TIDMGR1T
RNS Number : 8405C
Grit Real Estate Income Group
13 February 2020
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered by continuation in the Republic of Mauritius)
(Registration number: C128881 C1/GBL)
LSE share code: GR1T
SEM share code: DEL.N0000
JSE share code: GTR
ISIN: MU0473N00036
("Grit" or the "Company" or the "Group")
HALF YEAR ABRIDGED UNAUDITED CONSOLIDATED RESULTS
FOR THE SIX MONTHSED 31 DECEMBER 2019
Grit Real Estate Income Group Limited, a leading pan-African
real estate company focused on investing in and actively managing a
diversified portfolio of assets underpinned by predominantly US
Dollar and Euro denominated long-term leases with high quality
multi-national tenants, today announces its results for the six
months ended 31 December 2019.
Financial highlights
6 Months ended 6 Months ended Increase/
31 Dec 2019 31 Dec 2018 Decrease
Dividend per share USD5.25 cps USD5.25 cps +0.0%
--------------- --------------- ----------
EPRA Net asset value ("NAV") per share(2) USD144.7 cps USD143.1 cps +1.1%
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IFRS NAV per share(1) USD128.3 cps USD134.5 cps -4.6%
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Total Income Producing Assets(5) USD860.1m USD796.4m +8.0%
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Gross Rental income USD24.3m USD18.7m +29.9%
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Profit from operations USD10.7m USD7.3m +46.6%
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Earnings per share USD4.26 cps USD7.07 cps -39.8%
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Headline earnings per share(3) USD2.80 cps USD2.77 cps +1.1%
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Adjusted EPRA earnings per share(4) USD5.67 cps USD5.36 cps +5.8%
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EPRA cost ratio (incl associates and joint ventures) 18.6% 15.6% +3.0 pts
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Weighted average lease expiry ("WALE") 4.7 yrs 6.5 yrs -1.8 yrs
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EPRA portfolio occupancy rate 97.4% 96.0% +1.4 pts
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Group LTV 43.9% 43.4% +0.5 pts
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Property LTV 41.9% 40.5% +1.4 pts
--------------- --------------- ----------
-- Dividends per share declared for the six months ended 31
December 2019 of USD5.25cps (December 2018: USD5.25cps), putting
the Company on course to meet its progressive dividend policy and
minimum full year dividend per share target of USD12.25cps
-- EPRA NAV per share grew to USD1.447 (December 2018:
USD1.431). EPRA NAV growth was positively impacted by prefunding
profits on VDE but was largely offset by negative valuation impacts
on retail assets. The Group remains on track to meet its full year
target of 12%+ total return in US Dollars (inclusive of NAV growth)
which is expected to be supported by the impact of recent
acquisitions, contracted escalations and continued leasing activity
in the second half of the financial year
-- Profit from operations increased 46.6% to USD10.7 million as
a result of strong portfolio performance and acquisitive growth
over the period
-- Weighted average cost of debt declined to 6.07% (June 2019:
6.44%) as a result of active treasury management activities and
downward movements in LIBOR over the reporting period. The average
forward rate as at 31 December 2019 is currently 5.98% and 68.8% of
debt is now at fixed interest rates
-- LTV has been impacted by the acquisition of the additional
VDE units which were debt funded. LTV is expected to reduce towards
the targeted 40% by the end of the financial year
-- Earnings per share, Headline Earnings per share and Adjusted
EPRA Earnings per share were negatively impacted by one-off
non-recurring tax charges of USD1.1 million and USD1.3 million
additional provision for bad debts relating to retail property
portfolio assets
-- Completion of the first development pre-funding transaction
resulting in a total valuation increase of USD6.1 million
-- Acquisition of an additional 23.75% in Letlole La Rona in
Botswana ("LLR"), increasing the Company's overall shareholding in
LLR from 6.25% to 30.0%, represents a significant expansion of
Grit's strategy in Botswana, a strong and politically sound economy
and an investment grade country and a key market for Grit's future
growth
-- The portfolio was independently valued at 31 December 2019
(with the exception of LLR which was valued by Knight Frank as at
30 June 2019), with total income producing asset value increasing
to USD860.1 million (June 2019: USD825.2 million) and like for like
property valuations increasing 2.9%
Operational highlights
-- Property portfolio now comprises a total of 46 properties
(including 20 properties held in LLR), across seven countries and
five property sectors
-- 92.8% of revenue is earned from multinational tenants(6) (December 2018: 92.6%)
-- 94.1% of income is produced in hard currency(7) (December 2018: 93.2%)
-- EPRA portfolio occupancy rate improved to 97.4% as at 31
December 2019 (June 2019: 97.1%) as a result of continued leasing
activity at AnfaPlace Mall
-- Total gross lettable area ("GLA"), attributable to Grit,
increased 20.9% from June 2019 to 315,098 sqm as a result of
acquisitions in the period
-- Weighted average annual contracted rent escalations at 2.7% (June 2019: 2.8%)
-- Weighted average property capitalisation rate 7.8% (June 2019: 7.9%)
Post balance sheet activity
-- On 27 January 2020, Grit completed the acquisition of the
Club Med Cap Skirring Senegal resort upon a sale and leaseback
(with a new 12 year lease) from the Club Med group. The
re-development and expansion of the existing hotel (capped at EUR28
million) is expected to commence by the end of Q1 2020
-- On 12 February 2020, the Group announced a conditional
Memorandum of Agreement to purchase a Morrocan REIT / OPCI vehicle
consisting of a flagship mixed use development asset in Casablanca
and exclusivity over a further industrial asset located in the
Meknes industrial zone. The Group further intends to consolidate
its existing Morrocan assets and in-country pipeline within this
OPCI vehicle and will introduce equity co-investors upon
completion. The introduction of co-investors is expected to provide
a measured reduction in relation to Grit's sole exposure to the
vehicle going forward
-- Declared an interim dividend in respect of the six months 31
December 2019 of USD5.25cps in line with the prior year
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 14.
(3) Refer to Note 15.
(4) Adjustments to make earnings representative of Company
performance and includes adjustments for unrealised foreign
exchange movements and straight line leasing adjustments - refer to
note 14 for further details on adjustments made.
(5) Includes properties, investments and property loan
receivables - Refer to Financial Review.
(6) Forbes 2000, Other Global and Pan-African tenants.
(7) Hard (USD and EUR) or pegged currency rental income.
Bronwyn Corbett, Chief Executive Officer of GRIT Real Estate
Income Group Limited, commented:
"We continue to see strong demand for quality real estate
solutions from high quality multi-national tenants. This continues
to support Grit growing our property portfolio in an accretive
manner and enabling our expansion into an eighth African country
after we recently took transfer of the Club Med Cap Skirring resort
in Senegal.
We also took delivery of the first turnkey development which
Grit prefunded, providing the Company a meaningful share of
development profits, and which acts as a template for a number of
exciting risk mitigated development opportunities in our current
pipeline that we expect will deliver attractive capital growth
potential for our shareholders over the short and longer term.
Our team has continued to extract value from our asset portfolio
and we believe the Group is well placed to take advantage of the
deepening and increasing sophistication of the real estate sectors
across the countries in which we operate and where the fundamentals
remain positive.
Recent reductions in LIBOR rates, in conjunction with active
treasury management and refinancing activities, are assisting in
driving down the Group borrowing costs. The Group is continuing to
focus on delivering its investment strategy and remains on track to
meet its full year target of 12%+ total return in US Dollars. The
Company is in the process of engaging with financiers on the
upcoming LIBOR replacement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer +230 269 7090
Darren Veenhuis, Head of Investor Relations +44 779 512 3402
Morne Reinders, Investor Relations +27 82 480 4541
Maitland/AMO - Communications Adviser
James Benjamin +44 20 7379 5151
Grit-maitland@maitland.co.uk
finnCap Ltd - UK Financial Adviser
William Marle / Scott Mathieson / Matthew Radley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld (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
PSG Capital - JSE Sponsor and Corporate Adviser
David Tosi +27 21 887 9602
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 Dollar and Euro denominated
long-term leases with a wide range of blue-chip multi-national
tenant covenants across a diverse range of robust property
sectors.
The Company is committed to delivering strong and sustainable
income for shareholders, with the potential for income and capital
growth. The Company is targeting a net total shareholder return
inclusive of net asset value growth of 12.0%+ per annum.*
The Company currently holds 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+, Nomzamo Radebe, Catherine McIlraith+, David Love+, Sir
Samuel Esson Jonah+, and Bright Laaka (Permanent Alternate Director
to Nomzamo Radebe).
(* Executive Director) (+ Independent Non-Executive
Director)
Company secretary: Intercontinental Fund Services Limited
Registered address: c/o Intercontinental Fund Services Limited,
Level 5, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary (South Africa): Computershare Investor
Services Proprietary Limited
Registrar and transfer agent (Mauritius): Intercontinental
Secretarial Services Limited
Corporate advisor and JSE sponsor: PSG Capital Proprietary
Limited
SEM authorised representative and sponsor: Perigeum Capital
Ltd
This notice is issued pursuant to the LSE Listing Rules, JSE
Listings Requirements, SEM Listing Rule 11.3 and the Mauritian
Securities Act 2005. The Board of the Company accepts full
responsibility for the accuracy of the information contained in
this communiqué.
CHIEF EXECUTIVE OFFICER'S STATEMENT
The Group is continuing to focus on delivering its investment
strategy and remains on track to meet its full year target of 12%+
total shareholder return in US Dollars. The dividend declaration of
USD5.25 cps (December 2018: USD5.25 cps) is in line with the
strategy to maintain our current distribution in cents per share
while over the medium term (3 to 5 years) reducing the payout ratio
and redeploying resources into attractive and accretive
opportunities that we expect to deliver capital growth potential
over the short and longer term for our shareholders. We expect our
annual distributions to once again be weighted to the second half
of the financial year. The Group's earnings and dividends are
underpinned by the secure and growing income of our high-quality
portfolio.
In the first half of this financial year, the Company continued
to deliver on our business and growth strategy with the completion
of an acquisition, an addition to an existing asset and concluded
one post period acquisition which were all underpinned by
predominantly global blue-chip tenants and hard currency
leases.
-- The recent expansion of VDE Housing Estate marks the first
delivery of a risk-mitigated development via the pre-funding of
projects and has achieved our goal of participating in development
profits to increase our net asset value growth potential. A number
of our current pipeline opportunities include developments, and in
a similar fashion, we would expect to prefund into largely turnkey
contracts that Grit has risk-mitigated through upfront, contracted,
long duration leases.
-- The acquisition of the additional 23.75% in LLR provides us
with a solid foundation to continue our growth strategy within the
investment grade country of Botswana alongside our strategic new
partner, the Botswana Development Corporation.
-- The Group's acquisition of the Club Med resort (post
period-end) in Senegal has unlocked additional potential pipeline
within the hospitality sector and is the first asset to be acquired
in the Paradise Hospitality vehicle. The venture signals a
strategic partnership between Grit and Club Med for collaboration
on their entire real estate portfolio across the African continent
and Indian Ocean.
The latter two acquisitions also form the basis of activating
additional revenue streams by providing asset management solutions
to outside shareholders, associates and joint ventures of the Group
in the months to follow.
The Group delivered modest growth in asset values over the
six-month period. Reported net asset value growth has been limited
to 1.1% year on year, and while most sectors in our portfolio have
shown positive valuation growth, specifically the Corporate
Accommodation sector (which includes the component of development
profit from the VDE Housing Estate expansion), the retail sector
has been impacted by negative sentiment towards retail assets in
general as well as trading difficulties of some retailers on the
continent. The impacts were predominantly felt in our Mukuba Mall
and Mall de Tete exit capitalisation rates and cashflows. Mukuba
Mall, which currently has a relatively short WALE of 0.5 years due
to the timing of the initial lease terms subsequent to development,
is expected to increase in excess of 4.5 years by year end due to
current letting activity, and which should result in improved
capitalisation rates to underpin valuation growth.
The Group has concluded a number of the debt refinancing
programs, which together with the decrease in USD LIBOR has seen an
overall reduction in financing costs, with the current weighted
average forward rate being 5.98% down from 6.43% at December 2018.
We have taken the opportunity to fix a greater percentage of base
LIBOR exposures, and in the period we have moved our hedged
position from 42.1% in December 2018 to 68.8%.
The Company has access to a significant and growing pipeline of
potential investments that meet its strict investment criteria. The
pipeline of investments is strategically placed to continue
strengthening the geographic and sectoral spread of the group's
investment portfolio. We recently updated the market on the
progress we have made on the currently announced portion of this
pipeline and will be providing an update on the funding of these in
due course. The investments consist of a balanced mix of asset
acquisitions, and a risk mitigated development pipeline which we
expect will ultimately deliver higher capital growth prospects for
the Group in the medium term.
The Company's operations, management and reporting departments
have all been strengthened in order to cater for the additional
pipeline assets expected to come online in the near future. The
highly skilled management team and infrastructure that is now in
place have the capacity to manage not only the current income
producing asset base of USD860.1 million, but also for the
identified investment pipeline of c.USD470 million anticipated to
be delivered in the medium term, and the asset management contracts
with outside shareholders, associates and joint ventures.
The weighted average lease expiry of 4.73 years at December 2019
was impacted in the period by the lease lengths of the LLR
acquisition as Botswana's market generally has shorter lease terms
than the balance of our markets. Mukuba Mall in Zambia is nearing
the end of its initial five years of operations (with a current
WALE of 0.5 years) while the Vodacom Building approaches its first
renewal period after 10 years (with a current WALE of 1.0 year).
Lease renewal negotiations are continuing on these buildings, with
a number of others progressing well and we look forward to seeing
the positive impact these renewals are expected to have on the WALE
and exit capitalization rate once concluded in the next 6
months.
The Group's current vacancy rate has reduced to 2.6% (from 4.0%
at December 2018 and 2.9% at June 2019) in line with the completion
of the AnfaPlace Mall refurbishment project in September 2019. The
redevelopment and successful launch of the new anchor tenant Alpha
55 has been well received in the market, however a small number of
retailers experienced trading pressures over the refurbishment
period and this resulted in non-performing tenants that we have had
to exit. While this is expected to negatively impact operating
profit over the next few months (through reduced revenue in the
short term and additional provisions for bad debts recorded to
December), the Mall has now successfully been repositioned and we
have accelerated early renewals of existing successful retailers
which we are confident will ensure the long term profitability of
the Mall. Further initiatives on utilisation of common areas for
marketing and generation of specialty leasing income in the mall as
well as improvement on the parking management system will
facilitate the generation of additional revenue.
Recent changes to Moroccan legislation, introducing the
equivalent of a real estate investment trust ("REIT") framework
under the local equivalent called Organisme de Placement Collectif
Immobilier ("OPCI"), is providing further sophisticating of local
capital markets and is resulting in strong demand for real estate
investment. We recently announced our intention to acquire a OPCI
vehicle inclusive of a mixed-use asset, Massira Corner consisting
of gross lettable area ("GLA") of approximately 16,500 sqm and
anchored by Hotel Onomo with 201 keys (occupying c.67% of the GLA)
alongside a retail mall with notable high-street retail brands such
as H&M, Charles and Keith, Starbucks, Terranova and Cosmos, who
occupy the balance of ground floor retail space (c.33%).
Grit intends to further grow the OPCI's asset base with a number
of contemplated acquisitions to further diversify the vehicle's
sector and tenant exposures. We currently have exclusivity over an
A-grade light industrial asset secured by a 10-year triple net
lease to US-listed Aptiv plc (formerly named Delphi Automotive
plc), and have signed a non-binding memorandum of understanding
with Club Med in relation to the development of a 350-key
hospitality resort in Essaouira, leased back to Club Med on a
15-year fixed Euro lease. We additionally expect that AnfaPlace
Mall will be a suitable asset for inclusion within this OPCI
structure, and expect to make further announcements in this regard
in due course.
We have engaged with key cornerstone investors and will look to
inject their equity to take up shares alongside the Company in the
OPCI structure. The introduction of co-investors is expected to
provide a measured reduction in relation to Grit's sole exposure to
the vehicle, however with our positive views on the potential for
capitalization rate compression and further asset management
opportunities, we believe we are well placed to deliver meaningful
returns to our shareholders and co-investors through both income
and capital appreciation.
Finally, it is pleasing to see the steady growth in our London
Stock Exchange share register, which now represents c.28% of the
total shares in issue (15% as at December 2018 and 12% at our
initial IPO), which we believe is a testament to the growing
interest in attractive risk mitigated investments into Africa by
institutional shareholders in the UK and we thank them for their
support thus far.
Outlook
The Company continues to deliver on its targets of annual
attractive income distribution and total annual return growth and
is well positioned to capitalise on significant potential growth
from its unique high-quality portfolio of properties as well as
further attractive investment opportunities across the African
continent. Given the strength of the Group's existing portfolio, we
expect to continue to deliver annual rental growth as well as
capital value increases through yield compression, risk mitigated
developments and yield and NAV enhancing acquisitions.
Earnings in the second half of the year are expected to be
underpinned by both recent acquisitive activity as well as the
supportive dynamics of falling debt costs. Further improved
benchmarking exercises and facilities management initiatives will
bring about reduced and more efficient cost ratios to the
portfolio. As a result, we remain confident of meeting our
progressive dividend and total shareholder return targets for the
full year.
The Group is on track to move trading in its shares to the
premium listing segment of the Main Market of the London Stock
Exchange as well as redomiciling its corporate seat to Guernsey in
2020, which is expected to facilitate the Group's eligibility for
inclusion in the FTSE UK Index Series. This is anticipated to
significantly improve the liquidity in the Company's shares and
further diversify the Company's shareholder base. The Group is also
actively reviewing its current listing locations and assessing the
viability of three concurrent listings and the impacts that might
be having on share trading liquidity.
We expect that the retail sector will remain challenging in both
the occupier and investment markets against the backdrop of a
fast-changing retail sector but we expect to deliver value by
continuing to focus on maximising the yield of the current
portfolio and unlocking value through the Company's operational
expertise and proactive asset management, financial strength and
selective asset divestment strategies.
We are continuing to assess a number of financing options to
fund our investment pipeline of high-quality accretive assets
leased to multinational corporates and attracting hard currency
rental streams and will update shareholders in due course. The
Company is well placed to continue to benefit from its strong
position in the market and deliver attractive risk adjusted returns
to our shareholders over the short and longer term.
Bronwyn Corbett
Chief Executive Officer
BUSINESS REVIEW
Property diversification
The recently concluded additions and acquisitions have continued
to diversify the geographical and sectoral splits, and with the
purchase of the Club Med resort in Senegal post period-end, the
Group has added additional geographic diversification.
Acquisitions and additions
Letlole La Rona Limited (LLR) in Botswana
On 20 November 2019 Grit announced the acquisition of an
additional 23.75% interest in Botswana Stock Exchange listed
Letlole La Rona Limited (LLR) from the Botswana Development
Corporation ("BDC").
Through this transaction, Grit increased its stake in LLR from
6.25% to a strategic 30.0% and is expected to unlock a strategic
partnership with BDC as both an institutional investor in Grit and
a potential co-investor in direct property opportunities throughout
Africa.
The purchase consideration was settled through the issuance of
9,839,511 new Grit shares to BDC on 28 November 2019. The swap
ratio was determined using our most recently reported EPRA NAV per
share, less dividend declared, of USD140.0 cps.
The transaction for the 9,839,511 shares was recorded at the
ruling share price of the day of USD1.19, resulting in the
acquisition being recorded at USD11.7 million. The difference
between the agreed transaction price of USD13.8 million has
resulted in a gain of USD2.1 million.
In determining the fair value of the investment at the
acquisition date, Grit conducted an analysis of the volume and
frequency of the share trades of LLR on the Botswanan Stock
Exchange (including an analysis of the free float of the
shareholder base of LLR) in order to determine whether the shares
were traded in an active market and concluded that the share was
not traded with sufficient volume nor frequency to support the
conditions of an active market. As the share price was not
indicative as a proxy for fair value, the Company has concluded the
best mechanism would be Net Asset Value based on the latest
available independent valuations (which were conducted by Knight
Frank as part of the 30 June 2019 financial year end LLR). This
determination of fair value of LLR is consistent with the Group's
accounting policy and fair value determination of other associates
and joint ventures within the group.
Construction of additional 60 units for Vale in Mozambique
In December 2019, the Group took delivery of 60 units
constructed under a turnkey construction contract that concluded
the first transaction whereby the Group provided pre-development
funding to the developers and shared in the development profits.
Total construction costs amounted to USD9.3 million (exclusive of
VAT) and the profit share amounted to USD4.6 million of which
USD2.5 million was attributable to Grit. The specific units were
valued at USD17.4 million, resulting in value uplift of USD3.4
million attributable to Grit. The overall increase in the value of
the accommodation complex was positively impacted by the lease
renewals of Vale which combined with the USD3.4 million uplift from
the 60 units resulted in a total value increase of the property of
USD6.1 million.
The developer, being a related party of the Group via their
shareholding in Grit, has repaid USD9.4 million of the total
pre-development funding of USD12 million, with the balance due on
settlement of the amounts for the profit-sharing arrangement
(USD4.6 million).
Completion of the AnfaPlace Mall refurbishment project in
Morocco
The completion of the refurbishment project for a total cost of
USD25.1 million was concluded in September 2019. Additional costs
amounting to USD0.4 million have been spent on additional features,
out of the original scope, and additional interest costs of USD0.4
million have been incurred. At the end of the reporting period, an
amount of USD25.9 million remains outstanding to the developers,
with the final account due shortly.
The project was conducted by Gateway Delta Development Holdings
Limited, a 19.98% owned associate of the Group and a related party
to the Group (by virtue of a common material shareholder of both
companies, the Public Investment Corporation of South Africa).
The Geographical and Sector analysis of the assets (including
our proportionate holding in associates and joint ventures) are as
follows:
Geographical split WALE WALE Property Value Property Value
(years) (years) 31-Dec-19 31-Dec-18
31-Dec-19 31-Dec-18
-------------------- ----------- ----------- --------------- ---------------
Mozambique 3.4 3.1 38.6% 38.1%
Mauritius 10.8 11.8 20.6% 22.7%
Morocco 3.7 3.5 13.5% 13.2%
Kenya 7.7 8.6 3.5% 4.9%
Zambia 1.5 2.6 14.0% 12.8%
Ghana 3.6 3.5 6.4% 7.9%
Botswana 2.1 - 2.6% 0.4%
Other investments* - - 0.8% 0.0%
-------------------- ----------- ----------- --------------- ---------------
Total 4.7 6.5 100.0% 100.0%
-------------------- ----------- ----------- --------------- ---------------
*Other investments include land owned by Grit (Imperial phase 2)
and associate properties owned by Grit's development associate,
Gateway Delta Development Holdings Limited.
Sector split WALE WALE Property Value Property Value
(years) (years) 31-Dec-19 31-Dec-18
31-Dec-19 31-Dec-18
------------------------- ----------- ----------- --------------- ---------------
Office 4.3 4.6 25.1% 28.7%
Retail 2.6 3.2 32.1% 31.6%
Light industrial 5.7 6.4 3.4% 4.6%
Hospitality 11.0 12.1 18.8% 20.5%
Held for sale - - 0% 0.5%
LLR* 2.1 - 2.6% 0%
Corporate accommodation 3.7 2.6 17.2% 13.7%
Other investments** - - 0.8% 0.4%
------------------------- ----------- ----------- --------------- ---------------
Total 4.7 6.5 100.0% 100.0%
------------------------- ----------- ----------- --------------- ---------------
* LLR reflected separately to enable comparable analysis of
portfolio against prior reporting period.
**Other investments include land owned by Grit (Imperial phase
2) and associate properties owned by Grit's development associate,
Gateway Delta Development Holdings Limited.
The movement in the WALE has been predominantly driven by the
growth in the portfolio, including the development and acquisition
of the additional 60 units at the VDE Estate. The Botswanan LLR
portfolio, in a jurisdiction where shorter term leases are
concluded, has diluted the weighting of several of the long-term
leases. Furthermore impacts on retail centres in Zambia, with the
early exit of Truworths and TFG Group, have impacted portfolio
statistics.
The existing portfolio WALE is being strategically managed by
pre-empting renewals of strategic leases such as Vodacom and retail
tenants in Anfa and Mukuba Mall, as well as the driving of longer
term leases for new tenancies.
Asset Management
Notable new leases entered into by the Group during the period
includes:
Ghana:
GC Net Lease renewal for a period of 5 years
Rotan Power Lease renewal for a period of 3 years
Main One Cable Lease extended by additional 1 year to July 2022
Mozambique:
Vale Lease renewal for 5 years (including the additional 60 units developed in the current period)
Exxon New 5-year lease
Morocco:
Alpha 55 New 6.5-year lease
Kandy Oyster New 9-year lease
Orchestra Expanded and signed a new 9-year lease
Oliveri Renewal for a period of 9-year lease
La Cantinetti New lease for 9-year period
Optical In New lease for 9-year period
Le Coin Marocain New lease for 9-year period
Tenant analysis
Tenant Classification (by % Grit Ownership) % GLA % Rentals
---------------------------------------------- ------- -----------
Forbes 2000 23.1% 40.3%
Other Global 62.2% 41.1%
Pan African 10.8% 11.4%
National 2.3% 4.5%
Local 1.6% 2.7%
---------------------------------------------- ------- -----------
100% 100%
---------------------------------------------- ------- -----------
Tenant Lease Currency (by % Grit Ownership) 6 months to 31-Dec-19 6 months to 31-Dec-18
---------------------------------------------- ----------------------- -----------------------
US Dollars 61.7% 62.0%
Pegged to US Dollars 15.1% 15.5%
Euro 17.3% 15.7%
Local Currencies (Excluding Botswana Pula) 5.2% 6.8%
Local Currencies (Botswana Pula) 0.7% 0%
---------------------------------------------- ----------------------- -----------------------
100% 100%
---------------------------------------------- ----------------------- -----------------------
FINANCIAL REVIEW
Gross rental income (excluding straight line leasing and
amortisation of lease premiums), including associates and joint
ventures, increased by USD3.9 million to USD33.2 million (six
months ending December 2018: USD29.3 million). This increase is
attributable to acquisitions and additions (USD3.3 million) with
the balance of the movement from normal operations (including the
impact of the Euro vs the US Dollar). Property operating expenses,
including associates and joint ventures, increased by USD2.4
million, attributable to acquisitions (USD0.6 million), increased
provision for bad debts (USD1.3 million) and normal operations
(USD0.4 million). Net cash property income including associates and
joint ventures increased 7.5% to USD26.6 million from USD24.7
million in the comparative period.
Operating costs on the entire portfolio (included assets held in
associated companies) as a percentage of revenue increased in the
period to 20.8% from 15.5% for the period ended December 2018, with
4% of the increased cost being attributable to the provision for
bad debt focused on the Retail sector (which predominately relates
to a single tenant group that is facing liquidation in
Morocco).
Six months Six months Six months Six months Six months Six months
ended ended ended ended ended ended
31 Dec 2019 31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec 2018 31 Dec 2018
Associates and Associates and
Subsidiaries joint ventures Total Subsidiaries joint ventures Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Revenue * 25,972 7,258 33,230 18,733 10,560 29,293
Operating
expenses (6,284) (635) (6,919) (3,977) (577) (4,554)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net operating
income 19,688 6,623 26,311 14,756 9,983 24,739
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Operating costs
ratio 24.2% 8.7% 20.8% 21.2% 5.5% 15.5%
* Revenue excludes straight line leasing and amortization of
lease premiums
The Group incurred a 22.0% comparable increase in administration
expenses during the period from USD8.2 million to USD10.0 million.
Transaction costs of USD1.1 million (predominantly related to the
LLR acquisition) included in administration expenses is offset by
the day one gains on LLR recorded during the period.
The Group's staffing complement has been bolstered to absorb the
recent and future expected growth of the portfolio as well as third
party asset management services. Over the next 6 months, the Group
will place less reliance on external consultants as a result of the
recent appointments of in-house corporate advisory, legal, company
secretarial and human resource staff.
The comparative head count of staff is as follows:
As at As at
DEPARTMENT 31 Dec 2019 31 Dec 2018 Movement
-------------------- ------------- ------------- ---------
Legal & Compliance 5 4 1
Operations 22 18 4
Communications 4 2 2
Finance 18 17 1
Investment 9 8 1
Admin 13 9 4
Corporate Advisory 3 0 3
Treasury 5 0 5
Investor Relations 2 1 1
Human Resources 1 1 -
Management 3 5 (2)
-------------------- ------------- ------------- ---------
85 65 20
-------------------- ------------- ------------- ---------
With the Group's active on-site approach to asset and property
management in the various jurisdictions, it has attracted a number
of highly skilled and experienced staff to manage the
portfolio.
Fair value movements in subsidiaries and associates and joint
ventures
Retail Office Hospitality Light Industrial Corporate Accommodation TOTAL
--------------
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
-------------- ---------- ---------- -------------- -------------------- -------------------------- ----------
Mauritius - 596 1,169 - - 1,765
Mozambique (2,793) 3,568 - (101) 7,526 8,200
Morocco (3,939) - - - - (3,939)
Zambia (4,677) - - - - (4,677)
Kenya 1,377 - - 782 - 2,159
Ghana - (487) - - - (487)
-------------- ---------- ---------- -------------- -------------------- -------------------------- ----------
TOTAL* (10,032) 3,677 1,169 681 7,526 3,021
-------------- ---------- ---------- -------------- -------------------- -------------------------- ----------
* Total of fair value gains of properties including associates
and joint ventures, excluding fair value adjustment from
contractual receipts from vendors
Retail
The retail sector in general experienced pressure, with Mukuba
Mall in Zambia specifically demonstrating a negative valuation
adjustment of USD5.1 million a result of the relatively short lease
expiry profile and uncertainty around lease renewal rates.
Office
The Mozambique assets have benefited from securing long term
global tenancies and the increased demand for office space
consequent to the commencement of the LNG construction phase in the
Rovuma Basin. The offices in the other regions, Ghana and
Mauritius, had marginal movements impacted by recent lease
renewals.
Hospitality
The hospitality assets remained robust with the sector outlook
reflecting a stable tourism demand.
Light Industrial
Increased valuation on the Imperial Distribution Centre in Kenya
was expected and in line with contractual rental escalation. This
absorbed the slight downward adjustment on the Bollore Warehouse in
Mozambique which is driven by the decision to redevelop this Pemba
Industrial site in the strategic location at the Port.
Corporate accommodation
During the period Grit acquired an additional 60 units for Vale
in Mozambique. This was part of the first pre-development funding
initiative allowing Grit to profit share in the development as well
as to take advantage of the valuation uplift from the development
costs. The total fair value increase for this property was USD6.1
million for the period.
Distributable earnings and dividends
The financial results for the six months ended 31 December 2019
produced distributable earnings per share of USD5.48 cps (December
2018: USD6.06 cps). A number of once off costs incurred during the
six months including a provision for bad debts within the retail
assets amounting to USD1.3million, additional withholding taxes
amounting to USD1.2million to flow funds from Mozambique as part of
the Mozambique refinance transaction impacted results. The
additional withholding taxes has resulted in an increase in the
effective tax rate in the current reporting period. The impact of
these items amount to USD 0.85 cps. In line with the Group strategy
to maintain a progressive distribution in USD cps while reducing
the payout ratio over the medium term, a dividend of USD 5.25 cps
is declared for the six months to December 2019 (December 2018: USD
5.25 cps). New acquisitions, lease escalations, decrease in WACD
and the relative higher weighting of administration expenses in the
first six months will allow the company to maintain its full year
forecast.
Net asset value
EPRA NAV per share increased by 1.1%, or USD1.6 cps,
year-on-year from USD143.1 cps (December 2018) to USD144.7 cps. NAV
decreased by 4.6% or USD6.2 cps from USD134.5 cps (December 2018)
to USD128.3 cps.
The movement in net asset value per share for the period is
shown in the table below:
IFRS EPRA
Net Asset Value Movement USD cps USD cps
------------------------------------ -------- --------
Opening Balance 1 July 2019 131.9 147.1
Dividend paid (7.0) (7.0)
Portfolio performance
- Distributable earnings 5.5 5.5
- Fair value adjustments
- Retail (3.4) (3.4)
- Office 1.2 1.2
- Corporate accommodation 2.5 2.5
- Hospitality 0.4 0.4
- Light industrial 0.2 0.2
- Other non-cash items (3.2) (1.8)
------------------------------------ -------- --------
Closing Balance 31 December 2019 128.3 144.7
------------------------------------ -------- --------
Total investment in income generating assets has increased from
USD825.2 million in June 2019 to USD860.1 million in December 2019.
The increase is attributable to the LLR acquisition (USD20.8
million), additional 60 units for Vale (USD13.9 million cost) less
repayment of the development pre-funding loan of USD9.4 million for
the Vale construction contract.
COMPOSITION OF INCOME PRODUCING ASSETS 31-Dec-19 30-Jun-19
--------------------------------------------------------------------------------------
USD'm USD'm
-------------------------------------------------------------------------------------- ---------- ----------
Investment properties 599.5 576.8
Deposits paid on investment properties 8.5 8.5
Investment property included within 'Investment of associates and joint ventures' 208.2 183.8
816.2 769.1
Other investments, PPE, and loans to related parties and loans to property partners* 43.9 56.1
-------------------------------------------------------------------------------------- ---------- ----------
TOTAL INCOME PRODUCING ASSETS 860.1 825.2
-------------------------------------------------------------------------------------- ---------- ----------
* Includes receivable balances from partners in Zambia relating
to the back-to-back loan from Bank of China of USD77 million used
to fund the acquisition and loans advanced to Gateway Delta.
Net debt, cash flow and financing
As financing is integral to our business model, the Group has
continued to develop strong relationships with financiers. The
multi-bank approach adopted by Grit has continued, with the main
banking partners being Bank of China, Standard Bank, ABSA Bank and
SBM (Mauritius) Ltd. The breakdown of the interest-bearing
borrowings is listed in note 7.
The Group raised USD154.5 million of debt in the period to fund
acquisitions and refinance debt facilities (USD112.0 million was
repaid in the period and USD13.3 million repaid in early January
2020), of which USD140 million pertained to the Mozambique
refinancing program that was used to settle acquisition costs for
the Vale units in Tete, facility fees and retiring existing
Mozambican facilities of USD97.8 million at balance sheet date and
a further USD13.3 million after the reporting period. The terms of
the new facility will result in reduced cost of funding over the
four-year Mozambican portfolio facility to 3-month LIBOR plus a
margin of 5%.
The average 3-month USD LIBOR rates decreased from 2.46% for the
6 months to June 2019 to 1.90% for the 6 months to 31 December
2019. The 0.56% decrease in USD LIBOR rates in the period resulted
in the Group's WACD decreasing to an average of 6.07% (December
2018: 6.31%) for the six month period, and with the finalisation of
the Mozambique refinancing program, the weighted average forward
rate is 5.98%.
The Group's loan-to-value ("LTV") has increased to 43.9% in six
months ended December 2019 (30 June 2019: 43.1%).
Two new corporate term loans were secured being USD20 million
from SBM and USD8.5 million from Bank ABC which were utilised to
settle the Revolving Credit Facility held with SBM and the
overdraft facility held with Bank ABC respectively.
This has contributed to the increase in the debt expiry profile
and the decrease of the current portion of the interest-bearing
borrowings.
The Group has entered into a number of interest rate fixing
mechanism to minimise the risk of USD LIBOR rate volatility.
Details of the fixed rate contracts are as follows:
Financial Notional Amount Type Rate Effective date Termination date
institution
-------------------- ----------------- -------------------- ------------------- --------------- -----------------
Standard Bank of USD 20.0 million Interest rate swap 1.58% fixed rate 11-Oct-19 16-Oct-23
South Africa versus 3m USD
LIBOR floating
rate
Standard Bank of USD 40.0 million Interest rate Cap of 1.75%, 24-Oct-19 16-Oct-23
South Africa collar floor of 1.50%
versus 3m USD
LIBOR floating
rate
Standard Bank of USD 40.0 million Interest rate Cap of 1.85%, 25-Nov-19 16-Oct-23
South Africa collar floor of 1.30%
versus 3m USD
LIBOR floating
rate
Currently 68.8% of debt is fixed in nature.
Presentation of financial results
The financial statements have been prepared in accordance with
IFRS, in accordance with best practice in the sector, alternative
performance measures have also been provided to supplement IFRS,
based on the recommendations of European Public Real Estate
Association ("EPRA"). EPRA's Best Practice Recommendations have
been adopted widely throughout this report and are used within the
business when considering our operational performance of the
properties. Full reconciliations between IFRS and EPRA figures are
provided in note 14.
Leon van de Moortele
Chief Financial Officer
PRINCIPAL RISKS AND UNCERTAINTIES
Grit maintain a Key Risk Register which is shared with the Risk
Committee on a quarterly basis. The key risks are well managed and
monitored regularly as the risks could change with changes in the
industry, economy and stakeholders, amongst others.
The principal risks of the business are set out on pages 34-36
of the 2019 Annual Report alongside their potential impact and
related mitigations. These risks fall into four categories:
compliance; strategic; financial and operational.
The Board has reviewed the principal risks in the context of the
second half of the current financial year. The Board believes there
has been no material change to the risk categories outlined in the
2019 Annual Report of the Group and that the existing mitigation
actions remain appropriate to manage them.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that the abridged consolidated half year
financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting' as issued by the International
Accounting Standards Board ("IASB") and that the half year
management report includes a fair review of the information
required by the Disclosure Guidance and Transparency Rules ("DTR")
4.2.7R and DTR 4.2.8R, namely:
-- Important events that have occurred during the first six
months and their impact on the abridged set of half year financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial
year;
-- Material related party transactions in the first six months
and a fair review of any material changes in the related party
transactions described in the last Annual Report.
The maintenance and integrity of the Grit website is the
responsibility of the directors.
Legislation in Mauritius governing the preparation and
dissemination of financial statements may differ from legislations
in other jurisdictions. The directors of the Group are listed in
its Annual Report for the year ended 30 June 2019. A list of
current directors is maintained on the Grit website:
www.grit.group.
On behalf of the Board
Bronwyn Corbett Leon van de Moortele
Chief Executive Officer Chief Financial Officer
Unaudited Unaudited
six months six months
ended ended
31-Dec-19 31-Dec-18
Abridged consolidated statement of comprehensive income Notes USD'000 USD'000
----------------------------------------------------------------- ------ ----------- -----------
Gross rental income 8 24,276 18,733
Straight-line rental income accrual (171) 642
----------------------------------------------------------------- ------ ----------- -----------
Revenue 24,105 19,375
Property operating expenses (6,284) (3,977)
----------------------------------------------------------------- ------ ----------- -----------
Net property income 17,821 15,398
Other income 2,958 101
Administrative expenses (including corporate structuring costs) (10,030) (8,223)
----------------------------------------------------------------- ------ ----------- -----------
Profit from operations 10,749 7,276
----------------------------------------------------------------- ------ ----------- -----------
Fair value adjustment on investment properties 486 12,373
Contractual receipts from vendors of investment properties 3 2,525 2,652
----------------------------------------------------------------- ------ ----------- -----------
Total fair value adjustment on investment properties 3,011 15,025
Fair value adjustment on other investments 591 26
Fair value adjustment on other financial liability (552) -
Impairment of loans (904) -
Net impairment chargeon financial assets (218) -
Fair value adjustment on derivative financial instruments 136 -
Share-based payment expense (90) (78)
Share of profits from associates and joint ventures 4 12,590 7,720
Foreign currency gains / (losses) 8 (1,084)
----------------------------------------------------------------- ------ ----------- -----------
Profit before interest and taxation 25,321 28,885
Interest income 9 2,366 6,669
Finance costs 10 (12,605) (10,999)
----------------------------------------------------------------- ------ ----------- -----------
Profit for the period before taxation 15,082 24,555
Taxation (3,381) (3,605)
----------------------------------------------------------------- ------ ----------- -----------
Profit for the period after taxation 11,701 20,950
----------------------------------------------------------------- ------ ----------- -----------
Loss on translation of functional currency (1,406) (1,290)
Total comprehensive income 10,295 19,660
----------------------------------------------------------------- ------ ----------- -----------
Profit/(loss) attributable to:
Owners of the parent 13,130 20,643
Non-controlling interests (1,429) 307
11,701 20,950
Total comprehensive income/(loss) attributable to:
Owners of the parent 11,724 19,353
Non-controlling interests (1,429) 307
10,295 19,660
Basic and diluted earnings per share (cents) 4.26 7.07
Unaudited as at Audited as at Unaudited as at
31-Dec-19 30-Jun-19 31-Dec-18
Abridged consolidated statement of financial position Notes USD'000 USD'000 USD'000
------------------------------------------------------- ------ ---------------- -------------- ----------------
Assets
Non-current assets
Investment properties 3 595,965 573,664 552,763
Deposits paid on investment properties 3 8,500 8,500 15,382
Property, plant and equipment 2,122 2,158 1,847
Intangible assets 1,625 581 492
Investments in associates and joint ventures 4 171,407 150,605 135,695
Other investments 5 1 3,024 4,180
Related party loans receivable 12,477 25,320 802
Other loans receivable 6 29,290 29,226 42,863
Deferred tax 22,901 20,484 10,059
------------------------------------------------------- ------ ---------------- -------------- ----------------
Total non-current assets 844,288 813,562 764,083
--------------------------------------------------------------- ---------------- -------------- ----------------
Current assets
Non-current assets held for sale - - 4,282
Trade and other receivables 39,258 34,293 57,771
Related party loans receivable 2,693 166 2,000
Current tax receivable 769 693 402
Derivative financial instruments 127 - -
Cash and cash equivalents 25,545 15,164 5,698
------------------------------------------------------- ------ ---------------- -------------- ----------------
Total current assets 68,392 50,316 70,153
--------------------------------------------------------------- ---------------- -------------- ----------------
Total assets 912,680 863,878 834,236
--------------------------------------------------------------- ---------------- -------------- ----------------
Equity and liabilities
Total equity attributable to equity holders
Ordinary share capital 454,147 443,259 443,242
Treasury shares reserve (18,406) (18,406) (14,811)
Foreign currency translation reserve (1,442) (36) 490
Antecedent dividend reserve 418 - 927
Retained loss (42,301) (34,868) (28,776)
------------------------------------------------------- ------ ---------------- -------------- ----------------
Equity attributable to owners of the Company 392,416 389,949 401,072
--------------------------------------------------------------- ---------------- -------------- ----------------
Non-Controlling interests 2,571 4,581 16,655
--------------------------------------------------------------- ---------------- -------------- ----------------
Total equity 394,987 394,530 417,727
--------------------------------------------------------------- ---------------- -------------- ----------------
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840 12,840
Proportional shareholder loans 9,615 9,615 19,230
Interest-bearing borrowings 7 369,069 163,738 201,462
Obligations under leases 969 126 89
Deferred tax 48,951 44,410 25,463
------------------------------------------------------- ------ ---------------- -------------- ----------------
Total non-current liabilities 441,444 230,729 259,084
--------------------------------------------------------------- ---------------- -------------- ----------------
Current liabilities
Interest-bearing borrowings 7 15,043 182,359 123,415
Obligations under leases 226 46 50
Trade and other payables 33,106 31,606 25,334
Current tax payable 556 924 -
Derivative financial instruments 34 43 (3)
Related party loans payable 26,088 14,507 -
Other financial liability 1,196 644 128
Bank overdrafts - 8,490 8,501
------------------------------------------------------- ------ ---------------- -------------- ----------------
Total current liabilities 76,249 238,619 157,425
--------------------------------------------------------------- ---------------- -------------- ----------------
Total liabilities 517,693 469,348 416,509
--------------------------------------------------------------- ---------------- -------------- ----------------
Total equity and liabilities 912,680 863,878 834,236
--------------------------------------------------------------- ---------------- -------------- ----------------
Unaudited Unaudited
six months six months
ended ended
31-Dec-19 31-Dec-18
Abridged consolidated statement of cashflows Notes USD'000 USD'000
-------------------------------------------------------------- ------ ----------- -----------
Cash generated from operations
Profit before taxation for the period 15,082 24,555
Adjusted for:
Depreciation and amortisation 261 167
Interest income 9 (2,366) (6,669)
Share of profits from associates and joint ventures 3 (12,590) (7,720)
Finance costs 10 12,605 10,999
Allowance for credit losses 218 -
Bad debt provision 1,340 -
Impairment of loans 904 -
Foreign currency (gains)/losses (8) 1,084
Straight-line rental income accrual 171 (642)
Amortisation of lease premium 1,696 -
Share based payment expense 90 78
Fair value adjustment on investment properties 3 (3,011) (12,373)
Fair value adjustment on other investments (591) (26)
Fair value adjustment on other financial liability 552 -
Fair value adjustment on derivative financial instruments (136) -
---------------------------------------------------------------------- ----------- -----------
14,217 9,453
---------------------------------------------------------------------- ----------- -----------
Changes to working capital
Movement in trade and other receivables (7,313) (23,768)
Movement on deposits paid on investment properties 3 - (6,266)
Movement in trade and other payables 1,422 (4,953)
---------------------------------------------------------------------- ----------- -----------
Cash generated from/(utilised in) operations 8,326 (25,534)
---------------------------------------------------------------------- ----------- -----------
Taxation paid (1,701) (569)
---------------------------------------------------------------------- ----------- -----------
Net cash generated from/(utilised in) operating activities 6,625 (26,103)
---------------------------------------------------------------------- ----------- -----------
Cash utilised on investing activities
Acquisition of investment properties 3 (20,978) (80,958)
Acquisition of property, plant and equipment (91) (105)
Acquisition of intangible assets (computer software) (84)
Acquisition of other investments 5 (1) -
Acquisition of associates and joint ventures 4 - (10,500)
Dividends and interest received from associates and joint ventures 4,091 3,681
Interest received 1,911 4,864
Related party loans payable 11,582 -
Related party loans repayment received 9,387 -
Proportional shareholder loans received 1,110 -
Other loans (advanced)/repaid - (1,923)
---------------------------------------------------------------------- ----------- -----------
Net cash generated from/(utilised in) investing activities 6,927 (84,941)
---------------------------------------------------------------------- ----------- -----------
Proceeds from the issue of ordinary shares - 132,094
Share issue expenses (404) (10,666)
Dividends paid to non-controlling shareholders (581) -
Ordinary dividends paid (20,547) (18,749)
Proceeds from interest bearing borrowings 154,500 98,269
Settlement of interest-bearing borrowings (112,039) (81,135)
Finance costs and debt initiation fees paid (15,003) (5,738)
Settlement of obligations under leases (123) (37)
---------------------------------------------------------------------- ----------- -----------
Net cash generated from financing activities 5,803 114,038
---------------------------------------------------------------------- ----------- -----------
Net movement in cash and cash equivalents 19,355 2,994
Cash at the beginning of the year 6,674 (5,812)
Effect of foreign exchange rates (484) 15
---------------------------------------------------------------------- ----------- -----------
Total cash and cash equivalents at the end of the period 25,545 (2,803)
---------------------------------------------------------------------- ----------- -----------
Foreign
currency Antecedent Non- Total
Share Treasury translation dividend Retained controlling Equity
Capital Shares reserve reserve earnings interest Holders
Consolidated statement of USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
changes in equity
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Balance as at 1 July 2018 328,394 (14,811) 1,780 - (36,245) (3,940) 275,178
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Profit for the period - - - - 20,643 307 20,950
Other comprehensive expense for
the period - - (1,290) - - - (1,290)
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Total comprehensive income - - (1,290) - 20,643 307 19,660
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Ordinary shares issued 132,094 - - - - - 132,094
Ordinary shares issue expenses (10,666) - - - - - (10,666)
Transfer to antecedent dividend
reserve (6,580) - - 6,580 - - -
Ordinary dividends paid - - - (5,653) (13,096) - (18,749)
Share based payments - - - - (78) - (78)
Minority interest acquired
through effective control - - - - - 20,288 20,288
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Balance as at 31 December 2018 443,242 (14,811) 490 927 (28,776) 16,655 417,727
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Balance as at 1 July 2019
- As previously reported 443,259 (18,406) (36) - (34,869) 4,581 394,529
- Adoption of IFRS 16 - - - - (52) - (52)
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Restated total equity at the
beginning of the financial year 443,259 (18,406) (36) - (34,921) 4,581 394,477
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Profit for the period - - - - 13,130 (1,429) 11,701
Other comprehensive expense for
the period - - (1,406) - - - (1,406)
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Total comprehensive income - - (1,406) - 13,130 (1,429) 10,295
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
Share based payments - - - - 90 - 90
Ordinary dividends paid - - - - (20,600) - (20,600)
Dividends paid to
non-controlling shareholders - - - - - (581) (581)
Ordinary shares issued 11,710 - - - - - 11,710
Antecedent dividend reserve (418) - - 418 - - -
Share issue expenses (404) - - - - - (404)
Balance as at 31 December 2019 454,147 (18,406) (1,442) 418 (42,301) 2,571 394,987
--------------------------------- --------- --------- ------------ ----------- --------- ------------ ---------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
This abridged consolidated interim financial information
(financial statements) for the six months ended 31 December 2019
has been prepared on a going concern basis and in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and IAS 34 'Interim Financial Reporting' as issued by the
IASB, the JSE , LSE and SEM Listings Requirements; the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, the Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council and the Securities Act of
Mauritius 2005.
In order to satisfy themselves that the Group has adequate
resources to continue in operational existence for the foreseeable
future, the Directors have reviewed an 18-month cash flow target
includes assumptions about future trading performance and debt
requirements, and an assessment of the potential impact of
significant changes to those cash flows. This, together with
available market information, headroom under the financial
covenants, and experience of the Group's property portfolio and
markets, has given the Directors sufficient confidence to adopt the
going concern basis in preparing the financial statements.
The abridged consolidated interim financial information does not
comprise statutory accounts. Statutory accounts for the year ended
30 June 2019, presented in accordance with International Financial
Reporting Standards ("IFRS"), were approved by the Board of
Directors on 30 September 2019 and delivered to the Registrar of
Companies in Mauritius. The report of the auditor on those accounts
was unqualified, did not contain an emphasis of matter paragraph.
The abridged consolidated interim financial information should be
read in conjunction with the Group's annual financial statements
for the year ended 30 June 2019. This abridged consolidated interim
financial information was approved Board of Directors on 13
February 2020. The abridged consolidated interim financial
information has not been reviewed or reported on by the Group's
auditors.
Significant Judgements
The preparation of these financial statements requires the Board
to make judgements, assumptions and estimates that affect amounts
reported in the Statement of Comprehensive Income and Balance
Sheet. The directors consider the valuation of investment property
to be a critical estimate because of the level of complexity,
judgement or estimation involved and its impact on the financial
statements. This is consistent with the financial statements for
the previous year end. Full disclosure of the critical judgements,
assumptions and estimates is included in the 2019 financial
statements and there has been no change in the judgements,
assumptions and estimates as per the 2019 financial statements with
the exception of the accounting treatment of LLR below and
IFRS16.
The principle area where such judgement has been made was:
Acquisition of LLR
Grit increased its stake in LLR from 6.25% to 30.0%.
On 20 November 2019 Grit announced the acquisition of an
additional 23.75% interest in Botswana Stock Exchange listed
Letlole La Rona Limited (LLR) from the Botswana Development
Corporation ("BDC").
Through this transaction, Grit increased its stake in LLR from
6.25% to a strategic 30.0% and is expected to unlock a strategic
partnership with BDC as both an institutional investor in Grit and
a potential co-investor in direct property opportunities throughout
Africa.
The purchase consideration was settled through the issuance of
9,839,511 new Grit shares to BDC on 28 November 2019. The swap
ratio was determined using our most recently reported EPRA NAV per
share, less dividend declared, of USD 140 cps.
The transaction for the 9,839,511 shares was recorded at the
ruling share price of the day of USD1.19, resulting in the
acquisition being recorded at USD11.7 million. The difference
between the agreed transaction price of USD13.8 million has
resulted in a gain of USD2.1 million.
In determining the fair value of the investment at the
acquisition date, Grit conducted an analysis of the volume and
frequency of the share trades of LLR on the Botswanan Stock
Exchange (including an analysis of the free float of the
shareholder base of LLR) in order to determine whether the shares
were traded in an active market and concluded that the share was
not traded with sufficient volume nor frequency to support the
conditions of an active market. As the share price was not
indicative as a proxy for fair value, the Company has concluded the
best mechanism would be Net Asset Value based on the latest
available independent valuations (which were conducted by Knight
Frank as part of the 30 June 2019 financial year end of LLR). This
determination of fair value of LLR is consistent with the Group's
accounting policy and fair value determination of other associates
and joint ventures within the group.
Judgements in respect of new accounting standards have been
considered further below:
2. Changes in accounting policies
The abridged consolidated interim financial information has been
prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out in the notes
to the Group's annual financial statements for the year ended 30
June 2019, as amended where relevant to reflect the new standards,
amendments and interpretations which became effective in the period
which are detailed below.
New accounting standards and interpretations
The following amendment to an existing Standard was relevant to
the Group and mandatory for the first time for the financial year
beginning 1 July 2019:
Standard or Interpretation Effective from
IFRS 16 Leases 01-Jan-19
----------------
IFRIC 23 Uncertainty Over Income Tax Treatments 01-Jan-19
----------------
Prepayment Features with Negative Compensation (Amendments to IFRS 9) 01-Jan-19
----------------
Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28) 01-Jan-19
----------------
Plan Amendment, Curtailment or Settlement (Amendment to IAS 19) 01-Jan-19
----------------
Annual Improvements to IFRS Standards 2015/2017 Cycle various standards 01-Jan-19
----------------
This note explains the impact of the adoption of IFRS 16 Leases
on the group's financial statements and discloses the new
accounting policies that have been applied from 1 January 2019.
The group has adopted IFRS 16 retrospectively from 1 July 2019
but has not restated comparatives for the 2018 reporting period, as
permitted under the specific transitional provisions in the
standard. The reclassifications and the adjustments arising from
the new leasing rules are therefore recognised in the opening
balance sheet on 1 July 2019.
Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 July 2019. The weighted average lessee's incremental
borrowing rate applied to the lease liabilities on 1 July 2019 was
6.00%.
For leases previously classified as finance leases the entity
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right of use asset and the lease liability at the date of
initial application. The measurement principles of IFRS 16 are only
applied after that date.
USD'000
-------------------------------------------------------------------------------------------- --------
Operating lease payments at 30 June 2019 (226)
Discounted using the lessee's incremental borrowing rate of at date of initial application 76
Add: finance lease liabilities recognised as at 30 June 2019 1,296
Lease liability recognised as at 1 July 2019 1,146
Of which are:
Current lease liabilities 158
Non-current lease liabilities 988
-------------------------------------------------------------------------------------------- --------
Lease liability recognised as at 1 July 2019 1,146
-------------------------------------------------------------------------------------------- --------
The associated right-of-use assets for property and motor
vehicle leases were measured on a retrospective basis as if the new
rules had always been applied. There were no onerous lease
contracts that would have required an adjustment to the
right-of-use assets at the date of initial application. The
recognised right-of-use assets relate to the following types of
assets:
31-Dec-19 01-Jul-19
USD'000 USD'000
-------------------- ---------- ----------
Office 928 1,011
Motor vehicles 72 83
-------------------- ---------- ----------
Total right of Use 1,000 1,094
-------------------- ---------- ----------
The change in accounting policy affected the following items in
the balance sheet on 1 July 2019:
01-Jul-19
USD'000
-------------------------------------------------------------------- ----------
Right of use of assets (Included inintangible assets) - increase 1,094
Lease liabilities (Included inObligations under leases) - increase 1,146
Impact on retained earnings - decrease 52
Impact on segment disclosures
Adjusted Profit after taxation, segment assets and segment
liabilities for June 2019 as a result of the change in accounting
policy is displayed below. Lease liabilities are now included in
segment liabilities, whereas finance lease liabilities were
previously excluded from segment liabilities. The following
segments were affected by the change in policy:
Segment Adjusted Profit after taxation Segment assets Segment liabilities
USD'000 USD'000 USD'000
---------- ------------------------------- ----------------- --------------------
Corporate Decrease - 49 Increase - 1,044 Increase - 1,146
Geographical Adjusted Profit after taxation Segment assets Segment liabilities
USD'000 USD'000 USD'000
------------- ------------------------------- ----------------- --------------------
Mauritius Decrease - 49 Increase - 1,044 Increase - 1,146
(ii) Practical expedients applied
In applying IFRS 16 for the first time, the group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- reliance on previous assessments on whether leases are
onerous
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The group has also elected not to reassess whether a contract is
or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date the group
relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
The group's leasing activities and how these are accounted
for
The group leases an office and motor vehicles. Rental contracts
are typically made for fixed periods of 5 to 7 years but may have
extension options as described below. Lease terms are negotiated on
an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but
leased assets may not be used as security for borrowing
purposes.
Until the 2018 financial year, leases of property, plant and
equipment were classified as either finance or operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to profit or loss on a
straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset
and a corresponding liability at the date at which the leased asset
is available for use by the group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less any lease incentives receivable
-- variable lease payment that are based on an index or a rate
-- amounts expected to be payable by the lessee under residual value guarantees
-- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Critical judgements in determining the lease term
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended
(or not terminated). Management is of the opinion that the lease
term will not be extended at the expiry date of the current lease.
For the current reporting period there is no indication that the
lease term will be terminated earlier. The accounting treatment
determining the lease liability and the right of use of asset is
therefore calculated using the current lease term per the
contract.
Lessor accounting
There was no change to lessor accounting applied by the group as
a result of IFRS 16.
Segmental information
IFRS 8 requires operating segments to be reported in a manner
consistent with the internal financial reporting reviewed by the
chief operating decision maker. The chief operating decision maker
of the Group is the Board. The Board is responsible for reviewing
the Group's internal reporting in order to assess performance. The
information reviewed by the Board is prepared on a basis consistent
with these financial statements. That is, the information is
provided at a Group level and includes both the IFRS reported
results and EPRA measures. Refer to note 11 for segmental
reporting.
As at As at
31-Dec-19 30-Jun-19
3. Investment properties USD'000 USD'000
------------------------------------------------------------------------------------------ ---------- ----------
Net carrying value of properties excluding straight-line rental income accrual 595,965 573,664
------------------------------------------------------------------------------------------ ---------- ----------
Movement for the period excluding straight-line rental income accrual
Investment property at the beginning of the year 567,731 376,723
Acquisitions of investment properties - 94,254
Transfer from joint venture - 75,400
Other capital expenditure and construction 23,503 8,484
Foreign currency translation differences (1,517) (2,767)
Revaluation of properties at end of period 3,011 21,363
Contractual receipts from vendors of investment properties (reduction in purchase price) (2,525) (5,726)
------------------------------------------------------------------------------------------ ---------- ----------
As at period end 590,203 567,731
------------------------------------------------------------------------------------------ ---------- ----------
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 590,203 567,731
Straight-line rental income accrual 5,762 5,933
------------------------------------------------------------------------------------------ ---------- ----------
Total valuation of properties 595,965 573,664
------------------------------------------------------------------------------------------ ---------- ----------
Reconciliation to Property Valuation
Investment Property (disclosed on balance sheet) 595,965 573,664
Lease incentives (disclosed under Current Assets) 3,071 2,505
Right of use of land (disclosed under intangible assets) 464 478
Furniture and Fittings (disclosed under Property, plant and equipment) - 209
------------------------------------------------------------------------------------------ ---------- ----------
Total valuation of investment properties directly held by the Group 599,500 576,856
------------------------------------------------------------------------------------------ ---------- ----------
Investment property pledged as security
Mozambican investment properties with a market value of USD312.0
million are mortgaged to Standard Bank of South Africa to secure
debt facilities amounting to USD126.0 million and Bank of China to
secure debt facilities amounting to USD13.3 million. (June 2019:
Mozambican investment properties with a market value of USD287.9
million were mortgaged to Standard Bank of Mozambique to secure
debt facilities amounting to USD10.5 million, Standard Bank of
South Africa to secure debt facilities amounting to USD77.2
million, Standard Bank Mauritius USD10.1 million and Banco Unico of
Mozambique to secure debt facilities amounting to USD2.7 million
and Bank of China to secure debt facilities amounting to USD13.3
million)
Moroccan investment properties with a market value of USD109.2
million (June 2019: USD106.7 million) are mortgaged to Investec
South Africa to secure debt facilities amounting to USD44.5 million
(June 2019: USD45.1 million).
Mauritian investment properties with a market value of USD67.8
million (June 2019: USD68.4 million) are mortgaged to Barclays Bank
of Mauritius to secure debt facilities amounting to USD7.1 million
(June 2019: USD7.2 million) and State Bank of Mauritius to secure
debt facilities amounting to USD24.9 million (June 2019: USD25.4
million).
Kenyan investment properties with a market value of USD24.4
million (June 2019: USD23.4 million) are mortgaged to Bank of China
to secure debt facilities amounting to USD8.6 million (June 2019:
USD8.5 million).
Zambian investment properties with a gross market value of
USD163.9 million (June 2019: USD168.4 million) are mortgaged to
Bank of China to secure debt facilities amounting to USD76.4
million (June 2019: USD76.4 million). This includes the properties
of Cosmopolitan Shopping Centre and Kafubu Mall that is disclosed
within Investments in associates and joint ventures. The Group's
share of these properties are disclosed within note 4 as well as in
the table below.
Most recent Valuer As at As at
independent (for the most 31-Dec-19 30-Jun-19
Summary of valuation date recent valuation) Sector Country USD'000 USD'000
valuations by
reporting date
------------------- ---------------- -------------------- ------------------- ------------ ---------- ----------
Commodity House
Phase I building 31-Dec-19 REC Office Mozambique 46,953 46,236
Commodity House
Phase II building 31-Dec-19 REC Office Mozambique 19,266 17,200
Hollard Building 31-Dec-19 REC Office Mozambique 21,279 20,800
Vodacom Building 31-Dec-19 REC Office Mozambique 48,279 48,101
Zimpeto Square 31-Dec-19 REC Retail Mozambique 6,625 7,616
Bollore Warehouse 31-Dec-19 REC Light industrial Mozambique 6,699 6,800
Barclays House 31-Dec-19 Knight Frank Office Mauritius 14,699 14,312
AnfaPlace Mall 31-Dec-19 Knight Frank Retail Morocco 109,201 106,145
Tamassa Resort 31-Dec-19 Knight Frank Hospitality Mauritius 53,080 54,100
VDE Housing Estate 31-Dec-19 REC Accommodation Mozambique 72,074 49,900
Imperial
Distribution
Centre 31-Dec-19 Knight Frank Light industrial Kenya 21,140 20,200
Mara Viwandani 31-Dec-19 Knight Frank Light industrial Kenya 3,250 3,250
Mall de Tete 31-Dec-19 REC Retail Mozambique 23,696 25,416
Acacia Estate 31-Dec-19 REC Accommodation Mozambique 67,159 65,800
5th Avenue
Building 31-Dec-19 Knight Frank Office Ghana 22,080 21,880
Mukuba Mall 31-Dec-19 Knight Frank Retail Zambia 64,020 69,100
------------------- ---------------- -------------------- ------------------- ------------ ---------- ----------
Total valuation of investment properties directly held by
the Group 599,500 576,856
Deposits paid on Imperial Distribution Centre Phase 2 5,500 5,500
Deposits paid on Capital Place Limited 3,000 3,000
----------------------------------------------------------- --------------------------------- ---------- ----------
Total deposits paid on investment properties 8,500 8,500
----------------------------------------------------------- --------------------------------- ---------- ----------
Total carrying value of investment properties including
deposits paid 608,000 585,356
----------------------------------------------------------- --------------------------------- ---------- ----------
Investment properties held within associates and joint
ventures - Group share
Buffalo Mall -
Buffalo Mall
Naivasha Limited
(50%) 31-Dec-19 Knight Frank Retail Kenya 6,825 5,449
Kafubu Mall -
Kafubu Mall
Limited (50%) 31-Dec-19 Knight Frank Retail Zambia 11,320 12,300
CADS II Building -
CADS Developers
Limited (50%) 31-Dec-19 Knight Frank Office Ghana 18,275 18,230
Cosmopolitan
Shopping Centre -
Cosmopolitan
Shopping Centre
Limited (50%) 31-Dec-19 Knight Frank Retail Zambia 37,935 37,350
Canonniers,
Mauricia and
Victoria Resorts
and Spas -
Beachcomber
Hospitality
(44.42%) 31-Dec-19 Knight Frank Hospitality Mauritius 98,464 98,736
Capital Place -
Capital Place
Limited (47.5%) 31-Dec-19 Knight Frank Office Ghana 11,148 11,714
Letlole La Rona 30-Jun-19 Knight Frank Light industrial Botswana 12,987 -
Limited (30%) - 15
Investment
properties
Letlole La Rona 30-Jun-19 Knight Frank Hospitality Botswana 206 -
Limited (30%) - 1
Investment
property
Letlole La Rona 30-Jun-19 Knight Frank Retail Botswana 5,292 -
Limited (30%) - 2
Investment
properties
Letlole La Rona 30-Jun-19 Knight Frank Office Botswana 1,326 -
Limited (30%) - 1
Investment
property
Letlole La Rona 30-Jun-19 Knight Frank Accommodation Botswana 1,301 -
Limited (30%) - 1
Investment
property
Gateway Delta 31-Dec-19 Directors' Other investments Mauritius 3,143 -
Development valuation
Holdings Limited
(19.98%) - 2
Investments
------------------- ---------------- -------------------- ------------------- ------------ ---------- ----------
Total of investment properties acquired through associates and joint ventures 208,222 183,779
---------------------------------------------------------------------------------------------- ---------- ----------
Total portfolio 816,222 769,135
---------------------------------------------------------------------------------------------- ---------- ----------
Valuation policy and methodology for investment properties held
by the Group and by associates and joint ventures
For this interim reporting period, all investment properties
have been valued by reputable RICS accredited valuation experts who
have sufficient expertise in the jurisdictions where the properties
are located with the exception of Gateway Delta Development
Holdings Limited for which a directors'valuation was used.
The Group used the 30 June 2019 Knight Frank valuations for the
Letlole La Rona Limited portfolio for the interim reporting
period.
All valuations that are performed in the functional currency of
the relevant property company are converted to United States
Dollars at the effective closing rate of exchange. All independent
valuations have been undertaken in accordance with the RICS
Valuation Standards that were in effect at the relevant valuation
date and are further compliant with International Valuation
Standards. Market values presented by valuers have also been
confirmed by the respective valuers to be fair value in terms of
IFRS.
In respect of the Mozambican investment properties, independent
valuations were performed at 31 December 2019 by REC, Chartered
Surveyors, using the discounted cash flow method and the best use
method.
The remainder of the portfolio were independently valued at 31
December 2019 by Knight Frank, Chartered Surveyors, using the
discounted cash flow method.
As at As at
31-Dec-19 30-Jun-19
4. Investments in associates and joint ventures USD'000 USD'000
------------------------------------------------------------------------------- ----------- -----------
The following entities have been accounted for as associates and joint ventures in the current
and comparative consolidated financial statements using the equity method:
Name of joint venture Country % held
Kafubu Mall Limited(1) Zambia 50.00% 11,141 12,089
Cosmopolitan Shopping Centre Limited(1) Zambia 50.00% 38,038 37,301
CADS Developers Limited(1) Ghana 50.00% 11,108 11,366
----------------------------------------------------- ------------- --------- ----------- -----------
Carrying value of joint ventures 60,287 60,756
------------------------------------------------------------------------------- ----------- -----------
Name of associate Country % held
Letlole La Rona Limited Botswana 30.00% 20,311 -
Buffalo Mall Naivasha Limited Kenya 50.00% 5,028 3,610
Gateway Delta Development Holdings Limited Mauritius 19.98% 7,103 6,925
Capital Place Limited Ghana 47.50% 8,415 8,687
Beachcomber Hospitality Investments Limited Mauritius 44.42% 70,263 70,627
----------------------------------------------------- ------------- --------- ----------- -----------
Carrying value of associates 111,120 89,849
------------------------------------------------------------------------------- ----------- -----------
Joint Ventures 60,287 60,756
Associates 111,120 89,849
-------------------------------------------------------------------- --------- ----------- -----------
Total carrying value of associates and joint ventures 171,407 150,605
------------------------------------------------------------------------------- ----------- -----------
(1) The joint ventures were incorrectly classified as associates
in the prior period and has been restated in the current year. This
was correctly reclassified on the June 2019 financial statements.
This change has no impact on numbers presented.
Gateway
Beachcomber Delta Cosmopolitan Buffalo
Letlole Kafubu Hospitality Capital Development CADS Shopping Mall
La Rona Mall Investments Place Holdings Developers Centre Naivasha
Limited Limited Limited Limited Limited Limited Limited Limited Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
----------------- -------- -------- ------------ -------- ------------ ----------- ------------- --------- --------
Reconciliation
to carrying
value in
associates and
joint ventures
Opening Balance
1 July 2019 - 12,089 70,627 8,687 6,925 11,366 37,301 3,610 150,605
Acquired during
the period 15,324 - - - - - - - 15,324
Profit /
(losses) from
associates and
joint ventures
- Gross rental
income 210 527 3,247 566 106 763 1,572 267 7,258
- Straight-line
rental income
accrual - - 119 - - - - - 119
- Property
operating
expenses (41) (113) (12) (86) - (18) (265) (100) (635)
- Admin
expenses and
recoveries (3) (3) 2 (30) (160) (3) 27 (5) (175)
- Fair value
adjustment on
other
investments - - - - 129 - - - 129
- Unrealised
foreign
exchange
gains/(losses) - (417) 3 6 - - 2 (5) (411)
- Realisation
of profits on
acquisition 2,066 - - - - - - - 2,066
- Investment at
fair value 3,290 - - - - - - - 3,290
- Finance
Charges (20) (3) (540) (163) (102) (296) 1 (115) (1,238)
- Fair value
movement on
Investment
Property - (182) 1,276 (565) - 45 585 1,376 2,535
- Current tax (6) (25) (13) - (9) - - - (53)
- Deferred tax 53 - (348) - - - - - (295)
----------------- -------- -------- ------------ -------- ------------ ----------- ------------- --------- --------
Total profits
from associates
and joint
ventures 5,549 (216) 3,734 (272) (36) 491 1,922 1,418 12,590
Dividends
received and
interest
received (562) - (2,906) - - - (1,185) - (4,653)
Anfa profit in
Gateway Delta - - - - 214 - - - 214
Repayment of
proportionate
shareholders
loan - (361) - - - (749) - - (1,110)
Foreign currency
translation
differences - (371) (1,192) - - - - - (1,563)
----------------- -------- -------- ------------ -------- ------------ ----------- ------------- --------- --------
Carrying value
of associates
and joint
ventures 20,311 11,141 70,263 8,415 7,103 11,108 38,038 5,028 171,407
----------------- -------- -------- ------------ -------- ------------ ----------- ------------- --------- --------
Investment in the period ended 31 December 2019
On 20 November 2019 Grit announced the acquisition of an
additional 23.75% interest in Botswana Stock Exchange listed
Letlole La Rona Limited (LLR) from the Botswana Development
Corporation ("BDC").
Through this transaction, Grit increased its stake in LLR from
6.25% to a strategic 30.0% and is expected to unlock a strategic
partnership with BDC as both an institutional investor in Grit and
a potential co-investor in direct property opportunities throughout
Africa.
The purchase consideration was settled through the issuance of
9,839,511 new Grit shares to BDC on 28 November 2019. The swap
ratio was determined using our most recently reported EPRA NAV per
share, less dividend declared, of USD 140 cps.
The transaction for the 9,839,511 shares was recorded at the
ruling share price of the day of USD1.19, resulting in the
acquisition being recorded at USD11.7 million. The difference
between the agreed transaction price of USD13.8 million has
resulted in a gain of USD2.1 million.
In determining the fair value of the investment at the
acquisition date, Grit conducted an analysis of the volume and
frequency of the share trades of LLR on the Botswanan Stock
Exchange (including an analysis of the free float of the
shareholder base of LLR) in order to determine whether the shares
were traded in an active market and concluded that the share was
not traded with sufficient volume nor frequency to support the
conditions of an active market. As the share price was not
indicative as a proxy for fair value, the Company has concluded the
best mechanism would be Net Asset Value based on the latest
available independent valuations (which were conducted by Knight
Frank as part of the 30 June 2019 financial year end of LLR). This
determination of fair value of LLR is consistent with the Group's
accounting policy and fair value determination of other associates
within the group.
In the prior period in Letlole La Rona Limited was classified as
Other Investments as our stake was only 6.25% in the entity. With
the increase of our shareholding to 30% this was subsequently
reclassified to Investment in Associates and Joint Ventures.
As at As at
31-Dec-19 30-Jun-19
5. Other investments USD'000 USD'000
------------------------------------------------------------------ ---------- ----------
Balance at the beginning of the period 3,024 4,154
Additions 1 -
Reclassification to Investments in associates and joint ventures (3,615) (335)
Fair value adjustments recognised in profit or loss 591 (795)
------------------------------------------------------------------ ---------- ----------
Total 1 3,024
------------------------------------------------------------------ ---------- ----------
Level 1 investment comprise listed equity investment valued at
market prices. If all significant inputs required to fair value an
investment are observable, the investment is included in level 2.
If one or more of the significant inputs are not based on
observable market data, the investment is included in level 3.
Letlole La Rona Limited was reclassified from other investments
to investments in associates and joint ventures after increasing
the shareholding from 6.25% to 30% in the current period.
As at As at
31-Dec-19 30-Jun-19
6. Other loans receivable USD'000 USD'000
----------------------------------------------- ---------- ----------
Ndola Investments Limited 5,073 5,073
Paxton Investments Limited - 25
Kitwe Copperbelt Limited 5,577 5,577
Syngenta Limited 18,690 18,690
IFRS 9 - Impairment on financial assets (ECL) (50) (139)
----------------------------------------------- ---------- ----------
As at 31 December 29,290 29,226
----------------------------------------------- ---------- ----------
As at As at
31-Dec-19 30-Jun-19
7. Interest-bearing borrowings USD'000 USD'000
------------------------------------------------------------------------ ------------- ------------
Non-current liabilities
At amortised cost 369,069 163,738
Current liabilities
At amortised cost 15,043 182,359
------------------------------------------------------------------------ ------------- ------------
384,112 346,097
------------------------------------------------------------------------ ------------- ------------
Currency of the interest-bearing borrowings (stated gross of unamortised loan issue costs)
United States Dollars 271,022 214,345
Euros 117,766 131,561
Mozambican Meticais - 2,658
388,788 348,564
Unamortised loan issue costs (4,676) (2,467)
------------------------------------------------------------------------ ------------- ------------
As at period end 384,112 346,097
------------------------------------------------------------------------ ------------- ------------
Movement for the period
Balance at the beginning of the year 346,097 306,144
Proceeds of interest bearing-borrowings 154,500 147,275
Loan issue costs incurred (3,044) (2,670)
Amortisation of loan issue costs 835 1,785
Foreign currency translation differences (2,237) (1,529)
Debt settled during the year (112,039) (104,908)
------------------------------------------------------------------------ ------------- ------------
As at period end 384,112 346,097
------------------------------------------------------------------------ ------------- ------------
Analysis of facilities and loans in issue
As at As at
Initial 31-Dec-19 30-Jun-19
Lender Borrower facility USD'000 USD'000
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Financial institutions
Standard Bank Mozambique S&C Immobiliaria Limitada USD10.4m - 10,451
Standard Bank South Africa Sal Investments Holdings Limited USD12.0m - 12,000
Standard Bank South Africa Commotor Limitada USD38.0m - 38,000
Standard Bank South Africa Commotor Limitada USD140.0m 126,000 -
Standard Bank South Africa Cognis 1 Limitada USD28.0m - 27,239
Standard Bank South Africa Grit Services Limited RCF - EUR26.5m 29,619 30,128
Standard Bank (Mauritius) Limited Transformers Holdings Limited USD11.7m - 10,110
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total Standard Bank Group 155,619 127,928
Bank of China Warehously Limited USD8.5m 8,555 8,555
Bank of China Gerania Limited USD13.3m 13,300 13,300
Zambian Property Holdings
Bank of China Limited USD77.0m 76,405 76,405
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total Bank of China 98,260 98,260
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR9.0m 10,059 10,395
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR3.2m 3,577 3,474
Mara Delta Properties Mauritius
State Bank of Mauritius Limited EUR22.3m 24,925 25,353
State Bank of Mauritius Grit Real Estate Income Group Equity Bridge USD20.0m 20,000 -
Limited
Grit Real Estate Income Group
State Bank of Mauritius Limited RCF USD20.0m - 11,115
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total State Bank of Mauritius 58,561 50,337
Investec South Africa Freedom Property Fund SARL EUR36.0m 35,683 36,198
Investec South Africa Freedom Property Fund SARL USD15.7m 8,860 8,860
Grit Real Estate Income Group
Investec Mauritius Limited USD0.5m 402 425
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total Investec Group 44,945 45,483
Barclays Bank Mauritius BH Property Investment Limited EUR7.4m 7,054 7,174
Barclays Bank Ghana Limited Grit Accra Limited USD9.0m 9,000 9,000
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total Barclays Group 16,054 16,174
Grit Real Estate Income Group
Maubank Mauritius Limited USD3.7m 3,628 3,691
Maubank Mauritius Freedom Asset Management USD4.0m 3,221 4,033
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total Maubank 6,849 7,724
ABC Banking Corporation Grit Services Limited Equity bridge USD 8.5m 8,500 -
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total ABC Banking Corporation 8,500 -
Bank Unico of Mozambique Zimpeto Immobiliaria Limitada MZN182.7m - 2,658
---------------------------------- --------------------------------- ----------------------- ---------- ----------
Total loans in issue 388,788 348,564
less: unamortised loan issue costs (4,676) (2,467)
---------------------------------------------------------------------------------------------- ---------- ----------
As at period end 384,112 346,097
---------------------------------------------------------------------------------------------- ---------- ----------
The Group raised USD154.5 million of debt in the period to fund
acquisitions and refinance debt facilities (USD112.0 million repaid
in the period and USD13.3 million repaid in early January 2020). As
financing is integral to our business model, the Group has
continued to develop strong relationships with financiers. The
multi-bank approach adopted by Grit has continued, with the main
banking partners being Bank of China, Standard Bank, ABSA Bank and
SBM (Mauritius) Ltd. The breakdown of the interest-bearing
borrowings is listed in note 7.
The Group's loan-to-value ("LTV") has increased to 43.9% in six
months ended December 2019 (30 June 2019: 43.1%).
The average 3-month USD LIBOR rates decreased from 2.46% for the
6 months to June 2019 to 1.90% for the 6 months to 31 December
2019. The 0.56% decrease in USD LIBOR rates in the period resulted
in the Group's WACD decreasing to an average of 6.07% (December
2018: 6.31%). With the finalisation of the Mozambique refinancing
programme, the weighted average forward rate is 5.98%.
Included in the total USD 154.5 raise is the Mozambique
refinancing program that comprises USD140 million, of which USD126
million was paid out at reporting date in order to settle the
existing Mozambican facilities of USD97.8 million and a further
USD13.3 million after the reporting period as well as acquisition
costs for the Vale units in Tete and facility fees. The terms of
new facility will result in reduced cost of funding over the
Mozambican portfolio over its four-year tenor carrying interest of
3-month LIBOR plus a margin of 5%.
Two new corporate term loans were secured being USD20 million
from SBM and USD8.5 million from Bank ABC which were utilised to
settle the Revolving Credit Facility held with SBM and the
overdraft facility held with Bank ABC respectively.
This has contributed to the increase in the debt expiry profile
and the decrease of the current portion of the interest-bearing
borrowings.
Six months Six months
ended ended
31-Dec-19 31-Dec-18
8. Revenue USD'000 USD'000
------------------------------- ----------- -----------
Contractual rental income 19,802 15,450
Retail parking income 809 791
Recoverable property expenses 3,665 2,492
------------------------------- ----------- -----------
Total revenue 24,276 18,733
------------------------------- ----------- -----------
None of the revenue recognised in the current year reporting
period relates to carried forward contract liabilities and to
performance obligations that were satisfied in a prior period.
Contractual rental income included within deferred revenue in
the prior period has been fully recognised as revenue in the
current period. The recoverable property expenses were recognised
in the group income statement in accordance with the delivery of
services.
There was no change to lessor accounting applied by the group as
a result of IFRS 16.
Six months Six months
ended ended
31-Dec-19 31-Dec-18
9. Interest income USD'000 USD'000
-------------------------------------------------------- ----------- -----------
Bank interest receivable 12 121
Interest on loans to partners 969 5,009
Interest on loans to related parties 1,001 30
Interest on property deposits paid 278 1,399
Interest on convertible shareholder loans - 110
Interest on tenant rental arrears and penalty interest 106 -
-------------------------------------------------------- ----------- -----------
2,366 6,669
-------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
31-Dec-19 31-Dec-18
10. Finance costs USD'000 USD'000
------------------------------------------------------ ----------- -----------
Interest-bearing borrowings - financial institutions 11,268 9,445
Amortisation of loan issue costs 835 614
Preference share dividends 402 401
Interest on finance leases 37 -
Finance costs expensed related to capital projects 53 -
Interest on bank overdraft 10 149
Other interest payable - 390
------------------------------------------------------ ----------- -----------
12,605 10,999
------------------------------------------------------ ----------- -----------
11. Segmental reporting
Consolidated segmental
analysis Botswana Morocco Mozambique Zambia Kenya Ghana Mauritius Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Geographical location 31
December 2019 - USD'000
Gross rental income - 3,959 13,266 2,798 811 1,038 2,404 24,276
Straight-line rental income
accrual - (165) (290) - 158 15 111 (171)
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Revenue - 3,794 12,976 2,798 969 1,053 2,515 24,105
Property operating expenses - (3,389) (2,155) (398) (24) (244) (74) (6,284)
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Net property income - 405 10,821 2,400 945 809 2,441 17,821
Other income - 118 - 18 - 2 2,820 2,958
Administrative expenses
(including corporate
structuring costs) - (849) (759) (17) (24) (255) (8,126) (10,030)
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) from operations - (326) 10,062 2,401 921 556 (2,865) 10,749
Fair value adjustment on
investment properties - (6,512) 12,082 (5,080) 782 34 1,705 3,011
Fair value adjustment on other
investments 591 - - - - - - 591
Fair value adjustment on other
financial liability - - - - - - (552) (552)
Fair value adjustment on
derivatives financial
instruments - - - - - - 136 136
Share based payment expense - - - - - - (90) (90)
Share of profits from
associates and joint ventures 5,549 - - 1,707 1,418 219 3,697 12,590
Impairment of loans - - - - - - (904) (904)
ECL Provision - 326 (11) (1) - 1 (533) (218)
Foreign currency (losses) /
gains - 336 (230) 6 2 (48) (58) 8
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) before interest
and taxation 6,140 (6,176) 21,903 (967) 3,123 762 536 25,321
Interest income - (664) 88 3 (107) (469) 3,515 2,366
Finance costs - (982) (3,571) - (328) (389) (7,335) (12,605)
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) for the period
before tax 6,140 (7,822) 18,420 (964) 2,688 (96) (3,284) 15,082
Taxation - 1,776 (3,580) - (276) 96 (1,397) (3,381)
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Profit/(loss) for the period 6,140 (6,046) 14,840 (964) 2,412 - (4,681) 11,701
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Reportable segment assets and
liabilities
Non-current assets
Investment properties - 107,225 311,180 64,020 24,390 21,843 67,307 595,965
Deposits paid on investment
properties - - - - - - 8,500 8,500
Property, plant and equipment - 43 374 - - 30 1,675 2,122
Intangible assets - 59 - - - - 1,566 1,625
Other investments - - 1 - - - - 1
Investment in associates and
joint ventures 20,311 - - 49,179 5,028 19,523 77,366 171,407
Related party loans receivable - - - - - - 12,477 12,477
Other loans receivable - - - - - - 29,290 29,290
Deferred tax - 6,393 12,819 - 537 370 2,782 22,901
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Total non-current assets 20,311 113,720 324,374 113,199 29,955 41,766 200,963 844,288
Current assets
Trade and other receivables - 11,658 7,114 (8) 2,343 340 17,811 39,258
Current tax refundable - - 740 - - - 29 769
Related party loans receivable - - - - - - 2,693 2,693
Derivative financial
instruments - - - - - - 127 127
Cash and cash equivalents - 147 8,981 257 68 711 15,381 25,545
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Total assets 20,311 125,525 341,209 113,448 32,366 42,817 237,004 912,680
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Liabilities
Total liabilities - 70,873 192,320 6,387 11,005 10,481 226,627 517,693
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Net assets 20,311 54,652 148,889 107,061 21,361 32,336 10,377 394,987
------------------------------- --------- -------- ----------- -------- -------- -------- ---------- ---------
Consolidated Other Light Accommo-
segmental analysis investments Hospitality Retail Office industrial dation Corporate Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Type of property 31
December 2019 -
USD'000
Gross rental income - 1,834 8,021 7,340 1,036 6,045 - 24,276
Straight-line rental
income accrual - - (171) (394) 158 236 - (171)
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Revenue - 1,834 7,850 6,946 1,194 6,281 - 24,105
Property operating
expenses - - (4,650) (862) (35) (1,000) 263 (6,284)
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Net property income - 1,834 3,200 6,084 1,159 5,281 263 17,821
Other income - - 77 2 - - 2,879 2,958
Administrative
expenses (including
corporate
structuring costs) - (155) (882) (391) (40) (128) (8,434) (10,030)
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Profit/(loss) from
operations - 1,679 2,395 5,695 1,119 5,153 (5,292) 10,749
Fair value adjustment
on investment
properties - (107) (11,861) 4,198 681 10,099 1 3,011
Fair value adjustment
on other investments 591 - - - - - - 591
Fair value adjustment
on other financial
liability - 194 - - - - (746) (552)
Fair value adjustment
on derivatives
financial
instruments - - - 8 - - 128 136
Share based payment
expense - - - - - - (90) (90)
Share of profits from
associates and joint
ventures (36) 3,741 3,162 232 105 8 5,378 12,590
Impairment of loans - - - - - - (904) (904)
ECL Provision - 1 326 (3) (6) (3) (533) (218)
Foreign currency
(losses) / gains - (234) 292 (345) 39 62 194 8
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Profit/(loss) before
interest and
taxation 555 5,274 (5,686) 9,785 1,938 15,319 (1,864) 25,321
Interest income - 3 17 87 7 4 2,248 2,366
Finance costs - (1,252) (1,151) (3,282) (328) (669) (5,923) (12,605)
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Profit/(loss) for the
periodbefore tax 555 4,025 (6,820) 6,590 1,617 14,654 (5,539) 15,082
Taxation - (174) 4,467 (2,661) (175) (3,656) (1,182) (3,381)
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Profit/(loss) for the
period 555 3,851 (2,353) 3,929 1,442 10,998 (6,721) 11,701
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Reportable segment
assets and
liabilities
Non-current assets
Investment properties - 53,080 201,543 171,382 31,088 138,872 - 595,965
Deposits paid on
investment
properties - - - - - - 8,500 8,500
Property, plant and
equipment - - 44 59 - 240 1,779 2,122
Intangible assets - - 57 464 - - 1,104 1,625
Other investments - - - - - - 1 1
Investment in
associates and joint
ventures 7,103 70,461 59,298 20,799 12,494 1,252 - 171,407
Related party loans
receivable - - - - - - 12,477 12,477
Other loans
receivable - - - - - - 29,290 29,290
Deferred tax - 2,390 12,238 4,262 695 3,303 13 22,901
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Total non-current
assets 7,103 125,931 273,180 196,966 44,277 143,667 53,164 844,288
Current assets
Trade and other
receivables - 477 11,582 1,804 2,455 5,675 17,265 39,258
Current tax
refundable - - 35 453 139 41 101 769
Related party loans
receivable - - - - - - 2,693 2,693
Derivative financial
instruments - - - - - - 127 127
Cash and cash
equivalents - 78 1,445 8,274 216 179 15,353 25,545
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Total assets 7,103 126,486 286,242 207,497 47,087 149,562 88,703 912,680
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Liabilities
Total liabilities - 55,127 74,070 175,199 11,078 32,179 170,040 517,693
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
Net assets 7,103 71,359 212,172 32,298 36,009 117,383 (81,337) 394,987
---------------------- ------------ ------------ --------- -------- ----------- --------- ---------- ---------
12. Subsequent events
The acquisition of Club Med Cap Skirring closed on the 27th of
January 2020, through the acquisition of 100% of the equity of
Société Immobiliére et de Gestion Hôteliére du cap Skirring
("SIGHC") for EUR16.2 million ("Provisional Purchase Price"),
subject to an adjustment based on the final balance sheet and the
related profit and loss accounts of SIGHC. On 27 January, Casamance
Limited ("Casamance"), a wholly owned subsidiary of Grit paid
EUR15.5 million being 96% of the Provisional Purchase
Consideration, the balance of the purchase price will be settled
post the audit of the completion accounts of SIGHC dated 27 January
2020. EUR6.4 million of The Provisional Purchase Price was funded
through a debt facility from Bank ABC, the loan was availed to
Paradise Hospitality Group (100% shareholder of Casamance), and
injected into Casamance through a EUR6.4 million shareholder loan.
The loan is for a 5 year term and attracts interest at Euribor
(floored at zero) plus 4.6%.
Société de Gestion Touristique du Cap ("SOGETOC"), a wholly
owned subsidiary of Club Med SAS signed a 12 year triple net lease
with SIGHC commencing on 27 January 2020, the initial annual rent
is EUR1.3 million ("Initial Rent") equating to 8% of the property
value (EUR 15m) plus the pre development costs incurred up to
closing (EUR1.5 million). The lease is payable quarterly in advance
with an annual escalation of 66.6% of European CPI, with a collar
of 1% to 2%.
Casamance also entered into an Owner Agency Agreement appointing
Club Med SAS as its representative to carry out the redevelopment
program at the resort which will involve the renovation and upgrade
of the existing hotel, plus the addition of 122 rooms taking the
resort to 326 keys. The development budget is EUR 26.5m, and
guaranteed by Club Med at EUR28.0 million. Club Med will pay rent
monthly during the development period of 8% of funds deployed per
annum ("Development Rent"), and a final rent will be determined on
completion of the redevelopment which will equate to the escalated
Initial Rent plus 8% of the final project cost.
Six months
ended
31-Dec-19
13. Company distribution calculation (1) USD'000
----------------------------------------------------------------------------------- --------------
Adjusted EPRA Earnings 16,874
Company specific distribution adjustments
- VAT Credits utilised on rentals 304
- Interest related to AnfaPlace Mall areas under construction 53
- Depreciation and amortisation 259
- Share based payments 90
- Antecedent dividend 418
- LLR Initial day one gain (2,066)
- Operating costs related to AnfaPlace Mall refurbishment costs 271
DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 16,203
----------------------------------------------------------------------------------- --------------
DISTRIBUTABLE INCOME PER SHARE (USD cps) 5.48
----------------------------------------------------------------------------------- --------------
- Profits (withheld)/released (678)
----------------------------------------------------------------------------------- --------------
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 15,525
----------------------------------------------------------------------------------- --------------
TOTAL DISTRIBUTABLE INCOME PER SHARE (USD cps) 5.25
----------------------------------------------------------------------------------- --------------
Shares '000
--------------
Weighted average shares in issue 308,268
Less: Weighted average treasury shares for the year (12,546)
Add: Weighted average shares vested in Long term incentive scheme 1,859
----------------------------------------------------------------------------------- --------------
EPRA SHARES 297,581
----------------------------------------------------------------------------------- --------------
Less: Vested shares in consolidated entities (1,859)
----------------------------------------------------------------------------------- --------------
DISTRIBUTION SHARES 295,722
----------------------------------------------------------------------------------- --------------
Distribution declared:
Interim USD5.25 cps
(1 The distribution calculation is disclosed to provide clarity regarding the interim dividend
distribution of USD5.25 per share and to reconcile 'Distributable earnings' to 'Basic Earnings
attributable to the owner of the parent'.)
14. EPRA financial metrics
Non-IFRS Measures
Basis of preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT")
("Directors") have chosen to disclose additional non-IFRS measures,
these include EPRA earnings, adjusted net asset value, EPRA net
asset value, adjusted profit before tax and funds from operations
(collectively "Non-IFRS Financial Information").
The Directors have chosen to disclose:
-- EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition
of earnings as set out by the European Public Real Estate
Association. EPRA earnings represents earnings after adjusting for
fair value adjustments on investment properties, gain from bargain
purchase on associates, fair value adjustments included under
income from associates and joint ventures, ECL provisions, fair
value adjustments on other investments, fair value adjustments on
other financial assets, fair value adjustments on derivative
financial instruments, and non-controlling interest included in
basic earnings (collectively the "EPRA earnings adjustments") and
deferred tax in respect of these EPRA earnings adjustments. The
reconciliation between basic and diluted earnings and EPRA earnings
is detailed in the table below;
-- EPRA net asset value in order to assist in comparisons with
similar businesses in the real estate sector. EPRA net asset value
is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA net asset value represents net
asset value after adjusting for net impairment on financial assets
(ECL), fair value of financial instruments, and deferred tax
relating to revaluation of properties (collectively the "EPRA net
asset value adjustments"). The reconciliation for EPRA net asset
value is detailed in the table below;
-- adjusted EPRA earnings in order to provide an alternative
indication of GRIT and its subsidiaries' (the "Group") underlying
business performance. Accordingly, it excludes the effect of
non-cash items such as unrealised foreign exchange gains or losses,
straight-line leasing adjustments, amortisation of right of use
land, impairment of loans and deferred tax relating to the
aforementioned adjustments. The reconciliation for adjusted EPRA
earnings is detailed in the table below; and
-- total distributable earnings in order to assist in
comparisons with similar businesses and to facilitate the Group's
dividend policy which is derived from total distributable earnings.
Accordingly, it excludes VAT credit utilised on rentals, interest
related to Anfa Shopping Centre's areas under construction, Listing
and set-up costs, depreciation and amortisation , share based
payments, antecedent dividends, operating costs relating to Anfa
Shopping Centre's refurbishment costs, rental concessions for
capital projects/ amortisation of lease premiums and profits
withheld/released. The reconciliation for total distributable
earnings is detailed in the table below.
In this note, Grit presents European Real Estate Association
(EPRA) earnings and other metrics which is non-IFRS financial
information and considered pro forma financial information for the
purposes of JSE Listings Requirements.
The pro forma financial information has been compiled for
illustrative purposes only and is the responsibility of the
Directors. Due to the nature of this information, it may not fairly
present the Grit's financial position, changes in equity and
results of operations or cash flows going forward. The pro forma
information has been compiled in terms of the JSE Listings
Requirements and the Revised Guide on Pro Forma Information by
SAICA.
Six months Six months
ended Ended
31-Dec-19 31-Dec-18
14. Adjusted administration expenses USD'000 USD'000
------------------------------------------------------------------------------------------ ------------ ------------
Administrative expenses (including corporate structuring costs) 10,030 8,223
Less Admin expenses (non-controlling interest) (75) (706)
Less Acquisition and setup costs (1,130) (2,113)
------------------------------------------------------------------------------------------ ------------ ------------
Adjusted administration expenses 8,825 5,404
------------------------------------------------------------------------------------------ ------------ ------------
14a. EPRA earnings
Six months Six months
ended Ended
31-Dec-19 31-Dec-18
EPRA earnings USD'000 USD'000
------------------------------------------------------------------------------------------ ------------ ------------
Basic Earnings per above 11,701 20,950
Add Back:
- Total fair value adjustment on investment properties (486) (12,373)
- Fair value adjustments included under income from associates and joint ventures (2,535) (1,925)
- ECL Provision 218 -
- Fair value adjustment on other investments (591) (26)
- Fair value adjustment on other financial asset 552 -
- Fair value adjustment on derivative financial instruments (136) -
- Deferred tax in relation to the above 1,041 4,331
- Acquisition costs not capitalised 1,131 2,007
- Non-controlling interest included in basic earnings 1,427 (307)
------------------------------------------------------------------------------------------ ------------ ------------
EPRA EARNINGS 12,322 12,657
------------------------------------------------------------------------------------------ ------------ ------------
EPRA EARNINGS PER SHARE (DILUTED) 4.14 4.04
Company specific adjustments
- Unrealised foreign exchange gains or losses 403 4,213
- Straight-line leasing and amortisation of lease premiums (non-cash rental) 1,867 (642)
- Amortisation of Right of use of land (non-cash) - 167
- Impairment of loan 904 -
- Deferred tax in relation to the above 1,378 -
------------------------------------------------------------------------------------------ ------------ ------------
Total Company Specific adjustments 4,552 3,737
------------------------------------------------------------------------------------------ ------------ ------------
ADJUSTED EPRA EARNINGS 16,874 16,394
------------------------------------------------------------------------------------------ ------------ ------------
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED)USD cps 5.67 5.36
Shares '000 Shares '000
------------------------------------------------------------------------------------------ ------------ ------------
Weighted average shares in issue 308,224 291,971
Less: Non-entitled shares - (4,301)
Less: Weighted average treasury shares for the period (12,546) (9,940)
Add: Weighted average share awards and shares vested shares in Long term incentive scheme 1,859 1,943
------------------------------------------------------------------------------------------ ------------ ------------
EPRA SHARES 297,537 279,673
------------------------------------------------------------------------------------------ ------------ ------------
As at As at
31-Dec-19 30-Jun-19
14b. EPRA NAV USD'000 USD'000
-------------------------------------------------------------------------- ------------ ------------
NET ASSET VALUE OF THE GROUP 392,416 389,949
ADD BACK:
Fair value of financial instruments (93) 43
Net impairment on financial assets (ECL) 766 548
Deferred tax from revaluation of properties 48,951 44,410
-------------------------------------------------------------------------- ------------ ------------
EPRA NAV 442,040 434,950
-------------------------------------------------------------------------- ------------ ------------
EPRA NAV PER SHARE (cents per share) 144.7 147.1
Shares'000 Shares'000
Total shares in issue 316,236 306,396
Less: Treasury shares for the period (12,546) (12,546)
Add: Share awards and shares vested shares in Long term incentive scheme 1,859 1,859
-------------------------------------------------------------------------- ------------ ------------
EPRA SHARES 305,549 295,709
-------------------------------------------------------------------------- ------------ ------------
Six months Six months
ended Ended
31-Dec-19 31-Dec-18
15. Headline Earnings Notes USD'000 USD'000
------------------------------------------------------------------------------------ ------ ----------- -----------
Basic earnings 13,130 20,643
Fair value adjustments on investment property 3 (3,011) (15,025)
Deferred taxation on investment property revaluation 1,041 4,331
Other - 51
Share of fair value adjustment on investment property accounted by associates and
joint ventures 4 (2,535) (1,924)
------------------------------------------------------------------------------------ ------ ----------- -----------
Headline earnings attributable to shareholders 8,625 8,076
-------------------------------------------------------------------------------------------- ----------- -----------
Weighted average number of shares * 308,268 291,971
-------------------------------------------------------------------------------------------- ----------- -----------
Earnings per share 4.26 7.07
Basic and diluted earnings per share (cents) 4.26 7.07
-------------------------------------------------------------------------------------------- ----------- -----------
Headline diluted earnings per share (cents) 2.80 2.77
-------------------------------------------------------------------------------------------- ----------- -----------
OTHER NOTES
The abridged unaudited consolidated financial statements for the
six months period ended 31 December 2019 ("abridged unaudited
consolidated financial statements")have been prepared in accordance
with the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS"), the JSE Listings
Requirements, the LSE Listing Rules, the SEM Listing Rules and the
requirements of the Mauritian Companies Act 2001. The accounting
policies are consistent with those of the previous annual financial
statements with the exception of the change in accounting policy
and the significant judgement disclosed in note 2 and 1
respectively.
The Group is required to publish financial results for the six
months ended on 31 December 2019 in terms of Listing Rule 12.19 of
the SEM, the JSE Listings Requirements and the LSE Listing Rules.
The Directors are not aware of any matters or circumstances arising
subsequent to the period ended 31 December 2019 that require any
additional disclosure or adjustment to the financial statements.
These abridged unaudited consolidated financial statements were
approved by the Board on 13 February 2020.
Copies of the abridged unaudited consolidated financial
statements, and the statement of direct and indirect interests of
each officer of the Company pursuant to rule 8(2)(m) of the
Mauritian Securities (Disclosure Obligations of Reporting Issuers)
Rules 2007, are available free of charge, upon request at the
Company's registered address. Contact Person: Mrs. Smitha
Algoo-Bissonauth.
Top five shareholders for Grit as at 31 December 2019 are as
follows:
Anchor shareholders (>5%) %
------------------------------------------ --------
Government Employees Pension Fund (PIC) 26.75%
Drive In Trading Proprietary Limited 7.35%
M&G Investment Management Ltd UK 5.99%
Delta Property Fund 5.49%
Management & Staff 5.23%
The Grit shareholders base is made up of LSE investors holding
28%, SEM investors holding 55% with the balance of 17% held on the
JSE.
Interim dividend declaration
Shareholders are advised that dividend number 12 of USD 5.25
cents per share for the six months ended 31 December 2019 has been
approved and declared by the Board of the Company. The source of
the cash dividend is from rental income and cum-dividend
reserve.
Salient dates and times
For shareholders on the Mauritian Register 2020
Announcement of cash dividend on JSE, SEM and LSE Thursday, 13 February
----------------------
Announcement of USD to Rand conversion rate released on SEM website by no later than 1:00pm Tuesday, 25 February
----------------------
Last date to trade cum dividend Tuesday, 3 March
----------------------
Shares trade ex-dividend Wednesday, 4 March
----------------------
Record date of dividend on the SEM Friday, 6 March
----------------------
Payment date of dividend Friday, 3 April
----------------------
Notes
1. All dates and times quoted above are local dates and times in
Mauritius. The above dates and times are subject to change. Any
changes will be released on the SEM website.
2. No dematerialisation or rematerialisation of share
certificates may take place between Wednesday, 4 March 2020 and
Friday, 6 March 2020, both days inclusive.
3. No transfer of shares between sub-registers in Mauritius,
South Africa and the UK may take place between Tuesday, 25 February
2020 and Friday, 6 March 2020, both days inclusive.
4. Shareholders on the Mauritian sub-register who have opted to
receive their dividends through bank transfer, will be paid in USD.
Shareholders on the Mauritian sub-register who have opted to
receive their dividends by cheque, will be provided with a MUR bank
cheque, based on the USD:MUR exchange rate prevailing on the
payment date, being Friday, 3 April 2020. Should the latter
shareholders wish to receive their dividends through bank transfer,
they are required to contact Grit's Mauritian Registrar and
Transfer Agent, Intercontinental Secretarial Services Limited
(email: Grit@intercontinentaltrust.com | Tel: +230 403 0800) by no
later than Friday, 27 March 2020.
For shareholders on the South African Register 2020
Announcement of cash dividend on JSE, SEM and LSE Thursday, 13 February
----------------------
Announcement of USD to Rand conversion rate released on SENS by no later than 11:00am Tuesday, 25 February
----------------------
Last date to trade cum dividend Tuesday, 3 March
----------------------
Shares trade ex-dividend Wednesday, 4 March
----------------------
Record date of dividend on the JSE Friday, 6 March
----------------------
Payment date of dividend Friday, 3 April
----------------------
Notes
1. All dates and times quoted above are local dates and times in
South Africa. The above dates and times are subject to change. Any
changes will be released on SENS.
2. No dematerialisation or rematerialisation of share
certificates may take place between Wednesday, 4 March 2020 and
Friday, 6 March 2020, both days inclusive.
3. No transfer of shares between sub-registers in Mauritius,
South Africa and the UK may take place between Tuesday, 25 February
2020 and Friday, 6 March 2020, both days inclusive.
4. Shareholders on the South African sub-register will receive
dividends in South African Rand, based on the exchange rate to be
obtained by the Company on or before Tuesday, 25 February 2020. A
further announcement in this regard will be made on Tuesday, 25
February 2020.
For shareholders on the UK Register 2020
Announcement of cash dividend on JSE, SEM and LSE Thursday, 13 February
----------------------
Announcement of USD to Rand conversion rate released on the Regulatory Information Service Tuesday, 25 February
of the LSE by no later than 10:00am
----------------------
Last date to trade cum dividend Wednesday, 4 March
----------------------
Shares trade ex-dividend Thursday, 5 March
----------------------
Record date of dividend on the LSE Friday, 6 March
----------------------
Last date for receipt of currency election forms Friday, 6 March
----------------------
Payment date of dividend Friday, 3 April
----------------------
Notes
1. All dates and times quoted above are local dates and times in
the UK. The above dates and times are subject to change. Any
changes will be released on a Regulatory Information Service of the
LSE.
2. No dematerialisation or rematerialisation of share
certificates may take place between Wednesday, 4 March 2020 and
Friday, 6 March 2020, both days inclusive.
3. No transfer of shares between sub-registers in Mauritius,
South Africa and the UK may take place between Tuesday, 25 February
2020 and Friday, 6 March 2020, both days inclusive.
4. Shareholders on the UK sub-register will receive dividends in
USD. However, shareholders can elect to have dividends paid in
sterling (GBP) and the option to elect a sterling dividend payment
for this dividend will be available to shareholders until Friday, 6
March 2020 (the "Election Date").
5. Further details together with a copy of the Dividend Currency
Election Form, which should be sent to Link Asset Services, The
Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU when
completed, will be available on the Company's website shortly at
http://grit.group/. CREST shareholders must elect via CREST.
In terms of the JSE Listings Requirements regarding Dividends
Tax, the following information is only of direct application to
shareholders on the South African share register, as the dividend
is regarded as a foreign dividend for shareholders on the South
African share register:
-- the final dividend is subject to South African Dividends Tax;
-- the local dividend tax rate is 20%;
-- there is no withholding tax payable in Mauritius;
-- the number of ordinary shares in issue is 316 235 546; and
-- the Mauritian income tax reference number of the Company is 27331528.
Forward-looking statements
This document may contain certain forward-looking statements. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Actual outcomes and results may differ materially from any outcomes
or results expressed or implied by such forward-looking
statements.
Any forward-looking statements made by, or on behalf of, Grit
speak only as of the date they are made and no representation or
warranty is given in relation to them, including as to their
completeness or accuracy or the basis on which they were prepared.
Grit does not undertake to update forward-looking statements to
reflect any changes in its expectations with regard thereto or any
changes in events, conditions or circumstances on which any such
statement is based.
Information contained in this document relating to Grit or its
share price, or the yield on its shares, should not be relied upon
as an indicator of future performance.
Any forward-looking statements and the assumptions underlying
such statements are the responsibility of the Board of directors
and have not been reviewed or reported on by the Company's external
auditors.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GZGMZGFFGGZG
(END) Dow Jones Newswires
February 13, 2020 02:01 ET (07:01 GMT)
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