TIDMGWI
RNS Number : 3831M
Globalworth Real Estate Inv Ltd
21 September 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
21 September 2021
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Interim Results for the six months ended 30 June 2021
Globalworth, the leading office investor in Central and Eastern
Europe, announces the release of its Interim Report and Unaudited
Consolidated Financial Results for the six-month period ended 30
June 2021 (the "Interim Report").
The Interim Report is also available on Globalworth's website
at:
https://www.globalworth.com/investor-relations/reports-presentations/
For further information visit www.globalworth.com or
contact:
Enquiries
Stamatis Sapkas
Tel: +40 732 800 000
Deputy Chief Investment Officer
Jefferies (Joint Broker)
Tel: +44 20 7029 8000
Stuart Klein
Panmure Gordon (Nominated Adviser and Joint Broker) Tel: +44 20
7886 2500
Alina Vaskina
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central
and Eastern Europe, quoted on the AIM-segment of the London Stock
Exchange. It has become the pre-eminent office investor in the CEE
real estate market through its market-leading positions both in
Poland and Romania. Globalworth acquires, develops and directly
manages high-quality office and industrial real estate assets in
prime locations, generating rental income from high quality tenants
from around the globe. Managed by over 230 professionals across
Cyprus, Guernsey, Poland and Romania, a combined value of its
portfolio is EUR3.1 billion, as at 30 June 2021. Approximately
95.1% of the portfolio is in income-producing assets, predominately
in the office sector, and leased to a diversified array of over 650
national and multinational corporates. In Poland Globalworth is
present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Timisoara, Constanta
and Pitesti. For more information, please visit www.globalworth.com
and follow us on Facebook, Instagram and LinkedIn.
IMPORTANT NOTICE: This announcement has been prepared for the
purposes of complying with the applicable laws and regulations of
the United Kingdom and the information disclosed may not be the
same as that which would have been disclosed if this announcement
had been prepared in accordance with the laws and regulations of
any jurisdiction outside of the United Kingdom. This announcement
may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may
be identified by the use of forward-looking terminology, including
the terms "targets", "believes", "estimates", "plans", "projects",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward looking
statements include all matters that are not historical facts and
involve predictions. Forward-looking statements may and often do
differ materially from actual results. Any forward-looking
statements reflect the Company's current view with respect to
future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the
Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in
which it operates. Forward-looking statements speak only as of the
date they are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, the Company
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
announcement.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
INTERIM REPORT AND UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
30 JUNE 2021
FINANCIAL HIGHLIGHTS: H1-2021
Combined portfolio open Shareholders' equity EPRA NRV per share
market value
EUR1.7bn EUR8.61
EUR3.1bn
----------------------- -------------------------- -----------------------
+1.3(%) on YE-20 -1.1(%) on YE-20 -0.8(%) on YE-20
----------------------- -------------------------- -----------------------
IFRS Earnings before Adjusted normalised EBITDA Net Operating Income
tax
EUR64.8m EUR72.2m
EUR18.9m
----------------------- --------------------------
-EUR46.1m in H1-20 -9.4(%) on H1-20 -9.4(%) on H1-20
----------------------- -------------------------- -----------------------
IFRS Earnings per share EPRA Earnings per share Dividends paid in H1-21
6 cents 13 cents 15 cents
----------------------- -------------------------- -----------------------
-22 cents in H1-20 -38.1(%) on H1-20 -50.0(%) on H1-20
----------------------- -------------------------- -----------------------
CHIEF EXECUTIVE'S REVIEW
Dear readers,
The first half of 2021 has been one of contradictions for
Globalworth as, despite the continuing very challenging market due
to the COVID-19 pandemic, we have experienced operating successes
and business growth which has, nonetheless, not been reflected in
our results for this six-month period.
Having said this, we firmly believe that we have been
implementing the right strategy to address the present challenges,
which we anticipate will persist for the remainder of 2021, and
reinforce our position as THE landlord of choice in our home
markets of Poland and Romania.
Our Market
Overall, the uncertainty caused by the COVID-19 global pandemic
has had an impact on demand for office space in the second half of
2020, which has persisted in the first half of 2021 in both Poland
and Romania.
Market conditions are expected to remain challenging for the
remainder of 2021 as new COVID-19 variants are emerging, further
forcing a number of companies to keep reassessing their
occupational plans (extensions, expansions, relocations, release of
spaces etc), as well as the duration of the leases signed, and
delaying many of them from allowing their employees to return to
the office as originally planned.
Having said the above, although challenges remain ahead in the
near term, we continue to be optimistic about the medium and
long-term prospects of the office market. Economic activity has
rebounded significantly globally and in our home markets in
H1-2021, with year-on-year GDP growing by 10.9% and 13.0% in Poland
and Romania respectively, and we expect that multinationals sooner
rather than later will start implementing the expansion plans that
were halted as a result of the pandemic. In addition, we have seen
a significant reduction in future planned office development
projects which should translate into less supply in the next 18-24
months, thereby easing the competitive pressure from new stock in
the medium term.
Our Leasing
Despite the current challenging market environment, we achieved
our best ever half year in terms of leasing transactions, with 122
tenants signing contracts for 194.4k sqm (+68.2% increase compared
to H1-2020) of commercial space to be taken-up or extended, at an
average WALL of 4.7 years, which we expect to generate future
rental income of EUR132.5 million.
As was the case in 2020, most of our leasing success was in
contract renewals, accounting for 57.3% of our total leasing
activity, followed by new take-up (34.3%), while 27 tenants chose
to expand their operations, taking up additional space to house
their operations.
Investment in Our Portfolio
The footprint of our combined standing portfolio (net) increased
by 31.7k sqm to 1.3 million sqm of GLA on 30 June 2021. In the
period, we have successfully delivered our class " A " Globalworth
Square office in Bucharest and completed our first purchases of
standing properties since our decision to suspend new acquisitions
due to COVID-19 as part of our initiatives to safeguard our
business and liquidity in a period of increased uncertainty. These
two high-quality logistic / light-industrial facilities, which are
located in the western part of Romania, offer a total area of 27.0k
sqm, were acquired for EUR17.9 million and are 100% let to two
multinational tenants on 15-year lease agreements.
We prioritised the development of other new high-quality
logistic / light-industrial facilities in Romania (99.7k sqm) and
the refurbishment / repositioning of two mixed-use properties in
Poland aiming at increasing their class " A " office space and
improving their retail/commercial offering, in response to current
market conditions.
In addition, in our efforts to improve the quality of our
services to our partners, we continued to internalise the property
management of our portfolio, kept (re)investing in our properties,
maintained and, where required, improved the quality of our
buildings. Overall, we internally manage 962.4k sqm of high-quality
office and mixed-use space in Poland and Romania with an appraised
value of EUR2.5 billion, accounting for 96.8% of office and
mixed-use standing properties (90.7% by total standing portfolio by
value). In addition, we invested EUR7.7 million in our standing
portfolio and the two mixed-use properties which are under
refurbishment / repositioning.
Occupancy, Rent and Valuation
Our successful efforts in leasing in the first half of the year
were not fully reflected in the average occupancy of our combined
standing commercial portfolio, which decreased by 2.4% compared to
year-end 2020 to 88.7% (89.7% including tenant options), due to
average occupancy of three new standing properties lower than the
Group average, and the 1.3% decrease in like-for-like occupancy due
to very challenging market conditions.
However, total annualised contracted rent increased by 1.0% to
EUR185.2 million compared to year-end 2020, with 94.7% in active
leases and the remainder being pre-let. The benefits of our
longstanding strategy to establish long-term partnerships with
high-quality national and multinational tenants, thus ensuring
sustainable cash-flow generation, allowed us to maintain a high
rate of collection with c.98.9% of the rents invoiced being
received in line with their customary cycle.
As a result, the total combined portfolio value increased by
1.3% to EUR3.1 billion, with the like-for-like appraised value of
standing commercial properties remaining effectively unchanged at
EUR2.7 billion (0.1% lower compared to 31 December 2020).
Our Results and Corporate Activity
The lower occupancy in our portfolio, has impacted our Net
Operating Income for the first six months of 2021, decreasing by
9.4% to EUR72.2 million compared to the first half of 2020,
including the 1.3% impact due to restrictions addressing
COVID-19.
Our initiatives to improve operational efficiency where somewhat
offset by the one-off costs associated with the cash offer by the
consortium of CPI Property Group S.A. and Aroundtown SA (via
Zakiono Enterprises Limited " (Zakiono " )) to acquire the entire
issued and to be issued share capital (not already held, or agreed
to be acquired, by Zakiono) of Globalworth in May 2021, thus
resulting in EPRA earnings decreasing by 37.5% to EUR29.0 million,
as compared to the same period in 2020. Adjusted normalised EBITDA
decreased by a lower percentage (9.4% decrease) to EUR64.8 million,
due to the effect of lower NOI (9.4% lower than in H1-2020) and
despite the decrease in recurring administrative expenses of EUR0.8
million.
During the period we paid the second interim dividend for 2020
of EUR0.15 per share, while on 31 August 2021, we announced the
first interim dividend for 2021 of EUR0.15 per share. Both
dividends represented an amount of at least 90% of the EPRA
Earnings of the respective period they relate to, as stipulated by
our articles of incorporation.
Liquidity has always been a key area of focus and, especially
since the COVID -19 pandemic outbreak, we have taken several steps
to ensure that we have sufficient cash in this period while
investing in our portfolio, with our liquidity being c.EUR459.9
million (vs c.EUR527.8 million at 2020 year-end) and our LTV at
39.2% at 30 June 2021 (vs 37.8% at 2020 year-end).
In addition, all three major rating agencies, following their
year-end 2020 review of Globalworth, maintained their investment
grade status for the Group, with S&P and Fitch ratings of " BBB
-" rating and " Stable " outlook and Moody ' s of " Baa3 " rating
and " Negative " outlook mainly due to their house view on the
Romanian economy.
As mentioned above, CPI Property Group S.A. and Aroundtown SA
formed a consortium, and, via Zakiono, made a cash offer for the
entire issued and to be issued share capital in the Company at
EUR7.00 / share which was initiated by way of a formal offer first
announced on 12 May 2021. The offer was successfully completed,
with the consortium now holding 60.6% of the share capital, via
Zakiono, thus becoming the largest and controlling shareholder of
Globalworth. The fact that Globalworth is now controlled by two
very sizeable, financially strong, and reputable European real
estate institutional investors is not only a vote of confidence by
them in the quality of the company and its portfolio but also on
its future growth prospects. We are confident that with their
support and closer cooperation, Globalworth will be even more
successful in the future.
Sustainable Development
We maintained our strong focus of giving back to our community,
with Globalworth and the Globalworth Foundation contributing
c.EUR445k in more than 10 initiatives in Romania and Poland.
Furthermore, consistent with our commitment to energy efficient
properties, we certified or recertified 22 properties with BREEAM
Very Good or higher certifications, and at the end of the first
half of 2021 we owned 57 green certified properties valued at
EUR2.7 billion.
Most of our standing combined portfolio is environmentally
certified, with 55 properties awarded BREEAM Very Good and LEED
Gold or higher, and EDGE accreditation, accounting for 92.3% of our
standing commercial portfolio by value.
In addition, the Renoma and Supersam mixed-use properties in
Poland which are currently under refurbishment / repositioning have
maintained their BREEAM Excellent accreditations, as the works
performed are in accordance with a strict set of guidelines which
do not impact their green certification status.
Furthermore, in the first half we were able to secure 100% of
the energy used in our Polish properties to be generated from
renewable sources and in the third quarter of the year we increased
the use of energy generated from renewable sources in our Romanian
properties from 49% to 97%.
Outlook
For the second half of 2021, our primary focus will continue to
be the active management of our portfolio of high-quality
properties. At the same time, investing in our high-quality
developments will remain a priority and we are also ready to act
quickly if new attractive opportunities become available.
Although the office of the future may need to be adjusted to
potentially offer greater flexibility or alternative space planning
arrangements, I strongly believe that its importance will not
diminish. Many companies are also publicly confirming the view that
the office environment increases productivity, promotes creativity,
innovation, consistency, and fosters relationships and corporate
culture, which are essential for the long-term sustainability and
growth of their businesses.
We are very well-placed to continue to successfully address
ongoing challenges and I firmly believe that we can achieve new
levels of success in the future.
Stay safe and healthy!
Dimitris Raptis
Chief Executive Officer
20 September 2021
MANAGEMENT REVIEW
REAL ESTATE INVESTMENT ACTIVITY
* Completed the development of Globalworth Square in
Bucharest in June 2021, adding 29.1k sqm class "A"
office space to our portfolio.
* Prioritised the development of new high-quality
logistic / light-industrial facilities in Romania, in
response to current market conditions.
* Continued (and continuing) to monitor market trends
for the development of office properties in the
future.
* Acquired two high-quality logistic / light-industrial
facilities in the western part of Romania with a
total area of 27.0k sqm for EUR17.9 million which are
let to two multinational tenants on 15-year lease
agreements.
Developments
The COVID-19 pandemic outbreak resulted in us focusing our
development programme on projects with significant pre-lets or at
advanced levels of construction - thus, following a very active
2020 where, in Romania, we delivered four properties with 95.8k
sqm, at the beginning of 2021 we had one class " A " office under
construction in Bucharest and several other industrial projects at
various stages of development across the country.
New Deliveries
In June 2021, we delivered the Globalworth Square development in
the New CBD of Bucharest. This class " A " office features several
new technologies, such as ice storage and geothermal energy systems
which target the lowering of energy/occupational costs and the
improving of efficiencies in the property, aiming at becoming the
first property in our portfolio in Romania with BREEAM Outstanding
green accreditation (currently under certification process).
Globalworth Square is located between our own Globalworth Plaza
and Green Court B class " A " offices, extending over 15 floors
above ground and three underground levels, offering 29.1k sqm of
high-quality GLA and c.450 parking spaces. The property, as at 30
June 2021, was 36.8% leased to Wipro, a leading multinational
company delivering innovation-led strategy, technology and business
consulting services. Furthermore, to allow for the highest level of
" customisation " of the available spaces for future tenants in the
property, the available spaces have remained in a core and shell
design.
Review of Development Projects
In the first half of 2021, we prioritised the development of new
logistic / light-industrial facilities in our portfolio, and in
this period, we progressed with select preparatory activities,
including planning and/or permitting, of the subsequent phases in
four of our projects in Romania. We expect that together these
facilities will, on completion, further increase our footprint by
99.7k sqm of high-quality GLA.
In addition, we own, directly or through JV partnerships, other
land plots in prime locations in Bucharest, regional cities in
Romania and Poland, covering a total land surface of 1.2 million
sqm (comprising 2.3% of the Group ' s combined GAV), for future
developments of office, industrial or mixed-use properties. When
fully developed, these land plots have the potential to add in
total a further 785.1k sqm of high-quality GLA to our standing
portfolio footprint.
These projects, which are classified for " Future Development "
, continue to be reviewed by the Group, albeit periodically, with
the pace at which they will be developed being subject to tenant
demand and general market conditions.
Developments - Prioritised
-------------------------------- ------------------- -----------------------------------------------------------
Timisoara Chitila Logistics Pitesti Industrial Constanta
Industrial Hub Park Phase Business Park
Park II (Phase (Phases B B (Phase B)*
B) and C)*
-------------------------------- ------------------- ------------------- ------------------- -----------------
Location Timisoara Bucharest Pitesti Constanta
================================ =================== =================== =================== =================
Status Under construction Under construction Under permitting Dev. prioritised
================================ =================== =================== =================== =================
Expected Delivery 2022 2021-2022 2021 2022
================================ =================== =================== =================== =================
GLA (k sqm) 19.0 54.1 6.7 19.8
================================ =================== =================== =================== =================
CAPEX to 30 Jun 20
(EUR m) 0.6 6.1 1.9 0.5
================================ =================== =================== =================== =================
GAV (EUR m) 1.1 5.8 1.4 0.9
================================ =================== =================== =================== =================
Estimated CAPEX to
Go (EUR m) 7.7 23.4 3.4 8.5
================================ =================== =================== =================== =================
ERV (EUR m) 0.8 2.3 0.5 0.9
================================ =================== =================== =================== =================
Estimated Yield on
Development Cost 9.2% 8.0% 9.6% 9.7%
================================ =================== =================== =================== =================
(*) 50:50 Joint Venture; figures
shown on 100% basis.
Future Developments
----------------------------------------------------------------------------------------------------
Podium Globalworth Constanta Timisoara Luterana Green
Park III West Business Industrial Court
Park (Phased)* Park I D
& II
(Phased)
----------------- ----------- ------------ ---------------- ------------ ---------- ----------
Location Krakow Bucharest Constanta Timisoara Bucharest Bucharest
================= =========== ============ ================ ============ ========== ==========
Status Constr. Constr. Planned Planned Planned Planned
Postponed Postponed
================= =========== ============ ================ ============ ========== ==========
GLA (k sqm) 17.7 33.4 526.2 165.2 26.4 16.2
================= =========== ============ ================ ============ ========== ==========
CAPEX to 30 Jun
20 (EUR m) 8.5 5.2 11.5 6.43 7.4 2.5
================= =========== ============ ================ ============ ========== ==========
GAV (EUR m) 9.6 7.8 21.5 10.4 14.0 6.1
================= =========== ============ ================ ============ ========== ==========
Estimated CAPEX
to Go (EUR m) 29.7 38.5 243.6 63.5 39.7 23.9
================= =========== ============ ================ ============ ========== ==========
ERV (EUR m) 3.1 5.1 27.8 6.7 5.8 3.0
================= =========== ============ ================ ============ ========== ==========
Estimated Yield
on Development
Cost 8.1% 11.5% 10.9% 9.6% 12.3% 11.4%
================= =========== ============ ================ ============ ========== ==========
(*) 50:50 Joint Venture; figures shown on 100% basis.
New Acquisitions
During the period, we completed the acquisition of two
high-quality logistic / light-industrial facilities in the western
part of Romania with a total area of 27.0k sqm for EUR17.9 million
and acquired additional land adjacent to one of our existing
mixed-use developments in Constanta improving the visibility and
access of our existing investment.
The facilities in Arad and Oradea represent the first purchases
of standing properties for the Group since our decision in 2020 to
suspend the acquisition of new standing properties, as part of our
initiatives to safeguard our business and liquidity in a period of
increased uncertainty due to COVID-19.
Industrial Park West - Arad ( " IPW Arad " )
Industrial Park West - Arad is a 20.1k sqm facility in the
North-West part of the city and part of the industrial zone of
Arad. IPW Arad was developed in two phases between 2012 and
2020.
-- Phase 1 was delivered in 2012, and comprises of
light-production, warehouse, office and technical areas
-- Phase 2 was delivered in 2020, further increasing the
production and office areas in the property
IPW Arad is strategically located only a few kilometres from the
A1 motorway, the Arad International Airport and the city centre, to
which has excellent connectivity, while the park has the necessary
infrastructure within the park to be able to support high-quality
international corporates.
The park is 100% leased, and on a 15 year lease (13.6 years
remaining) to Huf Romania, the Romanian subsidiary of the global
automotive supplier Huf Group, the leading specialist for secure
car access and authorisation.
Industrial Park West - Oradea ( " IPW Oradea " )
Industrial Park West - Oradea comprises of 6.9k sqm facility
delivered in the second half of 2020, and 100% leased on a 15-year
lease (14.2 years remaining) to Iwis, the world leader in
innovative, cost-effective timing drive systems based on precision
chains.
IPW Oradea is located within the industrial zone of Oradea, and
strategically located in the European Road E60 and c.4 km from the
Romanian / Hungarian border.
The park could potentially increase its floor space by up to
9.9k sqm in the future.
Select Land Acquisition
In order to facilitate further the success and the development
of the future phases of the Constanta Business Park project, we
acquired a small parcel of land (1.5k sqm) which increases its
visibility from the main road and also improves access.
Industrial Park West - Arad & Oradea Overview
-----------------------------------------------------------------------------------------
City Acquisition GLA Occupancy 100% Occupancy
Price ( EUR (k sqm) (%) Yield (*)
m)
-------------- ------------------ ------------- --------- ---------- ---------------
IPW - Arad Arad / Romania 13.3 20.1 100% 8.5%
-------------- ------------------ ------------- --------- ---------- ---------------
IPW - Oradea Oradea / Romania 4.6 6.9 100% 8.6%
-------------- ------------------ ------------- --------- ---------- ---------------
Total 17.9 27.0 100% 8.5%
*100% Occupancy Yield based on acquisition data, divided by acquisition
price.
ASSET MANAGEMENT REVIEW
* 194.4k sqm of commercial space taken-up or extended
at an average WALL of 4.7 years despite challenging
market conditions, representing a +68.2% increase
compared to H1-2020.
* Leases renewed accounted for the majority of our
activity, at 57.3%, improving our WALL over the
period (4.8 years as at 30 June 2021 vs 4.5 years as
at 31 December 2020).
* Average standing occupancy of our combined commercial
portfolio of 88.7% (89.7% including tenant options),
decreasing from 90.9% (91.7% including tenant
options) at year-end 2020. Like-for-like occupancy
decreased by 1.3%.
* Most of our contracted rent is from office and
industrial spaces (91.4% of annualised contracted
rent) which have remained largely unaffected by
measures taken by the authorities against COVID-19.
* Moderate impact from COVID-19 with:
o Rate of collections for rents invoiced and due remaining high
at 98.9% during the first half of 2021
o Net Operating Income 1.3% lower due to pandemic
* Total combined value of our real estate portfolio in
Poland and Romania, marginally increased to EUR3.1
billion (+1.3%), mainly due to new acquisitions and
the net positive impact from our developments
(delivered, in progress or under refurbishment).
o Like-for-like appraised value of our standing commercial properties
remained effectively unchanged at EUR2.7 billion as at 30 June
2021, 0.1% lower compared to 31 December 2020.
Leasing Review
Despite the current challenging environment and drop on demand
for office space in our home markets, our total leasing activity in
the first half of 2021 was 68.2% higher compared to the same period
last year.
New Leases
In the first six months of 2021, the Group successfully
negotiated the take-up (including expansions) or extension of
194.4k sqm of commercial spaces in Poland (60.9% of transacted GLA)
and Romania (39.1% of transacted GLA), with an average WALL of 4.7
years. Our principal focus continued to be the prolongation of
leases with existing tenants in our portfolio and take-up of
available spaces in standing properties and developments as, in the
current market environment, companies in general are taking a much
more conservative approach to leasing (relocation or expansion of
their operations), while in several cases they were forced to
downsize or even close-down their operations. As such, signing of
new leases, typically for large multinational and national
corporates, takes longer in the current market environment as
potential tenants are re-assessing their future occupational
plans.
Leases were renewed for a total of 111.3k sqm of GLA with 68 of
our tenants, at a WALL of 3.8 years, with the most notable
extensions involving Infosys (25.5k sqm) in Green Horizon, Rockwell
(12.9k sqm renewal plus 6.7k sqm expansion) in A4 Business Park and
EY (6.0k sqm) in TCI, while c.74.7% of the renewals by GLA signed
were for leases that were expiring in 2022 or later.
New leases were signed with 40 tenants for 66.7k sqm of GLA at a
WALL of 6.5 years. The majority were for logistic /
light-industrial spaces which accounted for 52.8% with the
remainder involving office and retail/commercial spaces.
The largest new leases in this period were with HAVI Logistics,
for a total of 20.6k sqm in two logistic / light-industrial
facilities in Bucharest, Heineken (8.6k sqm) in Podium Park II and
Wipro (6.0k sqm plus 4.7k sqm expansion) in the newly delivered
Globalworth Square. In H1-2021 we have signed 16.3k sqm of
expansions with 27 tenants, at an average WALL of 5.7 years.
Summary Leasing Activity for Combined Portfolio in H1-2020
---------------------------------------------------------------------
GLA (k sqm) No. of Tenants* WALL (yrs)
------------------------ ------------ ---------------- -----------
New Leases / New
Contracts 66.7 40 6.5
------------------------ ------------ ---------------- -----------
New Leases / Expansion 16.3 27 5.7
------------------------ ------------ ---------------- -----------
Renewals / Extensions 111.3 68 3.8
------------------------ ------------ ---------------- -----------
Total 194.4 122 4.7
*Number of individual tenants.
Occupancy
The average occupancy of our combined standing commercial
portfolio as at 30 June 2021 was 88.7% (89.7% including tenant
options), representing a 2.4% decrease over the past 6 months
(90.9% as at 31 December 2020 / 91.7% including tenant
options).
Standing occupancy has been affected by the addition of three
properties with an average occupancy (67.2%) lower than the Group
average, and the negative net uptake of space despite the signing
of new contracts, resulting in a lower average standing commercial
occupancy rate across our portfolio.
On a like-for-like basis, following the reclassification of our
Supersam mixed-used property in Poland to a property under
refurbishment / redevelopment, occupancy decreased by 1.3% to 89.6%
at the end of the first half 2021. This decrease is considered
modest and is mainly attributable to the office properties in our
portfolio, due to the very challenging market conditions - however,
we remain confident that we will be able to lease the available
spaces in our portfolio in the future as business conditions return
to a more normalised state.
Occupancy in our Renoma and Supersam mixed-use assets in Wroclaw
and Katowice, respectively, has also decreased by 7.4% in this
six-month period to 67.9% (30 June 2021), however, this is due to
the properties undergoing a partial refurbishment / repositioning
and are not included in our occupancy metrics.
Across the portfolio, at the end of the first half of 2021, we
had 1,126.9k sqm of commercial GLA leased to approximately 560
tenants in our standing properties (98.3% of the total leased GLA
in our standing assets), at an average WALL of 4.7 years, the
majority of which is let to national and multinational corporates
that are well-known within their respective markets.
In addition, we had 44.2k sqm leased in the two mixed-use
properties which are currently under refurbishment / repositioning
and not included in our standing portfolio.
Occupancy Evolution H1-2021 (GLA 'k sqm) - Commercial Portfolio
-----------------------------------------------------------------------------------------------------
Occupancy Occupancy Occupancy
Rate Rate Rate
Poland (%) Romania (%) Group (%)
==================================== ======= ========== ======== ========== ======== ==========
Standing Available GLA
- 31 Dec. 20 566.2 672.7 1,238.9
==================================== ======= ========== ======== ========== ======== ==========
Acquired GLA - 27.0 27.0
New Built GLA - 29.1 29.1
Remeasurements, reclassifications* (24.3) 0.3 (24.0)
------------------------------------ ------- ---------- -------- ---------- -------- ----------
Standing Available GLA
- 30 Jun. 21 541.9 729.1 1,271.0
------------------------------------ ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 31 Dec. 20 506.4 89.4% 619.2 92.0% 1,125.6 90.9%
==================================== ======= ========== ======== ========== ======== ==========
Acquired/Developed Occupied
GLA - 37.7 37.7
Expiries & Breaks (33.2) (29.1) (62.3)
Renewals** 84.0 21.6 105.6
New Take-up 25.9 22.4 48.3
------------------------------------ ------- ---------- -------- ---------- -------- ----------
Other Adj.*** (relocations,
remeasurements, etc) (22.4) (0.0) (22.4)
------------------------------------ ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 30 Jun. 21 476.7 88.0% 650.2 89.2% 1,126.9 88.7%
------------------------------------ ------- ---------- -------- ---------- -------- ----------
* Includes the reclassification of Supersam mixed-use property
(Katowice) from standing to under refurbishment (24.3k sqm of
GLA).
** Renewals are neutral to the occupancy calculation.
*** Includes the reclassification of occupied GLA in Supersam
from standing to under refurbishment (22.6k sqm of occupied GLA).
Other lease expirations, renewals, or new take-up in relation to
Supersam are excluded from the table.
Rental Levels
Headline market rental levels have remained relatively stable in
our portfolio, despite the uncertainty in the market and the
cautious approach of tenants, reflecting the quality of our
properties, our active asset management initiatives since the
outbreak of the pandemic, our approach to sustainability as well as
the lower high-quality supply of spaces in Poland and Romania. . At
the end of June 2021 our average headline rent in our standing
properties for office, retail/commercial and industrial spaces were
EUR14.2/sqm/month (EUR14.2 at YE-2020), EUR12.0/sqm/month (EUR12.1
at YE-2020) and EUR3.8/sqm/month (EUR3.7 at YE-2020)
respectively.
In the first half of the year, although rental levels vary
significantly between type of spaces, buildings and submarkets, new
leases and leases extended were signed at 3.4% lower rents compared
to the previously prevailing averages.
Our overall commercial GLA take-up during the first six months
of 2021 was agreed at an average rent of EUR11.1/sqm/month
(EUR10.9/sqm/month for FY2020), with office leases signed at an
average rent of EUR13.5/sqm/month, industrial spaces at
EUR3.9/sqm/month, driving the average rate down for the period as
such leases accounted for 22.9% of the total leasing activity,
while retail spaces were leased at EUR11.7/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent in our portfolio in Poland and
Romania increased by 1.0% to EUR185.2 million compared to year-end
2020 mainly due to new additions and leases signed on properties
under refurbishment / repositioning or being developed.
Total annualised contracted rents in our standing commercial
portfolio were EUR176.0 million at 30 June 2021, lower by 1.0%
compared to 31 December 2020, increasing to EUR177.0 million when
including rental income generated by renting 153 residential units
and other auxiliary spaces in Upground, the residential complex in
Bucharest which we partially own.
Like-for-like annualised commercial contracted rents in our
standing commercial portfolio decreased by 1.5% to EUR171.8 million
at the end of the first half of 2021 compared to 31 December 2020,
as the increase in rents (0.5% on average) due to indexation was
outweighed primarily by the lower occupancy.
Annualised Contracted Rent Evolution H1-2021 (EURm)
-----------------------------------------------------------------------------
Poland Romania Group
================================================== ======= ======== ======
Rent from Standing Commercial Properties
( " SCP " ) 31 Dec 2020 97.0 80.7 177.7
================================================== ======= ======== ======
Less: Properties reclassified(*) (3.4) - (3.4)
================================================== ======= ======== ======
Rent from SCP Adj. for Properties Reclassified
31 Dec 2020 93.6 80.7 174.3
================================================== ======= ======== ======
Less: Space Returned (5.9) (2.6) (8.6)
================================================== ======= ======== ======
Plus: Rent Indexation 0.3 0.5 0.8
================================================== ======= ======== ======
Plus/Less: Lease Renewals (net impact)
& Other (1.0) (0.1) (1.1)
================================================== ======= ======== ======
Plus: New Take-up 4.7 1.6 6.3
================================================== ======= ======== ======
Total L-f-L Rent from SCP 30 Jun 2021 91.7 80.1 171.8
================================================== ======= ======== ======
Plus: Standing Commercial Properties
Acquired During the Period - 1.5 1.5
================================================== ======= ======== ======
Plus: Developments Completed During
the Period - 2.7 2.7
================================================== ======= ======== ======
Total Rent from Standing Commercial
Properties 91.7 84.3 176.0
================================================== ======= ======== ======
Plus: Residential Rent - 1.0 1.0
================================================== ======= ======== ======
Total Rent from Standing Properties 91.7 85.3 177.0
================================================== ======= ======== ======
Plus: Active and Pre-lets of Space
on Projects Under Development / Refurbishment 7.0 1.2 8.2
================================================== ======= ======== ======
Total Contracted Rent as at 30 Jun
2021 98.7 86.5 185.2
*Supersam mixed-use asset (Katowice) was reclassified under
redevelopment during H1-2021
Combined Annualised Commercial Portfolio Contracted Rent Profile
as at 30 June 2021
Poland Romania Group
------------------------------- ------------- -------------- ----------
Contracted Rent
(EUR m) 98.7 85.5 184.2
------------------------------- ------------- -------------- ----------
Tenant origin - %
--------------------------------------------------------------------------
Multinational 68.4% 91.6% 79.1%
------------------------------- ------------- -------------- ----------
National 30.1% 7.2% 19.5%
------------------------------- ------------- -------------- ----------
State Owned 1.5% 1.2% 1.4%
------------------------------- ------------- -------------- ----------
Note: Commercial Contracted Rent excludes c.EUR1.0 million from
residential spaces as at 30 June 2021
Annualised Contracted Rent by Period of Commencement Date
as at 30 Jun 2021 (EURm)
--------------------------------------------------------------------- ------
Active H2-2021 H1-2022 H2-2022 >2022 Total
Leases
--------------- --------- ---------- --------- --------- ------- ------
Standing
Properties 168.7 6.1 1.9 0.0 0.3 177.0
--------------- --------- ---------- --------- --------- ------- ------
Developments 6.7 1.5 - - - 8.2
--------------- --------- ---------- --------- --------- ------- ------
Total 175.4 7.6 1.9 0.0 0.3 185.2
Annualised Commercial Portfolio Lease Expiration Profile as at 30
Jun 2021 (EURm)
---------------------------------------------------------------------------------------
Year H2-2021 2022 2023 2024 2025 2026 2027 2028 2029 >=
2030
--------- --------- ----- ------ ------ ----- ------ ----- ----- ----- ------
Total 12.2 17.2 18.7 29.6 17.3 19.9 16.3 10.5 8.4 34.1
--------- --------- ----- ------ ------ ----- ------ ----- ----- ----- ------
% of
total 6.6% 9.4% 10.2% 16.1% 9.4% 10.8% 8.9% 5.7% 4.6% 18.5%
The Group ' s rent roll across its combined portfolio is well
diversified, with the largest tenant accounting for 5.0% of
contracted rents, while the top three tenants account for 10.6% and
the top 10 account for 27.1%. We expect this diversity to grow
further as the portfolio continues to expand.
Cost of Renting Spaces
The headline (base) rent presents the reference point which is
typically communicated in the real estate market when a new lease
is signed. However, renting spaces typically involves certain
costs, such as rent-free periods, fitouts for the space leased, and
brokerage fees, which are incurred by the landlord. These
incentives can vary significantly between leases, and depend on
market conditions, type of lease (new take-up or lease extension),
space leased (office, other commercial, etc), duration of the
contract and other factors.
In calculating our effective rent, we account for the costs
incurred over the lifetime of the lease, which we deduct from the
headline (base) rent, thus allowing us to assess the profitability
of a rental agreement.
Overall, in the first half of 2021, we successfully negotiated
the take-up (including expansions) or extension of 194.4k sqm of
commercial spaces in our portfolio. The overall weighted average
effective rent for these new leases was EUR7.8/sqm/month with a
weighted average lease term of 4.7 years. Industrial leases
completed in the period, which accounted for 22.9% of the total
leasing activity, resulted in lower average headline and effective
rent achieved.
The difference between headline (base) and effective rents in
the first half of 2021 was on average c.29.3%, a discount higher
compared to the FY2020 (average of c.21%) due to the continuing
challenging market conditions and the type of leases signed.
In total, new leases signed in the first six months of the year
will generate a future rental income of EUR132.5 million.
Weighted Average Effective Rent
(EUR / sqm / m) - H1-2021
--------------------------------- ----------------------- ---------------------- ----------------------
Poland Romania Group
================================= ======================= ====================== ======================
Headline Commercial Rent 13.1 7.8 11.1
================================= ======================= ====================== ======================
Less: Rent Free Concessions (2.8) (0.6) (2.0)
================================= ======================= ====================== ======================
Less: Tenant Fitouts (1.4) (0.4) (1.0)
================================= ======================= ====================== ======================
Less: Broker Fees (0.4) (0.2) (0.3)
================================= ======================= ====================== ======================
Effective Commercial Rent 8.5 6.7 7.8
================================= ======================= ====================== ======================
WALL (in years) 4.2 6.1 4.7
================================= ======================= ====================== ======================
Note: Certain casting differences in subtotals / totals
are due to figures presented in 1 decimal place.
Tenant Demands / Claims Review
Tenant demands / claims decreased in 2021 as the business
community has been absorbing the initial shock from the COVID-19
pandemic outbreak, and restrictions imposed by the authorities that
directly and/or indirectly impacted certain businesses and
industries have been easing in Poland and Romania since the
beginning of the year.
The majority of our portfolio comprises office premises and
industrial properties or essential retail businesses (supermarkets,
pharmacies, convenience stores etc), none of which were impacted by
measures taken by the authorities since the beginning of the
pandemic in our countries of focus. In February 2021, restrictions
on non-essential or stationary retail were significantly eased in
Poland, limited only by the number of customers in stores.
Of our EUR185.2 million of total contracted rent on the last day
of June, office rent accounted for 85.1% (including parking rent),
with retail / commercial, industrial and other spaces accounting
for 6.3%, 6.3% and 2.3%, respectively.
Overall, for the first six months of 2021 we have estimated the
value of the tenant demands / claims received at c.EUR3.6 million,
reflecting c.1.9% of our contracted annual rent, with the majority
of them mainly awarded to tenants of retail / commercial spaces in
our properties which were impacted by restrictive measures /
closures in the first part of the year.
Our approach towards these tenant demands / claims, was to
continue to consider each case separately, rather than applying a
horizontal or vertical approach, aiming at identifying the optimal
solution for our tenants and Globalworth. Some of the solutions
implemented have been to award rent free months or to replace fixed
rent with turnover rent for retail tenants for certain periods of
tenant leases which in certain cases resulted in lease
extensions.
For us, however, the most important measure is the impact on our
Net Operating Income due to COVID-19 which was limited to 1.3%,
with the majority related to tenants affected directly or
indirectly by restrictions imposed on the operation of
non-essential retail/commercial spaces by the authorities.
We expect the level of claims to decrease in the future, as
restrictive measures continue to ease and increasing number of
people return to the office.
Collections Review
The ability to collect contracted rents is a key determinant for
the success of a real estate company.
Our rate of collections of rents invoiced and due in the first
half of 2021 remained high at 98.9%(1) (99.0% for 2020FY), due to
the long-term partnerships we established with high-quality
national and multinational tenants since inception of the Group and
continue to cultivate since, which have helped us minimise the
impact on rent collections in this period of higher economic
uncertainty and ensure sustainable cash flow generation.
More specifically, considering the current market environment,
rent to be collected in the first six months of 2021 was classified
as:
-- Rent eligible for invoicing: Includes rents to be invoiced to
tenants in accordance with the terms of their lease agreements.
Such rents were either collected or subject to collection; and
-- Rent impacted by measures imposed by the authorities: Such
rent was to be collected based on the contractual agreements in
place, however due to measures taken by the authorities in Poland
and Romania, tenants were excluded from paying, and as such no
invoices were issued by the Group.
Under normal conditions, the Group during the period would have
had EUR77.5 million of rent be invoiced and due, however EUR1.0
million was not invoiced due to measures taken by the
authorities.
Portfolio Valuation
Our entire portfolio in Poland and Romania was revalued, by
independent appraisers, two times in the first half of 2021.
-- The first valuation was performed for the benefit of the
independent committee of the Group responsible for assessing the
cash offer for the entire issued and to be issued share capital of
Globalworth, with effective date the 31 March 2021;
-- The second valuation was performed, as at 30 June 2021, in
accordance with our policy of revaluing our properties twice a
year, at the end of June and December respectively.
The valuations were performed by CBRE and Knight Frank for our
properties in Poland, with Colliers and Cushman and Wakefield
valuing our properties in Romania (more information is available
under note 4 of the unaudited interim condensed consolidated
financial statements as of and for the period ended 30 June
2021).
Our portfolio since inception of the Group has been growing due
to new additions through acquisition or development of high-quality
properties in Poland and Romania, our asset management initiatives,
and the performance of the real estate markets in which we operate
resulting in healthy investor interest and contracting yields, as
well as healthy tenant demand leading to stable or growing rental
levels and lowering tenant incentives.
Overall, our total combined portfolio value increased from
EUR0.1 billion in 2013 to EUR3.0 billion in 2019, remaining
effectively unchanged in 2020 as the impact of the COVID-19
pandemic was reflected at our year-end independent valuation
appraisal of our properties, and marginally increasing (+1.3%) at
the end June 2021 to EUR3.1 billion.
Portfolio growth in the first half of 2021, is mainly attributed
to the addition through acquisition of two high-quality logistic /
light- industrial properties in Romania and the net positive impact
from our developments (delivered, in progress or under
refurbishment). Like-for-like appraised value of our standing
commercial properties was EUR2.7 billion at the end of the period,
0.1% lower compared to 31 December 2020.
(1) Information as at 10 September 2021.
In valuing our properties, the key market indicators used by the
four independent appraisers although vary, considering factors such
as the commercial profile of the property, its location and the
country in which it is situated, have remained consistent with
those of year-end 2020, with ERVs, yields and/or discount rates
remaining stable with only few exceptions, where positive
adjustments were made to reflect improvements in operating
performance.
It has to be noted that since 30 June 2020 independent
valuations, yields and/or discount rates used by appraisers have
remained stable, which for the majority of our office and mixed-use
properties, were 10 - 50bps wider compared to December 2019.
Combined Portfolio Value Evolution 30 Jun 2021 (EURm)
----------------------------------------------------------------------------------------
Poland Romania Group
====================================== ============= ================ ===============
Total Portfolio Value at
31 Dec 2020 1,610.1 1,422.8 3,032.9
====================================== ============= ================ ===============
Less: Properties Held in
Joint Venture (*) - (51.2) (51.2)
====================================== ============= ================ ===============
Total Investment Properties
at 31 Dec 2020 1,610.1 1,371.6 2,981.7
====================================== ============= ================ ===============
Plus: Transactions - 17.2 17.2
====================================== ============= ================ ===============
o/w New Acquisitions - 17.9 17.9
====================================== ============= ================ ===============
o/w Disposals - (0.7) (0.7)
====================================== ============= ================ ===============
Plus: Capital Expenditure 1.1 15.8 16.9
====================================== ============= ================ ===============
o/w Developments - 15.8 16.9
====================================== ============= ================ ===============
o/w Standing Properties - - -
====================================== ============= ================ ===============
o/w Future Developments - - -
====================================== ============= ================ ===============
Plus: Net Revaluations Adjustments (7.8) 11.0 3.2
====================================== ============= ================ ===============
o/w Developments (3.6) 5.5 1.8
====================================== ============= ================ ===============
o/w Standing Properties (4.1) 2.2 (2.0)
====================================== ============= ================ ===============
o/w Lands, Future Developments
& Acquisitions - 3.4 3.4
====================================== ============= ================ ===============
Total Investment Properties
at 30 Jun 2021 1,603.4 1,415.5 3,018.9
====================================== ============= ================ ===============
Plus: Properties Held in
Joint Venture (*) - 53.7 53.7
====================================== ============= ================ ===============
o/w Capital Expenditure
& Acquisitions - 4.4 4.4
====================================== ============= ================ ===============
o/w Net Revaluation Adjustments - (1.9) (1.9)
====================================== ============= ================ ===============
Total Portfolio Value at
30 Jun 2021 1,603.4 1,469.2 3,072.6
====================================== ============= ================ ===============
(*) Properties held through joint ventures are shown at 100%,
Globalworth owns 50% stake in the respective joint ventures
Note: Certain casting differences in subtotals / totals are due
to figures presented in 1 decimal place.
Combined Portfolio Value Overview 30 Jun 2021 (EURm)
-------------------------------------------------------------------------------------------
Poland Romania Group % of YoY LfL
Total
=========================== ======== ======== ========
Portfolio % Change % Change
=========================== ======== ======== ======== ========== ========= =========
Office 1,334.3 1,186.5 2,520.8 82.0% 0.8% (0.1%)
=========================== ======== ======== ======== ========== ========= =========
o/w Standing Properties 1,324.7 1,158.6 2,483.3 80.8% 2.5% (0.1%)
=========================== ======== ======== ======== ========== ========= =========
o/w Future Developments 9.6 27.9 37.5 1.2% 0.5% 0.5%
=========================== ======== ======== ======== ========== ========= =========
Mixed-Use 269.2 - 269.2 8.8% (1.3%) (1.2%)
=========================== ======== ======== ======== ========== ========= =========
o/w Standing Properties 120.1 - 120.1 3.9% (29.2%) (0.9%)
=========================== ======== ======== ======== ========== ========= =========
o/w Re-developments 149.0 - 149.0 4.9% 44.5% (1.6%)
=========================== ======== ======== ======== ========== ========= =========
Industrial - 206.4 206.4 6.7% 13.8% 0.9%
=========================== ======== ======== ======== ========== ========= =========
o/w Standing Properties - 165.3 165.3 5.4% 14.2% 0.8%
=========================== ======== ======== ======== ========== ========= =========
o/w Developments
in progress - 5.5 5.5 0.2% n.m. n.m.
=========================== ======== ======== ======== ========== ========= =========
o/w Future Developments - 35.6 35.6 1.2% (3.0%) 3.1%
=========================== ======== ======== ======== ========== ========= =========
Other - 76.3 76.3 2.5% (1.3%) (0.4%)
=========================== ======== ======== ======== ========== ========= =========
o/w Standing Properties - 68.4 68.4 2.2% (1.4%) (0.5%)
=========================== ======== ======== ======== ========== ========= =========
o/w Lands - 7.9 7.9 0.3% (0.0%) -
=========================== ======== ======== ======== ========== ========= =========
Total Portfolio
at 30 Jun 2021 1,603.4 1,469.2 3,072.6 100.0% 1.3% (0.1%)
=========================== ======== ======== ======== ========== ========= =========
(*) Properties held through joint ventures are shown at 100%,
Globalworth owns 50% stake in the respective joint ventures.
STANDING PORTFOLIO REVIEW
* Standing portfolio footprint increased by 31.7k sqm
mainly attributed to the addition of three new
high-quality office and industrial properties in
Romania, to 1,303.0k sqm of GLA.
o Supersam, the mixed-use property in Katowice has been reclassified
due to partial refurbishment / repositioning
* Total combined standing GLA of over 1.3 million sqm,
with total standing portfolio value remaining
effectively unchanged at EUR2.8 billion
* Total contracted rent of EUR185.2 million (over 99%
of rent from office, industrial or other commercial
spaces) in our standing properties
* Standing WALL remaining high at 4.7 years (versus 4.4
years at year-end 2020)
* All our properties in Poland are now internally
managed, resulting in 90.7% of our combined standing
commercial portfolio by value (96.8% of office and
mixed-use standing properties) being internally
managed by the Group
* EUR7.7 million were invested in our renovation and
upgrade programme in the first half of 2021
o Repositioning / renovation of two mixed use properties in Poland,
our landmark Renoma and Supersam in progress and expected to be
completed in 2022
Standing Portfolio Evolution
Our combined portfolio of high-quality standing properties as at
30 June 2021, comprised 39 standing investments (37 at 31 December
2020) with 66 buildings (64 at 31 December 2020) in Poland and
Romania.
In the first half of the year, two high-quality logistic /
light-industrial facilities in regional Romania and a new Class-A
office in Bucharest were added to our standing portfolio, with
Supersam our mixed-use property in Katowice (Poland) being
reclassified as it is going through partial refurbishment /
repositioning.
Overall, our standing portfolio comprised 30 Class " A " offices
(50 properties in total) and a mixed-use investment (with five
properties in total) in central locations in Bucharest (Romania),
Warsaw (Poland) and five of the largest office markets/cities of
Poland (Krakow, Wroclaw, Katowice, Gdansk and Lodz).
In addition, we fully own in Romania two logistic /
light-industrial parks with five facilities in Timisoara and three
modern warehouses in Pitesti, Arad and Oradea, and have a 50%
ownership through a Joint Venture in two other industrial parks
(with two standing facilities) in Bucharest and Constanta. We also
own part of a residential complex in Bucharest.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 30 Jun. 2020 31 Dec. 2020 30 Jun. 2021
--------------------------- ------------- ------------- -------------
Number of Investments 37 37 39
--------------------------- ------------- ------------- -------------
Number of Assets 62 64 66
--------------------------- ------------- ------------- -------------
GLA (k sqm) 1,248.5 1,271.3 1,303.0
--------------------------- ------------- ------------- -------------
GAV (EUR m) 2,844.1 2,805.5 2,837.2
--------------------------- ------------- ------------- -------------
Contracted Rent (EUR
m) 187.0 178.7 177.0
--------------------------- ------------- ------------- -------------
Of which Commercial 30 Jun. 2020 31 Dec. 2020 30 Jun. 2021
Properties
------------------------ -------------- --------------- ---------------
Number of Investments 36 36 38
------------------------ -------------- --------------- ---------------
Number of Assets 61 63 65
------------------------ -------------- --------------- ---------------
GLA (k sqm) 1,215.5 1,238.9 1,271.0
------------------------ -------------- --------------- ---------------
GAV (EUR m) 2,783.5 2,745.9 2,778.6
------------------------ -------------- --------------- ---------------
Occupancy (%) 93.3% (94.2%) 90.9% (91.7%*) 88.7% (89.7%*)
------------------------ -------------- --------------- ---------------
Contracted Rent (EUR
m) 186.1 177.7 176.0
------------------------ -------------- --------------- ---------------
Potential rent at 100%
occupancy (EUR m) 202.7 199.2 202.5
------------------------ -------------- --------------- ---------------
WALL (years) 4.4 4.5 4.7
------------------------ -------------- --------------- ---------------
(*) Including tenant
options
The total gross leasable area of our combined standing
commercial portfolio increased by 32.1k sqm or 2.6% over the first
six months of 2021 to reach 1,271.0k sqm, with the overall combined
standing portfolio GLA increasing 2.4% to 1,303.0k sqm.
The net increase in the size of our portfolio was attributed to
the addition of 29.1k sqm of class " A " office space following the
delivery of Globalworth Square in Bucharest and of 27.0k sqm from
the two newly acquired high-quality logistic / light-industrial
facilities in Arad and Oradea, partially offset by the
reclassification of our mixed-use Supersam (24.3k sqm) property,
the remeasurement of certain of our properties ((0.1)k sqm), and
the sale of certain units in our Upground residential complex.
The appraised value of our combined standing portfolio as at 30
June 2021 was EUR2.8 billion, with the overall increase mainly
attributed to the addition of new properties, through acquisition
and completion, which was offset by the revaluations of properties
held throughout the period (like-for-like), and the sale of certain
units in our Upground residential complex. Value of like-for-like
properties remained effectively unchanged, and 0.1% lower at the
end of June 2021 compared to 31 December 2020 (additional
information can be found in the " Asset Management Review " ).
Evolution of Combined Standing
Portfolio over 2021
------------------------------------------------ --------- ----------- ----------
31 Dec. LfL Change* New Acq. Reclass. New Deliv. Sales 30 Jun.
2020 (& Other 2021
Adj**)
============= ======== ============ ========= ========= =========== ========== ========
GLA (k sqm) 1,271.3 0.0 27.0 (24.3) 29.1 (0.1) 1,303.0
------------- -------- ------------ --------- --------- ----------- ---------- --------
GAV (EUR
m) 2,805.5 (2.3) 20.8 (48.4) 63.6 (2.0) 2,837.2
------------- -------- ------------ --------- --------- ----------- ---------- --------
(*) Like-for-Like change represents the changes in GLA or GAV of
standing properties owned by the Group at 31 December 2020 and 30
June 2021.
(**) Includes impact in areas (sqm) from the remeasurement of
certain properties and other GAV adjustments (redevelopment capex,
reclassification).
Standing Properties Operation, Renovation and Upgrade
Programme
Offering best-in-class real estate space to our business
partners is a key component of our strategy at Globalworth.
We believe that through a " hands-on " approach with continuous
active management and investment in our portfolio we can preserve
and enhance the value of our properties, generate long-term income,
as well as offering best-in-class real estate space to our business
partners.
Over the past few years, real estate has been gradually moving
away from " static " bricks and mortar buildings to more vibrant
environments where people and businesses can flourish, and as such
the ability to quickly adapt to trends and customise spaces is
becoming an increasingly important factor for success, which has
been accelerated by COVID-19 pandemic and the shifting format
towards a more flexible / hybrid-ecosystem with less desk space and
more collaborative areas.
In order to be able to provide spaces for our current and future
business partners requirements, we continue to internalise the
asset management of our portfolio, keep (re)investing in our
properties, maintain and, where required, improve the quality of
our buildings and of our services.
We are pleased that all our properties in Poland are now
internally managed by the Group, with the latest addition being the
Green Horizon class " A " office in Lodz, and in Romania, almost
all our offices (with the exception of one) are internally managed.
Overall, we internally manage 962.4k sqm of high-quality office and
mixed-use space in Poland and Romania with an appraised value of
EUR2.5 billion. Of our total standing commercial portfolio, our
internally managed properties account for 90.7% by value (96.8% of
office and mixed-use standing properties) as at 30 June 2021.
Our Renovation and Upgrade Programme has resumed at a more
normalised state in 2021, following its scaling back for part of
2020 due to COVID-19. Overall, in the first half of 2021, EUR7.7
million were invested in our standing portfolio and the two
mixed-use properties which are under refurbishment / repositioning.
As a result of our ongoing in-house initiatives and properties
additions, we consider holding a modern portfolio with 47 of our
standing commercial properties, accounting for 71.8% by GLA and
73.9% by commercial portfolio value, which has been delivered or
significantly refurbished in or after 2014.
In 2021 we commenced the refurbishment / repositioning project
of our Renoma landmark mixed-use property in Wroclaw which involves
the conversion of certain retail / commercial spaces to office, as
well as the reallocation of certain commercial uses. Works for
Renoma are in progress and are expected to be completed by the end
of H2-2022.
In addition, similar works will be performed to our Supersam
mixed-use property in Katowice, focusing on the redevelopment of
the entire first level from commercial / retail space to class " A
" office and reconfiguring part of the first underground level to
high-quality retail & commercial spaces (food court and
entertainment). Works are estimated to cost EUR3.6 million and are
expected to be completed in H2-2022.
Finally, we are pleased that tenant fitout works have not been
affected during this period.
Supersam Refurbishment / Repositioning
- Overview on Completion
----------------------------------------------
Total Gross Leasable 26.2k sqm (+7.7%)
Area
------------------------- -------------------
Total Office Leasable 13.4k sqm (+2x)
Area
------------------------- -------------------
Retail & Other Leasable 12.7k sqm (-27.5%)
Area
------------------------- -------------------
Total Investment EUR3.6m
------------------------- -------------------
Est. Completion Q3-2022
------------------------- -------------------
Properties Under Refurbishment / Repositioning
-----------------------------------------------------------------------------------------------
Renoma Supersam
------------------------------- ------------------------------ ------------------------------
Location Wroclaw Katowice
=============================== ============================== ==============================
Status Refurbishment / Repositioning Refurbishment / Repositioning
=============================== ============================== ==============================
Expected Delivery H2-2022 H2-2022
=============================== ============================== ==============================
GLA - on Completion
(k sqm) 48.4 26.2
=============================== ============================== ==============================
CAPEX to 30 Jun 21 (EUR
m) 2.5 0.5
=============================== ============================== ==============================
GAV (EUR m) 101.5 47.5
=============================== ============================== ==============================
Estimated CAPEX to Go
(EUR m)* 22.1 5.1
=============================== ============================== ==============================
ERV (EUR m) 9.4 4.3
=============================== ============================== ==============================
Estimated Yield on Completion
of Project** 9.7% 10.1%
=============================== ============================== ==============================
* Estimated CAPEX to Go partially excludes tenant contributions
which are subject to tenant negotiation and may impact the final
yield on Completion of the Project.
** Estimated Rental Value increase versus current Contracted rent
+ ERV on vacant spaces divided by total Development Capex.
SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES
* 22 properties were certified or recertified with
BREEAM Very Good or higher certifications to our
portfolio in H1-2021
* Newly certified and recertified properties included
Skylight & Lumen (Warsaw), Silesia Star (Katowice),
Rondo Business Park and Quattro A and B (Krakow)
* Overall, 57 green certified properties in our
portfolio valued at EUR2.7bn
* Issued the third sustainable development report for
the Group for the FY 2020, and our inaugural Green
Bond Report
* Globalworth maintained its low-risk rating by
Sustainalitics and BBB by MSCI
* c.EUR445k donated to over 10 initiatives in Romania
and Poland.
Green Buildings
Consistent with our commitment to energy efficient properties,
we certified or recertified 22 properties with BREEAM Very Good or
higher certifications to our portfolio.
Five properties in Poland were environmentally certified for the
first time in 2021, with Silesia Star (Katowice - 2 buildings) and
Rondo Business Park (Krakow - 3 buildings) accredited with BREEAM
Excellent certifications.
In addition, 17 other properties had their certifications
updated in this period and we are pleased that we were able to
improve the level of certification, from BREEAM Very Good to
Excellent, for three buildings part of the Quattro Business Park in
Krakow, for the A4 Business Park (3 buildings) in Katowice and for
West Link in Wroclaw. All other properties, including Skylight
& Lumen (Warsaw), maintained their original level of
accreditation.
Overall, as at 30 June 2021, our combined standing portfolio
comprised 55 green certified properties, accounting for 92.3% of
our standing commercial portfolio by value. BREEAM accredited
properties account for 72.1% of our green certified standing
portfolio by value, with the remainder of properties being holders
of other certifications (LEED Gold or Platinum, Edge).
In addition, the Renoma and Supersam mixed-use properties in
Poland which are currently under refurbishment / repositioning have
maintained their BREEAM Excellent accreditations, as the works
performed are in accordance with a strict set of guidelines which
do not impact their green certification status.
At Globalworth we aim for 100% of our portfolio to be green
accredited and are currently in the process of certifying or
recertifying 11 other properties in our portfolio, principally
targeting BREEAM certifications.
Furthermore, as part of our overall green initiatives in the
first half of the year we were able to secure 100% of the energy
used in our Polish properties to be generated from renewable
sources, and in the third quarter were able to increase the same
ratio from 49% to 97% for our Romanian properties. This represents
a significant increase from 2020 and 2019 where 56% and 40%,
respectively, of the energy used in our properties, in Poland and
Romania together, was generated from renewable sources.
Globalworth Foundation Initiatives
In the first half of 2021, the Globalworth Foundation continued
with its very active social programme, and together with the entire
Globalworth team, it has been working to ensure the safety and
wellbeing of our people, communities, and wider stakeholder
universe.
Participation in programmes such as " Nesting a brighter future
for children " (United Ways Foundation), the " Visits of Hope "
(Hospice "Casa Sperantei" Foundation), and bringing the first
digital solution for virtual sports to children and teenagers with
physical and intellectual disabilities in placement and residential
centres in Romania, the Globalworth Foundation aims at contributing
to the communities in Romania and Poland in which we live and
work.
Overall, in the first six months of 2021 the Globalworth
Foundation has contributed c.EUR445k to over 10 initiatives in
Romania and Poland.
Reporting
As part of our effort to improve disclosure in relation to our
sustainable development strategy, initiatives and performance, we
published Globalworth ' s " 2020 Sustainable Development Report "
.
This is the third report published by the Group and has been
prepared in accordance with the GRI Standards: Core option and with
the European Public Real Estate Association ' s Sustainability Best
Practice Reporting Recommendations (EPRA sBPR).
In addition, in July and in line with our commitment as part of
the issue of our inaugural EUR400 million Green Bond financing, we
issued our (first) " 2020 Green Bond Report " which has received
independent limited assurance from EY on the allocations of the net
proceeds.
Finally, the Globalworth Foundation published it inaugural
report, " 2020 Globalworth Foundation Annual Report " , focusing on
the social initiatives in which it is involved.
PORTFOLIO SNAPSHOT
Our real estate investments are in Poland and Romania, the two
largest markets in the CEE. As at 30 June 2021, our portfolio was
spread across 12 cities, with Poland accounting for 52.2% by value
and Romania 47.8%.
Combined Portfolio Snapshot (as at 30 June 2021)
-------------------------------------------------------------------------------------------------
Poland Romania Combined Portfolio
---------------------- ---------------------- ----------------------
Standing Investments(1) 19 20 39
------------------------- ---------------------- ---------------------- ----------------------
GAV(2) / Standing
GAV (EURm) EUR1,603m / EUR1,445m EUR1,469m / EUR1,392m EUR3,073m / EUR2,837m
------------------------- ---------------------- ---------------------- ----------------------
Occupancy(3) 88.0% 89.2% 88.7%
(91.0% including (89.7% including
tenant options) tenant options)
------------------------- ---------------------- ---------------------- ----------------------
WALL(4) 4.0 years 5.7 years 4.8 years
------------------------- ---------------------- ---------------------- ----------------------
Standing GLA (k 542.0k sqm 761.0k sqm 1,303.0k sqm
sqm)(5)
------------------------- ---------------------- ---------------------- ----------------------
Contracted Rent
(EURm)(6) EUR98.7m EUR86.5m EUR185.2m
------------------------- ---------------------- ---------------------- ----------------------
GAV Split by Asset
Usage
------------------------- ---------------------- ---------------------- ----------------------
Office 83.2% 79.4% 81.4%
Mixed-Use 16.8% 0.0% 8.8%
Industrial 0.0% 11.6% 5.6%
Others 0.0% 9.0% 4.3%
GAV Split by City
------------------------- ---------------------- ---------------------- ----------------------
Bucharest 0.0% 87.2% 41.7%
Timisoara 0.0% 5.5% 2.7%
Pitesti 0.0% 3.4% 1.6%
Constanta 0.0% 2.4% 1.1%
Arad 0.0% 1.1% 0.5%
Oradea 0.0% 0.4% 0.2%
Warsaw 44.4% 0.0% 23.2%
Wroclaw 21.4% 0.0% 11.2%
Katowice 15.5% 0.0% 8.1%
Lodz 10.8% 0.0% 5.7%
Krakow 4.3% 0.0% 2.2%
Gdansk 3.5% 0.0% 1.8%
------------------------- ---------------------- ---------------------- ----------------------
GAV as % of Total 52.2% 47.8% 100.0%
1. Standing Investments representing income producing properties.
One investment can comprise multiple buildings. e.g. Green
Court Complex comprises three buildings or one investment
2. Includes all property assets, land and development projects valued
at 30 June 2021
3. Occupancy of standing commercial properties, and in the case of
Poland, including office rental guarantees
4. Includes pre-let commercial standing and development assets. WALL
of standing commercial properties in Romania, Poland and the Combined
portfolio are 5.6 years, 3.9 years and 4.7 years, respectively.
5. Including 32.0k sqm of residential assets in Romania
6. Total rent comprises commercial (EUR176.0 million) and residential
(EUR1.0 million in Romania) standing properties, which includes contracted
rent under master lease agreement, rent in assets under redevelopment
(EUR7.0 million in Poland) and development pre-lets (EUR1.2 million
in Romania).
CAPITAL MARKETS UPDATE
* On 12 May 2021, CPI Property Group and Aroundtown
formed a consortium ("CPI/AT Consortium") and
launched a cash offer, via Zakiono Enterprises
Limited, for the acquisition of the entire issued and
to be issued share capital (not already held, or
agreed to be acquired, by Zakiono) (effectively 48.8%
of Globalworth shares) at EUR 7.00 / share
* Following the completion of the tender offer in July
2021, the CPI/AT Consortium holds 60.6% of
Globalworth's share capital
* Share price performance impacted by the COVID-19
pandemic and the Offer by the CPI/AT Consortium,
closing 3.0% lower at 30 June 2021 compared to
year-end 2020
* Globalworth maintained its investment grade rating by
all three major agencies post their 2020 year-end
review of the Group
Equity Capital Markets and Shareholder Structure Update
On 14 April 2021, CPI Property Group S.A. ("CPI") and Aroundtown
SA ("Aroundtown" and, together with CPI, the "CPI/AT Consortium")
announced a unilateral cash offer for the shares of Globalworth
(the "Offer") through Zakiono. The Offer was for the acquisition of
Globalworth shares at EUR 7.00 / share, with the transaction being
subject to certain conditions which were either fulfilled or waived
between the date of announcement and 23 July 2021, when the offer
closed.
The independent committee of the Board (the "Independent
Committee " ) responsible for evaluating the Offer, following
advice from J.P. Morgan and Panmure Gordon, considered that it
undervalued the Group and recommended to shareholders not to accept
it. Subsequently the Offer was accepted by holders of 9.24% of the
issued share capital of Globalworth, thus resulting for the CPI/AT
Consortium increasing through Zakiono their controlling share in
Globalworth from 51.39% to 60.63% of the share capital following
the completion of the transaction.
Globalworth ' s share price has been impacted by the COVID -19
pandemic and the Offer in the first half of 2021, trading
consistently below its 31 December 2020 EPRA NAV level of EUR 8.68
/ share, reaching its lowest closing price on 18 March at EUR5.70
per share and its highest price on 20 April at EUR7.48 per
share.
Following the formal announcement of the Offer, the share price
of Globalworth ranged between EUR6.74 and EUR7.48 per share,
closing at EUR6.91 per share on 30 June 2021, representing a 3.0%
decrease since the beginning of the year. Including dividends paid,
the total return for the first half of 2021 was (0.9)%.
The Globalworth share price underperformed both FTSE EPRA
Developed Europe and the FTSE EPRA Global indices in the first six
months of 2021.
Globalworth Shareholding
30 June 23 August
21 21
=================== ====================== ======== ==========
CPI Property Together:
Group Zakiono Enterprises 29.5% 60.6%
=================== ====================== ======== ==========
Aroundtown 22.0%
=========================================== ======== ==========
Growthpoint
Properties 29.5% 29.4%
=========================================== ======== ==========
Oak Hill Advisors 5.3% 5.3%
=========================================== ======== ==========
EBRD 5.0% -
=================== ====================== ======== ==========
Other 8.7% 4.7%
=========================================== ======== ==========
Basic Data on Globalworth Shares
(Information as at 30 June 2021)
Number of 221.1m plus 1.3m shares held
Shares in treasury
(22.6m plus 0.8m shares in treasury
at 23 Aug. 21)
============== =======================================
Share Capital EUR1.7bn
================ =====================================
WKN / ISIN GG 00B979FD04
================ =====================================
Symbol GWI
================ =====================================
Free Float 18.6%
(9.9% at 23 Aug. 21)
================ =====================================
Exchange London AIM
================ =====================================
Globalworth Share Performance
H1-2021 H1-2020
================================== ========
Market Capitalisation
(EUR million) - 30 June 1,528 1,369
=========================== ====== ========
30-June Closing Price
(EUR) 6.91 6.18
=========================== ====== ========
52-week high (EUR) 7.48 10.10
=========================== ====== ========
52-week low (EUR) 5.70 5.55
=========================== ====== ========
Dividend per share 0.15 0.19
=========================== ====== ========
Bonds Update
Globalworth in the first half of 2021 had three Eurobonds
outstanding for a total of EUR1.3 billion. The Eurobonds issued in
June 2017, March 2018 and July 2020 (inaugural green bond), are
expiring in 2022, 2025 and 2026, respectively, and have a weighted
average maturity of 3.5 years.
These three facilities, which account for 78.0% of our total
outstanding debt financing, provide us with a simplified capital
structure and improve the efficiency of our capital allocation.
In addition, to be able to issue Eurobonds in an efficient and
quick way, potentially benefiting from favourable market
opportunities, in 2018 we established a Euro Medium Term Notes
(EMTN) programme allowing the Group to issue EUR1.5 billion of
bonds. Currently, the Group has raised EUR950 million as part of
its EMTN programme, allowing a further EUR550 million of bonds to
be issued in the future.
Globalworth is rated from all three major agencies, with each of
S&P, Fitch and Moody ' s maintaining their investment credit
rating following their 2020 year-end review of the Group, which is
testament to the nature and quality of our portfolio, the
resilience of our cash flows, and the protective measures we have
taken to protect the business and its assets amidst very
challenging but improving market conditions.
We maintained our " BBB -" rating and " Stable " outlook from
S&P and Fitch, and from Moody ' s our " Baa3 " rating and "
Negative " outlook mainly due to their house view on the Romanian
economy.
In 2021, all our bonds continued performing well, resulting in
further compression in the yield to maturity, with 17/22 bond
trading negatively for the majority of the second quarter of the
year.
Basic Data on the Globalworth
Bonds
GWI bond 17/22 GWI bond 18/25 GWI bond 20/26
==================== ================= ================= ================
ISIN XS1577957837 XS1799975922 XS2208868914
==================== ================= ================= ================
SEDOL BD8Q3P6 BD9MPV -
==================== ================= ================= ================
Segment Euronext Dublin, Euronext Dublin, Euronext Dublin
BVB BVB
==================== ================= ================= ================
Minimum investment EUR100,000 EUR100,000 EUR100,000
amount and EUR1,000 and EUR1,000
thereafter thereafter
==================== ================= ================= ================
Coupon 2.875% 3.000% 2.950%
==================== ================= ================= ================
Issuance volume EUR550 million EUR550 million EUR400 million
==================== ================= ================= ================
Outstanding 30
Jun. 2021 EUR323 million EUR550 million EUR400 million
==================== ================= ================= ================
Maturity 20 June 2022 29 March 2025 29 July 2026
==================== ================= ================= ================
Performance of the Globalworth
Bonds
H1-2021 H1-2020
======================= ========= ========
GWI bond 17/22
======================= ========= ========
30 June closing
price 102.76 100.31
======================= ========= ========
Yield to maturity
at 30 June 0.02% 2.71%
======================= ========= ========
GWI bond 18/25
======================= ========= ========
30 June closing
price 107.72 100.82
======================= ========= ========
Yield to maturity
at 30 June 0.89% 2.81%
======================= ========= ========
GWI bond 20/26
======================= ========= ========
30 June closing 108.46 -
price
======================= ========= ========
Yield to maturity 1.14% -
at 30 June
======================= ========= ========
FINANCIAL REVIEW
1. Highlights
Globalworth had a relatively small negative impact on its
operational profitability in H1-2021, compared to its best
performing half year in H1-2020, as a result of the significant
efforts made by Management in minimising the negative impact of the
COVID-19 pandemic on its business and results.
Revenues NOI 1
EUR108.1m EUR72.2m
-5.2% on H1-20 -9.4% on H1-20
IFRS Earnings per Combined Portfolio Value (OMV)
share 2 1
6 cents EUR3.1bn
-22 cents in H1-20 +1.3% on 31 Dec. 2020
-------------------------------
EPRA NRV 1,3 EPRA NRV per share 1,3
EUR1,903.4m EUR8.61
-1.0% on 31 Dec. 2020 -0.8% on 31 Dec. 2020
-------------------------------
Adjusted normalised EPRA Earnings per share 1,2
EBITDA 1,4 13 cents
EUR64.8m -38.1% on H1-20
-9.4% on H1-20
-------------------------------
LTV 1,5 Dividends paid in H1- 21 per
share
39.2% 15 cents
37.8% at 31 Dec. 2020 -50.0% on H1-20
-------------------------------
1. See Glossary (pages 72-74) for definitions.
2. See note 12 of the unaudited condensed consolidated financial
statements for calculation.
3. See note 19 of the unaudited condensed consolidated financial
statements for calculation.
4. See page 22 for further details.
5. See note 21 of the unaudited condensed consolidated financial
statements for calculation.
2. Revenues and Profitability
Following the best performing six-month period from an operating
profitability point of view in H1-2020, consolidated revenues
decreased by 5.2% in H1-2021 (compared to H1-2020) due to the
effects of COVID-19 and our efforts to extend as many of our
existing leases and secure new ones for our available spaces in our
properties in Poland and Romania.
Lower consolidated revenues resulted from a 7.2% decline in
rental income to EUR75.4 million (H1-2020: EUR81.2 million), with
the overall reduction in consolidated revenues of EUR5.8 million
driven by:
-- a EUR6.0 million or 7.4% reduction in rental income from
standing properties owned throughout both periods (5.3% reduction
in Poland and 2.1% reduction in Romania);
-- a EUR0.8 million or 1.0% reduction in rental income from the
Renoma mixed-use property in Poland which is currently undergoing
refurbishment / repositioning, which started in December 2020;
-- a EUR0.5 million or 0.6% reduction in additional rental
income from surrender premia charged to tenants; and
-- an increase of EUR1.5 million or 1.8% in rental income in
H1-2021 from the completion of a property under development in
Poland (Podium Park B) in Q4-2020 (1.5% increase) and the
acquisition of two industrial Properties in Romania (IPW Arad and
IPW Oradea) in May 2021 (0.3% increase).
The Group revenues in H1-2021 were split 54% Poland / 46%
Romania, compared to 56% Poland / 44% Romania in H1-2020.
Net Operating Income declined to EUR72.2 million, lower by 9.4%
compared to H1-2020 (EUR79.6 million), which was largely in line
with the decrease in overall Group revenues. The decrease in NOI
reflected a drop of EUR5.4 million in Poland and an additional
EUR2.0 million in Romania.
-- NOI was split 56% Poland / 44% Romania, compared to 57% Poland / 43% Romania in H1-2020.
Adjusted normalised EBITDA(1) was EUR64.8 million for the
period, a decrease of 9.4% over H1-2020 (EUR71.5 million),
resulting from the net effect of the decrease of NOI (by EUR7.4
million) and the decrease in recurring administrative expenses (by
EUR0.8 million).
(1) Earnings before finance cost, tax, depreciation,
amortisation of other non-current assets (H1-2021: EUR47.1 million
positive; H1-2020: EUR24.8 million negative), plus: net fair value
loss on investment property and financial instruments (H1-2021:
EUR15.0 million loss; H1-2020: EUR91.8 million loss), less: other
income (H1-2021: EUR0.5 million; H1-2020: EUR0.3 million); plus:
acquisition costs (H1-2021: EUR0.0 million; H1-2020: EUR2.3
million); plus: non-recurring administration and other expense
items (H1-2021: EUR3.2 million, including EUR1.9 million related to
professional advisory fees in connection with the cash offer for
Globalworth shares made by CPI Property Group S.A. and Aroundtown
SA through Zakiono Enterprises Limited in May 2021; H1-2020: EUR2.5
million).
Net finance costs were EUR26.7 million for the period,
representing a 19.5% increase (or EUR4.4 million higher) over
H1-2020 (EUR22.3 million), due to:
-- higher (by EUR3.0 million) coupon on Bonds from the
additional net EUR173.3 million outstanding Eurobonds starting from
the end of July 2020 with the issuance of a new EUR400 million
green Bond maturing in 2026, which was partly used to repay
EUR226.7 million of the Bond maturing in 2022;
-- higher (by EUR0.7 million) debt amortisation costs resulting
from the issuance of the new green Bond and part repayment of the
2022 Bond;
-- higher (by EUR0.4 million) interest on new secured bank loans
drawn down in H1-2020, higher (by EUR0.5 million) negative interest
charged on Euro deposits and current accounts balances, as well as
on Polish Zloty current accounts balances, higher (by EUR0.2
million) lease liability, as well as less (by EUR0.3 million)
interest income on cash deposits; and
-- a partly offsetting reduction in interest expenses (by EUR0.7
million) resulting from the fact that no RCF balance was
outstanding during H1-2021, whereas during Q2-2020 EUR200 million
was outstanding.
Joint ventures, including two light industrial properties under
development in Romania, generated net losses during H1-2021 and our
share of these amounted to EUR1.3 million, whereas in H1-2020 they
contributed EUR1.3 million profit to the Group's result. The
negative result from joint ventures resulted from our share of the
net valuation losses (net of the related deferred tax effect) of
EUR2.7 million. In H1-2020 our share of valuation gains (net of the
related deferred tax effect) was EUR1.4 million.
Earnings before tax were positive (EUR18.9 million) in H1-2021
compared to H1-2020 where a loss was generated (EUR46.1 million),
mainly as a result of the EUR77.3 million lower revaluation loss
recorded in H1-2021 (EUR14.7 million) compared to H1-2020 (EUR92.0
million). EPRA earnings, however, were EUR29.0 million (or 13 cents
per share), 37.5% lower compared to H1-2020 (EUR46.4 million, or 21
cents per share) as a result of the reduction in operational
profitability, as indicated by the decrease in NOI and adjusted
normalised EBITDA. EPRA Earnings per share for H1-2021 also
followed the same trend as EPRA earnings as the weighted average
number of shares during H1-2021 (221.2 million) and H1-2020 (221.5
million) has not differed significantly .
Reconciliation of IFRS Earnings to EPRA Earnings
EURm cents/share
IFRS Earnings 12.5 6
----- ------------
Add/(subtract):
----- ------------
Fair value loss on properties 14.7 7
----- ------------
Deferred Tax 0.4 0
----- ------------
JVs and others 1.4 0
----- ------------
EPRA Earnings 29.0 13
----- ------------
Following the trend in earnings before tax, which turned to a
profit in H1-2021 from a loss in H1-2020 due to the more
significant valuation loss recorded in the prior year's comparative
period, IFRS earnings per share was 6 cents positive compared to 22
cents negative in H1-2020. The IFRS earnings were EUR12.5 million
positive compared to EUR48.6 million negative in H1-2020.
3. Balance Sheet
The combined portfolio open market value increased by EUR39
million, an increase of 1.3% compared to 31 December 2020, to
EUR3,103 million (31 Dec. 20: EUR3,064 million). This comprises
EUR3,049 million of investment property held on our balance sheet
as at 30 June 2021, and a further EUR54 million representing the
100% value of joint venture properties comprising two light
industrial properties under development, in phases, in Romania
(Chitila Logistics Hub and Constanta Business Park).
The balance sheet value of our investment property (freehold)
portfolio at 30 June 2021 amounted to EUR3,019 million (31 December
2020: EUR2,982 million). The small increase is mainly due to the
acquisition of two standing industrial properties (EUR18 million),
CAPEX investments made on a property under development in Romania
and other value accretive CAPEX on standing properties (EUR25.2
million), as offset by the net fair value losses on freehold
properties of EUR14.7 million (EUR20.8 million net fair value loss
in Poland and a EUR6.1 million net fair value gain in Romania).
Total assets as at 30 June 2021 were EUR3,606 million,
marginally lower by 0.7% compared to 31 December 2020 (EUR3,630
million), primarily due to the net fair value loss on freehold
investment property, as well as our Group's share of net fair value
loss on properties held through joint ventures.
EPRA NAV(2) Bridge from 31 December 2020 to 30 June 2021 (EUR
million)
EURm
EPRA NAV 31 Dec 2020 1,923.5
--------
EPRA Earnings 29.0
--------
Fair value loss on properties (14.7)
--------
Non-EPRA Earnings 0.2
--------
Dividends (33.1)
--------
Others (1.5)
--------
EPRA NAV 30 June 2021 1,903.4
--------
(2) From 2021 onwards the Group is using the EPRA NRV matric as
its primary NAV metric, which is equivalent to the EPRA NAV metric
used in prior years / periods.
EPRA NRV decreased to EUR1,903.4 million as at 30 June 2021, a
decrease of 1.0% compared to 31 December 2020 (EUR1,923.5 million).
As a result, EPRA NRV per share also decreased to EUR8.61 per share
(31 December 2020: EUR8.68 per share).
The main factors driving the change in EPRA NRV during H1-2021
were:
-- The effect of the fair value loss on properties of EUR14.7
million on the positive net profit for the period; and
-- The dividends of EUR33.1 million paid in March 2021 in
respect of the six months ended 31 December 2020.
Evolution of EPRA NAV(3) /share and OMV by semester
Jun-19 Dec-19 Jun-20 Dec-20 Jun-21
EPRA NAV per share
EUR 9.05 9.30 8.80 8.68 8.61
------- ------- ------- ------- -------
EPRA NRV (NAV)
EURbn 1.8 2.1 2.0 1.9 1.9
------- ------- ------- ------- -------
Combined Portfolio
OMV EURbn 2.7 3.0 3.0 3.0 3.1
------- ------- ------- ------- -------
(3) Reference to the EPRA NAV metric i refers to year or period
end dates prior to 31 December 2020 and are presented as equivalent
to the EPRA NRV metric.
4. Results and dividends
The results for the period are set out in the consolidated
statement of comprehensive income on page 30.
In March 2021, the Company made an interim dividend distribution
of 15 cents per share in respect of the six-month period ended 31
December 2020. Post the period end, on 31 August 2021, the Company
declared its first interim dividend in respect of the six-month
period ended 30 June 2021 of 15 cents per share.
5. Financing & Liquidity Review
In the context of the ongoing COVID-19 pandemic, the Group ' s
main focus during the first half of 2021 was to preserve the
available cash position and available undrawn RCF and minimise the
negative impact of the COVID-19 pandemic over its operations and
results.
Dividends
As stated above, in March 2021 the Company paid an interim
dividend of 15 cents per share (c.EUR33.1 million) in respect of
the six-month period ended 31 December 2020, while on 31 August
2021 it announced the payment of an interim dividend of 15 cents
per share (c.EUR33.2 million) in respect of the six-month period
ended 30 June 2021.
Debt Summary
The Group ' s outstanding debt remained largely unchanged at 30
June 2021 compared to 31 December 2020.
The total outstanding debt portfolio of the Group at 30 June
2021 of EUR1.63 billion (31 December 2020: EUR1.63 billion)
comprises medium to long-term debt, denominated entirely in Euro
and no debt maturity until 20 June 2022, when our 2022 Bond is
maturing (EUR323.1 million).
The Group has continued in 2021 its strategy over the last few
years of maintaining a relatively low weighted average interest
rate on debt financing. At 30 June 2021, our weighted average
interest rate on debt remained at 2.73% (same as at 31 December
2020), while the average period to maturity of 4.0 years (4.5 years
at 31 December 2020) followed an anticipated trend, as the Group
has not entered into any new financing arrangements nor extended
the term of existing debt, as presented in the table below:
Weighted average interest rate versus debt duration to
maturity
Dec.18 Jun.19 Dec.19 Jun.20 Dec.20 Jun.21
Weighted average
interest rate 2.91% 2.85% 2.83% 2.52% 2.73% 2.73%
------- ------- ------- ------- ------- -------
Weighted average
duration to maturity 5.1 4.9 4.3 4.2 4.5 4.0
------- ------- ------- ------- ------- -------
Servicing of Debt During H1-2021
In the first half of 2021, we repaid in total EUR1.4 million of
loan capital and EUR29.4 million of accrued interest on the Group '
s drawn debt facilities, including EUR25.8 million in relation to
the full annual coupon for two of the three Eurobonds of the
Company.
Liquidity & Loan to value ratio
The Group ' s aim is to maintain at all times sufficient
liquidity also in order to have the flexibility to react quickly at
the moment when attractive new investment opportunities may
arise.
As at 30 June 2021, the Group had cash and cash equivalents of
EUR459.9 million (31 December 2020: EUR527.8 million) available to
use. In addition, the Group had available liquidity from committed
undrawn loan facilities (RCF) amounting to EUR215 million.
The Group ' s loan to value ratio at 30 June 2021 was 39.2%,
compared to 37.8% at 31 December 2020. This is consistent with the
Group ' s strategy to manage its long-term target LTV of below
40%.
Debt Structure as at 30 June 2021
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group ' s debt at 30 June 2021 is unsecured:
77.8% (31 December 2020: 77.7%), with the remainder secured with
real estate mortgages, pledges on shares of the underlying
ring-fenced financing subsidiaries, trade receivables and
intra-group loan subordination agreements in favour of the
financing parties.
Loans and borrowings maturity and short-term / long-term debt
structure mix
The Group had at 30 June 2021 credit facilities and Eurobonds
with different maturities, all on medium and long-term (similar to
31 December 2020), as presented in the below table:
Maturity by year of the principal balance outstanding at 30 June
2021 (EUR million)
2021 2022 2023 2024 2025 2026 2027 2028 2029-2035
1.4 326.0 2.9 35.8 662.3 402.6 64.8 2.6 137.9
------ ----- ----- ------ ------ ----- ----- ----------
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear
interest based either on one month ' s or three months ' Euribor
plus a fixed margin (8.6% of the outstanding balance at 30 June
2021, compared to 8.7% at 31 December 2020), or at a fixed interest
rate (91.4% of the outstanding balance at 30 June 2021, compared to
91.3% at 31 December 2020).
The high degree of fixed interest rate debt ensures a natural
hedging to the Euro, the currency in which the most significant
part of our liquid assets (cash and cash equivalents and rental
receivables) is originally denominated and the currency for the
fair market value of our investment property.
Debt Covenants
The Group ' s financial indebtedness is arranged with standard
terms and financial covenants, the most notable as at 30 June 2021
being the following:
Unsecured Eurobonds and Revolving Credit Facility
-- the Consolidated Coverage Ratio, with minimum value of 200%;
-- the Consolidated Leverage Ratio, with maximum value of 60%;
-- the Consolidated Secured Leverage Ratio with a maximum value of 30%; and
-- the Total Unencumbered Assets Ratio, with minimum value of
125% (applicable only for the RCF).
Secured Bank Loans
-- the debt service cover ratio ('DSCR') / interest cover ratio
('ICR'), with values ranging from 120% to 350% (be it either
historic or projected); and
-- the LTV ratio, with contractual values ranging from 60% to 83%.
There have been no breaches of the aforementioned covenants
occurring during the period ended 30 June 2021.
Cash flows
-- Cash flows from operating activities decreased to EUR18.8
million, compared to EUR24.7 million in H1-2020, reflecting the
decline in operating profitability.
-- Acquisition of two industrial properties in Romania in May 2021 for EUR18.0 million.
-- Cash used on capital expenditure on a property under
development in Romania of EUR11.9 million, on an asset under
refurbishment in Poland of EUR1.3 million, on standing assets of
EUR11.3 million, and EUR1.2 million on land preparation costs.
-- Extended EUR5.8 million funding to joint ventures for use in
advancing two industrial development projects.
-- Dividends paid in H1-2021 of EUR33.1 million in respect of
the six-month period ended 31 December 2020, compared to EUR66.4
million in H1-2020 in respect of the six-month period ended 31
December 2019.
-- Cash and cash equivalents as at 30 June 2021 reached EUR459.9
million, compared to EUR527.8 million at 31 December 2020.
6. Principal Risks and Uncertainties
The key risks which may have a material impact on the Group's
performance, together with the corresponding mitigating actions,
are presented on pages 98 to 102 of the Annual Report for the year
ended 31 December 2020, which is available at www.globalworth.com
.
These risks comprise the following:
-- Exposure to the economic environment in Romania and Poland;
-- Changes in the political or regulatory framework in Romania, Poland or the European Union;
-- Inability to execute planned acquisitions and timely
completion of development of properties;
-- Risk of negative changes in the valuation of the portfolio;
-- Inability to lease space and renew expiring leases;
-- Counterparty credit risk;
-- Sustainable portfolio risk and Response to Climate Change;
-- Lack of available financing and refinancing;
-- Risk of breach of loan covenants;
-- Risk of changes in interest rates and exchange rates; and
-- Compliance with fire, structural, health and safety, or other regulations.
There has been no significant change in these risks during the
six month period ended 30 June 2021, and these risks are expected
to continue to remain relevant during the second half of 2021.
7. Going Concern
The Directors have considered the Company ' s ability to
continue to operate as a going concern based on the Management ' s
cash flow projections for the 15 months subsequent to the date of
approval of the unaudited interim condensed consolidated financial
statements. The Directors believe that the Company would have
sufficient cash resources to meet its obligations as they fall due
and continue to adopt the going concern basis in preparing the
unaudited interim condensed consolidated financial statements as of
and for the six months ended 30 June 2021.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE PERIODED 30 JUNE 2021
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
30 June 2021 30 June
2020
Note EUR'000 EUR'000
===================================================== ==== ============ ==========
Revenue 7 108,110 114,039
Operating expenses 8 (35,957) (34,392)
===================================================== ==== ============ ==========
Net operating income 72,153 79,647
===================================================== ==== ============ ==========
Administrative expenses 9 (9,323) (8,824)
Acquisition costs - (2,302)
Fair value loss on investment property 3 (14,703) (91,977)
Share-based payment expense 20.3 (432) (194)
Depreciation on other long-term assets (259) (203)
Other expenses (795) (1,444)
Other income 476 285
Foreign exchange loss (50) (167)
(Loss)/gain from fair value of financial instruments
at fair value through profit or loss 14 (243) 151
===================================================== ==== ============ ==========
(25,329) (104,675)
===================================================== ==== ============ ==========
Profit/(loss) before net financing cost 46,824 (25,028)
===================================================== ==== ============ ==========
Net financing cost
Finance cost 10 (27,523) (23,528)
Finance income 839 1,203
===================================================== ==== ============ ==========
(26,684) (22,325)
===================================================== ==== ============ ==========
Share of (loss)/profit of equity-accounted
investments in joint ventures 22 (1,273) 1,258
===================================================== ==== ============ ==========
Profit/(loss) before tax 18,867 (46,095)
===================================================== ==== ============ ==========
Income tax expense 11 (6,333) (2,487)
===================================================== ==== ============ ==========
Profit/(loss) for the period 12,534 (48,582)
===================================================== ==== ============ ==========
Other comprehensive income - -
===================================================== ==== ============ ==========
Total comprehensive income 12,534 (48,582)
===================================================== ==== ============ ==========
Profit/(loss) attributable to equity holders
of the Company 12,534 (48,582)
============================================= ======= ========
Cents Cents
============================================= ======= ========
Earnings per share
============================================= ======= ========
- Basic 12 6 (22)
- Diluted 12 6 (22)
============================================= ======= ========
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2021
Note 30 June 31 December
2021 2020
Unaudited Audited
EUR'000 EUR'000
---------------------------------------- ----- ---------- ------------
ASSETS
Non-current assets
Investment property 3 3,049,467 3,013,014
Goodwill 12,349 12,349
Advances for investment property 5 4,128 4,215
Investments in joint ventures 22 33,190 28,358
Equity investments 10,589 10,369
Other long-term assets 1,957 2,148
Prepayments 387 432
Deferred tax asset 11 137 786
---------------------------------------- ----- ---------- ------------
3,112,204 3,071,671
---------------------------------------- ----- ---------- ------------
Current assets
Financial assets at fair value through
profit or loss 14 7,510 7,695
Trade and other receivables 15 17,354 16,025
Contract assets 1,840 2,819
Guarantees retained by tenants 887 894
Income tax receivable 846 931
Prepayments 5,614 2,227
Cash and cash equivalents 16 459,893 527,801
---------------------------------------- ----- ---------- ------------
493,944 558,392
---------------------------------------- ----- ---------- ------------
Total assets 3,606,148 3,630,063
---------------------------------------- ----- ---------- ------------
EQUITY AND LIABILITIES
Issued share capital 1,704,374 1,704,374
Treasury shares 20.5 (9,592) (12,977)
Share-based payment reserve 20 3,557 6,184
Retained earnings 37,187 57,783
---------------------------------------- ----- ---------- ------------
Equity attributable to ordinary equity
holders of the Company 1,735,526 1,755,364
---------------------------------------- ----- ---------- ------------
Non-current liabilities
Interest-bearing loans and borrowings 13 1,284,655 1,604,043
Deferred tax liability 11 149,713 144,843
Lease liabilities 3.2 26,965 27,324
Guarantees retained from contractors 2,307 2,235
Deposits from tenants 3,558 3,449
Trade and other payables 1,012 692
---------------------------------------- ----- ---------- ------------
1,468,210 1,782,586
---------------------------------------- ----- ---------- ------------
Current liabilities
Interest-bearing loans and borrowings 13 340,211 26,051
Guarantees retained from contractors 3,417 4,032
Trade and other payables 37,835 40,209
Contract liability 3.2 2,488 2,088
Other current financial liabilities 552 875
Current portion of lease liabilities 2,096 1,765
Deposits from tenants 15,575 16,245
Provision for tenant lease incentives - 46
Income tax payable 238 802
---------------------------------------- ----- ---------- ------------
402,412 92,113
---------------------------------------- ----- ---------- ------------
Total equity and liabilities 3,606,148 3,630,063
---------------------------------------- ----- ---------- ------------
The financial statements were approved by the Board of Directors
on 20 September 2021 and were signed on its behalf by:
John Whittle
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
Share-based
Issued Treasury payment Retained Total
share capital shares reserve earnings Equity
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
======================================= ==== ============== ======== =========== ========= ===========
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
======================================= ==== ============== ======== =========== ========= ===========
Shares issued to the Executive
Directors and other senior management
employees - 392 (392) - -
Interim dividends - 271 (72) (108,523) (108,324)
Share based payment expense under
the subsidiaries' employees share
award plan - - 1,071 - 1,071
Shares vested under the subsidiaries'
employees share award plan - 540 (540) - -
Shares purchased with cash by
the Company - (8,345) - - (8,345)
Cash-based portion of deferred
annual bonus plan converted to
deferred shares settlement - - 1,025 - 1,025
Deferred annual bonus plan reserve
for the year - - 2,065 - 2,065
Shares vested under the deferred
annual bonus incentive plan - 2,544 (2,544) - -
Total comprehensive income for
the year - - - (46,795) (46,795)
--------------------------------------- ---- -------------- -------- ----------- --------- -----------
As at 31 December 2020 1,704,374 (12,977) 6,184 57,783 1,755,364
--------------------------------------- ---- -------------- -------- ----------- --------- -----------
Shares issued to the Executive
Directors and other senior management
employees 20.2 - 180 (180) - -
18,
Interim dividends 20 - 9 2 (33,130) (33,119)
Share based payment expense under
the subsidiaries' employees share
award plan 20.3 - - 432 - 432
Shares vested under the subsidiaries'
employees share award plan 20.3 - 823 (823) - -
Deferred annual bonus plan settled
in cash 20.4 - - (79) - (79)
Shares vested under the deferred
annual bonus incentive plan 20 - 2,373 (1,979) - 394
Total comprehensive income for
the period - - - 12,534 12,534
--------------------------------------- ---- -------------- -------- ----------- --------- -----------
As at 30 June 2021 1,704,374 (9,592) 3,557 37,187 1,735,526
--------------------------------------- ---- -------------- -------- ----------- --------- -----------
Issued Share-based
share Treasury payment Retained Total
capital shares reserve earnings Equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
====================================== ========= ========== =========== ========== ============
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
======================================= ========= ========== =========== ========== ============
Interim dividends - - 129 (66,572) (66,443)
Share based payment expense under
the subsidiaries' employees share
award plan - - 194 - 194
Shares vested under the subsidiaries'
employees share award plan - 14 (14) - -
Shares purchased with cash by the
Company - (1,624) - - (1,624)
Cash-based portion of deferred
annual bonus plan converted to
deferred shares settlement - - 1,025 - 1,025
Total comprehensive income for
the period - - - (48,582) (48,582)
--------------------------------------- --------- ---------- ----------- ---------- ------------
As at 30 June 2020 1,704,374 (9,989) 6,905 97,947 1,799,237
--------------------------------------- --------- ---------- ----------- ---------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
30 June 2021 30 June
Note EUR'000 2020
EUR'000
============================================= ====== ============ ==========
Profit/(loss) before tax 18,867 (46,095)
Adjustments to reconcile profit before
tax to net cash flows
Fair value loss on investment property 3 14,703 91,977
Loss on sale of investment property 162 107
Share-based payment expense 20 432 194
Depreciation on other long-term assets 259 203
Net increase in allowance for doubtful
debts 17.2 563 991
Foreign exchange loss/(gain) 50 (1,396)
Loss/(gain) from fair valuation of financial
instrument 14 243 (151)
Share of loss/(profit) of equity-accounted
joint ventures 22 1,273 (1,258)
Net financing costs 26,685 22,325
============================================= ====== ============ ==========
Operating profit before changes in working
capital 63,237 66,897
(Increase)/decrease in trade and other
receivables (4,560) 2
Decrease in trade and other payables (9,309) (3,844)
Interest paid (29,436) (35,470)
Interest received 178 663
Income tax paid (1,315) (3,533)
Cash flows from operating activities 18,795 24,715
============================================= ====== ============ ==========
Investing activities
Expenditure on investment property completed
and under development or refurbishment (25,715) (31,392)
Refund of advances given for property
acquisition - 10,000
Payment for acquisition of investment
property (18,011) -
Proceeds from sale of investment property 524 1,518
Investment in financial assets at fair
value through profit or loss 14 (143) (1,003)
Proceeds from sale of financial assets
through profit and loss 85 16,186
Payments for equity investments (220) (177)
Investment in and loans given to joint
ventures 22 (5,770) (13,656)
Payment for the acquisition of remaining
50% stake in joint venture - (2,000)
Payment for purchase of other long-term
assets (68) (230)
============================================= ====== ============ ==========
Cash flows used in investing activities (49,318) (20,754)
============================================= ====== ============ ==========
Financing activities
Purchase of own shares 20.5 - (1,624)
Proceeds from interest-bearing loans and
borrowings 13 - 346,577
Payments of interest-bearing loans and
borrowings 13 (1,398) (2,104)
Payment of interim dividend to equity
holders of the Company 18 (33,130) (66,443)
Payment for lease liability obligations 3.2 (1,463) (1,595)
Payment of bank loan arrangement fees
and other financing costs (1,208) (2,197)
Cash flows from financing activities (37,199) 272,614
============================================= ====== ============ ==========
Net increase in cash and cash equivalents (67,722) 276,575
Effect of exchange rate fluctuations on
cash and bank deposits held (186) (1,217)
Cash and cash equivalents at the beginning
of the period 16 527,801 290,694
============================================= ====== ============ ==========
Cash and cash equivalents at the end
of the period 1 16 459,893 566,052
============================================= ====== ============ ==========
(1) Nil restricted cash reserve (30 June
2020: EUR1.0 million), see note 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION I: BASIS OF PREPARATION
1 Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited ('the Company' or
'Globalworth') is a company with liability limited by shares and
incorporated in Guernsey on 14 February 2013, with registered
number 56250. The registered office of the Company is at Anson
Court, La Route des Camps, St Martin, Guernsey GY4 6AD.
Globalworth, being a real estate Company, has had its ordinary
shares admitted to trading on AIM (Alternative Investment Market of
the London Stock Exchange) under the ticker "GWI" since 2013.
The Company's Eurobonds have been admitted to trading on the
official List of the Irish Stock Exchange in June 2017, March 2018
and July 2020, respectively. In addition, the Company's Eurobonds
maturing in June 2022 and March 2025 have been admitted to trading
on the Bucharest Stock Exchange in July 2017 and May 2018,
respectively. The Group's principal activities and nature of its
operations are set out in the strategic report section of the 2020
Annual Report.
Directors
The Directors of the Company are:
-- Dimitris Raptis, Executive, Chief Executive Officer, Member of the Investment Committee
-- Geoff Miller, Independent Non-executive, Chair of the Board,
Investment and Nomination Committees, Member of the Remuneration
Committee
-- John Whittle, Independent Non-executive, Chair of the Audit
Committee, Member of the Remuneration Committee
-- Andreea Petreanu, Independent Non-executive Director, Chair
of the Risk Committee, Member of the Audit and Nomination
Committees
-- Richard van Vliet, Independent Non-executive, Member of the
Audit, Risk and Nomination Committees
-- Norbert Sasse, Non-executive, Member of Investment Committee
-- Martin Bartyzal, Non-executive, Chair of the Remuneration
Committee, Member of the Risk Committee
-- David Maimon, Non-executive, Member of the Risk and Investment Committees
Basis of Preparation and Compliance
The condensed consolidated financial statements of the Group (or
'financial statements' or 'consolidated financial statements') as
of and for the six-month period ended 30 June 2021 have been
prepared in accordance with International Accounting Standard (IAS)
34 "Interim Financial Reporting". These consolidated financial
statements are prepared in Euro ("EUR" or "EUR"), rounded to the
nearest thousand, being the functional currency and presentation
currency of the Company. These financial statements have been
prepared on a historical cost basis, except for investment
property, financial assets at fair value through profit or loss and
financial assets at fair value through other comprehensive income
which are measured at fair value.
These financial statements are prepared on a going concern
basis. The Directors believe that it is appropriate to adopt the
going concern basis in preparing the financial statements. The
Directors based their assessment on the Group's detailed cash flow
projections for the period up to 31 December 2022. These
projections take into account the very significant available cash
resources of the Group (as at 30 June 2021 these amounted to
c.EUR460 million), the latest contracted rental income, anticipated
additional rental income from new possible lease agreements during
the period covered by the projections, modification of existing
lease contracts due to COVID-19 as well as repayment of contracted
debt financing, CAPEX, and other commitments. The projections show
that, in the period up to 31 December 2022, the Company anticipates
having sufficient liquid resources to continue to fund ongoing
operations and asset development without the need to raise any
additional debt or equity financing, or the need to reschedule
existing debt facilities or other commitments. Further details on
the Company's response to the COVID-19 pandemic can be found in
other sections of the Interim Report.
Accounting policies
These consolidated financial statements apply the same
accounting policies, presentation and methods of calculation as
those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2020, which
were prepared in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the European Union ('EU') and the
Companies (Guernsey) Law 2008, as amended. The consolidated
financial statements included in this Interim Report should be read
in conjunction with the consolidated financial statements for the
year ended 31 December 2020. On 1 January 2021, the Group adopted
certain new accounting policies where necessary to comply with
amendments to IFRS, refer to note 26 for more details.
Basis of Consolidation
These condensed consolidated financial statements comprise the
financial statements of the Company and its subsidiaries ('the
Group') as of and for the period ended 30 June. Subsidiaries are
fully consolidated (refer to note 23) from the date of acquisition,
being the date on which the Group obtains control, and continues to
be consolidated until the date when such control ceases. The
financial statements of the subsidiaries are prepared for the
period from the date of obtaining control to 30 June, using
consistent accounting policies. All intra-group balances,
transactions and unrealised gains and losses resulting from
intra-group transactions are eliminated in full.
Foreign Currency transactions and balances
Foreign currency transactions during the period are initially
recorded in the functional currency at the exchange rates
approximating those ruling on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies other than
functional currency of the Company and its subsidiaries are
retranslated at the rates of exchange prevailing on the statement
of financial position date. Gains and losses on translation are
taken to profit and loss. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value
was determined.
2 Critical Accounting Judgements, Estimates and Assumptions
The preparation of consolidated financial statements in
conformity with IFRS requires management to make certain
judgements, estimates and assumptions that affect reported amounts
of revenue, expenses, assets and liabilities, and the accompanying
disclosures and the disclosures of contingent liabilities.
Selection of Functional Currency
The Company and its subsidiaries used their judgment, based on
the criteria outlined in IAS 21 "The Effects of Changes in Foreign
Exchanges Rates", and determined that the functional currency of
all the entities is the EUR. In determining the functional currency
consideration is given to the denomination of the major cash flows
of the entity e.g., revenues and financing.
As a consequence, the Company uses EURO (EUR) as the functional
currency, rather than the local currency Romanian Lei (RON) for the
subsidiaries incorporated in Romania, Polish Zloty (PLN) for the
subsidiaries in Poland and Pounds Sterling (GBP) for the Company
and the subsidiary incorporated in Guernsey.
Further additional critical accounting judgements, estimates and
assumptions are disclosed in the following notes to the financial
statements.
-- Investment Property, see note 3 and Fair value measurement
and related estimates and judgements, see note 4;
-- Commitments (operating leases commitments - Group as lessor), see note 6;
-- Taxation, see note 11;
-- Financial assets at fair value through profit or loss, see note 14;
-- Trade and other receivables, see note 15;
-- Share-based payment reserve, see note 20;
-- Investment in Joint Ventures, see note 22; and
-- Investment in Subsidiaries, see note 23.
SECTION II: INVESTMENT PROPERTY
This section focuses on the assets on the balance sheet of the
Group which form the core of the Group's business activities. This
includes investment property (both 100% owned by the Group and by
the Joint Ventures), related disclosures on fair valuation inputs,
commitments for future property developments and investment
property-leasehold and related lease liability recognised for the
right of perpetual usufruct of the land.
Further information about the property portfolio is described in
the Management Review section of the Interim Report.
3 Investment Property
Investment property - freehold
----------------------------------------------------------------
Completed Investment Investment Land for Sub-total Investment TOTAL
investment property property further property
property under under development leasehold-
refurbishment development Right
of usufruct
of the
land
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============== ===== =========== ============= =========== ============ ========= ============ =========
1 January 2020 2,845,958 - 131,720 39,200 3,016,878 32,077 3,048,955
============== ===== =========== ============= =========== ============ ========= ============ =========
Subsequent
expenditure 13,968 681 40,077 706 55,432 - 55,432
Net lease
incentive
movement 24,594 696 1,809 - 27,099 - 27,099
Other
operating
lease
commitment (1,353) - - - (1,353) - (1,353)
Capitalised
borrowing
costs - - 1,452 - 1,452 - 1,452
Transfer to
completed
investment
property 116,375 - (116,375) - - - -
Transfer to
land for
further
development (1,350) - - 1,350 - - -
Transfer to
investment
property
under
refurbishment (104,935) 104,935 - - - - -
Disposal
during the
period (2,131) - - (287) (2,418) - (2,418)
Fair value
gain/(loss)
on investment
property (112,806) (3,182) 1,067 (519) (115,440) (713) (116,153)
============== ===== =========== ============= =========== ============ ========= ============ =========
31 December
2020 2,778,320 103,130 59,750 40,450 2,981,650 31,364 3,013,014
============== ===== =========== ============= =========== ============ ========= ============ =========
Asset
acquisition 3.1 18,011 - - - 18,011 - 18,011
Subsequent
expenditure 6,165 1,550 16,336 1,181 25,232 - 25,232
Net lease
incentive
movement 7,482 (271) 902 - 8,113 - 8,113
Capitalised
borrowing
costs 10 - - 479 - 479 - 479
Transfer to
completed
investment
property 63,600 - (63,600) - - - -
Transfer to
investment
property
under
development - - 2,500 (2,500) - - -
Transfer to
investment
property
under
refurbishment (47,520) 47,520 - - - - -
Disposal
during the
period (679) - - - (679) - (679)
Fair value
gain/(loss)
on investment
property (13,729) (2,899) 3,483 (731) (13,876) (827) (14,703)
-------------- ----- ----------- ------------- ----------- ------------ --------- ------------ ---------
30 June 2021 2,811,650 149,030 19,850 38,400 3,018,930 30,537 3,049,467
============== ===== =========== ============= =========== ============ ========= ============ =========
3.1 Investment Property - Freehold
Judgements
Classification of Investment Property
Investment property comprises completed property, property under
construction or refurbishment and land bank for further development
which are not occupied substantially for use by, or in the
operations of, the Group, nor for sale in the ordinary course of
business, but are held primarily to earn rental income and for
capital appreciation. The Group considers that, when the property
is in a condition which will allow the generation of cash flows
from its rental, the property is no longer a property under
development or refurbishment but an investment property. If the
property is kept for sale in the ordinary course of the business,
then it is classified as inventory property.
Asset acquisition
On 27 April 2021, the Group acquired through its wholly owned
subsidiary Industrial Park West SRL, two standing industrial
investment properties located in the west side of Romania, namely
IPW Arad and IPW Oradea.
Disposal of Investment Property not in the Ordinary Course of
Business
The Group enters into contracts with customers to sell
properties that are complete. The sale of completed property is
generally expected to be the only performance obligation and the
Group has determined that it will be satisfied at the point in time
when control transfers. For unconditional exchange of contracts,
this is generally expected to be when legal title transfers to the
customer. For conditional exchanges, this is expected to be when
all significant conditions are satisfied. The recognition and
measurement requirements in IFRS 15 are applicable for determining
the timing of derecognition and the measurement of consideration
(including applying the requirements for variable consideration)
when determining any gains or losses on disposal of non-financial
assets when that disposal is not in the ordinary course of
business.
Other Disclosures Related to Investment Property
Interest-bearing loans and borrowings are secured on investment
property freehold, see note 13 for details. Further information
about individual properties is disclosed in the asset management
review section in the Interim Report.
3.2 Investment property - Leasehold
Ri g h t o f P e r p e t u a l U s u f r u c t o f t h e L a n d ( t h e "RPU" )
Under IFRS 16, right-of-use assets that meet the definition of
investment property are required to be presented in the statement
of financial position as investment property. The Group has the
right of perpetual usufruct of the land (the "RPU" or "right-of-use
assets") contracts for the property portfolio in Poland which meet
the definition of investment property under IFRS 16. Therefore, the
Group has presented its 'Right-of-use assets' in the statement of
financial position under the line item "Investment property". The
corresponding lease liabilities are presented under the line item
'Lease liabilities' as non-current and the related short-term
portion are presented in the line item "Current portion of lease
liability".
4 Fair Value Measurement and Related Estimates and Judgements
Investment Property Measured at Fair Value
The Group's investment property portfolio for Romania was valued
by Colliers Valuation and Advisory SRL and Cushman & Wakefield
LLP and for Poland by Knight Frank Sp. z o.o. and CBRE Sp. z o.o.
All independent professionally qualified valuers hold a recognised
relevant professional qualification and have recent experience in
the locations and segments of the investment properties valued
using recognised valuation techniques.
Our Property Valuation Approach and Process
The Group's investment department includes a team that reviews
twice in a financial year the valuations performed by the
independent valuers for financial reporting purposes. For each
independent valuation performed, the investment team along with the
finance team:
-- verifies all major inputs to the independent valuation report;
-- assesses property valuation movements when compared to the
initial valuation report at acquisition or latest period end
valuation report; and
-- holds discussions with the independent valuer.
The fair value hierarchy levels are specified in accordance with
IFRS 13 Fair Value Measurement. Some of the inputs to the
valuations are defined as "unobservable" by IFRS 13 and these are
analysed in the tables below. Any change in valuation technique or
fair value hierarchy (between level 1, level 2 and level 3) is
analysed at each reporting date or as of the date of the event or
variation in the circumstances that caused the change. As of 30
June 2021 (2020: same) the values of all investment properties were
classified as level 3 fair value hierarchy under IFRS 13 and there
were no transfers from or to level 3 from level 1 and level 2.
Valuation Techniques, Key Inputs and Underlying Management's
Estimations and Assumptions
Property valuations are inherently subjective as they are made
on the basis of assumptions made by the valuer. Valuation
techniques comprise the discounted cash flows, the sales comparison
approach and the residual value method.
The Group has based its assumptions and estimates on the
parameters available when the consolidated financial statements
were prepared, including the amendments or possible amendments of
the current lease contracts due to COVID-19, delays to
non-committed capital expenditure, cost-cutting initiatives and
delays in construction activity. Consideration was also given to
the possible impact of the stay at home and social distancing
measures imposed by governments in countries in which it operates.
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
However, all such assumptions or estimates are sensitive to change
due to the current market environment in light of COVID-19. Such
uncertainty is reflected in the assumptions used for the valuation
and the Group disclosed below the sensitivity to different key
inputs to overall valuation.
Key information about fair value measurements, valuation
technique and significant unobservable inputs (Level 3) used in
arriving at the fair value under IFRS 13 are disclosed below:
Carrying value
---------------------- ---------- ------- ------------ ----------------- -------------------
Class of 30 June 31 December Valuation Country Input 30 June 31 December
property 2021 2020 Technique 2021 2020
---------- ------- ------------
EUR'000 EUR'000
------------------- --------- ----------- ---------- ------- ------------ ----------------- -------------------
Completed
Investment Rent per
property 1,444,850 1,497,420 DCF Poland sqm EUR11.5-EUR24 EUR11.5-EUR24
--------- ----------- ---------- -------
Discount 4.56%-10.81% 4.18%-10.87%
rate
--------- ----------- ---------- -------
Exit yield 5.37%-8.50% 5.34%-8.50%
--------- ----------- ---------- ------- ------------ ----------------- -----------------
Rent per
1,287,900 1,119,000 DCF Romania sqm EUR3.25-EUR35.00 EUR3.40-EUR35.00
Discount 7.50%-8.75% 7.50%-8.75%
rate
Exit yield 6.25%-8.00% 6.25%-8.00%
--------- ----------- ---------- ------- ------------ ----------------- -----------------
Rent per
20,300 102,300 DC Romania sqm EUR2.91-EUR5.87 EUR2.90-EUR9.95
Exit yield 7.75% 6.85%-7.75%
========= =========== ========== ======= ============ ================= =================
Sub-total 2,753,050 2,718,720
Sales value
58,600 59,600 SC Romania (sqm) EUR1,866 EUR1,843
--------- ----------- ---------- ------- ------------ ----------------- -----------------
2,811,650 2,778,320
=================== ========= =========== ========== ======= ============ ================= =================
Investment
property Rent per
under development 9,550 9,550 RM Poland sqm EUR13.50 EUR13.50
===================
Discount 6.50%-7.53% 6.50%-7.64%
rate
===================
Exit yield 6.50% 6.50%
Capex (EURm) EUR27.98 EUR27.98
========= =========== ========== ======= ============ ================= =================
Rent per
10,300 50,200 RM Romania sqm EUR3.80-EUR15.00 EUR11.00-EUR15.00
Discount
rate 7.75%-9.00% 9.00%
Exit yield 7.00%-7.75% 7.00%-7.75%
Capex (EURm) EUR53.40 EUR57.40
=================== ========= =========== ========== ======= ============ ================= =================
Investment
property
under Rent per EUR13.25
refurbishment 149,030 103,130 RM Poland sqm -EUR14.00 EUR14.00
=================== --------- ----------- ---------- ------- ------------ ----------------- -----------------
Discount 6.76%-7.94% 4.53%-9.18%
rate
=================== --------- ----------- ---------- ------- ------------ ----------------- -----------------
Exit yield 6.87%-7.62% 6.88%
--------- ----------- ---------- ------- ------------ ----------------- -----------------
Capex (EURm) EUR37.71 EUR29.14
=================== ========= =========== ========== ======= ============ ================= =================
Land bank
-
for further Sales value
development 15,000 17,050 SC Romania (sqm) EUR25.00-EUR2,500 EUR25.00-EUR2,500
=================== --------- ----------- ---------- ------- ------------ ----------------- -----------------
Rent per EUR2.75-EUR16.50 EUR2.75-EUR16.50
sqm
===================
23,400 23,400 RM Romania Exit yield 7.00%-8.25% 7.00%-8.25%
=================== ========= =========== ========== ======= ============ ================= =================
TOTAL 3,018,930 2,981,650
=================== ========= =========== ========== ======= ============ ================= ===================
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales
Comparison, RM: Residual Method
Sensitivity Analysis on significant estimates used in the
valuation
The assumptions on which the property valuations have been based
include, but are not limited to, rent per sqm (per month), discount
rate, exit yield, cost to complete, comparable market transactions
for land bank for further development, tenant profile for the
rented properties, and the present condition of the properties.
These assumptions are market standard and in line with the
International Valuation Standards ('IVS'). Generally, a change in
the assumption made for the rent per sqm (per month) is accompanied
by a similar change in the rent growth per annum and discount rate
(and exit yield) and an opposite change in the other inputs.
A quantitative sensitivity analysis, in isolation, of the most
sensitive inputs used in the independent valuations performed, as
of the statement of financial position date, are set out below:
EUR0.5 25 bps change 5% change EUR50 change 2.5% change
change in market in Capex in sales in vacancy
in rental yield prices per in Perpetuity3
value per sqm2
month,
per sqm1
Investment Year Country Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
property
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR
' 000 ' 000 ' 000 ' 000 ' 000 ' 000 ' 000 ' 000 ' 000 ' 000
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Completed 2021 Poland 39,080 (39,080) (63,970) 69,700 - - - - - -
2021 Romania 34,000 (34,400) (33,100) 35,000 - - 1,800 (1,800) (15,200) 11,700
====== ========================= --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
2020 Poland 41,020 (41,140) (64,510) 70,160 - - - - - -
2020 Romania 33,700 (34,000) (30,900) 33,600 - - 1,900 (1,800) (13,600) 10,200
====== ========================= --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Under 2021 Poland 1,450 (1,450) (1,670) 1,810 (1,320) 1,320 - - - -
development 2021 Romania 2,400 (2,400) (1,300) 1,400 (2,500) 2,400 - - - -
------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
2020 Poland 1,450 (1,450) (1,670) 1,810 (1,530) 1,530 - - - -
2020 Romania 3,600 (3,600) 1,400 (1,100) (2,700) 2,600 - - - -
====== ========================= --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Under 2021 Poland 5,400 (5,380) (6,490) 6,990 (990) 1,000 - - - -
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
refurbishment 2020 Poland 3,620 (3,610) (4,720) 5,090 (1,750) 1,750 - - - -
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Further 2021 Poland - - - - - - - - - -
development 2021 Romania 2,000 (2,000) (1,800) 2,000 (2,200) 2,200 1,300 (1,400) - -
====== ========= --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
2020 Poland - - - - - - - - - -
2020 Romania 2,000 (2,000) (1,800) 2,000 (2,200) 2,200 1,450 (1,600) - -
====== ========================= ========= ========= ========= ========= ========= ========= ========= =========
1. The quantitative sensitivity analysis was computed as EUR0.25
change in rental value per month, per sqm for four industrial
properties (2020: two industrial properties at EUR0.25 change in
rental value per month, per sqm).
2. The quantitative sensitivity analysis was computed as EUR1.5
change in sales price per sqm for industrial properties
portfolio.
3. The vacancy in perpetuity sensitivity analysis is not
followed for the Polish properties portfolio as this factor is
considered in the valuation methodology as part of yields and not a
variable in isolation.
4.1 Investment properties owned by Joint Ventures
Completed Investment Land for
investment property further
property under development development TOTAL
Note EUR'000 EUR'000 EUR'000 EUR'000
1 January 2020 - 6,400 23,100 29,500
Subsequent expenditure 965 14,600 522 16,087
Net lease incentive movement 223 102 - 325
Capitalised borrowing costs - 311 - 311
Transfer to investment property
under development 24,976 (24,976) - -
Fair value gain/(loss) on investment
property (364) 3,563 1,778 4,977
31 December 2020 25,800 - 25,400 51,200
Land acquired during the period - - 130 130
Subsequent expenditure 339 4,284 844 5,467
Net lease incentive movement 50 - - 50
Capitalised borrowing costs - 20 - 20
Transfer to investment property
under development - 1,200 (1,200) -
Fair value gain/(loss) on investment
property 22.3 (689) (2,504) 26 (3,167)
30 June 2021 22.2 25,500 3,000 25,200 53,700
Sensitivity analysis on significant estimates used in the
valuation of investment properties owned by the joint venture
As disclosed in note 22, the Group also has investments in two
joint ventures where investment properties were valued at fair
value under the similar Group accounting policies by Colliers
Valuation and Advisory SRL, an independent qualified professional
valuer.
The table below describes key information about the fair value
measurements, valuation technique and significant unobservable
inputs (Level 3) used in arriving at the fair value under IFRS
13.
Carrying value Range
Class of 30 June 31 December Valuation Country Input 30 June 31 December
Joint venture 2021 2020 technique 2021 2020
property
EUR'000 EUR'000
Completed
Investment Rent per
Property 25,500 13,800 DCF Romania sqm EUR2.00-EUR8.50 EUR3.00-EUR7.35
Discount
rate 8.50% 8.50%
Exit yield 7.75% 7.75%
Rent per
- 12,000 DC sqm - EUR3.12-EUR8.50
Discount
rate - 8.75%
Exit yield - 7.75%
Investment
property Discount
under development 3,000 - RM Romania rate 8.50% -
Exit yield 7.75% -
Capex (EURm) EUR4.26 -
Land bank
- for further Sales value
development 25,200 25,400 SC Romania sqm EUR24.00-EUR42.00 EUR23.00-EUR42.00
TOTAL 53,700 51,200
DCF: Discounted Cash Flows, DC: Direct Capitalisation, SC: Sales
Comparison, RM: Residual Method
A quantitative sensitivity analysis (for properties owned by
joint ventures), in isolation, of the most sensitive inputs used in
the independent valuations performed, as of the statement of
financial position date, are set out below:
EUR0.25 change 25 bps change 5% change EUR1.5 change 2.5 % change
in rental in market in capex in sales in vacancy
value per yield prices per in perpetuity
Joint month, per sqm
Ventures sqm
Investment Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Year
Property Country EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
2021
- Completed Romania 1,200 (1,100) (400) 500 - - - - (300) 400
2020 Romania 1,200 (1,100) (400) 400 - - - - (400) 400
2021
- Under Romania 500 (500) (200) 200 (300) 200 - - - -
development 2020 - - - - - - - - - -
Romania
2021
- Further Romania - - - - - - 1,500 (1,500) - -
2020
development Romania - - - - - - 1,600 (1,500) - -
5 Advances for investment Property
30 June 31 December
2021 2020
EUR'000 EUR'000
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for investment properties
under development 2,128 2,215
4,128 4,215
6 Commitments
Commitments for Investment Property
As at 30 June 2021 the Group had agreed construction contracts
with third parties and is consequently committed to future capital
expenditure in respect of completed investment property of EUR7.3
million (2020: EUR11.3 million), investment property under
development of EUR3.2 million (2020: EUR21.0 million) and had
committed with tenants to incur incentives (such as fit-out works,
leasing fees and other lease incentives) of EUR24.0 million (2020:
EUR15.9 million).
The Group's Joint Ventures were committed to the construction of
investment property for the amount of EUR29.8 million at 30 June
2021 (2020: EUR0.1 million).
Judgements Made for Properties Under Operating Leases, being the
lessor
The Group has determined, based on an evaluation of the terms
and conditions of the arrangements, that it retains all the
significant risks and rewards of ownership of the investment
properties leased to third parties and, therefore, being the lessor
accounts for these leases as operating leases.
The duration of these leases is one year or more (2020: one year
or more) and rentals are subject to annual upward revisions based
on the consumer price index. The future aggregate minimum rentals
receivable under non-cancellable operating leases for investment
properties - freehold are as follows:
30 June 31 December
2021 2020
EUR'000 EUR'000
Not later than 1 year 167,265 171,841
Later than 1 year and not later than 5 years 438,557 433,228
Later than 5 years 193,706 186,307
799,528 791,376
SECTION III: FINANCIAL RESULTS
This section quantifies the financial impact of the operations
for the period; further analysis on operations is presented in the
Financial Review section of the Interim Report. This section
includes the results and performance of the Group, including
earnings per share and EPRA Earnings. This section also includes
details about the Group's tax position in the period and deferred
tax assets and liabilities held at the period end.
7 Revenue
Revenue from asset management fees, marketing and other income
are recognised at the time the service is provided.
30 June 30 June
2021 2020
EUR'000 EUR'000
Rental income 75,378 81,246
Revenue from contracts with customers
Service charge income 28,795 29,513
Fit-out services income 3,884 2,799
Asset management fees 24 -
Marketing and other income 29 481
32,732 32,793
108,110 114,039
The total contingent rents and surrender premia recognised as
rental income during the period amount to EUR0.8 million (30 June
2020: EUR0.1 million) and EUR0.4 million (30 June 2020: EUR0.9
million), respectively.
8 Operating Expenses
30 June 30 June
2021 2020
EUR'000 EUR'000
Property management, utilities and insurance 31,304 30,730
Property maintenance costs and other non-recoverable
costs 791 886
Property expenses arising from investment property
that generate rental income 32,095 31,616
Property expenses arising from investment property
that did not generate rental income 10 75
Fit-out services costs 3,852 2,701
35,957 34,392
9 Administrative expenses
30 June 30 June
2021 2020
EUR'000 EUR'000
Directors' emoluments 579 759
Employment related costs 4,141 3,402
Accounting, secretarial and administration costs 404 374
Legal and other advisory services 829 1,066
Audit and non-audit services 54 80
Corporate social responsibility 546 1,342
Travel and accommodation 74 220
Marketing and advertising services 237 200
Post, telecommunication, and office supplies 232 366
Stock exchange expenses 294 380
Exceptional and non-recurring expenses 1,933 635
9,323 8,824
During the period ended 30 June 2021, exceptional and
non-recurring expenses include mainly professional advisory fees in
connection with the cash offer for Globalworth shares, made by CPI
Property Group S.A. and Aroundtown SA through Zakiono Enterprises
Limited in May 2021. During the period ended 30 June 2020,
exceptional and non-recurring costs included restructuring costs of
EUR0.4 million and COVID-19 related expenses of EUR0.2 million.
10 Finance Cost
30 June 30 June
Note 2021 2020
EUR'000 EUR'000
Interest on secured loans 3,548 3,154
Interest on unsecured revolving facility - 721
Interest on fixed rate bonds 18,640 16,024
Debt cost amortisation and other finance costs 10.1 4,178 3,587
Other financial expenses - 16
Interest on lease liability 3.2 905 712
Bank charges 731 214
Gross finance cost 28,002 24,428
Less borrowing costs capitalised in investment property
under development (479) (900)
27,523 23,528
The capitalisation rate used to determine the borrowings
eligible for capitalisation was 3.33% (30 June 2020: 3.33%).
10.1 Debt cost amortisation and other finance costs
30 June 30 June
2021 EUR'000 2020
EUR'000
Debt issue cost amortisation - secured bank loans 256 153
Debt issue cost amortisation - unsecured revolving facility 738 817
Debt issue cost amortisation - fixed rate bonds 3,184 2,617
4,178 3,587
11 Taxation
30 June 30 June
2021 2020
EUR'000 EUR'000
Current income tax expense 814 2,191
- Related to current period 793 2,083
- Related to prior period 21 108
Deferred income tax expense 5,519 296
6,333 2,487
Current income tax expense
The Corporate income tax rate "CIT" applicable to the Company in
Guernsey is nil. The subsidiaries in Romania, Poland and Cyprus are
subject to tax on local sources of income. The current income tax
expense of EUR0.8 million (30 June 2020: EUR2.2 million) represents
the profit tax for the Group. The taxable income arising in each
jurisdiction is subject to the following standard corporate income
tax rates: Romania at 16%, Cyprus at 12.5% and Poland at 19%
(however for small entities with revenue up to EUR2 million (2020:
EUR1.2 million) in the given tax year and entities starting a new
business for their first tax year of operation, under certain
conditions, are charged a reduced rate of 9%).
The Group's subsidiaries in Poland are subject to the minimum
tax, which is applied to income from ownership of certain
high-value fixed assets having an initial value of the asset
exceeding PLN 10 million at a rate of 0.035% per month. From 2019,
the taxpayer has a right to apply for the refund of previously paid
minimum tax which was not deducted from the advance corporate
income tax. This minimum tax can be set-off against CIT if CIT is
higher. The tax is applied only to leased buildings while no tax
applies on vacant buildings or on vacant space in partially
occupied buildings. Due to the COVID-19 pandemic, the minimum tax
scheme was suspended since 1 March 2020 (until such a future date
when the authorities would resume its effect) and the Group's
subsidiaries are subject to corporate income tax.
The Group's subsidiaries registered in Cyprus need to comply
with the National tax regulations; however, the Group does not
expect to generate significant taxable income, other than dividend
and interest income, these being the most significant future
sources of income of the Group subsidiaries registered in Cyprus.
Dividend income is tax exempt under certain conditions and interest
income, however, is subject to corporate income tax at the rate of
12.5% in Cyprus.
Judgements and Assumptions Used in the Computation of Current
Income Tax Liability
There are uncertainties in Romania and Poland where the Group
has significant operations and this is due to the interpretation of
complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income. Differences arising between the
actual results and the assumptions made, or future changes to such
assumptions, could necessitate future adjustments to tax income and
expense already recorded. Such differences of interpretation may
arise on a wide variety of issues depending on the conditions
prevailing in the respective company's domicile. In Romania and
Poland, the tax position is open to further verification for five
years and no subsidiary in Romania has had a corporate income tax
audit in the last five years while in Poland some entities are
currently under tax audit with respect to the corporate income tax
settlement for the fiscal years 2016 and 2017.
Deferred tax (asset)/liabilities
30 June 31 December
2021 2020
EUR'000 EUR'000
Deferred tax asset (137) (786)
Deferred tax liabilities 149,713 144,843
149,576 144,057
Deferred income tax expense Consolidated statement Consolidated statement
of financial position of comprehensive
income
30 June 31 December 30 June 30 June
2021 2020 2021 2020
Net Deferred Tax EUR'000 EUR'000 EUR'000 EUR'000
Acquired through asset acquisition - - - 330
Valuation of investment property
at fair value 171,571 171,197 374 3,500
Deductible temporary differences (2,391) (3,657) 1,266 (247)
Interest expense and foreign exchange
loss on intra-group loans (15,954) (20,017) 4,063 (4,097)
Discounting of tenant deposits and
long-term deferred costs 75 63 12 (14)
Share issue cost recognised in equity (7) (7) - -
Valuation of financial instruments
at fair value 117 112 5 (1,067)
Recognised unused tax losses (3,835) (3,634) (201) 1,891
149,576 144,057 5,519 296
The Group has unused assessed tax losses carried forward of
EUR66.8 million (2020: EUR63.4 million) in Romania and EUR20.7
million (2020: EUR20.2 million) in Poland that are available for
offsetting against future taxable profits of the entity which has
the tax losses. The tax losses in Romania and Poland can be carried
forward over seven and five consecutive tax years from the year of
origination, respectively. In Poland, in any particular tax year,
the taxpayer may not deduct more than 50% of the loss incurred in
the year for which it was reported. Additionally, starting from
2020, the taxpayer may utilise one-time tax losses generated after
31 December 2018 in the amount of being the greater of PLN 5
million or 50% of tax loss of any given fiscal year in the
following five fiscal years.
As of the statement of financial position date the Group had
recognised deferred tax assets of EUR3.8 million (2020: EUR3.6
million) in Romania and Poland for which deferred tax asset
recognition criteria were met under IAS 12, out of the total
available deferred tax assets of EUR14.7 million (2020: EUR14.0
million), calculated at the corporate income tax rates of 16% in
Romania and 19% (9% for small entities) in Poland, respectively.
Thus, the deferred tax asset of EUR10.9 million (2020: EUR10.4
million) was not recognised in Romania and Poland out of total
available deferred tax assets, presented in the table below, in the
absence of conditions necessary for the recognition of asset as per
the criteria under IAS 12.
Expiry year 2021 2022 2023 2024 2025 2026 2027 2028 Total
Total available deferred
tax assets (EURm) 1.7 2.3 2.7 4.7 0.7 1.3 0.3 1.0 14.7
Furthermore, in addition to the above, there are also temporary
non-deductible interest expenses and net foreign exchange losses of
EUR213.7 million, EUR37.0 million in Romania and EUR176.7 million
in Poland (2020: EUR192.2 million, EUR32.8 million in Romania and
EUR159.4 million in Poland) related to intercompany and bank loans.
Such amounts can be carried forward indefinitely and each year an
amount up to 30% of tax EBITDA (but not less than PLN 3 million in
Poland) would become tax deductible for each respective subsidiary,
for which EUR15.9 million (EUR0.7 million in Romania and EUR15.2
million in Poland) deferred tax asset was recorded (2020: EUR20.0
million, EUR1.5 million in Romania and EUR18.5 million in
Poland).
12 Earnings Per Share
The following table reflects the data used in the calculation of
basic and diluted earnings per share per IFRS and EPRA
guidelines:
Number
of shares % of Weighted
issued the average
Date Event Note ('000) year ('000)
1 Jan 2020 At the beginning of the year 221,479 221,479
- Shares purchased with cash by the
Company (271) 7 (20)
30 June
2020 Shares in issue at period-end (basic) 221,208 221,459
Jan-June
2020 Effect of dilutive shares 1,160 92 1,064
30 June
2020 Shares in issue at period-end (diluted) 222,368 222,523
1 Jan 2021 At the beginning of the year 220,297 220,297
- Treasury shares allotted under the
Executive share option plan (vested
Jan 2021 and exercised) 20.2 26 89 23
Jan-Feb - Treasury shares allotted under deferred
2021 annual bonus plan (vested and exercised) 20.4 303 68 206
- Shares allotted under Subsidiaries'
Employees Share Award plan (vested
March 2021 and exercised) 20.3 97 51 49
30 June
2021 Shares in issue at period-end (basic) 220,723 220,575
Dilutive shares:
Jan 2021 - at the beginning of the year 895 100 895
Jan-March - vested and exercised under share-based
2021 plans during the period 20 (426) 65 (278)
Jan- March - assigned as unvested under share-based
2021 plans during the period 20 5 86 4
30 June
2021 Shares in issue at period-end (diluted) 221,197 221,196
Unvested share option warrants of 2.85 million were not included
in basic or diluted number of shares being unvested and
anti-dilutive on issue date (refer to note 25.1 for further
information). However, 20,000 share option warrants which were
vested and exercisable at 30 June 2021 were included in the
dilutive number of shares outstanding at 30 June 2021 (2020: same).
Subsequent to 30 June 2021, the Company issued 20,000 new shares to
two non-Executive Directors under the share option warrants
plan.
30 June 30 June
2021 2020
EUR'000 EUR'000
Profit/(loss) attributable to equity holders of the
Company for the basic and diluted earnings per share 12,534 (48,582)
IFRS earnings per share Cents Cents
- Basic 6 (22)
- Diluted 6 (22)
EPRA Earnings Per Share
The following table reflects the reconciliation between IFRS
earnings as per the statement of comprehensive income and EPRA
earnings (non-IFRS measure):
30 June 30 June
2021 2020
Note EUR'000 EUR'000
Earnings attributable to equity holders of the
Company (IFRS) 12,534 (48,582)
Changes in fair value of financial instruments
and associated close-out costs (325) (277)
Fair value loss on investment property 3 14,703 91,977
Losses on disposal of investment properties 162 107
Changes in value of financial assets at fair
value through profit or loss 14 243 (151)
Acquisition costs - 2,302
Deferred tax charge in respect of above adjustments 379 2,433
Adjustments in respect of joint ventures and
other items 1,337 (1,420)
EPRA earnings attributable to equity holders
of the Company 29,033 46,389
EPRA earnings per share Cents Cents
- Basic 13 21
- Diluted 13 21
SECTION IV: FINANCIAL ASSETS AND LIABILITIES
This section focuses on financial instruments, together with the
working capital position of the Group and financial risk management
of the risks that the Group is exposed to at period end.
13 Interest-Bearing Loans and Borrowings
This note describes information on the material contractual
terms of the Group's interest-bearing loans and borrowings. For
more information about the Group's exposure to market risk,
currency risk and liquidity risks, see note 17.
30 June 31 December
2021 2020
EUR'000 EUR'000
Current
Secured loans and accrued interest 3,497 3,580
Unsecured fixed rate Bonds, including
accrued interest 336,714 22,471
Sub-total 340,211 26,051
Non-current
Secured loans 357,607 358,836
Unsecured fixed rate Bonds 927,048 1,245,207
Sub-total 1,284,655 1,604,043
TOTAL 1,624,866 1,630,094
13.1 Key terms and conditions of outstanding debt
30 June 2021 31 December 2020
Face value Carrying Face value Carrying
value value
Nominal interest Maturity
Facility Currency rate date EUR'000 EUR'000 EUR'000 EUR'000
Loan EURIBOR 1 month +
16 EUR margin May 2025 14,102 14,099 14,724 14,721
Loan
25 EUR Fixed rate Bond June 2022 323,383 321,648 328,066 325,460
Loan
37 EUR Fixed rate Bond March 2025 554,204 547,886 562,522 555,324
Fixed rate & Floating
Loan rate EURIBOR 3 months
381 EUR + margin May 2025 100,105 99,475 100,111 99,405
Loan EURIBOR 3 month +
41 EUR margin March 2029 85,309 84,555 85,313 84,505
Loan EURIBOR 3 month + December
43 EUR margin 2024 36,814 36,669 37,599 37,438
Loan February
44/45 EUR Fixed rate 2027 62,293 61,964 62,295 61,935
Loan November
46 EUR Fixed rate 2029 65,043 64,342 65,105 64,412
Loan
48 EUR Fixed rate Bond July 2026 410,862 394,228 405,011 386,894
Total 1,652,115 1,624,866 1,660,746 1,630,094
1 Loan 38 was drawn down in two tranches - 95% of the facility
carries a fixed interest rate and 5% carries a floating EURIBOR
3-month rate.
Unsecured corporate Bonds
In June 2017, the Company issued a EUR550 million unsecured
Eurobond (Loan 25). The five-year Euro-denominated Bond matures on
20 June 2022 and carries a fixed interest rate of 2.875%. In March
2018, the Group issued a EUR550 million unsecured Eurobond (Loan
37). The seven-year Euro-denominated Bond
matures on 29 March 2025 and carries a fixed interest rate of 3.0%.
In July 2020 the Company successfully completed under its EUR1.5
billion Euro Medium Term Notes Programme the issuance of EUR400
million new Notes, due in 2026, by exchanging EUR226.9 million of
the EUR550 million Notes due in June 2022 (loan 25) and the
remaining amount EUR158.7 million, after deduction of buy-back
premium and issuance fees, was received in cash which further
enhanced the liquidity position of the Group.
The redemption of the June 2022 notes and the issuance of the
July 2026 notes were negotiated in contemplation of one another and
therefore the transaction constituted an exchange of old for new
debt instead of a separate extinguishment of part of the June 2022
notes and separate issuance of the July 2026 notes as per IFRS 9.
Therefore, unamortised finance costs of EUR1.5 million and the 2%
buy-back premium on the exchanged EUR226.9 million June 2022 notes
were added to the issuance cost of July 2026 notes and are
amortised over the term of the July 2026 notes.
Financial covenants
Financial covenants on unsecured fixed rate bonds are calculated
on a semi-annual basis at 30 June and 31 December each year and
include the Consolidated Coverage Ratio, with minimum value of
200%, the Consolidated Leverage Ratio, with maximum value of 60%,
and the Consolidated Secured Leverage Ratio with a maximum value of
30%.
U n s e c u r e d Re v ol v i n g Credit F ac i l i t y
At the end of October 2019, the Group entered into a EUR200
million unsecured Revolving Credit Facility ("RCF") with a
syndicate of local and international banks. On 18 March 2020, the
full amount was drawn down in order to further strengthen the
liquidity during the pandemic period, however, following the
successful Bond issuance, the EUR200 million outstanding balance on
the RCF was repaid in full on 13 August 2020.
In July 2020, the Group exercised its option to increase the RCF
credit line by EUR15 million under a pre-existing commitment from
the syndicate of Banks, thus as at 30 June 2021 and 31 December
2020, the entire RCF facility of EUR215 million was available for
utilisation until 31 March 2024, with maturity date 30 April
2024.
The RCF terms have been structured to, generally, align with the
Company's existing Euro Medium Term Note (EMTN) programme for fixed
rate Bonds. In addition to the financial covenants applicable for
unsecured fixed rate bonds, the RCF facility contains a
supplementary financial covenant of the Total Unencumbered Assets
Ratio with minimum value of 125%.
13.2 Secured facilities
Financial covenants
Financial covenants on secured loans are calculated based on the
individual financial statements of the respective subsidiaries and
subject to the following ratios:
-- gross loan-to-value ratio ("LTV") with maximum values ranging
from 60%-83% (2020: 60%-83%). LTV is calculated as the loan value
divided by the market value of the relevant property (for a
calculation date);
-- the debt service cover ratio ("DSCR") minimum values of 120%
(2020: 120%). DSCR is calculated, depending on the respective
credit facility, on the preceding 12-months historical ratio or
projected future 12-months period ratio; and
-- minimum interest cover ratio ("ICR"), historic with minimum
values from 350% and projected with minimum values from 250% (2020:
250%), which was applicable to two properties as at 30 June 2021
(31 December 2020: same). Historic ICR is calculated, as Actual Net
Rental Income as a percentage of the Actual Interest Costs for the
twelve preceding months period from the calculation date. Projected
ICR is calculated as Projected Net Rental Income as a percentage of
the Projected Interest Costs for the twelve months period
commencing immediately after the date of the calculation.
Secured bank loans are secured by investment properties which
were recognised in the statement of financial position at fair
value of EUR798.3 million at 30 June 2021 (2020: EUR796.7 million)
and also carry pledges on rent and other receivable balances of
EUR3.4 million (2020: EUR2.5 million), VAT receivable balances of
EUR0.8 million (2020: EUR0.7 million) and a movable charge on the
respective bank accounts with a total balances of EUR37.3 million
at 30 June 2021 (2020: EUR30.0 million).
The Group is in compliance with all financial covenants and
there were no payment defaults during the period ended 30 June 2021
(2020: same). As of 30 June 2021, the Group had undrawn borrowing
facilities of EUR215 million (2020: EUR215 million).
14 Financial assets at fair value through profit or loss
Interest Maturity 31 December Valuation 30 June
Project name rate date 2020 Additions Disposal loss 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
December
Browary Stage J fixed 2021 43 - - - 43
My Place I (formerly: December
Beethovena I) fixed 2021 4,229 143 - (112) 4,260
My Place II (formerly: December
Beethovena II) fixed 2021 3,423 - (85) (131) 3,207
TOTAL 7,695 143 (85) (243) 7,510
Right of First Offer Agreements ('ROFO' bonds)
The fair value of the financial assets (ROFO bonds) is
individually determined by taking into account a number of factors.
The significant key factors are fair value of underlying investment
properties, outstanding cost to complete the construction and
leasing progress. Any significant change in inputs may result in
significant change in the fair value of ROFO especially considering
current COVID-19 environment. For example, as at 30 June 2021 a 5%
change in outstanding cost to complete or the fair value of
underlying investment property would have increased or decreased
the ROFO fair value by EUR0.9 million and EUR1.0 million (2020:
EUR0.9 million and EUR0.9 million), respectively.
The maturity dates presented in the table above are stated in
the agreements, however, the planned repayment dates of debentures
would take place upon completion of each ROFO project. The fair
value of debentures is calculated based on percentage of completion
of each ROFO projects and developer margin of the project which is
calculated as a difference between each ROFO Project value upon
completion and the project's construction budget. As at 30 June
2021, a loss of EUR0.24 million (2020: gain of EUR0.15 million)
from the fair valuation of the above financial instruments was
recognised in the statement of comprehensive income, categorised
Level 3 within the fair value hierarchy.
The Group is committed to invest in each of the ROFO Assets at
least 25% of the funds required by each of the ROFO SPVs (less the
external construction bank financing at a loan to construction
ratio of 60%) to complete the development of each respective ROFO
Asset. As of 30 June 2021, the cumulative investment made by the
Group under the ROFO Agreement amounts to EUR16.6 million (2020:
EUR16.6 million) out of which EUR0.1 million was invested during
the current period (during 2020 the Group sold ROFO bonds for an
amount of EUR16.5 million). During 2020 the Group sold ROFO bonds
related to Browary Stage J for an amount of EUR16.5 million to Echo
Investment S.A., the majority stake holder. Due to COVID-19 the
completion date of the My Place development project was deferred to
December 2021.
15 Trade and Other receivables
30 June 31 December
2021 2020
EUR'000 EUR'000
Current
Rent and service charges receivable 10,755 10,785
VAT and other taxes receivable 6,102 5,028
Advances to suppliers for services 288 90
Sundry debtors 209 122
17,354 16,025
Rent and Service Charges receivable
Rent and service charges receivable are presented in the above
table net of an allowance for bad or doubtful debts of EUR5.5
million (2020: EUR4.9 million). Rent and service charges receivable
are non-interest-bearing and are typically due within 30-90 days
(see more information on credit risk and currency profile in note
17.2). For the terms and conditions for related party receivables,
see note 25.
16 Cash and Cash Equivalents
30 June 31 December
2021 2020
EUR'000 EUR'000
Cash at bank and in hand 200,119 300,704
Short-term deposits 259,774 226,097
Cash and cash equivalents as per statement of cash
flows 459,893 526,801
Guarantee deposits - cash reserve - 1,000
Cash and cash equivalents as per statement of financial
position 459,893 527,801
Cash at bank and in hand includes restricted cash balances of
EUR9.4 million (2020: EUR6.4 million) and short-term deposits
include restricted deposits of EUR0.1 million (2020: EUR3.2
million). The restricted cash balance can be used to repay the
outstanding debts and repayment of deposits to tenants. The cash
balance of EUR0.4 million (2020: EUR0.2 million) held by the
Globalworth Foundations (Fundatia Globalworth in Romania and
Fundacja Globalworth in Poland) is restricted only for charity
purposes.
Short-term deposits are made for varying periods depending on
the immediate cash requirements of the Group and earn interest at
rates on Euro deposits ranging from minus 0.17% to 0.20% (2020:
minus 0.60% to 0.35%) per annum and for RON deposits from 0.40% to
1.38% (2020: 0.62% to 2.55%) per annum. For RON deposits highest
interest rate was earned on overnight deposits.
Details of cash and cash equivalents denominated in foreign
currencies are disclosed in note 17.
17 Financial Risk Management - Objective and Policies
The Group is exposed to the following risks from its use of
financial instruments:
-- Market risk (including currency risk, interest rate risk);
-- Credit risk; and
-- Liquidity risk.
17.1 Market Risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices.
The Group's market risks arise from open positions in: (a)
foreign currencies; and (b) interest-bearing assets and
liabilities, to the extent that these are exposed to general and
specific market movements.
17.1 a) Foreign currency risk
The Group has entities registered in several EU countries, with
the majority of the operating transactions arising from its
activities in Romania and Poland.
Therefore, the Group is exposed to foreign exchange risk,
primarily with respect to the Romanian Lei (RON) and Polish Zloty
(PLN). Foreign exchange risk arises in respect of those recognised
monetary financial assets and liabilities that are not in the
functional currency of the Group.
The Group's exposure to foreign currency risk was as follows
(based on nominal amounts):
30 June 2021 31 December 2020
Denominated in Denominated in
Amounts in EUR'000 equivalent RON PLN GBP USD RON PLN GBP USD
value
ASSETS
Cash and cash equivalents 17,305 15,496 48 6 27,672 16,136 71 18
Trade and other receivables 8,508 7,102 - - 7,573 8,219 - -
Contract assets 860 980 - - 1,506 1,311 - -
Income tax receivable 42 806 - - 192 725 - -
Total 26,715 24,384 48 6 36,943 26,391 71 18
LIABILITIES
Trade and other payables 12,016 9,799 - - 10,418 9,909 - -
Lease liability - 29,061 - - - 29,089 - -
Income tax payable 160 86 - - 632 170 - -
Guarantees from subcontractors 137 1,846 - - - 2,165 - -
Deposits from tenants 2,799 6,598 - 5 3,271 5,954 - -
Total 15,112 47,390 - 5 14,321 47,287 - -
Net exposure 11,603 (23,006) 48 1 22,622 (20,896) 71 18
Foreign Currency Sensitivity Analysis
As of the statement of financial position date, the Group is
mainly exposed to foreign exchange risk in respect of the exchange
rate fluctuations of the RON and PLN. The following table details
the Group's sensitivity (impact on income statement before tax and
equity) to a 5% devaluation in RON, PLN and GBP exchange rates
against the Euro, on the basis that all other variables remain
constant.
The 5% sensitivity rate represents management's assessment of
the reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the
reporting date for a 5% appreciation in the Euro against other
currencies.
30 June 2021 30 December
2020
========
Profit or Profit
All amounts in EUR'000 (loss) Equity or (loss) Equity
RON (580) (580) (1,131) (1,131)
PLN 1,150 1,150 1,045 1,045
USD - - (1) (1)
GBP (2) (2) (4) (4)
A 5% devaluation of the Euro against the above currencies would
have had an equal but opposite impact on the above currencies to
the amounts shown above, on the basis that all other variables
remain constant.
17.1 b) Interest Rate Risk
Interest rate price risk is the risk that the value of a
financial instrument will fluctuate due to changes in market
interest rates relative to the interest rate that applies to the
financial instrument. Interest rate cash flows risk is the risk
that the interest cost will fluctuate over time.
The Group's interest rate risk principally arises from
interest-bearing loans and borrowings. As at 30 June 2021, the
total outstanding balance of interest-bearing loans and borrowing
91.4% (2020: 91.3%) carry fixed rate interest, as a consequence,
the Group is exposed to fair value interest rate risk, which has
been disclosed under IFRS. As of 30 June 2021, the fair value of
such fixed rate debt was higher by EUR94 million (2020: higher with
EUR93 million) than the carrying value as disclosed below in fair
value hierarchy table.
Furthermore, as at 30 June 2021, from the total outstanding
interest-bearing loans and borrowing balance 8.6% (2020: 8.7%)
carry variable interest rate, which range from EURIBOR 1-month to
EURIBOR 3-month rates, see note 13 for details on each individual
loan. These loans expose the Group to cash flow interest rate risk
and in order to minimise this risk, the Group hedged 10.0% (2020:
10.3%) of such variable interest rate exposure with fixed-variable
interest rate swap instrument and further 43.4% (2020: 30.0%)
hedged with interest rate cap instruments.
Based on the Group's debt balances at 30 June 2021, an increase
or decrease of 25 basis points in the EURIBOR will result in an
increase or decrease (net of tax) of interest expense by EUR2.1
million (2020: EUR2.3 million), with a corresponding impact on
equity for the same amount, respectively. This analysis assumes
that all other variables, in particular foreign currency rates,
remain constant .
17.2 Credit Risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group's policy is to trade with recognised and
creditworthy third parties. The Group's exposure is continuously
monitored and spread amongst approved counterparties. The Group's
maximum exposure to credit risk, by class of financial asset, is
equal to their carrying values at the statement of financial
position date.
30 June 31 December
Note 2021 2020
EUR'000 EUR'000
Financial assets measured at fair value through
profit or loss 14 7,510 7,695
Loan receivable from joint venture 22 22,556 16,451
Trade receivables - net of provision 15 10,755 10,785
Contract assets 1,840 2,819
Sundry debtors 209 122
Guarantees retained by tenants 887 894
VAT and other taxes receivable 15 6,102 5,028
Income tax receivable 846 931
Cash and cash equivalents 16 459,893 527,801
510,598 572,526
Financial assets at fair value through profit or loss and other
comprehensive income
The Group places funds in financial instruments issued by
reputable real estate companies with high credit worthiness.
Co n t r a c t a s s et s a n d Tr ad e Re c e i v a bl e s
A trade receivable is recognised if an amount of consideration
that is unconditional is due from the customer (only the passage of
time is required before payment of the consideration is due).
There is no significant concentration of credit risk with
respect to contract assets and trade receivables, as the Group has
a large number of tenants, most of which are part of multinational
groups, internationally dispersed, as disclosed in the Interim
Report. For related parties, including the joint ventures, it is
assessed that there is no significant risk of non-recovery.
Es t i m a t e s a n d as s u m p ti o n s us e d f o r i mp a i
r m e n t o f tr ad e re c e i v
a bl e s a n d co n t r a c t a s s et s
The Group's trade receivables do not contain any financing
component and mainly represent lease receivables. Therefore, the
Group applied the simplified approach under IFRS 9 and measured the
loss allowance based on a provision matrix that is based on
historical collection and default experience adjusted for forward
looking factors in order to estimate the provision on initial
recognition and throughout the life of the receivables at an amount
equal to lifetime ECL (Expected Credit Losses). The assessment is
performed on a six-month basis and any change in original allowance
will be recorded as gain or loss in the income statement.
The COVID-19 pandemic and work from home policies have created a
challenging environment for many industries and businesses and, in
particular, for some of our retail tenants. We are in close contact
with our tenants and we are communicating on a regular basis in
order to understand and respond to their challenges, including the
amendment of lease terms and also rescheduling of outstanding
receivables on a few occasions. We continue to monitor the cash
collections of rents daily throughout the entire portfolio. As of
financial statements approval date, we have observed insignificant
instances, primarily in our retail portfolio in the mixed-use
segment, where invoices were not collected from tenants within due
date or tenants requested rescheduling of outstanding invoices.
This indicates, as per instances observed until the end of July
2021, a lower likelihood of possible business failures, though we
continue to monitor closely all customers especially tenants who
are facing financial difficulties due to COVID-19. We expect to see
low to moderate risk delays in rent collection or low risk of
non-payment of rent in the future, considering the current
conditions and the availability of vaccines or other solutions
against the COVID-19 pandemic. Refer to the Collection Review in
the Interim Report for further details.
The movements in the provision for impairment of receivables
during the respective periods were as follows:
30 June 31 December
2021 2020
EUR'000 EUR'000
Opening balance 4,976 4,030
Provision for specific doubtful debts 783 1,370
Reversal of provision for doubtful debts (220) (218)
Utilised - (62)
Foreign currency translation income (43) (144)
Closing balance 5,496 4,976
The analysis by credit quality of financial assets, cumulated
for rent, service charge and property management, is as
follows:
30 June 2021 (EUR'000) Neither
past due
nor impaired due but not impaired
<90 days <120 days <365 days >365 days TOTAL
Trade and other receivables
- gross 4,445 4,590 597 2,471 4,147 16,250
Less: Specific provision - 290 110 588 4,147 5,135
Less: Expected credit
loss 3 131 7 219 - 360
Carrying amount 4,442 4,169 480 1,664 - 10,755
Expected credit loss
rate 0.1% 3.2% 1.5% 13.2% -
31 December 2020 (EUR'000) due but not impaired
Neither
past due
nor impaired <90 days <120 days <365 days >365 days TOTAL
Trade and other receivables
- gross 5,905 3,481 478 2,139 3,758 15,761
Less: Specific provision - 51 46 761 3,758 4,616
Less: Expected credit
loss 6 266 20 68 - 360
Carrying amount 5,899 3,164 412 1,310 - 10,785
Expected credit loss
rate 0.1% 8.4% 4.8% 5.2% -
The customer balances which were overdue but not provisioned are
due to the fact that the related customers committed and started to
pay the outstanding balances subsequent to the period end. Further
deposits payable to tenants may be withheld by the Group in part or
in whole if receivables due from the tenant are not settled or in
case of other breaches of contractual terms.
VAT and ot h e r ta x e s re c e i v a b l e
This balance relates to corporate income tax paid in advance,
VAT and other taxes receivable from the tax authorities in Romania
and Poland. The balances are not considered to be subject to
significant credit risk as all the amounts receivable from
Government authorities are secured under sovereign warranty.
Cash and cash equivalents
The credit risk on cash and cash equivalents is very small,
since the cash and cash equivalents are held at reputable banks in
different countries. The most significant part of the cash and cash
equivalents balance is kept at the company level with international
banks having credit rating profile (assigned by S&P, Moody's or
Fitch) in upper medium grade range (i.e. A+ to A- for long-term and
P-2, P2, F-1, F-2 for short-term) for 54% (2020: 70%) of the cash
and cash equivalents balance of the Group, in lower medium grade
range (BBBs) for 45% (2020: 29%) of the cash and cash equivalents
balance of the Group and only 1% (2020: 1%) in non-investment
grade. Surplus funds from operating activities are deposited only
for short-term period, which are highly liquid with reputable
institutions.
Lo a ns r e c e i v a b l e f r o m j o i n t v e n t u r e s
The outstanding loan balance is neither past due nor impaired.
Loans receivable from joint ventures are considered to be low
credit risk where they have a low risk of default and the issuer
has a strong capacity to meet its contractual cash flow
obligations.
Financial instruments for which Fair values are disclosed
Set out below is a comparison by class of the carrying amounts
and fair values of the Group's financial instruments, other than
those with carrying amounts that are reasonable approximations of
their fair values.
Fair value hierarchy
Carrying Level Level 2 Level Total
amount 1 3
Year EUR000 EUR000 EUR000 EUR000 EUR000
Interest-bearing loans
and borrowings
(note 13) 2021 1,624,866 1,358,335 - 374,690 1,733,025
2020 1,630,094 1,342,184 - 384,887 1,727,071
Other current financial
liabilities 2021 552 - 552 - 552
2020 875 - 875 - 875
Financial asset at fair
value through profit
or loss 2021 7,510 - - 7,510 7,510
2020 7,695 - - 7,695 7,695
Lease liabilities (note
3) 2021 29,061 - - 29,061 29,061
2020 29,089 - - 29,089 29,089
The fair value of financial liabilities is included at the
amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. When determining the fair values of interest-
bearing loans and borrowings and lease liabilities the Group used
the DCF method with inputs such as discount rate that reflects the
issuer's borrowing rate as at the statement financial position
date. Specifically, for the Eurobonds, their fair value is
calculated on the basis of their quoted market price. The own
non-performance risk at the statement of financial position date
was assessed to be insignificant.
17.3 Liquidity Risk
The Group's policy on liquidity is to maintain sufficient liquid
resources to meet its obligations as they fall due. Ultimate
responsibility for liquidity risk management rests with management.
The Group manages liquidity risk by maintaining adequate cash
reserves and planning and close monitoring of cash flows. The Group
expects to meet its financial liabilities through the various
available liquidity sources, including a secure rental income
profile, further equity raises and in the medium term, debt
refinancing. The table below summarises the maturity profile of the
Group's financial liabilities based on contractual undiscounted
payments.
The below table presents the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group
can be required to pay and includes both interest and principal
cash flows. As the amount of contractual undiscounted cash flows
related to bank borrowings is based on variable rather than fixed
interest rates, the amount disclosed is determined by reference to
the conditions existing at the year end, that is, the actual spot
interest rates effective at the end of the year are used for
determining the related undiscounted cash flows.
Contractual payment term Difference
from
carrying
amount
All amounts in EUR'000 <3 months 3 months- 1-5 years >5 years Total Carrying
1 year amount
30 June 2021
Interest-bearing loans
and borrowings 14,118 355,869 822,357 626,141 1,818,485 (193,619) 1,624,866
Lease liability - 2,096 8,885 118,375 129,356 (100,295) 29,061
Trade payables and guarantee
retained from
contracts (excluding advances
from customers) 19,830 15,001 2,057 1,455 38,343 (162) 38,181
Other payables 17 - - - 17 - 17
Deposits from tenants 15,445 130 3,323 810 19,708 (575) 19,133
Income tax payable 238 - - - 238 - 238
Total 49,648 373,096 836,622 746,781 2,006,147 (294,651) 1,711,496
Contractual payment term Difference
from
carrying
amount
All amounts in EUR'000 <3 months 3 months- 1-5 years >5 years Total Carrying
1 year amount
31 December 2020
Interest-bearing loans
and borrowings 18,823 28,029 1,172,979 628,991 1,848,822 (218,728) 1,630,094
Lease liability - 1,766 8,708 117,705 128,179 (99,090) 29,089
Trade payables and guarantee
retained from
contracts (excluding advances
from customers) 27,305 10,515 2,827 22 40,669 (186) 40,483
Other payables - 255 - - 255 - 255
Provision for tenant lease
incentives 46 - - - 46 - 46
Deposits from tenants 15,990 107 3,579 417 20,093 (399) 19,694
Income tax payable 802 - - - 802 - 802
Total 62,966 40,672 1,188,093 747,135 2,038,866 (318,403) 1,720,463
Other current financial liabilities
Other current financial liabilities represent the mark-to-market
value of an interest rate swap, obtained from the counterparty
financial institution, at EUR0.6 million at 30 June 2021 (2020:
EUR0.9 million). The fair value of derivative was developed in
accordance with the requirements of IFRS 13. Under the terms of the
swap agreement, the Group is entitled to receive a floating rate of
1-month EURIBOR at a notional amount of EUR14.85 million (2020:
EUR15.51 million) and is required to pay a fixed rate of interest
of 3.62% p.a. on the said notional amount in monthly instalments,
with maturity date of June 2022. A financial income of EUR0.3
million (30 June 2020: EUR0.3 million) was recognised in the income
statement for the period ended 30 June 2021 for the change in the
fair value.
The Group assessed that the fair values of other financial
assets and financial liabilities, such as trade and other
receivables, guarantees retained by tenants, cash and cash
equivalents, income tax receivable and payables, trade and other
payables, guarantees retained from contractors and deposits from
tenants, approximate their carrying amounts largely due to
short-term maturities and low transaction costs of these
instruments as of the statement of financial position date.
SECTION V: SHARE CAPITAL AND RESERVES
The disclosures in this section focus on dividend distributions,
the share schemes in operation and the associated share-based
payment charge to profit or loss. Other mandatory disclosures, such
as details of capital management, are also disclosed in this
section.
18 Dividends
30 June 30 June 2020
2021 EUR'000
EUR'000
Declared and paid during the period
Interim cash dividend: EUR0.15 per share (2020:
EUR0.30 per share) 33,130 66,443
On 19 February 2021, the Board of Directors of the Company
approved the payment of an interim dividend in respect of the
six-month financial period ended 31 December 2020 of EUR0.15 per
ordinary share, which was paid on 19 March 2021 to the eligible
shareholders.
19 Financial Position Key Performance Measures
The net assets value ("NAV"), EPRA Net Reinstatement Value
("EPRA NRV") and the numbers of shares used for the calculation of
each key performance measure on the financial position of the Group
and the reconciliation between IFRS and EPRA measures are shown
below.
30 June 2021 31 December
EUR'000 2020
Note EUR'000
Net assets attributable to equity holders
of the Company 1,735,526 1,755,364
Number of ordinary shares used for the Number ('000) Number ('000)
calculation of:
* NAV per share 12 220,723 220,297
* Diluted NAV and EPRA NRV per share 12 221,197 221,486
EUR EUR
NAV per share 7.86 7.97
Diluted NAV per share 7.85 7.93
30 June 2021 31 December
EPRA NRV Per Share EUR'000 2020
Note EUR'000
Net assets attributable to equity holders
of the Company
Exclude: 1,735,526 1,755,364
Deferred tax liability on investment
property 11 171,571 171,197
Fair value of interest rate swap instrument 17 547 872
Goodwill as a result of deferred tax (5,697) (5,697)
Adjustment in respect of the joint venture
for above items 1,495 1,742
EPRA NRV attributable to equity holders
of the Company 1,903,442 1,923,478
EUR EUR
EPRA NRV per share 8.61 8.68
20 Share-Based Payment Reserve
30 June 31 December
2021 2020
Share-based payments reserve Note EUR'000 EUR'000
Executive share option plan 20.1 158 158
Shares granted to Executive Directors and other
senior management employees - not transferred 20.2 175 353
Subsidiaries' Employees Share Award Plan 20.3 140 531
Performance Incentive Scheme - -
Deferred annual bonus plan 20.4.1 2,941 4,999
Long-term incentive plan 20.4.2 143 143
3,557 6,184
Share-based payments expense 30 June 30 June
2021 2020
EUR'000 EUR'000
Subsidiaries' Employees Share Award Plan 20.3 432 1,071
Total expense during the period 432 1,071
20.1 Executive Share Option Plan
Under the plan, the Directors of the Group were awarded share
option warrants as remuneration for services performed. The share
options granted to the Directors of the Group are equity
settled.
In 2013, the Group granted warrants to the Founder (at 30 June
2021 the unvested warrants were held by Zakiono Enterprises
Limited, a company owned on 30 June 2021 by CPI Property Group) and
the Directors which entitle each holder to subscribe for ordinary
shares in the Company at an exercise price of EUR5.00 per share if
the market price of an ordinary share, on a weighted average basis
over 60 consecutive days, exceeds a specific target price and the
holder is employed on such date. The contractual term of each
warrant granted is 10 years. There are no cash settlement
alternatives, and the Group does not have the intention to offer
cash settlement for these warrants.
As of 30 June 2021, under the share option warrants scheme
Zakiono Enterprises Limited had the right to subscribe in two
tranches of 2.85 million ordinary shares in total (1.425 million
for each tranche) at an exercise price of EUR5.00 per share if the
market price of an ordinary share, on a weighted average basis over
60 consecutive days, exceeds EUR10.00 per share and EUR12.50 per
share for each tranche respectively. As defined per IAS 33
"Earnings per share" ordinary shares to be issued for each unvested
share option warrants were not included in basic or diluted number
of shares as disclosed in note 12. The fair value of the warrants
was estimated at the grant date (i.e. July 2013) at EUR0.073 per
share. There have been no cancellations or modifications to any of
the plans during the period ended 30 June 2021.
The following table analyses the total cost of the executive
share option plan (Warrants), together with the number of options
outstanding:
30 June 2021 31 December 2020
Cost Number Cost Number
EUR'000 ('000) EUR'000 ('000)
Closing balance 158 2,850 158 2,850
Weighted average remaining contractual
life (years) 3.08 3.33
Warrants vested and exercisable 20 20
20.2 Shares granted to Executive Directors and other senior management employees
30 June 31 December
2021 2020
EUR'000 EUR'000
Opening balance 353 838
Vested shares transferred to the Executive Directors
and other senior management employees during the
period (180) (392)
Dividend equivalent amount on vested shares paid
in cash (4) (26)
Unpaid dividend equivalent on unvested shares 6 34
Unallocated dividend transferred to treasury shares - (101)
Closing balance 175 353
Shares Issued to the Executive Directors and Other Senior
Management Employees
In January 2021, Globalworth Investment Advisers Limited's
("GIAL") delivered 0.026 million ordinary shares (ordinary shares
of no par value), out of treasury shares held by it, to one of its
preference shareholders as settlement for the share-based payment
reserve, in order to settle the second tranche of 0.026 million
ordinary shares, comprising part of the ordinary shares that were
allotted to GIAL in part settlement of the fee due to GIAL by the
Company for the year ended 31 December 2018. As at 30 June 2021,
0.017 million shares (2020: 0.04 million shares) held by GIAL and
not transferred by that date are accounted for as treasury shares.
The shares rank pari passu with the existing shares of the
Company.
20.3 Subsidiaries' Employees Share Award Plan
30 June 2021 31 December
2020
EUR'000 EUR'000
Opening balance 531 -
Share-based payment expense during the period/year 432 1,071
Shares vested and exercised during the period/year (823) (540)
Closing balance 140 531
Weighted average remaining unvested period (years) 0.75 0.25
Weighted average price per share - vested and
exercised shares 7.00 7.00
Weighted average price per share - unvested shares 7.00 7.00
During 2021, the Company recorded EUR0.43 million (2020: EUR1.1
million) as share-based payment expense in the income statement for
the lapsed vesting period. Furthermore, during the current period,
the Group allotted 0.097 million ordinary shares to employees
(vested shares) in order to settle the share-based reserve under
this scheme.
Under the share award plan, the subsidiaries' employees are
required to remain in service for a one-year period after the date
of acceptance of the share offer letter. The Company anticipates
that all employees will remain in service until the expiry of the
unvested period.
20.4 Current Group remuneration policy
20.4.1 Deferred annual bonus plan ("DABP")
The Investment Manager and selected senior employees are
eligible to participate in an annual bonus plan. The current annual
bonus plan for participants in the scheme is paid through a
combination of maximum 50% cash and the balance in deferred shares.
The maximum award for each participant cannot exceed 150% of annual
salary, target performance cannot exceed 75% of annual salary and
threshold performance cannot exceed 37.5% of annual salary. Awards
under the DABP vest in three instalments on the first, second and
third anniversaries of the date of grant, unless otherwise approved
by the Company's Remuneration Committee and the Board of Directors.
Participants are entitled to receive dividend equivalents on the
unvested shares until, and payable on or shortly after, they
vest.
The Remuneration Committee sets performance targets for the
annual bonus at the start of each financial year to ensure
performance measures and weightings are appropriate and support the
business strategy. The performance targets are primarily based upon
Key Performance Indicators, although there may also be elements
subject to other measures and factors.
30 June 2021 31 December
2020
EUR'000 EUR'000
Deferred annual bonus plan - equity settlement
At the beginning of the period 4,999 1,888
Shares transferred during the year (1,979) -
Share based incentive bonus for the period - 2,065
Unpaid dividend equivalent on unvested shares - 21
Share based portion of annual incentive plan
settled in cash (79) -
Cash-based portion of annual incentive plan converted
to equity settled plan - 1,025
Closing balance 2,941 4,999
Following the assessment performed of the current year's
achievements for the specific key performance indicators compared
to the target amounts set for the year, the Group has provisioned
EUR4.0 million for the benefit of DABP participants as of 31
December 2020. Out of the total incentive amount, EUR3.8 million
was capitalised as cost of new lease addendum signed during the
year and would be amortised on such lease term in the income
statement and a corresponding credit was made under trade and other
payables, representing the 48% cash element, for an amount of
EUR1.9 million. In addition, a share-based payment reserve was set
up, representing the 52% of deferred shares element, for an amount
of EUR2.1 million. Dividend equivalents are paid in relation to
shares which vest until the normal vesting date or, if there is
one, until the end of the holding period.
20.4.2 Long-term Incentive Plan
The LTIP provides the long-term incentive arrangement for the
Investment Manager and selected senior employees (the "LTIP
Participants"). Under the LTIP, it is intended that performance
share awards will be granted on an annual basis either in the form
of Company shares without cost to the LTIP participant or nil (or
nominal) cost options to subscribe to Company shares. Annual awards
will be determined by reference to that number of shares which
equals in value to a maximum of 100% of salary for employees who
are not a director of the Company and 150% of salary for the
Executive Director of the Company. Awards vest three years from the
date of grant of the award (or upon the assessment of performance
conditions if later) subject to the LTIP participant's continued
service and the extent to which the performance conditions
specified for the awards are satisfied.
Performance conditions applying to the first awards will be
based 50% on relative Total Shareholder Return ("TSR") and 50% on
growth in Total Accounting Return per share ("TAR") (defined as the
growth in the Company's EPRA Net Assets Value per share and
dividend distributions per share paid over the three-year LTIP
performance period). The achievement of a threshold level of
performance will result in vesting of 25% of the maximum award.
Full vesting will occur for equalling or exceeding the maximum
performance target. A target level of performance may also be set
between the threshold and maximum performance targets. The level of
vesting for the achievement of target performance would take
account of the difficulty of achieving target performance.
Straight-line vesting will take place for performance between
threshold, target, and maximum. Dividend equivalents will be paid
in relation to shares which vest until the normal vesting date or,
if there is one, until the end of the holding period.
As at 30 June 2020 the Group continued to have a EUR0.14 million
provisional expense recorded in connection with the Company's TAR
performance for the year ended 31 December 2019.
20.5 Tr e a su r y s h a r e s
30 June 2021 31 December
2020
Amount Number Amount Number
Note EUR'000 ('000) EUR'000 ('000)
====
Opening balance (12,977) (2,109) (8,379) (929)
Shares purchased with cash by the
Company - - (8,345) (1,562)
Shares for Executive Directors and
other senior management employees 20.2 180 26 392 43
Shares for subsidiaries' employee
share award plan 20.3 823 97 540 62
Shares vested under the deferred
annual bonus incentive plan 2,373 303 - -
Transfer of vested shares for performance
incentive scheme termination - - 2,544 277
Dividend on treasury shares held
by subsidiary 9 - 271
Closing balance (9,592) (1,683) (12,977) (2,109)
21 Capital Management
The Company has no legal capital regulatory requirement. The
Group's policy is to maintain a strong equity capital base so as to
maintain investor, creditor and market confidence and to sustain
the continuous development of its business. The Board considers
from time to time whether it may be appropriate to raise new
capital by a further issue of shares. The Group monitors capital
primarily using an LTV ratio and manages its gearing strategy to a
long-term target LTV of less than 40%.
The LTV is calculated as the amount of outstanding debt (Group's
debt balance plus 50% of joint ventures' debt balance), less cash
and cash equivalents (Group cash balance plus 50% of joint
ventures' cash balance), divided by the open market value of its
investment property portfolio (Group's investment property-
freehold portfolio plus 50% of joint ventures' investment property
- freehold value) as certified by external valuers. The future
share capital raise or debit issuance are influenced, in addition
to other factors, by the prevailing LTV ratio.
30 June 31 December
Note 2021 2020
EUR'000 EUR'000
Interest-bearing loans and borrowings (face
value) 13 1,652,115 1,660,746
Less:
Cash and cash equivalents 16 459,893 527,801
Group Interest-bearing loans and borrowings
(net of cash) 1,192,222 1,132,945
Add:
50% Share of Joint Ventures interest-bearing
loans and borrowings 3,514 3,514
50% Share of Joint Ventures cash and cash
equivalents (1,699) (311)
Combined Interest-bearing loans and borrowings
(net of cash) 1,194,037 1,136,148
Less:
Group Investment property- freehold value
as of financial position date 3 3,018,930 2,981,650
Add:
50% Share of Joint Ventures Investment property
value as of financial position date 22 26,850 25,600
Open market value as of financial position
date 3,045,780 3,007,250
Loan-to-value ratio ("LTV") 39.2% 37.8%
Since the carrying value of lease liability closely matches with
fair value of the investment property - leasehold under the
applicable accounting policy as per IFRS 16 therefore both lease
asset and liability, related to the right of perpetual usufruct of
the lands, are excluded from the above calculation for the current
and prior periods.
SECTION VI: INVESTMENT IN SUBSIDIARIES, JOINT VENTURES AND
RELATED DISCLOSURE
This section includes details about Globalworth's subsidiaries,
if any new business and /or new properties acquired, investment in
joint ventures and related impact on the statement of comprehensive
income and cash flows.
22 Investment in Joint ventures
30 June 31 December
Investments Note 2021 2020
EUR'000 EUR'000
Opening balance 11,907 10,010
Share of (loss)/profit during the period 22.4 (1,273) 1,897
Sub-total 10,634 11,907
Loans receivable from joint ventures
Opening balance 16,451 7,847
Loan provided to the joint ventures 5,770 16,555
Loan repayments from the joint ventures - (8,485)
Interest repayment from the joint ventures - (199)
Interest income on the loans to joint ventures 335 733
Sub-total 22,556 16,451
TOTAL 33,190 28,358
22.1 Investments in the Joint Ventures
In April 2019, the Group's subsidiary, Globalworth Holdings
Cyprus Limited, entered into a joint venture agreement with
Bucharest Logistic Park SRL, through which it acquired a 50%
shareholding interest (EUR0.09 million investment) in Global
Logistics Chitila SRL ("Chitila Logistics Hub"), an unlisted
company in Romania, owning land for further development, at
acquisition date, in Chitila, Romania. As at 30 June 2021 and 31
December 2020, the investment properties were classified under the
industrial segment for the Group.
In June 2019, the Group's subsidiary, Globalworth Holdings
Cyprus Limited, entered into a joint venture agreement with Mr.
Sorin Preda through which it acquired a 50% shareholding interest
(EUR6.36 million investment) in Black Sea Vision SRL ("Constanta
Business Park"), an unlisted company in Romania, owning land for
further development, at acquisition date, in Constanta, Romania. As
at 30 June 2021 and 31 December 2020, the investment properties
were classified as industrial segment for the Group.
Judgements and assumptions used for Joint Ventures
Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing
control. The considerations made in determining significant
influence or joint control are similar to those necessary to
determine control over subsidiaries. Following such assessment, the
Group's investment was classified as a joint venture. Until the
disposal date, the carrying amount of the investment in the joint
venture was recorded at cost plus the change in the Group's share
of net assets of the joint venture until the disposal date.
As at 30 June 2021, the Group determined that there is no
objective evidence that the investments in the joint venture are
impaired. The financial statements of the joint ventures are
prepared for the same reporting period as the Group. The joint
ventures had no other contingent liabilities or commitments as at
30 June 2021 (2020: EURnil), except construction commitments
disclosed in note 6.
22.2 Summarised Statements of Financial Position of the Joint Ventures as at reporting date
The summarised statements of financial position of the joint
ventures are disclosed below, which represents the assets and
liabilities recognised in the financial statements of each joint
venture without adjusting of the balance payable to or receivable
from the Group. Transactions and balances receivable or payable
between the Group and the individual joint ventures are disclosed
in note 25.
30 June 30 June 30 June 31 December 31 December 31 December
2021 2021 2021 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Constanta Chitila
Business Logistics Business Logistics
Park Hub Combined Park Hub Combined
Completed investment
property 12,300 13,200 25,500 12,000 13,800 25,800
Land bank - for further
development 22,400 5,800 28,200 21,400 4,000 25,400
Other non-current assets 1 1,263 1,264 29 96 125
Total non-current assets 34,701 20,263 54,964 33,429 17,896 51,325
Other current assets 274 963 1,237 403 345 748
Cash and cash equivalents 89 3,309 3,398 420 203 623
Total assets 35,064 24,535 59,599 34,252 18,444 52,696
Loans payable to the
Group 11,273 11,283 22,556 11,060 5,391 16,451
Bank loans (at amortised
cost) - 6,978 6,978 - 6,976 6,976
Loan from Joint venture
partner 150 2,797 2,947 150 2,670 2,820
Other non-current liabilities 3,073 - 3,073 3,009 534 3,543
Total non-current liabilities 14,496 21,058 35,554 14,219 15,571 29,790
Loan from Joint venture
partner 11 205 216 9 276 285
Other current liabilities 432 4,299 4,731 356 313 669
Total liabilities 14,939 25,562 40,501 14,584 16,160 30,744
Net assets 20,125 (1,027) 19,098 19,668 2,284 21,952
The Group has signed loan facilities amounting to EUR53.3
million (2020: EUR23 million) with Chitila Logistics Hub and
Constanta Business Park joint ventures to fund the development
costs of the projects, out of which EUR31.6 million was available
for future drawdown as of 30 June 2021 (2020: EUR7.2 million).
Further details about the fair valuation of investment property
owned by the Joint Ventures are disclosed in note 4.1.
22.3 Summarised Statements of Financial Performance of the Joint Ventures
The table below includes individual and combined income
statements of the joint venture extracted from the individual
financial statements of each joint venture without adjusting for
the transactions with the Group.
30 June 30 June 30 June 30 June 30 June 30 June
2021 2021 2021 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Constanta Chitila
Business Logistics Business Logistics
Park Hub Combined Park Hub Combined
Revenue 428 343 771 - - -
Operating expenses (187) (234) (421) - (9) (9)
Administrative expenses (33) (22) (55) (15) (21) (36)
Fair value gain/(loss)
on investment property 508 (3,675) (3,167) 1,975 1,448 3,423
Foreign exchange loss (5) (13) (18) (21) (25) (46)
Profit/(loss) before net
financing cost 711 (3,601) (2,890) 1,939 1,393 3,332
Finance expense (217) (249) (466) 4 (91) (87)
Finance income 1 1 2 - - -
Income tax (expense)/income (48) 541 493 (335) (248) (583)
Total comprehensive income
for the period 447 (3,308) (2,861) 1,608 1,054 2,662
Income tax expense mainly represents deferred tax
(expense)/income on the valuation of investment property.
22.4 Share of profit/(loss) of equity-accounted investments in joint ventures
The following table presents a reconciliation between the
profit/(loss) for the period ended 30 June 2021 and 30 June 2020
recorded in the individual financial statements of the joint
ventures with the Share of profit recognised in the Group's
financial statements under the equity method.
30 June 30 June 30 June 30 June 30 June 30 June
2021 2021 2021 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Combined Constanta Chitila Combined
Business Logistics Business Logistics
Park Hub Park Hub
Profit/(loss) for the
period 447 (3,308) (2,861) 1,608 1,054 2,662
Group 50% share of profit/(loss)
for the period 224 (1,654) (1,430) 804 527 1,331
Adjustments for transaction
with the Group 114 43 157 (56) (17) (73)
Share of profit/ (loss)
of equity-accounted investments
in joint ventures 338 (1,611) (1,273) 748 510 1,258
23 Investment in Subsidiaries
Details on all direct and indirect subsidiaries of the Company,
over which the Group has control and consolidated as of 30 June
2021 and 31 December 2020, are disclosed in the table below. The
Group did not have any restrictions (statutory, contractual or
regulatory) on its ability to transfer cash or other assets (or
settle liabilities) between the entities within the Group.
As of 30 June 2021, the Group consolidated the following subsidiaries,
being holding companies as principal activities.
30 June 2021 31 December Place
2020 of incorporation
Subsidiary Note Shareholding Shareholding
interest (%) interest (%)
Globalworth Investment Advisers
Limited 100 100 Guernsey,
Channel
Islands
Elgan Automotive Kft. 23.2 - 100 Hungary
Globalworth Holdings Cyprus Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited 23.1
Kusanda Holdings Limited
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Dunvant Holding Limited
Oystermouth Holding Limited
Kinolta Investments Limited
Minory Investments Limited
Globalworth Tech Limited 100 100 Cyprus
IB 14 Fundusz Inwestycyjny Zamkniety
Aktywow Niepublicznych
Lima Sp. z o.o.
Luapele Sp. z o.o. w likwidacji 23.1 100 100 Poland
West Gate Wroclaw Sp. z o.o.
West Gate Investments Sp. z o.o 23.2 - 100 Poland
As of 30 June 2021, the Group consolidated the following
subsidiaries, which own real estate assets in Romania and Poland,
being asset holding companies as their principal activities, except
for Globalworth Building Management SRL, GPRE Property Management
Sp. z o.o. and GPRE Management Sp. z o.o. with building management
activities in Romania and Poland, and Fundatia Globalworth in
Romania and Fundacja Globalworth in Poland, non-profit
organisations with corporate social responsibility activities.
30 June 2021 31 December Place of
Subsidiary Shareholding 2020 Shareholding incorporation
Note interest (%) interest (%)
Aserat Properties SRL 100 100 Romania
BOB Development SRL
BOC Real Property SRL
Corinthian Five SRL
Corinthian Tower SRL
Corinthian Twin Tower SRL
Elgan Automotive SRL
Elgan Offices SRL
Globalworth Asset Managers SRL
Globalworth Building Management
SRL
Globalworth EXPO SRL
SPC Beta Property Development
Company SRL
SPC Epsilon Property Development
Company SRL
SPC Gamma Property Development
Company SRL
Netron Investment SRL
SEE Exclusive Development SRL
Tower Center International SRL
Upground Estates SRL
Fundatia Globalworth
Industrial Park West SRL* 100 - Romania
DH Supersam Katowice Sp. z o.o. 100 100 Poland
Hala Koszyki Sp. z o.o.
Dolfia Sp. z o.o.
Ebgaron Sp. z o.o.
Bakalion Sp. z o.o.
Centren Sp. z o.o.
Tryton Business Park Sp. z o.o.
GPRE Property Management Sp. z
o.o.
GPRE Management Sp. z o.o.
A4 Business Park Sp. z o.o.
West Link Sp. z o.o.
Lamantia Sp. z o.o.
Dom Handlowy Renoma Sp. z o.o.
Nordic Park Offices Sp. z o.o.
Warta Tower Sp. z o.o.
Quattro Business Park Sp. z o.o.
West Gate Sp. z o.o. (formerly:
Wagstaff Investments Sp. z o.o.)
Gold Project Sp. z o.o.
Spektrum Tower Sp. z o.o.
Warsaw Trade Tower 2 Sp. z o.o.
Rondo Business Park Sp. z o.o.
Artigo Sp. z o.o.
Ingadi Sp. z o.o.
Imbali Sp. z o.o.
Kusini Sp. z o.o.
Podium Park Sp. z o.o.
Fundacja Globalworth
* This subsidiary was set up in April 2021.
23.1 Subsidiaries under liquidation process
As of 30 June 2021 the following companies, who transferred all
assets to Globalworth Holdings Cyprus Limited as settlement for the
equity investment and shareholder loans from Globalworth Holdings
Cyprus Limited during the year 2020, are still under the
liquidation process, namely: Casalia Holdings Limited, Dunvant
Holding Limited, Kifeni Investments Limited, Oystermouth Holding
Limited, Pieranu Enterprises Limited, Ramoro Limited, Vaniasa
Holdings Limited, and Zaggatti Holdings Limited.
At 30 June 2021, the Polish entity Luapele Sp. z o.o. w
likwidacji was under a liquidation process, following which it will
be stricken off from the Register of Companies in Poland during
2021.
23.2 Mergers during the period
On 19 February 2021, Kinolta Investments Limited has absorbed
Elgan Automotive Kft. as a result of the cross-border merger
process that started during the year 2020.
During the six-month period ended 30 June 2021, Wagstaff
Investments Sp. z o.o. absorbed West Gate Wroclaw Sp. z o.o and
West Gate Investments Sp. z o.o, each one of them being registered
in Poland. As part of the merger process Wagstaff Investments Sp. z
o.o. was renamed to West Gate Sp. z o.o. West Gate Investments Sp.
z o.o. was the owner of West Gate investment property and the other
companies were holding companies.
SECTION VII: OTHER DISCLOSURES
This section includes segmental disclosures highlighting the
core areas of Globalworth's operations in the Office, Mixed-use,
residential, and other (industrial and corporate segments). There
were no significant transactions between segments except for
management services provided by the offices segment to the
residential, mixed-use and other (industrial) segments. This
section also includes the transactions with related parties, new
standards and amendments, contingencies that existed at the period
end and details on significant events which occurred subsequent to
the period end.
24 Segmental Information
The Group earns revenue and holds non-current assets (investment
properties) in Romania and Poland, the geographical area of its
operations. For investment property, discrete financial information
is provided on a property-by-property basis (including those under
construction or refurbishment) to members of executive management,
which collectively comprise the Executive Directors of the Group.
The information provided is Net Operating Income ('NOI' i.e. gross
rental income less property expenses) and valuation gains/losses
from property valuation at each semi-annual basis. The individual
properties are aggregated into Office, Mixed-use, Industrial and
Residential segments. Industrial property segment and head office
segments are presented on collective basis as Others in the table
below since their individual assets, revenue and absolute profit
(or loss) are below 10% of all combined total asset, total revenue
and total absolute profit (or loss) of all segments. All other
segments disclosed separately as these meets quantitative threshold
of IFRS 8.
Consequently, the Group is considered to have four reportable
operating segments: the Offices segment (acquires, develops, leases
and manages offices and spaces), the Residential segment (builds,
acquires, develops and leases apartments), Mixed-use and the Other
segment (acquires, develops, leases and manages industrial spaces
and corporate office). Share-based payments expense is not
allocated to individual segments as underlying instruments are
managed at Group basis. Segment assets and liabilities reported to
executive management on a segmental basis are set out below:
30 June 2021
Inter-
Mixed- segment
Office use Residential Other eliminations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income - Total 65,374 5,168 786 4,273 (223) 75,378
Romania 28,491 - 786 4,273 (141) 33,409
Poland 36,883 5,168 - - (82) 41,969
Revenue from contract with
customers - Total 28,231 2,571 253 3,035 (1,358) 32,732
Romania 13,459 - 253 3,035 (256) 16,491
Poland 14,772 2,571 - - (1,102) 16,241
Revenue-total 93,605 7,739 1,039 7,308 (1,581) 108,110
Operating expenses (29,740) (3,276) (419) (2,947) 425 (35,957)
Segment NOI 63,865 4,463 620 4,361 (1,156) 72,153
NOI - Romania 27,152 - 620 4,361 (350) 31,783
NOI - Poland 36,713 4,463 - - (806) 40,370
Administrative expenses (5,790) (336) (107) (3,702) 612 (9,323)
Acquisition costs - - - - - -
Fair value (loss)/gain on
investment property (11,475) (6,181) (576) 3,529 - (14,703)
Depreciation on other long-term
assets (213) - (27) (19) - (259)
Other expenses (649) 18 * (164) - - (795)
Other income 220 15 - 255 (14) 476
Foreign exchange loss 39 (48) (13) (28) - (50)
Finance cost (26,863) (250) (1) (409) - (27,523)
Finance income 488 - 9 342 - 839
Segment result 19,622 (2,319) (259) 4,329 (558) 20,815
Share-based payment expense - - - (432) - (432)
Gain from fair value of financial
instruments (243) - - - - (243)
Share of (loss)/profit of
equity-accounted investments
in joint ventures - - - (1,273) - (1,273)
Profit/(loss) before tax 19,379 (2,319) (259) 2,624 (558) 18,867
30 June 2020
Mixed Inter-segment
Office -use Residential Other eliminations Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income - Total 69,236 6,515 872 4,845 (222) 81,246
Romania 29,446 - 872 4,845 (137) 35,026
Poland 39,790 6,515 - - (85) 46,220
Revenue from contract with
customers - Total 27,655 2,789 294 2,260 (205) 32,793
Romania 13,334 - 294 2,260 (180) 15,708
Poland 14,321 2,789 - - (25) 17,085
Revenue-total 96,891 9,304 1,166 7,105 (427) 114,039
Operating expenses (28,223) (3,410) (502) (2,361) 104 (34,392)
Segment NOI 68,668 5,894 664 4,744 (323) 79,647
NOI - Romania 28,789 - 664 4,744 (238) 33,959
NOI - Poland 39,879 5,894 - - (85) 45,688
Administrative expenses (6,557) (1,413) (85) (3,967) 3,198 (8,824)
Acquisition costs (1,903) - - (399) - (2,302)
Fair value (loss)/gain on
investment property (71,301) (20,427) (567) 318 - (91,977)
Depreciation on other long-term
assets (50) (1) (32) (120) - (203)
Other expenses (766) (583) (129) 34 - (1,444)
Other income 74 220 - (9) - 285
Foreign exchange loss (339) 225 (10) (43) - (167)
Finance cost (22,914) (490) (2) (122) - (23,528)
Finance income 773 22 30 378 - 1,203
Segment result (34,315) (16,553) (131) 814 2,875 (47,310)
Share-based payment expense - - - (194) - (194)
Gain from fair value of financial
instruments 151 - - - - 151
Share of (loss)/profit of
equity-accounted investments
in joint ventures - - - 1,258 - 1,258
Profit/(loss) before tax (34,164) (16,553) (131) 1,878 2,875 (46,095)
* Other expenses include a loss on sale of non-core investment
property (residential apartments) of EUR162 thousand (30 June 2020:
EUR107 thousand) and other one-off expenses.
Revenues are derived from a large number of tenants and no
tenant contributes more than 10% of the Group's rental revenues for
the period ended 30 June 2021 (30 June 2020: EURnil).
30 June 2021
Inter segment
Office Mixed-use Residential Other eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current
assets 2,551,004 278,465 68,463 152,830 (1,295) 3,049,467
Romania 1,194,400 - 68,463 152,830 (193) 1,415,500
Poland 1,356,604 278,465 - - (1,102) 1,633,967
Total assets 3,088,726 287,919 68,798 162,719 (2,014) 3,606,148
Total liabilities 1,832,235 21,697 4,697 12,638 (645) 1,870,622
Additions to non-current assets
- Romania 19,281 - 257 18,995 - 38,533
- Poland 10,899 2,403 - - - 13,302
31 December 2020
Inter segment
Office Mixed-use Residential Other eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current
assets 2,585,332 281,260 66,909 138,577 (407) 3,071,671
Romania 1,222,364 - 66,909 138,577 (200) 1,427,650
Poland 1,362,968 281,260 - - (207) 1,644,021
Total assets 3,016,712 287,463 69,516 257,078 (706) 3,630,063
Total liabilities 1,834,889 22,243 4,582 13,914 (929) 1,874,699
Additions to non-current
assets
- Romania 29,440 - 512 3,162 - 33,114
- Poland 45,032 4,484 - - - 49,516
None of the Group's non-current assets are located in Guernsey
except for goodwill (there are no employment benefit plan assets,
deferred tax assets or rights arising under insurance contracts)
recognised on business combination.
25 Transactions with Related Parties
The Group's related parties are Joint ventures, the Company's
Executive and Non-Executive Directors, key other Executives, as
well as all the companies controlled by them or under their joint
control, or under significant influence. The related party
transactions are set out in the table below:
Income statement Statement of financial
position
Income/(expense) Amounts owing (to)/from
Nature of transaction/balances 30 June 30 June 30 June 31 December
2021 2020 2021 2020
Name Amounts EUR'000 EUR'000 EUR'000 EUR'000
Mindspace Ltd. (1) Revenue - 665 n/a(1) n/a(1)
(1)
Global Logistics Chitila Shareholder
SRL (50% Joint Venture) loan receivable - - 11,283 5,391
Trade and other
receivables 11 - - -
Finance income 122 146 - -
Office rent 6 6 - -
Asset management
fees 9 - - -
Black Sea Vision SRL Shareholder
(50% Joint Venture) loan receivable - - 11,273 11,060
Trade and other
receivables 12 - - -
Finance income - 117 - -
Office rent 6 6 - -
Asset management
fees 9 - - -
Mr. Ioannis Papalekas
(Chief Executive Officer Donation made
- until 16 December to Fundatia
2020) Globalworth n/a 200 n/a -
1. A key Executive of Mindspace Ltd. is a close family member of
a former Non-Executive Director of the Company. The former
non-Executive Director of the Company resigned from the Board of
the Company on 30 March 2020, therefore, the above table only
includes the transactions entered between the subsidiaries of
Mindspace Limited (namely Mindspace Co-working SRL and Mindspace
Poland S.A.) and certain subsidiaries of the Company until the end
of his term in office as a non-Executive Director of the Company
.
26 New and Amended Standards
Starting from 1 January 2021 the Group adopted the following new
and amended standards and interpretations. The new standards and
amendments had no significant impact on the Group's financial
position and performance.
Narrow scope amendments and new Standards Effective
Date (EU endorsement)
Interest Rate Benchmark Reform - Phase 2
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16 Jan-21
Amendments to IFRS 4 Insurance Contracts - deferral
of IFRS19 Jan-21
For other standards issued but not yet effective and not early
adopted by the Group, the management believes that there will be no
significant impact on the Group's consolidated financial
statements.
Narrow scope amendments and new Standards Effective Date
(EU endorsement)
IFRS 17 Insurance Contracts Jan-23
Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current Jan-23
Amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure of Accounting
policies Jan-23
Amendments to IAS 8 Accounting policies, Changes in
Accounting Estimates and Errors: Definition of Accounting
Estimates Jan-23
Amendments to IAS 12 Income Taxes: Deferred Tax related
to Assets and Liabilities arising from a Single Transaction Jan-23
Amendments to IFRS 3 Business Combinations; IAS 16
Property, Plant and Equipment; IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; and Annual Improvements
2018-2020 Jan-22
Amendments to IFRS 16 Leases: COVID-19-Related Rent
Concessions beyond 30 June 2021 Apr-21
27 Contingencies
Taxation
All amounts due to State authorities for taxes have been paid or
accrued at the balance sheet date. The tax system in Romania and
Poland undergoes a consolidation process and is being harmonised
with the European legislation. Different interpretations may exist
at the level of the tax authorities in relation to the tax
legislation that may result in additional taxes and penalties
payable. Where the State authorities have findings from reviews
relating to breaches of tax laws, and related regulations these may
result in confiscation of the amounts in case; additional tax
liabilities being payable; fines and penalties (that are applied on
the total outstanding amount). As a result, the fiscal penalties
resulting from breaches of the legal provisions may result in a
significant amount payable to the State. The Group believes that it
has paid in due time and in full all applicable taxes, penalties
and penalty interest to the extent applicable.
Transfer Pricing
According to the applicable relevant tax legislation in Romania
and Poland, the tax assessment of related party transactions is
based on the concept of market value for the respective transfers.
Following this concept, the transfer prices should be adjusted so
that they reflect the market prices that would have been set
between unrelated companies acting independently (i.e. based on the
"arm's length principle"). It is likely that transfer pricing
reviews will be undertaken in the future in order to assess whether
the transfer pricing policy observes the "arm's length principle"
and therefore no distortion exists that may affect the taxable base
of the taxpayer in Romania and Poland.
Legal Proceedings
In recent years the Romanian State Authorities initiated reviews
of real estate restitution processes and in some cases commenced
legal procedures where it has considered that the restitution was
not performed in accordance with the applicable legislation. The
Group is involved in one such case, which is currently at a very
early stage and may take a very long time to be concluded, and
management believes that the risk of any significant loss occurring
in future is remote.
28 Subsequent events
On 31 August 2021, the Company announced that its Board of
Directors had approved the payment of an interim dividend in
respect of the six-month financial period ended 30 June 2021 of
EUR0.15 per ordinary share, which will be paid on 1 October 2021 to
shareholders on the register as at close of business on 10
September 2021 with a corresponding ex-dividend date of 9 September
2021.
ADDITIONAL INFORMATION
EPRA NAV Metrics
EPRA EPRA EPRA EPRA NTA EPRA NDV EPRA NDV
NRV NRV NTA
30-Jun-21 31-Dec-20 30-Jun-21 31-Dec-20 30-Jun-21 31-Dec-20
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Net assets attributable
to equity holders of
the parent 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Include / exclude
I) Hybrid instruments - - - - - -
Diluted NAV 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Include:
II. a) Revaluation
of IP (if IAS 40 cost
option is used) - - - - - -
II. b) Revaluation
of IPUC (if IAS 40
cost option is used) - - - - - -
II. c) Revaluation
of other non-current
investments - - - - - -
III.) Revaluation of
tenant leases held
as finance leases - - - - - -
IV.) Revaluation of
trading properties - - - - - -
Diluted NAV at fair
value 1,735,526 1,755,364 1,735,526 1,755,364 1,735,526 1,755,364
Exclude:
V) Deferred tax in
relation to fair value
gains of IP 171,571 171,197 85,786 85,599 n/a n/a
VI) Fair value of financial
instruments 547 872 547 872 547 872
VII) Goodwill as a
result of deferred
tax (5,697) (5,697) (5,697) (5,697) (5,697) (5,697)
VIII. a) Goodwill as
per the IFRS balance
sheet n/a n/a (6,652) (6,652) (6,652) (6,652)
VIII. b) Intangibles
as per the IFRS balance
sheet n/a n/a (18) (49) (18) (49)
IX) Adjustment in respect
of joint venture for
above items 1,495 1,742 1,495 1,742 n/a n/a
Include:
IX) Fair value of fixed
interest rate debt n/a n/a n/a n/a (108,159) (93,441)
X) Revaluation of intangibles
to fair value n/a n/a n/a n/a n/a n/a
XI) Real estate transfer
tax / acquisition costs - - - - n/a n/a
NAV 1,903,442 1,923,478 1,810,986 1,831,179 1,615,547 1,650,397
Fully diluted number
of shares 221,197 221,486 221,197 221,486 221,197 221,486
NAV per share (EUR) 8.61 8.68 8.19 8.27 7.30 7.45
STANDING PORTFOLIO - BREAKDOWN BY LOCATION TYPE (30 JUNE
2021)
Number of Value Area Occupancy Rent Contracted Headline
Rate Rent / Sqm or
Unit
Investments Properties GAV GLA by Contracted WALL 100% Office Commercial Logistics
GLA Rent / L.I.
(#) (#) (EURm) (k (%) Rent Years (EURm) (EUR/sqm/m) (EUR/sqm/m) (EUR/sqm/m)
sqm) (EURm)
Office &
Mixed-Use
Portfolio
Bucharest
New CBD 8 12 876.4 344.5 82.6% 53.2 4.8 64.1 14.1 14.1 --
Bucharest
Other 4 6 282.2 118.2 92.3% 18.4 6.2 20.4 13.5 13.2 --
Romania:
Office 12 18 1,158.6 462.7 85.1% 71.7 5.2 84.5 14.0 13.8 --
Warsaw 9 14 712.3 210.9 86.5% 42.5 3.5 49.2 17.5 17.6 --
Krakow 4 12 333.7 150.1 82.0% 21.5 3.4 26.3 13.2 13.2 --
Wroclaw 2 3 147.3 56.6 97.8% 9.2 6.6 9.4 12.8 12.8 --
Lodz 1 2 68.5 35.5 87.1% 4.6 5.9 5.4 11.6 11.8 --
Katowice 2 5 126.2 63.3 94.3% 9.7 3.9 10.2 12.7 12.5 --
Gdansk 1 1 56.8 25.6 98.9% 4.2 3.3 4.3 12.9 12.8 --
Poland: Office
& Mixed-Use 19 37 1,444.9 542.0 88.0% 91.7 3.9 104.8 14.6 14.6 --
Total Office
& Mixed-Use
Portfolio 31 55 2,603.5 1,004.7 86.6% 163.4 4.5 189.3 14.3 14.3 --
Logistic
/
light-industrial
Timisoara 2 5 70.0 121.3 100.0% 5.5 5.8 5.5 6.3 3.8 3.5
Arad 1 1 15.5 20.1 100.0% 1.1 13.6 1.1 6.3 4.7 4.4
Oradea 1 1 5.3 6.9 100.0% 0.4 14.2 0.4 5.0 4.8 4.7
Pitesti 1 1 49.0 68.4 100.0% 3.4 9.4 3.4 4.2 4.2 4.2
Constanta 1 1 12.3 20.7 89.2% 0.8 6.2 0.9 6.8 3.5 3.3
Bucharest 1 1 13.2 23.0 67.6% 0.7 8.4 1.1 7.3 3.8 3.7
Total Logistics
/ Light-Ind.
Portfolio 7 10 165.3 260.4 96.3% 12.0 8.0 12.4 6.0 4.0 3.8
Other Portfolio
Bucharest
New CBD
Upground
Complex -
Residential 1 1 58.6 32.0 nm 1.0 0.8 1.0 -- -- --
Bucharest
New CBD
Upground
Complex -
Commercial -- -- 9.8 6.0 95.6% 0.7 10.8 0.7 -- 9.7 --
Total Other
Portfolio 68.4 38.0 nm 1.6 4.9 1.7 -- 9.7 --
Total Standing
Commercial
Portfolio 38 65 2,778.6 1,271.0 88.7% 176.0 4.7 202.5 14.2 12.0 3.8
Of which
Romania 19 28 1,333.7 729.1 89.2% 84.3 5.6 97.6 13.6 10.0 3.8
Of which
Poland 19 37 1,444.9 542.0 88.0% 91.7 3.9 104.8 14.6 14.6 --
GLOSSARY
Asset or Property
Represent the individual land plot or building under development
or standing building which forms part or the entirety of an
investment.
Bargain Purchase Gain
Any excess between the fair value of net assets acquired and
consideration paid, in accordance with IFRS 3 "Business
Combination".
BREEAM
Building Research Establishment Assessment Method, which
assesses the sustainability of the buildings against a range of
criteria.
CAPEX
Represents the estimated Capital Expenditure to be incurred for
the completion of the development projects.
Capitalisation Rates
Based on actual location, size and quality of the properties and
taking into account market data at the valuation date.
CBD
Central Business District
CEE
Central and Eastern Europe
CIT
Corporate income tax
Commercial Properties
Comprises the office, light-industrial and retail properties or
areas of the portfolio.
Combined Portfolio
Includes the Group's property investments consolidated on the
balance sheet under Investment Property- Freehold as at 30 June
2021, plus those properties held as Joint Ventures (currently the
lands relating to Chitila Logistics Hub and Constanta Business Park
projects) presented at 100%.
Completed Investment Property
Completed developments consist of those properties that are in a
condition which will allow the generation of cash flows from its
rental.
Completion Dates
The date when the properties under development will be completed
and ready to generate rental income after obtaining all necessary
permits and approvals.
Contracted Rent
The annualised headline rent as at 30 June 2021 that is
contracted on leases (including pre-leases) before any customary
tenant incentive packages.
Debt Service Cover Ratio ("DSCR")
It is calculated as net operating income for the year as defined
in specific loan agreements with the respective lenders, divided by
the principal plus interest due over the same year or period.
Discount Rates
The discount rate is the interest rate used to discount a stream
of future cash flows to their present value.
Discounted Cash Flow Analysis ("DCF")
Valuation method that implies income projections of the property
for a discrete period of time, usually between 5-10 years. The DCF
method involves the projection of a series of periodic cash flows
either to an operating property or a development property.
Discounted cash flow projections based on significant unobservable
inputs taking into account the costs to complete and completion
date.
Earnings Per Share ("EPS")
Profit after tax divided by the basic/diluted weighted average
number of shares in issue during the year or period.
Adjusted EBITDA (normalised)
Earnings before finance cost, tax, depreciation, amortisation of
other non-current assets, purchase gain on acquisition of
subsidiaries, fair value movement, and other non-operational and/or
non-recurring income and expense items.
EDGE
Excellence in Design for Greater Efficiencies ("EDGE"). An
innovation of the International Finance Corporation ("IFC"), member
of the World Bank Group, EDGE is a green building standard and a
certification system for more than 160 countries.
EPRA
The European Public Real Estate Association is a non-profit
association representing Europe's publicly listed property
companies.
EPRA Earnings
Profit after tax attributable to the equity holders of the
Company, excluding investment property revaluation, gains, losses
on investment property disposals and related tax adjustment for
losses on disposals, bargain purchase gain on acquisition of
subsidiaries, acquisition costs, changes in the fair value of
financial instruments and associated close-out costs and the
related deferred tax impact of adjustments made to profit after
tax.
EPRA Earnings Per Share
EPRA Earnings divided by the basic or diluted number of shares
outstanding at the year or period end.
EPRA Net Assets Value ("EPRA NAV")
Net assets per the statement of financial position, excluding
the mark-to-market on effective cash flow hedges and related debt
adjustments and deferred taxation on revaluations excluding
goodwill. This metric was used at year or period ends up to 31
December 2020.
EPRA Net Reinstatement Value ("EPRA NRV")
The objective of the EPRA Net Reinstatement Value measure is to
highlight the value of net assets on a long-term basis. Assets and
liabilities that are not expected to crystallise in normal
circumstances such as the fair value movements on financial
derivatives and deferred taxes on property valuation surpluses are
therefore excluded. Since the aim of the metric is to also reflect
what would be needed to recreate the company through the investment
markets based on its current capital and financing structure,
related costs such as real estate transfer taxes are included, as
applicable. This metric is used by the Group from 2021 onwards as
an equivalent to the previously used EPRA NAV metric.
EPRA Net Tangible Assets ("EPRA NTA")
The underlying assumption behind the EPRA Net Tangible Assets
calculation assumes entities buy and sell assets, thereby
crystallising certain levels of deferred tax liability.
EPRA Net Disposal Value ("EPRA NDV")
The EPRA Net Disposal Value provides the reader with a scenario
where deferred tax, financial instruments, and certain other
adjustments are calculated as to the full extent of their
liability, including tax exposure not reflected in the Balance
Sheet, net of any resulting tax. This measure should not be viewed
as a "liquidation NAV" because, in many cases, fair values do not
represent liquidation values.
EPRA NAV, EPRA NRV, EPRA NTA, EPRA NDV Per Share
EPRA NAV, or EPRA NRV, or EPRA NTA, or EPRA NDV divided by the
diluted number of shares outstanding at the year or period end.
Estimated Rental Value ("ERV")
ERV is the external valuers' opinion as to the open market rent
which, on the date of valuations, could reasonably be expected to
be obtained on a new letting or rent review of a property.
Estimated Vacancy Rates
Represent vacancy rates computed based on current and expected
future market conditions after expiry of any current lease.
EURIBOR
The Euro Interbank Offered Rate: the interest rate charged by
one bank to another for lending money, often used as a reference
rate in bank facilities.
Financial Year
Period from 1 January to 31 December.
FFO
Free funds from operations, estimated as the EPRA Earnings for
the relevant period.
GLA
Gross leasable area.
IFRS
International Financial Reporting Standards as adopted by the
European Union.
Interest Cover Ratio ("ICR")
Calculated as net operating income divided by the debt service /
interest.
Investment
Represent a location in which the Company owns / has interests
in.
Land Bank for Further Development
Land bought for further development but for which the Group did
not obtain all the legal documentations and authorisation permits
in order to start the development process.
LEED
Leadership in Energy & Environmental Design, a green
building certification programme that recognises best-in-class
building strategies and practices.
Loan-to-Cost Ratio ("LTC")
Calculated by dividing the value of loan drawdowns by the total
project cost.
Loan to Value ("LTV")
Calculated as the total outstanding debt excluding amortised
cost, less cash and cash equivalents as of financial position date,
divided by the appraised value of owned assets as of the financial
position date. both outstanding debt and the
appraised value of owned assets include our share of these
figures for joint ventures, which are accounted for in the
consolidated financial statements under the equity method.
Maintenance Costs
Including necessary investments to maintain functionality of the
property for its expected useful life.
Master Lease
Master lease, includes various rental guarantees, which range
between 3 and 5 years, covering certain vacant spaces in certain
properties owned in Poland.
MSCI
MSCI is an international finance company headquartered in New
York City and listed on New York Stock Exchange and serves as a
global provider of equity, fixed income, hedge fund stock market
indexes, multi-asset portfolio analysis tools and ESG products. An
MSCI ESG Rating is designed to measure a company's resilience to
long-term, industry material environmental, social and governance
(ESG) risks.
NBP
National bank of Poland.
Net Assets Value ("NAV")
Equity attributable to shareholders of the Company and/or net
assets value.
Net Asset Value ("NAV") Per Share
Equity attributable to owners of the Company divided by the
number of Ordinary shares in issue at the period end.
Net Operating Income ("NOI")
Net operating income (being the gross operating income less
operating expenses that are not paid by or rechargeable to tenants,
excluding funding costs, depreciation and capital expenditure).
Occupancy Rate
The estimated let sqm (GLA) as a percentage of the total
estimated total sqm (GLA) of the portfolio, excluding development
properties and in certain cases (where applicable) spaces subject
to asset management (where they have been taken back for
refurbishment and are not available to let as of the financial
position date).
Passing Rent
It is the gross rent, less any ground rent payable under the
head leases.
Open Market Value ("OMV" or "GAV")
Open market value means the fair value of the Group's investment
properties and the joint ventures (where the Group owns 50%)
determined by Colliers Valuation and Advisory SRL ("Colliers"),
Cushman & Wakefield LLP (C&W), Knight Frank Sp. z o.o.
("Knight Frank") and CBRE Sp. z o.o. ("CBRE") independent
professionally qualified valuers who hold a recognised relevant
professional qualification and have recent experience in the
locations and segments of the investment properties valued, using
recognised valuation techniques.
Property Under Development
Properties that are in development process that do not meet all
the requirements to be transferred to completed investment
property.
Residual Value Method
Valuation method that estimated the difference between the
market value of the building upon completion that can be built on
the plot of land and all the building's construction costs, as well
as the developer's profit. This method relies on the contribution
concept by estimating from the future income of the building, the
amount that can be distributed to the land.
ROBOR
Romanian Interbank Offer Rate.
Sales Comparison Approach
Valuation method that compares the subject property with quoted
prices of similar properties in the same or similar location.
SPA
Share sale purchase agreement.
SQM
Square metres.
The Company or the Group
Globalworth Real Estate Investments Limited and its
subsidiaries.
The Investment Adviser
Globalworth Investment Advisers Limited, a wholly owned holding
subsidiary incorporated in Guernsey.
Total Unencumbered Assets Ratio
Calculated as the Unsecured Consolidated Total Assets divided by
Unsecured Consolidated Total Indebtedness.
Unsecured Consolidated Total Assets
Means such amount of Consolidated Total Assets that is not
subject to any Security granted by any subsidiary of the Group.
WALL
Represents the remaining weighted average lease length of the
contracted leases as of the financial position date, until the
lease contracts full expiration.
Weighted Average Interest Rate
The average of the interest rate charged on the Group's loans,
weighted by the relative outstanding balance of each loan at the
year or period end.
WIBOR
Warsaw Interbank Offered Rate.
COMPANY DIRECTORY
Registered Office
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Nominated Adviser and Joint Broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
United Kingdom
Investment Adviser*
Globalworth Investment Advisers Limited
Anson Court
La Route des Camps
St Martin
Guernsey
GY4 6AD
Auditors
Ernst & Young Cyprus Limited
Jean Nouvel Tower
6 Stasinos Avenue
1511 Nicosia
Cyprus
* Wholly owned subsidiary of the Company.
Administrator
IQ EQ (Guernsey) Limited
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Company Secretary
Nicola Marrin
Anson Court
La Route Des Camps
St Martin
Guernsey
GY4 6AD
Joint Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
United Kingdom
Registrar
Link Market Services (Guernsey) Limited
Mont Crevalt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Globalworth Real Estate Investments Limited
Anson Court,
La Route des Camps, St Martin,
Guernsey, GY4 6AD
Email: enquiries@globalworth.com
www.globalworth.com
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IR GZGZLZGFGMZZ
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