TIDMGR1T
RNS Number : 7011Q
Grit Real Estate Income Group
29 October 2021
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered in Guernsey)
(Registration number: 68739)
LSE share code: GR1T
SEM share code: DEL.N0000
ISIN: GG00BMDHST63
LEI: 21380084LCGHJRS8CN05
("Grit" or the "Company" or the "Group")
FULL YEAR AUDITED CONSOLIDATED RESULTS FOR THE YEARED 30 JUNE
2021
The board of Directors (the "Board") of Grit Real Estate Income
Group Limited , a leading pan-African real estate company focused
on investing in and actively managing a diversified portfolio of
assets underpinned by predominantly US$ and Euro denominated
long-term leases with high quality multi-national tenants, today
announces its audited results for the financial year ended 30 June
2021.
Financial highlights
30 June 2021 30 June 2020 Increase/ (Decrease)
Distributable earnings per share(1) US$5.97 cps US$9.58 cps (37.7%)
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Dividend per share US$1.50 cps US$5.25 cps (71.4%)
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EPRA NRV per share(2) US$102.4 cps US$117.1 cps (12.6%)
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EPRA earnings per share US$2.57 cps US$3.82 cps (32.7%)
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Adjusted EPRA earnings per share(3) US$4.91 cps US$9.02 cps (45.6%)
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Property portfolio net operating income US$55.3m US$53.5m +3.5%
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Gross property income US$49.2m US$48.5m +1.4%
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Contractual rental collected 92.5% 88.6% +3.9ppt
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Loss for the year before taxation (US$60.9m) (US$53.9m) (13.0%)
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EPRA cost ratio (including associates) 13.2% 14.6% -1.4ppt
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Total Income Producing Assets(5) US$801.9m US$823.5m (2.6%)
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WALE(6) 4.8 yrs. 5.0 yrs. -0.2 yrs.
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EPRA portfolio occupancy rate(7) 94.7% 94.1% +0.6ppt
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Group LTV 53.1% 50.2% +2.9ppt
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Property LTV 46.6% 46.5% +0.1ppt
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-- EPRA net reinstatement value ("NRV") per share contracted to
US$1.024 (2020: US$1.171). The 12.6% reduction was principally as a
result of the decrease in the value of the Group's retail and VDE
Housing Estate ("VDE") assets and increased impairment charges.
-- Contractual rental collections, which represents the cash
collections as percentage of contractual revenue (before
adjustments of rental deferrals and concessions), has improved by
3.9 percentage points from 88.6% to 92.5%.
-- Group LTV increased to 53.1% (2020: 50.2%) predominantly as a
result of the decrease in the value of the Group's property
portfolio. The Group has successfully extended its lowest applied
LTV debt covenants to 55% to April 2023 and secured additional
liquidity facilities. The Board remains committed to reducing LTV
levels to its near-term target of 45% and then to its medium term
target of between 35% to 40% through capital recycling initiatives,
issuance of quasi equity instruments and select NAV accretive
acquisitions to be completed only upon the securing of appropriate
funding by the Group.
-- Dividends per share declared for the year ended 30 June 2021
of US$1.50cps (2020: US$5.25cps), comprising the interim dividend
declared in February 2021. The Board has decided against declaring
a final dividend for the year ended 30 June 2021, but plans to
resume payments in the current financial year ending 30 June 2022
with a view to the Group's LTV meaningfully declining towards the
Board's near term target of 45%.
-- The portfolio was independently valued at 30 June 2021, with
total income producing assets valued at US$801.9m (2020:
US$823.5m), including acquisitions and capex additions amounting to
US$18.8m and like-for-like property valuations decreasing 7.8% for
the year to 30 June 2021.
-- The Group's property portfolio net operating income
(including associates and joint ventures) increased 3.5% as a
result of the full year impact of prior year acquisitions in the
period and strong portfolio performance in sectors relatively
unaffected by COVID-19.
Operational highlights
-- Property portfolio now comprises a total of 54 investments,
across eight countries and five asset classes.
-- 90.9% (2020: 90.2%) of revenue is earned from multinational tenants8.
-- 92.7% (2020: 89.1%) of income is produced in hard currency9.
-- EPRA portfolio occupancy rate of 94.7% as at 30 June 2021 (2020: 94.1%).
-- Total Grit proportionately-owned lettable area ("GLA")
increased 2.3% year-on-year by 7,807m2 (30 June 2020: 34,589m2)
mostly as a result of acquisitions.
-- Weighted average annual rent escalations at 3.8% (2020: 2.8%).
-- Weighted average property exit capitalisation rate 8.1%
(2020: 8.1%) driven by COVID-19 uncertainty related upward
movements that were offset by favourable portfolio mix effects from
acquisitions.
-- Weighted average cost of debt moved down to 5.7% (2020: 5.9%)
as a result of movements in libor over the reporting period and
refinancing activities by the Group.
Corporate highlights
-- On 29 July 2020, Grit delisted from the Main Board of the
Johannesburg Stock Exchange and introduced two strong African
institutional shareholders.
-- On 3 August 2020, the trading of Grit's shares on the Main
Board of the London Stock Exchange (the "LSE") converted from a US$
quotation to a Sterling quotation.
-- On 22 January 2021, the Group stepped up to premium segment of the LSE.
-- On 4 February 2021, the Group redomiciled to Guernsey.
Post balance sheet events
-- Obtained an equity classified perpetual note and IFC debt
funding for the acquisition of the Orbit Africa manufacturing
facility and redevelopment, that is expected to be accretive to
both the Company's net asset value and earnings, delivering value
to Grit's shareholders.
-- Extended the maturity of US$116 million of debt to between April 2023 and April 2025.
Notes
(1) Refer to note 11 (unaudited).
(2) Explanations of how European Public Real Estate Association
("EPRA") figures are derived from IFRS are shown in note 12
(unaudited).
(3) Adjustments to make earnings better representative of what
the Directors believe is the underlying company performance and
includes adjustments for unrealised foreign exchange movements,
straight-line leasing and amortisation of lease premiums,
amortisation of right of use land, impairment of loan and deferred
tax adjustments - refer to note 10 (unaudited) for further details
on adjustments made.
(4) Based on EPRA cost to income ratio calculation methodology
which includes the proportionately consolidated effects of LLR and
other associates.
(5) Includes properties, investments and property loan
receivables - Refer to Chief Financial Officer's Statement for
reconciliation and analysis.
(6) Weighted average lease expiry ("WALE").
(7) Property occupancy rate based on EPRA calculation
methodology - Includes associates.
(8) Forbes 2000, Other Global and pan African tenants.
(9) Hard (US$ and EUR) or pegged currency rental income.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate
Income Group Limited, commented:
We have a high-quality portfolio of attractive property assets
leased to very strong tenant covenants that is continuing to
deliver a resilient performance with 92.5% of contracted revenue
collected this period, versus 88.6% in the prior year, despite the
headwinds of the pandemic. We are increasingly confident that the
Group's property occupancy rate of 94.7% at the period end will
continue to improve during the balance of 2021 and beyond,
supported by our hospitality sector assets benefitting from the
easing of travel restrictions and further leasing activity in both
our Ghanaian office portfolio and retail sector assets. Trading is
also showing encouraging signs of normalising, especially in the
hospitality and retail sectors.
Although we delivered a robust operational performance, with our
Property Portfolio Net Operating Income rising 3.5% for the year to
30 June 2021, our LTV ratio rose to 53.1% over the same period
impacted by valuation pressures, predominantly in the retail
sector. We expect Grit's LTV to benefit from improvements in our
property valuations over the medium term, the acceleration of our
asset recycling strategy and target of recycling 20% by property
portfolio value by the end of 2023, which we continue to pursue,
and our perpetual note issuance, which has now been concluded. Our
LTV will additionally benefit from the potential sale of AnfaPlace
at no lower than the 30 June 2021 book value, which would also be
expected to impact positively on the Group's distributable earnings
per share.
Although our short-term focus remains on continuing our strong
rental collections, balance sheet optimisation and the reduction of
our LTV to below 45%, we are pursuing select accretive growth,
co-investment and pre-funded development opportunities across
resilient sectors. These high-quality, diversified opportunities,
if successfully concluded, hold the potential to significantly
improve the Group's net asset value, distributable earnings and
yield.
Our strategy remains effective, and I am increasingly confident
that we are well positioned and that the steps we are taking will
not only safeguard Grit for the near term but ensure that we
proactively seize the opportunities that arise to return to growth,
acceptable shareholder returns and an attractive cash dividend.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Chief Strategy Officer and Investor
Relations +44 779 512 3402
Maitland/AMO - Communications Adviser
James Benjamin +44 7747 113 930
Grit-maitland@maitland.co.uk
finnCap Ltd - UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld/Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative
and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd - Mauritian Sponsoring
Broker
Neetusha Aubeeluck +230 402 0285
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African
real estate company focused on investing in and actively managing a
diversified portfolio of assets in carefully selected African
countries (excluding South Africa). These high-quality assets are
underpinned by predominantly US$ and Euro denominated long-term
leases with a wide range of blue-chip multi-national tenant
covenants across a diverse range of robust property sectors.
The Company is committed to delivering strong and sustainable
income for shareholders, with the potential for income and capital
growth. The Company is targeting net total shareholder return
inclusive of NAV growth of 12.0%+ p.a.*
The Company holds its primary listing on the Main Market of the
London Stock Exchange (LSE: GR1T and a secondary listing on the
Stock Exchange of Mauritius (SEM: DEL.N0000).
Further information on the Company is available at
http://grit.group/
* These are targets only and not a profit forecast and there can be no assurance that they will
be met. Any forward-looking statements and the assumptions underlying such statements are
the responsibility of the Board of Directors and have not been reviewed or reported on by
the Company's external auditors.
Directors:
Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive
Officer)*, Leon van de Moortele (Chief Financial Officer)*, David
Love+, Sir Samuel Esson Jonah+, Nomzamo Radebe, Catherine
McIlraith+, Jonathan Crichton+, Cross
Kgosidiile (+) and Bright Laaka+ (Permanent Alternate Director to Nomzamo Radebe).
(* Executive Director) ((+) independent Non-Executive
Director)
Company secretary : Intercontinental Fund Services Limited
Registered office address : PO Box 186, Royal Chambers, St
Julian's Avenue, St Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius) : Intercontinental
Secretarial Services Limited
SEM authorised representative and sponsor : Perigeum Capital
Ltd
UK Transfer secretary : Link Assets Services Limited
Mauritian Sponsoring Broker : Capital Markets Brokers Ltd
This notice is issued pursuant to the FCA Listing Rules and SEM
Listing Rule 15.24 and the Mauritian Securities Act 2005. The Board
of the Company accepts full responsibility for the accuracy of the
information contained in this communiqué.
A Company presentation for all investors and analysts via live
webcast and conference call
The Company will host a live Zoom webcast and conference call on
Friday, 29 October 2021 at 12:00pm Mauritius / 09: 00am UK . The
call can be accessed directly on the day using the following link:
https://us06web.zoom.us/j/82090379280 . For further queries please
contact IR@grit.group.
A playback will be accessible on-demand within 48 hours via the
Company website: https://grit.group/financial-results/
CHAIRMAN'S STATEMENT
The operating environment during the review period remained
challenging, however Grit's strategy of high-quality assets leased
to very strong tenant covenants helped to ensure that Grit was
resilient and maintained high rent collection rates. We continue to
concentrate on preserving the resilience and financial strength of
the Company to deliver secure attractive value to our shareholders
over both the short and longer term, with significant progress made
during the period.
Grit's strategic focus on counterparty strength and portfolio
diversification provided a stable asset base helping to ensure the
Group posted a robust operational performance for the year, with
its corporate accommodation, industrial, commercial office and
other assets materially unaffected by the COVID-19 fall-out. These
assets collectively comprise 53.2% (after excluding non-controlling
interests, ("Group's Economic Interest")) of the Group's Economic
Interest in property assets as at 30 June 2021.
The Group collected 92.5% of the value of its contracted revenue
in the financial year to 30 June 2021 (FY20: 88.6%) and over the
same period provided rent concessions, resulting in reduced
revenues of 5.6%, and rent deferrals of a further 2.3% of
contracted rental revenue . Management's continued focus on
proactive tenant and asset management resulted in a higher
occupancy rate of 94.7% (FY20: 94.1%) predominantly because of new
leases concluded in the corporate offices and retail
portfolios.
The retail sector across Africa continues to face both cyclical
and structural shifts and accounts for over 80% of the Group's
reported vacancy, of which AnfaPlace Mall in Morocco, our largest
asset by value, is the main contributor. Leasing activity to the
retail sector assets has improved and this is expected to continue
to improve in the current financial year, and whilst we continue to
be confident about the convenience and strip mall retail concepts,
our strategy is to continue reducing overall exposure to the retail
sector. To this end, Grit has recently granted 2-months exclusivity
to a potential buyer of AnfaPlace Mall in Casablanca, Morocco. Grit
expects to realise a price no lower than the updated 30 June 2021
book value and if concluded, the transaction is expected to reduce
the Group's LTV and positively impact the Group's distributable
earnings per share.
We are encouraged to see Mauritian border restrictions lifted
from 1 October 2021, with tourist arrivals expected to recover
strongly and swiftly. Grit has two principal tenant brands in the
Mauritius hospitality sector, both of which received strong
Mauritian government support, including liquidity support, from the
Mauritian Investment Corporation which is supporting the resumption
of lease repayments to Grit. Club Med Cap Skirring is expected to
resume trading on 5 December 2021 and this will see the resumption
of rental payments at that date. The resort is currently
experiencing strong bookings for the upcoming tourist season.
The Company redomiciled its corporate seat to Guernsey and
successfully applied to step-up to the Premium segment of the
London Stock Exchange in January 2021. A premium listing requires
the highest standards in governance and is expected to facilitate
the Group's eligibility for inclusion in the FTSE UK Index Series,
which is anticipated to significantly improve liquidity and further
diversify Grit's shareholder base.
Financial results
These are challenging and uncertain times, as demonstrated by
the valuation declines across the property portfolio that has
resulted, for the year under review, in the value of total income
producing assets dropping to US$801.9m (FY20: US$823.5m) and a
total return per share(1) of -11.3% (FY20: -15.8%).
(1) EPRA NRV per share movement plus dividend paid per share
during the year
EPRA NRV per share reduced by 12.6% mainly due to further
valuation write-downs in the retail sector assets and VDE housing
compound. Grit's property portfolio fair value losses, since the
onset of the pandemic, amount to US$114.9m, representing a 14.2%
(like-for-like) reduction compared to 31 December 2019.
Consequently, Grit Group LTV increased to 53.1% as at 30 June 2021,
predominantly as a result of this decrease in valuations,
additional short-term working capital facilities to fund rental
deferrals provided to tenants in the hospitality sector and capital
expenditure in the normal course of business, including GREA
capital calls. The Board continues to pursue a medium-term LTV
target of between 35% and 40% with a near-term focus of reducing
LTV to below 45%, and although it does not expect a rebound in
retail valuations until the financial year ending 30 June 2023 at
the earliest, it does, however, take note of positive trends such
as reduced vacancies and increased footfall in its retail assets
and the re-opening of the Mauritian borders to overseas
tourists.
Protection of the balance sheet and debt reduction remains a
strong focus and despite the recent positive rent collection trends
and notwithstanding raising gross proceeds of approximately US$9.8
million of fresh equity in late 2020, other initiatives by the
Group, such as a reduction of US$6.7 million in administrative and
operating expenses, have so far and at 30 June 2021 financial year
end, not yet had a positive impact on the Group's LTV.
The Board is now advancing its efforts to achieve an asset
recycling target of 20% of the value of the property portfolio by
31 December 2023. The potential sale of AnfaPlace Mall was recently
announced and further disposals are expected to be announced in due
course, which are expected to contribute to the reduction of
reported LTV to 30 June 2022.
Grit also successfully engaged with its debt providers and has
both increased its lowest applied LTV and dropped its Interest
Service Coverage Ratio (ISCR) covenants on debt facilities and,
more recently, secured maturity extensions for the bulk of the
Group's US$410.1 million outstanding debt to beyond April 2023.
Post balance sheet date, the Group secured full funding for the
accretive US$53.6 million acquisition and redevelopment of Orbit
Africa manufacturing facility in Kenya, obtaining a US$25.0 million
senior debt facility from the International Finance Corporation
(the "IFC"), the investment arm of the World Bank and up to US$31.5
million by way of Grit issued equity classified perpetual notes to
two additional external funders. This transaction is expected to be
the first in a number of strategic collaborations with the IFC
across Africa and positions the Company to execute on its focus of
increasing its exposure to industrial sector assets.
The Directors have modelled both a 'base case' and a 'severe but
plausible downside' of the Group's expected liquidity and covenant
position for a going concern period of at least 12 months from the
date of signing the annual report. The models show that, save for
the items highlighted in the CFO report, the Group has adequate
financing facilities and maintains its covenants throughout the
going concern period. The inherent uncertainty in future property
valuations is also such that should they decrease more severely or
quicker than anticipated as a result of the COVID-19 pandemic, then
the Group may breach some individual property and/or Group wide
covenants. Further details on the downside scenarios are reflected
in the CFO's report. Management has a number of mitigating actions
available to it should these situations arise. Further details of
matters relating to going concern are referenced in the external
auditors' Independent Audit Opinion.
Dividends
In light of recent events, especially the LTV which has
increased to over 53%, the Board has deliberated at length
regarding the current year dividend and considered the needs of its
income and yield investors against the long-term protection of the
Group's balance sheet. The Board has decided against recommending a
final dividend for the financial year ended 30 June 2021 and
expects to re-instate this once Group LTV declines towards the
Board's near - term target of 45%.
Changes to the Board
Mr Cross Kgosidiile joined the Board of Grit as an independent
Non-Executive Director and as a member of the Audit and Risk
Committees with effect from 5 March 2021. Mr Kgosidiile is the
Managing Director of the Botswana Development Corporation (" BDC
"), the country's main agency for commercial and industrial
development, founded in 1970 with the Government of Botswana as its
sole shareholder. BDC's shareholding in the Company represents
approximately 4.48% of the total issued share capital of the
Company.
He has over 20 years' experience in building high performance
businesses and teams, having served in a variety of leadership
roles, including at the Botswana Power Corporation (BPC), the Motor
Vehicle Accident (MVA) Fund and the national airline, Air Botswana.
Mr Kgosidiile has also worked as a business consultant where he
focused on property transactions. His expertise spans corporate
finance and business strategy, information technology, supply chain
management and business transformation.
Climate change and sustainability
With Africa rapidly urbanising, we understand the important role
that we as landlords must play in limiting carbon emissions and our
impact on natural resources for long-term sustainability.
The Group has committed to reducing carbon emissions by a
targeted 25% as well as a 25% improvement in our building
efficiency over the next four years and the Board has committed to
delivering a clear definition of our net zero carbon pathway. The
Responsible Business Committee has been tasked to monitor these
improvements, including having adequate data to support this
target.
We are proud to maintain more than 40% of women in leadership
positions at Grit, and a staff complement consisting of more than
80% local employees, exceeding our target of 65%.
Outlook
In a very challenging environment, our Board and management team
took decisive, proactive action to defend and grow our position and
safeguard the business to deliver shareholder value for both the
short and long term.
Trading is showing encouraging signs of normalising especially
in the hospitality and retail sectors. Whilst we maintain an
appropriately cautious stance in light of the potential longer-term
effects from COVID-19 on our tenants and the wider economy, we
remain confident in our strategy of unlocking superior total
returns for our investors in the medium to longer term through the
significant recovery potential across our unique portfolio of
properties as well as strategic, value accretive acquisitions and
capital recycling initiatives. Key to the long-term success of the
Company will be a more conservative capital structure, significant
disposals and successfully exploiting opportunities within our
portfolio to help ensure we return to growth, acceptable returns
and a cash dividend.
We are excited about the potential for further value creation
from the assets and development pipeline within Gateway Real Estate
Africa Limited ("GREA"), in which we currently hold a 19.98% equity
interest. The Group's exposure to embassy corporate accommodation
and data centre assets is expected to increase as these projects
are delivered in the coming months.
As a management team, we remain under no illusions about the
challenges ahead. However, I am confident that we are well
positioned and that the steps we are taking will not only safeguard
Grit for the near term but ensure that we proactively seize the
opportunities that arise from these unprecedented times.
Finally, I would like to thank my colleagues on the Board for
their significant time contributions this year; our colleagues in
the business for their Herculean efforts in an exceptionally tough
environment; and shareholders for their support for the actions
taken to date and those that are forthcoming.
Peter Todd
Chairman
CHIEF EXECUTIVE'S STATEMENT
COVID-19 has emerged as a multi-faceted risk with a variety of
implications for the Group. As we continue to navigate effectively
the ever-changing environment, the Company is carefully monitoring
the impact of COVID-19 on the business, financial conditions,
property valuations, medium-term growth strategies and prospects of
the Grit Group. Our strategy remains effective, and we are
confident that we have successfully navigated the worst of the
current cycle by virtue of the various interventions we have made
over the last 18 months.
Ongoing COVID-19 response
Although COVID-19 impacted our business over the full financial
year, we took clear action to strengthen the Group's financial
position while our colleagues simultaneously ensured that all our
stakeholders were safe and supported.
Our operational response included:
-- New safety measures and increased cleaning protocols across all our assets;
-- Support for key tenants and brand partners including
reductions in service charge, rent deferrals and concessions;
and
-- Support for our communities, including community food
programmes and provision of face masks.
Our financial response included:
-- Defining detailed strategies to achieve our near-term targets of reducing LTV to below 45%;
-- Suspending our 2020 final dividend and withholding our final 2021 year-end dividend;
-- 10% reduction in pay for the Board and senior management over
the period 1 July 2020 to 30 June 2021;
-- Negotiating a temporary extension to the Group LTVs and Group ISCR covenants;
-- Suspending and cancelling a number of announced pipeline
acquisitions in order to protect Balance sheet capacity; and
-- Advancing asset recycling within the portfolio with the
partial sales of AnfaPlace Mall and Acacia announced in late 2020.
These strategies are now being further accelerated with the Board
targeting 20% of the portfolio to be recycled by December 2023.
Resilient portfolio performing well
Grit's property portfolio comprises a total of 54 assets
(including 25 properties held in Letlole La Rona in Botswana) with
rentals predominantly collected monthly, of which 92.7% are
collected in US$, Euro or pegged currencies.
The Group's high-quality assets have a weighted average lease
expiry of 4.8 years (FY20: 5.0 years) and a weighted average
contracted lease escalation of 3.8% per annum (FY20: 2.8% per
annum), underpinned by a wide range of blue-chip multinational
tenants across a variety of sectors who account for over 90.9%
(FY20: 90.2%) of our contracted revenue.
The Group's weighted average EPRA vacancy rate reduced to 5.3%
as at 30 June 2021 (FY20: 5.9%) mainly because of two new leases to
Total in Commodity House Phase 1 (Mozambique) and several new
leases signed in AnfaPlace Mall (Morocco), as well as at the three
retail malls in Kitwe, Ndola and Lusaka, Zambia respectively.
The retail segment still accounts for over 80% of the reported
Group vacancy, of which AnfaPlace Mall is the largest contributor.
Strong leasing activity is expected over the remainder of the 2021
calendar year buoyed by increased footfall numbers as lockdown
restrictions are relaxed.
Other investments, Office, corporate accommodation, and light
industrial assets
Other investments, corporate accommodation, industrial and
commercial office sectors remained largely unaffected by the
COVID-19 fall-out. These sectors collectively represent over 53.2%
of Grit's Economic Interest in property assets as at 30 June
2021.
Light industrial assets continue to represent a resilient sector
and remain a key focus for growth in the portfolio. Several
significant opportunities have been presented to the Group and
management to consider options in relation to funding and
furthering the sector strategy. To this end, the Group recently
announced the successful conclusion of an equity classified
perpetual note of up to US$31.5 million to fund the acquisition of
the Orbit Africa warehouse and manufacturing buildings in Kenya via
a sale and lease back arrangement, with a 25-year lease in place
(at a 9.5% yield), followed by the development of additional
warehousing and manufacturing buildings at a 16% yield. The debt
component of the acquisition, amounting to US$25 million, will be
funded by the International Finance Corporation ("IFC") at libor +
5.75%, but pleasingly marks the opportunity for Grit to further
collaborate with the IFC across similar assets on the African
continent.
Retail assets
The pandemic has accelerated structural challenges in the retail
sector. Although convenience centres, which typically have a
proportionately higher services and basic necessities offering,
have continued to trade well, the larger enclosed malls remain
under pressure with rising vacancies and tenant strain.
Retail assets constituted 21.1% of Grit's Economic Interest in
property assets as at 30 June 2021 and are split between enclosed
malls (AnfaPlace Mall) and convenience shopping and service
orientated strip malls. During the year under review, Grit provided
a combination of concessions and rent deferrals to tenants at
AnfaPlace Mall in anticipation of the asset returning to normalised
levels of trading post the 2019 redevelopment and the more recent
COVID-19 related disruptions.
The asset management team made good progress on lease renewals
at Mukuba Mall in Kitwe, Zambia, following 85% of the leases
expiring in March 2020. At the reporting date, 98.5% of the mall's
available rental space has been let. Cosmo Mall (Lusaka, Zambia)
and Mall de Tete (Tete, Mozambique) continue to experience abnormal
levels of vacancies although signs of the vacancy rate normalising
through the current financial year are encouraging.
Hospitality assets
At the financial year end, hospitality assets comprised 25.7% of
Grit's Economic Interest in property assets. Grit does not have
direct occupancy and operational cost exposure in the hospitality
sector because of its fully servicing triple net lease rental
contracts with international leisure operators. Rent deferrals were
offered to tenants ahead of the re-opening of borders and the
expected resumption of normal tourist arrivals. Grit expects to
recover these deferrals over the coming months as described in the
cash collections section below.
Strong rental collection rate
For the financial year to June 2021, Grit collected 92.5% of the
value of its contracted rental revenue (FY20: 88.6%). Over this
same period, the Group has provided rent concessions, resulting in
reduced revenues of 5.6% and rent deferrals of a further 2.3% of
contracted rental revenue.
Corporate 1 July 2020 to 30 June
Office Retail accommodation Hospitality Light Industrial 2021
----------------------- ------ ------ ---------------------- ----------- ---------------- ----------------------
Contracted rent 100% 100% 100% 100% 100% 100%
Rent deferrals 0% (0.3%) 0% (11.2%) 0% (2.3%)
Rent concessions (2.3%) (8.9%) (5.5%) (6.5%) 0% (5.6%)
----------------------- ------ ------ ---------------------- ----------- ---------------- ----------------------
Expected collection
rate 97.7% 90.8% 94.5% 82.3% 100% 92.1%
----------------------- ------ ------ ---------------------- ----------- ---------------- ----------------------
Actual collection rate 100% 90.2% 99.2% 77.2% 100.3% 92.5%
----------------------- ------ ------ ---------------------- ----------- ---------------- ----------------------
Movement in debtors'
balances (excl. agreed
deferrals) (2.7%) 0.06% (4.7%) 5.1% (0.3%) (0.4%)
----------------------- ------ ------ ---------------------- ----------- ---------------- ----------------------
While the hospitality sector has not been as severely impacted
as our peers due to the fixed nature of our leases and the
significant government support granted to our hospitality tenants,
it continues to be a focus area of the Group. With the opening of
the Mauritian borders from 1 October 2021 and the planned opening
of the ClubMed in Senegal in December 2021, lease payments are
expected to resume fully by those dates and for the rental
deferments granted to be recovered over the coming months.
The Lux Group is up to date on current rentals and have repaid
all rent deferrals granted in 2020 in respect of the Tamassa resort
in Mauritius. The remaining three Mauritius hotels in Grit's
portfolio are tenanted to New Mauritius Hotels Group (NMH), owned
by a large Mauritian conglomerate, who have resumed rental
payments. Grit provided cashflow deferrals of c.50% of monthly
rental value for the period December 2020 until October 2021 that
will be collected over the subsequent 48-month period.
Collection rates of 77.2% achieved during the year are expected
to return 100% by December 2021 following the opening of the
various resorts.
Cost of debt
Total interest-bearing borrowings increased by US$17.6 million
for the financial year ended 30 June 2021.
Cost of debt reduced further to 5.7% for the year under review
from a weighted average of 5.9% in the comparative prior financial
year.
Refinancing negotiations were successfully concluded, and the
bulk of the maturities were extended beyond April 2023. Further
detailed commentary is in the CFO statement.
Growing value and strengthening our position
While our mandate is clear, that of reducing our Group LTV and
strengthening our balance sheet, Grit will continue to grow
shareholder value through asset recycling initiatives and
redeploying its equity into accretive opportunities across
resilient sectors.
In addition to focusing on the generation of revenue by
targeting completed, income generating properties, Grit's
investment strategy is complemented by our participation in
pre-funded development and co-investment opportunities as well as
property management services.
To this end Grit co-founded, and currently holds, a 19.98%
interest in Gateway Real Estate Africa ("GREA"), a private
development company focused on several turnkey build projects
across the African continent tenanted to current and targeted
multinational clients. Through its minority stake, Grit has access
to GREA's accretive pipeline of development projects, assets and
returns, including access to its attractive completed assets.
The roll out of the development projects within GREA has
accelerated during the financial year with several projects being
awarded recently.
Projects currently underway or concluded include:
-- Metroplex Uganda, a retail centre in Uganda anchored by Carrefour, completed in May 2021.
-- Diplomatic Housing compound in Ethiopia, anchored by the US
Embassy, completed in October 2021.
-- African Data Centre in Nigeria, due for handover in November 2021.
-- Diplomatic Housing compound in Kenya, fully let to the US
Embassy, due for completion in Q2 of 2022.
-- Diplomatic Housing compound in Mali, fully let to the US
Embassy, due to start construction before the end of the year.
-- The construction of the St Helene Hospital in Mauritius, to
be operated by the Artemis Group, was started prior to year-end and
is expected to complete at the end of 2022; and
-- Office building in Apolonia City in Ghana, anchored by
Rendeavour, has recently commenced construction.
As a result of the number of projects awarded to GREA in the
year, the company has now called for the remaining capital
commitments from its shareholders, with Grit due to inject an
additional US$17.9 million by the end of the year if it wishes to
retain its current equity ownership in GREA (this being in addition
to the US$8.4million injected into GREA during the year). The
growth trajectory of GREA has accelerated and based on the
independent valuers' completion valuations, and the pre-let nature
of the projects, net asset value growth is expected to be strongly
positive over the forthcoming two years as projects are
completed.
Grit is concurrently considering increasing its stake in GREA to
further align both Grit and GREA's future profitable growth
strategies and approach to servicing tenants, which would be a
cornerstone to further unlocking scale, synergy benefits and the
creation and delivery of further value to Grit's shareholders. A
potential transaction would likely require approvals from Grit's
shareholders and equity funding by Grit. Grit expects to engage
with its shareholders should this be further pursued.
Governance
Grit continues to invest in a strong governance framework,
resources, and ongoing training from both its Human Resources and
Compliance Departments to uphold the highest levels of corporate
governance across the continent and has increased its focus as a
result of the step up to the premium listing on the main market of
the London Stock Exchange.
Prospects
Our diversified portfolio and high-quality tenants provided
great stability to the Company despite the economic volatility on
the back of COVID-19.
Notwithstanding significant economic headwinds, especially in
the retail sector, early signs of post-COVID-19 recovery are
encouraging but dependent on ongoing vaccine rollouts. We expect
the Mauritian leisure market to recover significantly in the short
term, with a concomitant recovery of a major part of our leisure
segment, assuming no potential further COVID-19 lockdowns.
Although our short-term focus remains on continuing our strong
rental collections, balance sheet optimisation and the reduction of
our LTV to below 45%, we are pursuing select growth and
co-investment opportunities. These high-quality, diversified
opportunities, if successfully concluded, hold the potential to
significantly improve the Group's net asset value and yield.
Our strategy remains effective and we have successfully
navigated through the worst of the current cycle. We are
appreciative of the support provided by all our stakeholders, most
notably that of our providers of capital, the Grit Board, the
executive team, and our staff and I look forward to updating you on
our progress and strategy during the 2022 financial year .
Bronwyn Knight
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S STATEMENT
Presentation of financial statements
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB"). In line with
our continuous commitment to best practices in the sector, we
continue to present the European Public Real Estate Association
("EPRA") reporting as an alternative performance measures to
supplement IFRS. In considering our operational performance, we've
adopted the EPRA Best Practice and Policy Recommendations ("BPR")
throughout this report. Full reconciliations between IFRS and EPRA
figures are provided in note 43 of the Audited Financial
statements.
The financial statements include disclosures on material
uncertainty related to going concern. Although these uncertainties
are highlighted, and described in more detail in the statement of
going concern, the financial statements have not included any
adjustments that would be required if the Group were unable to
continue as a going concern.
Financial and Portfolio summary
The current financial year has proved to be challenging and
although some sectors have been severely impacted by the pandemic,
other sectors have started benefiting from the new opportunities
presented in the changing economic and social environments. The
Group has maintained its focus on tightly managing aspects which
are within its direct control while monitoring and reacting to
those factors that are not. Cost optimisation, debtors collections
and re-letting activities continue to be the key elements of daily
focus of the operations team, while the treasury team has made
great strides in securing extensions to debt tenors and obtaining
additional covenant headroom as required.
Gross IFRS rental income increased to US$49.2m from US$48.5m.
This increase is as a result of annual contractual lease
escalations in the period.
Audited for the year ended Audited for the year ended
30 June 2021 30 June 2020
US$'000 US$'000
--------------------------------------- --------------------------- --------------------------
Contractual rental income 38,884 38,798
Retail parking income 1,698 1,567
Other rental income (lease incentives) 3,042 2,240
Recoverable property expenses 5,366 5,349
Straight-line rental income accrual 227 580
--------------------------------------- --------------------------- --------------------------
Gross rental income 49,217 48,534
--------------------------------------- --------------------------- --------------------------
For meaningful comparison, assets accounted for as associates
and joint ventures have been proportionately presented in the
relevant sectors to produce a "Grit Property Portfolio" revenue,
operating expenses and NOI analysis below. Grit Property Portfolio
revenue has risen 2.0% from prior year on annual contractual lease
escalations and asset acquisitions annualising in the period, while
strong operational cost control (5.5% y.o.y. reduction) resulted in
a 3.5% increase in net operating income over the financial year to
30 June 2021.
Rental
Revenue Revenue Opex Opex NOI NOI Collection
Sector FY2021 FY2020 Movement FY2021 FY2020 Movement FY2021 FY2020 Movement FY2021
USD'000 USD'000 % USD'000 USD'000 % USD'000 USD'000 % %
-------------- -------- -------- -------- -------- -------- -------- --------- --------- -------- ----------
Retail 15,770 19,911 (20.8%) (6,341) (6,488) (2.3%) 9,429 13,423 (29.8%) 90.2%
Hospitality 12,728 10,654 19.5% - - - 12,728 10,654 19.5% 77.2%
Office 18,408 16,939 8.7% (1,835) (2,357) (22.1%) 16,573 14,582 13.7% 100.0%
Industrial 2,174 2,512 (13.5%) (74) (69) 7.2% 2,100 2,443 (14.0%) 100.3%
Corporate
Accommodation 13,117 12,397 5.8% (1,978) (1,949) 1.5% 11,139 10,448 6.6% 99.2%
LLR portfolio 2,811 1,315 113.8% (335) (184) 82.1% 2,476 1,131 118.9% n/a
GREA portfolio 250 199 25.6% - - - 250 199 25.6% n/a
Corporate (26) - - 675 585 15.4% 649 585 10.9% n/a
-------------- -------- -------- -------- -------- -------- -------- --------- --------- -------- ----------
TOTAL 65,232 63,927 2.0% (9,888) (10,462) (5.5%) 55,344 53,465 3.5% 92.50%
-------------- -------- -------- -------- -------- -------- -------- --------- --------- -------- ----------
Subsidiaries 49,217 48,534 1.4% (8,543) (8,985) (4.9%) 40,674 39,549 2.8%
Associates 16,015 15,393 4.0% (1,345) (1,477) (8.9%) 14,670 13,916 5.4%
-------------- -------- -------- -------- -------- -------- -------- --------- --------- -------- ----------
Note 1
Rental Collections represents the amount of cash received as a
percentage of contractual income. Contractual income is stated
before the effects of any rental deferment and concessions provided
to tenants.
Retail sector
The retail sector has been primarily impacted by COVID-19 with a
significant increase in vacancies, rental concessions and lease
renewals at much reduced rates since the start of the pandemic. In
the most recent months, there has been an improvement in letting
activity, with vacancies in the sector reducing from 16.2% to 14.7%
over the year. In addition, promising footfall (with AnfaPlace Mall
in Morocco recording figures well above pre-COVID levels) and
improving rent to turnover ratios, are being reported by our
tenants. The recent positive impacts on the Zambian economy, where
exchange rates have improved significantly against the USD and the
recovery in copper prices, bode well for the future of our Zambian
Malls, specifically those in the copper belt region.
Revenue declined by 20.8% as a result of short-term concessions
granted, weaker local currencies and lower lease rates upon
renewals. These were partially offset by reductions in operating
costs of 2.3% that resulted in a total NOI decline of 29.8%. Rental
collections of 92.5% of contractual revenue has been achieved
through very difficult trading environments, although these
collections are off the newly contracted lease rates which are on
average 11.4% lower per square metre than prior year.
Valuations continue to be impacted by the lower NOI and a
depressed view on lease renewal rates for the next 18 to 24 months.
In total, the retail properties experienced fair value losses of
17.8% over the year.
Hospitality Sector
Hospitality sector revenue increased in USD terms by 19.5%, 6.8%
of which was attributable to the full year impact of ClubMed
acquired in January 2020, and the balance to the Euro vs the USD
move during the year and lease escalations. Rental concessions of
$0.8million were provided to ClubMed during the period.
New Mauritius Hotels (operator of the Beachcomber resorts) have
been provided with cashflow deferrals of c.50% of monthly rental
value for the period 1 January 2021 until Mauritian border
restrictions were lifted and are current on the remaining portions
of their lease commitments. The agreed cashflow deferrals will be
collected over the subsequent 48-month period to December 2025.
The fixed nature of the leases and government support for our
hospitality tenants has limited the fair value impact on the assets
to -2.5% for the year while the recovery of the EUR against the USD
has resulted in reported values in USD terms increasing 7.5% over
the prior year.
Corporate Accommodation Sector
Operating performance in the sector remained resilient with
revenue increasing by 5.8% as a result of leasing activity and
rental escalations, while operating cost increases were limited to
1.5%, having a positive impact on the NOI of 6.6%.
As widely publicised, Vale has made the decision to dispose of
their coal mining assets in Tete Mozambique. While the next lease
renewal date is in May 2024, the valuation of the property has been
impacted by the uncertainty of the identity of a potential buyer
and whether the new owners of the mine would require the superior
level of accommodation the Group currently supplies to Vale and the
potential impact this might have on future lease renewals. This
resulted in a net fair value write down of the corporate
accommodation sector by 8.3%.
Office Sector
The office portfolio remains relatively unaffected by the
pandemic, with the property valuation decline of 4.5% mainly driven
by reductions in the value of Grit's office portfolio in Ghana as a
result of a softer leasing market. One of Grit's anchor tenants in
Ghana, GCNet, early terminated their lease which was due to expire
in November 2022, and while the bulk of the space has been re-let
post year end, the current oversupply and the slowdown due to
COVID-19 have impacted lease rates of the new tenants.
The revenue increase of 8.7% for the year includes the
additional revenue from the lease termination fee for GCNet. The
material decrease in operating costs of 22.1% (partly due to
planned maintenance not being able to be completed due to COVID-19
restrictions) resulted in a 13.7% increase in NOI.
Industrial Sector
The revenue drop in the industrial sector of 13.5% was
attributable to the reduction in revenue from the Bollore facility
redevelopment. The redevelopment of the Bollore facility has
progressing well with phase 1 delivered in March 2021 which
resulted in a new four-year lease being signed with Bollore. Phase
2 is due for completion in November 2021.
Letlole La Rona Portfolio (" LLR ")
Both asset values and revenue have been positive during the
year. The predominately industrial portfolio has had limited impact
from the COVID-19 pandemic and the revenue increase of 113.8% is
due to the full year impact of the November 2020 acquisition and
the additional five assets acquired by LLR in June/July 2021.
It is the intention to expand the working relationship between
LLR and Grit in the future, with the Group currently investigating
jointly purchasing new assets in order to provide LLR with
additional US Dollar revenue streams.
The value of our property portfolio decreased to US$755.9m as at
30 June 2021 from US$776.1m in 2020.
COMPOSITION OF INCOME PRODUCING ASSETS 2021 2020
US$'m US$'m
---------------------------------------------------------------------------------- ----- -----
Investment properties 549.5 577.2
Investment property included within 'Investment in associates' 193.8 193.9
Properties under development within 'Investment in associates' 12.6 5.0
755.9 776.1
Deposits paid on investment properties 5.7 4.5
Other investments, Property, plant & equipment, Intangibles & related party loans 40.3 42.9
---------------------------------------------------------------------------------- ----- -----
TOTAL INCOME PRODUCING ASSETS 801.9 823.5
---------------------------------------------------------------------------------- ----- -----
Cost control
In addition to the cost control measures put in place within the
property operating costs, the Group has made significant savings in
ongoing administrative costs, achieving a US$2.4 million saving in
the year, of which at least US$1 million is expected to be
permanent. Transaction costs are variable and are impacted by the
level of corporate activity undertaken by the Group.
Administrative costs as at 30 June 2021 as at 30 June 2020 Movement Movement
USD'000 USD'000 USD'000 %
-------------------------------- ------------------ ------------------ -------- --------
Total Administrative costs 13,867 20,131 (6,264) (31.1%)
Less: Transaction costs 79 3,905 (3,826) (98.0%)
-------------------------------- ------------------ ------------------ -------- --------
Ongoing administrative expenses 13,788 16,226 (2,438) (15.0%)
-------------------------------- ------------------ ------------------ -------- --------
A metric by which the Group measures its operating efficiency is
the ongoing administrative cost to assets ratio which has improved
to 1.7% in the current year under review. The Group continues to
target a medium-term admin cost to assets ratio of under 1.0%.
Total income producing assets for the year reduced by 2.6% which
negatively affected the cost ratio by 0.1%.
Property valuations
Investment properties are valued at each reporting date with
valuations performed every year by independent professional
valuation experts accredited by the Royal Institute of Chartered
Surveyors' ("RICS") and compliant with International Valuation
Standards.
Downward Fair value movements in the group's property portfolio,
including the proportionate share of the assets held in joint
ventures and associates, were predominantly reflected in the retail
and corporate accommodation sectors. The overall fair value decline
in the portfolio was US$60.4 million which offsets the additions
and forex movement over the reporting period.
Opening Closing Total
Property Forex Fair value Property Valuation Fair Value
Sector Value movement Additions Other movements Value Movement Movement
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 % %
-------------- ------------ ------------ --------- ------- ------------ ------------ ------------ ------------
Retail 217,760 5,643 1,917 (317) (38,710) 186,293 (14.5%) (17.8%)
Hospitality 162,279 11,592 3,455 1,159 (4,065) 174,420 7.5% (2.5%)
Office 199,378 (601) 1,307 383 (8,995) 191,472 (4.0%) (4.5%)
Industrial 30,235 - 3,595 201 2,201 36,232 19.8% 7.3%
Corporate
Accommodation 138,194 - 124 1,076 (11,494) 127,900 (7.4%) (8.3%)
LLR portfolio 23,223 2,159 1,337 67 213 26,999 16.3% 0.9%
GREA portfolio 5,009 - 7,051 - 498 12,558 150.7% 9.9%
-------------- ------------ ------------ --------- ------- ------------ ------------ ------------ ------------
TOTAL 776,078 18,793 18,786 2,569 (60,352) 755,874 (2.6%) (7.8%)
-------------- ------------ ------------ --------- ------- ------------ ------------ ------------ ------------
Subsidiaries 577,222 10,971 10,130 2,465 (51,297) 549,491 (4.8%) (8.9%)
Associates 198,856 7,822 8,656 104 (9,055) 206,383 3.8% (4.6%)
-------------- ------------ ------------ --------- ------- ------------ ------------ ------------ ------------
Net Asset Value and EPRA earnings per share
EPRA earnings during the year fell 29.9%, predominately due to
the sale of a 39.6% stake in AnfaPlace Mall in July 2020, resulting
the non-controlling interest impact on the underlying property of
US$1.1 million and the sale of 26.55% stake in Acacia Estate
amounting to US$0.8 million.
EPRA adjusted earnings were additionally impacted by a number of
lease incentives granted during the financial year, particularly in
retail and hospitality which have yet to be amortised as well as
unrealised foreign exchange gains added back for the year of US$1.1
million versus an unrealised foreign exchange loss of US$4.9
million in the prior year.
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
30 June 2021 30 June 2021 30 June 2020 30 June 2020
Per Share (Diluted) Per Share (Diluted)
$'000 (Cents Per Share) $'000 (Cents Per Share)
---------------------------------------------- ------------- ------------------- ------------- -------------------
EPRA Earnings 8,080 2.57 11,530 3.82
Total Company Specific Adjustments 7,351 2.34 15,727 5.20
---------------------------------------------- ------------- ------------------- ------------- -------------------
Adjusted EPRA Earnings 15,431 4.91 27,257 9.02
Total company specific distribution
adjustments 3,162 1.06 1,457 0.56
---------------------------------------------- ------------- ------------------- ------------- -------------------
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS
WITHELD) 18,593 5.97 28,714 9.58
Profits Withheld (13,920) (4.47) (12,979) (4.33)
---------------------------------------------- ------------- ------------------- ------------- -------------------
TOTAL DISTRIBUTABLE EARNINGS TO GRIT
SHAREHOLDERS 4,673 1.50 15,735 5.25
---------------------------------------------- ------------- ------------------- ------------- -------------------
EPRA NRV 328,863 102.4 358,370 117.1
EPRA NTA 319,907 99.6 348,007 113.7
EPRA NDV 270,858 84.3 296,948 97.0
---------------------------------------------- ------------- ------------------- ------------- -------------------
As at 30 June 2021, EPRA NRV per share decreased by 12.5% from
US$117.1cps to US$102.4cps, while IFRS NAV per share dropped 13.3%
to US$84.4cps. In total, property valuations accounted for an
US$19.7cps drop in both EPRA NRV and IFRS NAV per share.
NET ASSET VALUE EVOLUTION USD'000 US$ cps
--------------------------------- -------- -------
IFRS NAV as reported 297,883 97.3
IFRS 9 3,634 1.2
Derivative financial instruments 4,004 1.3
Deferred Tax on Properties 57,419 18.8
EPRA NAV at 30 Jun 2020 362,940 118.6
--------------------------------- -------- -------
EPRA NAV to EPRA NRV adjustment (4,569) (1.5)
EPRA NRV at 30 Jun 2020 358,371 117.1
--------------------------------- -------- -------
Dividend paid FY 2021 (4,780) (1.6)
Portfolio valuations (60,352) (18.8)
Other non-Cash items (8,804) (2.9)
Premium Listing Costs (3,467) (1.1)
Cash profits 23,946 7.8
Part disposal of assets 14,253 4.7
Issue of shares 9,696 (2.8)
EPRA NRV at 30 Jun 2021 328,863 102.4
--------------------------------- -------- -------
Deferred Tax on Properties (55,377) (17.2)
Derivatives (2,627) (0.9)
IFRS NRV at 30 Jun 2021 270,858 84.3
--------------------------------- -------- -------
Treasury
Financing continues to be an integral part of our business model
and maintaining relationship with key financiers is an ongoing
workstream of the Group's Treasury function. Net debt raised in the
period amounted to US$2.6 million versus US$45.4 million in the
comparative prior year. As at 30 June 2021, the Group's
loan-to-value ratio ("LTV") increased to 53.1% (2020: 50.2%) while
cost of debt further reduced to 5.7% (from a weighted average rate
of 5.9% in the comparative year). The Group's fixed interest rates
are equivalent to 45.1% of the total underlying debt (2020: 44.5%)
as at 30 June 2021.
Movement in Debt for the year as at 30 June 2021 as at 30 June 2020
USD'000 USD'000
----------------------------------------- ------------------ ------------------
Balance at the beginning of the year 392,999 346,097
Proceeds of interest bearing-borrowings 43,562 170,278
Overdraft converted to term loan 7,203 -
Loan issue costs incurred (1,520) (4,639)
Amortisation of loan issue costs 2,974 1,999
Foreign currency translation differences 7,548 (1,165)
Interest accrued (1,173) 5,349
Debt settled during the year (41,005) (124,920)
----------------------------------------- ------------------ ------------------
As at 30 June 410,588 392,999
----------------------------------------- ------------------ ------------------
In line with our policy, the Group has successfully refinanced
the majority of the debt becoming due in the next two years.
Although the Group's weighted average debt expiry as at 30 June
2021 was 1.48 years, these actions have resulted in an increase to
1.83 years as at 27 October 2021. In addition, the Group's Treasury
team has negotiated further extensions to the covenant relaxations
provided by the financiers over the COVID-19 period from December
2021 to beyond Q1 2023. Over this period, Group LTV covenant from
our main financiers Absa, Nedbank and Standard Bank of South Africa
have been extended to 55% (from 53%) and Interest Service Cover
Ratio ("ISCR") to 1.8x (from 2.0x cover).
One of the Group's major strategic goals is achieving an LTV of
between 35% to 40%. The recently announced equity perpetual note
and the resultant yield and NAV accretive acquisitions, in
conjunction with the sale of non-core assets and other corporate
actions, are expected to assist the Group in meeting the Board's
near term target of a 45% LTV.
Our multi-bank approach has once again proven to be an effective
approach to funding and banking in general. Post the year ended 30
June 2021, the Group added a new banking partner the International
Financial Corporation (the "IFC") to the list of Grit's financiers.
The total capital exposure to debt providers (net of interest
accrued and unamortised loan issue costs) as at 30 June 2021 is as
follows:
Debt in Debt in Debt in Debt in
Subsidiaries associates Total Subsidiaries associates Total
USD'000 USD'000 USD'000 % USD'000 USD'000 USD'000 %
---------------- --------------- --------------- ------- ------ --------------- --------------- ------- ------
Standard Bank
Group 170,676 - 170,676 37.5% 169,730 - 169,730 38.9%
Bank of China 84,960 - 84,960 18.6% 84,960 - 84,960 19.5%
State Bank of
Mauritius 62,840 8,830 71,670 15.7% 60,483 8,307 68,790 15.8%
Investec Group 47,023 8,830 55,853 12.3% 46,127 8,307 54,434 12.5%
Absa Group 16,179 7,500 23,679 5.2% 16,081 7,500 23,581 5.4%
ABC Banking
Corporation 14,918 - 14,918 3.3% 8,500 - 8,500 2.0%
Nedbank CIB 7,000 3,100 10,100 2.2% - - - 0.0%
Mauritius
Commercial Bank - 8,830 8,830 1.9% - 8,307 8,307 1.9%
Maubank 6,469 - 6,469 1.4% 6,876 - 6,876 1.6%
First National
Bank - 5,294 5,294 1.2% - 4,885 4,885 1.1%
Rand Merchant
Bank - - - 0.0% - 2,661 2,661 0.6%
Housing finance
corporation - 2,209 2,209 0.5% - 2,066 2,066 0.5%
Bank of Gaborone - 1,077 1,077 0.2% - 1,048 1,048 0.2%
---------------- --------------- --------------- ------- ------ --------------- --------------- ------- ------
TOTAL BANK DEBT 410,065 45,670 455,735 100.0% 392,757 43,081 435,838 100.0%
---------------- --------------- --------------- ------- ------ --------------- --------------- ------- ------
The following debt transactions were concluded during and
subsequent to the period under review as a short-term measure in
anticipation of a larger and more strategic balance sheet solution.
The Group has engaged advisors and is currently investigating the
potential for a corporate bond issuance, which it would expect to
pursue in 2022, subject to prevailing market conditions at that
time. The benefits would largely be the extension of debt tenor,
diversification of the Group's funding base and taking advantage of
supportive credit markets in relation to African and frontier
markets issuance.
Subsidiaries (within the financial year):
-- The Group's overdraft facility of EUR6.4m with ABC Banking
Corporation, has been converted into a term loan under Casamance
Holdings with a fixed interest rate of 4.25%, maturing in October
2025.
-- On 17 August 2020, the Group secured a short-term facility of
1 year from Nedbank South Africa to the value of US$7.0m bearing
interest at libor plus 7.5%.
-- Further temporary extensions have been made in this period to the following facilities:
- SBM MUR72.0 million facility from 31 October 2020 - 30 June
2021
- SBM US$20.0 million facility from 31 October 2021 - 31 October
2022
- SBSA EUR26.5 million RCF from 14 August 2021 - 30 June
2022
- Nedbank US$7.0 million RCF for a further 12 month period
- Investec SA US$15.0 million capital repayment extended by
16-months
Subsidiaries (subsequent to the financial year):
-- The Group has extended the MUR72.0 million (or US$1.7
million) Covid facility from the State Bank of Mauritius, to an
evenly amortised 48-month facility.
-- The Group has extended all its financing with the State Bank
of Mauritius ("SBM") to 2025. This applies to the following
facilities:
- Leisure Property North Mauritius Limited (EUR12.2 million,
with interest of 4.25% fixed) - related to the Beachcomber
Assets
- Mara Delta (Mauritius) Property Limited (EUR22.3 million, with
interest of 4.00% fixed) - Related to the Lux Tamassa Asset
- Grit Real Estate Income Group Limited (US$20.0 million, with
interest of 4.00% fixed) - a corporate facility
-- The US$46m facility (EUR31.8 million and US$8.7 million) with
Investec Bank on the AnfaPlace Mall held by Freedom Property Fund
SARL in Morocco has been extended to April 2023. As part of the
terms of the refinance, an amount of US$6.0 million will become due
in the next 12 months.
-- The Group's RCF facility of US$7.0 million held with Nedbank
has been extended to April 2023, with optional capital repayment
conditions, and bearing an interest of 6-month libor + 8.40%.
-- Negotiations are ongoing with regards the refinance
transaction with Bank of China in relation to the US$76.4 million
loan which matures in April 2022.
Associates and Joint Ventures (within the financial year):
-- The Group's RCF facility of US$7.0 million held with Nedbank
has been extended to April 2023, with optional capital repayment
conditions, and bearing an interest of 6-month libor + 8.40%.
Associates and Joint Ventures (subsequent to the financial
year)
-- The BHI syndicated loan of EUR50.0 million has been extended
to April 2023 whereby MCB and SBM have both extended their loans
and additionally SBM has also taken over the Investec portion of
the loan.
The below table provides a detailed analysis of the Property
Portfolio Debt (which includes the debt held within subsidiaries
and associates).
Net Debt Debt Expiry
Opening Forex obtained / Closing Debt Expiry at Signature Property
Sector Balance Movement (paid) Balance WACD at year end date LTV
USD'000 USD'000 USD'000 USD'000 % years years %
--------------- ------------ ------------- ------------ ------------- ----- ------------ ------------ --------
Retail 104,615 2,037 (946) 105,706 5.80% 1.02 1.07 56.7%
Hospitality 63,627 4,433 7,203 75,263 4.21% 0.98 2.65 43.2%
Office 94,634 446 92 95,171 6.62% 2.30 1.99 49.7%
Industrial 13,042 - - 13,042 4.56% 1.57 3.32 36.0%
Corporate
Accommodation 56,905 - - 56,905 6.95% 2.34 2.01 44.5%
LLR portfolio 5,933 437 - 6,370 5.08% 1.75 1.42 23.6%
GREA portfolio - - - - 0.00% n/a
--------------- ------------ ------------- ------------ ------------- ----- ------------ ------------ --------
TOTAL PROPERTY
DEBT 338,756 7,352 6,349 352,458 5.13% 1.56 1.83 46.6%
--------------- ------------ ------------- ------------ ------------- ----- ------------ ------------ --------
Net Debt
Debt Opening Forex obtained / Closing
reconciliation Balance Movement (paid) Balance WACD LTV
USD'000 USD'000 USD'000 USD'000 %%
--------------- ------------ ------------- ------------ ------------- ----- -----------
Corporate debt
in
subsidiaries 97,082 3,891 2,303 103,276
Property debt
in
subsidiaries 295,675 3,758 7,355 306,788
--------------- ------------ ------------- ------------ ------------- ----- ------------
TOTAL DEBT IN
SUBSIDIARIES 392,757 7,649 9,658 410,064 5.70% 53.10%
Property debt
in associates 43,081 2,006 583 45,669 5.10% 42.1%
--------------- ------------ ------------- ------------ ------------- ----- ------------
TOTAL 435,838 11,243 8,652 455,734
--------------- ------------ ------------- ------------ ------------- ----- ------------
Capital commitments
ClubMed
On 27 January 2020, Grit, through its wholly-owned subsidiary
Casamance Holdings Limited (the "Casamance") acquired 100% of the
shares in Société Immobiliére et de Gestion Hôteliére du cap
Skirring ("SIGHC"), the owner of Club Med Cap Skirring on a sale
and lease back basis. The parties agreed that a renovation and
development programme to the property, estimated at EUR25.0
million. The works are to be financed and owned by Grit.
With the onset of COVID-19, Grit and Clubmed are reassessing the
timing and extend of the renovation and the development programme
and have committed to an initial phase amounting to $0.8 million by
December 2021, with further phases being deferred to 2022 and 2023
until there is greater clarity on the re-opening of the hotel.
Should the agreed renovation be further delayed, the lease rate
applicable to the property shall drop from 8% yield to 7% yield (an
impact of EUR0.16 million per annum).
Bollore redevelopment
During the year, the Group has redeveloped the Bollore warehouse
in Mozambique. The remaining capital commitments still to be spent
in the following year amounts to US$1.2 million. The project
funding and management was outsourced to Grit's development
associate, GREA in which the Group holds a 19.98% interest. The
full development costs, expected to be US$7.7 million needs to be
settled by April 2023.
Gateway Real Estate Africa Limited ("GREA")
Having recently been awarded a number of high-quality
development projects over the last 12 months, GREA has now made a
call for the final capital draws from its shareholders. Grit is
required to inject a further US$17.9 million of capital into GREA
before the end of the year if it is to retain its current equity
stake in the company.
Drive in Trading guarantee update
By virtue of the Group's historic listing on the Johannesburg
Stock Exchange, the Company's largest shareholder, the Public
Investment Corporation ("PIC"), facilitated the Group's black
economic empowerment and transformation partner, Drive in Trading
("DIT"), in the acquisition of 23.25 million Grit shares in June
2017 by providing a guarantee against their external debt facility.
Separately, Grit indemnified the PIC for up to 50% of any potential
losses suffered by PIC as a result of the guarantee, capped at
US$17.5 million. In August 2020, following the expiry of the loan
facility, PIC has assumed the position of lender to DIT, and
continues to reserve its rights under the Grit indemnity to call
for cash collateral with four days' notice.
The Board and PIC continue to engage on this aspect and further
details will be published once agreement has been reached with the
PIC.
Grit's share price continues to trade at unprecedented levels of
discount to its Net Asset Value. As a result of the movement in the
share price, the Group has increased its provisions against
potential future losses in the financial year resulting in a
reported provision balance of US$5.4 million as at 30 June 2021 for
the Drive in Trading CRO (with the guaranteed loan being
underpinned by Grit's shares).
Dividend
Dividends per share declared for the year ended 30 June 2021
amounted to US$1.5cps (2020: US$5.25cps), comprising the interim
dividend declared in February 2021. Grit's Board has decided
against declaring a final dividend for the year ended 30 June 2021
due to the capital commitments and emphasis on reducing LTV in the
near term.
The below reconciliation provides further details of the IFRS
statement of comprehensive income and the adjustments made to
provide additional insight into the components of properties held
in joint ventures and associates, as well as the portion
attributable to non-controlling interest (for properties
consolidated by Grit, but part owned by minority partners.
IFRS Income statement to
distribution reconciliation IFRS YTD Split from Associate Split NCI GRIT Economic Interest Distributable Earnings
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Gross property income 49,217 16,015 (5,948) 59,284 56,597
Property operating expenses (8,543) (1,176) 2,170 (7,549) (7,520)
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Net property income 40,674 14,839 (3,778) 51,735 49,077
Other income 169 2,355 (795) 1,729 1,729
Administrative expenses (13,867) (1,861) 927 (14,801) (13,464)
Net impairment charge on
financial assets (7,119) (169) 163 (7,125) (654)
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Profit from operations 19,857 15,164 (3,483) 31,538 36,688
Fair value adjustment on
investment properties (51,297) (7,451) 8,293 (50,455) 144
Fair value adjustment on
other investments - (9) - (9) -
Fair value adjustment on
other financial liability (5,230) (1,604) - (6,834) -
Fair value adjustment on
other financial asset (1,106) - - (1,106) -
Fair value adjustment on
derivative financial
instruments 1,378 - - 1,378 -
Impairment of loans and
other receivables (1,113) (935) - (2,048) -
Corporate restructure costs (3,467) - - (3,467) -
Share-based payment (127) - - (127) -
Share of profits / (loss)
from associates and joint
ventures 583 (583) - - -
Foreign currency (losses) /
gains 2,343 (1,253) (543) 547 -
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Profit before interest and
taxation (38,179) 3,329 4,267 (30,583) 36,832
Interest income 2,690 3,517 (1) 6,206 6,206
Finance charges (25,442) (6,199) 1,867 (29,774) (27,331)
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Profit before taxation (60,931) 646 8,672 (51,612) 18,246
Current tax (1,791) (645) 420 (2,016) (2,016)
Deferred tax 1,346 (1) 357 1,702 -
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Profit after taxation (61,376) (0) 9,449 (51,927) 16,229
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
RBO OCI 42 - - 42 -
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Total comprehensive income (61,334) (0) 9,449 (51,885) 16,229
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Antecedent dividend - - - - -
VAT - - - - 2,364
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Distributable earnings - - - - 18,593
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Profit released/(withheld) - - - - (13,920)
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Total distributable
earnings - - - - 4,673
--------------------------- -------- -------------------- --------- ---------------------- ----------------------
Going Concern
The director's assessment of the Group's and Company's ability
to continue as a going concern is required when producing the
financial statements. As such the Directors have modelled a 'base
case' and a 'severe but plausible downside' of the Group's and
Company's expected liquidity and covenant position for a going
concern assessment period through to June 2023. The process
involved a thorough review of the Group's and Company's risk
register, an analysis of the trading information both pre and post
year end, extensive discussions with the independent property
valuers, a review of the operational indicators within the Group
and economic data available in the countries of operations. All of
this has been done in the context of the ongoing COVID-19 pandemic,
previous experience of the African real estate sector and best
estimates of expectations in the future.
The base case reflects the director's best expectations of the
position going forward. It was modelled on board approved forecasts
over the relevant period. Please refer to note 1.1 for further
details of the base case and a severe but plausible downside
scenarios.
Under the severe but plausible scenario, there are three
circumstances (set out below) in which the Group and Company would
be required to seek additional financing. There can be no guarantee
that such financing would be available to the Group and Company on
terms that are acceptable, or at all. Accordingly, the directors
have concluded that there is a material uncertainty that may cast
significant doubt on the Group's and Company's ability to continue
to operate as a going concern in the assessment period to June
2023. The factors giving rise to this conclusion are:
1. One of the debt facilities (for a net amount of US$47.1m,
being the total loan amount of US$76.4m, less the back-to-back loan
to the property partners of US$29.3m) is required to be refinanced
by April 2022. While the Directors have no reason to believe that
this will not be refinanced, should that not occur the Group and
Company would need to secure additional financing to avoid being in
default, with three related properties, valued at US$115m, being
pledged as security for the loan as well as a group guarantee on
the loan.
2. The Group is currently a guarantor to the Group's Black
Economic Empowerment consortium for an amount of up to US$17.5m
(being 50% of the total loan amount). The Public Investment
Corporation ("PIC"), Grit's 25.4% shareholder, has matched the
balance of the guarantee. Since August 2020, when the PIC took over
the debt from BoAML, the PIC had the ability to call for cash
collateral for the guarantee on four days' notice. Should the PIC
enforce their rights to call for the cash collateral, the Group
would be required to fund this from operational cashflow or with
new, currently uncommitted, debt facilities.
3. The inherent uncertainty in future property valuations as a
result of the COVID-19 pandemic are such that in the event that
property valuations across the portfolio decrease more severely or
quickly than expected, even after taking mitigating actions such as
stopping cash dividends, the Group may be in breach of some
individual property and Group wide covenants and would need to
negotiate a waiver with its lenders and, or, pay down debt through
either existing or new currently uncommitted facilities to avoid
borrowings becoming payable immediately.
Notwithstanding the material uncertainty detailed above and
taking into account the results of the analysis and the various
mitigating action available to the Company and the Group, the Board
has concluded that it is appropriate to prepare the financial
statements on the going concern basis. The financial statements do
not contain the adjustments that would be necessary if the Company
and the Group were unable to continue as a going concern.
Leon van de Moortele
Chief Financial Officer
29 October 2021
PRINCIPAL RISKS AND UNCERTAINTIES
Grit has a detailed risk management framework in place that is
reviewed annually and duly approved by the Risk Committee and the
Board. Through this risk management framework, the Company has
developed and implemented appropriate frameworks and effective
processes for the sound management of risk.
The principal risks and uncertainties facing the Group as at 30
June 2021 are set out on pages 24 to 31 of the 2021 Integrated
Annual Report together with the respective mitigating actions and
potential consequences to the Group's performance in terms of
achieving its objectives. These principal risks are not an
exhaustive list of all risks facing the Group but are a snapshot of
the Company's main risk profile as at year end.
The Board has reviewed the principal risks categories and
existing mitigating actions and are satisfied that the existing
mitigation actions remain appropriate to manage them.
STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The directors are responsible for preparing financial statements
for each financial year which give a true and fair view, in
accordance with applicable Guernsey law and International Financial
Reporting Standards , of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
those financial statements, the directors are required to :
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors confirm that they have complied with the above
requirements in preparing the financial statements.
directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the
financial statements comply with The Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
So far as the directors are aware, there is no relevant audit
information of which the Company's auditors are unaware, and each
director has taken all the steps that he or she ought to have taken
as a director in order to make himself or herself aware of any
relevant audit information and to establish that the Company's
auditors are aware of that information.
Directors' confirmations
The Directors consider that the Integrated Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
position, performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
pages 66 to 69 confirm that, to the best of their knowledge:
-- the Group and Company financial statements, which have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies (Guernsey) Law
2008, give a true and fair view of the assets, liabilities,
financial position and loss of the Group and profit of the Company;
and
-- the Strategic report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
The financial statements on pages 118 to 211 were approved by
the Board of Directors and signed on its behalf by:
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF INCOME
Audited for the year ended Audited for the year ended
30 June 2021 30 June 2020
Notes US$'000 US$'000
------------------------------------------------------- ----- -------------------------- --------------------------
Gross property income 49,217 48,534
Property operating expenses (8,543) (8,985)
-------------------------- --------------------------
Net property income 40,674 39,549
Other income 169 4,132
Administrative expenses (13,867) (20,131)
Net impairment charge on financial assets (7,119) (4,633)
-------------------------- --------------------------
Profit from operations 19,857 18,917
Fair value adjustment on investment properties (51,441) (44,523)
Contractual receipts from vendors of investment
properties 2 144 3,305
------------------------------------------------------- ----- -------------------------- --------------------------
Total fair value adjustment on investment properties (51,297) (41,218)
Fair value adjustment on other investments - 591
Corporate restructure costs (3,467) -
Fair value adjustment on other financial liability (5,230) (4,224)
Fair value adjustment on other financial asset (1,106) -
Fair value adjustment on derivative financial
instruments 1,378 (3,961)
Share-based payment expense (127) (109)
Share of profits from associates and joint ventures 3 583 6,698
Impairment of loans and other receivables (1,113) (6,883)
Gain from bargain purchase on associates - 178
Foreign currency losses 2,343 (2,933)
Loss before interest and taxation (38,179) (32,944)
Interest income 2,690 4,752
Finance costs (25,442) (25,674)
Loss for the year before taxation (60,931) (53,866)
Taxation 7 (445) (13,382)
Loss for the year after taxation (61,376) (67,248)
Loss attributable to:
Equity shareholders (51,927) (63,115)
Non-controlling interests (9,449) (4,133)
(61,376) (67,248)
------------------------------------------------------- ----- -------------------------- --------------------------
Basic and diluted (losses) / earnings per ordinary
share (cents) 10 (16.54) (20.85)
------------------------------------------------------- ----- -------------------------- --------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited for Audited for
the year ended the year ended
30 June 2021 30 June 2020
US$'000
-------------------------------------------------------------- --------------- ---------------
Loss for the year (61,376) (67,248)
-------------------------------------------------------------- --------------- ---------------
Retirement benefit obligation 42 209
-------------------------------------------------------------- --------------- ---------------
Profit/(loss) on translation of functional currency 7,005 (4,036)
-------------------------------------------------------------- --------------- ---------------
Other comprehensive income/(expense) that may be reclassified
to profit or loss 7,047 (3,827)
Total comprehensive (expense)/income relating to the
year (54,329) (71,075)
-------------------------------------------------------------- --------------- ---------------
Attributable to:
Equity shareholders (46,511) (66,942)
Non-controlling interests (7,818) (4,133)
-------------------------------------------------------------- --------------- ---------------
(54,329) (71,075)
-------------------------------------------------------------- --------------- ---------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited as at Audited as at
30 June 2021 30 June 2020
Notes US$'000 US$'000
--------------------------------------------------- ----- ------------- -------------
Assets
Non-current assets
Investment properties 2 549,491 577,222
Deposits paid on investment properties 2 5,698 4,500
Property, plant and equipment 2,448 2,907
Intangible assets 480 568
Investments in associates and joint ventures 3 167,492 161,301
Other investments 1 1
Related party loans receivable - 3
Other loans receivable 4 - 39,575
Trade and other receivables 2,166 2,858
Deferred tax 20,067 24,471
--------------------------------------------------- -----
Total non-current assets 747,843 813,406
--------------------------------------------------- ----- ------------- -------------
Current assets
Trade and other receivables 18,946 24,993
Current tax refundable 1,440 697
Related party loans receivable 197 138
Other loans receivable 4 37,303 2,846
Derivative financial instruments 87 39
Cash and cash equivalents 4,890 3,578
--------------------------------------------------- -----
Total current assets 62,863 32,291
--------------------------------------------------- ----- ------------- -------------
Total assets 810,706 845,697
--------------------------------------------------- ----- ------------- -------------
Equity and liabilities
Total equity attributable to ordinary shareholders
Ordinary share capital 463,842 454,145
Treasury shares reserve (18,406) (18,406)
Foreign currency translation reserve 1,495 (4,072)
Accumulated losses (176,073) (133,784)
--------------------------------------------------- ----- ------------- -------------
Equity attributable to owners of the Company 270,858 297,883
--------------------------------------------------- ----- ------------- -------------
Preference share capital 25,481 -
Non-Controlling interests (17,935) (614)
--------------------------------------------------- ----- ------------- -------------
Total equity 278,404 297,269
--------------------------------------------------- ----- ------------- -------------
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840
Proportional shareholder loans 17,582 9,615
Interest-bearing borrowings 5 215,565 337,620
Obligations under leases 750 905
Related party loans payable 648 3,918
Deferred tax liability 51,720 57,419
--------------------------------------------------- ----- ------------- -------------
Total non-current liabilities 299,105 422,317
--------------------------------------------------- ----- ------------- -------------
Current liabilities
Interest-bearing borrowings 5 195,023 55,379
Obligations under leases 205 254
Trade and other payables 24,843 23,220
Current tax payable 1,438 2,002
Derivative financial instruments 2,714 4,043
Related party loans payable 91 27,138
Other financial liability 6,307 4,868
Bank overdrafts 2,576 9,207
--------------------------------------------------- ----- ------------- -------------
Total current liabilities 233,197 126,111
--------------------------------------------------- ----- ------------- -------------
Total liabilities 532,302 548,428
--------------------------------------------------- ----- ------------- -------------
Total equity and liabilities 810,706 845,697
--------------------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited as at Audited as at
30 June 2021 30 June 2020
Notes US$'000 US$'000
------------------------------------------------------------------------------ ------ ------------- -------------
Cash generated from operations 19,885 7,661
-------------------------------------------------------------------------------------- ------------- -------------
Acquisition of, and additions to, investment properties (10,068) (42,573)
Deposits (paid) / refunded on investment properties (550) 4,000
Additions to property, plant and equipment (92) (213)
Additions to intangible assets (88) (518)
Additions other investments - (1)
Acquisition of associates and joint ventures (8,493) (2,335)
Dividends and interest received from associates and joint ventures 6,361 7,756
Interest received 1,488 4,635
Proceeds from partial disposal of property, plant and equipment 5,358 -
Proceeds from disposal of property, plant and equipment 122 1
Related party loan receivables (61) -
Other loans repayment received - 10,241
Related party loan payables (4,857) 16,221
Proceeds from proportional shareholder loans 7,726 -
Proportional shareholder loans received from associates 1,560 1,614
Other loans advanced 64 (278)
Net cash utilised in investing activities (1,530) (1,450)
-------------------------------------------------------------------------------------- ------------- -------------
Proceeds from the issue of ordinary shares 9,810 -
Share issue expenses (113) (406)
Dividends paid to non-controlling shareholders (419) (1,062)
Ordinary dividends paid (4,778) (36,479)
Proceeds from interest bearing borrowings 50,765 170,278
Settlement of interest-bearing borrowings (41,005) (124,920)
Finance costs (23,906) (25,019)
Payments of leases (274) (338)
Net cash (utilised) / generated from financing activities (9,920) (17,946)
-------------------------------------------------------------------------------------- ------------- -------------
Net movement in cash and cash equivalents 8,435 (11,735)
-------------------------------------------------------------------------------------- ------------- -------------
Cash at the beginning of the year (5,629) 6,674
Effect of foreign exchange rates (492) (568)
-------------------------------------------------------------------------------------- ------------- -------------
Total cash and cash equivalents (including overdrafts) at the end of the year 2,314 (5,629)
-------------------------------------------------------------------------------------- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Treasury currency
Ordinary shares translation Accumulated Preference Non-controlling Total
Share capital reserve reserve losses share capital interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Balance as at 1
July 2019 443,259 (18,406) (36) (35,022) 4,581 394,376
Loss for the
year - - - (63,115) - (4,133) (67,248)
Other
comprehensive
expense for the
year - - (4,036) 209 - - (3,827)
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Total
comprehensive
expense - - (4,036) (62,906) (4,133) (71,075)
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Share based
payments - - - 109 - - 109
Ordinary
dividends paid - - - (35,965) - - (35,965)
Ordinary shares
issued 11,292 - - - - - 11,292
Share issue
expenses (406) - - - - - (406)
Dividends paid
to
non-controlling
shareholders - - - - - (1,062) (1,062)
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Balance as at 30
June 2020 454,145 (18,406) (4,072) (133,784) - (614) 297,269
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Balance as at 1
July 2020 454,145 (18,406) (4,072) (133,784) - (614) 297,269
Loss for the
year - - - (51,927) - (9,449) (61,376)
Other
comprehensive
expense for the
year - - 5,374 42 - 1,631 7,047
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Total
comprehensive
expense - - 5,374 (51,885) - (7,818) (54,329)
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Share based
payments - - - 127 - - 127
Ordinary
dividends paid - - - (4,780) - - (4,780)
Ordinary shares
issued 9,810 - - - - - 9,810
Share issue
expenses (113) - - - - - (113)
Transaction with
non-controlling
interests
without change
in control - - 193 14,249 - (9,084) 5,358
Preference
shares issued - - - - 25,481 - 25,481
Dividends paid
to
non-controlling
shareholders - - - - - (419) (419)
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
Balance as at 30
June 2021 463,842 (18,406) 1,495 (176,073) 25,481 (17,935) 278,404
---------------- ------------- ------------- ------------- ------------- ------------- --------------- --------
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these separate and consolidated financial statements are set out
below.
1.1 Basis of preparation
The abridged financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as issued by the IASB; the Financial Pronouncements as issued by
Financial Reporting Standards Council and the LSE and SEM Listings
Requirements. The financial statements have been prepared on the
going-concern basis and were approved for issue by the board on 28
October 2021.
Going Concern
The director's assessment of the Group's and Company's ability
to continue as a going concern is required when producing the
financial statements. As such the Directors have modelled a 'base
case' and a 'severe but plausible downside' of the Group's and
Company's expected liquidity and covenant position for a going
concern assessment period through to June 2023. The process
involved a thorough review of the Group's and Company's risk
register, an analysis of the trading information both pre and post
year end, extensive discussions with the independent property
valuers, a review of the operational indicators within the Group
and economic data available in the countries of operations. All of
this has been done in the context of the ongoing COVID-19 pandemic,
previous experience of the African real estate sector and best
estimates of expectations in the future.
The base case reflects the director's best expectations of the
position going forward. It was modelled on board approved forecasts
over the relevant period The base case scenario includes the
Group's and Company's financial projections including:
1. Modelling of the Group's contractual lease income, which at
30 June 2021 had a weighted average lease expiry of 4.8 years, and
associated contractual lease escalations which equate to 3.8% per
annum on a weighted average basis across the portfolio. The Group's
revenue was adjusted for tenant support already provided and
expectation for potential further concessions in specific sectors
as a result of COVID-19;
2. Expected take up of vacant space through the ordinary letting
activities of the Group and current leasing negotiations;
3. Debt facilities falling due during the period being
refinanced in the ordinary course of business, specifically the
April 2022 facility with Bank of China on the Zambian malls;
4. Contractual maturity of debt facilities, which at signature
date had a weighted average maturity profile of 1.8 years and
associated weighted average cost of debt of 5.7%;
5. Drive in Trading guarantee assumed to be paid up in August
2022, followed by the security being realised by October 2022;
and
6. With the exception of the retail and hospitality sectors, the
model assumes trading returns to pre-COVID-19 levels. Retail is
modelled to have a structural change to base rentals which only
return to pre-COVID-19 levels beyond the going concern assessment
period while hospitality assets are modelled to return to
pre-COVID-19 levels at the expected dates of the applicable borders
being open for travellers.
A summary of the key assumptions made in the severe but
plausible scenario are as follows:
1. Reduced revenue as a result of potential rental concessions
provided to a range of tenants, particularly in the retail and
hospitality sectors, and extended assumptions on vacancy take
up:
-- A delay in vacancy take up of 12 months for all vacant space
for the retail sector, and 6 months for all other sectors;
-- Average of 5% additional rental concession on all
non-essential services tenants in the retail sector; and
-- Average rental concessions and deferments extensions of 6
months on the hospitality tenants who have yet to fully commence
normalised rental payments.
2. Cumulative decline in property valuations over the base case scenario of:
-- A decline in total property valuations of 10.5% to June 2022
versus the base case (predominately weighted to the retail sector
of 16% and the hospitality sector of 21%, both inclusive of the
foreign currency downside impacts); and
-- Total property valuation decline of 10.3% to June 2023 versus
the base case (predominately weighted to the retail sector of 9%
and the hospitality sector of 12%, both inclusive of the foreign
currency downside impacts)
3. Exchange Rates:
-- A 11% weakening of the Euro against the US Dollar over the next 18 months; and
-- Negative movements in the local African currencies against
the US Dollar ranging from 9% to 48% (in the case of the Zambian
Kwacha) over the analysis period.
4. Facilities and Finance costs:
-- All uncommitted debt facilities (i.e. overdraft facilities or
other facilities where the financier has the right to unilaterally
amend the terms of the agreement) are assumed to be repaid within
the relevant facilities' notice period.
-- An increased cost of funding ranging from 0.25% to 0.5% on
debt facilities over the next 18 months (excluding facilities
recently negotiated).
5. Dividends:
-- No dividends are paid over the going concern period to
maintain liquidity as a result of the assumptions above.
6. Drive in Trading Guarantee:
-- The Drive in Trading Guarantee is called in April 2022,
followed by the realisation of the security by December 2022.
7. The assumptions applied above are made on the basis that the
COVID-19 impact is extended beyond the assumptions in the base
case. This extended recovery period over the base case has an
impact as follows:
-- Revenue in year to June 2022 and 2023 declines by 5.4% and
9.6% respectively over the base case's assumed recovery period
which compares to the modest growth of 2% in revenue over the June
2021 financial year; and
-- Property devaluation of c.10% over both period versus the
base case which compares to the full year impact in the year to 30
June 2021 of 7.8%
Under the severe but plausible scenario, there are three
circumstances (set out below) in which the Group and Company would
be required to seek additional financing. There can be no guarantee
that such financing would be available to the Group and Company on
terms that are acceptable, or at all. Accordingly, the directors
have concluded that there is a material uncertainty that may cast
significant doubt on the Group's and Company's ability to continue
to operate as a going concern in the assessment period to June
2023. The factors giving rise to this conclusion are:
1. One of the debt facilities (for a net amount of US$47.1
million, being the total loan amount of US$76.4 million, less the
back-to-back loan to the property partners of US$29.3 million) is
required to be refinanced by April 2022. While the Directors have
no reason to believe that this will not be refinanced, should that
not occur the Group and Company would need to secure additional
financing to avoid being in default, with three related properties,
valued at US$115.3 million, being pledged as security for the loan
as well as a group guarantee on the loan.
2. The Group is currently a guarantor to the Group's Black
Economic Empowerment consortium for an amount of up to US$17.5
million (being 50% of the total loan amount). The Public Investment
Corporation ("PIC"), Grit's 25.5% shareholder, has matched the
balance of the guarantee. Since August 2020, when the PIC took over
the debt from BoAML, the PIC had the ability to call for cash
collateral for the guarantee on four days' notice. Should the PIC
enforce their rights to call for the cash collateral, the Group
would be required to fund this from operational cashflow or with
new, currently uncommitted, debt facilities.
3. The inherent uncertainty in future property valuations as a
result of the COVID-19 pandemic are such that in the event that
property valuations across the portfolio decrease more severely or
quickly than expected, even after taking mitigating actions such as
stopping cash dividends, the Group may be in breach of some
individual property and Group wide covenants and would need to
negotiate a waiver with its lenders and, or, pay down debt through
either existing or new currently uncommitted facilities to avoid
borrowings becoming payable immediately.
Notwithstanding the material uncertainty detailed above and
taking into account the results of the analysis and the various
mitigating action available to the Company and the Group, the Board
has concluded that it is appropriate to prepare the financial
statements on the going concern basis. The financial statements do
not contain the adjustments that would be necessary if the Company
and the Group were unable to continue as a going concern.
Functional and presentation currency
The consolidated financial statements are prepared and are
presented in United States Dollars (US$) which is also the
functional and presentational currency of the company. Amounts are
rounded to the nearest thousand, unless otherwise stated. Some of
the underlying subsidiaries and associates have different
functional currencies other than the US$ which is predominantly
determined in the country in which they operate.
Presentation of alternative performance measures
The group presents certain alternative performance measures on
the face of the income statement. Revenue is shown on a
disaggregated basis, split between gross rental income and the
straight line rental income accrual. Additionally, the total fair
value adjustment on investment properties is presented on a
disaggregated basis to show the impact of contractual receipts from
vendors separately from other fair value movements. These are non
IFRS measures and supplement the IFRS information presented. The
directors believe that the presentation of this information
provides useful insight to users of the financial statements and
assists in reconciling the IFRS information to industry-wide EPRA
metrics.
1.2 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is a person or group that is
responsible for allocating resources and assessing performance of
the operating segments. The Group has determined the board as its
chief operating decision-maker as it is the board that makes the
Group's strategic decisions. Each operating entity has its own
Segmental and Geographical allocation, and it is not allocated to
more than one sector.
1.3 Critical Judgements and estimates
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Group's accounting policies. The estimates and assumptions relating
to the fair value of investment properties in particular, have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the subsequent financial year.
Fair value adjustments do not affect the determination of
distributable earnings but have an effect on the net asset value
per share presented on the statement of financial position to the
extent that such adjustments are made to the carrying values of
assets and liabilities.
Judgements
The principal areas where such judgements have been applied
are:
Unconsolidated structured entity
Drive in Trading (DiT), a B-BBEE consortium, secured a facility
of US$33.4 million from the Bank of America N.A (UK Branch)
("BoAML") to finance its investment in Grit. The BoAML facility was
granted to DiT after South Africa's Government Employees Pension
Fund (GEPF), represented by Public Investment Corporation SOC
Limited ("PIC"), provided a guarantee to BoAML in the form of a
Contingent Repurchase Obligation ("CRO") for up to US$35 million.
The terms of the CRO obligate PIC to acquire the loan granted to
DiT should DiT default under the BoAML facility.
In order to facilitate the above, the Group agreed to de-risk
50% of PIC's US$35 million exposure to the CRO, by granting PIC a
guarantee whereby should BoAML enforce the CRO, the Group would
indemnify PIC for up to 50% of the losses, capped at US$17.5
million, following the sale of the underlying securities, being the
shares held by DiT in Grit.
Given the unusual structure of the transaction, the Group has
determined that DiT has limited and predetermined activities and
can be considered a "structured entity" under IFRS 10 as the
"design and purpose" of DiT was to fund Grit rights issue and at
the same time enable Grit to obtain B-BBEE credentials.
As the Group does not have both, power to direct the activities
of DiT and an exposure to variable returns, the Group has exercised
judgement on not to consolidate DiT but disclose it as an
unconsolidated structured entity due to DiT being a related
party.
Acquisition of Letlole La Rona Limited
On 20 November 2019 Grit announced the acquisition of an
additional 23.75% interest in Botswana Stock Exchange listed 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 at the time
EPRA NAV per share, less dividend declared, of US$140cps.
The transaction for the 9,839,511 shares was recorded at the
ruling share price of the day of US$1.19, resulting in the
acquisition being recorded at US$11.3m. 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.
Freedom Asset Management (FAM) as a subsidiary
The Group has considered Freedom Asset Management (FAM) to be
its subsidiary for consolidation purposes due to the Group's
implied control of FAM, as the Group has ability to control the
variability of returns of FAM and has the ability to affect those
returns through its power of FAM. The Group does not own any
interest in FAM and does not benefit from any profits of FAM nor is
it liable for any losses incurred by FAM.
Grit Executive Share Trust (GEST) as a subsidiary
The Group has considered Grit Executive Share Trust (GEST) to be
its subsidiary for consolidation purposes due to the Group's
implied control of GEST, as the Group's ability to appoint the
majority of the trustees and to control the variability of returns
of GEST. The Group does not own any interest in GEST but is exposed
to the credit risk and losses of (GEST) as the Group shall bear any
losses sustained by GEST and shall be entitled to receive and be
paid any profits made in respect of the purchase, acquisition, sale
or disposal of unawarded shares in the instance where shares revert
back to GEST. No non-controlling interest has been accounted for in
the current year.
Gateway Real Estate Africa Ltd (GREA) as an associate
The Group has considered Gateway Real Estate Africa Ltd (GREA)
to be its associate for consolidation purposes due to the Group's
significant influence of GREA, as the Group has a direct and
indirect ability to appoint some members to the board. The Group
owns 19.98% of GREA and benefit from profits of GREA. The Group
also has the ability to exercise significant influence to
participate in the financial and operating policy decisions of the
GREA but do not control or jointly control this policy as the CEO
of the Group is also on the investment committee of GREA and has a
close working relationship and history with Mr Pearson (MD of
GREA).
Acquisition of investment properties
Where investment properties are acquired through the acquisition
of corporate interests, the directors have regard to the substance
of the assets and activities of the acquired entity in determining
whether the acquisition represents the acquisition of a
business.
Where such acquisitions are not judged to be an acquisition of a
business under IFRS 3, the transactions are accounted for as if the
Group had acquired the underlying investment property directly,
together with any associated assets and liabilities. Accordingly,
no goodwill arises, rather the cost of acquiring the corporate
entity is allocated between the identifiable assets and liabilities
of the entity, based on their relative fair values at the
acquisition date.
The acquisition of Club Med Cap Skirring closed on 27 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. This was accounted as an asset acquisition.
Investments, associates and joint ventures
As an acquiring group, management needs to ensure that all
acquisitions are appropriately classified in the financial
statements. Depending on the shareholding and other factors there
can be some judgement as to whether the acquisition is shown as an
investment, associate, joint venture or consolidated as a
subsidiary. In particular the Group holds interests of 50% of the
total stake in multiple investments. The Group is not a controlling
party in any of the arrangements. The Company applies judgement to
determine whether the investment is classified as a joint venture
or an associate by considering the guidance provided and the
prevailing operational arrangements. The Group has exercised
judgement that, for all investments classified as joint ventures,
the arrangements will meet the definition of a joint arrangement
because there is no ultimate controlling party and the control is
shared. Therefore, the Group has accounted for these investments as
joint ventures.
Estimates
The principal areas where such estimations have been made
are:
Fair value of investment properties
The fair value of investment properties is determined using a
combination of the discounted cash flows method and the income
capitalisation valuation method, using assumptions that are based
on market conditions existing at the end of the relevant reporting
year. Material valuation uncertainty due to Novel Corona virus
("COVID-19"):
The outbreak of COVID-19, declared by the World Health
Organisation as a "Global Pandemic" on the 11th March 2020, has and
continues to impact many aspects of daily life and the global
economy - with some real estate markets having experienced lower
levels of transactional activity and liquidity. Travel, movement
and operational restrictions have been implemented by many
countries. In some cases, "lockdowns" have been applied to varying
degrees and to reflect further "waves" of COVID-19; although these
may imply a new stage of the crisis, they are not unprecedented in
the same way as the initial impact. The pandemic and the measures
taken to tackle COVID-19 continue to affect economies and real
estate markets globally. Nevertheless, as at the valuation date
property markets are mostly functioning again, with transaction
volumes and other relevant evidence at levels where an adequate
quantum of market evidence exists upon which to base opinions of
value. For the avoidance of doubt this explanatory note has been
included to ensure transparency and to provide further insight as
to the market context under which the valuation opinion was
prepared. In recognition of the potential for market conditions to
move rapidly in response to changes in the control or future spread
of COVID-19 we highlight the importance of the valuation date.
There has been no change in the valuation methodology used for
investment property as a result of COVID -19.
Fair value of financial instruments
The Group have estimated the value of its obligation arising
from its guarantee to de-risk 50% of PIC's exposure to the BoAML
CRO. The Group's obligation is based on the occurrence or
non-occurrence of uncertain future events (the probability of DiT
defaulting on the BoAML facility). Therefore, the fair value of the
obligation was based on the probability of DiT defaulting on the
facility (management has assessed the risk of default as low for
the years endings 30 June 2021 and 30 June 2020.)
Taxation
Judgements and estimates are required in determining the
provision for income taxes due to the complexity of legislation.
There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of
business. The Group recognises liabilities for anticipated tax
inspection issues in the jurisdictions in which it operates based
on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the
income tax and deferred tax provisions in the year in which such
determination is made.
The Group recognises the net future tax benefit related to
deferred income tax assets to the extent that it is probable that
the deductible temporary differences will reverse in the
foreseeable future. Assessing the recoverability of deferred tax
assets requires the Group to make significant estimates related to
expectations of future taxable income. Estimates of future taxable
income are based on forecast cash flows from operations and the
application of existing tax laws in each relevant jurisdiction. To
the extent that future cash flows and taxable income differ
significantly from estimates, the ability of the Group to realise
the net deferred tax assets recorded at the end of the reporting
year could be impacted.
COVID-19
Certain estimates have been made taking into the consideration
of the COVID-19 epidemic. Refer to the Going Concern under Note 1.1
for the estimates made.
2. INVESTMENT PROPERTIES
Audited as at Audited as at
30 June 2021 30 June 2020
US$'000 US$'000
---------------------------------------------------------------------------------------- ------------- -------------
Net carrying value of properties 549,491 577,222
Movement for the year excluding straight-line rental income accrual, lease incentive and
right
of use of land
Investment property at the beginning of the year 565,773 567,731
Acquisitions of investment properties(1) - 18,848
Transfer to right of use asset - (88)
Other capital expenditure and construction 10,130 27,030
Foreign currency translation differences 10,971 (3,225)
Revaluation of properties at end of year (51,297) (41,218)
Contractual receipts from vendors of investment properties (reduction in purchase price) (144) (3,305)
---------------------------------------------------------------------------------------- ------------- -------------
As at 30 June 535,433 565,773
---------------------------------------------------------------------------------------- ------------- -------------
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 535,433 565,773
Right of use of land 409 456
Lease incentive 7,027 4,680
Straight-line rental income accrual 6,622 6,313
---------------------------------------------------------------------------------------- ------------- -------------
Total valuation of investment properties directly held by the Group 549,491 577,222
---------------------------------------------------------------------------------------- ------------- -------------
1. Acquisitions of investment properties
The acquisition of Club Med Cap Skirring closed on 27 January 2020, through the acquisition
of 100% of the equity of Société Immobiliére et de Gestion Hôteliére
du Cap Skirring ("SIGHC") for EUR16.2m in total. This was accounted as an asset acquisition.
Investment property pledged as security
Certain of the Group's investment property has been pledged as
security for interest-bearing borrowings (note 6) as follows:
-- Mozambican investment properties with a market value of
US$294.1 million are mortgaged to Standard Bank of South Africa to
secure debt facilities amounting to US$140.0 million (2020:
Mozambican investment properties with a market value of
US$308.0million were mortgaged to Standard Bank of South Africa to
secure debt facilities amounting to US$140.0 million).
-- Moroccan investment properties with a market value of US$79.5
million (2020: US$89.4 million) are mortgaged to Investec Bank
South Africa to secure debt facilities amounting to US$46.7 million
(2020: US$45.7 million).
-- Mauritian investment properties with a market value of
US$65.4 million (2020: US$63.6 million) are mortgaged to ABSA Bank
Mauritius to secure debt facilities amounting to US$7.5 million
(2020: US$7.1 million) and State Bank of Mauritius to secure debt
facilities amounting to US$26.6 million (2020: US$25.0
million).
-- Kenyan investment properties with a market value of US$27.2
million (2020: US$24.4 million) are mortgaged to Bank of China to
secure debt facilities amounting to US$8.6 million (2020: US$8.6
million).
-- Zambian investment properties with a market value of US$46.2
million (2020: US$55.1 million) are mortgaged to Bank of China to
secure debt facilities amounting to US$28.7 million (2020: US$28.7
million).
-- Ghanaian investment properties with a market value of US$16.4
million (2020: US$19.2 million) are mortgaged to Barclays Bank
Ghana Limited to secure debt facilities amounting to US$8.7 million
(2020: US$9.0 million).
Valuation policy and methodology for investment properties held
by the Group, associates and joint ventures
Investment properties are valued at each reporting date with
independent valuations performed every year by independent
professional reputable valuation experts who have sufficient
expertise in the jurisdictions where the properties are located.
All valuations that are performed in the functional currency of a
group entity that is not United States Dollars are converted to
United States Dollars at the effective closing rate of exchange.
All valuations have been undertaken by the Royal Institute of
Chartered Surveyors' ("RICS's"), accredited and registered valuers,
in accordance with the version of the RICS Valuation Standards that
were in effect at the relevant valuation date and are further
compliant with International Valuation Standards. Market values
presented by valuers have also been confirmed by the respective
valuers to be fair value in terms of IFRS.
In respect of the majority of the Mozambican investment
properties, independent valuations were performed at 30 June 2021
by REC Chartered Surveyors (2020: REC Chartered Surveyors) using
the discounted cash flow method (2020: discounted cash flow
method).
The remainder of the portfolio including investment properties
held by associates and joint ventures was independently valued at
30 June 2021 by Knight Frank Chartered Surveyors (2020: Knight
Frank Chartered Surveyors), using the discounted cash flow method
with the exception of freehold land which is valued by comparable
method.
Material valuation uncertainty due to Novel Coronavirus
("COVID-19"): The outbreak of COVID-19, declared by the World
Health Organisation as a "Global Pandemic" on the 11th March 2020,
has and continues to impact many aspects of daily life and the
global economy - with some real estate markets having experienced
lower levels of transactional activity and liquidity. Travel,
movement and operational restrictions have been implemented by many
countries. In some cases, "lockdowns" have been applied to varying
degrees and to reflect further "waves" of COVID-19; although these
may imply a new stage of the crisis, they are not unprecedented in
the same way as the initial impact. The pandemic and the measures
taken to tackle COVID-19 continue to affect economies and real
estate markets globally. Nevertheless, as at the valuation date
property markets are mostly functioning again, with transaction
volumes and other relevant evidence at levels where an adequate
quantum of market evidence exists upon which to base opinions of
value. For the avoidance of doubt this explanatory note has been
included to ensure transparency and to provide further insight as
to the market context under which the valuation opinion was
prepared. In recognition of the potential for market conditions to
move rapidly in response to changes in the control or future spread
of COVID-19 we highlight the importance of the valuation date.
There has been no change in the valuation methodology used for
investment property as a result of COVID-19.
Audited Audited
Summary of Most recent Valuer (for the as at as at
valuations by independent most recent 30 June 2021 30 June 2020
reporting date valuation date valuation) Sector Country US$'000 US$'000
----------------- ----------------- ----------------- ------------------ ----------- ------------- -------------
Commodity House
Phase I building 30-Jun-21 REC Office Mozambique 47,214 48,095
Commodity House
Phase II
building 30-Jun-21 REC Office Mozambique 19,047 19,348
Hollard Building 30-Jun-21 REC Office Mozambique 20,816 21,332
Vodacom Building 30-Jun-21 REC Office Mozambique 49,624 49,438
Zimpeto Square 30-Jun-21 REC Retail Mozambique 4,587 5,848
Bollore Warehouse 30-Jun-21 REC Light industrial Mozambique 9,012 5,795
ABSA House 30-Jun-21 Knight Frank Office Mauritius 13,109 13,825
Anfa Place Mall 30-Jun-21 Knight Frank Retail Morocco 79,535 89,363
Tamassa Resort 30-Jun-21 Knight Frank Hospitality Mauritius 52,232 49,734
Vale Housing
Compound 30-Jun-21 REC Accommodation Mozambique 57,546 70,654
Imperial
Distribution
Centre 30-Jun-21 Knight Frank Light industrial Kenya 24,170 21,370
Mara Viwandani 30-Jun-21 Knight Frank Light industrial Kenya 3,050 3,070
Mall de Tete 30-Jun-21 REC Retail Mozambique 15,952 19,991
Acacia Estate 30-Jun-21 REC Accommodation Mozambique 70,353 67,540
5th Avenue
Building 30-Jun-21 Knight Frank Office Ghana 16,440 19,210
Mukuba Mall(4) 30-Jun-21 Knight Frank Retail Zambia 46,210 55,130
Club Med Cap
Skirring Resort 30-Jun-21 Knight Frank Hospitality Senegal 20,594 17,479
Total valuation of investment properties directly held by the Group 549,491 577,222
Deposits paid on Imperial Distribution Centre Phase 2 2,148 1,500
Deposits paid on Capital Place Limited 3,550 3,000
Total deposits paid on investment properties 5,698 4,500
--------------------------------------------------------------------------- ----------- ------------- -------------
Total carrying value of investment properties including deposits paid 555,189 581,722
--------------------------------------------------------------------------- ----------- ------------- -------------
Investment properties held within associates and joint ventures - Group share
Buffalo Mall -
Buffalo Mall
Naivasha Limited
(50%) 30-Jun-21 Knight Frank Retail Kenya 5,441 6,395
Kafubu Mall -
Kafubu Mall
Limited (50%) 30-Jun-21 Knight Frank Retail Zambia 9,623 9,658
CADS II Building
- CADS
Developers
Limited (50%) 30-Jun-21 Knight Frank Office Ghana 15,075 16,920
Cosmopolitan
Shopping Centre
- Cosmopolitan
Shopping Centre
Limited (50%) 30-Jun-21 Knight Frank Retail Zambia 24,945 31,375
Canonniers,
Mauricia and
Victoria Resorts
and Spas -
Beachcomber
Hospitality
(44.42%) 30-Jun-21 Knight Frank Hospitality Mauritius 101,594 95,066
Capital Place -
Capital Place
Limited (50%) 30-Jun-21 Knight Frank Office Ghana 10,150 11,210
Letlole La Rona
Limited (30%) -
19 Investment
properties 30-Jun-21 Knight Frank Light industrial Botswana 18,647 15,536
Letlole La Rona
Limited (30%) -
1 Investment
property 30-Jun-21 Knight Frank Hospitality Botswana 209 193
Letlole La Rona
Limited (30%) -
2 Investment
properties 30-Jun-21 Knight Frank Retail Botswana 5,325 4,957
Letlole La Rona
Limited (30%) -
1 Investment
property 30-Jun-21 Knight Frank Office Botswana 1,517 1,316
Letlole La Rona
Limited (30%) -
1 Investment
property 30-Jun-21 Knight Frank Accommodation Botswana 1,300 1,221
Gateway Real
Estate Africa Directors
Ltd (19.98%) 30-Jun-21 Valuation Other Investments Mauritius 12,557 5,009
Total of investment properties acquired through associates and joint ventures 206,383 198,856
---------------------------------------------------------------------------------------- ------------- -------------
Total portfolio 761,572 780,578
---------------------------------------------------------------------------------------- ------------- -------------
As indicated above, all of the valuations were performed using
the discounted cash flow method. These methodologies are based on
estimated rental values with consideration given to the future
earnings potential and applying an appropriate capitalisation rate
and/or discount rate to the property and country. The
capitalisation rates (equivalent yield) applied to the Group's
valuations of investment properties at 30 June 2021 ranged between
6.0% and 12.0%. The discount rates applied to the Group valuations
that were performed at 30 June 2021 using the discounted cash flow
method ranged between 8.25% and 16.0%.
Included in the valuation is lease incentives which includes
rent-free periods, rent abatements and fit-out contributions. The
lease incentive is disclosed separately under Trade and other
receivables.
In the current year, the valuations include the right of use of
land, lease incentives and certain furniture and fittings.
There have been no material changes to the information used and
assumptions applied by the registered valuer.
The fair value adjustments on investment property are included
in the income statement.
The Directors consider that the deposit payments and capital
expenditure which are carried at cost approximate their fair value
at the relevant reporting date.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (2)
Audited as at Audited as at
30 June 2021 30 June 2020
US$'000 US$'000
------------------------------------ ------------------------------------ ---------- ------------- ---------------
The following entities have been accounted for using the equity method:
Country of incorporation and
Name of joint venture operation % held
------------------------------------ ------------------------------------ ---------- ------------- ---------------
Kafubu Mall Limited(3) Zambia 50.00% 9,502 9,552
Cosmopolitan Shopping Centre
Limited(3) Zambia 50.00% 25,076 31,495
CADS Developers Limited(3) Ghana 50.00% 7,607 9,504
------------------------------------ ------------------------------------ ---------- ------------- ---------------
Carrying value of joint ventures 42,185 50,551
-------------------------------------------------------------------------- ---------- ------------- ---------------
Country of incorporation and
Name of associate operation % held
------------------------------------ ------------------------------------ ---------- ------------- ---------------
Letlole La Rona Limited(4) Botswana 30.00% 21,672 19,676
Buffalo Mall Naivasha Limited(3) Kenya 50.00% 3,402 4,612
Gateway Real Estate Africa Ltd(3,6) Mauritius 19.98% 20,706 11,404
Capital Place Limited(5) Ghana 50.00% 7,471 8,038
Beachcomber Hospitality
Investments(1,3) Limited Mauritius 44.42% 72,056 67,020
------------------------------------ ------------------------------------ ---------- ------------- ---------------
Carrying value of associates 125,307 110,750
-------------------------------------------------------------------------- ---------- ------------- ---------------
Joint ventures 42,185 50,551
Associates 125,307 110,750
-------------------------------------------------------------------------- ---------- ------------- ---------------
Total carrying value of associates and joint ventures 167,492 161,301
-------------------------------------------------------------------------- ---------- ------------- ---------------
(1) The carrying value of Beachcomber Hospitality Investments at
30 June 2021 includes an unsecured loan of USEUR37.5m (2020:
USEUR37.5m), from the Group to the associate, which bears interest
at 6.25% (2020: 6.25%).
(2) All investments in associates are private entities and do
not have quoted prices available with the exception of Letlole La
Rona Limited. 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.
(3) The percentage of ownership interest for 2021 did not change.
(4) In the prior year, 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. This company is incorporated in Botswana and listed
on the Botswana Stock Exchange.
(5) The percentage of ownership increased from 47.5% to 50.0% in the prior year.
Secured investments:
Zambian investment properties held by associates or joint
ventures have a market value of US$69.1 million as at 30 June 2021
(2020: US$82.1 million). The properties in the investee entities
are fully mortgaged to Bank of China to secure debt facilities
amounting to US$ 47.7 million as at that date (2020: US$47.7
million).
Mauritian investment properties held by an associate have a
market value of US$228.8 million as at 30 June 2021 (2020: US$214.0
million). The property in the investee entity is mortgaged in equal
proportions to SBM Bank (Mauritius) Limited, Investec Bank
(Mauritius) Limited and the Mauritius Commercial Bank Limited to
secure debt facilities amounting to US$59.6 million (2020: US$56.1
million).
Kenyan investment property held by an associate has a market
value of US$10.9 million as at 30 June 2021 (2020: US$12.8
million). The property in the investee entity is fully mortgaged to
HFCK Bank Limited to secure debt facilities amounting to US$4.4
million (2020: US$4.2 million).
Ghanaian investment property held by an associate has a market
value of US$30.2 million as at 30 June 2021 (2020: US$33.8
million). The property in the investee entity is fully mortgaged to
ABSA Bank Ghana Limited to secure debt facilities amounting to
US$14.9 million (2020: US$14.6 million).
Ghanaian investment property held by an associate has a market
value of US$20.3 million as at 30 June 2021 (2020: US$22.4
million). The property in the investee entity is fully mortgaged to
RMB Holdings Limited to secure debt facilities amounting to US$5.9
million (2020: US$6.2 million).
Botswana investment property held by an associate has a market
value of US$89.0 million as at 30 June 2021 (2020: US$77.9
million). The properties in the investee entity is mortgaged to
Bank Gaborone Limited and First National Bank of Botswana Limited
to secure debt facilities amounting to US$21.2 million (2020:
US$19.9 million).
Set out below is the summarised financial information of each of
the Group's associates for each reporting period together with a
reconciliation of this financial information to the carrying amount
of the Group's interests in each associate. Where an interest in an
associate has been acquired in a reporting period the results are
shown for the period from the date of such an acquisition.
Each of the acquisitions referred to below have given the Group
access to high quality African real estate in line with the Group's
strategy.
Where associates and joint ventures have non-coterminous
financial reporting dates, the Group uses management accounts to
incorporate their results into the consolidated financial
statements.
Gateway
Beachcomber Real Cosmo-politan Buffalo
Letlole Kafubu Hospitality Capital Estate CADS Shopping Mall
La Rona Mall Investments Place Africa Developers Centre Naivasha
Limited Limited Limited Limited Ltd Limited Limited Limited Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
As at 30 June
2021
Statement of
financial
position
Non-current
assets 90,872 19,246 228,698 20,301 154,854 30,150 49,897 10,893 604,911
Current assets 11,820 136 5,243 2,587 42,530 113 510 627 63,566
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
102,692 19,382 233,941 22,888 197,384 30,263 50,407 11,520 668,477
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Non-current
liabilities 25,835 210 62,612 7,125 4,106 14,877 - 4,521 119,286
Current
liabilities 4,618 168 9,123 821 2,306 171 256 196 17,659
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
30,453 378 71,735 7,946 6,412 15,048 256 4,717 136,945
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Net asset
value 72,239 19,004 162,206 14,942 190,972 15,215 50,151 6,803 531,532
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Percentage
held by Group 30.00% 50.00% 44.42% 50.00% 19.98% 50.00% 50.00% 50.00%
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Net Asset
Value
attributable
to the Group 21,672 9,502 72,056 7,471 20,706 7,607 25,076 3,402 167,492
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
For the year
to 30 June
2021
Total
comprehensive
income
Revenue 2,811 839 7,380 1,093 250 1,434 1,919 289 16,015
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Fair value
movement in
investment
properties 213 1,957 (1,305) (1,066) 498 (1,960) (6,433) (959) (9,055)
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Profit/(loss)
for the year 1,758 1,394 4,372 (542) 748 (1,040) (4,897) (1,210) 583
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Total
comprehensive
income /
(expense) 3,340 556 8,603 (542) 749 (1,040) (4,897) (1,210) 5,559
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Dividends
received from
associates
and joint
ventures 1,344 - 727 - - - 845 - 2,916
-------------- --------- --------- ----------- --------- --------- ---------- ------------- --------- -------
Reconciliation to carrying value in associates and joint
ventures
Gateway
Beachcomber Real Cosmo-politan Buffalo
Letlole Kafubu Hospitality Capital Estate CADS Shopping Mall
La Rona Mall Investments Place Africa Developers Centre Naivasha
Limited Limited Limited Limited Ltd Limited Limited Limited Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- --------- --------- ----------- --------- -------- ---------- ------------- --------- -------
Opening Balance
1 July 2021 19,676 9,552 67,020 8,038 11,404 9,504 31,495 4,612 161,301
Acquired during
the period - - - - 8,493 - - - 8,493
Profit /
(losses) from
associates and
joint ventures 1,758 1,394 4,372 (542) 748 (1,040) (4,897) (1,210) 583
--------------- --------- --------- ----------- --------- -------- ---------- ------------- --------- -------
- Revenue 2,811 839 7,380 1,093 250 1,434 1,919 289 16,015
- Property
operating
expenses (335) (183) - (227) - (68) (241) (291) (1,345)
- Admin
expenses and
recoveries (607) (12) (26) 132 996 (26) (13) (10) 434
- Fair value
adjustment on
other
investments 6 - - - (15) - - - (9)
- Unrealised
foreign
exchange
gains/(losses) 5 (1,167) (29) 29 - 4 (90) (6) (1,254)
- Investment at
fair value - - - - (1) - - - (1)
- Impairments - - - - (935) - - - (935)
- Interest
Income /
(costs) 64 3 - - - - 6 - 73
- Finance
charges (413) (6) (1,198) (335) (85) (424) - (233) (2,694)
- Fair value
movement on
investment
property 213 1,957 (1,305) (1,066) 498 (1,960) (6,433) (959) (9,055)
- Movement in
fair value of
share price
- Current tax 14 (37) (530) - (47) - (45) - (645)
- Deferred tax - - 80 (168) 87 - - - (1)
--------------- --------- --------- ----------- --------- -------- ---------- ------------- --------- -------
Dividends and
interest paid
to Group (1,344) - (3,567) - - (605) (845) - (6,361)
Repayment of
proportionate
shareholders
loan - (606) - (25) - (252) (677) - (1,560)
Consolidation
elimination - - - - 60 - - - 60
Foreign
currency
translation
differences 1,582 (838) 4,231 - 1 - - - 4,976
--------------- --------- --------- ----------- --------- -------- ---------- ------------- --------- -------
Carrying value
of associates
and joint
ventures 21,672 9,502 72,056 7,471 20,706 7,607 25,076 3,402 167,492
--------------- --------- --------- ----------- --------- -------- ---------- ------------- --------- -------
Investment in the year ended 30 June 2021
Through its 19.98% equity interest in GREA, the private African
property development company that Grit co-founded, Grit has an
interest in the developer's accretive pipeline assets and
development returns GREA has made strong progress on securing an
attractive risk-mitigated pipeline in the office, embassy corporate
accommodation and data centre sectors including:
-- Near completion of a 112 unit diplomatic residential tower in
Ethiopia predominantly tenanted to OBO, a division of the US State
Department, now being readied for occupation on 1 November 2021.
Estimated total project cost c.US$54 million.
-- The construction of a 90 unit diplomatic apartment and town
house community in Kenya fully tenanted by OBO, a division of the
US State Department, with expected completion date in Q1 2022.
-- Construction of a 994sqm GLA data centre in Lagos, Nigeria
tenanted to African Data Centres, part of the Liquid Intelligent
Technologies Group.
-- The Precinct, Mauritius: Commencement of a landmark 8,594sqm
GLA premium grade office development in Grand Baie in Q2 2021.
Targeted completion August 2022.
The Group sees significant further potential value creation from
the assets and development pipeline within GREA going forward,
which are expected to result in strong NAV growth to Grit
shareholders from exposure to risk mitigated developments tenanted
to current and target multinational clients.
GREA has now called for final capital calls in relation to its
shareholders' initial committed equity funding and Grit is required
to make its US$17.9 million payment in the coming months if it
wishes to retain its current equity ownership in GREA. Grit is
concurrently considering increasing its stake in GREA to further
align both Grit and GREA's future profitable growth strategies and
approach to servicing tenants, which would be a cornerstone to
further unlocking scale, synergy benefits and the creation and
delivery of further value to Grit's shareholders. A potential
transaction would likely require approvals from Grit's shareholders
and equity funding by Grit. Grit expects to engage with its
shareholders should this be further pursued.
4. OTHER LOANS RECEIVABLE
Audited as Audited as
at at
30 June 2021 30 June 2020
US$'000 US$'000
---------------------------------------------- ------------- -------------
Ndola Investments Limited 5,115 5,073
Kitwe Copperbelt Limited 5,624 5,577
Syngenta Limited 19,081 18,690
Healthcare Assets 239 303
Drift (Mauritius) Limited 9,731 12,846
IFRS 9 - Impairment on financial assets (ECL) (2,487) (68)
---------------------------------------------- ------------- -------------
Total as at 30 June 37,303 42,421
---------------------------------------------- ------------- -------------
Classification of other loans:
Non-current assets - 39,575
Current assets 37,303 2,846
------------------------------- ------ ------
37,303 42,421
------------------------------- ------ ------
5. INTEREST-BEARING BORROWINGS
Audited as at Audited as at
30 June 2021 30 June 2020
US$'000 US$'000
---------------------------------------------------------------------------------------- ------------- -------------
Non-current liabilities
Capital portion 215,565 337,620
Current liabilities
Capital portion 190,846 50,030
Accrued interest 4,177 5,349
---------------------------------------------------------------------------------------- ------------- -------------
Total as at 30 June 410,588 392,999
---------------------------------------------------------------------------------------- ------------- -------------
Currency of the interest-bearing borrowings (stated gross of unamortised loan issue
costs)
United States Dollars 276,947 271,560
Euros 131,420 119,419
Mauritian Rupees 1,698 1,778
Mozambican Meticais - -
---------------------------------------------------------------------------------------- ------------- -------------
410,065 392,757
Interest accrued 4,176 5,349
Unamortised loan issue costs (3,653) (5,107)
---------------------------------------------------------------------------------------- ------------- -------------
Total as at 30 June 410,588 392,999
---------------------------------------------------------------------------------------- ------------- -------------
Movement for the year
---------------------------------------------------------------------------------------- ------------- -------------
Balance at the beginning of the year 392,999 346,097
Proceeds of interest bearing-borrowings 50,765 170,278
Loan issue costs incurred (1,520) (4,639)
Amortisation of loan issue costs 2,974 1,999
Foreign currency translation differences 7,548 (1,165)
Interest accrued (1,173) 5,349
Debt settled during the year (41,005) (124,920)
---------------------------------------------------------------------------------------- ------------- -------------
Total as at 30 June 410,588 392,999
---------------------------------------------------------------------------------------- ------------- -------------
Analysis of facilities and loans in issue
Audited as at Audited as at
30 June 2021 30 June 2020
Lender Borrower Initial facility US$'000 US$'000
------------------------------- ------------------------------- ---------------------- ------------- -------------
Standard Bank South Africa Commotor Limitada US$140.0m 140,000 140,000
Standard Bank South Africa Grit Services Limited RCF - EUR26.5m 30,676 29,730
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total Standard Bank Group 170,676 169,730
Bank of China Warehousely Limited US$8.5m 8,555 8,555
Zambian Property Holdings
Bank of China Limited US$77.0m 76,405 76,405
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total Bank of China 84,960 84,960
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR9.0m 10,733 10,097
Leisure Property Northern
State Bank of Mauritius (Mauritius) Limited EUR3.2m 3,816 3,590
Mara Delta (Mauritius)
State Bank of Mauritius Properties Limited EUR22.3m 26,593 25,018
Grit Real Estate Income Group
State Bank of Mauritius Limited Equity Bridge US$20.0m 20,000 20,000
Grit Real Estate Income Group
State Bank of Mauritius Limited RCF MUR72.0m 1,698 1,778
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total State Bank of Mauritius 62,840 60,483
Investec South Africa Freedom Property Fund SARL EUR36.0m 37,974 37,027
Investec South Africa Freedom Property Fund SARL US$15.7m 8,722 8,722
Grit Real Estate Income Group
Investec Mauritius Limited US$0.5m 327 378
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total Investec Group 47,023 46,127
ABSA Bank Mauritius BH Property Investment Limited EUR7.4m 7,526 7,081
ABSA Bank Ghana Limited Grit Accra Limited US$9.0m 8,652 9,000
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total ABSA Group 16,178 16,081
Grit Real Estate Income Group
Maubank Mauritius Limited EUR3.2m 3,871 3,642
Maubank Mauritius Freedom Asset Management EUR4.0m 2,599 3,234
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total Maubank 6,470 6,876
ABC Banking Corporation Grit Services Limited Equity bridge US$8.5m 7,286 8,500
ABC Banking Corporation Casamance Holdings Limited EUR6.4m 7,632 -
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total ABC Banking Corporation 14,918 8,500
Grit Real Estate Income Group
Nedbank South Africa Limited US$7.0m 7,000 -
Total Nedbank South Africa 7,000 -
------------------------------- ------------------------------- ---------------------- ------------- -------------
Total loans in issue 410,065 392,757
---------------------------------------------------------------- ---------------------- ------------- -------------
plus: interest accrued 4,177 5,349
less: unamortised loan issue costs (3,654) (5,107)
---------------------------------------------------------------- ---------------------- ------------- -------------
As at year end 410,588 392,999
---------------------------------------------------------------- ---------------------- ------------- -------------
Fair value of borrowings are not materially different to their
carrying value amounts since interest payable on those borrowings
are either close to their current market rates or the borrowings
are of short-term in nature.
6 . TAXATION
Audited as at Audited as at
30 June 2021 30 June 2020
US$'000 US$'000
------------------------------------------------------------ ------------- -------------
Major components of the taxation expense
Current taxation 1,791 4,354
Deferred taxation (1,346) 9,028
------------------------------------------------------------ ------------- -------------
445 13,382
------------------------------------------------------------ ------------- -------------
Reconciliation of the taxation expense
(Loss) / profit before tax (60,931) (53,866)
------------------------------------------------------------ ------------- -------------
Statutory taxation (credit) / expense at 15% (all years) (9,140) (8,080)
Tax effect of adjustments to taxable income:
Non-taxable income (17,174) (3,299)
Non-deductible expenditure 20,979 14,066
Under provision in the previous year (5,749) (768)
Withholding tax 446 192
Foreign tax credit (1,060) (6,319)
Deferred tax asset not provided for 19,330 10,924
Investment tax credit - (119)
Minimum tax 7 216
Foreign currency translation differences (52) -
Effect of different tax rates and consolidation adjustments (7,142) 6,569
------------------------------------------------------------ ------------- -------------
Effective taxation expense at -0.73% (2020: -24.84%) 445 13,382
------------------------------------------------------------ ------------- -------------
7. Segmental information
The Group reports on a segmental basis in terms of geographical
location and type of property. Geographical location is split
between Morocco, Mozambique, Zambia, Kenya, Ghana and Mauritius, as
relevant to each reporting period. In terms of type of property,
the Group has investments in the retail, office and various other
sectors.
In US$'000
Geographical location Botswana Senegal Morocco Mozambique Zambia Kenya Ghana Mauritius Total
30 June 2021
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Reportable segment profit and
loss
Gross property income - 1,802 6,474 27,006 4,234 1,893 3,060 4,748 49,217
Property operating expenses - - (4,218) (3,017) (714) (39) (329) (226) (8,543)
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Net property income - 1,802 2,256 23,989 3,520 1,854 2,731 4,522 40,674
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Other income - - - 22 - - 147 - 169
Administrative expenses - (161) (702) (2,432) (25) (104) (447) (9,996) (13,867)
Net impairment (charge) /
credit on financial assets - 6 (415) (1,341) - - (627) (4,742) (7,119)
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Profit / (loss) from
operations - 1,647 1,139 20,238 3,495 1,750 1,804 (10,216) 19,857
Fair value adjustment on
investment properties - (2,262) (18,497) (20,047) (8,922) 2,572 (3,421) (720) (51,297)
Corporate restructure costs - - - - - - - (3,467) (3,467)
Fair value adjustment on
other financial liability - - - - - - - (5,230) (5,230)
Fair value adjustment on
other financial asset - - - - - - - (1,106) (1,106)
Fair value adjustment on
derivatives financial
instruments - - - - - - - 1,378 1,378
Share based payment expense - - - - - - - (127) (127)
Share of profits / (losses)
from associates and joint
ventures 1,758 - - - (3,503) (1,210) (1,582) 5,120 583
Impairment of loans and other
receivables - - - - - - (23) (1,090) (1,113)
Foreign currency gains /
(losses) - (96) 2,048 999 (34) (32) (31) (511) 2,343
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Profit / (loss) before
interest and taxation 1,758 (711) (15,310) 1,190 (8,964) 3,080 (3,253) (15,969) (38,179)
Interest income - - - 16 6 - 411 2,257 2.690
Finance costs - - (3,397) (8,360) - (469) (595) (12,621) (25,442)
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Profit / (loss) for the year
before taxation 1,758 (711) (18,707) (7,154) (8,958) 2,611 (3,437) (26,333) (60,931)
Taxation - (7) (970) 1,284 (96) 74 45 (775) (445)
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Profit / (loss) for the year
after taxation 1,758 (718) (19,677) (5,870) (9,054) 2,685 (3,392) (27,108) (61,376)
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Reportable segment assets and
liabilities
Non-current assets
Investment properties - 20,594 79,535 294,151 46,210 27,220 16,440 65,341 549,491
Deposits paid on investment
properties - - - - - - - 5,698 5,698
Property, plant and equipment - 24 24 308 - 3 23 2,066 2,448
Intangible assets - - 16 - - - - 464 480
Other investments - - - 1 - - - - 1
Investment in associates and
joint ventures 21,672 - - - 34,578 3,402 15,078 92,762 167,492
Trade and other receivables - - 2,166 - - - - - 2,166
Deferred tax - - 7,019 10,299 - 490 310 1,949 20,067
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Total non-current assets 21,672 20,618 88,760 304,759 80,788 31,115 31,851 168,280 747,843
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Current assets
Trade and other receivables - 503 4,840 5,426 63 2,180 1,038 4,896 18,946
Current tax refundable - - - 898 - 61 344 137 1,440
Related party loans
receivable - - - - - - - 197 197
Other loans receivable - - - - - - - 37,303 37,303
Derivative financial
instruments - - - - - - - 87 87
Cash and cash equivalents - 270 290 2,789 251 97 (246) 1,439 4,890
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Total assets 21,672 21,391 93,890 313,872 81,102 33,453 32,987 212,339 810,706
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Liabilities
Total liabilities - 1,591 76,592 209,761 80,506 10,579 10,524 142,749 532,302
----------------------------- -------- ------- -------- ---------- ------- ------- ------- --------- --------
Net assets 21,672 19,800 17,298 104,111 596 22,874 22,463 69,590 278,404
In US$'000
Other Light Corporate
Type of property investments Hospitality Retail Office industrial Accommodation Corporate Total
30 June 2021
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Reportable
segment profit
and loss
Gross property
income - 5,348 12,723 15,881 2,174 13,117 (26) 49,217
Property
operating
expenses - - (5,626) (1,540) (74) (1,978) 675 (8,543)
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Net property
income - 5,348 7,097 14,341 2,100 11,139 649 40,674
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Other income - - - - - - 169 169
Administrative
expenses - (458) (859) (1,116) (168) (2,202) (9,064) (13,867)
Net impairment
(charge)/credit
on financial
assets - (27) (923) (1,452) (7) - (4,710) (7,119)
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Profit / (loss)
from operations - 4,863 5,315 11,773 1,925 8,937 (12,956) 19,857
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Fair value
adjustment on
investment
properties - (2,905) (33,274) (5,969) 2,201 (11,494) 144 (51,297)
Fair value
adjustment on
other
investments - - - - - - - -
Corporate
restructure
costs - - - - - - (3,467) (3,467)
Fair value
adjustment on
other financial
liability - 9 - - - - (5,239) (5,230)
Fair value
adjustment on
other financial
asset - (503) - - - - (603) (1,106)
Fair value
adjustment on
derivatives
financial
instruments - - - 10 - - 1,368 1,378
Share based
payment expense - - - - - - (127) (127)
Share of profits
/ (losses) from
associates and
joint ventures 747 4,386 (4,366) (1,483) 1,214 85 - 583
Impairment of
loans and other
receivables - - - - - - (1,113) (1,113)
Gain from
bargain purchase
on associates - - - - - - - -
Foreign currency
gains /
(losses) - 1,191 1,920 (484) (126) 613 (771) 2,343
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Profit / (loss)
before interest
and taxation 747 7,041 (30,405) 3,847 5,214 (1,859) (22,764) (38,179)
Interest income - - 8 - 12 - 2,670 2,690
Finance costs - (2,673) (3,496) (8,873) (469) (326) (9,605) (25,442)
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Profit / (loss)
for the year
before taxation 747 4,368 (33,893) (5,026) 4,757 (2,185) (29,699) (60,931)
Taxation - (81) (1,067) (1,533) 74 2,803 (641) (445)
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Profit / (loss)
for the year
after taxation 747 4,287 (34,960) (6,559) 4,831 618 (30,340) (61,376)
Reportable
segment assets
and liabilities
Non-current
assets
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Investment
properties - 72,826 146,284 166,247 36,232 127,902 - 549,491
Deposits paid on
investment
properties - - - - - - 5,698 5,698
Property, plant
and equipment - 24 24 36 3 198 2,163 2,448
Intangible
assets - - - - - - 480 480
Other
investments - - - - - - 1 1
Investment in
associates and
joint ventures 20,705 72,224 42,255 16,296 14,968 1,044 - 167,492
Trade and other
receivables - - 2,166 - - - - 2,166
Deferred tax - 1,551 9,866 3,659 648 4,331 12 20,067
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Total
non-current
assets 20,705 146,625 200,595 186,238 51,851 133,475 8,354 747,843
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Current assets
Trade and other
receivables - 381 4,907 1,695 2,908 3,861 5,194 18,946
Current tax
refundable - 98 183 916 189 42 12 1,440
Related party
loans
receivable - - - - - - 197 197
Other loans
receivable - - - - - - 37,303 37,303
Derivative
financial
instruments - - - 87 - - - 87
Cash and cash
equivalents - 367 1,077 911 193 896 1,446 4,890
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Total assets 20,705 147,471 206,762 189,847 55,141 138,274 52,974 810,706
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Liabilities
Total
liabilities - 89,662 172,545 178,983 11,493 28,645 52,974 532,302
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Net assets 20,705 57,809 34,217 10,864 43,648 109,629 1,532 278,404
---------------- -------------- ----------- -------- ------- --------------- -------------- --------- --------
Major customers
Rental income stemming from Beachcomber represented
approximately 11.1% of the Group's total contractual rental income
for the year and Total 9.8%, Vale 9.4%, Vodacom Mozambique 6.3% and
Tamassa Resort 5.5% of the Group's total contractual rental income
for the year.
8.Subsequent events
Subsequent events
Perpetual Preference Note
Grit Services Limited has entered into a Subscription Agreement
with Ethos Mezzanine Partners GP Proprietary Limited and Blue Peak
Private Capital GP for the issuance by Grit of a perpetual note
that will raise up to
US$31,500,000 ("the Note") and will be applied towards:
-- the acquisition and redevelopment of the Orbit Africa
warehousing and manufacturing facility in Nairobi, Kenya; and
-- the St Helene Private Hospital development in Mauritius. The
Note is subject to fulfilment of conditions precedent prior to
disbursement.
Salient features of the Note
-- The Note is treated as equity for IFRS accounting purposes
and will reduce the Group's reported LTV.
-- The Note has a cash coupon of 9% per annum and a 4% per annum
redemption premium. The Company may elect to capitalise cash
coupons.
-- The Note, although perpetual in tenor, carries a material
coupon step-up provision after the fifth anniversary that is
expected to result in an economic maturity and redemption by the
Company on or before that date.
-- The Note may be voluntarily redeemed by the Company at any
time, although there would be call-protection costs associated with
doing so before the third anniversary.
-- The Note is subordinated to permitted indebtedness in the
Company but ranks ahead of shareholder claims.
-- The Note potentially offers noteholders an additional return
of not more than 3% per annum, linked to the performance of Grit
ordinary shares over the duration of the Note.
Orbit Africa transaction
The Orbit facility is situated on Mombasa Road, the principal
route south of Nairobi centre serving the main industrial node, the
link to the port of Mombasa and the industrial town of Athi River
and is strategically located 11 kilometres south of the
international airport and 9.6 kilometres from the Inland Container
Depot. The site is well known to Grit, being less than one
kilometre from the Imperial Health Sciences logistics facility
owned by Grit in the same industrial precinct.
The transaction comprises the acquisition of an existing
warehouse and manufacturing facility with a gross lettable area
("GLA") of 29,243 sqm at an accretive net acquisition yield of 9.
60 %. The facility will be leased back to Orbit Products Africa
Limited (the "Tenant") in terms of a 25-year US Dollar denominated
triple net lease with an option to extend for a further 10 years
and includes a contracted average annual escalation of 2%. The
transaction also incorporates a redevelopment and expansion of the
facility for the Tenant, to be undertaken by the Company at a
contractual development yield of 16.0%. The development project
provides potential scope for further value accretion through the
addition of 14,741 sqm GLA of modern warehouse space that will
reposition the property to the standards expected of a modern FMCG
light industrial facility and shall target an IFC EDGE green
building certification upon completion.
The total investment (incl. VAT) in the combined initial
acquisition and the expansion and redevelopment is expected to be
US$53. 6 million and will be funded through the US$ 25 million
senior debt financing from the International Finance Corporation
("IFC") , and the balance can be provided through the perpetual
preference note issuance.
The IFC debt terms are summarised below:
-- The IFC provides a US$25 million senior debt facility (the "Loan").
-- US$16.1 million1m of the Loan will be utilised to fund the
purchase consideration and associated transaction costs related to
the initial sale and leaseback of the Orbit transaction mentioned
above.
-- US$8.9 million of the Loan will be utilised to fund the Redevelopment Project.
-- The Loan provided by the IFC carries a tenure of eight years
of which the first three years are provided under a capital
repayment moratorium.
-- The applicable facility interest rate is 5.75% per annum above 6-month libor.
Interest bearing borrowings
The following debt transactions were concluded subsequent to the
period under review as a short term measure to create a platform
for a more strategic and suitable balance sheet solution. The Group
has engaged advisors and is currently investigating the potential
for a corporate bond issuance, which it would expect to pursue in
2022 subject to prevailing market conditions at that time. The
benefits would largely be extension of debt tenor, diversification
of the Group's funding base and taking advantage of supportive
credit markets in relation to African and frontier markets
issuance:
Subsidiaries
-- The Group has extended the MUR 72 million (or US$1.7 million)
Covid facility from the State Bank of Mauritius, to an evenly
amortized 48 month facility.
-- The Group has extended all its facilities with the State Bank
of Mauritius ("SBM") to 2025. This applies to the following
facilities:
- Leisure Property North Mauritius Limited (EUR 12.2 million,
with interest of 4.25% + 3-month libor) for the Beachcomber
properties;
- Mara Delta (Mauritius) Property Limited, owner of the Lux
Tamassa resort (EUR 22.3 million, with interest of 4.00% fixed);
and
- Grit Real Estate Income Group, a Corporate facility (US$ 20.0
million, with interest of 4.00% fixed).
-- The US$ 46m facility (EUR31.8 million and US$8.7 million)
with Investec Bank on the AnfaPlace Mall held by Freedom Property
Fund SARL in Morocco has been extended to April 2023, as part of
the terms of the refinance, an amount of US$6million will become
due in the next 12 months.
-- The Group's RCF facility of US$ 7.0 million held with Nedbank
has been extended to April 2023, with optional capital repayment
conditions, bearing an interest of 6-month libor + 8.40%.
Associates and Joint Ventures
-- The BHI syndicated loan of EUR 50.0 million has been extended to April 2023.
9. EARNINGS PER SHARE
Audited as at Audited as at
30 June 2021 30 June 2020
US$'000 US$'000
---------------------------------------------------------------------------------------- ------------- -------------
Basic and diluted (losses) / earnings (51,927) (63,115)
Reconciliation of weighted average number of shares in issue (net of unvested treasury
shares)
30 June 2021 30 June 2020
Shares Shares
'000 '000
---------------------------------------------------------------------------------------- ------------- -------------
Ordinary shares in issue at start of year 316,236 306,396
Unvested treasury shares at start of year (10,114) (10,114)
---------------------------------------------------------------------------------------- ------------- -------------
Total shares issue at start of year 306,122 296,282
Effect of shares issued in the year 7,849 5,834
Effect of treasury shares acquired in the year - -
Effect of treasury shares surrendered in the year - -
Effect of treasury shares vested or allocated in the year - 573
---------------------------------------------------------------------------------------- ------------- -------------
Weighted average number of shares at end of year - basic 313,971 302,689
Dilutive effect of share options - -
Weighted average number of shares at end of year - diluted 313,971 302,689
---------------------------------------------------------------------------------------- ------------- -------------
Basic and diluted earnings per share (cents) (16.5) (20.9)
---------------------------------------------------------------------------------------- ------------- -------------
10. EPRA FINANCIAL METRICS - UNAUDITED
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, 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 AnfaPlace Mall's areas under construction, Listing and
set-up costs, depreciation and amortisation, share based payments,
antecedent dividends, operating costs relating to AnfaPlace Mall's
refurbishment costs, rental concessions for capital projects/
amortisation of lease premiums and profits withheld/released. The
reconciliation for total distributable earnings is detailed in the
table below.
In this note, Grit presents European Real Estate Association
(EPRA) earnings and other metrics which is non-IFRS financial
information.
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
30 June 2021 30 June 2021 30 June 2020 30 June 2020
Per Share (Diluted) Per Share (Diluted)
$'000 (Cents Per Share) $'000 (Cents Per Share)
---------------------------------------------- ------------- ------------------- ------------- -------------------
EPRA Earnings 8,080 2.57 11,530 3.82
Total Company Specific Adjustments 7,351 2.34 15,727 5.20
---------------------------------------------- ------------- ------------------- ------------- -------------------
Adjusted EPRA Earnings 15,431 4.91 27,257 9.02
Total company specific distribution
adjustments 3,162 1.06 1,457 0.56
---------------------------------------------- ------------- ------------------- ------------- -------------------
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS
WITHELD) 18,593 5.97 28,714 9.58
Profits Withheld (13,920) (4.47) (12,979) (4.33)
---------------------------------------------- ------------- ------------------- ------------- -------------------
TOTAL DISTRIBUTABLE EARNINGS TO GRIT
SHAREHOLDERS 4,673 1.50 15,735 5.25
---------------------------------------------- ------------- ------------------- ------------- -------------------
EPRA NRV 328,863 102.4 358,370 117.1
EPRA NTA 319,907 99.6 348,007 113.7
EPRA NDV 270,858 84.3 296,948 97.0
---------------------------------------------- ------------- ------------------- ------------- -------------------
Unaudited
control 30 June 2021
EPRA EARNINGS Notes US$'000
----------------------------------------------------------------------------------- ------- -------------
Basic losses attributable to the owners of the parent (51,927)
Add Back:
Fair value adjustment on investment properties 51,441
Fair value adjustments included under income from associates 9,055
Change in value of other investments 9
Change in value of other financial asset 8,383
Change in value of derivative financial instruments (1,378)
Deferred tax in relation to the above (1,575)
Acquisition costs not capitalised 79
Non-controlling interest included in basic earnings (6,007)
----------------------------------------------------------------------------------- ------- -------------
EPRA EARNINGS 8,080
----------------------------------------------------------------------------------- ------- -------------
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 2.57
----------------------------------------------------------------------------------- ------- -------------
Company specific adjustments
Unrealised foreign exchange gains or losses (non-cash) 1 (1,089)
Straight-line leasing and amortisation of lease premiums (non-cash rental) 2 (2,565)
Amortisation of right of use of land (non-cash) 3 28
Impairment of loan and other receivables 4 6,466
Corporate restructure costs 5 3,467
Non-controlling interest included above 6 814
Deferred tax in relation to the above 7 230
----------------------------------------------------------------------------------- ------- -------------
Total Company specific adjustments 7,351
----------------------------------------------------------------------------------- ------- -------------
ADJUSTED EPRA EARNINGS 15,431
----------------------------------------------------------------------------------- ------- -------------
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 4.91
----------------------------------------------------------------------------------- ------- -------------
Shares
'000
----------------------------------------------------------------------------------- ------- -------------
Weighted average shares in issue 324,085
Less: Weighted average treasury shares for the year (12,546)
Add: Weighted average share awards and vested shares in long term incentive scheme 2,432
----------------------------------------------------------------------------------- ------- -------------
EPRA SHARES 313,971
----------------------------------------------------------------------------------- ------- -------------
COMPANY SPECIFIC ADJUSTMENTS TO EPRA EARNINGS
1. Unrealised foreign exchange gains or losses
The foreign currency revaluation of assets and liabilities in
subsidiaries gives rise to non-cash gains and losses that are
non-cash in nature. These adjustments (similar to those adjustments
that are recorded to the Foreign currency translation reserve) are
added back to provide a true reflection of the operating results of
the Group.
2. Straight-line leasing (non-cash rental)
Straight-line leasing adjustment and amortised lease incentives
under IFRS relate to non-cash rentals over the period of the lease.
This inclusion of such rental does not provide a true reflection of
the operational performance of the underlying property and are
therefore removed from earnings.
3. Amortisation of intangible asset (right of use of land)
Where a value is attached to the right of use of land for
leasehold properties, the amount is amortised over the period of
the leasehold rights. This represents a non-cash item and is
adjusted to earnings.
4. Impairment on loans and other receivables
Provisions for expected credit loss are non-cash items related
to potential future credit loss on non- property operational
provisions and is therefore added back in order to provide a better
reflection of underlying property performance. The add back
excludes and specific provisions for against tenant accounts.
5. Corporate restructure costs
Corporate restructure costs are once off in nature related to
corporate actions by the company and not underlying performance of
the portfolio.
6. Non-Controlling interest
Any Non-Controlling interest related to the company specific
adjustments.
7. Other deferred tax (non-cash)
Any deferred tax directly related to the company specific
adjustments.
11. COMPANY DISTRIBUTION CALCULATION - UNAUDITED
Unaudited
30 June 2021
Notes US$'000
---------------------------------------------------------------------------------- ----- -------------
Adjusted EPRA Earnings 15,431
Company specific distribution adjustments
VAT credits utilised on rentals 1 2,364
Listing and set up costs under administrative expenses 2 382
Depreciation and amortisation 3 787
Share based payments 4 127
Retirement fund & PRGF 111
Amortisation of capital funded debt structure fees 3,015
Non-controlling interest non distributable (3,624)
Total Company Specific distribution adjustments 3,162
---------------------------------------------------------------------------------- ----- -------------
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHHELD) 18,593
---------------------------------------------------------------------------------- ----- -------------
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 5.97
- Profits withheld (13,920)
---------------------------------------------------------------------------------- ----- -------------
TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS 4,673
---------------------------------------------------------------------------------- ----- -------------
DIVID PER SHARE (cents) 1.50
Reconciliation to amount payable
Total distributable earnings to Grit shareholders before profits withheld (cents) 5.97
Profits withheld (cents) (4.47)
Interim dividends already paid (cents) (1.50)
---------------------------------------------------------------------------------- ----- -------------
FINAL DIVID PROPOSED (cents) 0.00
---------------------------------------------------------------------------------- ----- -------------
Shares
'000
---------------------------------------------------------------------------------- ----- -------------
Weighted average shares in issue 324,085
Less: Weighted average treasury shares for the year (12,546)
Add: Weighted average shares vested in long term incentive scheme 2,432
---------------------------------------------------------------------------------- ----- -------------
EPRA SHARES 313,971
Less: Non-entitled shares -
Less: Vested shares in consolidated entities (2,432)
---------------------------------------------------------------------------------- ----- -------------
DISTRIBUTION SHARES 311,539
---------------------------------------------------------------------------------- ----- -------------
COMPANY DISTRIBUTION NOTES IN TERMS OF THE DISTRIBUTION
POLICY
1. VAT credits utilised on rentals
In certain African countries, there is no mechanism to obtain
refunds for VAT paid on the purchase price of the property. VAT is
recouped through the collection of rentals on a VAT inclusive
basis. The cash generation through the utilisation of the VAT
credit obtain on the acquisition of the underlying property is thus
included in the operational results of the property.
2. Listing and set-up costs under administrative expenses
Costs associated with the new listing of shares, setup on new
companies and structures are capital in nature and is added back
for distribution purposes.
3. Depreciation and amortisation
Non-cash items added back to determine the distributable
income.
4. Share based payments
Non-cash items added back to determine the distributable
income.
12. EPRA FINANCIAL METRICS - UNAUDITED
The EPRA NAV metrics are EPRA Net Reinstatement Value (NRV),
EPRA Net Tangible Assets (NTA) and EPRA Net Disposal Value
(NDV)
EPRA NRV EPRA NTA EPRA NDV
UNAUDITED UNAUDITED UNAUDITED
30 Jun 30 Jun 30 Jun
2021 2021 2021
$'000 $'000 $'000
--------------------------- --------- --------- ---------
IFRS Equity attributable
to shareholders 270,858 270,858 270,858
i) Hybrid instruments
Preference shares - - -
--------------------------- --------- --------- ---------
Diluted NAV 270,858 270,858 270,858
Add
Revaluation of IP
(if IAS 40 cost option
is used) - - -
Revaluation of IPUC
(if IAS 40 cost option
is used) - - -
Revaluation of other
non-current investments - - -
Revaluation of tenant
leases held as leases - - -
Revaluation of trading
properties - - -
--------------------------- --------- --------- ---------
Diluted NAV at fair
value 270,858 270,858 270,858
Exclude*:
Deferred tax in relation
to fair value gains
of Investment properties 55,377 46,901 -
Fair value of financial
instruments 2,628 2,628 -
Goodwill as a result
of deferred tax - - -
Goodwill as per the
IFRS balance sheet - - -
Intangibles as per
the IFRS balance
sheet - (480) -
Include*: - - -
Fair value of fixed
interest rate debt - - -
Revaluation of intangibles
to fair value - -
Real estate transfer
tax -
--------------------------- --------- --------- ---------
NAV 328,863 319,907 270,858
--------------------------- --------- --------- ---------
Fully diluted number
of shares 321,122 321,122 321,122
--------------------------- --------- --------- ---------
NAV per share (cents
per share) 102.4 99.6 84.3
Shares Shares Shares
'000 '000 '000
Total shares in issue 331,236 331,236 331,236
Less: Treasury shares
for the period (12,546) (12,546) (12,546)
Add: Share awards
and shares vested
shares in Long term
incentive scheme 2,432 2,432 2,432
--------------------------- --------- --------- ---------
EPRA SHARES 321,122 321,122 321,122
--------------------------- --------- --------- ---------
OTHER NOTES
The audited consolidated financial statements for the year ended
30 June 2021 have been prepared in accordance with the Disclosure
and Transparency Rules of the Financial Conduct Authority,
International Financial Reporting Standards ("IFRS"), the LSE and
SEM Listing Rules, the Financial Pronouncements as issued by
Financial Reporting Standards Council . 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 judgment disclosed in note 1.
The Group is required to publish financial results for the year
ended 30 June 2021 in terms of Listing Rule 12.14 of the SEM and
the LSE Listing Rules. The Directors are not aware of any matters
or circumstances arising subsequent to the year ended 30 June 2021
that require any additional disclosure or adjustment to the
financial statements. These audited consolidated financial
statements were approved by the Board on 28 October 2021.
PricewaterhouseCoopers have issued their unqualified audit
opinion on the Group's financial statements for the year ended 30
June 2021. Copies of the audited consolidated financial statements
for the year ended 30 June 2021, 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: Smitha
Algoo-Bissonauth.
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
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