TIDMGWI
RNS Number : 9263Z
Globalworth Real Estate Inv Ltd
20 September 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
20 September 2022
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Interim Results for the six months ended 30 June 2022
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 2022 (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
Chief Financial Officer
Panmure Gordon (Nominated Adviser and 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 240 professionals across
Cyprus, Guernsey, Poland and Romania, a combined value of its
portfolio is EUR3.2 billion, as at 30 June 2022. Approximately
96.3% of the portfolio is in income-producing assets, predominately
in the office sector, and leased to a diversified array of over 660
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,
Pitesti, Arad and Oradea.
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 2022
FINANCIAL HIGHLIGHTS: H1-2022
Combined portfolio open market value Shareholders' equity EPRA NRV per share
EUR3.2bn EUR1.7bn EUR8.72
------------------------------------ -------------------------- -----------------------
+1.7(%) on YE-21 +0.2(%) on YE-21 +0.7(%) on YE-21
------------------------------------ -------------------------- -----------------------
IFRS Earnings before tax Adjusted normalised EBITDA Net Operating Income
EUR45.7m EUR63.4m EUR69.9m
------------------------------------ --------------------------
+EUR18.9 in H1-21 -2.1(%) on H1-21 -3.2(%) on H1-21
------------------------------------ -------------------------- -----------------------
IFRS Earnings per share EPRA Earnings per share Dividends paid in H1-22
15 cents 16 cents 13 cents
------------------------------------ -------------------------- -----------------------
+6 cents in H1-21 +18.1(%) on H1-21 -13.0(%) on H1-21
------------------------------------ -------------------------- -----------------------
CHIEF EXECUTIVE'S REVIEW
Dear Stakeholders,
2022 started with an optimism that, following two years
surrounded by the COVID-19 pandemic, the world was ready to start
returning to normality. But as Europe and the CEE began moving on
from the pandemic, the war in Ukraine impacted the international
business environment, which brought about supply chain disruptions,
higher inflation and interest rates, and increased volatility,
impacting the economic and business environment negatively,
resulting in a more uncertain outlook.
The economic outlook in our region was revised as a result, with
the EU Commission now expecting slower growth due to the increasing
uncertainty. Still, it does not foresee any signs of a recession in
the Eurozone.
Globalworth's performance across the business was resilient,
despite the global challenges, as we continued implementing our
"local landlord" approach in managing our business.
Our initiatives included investments in existing and new
high-quality properties, managing our portfolio to preserve and
improve our operational performance, and maintaining an efficient
and flexible capital structure, resulting in a robust overall
performance. All this whilst simultaneously providing a safe and
healthy environment for our people, tenants and communities to
work, visit and be part of.
At this point, I would like to thank all our team members for
their positive attitude, commitment, and efficiency, as well as our
shareholders, partners and communities for their support in
achieving our results.
Investment in Our Portfolio
Our portfolio is predominantly comprised of Class "A" offices.
In the last 12 months, however, following the delivery of our Class
"A" Globalworth Square office and in response to market demand, we
have focused our development programme on high-quality logistics
facilities in Romania and the redevelopment of two mixed-use
properties in Poland.
As a result, in H1-2022, we finalised the construction of four
logistics facilities in our portfolio with a total of 61.7k sqm of
GLA. These facilities all represent subsequent phases in existing
successful projects of Globalworth.
During the year so far, we also formed a new strategic
partnership with a very experienced local developer to invest in
the "small business units" segment in logistics and warehouse
facilities in Romania. As part of this partnership in which we own
a majority (75%) stake, we acquired our first small business units
project (standing) in the North-Western part of Bucharest, and we
are developing a second project (in phases) in the North-Eastern
part of the capital. In addition, we have another industrial
project under construction in Bucharest and expected to be
delivered this year.
We also focused on actively improving our existing properties.
Of the three mixed-use properties we own in Poland, two are
currently under refurbishment to improve their Class-A office space
and their retail and commercial offerings in line with current
market trends. For the remainder of our standing properties, we
keep investing in maintaining and, where required, improving their
quality.
As a result, the values of our like-for-like standing
commercial, and total combined, portfolio increased by 0.8% to
EUR2.8 billion, and 1.7% to EUR3.2 billion, respectively.
Our Leasing and Occupancy
Our ability to lease spaces in our portfolio is key to the
success of our business. I am pleased to see that in the first half
of 2022, we successfully negotiated the take-up or extension of
106.1k sqm of commercial spaces at an average WALL of 5.0 years
despite the continued challenging market conditions.
It is also important to note that, although most of our tenants
are large multinationals or national corporates, their operations
within our portfolio had no material exposure to either Ukraine or
Russia. Thus our business has not been directly affected by the
war. That said, no business is immune to the war's impact and the
overall weakening macroeconomic prospects.
The average standing occupancy of our combined commercial
portfolio was 88.1% (88.4% including tenant options) on 30 June
2022, marginally lower compared to year-end 2021 (88.5% or 88.7%
including tenant options). Lower occupancy was driven by the four
newly completed industrial facilities, two of which are in the
lease-up phase. We are encouraged by the fact that like-for-like
occupancy marginally increased by 0.9% despite the challenging
market conditions and the fact that WARTA Tower is now effectively
vacant.
In Poland and Romania, increased construction costs and reduced
development activity due to the COVID-19 pandemic have limited new
supply in these markets. This means that the supply of high-quality
offices in central locations in the coming years will be lower than
the average levels recorded in the past, which may result in higher
tenant demand for such properties.
In addition, the gap between A-grade properties with strong ESG
credentials and B-grade properties has been widening both from an
investment and a leasing perspective, which should benefit our
portfolio of high-quality properties in the future.
Headline rental levels have remained stable, and the combination
of lower supply and higher inflation should be a strong mitigant
against the negative effects of a potential slowdown in tenant
demand due to the weakening economic conditions.
The total annualised contracted rent increased by 2.5% to
EUR188.4 million compared to year-end 2021, with like-for-like
annualised commercial contracted rents in our standing commercial
portfolio increasing by 2.1% to EUR178.1 million at the end of the
first half of 2022.
Our Financial Results
Gross rent remained effectively unchanged compared to the first
half of last year, as the positive impact from standing properties
added to the portfolio during the year, the addition of Globalworth
Square in June 2021(lease-up phase) and the higher occupancy, were
offset by Warta Tower which is now effectively empty.
In addition, an increase in the cost of non-recoverable service
charges and property operating costs covered by the Group as part
of our ESG spaces used in response to the Ukrainian Refugee Crises,
resulted in the Net Operating Income decreasing by 3.2% compared to
H1-2021.
However, our adjusted normalised EBITDA decreased by 2.1% to
EUR63.4 million due to the positive impact of savings in recurring
administrative and other expenses.
Our Net profit significantly improved to EUR32.6 million
(H1-2021: EUR12.5 million) due to fair value gain on investment
property and an increase in the share of profit of equity-accounted
investments in joint ventures.
Dividend
During the year, we paid the second interim dividend of EUR0.13
per share for the 2021 financial year, and on 31 August 2022, we
announced the first interim dividend for 2022 of EUR0.14 per share.
Both dividends represented at least 90% of the EPRA Earnings for
their respective six months periods, as stipulated by our articles
of incorporation.
Balance Sheet
Liquidity has always been a key area of focus for us, and I am
pleased that we proceeded with the repayment of the remaining
EUR323 million of our inaugural EUR550 million bond that was due to
mature in June 2022, thus resulting in the Globalworth having no
material debt maturing until March 2025. We also entered into a
6-year term loan agreement for EUR85 million with the International
Finance Corporation ("IFC"), which is a member of the World
Bank.
In addition, in this period, there were several projects which
have either recently completed or are still underway (including the
refurbishment of two mixed-use properties in Poland), and where the
total value uplift is yet to be seen; as such, our LTV increased
from 40.1% to 41.0%.
On 30 June 2022, EPRA Net Reinstatement Value (NRV) at the end
of the period was EUR1.9 billion, or EUR8.72 per share,
representing a marginal increase (+0.6% per share) from EUR8.66 on
31 December 2021, mainly due to dividends paid and lower operating
performance offsetting the positive impact from significantly lower
non-recurring costs in H1-22 and positive revaluation gains.
In addition, S&P and Fitch reaffirmed their investment grade
ratings following their 2021 year-end review of Globalworth, with
Moody's maintaining and stabilising their rating outlook of the
Company in Q4 2021.
Environmental and social
We maintained our A-rating by MSCI and a low-risk rating by
Sustainalytics. We issued our fourth Sustainable Development Report
and second Green Bond Report during the period.
We continued investing in our green portfolio and, during the
first six months of 2022, we certified or recertified 23
properties. At the end of June 2022, we had 57 green-certified
properties valued at EUR2.8 billion.
In addition, we have been conducting an internal analysis/review
of our portfolio to understand better our carbon footprint and ways
of improving it.
Management change
In May 2022, Mr S. Sapkas, who has been with the Group since
2013, took on the role of Group Chief Financial Officer, following
the decision of Mr A. Papadopoulos to step down. I wish Stamatis
every success in his new role within Globalworth.
Outlook
The current challenging global macroeconomic conditions are
expected to continue over the near to mid-term, resulting in an
uncertain outlook. As a result, our primary focus continues to be
maintaining a solid and resilient operating performance and a
prudent financial position with moderate leverage and high levels
of liquidity.
Hope for peace!
Dimitris Raptis
Chief Executive Officer
19 September 2022
MANAGEMENT REVIEW
REAL ESTATE INVESTMENT ACTIVITY
* Focused on high-quality logistics / light-industrial
facilities in Romania and the refurbishment /
repositioning of two mixed-use properties in Poland.
* Romania:
* Completed the development of four high-quality
logistics facilities, adding 61.7k sqm of spaces to
our portfolio.
* Acquired our first small business units' logistics
facility in Bucharest Greater Area with an area of
7.1k sqm.
* Two high-quality logistics facilities under
construction expected to add 56.0k sqm of GLA on
completion
* Poland:
* Refurbishment / repositioning of the Renoma and
Supersam mixed-use properties in progress, where we
are aiming at increasing their class "A" office space
and improving their retail/commercial offering.
* Continued (and continuing) to monitor market trends
for the acquisition or development of high-quality
office and industrial properties in the future.
New Acquisitions
In April 2022, we formed a new strategic partnership with CATTED
focusing on the "small business units" segment in logistics and
warehouse facilities in Romania. As part of this partnership in
which we own a majority (75%) stake, we acquired our first small
business units project in the North-Western part of Bucharest,
close to our Chitila Logistics Hub. The project, developed by
CATTED, has been rebranded to "Business Park Chitila" and comprises
13 small units, offering 7.1k sqm of GLA and was 98.0% occupied on
30 June 2022.
We also acquired a 45k sqm land plot in the North-Eastern part
of Bucharest (Stefanesti) where, together with CATTED, we are
currently constructing "Business Park Stefanesti", also focused on
small business units.
In addition, and to facilitate further the success and the
development of the future phases of the Constanta Business Park
project, we acquired a 34.5k sqm plot to secure a future railroad
connection for the entire park.
Review of Developments
In H1-2022, we continued with our active development programme
focusing on high-quality logistics / light-industrial facilities in
Romania and the refurbishment/repositioning of two mixed-use
properties in Poland. At the beginning of the year, we had four
logistics facilities under construction, all of which were
delivered in the first half, while the refurbishment/repositioning
works of two (of the three) mixed-use properties continued
throughout the period. In addition, we commenced the construction
of two other new industrial facilities, which we expect to have
completed by the end of the year.
New Deliveries
In the first half of 2022, we delivered four new logistics
facilities offering 61.7k sqm of GLA. All facilities represented
subsequent phases of development in existing established projects
which we directly own or through JV partnerships.
At the end of June 2022, the four facilities were 61.8%
contracted by multinational or large national tenants like HAVI
Logistics, Caroli, Linde, and Agricover. They had a total
annualised contracted rent of EUR2.2 million at an average WALL of
8.4 years. Total annualised rent could increase to EUR3.3 million
at full occupancy.
Developments - Delivered
-------------------------------- ------------------- ------------------ ----------- ------------
Pitesti Industrial Chitila Logistics Constanta Timisoara
Park Hub Business Industrial
Park Park II
(Phase II) (Phase B)*) (Phase B)* (Phase B)
*
-------------------------------- ------------------- ------------------ ----------- ------------
Location Pitesti Bucharest Constanta Timisoara
================================ =================== ================== =========== ============
GLA (k sqm) 6.7 16.4 19.6 19.0
================================ =================== ================== =========== ============
Occupancy (%) 100.0% 90.7%** 78.5% 6.1%
================================ =================== ================== =========== ============
Development Cost (EUR
m) 5.9 12.1 9.4 8.3
================================ =================== ================== =========== ============
GAV (EUR m) 7.8 11.0 19 10.8
================================ =================== ================== =========== ============
Contracted Rent (EUR
m) 0.6 0.8 0.8 0.1
================================ =================== ================== =========== ============
100% Rent (EUR m) 0.6 0.9 1.0 0.9
================================ =================== ================== =========== ============
Estimated Yield on Development
Cost 9.6% 7.2% 10.1% 11.0%
================================ =================== ================== =========== ============
(*) Joint Venture in which Globalworth owns 50%; figures shown
on 100% basis.
(**) Difference up to 100% occupancy is covered by tenant option
to expand
Current Developments & Refurbishment / Repositioning
Projects
In the first half of 2022, we commenced the development of the
third and last phase of our Chitila Logistics Hub (Northwest of
Bucharest) and our first development of a small business units
facility in the North Eastern part of Bucharest, expecting that
these facilities will, on completion, further increase our
footprint by 56.0k sqm of high-quality GLA.
The Chitila Logistics Hub, following the completion of all its
phases (last under construction), will offer in total 77.8k sqm of
high-quality last-mile logistics spaces close to Bucharest ring
road, providing easy access to the capital. The first phase was
delivered in Q3-2020 and is 100.0% occupied, with phase two
delivered in Q1-2022 and 90.7% occupied.
Business Park Stefanesti, located in the North-Eastern part of
Bucharest, offers easy access to the Bucharest Ring Road and allows
for a quick connection to the centre of Bucharest via the A2
motorway. The location is considered very advantageous for housing
small business units. The project comprises three buildings to be
delivered in phases with a total of 18.0k sqm GLA, offering up to
24 units for rent, ranging from 500 to 1,500 sqm. As of 30 June
2022, the first building was already partially pre-let to Delivery
Solutions SRL.
Following the review back in 2020 of our portfolio and in
response to market conditions, we commenced
refurbishment/repositioning of two of our three mixed-use
properties in Poland. Aiming to increase their class "A" office
space and improve their retail/commercial offering, work started in
our Renoma landmark property in Wroclaw in H2-2020 and in our
centrally located Supersam property in Katowice in H2-2021.
-- In Renoma, the refurbishment will increase the offer of Class
"A" office space on the higher floors. It will also reposition the
property's retail offer towards a more attractive food court and a
selected fashion mix on the ground floor and convenience
facilities, including a supermarket, gym and drugstore located on
the -1 level.
-- In Supersam, we are redeveloping the entire level 1 into an
office function. On level -1, we are repositioning selected retail
modules into high-quality retail & commercial spaces with food
and entertainment.
Works are expected to be completed in Renoma in H1-2023 and in
Supersam in H2-2022.
Developments - In progress
----------------------------------------- -----------------------------------------------------------------
Chitila Logistics Business Park Stefanesti**
Hub (Phase C)*
----------------------------------------- ------------------------------------ ---------------------------
Location Bucharest Bucharest
========================================= ==================================== ===========================
Status Under construction Under construction
========================================= ==================================== ===========================
Expected Delivery 2022 2023
========================================= ==================================== ===========================
GLA (k sqm) 38.0 18.0
========================================= ==================================== ===========================
CAPEX to 30 Jun 22 (EUR m) 16.4 1.7
========================================= ==================================== ===========================
GAV (EUR m) 17.0 3.9
========================================= ==================================== ===========================
Estimated CAPEX to Go (EUR m) 2.1 10.6
========================================= ==================================== ===========================
ERV (EUR m) 1.7 1.3
========================================= ==================================== ===========================
Estimated Yield on Development
Cost 9.1% 10.2%
========================================= ==================================== ===========================
(*) Joint Venture in which Globalworth
owns 50%; figures shown on 100% basis.
(*) Joint Venture in which Globalworth
owns 75%; figures shown on 100% basis.
Properties Under Refurbishment / Repositioning
-----------------------------------------------------------------------------------------------
Renoma Supersam
------------------------------- ------------------------------ ------------------------------
Location Wroclaw Katowice
=============================== ============================== ==============================
Status Refurbishment / Repositioning Refurbishment / Repositioning
=============================== ============================== ==============================
Expected Delivery H1-2023 H2-2022
=============================== ============================== ==============================
GLA - on Completion
(k sqm) 48.2 26.6
=============================== ============================== ==============================
CAPEX to 30 Jun 22 (EUR
m) 9.8 2.0
=============================== ============================== ==============================
GAV (EUR m) 111.5 48.1
=============================== ============================== ==============================
Estimated CAPEX to Go
(EUR m)* 14.8 3.6
=============================== ============================== ==============================
ERV (EUR m) 9.4 4.2
=============================== ============================== ==============================
Estimated Yield on Completion
of Project** 9.1% 11.2%
=============================== ============================== ==============================
* 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.
Future Developments
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 1.3 million sqm
(comprising 2.8% 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 a total
of a further 786.1k sqm of high-quality GLA to our standing
portfolio footprint.
These projects, which are classified as 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.
Future Developments
-------------------------------------------------------------------------------------------------------- ----------
Podium Green Globalworth Constanta Timisoara Luterana
Park III Court West Business Industrial
D Park (Phased)* Park I
and II
(Phased)
--------------------- -------------- ----------- -------------------- ---------------- ------------ ----------
Location Krakow Bucharest Bucharest Constanta Timisoara Bucharest
===================== ============== =========== ==================== ================ ============ ==========
Status Constr. Constr. Constr. Planned Planned Planned
Postponed Postponed Postponed
===================== ============== =========== ==================== ================ ============ ==========
GLA (k sqm) 17.7 17.2 33.4 526.2 165.2 26.4
===================== ============== =========== ==================== ================ ============ ==========
CAPEX to 30 Jun
22 (EUR m) 8.5 2.5 5.2 12.3 6.4 7.4
===================== ============== =========== ==================== ================ ============ ==========
GAV (EUR m) 9.6 9.1 7.9 36.3 11.0 14.3
===================== ============== =========== ==================== ================ ============ ==========
Estimated CAPEX
to Go (EUR m)** 29.7 23.9 38.5 243.6 63.5 39.7
===================== ============== =========== ==================== ================ ============ ==========
ERV (EUR m) 3.1 3.3 5.1 27.8 6.7 5.8
===================== ============== =========== ==================== ================ ============ ==========
Estimated Yield
on Development Cost 8.1% 12.6% 11.5% 10.8% 9.6% 12.3%
===================== ============== =========== ==================== ================ ============ ==========
(*) 50:50 Joint Venture; figures shown on 100% basis.
(**) Initial preliminary development budgets on future projects
to be revised prior to the permitting.
ASSET MANAGEMENT REVIEW
* 106.1k sqm of commercial space taken-up or extended
at an average WALL of 5.0 years despite continued
challenging market conditions.
* New take-up accounted for the majority of our leasing
activity, maintaining our overall WALL which is
effectively unchanged at 4.6 years.
* New leases (including expansions) accounted for 61.4%
of our leasing activity at a WALL of 6.1 years, with
renewals signed at a WALL of 4.2 years.
* Total annualised contracted rent increased by 2.5% to
EUR188.4 million compared to year end 2021.
* Total combined portfolio value increased by 1.7% to
EUR3.2 billion, mainly due to new acquisitions and
net positive impact from our developments (delivered,
in progress or under refurbishment).
* Like-for-like appraised value of standing commercial
properties marginally increased to EUR2.8 billion
(0.8% higher compared to 31 December 2021).
Leasing Review
New Leases
Our principal focus continued to be the prolongation of leases
with existing tenants in our portfolio and the take-up of available
spaces in standing properties and developments.
In the first six months of 2022, the Group successfully
negotiated the take-up (including expansions) or extension of
106.1k sqm of commercial spaces in Poland (34.9% of transacted GLA)
and Romania (65.1% of transacted GLA), with an average WALL of 5.0
years. Between 1 January and 30 June 2022, the majority of our
leasing activity involved new take-up of available spaces, with
such leases accounting for 61.4% of our total leasing activity and
were signed at a WALL of 6.1 years, while renewals accounted for
38.6% signed at a WALL of 4.2 years.
The leasing market remains challenging, and as the CEE was
beginning to move on from the COVID-19 pandemic, the war in Ukraine
impacted the international economic and business environment,
resulting in a more uncertain outlook. As such, signing new leases,
typically for large multinational and national corporates, is
taking longer in the current market environment as potential
tenants continue to assess their future occupational plans and
adapt to this new environment.
In total, we signed new leases for 65.2k sqm of GLA, with the
majority involving spaces (+75%) leased to new tenants, and the
remaining areas were taken up by existing tenants which were
expanding their operations.
New leases (new tenants) were signed with 39 tenants for 51.1k
sqm of GLA at a WALL of 6.6 years. The majority were for office
spaces, accounting for 54.4%, with the remainder involving
industrial (41.2%) and retail/other commercial spaces. Also, in
response to the Ukrainian refugee crisis in this period, we offered
14.5k sqm (2.9k sqm already returned to us) of GLA in our
properties in Poland and Romania to local authorities and
organisations, which we include in our performance. The largest new
leases in this period were with OVT Logisticzentrum (4.1k sqm) in
Timisoara Industrial Park II, Max Bet (4.1k sqm) in City Offices in
Bucharest and Relive Bike (3.6k sqm) in Constanta Business
Park.
In addition, 30 tenants signed new leases, expanding their
operations by 14.1k sqm at an average WALL of 4.8 years.
We renewed leases for a total of 41.0k sqm of GLA with 50 of our
tenants at a WALL of 4.2 years. The most notable extensions involve
Carrefour (5.3k sqm) in the Green Court Complex, Delivery Solutions
(4.3k sqm) in Globalworth Square and Elvada Company (2.3k sqm) in
Constanta Business Park, while c.62.5% of the renewals by GLA
signed were for leases that were expiring in 2023 or later.
Summary Leasing Activity for Combined Portfolio in H1-2022
--------------------------------------------------------------------
GLA (k sqm) No. of Tenants* WALL (yrs)
----------------------- ------------ ---------------- -----------
New Leases (incl.
expansions) 65.2 68 6.1
----------------------- ------------ ---------------- -----------
Renewals / Extensions 41.0 50 4.2
----------------------- ------------ ---------------- -----------
Total 106.1 109 5.0
*Number of individual tenants
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, and our
approach to sustainable development. In addition, we have started
to see a widening gap between A-grade properties with strong ESG
credentials and B-grade properties from a leasing perspective (and
investment perspective), which should benefit our portfolio of
high-quality properties in the future.
Our leases typically adjust annually in the first quarter of the
year and, in the first half, eligible leases were indexed at an
average of 3.5%. However, this positive impact is not fully
reflected in our averages, as the rates at which leases were
renewed or new leases signed were at their respective headline
rates.
At the end of June 2022, our average headline rent in our
standing properties for office, retail/commercial and industrial
spaces were EUR14.1/sqm/month (EUR14.0 at YE-2021),
EUR14.4/sqm/month (EUR13.9 at YE-2021) and EUR4.0/sqm/month (EUR3.8
at YE-2021) respectively.
It must be noted, though, that in both Poland and Romania,
increased construction costs and reduced development activity due
to the COVID-19 pandemic has limited new supply in these markets.
As such, the supply of high-quality offices in central locations in
the coming years is expected to be lower compared to the past,
which may result in higher tenant demand for such properties,
including ours.
Office leases signed in the first half were at an average rent
of EUR14.1/sqm/month, industrial spaces at EUR3.6/sqm/month, and
retail spaces at EUR14.8/sqm/month. The overall commercial GLA
take-up during the first six months of 2022 was at an average rent
of EUR11.2/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent across our portfolio in Poland
and Romania increased by 2.5% to EUR188.4 million compared to
year-end 2021, driven by active asset management, indexation, a new
acquisition and lease-up in our development projects.
Total annualised contracted rents in our standing commercial
portfolio were EUR180.8 million on 30 June 2022, up by 3.6%
compared to 31 December 2021, increasing to EUR181.7 million when
including rental income generated by renting 169 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 also increased by 2.1% to EUR178.1
million at the end of the first half of 2022 compared to 31
December 2021, mainly as an effect of rent indexation.
Annualised Contracted Rent Evolution H1-2022 (EURm)
-----------------------------------------------------------------------------
Poland Romania Group
================================================== ======= ======== ======
Rent from Standing Commercial Properties
("SCP") 31 Dec 2021 87.9 86.6 174.5
================================================== ======= ======== ======
Less: Space Returned (4.1) (1.4) (5.5)
================================================== ======= ======== ======
Plus: Rent Indexation 2.2 2.2 4.4
================================================== ======= ======== ======
Plus/Less: Lease Renewals (net impact)
& Other (0.0) (0.0) (0.1)
================================================== ======= ======== ======
Plus: New Take-up 2.3 2.4 4.8
================================================== ======= ======== ======
Total L-f-L Rent from SCP 30 Jun 2022 88.3 89.8 178.1
================================================== ======= ======== ======
Plus: Standing Commercial Properties
Acquired During the Period - 0.5 0.5
================================================== ======= ======== ======
Plus: Developments Completed During
the Period - 2.2 2.2
================================================== ======= ======== ======
Total Rent from Standing Commercial
Properties 88.3 92.5 180.8
================================================== ======= ======== ======
Plus: Residential Rent - 0.9 0.9
================================================== ======= ======== ======
Total Rent from Standing Properties 88.3 93.3 181.7
================================================== ======= ======== ======
Plus: Active and Pre-lets of Space
on Projects Under Development / Refurbishment 6.5 0.2 6.7
================================================== ======= ======== ======
Total Contracted Rent as at 30 Jun
2022 94.9 93.5 188.4
Combined Annualised Commercial Portfolio Contracted Rent Profile
as at 30 June 2022
Poland Romania Group
------------------------------- ------------- ------------- ----------
Contracted Rent
(EUR m) 94.9 92.7 187.5
------------------------------- ------------- ------------- ----------
Tenant origin - %
-------------------------------------------------------------------------
Multinational 72.3% 87.9% 80.0%
------------------------------- ------------- ------------- ----------
National 26.6% 10.7% 18.8%
------------------------------- ------------- ------------- ----------
State Owned 1.1% 1.4% 1.2%
------------------------------- ------------- ------------- ----------
Note: Commercial Contracted Rent excludes c.EUR0.9 million from
residential spaces as at 30 June 2022
Annualised Contracted Rent by Period of Commencement
Date as at 30 Jun 2022 (EURm)
------------------------------------------------------------------ ------
Active H2-2022 H1-2023 H2-2023 >2023 Total
Leases
-------------- -------- --------- --------- --------- ------- ------
Standing
Properties 174.6 6.2 0.9 - - 181.7
-------------- -------- --------- --------- --------- ------- ------
Developments 5.9 0.8 - - - 6.7
-------------- -------- --------- --------- --------- ------- ------
Total 180.6 6.9 0.9 - - 188.4
Annualised Commercial Portfolio Lease Expiration Profile as at
30 Jun 2022 (EURm)
--------------------------------------------------------------------------------------
Year H2-2022 2023 2024 2025 2026 2027 2028 2029 2030 >2030
-------- -------- ----- ------ ----- ------ ------ ----- ----- ------ ------
Total 11.1 18.5 28.5 17.6 20.1 25.6 14.1 12.4 26.5 13.1
-------- -------- ----- ------ ----- ------ ------ ----- ----- ------ ------
% of
total 5.9% 9.9% 15.2% 9.4% 10.7% 13.7% 7.5% 6.6% 14.1% 7.0%
The Group's rent roll across its combined portfolio is well
diversified, with the largest tenant accounting for 5.2% of
contracted rents, while the top three tenants account for 10.8% and
the top 10 account for 25.9%.
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 the landlord incurs. These incentives can
vary significantly between leases and depend on market conditions,
type of lease (new take-up or lease extension), space leased
(office, industrial, other), contract duration and other
factors.
In calculating our effective rent, we account for the costs
incurred over the lease's lifetime, which we deduct from the
headline (base) rent, thus allowing us to assess the profitability
of a rental agreement. To analyse the effective rent more
accurately in this period, we excluded ESG leases offered as
assistance to support Ukrainian Refugees initiatives in Poland and
Romania.
Overall, in the first half of 2022, we successfully negotiated
the take-up (including expansions) or extension of 91.3k sqm of
commercial spaces in our portfolio (excluding ESG leases). The
weighted average effective rent for these new leases was
EUR8.4/sqm/month with a WALL of 5.3 years. Industrial leases
completed in the period, which accounted for 27.3% of the total
leasing activity, resulted in lower average headline and effective
rent.
The difference between headline (base) and effective rents in
the first half of 2022 was, on average, 24.8%, which is lower than
for FY2021 (average of 29.2%) but reflects the fact that market
conditions continued to be challenging.
In total, new leases signed in the first six months of the year
will generate a future rental income of EUR67.0 million (including
auxiliary spaces), with leases from office properties accounting
for 77.9% of future rental income
Weighted Average Effective Rent
(EUR / sqm / m) - H2-2022
---------------------------------------- -------- --------- ------
Poland Romania Group
======================================== ======== ========= ======
Headline Commercial Rent 16.0 8.6 11.2
======================================== ======== ========= ======
Less: Rent Free Concessions (2.1) (0.9) (1.3)
======================================== ======== ========= ======
Less: Tenant Fitouts (1.6) (1.1) (1.3)
======================================== ======== ========= ======
Less: Broker Fees (0.4) (0.1) (0.2)
======================================== ======== ========= ======
Effective Commercial Rent 12.0 6.5 8.4
======================================== ======== ========= ======
WALL (in years) 5.0 5.6 5.3
======================================== ======== ========= ======
Note: Certain casting differences in subtotals /
totals are due to figures presented in 1 decimal place
Collections Review
The ability to collect - cash in - 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 2022 remained high at 99% (over 99% for 2021FY), due to the
long-term partnerships we have established and maintained with
high-quality national and multinational tenants since the inception
of the Group, which have helped us minimise the impact on rent
collections in this period of higher economic uncertainty and
ensure sustainable cash flow generation.
(1) Information as at 19 September 2022.
Portfolio Valuation
In line with our practice of biannual valuations, our entire
portfolio in Poland and Romania was revalued as at 30 June
2022.
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
2022).
Assigning the appraisal of our portfolio to four independent and
experienced service providers makes the process of determining the
value properties transparent and impartial. Through our oversight,
we ensure that a consistent methodology, reporting, and timeframe
are respected.
Our portfolio since the inception of the Group has been growing
due to new additions, through the 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.
Overall, our total combined portfolio value increased from
EUR0.1 billion in 2013 to EUR3.0 billion in 2019. It remained
effectively unchanged in 2020 due to the impact of the COVID-19
pandemic, which was reflected in our year-end valuations. It then
marginally increased at year-end 2021 to EUR3.1 billion (+3.9%
compared to the end of 2020) and had reached EUR3.2 billion by the
end of June 2022 (+1.7% compared to the end of 2021).
Portfolio growth in the first half of 2022 is mainly attributed
to the delivery of four high-quality logistics / light-industrial
properties in Romania, the acquisition of a "small business units"
facility and the net positive impact from our developments (in
progress or under refurbishment). The like-for-like appraised value
of our standing commercial properties was EUR2.8 billion at the end
of the period, 0.8% higher compared to 31 December 2021.
In valuing our properties, the key market indicators used by the
four independent appraisers, although they vary, consider factors
such as the commercial profile of the property, its location and
the country in which it is situated. These factors have remained
consistent with year-end 2021, with ERVs remaining stable and
yields remaining stable or marginally softening, while discount
rates have adjusted to reflect inflationary pressure coming from
energy prices.
Combined Portfolio Value Evolution 30 Jun 2022 (EURm)
------------------------------------------------------------------------------------------------------------------------
Poland Romania Group
================== ==================================== ============================== ==============================
Total Portfolio
Value at
31 Dec 2021 1,612.8 1,539.5 3,152.3
================== ==================================== ============================== ==============================
Less: Properties
Held in
Joint Venture
(*) - (86.7) (86.7)
================== ==================================== ============================== ==============================
Total Investment
Properties
at 31 Dec 2021 1,612.8 1,452.8 3,065.6
================== ==================================== ============================== ==============================
Plus:
Transactions - (0.2) (0.2)
================== ==================================== ============================== ==============================
o/w New
Acquisitions - 7.2 7.2
================== ==================================== ============================== ==============================
o/w Disposals - (7.4) (7.4)
================== ==================================== ============================== ==============================
Plus: Capital
Expenditure 5.3 3.7 9.0
================== ==================================== ============================== ==============================
o/w
Developments 5.3 3.7 9.0
================== ==================================== ============================== ==============================
o/w Standing - - -
Properties
================== ==================================== ============================== ==============================
o/w Future - - -
Developments
================== ==================================== ============================== ==============================
Plus: Net
Revaluations
Adjustments 10.3 17.2 27.5
================== ==================================== ============================== ==============================
o/w
Developments (1.7) 4.3 2.5
================== ==================================== ============================== ==============================
o/w Standing
Properties 12.0 8.2 20.2
================== ==================================== ============================== ==============================
o/w Lands,
Future
Developments
&
Acquisitions - 4.7 4.7
================== ==================================== ============================== ==============================
Total Investment
Properties
at 30 Jun 2022 1,628.3 1,473.5 3,101.8
================== ==================================== ============================== ==============================
Plus:
Properties
Held in
Joint Venture
(*) - 104.2 104.2
================== ==================================== ============================== ==============================
o/w Capital
Expenditure
&
Acquisitions - 12.3 12.3
================== ==================================== ============================== ==============================
o/w Net
Revaluation
Adjustments - 5.3 5.3
================== ==================================== ============================== ==============================
Total Portfolio
Value at
30 Jun 2022 1,628.3 1,577.7 3,206.1
================== ==================================== ============================== ==============================
(*) 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
STANDING PORTFOLIO REVIEW
* Standing portfolio footprint increased by 64.2k sqm
to 1,366.5k sqm of GLA, mainly attributed to the
delivery of four new high-quality logistics
properties and the acquisition of our first small
business units facility in Romania.
* Total combined standing GLA of 1.4 million sqm, with
total standing portfolio value at EUR2.9 billion.
* Average standing occupancy of our combined commercial
portfolio of 88.1% (88.4% including tenant options),
marginally lower vs. year-end 2021 (88.5% or 88.7%
including tenant options), due to net impact of five
standing properties added to our portfolio.
* Like-for-like occupancy marginally increased by 0.9%
despite the challenging market conditions and WARTA
Tower now being effectively vacant.
* Total contracted rent of EUR181.7 million in our
standing properties (over 85% coming from standing
office properties).
* Standing WALL remaining high at 4.5 years (versus 4.6
years at year-end 2021).
* All our properties in Poland are now internally
managed, resulting in 89.4% of our combined standing
commercial portfolio by value (96.8% of office and
mixed-use standing properties) being internally
managed by the Group.
Standing Portfolio Evolution
Our combined portfolio of standing properties grew in 2022 with
the addition of five logistics facilities in Romania. Two
facilities were added in Bucharest, including our first small
business units facility acquired in April, and three in regional
cities of Romania (Pitesti, Constanta and Timisoara), with a total
GLA of 68.8k sqm.
Overall, our standing portfolio is predominantly focused on 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), which account for 90.3% of our standing portfolio by
value.
In addition, in Romania, we fully own two logistics /
light-industrial parks with six facilities in Timisoara, one
industrial park in Pitesti (2 facilities), two modern warehouses in
Arad and Oradea, and, since earlier this year, we now own the
majority stake in a small business units facility in Bucharest. We
also have 50% ownership through a joint venture of two other
logistics/business parks (with four standing facilities) in
Bucharest and Constanta. We also own part of a residential complex
in Bucharest.
As of 30 June 2022, our combined standing portfolio comprised 40
investments (39 on 31 December 2021) with 71 buildings (66 on 31
December 2021) in Poland and Romania.
During the period, our standing commercial portfolio's total GLA
increased by 68.9k sqm or 5.4% to reach 1,340.8k sqm at the end of
June. This increase in the size of our portfolio was attributable
to the delivery of 61.7k sqm in four high-quality logistics
facilities, the acquisition of a 7.1k sqm small business units
facility all in Romania, and the remeasurement of certain areas in
our portfolio.
Overall, our standing portfolio (commercial and other) increased
in GLA by 4.9% to 1,366.5k sqm due to the sale of residential units
in our Upground Residential project.
The appraised value of our combined standing portfolio as of 30
June 2022 was EUR2.9 billion (+98% in commercial properties). This
overall increase is mainly attributable to the addition of new
properties through acquisition and completion plus a relatively
small revaluations uplift of properties held throughout the period
(like-for-like), partly offset by the sale of certain units in our
Upground residential complex. The value of like-for-like properties
increased by 0.7% as of 30 June 2022 compared to 31 December 2021
(additional information can be found in the "Asset Management
Review").
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 30 Dec. 2020 31 Dec. 2021 30 Jun. 2022
--------------------------- ------------- ------------- -------------
Number of Investments 37 39 40
--------------------------- ------------- ------------- -------------
Number of Assets 64 66 71
--------------------------- ------------- ------------- -------------
GLA (k sqm) 1,271.3 1,302.3 1,366.5
--------------------------- ------------- ------------- -------------
GAV (EUR m) 2,805.5 2,866.3 2,928.7
--------------------------- ------------- ------------- -------------
Contracted Rent (EUR
m) 178.7 175.4 181.7
--------------------------- ------------- ------------- -------------
Of which Commercial 30 Dec. 2020 31 Dec. 2021 30 Jun. 2022
Properties
------------------------ --------------- --------------- ---------------
Number of Investments 36 38 39
------------------------ --------------- --------------- ---------------
Number of Assets 63 65 70
------------------------ --------------- --------------- ---------------
GLA (k sqm) 1,238.9 1,272.0 1,340.8
------------------------ --------------- --------------- ---------------
GAV (EUR m) 2,745.9 2,810.3 2,880.5
------------------------ --------------- --------------- ---------------
Occupancy (%) 90.9% (91.7%*) 88.5% (88.7%*) 88.1% (88.4%*)
------------------------ --------------- --------------- ---------------
Contracted Rent (EUR
m) 177.7 174.5 180.8
------------------------ --------------- --------------- ---------------
Potential rent at 100%
occupancy (EUR m) 199.2 201.2 207.8
------------------------ --------------- --------------- ---------------
WALL (years) 4.5 4.7 4.5
------------------------ --------------- --------------- ---------------
(*) Including tenant
options
Evolution of Combined Standing
Portfolio over 2022
------------------------------------ --------- ----------- ----------
31 Dec. LfL Change* New Acq. New Deliv. Sales 30 Jun.
2021 (& Other 2022
Adj**)
=========== ========= ============ ========= =========== ========== ========
GLA (k
sqm) 1,302.3 - 7.1 61.7 (4.5) 1,366.5
----------- --------- ------------ --------- ----------- ---------- --------
GAV (EUR
m) 2,866.3 21.0 7.3 41.5 (7.4) 2,928.7
----------- --------- ------------ --------- ----------- ---------- --------
(*) Like-for-Like change represents the changes in GLA or GAV of
standing properties owned by the Group at 31 December 2021 and 30
June 2022.
(**) Includes impact in areas (sqm) from the remeasurement of
certain properties and other GAV adjustments (redevelopment capex,
reclassification).
Standing Portfolio Occupancy
Our standing commercial portfolio's average occupancy as of 30
June 2022 was 88.1% (88.4% including tenant options), representing
a 0.4% decrease over the past six months (88.5% as of 31 December
2021 / 88.7% including tenant options).
Standing occupancy has been affected by the addition of five
industrial properties (four deliveries and one acquisition) with an
average occupancy of 65.5%, lower than the Group average, resulting
in a lower average standing commercial occupancy rate across our
portfolio.
On a like-for-like basis, occupancy slightly increased by 0.9%
to 89.3% at the end of the first half of 2022 but is virtually
unchanged if we exclude the effect of ESG leases. We see this
relative stagnation as a changing point under normalising market
conditions. Therefore, 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 balanced state.
Across the portfolio, at the end of the first half of 2022, we
had 1,226.2k sqm of commercial GLA leased to more than 660 tenants
at an average WALL of 4.6 years, the majority of which is let to
national and multinational corporates that are well-known within
their respective markets.
Occupied GLA in our standing portfolio accounted for 96.4% of
the total GLA leased at a WALL of 4.5 years. In addition, we had
42.1k sqm leased in the two mixed-use properties, which are
currently under refurbishment/repositioning and 2.6k sqm in our
first small business units development project, which are not
included in our standing portfolio metrics.
Occupancy Evolution H1-2022 (GLA 'k sqm) - Commercial Portfolio
----------------------------------------------------------------------------------------------------
Occupancy Occupancy Occupancy
Rate Rate Rate
Poland (%) Romania (%) Group (%)
=================================== ======= ========== ======== ========== ======== ==========
Standing Available GLA
- 31 Dec. 21 542.1 729.9 1,272.0
=================================== ======= ========== ======== ========== ======== ==========
Acquired GLA - 7.1 7.1
New Built GLA - 61.7 61.7
Remeasurements, reclassifications (0.0) 0.2 0.1
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Standing Available GLA
- 30 Jun. 22 542.1 798.8 1,340.8
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 31 Dec. 21 464.1 85.6% 662.1 90.7% 1,126.2 88.5%
=================================== ======= ========== ======== ========== ======== ==========
Acquired/Developed Occupied
GLA - 45.0 45.0
Expiries & Breaks (25.4) (12.9) (38.3)
Renewals* 16.0 21.8 37.8
New Take-up 16.1 31.9 48.0
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Other Adj. (relocations,
remeasurements, etc) 0.5 (0.0) 0.5
----------------------------------- ------- ---------- -------- ---------- -------- ----------
Occupied Standing GLA
- 30 Jun. 22 455.3 84.0% 726.1 90.9% 1,181.4 88.1%
----------------------------------- ------- ---------- -------- ---------- -------- ----------
* Renewals are neutral to the occupancy calculation.
Standing Properties Operation 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,
and offer best-in-class real estate space to our business
partners.
To be able to provide spaces for our current and future business
partners' requirements, we keep (re)investing in our properties,
maintain and, where required, improve the quality of our buildings
and 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. In Romania, we manage all
but one of our offices in-house. Overall, we internally manage
962.6k sqm of high-quality office and mixed-use space with an
appraised value of EUR2.6 billion. Of our total standing commercial
portfolio, internally managed properties account for 89.4% by value
(96.8% of office and mixed-use standing properties) as of 30 June
2022.
Our Upgrade Programme has resumed at a more normalised pace
since last year, following its scaling back for part of 2020 due to
COVID-19. As a result of our ongoing in-house initiatives and
property additions, we hold a modern portfolio with 52 of our
standing commercial properties, accounting for 73.3% by GLA and
74.9% by commercial portfolio value, which have been delivered or
significantly refurbished in or after 2014. In the first half of
2022, we invested EUR9.4 million in select improvement initiatives
in our standing portfolio.
In Q3-2022, we chose Honeywell Forge to help us lower
maintenance costs and reduce energy consumption in our
portfolio.
SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES
* 23 properties were certified or recertified with
BREEAM Very Good or higher certifications to our
portfolio in H1-2022
* Newly certified and recertified properties included
Globalworth Square (Bucharest), CB Lubicz and Quattro
Business Park (Krakow), Skylight and Lumen (Warsaw)
* Overall, 57 green certified properties in our
portfolio valued at EUR2.8 billion
* Issued the fourth sustainable development report for
the Group for FY 2021
* Globalworth maintained its low-risk rating by
Sustainalytics and A by MSCI
* c.EUR270k donated to over 15 initiatives in Romania
and Poland.
Green Buildings
Consistent with our commitment to energy-efficient properties,
we certified or recertified 23 properties in our portfolio with
BREEAM Very Good or higher certifications.
Three properties in Romania were environmentally certified for
the first time in 2022, with Globalworth Square (Bucharest)
receiving the highest BREEAM certification (Outstanding) and two
industrial properties in Timisoara certified with BREEAM Very Good.
Also, we renewed the expired certification for CB Lubicz (Krakow)
in the first part of the year.
In addition, 18 other properties had their certifications
updated in this period, and we are pleased that we were able to
improve the level of certification, from LEED Gold to LEED
Platinum, for the entire Green Court Complex and our City Offices
property in Bucharest.
Overall, as of 30 June 2022, our combined standing portfolio
comprised 55 green-certified properties, accounting for 92.8% of
our standing commercial portfolio by value. BREEAM-accredited
properties account for 80.4% of our green-certified standing
portfolio by value, with the remaining 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 are aiming for 100% of our portfolio to be
green-accredited. We are currently in the process of certifying or
recertifying 16 other properties in our portfolio, principally
targeting BREEAM certifications.
Furthermore, as part of our overall green initiatives, we kept
securing 100% of the energy used in our Polish properties from
renewable sources and 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 portfolio was
generated from renewable sources.
In addition, in Q3-2022, we received a WELL Health-Safety Rating
in 17 properties in Poland, including Warsaw Trade Tower, Skylight
& Lumen and Spektrum Tower Class "A" offices in Warsaw, and all
three of our mixed-use projects (Hala Koszyki in Warsaw, Supersam
in Katowice or Renoma in Wroc aw).
The WELL Health-Safety Rating is an evidence-based, third-party
verified rating for all new and existing building and space types
focusing on operational policies, maintenance protocols,
stakeholder engagement and emergency plans to address a
post-COVID-19 environment now and into the future.
Receipt of the WELL rating for our Polish properties follows
that of Romania when in December 2021, we successfully received a
WELL Health-Safety Rating for 15 (of the 16) office buildings in
Bucharest. Overall, 93.1% by value of our office and mixed-use
portfolio (including Renoma and Supersam) is rated for a WELL
Health-Safety. This is further evidence of the quality of our
portfolio, which is recognised as among the safest in the world in
terms of sanitation and providing a friendly and healthy work
environment.
Social Initiatives
In the first half of 2022, Globalworth and the Globalworth
Foundation continued with their very active social programme,
contributing EUR270k to over 15 initiatives in Romania and
Poland.
Initiatives to which we contributed included:
-- 2031 NOW_our cities in 10 years an international competition
dedicated to students in architecture, city planning and design
from Poland and Romania // organised with the prestigious magazine
Igloo
-- Virtual Sports Fitness - over 400 children and young people
with intellectual disabilities were able to benefit from the
digital solution for Virtual Sports Fitness implemented with
funding from the Globalworth Foundation
-- The first school robotics hackathon in Bucharest - 200
students from 11 educational institutions competed in Globalworth
Green Urban Robohackathon
-- The Butterfly Trail in V c re ti Natural Park - a new way to
explore the V c re ti Natural Park.
Reporting
As part of our effort to improve disclosure in relation to our
sustainable development strategy, initiatives and performance, we
published Globalworth's "2021 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 second "Green Bond Report" which has received
independent limited assurance from EY on the allocations of the net
proceeds.
PORTFOLIO SNAPSHOT
Our real estate investments are in Poland and Romania, the two
largest markets in the CEE. As at 30 June 2022, our portfolio was
spread across 12 cities, with Poland accounting for 50.8% by value
and Romania 49.2%.
Combined Portfolio Snapshot (as at 30 June 2022)
-------------------------------------------------------------------------------------------------
Poland Romania Combined Portfolio
---------------------- ---------------------- ----------------------
Standing Investments(1) 19 21 40
------------------------- ---------------------- ---------------------- ----------------------
GAV(2) / Standing
GAV (EURm) EUR1,628m / EUR1,459m EUR1,578m / EUR1,470m EUR3,206m / EUR2,929m
------------------------- ---------------------- ---------------------- ----------------------
Occupancy 84.0% 90.9% 88.1%
(91.3% incl. tenant (88.4% incl. tenant
options) options)
------------------------- ---------------------- ---------------------- ----------------------
WALL(3) 3.8 years 5.3 years 4.6 years
------------------------- ---------------------- ---------------------- ----------------------
Standing GLA 542.1k sqm 824.4k sqm 1,366.5k sqm
(k sqm)(4)
------------------------- ---------------------- ---------------------- ----------------------
Contracted Rent
(EURm)(5) EUR94.9m EUR93.5m EUR188.4m
------------------------- ---------------------- ---------------------- ----------------------
GAV Split by
Asset Usage
------------------------- ---------------------- ---------------------- ----------------------
Office 82.7% 76.2% 79.5%
Mixed-Use 17.3% 0.0% 8.8%
Industrial 0.0% 15.7% 7.7%
Others 0.0% 8.1% 4.0%
GAV Split by
City
------------------------- ---------------------- ---------------------- ----------------------
Bucharest 0.0% 84.7% 41.7%
Timisoara 0.0% 6.2% 3.1%
Pitesti 0.0% 3.8% 1.9%
Constanta 0.0% 3.9% 1.9%
Arad 0.0% 1.1% 0.5%
Oradea 0.0% 0.4% 0.2%
Warsaw 44.2% 0.0% 22.5%
Krakow 21.1% 0.0% 10.7%
Wroclaw 16.0% 0.0% 8.1%
Katowice 10.9% 0.0% 5.5%
Lodz 4.2% 0.0% 2.1%
Gdansk 3.5% 0.0% 1.8%
------------------------- ---------------------- ---------------------- ----------------------
GAV as % of Total 50.8% 49.2% 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 2022
3. Includes pre-let commercial standing and development/re-development
assets. WALL of standing commercial properties in Romania, Poland
and the Combined portfolio are 5.3 years, 3.8 years and 4.5 years,
respectively.
4. Including 25.7k sqm of residential assets in Romania
5. Total rent comprises commercial (EUR180.8 million) and residential
(EUR0.9 million in Romania) standing properties, rent in assets under
redevelopment (EUR6.5 million in Poland) and development pre-lets
(EUR0.2 million in Romania).
CAPITAL MARKETS UPDATE
* The first half was characterised by higher volatility
in the economic and business environment negatively
impacting capital markets.
* Globalworth's share price in this period trading
consistently below its last reported 31 December 2021
EPRA NRV, but outperforming the FTSE EPRA Developed
Europe and the FTSE EPRA Global indices.
* GWI 18/25 and 20/26 bonds yield at 7.9% and 8.6% at
30 June 2022 respectively Vs 0.9% and 1.1% at 30 June
2021.
* Remaining EUR323 million of principal amount of
inaugural GWI 17/22 bond repaid on maturity in June
2022.
* S&P and Fitch re-affirmed the investment grade rating
following their 2021 year-end review of Globalworth,
with Moody's maintaining and stabilising their rating
outlook of Globalworth in Q4 2021.
Equity Capital Markets and Shareholder Structure Update
The first half of 2022 was characterised by increased inflation,
central bank tightening, supply chain disruption, the war in the
Ukraine and the continuing impact of COVID-19 (albeit smaller
compared to the past), all of which we expect to continue in 2022,
maintaining the higher volatility in the capital markets.
Direct real estate valuations have not seen material changes in
H1-22, however, equity investors have been reassessing their risk
premiums in this period due to the higher volatility in the market.
The higher risk premiums have resulted in higher discount rates,
implying lower equity valuations.
As of 30 June 2022, FTSE EPRA Developed Europe and the FTSE EPRA
Global indices recorded a negative performance of 29.7% and 19.5%,
respectively, for the six months starting on 1 January 2022.
Globalworth has in comparison outperformed these indices as its
negative performance was 8.8%, however this can be attributed to
the limited free float of the Group.
Globalworth's share price in this period has been trading
consistently below its last reported 31 December 2021 EPRA NRV
level of EUR8.66 / share, reaching its lowest closing price on 21
June at EUR5.25 per share and its highest price on 12 January at
EUR6.68 per share.
Zakiono Enterprises Ltd, which is jointly and equally owned by
CPI Property Group S.A. ("CPI") and Aroundtown SA ("Aroundtown"),
holds 60.6% of the share capital of the Group, followed by
Growthpoint Properties Ltd with 29.4%.
Globalworth Shareholding
30 June 30 June
21 22
=================== ====================== ======== ========
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 2022)
Number of 221.6m plus 0.8m shares held
Shares in treasury
========================== ==================================
Share Capital EUR1.7bn
=========================== =================================
WKN / ISIN GG 00B979FD04
=========================== =================================
Symbol GWI
=========================== =================================
Free Float 9.9%
=========================== =================================
Exchange London AIM
=========================== =================================
Globalworth Share Performance
H1-2022 H1-2021
=========================== ============= ================
Market Capitalisation
(EUR million) - 30 June 1,188 1,528
=========================== ============= ================
30-June Closing Price
(EUR) 5.36 6.91
=========================== ============= ================
52-week high (EUR) 6.68 7.48
=========================== ============= ================
52-week low (EUR) 5.25 5.70
=========================== ============= ================
Dividend paid per share 0.13 0.15
=========================== ============= ================
Bonds Update
We finance ourselves through a combination of equity and debt,
and we compete with a large number of other real estate companies
for investor trust to support our initiatives.
At the beginning of the year, we had three Eurobonds outstanding
for a total of EUR1.3 billion with weighted average maturity of 3.0
years.
In June our inaugural GWI 17/22 bond was maturing, and we are
pleased to have completed the repayment of the remaining principal
of EUR323.1 million, which was the outstanding balance of the 17/22
notes following the partial tender and settlement of EUR226.9
million 17/22 notes in July 2020.
We currently have two Eurobonds outstanding, issued in March
2018 and July 2020 (inaugural green bond) and expiring in 2025 and
2026, respectively, with a weighted average cost of 3.0%, and,
together with the EUR85.0 million unsecured facility raise in June
2022 from the IFC, these provide us with a simplified capital
structure and improve the efficiency of our capital allocation.
In addition, in order 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 up to 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 by all three major agencies, with each of
S&P, Fitch and Moody's maintaining their investment credit
rating following their review of the Group, and despite the
volatile and challenging market environment, which is testament to
the nature and quality of our portfolio, the resilience of our cash
flows, and the measures we have taken to protect the business and
its assets in this period.
In 2022, our bonds performance has been impacted by the higher
volatility in the market and rising interest rates. On average, our
18/25 and 20/26 bonds traded at 2.9% and 4.0%, respectively, during
the period. However, yield to maturity has been increasing as the
year progressed, closing at 7.9% and 8.9% on 30 June 2022.
Rating
S&P Fitch Moodys
======== ======= ======= =======
Rating BBB- BBB- Baa3
======== ======= ======= =======
Outlook Stable Stable Stable
======== ======= ======= =======
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. 2022 - EUR550 million EUR400 million
==================== ==================== ================= ================
Maturity 20 June 2022 29 March 2025 29 July 2026
(EUR323 million
paid on maturity)
==================== ==================== ================= ================
Performance of the Globalworth
Bonds
H1-2022 H1-2021
======================= ========= ========
GWI bond 17/22
======================= ========= ========
30 June closing
price - 102.76
======================= ========= ========
Yield to maturity
at 30 June - 0.02%
======================= ========= ========
GWI bond 18/25
======================= ========= ========
30 June closing
price 88.29 107.72
======================= ========= ========
Yield to maturity
at 30 June 7.92% 0.89%
======================= ========= ========
GWI bond 20/26
======================= ========= ========
30 June closing
price 80.54 108.46
======================= ========= ========
Yield to maturity
at 30 June 8.85% 1.14%
======================= ========= ========
FINANCIAL REVIEW
1. Introduction and Highlights
Our performance in the first half of 2022 was resilient, despite
the global challenges, as we continued implementing our "local
landlord" approach in managing our business.
To help explain our performance, we use a number of measures
typically observed in our sector. These include quoting several
measures on a consolidated basis (including our joint ventures), as
it best describes how we manage our portfolio and overall business,
like-for-like measures and measures prescribed by EPRA.
The measures defined by EPRA are designed to enhance
transparency and comparability across the European real estate
sector.
Revenues NOI 1
EUR116.5 EUR69.9m
7.8% on H1-21 -3.2% on H1-21
IFRS Earnings per Combined Portfolio Value (OMV)
share 2 1
15 cents EUR3.2bn
-9 cents in H1-21 +2% on 31 Dec. 2021
-------------------------------
EPRA NRV 1,3 EPRA NRV per share 1,3
EUR1,930.7m EUR8.72
0.7% on 31 Dec. 2021 0.7% on 31 Dec. 2021
-------------------------------
Adjusted normalised EPRA Earnings per share 1,2
EBITDA 1,4 16 cents
EUR63.2m 18.1% on H1-21
-2.1% on H1-21
-------------------------------
LTV 1,5 Dividends paid in H1- 22 per
share
41.0% 13 cents
40.1% at 31 Dec. 2021 -13.0% on H1-21
-------------------------------
1. See Glossary (pages 68-72) 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
Consolidated revenue in the first half of 2022 was EUR116.5
million, up by 7.8% from the prior year.
Gross Rental income continued to grow, reaching EUR90.2 million
for H1-2021, higher by EUR3.1 million compared H1-2021, decreasing
to EUR75.2 million when accounting for costs associated with the
renting of spaces in our portfolio, and which are amortised during
the life of the lease.
(Net) Rental Income remained effectively unchanged compared to
the same period in 2021 as:
-- the additional rental income of EUR3.1 million from
properties added to our portfolio, including developments delivered
over the past 12 months (GW Square and PIP Caroli in Romania -
EUR1.9 million), acquisitions completed in 2021 and partially
accounted for in H1-2021 (Industrial Park West Arad and Industrial
Park West Oradea, in Romania - EUR1.9 million), and additional rent
from properties under refurbishment in Poland (Renoma and Supersam
- EUR0.7 million), and
-- the additional rental income of EUR0.5 million from
like-for-like standing properties in Romania,
were offset by:
-- lower rental income of EUR1.1 million from like-for-like
standing properties in Poland (excluding properties held for sale),
and
-- lower net rental income from properties held for sale in
Poland EUR2.7 million (56% decrease), as TUIR Warta, the principal
tenant in Warta Tower vacated its premises at the end of 2021 with
the space remaining partially vacant in 2022.
The overall EUR8.4 m illion increase in our consolidated revenue
was due to an EUR11.1 million or 38.5% increase in service charge
income from standing properties (37.2% increase in Poland and 40.3%
in Romania) as a result of an average increase in service charge
rate per square metre of 27% across our standing portfolio,
increase in like-for-like occupied occupancy and increase in the
size of our portfolio , partially offset by a EUR2.6 million or
66.5% reduction in fit-out service income which is mainly dependent
on new fit-out contracts for new tenants.
-- Overall our revenues remained relatively evenly split between
our two markets of operation, with Poland accounting for 52% (54%
in H1-2021) and Romania 48% (46% in H1-2021).
Net Operating Income ("NOI"), after taking into account property
and fitout costs, was EUR69.9 million, lower by 3.2% compared to
H1- 2021. Overall operating expenses in our portfolio increased by
EUR13.4 million to EUR44.7 million of which c.90% were reinvoiced
to tenants as the vast majority of our leases are triple-net. The
portion of our operating expenses not reinvoiced typically involved
spaces available to be leased and resulted in net operating costs
being higher by EUR2.1 million across the Group.
-- NOI was split 51% Poland / 49% Romania, compared to 56% Poland / 44% Romania in H1-2021.
Adjusted normalised EBITDA(2) (including share of minority
interests) was EUR63.4 million, lower by 2.1% compared to H1-2021
(EUR64.8 million), as the decrease in NOI was partially offset by
lower administrative and other expenses.
Net finance costs were EUR26.4 million for the period, lower by
1.2% (or EUR0.3 million lower) compared H1-2021 (EUR26.7 million),
due to:
-- higher finance income (by EUR0.3 million) from interest
charged to our joint venture partner for shareholder loans given to
the joint venture; and
-- lower finance expenses (by 0.1% or EUR0.02 million) as a
result of a reduction in the negative interest charged on Euro and
Polish Zloty deposits and current accounts balances which were
offset by higher interest expenses from current and new financing
facilities.
Joint ventures generated net gains in H1-2022 and our share of
these amounted to EUR2.0 million compared to net losses of EUR1.3
million for H1-2021. This positive result is mainly due to our
share of the net valuation gains of EUR3.4 million (net of the
related deferred tax effect) compared to net valuation losses of
EUR2.7 million (net of the related deferred tax effect) in
H1-2021.
Earnings before tax were EUR45.7 million for H1-2022 (EUR18.9
million in H1-2021), mainly due to EUR7.0 million revaluation gains
recorded for the period compared to revaluation losses of EUR14.7
million in H1-2021.
-- EUR13.4 million revaluation gain from the industrial segment
offsetting EUR4.3 million and EUR2.1 million revaluation losses
from the office and mixed-used segments respectively.
EPRA earnings for the first six months of 2022 were EUR34.3
million (or 16 cents per share), up by 18.2% from the prior year
due to improved operating results as administrative costs were
lower and lower income tax expenses (excluding deferred tax expense
on investment property) compared to the same period in 2021.
IFRS earnings, similar to earnings before tax, improved to 15
cents per share compared to 6 cents per share in H1-2021. Total
IFRS earnings were higher by 166.7% to EUR32.6 million compared to
H1-2021.
(2) Earnings before finance cost, tax, depreciation,
amortisation of other non-current assets (H1-2022: EUR70.3 million
positive; H1-2021: EUR47.1 million positive), plus: net fair value
loss on investment property and financial instruments (H1-2022:
EUR7.1 million gain; H1-2021: EUR15.0 million loss), less: other
income (H1-2022: EUR0.3 million; H1-2021: EUR0.5 million); plus:
acquisition costs (H1-2022: EUR0.07 million negative; H1-2021:
EUR0.0 million); plus: non-recurring administration and other
expense items (H1-2022: EUR0.4million; H1-2021: EUR3.2
million).
cents/share
IFRS Earnings 15
Add/(subtract):
-------------------------------
Fair value loss on properties (3)
-------------------------------
Deferred Tax 4
-------------------------------
EPRA Earnings 16
-------------------------------
3. Balance Sheet
The two largest assets in our balance sheet are real estate and
cash which account for c.98% of our total assets on the balance
sheet as at 30 June 2022.
Overall, the combined market value of the portfolio increased by
EUR54 million to EUR3,206 million (31 Dec. 21: EUR3,151 million),
comprising of EUR3,102 million included in our investment property
and EUR104 million representing the 100% value of the properties
owned by the two joint ventures in which we own a 50% stake.
The balance sheet value of our investment property (freehold and
properties held for sale) was EUR3,102 million as at 30 June 2022,
EUR36.7 million higher compared to year-end 2021. This increase is
mainly due to the acquisition of our first small business units
project in the North-Western of Bucharest (EUR5.5 million), the
purchase of land for future development (EUR1.8 million), CAPEX
invested in our portfolio (EUR18.7 million), net additional lease
incentives (EUR10.7 million) and fair value gains on freehold
properties (EUR7.0 million), which were offset by the disposal of
residential units (EUR 7.4 million).
In the first half we proceeded with the repayment of the
remaining EUR323 million of our inaugural EUR550 million which
principally contributed in in lowering our cash position to
EUR184.7 million at 30 June 2022 (EUR418.7 million at 31 Dec.
21).
Total assets at the end of the period were EUR3,452 million,
lower by 5% compared to 31 December 2021 (EUR3,627 million).
EPRA NRV was EUR1,930.7 million as at 30 June 2022, marginally
higher by 0.7% compared to 31 December 2021 (EUR1,917.5 million).
As a result, EPRA NRV per share also increased to EUR8.72 per share
(31 December 2021: EUR8.66 per share).
Increase in EPRA NRV over the first six-months of the year were
largely due to the EUR7.0 million positive effect of fair value
gains on the portfolio and EPRA earnings of EUR34.3 million from
the performance of the group, offset by EUR28.8 million of
dividends paid in March 2022 to shareholders in respect of the six
months ended 31 December 2021.
EURm
EPRA NAV 31 Dec 2021 1,917.5
-------------------------
EPRA Earnings 34.3
-------------------------
Fair value loss on properties 7.0
-------------------------
Non-EPRA Earnings (1.7)
-------------------------
Dividends (28.8)
-------------------------
Others 3.1
-------------------------
EPRA NAV 30 June 2022 1,930.7
-------------------------
4. Dividends
Globalworth distributes bi-annually at least 90% of its EPRA
Earning to its shareholders. As a result, in March 2022, it paid an
interim dividend of 13 cents per share (EUR28.8 million) in respect
of the six-month period ended 31 December 2021. In addition, on 31
August 2022, Globalworth declared its first interim dividend in
respect of the six-month period ended 30 June 2022 of 14 cents per
share (EUR31.0 million).
The results for the period are set out in the consolidated
statement of comprehensive income on page 29.
5. Financing & Liquidity Review
The international business and the economic environments have
continued to be impacted by the ongoing uncertainty caused by the
COVID-19 pandemic and also by the war in Ukraine. This has brought
about supply chain disruptions, higher inflation and interest
rates, and increased volatility, resulting in a more uncertain
outlook. Throughout this period, and with these issues in mind, our
main focus has been to continue implementing our "local landlord"
approach in managing our business.
Our initiatives have included investments in existing and new
high-quality properties, managing our portfolio to preserve and
improve our operational performance, and maintaining an efficient
and flexible capital structure, all of which have resulted in a
robust overall performance.
Debt Summary
The total debt of the Group at 30 June 2022 was EUR1.5 billion
(31 Dec. 2021: EUR1.6 billion) comprising of medium to long-term
debt, denominated entirely in Euro currency. The majority of the
debt is in two bonds totalling EUR1.0 billion, with bank loans of
EUR0.5 billion.
In the first half, we proceeded with the repayment from our own
resources of the remaining EUR323 million of our inaugural EUR550
million bond that was due to mature in June 2022, thus resulting in
Globalworth having no material debt maturing until March 2025. In
addition, during the period, we repaid the coupon on the 2022 Bond,
entered into a 6-year term loan agreement for EUR85 million with
IFC, and drew down on part of the RCF available to us until April
2024.
The Group continuously strives to maintain a low weighted
average interest rate cost, which as at 30 June 2022 was 2.55%
(2.73% at 31 Dec 2021), while the average maturity period improved
to 3.8 years (3.5 years at 31 December 2021), as depicted in the
chart below.
In this higher inflationary and interest rate environment, it is
important to note that at the end of the period, Globalworth had
c.85% of its debt facilities at fixed interest rate cost (81%) or
floating interest rates which are though hedged (4%).
Weighted average interest rate versus debt duration to
maturity
Dec Jun Dec Jun Dec Jun
19 20 20 21 21 22
Weighted average interest rate 2.83% 2.52% 2.73% 2.73% 2.73% 2.55%
------ ------ ------ ------ ------ ------
Weighted average duration to
maturity 4.3 4.2 4.5 4.0 3.5 3.8
------ ------ ------ ------ ------ ------
Servicing of Debt During 2022
In the first half of 2022, we repaid EUR1.4 million in bank debt
principal amounts, the entire remaining balance of the 2022
Eurobond (EUR323.1 million) and EUR29.3 million of accrued interest
on the Group's outstanding debt facilities.
Maturity by year of the principal balance outstanding at 30 June
2022 (EUR million)
2022 2023 2024 2025 2026 2027 2028 2029
1.4 2.9 95.8 662.3 402.6 2.6 87.6 137.9
----- ----- ------ ------ ----- ----- ------
Liquidity & Loan to value ratio (LTV")
Managing our resources has been a key area of focus for the
Group, especially since the COVID-19 pandemic outbreak, and this
careful management has carried on throughout this period of higher
volatility and uncertainty.
As at 30 June 2022, the Group had cash and cash equivalents of
EUR184.7 million (31 December 2021: EUR418.7 million) of which an
amount of EUR6.8 million was restricted due to various conditions
imposed by the financing Banks. In addition, the Group had
available liquidity from committed undrawn loan facilities of
EUR155 million.
The Group's loan to value ratio at 30 June 2022 was 41.0%,
compared to 40.1% at 31 December 2021. This is consistent with the
Group's strategy to manage its long-term target LTV of around or
below 40%.
Debt Structure as at 30 June 2022
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt at 30 June 2022 is unsecured:
75.3% (31 December 2021: 77.9%), with the remainder secured with
real estate mortgages, pledges on shares, receivables and loan
subordination agreements in favour of the financing parties.
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear
interest based either on one month, three months or six months
Euribor plus a margin (19.4% of the outstanding balance compared to
8.5% at 31 December 2021), or at a fixed interest rate (80.6% of
the outstanding balance compared to 91.5% at 31 December 2021).
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. Based on the Group's
debt balances at 30 June 2022, an increase of 100 basis points in
the EURIBOR will result in an increase of interest expense of
EUR2.9 million per annum.
Debt Covenants
As of 30 June 2022, the Group is in compliance with all of its
debt covenants.
The Group's financial indebtedness is arranged with standard
terms and financial covenants, the most notable as at 30 June 2022
being the following:
Unsecured Eurobonds, Revolving Credit Facility and IFC loan
-- the Consolidated Coverage Ratio, with minimum value of 200%
(150% applicable for the Revolving Credit Facility and IFC
loan);
-- 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% (additional covenant applicable for the Revolving Credit
Facility and IFC loan).
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%.
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 100 to 104 of the Annual Report for the year
ended 31 December 2021, which is available at www.globalworth.com
.
These risks comprise the following:
-- Market conditions and the economic environment, particularly in Romania and Poland;
-- Changes in the political or regulatory framework in Romania, Poland or the European Union;
-- Execution of investment strategy;
-- Risk of negative changes in the valuation of the portfolio;
-- Inability to lease space;
-- 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 and Foreign 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 2022, and these risks are expected
to continue to remain relevant during the second half of 2022.
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 2022.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE PERIODED 30 JUNE 2022
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
30 June 30 June
2022 2021
Note EUR'000 EUR'000
======================================================================================== ==== ======== ========
Revenue 7 116,551 108,110
Operating expenses 8 (46,696) (35,957)
======================================================================================== ==== ======== ========
Net operating income 69,855 72,153
======================================================================================== ==== ======== ========
Administrative expenses 9 (6,484) (9,323)
Acquisition costs (7) -
Fair value gain/(loss) on investment property 3 7,019 (14,703)
Share-based payment expense 20 - (432)
Depreciation and amortisation expense (309) (259)
Other expenses (720) (795)
Other income 295 476
Foreign exchange gain/(loss) 307 (50)
Gain/loss from fair value of financial instruments at fair value through profit or loss 14 73 (243)
======================================================================================== ==== ======== ========
Profit before net financing cost 70,029 46,824
======================================================================================== ==== ======== ========
Finance cost 10 (27,547) (27,523)
Finance income 1,179 839
Share of profit/(loss) of equity-accounted investments in joint ventures 22 2,012 (1,273)
======================================================================================== ==== ======== ========
Profit before tax 45,673 18,867
======================================================================================== ==== ======== ========
Income tax expense 11 (12,245) (6,333)
======================================================================================== ==== ======== ========
Profit for the period 33,428 12,534
======================================================================================== ==== ======== ========
Items that will not be reclassified to profit or loss
Gain on equity instruments designated at fair value through other comprehensive income
36 -
======================================================================================== ==== ======== ========
Other comprehensive income for the period, net of tax 36 -
Total comprehensive income for the period 33,464 12,534
---------------------------------------------------------------------------------------- ---- -------- --------
Profit attributable to: 33,428 12,534
---------------------------------------------------------------------------------------- ---- -------- --------
* ordinary equity holders of the Company 32,606 12,534
* non-controlling interests 822 -
======================================================================================== ==== ======== ========
Total comprehensive income attributable to: 33,464 12,534
---------------------------------------------------------------------------------------- ---- -------- --------
* ordinary equity holders of the Company 32,642 12,534
* non-controlling interests 822 -
======================================================================================== ==== ======== ========
Cents Cents
Earnings per share
* Basic 12 15 6
* Diluted 12 15 6
======================================================================================== ==== ======== ========
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2022
Note 30 June 31 December
2022 2021
Unaudited Audited
EUR'000 EUR'000
---------------------------------------- ----- ---------- ------------
ASSETS
Investment property 3 3,005,689 2,966,080
Goodwill 12,349 12,349
Advances for investment property 5 3,483 3,436
Investments in joint ventures 22 66,155 48,908
Equity investments 12,628 12,109
Other long-term assets 1,927 2,083
Prepayments 460 338
Deferred tax asset 11 17 151
---------------------------------------- ----- ========== ------------
Non-current assets 3,102,708 3,045,454
---------------------------------------- ----- ========== ------------
Financial assets at fair value through
profit or loss 14 7,397 7,324
Trade and other receivables 15 17,951 16,208
Contract assets 6,138 6,106
Guarantees retained by tenants 47 885
Income tax receivable 1,769 117
Prepayments 4,591 2,104
Cash and cash equivalents 16 184,709 418,748
---------------------------------------- ----- ========== ------------
222,602 451,492
---------------------------------------- ----- ========== ------------
Investment property held for sale 126,926 130,537
---------------------------------------- ----- ========== ------------
Total Current assets 349,528 582,029
---------------------------------------- ----- ========== ------------
Total assets 3,452,236 3,627,483
---------------------------------------- ----- ========== ------------
EQUITY AND LIABILITIES
Issued share capital 1,704,476 1,704,476
Treasury shares 20.2 (4,889) (4,917)
Share-based payment reserve 20 156 156
Retained earnings 42,749 38,914
---------------------------------------- ----- ========== ------------
Equity attributable to ordinary equity
holders of the Company 1,742,492 1,738,629
---------------------------------------- ----- ------------
Non-controlling interests 827 -
Total equity 1,743,319 1,738,629
Interest-bearing loans and borrowings 13 1,431,659 1,285,641
Deferred tax liability 11 163,731 150,713
Lease liabilities 3.2 17,834 18,762
Guarantees retained from contractors 1,628 2,661
Deposits from tenants 4,050 3,844
Trade and other payables 956 956
---------------------------------------- ----- ========== ------------
Non-current liabilities 1,619,858 1,462,577
---------------------------------------- ----- ========== ------------
Interest-bearing loans and borrowings 13 18,623 348,279
Guarantees retained from contractors 3,737 3,361
Trade and other payables 32,306 39,788
Contract liability 1,729 1,940
Other current financial liabilities 47 261
Current portion of lease liabilities 1,426 1,303
Deposits from tenants 16,603 16,068
Income tax payable 702 550
---------------------------------------- ----- ========== ------------
75,173 411,550
---------------------------------------- ----- ========== ------------
Liabilities directly associated with
the assets held for sale 13,886 14,727
---------------------------------------- ----- ========== ------------
Total current liabilities 89,059 426,277
---------------------------------------- ----- ========== ------------
Total equity and liabilities 3,452,236 3,627,483
---------------------------------------- ----- ========== ------------
The financial statements were approved by the Board of Directors
on 19 September 2022 and were signed on its behalf by:
Andreas Tautscher,
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
Issued Treasury Share-based Fair Retained Total Non- Total
share shares payment value earnings controlling Equity
capital reserve reserve interests
of financial
assets
at FVOCI
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
===== ================ ================= =================== ================== ================= ================== ================== ==================
As at 1
January
2021 1,704,374 (12,977) 6,184 - 57,783 1,755,364 - 1,755,364
=============== ===== ================ ================= =================== ================== ================= ================== ================== ==================
Shares issued
to
the Executive
Directors
and other
senior
management
employees - 339 (339) - - - - -
Interim
dividends - 72 - - (66,358) (66,286) - (66,286)
Share based
payment
expense under
the
subsidiaries'
employees
share award
plan - - 532 - - 532 - 532
Shares vested
under
the
subsidiaries'
employees
share award
plan - 1,253 (1,253) - - - - -
Share issued
for
cash under
Executive
share option
plan 102 - (2) - - 100 - 100
Cash-based
portion
of deferred
annual
bonus plan
converted
to deferred
shares
settlement - - (79) - - (79) - (79)
Share issued
for
long term
plan
termination
and employee
incentive
plan - 1,476 33 - - 1,509 - 1,509
Shares vested
under
the deferred
annual
bonus
incentive
plan - 4,920 (4,920) - - - - -
Total
comprehensive
income for
the year - - - - 47,489 47,489 - 47,489
===== ================ ================= =================== ================== ================= ==================
As at 31
December
2021 1,704,476 (4,917) 156 - 38,914 1,738,629 - 1,738,629
=============== ===== ================ ================= =================== ================== ================= ================== ================== ==================
Interim
dividends 18 - 28 - - (28,807) (28,779) - (28,779)
Shares issued
in
a newly
acquired
subsidiary - - - - - - 5 5
Gain on equity
instruments
designated at
FV
through OCI - - - 36 - 36 - 36
Settlement of
fair
value reserve
of
equity
instruments
designated at
FVOCI
in cash - - - (36) 36 - - -
Total
comprehensive
income for
the year - - - - 32,606 32,606 822 33,428
As at 30 June
2022 1,704,476 (4,889) 156 - 42,749 1,742,492 827 1,743,319
=============== ===== ================ ================= =================== ================== ================= ================== ================== ==================
Issued Treasury Share-based Fair Retained Total Non- Total
share shares payment value earnings controlling Equity
capital reserve reserve interests
of financial
assets
at FVOCI
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
======= ================ ================ ================== ================ ================ ================ ================== ==================
As at 1 January
2021 1,704,374 (12,977) 6,184 - 57,783 1,755,364 - 1,755,364
======================== ================ ================ ================== ================ ================ ================ ================== ==================
Shares issued
to the
Executive
Directors
and other
senior
management
employees - 180 (180) - - - - (28,779)
Interim
dividends - 9 2 - (33,130) (33,119) - 5
Share based
payment
expense under
the
subsidiaries'
employees
share award
plan - - 432 - - 432 - 36
Shares vested
under
the
subsidiaries'
employees
share award
plan - 823 (823) - - - - -
Deferred annual
bonus
plan settled
in cash - - (79) - - (79) - 33,428
As at 30 June 2021 1,704,374 (9,592) 3,557 - 37,187 1,742,492 - 1,735,526
======================== ================ ================ ================== ================ ================ ================ ================== ==================
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
30 June 30 June
Note 2022 2021
EUR'000 EUR'000
======================================================================== ======= ======================= ==========
Profit/(loss) before tax 45,673 18,867
Adjustments to reconcile profit before tax to net cash flows
Fair value (gain)/loss on investment property 3.3 (7,019) 14,703
Loss on sale of investment property 654 162
Share-based payment expense 20 - 432
Depreciation and amortisation expense 309 259
Net increase in allowance for doubtful debts 17.2 9 563
Foreign exchange (gain)/loss (307) 50
(Gain)/loss from fair valuation of financial instrument 14 (73) 243
Share of (profit)/loss of equity-accounted joint ventures 22 (2,012) 1,273
Net financing costs 26,368 26,685
------------------------------------------------------------------------ ------- ----------------------- ----------
Operating profit before changes in working capital 63,602 63,237
(Increase)/decrease in trade and other receivables (4,888) (4,560)
Decrease in trade and other payables (2,699) (9,309)
Interest paid (29,286) (29,436)
Interest received 207 178
Income tax paid (974) (1,315)
Interest received from joint ventures 250 -
----------------------- ----------
Cash flows from operating activities 26,212 18,795
======================================================================== ======= ----------------------- ----------
Investing activities
Expenditure on investment property completed and under development or
refurbishment (33,642) (25,715)
Payment for land acquisitions (1,732) -
Proceeds from sale of land 501 -
Payment for acquisition of investment property (5,584) (18,011)
Proceeds from sale of investment property 6,331 524
Investment in financial assets at fair value through profit or loss 14 - (143)
Proceeds from sale of financial assets through profit and loss - 85
Payments for equity investments (483) (220)
Investment in and loans given to joint ventures 22 (17,173) (5,770)
Proceeds from joint ventures for loans given 22 2,377 -
Payment for purchase of other long-term assets (156) (68)
======================================================================== ------- ----------------------- ----------
Cash flows used in investing activities (49,561) (49,318)
======================================================================== ------- ----------------------- ----------
Financing activities
Proceeds for issuance of new shares in subsidiary from non-controlling 5 -
interest
Proceeds from interest-bearing loans and borrowings 13 146,825 -
Payments of interest-bearing loans and borrowings 13 (324,545) (1,398)
Payment of interim dividend to equity holders of the Company 18 (28,779) (33,130)
Payment for lease liability obligations 3.2 (1,630) (1,463)
Payment of bank loan arrangement fees and other financing costs (2,152) (1,208)
------------------------------------------------------------------------ ------- ----------------------- ----------
Cash flows from financing activities (210,276) (37,199)
======================================================================== ======= ----------------------- ----------
Net increase in cash and cash equivalents (233,625) (67,722)
Effect of exchange rate fluctuations on cash and bank deposits held (414) (186)
Cash and cash equivalents at the beginning of the period 16 418,748 527,801
======================================================================== ------- ----------------------- ==========
Cash and cash equivalents at the end of the period 16 184,709 459,893
======================================================================== ======= ======================= ==========
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 Eurobond
maturing in March 2025 has been admitted to trading on the
Bucharest Stock Exchange in May 2018. The Group's principal
activities and nature of its operations are set out in the
strategic report section of the 2021 Annual Report.
Directors
The Directors of the Company are:
-- Dimitris Raptis, Executive, Chief Executive Officer, Member
of the Investment and Remuneration Committees
-- Martin Bartyzal, Independent Non-Executive, Chair of the
Board, Member of the Remuneration Committee, Audit and Risk
Committee
-- Norbert Sasse, Non-Executive, Member of the Investment Committee
-- George Muchanya, Non-Executive, Member of the Nomination Committee
-- Richard van Vliet, Independent Non-Executive, Member of the
Audit, Risk and Remuneration Committees
-- Andreas Tautscher, Senior Independent Non-Executive, Chair
the Audit and Risk Committee, Member of Nomination Committee
-- David Maimon, Independent Non-Executive, Chair of the Audit
and Risk Committee, Member of the Investment Committee
-- Piotr Olendski, Independent Non-Executive, Chair on the Remuneration Committee
-- Daniel Malkin, Independent Non-Executive, Chair of the
Nomination Committee, Member of the Audit and Risk Committees
-- Favieli Stelian, Independent Non-Executive, Chair of the
Investment Committee, Member of the Remuneration Committee
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 2022 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 2023. These
projections take into account the very significant available cash
resources of the Group (as at 30 June 2022 these amounted to EUR185
million - note 16), 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 as well as repayment of
contracted debt financing, CAPEX, and other commitments. The
projections show that, in the period up to 31 December 2023, 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.
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 2021, 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 2021. On 1 January 2022, 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 development leasehold-
refurbishment Right
of usufruct
of the
land
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------- --------------- ------------------- --------------------- --------------------- ----------------- ----------------- ------------------
1 January 2021 2,778,320 103,130 59,750 40,450 2,981,650 31,364 3,013,014
===================== =============== =================== ===================== ===================== ================= ================= ==================
Asset acquisition 18,011 - - - 18,011 18,011
Subsequent
expenditure 20,790 7,381 25,279 1,299 54,749 54,749
Net lease incentive
movement 18,384 (97) 1,015 - 19,302 19,302
Capitalised borrowing
costs - 53 486 - 539 539
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
year (3,260) - - - (3,260) (3,260)
Transfer to held for
sale (120,690) - - - (120,690) (9,847) (130,537)
Fair value gain
/(loss)
on investment
property (9,375) (1,986) 5,420 51 (5,890) 152 (5,738)
--------------------- --------------- ------------------- --------------------- --------------------- ----------------- ----------------- ------------------
31 December 2021 2,718,260 156,001 30,850 39,300 2,944,411 21,669 2,966,080
--------------------- --------------- ------------------- --------------------- --------------------- ----------------- ----------------- ------------------
Asset acquisition 5,584 - - - 5,584 5,584
Land acquired during
the period - - - 1,785 1,785 1,785
Subsequent
expenditure 9,118 5,174 3,874 313 18,479 18,559
Net lease incentive
movement 10,123 336 80 - 10,539 10,539
Other - - - - - -
operating
lease
commitment
Capitalised borrowing
costs - 119 37 - 156 156
Disposal during the
year (7,873) - - - (7,873) (7,873)
Transfer to - - - - -
held for
sale
Fair value gain
/(loss)
on investment
property 6,907 (2,079) 1,209 5,302 11,339 (400) 10,939
--------------------- --------------- ------------------- --------------------- --------------------- ----------------- ----------------- ------------------
30 June 2022 2,742,119 159,551 36,050 46,700 2,984,420 21,269 3,005,689
--------------------- --------------- ------------------- --------------------- --------------------- ----------------- ----------------- ------------------
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 22 March 2022, the Group acquired through its subsidiary
North Logistics Hub SRL a land located in the north-east periphery
of Bucharest, Romania for an amount of EUR1.8 million, namely
Business Park Stefanesti, for the development of an industrial
park.
On 20 April 2022, the Group acquired through its subsidiary
Logistics Hub Chitila SRL one industrial investment property
located in the north-west periphery of Bucharest, Romania for an
amount of EUR5.6 million, namely Business Park Chitila The project
will generate EUR0.5 million in rental income, annually.
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") or "right-of-use assets"
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) 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".
Note 31 December CAPEX Fair Movement 30 June
2021 value during the 2022
loss period
Completed Investment
property 3.1 120,690 309 (3,599) (3.290) 117,400
Investment property
- leasehold 3.2 9,847 - (321) (321) 9,526
------------------------- ----- ------------ ------ -------- ------------ --------
Investment property
held for sale 130,537 309 (3,920) (3,611) 126,926
------------------------- ----- ------------ ------ -------- ------------ --------
Lease liabilities 3.2 9,141 - - (506) 8,635
Deferred tax liability 11.1 5,586 - - (335) 5,251
------------------------- ----- ------------ ------ -------- ------------ --------
Liabilities directly
associated with the
assets held for sale 14,727 - - (841) 13,886
------------------------- ----- ------------ ------ -------- ------------ --------
Net assets held
for sale 115,810 - - - 113,040
------------------------- ----- ------------ ------ -------- ------------ --------
3.3 Investment property - Fair value gain/(loss)
30-Jun-22 30-Jun-21
Note EUR'000 EUR'000
Fair value gain /(loss) on investment
property 7,019 (14,703)
- Related to investment property
-freehold 3.1 10,939 (14,703)
- Related to investment property
-held for sale 3.2 (3,920) -
--------------------------------------- ----- ---------- ----------
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 2022 (2021: 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.
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 property 30 June 31 December Valuation Country Input 30 June 31 December
2022 2021 Technique 2022 2021
---------- ------- ------------
EUR'000 EUR'000
------------------ ---------- ----------- ---------- ------- ------------ ----------------- -------------------
Completed
Investment 1,459,220 1,447,220
Property
Completed Rent per
Held for sale (117,400) (120,690) DCF Poland sqm EUR11.5-EUR26 EUR11.5-EUR24
---------- ----------- ---------- -------
Discount 4.16%-12.31% 4.53%-11.56%
rate
---------- ----------- ---------- -------
Exit yield 5.25%-7.50% 5.25%-7.50%
---------- ----------- ---------- ------- ------------ ----------------- -----------------
Rent per EUR2.91-
1,370,700 1,336,200 DCF Romania sqm EUR2.00-EUR35.00 EUR35.00
Discount 7.75%-9.20% 7.50%-8.75%
rate
Exit yield 6.25%-7.75% 6.25%-8.00%
---------- ----------- ---------- ------- ------------ ----------------- -----------------
Sub-total 2,712,520 2,662,730
Sales value
48,200 55,531 SC Romania (sqm) EUR1,878 EUR1,848
---------- ----------- ---------- ------- ------------ ----------------- -----------------
2,760,720 2,718,261
================== ========== =========== ========== ======= ============ ================= =================
Investment
property Rent per
under development 9,550 9,550 RM Poland sqm EUR13.50 EUR13.50
==================
Discount 6.76%-7.53% 6.76%-7.53%
rate
==================
Exit yield 6.50% 6.50%
Capex (EURm) EUR26.64 EUR27.98
========== =========== ========== ======= ============ ================= =================
Rent per EUR3.75 -
20,900 21,300 RM Romania sqm EUR5.75-EUR15.00 EUR15.00
Discount 7.75%-9.00% 7.75%-9.00%
rate
Exit yield 6.25%-7.75% 6.75%-7.75%
Capex (EURm) EUR83.32 EUR43.42
================== ========== =========== ========== ======= ============ ================= =================
Investment
property under Rent per EUR13.25 EUR13.25
refurbishment 159,550 156,000 RM Poland sqm -EUR14.25 -EUR14.00
================== ---------- ----------- ---------- ------- ------------ ----------------- -----------------
Discount 6.69%-7.77% 6.77%-7.82%
rate
================== ---------- ----------- ---------- ------- ------------ ----------------- -----------------
Exit yield 6.89%-7.63% 6.87%-7.62%
---------- ----------- ---------- ------- ------------ ----------------- -----------------
Capex (EURm) EUR22.18 EUR30.24
================== ========== =========== ========== ======= ============ ================= =================
Land bank -
for further Sales value
development 9,500 15,200 SC Romania (sqm) EUR25.00-EUR2,941 EUR25.00-EUR2,627
================== ---------- ----------- ---------- ------- ------------ ----------------- -----------------
Rent per EUR2.75-EUR17.5 EUR2.75-EUR17.00
sqm
==================
24,200 24,100 RM Romania Exit yield 6.75%-8.25% 6.85%-8.25%
================== ========== =========== ========== ======= ============ ================= =================
TOTAL 2,984,420 2,944,411
================== ========== =========== ========== ======= ============ ================= ===================
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 change 25 bps change in market yield 5% change in Capex EUR50 change in sales prices per sqm2 2.5% change in vacancy in Perpetuity3
in rental
value per
month, per
sqm1
Investment Year Country Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
property
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============== ================================================================= ================================================================================================================== ======================================================== ======================================================= ======================================================================================= ======================================================= ======================================================================================= ==================================================== ======================================================
Completed (40,170) (66,900) 72,910
2022 Poland 40,120 - - - - -
(32,400) (34,300) 36,900 1,500 (1,500) (16,000) 12,900
2022 Romania 32,200 - -
====== ========================= -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
(40,120) (66,510) 72,480
2021 Poland 40,140 - - - -
(33,800) (33,300) 36,200 1,800 (1,700) (15,200) 12,500
2021 Romania 33,800 - -
====== ========================= -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
Under (1,450) (1,670) 1,810 (1,320) 1,320
2022 Poland 1,450 - -
development (3,300) (3,100) 3,500 (2,600) 2,800 -
2022 Romania 3 ,400 - -
------ --------- -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
(1,450) (1,670) 1,810 (1,320) 1,320
2021 Poland 1,450 - -
(2,300) (1,300) 1,400 (800) 1,000
2021 Romania 2,400 - - -
------ ------------------------- -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
Under (5,390) (6,490) 6,990 (330) 320 - - -
2022 Poland 5,400
------ --------- -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
refurbishment (590) 590 - - -
2021 Poland 5,400 (5,390) (6,490) 6,990
-------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
Further 2022 Poland - - - - - - - - -
development (2,100) (2,100) 2,300 (2,400) 2,600 1,300 (1,300) -
2022 Romania 2,100
====== ========= -------------- ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------
2021 Poland - - - - - - - - - -
2021 Romania 2,200 (2,000) (1,900) 2,200 (2,300) 2,500 1,400 (1,500) - -
====== ========================= ============== ================================================================= ================================================================================================================== ======================================================== ======================================================= ======================================================================================= ======================================================= ======================================================================================= ==================================================== ======================================================
1. The quantitative sensitivity analysis was computed as EUR0.25
change in rental value per month, per sqm for four industrial
properties (2021: four 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 Investment property Land for further
property under development development TOTAL
Note EUR'000 EUR'000 EUR'000 EUR'000
---------------------- ---- ----------------------- --------------------- --------------------- -----------------
1 January 2021 28,800 - 25,400 51,200
====================== ==== ======================= ===================== ===================== =================
Land acquired during
the period - - 130 130
Subsequent expenditure 11,742 10,196 864 22,802
Net lease incentive
movement 789 - - 789
Capitalised borrowing
costs 202 87 - 289
Transfer to investment
property 1,200 - (1,200) -
Transfer to investment
property under
development 2,804 (2,804) -
Fair value gain/(loss)
on investment
property (2,333) 613 13,210 11,490
31 December 2021 37,400 13,700 35,600 86,700
====================== ==== ======================= ===================== ===================== =================
Land acquired during
the period 8 - 802 810
Subsequent expenditure 833 11,368 80 12,281
Net lease incentive
movement 50 - - 50
Capitalised borrowing
costs 92 242 - 334
Transfer to completed
investment property 11,900 (11,900)
Fair value gain/(loss)
on investment
property 22.3 317 3,590 165 4,072
====================== ==== =======================
30 June 2022 22.3 50,600 17,000 36,647 104,247
====================== ==== ======================= ===================== ===================== =================
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 2022 31 December Valuation Country Input 30 June 31 December 2021
Joint 2021 technique 2022
Venture
property
EUR'000 EUR'000
------------- ------------- ------------ ------------ -------- ------------ ----------------- -----------------
Completed Rent per
Investment 50,600 37,700 DCF Romania sqm EUR3.12-EUR9.00 EUR2.00-EUR8.50
Discount
property rate 8.25%-8.75% 8.50%
Exit yield 7.00%-7.25% 7.25%-7.50%
------------- ------------- ------------ ------------ -------- ------------ -----------------
Investment
property
under Discount
development 17,000 13,700 RM Romania rate 8.50% 8.50%
Exit yield
7.00% 7.25%-7.50%
Capex
(EURm) EUR2.00 EUR14.69
Land bank -
for further Sales value
development 36,647 35,600 SC Romania sqm EUR29.00-EUR70.00 EUR29.00-EUR70.00
TOTAL 104,247 86,700
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
2022
- Completed Romania 1,200 (1,100) (700) 900 - - - - (500) 600
2021 Romania 700 (800) (600) 600 - - - - (500) 500
2022
- Under Romania 1,200 (1,300) (500) 500 (100) 100 - - - -
2021
development Romania 1,600 (1,800) (800) 600 (800) 600 - - - -
2022
- Further Romania - - - - - - 1,353 (1,447) - -
2021
development Romania - - - - - - 1,400 (1,200) - -
5 Advances for investment Property
30 June 31 December 2021
2022
EUR'000 EUR'000
Advances for land and other property acquisitions 2,000 2,000
Advances to contractors for investment properties under development 1,483 1,436
3,483 3,436
6 Commitments
Commitments for Investment Property
As at 30 June 2022 the Group had agreed construction contracts
with third parties and is consequently committed to future capital
expenditure in respect of completed investment property of EUR8.3
million (2021: EUR20 million), investment property under
development of EUR9.6 million (2021: EUR3.5 million) and had
committed with tenants to incur incentives (such as fit-out works,
leasing fees and other lease incentives) of EUR12.7 million (2021:
EUR13.8 million).
The Group's Joint Ventures were committed to the construction of
investment property for the amount of EUR9.7 million at 30 June
2022 (2021: EUR6.3 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 (2021: 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
2022 2021
EUR'000 EUR'000
Not later than 1 year 171,080 155,902
Later than 1 year and not later than 5 years 441,635 389,289
Later than 5 years 156,312 152,647
769,027 697,838
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
2022 EUR'000
EUR'000
Rental income 75,214 75,378
Revenue from contracts with customers
Service charge income 39,888 28,795
Fit-out services income 1,301 3,884
Asset management fees 31 24
Marketing and other income 117 29
41,337 32,732
116,551 108,110
The total contingent rents and surrender premia recognised as
rental income during the period amount to EUR0.9 million (30 June
2021: EUR0.8 million) and EURnil (30 June 2021: EUR0.4 million),
respectively.
8 Operating Expenses
30 June 2022 30 June
EUR'000 2021
EUR'000
Property management, utilities and insurance 44,739 31,304
Property maintenance costs and other non-recoverable costs 825 791
Property expenses arising from investment property that generate rental income 45,564 32,095
Property expenses arising from investment property that did not generate rental income 11 10
Fit-out services costs 1,121 3,852
46,696 35,957
9 Administrative expenses
30 June 2022 30 June
EUR'000 2021
EUR'000
Directors' emoluments 463 579
Salary and remuneration costs 3.783 4,141
Accounting, secretarial and administration costs 240 404
Legal and other advisory services 592 829
Audit and non-audit services 182 54
Corporate social responsibility 256 546
Travel and accommodation 78 74
Marketing and advertising services 414 237
Post, telecommunication, and office supplies 252 232
Stock exchange expenses 224 294
Exceptional and non-recurring expenses - 1,933
6.484 9,323
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.
10 Finance Cost
30 June 2022 30 June
Note EUR'000 2021
EUR'000
Interest on secured loans 3,410 3,548
Interest on unsecured credit facilities 116 -
Interest on fixed rate bonds 18,230 18,161
Debt cost amortisation and other finance costs 10.1 4,368 4,178
Interest on lease liabilities 3.2 909 905
Bank charges 514 731
Gross finance cost 27,547 27,523
Less borrowing costs capitalised on investment property 156 479
27,703 28,002
The average capitalisation rate used to determine the borrowings
eligible for capitalisation was 3.33% (30 June 2021: 3.33%).
10.1 Debt cost amortisation and other finance costs
30 June 2022 30 June 2021
EUR'000 EUR'000
Debt issue cost amortisation - secured bank loans 298 256
Debt issue cost amortisation - unsecured facility 744 738
Debt issue cost amortisation - fixed rate bonds 3,326 3,184
4,368 4,178
11 Taxation
30 June 2022 30 June 2021
EUR'000 EUR'000
Current income tax expense (572) 814
- Related to current period 777 793
- Related to prior period (1,349) 21
Deferred income tax expense 12,817 5,519
12,245 6,333
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 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 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 year 2017.
Deferred tax (asset)/liabilities
30 June 31 December
2022 2021
EUR'000 EUR'000
Deferred tax asset (17) (151)
Deferred tax liabilities - classified to
held for sale (5,251) (5,586)
Deferred tax liabilities 163,714 150,562
168,982 156,299
Deferred income tax Consolidated statement of financial Consolidated statement of comprehensive income
expense position
30 June 31 December 2021 30 June 30 June
2022 2022 2021
Net Deferred Tax EUR'000 EUR'000 EUR'000 EUR'000
Acquired through asset - - - -
acquisition
Valuation of
investment property
at fair value 190,868 181,542 9,326 374
Deductible temporary
differences (1,773) (2,587) 814 1,266
Interest expense and
foreign exchange loss
on intra-group loans (17,590) (19,609) 2,019 4,063
Discounting of tenant
deposits and
long-term deferred
costs 65 72 (7) 12
Share issue cost
recognised in equity (7) (7) - -
Valuation of financial
instruments at fair
value 191 139 52 5
Recognised unused tax
losses (2,789) (3,402) 613 (201)
168,965 156,148 12,817 5,519
Unused assessed tax losses
As at 30 June 2022, the Group has unused assessed tax losses
carried forward of EUR60.5 million (2021: EUR54.3 million) in
Romania and EUR22.4 million (2021: EUR20.8 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 EUR2.8 million (2021: EUR3.4
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 EUR13.9 million (31 December 2021:
EUR11.7 million), calculated at the corporate income tax rates of
16% in Romania and 19% (9% for small entities) in Poland,
respectively.
Expiry year 2022 2023 2024 2025 2026 2027 2028 2029 Total
Total available deferred tax assets (EURm) 1.5 2.2 4.5 0.8 2.2 1.0 0.7 1.0 13.9
From the above total available deferred tax assets, of EUR11.1
million (31 December 2021: EUR8.3 million) was not recognised
(Romania and Poland) in the income statement of the Group as the
amount could not be utilised from the future taxable income as per
the criteria under IAS 12.
Temporary non-deductible interest expenses and net foreign
exchange
Furthermore, in addition to the above, there are also temporary
non-deductible interest expenses and net foreign exchange losses of
EUR256.3 million, EUR37.0 million in Romania and EUR219.3 million
in Poland (31 December 2021: EUR258.4million, EUR51.2 million in
Romania and EUR207.2 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 EUR17.2 million (EUR0.7 million in
Romania and EUR16.5 million in Poland) deferred tax asset was
recorded (31 December 2021: EUR19.7 million, EUR1.3 million in
Romania and EUR18.4 million in Poland).
In Romania such temporary non-deductible interest expenses can
be carried forward indefinitely until it is tax deductible as per
EBITDA threshold. However, in Poland interest expense which was
already paid prior to financial position date (and corresponding
net foreign exchange loss on such interest expense) can only be
utilised over five consecutive tax years from the year of
origination and unpaid interest expense (and corresponding net
foreign exchange loss on such interest expense) is available for
utilisation indefinitely.
Judgements, Estimates and Assumptions Used for Assessed Tax
Losses and Related Deferred Tax Assets
At each statement of financial position date, the Group assesses
whether the realisation of future tax benefits is sufficiently
probable to recognise deferred tax assets. This assessment requires
the exercise of judgement on the part of management with respect
to, among other things, benefits that could be realised from
available tax strategies and future taxable income, as well as
other positive and negative factors. The recorded amount of total
deferred tax assets could be reduced if estimates of projected
future taxable income, or if changes in current tax regulations are
enacted that impose restrictions on the timing or extent of the
Group's ability to utilise future tax benefits.
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 Weighted
issued % Of the average
Date Event Note ('000) period ('000)
1 Jan 2021 At the beginning of the year 220,297 220,297
Jan - June Effect of shares vested and exercised under
2021 Employees share-based payment plans 426 65 278
30 June 2021 Shares in issue at period-end (basic) 220,723 220,575
Dilutive shares:
Jan- March * at the beginning of the year 895 100 895
* vested and exercised under employees share-based
2021 plans (421) 65 (274)
30 June 2021 Shares in issue at period-end (diluted) 221,197 221,196
1 Jan 2022 At the beginning of the year 221,373 221,373
30 June 2022 Shares in issue at year-end (basic) 221,373 221,373
Jan- Jun 2022 Effect of dilutive shares 20 97 54 52
30 June 2022 Shares in issue at period-end (diluted) 221,470 221,425
Unvested share option warrants of EUR2.85 million were not
included in basic or diluted number of shares being unvested and
anti-dilutive on issue date (refer to note 20.1 for further
information)
30 June 30 June
2022 2021
EUR'000 EUR'000
Profit attributable to equity holders of the Company for the basic and diluted earnings per
share 32,606 12,534
IFRS earnings per share Cents Cents
- Basic 15 6
- Diluted 15 6
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 2022 30 June 2021
Note EUR'000 EUR'000
Earnings attributable to equity holders of the Company (IFRS) 32,606 12,534
Changes in fair value of financial instruments and associated close-out costs (283) (325)
Fair value gain/(loss) on investment property 3 (7,019) 14,703
Losses on disposal of investment properties 585 162
Changes in value of financial assets at fair value through profit or loss 13 (73) 243
Acquisition costs on share deals 7 -
Deferred tax charge in respect of above adjustments 9,378 379
Non-controlling interests share of the above adjustments 821 -
Adjustments in respect of joint ventures (1,694) 1,337
EPRA earnings attributable to equity holders of the Company 34,329 29,033
EPRA earnings per share Cents Cents
* Basic 16 13
* Diluted 16 13
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
2022 EUR'000
EUR'000
Current
Secured loans and accrued interest 3,458 3,521
Unsecured loans and accrued interest 15,165 344,758
Sub-total 18,623 348,279
Non-current
Secured loans 357,034 356,416
Unsecured fixed rate Bonds and unsecured credit facilities 1,074,625 929,225
Sub-total 1,431,659 1,285,641
TOTAL 1,450,282 1,633,920
13.1 Key terms and conditions of outstanding debt
30 June 2022 31 December 2021
Carrying Carrying
Face value value Face value value
Nominal interest
Facility Currency rate Maturity date EUR'000 EUR'000 EUR'000 EUR'000
EURIBOR 1 month +
Loan 16 EUR margin May 2025 12,802 14,099 13,485 13,482
Loan 25 EUR Fixed rate Bond June 2022 - - 328,066 327,225
Loan 37 EUR Fixed rate Bond March 2025 554,203 549,408 562,522 556,920
Fixed rate &
Floating rate
EURIBOR 3 months
Loan 381 EUR + margin May 2025 100,105 99,628 100,110 99,556
EURIBOR 3 month +
Loan 41 EUR margin March 2029 85,309 84,662 85,313 84,613
EURIBOR 3 month +
Loan 43 EUR margin December 2024 35,228 35,114 36,032 35,902
Loan 44/45 EUR Fixed rate February 2027 62,293 62,028 62,295 62,000
Loan 46 EUR Fixed rate November 2029 65,043 64,419 65,045 64,384
EURIBOR 3 month +
Loan 47 EUR margin April 2024 60,029 59,060 - -
Loan 48 EUR Fixed rate Bond July 2026 410,862 397,247 405,011 389,838
Loan 49 EUR Fixed rate March 2029 440 440 - -
Loan 50 EUR Fixed rate March 2029 1,401 1,401 - -
EURIBOR 6 month +
Loan 51 EUR margin March 2028 85,071 84,075 - -
Total 1,472,786 1,450,282 1,657,879 1,633,920
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
The five-year Euro-denominated Bond (Loan 25) matured on 20 June
2022 and it was fully repaid by the Group together with the
carrying interest.
In March 2018, the Group issued a EUR550 million unsecured
Eurobond (Loan 37) and it 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.
Financial covenants for unsecured corporate Bonds
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
On 16 June 2022, the amount EUR60 million was drawn down in
order to strengthen the liquidity of the Group, for an initial
period of 1 month that was further extended. Therefore, as at 30
June 2022, the amount of EUR155 million was available for
utilisation form the RCF and will continue to be available until
the end of March 2024, with maturity at the end of 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 (except for Consolidated Coverage Ratio, with minimum
value of 150%). 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%.
U n s e c u r e d International Finance Corporation ("IFC")
Loan
At the end of May 2022, the Group entered into a six-year term
unsecured loan agreement for EUR85 million with IFC. On 14 June
2022, the full amount was drawn down. The IFC loan terms have been
aligned with the Company's Revolving Credit Facility terms
including financial covenants.
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% (2021: 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%
(2021: 120%). DSCR is calculated for each respective credit
facility separately at a pre-determined date under each 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% (2021:
250%), which was applicable to two properties as at 30 June 2022
(31 December 2021: 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 EUR808.4 million at 30 June 2022 (2021: EUR800.4 million)
and also carry pledges on rent and other receivable balances of
EUR3.7 million (2021: EUR3.2 million), VAT receivable balances of
EUR1.0 million (2021: EUR0.9 million) and a movable charge on the
respective bank accounts (refer to note 16).
The Group is in compliance with all financial covenants and
there were no payment defaults during the period ended 30 June 2022
(2021 : same). As of 30 June 2022, the Group had undrawn borrowing
facilities of EUR155 million (2021: EUR215 million).
13.3 Loan from non-controlling interest holders to a
subsidiary
In March 2022 and April 2022, North Logistics Hub SRL and
Logistics Hub Chitila SRL, two newly incorporated subsidiaries,
received a loan from minority shareholders for an amount of EUR0.4
million and EUR1.4 million respectively, representing 25% of CAPEX
investment in the projects which were financed through shareholders
loans both from the Group and minority shareholder in proportion to
the equity interest in the Company. The loans are unsecured and
carry a fixed interest of 4%.
14 Financial assets at fair value through profit or loss
Interest rate Maturity date 31 December 2021 Additions Disposal Valuation gain 30 June 2022
Project name
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
My Place I fixed September 2022 4,103 - - 73 4,176
My Place II fixed March 2023 3,221 - - - 3,221
TOTAL 7,324 - - 73 7,397
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. For example, as at 30
June 2022 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 EUR0.5 million (2021: EUR0.9
million and EUR1 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
2022, a gain of EUR0.07 million (2021: loss of EUR0.24 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 2022, the cumulative investment made by the
Group under the ROFO Agreement amounts to EUR16.6 million (2021:
EUR16.6 million). In September 2022 ROFO bonds and loans related to
My Place I are expected to be repaid in the amount of EUR4
million.
15 Trade and Other receivables
30 June 31 December
2022 2021
EUR'000 EUR'000
Rent and service charges receivable 15,556 11,049
VAT and other taxes receivable 1,975 4,236
Advances to suppliers for services 183 219
Sundry debtors 237 704
17,951 16,208
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 (2021: EUR5.8 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
2022 2021
EUR'000 EUR'000
Cash at bank and in hand 163,179 188,005
Short-term deposits 21,530 230,743
Cash and cash equivalents at period end 184,709 418,748
Cash at bank and in hand includes restricted cash balances of
EUR6.8 million (2021: EUR7.5 million) and short-term deposits
include restricted deposits of EUR0.3 million (2021: EUR0.2
million). The restricted cash balance can be used to repay the
outstanding debts and repayment of deposits to tenants. The cash
balance of EUR0.10 million (2021: EUR0.08 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 0.60% to positive 0.01%
(2021: minus 0.60% to positive 0.01%) per annum, for RON deposits
from 0.68% to 3.75% (2021: 0.10% to 1.75%) per annum and for PLN
deposits from minus 0.24% to nil (2021: minus 0.24% to nil) per
annum. For RON deposits highest interest rate was earned on
overnight deposits.
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 2022 31 December 2021
Denominated in Denominated in
Amounts in EUR'000 equivalent value RON PLN GBP USD RON PLN GBP USD
ASSETS
Cash and cash equivalents 25,778 20,605 4 16 12,607 15,047 37 30
Trade and other receivables 11,601 5,063 - - 9,391 6,269 - -
Contract assets 3,433 2,706 - - 4,352 1,601 - -
Income tax receivable 33 1,538 - - 33 74 - -
Total 40,845 29,912 4 16 26,383 22,991 37 30
LIABILITIES
Trade and other payables 14,670 11,036 - - 15,490 10,063 - -
Lease liability - 27,895 - - - 29,206 - -
Income tax payable 204 310 - - 361 191 - -
Guarantees from subcontractors 1,020 2,047 - - 1,807 1,808 - -
Deposits from tenants 3,394 6,901 - 5 3,503 6,713 - 5
Total 19,288 48,189 - 5 21,161 47,981 - -
Net exposure 21,557 (18,277) 4 11 5,222 (24,990) 37 25
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 2022 31 December 2021
======
Profit or (loss) Equity Profit or (loss) Equity
All amounts in EUR'000
RON (1,078) 1,078 (261) (261)
PLN 914 914 1,192 1,192
USD (1) (1) (1) (1)
GBP (0) (0) (2) (2)
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 2022, the
total outstanding balance of interest-bearing loans and borrowing
80.6% (2021: 91.5%) 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 2022, the fair value of
such fixed rate debt was lower by EUR118.3 million (31 December
2021: higher with EUR78 million) than the carrying value as
disclosed in note 17.2 in the fair value hierarchy table.
Furthermore, as at 30 June 2022, from the total outstanding
interest-bearing loans and borrowing balance 19.4% (2021: 8.5%)
carry variable interest rate, which range from EURIBOR 1-month to
EURIBOR 6-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 21.8% (31
December 2021: 40.3%) of such variable interest rate exposure with
fixed-variable interest rate swap instrument and interest rate cap
instruments with strike price range from minimum 3% to 4%.
Based on the Group's debt balances at 30 June 2022, an increase
or decrease of 100 basis points in the EURIBOR will result in an
increase or decrease (net of tax) of interest expense by EUR2.9
million per annum (2021: EUR1.4 million per annum), with a
corresponding impact on equity for the same amount,
respectively.
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 2022 31 December 2021
Note EUR'000 EUR'000
Financial assets measured at fair value through profit or loss 14 7,397 7,324
Equity investments 12,628 12,109
Loan receivable from joint venture 22 47,226 31,991
Trade receivables - net of provision 15 15,556 11,049
Contract assets 6,138 6,106
Other receivables 15 237 704
Guarantees retained by tenants 47 885
VAT and other taxes receivable 15 1,975 4,236
Income tax receivable 1,769 117
Cash and cash equivalents 16 184,709 418,748
277,682 493,269
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 tim 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 movements in the provision for impairment of receivables
during the respective periods were as follows:
30 June 31 December 2021
2022 EUR'000
EUR'000
Opening balance 5,776 4,976
Provision for specific doubtful debts 130 1,432
Reversal of provision for doubtful debts (191) (298)
Utilised (256) (188)
Foreign currency translation income 14 (146)
Closing balance 5,473 5,776
The analysis by credit quality of financial assets, cumulated
for rent, service charge and property management, is as
follows:
30 June 2022 (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 10,612 3,881 152 1,565 4,819 21,029
Less: Specific provision - 44 50 199 4,819 5,112
Less: Expected credit loss 4 198 7 152 - 361
Carrying amount 10,612 3,639 95 1,214 - 15,559
Expected credit loss rate 0.0% 5.4% 7.4% 12.5% -
31 December 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 6,827 2,481 214 2,469 4,474 16,825
Less: Specific provision - 103 62 707 4,474 5,346
Less: Expected credit loss 4 198 7 221 - 430
Carrying amount 6,823 2,540 145 1,541 - 11,049
Expected credit loss rate 0.1% 7.8% 4.8% 14.3% -
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, F1, F2 for short-term) for 73% (2021: 65%) of the cash and
cash equivalents balance of the Group, in lower medium grade range
(BBBs) for 27% (2021: 35%) of the cash and cash equivalents balance
of the Group and insignificant amounts (2021: same) 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) 2022 1,450,282 813,345 - 518,692 1,332,037
2021 1,633,920 1,330,142 - 381,567 1,711,709
Other current financial
liabilities 2022 47 - 47 - 47
2021 261 - 261 - 261
Financial asset at fair
value through profit
or loss 2022 7,397 - - 7,397 7,397
2021 7,324 - - 7,324 7,324
Lease liabilities (note
3) 2022 19,260 - - 19,260 19,260
2021 20,065 - - 20,065 20,065
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 2022
Interest-bearing loans and
borrowings 18,821 351,149 1,220,530 211,470 1,801,970 (351,688) 1,450,282
Lease liability - 1,908 8,585 110,899 121,392 (102,132) 19,260
Trade payables and guarantee
retained from
contracts (excluding advances
from customers) 14,637 16,421 2,246 253 33,558 (671) 32,887
Other payables 17 - - - 17 - 17
Deposits from tenants 16,461 1,070 2,785 940 21,256 (603) 20,653
Income tax payable 702 - - - 702 - 702
Total 50,638 370,548 1,234,146 323,562 1,978,895 (455,094) 1,523,801
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 2021
Interest-bearing loans and
borrowings 18,821 351,149 1,220,530 211,470 1,801,970 (168,050) 1,633,920
Lease liability - 1, 855 8,737 114,604 125,196 (105,131) 20,065
Trade payables and guarantee
retained from
contracts (excluding advances
from customers) 18,863 1 7,601 3,696 0 39,990 1,292 41,282
Other payables 17 - - - 17 - 17
Provision for tenant lease
incentives - - - - 0 - -
Deposits from tenants 15,917 1 68 3,212 1,182 20,479 (567) 19,912
Income tax payable 550 - - - 550 - 550
Total 53,998 370,773 1,236,175 327,256 1,988,202 (272,456) 1,715,746
Other current financial liabilities
Other current financial liabilities represented the
mark-to-market value of CAP instruments for covering the increase
of 3-month EURIBOR above strikes of 3 and 4% interest rate capes,
obtained from the counterparty financial institution and were
valued at EUR0.05 million at 30 June 2022 (2021: EUR0.3 million).
The fair value of derivative was developed in accordance with the
requirements of IFRS 13. The swap agreement under which the Group
was entitled to receive a floating rate of 1-month EURIBOR and was
required to pay a fixed rate of interest of 3.62% p.a. matured in
June 2022.
A financial income of EUR0.3 million (30 June 2021: EUR0.3
million), representing the fair value movement during the period,
was recognised in the income statement for the period ended 30 June
2022.
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 31 December
2022 2021
EUR'000 EUR'000
Declared and paid during the period
Interim cash dividend: EUR0.13 per share 28,807 66,358
On 10 March 2022, 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 2021 of EUR0.13 per ordinary
share, which was paid on 01 April 2022 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 31 December 2021
2022 EUR'000
Note EUR'000
Net assets attributable to equity holders of the Company 1,742,492 1,738,629
Number of ordinary shares used for the calculation of: Number ('000) Number ('000)
* NAV per share 12 221,373 221,373
* Diluted NAV and EPRA NRV per share 12 221,470 221,373
EUR EUR
NAV per share 7.87 7.85
Diluted NAV per share 7.87 7.85
30 June 31 December 2021
EPRA NRV Per Share 2022 EUR '000
Note EUR'000
Net assets attributable to equity holders of the Company 1,742,492 1,738,629
Exclude:
Deferred tax liability on investment property 11 190,868 181,542
Fair value of interest rate swap instrument 17 (48) 236
Goodwill as a result of deferred tax (5,697) (5,697)
Adjustment in respect of the joint venture and non-controlling
interests for above items 3,134 2,753
EPRA NRV attributable to equity holders of the Company 1,930,749 1,917,463
EUR EUR
EPRA NRV per share 8.72 8.66
20 Share-Based Payment Reserve
30 June 2022 31 December
2021
Share-based payments reserve Note EUR'000 EUR'000
Executive share option plan reserve 20.1 156 156
30 June 30 June
2022 2021
Share-based payments expense Note EUR'000 EUR'000
Total expense during the period - 432
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) 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 2022, under the share option warrants scheme
Zakiono Enterprises Limited had the right to subscribe in two
tranches of 2.83 million ordinary shares in total (1.415 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 2022.
The following table analyses the total cost of the executive
share option plan (Warrants), together with the number of options
outstanding:
30 June 2022 31 December 2021
Cost Number Cost Number
EUR'000 ('000) EUR'000 ('000)
Closing balance 156 2,830 156 2,830
Weighted average remaining contractual life (years) 1.08 1.58
There were no warrants vested and exercisable at 30 June 2022
(31 December 2021: same)
20.2 Tr e a su r y s h a r e s
30 June 2022 31 December 2021
Amount Number Amount Number
EUR'000 ('000) EUR'000 ('000)
Opening balance (4,917) (1,053) (12,977) (2,109)
Shares for Executive Directors and
other senior management employees - - 339 43
Shares for subsidiaries' employee
share award plan - - 1,253 172
Shares for long-term incentive plan 1,476 130
Shares vested under the deferred
annual bonus incentive plan - - 4,920 711
Dividend on treasury shares held
by a subsidiary 28 - 72 -
Closing balance (4,889) (1,053) (4,917) (1,053)
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 2022 2021
EUR'000 EUR'000
Interest-bearing loans and borrowings (face
value) 13 1,472,786 1,657,879
Less:
Cash and cash equivalents 16 184,709 418,748
Group Interest-bearing loans and borrowings
(net of cash) 1,288,077 1,239,131
Add:
50% Share of Joint Ventures interest-bearing
loans and borrowings 7,658 7,342
50% Share of Joint Ventures cash and cash
equivalents (2,227) (846)
Combined Interest-bearing loans and borrowings
(net of cash) 1,293,509 1,245,628
Group open market value as of financial position
date 3,101,820 3,065,101
Add:
50% Share of Joint Ventures open market value
as of financial position date 22 52,124 43,350
Open market value as of financial position
date 3,153,944 3,108,451
Loan-to-value ratio ("LTV") 41.0% 40.1%
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 2022 2021
EUR'000 EUR'000
Opening balance 16,917 11,907
Share of profit during the period 2,012 5,010
Sub-total 18,929 16,917
Loans receivable from joint ventures
Opening balance 31,991 16,451
Loan provided to the joint ventures 17,173 23,354
Loan repayments from the joint ventures (2,377) (8,111)
Interest repayment from the joint ventures (250) (536)
Interest income on the loans to joint ventures 689 833
Sub-total 47,226 31,991
TOTAL 66,155 48,908
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 2022 and 31
December 2021, 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 2022 and 31 December 2021, 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 2022, 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 2022 (2021: 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
2022 2022 2022 31 December 2021 31 December 2021 31 December 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Combined Constanta Chitila
Constanta Chitila Business Logistics
Business Park Logistics Hub Park Hub Combined
Completed
investment
property 24,800 25,800 50,600 12,900 14,000 26,900
Investment
property under
development/
Land bank - for
further
development 36,647 17,000 53,647 42,600 17,200 59,800
Other non-current
assets 12 137 149 438 1,577 2,015
Total non-current
assets 61,459 42,937 104,396 55,938 32,777 88,715
Other current
assets 424 1,297 1,721 431 2,029 2,460
Cash and cash
equivalents 1,459 2,994 4,453 1,364 327 1,691
Total assets 63,342 47,228 110,570 57,733 35,133 92,866
Loans payable to
the Group 13,303 33,921 47,224 8,835 23,156 31,991
Bank loans (at
amortised cost) 7,671 7,613 14,484 7,827 6,857 14,684
Loan from Joint
venture partner 573 3,142 3,715 150 2,796 2,946
Deferred tax
liability 6,001 188 6,189 5,505 - 5,505
Other non-current
liabilities 157 46 203 157 12 169
Total non-current
liabilities 27,705 44,910 72,615 22,474 32,821 55,295
Loan from Joint
venture partner - 28 28 15 290 305
Other current
liabilities 145 2,165 2,310 2,473 3,168 5,641
Current portion
of bank loans 31 - 31 - - -
Total liabilities 27,882 47,103 74,985 24,962 36,279 61,241
Net assets 35,460 125 35,585 32,771 (1,146) 31,625
The Group has signed loan facilities amounting to EUR59.2
million (2021: EUR54.1 million) with Chitila Logistics Hub and
Constanta Business Park joint ventures to fund the development
costs of the projects, out of which EUR13.3 million was available
for future drawdown as of 30 June 2022 (2021: EUR23 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
2022 2022 2022 2021 2021 30 June 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Combined Constanta
Constanta Chitila Logistics Business Chitila Logistics
Business Park Hub Park Hub Combined
Revenue 610 1,198 1,808 428 343 771
Operating expenses (208) (446) (654) (187) (234) (421)
Administrative
expenses (28) (42) (70) (33) (22) (55)
Fair value
gain/(loss) on
investment
property 2,932 1,140 4,072 508 (3,675) (3,167)
Foreign exchange
loss - (42) (42) (5) (13) (18)
Profit/(loss)
before net
financing cost 3,306 1,808 5,114 711 (3,601) (2,890)
Finance expense (124) (355) (479) (217) (249) (466)
Finance income 4 6 10 1 1 2
Income tax
(expense)/income (497) (188) (685) (48) 541 493
Total
comprehensive
income for the
period 2,689 1,271 3,960 447 (3,308) (2,861)
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 2022 and 30 June 2021
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 2022 30 June 2022 30 June 2022 30 June 2021 30 June 2021 30 June 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Constanta Chitila Constanta Chitila Logistics
Business Park Logistics Hub Combined Business Park Hub Combined
Profit/(loss) for
the period 2,689 1,271 3,960 447 (3,308) (2,861)
Group 50% share
of profit/(loss)
for the period 1,345 636 1,981 224 (1,654) (1,430)
Adjustments for
transactions
with the Group 56 (25) 31 114 43 157
Share of profit/
(loss) of
equity-accounted
investments in
joint ventures 1,401 611 2,012 338 (1,611) (1,273)
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
2022 and 31 December 2021, 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 2022, the Group consolidated the following subsidiaries, being holding
companies
as principal activities.
30 June 2022 31 December 2021 Place of incorporation
Subsidiary Note Shareholding interest (%) Shareholding interest (%)
Globalworth Investment Advisers
Limited 100 100 Guernsey,
Channel Islands
Globalworth Holdings Cyprus
Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited
Kusanda Holdings Limited
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Dunvant Holding Limited
Oystermouth Holding Limited
Minory Investments Limited
Globalworth Tech Limited 100 100 Cyprus
IB 14 Fundusz Inwestycyjny Zamkniety
Aktywow Niepublicznych
Lima Sp. z o.o.
As of 30 June 2022, 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 2022 31 December Place of
Subsidiary Shareholding 2021 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
Nord 50 Herastrau Premium SRL
Otopeni Logistics Hub SRL 23.3 100 n/a Romania
West Logistics Hub SRL 23.3 100 n/a Romania
North Logistics Hub SRL 23.3 75 n/a Romania
Logistics Hub Chitila SRL 23.3 75 n/a 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.
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
23.1 Subsidiaries under liquidation process
Following companies are dormant and have applied for the
voluntary liquation during 2020: Casalia Holdings Limited, Dunvant
Holding Limited, Oystermouth Holding Limited, Pieranu Enterprises
Limited, Ramoro Limited and Vaniasa Holdings Limited.
23.2 Mergers during the period
Kinolta Investments Limited was merged in Globalworth Holdings
Cyprus Limited, a company registered in Cyprus, on 11 January
2022.
23.3 New Subsidiaries
On 27 January 2022, two new subsidiaries, named Otopeni
Logistics Hub SRL and West Logistics Hub SRL respectively, were set
up for future projects.
On 3 March 2022 and 4 April 2022, two new subsidiaries, named
North Logistics Hub SRL and Logistic Hub Chitila SRL respectively,
were set up for future projects in partnership with Catted
Industrial SRL being a minority interest shareholder representing
25% equity shareholding in the subsidiaries.
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 2022
Office Mixed-use Residential Other Inter- segment Total
eliminations
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income - Total 64,042 5,686 798 4,911 (223) 75,214
Romania 30,878 - 798 4,911 (141) 36,446
Poland 33,164 5,686 - - (82) 38,768
Revenue from contract with
customers - Total 34,382 3,700 411 4,368 (1,524) 41,337
Romania 14,569 - 411 4,368 (315) 19,033
Poland 19,813 3,700 - - (1,209) 22,304
Revenue-total 98,424 9,386 1,209 9,279 (1,747) 116,551
Operating expenses (37,539) (4,652) (489) (4,443) 427 (46,696)
Segment NOI 60,885 4,734 720 4,836 (1,320) 69,855
NOI - Romania 28,886 - 720 4,836 (402) 34,040
NOI - Poland 31,999 4,734 - - (918) 35,815
Administrative expenses (4,347) (85) (25) (2,027) - (6,484)
Acquisition costs - - - (7) - (7)
Fair value (loss)/gain on
investment property (4,311) (2,104) 45 13,389 - 7,019
Depreciation and
amortisation expense (285) - (10) (14) - (309)
Other expenses (98) 38 * (660) - - (720)
Other income 290 19 1 2 (17) 295
Foreign exchange
(loss)/gain 208 102 2 (5) - 307
Finance cost (4,509) (139) (3) (22,896) - (27,547)
Finance income 465 - 16 698 - 1,179
Segment result 48,298 2,565 86 (6,024) (1,337) 43,588
Gain from fair value of
financial instruments 73 - - - - 73
Share of (loss)/profit of
equity-accounted
investments in joint
ventures - - - 2,012 - 2,012
Profit/(loss) before tax 48,371 2,565 86 (4,012) (1,337) 45,673
* Other expenses include a loss on sale of non-core investment
property (residential apartments) of EUR654 thousand (30 June 2021:
EUR162 thousand).
30 June 2021
Office Mixed-use Residential Other Inter- segment 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)/gain 39 (48) (13) (28) - (50)
Finance cost (4,635) (250) (1) (22,637) - (27,523)
Finance income 488 - 9 342 - 839
Segment result 41,850 (2,319) (259) (17,899) (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 41,607 (2,319) (259) (19,604) (558) 18,867
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 2022 (30 June 2021: EURnil).
30 June 2022
Office Mixed-use Residential Other Inter segment eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current assets 2,467,119 290,736 58,163 191,094 (1,424) 3,005,689
Romania 1,224,500 - 58,163 191,094 (257) 1,473,500
Poland 1,242,619 290,736 - - (1,167) 1,532,189
Total assets 3,892,626 298,655 61,447 201,252 (1,744) 3,452,236
Total liabilities 557,278 22,955 4,215 1,110,793 (210) 1,695,031
Additions to non-current assets
- Romania 5,732 - 66 11,510 - 17,308
- Poland 13,575 5,660 - - - 19,235
31 December 2021
Office Mixed-use Residential Other Inter segment eliminations Total
Segments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment non-current assets 2,448,634 287,342 65,494 166,142 (1,532) 2,966,080
Romania 1,220,900 - 65,494 166,142 (205) 1,452,331
Poland 1,227,734 287,342 - - (1,327) 1,513,749
Total assets 3,092,367 294,007 68,863 174,203 (1,957) 3,627,483
Total liabilities 554,962 21,752 4,881 1,292,863 (331) 1,874,127
Additions to non-current assets
- Romania 29,775 - 482 28,379 - 58,636
- Poland 25,397 8,568 - - - 33,965
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 30 June 2022 30 June 2021 30 June 2022 31 December 2021
transaction/balances
Name Amounts EUR'000 EUR'000 EUR'000 EUR'000
Global Logistics Chitila Shareholder loan
SRL (50% Joint Venture) receivable - - 33,921 23,156
Trade and other receivables - - 12 11
Finance income 476 122 - -
Office rent 6 6 - -
Asset management fees 20 9 - -
Black Sea Vision SRL Shareholder loan
(50% Joint Venture) receivable - - 13,303 8,835
Trade and other receivables - - 7 12
Finance income 212 213 - -
Office rent 6 6 - -
Asset management fees 11 9 - -
Mr. Dimitris Raptis
(Chief Executive
Officer) Rent revenue 1 1 0.7 0
26 New and Amended Standards
Starting from 1 January 2022 the Group adopted the following
amended standards and interpretations. The new amendments had no
significant impact on the Group's financial position and
performance.
Narrow scope amendments and new Standards Effective Date (EU endorsement)
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
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 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9
- Comparative
Information Jan-23
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in
Associates
and Joint Ventures: Sale or Contribution of Assets between an Investor and its
Associate or
Joint Venture Deferred
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 2022, 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 2022 of
EUR0.14 per ordinary share, which will be paid on 30 September 2022
to shareholders on the register as at close of business on 9
September 2022 with a corresponding ex-dividend date of 8 September
2022.
ADDITIONAL INFORMATION
EPRA NAV Metrics
EPRA EPRA EPRA EPRA NTA EPRA NDV EPRA NDV
NRV NRV NTA
30-Jun-22 31-Dec-21 30-Jun-22 31-Dec-21 30-Jun-22 31-Dec-21
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Net assets attributable
to equity holders of
the parent 1,742,492 1,738,629 1,742,492 1,738,629 1,742,492 1,738,629
Include / exclude
I) Hybrid instruments - - - - - -
Diluted NAV 1,742,492 1,738,629 1,742,492 1,738,629 1,742,492 1,738,629
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 1,742,492 1,738,629 1,742,492 1,738,629 1,742,492 1,738,629
Exclude:
V) Deferred tax in
relation to fair value
gains of IP 190,868 181,542 95,434 90,771 n/a n/a
VI) Fair value of financial
instruments (48) 236 (48) 236 (48) 236
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 (41) (73) (41) (73)
IX) Adjustment in respect
of joint venture and
NCI share for above
items 3,134 2,753 3,134 2,753 n/a n/a
Include:
IX) Fair value of fixed
interest rate debt n/a n/a n/a n/a 118,246 (77,789)
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 1,930,749 1,917,463 1,828,622 1,819,967 1,848,300 1,648,654
Fully diluted number
of shares 221,470 221,373 221,470 221,373 221,470 221,373
NAV per share (EUR) 8.72 8.66 8.26 8.22 8.35 7.45
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
2022, 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 2021.
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 includes 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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