Grit Real Est. Regulatory News (GR1T)

Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro denominated long-term leases with high quality multi-national tenants, today announces its annual results for the 12 months ended 30 June 2019.

Financial highlights

·; The Company achieved a total return of 12.4% from Portfolio Performance7, which included impacts of EUR:USD exchange rate movements and negative impacts of valuation trends of retail assets in particular. Based on the share issue price of US$1.43 per share, a reported total shareholder return of 11.4% was achieved since the LSE listing on 31 July 2018

·; Dividends per share declared for the year ended 30 June 2019 of US$12.20cps (2018: US$12.19cps), equating to an annual dividend yield of SEM: 8.84%, JSE: 9.55% and LSE:8.81% (based on 30 June 2019 exchange rates and share prices on the respective Exchanges)

·; EPRA net asset value ("NAV") per share grew to US$1.471 (2018: US$1.457). EPRA NAV growth from Portfolio Performance grew 4.0% during the period, absent extraordinary corporate activity costs (costs incurred in relation to the LSE listing) of 3.1% negatively impacting the result

·; The portfolio was independently valued at 30 June 2019, with total income producing assets valued at US$825.2 million (2018: US$642.3 million) and like for like property valuations increasing 3.8%

·; Profit from operations increased 57.3% as a result of strong portfolio performance and acquisitive growth over the period

·; Successful admission to the Main Market of the London Stock Exchange on 31 July 2018, raising gross new equity capital of US$132.2 million (net US$121.6 million after costs of US$10.6 million)

Operational highlights

·; Property portfolio now comprises a total of 25 investments, across seven countries, five asset classes

·; 93.6% (2018: 89.1%) of revenue is earned from multinational tenants8

·; 95.4% (2018: 93.2%) of income is produced in hard currency9

·; EPRA portfolio occupancy rate of 97.1% as at 30 June 2019 (2018: 96.7%)

·; Total gross lettable area ("GLA") increased 9.96% to 338,854 sqm as a result of acquisitions in the period

·; Weighted average annual rent escalations at 2.8% (2018: 3.1%)

·; Weighted average property capitalisation rate 7.9% (2018: 8.3%)

·; Weighted average cost of property debt moved up to 6.44% (2018: 5.75%) as a result of upwards movements in LIBOR over the reporting period.

·; Significant leasing activity took place at the Anfa Place Mall (the Company's largest asset by value), during the year in conjunction with the successful redevelopment and relaunch. This was not fully reflected in current year valuations and still provide upside potential both from asset valuation and income generation prospects in future reporting periods

·; Successful leasing activity with Anadarko, Exxon Mobil and Vale over the period

Post balance sheet activity

·; On 24 July 2019, Grit announced the acquisition of the Club Med Cap Skirring asset in Casamance, Senegal upon a sale and leaseback from the Club Med group. The acquisition is still subject to the fulfilment of certain final conditions precedent. Club Med and Grit will additionally re-develop and expand the existing hotel at a development cost of EUR25 million capped at EUR28 million. This acquisition is expected to signal a strategic relationship between both companies for future similar transactions.

·; The Mozambique debt refinance was approved by the Central Bank of Mozambique with Phase1 being implemented by the Company in September 2019. The new single US$140 million syndicated facility led by Standard Bank South Africa was signed for four years at a rate of three Month Libor + 5%.

·; On 18 September 2019, the Group concluded a turnkey construction contract in Mozambique for the delivery of an additional 60 housing units in the VDE accommodation compound which have been leased to Vale for a period of five years.

·; Declared final dividend in respect of the year ended 30 June 2019 of US$6.95cps bringing the total dividend paid and proposed in respect of the year to US$12.20cps (2018: US$12.19cps).

·; On 11 September, the Company distributed a circular to Shareholders and notice of general meeting:

·; seeking authority from its shareholders to issue, subject to market conditions, up to 280 million ordinary no par value shares in the issued share capital of Grit ("Shares") in connection with a placing, offer for subscription and intermediaries offer of Shares ("Issue")

·; Grit is undertaking the proposed Issue to support its strategic objectives, including its growth aspirations, through the conversion of its current and future investment pipeline, which are valued at c.US$470 million, predominantly in the industrial, office, corporate accommodation and hospitality sectors. The Company also intends to reduce its bank debt in line with the Company's overall gearing target of between 35% to 40% loan to value

·; The Issue Price will not be less than the most recently published net asset value per Share in US$ at the time of the Issue, adjusted for any dividends declared at that date. There will be no dilutive effect on the net asset value per Share as a result of the Issue

Notes

1 The Net Asset Value attributable to the Ordinary Shares divided by the number of Ordinary Shares in issue (other than Ordinary Shares held in treasury if any) at the date of calculation.

2 Explanations of how European Public Real Estate Association ("EPRA") figures are derived from IFRS are shown in note 18.

3 Refer to Note 17.

4 Adjustments to make earnings better representative of company performance and includes adjustments for unrealised foreign exchange movements and straight line leasing adjustments - refer to note 18 for further details on adjustments made.

5 Refer to Note 18.

6 Includes properties, investments and property loan receivables - Refer to Chief Financial Officer's Statement.

7 Return from Portfolio Performance excludes Corporate activity costs in relation to the LSE listing in July 2018.

8 Forbes 2000, Other Global and pan African tenants.

9 Hard (USD and EUR) or pegged currency rental income.

Bronwyn Corbett, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:

"I am delighted to report to you another year of strong performance by the Company in which we have continued to implement successfully our investment strategy. During the year, the Company delivered a total return of 12.4% from Portfolio Performance.

Our portfolio delivered in line with expectations and the Company's targets despite currency headwinds and significant corporate activity, including a successful listing and capital raise on the London Stock Exchange on 31 July 2018. Country and sector diversification and our proactive asset management initiatives have helped the Company to manage effectively the challenges faced in the retail sector across the continent.

The quality of the Group's diversified portfolio and our strong multinational tenant base have once again helped us to deliver a strong set of results and our solid foundation leaves us confident of continuing to deliver attractive returns over the short and longer term.

We are excited about the identified opportunities we have to add attractive, accretive assets to the portfolio at prices that create value for our shareholders and that will underpin our EPRA NAV growth and our progressive dividend policy over the medium term."

By order of the Board

30 September 2019

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is: 21380084LCGHJRS8CN05

NOTES:

Grit Real Estate Income Group Limited is a leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip multi-national tenant covenants across a diverse range of robust property sectors.

The Company is committed to delivering strong and sustainable income for shareholders, with the potential for income and capital growth. The Company is targeting net total shareholder return inclusive of NAV growth of 12.0% p.a.*

The Company currently holds primary listings on both the Main Market of the London Stock Exchange (LSE: GR1T) and on the Main Board of the Johannesburg Stock Exchange (JSE: GTR), while its listing on the Official Market of the Stock Exchange of Mauritius Ltd is termed as a secondary listing (SEM: DEL.N0000).

Further information on the Company is available at http://grit.group/

* This is a target only and not a profit forecast and there can be no assurance that it will be met. Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of directors and have not been reviewed or reported on by the Company's external auditors.

Directors:

Peter Todd+ (Chairman), Bronwyn Corbett (Chief Executive Officer)*, Leon van de Moortele (Chief Financial Officer)*, Ian Macleod+, Sir Samuel Esson Jonah+, Nomzamo Radebe, Catherine McIlraith+, David Love+, and Bright Laaka (Permanent Alternate Director to Nomzamo Radebe).

(* Executive Director) (+ independent Non-Executive Director)

Company secretary: Intercontinental Fund Services Limited

Registered office address: c/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebène 72201, Mauritius

Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited

Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited

JSE sponsor: PSG Capital Proprietary Limited

Sponsoring broker: Axys Stockbroking Limited

SEM authorised representative and sponsor: Perigeum Capital Ltd

This notice is issued pursuant to the JSE Listings Requirements, LSE Listing Rules, SEM Listing Rules 11.3 3 and 12.14 and the Mauritian Securities Act 2005. The Board accepts full responsibility for the accuracy of the information contained in this communication.

A Company presentation for all investors and analysts via live webcast and conference call

The Company will host a live webcast and conference call, from London, for all investors and analysts on the morning of Monday, 30 September 2019 at 11:30am Mauritius/08:30am UK/09:30am South Africa. The webcast and conference call require registration and can be accessed from the following link:

http://www.diamondpass.net/2373618

A playback will be accessible on-demand within 48 hours via the Company website:

https://grit.group/financial-results/

CHAIRMAN'S STATEMENT

The value of diversification across the continent

Grit continued to deliver against its objectives of creating a diversified property portfolio of hard currency income generating assets across carefully selected African countries. In the financial year the Company successfully acquired two additional assets in Ghana, the Acacia Estate, increased the units available for lease in the Vale accommodation compound in Tete (both in Mozambique) and increased its equity interest in the Mukuba Mall in accretive transactions funded from proceeds of the Main Board listing on the London Stock Exchange in July 2018.

The portfolio now comprises a total of 25 investments, across seven countries and five asset classes and was independently valued at 30 June 2019, with total income producing assets valued at US$825.2 million (2018 US$642.3 million) with like for like property valuations increasing 3.8%. 93.6% (2018: 89.1%) of revenue is earned from multinational tenants3 and 95.4% (2018: 93.2%) of income is produced in hard currency4. The EPRA portfolio occupancy rate was 97.1% as at 30 June 2019 (2018: 96.7%).

The Group performed marginally below its market guidance, achieving reported total shareholder return of 9.3%, including an annualised dividend yield in excess of 8.5%. Net Asset Value per share growth was impacted by exchange rate headwinds and costs of corporate activity which collectively resulted in a 4.7% reduction. Excluding these impacts, shareholders would have enjoyed a 14.0% total return.

Property LTV's were successfully reduced to 40.6% from 43.7% and the overall portfolio remains well-tenanted with a 97.1% occupancy rate and a WAULT/WALE of 6.3 years. The capital costs associated with the recently refurbished Anfa Place Mall in Morocco (the Company's largest asset by value) were not fully reflected in current year valuations and still provide upside potential both from asset valuation and income generation prospects in future reporting periods.

A compelling investment case

The Company continues to prove its ability to generate attractive returns based on African yields with a sound risk profile.

Bronwyn and her highly experienced management team have continued to demonstrate strong competencies in managing existing assets while consolidating the substantial and attractive acquisitive growth the Company has achieved in recent years. Today the Group has declared its 11th distribution and has met its progressive dividend policy since inception.

With high economic growth experienced in a number of African countries (especially Mozambique where the long awaited onshore gas production facilities where approved by Anadarko), the Group is well-placed to successfully grow the portfolio, through expanding a number of existing tenant relationships and has an identified and growing pipeline of attractive near term acquisition targets.

Move to the Premium segment of the London Stock Exchange and Redomiciliation to Guernsey

The Board has decided to postpone the move to the premium segment of the LSE into calendar year 2020 due to the complexity and timelines of the multiple workstreams.

The Board believes that the corporate governance surety provided by a premium listing, as well as eligibility for FTSE UK Index Series inclusion will support the Company's longer term aspirations and performance. To facilitate the Group's eligibility for inclusion in the FTSE UK Index Series the Group is also conducting an investigation into the possibility of redomiciling its corporate seat to Guernsey.

Governance and the Board

Grit's Board constitutes six Non-Executive Directors, five of whom are independent. There are also two Executive Directors as part of the Board and three Board seats are held by females. In addition, there is a permanent alternate director to the Non-independent Non-Executive Director.

During the year under review, the Board received communication from the Public Investment Corporation of South Africa, (currently Grit's largest shareholder) requesting that Ms Matshepo More be replaced as its nominee non-executive director on the Board of Grit. We wish to thank Ms More for her valuable contributions during her tenure.

Mr Paul Huberman did not put himself up for re-election to the Board. On behalf of my fellow Board members, I wish to thank Paul for his input and guidance. Mrs Catherine McIlraith has been appointed as Chairman of the Audit Committee in replacement of Mr Huberman with effect from 27 November 2018.

I am delighted to welcome and thank Sir Samuel Jonah (appointed as Director on 21 February 2019) and Mr David Love (appointed as Director on 4 December 2018) to the Grit Board as Non-Executive Directors. They bring invaluable experience and knowledge and we look very much forward to working with them.

Appreciation

I would like to thank my fellow Board members, the Grit team and in particular our executive directors, our investors and all other stakeholders for their continued support in a challenging global environment.

We look forward to continuing growing against our objectives for the benefit of our investors, our tenants, our staff and the communities in which we operate.

Outlook

The Company provides a secure, diversified and growing income stream as well as the potential for attractive capital appreciation from our long-let, high quality and robust portfolio across defensive sectors with strong tenant covenants with hard currency leases. We remain confident of delivering further value to our shareholders and continuing to grow the returns to our investors over the short and longer term.

Peter Todd

Chairman

CHIEF EXECUTIVE'S STATEMENT

The day after accomplishing our LSE listing on the 31 July 2018, we turned our attention to refining the vision for the Company and on implementing the next stage in the evolution of Grit's strategy.

Our team continued its exciting and careful expansion on the African continent. We have reaffirmed our vision of pioneering real estate owners, generating sustainable returns for generations to come, for all stakeholders including the people of Africa in each of the countries we operate. This vision, and what we now define as our Code of Honour, could not be fulfilled without a solid foundation and the relentless implementation of our values.

During the year under review, the portfolio grew to 24 property assets after our successful entry into the Ghanaian office property market and the acquisition of Acacia Estate in Maputo which is tenanted to, amongst others, the US embassy and is already providing opportunities for similar assets across other countries. We were pleased with the operational performance of our existing portfolio which delivered secure and growing income in line with our expectations. Country and sector diversification combined with proactive asset management initiatives offset some minor challenges we faced in the retail sector, and although we do not have further retail assets in our acquisition pipeline, we continue to believe our strip mall and convenience offerings are a compelling proposition for the African continent.

Operational and investment overview

We continued to internalise asset management and facilities management services and the successful implementation of Broll Online has standardised reporting processes. We bolstered our teams across our current geographic footprint to support near term growth aspirations which will be integral in achieving our medium term target to reduce administration costs as a percentage of assets towards 0.8%.

The most significant activity this year was the redevelopment of our flagship retail asset, Anfa Place Mall in Casablanca, Morocco at a total capital cost of US$25.09 million (inclusive of VAT, not all of which was incurred in the year). Post completion valuations and assets returns are expected to be enhancing to the portfolio in the current and future financial years. We recently hosted the official relaunch and have already been encouraged by positive footfall trends and market acceptance.

Successful pre-letting and re-tenanting activities have reduced vacancies at Anfa Place Mall to 12.9% as at 30 June 2019. Strategic vacancies of 20% were maintained during the redevelopment stage. Significant new tenants to the centre include new anchor tenant Alpha 55 (1,908 sq m), a well-known Moroccan general merchandiser, while food and entertainment offerings have also been increased as a percentage of overall GLA.

During the year, the Group also acquired an additional 20 completed units leased to Barloworld at VDE corporate accommodation compound in Tete, Mozambique, including the remaining 15.5 hectares of land earmarked for further development at a total acquisition price of US $3.6 million. The additional units are adjacent to Grit's existing 123 unit corporate accommodation asset. Post year end, the Group concluded a new lease contract with Vale for a period of five years, with a material requirement of this lease being the supply of an additional 60 accommodation units. By December 2019, 203 units are expected to be completed, representing an increase of 65% in units available for Vale and their subcontractors.

We increased our stake in Mukuba Mall in Kitwe, Zambia from 50% to 75% for a net (excluding debt) consideration of US$8.2 million. Mukuba Mall remains one of the better performing retail assets in the region, due to its location and offering.

Significant Leasing activity

91.4% of expiring GLA was either renewed or replaced (as part of active asset management activities) with significant activity during the year under review including a new five-year office lease to Exxon Mobil in Commodity house Phase 2 in Maputo. Exxon Mobil has also been granted first option on any further Grit controlled office space in Maputo that becomes available.

We successfully concluded a new 10-year office lease, including an increase in GLA, with Anadarko (1,910 sq m) after the exit of an existing local tenant at Commodity House Phase 1.

We introduced the Macau Casino (947 sq m) to Mall de Tete on a new five-year lease and concluded a new five-year lease with VIP Spar (1,780 sq m) as anchor tenant in Zimpeto Square shopping mall in Maputo.

Financing

A US$140 million syndicated debt refinancing program pertaining to the Mozambique portfolio was agreed with a syndicate of banks led by Standard Bank of South Africa and was implemented post year end. More information on this is available in the CFO review.

At year-end, Grit's Property Loan to Value was 40.6%. We continue to target a range of between 35% and 40% over the medium term.

Capital allocation

The portfolio has reached a level of maturity where certain assets may be recycled and proceeds reinvested into higher returning projects. The finalisation of real estate collective investment schemes (OPCI) in Morocco provides us with an opportunity to unlock value through yield compression should Anfa Place Mall be put into an OPCI structure.

In line with our strategy of being the real estate partner of choice, we are considering a number of co-investment opportunities with pension and sovereign wealth funds on the continent. In addition to equity ownership, it is anticipated that Grit will also provide asset management services, which we would expect to generate additional revenue and to support NAV growth.

Strategy update

The Board has recently broadened the Company's mandate to include the pre-funding of risk mitigated development projects as it looks to deploy surplus cash into business units demonstrating higher returns, strong fee generation and strategies that further accelerate NAV growth. The Group aims to deliver superior returns through three primary areas, namely:

·; Property Investment

- A targeted 12% US$ total return* including secure and growing distributions underpinned by high-quality hard currency leases and contracted rental escalations.

·; Property Development

- Pre-funding of risk-mitigated development projects which, together with the investment in the Group's development associate Gateway Delta, is limited to 20% of Group gross asset value ("GAV"). The turnkey nature of developments are not expected to impact dividends. Profits are applied as a reduction in acquisition cost of future assets, which will make it a key component of delivering sustainably higher targeted future NAV growth from Grit's strong multinational tenant relationships.

·; Asset Management fee income

- Fees charged on full property asset values where Grit owns less than 100% of the portfolio has the ability to further leverage on Grit's operational cost base. The provision of Asset Management Services, both internally and to external property owners is a strategic focus area for the Group and is expected to drive strong fee generation and should assist in lowering a number of the Group's operating cost ratios into the future.

* This is a target only and not a profit forecast and there can be no assurance that it will be met. Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of directors and have not been reviewed or reported on by the Company's external auditors.

Pipeline Target Acquisitions

We recently announced that we have visibility of c.US$600 million of identified pipeline targets. The Group has concluded transactions or secured exclusivity agreements on 13 of these assets, focused on tenant driven opportunities, which are collectively valued at c.US$470 million across both completed assets and development opportunities. Targets are still subject to, inter alia, successful funding and other conditions precedent and we intend to update the market in due course about our further plans to proceed on a number of the opportunities presented in the table below.

Outlook

During the year under review management has positioned the business to optimise our growth ambitions in a sustainable, predictable way.

The successful execution of the pipeline is expected to further diversify the portfolio, significantly reducing the exposure to retail and increasing our footprint in logistics, hospitality, corporate accommodation and office real estate sectors.

I am grateful to serve as CEO of Grit, and wish to thank all members of our audacious, innovative team. We are built to perform: every member of my team has met the challenges during the past year and have already prepared themselves to optimise all opportunities in the coming year.

The quality of the Group's diversified portfolio and our strong multinational tenant base have once again helped us to deliver a strong set of results despite a number of headwinds. This solid foundation leaves us confident of continuing to deliver attractive returns over the short and longer term.

We are excited about the opportunities we have identified to continue adding attractive, accretive assets to the portfolio at prices that create value for our shareholders and that will underpin our EPRA NAV growth and our progressive dividend policy over the medium term.

Bronwyn CorbettChief Executive Officer

CHIEF FINANCIAL OFFICER'S STATEMENT

Financial overview

Our financial results for the year ended 30 June 2019 have shown a solid return with the resilient property portfolio delivering a total return of 12.4% from Portfolio performance, notwithstanding the negative impacts of movements in the EUR:USD.

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). In common with best practice in the sector, alternative performance measures have also been provided to supplement IFRS based on the recommendations of the European Public Real Estate Association ("EPRA"). EPRA Best Practice and Policy Recommendations ("BPR") have been adopted widely throughout this report and are used within the business when considering our operational performance as well as matters such as dividend policy and elements of our Directors' remuneration. Full reconciliations between IFRS and EPRA figures are provided in note 18.

As a result of the various acquisitions and ongoing performance of the existing portfolio, the Group achieved a 57.3% increase in profits from operations (increasing to US$17.3 million in 2019 versus US$11.0 million in 2018). Although the Group incurred a 20.7% increase in financing costs (attributable to increased Libor rates over the period and the impact of the new debt from acquisitions), profit before tax increased from US$30.5 million to US$39.5million, representing an increase of 29.5% for the year. The Group finished the year reporting Adjusted EPRA earnings of US$28.7 million which is a 42.8% increase from US$20.1 million in 2018.

Net Asset value per share decreased from US$135.6cps to US$131.9cps, driven by a deferred tax charge of US$13.6 million (or US$4.6cps). However, EPRA NAV per share growth of 0.96% to US$147.1cps from US$145.7cps in 2018. The impact of the corporate activity during the year accounted for a reduction in EPRA net asset value per share of US$4.5cps.

Property Portfolio

The Group acquired two additional properties during the year, Acacia Estate in Mozambique and 5th Avenue Building in Ghana and increased its stake in Mukuba Mall. In addition, the Group expanded its VDE accommodation compound with the addition of 20 housing units while acquiring 15.5ha of land for additional expansion, currently an additional 60 units are under construction to meet the increasing demand for staff housing for Vale in Tete.

The Group also acquired 50% of the CADS II Building (tenanted by Tullow Oil) in Ghana (included in associates and joint ventures).

The value of our property portfolio increased to US$769.1 million as at 30 June 2019 from US$595.5 million in 2018.

All properties were valued at 30 June 2019 by independent external valuers who are RICS accredited. The below table details the valuations of the properties as at 30 June 2019.

Property fair value movements have been positively impacted by the Euro denominated hospitality sector assets, which have seen significant growth, this is particularly encouraging taking into consideration the negative 2.7% movement in the Euro:USD exchange rate. The valuation performance of the retail assets is in line with general negative market sentiment toward this sector, however operational performance of the specific retail assets remains as per targets. The impact of the Anfa Place Mall refurbishment has yet to be fully reflected in the valuations as the success of the refurbishment will need to be demonstrated over the coming months.

Income statement

Gross rental income increased to US$43.6 million from US$32.1 million in 2018 and net property income increased to US$32.3 million from US$25.7 million in 2018. These increases are due to additional rental income received from 5th Avenue and Acacia Estate which were acquired during the year as well as the impact of Mukuba Mall now being treated as a subsidiary since 31 December 2018 (previously being equity accounted for). 

Property operating costs increased by 37.3% (or US$2.8 million), which is in line with the gross rental increase of 35.6% from 2018. With the Company's active on-site administration approach to asset and property management in the various jurisdictions, the Company has attracted a number of highly skilled and experienced staff to manage the portfolio and has expanded capacity to cater for growth.

Operating costs as a percentage of revenue has slightly increased to 24.4% from 22.8% in 2018.

Administrative expenses increased to US$15.2 million from US$14.7 million in 2018, the additional costs are attributable to the increases in costs necessitated by the compliance and reporting requirements associated with the addition of the London Stock Exchange to the previous JSE and SEM listings (with the largest contributors to these costs being external valuation costs, increased cost of non-executive directors and additional audit fees). The administrative expenses include a number of one-off costs associated with additional advisors during the London listing process as well as the additional costs for the joint audit conducted for the previous financial year. The Group is committed to proactively managing the cost base, which includes decreasing the number of professional consultants utilised through the new staff members in the various departments.

Total profit for the year attributable to shareholders (which includes the impact of deferred tax) is slightly down to US$28.0 million in 2019 from US$28.6 million in 2018.

Adjusted EPRA earnings for 2019, which removes the impact of non-cash items such as fair value movements, deferred tax, straight lining of leases and unrealised foreign currency translation impacts from profit for the year attributable to shareholders, increased to US$28.7 million from US$20.1 million in 2018.

Net debt and cash flow

The Group raised net debt of US$42.4 million in 2019 through refinancing existing facilities and new debt acquired. As financing is integral to our business model, the Group has continued to develop strong relationships with financiers. The multi-bank approach adopted by Grit has continued, with the main banking partners being Standard Bank, Bank of China and State bank of Mauritius. During the year, the Group added new banking partners in Maubank from Mauritius and Rand Merchant Bank from South Africa (within equity accounted investments) to the list of Grit's financiers.

The breakdown of the interest-bearing borrowings is listed in note 8.

The Group's loan-to-value ("LTV") has decreased to 43.12% at the period, from 51.4% in 2018.

Debt and financing arrangements

The main changes in our debt facilities during the year were:

- Facilities settled:

- EUR20 million revolving credit facility ("RCF") with Barclays Bank Mauritius

- New facilities:

- US$9 million with Barclays Bank Ghana for the acquisition of the 5th Avenue Building in Ghana

- US$28 million with Standard Bank SA for the acquisition of the Acacia Housing Compound in Mozambique

- EUR26.5 million RCF with Standard Bank SA

- US$7.7 million (in Euros) with Maubank in Mauritius

Post year end debt refinance

Phase 1 of the announced debt refinance was implemented in September 2019 whereby the Group consolidated a number of its debt facilities into a single US$140 million facility from Standard Bank South Africa which cross collateralises the Mozambique asset portfolio for a 4-year term bearing interest at a 3 Month Libor+5%. The resultant interest cost saving on the phase 1 refinance is 1.14%.

Loans settled as part of refinance:

Post Balance sheet extension of facilities

On 24 June 2019, Mara Delta (Mauritius) Properties Limited secured an extension of the Euro facility for Euro 22.3 million from March 2020 to March 2022. The interest rate will increase from 3.75% to 4.00%. The terms of the loan were approved by the Board in August 2019.

Full Details of debt facilities as at 30 June 2019 are as follows:

The Group closed the year with a WACD of 6.44% (2018: 5.75%) and the weighted average maturity of our debt was 1.84 years at 30 June 2019 (2018: 2.3 years). This post year end refinancing transaction will cause a decrease in the WACD to c.6.0% and increase our maturity profile to c.2.57 years.

Dividend

Dividend declared of US$6.95 cents per share for the six months ended 30 June 2019, taking the full year dividend US$12.20 cents per share, which is an increase of 0.1% and equates to an annual dividend yield of SEM: 8.84%, JSE: 9.55% and LSE:8.81% (based on 30 June 2019 exchange rates and share prices on the respective Exchanges).

PRINCIPLE RISKS AND UNCERTAINTIES

Grit maintain a Principle Risk Register which is reviewed and updated on a regular basis and presented to the Risk committee for review on a quarterly basis. The key risks are well managed and monitored regularly as the risks could change with changes in the industry, economy and stakeholders, amongst others.

The principle risks and uncertainties facing the Group are set out in the following pages with the potential consequence and impact and the mitigation actions and control in place.

Financial instruments - risk management

The principal financial instruments used by the Group consist mainly of deposits with banks, interest-bearing borrowings, related party loans receivable/payable, other loans receivable, trade and other receivables, trade and other payables and other financial asset and other financial liability. Exposure to market, credit and liquidity risk arises in the normal course of business.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial commitments as and when they fall due. This risk is managed by holding cash balances and overdraft facilities and by regularly monitoring cash flows. The directors have taken out Political Risk Insurance ("PRI") to cover the Group in the event of any potential currency inconvertibility or exchange transfer limitations. The insurance cover for Mozambique cost 1.15% per annum of the amount insured whilst the cost of the policy for Morocco is currently 0.40% of the cost insured per annum.

The Group utilises undrawn facilities and cash on hand to meet its short-term funding requirements. The intention is that non-current financial liabilities will predominantly be serviced through cash generated from operations and the restructuring of debt upon maturity. Subsequent to year end the matured facilities have been refinanced with Standard Bank South Africa totalling USD140.0 million.

Interest rate risk

The Group seeks to manage its exposure to changes in interest rates by fixing interest rates in respect of certain of its borrowings when considered appropriate. The Group is however exposed to interest rate risk through its variable rate cash balances and interest-bearing borrowings. At 30 June 2019, interest rates in respect of 27.36% (2018: 9.00%) of the Group's borrowings were fixed.

The Group's weighted average effective rate of interest for the year to 30 June 2019 was 6.44% (2018: 5.75%) based on the interest rates applicable to its long-term borrowings, short-term bridge funding and loan issue costs capitalised.

An increase of 1.00% in the interest rate on floating rate borrowings (USD) would result in an increase to finance charges of US$3.1 million (2018: US$1.8 million) pre-tax per annum. This is based on calculating the effective interest rate of the Group and adding 1.00% escalation to the effective interest rate.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from trade and other receivables, cash and cash equivalents. There is considered to be no significant concentration of credit risk as exposure is spread over a large number of counterparties.

The carrying amount of financial assets recorded in the financial statements represents the Group's maximum exposure to credit risk.

Cash and cash equivalents

It is the Group's policy to deposit short-term cash investments with reputable financial institutions.

Trade and other receivables

Credit risk is principally the risk that a tenant may default or not meet its obligations timeously. The financial position of the tenants is monitored on an ongoing basis. Allowance is made for specific doubtful debts and credit risk is therefore considered to be limited to the carrying amount of the financial assets at the end of the relevant financial year.

Loans to related parties and other loans receivable from partners

The Group has policies in place to ensure that loans are granted to related and other parties with an appropriate credit history so as to limit the amount of exposure to credit risk.

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Moroccan Dirham and Mozambican Metical and to a lesser extent the Mauritian Rupee, Zambian Kwacha, South African Rand, Euro and Kenyan Shilling. Foreign exchange risk arises in relation to future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group has entered into US Dollar denominated rental contracts with tenants that rent properties held within its Mozambican and Kenyan property portfolios. This is to ensure that the Group is not exposed to a devaluation of rental income generated from these property portfolios. The rental contracts with tenants that rent properties held within the Moroccan property portfolio are denominated in Moroccan Dirhams and the rental contracts with tenants that rent properties within the Zambian property portfolio are denominated in either Zambian Kwachas or US Dollars. The rental income from the Beachcomber hospitality assets in Mauritius is generated in Euros whilst the rentals on the office building in Mauritius are charged in Mauritian Rupees.

Capital management

Overall policy

The Group's overall policy in relation to capital management is to maintain an adequate capital base in order to provide a sound platform from which to provide returns for shareholders and benefits for other stakeholders. The Directors seek to ensure there is an optimal structure to reduce the Group's overall cost of capital.

Approach to capital management

The Board's aim is to maintain a strong equity capital base, comprising of all items within 'total equity attributable to ordinary shareholders' in the consolidated statement of financial position. This is in order to maintain investor, creditor and market confidence and to provide a sound platform from which to enable the Group to sustain its plans for the future development of the business. It is the Group's stated intention to deliver long-term sustainable growth in distributions per ordinary share.

The Group is principally funded by bank debt, equity raised in capital markets, and other new equity issues.

The Company's Constitution states that the Company has an unlimited borrowing capacity.

It is the Group's objective, whenever practical, to maintain its net borrowings at no more than 50% of the value of its principal property and related assets.

STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The directors are responsible for preparing the group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as issued by the International Accounting Standards Board (IASB) and the Mauritius Companies Act 2001, for purposes of complying with the SEM Listings Rules, and to enable the company to meet its filing obligations regarding the financial statements annual report applicable to its listings in London and Johannesburg.

The directors must not approve the group financial statements unless they are satisfied that the group financial statements give a true and fair view of the state of affairs of the group and of the profit or loss of the group for that period. In preparing the financial statements, the directors are responsible for:

- selecting suitable accounting policies and then applying them consistently;

- stating whether applicable IFRSs as issued by the IASB have been followed, subject to any material departures disclosed and explained in the financial statements;

- making judgements and accounting estimates that are reasonable and prudent; and

- preparing the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's transactions and disclose with reasonable accuracy at any time the financial position of the group and enable them to ensure that the financial statements comply with the Mauritius Companies Act 2001.

Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors confirms that to the best of their knowledge:

·; they have complied with the above mentioned requirements in preparing the group financial statements; and

·; the group financial statements, which have been prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit and loss of the group.

The Directors consider that the Integrated Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy.

The Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The annual financial statements of the Company have been approved by the Board on 30 September 2019. Each of the Directors confirms that to the best of their knowledge that the group financial statements, which have been prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit and loss of the group.

On behalf of the Board

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated statement of changes in equity

NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these separate and consolidated financial statements are set out below.

1.1 Basis of preparation

The financial information included in this announcement does not constitute the Group's statutory accounts for either the financial year ended 30 June 2019 or the financial year ended 30 June 2018, but is derived from those accounts. The Group's statutory accounts for the year ended 30 June 2019 will be considered at the Company's Annual General Meeting of shareholders. The Auditor's reports on both the 2019 accounts (audited by PricewaterhouseCoopers) and 2018 accounts (audited by BDO & Co and PricewaterhouseCoopers) were unmodified, did not draw attention to any matters by way of an emphasis of matter.

The consolidated financial statements for the financial year ended 30 June 2019 ("financial statements") have been prepared in accordance with: International Financial Reporting Standards (IFRS) as issued by the IASB; the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by Financial Reporting Standards Council, the JSE Listings Requirements, the SEM Listing Rules and the LSE Listing Rules; and, the requirements of the Mauritian Companies Act 2001. The financial statements have been prepared on the going-concern basis and were approved for issue by the Board on 30 September 2019.

The financial statements have been prepared under the historical cost basis, except for investment properties and certain financial instruments that are measured at fair value through profit or loss and which are stated at fair value.

Going concern

The Directors have satisfied themselves that Group and Company has access to sufficient cash and borrowing facilities to meet its foreseeable cash requirements and that it is appropriate to adopt the going-concern basis in preparing the Group's financial statements. However, should for whatever reason some of the refinancing is not available the Group will need to consider its outgoing cash position which could include a reduction of dividends paid and/or reassessments of the extent of planned capital projects.

Changes in accounting policies and comparability

The accounting policies have been applied consistently to all years presented unless otherwise stated below. Where necessary, comparative figures have been amended to be consistent with changes in presentation in the later years.

IFRS 9 Financial Instruments

The Group has applied IFRS 9 retrospectively but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group's previous accounting policy for financial instruments (application of IAS 39).

As a result of adoption of IFRS 9, the Group adopted certain consequential amendments to IAS 1 Presentation of Financial Statements, which requires the disclosure of interest revenue on the effective interest rate method, as well as impairment losses on financial assets held at amortised cost. In addition, the Group adopted the consequential amendments to IFRS 7 Financial Instruments: Disclosures, which were applied in the 2018 financial year. Comparative disclosures have not been restated.

IFRS 15 Revenue from contracts with customers

IFRS 15 established a comprehensive framework for determining and reporting the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. It replaces all existing revenue standards and their related interpretations in IFRS and applies to all contracts with customers except for contracts that are within the scope of other standards on leases, insurance contracts and financial instruments and therefore does not impact the majority of the Group's revenue.

The standard outlines the principles that must be applied to measure and recognise revenue with the core principle being that revenue should be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for fulfilling its performance obligations to a customer.

The principles in IFRS 15 must be applied using the following 5 step model:

(i) Identify the contract(s) with a customer

(ii) Identify the performance obligations in the contract

(iii) Determine the transaction price

(iv) Allocate the transaction price to the performance obligations in the contract

(v) Recognise revenue when or as the entity satisfies its performance obligations

The Group has adopted IFRS 15 without restating the information presented for 2018. Apart from providing more qualitative disclosures on the Group's revenue transactions, the application of IFRS 15 has not had a significant impact on the financial position and/or financial performance of the Group. As at the date of initial application, no adjustments were required to the Group's performance or financial position.

Functional and presentation currency

The consolidated financial statements are prepared and are presented in USD (US$) which is also the company's functional and presentational currency of the company. Amounts are rounded to the nearest thousand, unless otherwise stated. Some of the underlying subsidiaries and associates have different functional currencies other than the USD (US$) which is predominantly determined in the country in which they operate.

Presentation of alternative performance measures

The group presents certain alternative performance measures on the face of the income statement. Revenue is shown on a disaggregated basis, split between gross rental income and the straight line rental income accrual. Additionally, the total fair value adjustment on investment properties is presented on a disaggregated basis to show the impact of contractual receipts from vendors separately from other fair value movements. These are non IFRS measures and supplement the IFRS information presented. The directors believe that the presentation this information provides useful insight to users of the financial statements and assists in reconciling the IFRS information to industry-wide EPRA metrics as discussed further in Note 18. 

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.

1.3 Critical judgments and estimates 

The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and assumptions relating to the fair value of investment properties in particular have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the subsequent financial period. Fair value adjustments do not affect the determination of distributable earnings but have an effect on the net asset value per share presented on the statement of financial position to the extent that such adjustments are made to the carrying values of assets and liabilities.

Judgements

The principal areas where such judgments have been made are:

Unconsolidated structured entity

Drive in Trading (DIT), a B-BBEE consortium, secured a facility of US$33.4 million from the Bank of America N.A (UK Branch) ("BoAML") to finance its investment in Grit. The BoAML facility was granted to DIT after South Africa's Government Employees Pension Fund (GEPF), represented by Public Investment Corporation ("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 the 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 10 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 disclose it as an unconsolidated structured entity due to DiT being a related party.

Grit Executive Share Trust (GEST) as a subsidiary

The Group has 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. No Non-controlling interest has been accounted for in the current year.

Gateway Delta Development Holdings Ltd (GDDH) as an associate

The Group has considered Gateway Delta Development Holdings Ltd (GDDH) to be its associate for consolidation purposes due to the Group's significant influence of GDDH, as the Group has a direct and indirect ability to appoint some members to the Board. The Group owns 19.98% of GDDH and benefit from profits of GDDH. The group also has significant influence to participate in the financial and operating policy decisions of the GDDH but do not control or jointly control this policy as the CEO of the Group is also on the investment committee of GDDH and has a close working relationship and history with Mr Pearson (MD of GDDH). This view has changed in this year as it was classified as other investments in the previous financial year.

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. The Group does not own any interest in FAM and does not benefit from any profits of FAM nor is it liable for any losses incurred by FAM.

Acquisition of investment properties

Where investment properties are acquired through the acquisition of corporate interests, the directors have regard to the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

Where such acquisitions are not judged to be an acquisition of a business under IFRS 3, the transactions are accounted for as if the Group had acquired the underlying investment property directly, together with any associated assets and liabilities. Accordingly, no goodwill arises, rather the cost of acquiring the corporate entity is allocated between the identifiable assets and liabilities of the entity, based on their relative fair values at the acquisition date.

Otherwise corporate acquisitions are accounted for as business combinations.

Investments, associates and joint ventures

As an acquiring group, management needs to ensure that all acquisitions are appropriately classified in the financial statements. Depending on the shareholding and other factors there can be some judgement as to whether the acquisition is shown as an investment, associate or consolidated as a subsidiary. In particular the Group holds interests of 50% of the total stake in multiple investments. The Group is not a controlling party in any of the arrangements. The Company applies judgement to determine whether the investment is classified as a Joint venture or an associate by considering the guidance provided and the prevailing operational arrangements. The Group has exercised judgement that, for all investments classified as joint ventures, the arrangements will meet the definition of a joint arrangement because there is no ultimate controlling party, control is shared. Therefore, the Group has accounted for these investments as joint ventures.

Estimates

The principal areas where such estimations have been made are:

Fair value of financial instruments

The Group have estimated the value of its obligation arising from its guarantee to de-risk 50% of PIC's exposure to the BoAML CRO. The Group's obligation is based on the occurrence or non-occurrence of uncertain future events (the probability of DiT defaulting on the BoAML facility). Therefore, the fair value of the obligation was based on the probability of DiT defaulting on the facility, which has been assessed as insignificant as at 30 June 2019.

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 period.

Impairment of CGUs and non-financial assets

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions.

The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In the case of any goodwill, this is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that an impairment may have occurred, estimates are prepared of expected future cash flows for each relevant group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including the pre-tax discount rate used that reflects current market assessments of the time value of money, together with economic factors such as exchange rates and country specific inflation and interest rates.

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 period 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. New standards and interpretations

Standards, interpretations and amendments to published standards that are not yet effective

The following new standards, interpretations and amendments to existing standards have been published that are applicable for future accounting periods that have not been adopted early by the Group. These standards and interpretations will be applied in the first year that they are applicable to Grit.

Standards, interpretations and amendments to published standards that are effective and applicable to the Group

The Group has adopted the following new standards, interpretations and amendments to existing standards for the first time for the financial year ended 30 June 2019. The nature and effect of the changes are as follows:

3. INVESTMENT PROPERTIES

Investment property pledged as security

Certain of the Group's investment property has been pledged as security for interest-bearing borrowings as follows:

- Mozambican investment properties with a market value of US$287.9 million (2018: US$198.0 million) are mortgaged to Standard Bank of Mozambique to secure debt facilities amounting to US$10.5 million (2018: US$10.4 million), Standard Bank of South Africa to secure debt facilities amounting to US$77.2 million (2017: US$50.0 million), Standard Bank (Mauritius) Limited to secure debt facilities amounting to US$10.1 million (2018: US$11.0 million) and Banco Unico of Mozambique to secure debt facilities amounting to US$2.7 million (2018: US$2.9 million) and Bank of China to secure debt facilities amounting to US$13.3 million (2018: US$13.3 million).

- Moroccan investment properties with a market value of US$106.7 million (2018: US$92.6 million) are mortgaged to Investec South Africa to secure debt facilities amounting to US$45.1 million (2018: US$48.5 million).

- Mauritian investment properties with a market value of US$68.4 million (2018: US$63.7 million) are mortgaged to Barclays Bank of Mauritius to secure debt facilities amounting to US$7.2 million (2018: US$7.4 million) and State Bank of Mauritius to secure debt facilities amounting to US$25.4 million (2018: US$26.0 million).

- Kenyan investment properties with a market value of US$23.4 million (2018: US$18.8 million) are mortgaged to Bank of China to secure debt facilities amounting to US$8.5 million (2018: US$8.5 million).

- Zambian investment properties with a market value of US$69.1 million (2018: US$nil) are mortgaged to Bank of China to secure debt facilities amounting to US$29.0 million (2018: US$nil).

- Ghanaian investment properties with a market value of US$21.9 million (2018:US$nil) are mortgaged to Barclays Bank Ghana Limited to secure debt facilities amounting to US$9.0 million (2018: US$nil).

Valuation policy and methodology for investment properties held by the Group and by associates

Investment properties are valued at each reporting date with independent valuations performed every year by independent professional reputable valuation experts who have sufficient expertise in the jurisdictions where the properties are located. All valuations that are performed in the functional currency of a group entity that is not United States Dollars are converted to United States Dollars at the effective closing rate of exchange. All valuations have been undertaken by the Royal Institute of Chartered Surveyors' ("RICS's"), accredited and registered valuers, in accordance with the version of the RICS Valuation Standards that were in effect at the relevant valuation date and are further compliant with International Valuation Standards. Market values presented by valuers have also been confirmed by the respective valuers to be fair value in terms of IFRS.

In respect of the majority of the Mozambican investment properties, independent valuations were performed at 30 June 2019 by Knight Frank Chartered Surveyors and REC Chartered Surveyors (2018: Jones Lang LaSalle Proprietary Limited (JLL), Chartered Surveyors) using either the discounted cash flow method (2018: income capitalisation (yield) or the discounted cash flow method). The remaining Mozambican properties were valued by REC Chartered Surveyors and part of the Meridian Group, at 30 June 2019 using the discounted cash flow method.

The Moroccan investment property was independently valued at 30 June 2019 by Knight Frank Chartered Surveyors (2018: Knight Frank Chartered Surveyors), using the discounted cash flow method.

The Zambian investment properties held by associates were independently valued at 30 June 2019 by Knight Frank Chartered Surveyors (2018: Broll Valuation and Advisory Services (Pty) Ltd, Chartered Surveyors), using the discounted cash flow method.

The Kenyan investment properties held by the Group and its associates were independently valued at 30 June 2019 by Knight Frank Chartered Surveyors (2018: Broll Valuation and Advisory Services (Pty) Ltd, Chartered Surveyors), using the discounted cash flow method.

The Mauritian investment properties held by the Group and its associates were independently valued at 30 June 2019 by Knight Frank Chartered Surveyors (2018: Broll Indian Ocean (Pty) Ltd, Chartered Surveyors), using the discounted cash flow method.

The Ghanaian investment properties held by the Group and its associates were independently valued at 30 June 2019 by Knight Frank Chartered Surveyors and Apex Charter Surveyors (2018: Broll Valuation and Advisory Services (Pty) Ltd, Chartered Surveyors), using the discounted cash flow method.

4. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

¹The carrying value at 30 June 2019 includes an unsecured loan of US$46.6 million (30 June 2018: US$46.6 million), from the Group to the associate, which bears interest at 6.25% (30 June 2018: 6.25%).

Secured investments:

Zambian investment properties held by associates have a market value of US$90.3 million as at 30 June 2019 (30 June 2018: US$183.9 million). The properties in the investee entities are fully mortgaged to Bank of China to secure debt facilities amounting to US$47.4 million as at that date (30 June 2018: $76.4 million).

Mauritian investment properties held by an associate have a market value of US$222.2 million as at 30 June 2019 (30 June 2018: US$206.7 million). The property in the investee entity is mortgaged in equal proportions to SBM Bank (Mauritius) Limited, Investec Bank (Mauritius) Limited and the Mauritius Commercial Bank Limited to secure debt facilities amounting to US$56.8 million (30 June 2018: US$62.2 million).

Kenyan investment property held by an associate has a market value of US$10.9 million as at 30 June 2019 (30 June 2018: US$10.4 million). The property in the investee entity is fully mortgaged to HFCK Bank Limited to secure debt facilities amounting to US$4.4 million (30 June 2018: US$4.4 million).

Ghanain investment property held by an associate has a market value of US$36.5 million as at 30 June 2019 (30 June 2018: US$nil). The property in the investee entity is fully mortgaged to Barclays Bank Ghana Limited to secure debt facilities amounting to US$15.1 million (2018: US$nil).