Last checked at 24 Feb 2023 07:00
GRIT REAL ESTATE INCOME GROUP LIMITED (Registered in Guernsey) (Registration number: 68739) LSE share code: GR1T SEM share code: DEL.N0000 ISIN: GG00BMDHST63 LEI: 21380084LCGHJRS8CN05 ("Grit" or the "Company" or the "Group") |
ABRIDGED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Strong cash collection, Group LTV reduced to 45.5% and
substantial progress on asset disposal strategy`
Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets underpinned by predominantly US Dollar and Euro denominated long-term leases with high quality multi-national tenants, today announces its results for the six months ended 31 December 2022.
Financial and Portfolio highlights
| 6 Months ended 31 Dec 2022 | 6 Months ended 31 Dec 2021 | Increase/ Decrease |
Contractual rental collected 10 | 108.4% | 94.9% | +13.5ppt |
Gross property income (proportionate9) | US$35.0m | US$32.6m | +7.52% |
Property portfolio net operating income (IFRS) | US$22.1m | US$19.2m | +15.10% |
Property portfolio net operating income (proportionate9) | US$29.6m | US$27.1m | +9.14% |
EPRA cost ratio (including associates) 3 | 12.7% | 13.5% | -0.8ppt |
Finance costs | US$18.2m | US$12.5m | +45.60% |
Adjusted EPRA earnings2 | US$4.94m | US$5.92m | -16.55% |
Distributable earnings per share1 | US$2.56 cps | US$3.08 cps | -16.88% |
Dividend per share | US$2.00 cps | US$2.50 cps | -20.00% |
Adjusted EPRA earnings per share2 | US$1.02 cps | US$1.80 cps | -43.33% |
As at 31 Dec 2022 | As at 30 June 2022 | Increase/ Decrease | |
EPRA NRV per share2 | US$78.8 cps | US$79.4 cps | -0.75% |
Total Income Producing Assets4 | US$832.8m | US$856.7m | -2.79% |
WALE5 | 4.6 yrs | 4.8 yrs | -0.2 yrs |
EPRA portfolio occupancy rate6 | 95.7% | 95.3% | +0.4 ppt |
Group LTV | 45.5% | 46.7% | -1.2 ppt |
On 22 August 2022, Grit increased its stake in Gateway Real Estate Africa Limited ("GREA") to 35.01% and in conjunction with its interest in Africa Property Development Managers Limited ("APDM"), is expected to materially accelerate the Group's ability to access development returns from risk mitigated development projects and introduce the potential for new revenue and fee income streams. Grit has the option to acquire a further 13.61% interest in GREA and an additional 1% of APDM by 15 May 2023, giving it control over both entities at that date.
The Group also made substantial progress on further asset sales in support of its 20% recycling target by 31 December 2023, disposing of interest in assets amounting to US$53.3m in the period and a further US$56.7m announced after the Balance sheet date. Aggregate announced asset disposals (including the potential Beachcomber Hospitality Investment ("BHI") exit) are now in excess of US$126.3m which represents 15.8% of the targeted 20% by 31 December 2023.
Key commentary
• | EPRA net reinstatement value ("NRV") per share of US$78.8 cents per share (30 June 2022: US$79.4 cents per share). |
• | The Group independently values all its assets at the financial year-end and at least 50%, by value, at the interim reporting date. For the six months ended 31 December 2022, 60% of the portfolio was independently valued with total income producing assets valued at US$832.8m (30 June 2022: US$856.7m), including positive local currency like-for-like fair value gains of US$3.0m, net disposals of US$27.6m and additions and capital expenditure of US$13.7m. |
• | On 20 December 2022, the Group finalised its US$306 million sustainability linked debt refinance, the largest of its kind in sub-Saharan real estate sector, which significantly reduces Grit's refinance risk amidst turbulent global financial markets. Group LTV decreased to 45.5% at 31 December 2022 and WADE is 3.6 years. The Board remains committed to reducing LTV to its medium-term target of between 35% to 40% through capital recycling initiatives, select NAV accretive acquisitions and through the consolidation of GREA upon gaining control. |
• | Rising global interest rates have resulted in the Group WACD increasing from 5.7% in December 2021 to 8.1% currently, which resulted in a US$5.7m increase (+45.6%) in finance costs. The impact has been offset by good leasing activity and inflation linked lease escalations which drove growth in net operating income during the period. The Group has interest rates hedges over c.US$200 million worth of notional debt, which has now materially reduced Grit's exposure to further movements in base rates. |
• | Earnings and distribution per share calculations were impacted by the weighted average share count that increased to 482.4m at 31 December 2022 (31 December 2021: 328.8m) because of the new ordinary share issuance in December 2021 and April 2022. |
• | Cash collection as a percentage of contractual revenue, improved by 13.5 percentage points from 94.9% to 108.4%, specifically impacted by improved collections from hospitality sector assets in the six months. |
Operational highlights
• | The property portfolio now comprises a total of 60 investments, across twelve countries and seven asset classes. |
• | Net operating income in the six months to 31 December 2022 grew 9.1% versus the comparable period, positively impacted by leasing activity and rent escalations achieved. |
• | 85.9% (30 June 2022: 85.6%) of revenue is earned from multinational tenants7. |
• | 92.4% (30 June 2022: 91.5%) of income is produced in hard currency8. |
• | EPRA portfolio occupancy rate of 95.4% (30 June 2022: 95.3%). |
• | Total Grit proportionately owned lettable area ("GLA") is 343,038m2. |
• | Weighted average contracted annual rent escalations at 4.1% (30 June 2022: 5.4%). |
ESG and Sustainability highlights
• | Remains on track to achieve sustainability targets of a 25% reduction in carbon emissions and a 25% improvement in its building efficiency by 2025 11 |
• | 40% of women in leadership positions. |
• | 79% localised employees. |
• | 80% employee satisfaction. |
Post period end
• | The Board today declares an interim dividend, out of operating profits, of US$2.0 cents per share ("cps") for the six months ended 31 December 2022 (31 December 2021: US$2.50 cps). The Board continues to target paying a dividend in the current financial year of between US$ 4.5 cps to US$ 5.0 cps distributing out of net operating income generated from its existing property assets, in line with its stated policy of paying out at least 80 per cent. of distributable earnings. |
• | In January 2023, in anticipation of potentially acquiring the remaining 13.61% of GREA from Gateway Africa Real Estate Limited, the Group has paid a deposit of US$ 10 million, with a further deposit of US$10 million to be paid in March 2023. On final execution of the option on the GREA shares, a final payment of US$14.1 million will be paid in May 2023. |
• | The BHI board has approved a merger agreement which includes a listed preference share issuance that will facilitate an exit of Grit's remaining 27.1% interest in BHI for an expected net cash payment of EUR 25.8 million (US$27.5 million). |
Notes
1 | Various alternative performance measures (APMs) are used by management and investors, including a number of European Public Real Estate Association ("EPRA") metrics, Distributable Earnings, Total Income Producing Assets and Property portfolio net operating income. APMs are not a substitute, and not necessarily better for measuring performance than statutory IFRS results and where used, full reconciliations are provided. |
2 | Explanations of how EPRA figures and Distributable earnings per share are derived from IFRS are shown in note 17 (unaudited). |
3 | Based on EPRA cost to income ratio calculation methodology which includes the proportionately consolidated effects of LLR and other associates. |
4 | Includes controlled Investment properties with Subsidiaries, Investment Property owned by Associates and Joint Ventures, Deposits paid on Investment properties and other investments, property plant and equipment, intangibles, and related party loans - Refer to Chief Financial Officer's Statement for reconciliation and analysis. |
5 | Weighted average lease expiry ("WALE"). |
6 | Property occupancy rate based on EPRA calculation methodology - Includes associates. |
7 | Forbes 2000, Other Global and pan African tenants. |
8 | Hard (US$ and EUR) or pegged currency rental income. |
9 | Property portfolio revenue and net operating income ("NOI") are APM's and is derived from IFRS revenue and NOI adjusted for the results of associates and joint ventures and further includes the results of the GREA associates. A full reconciliation is provided in the Chief Financial Officers Statement. |
10 | Contractual rental collection was positively impacted by the recovery of COVID-19 back-rentals, that was recovered from tenants in the hospitality sector. |
11 | Sustainability targets use 2019 as the base year. |
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:
"Grit produced a robust operating performance, including strong cash collections of 108.4% of contracted revenue, and is increasingly well placed to deliver further positive sustainable value for our shareholders and positive impact for the people of Africa. Our resilient and defensive business and investment potential is backed by our high-quality assets, strong cash collection, increasing leasing activity, successful delivery of development projects and the potential for progressive dividends and stronger NAV growth going forward.
The Group made substantial progress towards its stated strategy of asset recycling 20% of the value of its portfolio by 31 December 2023 with the announced disposals in the hospitality and industrial asset sectors. Furthermore, Grit's targeted acquisition of a controlling interest in Gateway Real Estate Africa in May 2023 is expected to be a key milestone for the Group, reinforcing our solid growth and positive impact strategy with a high-quality team and attractive accretive pipeline of developments, whilst also further reducing Grit's LTV.
The Grit Group is committed to, and passionate about, developing smart business solutions through impact real estate that goes beyond buildings. Our team have made great strides in achieving our target of reducing carbon emission across our portfolio by 25% by 2025 and we're proud of continuing to exceed our gender equality targets. As a team of spirited warriors we always find the way."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited | |
Bronwyn Knight, Chief Executive Officer | +230 269 7090 |
Darren Veenhuis, Investor Relations | +44 779 512 3402 |
Maitland/AMO - Communications Adviser | |
James Benjamin | +44 7747 113 930 / +44 20 7379 5151 |
Alistair de Kare-silver | Grit-maitland@h-advisors.global |
finnCap Ltd - UK Financial Adviser | |
William Marle/Teddy Whiley (Corporate Finance) | +44 20 7220 5000 |
Mark Whitfeld/Pauline Tribe (Sales) | +44 20 3772 4697 |
Monica Tepes (Research) | +44 20 3772 4698 |
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor | |
Shamin A. Sookia | +230 402 0894 |
Kesaven Moothoosamy | +230 402 0898 |
Capital Markets Brokers Ltd - Mauritian Sponsoring Broker | |
Elodie Lan Hun Kuen | +230 402 0280 |
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip multi-national tenant covenants across a diverse range of robust property sectors.
The Company is committed to delivering strong and sustainable income for shareholders, with the potential for income and capital growth.
The Company holds its primary listing on the Main Market of the London Stock Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius (SEM: DEL.N0000).
Further information on the Company is available at www.grit.group
Directors:
Peter Todd (Chairman), Bronwyn Knight (Chief Executive Officer) *, Leon van de Moortele (Chief Financial Officer) *, David Love+, Sir Samuel Esson Jonah+, Catherine McIlraith+, Jonathan Crichton+ and Cross Kgosidiile.
(* Executive Director) (+ independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Registered office address: PO Box 186, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
SEM authorised representative and sponsor: Perigeum Capital Limited
UK Transfer secretary: Link Assets Services Limited
Mauritian Sponsoring Broker: Capital Markets Brokers Limited
This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule 15.24 and 15.36A and the Mauritian Securities Act 2005. The Board of the Company accepts full responsibility for the accuracy of the information contained in this communiqué.
A Company presentation for all investors and analysts via live webcast and conference call
The Company will host a live webcast and conference call on Friday, 24 February 2023 at 13:00 Mauritius time / 09:00 UK time / 11:00 SA time via the Investor Meet Company platform, with the presentation being open to all existing and potential shareholders.
Pre-registration is advised via:
https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor
Investors who already follow Grit Real Estate Income Group Limited on the Investor Meet Company platform will automatically be invited.
A playback will be accessible on-demand within 48 hours via the Company website: https://grit.group/financial-results/
CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
Grit was in a transitionary phase in 2022, characterised by a continuing recovery of the Group's property portfolio and strong cash collections while we made substantial strides in refinancing the Group's debt facilities, managing interest rate risk, and securing the Group's long-term growth with the phased acquisitions of controlling interests in GREA and APDM. These actions have collectively laid the foundations of the Grit 2.0 growth strategy, which will be further discussed at our upcoming capital markets day to be held at our new corporate head office in Mauritius on 10 & 11 May 2023.
In the six months to 31 December 2022, Grit's portfolio in the office, light industrial and corporate accommodation sectors remained resilient, whilst recovery in the hospitality and retail sector (which benefitted from strong leasing activity) and net acquisitions in the period, contributed to Net operating income growth of 9.1%. Highlights included:
• | Cash collections improved to 108% of contracted lease income, up from 94.9% in the corresponding 6-month period ended 31 December 2021, driven in part by the collection of Covid period back-rents on hospitality assets; |
• | The weighted average EPRA portfolio occupancy rate increased from 95.7% in June 2022 to 95.4% with encouraging leasing in the retail sector and lease renewals over the office and corporate accommodation assets; |
• | Property fair value increased a modest 0.4% (or US$3.0 million) indicative of stabilising valuations as the impacts of the pandemic reside, although headwinds because of rising interest rates continued in this period; |
• | GREA completed the Rosslyn Grove development in Nairobi, Kenya, an asset fully leased as diplomatic housing to the US government. The project was awarded the "Best High-end residential development of 2022" at the recent African Property Investment Awards; and |
• | 92.4% of lease income for the period was produced in US$, Euro or pegged currencies (30 June 2022: 91.5%). |
Performance against strategy
The ongoing recovery of our portfolio contributes to the Board's target of reducing Group LTV, which reached 45.5% as at 31 December 2022 (from 46.7% in June 2022) with the US$15.2 million reduction in Group debt in the period.
In October 2022 Grit successfully refinanced up to US$306 million in a syndicated sustainability-linked term loan and revolving credit facility aligned to its ESG goals. The transaction represents the largest real estate refinance agreement of its kind to date in sub-Saharan Africa (excluding South Africa) and cross-collateralises assets in multiple jurisdictions whilst significantly streamlining Grit's loan management processes. This, and detail on our interest rate risk management actions, are further covered in the CFO's commentary below.
Grit is also furthering its ongoing capital recycling strategies out of non-core assets, including large-format metropolitan retail, hospitality and other assets and is making steady progress towards the Board's target of 20% portfolio recycling (equivalent to US$160 million worth of property asset sales) by 31 December 2023. Aggregate announced asset disposals (including the potential BHI exit) are now more than US$126.3m, which represents 15.8% of the targeted 20% by 31 December 2023 and include the following:
• | Sale of 100% interest in ABSA house in June 2022, for US$12.2 million property value, a discount of 6.9% to book value; |
• | Sale of a 4.9% interest Letlole La Rona ("LLR") in June 2022 with an implied property valuation of US$4.1 million, at an 8% premium to NAV; |
• | Sale of 30% interest in Orbit warehouse project in July 2022, at a US$38.9 million property value, which was the book value at that time, resulting in a deemed disposal amounting to US$11.7 million; |
• | A disposal of a further 6.79% interest in LLR in December 2022, representing an implied property valuation of US$5.2 million, at a 15% premium to NAV at that time; |
• | Deemed disposal of a portion of the Group's minority interest in Beachcomber Hospitality Investments ("BHI"), the owner of three luxury resorts in the north of Mauritius, which reduced Grit's stake from 44.42% to 27.1% through receipt of a cash dividend of EUR19.3 million (US$19.7 million). The implied property valuation of the deemed disposal is US$36.4 million; and |
• | Post balance sheet date, the Board has approved a merger agreement, which provides for a preference note issuance in BHI that will facilitate the possible exit of Grit's remaining 27.1% interest for an expected net cash payment of EUR 25.8 million (US$ 27.51 million), representing a 1.7% discount to the property value within the BHI associate. The implied property valuation of the deemed disposal is US$56.7 million. |
The asset recycling strategy not only underpins the Group's independent property valuations but also positions Grit for its ongoing re-investment towards infrastructure and impact assets (comprising light industrial & logistics, corporate & consular accommodation, healthcare, and data centres). Recycled capital is being deployed into completing the acquisitions of GREA and APDM and to funding new Grit projects and initiatives. These Grit 2.0 initiatives will not only have an immediate positive impact on Grit's balance sheet but will further bolster the Group's growth in net asset value (NAV), net operating income (NOI), and provide opportunities to generate fee income into the future.
GREA & APDM acquisition update
In August 2022, Grit increased its holdings in GREA to 35.01% and retains an option to acquire a further 13.61% by 15 May 2023, which is in addition to the option to acquire a further 1% of APDM at that same date, for a combined value of US$ 34.1 million. Through the exercise of its option and with the APDM management incentive, Grit has a clear pathway to a controlling interest in GREA before the end of the financial year ending 30 June 2023, and whose consolidation will bring a wide range of benefits to Grit, including:
• | A fully funded existing pipeline which is further expected to deliver strong NAV growth as projects complete over the next 24 to 36 months; |
• | Access to GREA's further extensive pipeline of resilient, income producing and NAV accretive US Bureau of Overseas Building Operations ("OBO") diplomatic housing and data centre development opportunities; |
• | Immediate balance sheet improvement for Grit, materially reducing the Group's loan-to-value (LTV) by up to 3 percentage points because of the consolidation of GREA's current low leverage; and |
• | Opportunities for the Group to leverage its deep African real estate insights and in-country expertise to offer unique real estate solutions in property development, asset, and property management as well as selected co-investment opportunities for qualifying counterparties, generating additional fee income. |
Environmental, Social and Governance (ESG)
We continue to advance in our sustainability journey and remain convinced that our strength remains our employees, without whom, progress and value creation would not be possible. We have consistently improved and built on our sustainability agenda to deliver meaningful value to the society. In October 2022, we released our first Sustainability Report, which is a testament to our commitment to increased transparency and accountability towards our stakeholders.
Climate change is a critical topic for businesses in the real estate sector. We are acutely aware of how we contribute to climate change and are actively looking for ways to mitigate same. At the same time, we also understand the need to future-proof our portfolio and assets. In this vein we are committed to the Task Force on Climate Related Financial Disclosures and have released our first report covering our climate related risks and opportunities, which can be found in our Sustainability Report 2022.
We are proud of the progress made against our ESG targets of a 25% reduction in carbon emissions and a 25% improvement in building efficiencies by 2025, using 2019 as a base year. The Group aims to accelerate its carbon emission reduction performance with the installation of solar generated power to several of our assets in the coming year.
Grit remains well diversified from a gender and employee perspective, with more than 40% of women in leadership positions and 65% localised employees.
Drive in Trading ("DiT") guarantee update
The DiT structure and related guarantee is currently being wound up. Grit's obligations under the Guarantee Agreement to the PIC are expected to be fulfilled and the Guarantee Agreement terminated upon the expected completion in the second quarter of calendar year 2023.
Distributions
The Board declared an interim dividend of US$2.0 cents per share, distributing out of net operating income generated from its existing property assets, in line with its stated policy of paying out at least 80 per cent. of distributable earnings. The Board anticipates paying a total dividend in the current financial year of between US$4.5 and 5 cents per share.
In addition to the interim dividend, the Board anticipates further complementing the return of cash to shareholders with the ongoing buyback of shares equivalent to US$0.05cps over the second half of the financial year.
Change to the Board of Directors
On 6 February 2023, Nomzamo Radebe stepped down from the Board following her appointment as Chief Operating Officer for a listed South African real estate business. The Board would like to express its gratitude to Nomzamo for her meaningful contribution to Grit over the years and wishes her well for the future.
Outlook
As outlined in the strategic review above, we will continue to pursue the Board's mandated target of reducing LTV, recycling 20% of the value of Grit's portfolio by 31 December 2023 and transitioning the Group towards a more resilient, higher-growth asset base. Grit will increasingly focus on co-investment opportunities within selected high-growth asset classes where it is able to leverage its considerable experience in asset, property, and development management to generate additional fee income.
The expected conclusion of the GREA acquisition is seen as a significant catalyst for immediate balance sheet optimisation and ongoing NAV and NOI growth in the medium to longer term.
We want to thank our shareholders for their ongoing support as we transition to an even more resilient portfolio with near- and longer-term growth opportunities in Net asset value and income which will benefit all our stakeholders, including the people of Africa.
Bronwyn Knight |
Chief Executive Officer |
CHIEF FINANCIAL OFFICER'S STATEMENT
Presentation of financial results
The consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. Alternative performance measures (APMs) have also been provided to supplement the IFRS financial statements as the Directors believe that this adds meaningful insight into the operations of the Group and how the Group is managed. European Public Real Estate Association ("EPRA") Best Practice Recommendations have been adopted widely throughout this report and are used within the business when considering the operational performance of our properties. Full reconciliations between IFRS and EPRA figures are provided in note 17. Other APMs used are also reconciled below.
"Grit Proportionate Interest" income statement, presented below, is a management measure to assess business performance and is considered meaningful in the interpretation of the financial results. The IFRS statement of comprehensive income is adjusted for the component income statement line items of properties held in joint ventures and associates.
This measure, in conjunction with adjustments for non-controlling interests (for properties consolidated by Grit, but part-owned by minority partners), form the basis of the Group's distributable earnings build up, which is alternatively shown in Note 8 "Distributable earnings".
IFRS YTD | Extracted from Associates | GRIT Proportionate Income statement | Split NCI | GRIT Economic IS | YTD Distributable earnings | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
Gross rental income | 26,914 | 7,340 | 34,254 | (4,397) | 29,857 | 30,373 |
Property operating expenses | (4,797) | (578) | (5,375) | 1,080 | (4,295) | (4,240) |
Net operating profit | 22,117 | 6,762 | 28,879 | (3,317) | 25,562 | 26,133 |
Other income | 120 | 9,017 | 9,137 | (386) | 8,751 | 8,874 |
Administration expenses | (9,408) | (3,177) | (12,585) | 621 | (11,964) | (11,184) |
Net impairment charge on financial assets | 903 | - | 903 | (180) | 723 | - |
Profit from operations | 13,732 | 12,602 | 26,334 | (3,262) | 23,072 | 23,823 |
Fair value adjustment on investment properties | 3,139 | 775 | 3,914 | 79 | 3,993 | - |
Transaction costs | - | 272 | 272 | 9 | 281 | - |
Fair value adjustment on other financial asset | 47 | 1,948 | 1,995 | (23) | 1,972 | - |
Fair value adjustment on investment in subsidiary | - | 1 | 1 | - | 1 | - |
Fair value adjustment on derivative financial instruments | (1,007) | - | (1,007) | - | (1,007) | - |
Impairment of loans | - | (12) | (12) | (657) | (669) | - |
Loss on extinguishment of loans | (1,166) | (25) | (1,191) | 41 | (1,150) | - |
Share-based payment | (413) | (2,620) | (3,033) | - | (3,033) | - |
Share of profits from associates | 12,008 | (12,008) | - | - | - | - |
Loss on partial disposal of associate | (295) | - | (295) | - | (295) | - |
Foreign currency (losses) / gains | (3,381) | (396) | (3,777) | 882 | (2,895) | - |
Profit before interest and taxation | 22,664 | 537 | 23,201 | (2,931) | 20,270 | 23,823 |
Interest income | 1,738 | 3,596 | 5,334 | (13) | 5,321 | 5,321 |
Finance costs - Intercompany | - | (19) | (19) | 1,829 | 1,810 | 1,810 |
Finance charges | (18,210) | (3,823) | (22,033) | 1,330 | (20,703) | (18,543) |
Profit before taxation | 6,192 | 291 | 6,483 | 215 | 6,698 | 12,411 |
Current tax | (880) | (510) | (1,390) | 271 | (1,119) | (1,118) |
Deferred tax | (1,707) | 219 | (1,488) | 441 | (1,047) | - |
Profit after taxation | 3,605 | - | 3,605 | 927 | 4,532 | 11,293 |
RBO OCI | - | - | - | - | - | - |
Total comprehensive income | 3,605 | - | 3,605 | 927 | 4,532 | 11,293 |
VAT credits | - | - | - | - | - | 1,046 |
Distributable earnings | 3,605 | - | 3,605 | 927 | 4,532 | 12,339 |
Portfolio financial performance
Sector | Revenue HY2023 | Revenue HY2022 | Movement | Opex HY2023 | Opex HY2022 | Movement | NOI HY2023 | NOI HY2022 | Movement | Rental Collections1 HY2023 |
| US$'000 | US$'000 | % | US$'000 | USD'000 | % | US$'000 | US$'000 | % | % |
Retail | 8,981 | 8,870 | 1.3% | (3,205) | (3,825) | -16.2% | 5,776 | 5,045 | 14.5% | 96.2% |
Hospitality | 5,192 | 6,125 | -15.2% | - | - | 0.0% | 5,192 | 6,125 | -15.2% | 167.0% |
Office | 8,903 | 8,170 | 9.0% | (1,046) | (922) | 13.5% | 7,857 | 7,248 | 8.4% | 105.6% |
Industrial | 3,141 | 1,289 | 143.7% | (119) | (41) | 190.2% | 3,022 | 1,248 | 142.1% | 93.0% |
Data Centres | 383 | 89 | 330.3% | - | (40) | 100% | 383 | 49 | 681.6% | 27.2% |
Corporate Accommodation | 6,719 | 6,618 | 1.5% | (1,249) | (998) | 25.2% | 5,470 | 5,620 | -2.7% | 97.0% |
LLR portfolio | 1,090 | 1,417 | -23.1% | (93) | (140) | -33.6% | 997 | 1,277 | -21.9% | n/a |
Corporate3 | 626 | 8 | 7,700.0% | 237 | 464 | -48.5% | 863 | 472 | 82.8% | n/a |
TOTAL | 35,035 | 32,586 | 7.5% | (5,475) | (5,502) | -0.5% | 29,560 | 27,084 | 9.1% | 108.4% |
Subsidiaries | 26,914 | 24,147 | 11.5% | (4,797) | (4,950) | -3.1% | 22,117 | 19,197 | 15.2% | |
Associates | 7,340 | 8,097 | -9.3% | (578) | (544) | 6.3% | 6,762 | 7,553 | -10.5% | |
SUBTOTAL | 34,254 | 32,244 | 6.2% | (5,375) | (5,494) | -2.2% | 28,879 | 26,750 | 8.0% | |
GREA Associates2 | 781 | 342 | 128.4% | (100) | (8) | 1,150.0% | 681 | 334 | 104.2% | |
TOTAL | 35,035 | 32,586 | 7.5% | (5,475) | (5,502) | -0.5% | 29,560 | 27,084 | 9.1% | 108.4% |
1 | Rental collections represents the amount of cash received as a percentage of contractual income. Contractual income is stated before the effects of any rental deferment and concessions provided to tenants. |
2 | GREA Associates represents legal entities in which GREA does not have control. |
3 | Includes consolidation entries and property management fees. |
The year-on year movement in revenue generated is made up by the following:
Sector | Revenue HY2022 | Foreign exchange movement | Capital movements 1 | Other income | Non-cash movements 2 | Recoveries movements | Leasing activities | Revenue HY2023 |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
Retail | 8,870 | (19) | 36 | (22) | (445) | 26 | 535 | 8,981 |
Hospitality | 6,125 | (687) | (212) | - | (721) | - | 687 | 5,192 |
Office | 8,170 | - | (48) | 650 | (552) | 248 | 435 | 8,903 |
Industrial | 1,289 | - | 1,548 | 23 | 283 | (118) | 116 | 3,141 |
Data Centres | 89 | - | 294 | - | - | - | - | 383 |
Corporate Accommodation | 6,618 | - | 278 | - | (521) | 151 | 193 | 6,719 |
LLR portfolio | 1,417 | (176) | (218) | - | 7 | (11) | 71 | 1,090 |
Corporate | 8 | - | - | 618 | - | - | - | 626 |
TOTAL | 32,586 | (882) | 1,678 | 1,269 | (1,949) | 296 | 2,037 | 35,035 |
Subsidiaries | 24,147 | 26,914 | ||||||
Associates | 8,097 | 7,340 | ||||||
SUBTOTAL | 32,244 |
|
|
|
|
|
| 34,254 |
GREA Associates 3 | 342 | 781 | ||||||
TOTAL | 32,586 | (882) | 1,678 | 1,269 | (1,949) | 296 | 2,037 | 35,035 |
1 | Capital movements include changes in ownership, disposals, acquisitions and completed projects. |
2 | Non-cash movements include straight-line adjustments and lease incentives. |
3 | GREA Associates represents legal entities in which GREA does not have control. |
Property valuations
Sector | Property Value 30 June 2022 | Foreign exchange movement | Additions / Completed projects | Change in ownership | Other movements | Fair value movement | Property Value 31 Dec 2022 | Total Valuation Movement |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | % | |
Retail | 197,417 | (3,565) | 2,005 | 2,151 | 111 | 540 | 198,659 | 0.6% |
Hospitality | 164,603 | 659 | 540 | (36,436) | 68 | (261) | 129,173 | -21.5% |
Office | 195,823 | - | 24 | - | (97) | 2,372 | 198,122 | 1.2% |
Industrial | 80,414 | - | 641 | - | 340 | (506) | 80,889 | 0.6% |
Data Centres | 6,839 | - | 2,140 | - | - | 208 | 9,187 | 34.3% |
Corporate Accommodation | 145,883 | (182) | 933 | 5,651 | (99) | (381) | 151,805 | 4.1% |
LLR portfolio | 20,946 | (3,374) | 1,224 | (4,064) | 9 | 150 | 14,891 | -28.9% |
GREA under construction | 13,214 | - | 5,838 | 5,070 | - | 917 | 25,039 | 89.5% |
TOTAL | 825,139 | (6,462) | 13,345 | (27,628) | 332 | 3,039 | 807,765 | -2.1% |
Subsidiaries | 604,474 | (1,309) | 2,527 | - | 184 | 3,140 | 609,016 | 0.8% |
Associates | 203,770 | (4,973) | 9,776 | (33,280) | 62 | 774 | 176,129 | -13.6% |
SUBTOTAL | 808,244 | (6,282) | 12,303 | (33,280) | 246 | 3,914 | 785,145 | -2.9% |
GREA Associates | 16,895 | (180) | 1,042 | 5,652 | 86 | (875) | 22,620 | 33.9% |
TOTAL | 825,139 | (6,462) | 13,345 | (27,628) | 332 | 3,039 | 807,765 | -2.1% |
Movements in Property valuations in the period were principally impacted by "Changes in ownership" related to the disposal of stakes in BHI and LLR (both accounted for as associates) against increased stakes in the GREA assets (reflected in their various sectors) because of Grit's increased interest in GREA that moved from 26.29% to 35.01%. Additions predominantly related to capex deployed to various development projects in GREA. Like-for-like local currency fair value movements of US$3.0m. This measure, in conjunction with adjustments for non-controlling interests (for properties consolidated by Grit, but part-owned by minority partners), form the basis of the Group's distributable earnings build up, which is alternatively shown in Note 17b "Company distribution calculation".
Income producing assets
Composition of income producing assets | 31 Dec 2022 | 30 June 2022 |
| US$'m | US$'m |
Investment properties | 609.0 | 604.5 |
Investment properties included within 'Investment in associates and joint ventures' | 149.6 | 190.6 |
Properties under development within 'Investment in associates and joint ventures' | 26.5 | 13.2 |
785.1 | 808.3 | |
Deposits paid on investment properties | 10.9 | 8.2 |
Other investments, Property, plant & equipment, Intangibles & related party loans | 36.8 | 40.2 |
Total income producing assets | 832.8 | 856.7 |
Cost control
Administrative costs | 31 December 2022 | 31 December 2021 | Movement | Movement |
US$'000 | US$'000 | US$'000 | % | |
Ongoing administrative costs | 9,377 | 6,542 | 2,835 | 43.34% |
Transaction costs | 31 | 32 | (1) | (3.1%) |
Total administrative expenses | 9,408 | 6,574 | 2,834 | 43.11% |
Administrative expenses increased 43.3% on the comparative period year. During the period Grit has established a full operational office in Kenya (to service the increased portfolio in the East Africa region as well as a representative office in Dubai). In line with the above and to continue servicing the growth initiatives of the Group, the Group increased headcount from 84 to 105 staff over the comparative period. The combination of high inflationary pressures, which has impacted costs across the globe, and the full resumption of travel and pre-covid business practices during the six months to December 2022 also contributed to the increased administrative expenses. During the period the Group earned fees amounting to US$0.7 million to offset these addition costs, with such fees expected to increase as the operational base increases. On an annualised basis, administrative expenses amount to 2.2% of the total incoming producing asset value as compared to 1.5% in the comparative period, with the increase due to the factors described above.
Material finance cost increases
Rising global interest rates have driven the Group's weighted average cost of debt up from 5.7% in December 2021 to 8.1% at 31 December 2022 and resulted in 45.6% increase in finance charges for the six-month period. Included in this charge however are a number of non-recurring items, most notably loan write off fees of US$1.0 million. The reported WACD of 8.1% also includes amortisation of loan issuance costs related to the debt refinance concluded in the period, which if excluded, reflects an ongoing cash WACD of 7.5%.
The increase in ongoing funding costs is somewhat shielded by annual contractual lease escalations over the property portfolio, which are predominantly linked to US consumer price inflation. Additionally, during the period under review, Grit entered into US$100m notional new interest rate hedges to complement the existing US$100 million of hedging in place at the beginning of the financial period. The hedges have become increasingly more effective as base interest rates have risen and are now largely shielding Grit from further material increases in base rates. A sensitivity of Grit's expected WACD to further moves in base rates as well as impact of non-cash elements (cash WACD) included in reported WACD is shown below:
All debt | WACD | Movement vs current WACD | Cash WACD |
Current | 8.1% | 0.0% | 7.5% |
+200bps | 9.0% | 0.9% | 8.4% |
+100bps | 8.5% | 0.5% | 7.9% |
+50bps | 8.3% | 0.2% | 7.6% |
-100bps | 7.0% | -1.1% | 6.4% |
-200bps | 6.5% | -1.5% | 5.9% |
US$ denominated debt | WACD | Movement vs current WACD | Cash WACD |
Current | 8.3% | 0.0% | 7.8% |
+200bps | 8.8% | 0.5% | 8.3% |
+100bps | 8.5% | 0.2% | 8.0% |
+50bps | 8.4% | 0.1% | 7.9% |
-100bps | 7.2% | -1.1% | 6.7% |
-200bps | 6.9% | -1.4% | 6.4% |
Net Asset Value and EPRA earnings per share
UNAUDITED31 December 2022 | UNAUDITED31 December 2022 | UNAUDITED31 December 2021 | UNAUDITED31 December 2021 | |
US$'000 | Per Share (Diluted)(Cents Per Share) | US$'000 | Per Share (Diluted)(Cents Per Share) | |
EPRA Earnings | 2,202 | 0.46 | 8,413 | 2.56 |
Total Company Specific Adjustments | 2,737 | 0.56 | (2,493) | (0.76) |
Adjusted EPRA Earnings | 4,939 | 1.02 | 5,920 | 1.80 |
Total Company Specific Distribution Adjustments | 7,400 | 1.54 | 4,122 | 1.28 |
TOTAL DISTRIBUTABLE EARNINGS | 12,339 | 2.56 | 10,042 | 3.08 |
DIVIDEND DECLARED OUT OF PROFITS | 9,902 | 2.00 | 8,158 | 2.50 |
|
|
|
|
|
UNAUDITED31 December 2022 | UNAUDITED31 December 2022 | AUDITED30 June 2022 | AUDITED30 June 2022 | |
US$'000 | Per Share (Diluted)(Cents Per Share) | US$'000 | Per Share (Diluted)(Cents Per Share) | |
EPRA NRV | 380,865 | 78.77 | 381,307 | 79.35 |
EPRA NTA | 366,736 | 75.84 | 366,805 | 76.33 |
EPRA NDV | 333,297 | 68.93 | 336,296 | 69.98 |
Net asset value evolution
NET ASSET VALUE EVOLUTION | US$'000 | US$ cps |
June 2022 as reported - IFRS | 336,296 | 69.98 |
Derivative financial instruments | (1,863) | (0.39) |
Deferred Tax on Properties | 46,873 | 9.75 |
EPRA NRV at 30 Jun 2022 | 381,306 | 79.34 |
Cash Profits | 11,293 | 2.34 |
Fair Value - Retail Assets | 540 | 0.11 |
Fair Value - Office | 2,372 | 0.49 |
Fair Value - Corporate Accommodation | (381) | (0.08) |
Fair Value - Hospitality | (261) | (0.05) |
Fair Value - Light Industrial | (506) | (0.10) |
Fair Value - Data centres | 208 | 0.04 |
Fair Value - LLR portfolio | 150 | 0.03 |
Fair Value - GREA under construction | 917 | 0.19 |
Fair Value - Non-controlling interests | (180) | (0.04) |
Fair value of financial Assets | 1,135 | 0.23 |
Other non-cash profits and movements | (8,199) | (2.19) |
Movement in Foreign Currency Translation reserve | (475) | (0.10) |
Dividend attributable to NCI | 2,397 | 0.50 |
Dividends paid | (9,599) | (1.99) |
Preference share capital | (1,019) | (0.21) |
Perpetual preference notes | (1,779) | (0.37) |
Share based payment via equity | 3,033 | 0.63 |
Transfers to non-controlling interests | (87) | (0.02) |
EPRA NRV before dilution | 380,865 | 78.75 |
Issue of shares / Treasury shares | - | 0.02 |
EPRA NRV at 31 Dec 2022 | 380,865 | 78.77 |
Deferred Tax on Properties | (47,592) | (9.84) |
Derivative financial instruments | 28 | 0.01 |
IFRS NRV at 31 Dec 2022 | 333,301 | 68.94 |
Interest-bearing borrowings
The Group has successfully refinanced the bulk of its short-dated debt, and with the SBSA syndication has increased the Group's Weighted Average Debt Expiry (WADE) from 1.8 years as at June 2022 to 3.6 years as at December 2022.
The Board continues to target a Group LTV of 35% to 40% and has defined actions to achieve this target including the consolidation of GREA and further reductions in absolute levels of debt. In the six-month period to 31 December 2022, the Group decreased total reported interest-bearing borrowings from US$425.0m to US$409.8m.
Movement in Debt for the period | As at 31 December 2022 | As at 30 June 2022 |
US$'000 | US$'000 | |
Balance at the beginning of the period | 425,066 | 410,588 |
Proceeds of interest bearing-borrowings | 280,707 | 58,513 |
Loan reduced through disposal of subsidiary | - | (6,624) |
Loan acquired through asset acquisition | - | 6,011 |
Loan issue costs incurred | (7,939) | (4,386) |
Amortisation of loan issue costs | 2,532 | 2,765 |
Costs associated with extinguishment of loans | 1,166 | - |
Foreign currency translation differences | 1,389 | (14,836) |
Interest accrued | 221 | 751 |
Debt settled during the year | (293,325) | (27,716) |
As at period end | 409,817 | 425,066 |
The following debt transactions were concluded during the period under review:
• | The refinance of the Bank ABC Club Med Facility in Casamance Holdings Limited by Nedbank, this facility was then wrapped up within the SBSA Syndication. Pushing out the maturity date to June 2027. Additionally, an Asset Refurbishment facility was secured as part of the syndication. |
• | The Zambia (US$76.4m), Ghana (US$14.1m), Mozambique (US$140m) and Senegal Facilities (EUR 6.6m) with the addition of the SBSA Mauritian RCF (EUR 26.5) were refinanced through the Standard Bank lead Syndication. Participant banks were SBSA, ABSA and Nedbank. Refer - Note 8. |
• | The remaining Maubank (US$1.8m) and ABC (US$2.4m) Bridge / Term Loan facilities at Grit Real Estate Income Group Limited and Grit Services Limited were fully repaid. |
• | A US$6.5m Bridging loan was availed from SBM to partially fund the increase in shareholding of GREA. |
• | Amortization of $1.5m of the Investec Anfa Loan, which extended the maturity date of the facility to April 2024. |
The total capital exposure to debt providers (net of interest accrued and unamortised loan issue costs) as at 31 December 2022 is as follows:
31 December 2022 | 30 June 2022 | |||||||
Debt in Subsidiaries | Debt in associates | Total | Debt in Subsidiaries | Debt in associates | Total | |||
US$'000 | US$'000 | US$'000 | % | US$'000 | US$'000 | US$'000 | % | |
Standard Bank Group | 267,640 | 14,859 | 282,499 | 59.7% | 183,496 | 6,516 | 190,012 | 40.3% |
Bank of China | - | - | - | 0.0% | 76,405 | - | 76,405 | 16.2% |
State Bank of Mauritius | 64,497 | 2,701 | 67,198 | 14.2% | 57,659 | 16,375 | 74,034 | 15.7% |
Investec Group | 34,254 | - | 34,254 | 7.2% | 36,129 | - | 36,129 | 7.7% |
Absa Group | - | - | - | 0.0% | 7,913 | 3,057 | 10,970 | 2.3% |
ABC Banking Corporation | - | - | - | 0.0% | 7,121 | - | 7,121 | 1.5% |
Nedbank CIB | 15,620 | 3,544 | 19,164 | 4.1% | 21,820 | 286 | 22,106 | 4.7% |
Mauritius Commercial Bank | - | - | - | 0.0% | - | 7,774 | 7,774 | 1.7% |
Maubank | 648 | - | 648 | 0.1% | 3,345 | - | 3,345 | 0.7% |
First National Bank | - | 35,104 | 35,104 | 7.4% | - | 9,013 | 9,013 | 1.9% |
Housing finance corporation | - | - | - | 0.0% | - | 2,316 | 2,316 | 0.5% |
Bank of Gaborone | - | 2,676 | 2,676 | 0.6% | - | 727 | 727 | 0.2% |
NCBA Bank Kenya | 10,700 | - | 10,700 | 2.3% | 10,700 | - | 10,700 | 2.2% |
Private Equity | 4,725 | - | 4,725 | 1.0% | 4,725 | - | 4,725 | 1.0% |
International Finance Corporation | 16,100 | - | 16,100 | 3.4% | 16,100 | - | 16,100 | 3.4% |
TOTAL BANK DEBT | 414,184 | 58,884 | 473,068 | 100.0% | 425,413 | 46,064 | 471,477 | 100.0% |
Interest accrued | 5,148 | 4,927 | ||||||
Unamortised loan issue costs | (9,515) | (5,274) | ||||||
TOTAL DEBT | 409,817 | 425,066 | ||||||
Dividend
An interim dividend per share has been declared for the six-month period ended 31 December 2022 of US$2.0 cents per share, paying out at least 80 percent of distributable earnings.
Leon van de Moortele |
Chief Financial Officer |
24 February 2023
PRINCIPAL RISKS AND UNCERTAINTIES
Grit has a detailed risk management framework in place that is reviewed annually and duly approved by the Risk Committee and the Board. Through this risk management framework, the Company has developed and implemented appropriate frameworks and effective processes for the sound management of risk.
The principal risks and uncertainties facing the Group as at 30 June 2022 are set out on pages 24 to 29 of the 2022 Integrated Annual Report together with the respective mitigating actions and potential consequences to the Group's performance in terms of achieving its objectives. These principal risks are not an exhaustive list of all risks facing the Group but are a snapshot of the Company's main risk profile as at year end.
The Board has reviewed the principal risks and existing mitigating actions in the context of the second half of the current financial year. The Board believes there has been no material change to the risk categories and are satisfied that the existing mitigation actions remain appropriate to manage them.
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The directors confirm that the abridged consolidated half year financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ("IASB") and that the half year management report includes a fair review of the information required by the Disclosure Guidance and Transparency Rules ("DTR") 4.2.7R and DTR 4.2.8R, namely:
• | Important events that have occurred during the first six months and their impact on the abridged set of half year unaudited financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and |
• | Material related party transactions in the first six months and a fair review of any material changes in the related party transactions described in the last Annual Report. |
The maintenance and integrity of the Grit website is the responsibility of the directors.
Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from the legislation in other jurisdictions. The directors of the Group are listed in its Annual Report for the year ended 30 June 2022. A list of current directors is maintained on the Grit website: www.grit.group.
On behalf of the Board
Bronwyn Knight | Leon van de Moortele |
Chief Executive Officer | Chief Financial Officer |
ABRIDGED CONSOLIDATED STATEMENT OF INCOME STATEMENT
| Unaudited six months ended 31 Dec 2022 | Unaudited six months ended 31 Dec 2021 | |
Notes | US$'000 | US$'000 | |
Gross property income | 9 | 26,914 | 24,147 |
Property operating expenses | (4,797) | (4,950) | |
Net property income | 22,117 | 19,197 | |
Other income | 120 | 568 | |
Administrative expenses | (9,408) | (6,542) | |
Net impairment charge on financial assets | 903 | 1,100 | |
Profit from operations | 13,732 | 14,323 | |
Fair value adjustment on investment properties | 3,139 | 3,256 | |
Corporate restructure costs | - | (32) | |
Fair value adjustment on other financial liability | - | (6,716) | |
Fair value adjustment on other financial asset | 47 | - | |
Fair value adjustment on derivative financial instruments | (1,007) | 1,252 | |
Share-based payment expense | (413) | (1,162) | |
Loss on extinguishment of loans | (1,166) | - | |
Share of profits from associates and joint ventures | 3 | 12,008 | 10,286 |
Loss on disposal of interest in associate | 3a | (295) | - |
Foreign currency losses | (3,381) | (1,132) | |
Profit before interest and taxation |
| 22,664 | 20,075 |
Interest income | 10 | 1,738 | 923 |
Finance costs | 11 | (18,210) | (12,536) |
Profit for the period before taxation |
| 6,192 | 8,462 |
Taxation | (2,587) | (3,615) | |
Profit for the period after taxation |
| 3,605 | 4,847 |
|
| ||
Profit / (loss) attributable to: |
| ||
Owners of the parent | 4,741 | 4,278 | |
Non-controlling interests | (1,136) | 569 | |
|
| 3,605 | 4,847 |
|
|
|
|
Basic and diluted earnings per share (cents) | 14 | 0.98 | 1.30 |
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited six months ended 31 Dec 2022 | Unaudited six months ended 31 Dec 2021 | |
| US$'000 | US$'000 |
Profit for the year | 3,605 | 4,847 |
Retirement benefit obligation | - | - |
Loss on translation of functional currency | (1,464) | (2,626) |
Other comprehensive expense that may be reclassified to profit or loss | (1,464) | (2,626) |
Total comprehensive income relating to the period | 2,141 | 2,221 |
|
| |
Total comprehensive income/ (expense) attributable to: |
| |
Owners of the parent | 3,495 | 2,133 |
Non-controlling interests | (1,354) | 88 |
| 2,141 | 2,221 |
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Unaudited as at 31 Dec 2022 | Audited as at 30 June 2022 | Unaudited as at 31 Dec 2021 | |
Notes | US$'000 | US$'000 | US$'000 | |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Investment properties | 2 | 609,016 | 604,474 | 549,887 |
Deposits paid on investment properties | 2 | 10,867 | 8,309 | 5,753 |
Property, plant and equipment | 2,095 | 2,087 | 2,260 | |
Intangible assets | 561 | 670 | 770 | |
Other investments | 1 | 1 | 1 | |
Investments in associates and joint ventures | 3 | 212,317 | 206,997 | 188,079 |
Related party loans receivable | 1,313 | 515 | 92 | |
Trade and other receivables | 5 | 1,829 | 4,615 | 1,246 |
Deferred tax | 12,698 | 12,544 | 21,042 | |
Total non-current assets |
| 850,697 | 840,212 | 769,130 |
|
|
| ||
Current assets |
|
|
| |
Trade and other receivables | 5 | 31,760 | 29,055 | 36,058 |
Current tax receivable | 2,070 | 1,881 | 1,397 | |
Related party loans receivable | 988 | 298 | 248 | |
Other loans receivable | 4 | 34,477 | 37,908 | 37,050 |
Derivative financial instruments | 3,003 | 1,862 | 46 | |
Cash and cash equivalents | 12,580 | 26,002 | 34,949 | |
Total current assets |
| 84,878 | 97,006 | 109,748 |
Total assets |
| 935,575 | 937,218 | 878,878 |
|
|
| ||
Equity and liabilities |
|
|
| |
Total equity attributable to ordinary shareholders |
|
|
| |
Ordinary share capital | 535,694 | 535,694 | 528,670 | |
Treasury shares reserve | (16,212) | (16,212) | (21,312) | |
Foreign currency translation reserve | (5,666) | (5,191) | (650) | |
Antecedent dividend reserve | - | - | 3,659 | |
Accumulated losses | (180,515) | (177,990) | (170,568) | |
Equity attributable to owners of the Company |
| 333,301 | 336,301 | 339,799 |
Preference share capital | 6 | 30,577 | 29,558 | 25,481 |
Perpetual preference notes | 7 | 26,289 | 25,741 | 25,169 |
Non-controlling interests | (25,675) | (22,224) | (19,012) | |
Total equity |
| 364,492 | 369,376 | 371,437 |
|
|
|
|
|
Liabilities |
|
|
| |
Non-current liabilities |
|
|
| |
Redeemable preference shares | 12,840 | 12,840 | 12,840 | |
Proportional shareholder loans | 40,989 | 26,716 | 17,725 | |
Interest-bearing borrowings | 8 | 371,549 | 242,091 | 259,904 |
Derivative financial instruments | 2,976 | - | - | |
Lease liabilities | 750 | 545 | 750 | |
Related party loans payable | 1,454 | 1,205 | 848 | |
Deferred tax liability | 51,480 | 49,592 | 55,535 | |
Total non-current liabilities |
| 482,038 | 332,989 | 347,602 |
|
|
|
|
|
Current liabilities |
|
|
| |
Interest-bearing borrowings | 8 | 38,268 | 182,975 | 103,016 |
Lease liabilities | 589 | 864 | 57 | |
Trade and other payables | 31,269 | 31,411 | 23,305 | |
Current tax payable | 1 | 763 | 1,215 | |
Derivative financial instruments | - | - | 1,424 | |
Related party loans payable | 1 | 1 | 17,799 | |
Other financial liabilities | 16,983 | 16,983 | 13,023 | |
Bank overdrafts | 1,934 | 1,856 | - | |
Total current liabilities |
| 89,045 | 234,853 | 159,839 |
Total liabilities |
| 571,083 | 567,842 | 507,441 |
Total equity and liabilities |
| 935,575 | 937,218 | 878,878 |
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
| Unaudited six months ended 31 Dec 2022 | Unaudited six months ended 31 Dec 2021 | |
| Notes | US$'000 | US$'000 |
Cash generated from operations |
|
|
|
Profit before taxation for the period |
| 6,192 | 8,462 |
Adjusted for: |
|
| |
Depreciation and amortisation | 282 | 320 | |
Interest income | 10 | (1,738) | (923) |
Share of profits from associates and joint ventures | 3 | (12,008) | (10,286) |
Finance costs | 11 | 18,210 | 12,536 |
IFRS 9 charges | (481) | (1,100) | |
Foreign currency gains | 3,381 | 1,132 | |
Straight-line rental income accrual | (186) | (352) | |
Amortisation of lease premium | 708 | (1,000) | |
Share based payment expense | 413 | 1,162 | |
Loss on disposal of interest in associate | 3a | 295 | - |
Loss on extinguishment on loan | 1,166 | - | |
Fair value adjustment on investment properties | 2 | (3,139) | (3,256) |
Fair value adjustment on other financial liability | (47) | 6,716 | |
Fair value adjustment on derivative financial instruments | 1,007 | (1,252) | |
|
| 14,055 | 12,159 |
Changes to working capital |
| ||
Movement in trade and other receivables | (1,815) | 870 | |
Movement in trade and other payables | 248 | (2,596) | |
Cash generated from operations | 12,488 | 10,433 | |
Taxation paid | (1,814) | (887) | |
Net cash generated from operating activities | 10,674 | 9,546 | |
Cash utilised on investing activities | |||
Acquisition of, and additions to investment properties | 2 | (2,875) | (2,542) |
Deposits paid on investment properties | 2 | (2,558) | - |
Additions to property, plant and equipment | (184) | (36) | |
Additions to intangible assets | - | (378) | |
Acquisition of associates and joint ventures | 3b | (19,440) | - |
Proceeds from partial disposal of associates and joint ventures | 3a | 5,102 | - |
Dividends and interest received from associates and joint ventures | 3 | 21,337 | 2,093 |
Interest received | 1,739 | 1,047 | |
Proceeds from partial disposal of investment in subsidiaries | 12 | 1 | - |
Related party loans advanced | - | (226) | |
Related party loans received | 1,488 | 456 | |
Other loans advanced | (2,189) | - | |
Proportional shareholder loans received from associates | 3 | 1,507 | 2,002 |
Proportional shareholder loans repaid | - | (472) | |
Proceeds from proportional shareholder loans | 14,273 | 393 | |
Other loans repayment received | 4,378 | - | |
Net cash generated in investing activities |
| 22,579 | 2,337 |
Proceeds from the issue of equity instruments | - | 83,767 | |
Equity issuance costs | - | (9,217) | |
Dividends paid to non-controlling shareholders | - | (1) | |
Ordinary dividends paid | (7,377) | - | |
Perpetual preferences note dividend paid | (1,228) | - | |
Proceeds from interest bearing borrowings | 8 | 280,707 | 6,522 |
Settlement of interest-bearing borrowings | 8 | (293,325) | (47,024) |
Finance costs | (17,137) | (12,942) | |
Loan issue costs incurred | (7,939) | - | |
Payments of leases | (70) | (173) | |
Net cash (utilised in) / generated from financing activities |
| (46,369) | 20,932 |
Net movement in cash and cash equivalents |
| (13,116) | 32,815 |
Cash at the beginning of the year |
| 24,146 | 2,314 |
Effect of foreign exchange rates |
| (384) | (180) |
Total cash and cash equivalents at the end of the period |
| 10,646 | 34,949 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Ordinary share capital | Treasury shares reserve | Foreign currency translation reserve | Antecedent Dividend reserve | Accumulated losses | Preference share capital | Perpetual preference notes | Non-controlling interests | Total Equity |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Balance as at 1 July 2021 | 463,842 | (18,406) | 1,495 | - | (176,073) | 25,481 | - | (17,935) | 278,404 |
Profit / (loss) for the year | - | - | - | - | 10,443 | - | - | 670 | 11,113 |
Other comprehensive income for the year | - | - | (8,010) | - | 154 | - | - | (1,608) | (9,464) |
Total comprehensive income / (expense) | - | - | (8,010) | - | 10,597 | - | - | (938) | 1,649 |
Share based payments | - | - | - | - | 138 | - | - | - | 138 |
Antecedent dividend reserve | (3,659) | - | - | 3,659 | - | - | - | - | - |
Ordinary dividends declared | - | - | - | (3,659) | (7,903) | - | - | - | (11,562) |
Treasury shares | - | (2,906) | - | - | - | - | - | - | (2,906) |
Disposal of treasury shares | - | 5,100 | - | - | - | - | - | (3,600) | 1,500 |
Ordinary shares issued | 83,454 | - | - | - | - | - | - | - | 83,454 |
Perpetual preference notes issued | - | - | - | - | - | - | 26,775 | - | 26,775 |
Preferred dividend accrued on perpetual notes | - | - | - | - | (1,837) | - | 572 | - | (1,265) |
Share issue expenses relating to issue of perpetual notes | - | - | - | - | - | - | (1,606) | - | (1,606) |
Preferred dividend accrued on preference shares | - | - | - | - | (4,077) | 4,077 | - | - | - |
Share issue expenses | (7,943) | - | - | - | - | - | - | - | (7,943) |
Non-controlling interests on acquisition of subsidiary other than business combination | - | - | - | - | - | - | - | 1,414 | 1,414 |
Reclassification of foreign currency translation reserve on sale of subsidiary | - | - | 906 | - | - | - | - | - | 906 |
Reclassification of foreign currency translation reserve on part sale of interests in associate | - | - | 418 | - | - | - | - | - | 418 |
Dividends distributable to non-controlling shareholders | - | - | - | - | 1,165 | - | - | (1,165) | - |
Balance as at 30 June 2022 (audited) | 535,694 | (16,212) | (5,191) | - | (177,990) | 29,558 | 25,741 | (22,224) | 369,376 |
Balance as at 1 July 2021 | 463,842 | (18,406) | 1,495 | - | (176,073) | 25,481 | - | (17,935) | 278,404 |
Profit for the period | - | - | - | - | 4,278 | - | - | 569 | 4,847 |
Other comprehensive expense for the period | - | - | (2,145) | - | - | - | - | (481) | (2,626) |
Total comprehensive income | - | - | (2,145) | - | 4,278 | - | - | 88 | 2,221 |
Share based payments | - | - | - | - | 62 | - | - | - | 62 |
Treasury shares | - | (2,906) | - | - | - | - | - | - | (2,906) |
Ordinary shares issued | 76,098 | - | - | - | - | - | - | - | 76,098 |
Transfer to antecedent dividend reserve | (3,659) | - | - | 3,659 | - | - | - | - | - |
Perpetual preference note issued | - | - | - | - | - | - | 26,775 | - | 26,775 |
Perpetual preference notes issue expenses | - | - | - | - | - | - | (1,606) | - | (1,606) |
Share issue expenses | (7,611) | - | - | - | - | - | - | - | (7,611) |
Dividends distributable to non-controlling shareholders | - | - | - | - | 1,165 | - | - | (1,165) | - |
Balance as at 31 December 2021 (unaudited) | 528,670 | (21,312) | (650) | 3,659 | (170,568) | 25,481 | 25,169 | (19,012) | 371,437 |
|
|
|
|
|
|
|
|
|
|
Balance as at 1 July 2022 | 535,694 | (16,212) | (5,191) | - | (177,990) | 29,558 | 25,741 | (22,224) | 369,376 |
Profit / (Loss) for the period | - | - | - | - | 4,741 | - | - | (1,136) | 3,605 |
Other comprehensive expense for the period | - | - | (1,246) | - | - | - | - | (218) | (1,464) |
Total comprehensive (expense) / income | - | - | (1,246) | - | 4,741 | - | - | (1,354) | 2,141 |
Share based payments | - | - | - | - | 413 | - | - | - | 413 |
Share of other changes in equity of associate | - | - | - | - | 2,620 | - | - | - | 2,620 |
Reclassification of foreign currency translation reserve on part sale of interests in associate | - | - | 771 | - | - | - | - | - | 771 |
Preferred dividend accrued on preference shares | - | - | - | - | (1,019) | 1,019 | - | - | - |
Preferred dividend accrued on perpetual notes | - | - | - | - | (1,779) | - | 548 | - | (1,231) |
Ordinary dividends paid | - | - | - | - | (9,599) | - | - | - | (9,599) |
Transaction with non-controlling interests without change in control | - | - | - | - | (299) | - | - | 300 | 1 |
Dividends distributable to non-controlling shareholders | - | - | - | - | 2,397 | - | - | (2,397) | - |
Balance as at 31 December 2022 (unaudited) | 535,694 | (16,212) | (5,666) | - | (180,515) | 30,577 | 26,289 | (25,675) | 364,492 |
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of this abridged consolidated financial statements are set out below.
1.1 Basis of preparation
The unaudited abridged consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, interpretations issued by the IFRS Interpretations Committee (IFRIC); the Financial Pronouncements as issued by Financial Reporting Standards Council and the LSE and SEM Listings Rules. The unaudited abridged consolidated financial statements have been prepared on the going-concern basis and were approved for issue by the Board on 23 February 2023.
Going Concern
The directors are required to consider an assessment of the Group's ability to continue as a going concern when producing the interim abridged unaudited consolidated nancial statements.
The Directors are of the opinion that after reconsideration of the items highlighted in the Integrated Annual Report published on 28 October 2022 (see pages 152 to 153), the risks assessed are being managed and the Group continues to perform within the parameters of the going concern models prepared. The directors therefore concluded that it remains appropriate to prepare the financial statements on a going concern basis.
Functional and presentation currency
The abridged unaudited consolidated half year financial statements are prepared and are presented in United States Dollars (US$). Amounts are rounded to the nearest thousand, unless otherwise stated. Some of the underlying subsidiaries and associates have functional currencies other than the US$. The functional currency of those entities reflects the primary economic environment in which they operate.
Presentation of alternative performance measures
The Group presents certain alternative performance measures on the face of the income statement. Revenue is shown on a disaggregated basis, split between gross rental income and the straight-line rental income accrual. Additionally, if applicable, the total fair value adjustment on investment properties is presented on a disaggregated basis to show the impact of contractual receipts from vendors separately from other fair value movements. These are non IFRS measures and supplement the IFRS information presented. The directors believe that the presentation of this information provides useful insight to users of the financial statements and assists in reconciling the IFRS information to industry wide EPRA metrics.
1.2 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is a person or group that is responsible for allocating resources and assessing performance of the operating segments. The Group has determined the board as its chief operating decision-maker as it is the board that makes the Group's strategic decisions. Each operating entity has its own segmental and geographical allocation, and it is not allocated to more than one sector. Depreciation and amortization are not shown separately due to the immaterial nature thereof.
1.3 Critical Judgements and estimates
The preparation of these abridged consolidated half year financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in applying the Group's accounting policies. Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectation of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
Judgements
In the process of applying the Group's accounting policies, management has made the following judgements.
Unconsolidated structured entity
Drive in Trading (DiT), a B-BBEE consortium, secured a facility of US$33.4 million from the Bank of America N.A (UK Branch) ("BoAML") to finance its investment in Grit. The BoAML facility was granted to DiT after South Africa's Government Employees Pension Fund (GEPF), represented by Public Investment Corporation SOC Limited ("PIC"), provided a guarantee to BoAML in the form of a Contingent Repurchase Obligation ("CRO") for up to US$35 million. The terms of the CRO obligate PIC to acquire the loan granted to DiT should DiT default under the BoAML facility.
In order to facilitate the above, the Group agreed to de-risk 50% of PIC's US$35 million exposure to the CRO, by granting PIC a guarantee whereby should BoAML enforce the CRO, the Group would indemnify PIC for up to 50% of the losses, capped at US$17.5 million, following the sale of the underlying securities, being the shares held by DiT in Grit.
Given the unusual structure of the transaction, the Group has determined that DiT has limited and predetermined activities and can be considered a structured entity under IFRS 12 as the design and purpose of DiT was to fund Grit rights issue and at the same time enable Grit to obtain B-BBEE credentials.
As the Group does not have both, power to direct the activities of DiT and an exposure to variable returns, the Group has exercised judgement on not to consolidate DiT but instead treat it as an unconsolidated structured entity due to DiT being a related party.
Freedom Asset Management (FAM) as a subsidiary
The Group has considered Freedom Asset Management (FAM) to be its subsidiary for consolidation purposes due to the Group's implied control of FAM, as the Group has ability to control the variability of returns of FAM and has the ability to affect returns through its power to direct the relevant activities of FAM. The Group does not own any interest in FAM however it has exposure to returns from its involvement in directing the activities of FAM.
Grit Executive Share Trust (GEST) as a subsidiary
The Group has considered Grit Executive Share Trust (GEST) to be its subsidiary for consolidation purposes due to the Group's implied control of GEST, as the Group's ability to appoint the majority of the trustees and to control the variability of returns of GEST. The Group does not own any interest in GEST but is exposed to the credit risk and losses of (GEST) as the Group shall bear any losses sustained by GEST and shall be entitled to receive and be paid any profits made in respect of the purchase, acquisition, sale or disposal of unawarded shares in the instance where shares revert back to GEST. No non-controlling interest has been accounted for in the current year.
Grit Executive Share Trust II (GEST II) as a subsidiary
During the financial year 2022, Grit Executive Share Trust II has been incorporated to act as trust for the new long term incentive plan of the Group. The trust will hold Grit shares to service the new scheme when the shares will vest to the employees in the future. The corporate set-up of GEST II is like GEST and the Group has considered GEST II to be a subsidiary the Group's implied control on GEST II.
African Development Managers Ltd (APDM) as a joint venture
The Group has acquired an equity interest of 77.95% in African Development Managers Ltd. The Group has concluded that even though it holds a majority shareholding in African Development Managers Ltd, it does not have control of the latter because it is currently not satisfying the power criteria of control. The design of African Development Managers Ltd is such that decisions about the relevant activities need to be approved by the investment committee of the company. For a decision to be approved, seventy five percent of the members present need to vote in favor of the decision. Currently the Group has the right to appoint two members to the investment committee. Prudential Impact Investments Private Equity LLC who holds 21.05% of African Development Managers Ltd also has the right to appoint two members and Gateway Africa Real Estate Limited with a current shareholding of 1% can appoint one member. Given the seventy five percent threshold requirement to pass any resolution, the Group and Prudential Impact Investments Private Equity LLC will have to unanimously agree to any decision before those are formally enacted by management. Therefore, neither the Group nor Prudential Impact Investments Private Equity LLC on their own control African Development Managers Ltd. Because of the unanimous consent required by both the significant shareholders of African Development Managers Ltd, the Group has classified the investment in African Development Managers Ltd as an investment in joint venture.
Gateway Real Estate Africa Ltd (GREA) as an associate
The Group has considered Gateway Real Estate Africa Ltd (GREA) to be its associate for consolidation purposes due to the Group's significant influence over the latter. During the six months period ended 31 December 2022, the Group has acquired an additional 8.72% equity interests in GREA which brings the total shareholding of Grit in GREA to 35.01%. However, the increase in shareholding has not resulted in Grit being able to exercise control over GREA. As at 31 December 2022, the Group has accounted GREA as an associate.
Estimates
The principal areas where such estimations have been made are:
Fair value of investment properties
The fair value of investment properties is determined using a combination of the discounted cash flows method and the income capitalisation valuation method, using assumptions that are based on market conditions existing at the end of the relevant reporting date. For further details on the valuation method, judgements and assumptions made, refer to note 2.
Taxation
Judgements and estimates are required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax inspection issues in the jurisdictions in which it operates based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made.
The Group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred tax assets requires the Group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each relevant jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the end of the reporting period could be impacted.
2. INVESTMENT PROPERTIES
As at 31 Dec 2022 | As at 30 June 2022 | |
US$'000 | US$'000 | |
Net carrying value of properties | 609,016 | 604,474 |
Movement for the year excluding straight-line rental income accrual, lease incentive and right of use of land |
| |
Investment property at the beginning of the year | 584,768 | 535,433 |
Acquisition through subsidiary other than business combination | - | 33,050 |
Transfer from associate on step up to subsidiary | - | 19,343 |
Disposal of subsidiary | - | (10,975) |
Other capital expenditure and construction | 2,875 | 5,946 |
Foreign currency translation differences | (1,173) | (18,196) |
Revaluation of properties at end of period | 3,139 | 19,870 |
Contractual receipts from vendors of investment properties (reduction in purchase price) | - | 297 |
As at period end | 589,609 | 584,768 |
|
|
|
Reconciliation to consolidated statement of financial position and valuations |
| |
Investment properties carrying amount per above | 589,609 | 584,768 |
Right of use of land | 6,633 | 6,666 |
Lease incentive | 6,635 | 7,053 |
Straight-line rental income accrual | 6,139 | 5,987 |
Total valuation of properties | 609,016 | 604,474 |
Lease incentive asset included in investment property
In accordance with IFRS 16, rental income is recognised in the Group income statement on a straight-line basis over the lease term. This includes the effect of lease incentives given to tenants. The Group has granted lease incentives to tenants (in the form of rent-free periods). The result is a receivable balance included within investment property in the balance sheet as those are balances that must be considered when reconciling to valuation figures to prevent double counting of assets. This balance is subject to impairment testing under IFRS 9 using the simplified approach to expected credit loss of IFRS 9.
As at 31 Dec 2022 | As at 30 June 2022 | |
US$'000 | US$'000 | |
Lease incentive receivables before impairment | 7,158 | 7,993 |
Impairment of lease incentive receivables | (523) | (940) |
Net lease incentive included within investment property | 6,635 | 7,053 |
Investment property pledged as security
Certain of the Group's investment property has been pledged as security for interest-bearing borrowings (note 8) as follows:
• | Mozambican investment properties with a market value of US$305.1 million are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$140.0 million (June 2022: Mozambican investment properties with a market value of US$301.1 million are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$140.0 million). |
• | Moroccan investment property with a market value of US$67.5 million (June 2022: US$71.5 million) is mortgaged to Investec Bank South Africa to secure debt facilities amounting to US$33.8 million (June 2022: US$35.7 million). |
• | Mauritian investment property with a market value of US$48.3 million (June 2022: US$48.8 million) is mortgaged to State Bank of Mauritius to secure debt facilities amounting to US$25.0 million (June 2022: US$24.8 million). |
• | Kenyan investment properties with a market value of US$60.6 million (June 2022: US$60.5 million) are mortgaged to Nedbank South Africa to secure debt facilities amounting to US$8.6 million (June 2022: US$8.6 million) and International Finance Corporation to secure debt facilities amounting to US$ 16.1 million (June 2022: US$16.1 million). |
• | Zambian investment property with a market value of US$57.2 million (June 2022: US$56.9 million) is mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$28.1 million (June 2022: Bank of China US$34.8 million). |
• | Senegalese investment property with a market value of US$24.1 million (June 2022: US$20.7 million) is mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$7.0 million (June 2022: ABC Banking Corporation: US$4.6 million). |
• | Ghanaian investment properties with a market value of US$36.6 million (June 2022: US$35.3 million) are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$14.6 million (June 2022- Nedbank South Africa: US$6.2million and ABSA Bank Ghana Limited: US$7.9 million). |
Summary of valuations by reporting date | Most recent independent valuation date | Valuer (for the most recent valuation) | Sector | Country | As at 31 Dec 2022 US$'000 | As at 30 June 2022 US$'000 |
Commodity House Phase I | 31-Dec-22 | REC | Office | Mozambique | 52,513 | 52,346 |
Commodity House Phase II | 31-Dec-22 | Directors' valuation | Office | Mozambique | 20,008 | 19,264 |
Hollard Building | 31-Dec-22 | Directors' valuation | Office | Mozambique | 21,179 | 21,012 |
Vodacom Building | 31-Dec-22 | REC | Office | Mozambique | 52,497 | 51,906 |
Zimpeto Square | 31-Dec-22 | Directors' valuation | Retail | Mozambique | 4,038 | 3,395 |
Bollore Warehouse | 31-Dec-22 | Directors' valuation | Light industrial | Mozambique | 10,791 | 10,410 |
Anfa Place Mall | 31-Dec-22 | Knight Frank | Retail | Morocco | 67,473 | 71,532 |
Tamassa Resort | 31-Dec-22 | Knight Frank | Hospitality | Mauritius | 48,262 | 48,827 |
VDE Housing Compound | 31-Dec-22 | REC | Accommodation | Mozambique | 54,177 | 55,180 |
Imperial Distribution Centre | 31-Dec-22 | Knight Frank | Light industrial | Kenya | 20,140 | 21,620 |
Mara Viwandani | 31-Dec-22 | Directors' valuation | Light industrial | Kenya | 2,792 | 2,792 |
Mall de Tete | 31-Dec-22 | Directors' valuation | Retail | Mozambique | 14,940 | 13,804 |
Acacia Estate | 31-Dec-22 | REC | Accommodation | Mozambique | 75,008 | 73,809 |
5th Avenue | 31-Dec-22 | Directors' valuation | Office | Ghana | 17,099 | 16,010 |
Capital Place | 31-Dec-22 | Directors' valuation | Office | Ghana | 19,540 | 19,320 |
Mukuba Mall | 31-Dec-22 | Knight Frank | Retail | Zambia | 57,270 | 56,933 |
Orbit Complex | 31-Dec-22 | Directors' valuation | Light industrial | Kenya | 40,534 | 38,926 |
Copia Land | 31-Dec-22 | Directors' valuation | Light industrial | Kenya | 6,633 | 6,666 |
Club Med Cap Skirring Resort | 31-Dec-22 | Directors' valuation | Hospitality | Senegal | 24,122 | 20,722 |
Total valuation of investment properties directly held by the Group |
| 609,016 | 604,474 | |||
Deposits paid on Imperial Distribution Centre Phase 2 | 2,317 | 2,259 | ||||
Deposits paid on Capital Place Limited | 3,550 | 3,550 | ||||
Deposit paid on Gateway Real Estate Africa Limited | 5,000 | 2,500 | ||||
Total deposits paid on investment properties |
| 10,867 | 8,309 | |||
Total carrying value of investment properties including deposits paid |
| 619,883 | 612,783 | |||
Investment properties held within associates and joint ventures - Group share |
|
| ||||
Buffalo Mall - Buffalo Mall Naivasha Limited (50%) | 31-Dec-22 | Knight Frank | Retail | Kenya | 5,805 | 6,116 |
Kafubu Mall - Kafubu Mall Limited (50%) | 31-Dec-22 | Directors' valuation | Retail | Zambia | 12,398 | 11,965 |
CADS II Building - CADS Developers Limited (50%) | 31-Dec-22 | Directors' valuation | Office | Ghana | 14,420 | 15,100 |
Cosmopolitan Shopping Centre - Cosmopolitan Shopping Centre Limited (50%) | 31-Dec-22 | Directors' valuation | Retail | Zambia | 28,113 | 27,199 |
Canonniers, Mauricia and Victoria Resorts and Spas - Beachcomber Hospitality (27.1%) (30 June 2022 - 44.42%) | 31-Dec-22 | Directors' valuation | Hospitality | Mauritius | 56,789 | 95,055 |
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%)- 20 Investment properties | 31-Dec-22 | Knight Frank | Light industrial | Botswana | 10,432 | 14,662 |
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property | 31-Dec-22 | Knight Frank | Hospitality | Botswana | 107 | 155 |
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 2 Investment properties | 31-Dec-22 | Knight Frank | Retail | Botswana | 2,969 | 4,160 |
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property | 31-Dec-22 | Knight Frank | Office | Botswana | 706 | 1,003 |
Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property | 31-Dec-22 | Knight Frank | Accommodation | Botswana | 676 | 966 |
Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) consisting of: | ||||||
- DH4 Bamako | 31-Dec-22 | Directors' valuation | Corporate accommodation | Mali | 5,460 | 5,733 |
- ADC - Phase 1 | 31-Dec-22 | Knight Frank | Data Centre | Nigeria SEZ | 9,187 | 6,839 |
- St Helene | 31-Dec-22 | Knight Frank | Medical | Mauritius | 5,753 | 3,076 |
- The Precinct | 31-Dec-22 | Knight Frank | Office | Mauritius | 9,868 | 4,390 |
- Appolonia Ph1 | 31-Dec-22 | Directors' valuation | Office | Ghana | 1,202 | 873 |
- CCI House | 31-Dec-22 | Directors' valuation | Office | Kenya | 3,614 | - |
- Metroplex | 31-Dec-22 | Directors' valuation | Retail | Uganda | 8,630 | 6,478 |
Total of investment properties acquired through associates and joint ventures | 176,129 | 203,770 | ||||
Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) - Associates - consisting of: | 31-Dec-22 | |||||
- DH1 Elevation | 31-Dec-22 | Knight Frank | Corporate accommodation | Ethiopia | 12,800 | 9,806 |
- DH3 Roslyn Grove | 31-Dec-22 | Knight Frank | Corporate accommodation | Kenya | 9,820 | 7,089 |
Total of investment properties acquired through GREA Associates | 22,620 | 16,895 | ||||
Total portfolio |
|
|
|
| 818,632 | 833,448 |
|
|
|
|
|
|
|
Functional currency of total investment property portfolio |
|
| ||||
United States Dollars | 586,153 | 558,533 | ||||
Euros | 134,927 | 167,680 | ||||
Moroccan Dirham | 67,473 | 71,532 | ||||
Botswanan Pula | 14,890 | 20,946 | ||||
Kenyan Shilling | 2,792 | 2,792 | ||||
Zambian Kwacha | 12,397 | 11,965 | ||||
Total portfolio |
|
|
|
| 818,632 | 833,448 |
Valuation policy and methodology for investment properties held by the Group and by associates and joint ventures
For this interim reporting period, investment properties have been valued by reputable RICS accredited valuation experts who have sucient expertise in the jurisdictions where the properties are located. As per the valuation policy, external valuations are obtained for the top 50% of the portfolio or where any property specific changes may have affected the property valuation. For December 2022, a total of 60% of the property portfolio was externally valued and directors' valuation were utilized for the following properties:
• | CADS II Building |
• | Capital Place |
• | 5th Avenue Building |
• | Orbit Complex |
• | Mara Viwandani |
• | Copia Land |
• | BHI- Cannonier, Victoria, Mauritia Hotels |
• | Hollard Building |
• | Commodity House Phase II building |
• | Mall de Tete |
• | Bollore Warehouse |
• | Zimpeto Square |
• | Club Med Cap Skirring Resort |
• | Kafubu Mall |
Investment Properties under the GREA Portfolio
• | Appolonia Ph1 |
• | DH4 Bamako |
• | CCI House |
• | Metroplex Shopping Mall |
All valuations that are performed in the functional currency of the relevant property company are converted to United States Dollars at the eective closing rate of exchange. All independent valuations have been undertaken in accordance with the RICS Valuation Standards that were in eect at the relevant valuation date and are further compliant with International Valuation Standards. Market values presented by valuers have also been conrmed by the respective valuers to be fair value in terms of IFRS.
Independent valuations were performed at 31 December 2022 by REC, Chartered Surveyors and Knight Frank, Chartered Surveyors, using the discounted cash flow method for all building valuations and using the comparable method for all land parcel valuations.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The following entities have been accounted for as associates and joint ventures in the current and comparative consolidated financial statements using the equity method:
As at 31 Dec 2022 | As at 30 June 2022 | |||
Name of joint venture | Country | % Held | US$'000 | US$'000 |
Kafubu Mall Limited 1 | Zambia | 50.00% | 12,222 | 11,761 |
Cosmopolitan Shopping Centre Limited 1 | Zambia | 50.00% | 28,101 | 27,173 |
CADS Developers Limited 1 | Ghana | 50.00% | 6,521 | 6,974 |
Africa Property Development Managers Ltd 1 | Mauritius | 77.95% | 19,762 | 14,247 |
Carrying value of joint ventures |
|
| 66,606 | 60,155 |
|
|
| ||
|
|
| As at 31 Dec 2022 | As at 30 June 2022 |
Name of associate | Country of incorporation and operation | % Held | US$'000 | US$'000 |
Buffalo Mall Naivasha Limited 1 | Kenya | 50.00% | 12,390 | 3,753 |
Letlole La Rona Limited 2 | Botswana | 18.31% | 3,354 | 17,353 |
Gateway Real Estate Africa Ltd 3 | Mauritius | 35.01% | 79,116 | 55,866 |
Beachcomber Hospitality Investments Limited 4,5 | Mauritius | 27.10% | 50,851 | 69,870 |
Carrying value of associates |
|
| 145,711 | 146,842 |
Joint ventures | 66,606 | 60,155 | ||
Associates | 145,711 | 146,842 | ||
Total carrying value of associates and joint ventures | 212,317 | 206,997 |
1 | The percentage ownership of the Group during the six months period ended 31st December 2022 did not change. |
2 | The Group interests in the associate has decreased from 25.10% to 18.31% following the part disposal made during the six months period ended 31st December 2022. |
3 | The Group interests in the associate has increased from 26.29% to 35.01% following acquisition made during the six months period ended 31st December 2022. |
4 | Beachcomber Hospitality Investments Limited ("BHI") has declared dividend amounting to €32.6 million towards the end of the reporting period. The dividends declared were scrip dividend where the shareholders had the option to elect to receive the dividend in cash or additional shares in BHI in proportion to their current shareholding. The Group has elected for a cash payout whereas New Mauritius Hotel ("NMH"), the other shareholder of BHI has elected to convert the dividend payout into additional BHI shares. Following the increase in shareholding of NMH in BHI, the Group interests in the associate has decreased from 44.42% to 27.10%. |
5 | The carrying value of Beachcomber Hospitality Investments at 31 December 2022 includes an unsecured loan of €37.5 million (30 June 2022: €37.5 million), from the Group to the associate, which bears interest at 6.25% (30 June 2022: 6.25%). |
All investments in associates are private entities and do not have quoted prices available with the exception of Letlole La Rona Limited who is a listed entity on the Botswana Stock Exchange.
3a. Disposal of equity interest in Letlole La Rona Limited
During the six months period ended 31st December 2022, Grit Services Limited a wholly owned subsidiary of the Group has disposed of 6.79% equity interests in Letlole La Rona Limited on the Botswana Stock Exchange. The trading price as at the date of disposal was BWP 3.48. The total number of shares disposed was 19 million shares. Following the disposal transaction, the equity interests of the Group in Letlole La Rona Limited has been reduced to 18.31%.
US$'000 | |
Fair value of consideration received | 5,102 |
Less: Carrying amount of investment in associate disposed | (4,626) |
Gain on part disposal of interest in associate | 476 |
Reclassification of cumulated foreign currency translation reserve to profit or loss | (771) |
Total loss on part disposal of investment in associate | (295) |
Note: the reclassification of cumulated foreign currency translation reserve to profit or loss has no impact on the NAV.
3b. Additional equity interest acquired in Gateway Real Estate Africa Ltd
During the six-months period ended 31st December 2022, the Group has continued its announced plan to acquire a controlling stake in Gateway Real Estate Africa Ltd ("GREA"). The Group has acquired an additional equity interest of 8.72% in GREA. The shareholding of the Group has increased from 26.29% to 35.01%. A cash consideration of US$19.4million has been paid to the selling shareholder Gateway Africa Real Estate Limited. Following the transaction, the Group kept exercising significant influence over GREA and therefore continues to account for GREA using the equity method. The increase of the investment in GREA has been split notionally between goodwill and the additional interest in the fair value of the net identifiable assets of the associate acquired. The notional goodwill on the acquisition of the additional 8.72% in GREA amounted to US$1.75 million. The notional goodwill element has been included in the carrying amount of the associate. The total notional goodwill element embedded in the carrying amount of the associate as at 31st December 2022 is US$4.04 million which is made up of US$2.29 million goodwill on acquisition of the additional 6.31% in GREA in the financial year 2022 and US$1.75 million arising on the acquisition of the 8.72% in GREA during the period ended 31st December 2022.
US$'000 | |
Fair value of net identifiable assets acquired (8.72% additional interests in GREA) | 17,683 |
Notional goodwill | 1,757 |
Fair value of consideration paid (in cash) | 19,440 |
Each of the acquisitions referred to below have given the Group access to high quality African real estate in line with the Group's strategy.
In circumstances where an associate or joint venture has the same reporting date as the Group, the Group will use the IFRS financial statements of the associate or joint venture. However, if the associate or joint venture has a different reporting date to the Group, the latter will use the IFRS reporting pack of the associate or joint venture to incorporate their results in the consolidated financial statements. Where necessary, the financial information has been amended to reflect adjustments made by the Group when using the equity method due to the differences in accounting policies.
Included below is a reconciliation of the carrying amount of the Group's interests in each associate and joint venture to the Group share of net assets of the associate and joint venture.
Reconciliation to carrying value in associates and joint ventures
Letlole La Rona Limited | Kafubu Mall Limited | Beachcomber Hospitality Investments Limited | Africa Property Development Managers Ltd | Gateway Real Estate Africa Ltd | CADS Developers Limited | Cosmopolitan Shopping Centre Limited | Buffalo Mall Naivasha Limited | Total | |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Opening Balance 1 July 2022 | 17,353 | 11,761 | 69,870 | 14,247 | 55,866 | 6,974 | 27,173 | 3,753 | 206,997 |
(Disposed) / acquired during the period | (4,626) | - | - | - | 19,440 | - | - | - | 14,814 |
Profit / (losses) from associates and joint ventures | |||||||||
Revenue | 1,090 | 553 | 2,879 | - | 617 | 732 | 1,195 | 149 | 7,215 |
Asset and development fees | - | - | - | 1,705 | - | - | - | - | 1,705 |
Property operating expenses | (93) | (96) | - | - | (100) | (14) | (192) | (83) | (578) |
Admin expenses and recoveries | (23) | (6) | (15) | (2,021) | (562) | - | (6) | (5) | (2,638) |
Other income | - | - | - | 5,834 | 1,215 | - | - | - | 7,049 |
Net impairment charge on financial assets | - | - | - | - | (16) | - | - | - | (16) |
Unrealised foreign exchange gains/(losses) | 92 | 46 | (261) | - | (33) | 12 | - | (19) | (163) |
Share based payment expense | - | - | - | - | (2,620) | - | - | - | (2,620) |
Interest income | 144 | - | - | - | 2,046 | - | 2 | - | 2,192 |
Loss on extinguishment of loans | - | - | - | - | - | (25) | - | - | (25) |
Finance charges | (301) | (3) | (805) | (3) | (812) | (497) | - | (127) | (2,548) |
Fair value movement on investment property | 150 | 1,090 | (1,523) | - | 1,135 | (666) | 903 | (314) | 775 |
Fair value adjustment on other financial asset | - | - | 1,948 | - | - | - | - | - | 1,948 |
Current tax | (197) | (25) | (199) | - | (52) | - | (35) | - | (508) |
Deferred tax | - | - | (322) | - | 372 | 170 | - | - | 220 |
Total profits/(losses) from associates and joint ventures | 862 | 1,559 | 1,702 | 5,515 | 1,190 | (288) | 1,867 | (399) | 12,008 |
Dividends and interest paid to Group | (356) | - | (20,981) | - | - | - | - | - | (21,337) |
Other equity movement | - | - | - | - | 2,620 | - | - | - | 2,620 |
Repayment of proportionate shareholders loan | - | (403) | - | - | - | (165) | (939) | - | (1,507) |
Effect of dilution | - | - | (71) | - | - | - | - | - | (71) |
Foreign currency translation differences | (843) | (695) | 331 | - | - | - | - | (1,207) | |
Carrying value of associates and joint ventures- 31 December 2022 | 12,390 | 12,222 | 50,851 | 19,762 | 79,116 | 6,521 | 28,101 | 3,354 | 212,317 |
4. OTHER LOANS RECEIVABLE
As at 31 Dec 2022 | As at 30 Jun 2022 | |
US$'000 | US$'000 | |
Ndola Investments Limited | 5,073 | 5,130 |
Kitwe Copperbelt Limited | 5,404 | 5,640 |
Syngenta Limited | 18,265 | 19,133 |
Healthcare assets | 239 | 231 |
Drift (Mauritius) Limited | 6,210 | 8,211 |
Drift (Mauritius) Limited | 1,794 | 2,071 |
Pangea 2 Limited | 6 | 6 |
IFRS 9 - Impairment on financial assets (ECL) | (2,514) | (2,514) |
As at period end | 34,477 | 37,908 |
|
|
|
Classification of other loans: |
|
|
Non-current assets | - | - |
Current assets | 34,477 | 37,908 |
As at period end | 34,477 | 37,908 |
5. TRADE AND OTHER RECEIVABLES
As at 31 Dec 2022 | As at 30 Jun 2022 | |
US$'000 | US$'000 | |
Trade receivables | 8,952 | 10,298 |
Total allowance for credit losses and provisions | (4,201) | (4,782) |
IFRS 9 - Impairment on financial assets (ECL) | (1,527) | (1,965) |
IFRS 9 - Impairment on financial assets (ECL) Management overlay on specific provisions | (2,674) | (2,817) |
Trade receivables - net | 4,751 | 5,516 |
Accrued Income | 2,386 | 1,934 |
Loan interest receivable | 2,869 | - |
Deposits paid | 56 | 57 |
VAT recoverable | 11,530 | 12,186 |
Deferred expenses and prepayments | 3,976 | 1,781 |
Sundry debtors | 13,570 | 13,660 |
Cash balance held in escrow account | 346 | 4,548 |
Other receivables | 34,733 | 34,166 |
IFRS 9 - Impairment on other financial assets (ECL) | (5,895) | (6,012) |
Other receivables - net | 28,838 | 28,154 |
As at period end | 33,589 | 33,670 |
|
|
|
Classification of trade and other receivables: |
|
|
Non-current assets | 1,829 | 4,615 |
Current assets | 31,760 | 29,055 |
As at period end | 33,589 | 33,670 |
6. PREFERENCE SHARE CAPITAL
As at 31 Dec 2022 | As at 30 Jun 2022 | |
US$'000 | US$'000 | |
Opening balance | 29,558 | 25,481 |
Preference shares dividend accrued | 1,019 | 4,077 |
As at period end | 30,577 | 29,558 |
7. PERPETUAL PREFERENCE NOTES
As at 31 Dec 2022 | As at 30 Jun 2022 | |
US$'000 | US$'000 | |
Opening balance | 25,741 | - |
Issue of perpetual preference note classified as equity | - | 26,775 |
Preferred dividend accrued | 1,779 | 1,837 |
Preferred dividend paid | (1,231) | (1,265) |
Less: Incremental costs of issuing the perpetual preference note | - | (1,606) |
As at period end | 26,289 | 25,741 |
Perpetual Preference Note
The Group through its wholly-owned subsidiary, Grit Services Limited has issued perpetual preference note to two investors Ethos Mezzanine Partners GP Proprietary Limited and Blue Peak Private Capital GP. The total cash proceeds received from the two investors for the issuance of the perpetual note amounted to US$31.5million.
Included below are salient features of the notes:
• | The Note has a cash coupon of 9% per annum and a 4% per annum redemption premium. The Group at its sole discretion may elect to capitalise cash coupons. |
• | Although perpetual in tenor, the note carries a material coupon step-up provision after the fifth anniversary that is expected to result in economic maturity and redemption by the Group on or before that date. |
• | The Note may be voluntarily redeemed by the Group at any time, although there would be call-protection costs associated with doing so before the third anniversary. |
• | The Note, if redeemed in cash by the Group, can offer the noteholders an additional return of not more than 3% per annum, linked to the performance of Grit ordinary shares over the duration of the Note. |
• | The noteholders have the option to convert the outstanding balance of the note into Grit equity shares. If such option is exercised by the noteholders, the number of shares to be issued shall be calculated based on a pre-defined formula as agreed between both parties in the note subscription agreement. |
The Group has classified eighty-five percent of the instrument as equity because for this portion of the instrument, the Group always will have an unconditional right to avoid delivery of cash to the noteholders. The remaining fifteen percent of the instrument has been classified as debt and included as part of interest-bearing borrowings. The debt portion arises because the note contains terms that can give the noteholders the right to ask for repayment of fifteen percent of the outstanding amount of the notes on the occurrence of some future events that are not wholly within the control of the Group. The directors believe that the probability that those events will happen are remote but for classification purposes, because the Group does not have an unconditional right to avoid delivering cash to the noteholders on fifteen percent of the notes, this portion of the instrument has been classified as liability.
The accrued dividend on the equity portion of the note has been recognised as a deduction into equity i.e., reduction of retained earnings.
8. INTEREST-BEARING BORROWINGS
The following debt transactions were concluded during the period under review
During the period under review the Group completed a sustainability-linked term loan and revolving credit facility amounting to US$ 306 million, making it the largest real estate sector transaction to date in Sub-Saharan Africa (excluding South Africa). Standard Bank of South Africa acted as sole lead arranger and bookrunner for the multi-jurisdictional debt syndication covering Grit's assets and debt facilities in Mozambique, Zambia, Ghana and Senegal and a corporate level revolving credit facility. The facility refinanced debt amounting to c. US$ 280 million and pushed out the average debt expiry profile to approximately 3.6 years as of December 2022 as well as securing a development facility of US$23 million for the refurbishment and extension of its Club Med Cap Skirring Resort in Senegal. The main benefits of this loan syndication are the increase in loan tenor, locking a competitive interest margin despite the market's upward pricing pressure, and 7 different facilities being consolidated streamlining the management process and creating scalable solutions for the future.
During the period the Nedbank RCF facility held at Grit Real Estate Income Group Limited was increased from an US$ 7 million facility to an US$ 7 million plus Euro 6.6 million facility. This loan was used to refinance the Bank ABC Casamance Holdings Limited debt while the syndication was being completed.
An SBM bridging facility of US$ 6.5 million was implemented that was used to fund Phase 2 of the acquisition of GREA.
The following facilities were settled during the period under review:
• | The Bank ABC facility held by Casamance Holdings of US$ 4.7 million. |
| ||
• | The Bank ABC facility held by Grit Services Limited of US$ 2.4 million. |
| ||
• | The Maubank facility held by Grit Real Estate Income Group Limited of EUR 1.7 million |
| ||
As at 31 Dec 2022 | As at 30 Jun 2022 | |||
US$'000 | US$'000 | |||
Non-current liabilities | 371,549 | 242,091 | ||
Current liabilities | 38,268 | 182,975 | ||
409,817 | 425,066 | |||
|
| |||
Currency of the interest-bearing borrowings (stated gross of unamortised loan issue costs) |
| |||
United States Dollars | 337,418 | 319,687 | ||
Euros | 75,549 | 104,357 | ||
Mauritian Rupees | 1,217 | 1,369 | ||
| 414,184 | 425,413 | ||
Interest accrued | 5,148 | 4,927 | ||
Unamortised loan issue costs | (9,515) | (5,274) | ||
As at period end | 409,817 | 425,066 | ||
|
| |||
Movement for the period |
| |||
Balance at the beginning of the year | 425,066 | 410,588 | ||
Proceeds of interest bearing-borrowings | 280,707 | 58,513 | ||
Loan reduced through disposal of subsidiary | - | (6,624) | ||
Loan acquired through asset acquisition | - | 6,011 | ||
Loan issue costs incurred | (7,939) | (4,386) | ||
Amortisation of loan issue costs | 2,532 | 2,765 | ||
Costs associated with extinguishment of loan | 1,166 | |||
Foreign currency translation differences | 1,389 | (14,836) | ||
Interest accrued | 221 | 751 | ||
Debt settled during the period | (293,325) | (27,716) | ||
As at period end | 409,817 | 425,066 | ||
Analysis of facilities and loans in issue
| As at 31 Dec 2022 | As at 30 Jun 2022 | ||
Lender | Borrower | Initial facility | US$'000 | US$'000 |
Financial institutions | ||||
Standard Bank South Africa | Commotor Limitada | US$140.0m | 140,000 | 140,000 |
Standard Bank South Africa | Zambian Property Holdings Limited | US$70.4m | 70,400 | - |
Standard Bank South Africa | Grit Services Limited | €33m | 35,609 | - |
Standard Bank South Africa | Capital Place Limited | US$6.2m | 6,200 | - |
Standard Bank South Africa | Casamance Holdings Limited | €6.5m | 7,031 | - |
Standard Bank South Africa | Grit Accra Limited | US$8.4m | 8,400 | - |
Standard Bank South Africa | Zambian Property Holdings Limited | US$16.4m | - | 16,405 |
Standard Bank South Africa | Grit Services Limited | RCF - €26.5m | - | 27,091 |
Total Standard Bank Group |
|
| 267,640 | 183,496 |
Bank of China | Zambian Property Holdings Limited | US$77.0m | - | 76,405 |
Total Bank of China |
|
| - | 76,405 |
State Bank of Mauritius | Leisure Property Northern (Mauritius) Limited | €9.0m | 9,595 | 9,467 |
State Bank of Mauritius | Leisure Property Northern (Mauritius) Limited | €3.2m | 3,412 | 3,366 |
State Bank of Mauritius | Leisure Property Northern (Mauritius) Limited | US$6.5m | 6,500 | - |
State Bank of Mauritius | Mara Delta Properties Mauritius Limited | €22.3m | 23,774 | 23,457 |
State Bank of Mauritius | Grit Real Estate Income Group Limited | Equity Bridge US$20.0m | 20,000 | 20,000 |
State Bank of Mauritius | Mara Delta Properties Mauritius Limited | RCF Mur 72m | 1,217 | 1,369 |
Total State Bank of Mauritius |
|
| 64,498 | 57,659 |
Investec South Africa | Freedom Property Fund SARL | €36.0m | 31,089 | 32,950 |
Investec South Africa | Freedom Property Fund SARL | US$8.7m | 2,722 | 2,722 |
Investec Mauritius | Grit Real Estate Income Group Limited | US$0.5m | 442 | 457 |
Total Investec Group |
|
| 34,253 | 36,129 |
ABSA Bank Ghana Limited | Grit Accra Limited | US$9.0m | 7,913 | |
Total ABSA Group |
|
| - | 7,913 |
Maubank Mauritius | Grit Real Estate Income Group Limited | €3.2m | - | 1,837 |
Maubank Mauritius | Freedom Asset Management | €4.0m | 648 | 1,508 |
Total Maubank |
|
| 648 | 3,345 |
ABC Banking Corporation | Grit Services Limited | Equity bridge US$ 8.5m | - | 2,440 |
ABC Banking Corporation | Casamance Holdings Limited | €6.4m | - | 4,681 |
Total ABC Banking Corporation |
|
| - | 7,121 |
Nedbank South Africa | Warehously Limited | US$8.5m | 8,635 | 8,635 |
Nedbank South Africa | Grit Real Estate Income Group Limited | US$7m | 6,985 | 6,985 |
Nedbank South Africa | Capital Place Limited | US$6.2m | - | 6,200 |
Total Nedbank South Africa |
|
| 15,620 | 21,820 |
NCBA Bank Kenya | Grit Services Limited | US$6.5m | 6,542 | 6,542 |
NCBA Bank Kenya | Grit Services Limited | US$4.1m | 4,158 | 4,158 |
Total NCBA Bank Kenya |
|
| 10,700 | 10,700 |
Ethos Private Equity | Grit Services Limited | US$2.4m | 2,475 | 2,475 |
Blue Peak Private Equity | Grit Services Limited | US$2.2m | 2,250 | 2,250 |
Total Private Equity |
|
| 4,725 | 4,725 |
International Finance Corporation | Stellar Warehousing and Logistics Limited | US$16.1m | 16,100 | 16,100 |
Total International Finance Corporation |
|
| 16,100 | 16,100 |
Total loans in issue |
|
| 414,184 | 425,413 |
plus: interest accrued |
|
| 5,148 | 4,927 |
less: unamortised loan issue costs | (9,515) | (5,274) | ||
As at period end |
|
| 409,817 | 425,066 |
Fair value of borrowings is not materially different to their carrying value amounts since interest payable on those borrowings are either close to their current market rates or the borrowings are of short-term in nature.
9. GROSS PROPERTY INCOME
| Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 |
| US$'000 | US$'000 |
Contractual rental income | 22,600 | 19,270 |
Retail parking income | 856 | 809 |
Straight-line rental income accrual | 186 | 352 |
Other rental income (Lease incentives) | (58) | 1,008 |
Gross rental income | 23,584 | 21,439 |
Asset management fees | 526 | - |
Recoverable property expenses | 2,804 | 2,708 |
Total revenue | 26,914 | 24,147 |
10. INTEREST INCOME
Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 | |
US$'000 | US$'000 | |
Interest on loans to partners | 1,653 | 890 |
Interest on loans to related parties | 7 | 28 |
Other Interest | 78 | 5 |
Total interest income | 1,738 | 923 |
11. FINANCE COSTS
Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 | |
US$'000 | US$'000 | |
Interest-bearing borrowings - financial institutions | 15,061 | 10,499 |
Early settlement charges | 46 | 36 |
Amortisation of loan issue costs | 2,307 | 1,318 |
Preference share dividends | 462 | 410 |
Interest on obligations under leases | 16 | 27 |
Interest on loans to proportional shareholders | 275 | 222 |
Interest on bank overdraft | 43 | 24 |
Total finance costs | 18,210 | 12,536 |
12. Part disposal of subsidairy
On 18th July 2022, Grit disposed of an indirect interest of 30% in its Orbit Africa asset ("Orbit") located in Kenya by disposing of 30% equity interest in Orbit Africa Logistics ("OAL"), the beneficial owner of Orbit to Letlole La Rona Limited ("LLR"). The total acquisition value was US$7.23 million split between an equity subscription of US$1,000 and shareholder loan of US$7.23 million. For the portion of the shareholder loan received by LLR of US$7.23 million, the Group has recorded a corresponding liability of the same amount which is being presented as part of proportional shareholder loans on the face of the Group statement of financial position.
The consideration received by the Group for the actual share disposal transactions amounted to US$ 1,000. Prior to the disposal of interests, the carrying amount of existing non-controlling interests which have been disposed of was US$0.30 million. The Group recognized an increase in non-controlling interest of US$0.30 million and a decrease in equity attributable to owners of the parent of US$ 0.299 million. The effect on the equity attributable to the owners of Grit during the financial period ended 31 December 2022 is summarized as follows:
US$'000 | |
Carrying amount of non-controlling interests disposed | (300) |
Consideration received from non-controlling interests | 1 |
Decrease in equity attributable to owner | (299) |
13. Segmental reporting
Consolidated segmental analysis
The Group reports on a segmental basis in terms of geographical location and type of property. Geographical location is split between Botswana, Senegal, Morocco, Mozambique, Zambia, Kenya, Ghana, and Mauritius, as relevant to each reporting period. In terms of type of property, the Group has investments in the hospitality, retail, office, and various other sectors.
Botswana | Senegal | Morocco | Mozambique | Zambia | Kenya | Ghana | Mauritius | Total | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
Geographical location 31 Dec 2022 |
|
|
|
|
|
|
|
|
|
Gross property income | - | 807 | 3,220 | 13,768 | 2,815 | 2,680 | 1,594 | 2,030 | 26,914 |
Property operating expenses | - | - | (1,846) | (1,918) | (383) | (80) | (257) | (313) | (4,797) |
Net property income | - | 807 | 1,374 | 11,850 | 2,432 | 2,600 | 1,337 | 1,717 | 22,117 |
Other income | - | - | - | (5,011) | - | - | (8) | 5,139 | 120 |
Administrative expenses | - | (75) | (425) | (796) | (13) | (249) | (233) | (7,617) | (9,408) |
Net impairment (charge) / credit on financial assets | - | - | 486 | (162) | - | 218 | (31) | 392 | 903 |
Profit/(loss) from operations | - | 732 | 1,435 | 5,881 | 2,419 | 2,569 | 1,065 | (369) | 13,732 |
Fair value adjustment on investment properties | - | 2,485 | (3,183) | 3,956 | 314 | (657) | 1,448 | (1,224) | 3,139 |
Fair value adjustment on other financial asset | - | - | - | - | - | 47 | - | - | 47 |
Fair value adjustment on derivatives financial instruments | - | - | - | - | - | - | - | (1,007) | (1,007) |
Share based payment expense | - | - | - | - | - | - | - | (413) | (413) |
Loss on extinguishment of loans | - | - | - | (813) | - | - | (176) | (177) | (1,166) |
Share of profits / (losses) from associates and joint ventures | 862 | - | - | - | 3,426 | (399) | (288) | 8,407 | 12,008 |
Loss on disposal of interest in associate | - | - | - | - | - | - | - | (295) | (295) |
Impairment of loans and other receivables | - | - | - | 93 | - | - | - | (93) | - |
Foreign currency gains / (losses) | - | (8) | (1,925) | 88 | 13 | (290) | (325) | (934) | (3,381) |
Profit/(loss) before interest and taxation | 862 | 3,209 | (3,673) | 9,205 | 6,172 | 1,270 | 1,724 | 3,895 | 22,664 |
Interest income | - | - | (610) | (24) | 3 | (421) | - | 2,790 | 1,738 |
Finance costs | - | - | (1,155) | (6,109) | - | (1,211) | (911) | (8,824) | (18,210) |
Profit / (loss) for the year before taxation | 862 | 3,209 | (5,438) | 3,072 | 6,175 | (362) | 813 | (2,139) | 6,192 |
Taxation | - | - | (124) | (1,859) | (82) | 154 | (73) | (603) | (2,587) |
Profit / (loss) for the year after taxation | 862 | 3,209 | (5,562) | 1,213 | 6,093 | (208) | 740 | (2,742) | 3,605 |
Reportable segment assets and liabilities | |||||||||
Non-current assets | |||||||||
Investment properties | - | 24,122 | 67,473 | 305,151 | 57,270 | 70,099 | 36,639 | 48,262 | 609,016 |
Deposits paid on investment properties | - | - | - | - | - | - | - | 10,867 | 10,867 |
Property, plant and equipment | - | 2 | 9 | 245 | - | 151 | 26 | 1,662 | 2,095 |
Intangible assets | - | - | 25 | - | - | - | - | 536 | 561 |
Other investments | - | - | - | 1 | - | - | - | - | 1 |
Investment in associates and joint ventures | 12,390 | - | - | - | 40,323 | 3,354 | 6,521 | 149,729 | 212,317 |
Derivative financial instruments | - | - | - | - | - | - | - | - | - |
Related party loans receivable | - | - | - | - | - | - | - | 1,313 | 1,313 |
Trade and other receivables | - | - | 1,348 | - | - | 481 | - | - | 1,829 |
Deferred tax | - | - | 1,389 | 7,289 | - | 187 | 2,272 | 1,561 | 12,698 |
Total non-current assets | 12,390 | 24,124 | 70,244 | 312,686 | 97,593 | 74,272 | 45,458 | 213,930 | 850,697 |
Current assets | |||||||||
Trade and other receivables | - | 107 | 4,835 | 6,071 | (130) | 5,573 | 592 | 14,712 | 31,760 |
Current tax receivable | - | - | (16) | 609 | - | 472 | 747 | 258 | 2,070 |
Related party loans receivable | - | - | - | - | - | - | - | 988 | 988 |
Other loans receivable | - | - | - | - | - | - | - | 34,477 | 34,477 |
Derivative financial instruments | - | - | - | - | - | - | - | 3,003 | 3,003 |
Cash and cash equivalents | - | 47 | 383 | 3,633 | 288 | 370 | 134 | 7,725 | 12,580 |
Total assets | 12,390 | 24,278 | 75,446 | 322,999 | 97,751 | 80,687 | 46,931 | 275,093 | 935,575 |
Liabilities | |||||||||
Total liabilities | - | 199 | 58,201 | 208,425 | 4,444 | 31,644 | 21,334 | 246,836 | 571,083 |
Net assets | 12,390 | 24,079 | 17,245 | 114,574 | 93,307 | 49,043 | 25,597 | 28,257 | 364,492 |
Type of property | Other investments | Hospitality | Retail | Office | Light industrial | Accommodation | Corporate | Total |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
31 Dec 2022 |
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Gross property income | - | 2,313 | 6,885 | 8,135 | 3,117 | 5,939 | 525 | 26,914 |
Property operating expenses | - | - | (2,600) | (1,029) | (112) | (1,150) | 94 | (4,797) |
Net property income | - | 2,313 | 4,285 | 7,106 | 3,005 | 4,789 | 619 | 22,117 |
Other income | - | - | - | (135) | - | (4,421) | 4,676 | 120 |
Administrative expenses | - | (211) | (660) | (524) | (113) | (435) | (7,465) | (9,408) |
Net impairment (charge) / credit on financial assets | - | - | 430 | (144) | 218 | 7 | 392 | 903 |
Profit/(loss) from operations | - | 2,102 | 4,055 | 6,303 | 3,110 | (60) | (1,778) | 13,732 |
Fair value adjustment on investment properties | - | 1,262 | (1,147) | 3,038 | (506) | 492 | - | 3,139 |
Fair value adjustment on other financial asset | - | - | - | - | 47 | - | - | 47 |
Fair value adjustment on derivatives financial instruments | - | - | - | - | - | - | (1,007) | (1,007) |
Share based payment expense | - | - | - | - | - | - | (413) | (413) |
Loss on extinguishment of loans | - | - | (62) | (665) | - | (261) | (178) | (1,166) |
Share of profits / (losses) from associates and joint ventures | 7,567 | 1,702 | 3,027 | (288) | - | - | - | 12,008 |
Loss on disposal of interest in associate | - | - | - | - | - | - | (295) | (295) |
Impairment of loans and other receivables | - | - | 93 | - | - | - | (93) | - |
Foreign currency gains / (losses) | - | 919 | (1,904) | (309) | (293) | 83 | (1,877) | (3,381) |
Profit/(loss) before interest and taxation | 7,567 | 5,985 | 4,062 | 8,079 | 2,358 | 254 | (5,641) | 22,664 |
Interest income | - | (1,126) | (769) | 2,102 | (775) | (1,610) | 3,916 | 1,738 |
Finance costs | - | (1,651) | (1,191) | (6,907) | (1,211) | (78) | (7,172) | (18,210) |
Profit / (loss) for the year before taxation | 7,567 | 3,208 | 2,102 | 3,274 | 372 | (1,434) | (8,897) | 6,192 |
Taxation | - | (74) | (206) | (957) | 164 | (917) | (597) | (2,587) |
Profit / (loss) for the year after taxation | 7,567 | 3,134 | 1,896 | 2,317 | 536 | (2,351) | (9,494) | 3,605 |
Reportable segment assets and liabilities | ||||||||
Non-current assets | ||||||||
Investment properties | - | 72,384 | 143,721 | 182,836 | 80,890 | 129,185 | - | 609,016 |
Deposits paid on investment properties | - | - | - | - | - | - | 10,867 | 10,867 |
Property, plant and equipment | - | 2 | 9 | 17 | - | 157 | 1,910 | 2,095 |
Intangible assets | - | - | 25 | - | - | - | 536 | 561 |
Other investments | - | - | - | 1 | - | - | - | 1 |
Investment in associates and joint ventures | 111,268 | 50,851 | 43,677 | 6,521 | - | - | - | 212,317 |
Derivative financial instruments | - | - | - | - | - | - | - | - |
Related party loans receivable | - | - | - | - | - | - | 1,313 | 1,313 |
Other loans receivable | - | - | - | - | - | - | - | - |
Trade and other receivables | - | - | 1,348 | - | 481 | - | - | 1,829 |
Deferred tax | - | 1,560 | 4,041 | 3,993 | 452 | 2,638 | 14 | 12,698 |
Total non-current assets | 111,268 | 124,797 | 192,821 | 193,368 | 81,823 | 131,980 | 14,640 | 850,697 |
Current assets |
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Trade and other receivables | - | 638 | 4,615 | 1,300 | 6,334 | 4,551 | 14,322 | 31,760 |
Current tax refundable | - | 190 | 275 | 1,270 | 609 | (306) | 32 | 2,070 |
Related party loans receivable | - | - | - | - | - | - | 988 | 988 |
Other loans receivable | - | - | - | - | - | - | 34,477 | 34,477 |
Derivative financial instruments | - | - | - | - | - | - | 3,003 | 3,003 |
Cash and cash equivalents | - | 221 | 875 | 2,157 | 464 | 1,159 | 7,704 | 12,580 |
Total assets | 111,268 | 125,846 | 198,586 | 198,095 | 89,230 | 137,384 | 75,166 | 935,575 |
Liabilities | ||||||||
Total liabilities | - | 64,446 | 59,999 | 194,194 | 32,398 | 30,910 | 189,136 | 571,083 |
Net assets | 111,268 | 61,400 | 138,587 | 3,901 | 56,832 | 106,474 | (113,970) | 364,492 |
Major customers
Rental income stemming from Vulcan represented approximately 9.4% of the Group's total contractual rental income for the period, with Total 9.4%, US Embassy 8.7%, Vodacom Mozambique 6.5%, and Beachcomber 6.5% of the Group's total contractual rental income for the period, making up the top 5 tenants of the Group.
14. Basic and diluted earnings per ordinary share
| Attributable earnings | Weighted average number of shares | Cents per share | |||
Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 | Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 | Six months ended 31 Dec 2022 | Six months ended 31 Dec 2021 | |
US$'000 | US$'000 | Shares '000 | Shares '000 | US Cents | US Cents | |
Earnings per share - Basic | 4,741 | 4,278 | 482,373 | 328,771 | 0.98 | 1.30 |
Earnings per share - Diluted | 4,741 | 4,278 | 482,373 | 328,771 | 0.98 | 1.30 |
15. sUBSEQUENT EVENTS
• | In January 2023, as part of acquiring the remaining 13.61% of Gateway Real Estate Africa from Gateway Africa Real Estate, the Group has made a deposit of US$ 10 million. The remaining cash commitment of the group to complete the transaction has been disclosed in note 16. |
• | Post balance sheet date, the Board has approved a merger agreement, which provides for a preference note issuance in BHI that will facilitate the possible exit of Grit's remaining 27.1% interest for an expected net cash payment of EUR 25.8 million (US$ 27.51 million), |
16. CAPITAL COMMITMENTS
• | Club Med Senegal: Euro 24.4 million (US$26.01 million) over the next 22 months. |
• | Acquisition of an additional 50% stake in Buffalo Mall amounting to c. US$2 million. |
• | Acquisition of remaining 13.61% in Gateway Real Estate Africa and 1% in African Development Managers Limited- US$ 34.1 million, out of which a US$10 million deposit has been paid in January 2023, an additional US$10 million deposit is to be paid in March 2023 and the balance of US$ 14.1 million is to be paid in May 2023. |
• | Orbit Africa phase 2 redevelopment: expected to be US$15.5 million (inclusive of VAT) to be completed by April 2024. |
17. EPRA financial metrics
17a. EPRA earnings
Basis of Preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors") have chosen to disclose additional non-IFRS measures, these include EPRA earnings, adjusted net asset value, EPRA net asset value, adjusted profit before tax and funds from operations (collectively "Non-IFRS Financial Information").
The Directors have chosen to disclose:
• | EPRA earnings to assist in comparisons with similar businesses in the real estate sector. EPRA earnings is a definition of earnings as set out by the European Public Real Estate Association. EPRA earnings represents earnings after adjusting for fair value adjustments on investment properties, gain from bargain purchase on associates, fair value adjustments included under income from associates, ECL provisions, fair value adjustments on other investments, fair value adjustments on other financial assets, fair value adjustments on derivative financial instruments, and non-controlling interest included in basic earnings (collectively the "EPRA earnings adjustments") and deferred tax in respect of these EPRA earnings adjustments. The reconciliation between basic and diluted earnings and EPRA earnings is detailed in the table below; |
• | EPRA net asset value to assist in comparisons with similar businesses in the real estate sector. EPRA net asset value is a definition of net asset value as set out by the European Public Real Estate Association. EPRA net asset value represents net asset value after adjusting for net impairment on financial assets (ECL), fair value of financial instruments, and deferred tax relating to revaluation of properties (collectively the "EPRA net asset value adjustments"). The reconciliation for EPRA net asset value is detailed in the table below; |
• | adjusted EPRA earnings to provide an alternative indication of GRIT and its subsidiaries' (the "Group") underlying business performance. Accordingly, it excludes the effect of non-cash items such as unrealised foreign exchange gains or losses, straight-line leasing adjustments, amortisation of right of use land, impairment of loans and deferred tax relating to the adjustments. The reconciliation for adjusted EPRA earnings is detailed in the table below; and |
• | total distributable earnings to assist in comparisons with similar businesses and to facilitate the Group's dividend policy which is derived from total distributable earnings. Accordingly, it excludes VAT credit utilised on rentals, Listing and set-up costs, depreciation, and amortisation, share based payments, antecedent dividends, operating costs relating to AnfaPlace Mall's refurbishment costs, amortisation of lease premiums and profits withheld/released. The reconciliation for total distributable earnings is detailed in the table below. |
In this note, Grit presents European Real Estate Association (EPRA) earnings and other metrics which is non-IFRS financial information.
UNAUDITED31 Dec 2022 | UNAUDITED31 Dec 2022 | UNAUDITED31 Dec 2021 | UNAUDITED31 Dec 2021 | |
$'000 | Per Share (Diluted)(Cents Per Share) | $'000 | Per Share (Diluted)(Cents Per Share) | |
EPRA Earnings | 2,202 | 0.46 | 8,413 | 2.56 |
Total Company Specific Adjustments | 2,737 | 0.56 | (2,493) | (0.76) |
Adjusted EPRA Earnings | 4,939 | 1.02 | 5,920 | 1.80 |
Total Company Specific Distribution Adjustments | 7,400 | 1.54 | 4,122 | 1.28 |
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) | 12,339 | 2.56 | 10,042 | 3.08 |
Profits Withheld | (2,437) | (0.56) | (1,884) | (0.58) |
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS | 9,902 | 2.00 | 8,158 | 2.50 |
UNAUDITED31 Dec 2022 | UNAUDITED31 Dec 2022 | AUDITED30 June 2022 | AUDITED30 June 2022 | |
$'000 | Per Share (Diluted)(Cents Per Share) | $'000 | Per Share (Diluted)(Cents Per Share) | |
EPRA NRV | 380,865 | 78.77 | 381,307 | 79.35 |
EPRA NTA | 366,736 | 75.84 | 366,805 | 76.33 |
EPRA NDV | 333,297 | 68.93 | 336,296 | 69.98 |
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Distribution shares | UNAUDITED31 Dec 2022 | |||
Shares '000 | ||||
Weighted average shares in issue | 495,092 | |||
Less: Weighted average treasury shares for the year | (12,719) | |||
Add: Weighted average shares vested shares in long term incentive scheme | 573 | |||
EPRA SHARES | 482,946 | |||
Less: Vested shares in consolidated entities | (573) | |||
DISTRIBUTION SHARES | 482,373 | |||
In this note, Grit presents European Real Estate Association (EPRA) earnings and other metrics which is non-IFRS financial information.
| UNAUDITED31 Dec 2022 |
US$'000 | |
EPRA Earnings Calculated as follows: | |
Basic Earnings attributable to the owners of the parent | 4,535 |
Add Back: | |
- Fair value adjustment on investment properties | (3,139) |
- Fair value adjustments included under income from associates | (775) |
- Change in value on other investments | (1) |
- Change in value on other financial asset | (1,994) |
- Change in value on derivative financial instruments | 1,007 |
- Impairment of loan | 11 |
- Profit on partial disposal of associate | 295 |
- Acquisition costs not capitalized | 912 |
- Deferred tax in relation to the above | 1,365 |
- Non-controlling interest included in basic earnings | (14) |
EPRA EARNINGS | 2,202 |
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) | 0.46 |
Company specific adjustments | |
- Unrealised foreign exchange gains or losses (non-cash) | 3,777 |
- Straight-line leasing and amortisation of lease premiums (non-cash rental) | 443 |
- Profit or loss on disposal of property, plant and equipment | (9) |
- Amortisation of right of use of land (non-cash) | 34 |
- Impairment of loan and other receivables | (889) |
- Non-controlling interest included above | (659) |
- Deferred tax in relation to the above | 40 |
Total Company Specific adjustments | 2,737 |
ADJUSTED EPRA EARNINGS | 4,939 |
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) | 1.02 |
COMPANY SPECIFIC ADJUSTMENTS TO EPRA EARNINGS
1. | Unrealised foreign exchange gains or losses |
The foreign currency revaluation of assets and liabilities in subsidiaries gives rise to non-cash gains and losses that are non-cash in nature. These adjustments (similar to those adjustments that are recorded to the foreign currency translation reserve) are added back to provide a true reflection of the operating results of the Group. | |
2. | Straight-line leasing (non-cash rental) |
Straight-line leasing adjustment and amortised lease incentives under IFRS relate to non-cash rentals over the period of the lease. This inclusion of such rental does not provide a true reflection of the operational performance of the underlying property and are therefore removed from earnings. | |
3. | Amortisation of intangible asset (right of use of land) |
Where a value is attached to the right of use of land for leasehold properties, the amount is amortised over the period of the leasehold rights. This represents a non-cash item and is adjusted to earnings. | |
4 | Impairment on loans and other receivables |
Provisions for expected credit loss are non-cash items related to potential future credit loss on non- property operational provisions and is therefore added back to provide a better reflection of underlying property performance. The add back excludes and specific provisions for against tenant accounts. | |
5 | Non-Controlling interest |
Any Non-Controlling interest related to the company specific adjustments. | |
6. | Other deferred tax (non-cash) |
Any deferred tax directly related to the company specific adjustments. |
17b. Company distribution calculation
| UNAUDITED31 Dec 2022 |
US$'000 | |
Adjusted EPRA Earnings | 4,939 |
Company specific distribution adjustments | |
- VAT Credits utilised on rentals | 1,046 |
- Listing and set-up costs under administrative expenses | 40 |
- Depreciation and amortisation | 758 |
- Share based payments | 3,033 |
- Dividends | 132 |
- Retirement fund & PRGF | - |
- Right of use imputed leases | 40 |
- Amortisation of capital funded debt structure fees | 2,414 |
- Deferred tax in relation to the above | 82 |
- Non-controlling interest included above | (145) |
Total company specific distribution adjustments | 7,400 |
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD) | 12,339 |
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) | 2.56 |
- Profits withheld | (2,437) |
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS | 9,902 |
DIVIDEND PER SHARE (cents) | 2.00 |
Reconciliation to amount payable | |
Total distributable earnings to Grit shareholders before profits withheld (cents) | 2.56 |
Profits withheld (cents) | (0.56) |
INTERIM DIVIDEND PROPOSED (cents) | 2.00 |
COMPANY DISTRIBUTION NOTES IN TERMS OF THE DISTRIBUTION POLICY
1. | VAT credits utilised on rentals |
In certain African countries, there is no mechanism to obtain refunds for VAT paid on the purchase price of the property. VAT is recouped through the collection of rentals on a VAT inclusive basis. The cash generation through the utilisation of the VAT credit obtain on the acquisition of the underlying property is thus included in the operational results of the property. | |
2. | Listing and set-up costs under administrative expenses |
Costs associated with the new listing of shares, setup on new companies and structures are capital in nature and is added back for distribution purposes. | |
3. | Depreciation and amortisation |
Non-cash items added back to determine the distributable income. | |
4. | Share based payments |
Non-cash items added back to determine the distributable income. | |
5. | Retirement fund & PRGF |
Non- cash item held as a provision. | |
6. | Amortisation of capital funded debt structure fees |
Amortisation of upfront debt structuring fees. |
OTHER NOTES
The abridged unaudited consolidated financial statements for the six months period ended 31 December 2022 ("abridged unaudited consolidated financial statements") have been prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), the FCA Listing Rules and the SEM Listing Rules. The accounting policies are consistent with those of the previous annual financial statements except for the change in accounting policy and the significant judgement disclosed in note 1.
The Group is required to publish financial results for the six months ended 31 December 2022 in terms of SEM Listing Rule 15.36A and the FCA Listing Rules. The Directors are not aware of any matters or circumstances arising subsequent to the period ended 31 December 2022 that require any additional disclosure or adjustment to the financial statements. These abridged unaudited consolidated financial statements were approved by the Board on 23 February 2023.
Copies of the abridged unaudited consolidated financial statements, and the statement of direct and indirect interests of each officer of the Company pursuant to rule 8(2)(m) of the Mauritian Securities (Disclosure Obligations of Reporting Issuers) Rules 2007, are available free of charge, upon request at the Mauritian office of the Company at 3rd Floor, Unity Building, The Precinct, Grand Baie, Mauritius. Contact Person: Leon van de Moortele.
Forward-looking statements
This document may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.
Any forward-looking statements made by, or on behalf of, Grit speak only as of the date they are made, and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Grit does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions, or circumstances on which any such statement is based.
Information contained in this document relating to Grit or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.
Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of directors and have not been reviewed or reported on by the Company's external auditors.