Globalworth owns 50%; figures shown
on 100% basis.
(**) Development cost includes amounts to be spent post delivery
in order to accommodate additional tenant requests that yet to be
reflected in GAV value at 30 June 2023
Current Developments & Refurbishment / Repositioning
Projects
In the first 6 months of 2023, we continued with the developing
of the second and third phase of our Business Park Stefanesti which
is located Northeast of Bucharest, expecting that these facilities
will, on completion, further increase our footprint with 13.3k sqm
of high-quality GLA.
Business Park Stefanesti, which is our second small business
units investment in Bucharest area, offers easy access to the
Bucharest Ring Road and allows for a quick connection to the centre
of Bucharest via the A3 motorway. The project comprises three
buildings, the first one being delivered in November 2022 and, as
of June 2023, being 100% leased to Delivery Solutions SRL, one of
the leading delivery companies in Romania, while the second and
third phase are, in average, 34.8% pre-let by the end of June
2023.
Following the review back in 2020 of our portfolio and in
response to market conditions, we commenced
refurbishment/repositioning of two of our three mixed-use
properties in Poland. Aiming to increase their class "A" office
space and improve their retail/commercial offering, work started in
our Renoma landmark property in Wroclaw in H2-2020 and in our
centrally located Supersam property in Katowice in H2-2021.
-- In Renoma, the refurbishment will increase the offer of Class
"A" office space on the higher floors. It will also reposition the
property's retail offer towards a more attractive food court and a
selected fashion mix on the ground floor and convenience
facilities, including a supermarket, gym and drugstore located on
the -1 level.
-- In Supersam, we are redeveloping the entire level 1 into an
office function. On level -1, we are repositioning selected retail
modules into high-quality retail & commercial spaces with food
and entertainment.
Works in Renoma and Supersam are expected to be completed in
2023.
Developments - In progress
-------------------------------- -------------------------------------------------
Business Park Stefanesti Business Park Stefanesti
II* III*
-------------------------------- --------------------------- -------------------------
Location Bucharest Bucharest
================================ =========================== =========================
Status Under construction Under construction
================================ =========================== =========================
Expected Delivery 2023 2023
================================ =========================== =========================
GLA (k sqm) 5.9 7.4
================================ =========================== =========================
Development Cost (EUR m) 4.2 5.2
================================ =========================== =========================
GAV (EUR m) 5.2 6.5
================================ =========================== =========================
100% Rent (EUR m) 0.4 0.6
================================ =========================== =========================
Estimated Yield on Development
Cost 10.1% 10.7%
================================ =========================== =========================
(*) Joint Venture in which Globalworth owns 75%;
figures shown on 100% basis.
Properties Under Refurbishment / Repositioning
---------------------------------------------------------------------------------
Renoma Supersam
------------------------------- ------------------------------ ----------------
Location Wroclaw Katowice
=============================== ============================== ================
Status Refurbishment / Repositioning Refurbishment /
Repositioning
=============================== ============================== ================
Expected Delivery H2-2023 H2-2023
=============================== ============================== ================
GLA - on Completion
(k sqm) 48.2 26.7
=============================== ============================== ================
CAPEX to 30 Jun 23 (EUR
m) 19.4 3.8
=============================== ============================== ================
GAV (EUR m) 114.9 49.8
=============================== ============================== ================
Estimated CAPEX to Go
(EUR m)* 7.8 2.2
=============================== ============================== ================
ERV (EUR m) 9.5 4.5
=============================== ============================== ================
Estimated Yield on Completion
of Project** 9.2% 10.6%
=============================== ============================== ================
* Estimated CAPEX to Go partially excludes tenant contributions
which are subject to tenant negotiation and may impact the final
yield on Completion of the Project.
** Estimated Rental Value increase versus current Contracted rent
+ ERV on vacant spaces divided by total Development Capex.
Future Developments
We own, directly or through JV partnerships, other land plots in
prime locations in Bucharest and regional cities in Romania and
Poland, covering a total land surface of 1.2 million sqm
(comprising 2.7% of the Group's combined GAV), for future
developments of office, industrial or mixed-use properties. When
fully developed, these land plots have the potential to add a total
of a further 785.7k sqm of high-quality GLA to our standing
portfolio footprint.
In the first half of 2023, we sold a plot of land of 3.2k sqm
located in the northern part of Bucharest.
These projects, which are classified as "Future Development",
continue to be reviewed by the Group, albeit periodically, with the
pace at which they will be developed being subject to tenant demand
and general market conditions.
Future Developments
------------------------------------------------------------------------------------------------------------------
Podium Green Globalworth Constanta Timisoara Luterana
Park III Court West Business Industrial
D Park (Phased)* Park I
and II
(Phased)
-------------------- -------------- ---------- ------------------ ---------------- ------------ ----------
Location Krakow Bucharest Bucharest Constanta Timisoara Bucharest
==================== ============== ========== ================== ================ ============ ==========
Status Postponed Postponed Postponed Planned Planned Planned
==================== ============== ========== ================== ================ ============ ==========
GLA (k sqm) 17.7 17.2 33.4 525.8 165.2 26.4
==================== ============== ========== ================== ================ ============ ==========
CAPEX to 30 Jun 23
(EUR m) 8.5 2.5 5.2 12.3 7.0 7.4
==================== ============== ========== ================== ================ ============ ==========
GAV (EUR m) 7.8 8.3 6.9 37.2 11.0 12.9
==================== ============== ========== ================== ================ ============ ==========
Estimated CAPEX to
Go (EUR m)** 29.7 23.9 38.5 243.6 63.5 39.7
==================== ============== ========== ================== ================ ============ ==========
ERV (EUR m) 3.1 3.5 5.2 27.7 6.9 6.5
==================== ============== ========== ================== ================ ============ ==========
Estimated Yield on
Development Cost 8.1% 13.2% 12.0% 10.8% 9.8% 13.8%
==================== ============== ========== ================== ================ ============ ==========
(*) 50:50 Joint Venture; figures shown on 100% basis.
(**) Initial preliminary development budgets on future projects
to be revised prior to the permitting.
ASSET MANAGEMENT REVIEW
* 181.0k sqm of commercial space taken-up or extended
at an average WALL of 6.9 years despite continued
challenging market conditions
* Leasing activity equally divided between new take-up
and renewals, improving our overall WALL to 4.9
years.
* New leases (including expansions) accounted for 50.0%
of our leasing activity at a WALL of 8.1 years, with
renewals signed at a WALL of 5.9 years
* Total annualised contracted rent increased by 6.8% to
EUR202.2 million compared to year end 2022
* Total combined portfolio value decreased by 2.5% to
EUR3.1 billion, mainly due to revaluations and
disposals
* Like-for-like appraised value of standing commercial
properties decreased to EUR2.8 billion (3.0% lower
compared to 31 December 2022)
Leasing Review
New Leases
Our principal focus continued to be the prolongation of leases
with existing tenants in our portfolio and the take-up of available
spaces in standing properties and developments.
In the first six months of 2023, the Group successfully
negotiated the take-up (including expansions) or extension of
181.0k sqm of commercial spaces in Poland (26.4% of transacted GLA)
and Romania (73.6% of transacted GLA), with an average WALL of 6.9
years. Between 1 January and 30 June 2023, our leasing activity
involved new take-up of available spaces, with such leases
accounting for 50.0% of our total leasing activity signed at a WALL
of 8.1 years, while renewals were signed at a WALL of 5.9
years.
The leasing market remains challenging, as the CEE economy
continues to recover at a moderate pace with inflation returning to
single-digits coupled with the stabilization and general acceptance
of the hybrid work model. As such, most of our large multinational
and national corporates have begun taking decisions on their future
occupational plans, re-defining the role of the office as a place
for collaboration and creativity, part of their corporate
identity.
In total, we signed new leases for 90.6k sqm of GLA, with the
majority involving spaces (more than 85%) leased to new tenants,
and the remaining areas were taken up by existing tenants which
were expanding their operations.
New leases (new tenants) were signed with 46 tenants for 80.4k
sqm of GLA at a WALL of 8.6 years. The majority were for office
spaces, accounting for 58.2%, with the remainder involved
industrial (39.3%) and retail/other commercial spaces. The largest
new leases in this period were with EKR-Elektrokontakt (14.1k sqm)
in Targu Mures Logistics Hub, Banca Transilvania (9.6k sqm) in
Green Court Complex, Dante International (9.6k sqm) in Globalworth
Square in Bucharest and Leverx Poland (3.3k sqm) in Retro Office
House (Wroclaw).
In addition, 15 tenants signed new leases, expanding their
operations by 10.2k sqm at an average WALL of 5.2 years.
We renewed leases for a total of 90.4k sqm of GLA with 52 of our
tenants at a WALL of 5.9 years. The most notable extensions involve
Honeywell (24.4k sqm) in BOC Tower, Deutsche Bank (12.9k sqm) in
BOB Tower, Huawei (12.5k sqm) in Globalworth Tower and Ailleron
(5.2k sqm) in Podium Park while c.84.3% of the renewals by GLA
signed were for leases that were expiring in 2024 or later.
Summary Leasing Activity for Combined Portfolio in H1-2023
--------------------------------------------------------------------
GLA (k sqm) No. of Tenants* WALL (yrs)
----------------------- ------------ ---------------- -----------
New Leases (incl.
expansions) 90.6 60 8.1
----------------------- ------------ ---------------- -----------
Renewals / Extensions 90.4 52 5.9
----------------------- ------------ ---------------- -----------
Total 181.0 107 6.9
*Number of individual tenants
Rental Levels
Headline market rental levels have remained relatively stable in
our portfolio, despite the uncertainty in the market and the
cautious approach of tenants, reflecting the quality of our
properties, our active asset management initiatives, and our
approach to sustainable development. In addition, we have seen a
widening gap between A-grade properties with strong ESG credentials
and B-grade properties from a leasing and investment perspective,
which should benefit our portfolio of high-quality properties in
the future.
Our leases typically adjust annually and in the first quarter of
the year. In the first half of 2023, eligible leases were indexed
at an average of 8.8%. Nevertheless, this positive impact was
partly offset by the rates at which leases were renewed or new
leases signed throughout the period.
At the end of June 2023, our average headline rent in our
standing properties for office, retail/commercial and industrial
spaces were EUR15.2/sqm/month (EUR14.2 at YE-2022),
EUR15.7/sqm/month (EUR14.2 at YE-2022) and EUR4.2/sqm/month (EUR4.0
at YE-2022) respectively.
Office leases signed in the first half of the year were at an
average rent of EUR14.4/sqm/month, industrial spaces at
EUR4.6/sqm/month, and retail spaces at EUR15.2/sqm/month. The
overall commercial GLA take-up during the first six months of 2023
was at an average rent of EUR12.6/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent across our portfolio in Poland
and Romania increased by 6.8% to EUR202.2 million compared to
year-end 2022, driven by active asset management, indexation and
lease-up in our development projects.
Total annualised contracted rents in our standing commercial
portfolio were EUR192.5 million on 30 June 2023, up by 6.2%
compared to 31 December 2022, increasing to EUR193.1 million when
including rental income generated by renting 137 residential units
and other auxiliary spaces in Upground, the residential complex in
Bucharest which Globalworth partially own.
Like-for-like annualised commercial contracted rents in our
standing commercial portfolio also increased by 5.4% to EUR191.0
million at the end of the first half of 2023 compared to 31
December 2022, mainly as an effect of rent indexation.
Annualised Contracted Rent Evolution H1-2023 (EURm)
------------------------------------------------------------------------------
Poland Romania Group
================================================== ======= ======== =======
Rent from Standing Commercial Properties
("SCP") 31 Dec 2022 86.6 94.7 181.3
================================================== ======= ======== =======
Less: Space Returned (8.9) (3.9) (12.8)
================================================== ======= ======== =======
Plus: Rent Indexation 6.2 6.8 13.0
================================================== ======= ======== =======
Plus/Less: Lease Renewals (net impact) &
Other (0.0) (1.4) (1.4)
================================================== ======= ======== =======
Plus: New Take-up 3.2 7.6 10.8
================================================== ======= ======== =======
Total L-f-L Rent from SCP 30 Jun 2023 87.2 103.8 191.0
================================================== ======= ======== =======
Plus: Standing Commercial Properties Acquired - - -
During the Period
================================================== ======= ======== =======
Plus: Developments Completed During the
Period - 1.5 1.5
================================================== ======= ======== =======
Total Rent from Standing Commercial Properties 87.2 105.3 192.5
================================================== ======= ======== =======
Plus: Residential Rent - 0.6 0.6
================================================== ======= ======== =======
Total Rent from Standing Properties 87.2 105.9 193.1
================================================== ======= ======== =======
Plus: Active and Pre-lets of Space on Projects
Under Development / Refurbishment 8.7 0.3 9.1
================================================== ======= ======== =======
Total Contracted Rent as at 30 Jun 2023 95.9 106.2 202.2
Combined Annualised Commercial Portfolio Contracted Rent Profile
as at 30 June 2023
Poland Romania Group
------------------------------- ------------ ------------- ----------
Contracted Rent
(EUR m) 95.9 105.6 201.5
------------------------------- ------------ ------------- ----------
Tenant origin - %
------------------------------------------------------------------------
Multinational 64.0% 84.3% 74.7%
------------------------------- ------------ ------------- ----------
National 34.8% 14.4% 24.1%
------------------------------- ------------ ------------- ----------
State Owned 1.2% 1.3% 1.3%
------------------------------- ------------ ------------- ----------
Note: Commercial Contracted Rent excludes c.EUR0.6 million from
residential spaces as at 30 June 2022
Annualised Contracted Rent by Period of Commencement
Date as at 30 June 2023 (EURm)
------------------------------------------------------------------ ------
Active H2-2023 H1-2024 H2-2024 >2024 Total
Leases
-------------- -------- --------- --------- --------- ------- ------
Standing
Properties 182.4 6.9 1.8 2.0 - 193.1
-------------- -------- --------- --------- --------- ------- ------
Developments 7.8 1.1 0.1 0.1 - 9.1
-------------- -------- --------- --------- --------- ------- ------
Total 190.2 7.9 1.8 2.2 - 202.2
Annualised Commercial Portfolio Lease Expiration Profile as at
30 June 2023 (EURm)
--------------------------------------------------------------------------------------
Year H2-2023 2024 2025 2026 2027 2028 2029 2030 2031 >2031
-------- -------- ----- ----- ----- ------ ------ ------ ------ ----- ------
Total 9.1 20.0 18.6 19.2 27.6 23.1 20.2 31.6 11.7 20.3
-------- -------- ----- ----- ----- ------ ------ ------ ------ ----- ------
% of
total 4.5% 9.9% 9.2% 9.5% 13.7% 11.5% 10.0% 15.7% 5.8% 10.1%
The Group's rent roll across its combined portfolio is well
diversified, with the largest tenant accounting for 5.1% of
contracted rents, while the top three tenants account for 10.8% and
the top 10 account for 24.3%.
Cost of Renting Spaces
The headline (base) rent presents the reference point, which is
typically communicated in the real estate market when a new lease
is signed. However, renting spaces typically involves certain
costs, such as rent-free periods, fitouts for the space leased, and
brokerage fees, which the landlord incurs. These incentives can
vary significantly between leases and depend on market conditions,
type of lease (new take-up or lease extension), space leased
(office, industrial, other), contract duration and other
factors.
In calculating our effective rent, we account for the costs
incurred over the lease's lifetime, which we deduct from the
headline (base) rent, thus allowing us to assess the profitability
of a rental agreement.
Overall, in the first half of 2023, we successfully negotiated
the take-up (including expansions) or extension of 181.0k sqm of
commercial spaces in our portfolio. The weighted average effective
rent for these new leases was EUR9.1/sqm/month with a WALL of 6.9
years. Industrial leases completed in the period, which accounted
for 18.9% of the total space leased, resulted in lower average
headline and effective rents.
The difference between headline (base) and effective rents in
the first half of 2023 was, on average, 27.8%, which is higher than
for FY2022 (average of 26.1%) reflecting the fact that competition
remained challenging.
In total, new leases signed in the first six months of the year
will generate a future rental income of EUR202.9 million (including
auxiliary spaces), with leases from office properties accounting
for 82.0% of future rental income.
Weighted Average Effective Rent
(EUR / sqm / m) - H1-2023
--------------------------------- ------- -------- ------
Poland Romania Group
================================= ======= ======== ======
Headline Commercial Rent 16.7 11.1 12.6
================================= ======= ======== ======
Less: Rent Free Concessions (1.7) (1.3) (1.4)
================================= ======= ======== ======
Less: Tenant Fitouts (2.1) (1.6) (1.7)
================================= ======= ======== ======
Less: Broker Fees (0.5) (0.3) (0.4)
================================= ======= ======== ======
Effective Commercial Rent 12.5 7.9 9.1
================================= ======= ======== ======
WALL (in years) 5.1 7.9 6.9
================================= ======= ======== ======
Collections Review
The ability to collect - cash in - contracted rents is a key
determinant for the success of a real estate company.
Our rate of collections of rents invoiced and due in the first
half of 2023 remained high at 99% [1] (over 99% for 2022FY), due to
the long-term partnerships we have established and maintained with
high-quality national and multinational tenants since the inception
of the Group, which have helped us minimise the impact on rent
collections in this period and ensure sustainable cash flow
generation.
Portfolio Valuation
In line with our practice of biannual valuations, our entire
portfolio in Poland and Romania was revalued as of 30 June 2023.
The valuations were performed by Knight Frank for our properties in
Poland, with Colliers and Cushman & Wakefield valuing our
properties in Romania (more information is available under note 4
of the unaudited interim condensed consolidated financial
statements as of and for the period ended 30 June 2023).
Assigning the appraisal of our portfolio to four independent and
experienced service providers makes the process of determining the
value of properties transparent and impartial. Through our
oversight, we ensure that a consistent methodology, reporting, and
timeframe are respected. Our portfolio has been growing since the
inception of the Group, driven by new additions through the
acquisition or development of high-quality properties in Poland and
Romania, our asset management initiatives, and the performance of
the real estate markets in which we operate.
Overall, the total combined portfolio value was EUR3.0 billion
at the end of 2019 and remained effectively unchanged in 2020 due
to the impact of the COVID-19 pandemic. It increased to EUR3.2
billion at both 31 December 2021 and 31 December 2022, thanks to
additions made in the last two full years.
The portfolio decrease in the first half of 2023 is mainly
attributed to continued challenging market conditions across our
markets, which led to marginal changes in key market indicators
used by valuation companies. Our combined portfolio value as of 30
June 2023 was EUR3.1 billion, representing a 2.5% decrease compared
to 31 December 2022. The like-for-like appraised value of our
standing commercial properties was EUR2.8 billion at the end of the
period, reflecting a 3.0% decrease compared to 31 December
2022.
In valuing our properties, the key market indicators used by the
four independent appraisers, although varying, consider factors
such as the commercial profile of the property, its location, and
the country in which it is situated. These factors have remained
consistent with year-end 2022, with Effective Rental Values (ERVs)
remaining stable and yields marginally decompressing in our markets
of interest.
Combined Portfolio Value Evolution 30 June 2023 (EURm)
-------------------------------------------------------------------------------------------------------------------------
Poland Romania Group
================== ================================== ================================= ==============================
Total Portfolio
Value at
31 Dec 2022 1,584.5 1,574.4 3,158.9
================== ================================== ================================= ==============================
Less: Properties
Held in
Joint Venture
(*) - (119.3) (119.3)
================== ================================== ================================= ==============================
Total Investment
Properties
at 31 Dec 2022 1,584.5 1,455.1 3,039.6
================== ================================== ================================= ==============================
Plus:
Transactions - (10.9) (10.9)
================== ================================== ================================= ==============================
o/w New - - -
Acquisitions
================== ================================== ================================= ==============================
o/w Disposals - (10.9) (10.9)
================== ================================== ================================= ==============================
Plus: Capital
Expenditure 7.0 1.2 8.2
================== ================================== ================================= ==============================
o/w
Developments 7.0 1.2 8.2
================== ================================== ================================= ==============================
o/w Standing - - -
Properties
================== ================================== ================================= ==============================
o/w Future - - -
Developments
================== ================================== ================================= ==============================
Plus: Net
Revaluations
Adjustments (58.4) (25.6) (84.0)
================== ================================== ================================= ==============================
o/w
Developments 3.5 1.2 4.7
================== ================================== ================================= ==============================
o/w Standing
Properties (62.0) (26.1) (88.0)
================== ================================== ================================= ==============================
o/w Lands,
Future
Developments
&
Acquisitions - (0.7) (0.7)
================== ================================== ================================= ==============================
Total Investment
Properties
at 30 Jun 2023 1,533.1 1,419.8 2,952.9
================== ================================== ================================= ==============================
Plus:
Properties
Held in
Joint Venture
(*) - 127.1 127.1
================== ================================== ================================= ==============================
o/w Capital
Expenditure
&
Acquisitions - 1.8 1.8
================== ================================== ================================= ==============================
o/w Net
Revaluation
Adjustments - 6.0 6.0
================== ================================== ================================= ==============================
Total Portfolio
Value at
30 Jun 2023 1,533.1 1,546.9 3,080.0
================== ================================== ================================= ==============================
STANDING PORTFOLIO REVIEW
* Standing portfolio footprint increased by 17.3k sqm
to 1,422.9k sqm of GLA, mainly attributed to the
delivery of our first logistic / light-industrial
facility in Targu Mures, Romania
* Total combined standing GLA of 1.4 million sqm, with
total standing portfolio value at EUR2.8 billion
* Average standing occupancy of our combined commercial
portfolio of 85.5% (85.7% including tenant options),
marginally lower vs. year-end 2022 (85.6% or 85.9%
including tenant options)
* Average commercial standing occupancy, adjusted for
Warta Tower, which was sold in July and was fully
vacant as of 30 June 2023, was 87.7%
* Total contracted rent of EUR193.1 million in our
standing properties (over 85% coming from standing
office properties)
* Standing commercial WALL increasing to 5.0 years
(versus 4.4 years at year-end 2022) due to renewals
and new leases signed in the period
* All our properties in Poland are now internally
managed, resulting in 87.1% of our combined standing
commercial portfolio by value (97.0% of office and
mixed-use standing properties) being internally
managed by the Group
Standing Portfolio Evolution
Our combined portfolio of standing properties expanded in the
first half of 2023 with the addition of our first logistic/light
industrial facility in Targu Mures, Romania. The Targu Mures
Logistic Hub offers a total of 18.3k sqm of high-quality Gross
Lettable Area (GLA) and, as of 30 June 2023, was fully leased to
two large multinational companies, with an average Weighted Average
Lease Length (WALL) of 10.2 years.
In general, our standing portfolio primarily comprises 30 Class
"A" offices (comprising a total of 50 properties) and a mixed-use
investment (comprising a total of five properties) in central
locations in Bucharest (Romania), Warsaw (Poland), and five of the
largest office markets/cities in Poland (Krakow, Wroclaw, Katowice,
Gdansk, and Lodz). These locations collectively account for 88.5%
of the value of our standing portfolio.
Furthermore, in Romania, we fully own five
logistics/light-industrial parks with ten facilities located in
Timisoara, Arad, Oradea, and Pitesti. We also own the majority
stake in two small business unit projects in Bucharest, each with
two standing facilities. Additionally, we have a 50% ownership
stake through joint venture agreements in three other
logistics/business parks (with four standing facilities) in
Bucharest, Constanta, and Targu Mures. Moreover, we own a portion
of a residential complex in Bucharest.
As of 30 June 2023, our combined standing portfolio consisted of
42 investments (compared to 41 on 31 December 2022) encompassing 72
buildings (compared to 71 on 31 December 2022) in Poland and
Romania.
During the period, the total Gross Lettable Area (GLA) of our
standing commercial portfolio increased by 18.6k sqm, representing
a growth of 1.3%, reaching a total of 1,401.8k sqm by the end of
June. This expansion was primarily attributed to the completion of
the Targu Mures Logistic Hub, which contributed a total GLA of
18.3k sqm, as well as the remeasurement of certain areas within our
portfolio.
In total, our standing portfolio (comprising commercial and
other properties) increased in GLA by 1.2% to reach 1,422.9k sqm.
This increase was influenced by the sale of residential units in
our Upground Residential project.
The appraised value of our combined standing portfolio as of 30
June 2023 amounted to EUR2.8 billion, with more than 98% of this
value attributed to commercial properties. This value reflected a
decrease of 2.6% compared to 31 December 2022. This overall decline
is primarily attributable to negative revaluation differences,
partially offset by the completion and addition of the Targu Mures
Logistic Hub. The value of like-for-like standing commercial
properties decreased by 3.0% as of 30 June 2023 compared to 31
December 2022, with a 3.6% reduction in the value of like-for-like
standing office and mixed-use properties partly offset by an
increase in the value of our industrial properties. (Additional
information can be found in the "Asset Management Review").
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 30 Dec. 2021 31 Dec. 2022 30 Jun. 2023
--------------------------- ------------- ------------- -------------
Number of Investments 39 41 42
--------------------------- ------------- ------------- -------------
Number of Assets 66 71 72
--------------------------- ------------- ------------- -------------
GLA (k sqm) 1,302.3 1,405.6 1,422.9
--------------------------- ------------- ------------- -------------
GAV (EUR m) 2,866.3 2,893.6 2,819.5
--------------------------- ------------- ------------- -------------
Contracted Rent (EUR
m) 175.4 182.0 193.1
--------------------------- ------------- ------------- -------------
Of which Commercial 30 Dec. 2021 31 Dec. 2022 30 Jun. 2023
Properties
------------------------ --------------- --------------- ---------------
Number of Investments 38 40 41
------------------------ --------------- --------------- ---------------
Number of Assets 65 70 71
------------------------ --------------- --------------- ---------------
GLA (k sqm) 1,272.0 1,383.2 1,401.8
------------------------ --------------- --------------- ---------------
GAV (EUR m) 2,810.3 2,850.3 2,778.6
------------------------ --------------- --------------- ---------------
Occupancy (%) 88.5% (88.7%*) 85.6% (85.9%*) 85.5% (85.7%*)
------------------------ --------------- --------------- ---------------
Contracted Rent (EUR
m) 174.5 181.3 192.5
------------------------ --------------- --------------- ---------------
Potential rent at 100%
occupancy (EUR m) 201.2 211.6 224.8
------------------------ --------------- --------------- ---------------
WALL (years) 4.7 4.4 5.0
------------------------ --------------- --------------- ---------------
(*) Including tenant
options
Evolution of Combined Standing
Portfolio over H1-2023
------------------------------------------- ----------- ------------- ---------
31 Dec. LfL Change* New Acq. New Deliv. Sales 30 Jun.
2022 (& Other 2023
Adj**)
========== ======== ============ =========== ============= ============ ==========
GLA (k
sqm) 1,405.6 (0.0) - 18.3 (1.0) 1,422.9
---------- -------- ------------ ----------- ------------- ------------ ----------
GAV (EUR
m) 2,893.6 (85.0) - 13.2 (2.2) 2,819.5
---------- -------- ------------ ----------- ------------- ------------ ----------
(*) Like-for-Like change represents the changes in GLA or GAV of
standing properties owned by the Group at 31 December 2022 and 30
June 2023.
(**) Includes impact in areas (sqm) from the remeasurement of
certain properties and other GAV adjustments (redevelopment capex,
reclassification).
Standing Portfolio Occupancy
Our standing commercial portfolio's average occupancy as of 30
June 2023 stood at 85.5% (85.7% including tenant options),
indicating a marginal 0.1% decrease over the past six months
(compared to 85.6% as of 31 December 2022, or 85.9% including
tenant options).
The addition of the Mures Logistic Hub, fully leased as of 30
June 2023, was counterbalanced by mixed occupancy trends in our
markets. In Poland, standing commercial occupancy decreased by 8.1%
compared to 30 December 2022, primarily influenced by excess supply
in our Regional Polish submarkets. In contrast, in Romania, it
increased by 4.5% during the first half of 2023.
When adjusting for Warta Tower, which was sold in July and was
entirely vacant as of 30 June 2023, our standing commercial
occupancy reached 87.7% (87.8% including tenant options). On a
like-for-like basis, occupancy experienced a slight decline of
0.3%, settling at 85.4% by the end of the first half of 2023.
Like-for-like standing commercial occupancy, adjusted for Warta
Tower, remained unchanged at 87.5% as of 30 June 2023, compared to
the figures on 31 December 2022.
Across the portfolio, as of the end of the first half of 2023,
we had 1,199.2k sqm of commercial Gross Lettable Area (GLA) leased
to more than 630 tenants, with an average Weighted Average Lease
Length (WALL) of 5.0 years. The majority of these tenants are
national and multinational corporates, renowned within their
respective markets.
Additionally, we had 47.8k sqm leased in the two mixed-use
properties currently undergoing refurbishment/repositioning, and
4.6k sqm pre-let in our two facilities under construction in
Business Park Stefanesti. These figures are not included in our
standing portfolio metrics.
Occupancy Evolution H1-2023 (GLA 'k sqm) - Commercial Portfolio
----------------------------------------------------------------------------------------------------
Occupancy Occupancy Occupancy
Rate Rate Rate
Poland (%) Romania (%) Group (%)
=================================== ======= ========== ======== ========== ======== ==========
Standing Available GLA
- 31 Dec. 22 542.1 841.0 1,383.2
=================================== ======= ========== ======== ========== ======== ==========
Acquired GLA - - 0.0
New Built GLA - 18.3 18.3
Remeasurements, reclassifications 0.0 0.3 0.3
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Standing Available GLA
- 30 Jun. 23 542.1 859.6 1,401.8
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 31 Dec. 22 440.6 81.3% 743.7 88.4% 1,184.3 85.6%
=================================== ======= ========== ======== ========== ======== ==========
Acquired/Developed Occupied
GLA - 18.3 18.3
Expiries & Breaks (50.2) (22.2) (72.4)
Renewals* 28.4 60.9 89.3
New Take-up 14.6 54.2 68.8
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Other Adj. (relocations,
remeasurements, etc) (0.2) 0.4 0.2
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 30 Jun. 23 404.8 74.7% 794.4 92.4% 1,199.2 85.5%
----------------------------------- ------- ---------- -------- ---------- -------- ----------
* Renewals are neutral to the occupancy calculation.
Standing Properties Operation and Upgrade Programme
Providing best-in-class real estate spaces to our business
partners stands as a fundamental component of our strategy at
Globalworth.
We firmly believe that employing a "hands-on" approach, coupled
with continuous active management and investment in our portfolio,
enables us to preserve and augment the value of our properties,
yield long-term income, and offer top-tier real estate spaces to
our business partners.
To cater to the requirements of our current and prospective
business partners, we persistently (re)invest in our properties,
ensuring the maintenance and, where necessary, enhancement of the
quality of our buildings and services.
We are pleased to report that all our properties in Poland are
now under internal management by the Group. In Romania, we manage
all but one of our offices in-house. Collectively, we internally
oversee 962.3k sqm of high-quality office and mixed-use space, with
an appraised value of EUR2.4 billion. Within our total standing
commercial portfolio, internally managed properties account for
87.1% by value (comprising 97.0% of office and mixed-use standing
properties) as of 30 June 2023.
Our Upgrade Programme has returned to a more conventional pace
since 2021, following a temporary scaling back in 2020 due to
COVID-19. As a result of our ongoing in-house initiatives and
property additions, we possess a modern portfolio. Notably, 54 of
our standing commercial properties, constituting 77.4% by Gross
Lettable Area (GLA) and 76.4% by commercial portfolio value, have
either been delivered or significantly refurbished in or after
2014. In the first half of 2023, we invested EUR24.1 million in
selected improvement initiatives within our standing portfolio.
Internally Managed Commercial Poland Romania Group
Portfolio as at 30 June 2023
-------------------------------- -------- -------- --------
Internally Managed GLA (k sqm) 542.1 426.1 968.3
================================ ======== ======== ========
% of Commercial GLA 100.0% 49.6% 69.1%
================================ ======== ======== ========
% of Office and Mixed-Use GLA 100.0% 90.9% 96.4%
================================ ======== ======== ========
Internally Managed GAV (EUR m) 1,360.6 1,058.2 2,418.8
================================ ======== ======== ========
% of Commercial GAV 100.0% 74.7% 87.1%
================================ ======== ======== ========
% of Office and Mixed-Use GAV 100.0% 92.5% 97.0%
================================ ======== ======== ========
SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES
* 15 properties were certified or recertified with
BREEAM Very Good or higher certifications in our
portfolio in H1-2023
* Overall, 52 green certified properties in our
portfolio valued at EUR2.4 billion accounting for
87.1% from our combined standing commercial portfolio
value.
* 95.8% of our office and mixed-use properties by value
have a WELL Health-Safety rating, further
demonstrating the quality of our portfolio
* Issued the fifth sustainable development report for
the Group for FY 2022
* Globalworth maintained its low-risk rating by
Sustainalytics and A by MSCI
* c. EUR150k contributed to over 15 initiatives in
Romania and Poland
Green Buildings
Consistent with our commitment to energy-efficient properties,
during H1-2023 we certified or recertified 15 properties in our
portfolio with BREEAM Very Good or higher certifications.
Overall, as of 30 June 2023, our combined standing portfolio
comprised 52 green-certified properties, accounting for 87.1% of
our standing commercial portfolio by value. BREEAM-accredited
properties account for 82.0% of our green-certified standing
portfolio by value, with the remaining properties being holders of
other certifications (LEED Gold or Platinum, Edge).
At Globalworth, we are aiming for 100% of our portfolio to be
green-accredited. We are currently in the process of certifying or
recertifying 20 other properties in our portfolio, principally
targeting BREEAM certifications.
Furthermore, as part of our overall green initiatives, we kept
our policy of securing 100% of the energy used in our Polish and
Romanian properties from renewable sources.
In addition, as of 30 June 2023, 50 of our standing commercial
properties had a WELL Health-Safety Rating, with a total value of
EUR2.4 billion accounting for 95.5% of our standing office and
mixed-use properties by value. Overall, 95.8% of our office and
mixed-use portfolio by value (including Renoma and Supersam) is
rated for WELL Health-Safety, standing as further evidence of the
quality of our portfolio.
Social Initiatives
In the first half of 2023, Globalworth and the Globalworth
Foundation continued with their very active social programme,
contributing EUR154k to over 20 initiatives in Romania and
Poland.
Initiatives to which we contributed included:
-- Primo Hub Center: As part of our 'Space for Ukraine'
initiative in the BOB building, we offered support to DGASMB in
opening a much-needed educational center for over 160 refugee
children. The 'Space for Ukraine' initiative is an aid program that
we've put in place since the beginning of the Ukrainian conflict.
It is aimed at providing shelter and support for the better
integration of refugees into our communities.
-- Heart to Heart
-- Globalworth Foundation's activities include concern for
children's health. By organizing a fundraising campaign among
Globalworth tenants it was possible to raise funds to support
little patients with heart defects. The campaign started on Saint
Valentine's Day.Thanks to the initiative an INR apparatus to
measure coagulation, which is necessary after heart operations was
purchased. Globalworth Foundation donated a treatment chair for the
cardiac surgery unit at paediatric hospital in Warsaw
-- 'Zaczytane Bibiloteki', Book-crossing in hospitals and care
centres for children in Katowice
-- The Globalworth Foundation, together with the Zaczytani.org
Foundation, has opened four "Zaczytane Bibiloteki" in hospitals and
care centers for children in Katowice, Krakow Warsaw and Wroclaw.
The books were collected among employees of companies that are
tenants of Globalworth properties. Thanks to the campaign, it was
possible to collect more than 1,000 books, which will receive a
second life and give others a chance to read them. The aim of the
campaign is to help children undergoing treatment in hospitals and
wards of childcare centres by making their time more pleasant and
providing permanent access to literature.
In addition to these we had several campaigns within our
communities among which it is noteworthy to mention:
-- Super Woman - where we offered to the astonishing women from
our buildings a special gift: their own super-hero icon tote bags,
based on their unique powers
-- Coffee Talks - s ince offices are more than simply physical
spaces, Globalworth continued to strive to offer its community the
greatest workplace experiences. In May, we went on a tour of our
buildings and offered our community the best coffee in town
-- Office Moji Day - To celebrate World Emoji Day in July, we encouraged our tenants' creative communication by replacing conventional language with emojis
-- "Bike services" for our tenants in Poland - The celebrate the
start of spring and summer season Globalworth Poland organized in
May a series of Bike Days in our office buildings in Poland.
Skilled technicians were on hand to provide basic maintenance and
repairs, ensuring that our tenants' bikes were in excellent
condition for their upcoming adventures
Reporting
As part of our effort to improve disclosure in relation to our
sustainable development strategy, initiatives and performance, we
published Globalworth's "2022 Sustainable Development Report".
This is the fifth report published by the Group and has been
prepared in accordance with the GRI Standards: Core option and with
the European Public Real Estate Association's Sustainability Best
Practice Reporting Recommendations (EPRA sBPR).
PORTFOLIO SNAPSHOT
Our real estate investments are in Poland and Romania, the two
largest markets in the CEE. As at 30 June 2023, our portfolio was
spread across 13 cities, with Poland accounting for 49.8% by value
and Romania 50.2%.
Combined Portfolio Snapshot (as at 30 June 2023)
-------------------------------------------------------------------------------------------------
Poland Romania Combined Portfolio
---------------------- ---------------------- ----------------------
Standing Investments(1) 19 23 42
------------------------- ---------------------- ---------------------- ----------------------
GAV(2) / Standing
GAV (EURm) EUR1,533m / EUR1,361m EUR1,546m / EUR1,458m EUR3,080m / EUR2,819m
------------------------- ---------------------- ---------------------- ----------------------
Occupancy 74.7% 92.4% 85.5%
(92.6% incl. tenant (85.7% incl. tenant
options) options)
------------------------- ---------------------- ---------------------- ----------------------
WALL(3) 4.0 years 5.8 years 4.9 years
------------------------- ---------------------- ---------------------- ----------------------
Standing GLA 542.1k sqm 880.8k sqm 1,422.9k sqm
(k sqm)(4)
------------------------- ---------------------- ---------------------- ----------------------
Contracted Rent
(EURm)(5) EUR95.9m EUR106.2m EUR202.2m
------------------------- ---------------------- ---------------------- ----------------------
GAV Split by
Asset Usage
------------------------- ---------------------- ---------------------- ----------------------
Office 81.8% 74.2% 78.0%
Mixed-Use 18.2% 0.0% 9.0%
Industrial 0.0% 18.5% 9.3%
Others 0.0% 7.3% 3.7%
GAV Split by
City
------------------------- ---------------------- ---------------------- ----------------------
Bucharest 0.0% 83.1% 41.7%
Timisoara 0.0% 6.5% 3.3%
Pitesti 0.0% 3.8% 1.9%
Constanta 0.0% 4.2% 2.1%
Arad 0.0% 1.1% 0.6%
Oradea 0.0% 0.4% 0.2%
Targu Mures 0.0% 0.9% 0.4%
Warsaw 44.9% 0.0% 22.4%
Krakow 19.8% 0.0% 9.8%
Wroclaw 16.6% 0.0% 8.3%
Katowice 11.0% 0.0% 5.5%
Lodz 4.1% 0.0% 2.0%
Gdansk 3.6% 0.0% 1.8%
------------------------- ---------------------- ---------------------- ----------------------
GAV as % of Total 49.8% 50.2% 100.0%
1. Standing Investments representing income producing properties.
One investment can comprise multiple buildings. e.g., Green Court
Complex comprises three buildings or one investment
2. Includes all property assets, land and development projects valued
at 30 June 2023
3. Includes pre-let commercial standing and development/re-development
assets. WALL of standing commercial properties in Poland, Romania
and the Combined portfolio are 4.0 years, 5.8 years and 5.0 years,
respectively.
4. Including 21.1k sqm of residential assets in Romania
5. Total rent comprises commercial (EUR192.5 million) and residential
(EUR0.6 million in Romania) standing properties, rent in assets under
redevelopment (EUR8.8 million in Poland) and development pre-lets
(EUR0.3 million in Romania).
CAPITAL MARKETS UPDATE
* The first half of 2023 was characterised by continued
high volatility in the economic and business
environment, negatively, impacting capital markets
* Globalworth's share price in this period traded
consistently below its last reported 31 December 2022
EPRA NRV
* GWI 18/25 and 20/26 bonds yields were at 14.9% and
13.2% at 30 June 2023 respectively vs 7.9% and 8.9%
at 30 June 2022
* In June 2023, considering the market context, we have
purchased EUR100.0 million of the 2025 Eurobond notes,
and in the future, we aim to acquire more of our
outstanding notes in order to proactively manage debt
maturities
* Fitch re-affirmed the investment grade rating
following their 2022 year-end review of Globalworth
and changed the outlook to negative, while S&P
downgraded the group's corporate credit rating to BB+
with a stable outlook
Equity Capital Markets and Shareholder Structure Update
The first half of 2023 was characterised by continued high
inflation, rising interest rates and the continuation of the war in
Ukraine, all of which we expect continue to impact in the near and
medium term the economic environment, maintaining higher volatility
in the capital markets.
During the first half of 2023, real estate valuations
encountered notable headwinds stemming from restricted access to
capital markets and general uncertainty in investment in most asset
classes. A resulting heightened investor risk aversion led to an
elevation in demanded risk premia, subsequently contributing to an
escalation in discount rates. This, coupled with a modest yield
decompression observed within our targeted markets, culminated in
diminished equity valuations as of 30 June 2023.
As of 30 June 2023, it is essential to place Globalworth's share
price performance in the context of the prevailing macroeconomic
landscape. Throughout the first half of 2023, the FTSE EPRA
Developed Europe index demonstrated a negative performance,
registering a decline of -11.8%. Conversely, the FTSE EPRA Global
index exhibited a positive performance, reflecting an increase of
+2.5%.
In contrast, despite several favourable factors such as the high
quality of its portfolio, robust leasing activity, and the
company's presence in high-growth, low office stock markets,
Globalworth's share price experienced a notable decline of -22.9%.
It is pertinent to acknowledge that this decline can be attributed
in part to the limited free float of the Group.
Throughout this period, Globalworth's share price consistently
traded below its last reported EPRA Net Reinstatement Value (NRV)
as of 31 December 2022, which stood at EUR8.29 per share. The share
price reached its lowest closing point on 5 June 2023, at EUR2.41
per share, and its highest price on 1 July 2022, at EUR5.05 per
share.
Zakiono Enterprises Ltd, which is jointly and equally owned by
CPI Property Group S.A. ("CPI") and Aroundtown SA ("Aroundtown"),
holds 60.7% of the share capital of the Group, followed by
Growthpoint Properties Ltd with 29.4%.
Globalworth Shareholding
30 June 30 June
22 23
=================== ====================== ======== ========
CPI Property Together:
Group Zakiono Enterprises 60.6% 60.7%
=================== ====================== ======== ========
Aroundtown
=================== ====================== ======== ========
Growthpoint
Properties 29.4% 29.4%
=========================================== ======== ========
Oak Hill Advisors 5.3% 5.3%
=========================================== ======== ========
Other 4.7% 4.6%
=========================================== ======== ========
Basic Data on Globalworth Shares (Information
as at 30 June 2023)
Number of 235.9m plus 0.8m shares held
Shares in treasury
============= =====================================
Share Capital EUR1.7bn
=========================== =======================
WKN / ISIN GG 00B979FD04
=========================== =======================
Symbol GWI
=========================== =======================
Free Float 9.8%
=========================== =======================
Exchange London AIM
=========================== =======================
Globalworth Share Performance
H1-2022 H1-2023
========================= ============ ========
Market Capitalisation
(EUR million) - 30 June 1,188 715
============================= ======== ========
30-June Closing Price
(EUR) 5.36 3.03
============================= ======== ========
52-week high (EUR) 6.68 5.05
============================= ======== ========
52-week low (EUR) 5.25 2.41
============================= ======== ========
Dividend paid per share 0.13 0.15
============================= ======== ========
Bonds Update
We finance ourselves through a combination of equity and debt,
and we compete with many other real estate companies for investor
trust to support our initiatives.
At the beginning of the year, we had two Eurobonds outstanding
for a total of EUR950 million with a weighted average maturity of
2.8 years.
These two Eurobonds outstanding, issued in March 2018 and July
2020 (inaugural green bond) and expiring in 2025 and 2026,
respectively, with a weighted average cost of 3.0%, and, together
with the EUR85.0 million unsecured facility raised in June 2022
from the IFC, provide us with a simplified capital structure and
improve the efficiency of our capital allocation.
Globalworth is rated by two of the three major agencies, with
Fitch maintaining their investment credit rating following their
review of the Group and changing the outlook to negative while
S&P downgraded the group's corporate credit rating to BB+ with
a stable outlook considering the volatile and challenging market
environment.
In the first six months of 2023, our bonds performance has been
impacted by rising interest rates and bond investor risk aversion.
On average, our 18/25 and 20/26 bonds traded at 11.4% and 10.4%,
respectively, during the period. However, yield to maturity
increased as the year progressed, closing at 14.9% and 13.2% on 30
June 2023.
Considering the context, the board decided to launch in June a
cash tender offer for our outstanding notes due 2025 and 2026 in
line with proactively managing the Company's debt maturity profile
and, as a result, we have purchased EUR100.0 million of the 2025
notes. The Company may, in the future, depending on market
conditions, acquire more of the notes issued under the two
Eurobonds outstanding with the aim of addressing its bond debt
maturities.
Rating
S&P Fitch
======== ======= =========
Rating BB+ BBB-
======== ======= =========
Outlook Stable Negative
======== ======= =========
Basic Data on the Globalworth Bonds
GWI bond 18/25 GWI bond 20/26
===================== ===================== =====================
ISIN XS1799975922 XS2208868914
===================== ===================== =====================
SEDOL BD9MPV -
===================== ===================== =====================
Segment Euronext Dublin, Euronext Dublin
BVB
===================== ===================== =====================
Minimum investment EUR100,000 and EUR100,000 and
amount EUR1,000 thereafter EUR1,000 thereafter
===================== ===================== =====================
Coupon 3.000% 2.950%
===================== ===================== =====================
Issuance volume EUR550 million EUR400 million
===================== ===================== =====================
Outstanding 30 Jun.
2023 EUR450 million EUR400 million
===================== ===================== =====================
Maturity 29 March 2025 29 July 2026
===================== ===================== =====================
Performance of the Globalworth
Bonds
H1-2022 H1-2023
=================== ================== ==============
GWI bond 18/25
=================== ================== ==============
30 June closing
price 88.29 82.80
=================== ================== ==============
Yield to maturity
at 30 June 7.92% 14.95%
=================== ================== ==============
GWI bond 20/26
=================== ================== ==============
30 June closing
price 80.54 75.38
=================== ================== ==============
Yield to maturity
at 30 June 8.85% 13.22%
=================== ================== ==============
1. Introduction and Highlights
Gross rental income saw a 5.4% increase, primarily due to a
like-for-like rise in rental income due to indexation, which
amounted to 8.8%. However, this growth was mitigated by the reduced
rates at which leases were renewed or new leases were secured
during the period. Consequently, our combined occupancy level
remained stable at 85.5%, maintaining the same level as in December
2022. This outcome underscores our commitment to the "local
landlord" approach, which centres on cultivating strong tenant
relationships and addressing their specific requirements.
In our financial performance analysis, we employ a range of
metrics, encompassing both IFRS and EPRA measures. These metrics
are deliberately designed to augment transparency and facilitate
comparisons within the European real estate sector.
Revenues NOI 1
EUR119.1 EUR73.7m
2.1% on H1-2022 +5.6% on H1-2022
IFRS Earnings per Combined Portfolio Value (OMV)
share 2 1
-11 cents EUR3.1bn
+15 cents in H1-2022 -2.4% on 31 Dec. 2022
---------------------------------------------
EPRA NRV 1,3 EPRA NRV per share 1,3
EUR1,781.1m EUR7.55
-2.96% on 31 Dec. -8.9% on 31 Dec. 2022
2022
---------------------------------------------
Adjusted normalised EPRA Earnings per share 1,2
EBITDA 1,4 15 cents
EUR66.0m -6.3% on H1-2022
+4.1% on H1-2022
---------------------------------------------
LTV 1,5 Dividends paid in H1-2023
per share
42.7% 15 cents
42.7% at 31 Dec. 2022 15.4% on H1-2022
---------------------------------------------
1. See Glossary for definitions.
2. See note 12 of the unaudited condensed consolidated financial
statements for calculation.
3. See note 19 of the unaudited condensed consolidated financial
statements for calculation.
4. See page 23 for further details.
5. See note 21 of the unaudited condensed consolidated financial
statements for calculation.
2. Revenues and Profitability
Consolidated revenue in the first half of 2023 was EUR119.1
million, up by 2.1% from the prior year results.
Gross Rental income continued to grow, reaching EUR95.3 million
for H1-2023, higher by EUR5.1 million compared H1-2022, decreasing
to EUR80.5 million when accounting for tenant incentives which are
amortised during the life of the lease.
Net Rental Income increase with EUR5.3 million compared to the
same period in 2022, as follows:
-- additional rental income of EUR0.4 million from industrial
developments delivered over the past 12 months to our portfolio
(Catted Chitila, TAP 2 B3 and Catted Stefanesti) and the additional
rental income of EUR4.9 million from like-for-like standing
properties in Romania (EUR3.5 million increase representing 9.7%)
and Poland (EUR1.4 million increase representing 3.9%), and
The overall consolidated revenue increased by EUR2.5 million,
compensated by EUR3 million lower (a decline of 8%) service charge
income from standing properties when net rental income grew by 7.1%
to EUR80.5 million. As a result of an average decrease in service
charge rate per square metre across our standing portfolio and
predominantly due to decline in the occupancy in Poland on
like-for-like basis.
Overall, our revenues remained relatively evenly split between
our two markets of operation, with Poland accounting for 49% (52%
in H1-2022) and Romania 51% (48% in H1-2022).
Net Operating Income ("NOI"), after taking into account property
and fitout costs, was EUR73.7 million, higher by 5.6% compared to
H1-2022. Overall operating expenses in our portfolio decreased by
EUR1.4 million to EUR45.3 million of which c.84% were reinvoiced to
tenants as the vast majority of our leases are triple net. The
portion of our operating expenses not reinvoiced typically involved
spaces available to be leased and resulted in net operating costs
being higher by EUR1.0 million across.
-- NOI was split 48% Poland / 52% Romania, compared to 51% Poland / 49% Romania in H1-2022.
Adjusted normalised EBITDA (including share of minority
interests) was EUR66.0 million, higher by 4.1% compared to H1-2022
(EUR63.4 million), as the increase in NOI was partially offset by
higher administrative and other expenses.
Net finance costs were EUR9.7 million for the period, lower by
63% (or EUR16.7 million lower) compared H1-2022 (EUR26.4 million),
due to:
-- higher finance income (by EUR17.0 million) from the one-off
gain related to the bond buyback of EUR15.8 million, income from
bank deposits EUR1.0 million and interest received from joint
ventures EUR0.3 million; and
-- higher finance expenses by 1% overall (EUR0.4 million) as a result of numerous factors;
a) decline in interest costs on public notes by EUR4.5 million
due to repayment of FY2022 notes in prior year and EUR0.6 million
reduction in bank charges and other financial expenses, which
mitigated,
b) EUR1.5 million increased expense from higher Euribor rates
and additional EUR3.6 million interest expenses from new loan
facilities outstanding in last 12 months as compared to 30 June
2022.
Joint ventures generated net gains in H1-2023 and our share of
these amounted to EUR2.6 million increased with 30% as compared to
H1-2022. This positive result is mainly due to an improvement in
operating performance of the existing assets and our share of the
net profit generated by the addition of Targu Mures during.
Earnings before tax turner to a loss of EUR44.3 million for
H1-2023 (EUR45.7 million profit in H1-2022), mainly as a result of
the EUR102.9 million revaluation loss recorded versus the valuation
gain of EUR7.0 million recorded in H1-2022.
-- EUR31.8 million and EUR71.1 million net fair value loss in
Romania and Poland respectively (EUR11.7 million gain and EUR4.7
million loss recorded in Romania and Poland respectively in
H1-2022)
EPRA earnings for the first six months of 2023, however,
amounted to EUR34.2 million (or 15 cents per share), lower by 0.4%,
EPRA earnings per share decreased as the weighted average number of
shares was 228.4 million in H1-2023 (221.4 million in H1-2022).
IFRS earnings, similar to earnings before tax, which turned to a
loss in H1-2023 due to the valuation loss recorded in the period,
was 11 cents per share negative compared to positive 15 cents per
share in H1-2022. The IFRS earnings were EUR24.6 million negative
compared to EUR33.5 million positive in H1-2022. The lower income
tax expense by EUR31.9 million (due to deferred tax impact on
revaluation loss) compared to H1-2022 helped to reduce the
magnitude of the negative result. Excluding the effects of
investment property valuations, the net result for H1-2023 was
EUR54.8 million, 15.6% higher than for H1-2022 (EUR32.2
million).
IFRS to EPRA earnings bridge (EURcents)
EURcents
IFRS EPS (11)
--------------------
Add/(subtract):
FV loss on properties 45
--------------------
Loan close-out
costs (18)
--------------------
JVs & NCI (1)
--------------------
EPRA EPS 15
--------------------
3. Balance Sheet
The two largest assets in our balance sheet are real estate and
cash which account for c.98% of our total assets on the balance
sheet as at 30 June 2023.
Overall, the combined market value of the portfolio decreased by
EUR77 million to EUR3,080 million (31 Dec. 22: EUR3,157 million),
comprising of EUR2,953 million included in our investment property
and EUR127 million representing the 100% value of the properties
owned by the two joint ventures in which we own a 50% stake.
The balance sheet value of our investment property (freehold and
properties held for sale), of EUR2,953 million as at 30 June 2023,
was EUR84.9 million lower compared to year-end 2022. The reduction
is due to the fair value losses on freehold properties of EUR102.9
million, with a split of 69% in Poland and 31% in Romania, which
capital expenditure on development projects and standing assets
helped to reduce the effect of the valuation losses on the overall
portfolio value.
In June 2023 we proceeded with the buyback of EUR100 million of
our FY2024 notes which principally contributed in lowering our cash
position to EUR130.5 million at 30 June 2023 (EUR163.8 million at
31 Dec. 22).
Total assets at the end of the period were EUR3,260 million,
lower by 3% compared to 31 December 2022 (EUR3,369 million).
EPRA NRV was EUR1,781.1 million as of 30 June 2023, lower by 3%
compared to 31 December 2022 (EUR1,835.5 million). As a result,
EPRA NRV per share also increased to EUR7.55 per share (31 December
2022: EUR8.29 per share) by 8.9%. The decrease was largely due to
the EUR102.9 million negative effect of fair value gains on the
portfolio and increase in the fully diluted number of shares.
EPRA NAV per share (EUR)
EUR
EPRA NRV 31 Dec 2022 8.29
-------
EPRA Earnings 0.15
-------
Bond gain 0.07
-------
FV loss (0.45)
-------
S. shares (0.50)
-------
Others (0.01)
-------
EPRA NRV 30 June 2023 7.55
-------
4. Dividends
Globalworth distributes bi-annually at least 90% of its EPRA
Earning to its shareholders. On 8 March 2023, the Board of
Directors of the Company approved the distribution of an interim
dividend in respect of the six-month financial period ended 31
December 2022 of EUR0.15 per ordinary share, with the option to
receive their net dividend in the form of Globalworth shares
("Scrip Dividend Shares") or cash. As a result, on 18 April 2023,
the Company paid EUR630,224 in cash and issued 14,305,676 Scrip
Dividend Shares at a reference price of EUR2.28 per share.
On 30 August 2023, the Company announced that its Board of
Directors had approved the payment of an interim dividend in
respect of the six-month financial period ended 30 June 2023 of
EUR0.14 per ordinary share with the same option to receive their
net dividend in the form of Globalworth shares ("Scrip Dividend
Shares") or cash.
The results for the period are set out in the consolidated
statement of comprehensive income on page 30.
5. Financing Review
The global business and economic landscapes have encountered
turbulence amid the persistent uncertainty in the public debt
market. This uncertainty can be attributed to the surge in
inflation, escalating interest rates, and the heightened
probability of an impending recession. Consequently, the outlook
has become notably uncertain.
Throughout this period, our unwavering focus has remained on
maintaining liquidity. Concurrently, we have diligently executed
our liability management strategy, especially with regard to
forthcoming debt maturities in 2025. Additionally, we have
steadfastly implemented our "local landlord" approach to drive
effective management of our business operations.
Debt Summary
The total debt of the Group at 30 June 2023 was EUR1.389 billion
(31 Dec. 2022: EUR1.456 billion) comprising of medium to long-term
debt, denominated entirely in Euro. The majority of the debt is in
two bonds totalling EUR0.85 billion, with bank loans of EUR0.5
billion.
In the first half of 2023, we bought back EUR100m nominal value
of our EUR550 million bond by paying a cash consideration of
EUR83.2m thus reducing the debt maturing March 2025.
In addition, during the period in the first half of 2023,
we:
-- paid the annual coupon of the 2025 bond;
-- drew the EUR110 million ten-year term secured debt facility
which was signed with Erste Group Bank AG and Banca Comerciala
Romana SA in December 2022 for refinancing of the Company's
logistics / light industrial portfolio in Romania. Out of the
EUR110 million, EUR96.5 million was made available to the Group and
the difference to one of the Group's joint venture companies;
-- repaid the EUR60 million outstanding balance on the RCF.
The Group continuously strives to maintain a low weighted
average interest rate cost, which as at 30 June 2023 was 3.29%
(2.89% at 31 Dec 2022), a small increase having in view the despite
EURIBOR increasing c.130 basis points in the first half of the year
while the average maturity period improved to 3.4 years (3.3 years
at 31 December 2022), as depicted in the chart below.
In this higher inflation and interest rate environment, it is
important to note that at the end of the period, Globalworth had
c.85% of its debt facilities at fixed interest rates (77.3%) or
floating interest rates which are however hedged (7.7%).
Weighted average interest rate vs debt duration to maturity
31 Dec 20 30 Jun 21 31 Dec 21 30 Jun 22 31 Dec 22 30 Jun 23
Weighted average interest rate 2.73% 2.73% 2.73% 2.55% 2.89% 3.29%
Weighted average duration to maturity 4.5 4.0 3.5 3.8 3.3 3.4
---------- ---------- ---------- ---------- ---------- ----------
Servicing of Debt During 2023
In the first half of 2023, we repaid bank debt principal of
EUR63.4 million, EUR100million nominal value of the 2025 Eurobond
for a cash consideration of EUR83.2million and t otal accrued
interest of EUR24.6million on the Group's outstanding debt
facilities.
Maturity profile (by year) of the principal loan outstanding at
30 June 2023 (EURm)
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Bonds 450.00 400.00
----- ------ ------- ------- ------ ------ ------- ----- ----- ------
Bank Loans 3.27 39.56 116.10 6.48 68.77 91.58 142.09 4.32 4.34 61.40
----- ------ ------- ------- ------ ------ ------- ----- ----- ------
Minority shareholder debt 0.80
----- ------ ------- ------- ------ ------ ------- ----- ----- ------
Liquidity & Loan to value ratio (LTV")
Managing our financial and operational resources has been a key
area of focus for the Group, especially since the COVID-19 pandemic
outbreak, and this careful management has carried on throughout
this period of higher volatility and uncertainty.
As of 30 June 2023, the Group had cash and cash equivalents of
EUR130.5 million (31 December 2022: EUR 163.8 million) of which an
amount of EUR5.6 million was restricted due to various conditions
imposed by the financing Banks. In addition, the Group had
available liquidity from committed undrawn loan facilities of
EUR265million.
The Group's loan to value ratio on 30 June 2023 was 42.7 %, same
as at 31 December 2022. This is consistent with the Group's
strategy to manage its long-term target LTV of around or below
40%.
Debt Structure as at 30 June 2023
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt on 30 June 2023 is unsecured:
67.4% (31 December 2022: 75.4%), with the remainder secured with
real estate mortgages, pledges on shares, receivables and loan
subordination agreements in favour of the financing parties.
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear
interest based either on one month, three months or six months
Euribor plus a margin (22.7% of the outstanding balance compared to
19.3% on 31 December 2022), or at a fixed interest rate (77.3% of
the outstanding balance compared to 80.7% at 31 December 2022).
The high degree of fixed interest rate debt ensures a natural
hedging to the Euro, the currency in which the most significant
part of our liquid assets (cash and cash equivalents and rental
receivables) is originally denominated and the currency for the
fair market value of our investment property. Based on the Group's
debt balances on 30 June 2023, an increase of 100 basis points in
the EURIBOR will result in an increase of interest expense of
EUR2.1 million per annum.
Debt Covenants
As of 30 June 2023, the Group is in compliance with all of its
debt covenants.
The Group's financial indebtedness is arranged with standard
terms and financial covenants, the most notable as at 30 June 2023
being the following:
Unsecured Eurobonds, Revolving Credit Facility and IFC loan
-- the Consolidated Coverage Ratio, with minimum value of 200%
(150% applicable for the Revolving Credit Facility and IFC
loan)
-- the Consolidated Leverage Ratio, with maximum value of 60%
-- the Consolidated Secured Leverage Ratio with a maximum value of 30%, and
-- the Total Unencumbered Assets Ratio, with minimum value of
125% (additional covenant applicable for the Revolving Credit
Facility and IFC loan).
Secured Bank Loans
-- the debt service cover ratio ('DSCR') / interest cover ratio
('ICR'), with values ranging from 120% to 350% (be it either
historic or projected), and
-- the LTV ratio, with contractual values ranging from 60% to 83%
6. Principal Risks and Uncertainties
The key risks which may have a material impact on the Group's
performance, together with the corresponding mitigating actions,
are presented on pages 100 to 104 of the Annual Report for the year
ended 31 December 2022, which is available at www.globalworth.com
.
These risks comprise the following:
-- Market conditions and the economic environment, particularly in Romania and Poland
-- Changes in the political or regulatory framework in Romania, Poland or the European Union
-- Execution of investment strategy
-- Valuation of the portfolio
-- Inability to lease space
-- Counterparty credit risk
-- Sustainable portfolio risk and Response to Climate Change
-- Lack of available financing and refinancing in interest environment
-- Breach of loan covenants
-- Changes in Interest and Foreign Exchange Rates, and
-- Compliance with fire, structural, health and safety, or other regulations
There have been no new risks identified during the six-month
period ended 30 June 2023, and the identified risks are expected to
continue to remain relevant during the second half of 2023.
7. Going Concern
These financial statements are prepared on a going concern
basis. The Directors believe that it is appropriate to adopt the
going concern basis in preparing the financial statements. The
Directors based their assessment on the Group's detailed cash flow
projections for the period up to 31 December 2024. These
projections take into account the available cash balance of the
Group as of 30 June 2023 of EUR130 million (see note 15 to the
financial statement), the available undrawn financing facilities of
EUR265 million, the latest contracted rental income, 99%
collections rate of rents invoiced and due, anticipated additional
rental income from new possible lease agreements during the period
covered by the projections, modification of existing lease
contracts as well as repayment of contracted debt financing due
until cash flow projection period and value accretive CAPEX. During
this assessment, the Group has also considered, but not relied
upon, other options available to generate or conserve additional
cash, to reduce debt levels and to fund value accretive capital
expenditure and tenant incentives. These include but are not
limited to extension of debt falling due in projected period, the
potential disposal of assets; the opportunity to offer scrip
alternative instead of cash dividend and the potential raising of
additional funds.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE PERIODED 30 JUNE 2023
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2023
30 June 30 June
2023 2022
Note EUR'000 EUR'000
========================================================================================== ==== ========= ========
Revenue 7 119,050 116,551
Operating expenses 8 (45,306) (46,696)
========================================================================================== ==== ========= ========
Net operating income 73,744 69,855
========================================================================================== ==== ========= ========
Administrative expenses 9 (7,755) (6,484)
Acquisition costs - (7)
Fair value (loss)/gain on investment property 3 (102,884) 7,019
Share-based payment expense 20 ( 167) -
Loss on disposal of subsidiary (164) -
Depreciation and amortisation expense (289) (309)
Other expenses (1,182) (720)
Other income 2,215 295
Foreign exchange (loss)/gain (569) 307
(Loss)/gain from fair value of financial instruments at fair value through profit or loss (121) 73
========================================================================================== ==== ========= ========
(Loss)/ Profit before net financing cost (37,172) 70,029
========================================================================================== ==== ========= ========
Finance cost 10 ( 27,945) (27,547)
Finance income 18,224 1,179
Share of profit of equity-accounted investments in joint ventures 22 2,613 2,012
========================================================================================== ==== --------- ========
(Loss)/ Profit before tax (44,280) 45,673
========================================================================================== ==== ========= ========
Income tax expense 11 19,701 (12,245)
========================================================================================== ==== ========= ========
(Loss)/Profit for the period (24,579) 33,428
========================================================================================== ==== --------- ========
Items that will not be reclassified to profit or loss
Gain on equity instruments designated at fair value through other comprehensive income - 36
========================================================================================== ==== ========= ========
Other comprehensive income for the period, net of tax - 36
Total comprehensive income for the period (24,579) 33,464
------------------------------------------------------------------------------------------ ---- --------- --------
(Loss)/Profit attributable to: (24,579) 33,428
------------------------------------------------------------------------------------------ ---- --------- --------
* ordinary equity holders of the Company (25,078) 32,606
* non-controlling interests 499 822
========================================================================================== ==== --------- ========
Total comprehensive income attributable to: (24,579) 33,464
------------------------------------------------------------------------------------------ ---- --------- --------
* ordinary equity holders of the Company (25,078) 32,642
* non-controlling interests 499 822
========================================================================================== ==== --------- ========
Cents Cents
Earnings per share
* Basic 12 (11) 15
* Diluted 12 (11) 15
========================================================================================== ==== ========= ========
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2023
Note 30 June 31 December
2023 2022
Unaudited Audited
EUR'000 EUR'000
---------------------------------------- ----- ---------- ------------
ASSETS
Investment property 3 2,864,290 2,945,460
Goodwill 12,349 12,349
Advances for investment property 5 6,102 4,393
Investments in joint ventures 22 72,645 67,967
Equity investments 7,629 7,521
Other long-term assets 1,724 1,784
Prepayments 210 226
Deferred tax asset 11 5,888 161
---------------------------------------- ----- ========== ------------
Non-current assets 2,970,837 3,039,861
---------------------------------------- ----- ========== ------------
Financial assets at fair value through
profit or loss 3,433 3,554
Trade and other receivables 14 21,919 22,337
Contract assets 4,598 9,967
Guarantees retained by tenants 99 98
Income tax receivable 371 840
Prepayments 6,679 2,430
Cash and cash equivalents 15 130,545 163,767
---------------------------------------- ----- ========== ------------
167,644 202,993
---------------------------------------- ----- ========== ------------
Investment property held for sale 3 .3 121,138 126,009
---------------------------------------- ----- ========== ------------
Total Current assets 288,782 329,002
---------------------------------------- ----- ========== ------------
Total assets 3,259,619 3,368,863
---------------------------------------- ----- ========== ------------
EQUITY AND LIABILITIES
Issued share capital 1,736,955 1,704,476
Treasury shares 20.2 (4,827) (4,859)
Fair value reserve of financial assets
at FVOCI (5,469) (5,469)
Share-based payment reserve 20 156 156
Retained earnings (96,123) (37,798)
---------------------------------------- ----- ========== ------------
Equity attributable to ordinary equity
holders of the Company 1,630,692 1,656,506
---------------------------------------- ----- ------------
Non-controlling interests 1,361 862
Total equity 1,632,053 1,657,368
Interest-bearing loans and borrowings 13 1,365,191 1,433,631
Deferred tax liability 11 138,958 154,866
Lease liabilities 3.2 19,426 19,861
Guarantees retained from contractors 2,834 1,995
Deposits from tenants 2,894 3,897
Trade and other payables 78 1,034
---------------------------------------- ----- ========== ------------
Non-current liabilities 1,529,381 1,615,284
---------------------------------------- ----- ========== ------------
Interest-bearing loans and borrowings 13 24,078 21,600
Guarantees retained from contractors 4,625 3,652
Trade and other payables 32,013 35,679
Contract liability 2,126 1,743
Other current financial liabilities 50 67
Current portion of lease liabilities 2,313 1,669
Deposits from tenants 20,221 17,477
Income tax payable 468 382
---------------------------------------- ----- ========== ------------
85,894 82,269
---------------------------------------- ----- ========== ------------
Liabilities directly associated with
the assets held for sale 3.3 12,291 13,942
---------------------------------------- ----- ========== ------------
Total current liabilities 98,185 96,211
---------------------------------------- ----- ========== ------------
Total equity and liabilities 3,259,619 3,368,863
---------------------------------------- ----- ========== ------------
The financial statements were approved by the Board of Directors
on 18 September 2023 and were signed on its behalf by:
Andreas Tautscher,
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2023
Issued Treasury Share-based Fair Retained Total Non- Total
share shares payment value earnings controlling Equity
capital reserve reserve interests
of
financial
assets
at FVOCI
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
====== ========== ========= ============ ========== ========= ========== ============ ==========
As at 1
January
2022 1,704,476 (4,917) 156 - 38,914 1,738,629 - 1,738,629
=============== ====== ========== ========= ============ ========== ========= ========== ============ ==========
- - -
Interim
dividends 18 - 58 - - (59,829) (59,771) - (59,771)
Shares issued
in
a newly
acquired
subsidiary - - - - - - 5 5
Settlement of
fair
value reserve
of
equity
instruments
designated at
FVOCI
in cash - - - (78) 78 - - -
Total
comprehensive
income for
the period - - - (5,391) (16,961) (22,352) 857 (21,495)
--------------- ------ ---------- --------- ------------ ---------- --------- ---------- ------------ ----------
As at 31
December
2022 1,704,476 (4,859) 156 (5,469) (37,798) 1,656,506 862 1,657,368
=============== ====== ========== ========= ============ ========== ========= ========== ============ ==========
Interim
dividends
paid in cash
and
scrip
dividend 17,18 32,617 32 - - (33,247) (598) - (598)
Transaction
costs
on issuance
of scrip
dividend
shares (138) - - - - (138) - (138)
Total
comprehensive
income for
the period - - - - (25,078) (25,078) 499 (24,579)
As at 30 June
2023 1,736,955 (4,827) 156 (5,469) (96,123) 1,630,692 1,361 1,632,053
=============== ====== ========== ========= ============ ========== ========= ========== ============ ==========
Issued Treasury Share-based Fair Retained Total Non- Total
share shares payment value earnings controlling Equity
capital reserve reserve interests
of
financial
assets
at FVOCI
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============ ========== ========= ============ ========== ========= ========== ============ ==========
As at 1 January
2022 1,704,476 (4,917) 156 - 38,914 1,738,629 - 1,738,629
================================= ========== ========= ============ ========== ========= ========== ============ ==========
Interim dividends - 28 - - (28,807) (28,779) - (28,779)
Shares issued in a
newly acquired subsidiary - - - - - - 5 5
Gain on equity instruments
designated at FV through
OCI - - - 36 - 36 - 36
Settlement of fair
value reserve of equity
instruments designated
at FVOCI in cash - - - (36) 36 - - -
Total comprehensive
income for the year - - - - 32,606 32,606 822 33,428
As at 30 June 2022 1,704,476 (4,889) 156 - 42,749 1,742,492 827 1,743,319
================================= ========== ========= ============ ========== ========= ========== ============ ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2023
30 June 30 June
Note 2023 2022
EUR'000 EUR'000
=================================================================================== ======= =========== ===========
(Loss)/profit before tax (44,280) 45,673
Adjustments to reconcile profit before tax to net cash flows
Fair value loss/(gain) on investment property 3.4 102,884 (7,019)
Loss on sale of investment property 97 654
Share-based payment expense 20 167 -
Depreciation and amortisation expense 289 309
Net movement in allowance for doubtful debts 16.2 769 9
Foreign exchange loss/(gain) 569 (307)
Loss/(gain) from fair valuation of financial instrument 121 (73)
Loss on disposal of subsidiary 3.5 164 -
Share of profit of equity-accounted joint ventures 22.4 (2,613) (2,012)
Net financing costs 9,721 26,368
----------------------------------------------------------------------------------- ------- ----------- -----------
Operating profit before changes in working capital 67,888 63,602
Decrease/(increase) in trade and other receivables 4,951 (4,888)
Decrease in trade and other payables (2,346) (2,699)
Interest paid (24,625) (29,286)
Interest received 1,168 207
Income tax paid (3,278) (974)
Interest received from joint ventures 173 250
----------- -----------
Cash flows from operating activities 43,931 26,212
=================================================================================== ======= ----------- -----------
Investing activities
Expenditure on investment property completed and under development or refurbishment (29,102) (33,642)
Payment for land acquisitions - (1,732)
Proceeds from disposal of subsidiary 4,000 501
Payment for acquisition of investment property - (5,584)
Proceeds from sale of investment property 2,278 6,331
Payments for equity investments (108) (483)
Investment in and loans given to joint ventures 22 (8,360) (17,173)
Proceeds from joint ventures for loans given 22 7,135 2,377
Payment for purchase of other long-term assets (232) (156)
=================================================================================== ------- ----------- -----------
Cash flows used in investing activities (24,389) (49,561)
=================================================================================== ------- ----------- -----------
Financing activities
Payment of transaction costs on issuance of scrip dividend shares (138) -
Proceeds for issuance of new shares in subsidiary from non-controlling interest - 5
Proceeds from interest-bearing loans and borrowings 13 96,500 146,825
Payments of interest-bearing loans and borrowings 13 (146,554) (324,545)
Payment of interim dividend (net of scrip) 18 (598) (28,779)
Payment for lease liability obligations 3.2 (2,079) (1,630)
Payment of bank loan arrangement fees and other financing costs (1,206) (2,152)
----------------------------------------------------------------------------------- ------- ----------- -----------
Cash flows from financing activities (54,075) (210,276)
=================================================================================== ======= ----------- -----------
Net decrease in cash and cash equivalents (34,533) (233,625)
Effect of exchange rate fluctuations on cash and bank deposits held 1,311 (414)
Cash and cash equivalents at the beginning of the period 15 163,767 418,748
=================================================================================== ------- ----------- ===========
Cash and cash equivalents at the end of the period 15 130,545 184,709
=================================================================================== ======= =========== ===========
1. Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited ('the Company' or
'Globalworth') is a company with liability limited by shares and
incorporated in Guernsey on 14 February 2013, with registered
number 56250. The registered office of the Company is at Anson
Court, La Route des Camps, St Martin, Guernsey GY4 6AD.
Globalworth, being a real estate Company, has had its ordinary
shares admitted to trading on AIM (Alternative Investment Market of
the London Stock Exchange) under the ticker "GWI" since 2013.
On 23 July 2021 Zakiono Enterprises Limited, a company wholly
owned by Tevat Limited, become a controlling shareholder by holding
60.6% share capital of the company through public offer. Tevat
Limited is a joint venture between CPI Property Group S.A. and
Aroundtown SA.
The Company's Eurobonds have been admitted to trading on the
official List of the Irish Stock Exchange in June 2017, March 2018
and July 2020, respectively. In addition, the Company's Eurobond
maturing in March 2025 has been admitted to trading on the
Bucharest Stock Exchange in May 2018. The main country of operation
of the Company is Guernsey. The Group's principal activities and
nature of its operations are mainly investments in real estate
properties, through both acquisition and development, as set out in
the Strategic Report section of the 2022 Annual Report.
Directors
The Directors of the Company are:
-- Dennis Selinas, Executive, Chief Executive Officer, Member of the Investment Committee
-- Martin Bartyzal, Independent Non-Executive, Chair of the
Board, Member of the Remuneration Committee
-- Norbert Sasse, Non-Executive, Member of the Investment Committee
-- Richard van Vliet, Independent Non-Executive, Member of the
Audit & Risk Committee and Remuneration Committee
-- Andreas Tautscher, Senior Independent Non-Executive, Chair of
the Audit and Risk Committee, Member of Nomination Committee
-- David Maimon, Independent Non-Executive, Member of the Audit
& Risk Committee and Investment Committee
-- Piotr Olendski, Independent Non-Executive, Chair of the
Remuneration Committee, Member of the Investment Committee
-- Daniel Malkin, Independent Non-Executive, Chair of the
Nomination Committee, Member of the Audit & Risk Committee
-- Favieli Stelian, Independent Non-Executive, Chair of the
Investment Committee, Member of the Remuneration Committee
-- Panico Theocharides, Non-Executive, Member of the Nomination Committee
Basis of Preparation and Compliance
The condensed consolidated financial statements of the Group (or
'financial statements' or 'consolidated financial statements') as
of and for the six-month period ended 30 June 2023 have been
prepared in accordance with International Accounting Standard (IAS)
34 "Interim Financial Reporting". These consolidated financial
statements are prepared in Euro ("EUR" or "EUR"), rounded to the
nearest thousand, being the functional currency and presentation
currency of the Company. These financial statements have been
prepared on a historical cost basis, except for investment
property, financial assets at fair value through profit or loss and
financial assets at fair value through other comprehensive income
which are measured at fair value.
These financial statements are prepared on a going concern
basis. The Directors believe that it is appropriate to adopt the
going concern basis in preparing the financial statements. The
Directors based their assessment on the Group's detailed cash flow
projections for the period up to 31 December 2024. These
projections take into account the available cash balance of the
Group as of 30 June 2023 of EUR130 million (see note 15), the
available undrawn financing facilities of EUR265 million, the
latest contracted rental income, 99% collections rate of rents
invoiced and due, anticipated additional rental income from new
possible lease agreements during the period covered by the
projections, modification of existing lease contracts as well as
repayment of contracted debt financing due until cash flow
projection period and value accretive CAPEX. During this
assessment, the Group has also considered, but not relied upon,
other options available to generate or conserve additional cash, to
reduce debt levels and to fund value accretive capital expenditure
and tenant incentives. These include but are not limited to
extension of debt falling due in projected period, the potential
disposal of assets; the opportunity to offer scrip alternative
instead of cash dividend and the potential raising of additional
funds .
Accounting policies
These consolidated financial statements apply the same
accounting policies, presentation and methods of calculation as
those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2022, which
were prepared in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the European Union ('EU') and the
Companies (Guernsey) Law 2008, as amended. The consolidated
financial statements included in this Interim Report should be read
in conjunction with the consolidated financial statements for the
year ended 31 December 2022.
Basis of Consolidation
These condensed consolidated financial statements comprise the
financial statements of the Company and its subsidiaries ('the
Group') as of and for the period ended 30 June. Subsidiaries are
fully consolidated (refer to note 23) from the date of acquisition,
being the date on which the Group obtains control, and continues to
be consolidated until the date when such control ceases. The
financial statements of the subsidiaries are prepared for the
period from the date of obtaining control to 30 June, using
consistent accounting policies. All intra-group balances,
transactions and unrealised gains and losses resulting from
intra-group transactions are eliminated in full. Non-controlling
interest represents the portion of profit or loss, other
comprehensive income and net assets not held by the Group and is
presented separately in the income statement and within equity in
the consolidated statement of financial position, separately from
net assets and profit and loss attributable to the equity holders
of the Company.
Foreign Currency transactions and balances
Foreign currency transactions during the period are initially
recorded in the functional currency at the exchange rates
approximating those ruling on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies other than
functional currency of the Company and its subsidiaries are
retranslated at the rates of exchange prevailing on the statement
of financial position date. Gains and losses on translation are
taken to profit and loss. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value
was determined.
2. Critical Accounting Judgements, Estimates and Assumptions
The preparation of consolidated financial statements in
conformity with IFRS requires management to make certain
judgements, estimates and assumptions that affect reported amounts
of revenue, expenses, assets and liabilities, and the accompanying
disclosures and the disclosures of contingent liabilities.
Selection of Functional Currency
The Company and its subsidiaries used their judgment, based on
the criteria outlined in IAS 21 "The Effects of Changes in Foreign
Exchanges Rates", and determined that the functional currency of
all the entities is the EUR. In determining the functional currency
consideration is given to the denomination of the major cash flows
of the entity e.g., revenues and financing.
As a consequence, the Company uses EURO (EUR) as the functional
currency, rather than the local currency Romanian Lei (RON) for the
subsidiaries incorporated in Romania, Polish Zloty (PLN) for the
subsidiaries in Poland and Pounds Sterling (GBP) for the Company
and the subsidiary incorporated in Guernsey.
Further additional critical accounting judgements, estimates and
assumptions are disclosed in the following notes to the financial
statements.
-- Investment Property, see note 3 and Fair value measurement
and related estimates and judgements, see note 4;
-- Commitments (operating leases commitments - Group as lessor), see note 6;
-- Taxation, see note 11;
-- Trade and other receivables, see note 14;
-- Share-based payment reserve, see note 20;
-- Investment in Joint Ventures, see note 22; and
-- Investment in Subsidiaries, see note 23.
This section focuses on the assets on the balance sheet of the
Group which form the core of the Group's business activities. This
includes investment property (both 100% owned by the Group and by
the Joint Ventures), related disclosures on fair valuation inputs,
commitments for future property developments and investment
property-leasehold and related lease liability recognised for the
right of perpetual usufruct of the land.
Further information about the property portfolio is described in
the Management Review section of the Interim Report.
3. Investment Property
Investment property - freehold
----------------------------------------------------------------------
Completed Investment Investment Land for Sub-total Investment TOTAL
investment property property further property
property under under development leasehold-
refurbishment development Right
of usufruct
of the
land
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ ---- ----------- ------------- ----------- ----------- ----------- -------------- -------------
1 January 2022 2,718,260 156,001 30,850 39,300 2,944,411 21,669 2,966,080
================== ==== =========== ============= =========== =========== =========== ============== =============
Investment
property
acquisition 3.1 5,584 - - - 5,584 - 5,584
Land acquired
during
the year 3.1 - - - 1,785 1,785 - 1,785
Subsequent
expenditure 24,897 11,512 12,430 1,258 50,097 - 50,097
Net lease
incentive
movement 15,411 1,664 134 - 17,209 - 17,209
Capitalised
borrowing
costs 10 - 119 46 - 165 - 165
Transfer to
completed
investment
property 18,600 - (14,700) (3,900) - - -
Disposal during
the
year (14,120) - - - (14,120) - (14,120)
Additions to
nominal
lease liability - - - - - 2,814 2,814
Fair value gain
/(loss)
on investment
property (69,078) (16,915) 690 1,757 (83,546) (608) (84,154)
------------------ ---- ----------- ------------- ----------- ----------- ----------- -------------- -------------
31 December 2022 2,699,554 152,381 29,450 40,200 2,921,585 23,875 2,945,460
------------------ ---- ----------- ------------- ----------- ----------- ----------- -------------- -------------
Subsequent
expenditure 24,052 6,987 321 25 31,385 31,385
Net lease
incentive
movement (4,894) (731) (1) - (5,626) (5,626)
Capitalised
borrowing
costs - - 144 - 144 144
Disposal during
the
year (2,219) - - (7,000) (9,219) (9,219)
Transfer to
completed
investment
property 4,000 - (4,000) - - -
Fair value gain
/(loss)
on investment
property (102,556) 6,044 467 (1,025) (97,070) (784) (97,854)
------------------ ---- ----------- ------------- ----------- ----------- ----------- -------------- -------------
30 June 2023 2,617,937 164,681 26,381 32,200 2,841,999 23,091 2,864,290
------------------ ---- ----------- ------------- ----------- ----------- ----------- -------------- -------------
3.1 Investment Property - Freehold
Judgements
Classification of Investment Property
Investment property comprises completed property, property under
construction or refurbishment and land bank for further development
which are not occupied substantially for use by, or in the
operations of, the Group, nor for sale in the ordinary course of
business, but are held primarily to earn rental income and for
capital appreciation. The Group considers that, when the property
is in a condition which will allow the generation of cash flows
from its rental, the property is no longer a property under
development or refurbishment but an investment property. If the
property is kept for sale in the ordinary course of the business,
then it is classified as inventory property.
Disposal of Investment Property not in the Ordinary Course of
Business
The Group enters into contracts with customers to sell
properties that are complete. The sale of completed property is
generally expected to be the only performance obligation and the
Group has determined that it will be satisfied at the point in time
when control transfers. For unconditional exchange of contracts,
this is generally expected to be when legal title transfers to the
customer. For conditional exchanges, this is expected to be when
all significant conditions are satisfied. The recognition and
measurement requirements in IFRS 15 are applicable for determining
the timing of derecognition and the measurement of consideration
(including applying the requirements for variable consideration)
when determining any gains or losses on disposal of non-financial
assets when that disposal is not in the ordinary course of
business.
Other Disclosures Related to Investment Property
Interest-bearing loans and borrowings are secured on investment
property freehold, see note 13 for details. Further information
about individual properties is disclosed in the asset management
review section in the Interim Report.
3.2 Investment property - Leasehold
Ri g h t o f P e r p e t u a l U s u f r u c t o f t h e L a n d
( t h e " RPU") or "right-of-use assets"
Under IFRS 16, right-of-use assets that meet the definition of
investment property are required to be presented in the statement
of financial position as investment property. The Group has the
right of perpetual usufruct of the land (the RPU) contracts for the
property portfolio in Poland which meet the definition of
investment property under IFRS 16. Therefore, the Group has
presented its 'Right-of-use assets' in the statement of financial
position under the line item "Investment property". The
corresponding lease liabilities are presented under the line item
'Lease liabilities' as non-current and the related short-term
portion are presented in the line item "Current portion of lease
liability".
3.3 Assets Held for Sale
Judgements and Assumptions Used in the Classification of
Investment Properties as Held for Sale
In 2021, the Group entered into a preliminary agreement to sell
the following properties: Batory Building 1, Bliski Centrum,
Philips, Nordic Park. and Warta Tower, for a total consideration of
EUR125.2 million. The original transaction date was delayed from
the initial disposal date as the buyer has to reorganise the
financing arrangement with a new consortium of banks, to provide
the secured financing for the SPA, as some banks in the initial
consortium organised by the buyer in September 2021 withdrew due to
the start of the war in Ukraine.
Warta Tower was sold in July 2023 (please refer to note 28 for
further details) and terminated the original SPA for remaining four
properties. The disposal of two properties is expected to conclude
by end of 2023 and the remaining during first half of 2024.
All the assets under held for sale group are available for
immediate sale in their present condition subject only to terms
that are usual and customary for sales of such assets. The
management has an active disposal programme with appropriate
approvals from the Board and is planning to complete the sale in
the near future by signing a new SPA with a new buyer(s).
The carrying values of investment properties held for sale at 30
June 2023 are fair valued after taking into account the existing
SPA and management's intention to actively market these assets for
sale at a price that is reasonable in relation to its current fair
value under present market conditions. Therefore, the Group
continues to classify the carrying value of this investment under
investment property held for sale and disclose separately the
liabilities directly associated with the assets held for
sale.
Note 31 December CAPEX Fair Movement 30 June
2022 value during the 2023
loss period
Completed Investment
property 3.1 116,199 159 (4,707) (4,548) 111,651
Investment property
- leasehold 3.2 9,810 - (323) (323) 9,487
--------------------------- ---- ------------ ------ -------- ------------ --------
Investment property
held for sale 126,009 159 (5,030) (4,871) 121,138
--------------------------- ---- ------------ ------ -------- ------------ --------
Lease liabilities 3.2 8,877 - - 109 8,986
Deferred tax liability 11 5,065 - - (1,760) 3,305
--------------------------- ---- ------------ ------ -------- ------------ --------
Liabilities directly
associated with the
assets held for sale 13,942 - - (1,651) 12,291
--------------------------- ---- ------------ ------ -------- ------------ --------
Net assets held
for sale 112,067 - - (3,220) 108,847
--------------------------- ---- ------------ ------ -------- ------------ --------
3.4 Investment property - Fair value gain/(loss)
30 June 2023 30 June 2022
Note EUR'000 EUR'000
Fair value (loss )/gain on investment property (102,884) 7,019
- Related to investment property -freehold 3.1 (97,854) 10,939
- Related to investment property -held for sale 3.2 (5,030) (3,920)
------------------------------------------------- ----- ------------- -------------
3.5 Sale of land plot
In the first half of 2023, the Group sold a fully owned
subsidiary, Nord 50 Herastrau Premium SRL, owning a non-core plot
of land of 3.2k sqm located in the northern part of Bucharest for
total consideration of EUR7.0 million out of which EUR4.0 million
was paid in cash and remaining EUR3.0 million is receivable in
January 2024. At the disposal date, the subsidiary held net asset
of EUR7.2 million thus result in a net loss of EUR0.2 million.
4. Fair Value Measurement and Related Estimates and Judgements
Investment Property Measured at Fair Value
The Group's investment property portfolio for Romania was valued
by Colliers Valuation and Advisory SRL and Cushman & Wakefield
LLP and for Poland by Knight Frank Sp. z o.o... All independent
professionally qualified valuers hold a recognised relevant
professional qualification and have recent experience in the
locations and segments of the investment properties valued using
recognised valuation techniques.
Our Property Valuation Approach and Process
The Group's investment department includes a team that reviews
twice in a financial year the valuations performed by the
independent valuers for financial reporting purposes. For each
independent valuation performed, the investment team along with the
finance team:
-- verifies all major inputs to the independent valuation report.
-- assesses property valuation movements when compared to the
initial valuation report at acquisition or latest period end
valuation report; and
-- holds discussions with the independent valuer.
The fair value hierarchy levels are specified in accordance with
IFRS 13 Fair Value Measurement. Some of the inputs to the
valuations are defined as "unobservable" by IFRS 13 and these are
analysed in the tables below. Any change in valuation technique or
fair value hierarchy (between level 1, level 2 and level 3) is
analysed at each reporting date or as of the date of the event or
variation in the circumstances that caused the change. As of 30
June 2023 (2022: same) the values of all investment properties were
classified as level 3 fair value hierarchy under IFRS 13 and there
were no transfers from or to level 3 from level 1 and level 2.
Valuation Techniques, Key Inputs and Underlying Management's
Estimations and Assumptions
Property valuations are inherently subjective as they are made
on the basis of assumptions made by the valuer. Valuation
techniques comprise the discounted cash flows, the sales comparison
approach and the residual value method.
Key information about fair value measurements, valuation
technique and significant unobservable inputs (Level 3) used in
arriving at the fair value under IFRS 13 are disclosed below:
Carrying value
----------------------- ---------- ------- ------------ ---------------- ----------------
Class of property 30 June 31 December Valuation Country Input 30 June 31 December
2023 2022 Technique 2023 2022
---------- ------- ------------
EUR'000 EUR'000
---------------------- ---------- ----------- ---------- ------- ------------ ---------------- ----------------
Completed Investment
Property
Completed held 1,360,590 1,422,550
for sale
Completed Investment Rent per EUR11.50 EUR11.50
Property (111,651) (116,199) DCF Poland sqm - EUR24.00 - EUR26.00
---------- ----------- ---------- -------
Discount 5.11%-12.72% 4.67%-12.30%
rate
---------- ----------- ---------- -------
Exit yield 5.45%-8.50% 5.45%-8.00%
---------- ----------- ---------- ------- ------------ ---------------- ----------------
Rent per EUR2.00 EUR2.00 -
1,328,100 1,350,000 DCF Romania sqm - EUR35.00 EUR35.00
Discount 8.00% - 8.25% - 9.50%
rate 9.75%
Exit yield 6.5% - 7.75% 6.25% - 7.75%
---------- ----------- ---------- ------- ------------ ---------------- ----------------
Sub-total 2,577,039 2,656,350
Sales value
40,900 43,205 SC Romania (sqm) EUR1,939 EUR1,934
---------- ----------- ---------- ------- ------------ ---------------- ----------------
2,617,939 2,699,554
====================== ========== =========== ========== ======= ============ ================ ================
Investment
property Rent per
under development 7,780 9,550 RM Poland sqm EUR13.50 EUR13.50
----------------------
Discount 6.92%-7.78% 6.76%-7.53%
rate
----------------------
Exit yield 6.65% 6.50%
Capex (EURm) EUR 27.05 EUR 26.64
========== =========== ========== ======= ============ ================ ================
Rent per EUR11.50 EUR4.60 -
15,200 19,900 RM Romania sqm - EUR15.50 EUR15.00
Discount 8.25% - 8.00% - 9.25%
rate 9.50%
Exit yield 6.5% - 7.75% 6.25% - 7.75%
Capex (EURm) EUR 75.68 EUR 77.43
---------- ----------- ---------- ------- ------------ ---------------- ----------------
Rent per EUR5.20
11,700 - DCF Romania sqm - EUR9.70 -
Discount 8.75% - -
rate 8.75%
Exit yield 7% -
---------------------- ---------- ----------- ---------- ------- ------------ ---------------- ----------------
Investment
property under Rent per EUR13.25 EUR13.50
refurbishment 164,680 152,380 DCF* Poland sqm -EUR14.25 -EUR15.00
====================== ---------- ----------- ---------- ------- ------------ ---------------- ----------------
Discount 6.84% - 7.49% - 8.67%
rate 8.36%
====================== ---------- ----------- ---------- ------- ------------ ---------------- ----------------
Exit yield 6.58%-6.80% 7.18%-8.06%
---------- ----------- ---------- ------- ------------ ---------------- ----------------
Capex (EURm) EUR 10.0 EUR 21.00
====================== ========== =========== ========== ======= ============ ================ ================
Land bank -
for further Sales value EUR 27 - EUR 27 -
development 9,500 9,500 SC Romania (sqm) EUR 2,215.19 EUR 2,215.19
====================== ---------- ----------- ---------- ------- ------------ ---------------- ----------------
Rent per EUR3.25-EUR18.50 EUR2.75-EUR18.00
sqm
======================
7.00% -
14,400 30,700 RM Romania Exit yield 8.25% 6.90% - 8.25%
====================== ========== =========== ========== ======= ============ ================ ================
TOTAL 2,841,199 2,921,585
====================== ========== =========== ========== ======= ============ ================ ================
*Properties were valued using RM as of 31 December 2022
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales
Comparison, RM: Residual Method
Sensitivity Analysis on significant estimates used in the
valuation
The assumptions on which the property valuations have been based
include, but are not limited to, rent per sqm (per month), discount
rate, exit yield, cost to complete, comparable market transactions
for land bank for further development, tenant profile for the
rented properties, and the present condition of the properties.
These assumptions are market standard and in line with the
International Valuation Standards ('IVS'). Generally, a change in
the assumption made for the rent per sqm (per month) is accompanied
by a similar change in the rent growth per annum and discount rate
(and exit yield) and an opposite change in the other inputs.
A quantitative sensitivity analysis, in isolation, of the most
sensitive inputs used in the independent valuations performed, as
of the statement of financial position date, are set out below:
EUR0.5 change in 25 bps change in 5% change in Capex EUR50 change in sales 2.5% change in vacancy
rental value per market yield prices per sqm (2) in Perpetuity (3)
month, per sqm (1)
Investment Year Country Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
property
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
========== ========= ========= ========= ========= ========= ========= ========= =============== ============
Completed 2023 Poland 36,670 (36,690) (58,450) 63,300 - - - - (31,400) -
2023 Romania 29,400 (29,400) (49,000) 53,000 - - 1,300 (1,200) (15,300) 12,500
===== ======== ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
2022 Poland 38,490 (38,530) (62,280) 67,730 - - - - (32,450)
2022 Romania 31,600 (31,200) (49,900) 54,600 - - 1,300 (1,300) (15,700) 12,400
=============== ===== ======== ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
Under 2023 Poland 1,410 (1,410) (1,600) 1,720 (1,320) 1,320 (1,060)
development 2023 Romania 3,000 (3,100) (3,600) 3,800 (3,400) 3,400 - - (200) 100
----- -------- ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
2022 Poland 1,450 (1,450) (1,670) 1,810 (1,320) 1,320 - - (1,060)
2022 Romania 2,200 (2,200) (1,800) 2,100 (1,900) 2,000 - - -
--------------- ----- -------- ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
Under 2023 Poland 5,160 (5,160) (7,130) 7,710 (4,030)
----- -------- ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
refurbishment 2022 Poland 4,760 (4,750) (6,120) 6,560 (210) 200 - - (3,740) -
---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
Further 2023 Poland - - - - - - - - -
development 2023 Romania 2,100 (2,000) (2,000) 2,300 (2,000) 2,200 400 (500) -
===== ======== ---------- --------- --------- --------- --------- --------- --------- --------- --------------- ------------
2022 Poland - - - - - - - - - -
2022 Romania 3,200 (3,100) (3,600) 4,000 (3,400) 3,500 400 (500) - -
=============== ===== ======== ========== ========= ========= ========= ========= ========= ========= ========= =============== ============
1. The quantitative sensitivity analysis was computed as EUR0.25
change in rental value per month, per sqm for four industrial
properties (2022: four industrial properties at EUR0.25 change in
rental value per month, per sqm).
2. The quantitative sensitivity analysis was computed as EUR1.5
change in sales price per sqm for industrial properties
portfolio.
3. The vacancy in perpetuity sensitivity analysis is not
followed for the Polish properties portfolio as this factor is
considered in the valuation methodology as part of yields and not a
variable in isolation.
4.1 Investment properties owned by Joint Ventures
Completed investment Investment property Land for further TOTAL
property under development development
Note EUR'000 EUR'000 EUR'000 EUR'000
------------------------- ---- ------------------------ ------------------------ ------------------------ -------
1 January 2022 37,400 13,700 35,600 86,700
========================= ==== ======================== ======================== ======================== =======
Land acquired during the
period 8 1,592 802 2,402
Subsequent expenditure 964 22,167 92 23,223
Net lease incentive
movement (17) 155 - 138
Capitalised borrowing
costs 92 336 - 428
Transfer to investment
property 34,700 (34,700) - -
Transfer to investment
property under
development - - (28) (28)
Fair value gain/(loss) on
investment property 553 5,150 434 6,137
31 December 2022 73,700 8,400 36,900 119,000
========================= ==== ======================== ======================== ======================== =======
Subsequent expenditure 1,400 1,823 224 3,447
Net lease incentive
movement (95) 110 - 15
Transfer to completed
investment property 13,200 (13,200) - -
Fair value gain/(loss) on
investment property 22.3 1,695 2,867 123 4,685
========================= ==== ========================
30 June 2023 22.3 89 ,900 0 37,247 127,147
========================= ==== ======================== ======================== ======================== =======
Sensitivity analysis on significant estimates used in the
valuation of investment properties owned by the joint venture
As disclosed in note 22, the Group also has investments in three
joint ventures where investment properties were valued at fair
value under the similar Group accounting policies by Colliers
Valuation and Advisory SRL, an independent qualified professional
valuer.
The table below describes key information about the fair value
measurements, valuation technique and significant unobservable
inputs (Level 3) used in arriving at the fair value under IFRS
13.
Carrying value Range
Class of Joint 30 June 2023 31 December Valuation Country Input 30 June 31 December
Venture 2022 technique 2023 2022
property
EUR'000 EUR'000
Completed EUR2.00 - EUR2.00 -
Investment 89,900 73,700 DCF Romania Rent per sqm EUR10.00 EUR9.00
property Discount rate 8.50% - 9.00% 8.50% - 9.00%
Exit yield 7.00% -7.25% 7.00% - 7.25%
Investment
property under
development - 8,400 RM Romania Discount rate - 8.75%
Exit yield - 7.25%
Capex (EURm) - EUR2.38
Land bank - for
further Sales value EUR30.00 - EUR30.00 -
development 37,247 36,900 SC Romania sqm EUR70.00 EUR70.00
TOTAL 127,147 119,000
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales
Comparison, RM: Residual Method
A quantitative sensitivity analysis (for properties owned by
joint ventures), in isolation, of the most sensitive inputs used in
the independent valuations performed, as of the statement of
financial position date, are set out below:
EUR0.25 change 25 bps change 5% change EUR1.5 change 2.5 % change
in rental in market in capex in sales in vacancy
value per yield prices per in perpetuity
Joint month, per sqm
Ventures sqm
Investment Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Year
Property Country EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
2023
- Completed Romania 2,400 (2,400) (3,200) 3,300 - - - - (1,300) 1,100
2022 Romania 2,300 (2,200) (2,500) 2,700 - - - - (1,000) 900
- Under 2023 - - - - - - - - - -
Romania
2022
development Romania 600 (500) (400) 400 (100) 100 - - - -
2023
- Further Romania - - - - - - 1,400 (1,400) - -
2022
development Romania - - - - - - 1,400 (1,400) - -
5. Advances for investment Property
30 June 31 December 2022
2023
EUR'000 EUR'000
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for investment properties under development 4,102 2,393
6,102 4,393
6. Commitments
Commitments for Investment Property
As at 30 June 2023 the Group committed to future capital
expenditure, for the next 12 months from the statement of financial
position date, in respect of completed investment property of
EUR14.4 million (2022: EUR10.9 million), investment property under
development of EUR0.02 million (2022: EUR0.7 million) and had
committed with tenants to incur incentives (such as fit-out works,
leasing fees and other lease incentives) of EUR9.8 million (2022:
EUR10.3 million).
The Group's Joint Ventures were committed to the construction of
investment property for the amount of EUR1.0 million at 30 June
2023 (2022: EUR1.3 million).
Judgements Made for Properties Under Operating Leases, being the
lessor
The Group has determined, based on an evaluation of the terms
and conditions of the arrangements, that it retains all the
significant risks and rewards of ownership of the investment
properties leased to third parties and, therefore, being the lessor
accounts for these leases as operating leases.
The duration of these leases is one year or more (2022: one year
or more) and rentals are subject to annual upward revisions based
on the consumer price index. The future aggregate minimum rentals
receivable under non-cancellable operating leases for investment
properties - freehold are as follows:
30 June 31 December
2023 2022
EUR'000 EUR'000
Not later than 1 year 185,623 169,880
Later than 1 year and not later than 5 years 545,890 426,748
Later than 5 years 201,399 152,843
932,912 749,471
This section quantifies the financial impact of the operations
for the period; further analysis on operations is presented in the
Financial Review section of the Interim Report. This section
includes the results and performance of the Group, including
earnings per share and EPRA Earnings. This section also includes
details about the Group's tax position in the period and deferred
tax assets and liabilities held at the period end.
7. Revenue
Revenue from asset management fees, marketing and other income
are recognised at the time the service is provided.
30 June 30 June 2022
2023 EUR'000
EUR'000
Rental income 80,527 75,214
Revenue from contracts with customers
Service charge income 36,870 39,888
Fit-out services income 1,187 1,301
Asset management fees 58 31
Marketing and other income 408 117
38,523 41,337
119,050 116,551
The total contingent rents and surrender premia recognised as
rental income during the period amount to EUR1.1 million (30 June
2022: EUR0.4 million) and EUR0.3 million (30 June 2022: nil),
respectively.
8. Operating Expenses
30 June 2023 30 June
EUR'000 2022
EUR'000
Property management, utilities and insurance 42,933 44,739
Property maintenance costs and other non-recoverable costs 958 825
Property expenses arising from investment property that generate rental income 43,891 45,564
Property expenses arising from investment property that did not generate rental income 11 11
Fit-out services costs 1,404 1,121
45,306 46,696
9. Administrative expenses
30 June 2023 30 June
EUR'000 2022
EUR'000
Directors' emoluments 366 463
Salary and remuneration costs 4,240 3,783
Accounting, secretarial and administration costs 302 240
Legal and other advisory services 842 592
Audit and non-audit services 491 182
Corporate social responsibility 64 256
Travel and accommodation 130 78
Marketing and advertising services 739 414
Post, telecommunication, and office supplies 292 252
Stock exchange expenses 270 224
Exceptional and non-recurring expenses 19 -
7,755 6,484
10. Finance Cost
30 June 2023 30 June
Note EUR'000 2022
EUR'000
Interest on secured loans 6,300 3,410
Interest on unsecured credit facilities 2,432 116
Interest on fixed rate bonds 14,034 18,230
Debt cost amortisation and other finance costs 10.1 4,075 4,368
Interest on lease liabilities 3.2 965 909
Bank charges 139 514
Gross finance cost 27,945 27,547
Less borrowing costs capitalised on investment property 144 156
28,089 27,703
The average capitalisation rate used to determine the borrowings
eligible for capitalisation was 3.29% (30 June 2022: 3.33%).
10.1 Debt cost amortisation and other finance costs
30 June 2023 30 June 2022
EUR'000 EUR'000
Debt issue cost amortisation - secured bank loans 338 298
Debt issue cost amortisation - unsecured facility 755 744
Debt issue cost amortisation - fixed rate bonds 2,982 3,326
4,075 4,368
11. Taxation
30 June 2023 30 June 2022
EUR'000 EUR'000
Current income tax expense 3,781 (572)
- Related to current period 4,360 777
- Related to prior period (579) (1,349)
Deferred income tax expense/(income) (23,482) 12,817
(19,701) 12,245
Current income tax expense
The Corporate income tax rate "CIT" applicable to the Company in
Guernsey is nil. The subsidiaries in Romania, Poland and Cyprus are
subject to tax on local sources of income. The taxable income
arising in each jurisdiction is subject to the following standard
corporate income tax rates: Romania at 16%, Cyprus at 12.5% and
Poland at 19% (however for small entities with revenue up to EUR2
million in the given tax year and entities starting a new business
for their first tax year of operation, under certain conditions,
are charged a reduced rate of 9%).
The Group's subsidiaries in Poland are subject to the minimum
tax, which is applied to income from ownership of certain
high-value fixed assets having an initial value of the asset
exceeding PLN 10 million at a rate of 0.035% per month. From 2019,
the taxpayer has a right to apply for the refund of previously paid
minimum tax which was not deducted from the advance corporate
income tax. This minimum tax can be set-off against CIT if CIT is
higher. The tax is applied only to leased buildings while no tax
applies on vacant buildings or on vacant space in partially
occupied buildings. Due to the COVID-19 pandemic, the minimum tax
scheme was suspended from 1 March 2020 until 31 May 2022 and the
Group's subsidiaries are subject to corporate income tax.
The Group's subsidiaries registered in Cyprus need to comply
with the National tax regulations; the most significant future
sources of income of the Group subsidiaries registered in Cyprus
are dividend and interest income. Dividend income is tax exempt
under certain conditions and interest income, however, is subject
to corporate income tax at the rate of 12.5% in Cyprus.
Judgements and Assumptions Used in the Computation of Current
Income Tax Liability
There are uncertainties in Romania and Poland where the Group
has significant operations and this is due to the interpretation of
complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income. Differences arising between the
actual results and the assumptions made, or future changes to such
assumptions, could necessitate future adjustments to tax income and
expense already recorded. Such differences of interpretation may
arise on a wide variety of issues depending on the conditions
prevailing in the respective company's domicile. In Romania and
Poland, the tax position is open to further verification for five
years and no subsidiary in Romania has had a corporate income tax
audit in the last five years while in Poland some entities are
currently under tax audit.
Deferred tax (asset)/liabilities
30 June 31 December 2022
2023 EUR'000
Note EUR'000
Deferred tax asset (5,888) (161)
Deferred tax liabilities directly associated with the assets held for sale 3.3 3,305 5,065
Deferred tax liabilities 138,958 154,866
136,375 159,770
Deferred income tax expense
Consolidated statement of financial Consolidated statement of
position comprehensive income
30 June 31 December 2022 30 June 30 June
2023 2023 2022
Net Deferred Tax EUR'000 EUR'000 EUR'000 EUR'000
Subsidiary sold during the year - - - -
Valuation of investment property
at fair value 155,079 181,070 (25,991) 9,326
Deductible temporary differences (1,950) (1,247) (703) 814
Interest expense and foreign
exchange loss on intra-group
loans (15,323) (18,743) 3,420 2,019
Discounting of tenant deposits
and long-term deferred costs 67 68 (1) (7)
Share issue cost recognised in
equity (7) (7) - -
Valuation of financial
instruments at fair value 50 72 (22) 52
Recognised unused tax losses (1,541) (1,443) (183) 613
136,375 159,770 (23,480) 12,817
As at 30 June 2023, the Group has unused assessed tax losses
carried forward of EUR56.7 million (2022: EUR49.7 million) in
Romania and EUR18.4 million (2022: EUR19.1 million) in Poland that
are available for offsetting against future taxable profits of the
entity which has the tax losses. The tax losses in Romania and
Poland can be carried forward over seven and five consecutive tax
years from the year of origination, respectively. In Poland, in any
particular tax year, the taxpayer may not deduct more than 50% of
the loss incurred in the year for which it was reported.
Additionally, starting from 2020, the taxpayer may utilise one-time
tax losses generated after 31 December 2018 in the amount of being
the greater of PLN 5 million or 50% of tax loss of any given fiscal
year in the following five fiscal years.
As of the statement of financial position date the Group had
recognised deferred tax assets of EUR1.5 million (2022: EUR1.4
million) in Romania and Poland for which deferred tax asset
recognition criteria were met under IAS 12, out of the total
available deferred tax assets of EUR12.5 million (2022: EUR10.7
million), calculated at the corporate income tax rates of 16% in
Romania and 19% (9% for small entities) in Poland,
respectively.
Expiry year 2023 2024 2025 2026 2027 2028 2029 2030 Total
Total available deferred tax assets (EURm) 1.7 4.4 0.7 2.3 0.9 1.3 0.5 0.8 12.6
From the above total available deferred tax assets, of EUR9.1
million (2022: EUR9.2 million) was not recognised (Romania and
Poland) in the income statement of the Group as the amount could
not be utilised from the future taxable income as per the criteria
under IAS 12.
Temporary non-deductible interest expenses and net foreign
exchange
There are also temporary non-deductible interest expenses and
net foreign exchange losses of EUR231.8 million, EUR40.9 million in
Romania and EUR190.9 million in Poland (2022: EUR276.5 million,
EUR38.9 million in Romania and EUR237.6 million in Poland) related
to intercompany and bank loans. Each year an amount up to 30% of
tax EBITDA (but not less than PLN 3 million in Poland) would become
tax deductible for each respective subsidiary, for which EUR15.2
million (EUR1.1 million in Romania and EUR14.1 million in Poland)
deferred tax asset was recorded (2022: EUR18.7 million, EUR1.1
million in Romania and EUR17.7 million in Poland).
In Romania such temporary non-deductible interest expenses can
be carried forward indefinitely until they are tax deductible as
per EBITDA threshold. However, in Poland interest expense which was
already paid prior to financial position date (and corresponding
net foreign exchange loss on such interest expense) can only be
utilised over five consecutive tax years from the year of
origination and unpaid interest expense (and corresponding net
foreign exchange loss on such interest expense) is available for
utilisation indefinitely. As of 31 December 2022, out of the total
EUR14.1 million (2022: EUR17.7 million) deferred tax asset on
interest expense and foreign exchange loss recognised in Poland,
EUR2.2 million (2022: EUR2.6 million) is available for utilisation
in five years from the origination.
Judgements, Estimates and Assumptions Used for Assessed Tax
Losses and Related Deferred Tax Assets
At each statement of financial position date, the Group assesses
whether the realisation of future tax benefits is sufficiently
probable to recognise deferred tax assets. This assessment requires
the exercise of judgement on the part of management with respect
to, among other things, benefits that could be realised from
available tax strategies and future taxable income, as well as
other positive and negative factors. Based on the above assessment,
the Group recognised deferred tax expense related to deferred tax
asset for fiscal losses carried forward for an amount of EUR2.2
million (2022: EUR2.0 million) representing derecognition of
deferred tax assets of EUR2 million (2022: derecognition of EUR1.5
million) in Romania, due to improved actual tax results and
transition of some subsidiaries to a taxable profit position, and
derecognition of deferred tax assets of EUR0.2 million (2022:
derecognition of EUR0.5 million) in Poland, due to improved actual
tax results.
The recorded amount of total deferred tax assets could be
reduced if estimates of projected future taxable income or if
changes in current tax regulations are enacted that impose
restrictions on the timing or extent of the Group's ability to
utilise future tax benefits.
12. Earnings Per Share
The following table reflects the data used in the calculation of
basic and diluted earnings per share per IFRS and EPRA
guidelines:
Number of shares issued % Of the Weighted average
Date Event Note ('000) period ('000)
1 Jan 2022 At the beginning of the year 221,373 221,373
30 June 2022 Shares in issue at period-end (basic) 221,373 221,373
Jan- Jun 2022 Effect of dilutive shares 97 54% 52
30 June 2022 Shares in issue at period-end (diluted) 221,470 221,425
1 Jan 2023 At the beginning of the year 221,373 221,373
30 June 2023 Shares in issue at year-end (basic) 235,679 228,287
Jan- Jun 2023 Effect of dilutive shares 150 124
30 June 2023 Shares in issue at period-end (diluted) 235,829 228,411
Unvested share option warrants of EUR2.85 million were not
included in basic or diluted number of shares being unvested and
anti-dilutive on issue date (refer to note 20.1 for further
information)
30 June 30 June
2023 2022
EUR'000 EUR'000
(Loss)/Profit attributable to equity holders of the Company for the basic and diluted earnings
per share (25,078) 32,606
IFRS earnings per share Cents Cents
- Basic (11) 15
- Diluted (11) 15
EPRA Earnings Per Share
The following table reflects the reconciliation between IFRS
earnings as per the statement of comprehensive income and EPRA
earnings (non-IFRS measure):
ff
30 June 2023 30 June 2022
Note EUR'000 EUR'000
Earnings per IFRS income statement (25,078) 32,606
Changes in value of investment property 102,884 (7,019)
Changes in value of ROFO 121 (73)
Losses/(income) on disposal of investment properties 3.4 (67) 585
Loan close-out costs (15,809) -
Changes in fair value of financial instruments and associated close-out costs (163) (283)
Acquisition costs on share deals - 7
Deferred tax charge in respect of above (26,013) 9,378
Non-controlling interests share of above 356 821
Adjustments in respect of joint ventures for above items (2,045) (1,694)
EPRA earnings attributable to equity holders of the Company 34,186 34,329
EPRA earnings per share Cents Cents
* Basic 15 16
* Diluted 15 16
This section focuses on financial instruments, together with the
working capital position of the Group and financial risk management
of the risks that the Group is exposed to at period end.
13. Interest-Bearing Loans and Borrowings
This note describes information on the material contractual
terms of the Group's interest-bearing loans and borrowings. For
more information about the Group's exposure to market risk,
currency risk and liquidity risks, see note 16.
30 June 31 December 2022
2023 EUR'000
EUR'000
Current
Secured loans and accrued interest 9,568 3,845
Unsecured loans and accrued interest 14,510 17,755
Sub-total 24,078 21,600
Non-current
Secured loans 443,270 353,978
Unsecured fixed rate Bonds and unsecured credit facilities 921,921 1,079,653
Sub-total 1,365,191 1,433,631
TOTAL 1,389,269 1,455,231
13.1 Key terms and conditions of outstanding debt
30 June 2023 31 December 2022
Carrying Carrying
Face value value Face value value
Facility Nominal interest rate Maturity date EUR'000 EUR'000 EUR'000 EUR'000
EURIBOR 1 month +
Loan 16 margin May 2025 11,615 11,613 12,220 12,218
FY18/25
Bond Fixed rate March 2025 453,449 451,086 562,522 558,569
Fixed/Floating rate
Loan 381 + margin May 2025 100,113 100,020 100,115 99,874
EURIBOR 3 month +
Loan 41 margin March 2029 85,848 85,308 85,552 84,959
EURIBOR 3 month +
Loan 43 margin December 2024 33,812 33,729 34,522 34,423
Loan 44/45 Fixed rate February 2027 62,293 62,089 62,295 62,062
Loan 46 Fixed rate November 2029 65,043 64,478 65,045 64,462
EURIBOR 3 month +
Loan 47 margin April 2024 - - 60,060 60,060
FY20/26
Bond Fixed rate July 2026 410,863 400,382 405,011 392,658
Loan 49 Fixed rate March 2029 457 457 449 449
Loan 50 Fixed rate March 2029 4,480 4,435 1,429 1,421
EURIBOR 6 month +
Loan 51 margin May 2028 85,198 84,211 85,162 84,076
EURIBOR 3 month +
Loan 53 margin December 2032 92,491 91,461 - -
Total 1,405,662 1,389,269 1,474,382 1,455,231
1 Loan 38 was drawn down in two tranches - 95% of the facility
carries a fixed interest rate and 5% carries a floating EURIBOR
3-month rate.
Unsecured corporate Bonds
In June 2023, the Company successfully completed a buyback of
EUR100 million nominal value of FY18/25 bonds by paying a cash
consideration of EUR83.2 million.
Financial covenants for unsecured corporate Bonds
Financial covenants on unsecured fixed rate bonds are calculated
on a semi-annual basis at 30 June and 31 December each year and
include the Consolidated Coverage Ratio, with minimum value of
200%, the Consolidated Leverage Ratio, with maximum value of 60%,
and the Consolidated Secured Leverage Ratio with a maximum value of
30%.
U n s e c u r e d Re v ol v i n g Credit F ac i l i t y
On 16 June 2022, the amount EUR60 million was drawn down in
order to strengthen the liquidity of the Group, for an initial
period of 1 month that was further extended for successive periods
of 1 month each, until 27 March 2023 when it was repaid in
full.
The RCF terms have been structured to, generally, align with the
Company's existing Euro Medium Term Note (EMTN) programme for fixed
rate Bonds (except for Consolidated Coverage Ratio, with minimum
value of 150%). In addition to the financial covenants applicable
for unsecured fixed rate bonds, the RCF facility contains a
supplementary financial covenant of the Total Unencumbered Assets
Ratio with minimum value of 125%.
13.2 Secured facilities
New facilities
On 17 March 2023, the Group drew down the EUR110 million a
ten-year term secured debt facility (Loan 53), which was signed
Erste Group Bank AG and Banca Comerciala Romana SA for refinancing
of the Company's logistics/light industrial portfolio in Romania.
Out of the EUR110 million, EUR96.5 million was drawn by the
subsidiaries of the Group and the difference of EUR13.5 million by
Black Sea Vision SRL, one of the Group's joint venture companies,
which was used the funds to refinance the existing debt held with
Banca Comerciala Romana SA and part of the debt held with the
Group.
Financial covenants
Financial covenants on secured loans are calculated based on the
individual financial statements of the respective subsidiaries and
subject to the following ratios:
-- gross loan-to-value ratio ("LTV") with maximum values ranging
from 60%-83% (2022: 60%-83%). LTV is calculated as the loan value
divided by the market value of the relevant property (for a
calculation date).
-- the debt service cover ratio ("DSCR") minimum values of 120%
(2022: 120%). DSCR is calculated for each respective credit
facility separately at a pre-determined date under each facility,
on the preceding 12-months historical ratio or projected future
12-months period ratio; and
-- minimum interest cover ratio ("ICR"), historic with minimum
values from 350% and projected with minimum values from 250% (2022:
250%), which was applicable to two properties as at 30 June 2023
(31 December 2022: same). Historic ICR is calculated, as Actual Net
Rental Income as a percentage of the Actual Interest Costs for the
twelve preceding months period from the calculation date. Projected
ICR is calculated as Projected Net Rental Income as a percentage of
the Projected Interest Costs for the twelve months period
commencing immediately after the date of the calculation.
Secured bank loans are secured by investment properties which
were recognised in the statement of financial position at fair
value of EUR965.3 million at 30 June 2023 (2022: EUR 794.4million)
and also carry pledges on rent and other receivable balances of
EUR4.3 million (2022: EUR7.4 million), VAT receivable balances of
EUR0.3million (2022: EUR0.8million) and a movable charge on the
respective bank accounts (refer to note 15).
The Group is in compliance with all financial covenants and
there were no payment defaults during the period ended 30 June 2023
(2022 : same). As of 30 June 2023, the Group had undrawn borrowing
facilities of EUR265 million (2022: EUR300 million) out of this
EUR215 million is available to draw until March 2024 and remaining
EUR50 million until December 2025.
13.3 Loan from non-controlling interest holders to a
subsidiary
In March 2022 and April 2022, North Logistics Hub SRL and
Logistics Hub Chitila SRL, two newly incorporated subsidiaries,
received a loan from minority shareholders for an amount of EUR0.4
million and EUR1.4 million respectively (loan 49 and loan 50),
representing 25% of CAPEX investment in the projects which were
financed through shareholders loans from the minority shareholder
in proportion to the equity interest in the Company. The loans are
unsecured and carry a fixed interest of 4%.
14. Trade and Other receivables
30 June 31 December
2023 2022
EUR'000 EUR'000
Rent and service charges receivable 17,101 19,201
VAT and other taxes receivable 940 2,616
Consideration receivable for the sale of land
(note 3.5) 3,000 -
Advances to suppliers for services 166 177
Sundry debtors 712 343
21,919 22,337
Rent and Service Charges receivable
Rent and service charges receivable are presented in the above
table net of an allowance for bad or doubtful debts of EUR4.6
million (2022: EUR4.1 million). Rent and service charges receivable
are non-interest-bearing and are typically due within 30-90 days
(see more information on credit risk and currency profile in note
16.2). For the terms and conditions for related party receivables,
see note 25.
15. Cash and Cash Equivalents
30 June 31 December
2023 2022
EUR'000 EUR'000
Cash at bank and in hand 110,248 151,343
Short-term deposits 20,297 12,424
Cash and cash equivalents at period end 130,545 163,767
Cash at bank and in hand includes restricted cash balances of
EUR5.6 million (2022: EUR7.8 million) and short-term deposits
include restricted deposits of EUR0.1 million (2022: EUR0.1
million). The restricted cash balance can be used to repay the
outstanding debts and repayment of deposits to tenants.
Details of cash and cash equivalents denominated in foreign
currencies are disclosed in note 20.
Short-term deposits are made for varying periods depending on
the immediate cash requirements of the Group and earn interest at
rates on Euro deposits ranging from minus 0.60% to positive 2.70%
(2022: minus 0.60% to positive 0.01%) per annum, for RON deposits
from 5.33% to 5.81% (2022: 0.68% to 6.25%) per annum and for PLN
deposits from 2.19% to 4.44% (2022: minus 0.24% to 4.56%) per
annum. For RON deposits highest interest rate was earned on
overnight deposits.
16. Financial Risk Management - Objective and Policies
The Group is exposed to the following risks from its use of
financial instruments:
-- Market risk (including currency risk, interest rate risk).
-- Credit risk.
-- Liquidity risk.
Refer to the Principal Risks & Uncertainties section on the
Annual Report, pages 58 to 64, for further details on the Group's
Risk Management Framework, covering Business Environment Risks,
Property Portfolio Risks, Financial, Financing & Liquidity
Risks and Regulatory Risks.
16.1 Market Risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices.
The Group's market risks arise from open positions in: (a)
foreign currencies; (b) interest-bearing assets and liabilities,
(c) investments in equity instruments - refer to note 17 and (d)
fair value of investment property - refer to note 4, to the extent
that these are exposed to general and specific market
movements.
16.1 a) Foreign currency risk
The Group has entities registered in several EU countries, with
the majority of the operating transactions arising from its
activities in Romania and Poland.
Therefore, the Group is exposed to foreign exchange risk,
primarily with respect to the Romanian Lei (RON) and Polish Zloty
(PLN). Foreign exchange risk arises in respect of those recognised
monetary financial assets and liabilities that are not in the
functional currency of the Group.
The Group's exposure to foreign currency risk was as follows
(based on nominal amounts):
30 June 2023 31 December 2022
Denominated in Denominated in
Amounts in EUR'000 equivalent value RON PLN GBP USD RON PLN GBP USD
ASSETS
Cash and cash equivalents 22,050 26,312 143 5 16,691 20,817 11 20
Trade and other receivables 12,144 8,879 - - 13,720 7,037 - -
Contract assets 3,299 1,153 - - 4,760 5,063 - -
Income tax receivable 33 338 - - 33 1,629 - -
Total 37,526 34,203 143 5 35,204 34,546 11 20
LIABILITIES
Trade and other payables 11,095 14,258 - - 16,028 12,984 - -
Lease liability - 30,725 - - - 30,407 - -
Income tax payable 256 215 - - 197 (6) - -
Guarantees from subcontractors 959 4,038 - - 959 2,672 - -
Deposits from tenants 3,784 6,973 - 5 3,784 7,081 - 5
Total 16,094 56,209 - 5 20,968 53,138 - 5
Net exposure 21,432 (19,527) 143 - 14,236 (18,592) 11 15
Foreign Currency Sensitivity Analysis
As of the statement of financial position date, the Group is
mainly exposed to foreign exchange risk in respect of the exchange
rate fluctuations of the RON and PLN. The following table details
the Group's sensitivity (impact on income statement before tax and
equity) to a 5% devaluation in RON, PLN and GBP exchange rates
against the Euro, on the basis that all other variables remain
constant.
The 5% sensitivity rate represents management's assessment of
the reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the
reporting date for a 5% appreciation in the Euro against other
currencies.
30 June 2023 31 December 2022
Profit or (loss) Equity Profit or (loss) Equity
All amounts in EUR'000
RON (1,072) (1,072) (712) (712)
PLN 976 976 930 930
USD - - (1) (1)
GBP (7) (7) (1) (1)
A 5% devaluation of the Euro against the above currencies would
have had an equal but opposite impact on the above currencies to
the amounts shown above, on the basis that all other variables
remain constant.
16.1 b) Interest Rate Risk
Interest rate price risk is the risk that the value of a
financial instrument will fluctuate due to changes in market
interest rates relative to the interest rate that applies to the
financial instrument. Interest rate cash flows risk is the risk
that the interest cost will fluctuate over time.
The Group's interest rate risk principally arises from
interest-bearing loans and borrowings. As at 30 June 2023, the
total outstanding balance of interest-bearing loans and borrowing
77.3% (2022: 80.7%) carry fixed rate interest, as a consequence,
the Group is exposed to fair value interest rate risk, which has
been disclosed under IFRS. As of 30 June 2023, the fair value of
such fixed rate debt was lower by EUR124.6 million (2022: higher
with EUR133.6 million) than the carrying value as disclosed in note
17.2 in the fair value hierarchy table.
Furthermore, as at 30 June 2023, from the total outstanding
interest-bearing loans and borrowing balance 22.7% (2022: 19.3%)
carry variable interest rate, which range from EURIBOR 1-month to
EURIBOR 6-month rates, see note 13 for details on each individual
loan. These loans expose the Group to cash flow interest rate risk
and in order to minimise this risk, the Group hedged 19.3% (2022:
21.6%) of such variable interest rate exposure with fixed-variable
interest rate swap instrument and interest rate cap instruments
with strike price range from minimum 3% to 4%.
Based on the Group's debt balances at 30 June 2023, an increase
or decrease of 100 basis points in the EURIBOR will result in an
increase or decrease (net of tax) of interest expense by EUR2.1
million per annum (2022: EUR2.8 million per annum), with a
corresponding impact on equity for the same amount,
respectively.
16.2 Credit Risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group's policy is to trade with recognised and
creditworthy third parties. The Group's exposure is continuously
monitored and spread amongst approved counterparties. The Group's
maximum exposure to credit risk, by class of financial asset, is
equal to their carrying values at the statement of financial
position date.
30 June 2023 31 December 2022
Note EUR'000 EUR'000
Financial assets measured at fair value through profit or loss 3,433 3,554
Loan receivable from joint venture 22 48,689 47,324
Trade receivables - net of provision 14 17,101 19,201
Contract assets 14 4,598 9,967
Other receivables 712 343
Guarantees retained by tenants 99 98
VAT and other taxes receivable 14 940 2,616
Income tax receivable 371 840
Cash and cash equivalents 15 130,545 163,767
206,488 247,710
Financial assets at fair value through profit or loss and other
comprehensive income
The Group places funds in financial instruments issued by
reputable real estate companies with high credit worthiness.
Co n t r a c t a s s et s a n d Tr ad e Re c e i v a bl e s
A trade receivable is recognised if an amount of consideration
that is unconditional is due from the customer (only the passage of
time is required before payment of the consideration is due).
There is no significant concentration of credit risk with
respect to contract assets and trade receivables, as the Group has
a large number of tenants, most of which are part of multinational
groups, internationally dispersed, as disclosed in the Interim
Report. For related parties, including the joint ventures, it is
assessed that there is no significant risk of non-recovery.
Es tim a t e s a n d as s u m p ti o n s us e d f o r i mp a i r
m e n t o f tr ad e re c e i v a bl e s a n d co n t r a c t a s s
et s
The Group's trade receivables do not contain any financing
component and mainly represent lease receivables. Therefore, the
Group applied the simplified approach under IFRS 9 and measured the
loss allowance based on a provision matrix that is based on
historical collection and default experience adjusted for forward
looking factors (such as macroeconomic forecasts of unemployment,
economic sentiment indicator, real GDP growth, inflation rate) in
order to estimate the provision on initial recognition and
throughout the life of the receivables at an amount equal to
lifetime ECL (Expected Credit Losses). The assessment is performed
on a six-month basis and any change in original allowance will be
recorded as gain or loss in the income statement.
The movements in the provision for impairment of receivables
during the respective periods were as follows:
30 June 31 December 2022
2023 EUR'000
EUR'000
Opening balance 4,112 5,776
Provision for specific doubtful debts 862 263
Reversal of provision for doubtful debts (163) (219)
Utilised - (1,658)
Foreign currency translation income (190) (50)
Closing balance 4,621 4,112
The analysis by credit quality of financial assets, cumulated
for rent, service charge and property management, is as
follows:
30 June 2023 (EUR'000) Neither past due nor impaired due but not impaired
<90 days <120 days <365 days >365 days TOTAL
Trade and other receivables - gross 9,936 5,548 710 1,573 3,954 21,721
Less: Specific provision - 140 22 143 3,954 4,260
Less: Expected credit loss 4 198 7 152 - 361
Carrying amount 9,932 5,210 681 1,278 - 17,101
Expected credit loss rate 0.0% 3.8% 1.0% 11.9% -
31 December 2022 (EUR'000) Neither past due nor impaired due but not impaired
<90 days <120 days <365 days >365 days TOTAL
Trade and other receivables - gross 11,785 6,334 162 1,416 3,616 23,313
Less: Specific provision - 80 11 44 3,616 3,751
Less: Expected credit loss 4 198 7 152 - 361
Carrying amount 11,781 6,056 144 1,220 - 19,201
Expected credit loss rate 0.0% 3.3% 4.9% 12.5% -
The Group considers that a default on a trade receivable occurs
when the counterparty fails to make contractual payments within 90
days of when they fall due. The customer balances which were
overdue but for which no specific loss allowance was recorded are
due to the fact that the related customers committed and started to
pay the outstanding balances subsequent to the year-end. Further
deposits payable to tenants may be withheld by the Group in part or
in whole if receivables due from the tenant are not settled or in
case of other breaches of contractual terms.
VAT and ot h e r ta x e s re c e i v a b l e
This balance relates to corporate income tax paid in advance,
VAT and other taxes receivable from the tax authorities in Romania
and Poland. The balances are not considered to be subject to
significant credit risk as all the amounts receivable from
Government authorities are secured under sovereign warranty.
Cash and cash equivalents
The credit risk on cash and cash equivalents is very small,
since the cash and cash equivalents are held at reputable banks in
different countries. The most significant part of the cash and cash
equivalents balance is kept at the company level with international
banks having credit rating profile (assigned by S&P, Moody's or
Fitch) in upper medium grade range (i.e. A+ to A- for long-term and
P-2, F1, F2 for short-term) for 64% (2022: 60%) of the cash and
cash equivalents balance of the Group, in lower medium grade range
(BBBs) for 36% (2022: 40%) of the cash and cash equivalents balance
of the Group and insignificant amounts (2022: same) in
non-investment grade. Surplus funds from operating activities are
deposited only for short-term period, which are highly liquid with
reputable institutions.
Lo a ns r e c e i v a b l e f r o m j o i n t v e n t u r e
s
The outstanding loan balance is neither past due nor impaired.
Loans receivable from joint ventures are considered to be low
credit risk where they have a low risk of default and the issuer
has a strong capacity to meet its contractual cash flow
obligations.
Financial instruments for which Fair values are disclosed
Set out below is a comparison by class of the carrying amounts
and fair values of the Group's financial instruments, other than
those with carrying amounts that are reasonable approximations of
their fair values.
Fair value hierarchy
Carrying Level Level 2 Level Total
amount 1 3
Year EUR000 EUR000 EUR000 EUR000 EUR000
Interest-bearing loans
and borrowings
(Note 14) 2023 1,389,269 674,120 - 552,113 1,266,233
2022 1,455,231 800,385 - 521,275 1,321,660
Other current financial
liabilities 2023 50 50 - 50
2022 67 - 67 - 67
Financial asset at fair
value through profit
or loss 2023 3,433 - 3,433 3,433
2022 3,554 - - 3,554 3,554
Lease liabilities (note
3) 2023 21,739 - 21,739 21,739
2022 21,530 - - 21,530 21,530
The fair value of financial liabilities is included at the
amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. When determining the fair values of interest-
bearing loans and borrowings and lease liabilities the Group used
the DCF method with inputs such as discount rate that reflects the
issuer's borrowing rate as at the statement financial position
date. Specifically, for the Eurobonds, their fair value is
calculated on the basis of their quoted market price. The own
non-performance risk at the statement of financial position date
was assessed to be insignificant.
16.3 Liquidity Risk
The Group's policy on liquidity is to maintain sufficient liquid
resources to meet its obligations as they fall due. Ultimate
responsibility for liquidity risk management rests with management.
The Group manages liquidity risk by maintaining adequate cash
reserves and planning and close monitoring of cash flows. The Group
expects to meet its financial liabilities through the various
available liquidity sources, including a secure rental income
profile, further equity raises and in the medium term, debt
refinancing. The table below summarises the maturity profile of the
Group's financial liabilities based on contractual undiscounted
payments.
The below table presents the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group
can be required to pay and includes both interest and principal
cash flows. As the amount of contractual undiscounted cash flows
related to bank borrowings is based on variable rather than fixed
interest rates, the amount disclosed is determined by reference to
the conditions existing at the year end, that is, the actual spot
interest rates effective at the end of the year are used for
determining the related undiscounted cash flows.
Contractual payment term Difference
from
carrying
amount
All amounts in EUR'000 <3 months 3 months- 1 year 1-5 years >5 years Total Carrying amount
30 June 2023
Interest-bearing loans
and borrowings 17,373 33,683 1,281,212 238,649 1,570,917 (181,648) 1,389,269
Lease liability - 2,314 13,614 113,914 129,842 (99,117) 30,725
Trade payables and
guarantee retained from
contracts (excluding
advances from
customers) 22,716 8,686 2,713 161 34,276 (458) 33,818
Other payables 16 - - - 16 - 16
Deposits from tenants 18,718 1,522 2,556 924 23,720 (605) 23,115
Total 58,823 46,205 1,300,095 353,648 1,758,771 (281,828) 1,476,943
Contractual payment term Difference
from carrying
amount
All amounts in EUR'000 <3 months 3 months- 1 year 1-5 years >5 years Total Carrying amount
31 December 2022
Interest-bearing loans
and borrowings 19,897 26,082 1,335,002 235,216 1,616,197 (160,966) 1,455,231
Lease liability - 2,151 13,614 113,914 129,679 (99,272) 30,407
Trade payables and
guarantee retained from
contracts (excluding
advances from
customers) 21,235 12,963 2,948 16 37,162 260 37,422
Other payables 20 - - - 20 - 20
Deposits from tenants 17,303 186 3,336 1,251 22,076 (702) 21,374
Total 58,455 41,382 1,354,900 350,397 1,805,134 (260,680) 1,544,454
Other current financial liabilities
Other current financial liabilities represented the
mark-to-market value of CAP instruments for covering the increase
of 3-month EURIBOR above strikes of 3 and 4% interest rate capes,
obtained from the counterparty financial institution and were
valued at EUR0.05 million at 30 June 2023 (2022: EUR0.07 million).
The fair value of derivative was developed in accordance with the
requirements of IFRS 13.
A financial income of EUR0.3 million (30 June 2022: EUR0.3
million), representing the fair value movement during the period,
was recognised in the income statement for the period ended 30 June
2023.
The Group assessed that the fair values of other financial
assets and financial liabilities, such as trade and other
receivables, guarantees retained by tenants, cash and cash
equivalents, income tax receivable and payables, trade and other
payables, guarantees retained from contractors and deposits from
tenants, approximate their carrying amounts largely due to
short-term maturities and low transaction costs of these
instruments as of the statement of financial position date.
The disclosures in this section focus on dividend distributions,
the share schemes in operation and the associated share-based
payment charge to profit or loss. Other mandatory disclosures, such
as details of capital management, are also disclosed in this
section.
17. Issued share capital
30 June 2023 31 December
2022
EUR'000 Number EUR'000 Number
Opening balance 1,704,476 222,427 1,704,476 222,427
Share issued for scrip dividends 32,617 14,305 - -
Transaction costs on issuance of shares
in cash (138) - - -
Closing balance 1,736,955 236,732 1,704,476 222,427
On 8 March 2023 , the Company offered a scrip dividend
alternative to the interim dividend so that qualifying shareholders
can elect to receive new ordinary shares at a reference price of
EUR2.28 per scrip dividend share instead of cash dividend of
EUR0.15 per share. The reference price was determined on the basis
of a discount of 20% to the average of the middle market quotations
on the five consecutive dealing days from and including the
Ex-Dividend Date.
Approximately 98.1% of the qualifying shareholders (excluding
shares held in treasury), elected to receive scrip dividend shares
in respect of their entitlement to the interim dividend resulting
in the issuance of 14,305,676 new shares on 18 April 2023 to
qualifying shareholders.
18. Dividends
30 June 31 December
2023 2022
EUR'000 EUR'000
Distributed during the period
First Interim dividend 2023: EUR0.15 per share
First Interim dividend 2022: EUR0.13 per share
Second Interim dividend 2022: EUR0.14 per share 33,247 59,771
On 8 March 2023, the Board of Directors of the Company approved
the distribution of an interim dividend in respect of the six-month
financial period ended 31 December 2022 of EUR0.15 per ordinary
share.
19. Financial Position Key Performance Measures
The net assets value ("NAV"), EPRA Net Reinstatement Value
("EPRA NRV") and the numbers of shares used for the calculation of
each key performance measure on the financial position of the Group
and the reconciliation between IFRS and EPRA measures are shown
below.
30 June 31 December 2022
2023 EUR'000
Note EUR'000
Net assets attributable to equity holders of the Company 1,630,692 1,656,506
Number of ordinary shares used for the calculation of: Number ('000) Number ('000)
* NAV per share 12 235,679 221,373
* Diluted NAV and EPRA NRV per share 12 235,829 221,470
EUR EUR
NAV per share 6.92 7.48
Diluted NAV per share 6.91 7.48
30 June 31 December 2022
EPRA NRV Per Share 2023 EUR '000
Note EUR'000
Net assets attributable to equity holders of the Company 1,630,692 1,656,506
Exclude:
V) 50% of deferred tax in relation to fair value gains of IP 11 155,079 181,070
VI) Fair value of financial instruments 16.3 (357) (194)
VII) Goodwill as a result of deferred tax (5,697) (5,697)
IX) Adjustment in respect of Joint venture and NCI for above
items 1,433 3,798
EPRA NRV attributable to equity holders of the Company 1,781,150 1,835,483
EUR EUR
EPRA NRV per share 7.55 8.29
20. Share-Based Payment Reserve
30 June 2023 31 December
2022
Share-based payments reserve Note EUR'000 EUR'000
Executive share option plan reserve 20.1 156 156
30 June 30 June
2023 2022
Share-based payments expense Note EUR'000 EUR'000
Expense during the period 167 -
20.1 Executive Share Option Plan
Under the plan, the Directors of the Group were awarded share
option warrants as remuneration for services performed. The share
options granted to the Directors of the Group are equity
settled.
In 2013, the Group granted warrants to the Founder (currently
held by Zakiono Enterprises Limited) and the Directors which
entitle each holder to subscribe for ordinary shares in the Company
at an exercise price of EUR5.00 per share if the market price of an
ordinary share, on a weighted average basis over 60 consecutive
days, exceeds a specific target price and the holder is employed on
such date. The contractual term of each warrant granted is 10
years. There are no cash settlement alternatives, and the Group
does not have the intention to offer cash settlement for these
warrants.
Under the share option warrants scheme, Zakiono Enterprises
Limited had the right to subscribe in two tranches of 2.83 million
ordinary shares in total (1.415 million for each tranche) at an
exercise price of EUR5.00 per share if the market price of an
ordinary share, on a weighted average basis over 60 consecutive
days, exceeds EUR10.00 per share and EUR12.50 per share for each
tranche respectively. As defined per IAS 33 "Earnings per share"
ordinary shares to be issued for each unvested share option
warrants were not included in a basic or diluted number of shares
as disclosed in note 12. The fair value of the warrants was
estimated at the grant date (i.e. July 2013) at EUR0.073 per share.
The warrants were exercisable in whole or in part during a period
ending in 10 years from the date of admission.
On 9 July 2021, two Non-Executive Directors exercised 20,000
vested warrants at EUR5.00 per share under the contractual terms
for an amount of EUR0.1 million and a corresponding EUR2,000
share-based payment reserve was also transferred to share capital.
These warrants were vested during 2017 at the weighted average
market share price of EUR7.71. There have been no cancellations or
modifications to any of the plans during the period ended 30 June
2023.
The following table analyses the total cost of the executive
share option plan (Warrants), together with the number of options
outstanding:
30 June 2023 31 December 2022
Cost Number Cost Number
EUR'000 ('000) EUR'000 ('000)
Closing balance 156 - 156 -
Weighted average remaining contractual life (years) 0.08 0.58
There were no warrants vested and exercisable at 30 June 2023
(31 December 2022: same)
20.2 Tr e a su r y s h a r e s
30 June 2023 31 December 2022
Amount Number Amount Number
EUR'000 ('000) EUR'000 ('000)
Opening balance (4,859) 1,056 (4,917) 1,053
Dividend on treasury shares held
by a subsidiary 32 - 58 -
Closing balance (4,827) 1,056 (4,859) 1,053
21. Capital Management
The Company has no legal capital regulatory requirement. The
Group's policy is to maintain a strong equity capital base so as to
maintain investor, creditor and market confidence and to sustain
the continuous development of its business. The Board considers
from time to time whether it may be appropriate to raise new
capital by a further issue of shares. The Group monitors capital
primarily using an LTV ratio and manages its gearing strategy to a
long-term target LTV of less than 40%.
The LTV is calculated as the amount of outstanding debt (Group's
debt balance plus 50% of joint ventures' debt balance), less cash
and cash equivalents (Group cash balance plus 50% of joint
ventures' cash balance), divided by the open market value of its
investment property portfolio (Group's investment property-
freehold portfolio plus 50% of joint ventures' investment property
- freehold value) as certified by external valuers. The future
share capital raise or debit issuance are influenced, in addition
to other factors, by the prevailing LTV ratio.
30 June 31 December
Note 2023 2022
EUR'000 EUR'000
Interest-bearing loans and borrowings (face
value) 13 1,405,662 1,474,382
Less:
Cash and cash equivalents 15 130,545 163,767
Group Interest-bearing loans and borrowings
(net of cash) 1,275,117 1,310,615
Add:
50% Share of Joint Ventures interest-bearing
loans and borrowings 14,518 11,764
50% Share of Joint Ventures cash and cash
equivalents (1,655) (1,524)
Combined Interest-bearing loans and borrowings
(net of cash) 1,287,980 1,320,856
Group open market value as of financial position
date 2,952,850 3,037,784
Add:
50% Share of Joint Ventures open market value
as of financial position date 22 63,574 59,500
Open market value as of financial position
date 3,016,423 3,097,284
Loan-to-value ratio ("LTV") 42.70% 42.70%
Since the carrying value of the lease liability closely matches
the fair value of the investment property - leasehold at 30 June
2023 under the applicable accounting policy as per IFRS 16, both
asset and liability, related to the right of perpetual usufruct of
the lands, are excluded from the above calculation.This section
includes details about Globalworth's subsidiaries, if any new
business and /or new properties acquired, investment in joint
ventures and related impact on the statement of comprehensive
income and cash flows.
22. Investment in Joint ventures
30 June 31 December
Investments Note 2023 2022
EUR'000 EUR'000
Opening balance 20,643 16,917
Investments in the joint ventures (including acquisition costs) 700 507
Share of profit during the period 2,613 3,219
Sub-total 23,956 20,643
Loans receivable from joint ventures
Opening balance 47,324 31,991
Loan provided to the joint ventures 7,660 28,033
Loan repayments from the joint ventures (7,135) (13,429)
Interest repayment from the joint ventures (173) (797)
Interest income on the loans to joint ventures 1,013 1,526
Sub-total 48,689 47,324
TOTAL 72,645 67,967
22.1 Investments in the Joint Ventures
In April 2019, the Group's subsidiary, Globalworth Holdings
Cyprus Limited, entered into a joint venture agreement with
Bucharest Logistic Park SRL, through which it acquired a 50%
shareholding interest (EUR0.09 million investment) in Global
Logistics Chitila SRL ("Chitila Logistics Hub"), an unlisted
company in Romania, owning land for further development, at
acquisition date, in Chitila, Romania. As at 30 June 2023 and 31
December 2022, the investment properties were classified under the
industrial segment for the Group.
In June 2019, the Group's subsidiary, Globalworth Holdings
Cyprus Limited, entered into a joint venture agreement with Mr.
Sorin Preda through which it acquired a 50% shareholding interest
(EUR6.36 million investment) in Black Sea Vision SRL ("Constanta
Business Park"), an unlisted company in Romania, owning land for
further development, at acquisition date, in Constanta, Romania. As
at 30 June 2023 and 31 December 2022, the investment properties
were classified as industrial segment for the Group.
In September 2022, the Group's subsidiary, Globalworth Holdings
Cyprus Limited, entered into a joint venture agreement with Global
Vision Business Development SRL through which it acquired a 50%
shareholding interest (EUR0.07 million investment) in Targu Mures
Logistics Hub SRL ("Targu Mures Logistics Hub"), an unlisted
company in Romania, owning land for further development, at
acquisition date, in Mures, Romania. As at 30 June 2023 and 31
December 2022 the land was classified as an industrial segment for
the Group.
Judgements and assumptions used for Joint Ventures
At the time of acquisition, the Group considered whether the
acquisition represented an acquisition of a business or an
acquisition of an asset. In the absence of an integrated set of
activities required for a business other than the property, the
Group concluded the acquisition of the joint venture does not
represent a business therefore accounted for it as an acquisition
of a group of assets and liabilities. The cost to acquire the
entity is allocated between the identifiable assets and liabilities
of the entity based upon their relative fair values at the
acquisition date and no goodwill or deferred tax is recognised.
Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing
control. The considerations made in determining significant
influence or joint control are similar to those necessary to
determine control over subsidiaries. Following such assessment, the
Group's investment was classified as a joint venture. Until the
disposal date, the carrying amount of the investment in the joint
venture was recorded at cost plus the change in the Group's share
of net assets of the joint venture until the disposal date.
22.2 Summarised Statements of Financial Position of the Joint
Ventures as at reporting date
The summarised statements of financial position of the joint
ventures are disclosed below, which represents the assets and
liabilities recognised in the financial statements of each joint
venture without adjusting of the balance payable to or receivable
from the Group. Transactions and balances receivable or payable
between the Group and the individual joint ventures are disclosed
in note 25.
30 June 30 June 30 June 30 June 31 31 December 31 December 31 December
2023 2023 2023 2023 December 2022 2022 2022
2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Tg Mures Combined Constanta Chitila Tg Mures Combined
Business Logistics Business Logistics
Park Hub Park Hub
Completed
investment
property 27,100 49,600 13,200 89,900 26,300 47,400 - 73,700
Investment
property under
development/
Land bank - for
further
development 37,247 - - 37,247 36,900 - 8,400 45,300
Other non-current
assets 26 410 135 571 470 41 8 519
Total non-current
assets 64,373 50,010 13,335 127,718 63,670 47,441 8,408 119,519
Other current
assets 684 951 945 2,580 751 350 1,218 2,319
Cash and cash
equivalents 1,982 1,280 47 3,309 1,134 1,437 476 3,047
Total assets 67,039 52,241 14,327 133,607 65,555 49,228 10,102 124,885
Loans payable to
the Group 10,802 25,937 11,950 48,689 14,209 25,138 7,976 47,323
Bank loans (face
value) 13,372 15,448 - 28,820 7,598 15,878 - 23,476
Bank loans
(amortised cost) (158) (110) - (268) (107) (115) - (222)
Loan from Joint
venture partner 636 2,551 306 3,493 584 3,196 302 4,082
Deferred tax
liability 6,003 1,269 201 7,473 6,008 871 - 6,879
Other non-current
liabilities 127 73 200 176 106 282
Total non-current
liabilities 30,782 45,168 12,457 88,407 28,468 45,074 8,278 81,820
Loan from Joint
venture partner - 28 - 28 - 28 - 28
Other current
liabilities 568 427 234 1,229 1,477 716 2,607 4,800
Current portion
of bank loans 142 73 - 215 52 - - 52
Total liabilities 31,492 45,696 12,691 89,879 29,997 45,818 10,885 86,700
Net assets 35,547 6,545 1,636 43,728 35,558 3,410 (783) 38,185
The Group has signed loan facilities amounting to EUR78.3
million (2022: EUR63.3 million) with Chitila Logistics Hub and
Constanta Business Park joint ventures to fund the development
costs of the projects, out of which EUR33.0 million was available
for future drawdown as of 30 June 2023 (2022: EUR33.5 million).
Further details about the fair valuation of investment property
owned by the Joint Ventures are disclosed in note 4.1.
22.3 Summarised Statements of Financial Performance of the Joint
Ventures
The table below includes individual and combined income
statements of the joint venture extracted from the individual
financial statements of each joint venture without adjusting for
the transactions with the Group.
30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2023 2023 2023 2023 2022 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Tg Mures Combined Constanta Chitila Tg Mures Combined
Business Logistics Business Logistics
Park Hub Park Hub
Revenue 1,383 1,820 286 3,489 610 1,198 - 1,808
Operating
expenses (428) (951) (135) (1,514) (208) (446) - (654)
Administrative
expenses (47) (62) (49) (158) (28) (42) - (70)
Fair value
gain/(loss) on
investment
property (353) 2,170 2,867 4,684 2,932 1,140 - 4,072
Foreign exchange
loss (5) (6) (17) (28) - (42) - (42)
Profit before net
financing cost 550 2,971 2,952 6,473 3,306 1,808 - 5,114
Finance expense (593) (842) (332) (1,767) (124) (355) - (479)
Finance income 27 3 - 30 4 6 - 10
Income tax
(expense)/income 5 (398) (201) (594) (497) (188) - (685)
Total
comprehensive
income for the
period (11) 1,734 2,419 4,142 2,689 1,271 - 3,960
Income tax expense mainly represents deferred tax
(expense)/income on the valuation of investment property.
22.4 Share of profit/(loss) of equity-accounted investments in
joint ventures
The following table presents a reconciliation between the
profit/(loss) for the period ended 30 June 2023 and 30 June 2022
recorded in the individual financial statements of the joint
ventures with the Share of profit recognised in the Group's
financial statements under the equity method.
30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2023 2023 2023 2023 2022 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Tg Mures Combined Constanta Chitila Tg Mures Combined
Business Logistics Business Logistics
Park Hub Park Hub
Profit/(loss) for
the period (11) 1,734 2,419 4,142 2,689 1,271 - 3,960
Group 50% share
of profit/(loss)
for the period (6) 867 1,210 2,071 1,345 636 - 1,981
Adjustments for
transactions
with the Group 142 236 164 542 56 (25) - 31
Share of profit
of
equity-accounted
investments in
joint ventures 136 1,103 1,374 2,613 1,401 611 - 2,012
23. Investment in Subsidiaries
Details on all direct and indirect subsidiaries of the Company,
over which the Group has control and consolidated as of 30 June
2023 and 31 December 2022, are disclosed in the table below. The
Group did not have any restrictions (statutory, contractual or
regulatory) on its ability to transfer cash or other assets (or
settle liabilities) between the entities within the Group.
As of 30 June 2023, the Group consolidated the following subsidiaries, being holding companies
as principal activities.
30 June 2023 31 December 2022 Place of incorporation
Subsidiary Note Shareholding interest Shareholding interest
(%) (%)
Globalworth Investment Advisers
Limited 100 100 Guernsey,
Channel Islands
Globalworth Holdings Cyprus
Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited
Kusanda Holdings Limited
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Dunvant Holding Limited
Oystermouth Holding Limited
Minory Investments Limited
Globalworth Tech Limited 100 100 Cyprus
IB 14 Fundusz Inwestycyjny Zamkniety
Aktywow Niepublicznych
Lima Sp. z o.o.
As of 30 June 2023, the Group consolidated the following
subsidiaries, which own real estate assets in Romania and Poland,
being asset holding companies as their principal activities, except
for Globalworth Building Management SRL, GPRE Property Management
Sp. z o.o. and GPRE Management Sp. z o.o. with building management
activities in Romania and Poland, and Fundatia Globalworth in
Romania and Fundacja Globalworth in Poland, non-profit
organisations with corporate social responsibility activities.
30 June 2023 31 December Place of
Subsidiary Shareholding 2022 Shareholding incorporation
Note interest (%) interest (%)
Aserat Properties SRL 100 100 Romania
BOB Development SRL
BOC Real Property SRL
Corinthian Five SRL
Corinthian Tower SRL
Corinthian Twin Tower SRL
Elgan Automotive SRL
Elgan Offices SRL
Globalworth Asset Managers SRL
Globalworth Building Management
SRL
Globalworth Expo SRL
SPC Beta Property Development
Company SRL
SPC Epsilon Property Development
Company SRL
SPC Gamma Property Development
Company SRL
Netron Investment SRL
SEE Exclusive Development SRL
Tower Center International SRL
Upground Estates SRL
Fundatia Globalworth
Industrial Park West SRL
Nord 50 Herastrau Premium SRL
note 3.5) - 100
Otopeni Logistics Hub SRL 23.3 100 100 Romania
West Logistics Hub SRL 23.3 100 100 Romania
North Logistics Hub SRL 23.3 75 75 Romania
Logistics Hub Chitila SRL 23.3 75 75 Romania
DH Supersam Katowice Sp. z o.o. 100 100 Poland
Hala Koszyki Sp. z o.o.
Dolfia Sp. z o.o.
Ebgaron Sp. z o.o.
Bakalion Sp. z o.o.
Centren Sp. z o.o.
Tryton Business Park Sp. z o.o.
GPRE Property Management Sp. z
o.o.
GPRE Management Sp. z o.o.
A4 Business Park Sp. z o.o.
West Link Sp. z o.o.
Lamantia Sp. z o.o.
Dom Handlowy Renoma Sp. z o.o.
Nordic Park Offices Sp. z o.o.
Warta Tower Sp. z o.o.
Quattro Business Park Sp. z o.o.
West Gate Sp. z o.o.
Gold Project Sp. z o.o.
Spektrum Tower Sp. z o.o.
Warsaw Trade Tower 2 Sp. z o.o.
Rondo Business Park Sp. z o.o.
Artigo Sp. z o.o.
Ingadi Sp. z o.o.
Imbali Sp. z o.o.
Kusini Sp. z o.o.
Podium Park Sp. z o.o.
Fundacja Globalworth
23.1 Subsidiaries under liquidation process
The following companies are dormant and have applied for
voluntary liquation during 2020: Zaggatti Holdings Limited, Kifeni
Investments Limited, Casalia Holdings Limited, Oystermouth Holding
Limited, Pieranu Enterprises Limited, Ramoro Limited and Vaniasa
Holdings Limited.
This section includes segmental disclosures highlighting the
core areas of Globalworth's operations in the Office, Mixed-use,
residential, and other (industrial and corporate segments). There
were no significant transactions between segments except for
management services provided by the offices segment to the
residential, mixed-use and other (industrial) segments. This
section also includes the transactions with related parties, new
standards and amendments, contingencies that existed at the period
end and details on significant events which occurred subsequent to
the period end.
24. Segmental Information
The Board of Directors is of the opinion that the Group is
engaged mainly in real estate business, comprising offices,
mixed-use, industrial and residential investment properties
segments and property management services, in two geographical
areas, Romania and Poland. Operating segments are reported in a
manner consistent with the internal reporting provided to the chief
operating decision-makers. The chief operating decision-makers who
are responsible for allocating resources and assessing the
performance of the operating segments have been identified as the
Executive Directors.
The Group earns revenue and holds non-current assets (investment
properties) in Romania and Poland, the geographical area of its
operations. For investment property, discrete financial information
is provided on a property-by-property basis (including those under
construction or refurbishment) to members of Executive Management,
which collectively comprise the Executive Directors of the Group.
The information provided is Net Operating Income ("NOI", i.e. gross
rental income less property expenses) on a quarterly basis and
valuation gains/losses from property valuation at each semi-annual
basis. The individual properties are aggregated into office,
mixed-use, industrial and residential segments.
The industrial property segment and head office segments are
presented on a collective basis as Others in the table on the next
page since their individual assets, revenue and absolute profit (or
loss) are below 10% of all combined total asset, total revenue and
total absolute profit (or loss) of all segments. All other segments
are disclosed separately as these meet the quantitative threshold
of IFRS 8. Consequently, the Group is considered to have four
reportable operating segments: the offices segment (acquires,
develops, leases and manages offices and spaces), the residential
segment (builds, acquires, develops and leases apartments),
mixed-use and the other segment (acquires, develops, leases and
manages industrial spaces and corporate office). Share-based
payments expense is not allocated to individual segments as
underlying instruments are managed at the Group level. Segment
assets and liabilities reported to Executive Management on a
segmental basis are set out below:
30 June 2023
Office Mixed-use Residential Other Inter- segment eliminations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income - Total 67,822 5,904 802 6,233 (234) 80,527
Romania 33,492 - 802 6,233 (147) 40,380
Poland 34,330 5,904 - - (87) 40,147
Revenue from contract with
customers - Total 32,509 3,660 480 3,755 (1,881) 38,523
Romania 17,102 - 480 3,755 (436) 20,901
Poland 15,407 3,660 - - (1,445) 17,622
Revenue-total 100,331 9,564 1,282 9,988 (2,115) 119,050
Operating expenses (36,479) (4,774) (480) (4,022) 449 (45,306)
Segment NOI 63,852 4,790 802 5,966 (1,666) 73,744
NOI - Romania 31,793 - 802 5,966 (509) 38,052
NOI - Poland 32,059 4,790 - - (1,157) 35,692
Administrative expenses (5,206) (217) (54) (2,278) - (7,755)
Fair value (loss)/gain on
investment property (111,236) 2,489 21 5,842 - (102,884)
Depreciation and amortisation
expense (268) - (8) (13) - (289)
Other expenses (940) (145) (97) - - (1,182)
Other income 266 1,948 12 5 (16) 2,215
Loss on disposal of subsidiary - - - (164) (164)
Foreign exchange loss (309) (224) (12) (24) (569)
Segment result (53,841) 8,641 664 9,334 (1,682) (36,884)
Finance cost (6,189) (251) - (21,505) - (27,945)
Finance income 853 45 34 17,292 - 18,224
Share-based payment expense (167) - - - - (167)
Gain from fair value of financial
instruments (121) - - - - (121)
Share of profit of
equity-accounted investments in
joint ventures - - - 2,613 - 2,613
Profit/(loss) before tax (59,465) 8,435 698 7,734 (1,682) (44,280)
30 June 2022
Office Mixed-use Residential Other Inter- segment eliminations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income - Total 64,042 5,686 798 4,911 (223) 75,214
Romania 30,878 - 798 4,911 (141) 36,446
Poland 33,164 5,686 - - (82) 38,768
Revenue from contract with
customers - Total 34,382 3,700 411 4,368 (1,524) 41,337
Romania 14,569 - 411 4,368 (315) 19,033
Poland 19,813 3,700 - - (1,209) 22,304
Revenue-total 98,424 9,386 1,209 9,279 (1,747) 116,551
Operating expenses (37,539) (4,652) (489) (4,443) 427 (46,696)
Segment NOI 60,885 4,734 720 4,836 (1,320) 69,855
NOI - Romania 28,886 - 720 4,836 (402) 34,040
NOI - Poland 31,999 4,734 - - (918) 35,815
Administrative expenses (4,347) (85) (25) (2,027) - (6,484)
Acquisition costs - - - (7) - (7)
Fair value (loss)/gain on
investment property (4,311) (2,104) 45 13,389 - 7,019
Depreciation on other long-term
assets (285) - (10) (14) - (309)
Other expenses (98) 38 (660) - - (720)
Other income 290 19 1 2 (17) 295
Foreign exchange (loss)/gain 208 102 2 (5) - 307
Finance cost (4,509) (139) (3) (22,896) - (27,547)
Finance income 465 - 16 698 - 1,179
Segment result 48,298 2,565 86 (6,024) (1,337) 43,588
Gain from fair value of financial
instruments 73 - - - - 73
Share of profit of
equity-accounted investments in
joint ventures - - - 2,012 - 2,012
Profit/(loss) before tax 48,371 2,565 86 (4,012) (1,337) 45,673
Revenues are derived from a large number of tenants and no
tenant contributes more than 10% of the Group's rental revenues for
the period ended 30 June 2023 (30 June 2022: EURnil).
30 June 2023
Office Mixed-use Residential Other Inter segment eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current assets 2,319,135 288,321 51,065 207,687 (1,918) 2,864,290
Romania 1,161,500 - 51,065 207,687 (452) 1,419,800
Poland 1,157,635 288,321 - - (1,466) 1,444,490
Total assets 2,692,541 297,510 50,087 222,363 (2,882) 3,259,619
Total liabilities 553,200 24,486 3,884 1,046,845 (849) 1,627,566
Additions to non-current assets
- Romania 5,684 - - 1,861 7,545
- Poland 11,974 6,383 - - 18,357
31 December 2022
Office Mixed-use Residential Other Inter segment eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current assets 2,414,875 279,612 53,067 199,930 (2,024) 2,945,460
Romania 1,200,703 - 53,067 199,930 (395) 1,453,305
Poland 1,214,172 279,612 - - (1,629) 1,492,155
Assets held for sale 126,009 - - - - 126,009
Total assets 2,812,401 289,743 56,821 212,445 (2,547) 3,368,863
Total liabilities 557,192 23,334 3,983 1,113,450 (406) 1,697,553
Additions to non-current assets
- Romania 15,377 - 74 21,204 - 36,655
- Poland 27,651 13,348 - - - 40,999
None of the Group's non-current assets are located in Guernsey
except for goodwill (there are no employment benefit plan assets,
deferred tax assets or rights arising under insurance contracts)
recognised on business combination.
25. Transactions with Related Parties
The Group's related parties are Joint ventures, the Company's
Executive and Non-Executive Directors, key other Executives, as
well as all the companies controlled by them or under their joint
control, or under significant influence. The related party
transactions are set out in the table below:
Income statement Statement of financial position
Income/(expense) Amounts owing (to)/from
Nature of 30 June 2023 30 June 2022 30 June 2023 31 December 2022
transaction/balances
Name Amounts EUR'000 EUR'000 EUR'000 EUR'000
Global Logistics Chitila Shareholder loan
SRL (50% Joint Venture) receivable - - 25,937 25,138
Trade and other receivables - - 18 -
Finance income 439 476 - -
Office rent 6 6 - -
Asset management fees 28 20 - -
Black Sea Vision SRL Shareholder loan
(50% Joint Venture) receivable - - 10,802 14,209
Trade and other receivables - - 17 -
Finance income 252 213 - -
Office rent 6 6 - -
Asset management fees 27 9 - -
Targu Mures Logistics Hub Shareholder loan
SRL receivable - - 11,950 7,976
Trade and other - - 4 -
receivables
( 50% Joint Venture) Finance income 212 - - -
Office rent 6 - - -
Asset management fees 11 - - -
26. New and Amended Standards
Starting from 1 January 2023 the Group adopted the following
amended standards and interpretations. The new amendments had no
significant impact on the Group's financial position and
performance.
Narrow scope amendments and new Standards Effective Date (EU endorsement)
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9
- Comparative
Information Jan-23
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities
arising
from a Single Transaction Jan-23
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement
2: Disclosure
of Accounting policies Jan-23
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors:
Definition
of Accounting Estimates Jan-23
IFRS 17 Insurance Contracts Jan-23
27. Contingencies
Taxation
All amounts due to State authorities for taxes have been paid or
accrued at the balance sheet date. The tax system in Romania and
Poland undergoes a consolidation process and is being harmonised
with the European legislation. Different interpretations may exist
at the level of the tax authorities in relation to the tax
legislation that may result in additional taxes and penalties
payable. Where the State authorities have findings from reviews
relating to breaches of tax laws, and related regulations these may
result in confiscation of the amounts in case; additional tax
liabilities being payable; fines and penalties (that are applied on
the total outstanding amount). As a result, the fiscal penalties
resulting from breaches of the legal provisions may result in a
significant amount payable to the State. The Group believes that it
has paid in due time and in full all applicable taxes, penalties
and penalty interest to the extent applicable.
Transfer Pricing
According to the applicable relevant tax legislation in Romania
and Poland, the tax assessment of related party transactions is
based on the concept of market value for the respective transfers.
Following this concept, the transfer prices should be adjusted so
that they reflect the market prices that would have been set
between unrelated companies acting independently (i.e. based on the
"arm's length principle"). It is likely that transfer pricing
reviews will be undertaken in the future in order to assess whether
the transfer pricing policy observes the "arm's length principle"
and therefore no distortion exists that may affect the taxable base
of the taxpayer in Romania and Poland.
Legal Proceedings
In recent years the Romanian State Authorities initiated reviews
of real estate restitution processes and in some cases commenced
legal procedures where it has considered that the restitution was
not performed in accordance with the applicable legislation. The
Group is involved in one such case, which is currently at a very
early stage and may take a very long time to be concluded, and
management believes that the risk of any significant loss occurring
in future is remote.
28. Subsequent events
Dividends
On 30 August 2023, the Company announced that its Board of
Directors has approved the payment of an interim dividend in
respect of the six-month financial period ended 30 June 2023 of
EUR0.14 per ordinary share (which will be paid on 10 October 2023)
and intends to offer a scrip dividend alternative to the Interim
Dividend so that qualifying shareholders can elect to receive new
ordinary shares in the Company instead of cash in respect of all or
part of their entitlement to the Interim Dividend.
Qualifying shareholders who validly elect to receive the Scrip
Dividend Alternative will become entitled to a number of Scrip
Dividend Shares in respect of their entitlement to the Interim
Dividend that is based on a price per Scrip Dividend Share
calculated on the basis of a discount of 20% to the average of the
middle market quotations for the Company's shares as derived from
the Daily Official List (or any other publication of a recognised
investment exchange showing quotations for the Company's shares) on
the five consecutive dealing days from and including the
Ex-Dividend Date, the "Reference Price".
Sale of Warta Tower
In July 2023 the Company sold the Warta Tower office building, a
fully vacant building, in Warsaw to a company from the Cornerstone
Investment Management platform. The transaction was valued EUR63.4
million (higher than book value at 30 June 2023), out of which
EUR20 million are deferred and will be received in October
2025.
ADDITIONAL INFORMATION
29. EPRA NAV Metrics
EPRA EPRA EPRA EPRA NTA EPRA EPRA NDV
NRV NRV NTA NDV
30-Jun-23 31-Dec-22 30-Jun-23 31-Dec-22 30-Jun-23 31-Dec-22
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Net assets attributable
to equity holders of
the parent 1,630,692 1,656,506 1,630,692 1,656,506 1,630,692 1,656,506
Include / exclude
I) Hybrid instruments - - - - - -
Diluted NAV 1,630,692 1,656,506 1,630,692 1,656,506 1,630,692 1,656,506
Include:
II. a) Revaluation
of IP (if IAS 40 cost
option is used) - - - - - -
II. b) Revaluation
of IPUC (if IAS 40
cost option is used) - - - - - -
II. c) Revaluation
of other non-current
investments - - - - - -
III.) Revaluation of
tenant leases held
as finance leases - - - - - -
IV.) Revaluation of
trading properties - - - - - -
Diluted NAV at fair
value 1,630,692 1,656,506 1,630,692 1,656,506 1,630,692 1,656,506
Exclude:
V) Deferred tax in
relation to fair value
gains of IP 155,079 181,070 77,540 90,535 n/a n/a
VI) Fair value of financial
instruments (357) (194) (357) (194) (357) (194)
VII) Goodwill as a
result of deferred
tax (5,697) (5,697) (5,697) (5,697) (5,697) (5,697)
VIII. a) Goodwill as
per the IFRS balance
sheet n/a n/a (6,652) (6,652) (6,652) (6,652)
VIII. b) Intangibles
as per the IFRS balance
sheet n/a n/a - (1) - (1)
IX) Adjustment in respect
of joint venture and
NCI share for above
items 1,433 3,798 1,433 3,798 3,798 n/a
Include:
IX) Fair value of fixed
interest rate debt n/a n/a n/a n/a 124,521 133,571
X) Revaluation of intangibles
to fair value n/a n/a n/a n/a n/a n/a
XI) Real estate transfer
tax / acquisition costs - - - - n/a n/a
NAV 1,781,150 1,835,483 1,696,958 1,738,295 1,742,507 1,777,533
Fully diluted number
of shares 235,829 221,470 235,829 221,470 235,829 221,470
NAV per share (EUR) 7.55 8.29 7.20 7.85 7.39 8.03
STANDING PORTFOLIO - BREAKDOWN BY LOCATION & TYPE
(data as of 30
June 2023)
Number of Value Area Occupancy Rent Contracted Headline
Rate Rent / Sqm or Unit
Investments Properties GAV GLA by GLA Contracted WALL 100% Office Commercial Industrial
Rent
(#) (#) (EURm) (k (%) Rent Years (EURm) (EUR/sqm/m) (EUR/sqm/m) (EUR/sqm/m)
sqm) (EURm)
Office &
Mixed-Use
Portfolio
Bucharest New CBD 8 12 854.3 344.2 93.3% 63.1 5.5 67.1 14.7 14.7 --
Bucharest Other 4 6 279.1 118.2 96.4% 21.4 5.0 22.6 14.9 14.5 --
Romania: Office 12 18 1,133.4 462.4 94.1% 84.5 5.4 89.7 14.8 14.7 --
Warsaw 9 14 689.1 210.9 75.5% 41.4 3.9 51.9 19.4 19.6 --
Krakow 4 12 295.5 150.2 60.3% 17.7 3.5 28.0 14.7 14.8 --
Wroclaw 2 3 139.4 56.7 99.2% 10.5 5.1 10.6 14.9 14.5 --
Lodz 1 2 63.3 35.5 86.3% 5.0 3.2 5.8 12.7 12.9 --
Katowice 2 5 118.5 63.3 72.2% 8.3 4.5 11.2 13.8 13.4 --
Gdansk 1 1 54.8 25.6 87.4% 4.3 4.0 4.9 14.6 14.5 --
Poland: Office
& Mixed-Use 19 37 1,360.6 542.1 74.7% 87.2 4.0 112.4 16.3 16.3 --
Total Office &
Mixed-Use
Portfolio 31 55 2,494.0 1,004.6 83.6% 171.7 4.7 202.1 15.5 15.5 --
Logistics /
Light-Industrial
Timisoara 2 6 89.2 140.4 88.0% 6.2 5.4 7.0 7.0 4.1 3.8
Arad 1 1 17.6 20.1 100.0% 1.3 11.6 1.3 7.1 5.3 4.9
Oradea 1 1 6.8 6.9 100.0% 0.5 12.2 0.5 5.7 5.3 5.3
Targu Mures 1 1 13.2 18.3 100.0% 1.5 10.2 1.5 8.8 6.1 5.5
Pitesti 1 2 59.5 75.2 100.0% 4.3 7.6 4.3 5.3 4.7 4.7
Constanta 1 2 27.1 41.1 99.8% 2.3 5.2 2.3 7.8 4.1 3.8
Bucharest 3 3 61.1 89.2 76.7% 3.9 8.0 4.9 7.9 4.3 4.1
Total Industrial
Portfolio 10 16 274.5 391.2 90.4% 19.9 7.3 21.8 7.2 4.5 4.2
Other Portfolio
Bucharest New CBD
Upground Complex
- Residential 1 1 40.9 21.1 nm 0.6 2.6 0.6 -- -- --
Bucharest New CBD
Upground Complex
- Commercial -- -- 10.1 6.0 97.7% 0.8 9.3 0.9 -- 11.2 --
Total Other
Portfolio 51.0 27.1 nm 1.4 6.5 1.5 -- 11.2 --
Total Standing
Commercial
Portfolio 41 71 2,778.6 1,401.8 85.5% 192.5 5.0 224.8 15.2 12.2 4.2
Of which Romania 22 34 1,418.0 859.6 92.4% 105.3 5.8 112.4 14.3 10.1 4.2
Of which Poland 19 37 1,360.6 542.1 74.7% 87.2 4.0 112.4 16.3 16.3 --
GLOSSARY
Adjusted EBITDA (normalised)
Earnings before finance cost, tax, depreciation, amortisation of
other non-current assets, purchase gain on acquisition of
subsidiaries, fair value movement, and other non-operational and/or
non-recurring income and expense items.
Asset or Property
Represent the individual land plot or building under development
or standing building which forms part or the entirety of an
investment.
Bargain Purchase Gain
Any excess between the fair value of net assets acquired and
consideration paid, in accordance with IFRS 3 "Business
Combination".
BREEAM
Building Research Establishment Assessment Method, which
assesses the sustainability of the buildings against a range of
criteria.
CAPEX
Represents the estimated Capital Expenditure to be incurred for
the completion of the development projects.
Capitalisation Rates
Based on actual location, size and quality of the properties and
considering market data at the valuation date.
CBD
Central Business District
CEE
Central and Eastern Europe
CIT
Corporate income tax
Commercial Properties
Comprises the office, light-industrial and retail properties, or
areas of the portfolio.
Combined Portfolio
Includes the Group's property investments consolidated on the
balance sheet under Investment Property- Freehold, plus those
properties held as Joint Ventures (currently the lands relating to
Chitila Logistics Hub and Constanta Business Park projects)
presented at 100%.
Completed Investment Property
Completed developments consist of those properties that are in a
condition which will allow the generation of cash flows from its
rental.
Completion Dates
The date when the properties under development will be completed
and ready to generate rental income after obtaining all necessary
permits and approvals.
Consolidated Coverage Ratio
Calculated as the aggregate amount of Adjusted EBITDA for the
period of the most recent two consecutive semi-annual periods
ending on such Measurement Date divided by the Consolidated
Interest Expense for such two semi-annual periods.
Consolidated Interest Expense
All charges, interest, commission, fees, discounts, premiums,
and other finance costs in respect of Indebtedness (but excluding
such interest on Subordinated Shareholder Debt) incurred by the
Group.
Consolidated Leverage Ratio
Calculated as the Consolidated Total Indebtedness divided by
Consolidated Total Assets
Consolidated Secured Leverage Ratio
Calculated as the Secured Consolidated Total Indebtedness
divided by Consolidated Total Assets at that date
Consolidated Total Assets
Total assets (excluding intangible assets) of the Group.
Consolidated Total Indebtedness
Total Indebtedness of the Group (excluding deferred tax
liabilities and income and deposits from tenants
Contracted Rent
The annualised headline rent that is contracted on leases
(including pre-leases) before any customary tenant incentive
packages.
Debt Service Cover Ratio ("DSCR")
It is calculated as net operating income for the year as defined
in specific loan agreements with the respective lenders, divided by
the principal plus interest due over the same year or period.
Discount Rates
The discount rate is the interest rate used to discount a stream
of future cash flows to their present value.
Discounted Cash Flow Analysis ("DCF")
Valuation method that implies income projections of the property
for a discrete period, usually between 5-10 years. The DCF method
involves the projection of a series of periodic cash flows either
to an operating property or a development property. Discounted cash
flow projections based on significant unobservable inputs
considering the costs to complete and completion date.
Earnings Per Share ("EPS")
Profit after tax divided by the basic/diluted weighted average
number of shares in issue during the year or period.
EDGE
Excellence in Design for Greater Efficiencies ("EDGE"). An
innovation of the International Finance Corporation ("IFC"), member
of the World Bank Group, EDGE is a green building standard and a
certification system for more than 160 countries.
EPRA
The European Public Real Estate Association is a non-profit
association representing Europe's publicly listed property
companies. EPRA Earnings profit after tax attributable to the
equity holders of the Company, excluding investment property
revaluation, gains, losses on investment property disposals and
related tax adjustment for losses on disposals, bargain purchase
gain on acquisition of subsidiaries, acquisition costs, changes in
the fair value of financial instruments and associated closeout
costs and the related deferred tax impact of adjustments made to
profit after tax.
EPRA Earnings Per Share
EPRA Earnings divided by the basic or diluted number of shares
outstanding at the year or period end.
EPRA Net Assets Value ("EPRA NAV")
Net assets per the statement of financial position, excluding
the mark-to-market on effective cash flow hedges and related debt
adjustments and deferred taxation on revaluations excluding
goodwill. This metric was used at year or period ends up to 31
December 2022.
EPRA Net Disposal Value ("EPRA NDV")
The EPRA Net Disposal Value provides the reader with a scenario
where deferred tax, financial instruments, and certain other
adjustments are calculated as to the full extent of their
liability, including tax exposure not reflected in the Balance
Sheet, net of any resulting tax. This measure should not be viewed
as a "liquidation NAV" because, in many cases, fair values do not
represent liquidation values.
EPRA Net Reinstatement Value ("EPRA NRV")
The objective of the EPRA Net Reinstatement Value measure is to
highlight the value of net assets on a long-term basis. Assets and
liabilities that are not expected to crystallise in normal
circumstances such as the fair value movements on financial
derivatives and deferred taxes on property valuation surpluses are
therefore excluded. Since the aim of the metric is to also reflect
what would be needed to recreate the Company through the investment
markets based on its current capital and financing structure,
related costs such as real estate transfer taxes are included, as
applicable.
EPRA Net Tangible Assets ("EPRA NTA")
The underlying assumption behind the EPRA Net Tangible Assets
calculation assumes entities buy and sell assets, thereby
crystallising certain levels of deferred tax liability.
EPRA NAV, EPRA NRV, EPRA NTA, EPRA NDV Per Share
EPRA NAV, or EPRA NRV, or EPRA NTA, or EPRA NDV divided by the
diluted number of shares outstanding at the year or period end.
Estimated Rental Value ("ERV")
ERV is the external valuers' opinion as to the open market rent
which, on the date of valuations, could reasonably be expected to
be obtained on a new letting or rent review of a property.
Estimated Vacancy Rates
Represent vacancy rates computed based on current and expected
future market conditions after expiry of any current lease.
EURIBOR
The Euro Interbank Offered Rate: the interest rate charged by
one bank to another for lending money, often used as a reference
rate in bank facilities.
Financial Year
Period from 1 January to 31 December.
FFO
Free funds from operations, estimated as the EPRA Earnings for
the relevant period.
GLA
Gross leasable area.
IFRS
International Financial Reporting Standards as adopted by the
European Union.
Interest Cover Ratio ("ICR")
Calculated as net operating income divided by the debt service /
interest.
Investment
Represent a location in which the Company owns / has interests
in.
Land Bank for Further Development
Land bought for further development but for which the Group did
not obtain all the legal documentations and authorisation permits
in order to start the development process.
Leadership in Energy & Environmental Design ("LEED")
LEED, a green building certification programme that recognises
best-in-class building strategies and practices.
Loan-to-Cost Ratio ("LTC")
Calculated by dividing the value of loan drawdowns by the total
project cost.
Loan to Value ("LTV")
Calculated as the total outstanding debt excluding amortised
cost, less cash and cash equivalents as of financial position date,
divided by the appraised value of owned assets as of the financial
position date. both outstanding debt and the
appraised value of owned assets includes our share of these
figures for joint ventures, which are accounted for in the
consolidated financial statements under the equity method.
Maintenance Costs
Including necessary investments to maintain functionality of the
property for its expected useful life.
Master Lease
Master lease includes various rental guarantees, which range
between 3 and 5 years, covering certain vacant spaces in certain
properties owned in Poland.
MSCI
MSCI is an international finance company headquartered in New
York City and listed on New York Stock Exchange and serves as a
global provider of equity, fixed income, hedge fund stock market
indexes, multi-asset portfolio analysis tools and ESG products. An
MSCI ESG Rating is designed to measure a company's resilience to
long-term, industry material environmental, social and governance
(ESG) risks.
NBP
National bank of Poland.
Net Assets Value ("NAV")
Equity attributable to shareholders of the Company and/or net
assets value.
Net Asset Value ("NAV") Per Share
Equity attributable to owners of the Company divided by the
number of Ordinary shares in issue at the period end.
Net Operating Income ("NOI")
Net operating income (being the gross operating income less
operating expenses that are not paid by or rechargeable to tenants,
excluding funding costs, depreciation and capital expenditure).
Occupancy Rate
The estimated let sqm (GLA) as a percentage of the total
estimated total sqm (GLA) of the portfolio, excluding development
properties and in certain cases (where applicable) spaces subject
to asset management (where they have been taken back for
refurbishment and are not available to let as of the financial
position date).
Open Market Value ("OMV" or "GAV")
Open market value means the fair value of the Group's investment
properties and the joint ventures (where the Group owns 50%)
determined by Colliers Valuation and Advisory SRL ("Colliers"),
Cushman & Wakefield LLP (C&W) and Knight Frank Sp. z o.o.
("Knight Frank") independent professionally qualified valuers who
hold a recognised relevant professional qualification and have
recent experience in the locations and segments of the investment
properties valued, using recognised valuation techniques.
Passing Rent
It is the gross rent, less any ground rent payable under the
head leases.
Property Under Development
Properties that are in development process that do not meet all
the requirements to be transferred to completed investment
property.
RCF
Revolving Credit Facility.
Residual Value Method
Valuation method that estimated the difference between the
market value of the building upon completion that can be built on
the plot of land and all the building's construction costs, as well
as the developer's profit. This method relies on the contribution
concept by estimating from the future income of the building, the
amount that can be distributed to the land.
ROBOR
Romanian Interbank Offer Rate.
Sales Comparison Approach
Valuation method that compares the subject property with quoted
prices of similar properties in the same or similar location.
Secured Consolidated Total Indebtedness Consolidated
Total Indebtedness that is secured by any Security granted by
any member of the Group.
SPA
Share sale purchase agreement.
SQM
Square metres.
The Company or the Group
Globalworth Real Estate Investments Limited and its
subsidiaries.
The Investment Adviser
Globalworth Investment Advisers Limited, a wholly owned holding
subsidiary incorporated in Guernsey.
Total Accounting Return
Total accounting return is the growth in EPRA NRV per share plus
dividends paid, expressed as a percentage of EPRA NRV per share at
the beginning of the year
Total Unencumbered Assets Ratio
Calculated as the Unsecured Consolidated Total Assets divided by
Unsecured Consolidated Total Indebtedness.
Unsecured Consolidated Total Assets
Means such amount of Consolidated Total Assets that is not
subject to any Security granted by any subsidiary of the Group.
Unsecured Consolidated Total Indebtedness
Means the Consolidated Total Indebtedness less Secured
Consolidated Total Indebtedness.
WALL
Represents the remaining weighted average lease length of the
contracted leases as of the financial position date, until the
lease contracts full expiration.
Weighted Average Interest Rate
The average of the interest rate charged on the Group's loans,
weighted by the relative outstanding balance of each loan at the
year or period end.
WIBOR
Warsaw Interbank Offered Rate.
COMPANY DIRECTORY
Registered Office
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Nominated Adviser and Broker
Panmure Gordon (UK) Limited
40 Gracechurch Street
London EC3V 0BT
United Kingdom
Investment Adviser (wholly owned subsidiary of the Company)
Globalworth Investment Advisers Limited
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Auditors
Ernst & Young Cyprus Limited
Jean Nouvel Tower
6 Stasinos Avenue
1511 Nicosia
Cyprus
Administrator
IQ EQ (Guernsey) Limited
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Company Secretary
Nicola Marrin
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Registrar
Link Market Services (Guernsey) Limited
Mont Crevalt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Globalworth Real Estate Investments Limited
Anson Court,
La Route des Camps, St Martin,
Guernsey, GY4 6AD
Email: enquiries@globalworth.com
www.globalworth.com
[1] Information as at 13 September 2023.
(*) Properties held through joint ventures are shown at 100%,
Globalworth owns 50% stake in the respective joint ventures.
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END
IR BCGDCGUBDGXI
(END) Dow Jones Newswires
September 19, 2023 02:00 ET (06:00 GMT)
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