THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
FOR IMMEDIATE RELEASE
11
March 2024
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Preliminary Unaudited Financial Results for the year ended 31
December 2023
Globalworth, the leading
office investor in Central and Eastern
Europe, is pleased to provide a
comprehensive update of its operations, along with a preliminary
release of its unaudited Consolidated Financial Statements for the
year ended 31 December 2023.
Dennis Selinas, Chief Executive
Officer of Globalworth, commented: "Globalworth's performance
throughout the year remained resilient, despite global challenges,
as we continued to implement our "local landlord" approach, with an
increasing focus on sustainability."
Operational Highlights
·
Record year in leasing with 314.4 k sqm taken-up
or extended at an average WALL of 6.0 years despite continued
challenging market conditions.
o Improved our average WALL in our standing commercial
properties to 4.9 years (from 4.4 years as of December
2022).
·
As of 31 December 2023, the average standing
occupancy of our combined commercial portfolio was 88.3% (88.7%
including tenant options), representing a 2.6% rebound compared to
the previous year-end,
o Resilient performance of our capital cities standing
commercial properties at 92.0% average occupancy.
·
The total annualised contracted rent of our
combined portfolio increased by 6.3% to €201.2 million, compared to
year-end 2022,
o Like-for-like annualised commercial contracted rents in our
combined standing commercial portfolio increased by 4.9% to €190.0
million.
·
Standing portfolio GLA stood at 1.4m sqm
marginally decreasing with 19.6k sqm compared to year-end
2022.
o Successfully finalised the sale of Warta Tower in
Warsaw
o Delivered our first logistic/light industrial facility in
Targu Mures, Romania
·
Total combined portfolio value decreased by 5.2%
to €3.0 billion, mainly due to sales and negative revaluation
adjustments.
o Like-for-like decrease of 4.0% in the appraised value of our
standing commercial properties compared to year-end 2022
·
Developments activity scaled down and focused on
high-quality logistic / light-industrial facilities in Romania
(19.3k sqm) and the finalization of refurbishment/repositioning of
two mixed-use properties in Poland.
·
Continued our active investment and upgrade
program, investing over €43.2 million during the year in our
standing commercial portfolio aiming at bringing all our buildings
at the highest level of energy efficiency, technology, and
comfort.
·
Sustainability:
o €2.5bn in 59 green-certified properties in our portfolio
accounting for 92.5% of our standing commercial portfolio by
value;
o 27 properties were certified or recertified with BREEAM Very
Good or higher certifications in the period
o Maintained our "low-risk" rating by Sustainalytics at 11.1
and "A" rating by MSCI;
o SBTi approved our targets to reduce GHG emissions intensity
by 46% by 2030 versus our baseline 2019 levels (for Scope 1 and 2)
and commit to measuring and reducing Scope 3
Financial Highlights
|
Combined Portfolio Value
(OMV)
€3.0bn
(5.3)% on 31 Dec. 2022
|
Shareholders' equity
€1.6bn
(0.03)% on 31 Dec. 2022
|
EPRA NRV per share
€6.94
(16.2)% on 31 Dec. 2022
|
|
IFRS Earnings before tax
€(61.3)m
€(11.2)m in. 2022
|
Adjusted normalised EBITDA
€131.4m
4.3% on 2022
|
NOI
€147.0m
5.2% on 2022
|
|
IFRS Earnings per share
(23) cents
(8) cents in 2022
|
EPRA Earnings per share
26 cents
(19)% on 2022
|
Revenues
€240.4m
0.5% on 2022
|
Outlook
For the year ahead of us, we
expect that macroeconomic developments and the financial market
evolution, especially the response of monetary authorities to the
trajectory of inflation, among other variables, will have a
significant impact on the real estate market.
We remain focused on our goal of
providing sustainable spaces where our partners can grow and
succeed while closely weighing various liquidity initiatives to
provide our group with resources for improving and simplifying our
capital structure.
For further information
visit
www.globalworth.com or
contact:
|
Enquiries
|
|
|
Rashid Mukhtar
Group CFO
|
Tel: +40 732 800 000
|
|
Panmure Gordon (Nominated Adviser
and Broker)
Dominic Morley
|
Tel: +44 20 7886 2500
|
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 269 professionals across Cyprus, Guernsey,
Poland and Romania the combined value of its portfolio is €3.0
billion, as at 31 December 2023. Approximately 96.8% of
the portfolio is in income-producing assets, predominately in the
office sector, and leased to a diversified array of
over 715 national and multinational corporates. In Poland
Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and
Katowice, while in Romania it has assets in Bucharest and
seven other cities. For more information, please
visit www.globalworth.com and follow us on Facebook, Instagram and
LinkedIn.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
PRELIMINARY RESULTS AND UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023
MANAGEMENT
REVIEW
REVIEW OF DEVELOPMENTS
In 2023, we continued developing
high-quality logistics / light-industrial facilities in Romania. At
the beginning of the year, we had two projects (with three
facilities) under construction (30.0k sqm) out of which we have
delivered the Targu Mures project with the other two facilities
waiting to be delivered in the first part of 2024.
In November 2023, we have started
our first logistic project in Craiova, by acquiring a plot of land,
north of the city. The built to suite project is aimed to deliver
6.0k sqm of high-quality GLA in the first part of 2024 and was 100%
pre-leased to Returo SGR as of 31 December 2023 through a 20-year
lease.
Delivery of Targu Mures
Logistic Hub
In the first half of 2023, we
delivered our first project in Targu Mures with a leasable area of
18.3k sqm. At the end of December, the project, which is held
through a JV partnership, was 100% let to two large multinational
companies, Friesland Campina and EKR Elektrokontakt (Nexans Group)
at an average WALL of 10.1 years.
|
Delivery
|
|
|
Targu
Mures Logistic Hub*
|
|
Location
|
Targu
Mures
|
|
GLA (k sqm)
|
18.3
|
|
Occupancy (%)
|
100.0%
|
|
Development Cost (€ m)
|
14.0
|
|
GAV (€ m)
|
15.5
|
|
Contracted Rent (€ m)
|
1.5
|
|
WALL (years)
|
10.1
|
|
Estimated Yield on Development
Cost
|
10.4%
|
|
(*) Joint Venture in which
Globalworth owns 50%; figures shown on 100% basis.
|
Developments in
Progress
We currently have two projects
under development (with three facilities) expected to be delivered
in 2024, further expanding our industrial footprint by 19.3k sqm of
high-quality GLA and at full occupancy are expected to generate
€1.3 million of annualised rent.
|
Developments
|
|
|
|
|
Business
Park Stefanesti1 (Phases B and C)
|
Craiova
Logistic Park
|
|
Location
|
Bucharest
|
Craiova
|
|
GLA (k sqm)
|
13.3
|
6.0
|
|
Occupancy (%)
|
34.7%
|
100%
|
|
Development Cost (€ m)
|
9.4
|
4.5
|
|
GAV (€ m)
|
11.7
|
1.8
|
|
Contracted Rent (€ m)
|
0.3
|
0.4
|
|
100% Rent (€ m)
|
1.0
|
0.4
|
|
Estimated Yield on Development
Cost
|
10.4%
|
8.2%
|
|
|
|
|
(1) 75% owned by Globalworth; figures shown on 100%
basis
Refurbishment / Repositioning of Mixed-Use Properties
(Poland)
Following the review back in 2020
of our portfolio and in response to market conditions, we commenced
refurbishing/repositioning 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 our centrally located
Supersam property in Katowice in H2-2021.
·
In Renoma, the refurbishment has increased the
offer of Class "A" office space on the higher floors. It had also
repositioned 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 have redeveloped the entire level
1 into an office function. On level -1, we have repositioned
selected retail modules into high-quality retail and commercial
spaces with food and entertainment.
In 2022 and 2023 we invested €22.6
million in the two properties, and we expect to deliver the
properties in the coming months.
|
Properties Under Refurbishment /
Repositioning
|
|
|
Renoma
|
Supersam
|
|
Location
|
Wroclaw
|
Katowice
|
|
Status
|
Refurbishment / Repositioning
|
Refurbishment / Repositioning
|
|
Expected Delivery
|
H1-2024
|
H1-2024
|
|
GLA - on Completion (k
sqm)
|
48.3
|
26.7
|
|
CAPEX to 31 Dec 23 (€
m)
|
22.0
|
4.0
|
|
GAV (€ m)
|
111.8
|
51.3
|
|
Estimated CAPEX to Go (€
m)*
|
6.7
|
2.2
|
|
ERV (€ m)
|
9.5
|
4.5
|
|
Estimated Yield on Completion of
Project**
|
9.3%
|
10.7%
|
|
* 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.
|
Ongoing Investment & Upgrade Programme of Our Standing
Properties
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, maintaining and, where required,
improving the quality of our buildings and our services.
We manage all our properties in
Poland internally, and in Romania, we manage all but one of our
offices in-house. This translates to 1,086.6k sqm of high-quality
commercial spaces with an appraised value of €2.4 billion
internally managed by our team.
|
Internally Managed Commercial Portfolio as at 31 Dec.
2023
|
|
|
Poland
|
Romania
|
Group
|
|
GLA (k sqm)
|
508.5
|
578.1
|
1,086.6
|
|
% of Commercial GLA
|
100%
|
67%
|
79%
|
|
% of Office and Mixed-Use
GLA
|
100%
|
91%
|
96%
|
|
GAV (€ m)
|
1,304.7
|
1,137.3
|
2,442.0
|
|
% of Commercial GAV
|
100%
|
82%
|
90%
|
|
% of Office and Mixed-Use
GAV
|
100%
|
93%
|
97%
|
In 2023, we invested €43.2 million
in select improvement initiatives in our standing commercial
portfolio. As a result of our ongoing in-house initiatives and
property additions, we hold a modern portfolio with 54 of our
standing commercial properties, accounting for 79.3% by GLA and
78.3% by commercial portfolio value, having been delivered or
significantly refurbished in the last 10 years.
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 1.2 million sqm (comprising 2.7% 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 785.7k sqm of high-quality
GLA to our standing portfolio footprint.
These projects, which are
classified as "Future Development", continue to be reviewed by the
Group, albeit periodically, with the pace at which they will be
developed subject to tenant demand and general market
conditions.
|
Future Developments
|
|
|
Podium
Park
III
|
Green
Court D
|
Globalworth West
|
Constanta Business Park (Phased)*
|
Timisoara Industrial Park I and II (Phased)
|
Luterana
|
|
Location
|
Krakow
|
Bucharest
|
Bucharest
|
Constanta
|
Timisoara
|
Bucharest
|
|
Status
|
Constr.
Postponed
|
Constr.
Postponed
|
Constr.
Postponed
|
Planned
|
Planned
|
Planned
|
|
GLA (k sqm)
|
17.7
|
17.2
|
33.4
|
525.8
|
165.2
|
26.4
|
|
CAPEX to 31 Dec 23 (€
m)
|
8.5
|
2.5
|
5.2
|
12.3
|
7.0
|
7.4
|
|
GAV (€ m)
|
7.1
|
7.5
|
6.6
|
37.2
|
11.0
|
12.5
|
|
Estimated CAPEX to Go (€
m)**
|
29.7
|
23.9
|
38.5
|
243.6
|
63.5
|
39.7
|
|
ERV (€ m)
|
3.1
|
3.6
|
5.2
|
27.7
|
6.9
|
6.7
|
|
Estimated Yield on Development
Cost
|
8.1%
|
13.6%
|
12.0%
|
10.8%
|
9.8%
|
14.1%
|
|
(*) 50:50 Joint Venture; figures shown on 100%
basis.
|
(**) Initial preliminary development budgets on future
projects; to be revised prior to permitting.
Divestment of Warta Tower and other
divestments
In July we have finalised the sale
of Warta Tower office building in Warsaw to a company from the
Cornerstone Investment Management platform, the transaction being
initially agreed upon back in 2021 but was delayed as the buyer had
to reorganise the financing arrangement due to the start of the war
in Ukraine in the early 2022.
The value of the transaction has
been set at over EUR €63 million, which is above book value of the
property, as valued in December 2022 and in June 2023 and this
stands, once again, as a confirmation of the quality of our
properties.
Warta Tower was completed in 2000
and acquired by Globalworth in March 2018 and as of June 2023 the
property was fully vacant, following the relocation of its main
tenant.
Also, in the course of the year we
have sold a non-core plot of land in the northern part of Bucharest
to a local entrepreneur, and we have sold our 25% share in My Place
II, an office project in Warsaw, to a Czech real estate
fund.
ASSET MANAGEMENT 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 twelve months of 2023, the
Group successfully negotiated the take-up (including expansions) or
extension of 314.4k sqm of commercial spaces in Poland (29.7% of
transacted GLA) and Romania (70.3% of transacted GLA), with an
average WALL of 6.0 years, making 2023 our best year in terms of
leased GLA since Globalworth was created.
Between 1 January and 31 December
2023, our leasing activity was almost equally split between new
take-up of available spaces, with such leases accounting for 48.8%
of our total leasing activity being signed at a WALL of 6.8 years
and renewals accounting for 51.2% signed at a WALL of 5.4
years.
In total, we signed new leases for
153.5k sqm of GLA, with the majority involving spaces (+90.0%)
leased to new tenants, and the remaining areas being taken up by
existing tenants which were expanding their operations.
·
New leases were signed with 83 new tenants for
138.3k sqm of GLA at a WALL of 7.0 years. The majority were for
office and industrial spaces, accounting for 49.8% and 47.5%
respectively, with the remainder involving retail/other commercial
spaces.
|
Selected New Leases Signed in 2023
|
|
|
City
|
Property
|
Use
|
GLA
|
|
Mediapost Hit Mail
|
Bucharest (RO)
|
Chitila
Logistic Hub III
|
Industrial
|
18.1k
|
|
Banca Transilvania
|
Bucharest (RO)
|
Green
Court Complex
|
Office
|
10.1k
|
|
Dante International (eMAG)
|
Bucharest (RO)
|
Globalworth Square
|
Office
|
9.6k
|
|
LeverX Poland
|
Wroclaw
(PL)
|
Retro
Office House
|
Office
|
3.3k
|
|
Aramco Fuels
|
Gdansk
(PL)
|
Tryton
|
Office
|
2.6k
|
·
In addition, 37 tenants signed new leases,
expanding their operations by 15.2k sqm at an average WALL of 5.9
years.
We also renewed leases for a total
of 160.8 sqm of GLA with 101 of our tenants at a WALL of 5.4 years.
It is important to note that c.82% (by GLA) of these renewals were
for leases that were expiring in 2024 or later.
|
Selected Leases Extensions Signed in 2023
|
|
|
City
|
Property
|
Use
|
GLA
|
|
Honeywell Romania
|
Bucharest (RO)
|
BOC
Tower
|
Office
|
24.4k
|
|
Unicredit Bank
|
Bucharest (RO)
|
Unicredit HQ
|
Office
|
17.4k
|
|
Google
|
Krakow
(PL)
|
Quattro
Business Park
|
Office
|
13.0k
|
|
Deutsche Bank
|
Bucharest (RO)
|
BOB
Tower
|
Office
|
12.9k
|
|
Huawei
|
Bucharest (RO)
|
Globalworth Tower
|
Office
|
12.5k
|
|
Summary Leasing Activity for Combined Portfolio in
2023
|
|
|
GLA (k
sqm)
|
No. of
Tenants*
|
WALL (yrs)
|
|
New Leases (incl. expansions)
|
153.5
|
117
|
6.8
|
|
Renewals / Extensions
|
160.8
|
101
|
5.4
|
|
Total
|
314.4
|
201
|
6.0
|
|
*Number of individual tenants
|
Rental
Levels
Headline market rental levels have
shown an upward trend during last 12 months, mostly influenced by
indexation, despite the challenges in the market and a cautious
approach of tenants related to the renewal of the expiring leases,
thus reflecting the quality of our properties, our active asset
management initiatives, and our approach to sustainable
development.
Our leases typically adjust
annually in the first quarter of the year, with eligible leases
indexed at an average of 8.5% in 2023. 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 ERV rates.
|
Average Portfolio Headline Rents in Standing Portfolio (€ /
sqm / m)
|
|
|
31 Dec.
2023
|
31 Dec.
2022
|
Change (%)
|
|
Office
|
15.0
|
14.2
|
5.5%
|
|
Industrial
|
4.3
|
4.0
|
7.0%
|
|
Retail/Commercial
|
16.7
|
14.2
|
17.1%
|
Rental levels can vary
significantly between type of spaces, buildings and submarkets.
Leases signed in 2023 were at €12.9/sqm/m, 8.3% higher than the
previous year group averages.
|
Average Headline Rents of New Leases Signed (€ / sqm /
m)
|
|
|
31 Dec.
2023
|
31 Dec.
2022
|
Change (%)
|
|
Office
|
14.8
|
14.8
|
0.2%
|
|
Industrial
|
4.4
|
3.7
|
17.2%
|
|
Retail/Commercial
|
16.2
|
14.1
|
14.9%
|
|
Average:
|
12.9
|
11.9
|
8.3%
|
Contracted Rents (on
annualised basis)
Total annualised contracted rent
across our portfolio in Poland and Romania increased by 6.3% to
€201.2 million compared to year-end 2022, driven by active asset
management, indexation, a new acquisition and lease-up in our
development projects (completed or in-progress).
Total annualised contracted rents
in our standing commercial portfolio were €191.5 million on 31
December 2023, up by 5.6% compared to 31 December 2022, increasing
to €192.0 million when including rental income generated by renting
132 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 4.9% to €190.0 million at the end of December
2023 compared to the same period in 2022, mainly as an effect of
rent indexation.
|
Annualised Contracted Rent Evolution 2023
(€m)
|
|
|
Poland
|
Romania
|
Group
|
|
Rent from Standing Commercial Properties ("SCP") 31 Dec.
2022
|
86.6
|
94.7
|
181.3
|
|
Less: Assets Sold
(Warta Tower)
|
(0.1)
|
-
|
(0.1)
|
|
Rent from SCP Adj. for Properties Sold 31 Dec
2022
|
86.5
|
94.7
|
181.2
|
|
Less: Space
Returned
|
(11.3)
|
(7.6)
|
(18.9)
|
|
Plus: Rent
Indexation
|
6.5
|
7.7
|
14.2
|
|
Plus/Less: Lease
Renewals (net impact) & Other
|
(0.6)
|
(2.2)
|
(2.8)
|
|
Plus: New
Take-up
|
5.4
|
11.0
|
16.4
|
|
Total L-f-L Rent from SCP 31 Dec. 2023
|
86.4
|
103.6
|
190.0
|
|
Plus: Developments
Completed During the Period
|
-
|
1.5
|
1.5
|
|
Total Rent from Standing Commercial
Properties
|
86.4
|
105.1
|
191.5
|
|
Plus: Residential
Rent
|
-
|
0.5
|
0.5
|
|
Total Rent from Standing Properties
|
86.4
|
105.6
|
192.0
|
|
Plus: Active and
Pre-lets of Space on Projects Under Development /
Refurbishment
|
8.4
|
0.7
|
9.1
|
|
Total Contracted Rent as at 31 Dec 2023
|
94.9
|
106.3
|
201.2
|
|
|
|
|
|
|
Combined Annualised Commercial Portfolio Contracted Rent
Profile as at 31 Dec. 2023
|
|
|
Poland
|
Romania
|
Group
|
|
Contracted Rent (€ m)
|
94.9
|
105.8
|
200.6
|
|
Tenant origin - %
|
|
Multinational
|
66.7%
|
83.1%
|
75.3%
|
|
National
|
32.1%
|
15.4%
|
23.3%
|
|
State
Owned
|
1.3%
|
1.5%
|
1.4%
|
|
Note: Commercial Contracted Rent excludes c.€0.5 million from
residential spaces as at 31 December 2023
|
|
Annualised Contracted Rent by Period of Commencement Date as
at 31 Dec. 2023 (€m)
|
|
|
Active
Leases
|
H1-2024
|
H2-2024
|
Total
|
|
Standing Properties
|
186.1
|
3.9
|
2.0
|
192.0
|
|
Developments
|
8.4
|
0.8
|
-
|
9.1
|
|
Total
|
194.5
|
4.7
|
2.0
|
201.2
|
|
Annualised Commercial Portfolio Lease Expiration Profile as
at 31 Dec. 2023 (€m)
|
|
Year
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
3030
|
2031
|
2032
|
>2032
|
|
Total
|
18.6
|
12.1
|
21.4
|
27.3
|
25.5
|
26.3
|
31.6
|
15.7
|
5.8
|
16.4
|
|
% of total
|
9.3%
|
6.0%
|
10.7%
|
13.6%
|
12.7%
|
13.1%
|
15.8%
|
7.8%
|
2.9%
|
8.2%
|
The Group's rent roll across its
combined portfolio is well diversified, with the largest tenant
accounting for 5.3% of contracted rents, while the top three
tenants account for 10.5% and the top 10 account for
24.1%.
Cost of Renting
Spaces
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 signed (new take-up or lease
extension), space leased (office, industrial, other), contract
duration and other factors.
Headline (base) rents present the
reference point typically communicated in the real estate market
when referring to the level at which lease contracts are expected
to be signed or are signed. However, the effective rent is a more
useful indicator of a rental agreement's profitability.
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 short term leases
and leases signed and ended during the year.
Overall, in 2023, we successfully
negotiated the take-up (including expansions) or extension of
294.3k sqm of commercial spaces in our portfolio (excluding short
term leases). The weighted average effective rent for these new
leases was €9.5/sqm/month with a WALL of 6.1 years.
·
Leases for industrial spaces signed in the period
accounted for 18.0% of the total leasing activity, resulting in the
lower average headline and effective rent.
The difference between headline
(base) and effective rents in 2023 was, on average, 26.2%, which is
very close to the level recorded in FY2022 (average of 26.1%)
reflecting a stabilizing but still challenging market.
In total, new leases signed during
the year will generate a future rental income of €297.4 million
(including auxiliary spaces), with leases from office properties
accounting for 78.9% of future rental income.
|
Weighted Average Effective Rent (€ / sqm / m) -
2023
|
|
|
Poland
|
Romania
|
Group
|
|
Headline Commercial Rent
|
16.4
|
11.3
|
12.9
|
|
Less: Rent Free
Concessions
|
(2.6)
|
(1.2)
|
(1.6)
|
|
Less: Tenant
Fitouts
|
(1.8)
|
(1.3)
|
(1.5)
|
|
Less: Broker
Fees
|
(0.6)
|
(0.2)
|
(0.3)
|
|
Effective Commercial Rent
|
11.5
|
8.6
|
9.5
|
|
WALL (in
years)
|
4.7
|
7.1
|
6.1
|
|
|
|
Portfolio
Valuation
In line with our practice of
biannual valuations, we valued our entire portfolio in Poland and
Romania as of 30 June and 31 December 2023.
The valuations were performed by
Knight Frank for our properties in Poland, with Colliers and
Cushman and Wakefield valuing our properties in Romania (more
information is available under note 3 of the audited annual
condensed consolidated financial statements as of and for the
period ended 31 December 2023).
Assigning the appraisal of our
portfolio to three independent and experienced service providers
makes the process of determining the value of our properties
transparent and impartial. Through our oversight, we ensure that a
consistent methodology, reporting, and timeframe are
respected.
The main drivers in the evolution
of our portfolio value since the inception of the Group have
been:
·
Acquisition or development of high-quality
properties in Poland and Romania,
·
Active asset management of the properties,
and
·
The performance of the real estate markets in
which we operate.
Overall, our total combined
portfolio value was €3.0 billion at the end of 2019, and remained
effectively unchanged in 2020 due to the impact of the COVID-19
pandemic, increasing to €3.2 billion at 31 December 2021 due to
additions and remained relatively constant in the year
after.
In valuing our properties, 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.
As at 31 December 2023 and
throughout the year, third-party appraisals continued to be
impacted by high inflation and interest rates, with market
volatility and outlook uncertainty remaining at high levels. This
has led to the application of moderate yield expansion and higher
discount rates in determining the valuations.
As such, the portfolio's
third-party appraised value on 31 December 2023 was estimated at
€3.0 billion, impacted by the sale of assets worth €70.6 million
and the like-for-like decrease (€110.6 million / 4.0%) in the
appraised value of our standing commercial properties, leading to
an overall decrease of 5.2% compared to the end of 2022.
|
Combined Portfolio Value Evolution 31 Dec. 2023
(€m)
|
|
|
Poland
|
Romania
|
Group
|
|
Total Portfolio Value at 31 Dec 2022
|
1,584.5
|
1,574.4
|
3,158.9
|
|
Less: Properties Held in Joint
Venture (*)
|
-
|
(119.3)
|
(119.3)
|
|
Total Investment Properties at 31 Dec 2022
|
1,584.5
|
1,455.1
|
3,039.6
|
|
Plus/Less:
Transactions
|
(55.1)
|
(15.1)
|
(70.2)
|
|
o/w New
Acquisitions
|
-
|
0.4
|
0.4
|
|
o/w Disposals
|
(55.1)
|
(15.5)
|
(70.6)
|
|
Plus: Capital
Expenditure
|
31.4
|
19.9
|
51.3
|
|
o/w Developments
|
8.6
|
2.3
|
10.9
|
|
o/w Standing
Properties
|
22.8
|
17.6
|
40.4
|
|
o/w Future
Developments
|
-
|
-
|
-
|
|
Plus/Less: Net
Revaluations Adjustments
|
(86.0)
|
(69.0)
|
(154.9)
|
|
o/w
Developments/Re-developments
|
(0.4)
|
0.4
|
(0.1)
|
|
o/w Standing
Properties
|
(85.5)
|
(68.3)
|
(153.8)
|
|
o/w Lands, Future Developments &
Acquisitions
|
-
|
(1.1)
|
(1.1)
|
|
Total Investment Properties at 31 Dec. 2023
|
1,474.8
|
1,391.0
|
2,865.8
|
|
Plus: Properties Held
in Joint Venture (*)
|
-
|
129.0
|
129.0
|
|
o/w Capital Expenditure &
Acquisitions
|
-
|
6.8
|
6.8
|
|
o/w Net Revaluation
Adjustments
|
-
|
2.9
|
2.9
|
|
Total Portfolio Value at 31 Dec. 2023
|
1,474.8
|
1,520.0
|
2,994.8
|
(*) 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
REVIEW OF STANDING PORTFOLIO
Maintained our footprint at 1.4m
sqm.
We provide our business partners
with high-quality spaces in 13 major real estate markets in Poland
and Romania that are sustainable, technologically advanced, and
custom-fitted to their requirements, offering premium services to
allow the businesses to succeed.
Overall, our standing portfolio
predominantly comprises 29 Class "A" offices (49 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 in Poland (Krakow,
Wroclaw, Katowice, Gdansk and Lodz), which in total account for
88.2% of our standing portfolio by value.
In addition, in Romania, we fully
own five logistic / light-industrial parks with ten facilities in
Timisoara, Arad, Oradea and Pitesti and own the majority stake in
two small business units projects in Bucharest (with two standing
facilities). We also have 50% ownership through joint venture
agreements in three other logistics/business parks (with four
standing facilities) in Bucharest, Constanta and Targu Mures and
own part of a residential complex in Bucharest.
During the year, our standing
commercial portfolio's total GLA slightly decreased with 15.8k sqm
or 1.1% to reach 1,367.4k sqm at the end of December 2023 whilst
our overall standing portfolio (commercial and other) decreased in
GLA by 1.4% to 1,386.0k sqm after considering the sale of
residential units in our Upground residential project.
Globalworth Combined
Standing Portfolio: 2023 Evolution
|
Total Standing YE 2022
|
1,405.6k
sqm
|
|
of which Standing Commercial YE
2022
|
1,383.2k
sqm
|
|
+ Mures Logistic Hub
/ logistics facility developed in Targu Mures (RO)
|
+18.3k
sqm
|
|
- Sale of Warta Tower
/ office property in Warsaw (PL)
|
-33.7k
sqm
|
|
+/- Net remeasurement
adjustments & other (RO & PL)
|
-0.4k
sqm
|
|
Standing Commercial YE 2023
|
1,367.4k
sqm
|
|
Upground residential
in Bucharest (RO)(*)
|
18.6k
sqm
|
|
Total Standing YE 2023
|
1,386.0k
sqm
|
* In 2023, units with 3.8k GLA
were sold in our Upground residential complex.
Standing Portfolio Value at
€2.7bn
The appraised value of our
combined standing portfolio as of 31 December 2023 was €2.7 billion
(more than 98% in commercial properties) which was 5.4% lower
compared to 31 December 2022. This overall decrease is mainly
attributable to the sale of Warta Tower (valued at €55.1m as of 31
December 2022) and negative revaluation differences which were
partly offset by the delivery of Targu Mures Logistic Hub in the
first half of the year.
The value of like-for-like
standing commercial properties decreased by 4.0% as of 31 December
2023 compared to the prior year, as the reduction in value by 4.6%
of our like-for-like standing office and mixed-use properties was
offset by the increase in value of our industrial
properties.
Globalworth Combined
Standing Portfolio: 2023 Evolution
|
GAV - 31 December 2022
|
€2,893.6m
|
|
Like for Like
Change(*)
|
-€110.7m
|
|
Acquisitions of
Properties
|
-
|
|
Delivery of
Properties
|
+€15.5m
|
|
Sales
|
-€61.9m
|
|
GAV - 31 December 2023
|
€2,736.4m
|
(*) Like-for-Like change
represents the changes in GAV of standing properties owned by the
Group at 31 December 2022 and 31 December 2023.
Like-for-Like Occupancy Slightly
Improving
Our standing commercial
portfolio's average occupancy as of 31 December 2023 was 88.3%
(88.7% including tenant options), representing a 2.6% increase over
the previous twelve months (85.6% as of 31 December 2022 / 85.9%
including tenant options).
This increase is mainly
attributable to the positive net take-up recorded in our standing
commercial portfolio, the sale of Warta Tower in July (vacant at
the date of sale) and the addition of Mures Logistic Hub which was
100% leased as of 31 December 2023.
On a like-for-like basis,
occupancy increased by 0.7% to 88.1% at the end of the year, as
effect of positive net take-up in our capital cities office
properties and lease-up of our industrial portfolio during the
year.
Across our standing portfolio, at
31 December 2023, we had 1,206.9k sqm of commercial GLA leased to
more than 600 tenants at an average WALL of 4.9 years, the majority
of which is let to national and multinational corporates that are
well-known within their respective markets.
|
Occupancy Evolution 2023 (GLA 'k sqm) - Commercial
Portfolio
|
|
|
Poland
|
Occupancy
Rate (%)
|
Romania
|
Occupancy
Rate (%)
|
Group
|
Occupancy
Rate (%)
|
|
Standing Available GLA - 31 Dec. 22
|
542.1
|
|
841.0
|
|
1,383.2
|
|
|
Sold GLA
|
(33.7)
|
|
-
|
|
(33.7)
|
|
|
New Built GLA
|
-
|
|
18.3
|
|
18.3
|
|
|
Remeasurements,
reclassifications
|
(0.0)
|
|
(0.4)
|
|
(0.4)
|
|
|
Standing Available GLA - 31 Dec. 23
|
508.5
|
|
858.9
|
|
1,367.4
|
|
|
Occupied Standing GLA - 31 Dec. 22
|
440.6
|
81.3%
|
743.7
|
88.4%
|
1,184.3
|
85.6%
|
|
Sale of Occupied GLA
|
(3.3)
|
|
-
|
|
(3.3)
|
|
|
Acquired/Developed Occupied
GLA
|
-
|
|
18.3
|
|
18.3
|
|
|
Expiries & Breaks
|
(57.7)
|
|
(58.6)
|
|
(116.3)
|
|
|
Renewals
|
58.5
|
|
97.3
|
|
155.8
|
|
|
New Take-up
|
23.9
|
|
99.7
|
|
123.6
|
|
|
Other Adj. (relocations,
remeasurements, etc)
|
0.1
|
|
0.3
|
|
0.5
|
|
|
Occupied Standing GLA - 31 Dec. 23
|
403.4
|
79.3%
|
803.5
|
93.5%
|
1,206.9
|
88.3%
|
Not included in our standing
portfolio metrics are: 45.6k sqm leased in our two mixed-use
properties which are currently under refurbishment/repositioning,
and 10.6k sqm in our industrial properties which are under
development in Romania (Bucharest and Craiova).
Standing Portfolio
Snapshot
As of 31 December 2023, our
combined standing portfolio comprised 41 investments (41 on 31
December 2022) with 71 buildings (71 on 31 December 2021) in Poland
and Romania. The appraised value of the portfolio was €2,736.4
million, of which 91.3% was green-certified.
Globalworth Combined
Portfolio: Key Metrics
|
Total Standing Properties
|
31 Dec.
2021
|
31 Dec.
2022
|
31 Dec.
2023
|
|
Number of Investments
|
39
|
41
|
41
|
|
Number of Assets
|
66
|
71
|
71
|
|
GLA (k sqm)
|
1,302.3
|
1,405.6
|
1,386.0
|
|
GAV (€ m)
|
2,866.3
|
2,893.6
|
2,736.4
|
|
Contracted Rent (€ m)
|
175.4
|
182.0
|
192.0
|
|
Of which Commercial Properties
|
31 Dec.
2021
|
31 Dec.
2022
|
31 Dec.
2023
|
|
Number of Investments
|
38
|
40
|
40
|
|
Number of Assets
|
65
|
70
|
70
|
|
GLA (k sqm)
|
1,272.0
|
1,383.2
|
1,367.4
|
|
GAV (€ m)
|
2,810.3
|
2,850.6
|
2,700.0
|
|
Occupancy (%)
|
88.5%
(88.7%1)
|
85.6%
(86.0%1)
|
88.3%
(88.7%1)
|
|
Contracted Rent (€ m)
|
174.5
|
181.3
|
191.5
|
|
Potential rent at 100% occupancy
(€ m)
|
201.2
|
211.4
|
217.7
|
|
WALL (years)
|
4.7
|
4.4
|
4.9
|
|
1) Including tenant options
|
CAPITAL MARKETS REVIEW
Equity Markets
Review
In 2023 we have seen the return of
high interest rates and an overall tightening of credit conditions
in a real estate world that was still recovering from the impact of
the 2020 pandemic. These evolutions have started to ease down in
the last several months as the inflation in European Union is
moderating and central banks are cautiously assessing the tempo for
interest cuts in their plans for the following period.
Direct real estate valuations have
shown small adjustments during the year impacted by the changes of
valuation variables used by professional appraisers. Equity
investors have reassessed their risk premiums and allocations
considering higher interest rates environment resulting in higher
discount rates and exit yields for office and other real estate
assets, thus leading to slightly lower valuation figures by the end
of the year.
Since 23 July 2021, Globalworth
has been controlled by Zakiono Enterprises Ltd, which is jointly
and equally owned by CPI Property Group S.A. ("CPI") and Aroundtown
SA ("Aroundtown"), currently holding 60.8% of the share capital of
the Group. In addition, Growthpoint Properties Ltd has 29.5% and
Oak Hill Advisors 5.3%; thus, the effective trading free-float by
the end of 2023 was limited to 4.4% of the share capital of
Globalworth.
As of 31 December 2023, it is
essential to place Globalworth's share price performance in the
context of the prevailing macroeconomic landscape. Throughout the
year, the FTSE EPRA Developed Europe and the FTSE EPRA Global
indices demonstrated a positive performance of +10.7% and +10.8%,
respectively, for the twelve months starting on 1 January
2023.
In contrast, despite several
favourable factors such as the high quality of its portfolio,
robust leasing activity, and the company's presence in high-growth,
low office stock markets, Globalworth's share price experienced a
notable decline of -30.5%. It is pertinent to acknowledge that this
decline can be attributed in part to the limited free float of the
Group.
Globalworth's share price in this
period has been trading consistently below its latest reported 31
December 2022 and 30 June 2023 EPRA NRV levels of €8.29 and €7.55 /
share, respectively, reaching its lowest closing price on 02
November at €2.05 per share and its highest price on 2 January at
€3.73 per share.
In the first part of the year, as
a measure of safeguarding cash resources of the company, the group
has offered a scrip dividend alternative to the shareholders,
meaning that they could elect to receive newly issued shares at a
pre-determined price instead of cash in connection to dividends
announced by the company. As a result, at each of the two dividend
payments during 2023, shareholders representing more than 98% of
the total issued share capital have elected to receive the Scrip
Dividend Alternative, emphasizing the strong shareholder support
for the company.
|
Globalworth Shareholding
|
|
|
|
31 Dec. 23
|
31 Dec.
22
|
|
CPI
|
Together: Zakiono
Enterprises
|
60.8%
|
60.6%
|
|
Aroundtown
|
|
Growthpoint Properties
|
|
29.5%
|
29.4%
|
|
Oak Hill Advisors
|
|
5.3%
|
5.3%
|
|
Other
|
|
4.7%
|
4.7%
|
|
Basic Data on Globalworth Shares
(Information as at 31 Dec
2023)
|
|
Number of Shares
|
252.2m
plus 0.8m shares held in treasury
|
|
Share Capital
|
€1.7bn
|
|
WKN / ISIN
|
GG
00B979FD04
|
|
Symbol
|
GWI
|
|
Free Float
|
7.7%
|
|
Exchange
|
London
AIM
|
|
|
|
|
Globalworth Share Performance
|
|
|
|
2023
|
2022
|
|
Market Capitalisation (€ million)
- 31 Dec
|
653
|
914
|
|
31-Dec Closing Price
(€)
|
2.59
|
4.13
|
|
52-week high (€)
|
3.73
|
6.68
|
|
52-week low (€)
|
2.05
|
3.90
|
|
Dividend paid per share
|
0.29
|
0.27
|
|
Globalworth FY-2023 Share Price Performance
|
|
|
Bonds
Update
We finance ourselves through a
combination of equity and debt, and we compete with many other real
estate companies for investor trust to support our
initiatives.
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 €1.5 billion of bonds. Out of this amount the Group has raised
€950 million issued in March 2018 and July 2020 (inaugural green
bond) and expiring in 2025 and 2026.
At the beginning of 2023, our two
Eurobonds outstanding in total of €950 million had a weighted
average maturity of 2.8 years. In the first six months of 2023, the
bonds performance has been impacted by rising interest rates and
investor risk aversion leading our 18/25 and 20/26 bonds to be
traded, by the end of the period, at 14.9% and 13.2% yield to
maturity. Considering the context and looking to proactively manage
the Company's debt maturity profile, we have completed in June a
cash tender offer for our outstanding notes due 2025 and 2026 and,
as a result, we have purchased €100.0 million of the 2025
notes.
As a result, at 31 December 2023,
our two Eurobonds outstanding amounted to €850 million having a
weighted average cost of 2.98%. Considering tightening credit
market conditions and looking to manage in advance our debt
maturities we have accessed, during the year, several secured
financings both in Poland and Romania with reputable credit
institutions from the CEE.
Globalworth is rated by two of the
three major agencies, with Fitch maintaining their investment
credit rating following their review of the Group and changing the
outlook to negative while S&P downgraded the group's corporate
credit rating to BB+ with a negative outlook considering the
volatile and challenging market environment.
In 2023, 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
86.1% and 78.6% respectively, during the period. However, as the
inflation cooled down and with interest rate cuts on the horizon,
by the end of the year our yield to maturity has adapted, closing
at 11.0% and 11.1% on 31 December 2023.
|
Rating
|
|
|
|
|
S&P
|
Fitch
|
|
|
Rating
|
BB+
|
BBB-
|
|
|
Outlook
|
Negative
(from
Stable)
|
Negative
(from
Stable)
|
|
|
|
|
|
|
|
|
Basic Data on the Globalworth Bonds
|
|
|
|
|
GWI bond
18/25
|
GWI bond
20/26
|
|
|
ISIN
|
XS1799975922
|
XS2208868914
|
|
|
SEDOL
|
BD9MPV
|
-
|
|
|
Segment
|
Euronext
Dublin, BVB
|
Euronext
Dublin
|
|
|
Minimum investment
amount
|
€100,000
and €1,000 thereafter
|
€100,000
and €1,000 thereafter
|
|
|
Coupon
|
3.000%
|
2.950%
|
|
|
Issuance volume
|
€550
million
|
€400
million
|
|
|
Outstanding 31 Dec.
2023
|
€450
million
|
€400
million
|
|
|
Maturity
|
29 March
2025
|
29 July
2026
|
|
|
|
|
|
|
|
|
Performance of the Globalworth Bonds
|
|
|
|
2023
|
2022
|
|
GWI bond 18/25
|
|
|
|
31 December closing
price
|
91.2
|
87.7
|
|
Yield to maturity at 31
December
|
10.992%
|
9.317%
|
|
GWI bond 20/26
|
|
|
|
31 December closing
price
|
82.6
|
79.4
|
|
Yield to maturity at 31
December
|
11.080%
|
10.085%
|
|
|
|
|
|
Globalworth FY-2023 Eurobond Yield
Performance
|
|
|
ENVIRONMENTAL
REVIEW
Our
"Places"
Consistent with our commitment to
energy-efficient properties, during 2023 we certified or
recertified 27 of the properties in our portfolio with BREEAM Very
Good or higher certifications.
In Romania, we were able to
improve the level of certification, from BREEAM Very Good to LEED
Gold, for Tower Center International, our iconic office building
located in Bucharest CBD, while certifying for the first time five
of our industrial / light logistic properties in Bucharest,
Constanta, Arad and Oradea.
In total, 22 properties had their
certifications updated during the year with 11 in Romania and 11 in
Poland.
Overall, as of 31 December 2023,
our combined standing portfolio comprised 59 green-certified
properties, accounting for 92.5% of our standing commercial
portfolio by value. BREEAM accredited properties account for 82.0%
of our green-certified standing portfolio by value, with the
remainder of properties being holders of other certifications (LEED
Platinum or LEED Gold).
We remain committed to our green
goals, aiming for 100% of our commercial portfolio to be green
accredited. We are currently in the process of certifying or
recertifying 12 other properties in our portfolio, principally
targeting BREEAM certifications.
In addition, in 2023, we
maintained our policy of securing 100% of the energy used in our
Polish properties and in our Romanian office portfolio from
renewable sources. The switch to green energy is part of our
broader preparatory actions for nZEB, which also involves other
steps, including introducing intelligent metering and implementing
FORGE for monitoring.
In 2023, we successfully certified
or recertified all our office and mixed-use buildings in Poland and
Romania with WELL Health-Safety Rating, which is an evidence-based,
third-party verified rating for all new and existing types of
building and space, focusing on operational policies, maintenance
protocols, stakeholder engagement and emergency plans to address a
post-COVID-19 environment now and into the future.
As a result, by the end of 2023,
all our standing office and mixed-use properties had a WELL
Health-Safety Rating, with a total value of €2.4 billion, standing
as further evidence of the quality of our portfolio.
In September 2022, Globalworth
obtained the European certification mark "access4you" for 10 of the
office buildings in Bucharest. These are the first buildings to
obtain such a certification in Romania.
As part of our ambitious ESG
strategy, we are committed to contribute towards the global efforts
to limit global temperature rise by reducing our direct and
indirect greenhouse emissions in our operations and value chain. As
such, in 2022, we performed a detailed review of how we can improve
our footprint and we set our environmental target to reduce GHG
emissions intensity by +40% by 2030 versus our baseline 2019 levels
(for Scope 1 and 2) and we committed to measuring and reducing
Scope 3 too. In setting this target, we used a science-based
approach to align with a 1.5oC trajectory.
These targets were approved and
validated by the globally recognised Science Based Targets
initiative (SBTi), and will form key
stepping blocks to enable Globalworth to deliver on its long-term
strategy and ambition to become the first
choice in sustainable real estate.
Social
Review
"People": Our Team
Our most important asset is our
team of dedicated professionals, who have been selected by
employing the best available candidate for each and every position,
regardless of gender, ethnic group This team has been offering
premium services to our partners, efficiently managing our
high-quality portfolio, facilitating growth and creating value for
our shareholders and stakeholders.
One of our key objectives is for
our team to meet the highest standards, and to achieve this
(through our Human Resources teams in Romania and Poland), we
organise a series of in-house and third-party led training
programs, designed to improve our team's skillset, knowledge,
operational experience, and interaction with our
stakeholders.
Our approach starts with
transparent recruiting, an orientation program for new employees,
continuous staff support and consulting, training, regular feedback
sessions and annual performance appraisals.
All our team members also receive
a wide array of benefits that include, inter alia, private health
insurance, and experience and sport activities vouchers.
At the end of 2023, our team
comprised 269 professionals, most of which sit in our two main
offices in Warsaw and Bucharest. Team members are also located in
regional cities in Poland and Romania, Cyprus and the
UK.
"People": Our Communities
We view our role as increasingly responsible towards
the people who work at and visit our properties and the broader
community of which we consider ourselves to be an integral
part.
Our significant footprint in Poland and Romania
creates this responsibility for us. Our communities include more
than 200k daily workers in / visitors to our properties under
normal conditions, with the lives of many more people in the
broader community also being touched.
In 2023, we maintained our strong focus on giving
back to our community and, together with the Globalworth
Foundation, we contributed over €180k in more than 13 initiatives
in Romania and Poland, having over 29.000 beneficiaries.
Rashid Mukhtar
Group Chief Financial
Officer
1. Introduction and
Highlights
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
€240.4m
0.5% on 2022
|
NOI
€147.0m
5.2% on 2022
|
|
IFRS Earnings per share
(23) cents
(8) cents in 2022
|
Combined Portfolio Value
(OMV)1
€3.0bn
(5.3)% on 31 Dec. 2022
|
|
EPRA NRV
€1,750.6m
(4.6)% on 31 Dec. 2022
|
EPRA NRV per share
€6.94
(16.2)% on 31 Dec. 2022
|
|
Adjusted normalised
EBITDA
€131.4m
4.3% on 2022
|
EPRA Earnings per share
26 cents
(19)% on 2022
|
|
LTV
42.2%
42.7% at 31 Dec. 2022
|
Dividends paid in 2023 per
share
29 cents
7.4% on 2022
|
2. Revenues and
Profitability
Our primary income comes from rent
paid by our partners who lease space in our properties. We also
generate additional income from service charges. These charges
cover the costs of maintaining common areas and providing shared
services within our properties. However, any income from service
charges is offset by the actual costs we incur in providing those
services.
Total Revenue & Net Operating Income
|
|
2023
|
2022
|
|
Year ended December 31,
|
€'m
|
€'m
|
|
Contracted rent
|
191.9
|
180.9
|
|
Adjustment for lease
incentives
|
(31.5)
|
(31.1)
|
|
Rental income
|
160.4
|
149.8
|
|
Service charge income
|
75.0
|
86.8
|
|
Other income
|
5.0
|
2.5
|
|
Operating Expenses
|
(93.4)
|
(99.6)
|
|
Net
Operating expense
|
(13.4)
|
(10.1)
|
|
Net
Operating Income (NOI)
|
147.0
|
139.7
|
Globalworth generated total
consolidated revenue of €240.4 million during 2023, reflecting a
modest 0.5% increase over 2022 revenue of €239.3
million.
Our core revenue stream, gross
rental income, grew by a healthy 6.1% to €191.9 million in 2023,
compared to the previous year. This increase is primarily due to a
7% rise in net rental income (10% increase in Romania and 2%
increase in Poland), which climbed to €160.4 million in 2023 from
€149.8 million in 2022.
|
|
2023
|
2022
|
|
Year ended December 31,
|
€'m
|
€'m
|
|
Office
|
132.7
|
126.9
|
|
Bucharest
|
67.5
|
61.4
|
|
Regional
|
39.0
|
41.1
|
|
Warsaw
|
26.2
|
24.4
|
|
Mixed-Use
|
12.4
|
10.4
|
|
Industrial
|
13.9
|
11.1
|
|
Other
|
1.3
|
1.4
|
|
Rental Income by Segment
|
160.4
|
149.8
|
Rental income from our standing
properties on like for like basis grew by a solid 5.8% in 2023,
reaching €153.5 million. This represents an increase of €7.8
million year-over-year. Romania led the growth with rental income
up 11.6% to €82.5 million, while Poland saw a modest increase of
0.8%, bringing rental income to €71.0 million.
Rental Income received during the
year from properties delivered or under refurbishment in 2022 and
2023 was €6.9 million. This income was received from Supersam and
Renoma (refurbished) and two industrial facilities which were
delivered in 2023.
The Service Charge Income for 2023
was €75.0 million, 14% lower compared to €86.8 million in 2022. Net
service charge margin decreased with €3.3 million, due to void
vacancy costs and increase in service charge rate per square metre
across our standing portfolio.
In addition, we received €5.0
million in 2023 (2022: €2.6 million) from other services provided
to tenants and partners which included fit-out services, marketing
fees and other.
|
Year ended December 31,
|
2023
|
2022
|
|
Revenue Share per Country
|
€'m
|
€'m
|
|
Poland
|
52.1%
|
51.0%
|
|
Romania
|
47.9%
|
49.0%
|
Our Net Operating Income ("NOI"),
for the full year 2023 reached €147.0 million, this reflects a €7.3
million increase compared to 2022, after accounting for property
and fitout costs, marketing and other income that contributed with
€2.3 million more compared to prior year. Overall operating
expenses in our portfolio decreased by €6.1 million to €93.4
million with 84.5% were reinvoiced to tenants. The remaining
portion typically relates to vacant spaces that are currently
available for lease.
|
Year ended December 31,
|
YoY change
|
|
Net
Operating Income Build Up
|
€'m
|
|
NOI
- 2022
|
139.7
|
|
NOI Change - Poland
|
(1.2)
|
|
NOI Change - Romania
|
8.5
|
|
NOI
- 2023
|
147.0
|
|
Year ended December 31,
|
YoY change
|
|
Net
Operating Income Build Up
|
€'m
|
|
NOI
- 2021
|
144.3
|
|
NOI Change - Poland
|
(8.6)
|
|
NOI Change - Romania
|
4.0
|
|
NOI
- 2022
|
139.7
|
|
Year ended December 31,
|
2023
|
2022
|
|
Net
Operating Income Share per Country
|
€'m
|
€'m
|
|
Poland
|
53.0%
|
50.3%
|
|
Romania
|
47.0%
|
49.7%
|
Adjusted Normalised EBITDA
To assess the ongoing performance
of our core operations, we focus on a key metric called Adjusted
Normalized EBITDA. This measure excludes non-recurring or non-cash
items that wouldn't reflect our typical business activity, as
revaluations, gains or losses from asset sales and unusual
expenses.
Our adjusted normalised EBITDA was
€131.4 million (excluding share of minority interests, EBITDA was
€131.1 million), higher by 4.3% compared to 2022 (€125.9 million),
the improvement was driven primarily by higher NOI. However, a
slight rise in administrative and other expenses partially offset
this gain.
|
|
2023
|
2022
|
|
Year ended December 31,
|
€'m
|
€'m
|
|
(Loss)/Profit before net financing cost
|
(29.7)
|
35.4
|
|
Plus: Fair value loss on investment
property
|
164.9
|
89.5
|
|
Plus: Depreciation on other
long-term assets
|
0.6
|
0.7
|
|
Plus: Other expenses
|
3.4
|
2.0
|
|
Plus: Other income
|
(2.0)
|
(0.5)
|
|
Plus: Foreign exchange
(gain)/loss
|
1.5
|
(0.9)
|
|
Plus: Loss/(Gain) from fair
valuation of financial instrument
|
1.4
|
(0.2)
|
|
Plus: Profit on disposal of
investment property and subsidiary
|
(9.1)
|
-
|
|
Plus: Non-recurring
expenses
|
0.4
|
-
|
|
Adjusted Normalised EBITDA
|
131.4
|
126.0
|
|
Share of minority
interest
|
(0.3)
|
(0.1)
|
|
Adjusted Normalised EBITDA (excluding minority
share)
|
131.1
|
125.9
|
Property Valuation
Recent economic and geopolitical
headwinds have put downward pressure on property values in our
markets over the past year. This, combined with factors impacting
our operating performance, has resulted in a €164.9 million
revaluation decrease in our consolidated property portfolio as of
December 31, 2023. The revaluation fully reflects current market
conditions and portfolio operations.
Properties located in Poland
accounted for 56.4% of this net decrease, while those in Romania
comprised the remaining 43.6%. It's important to note that there
was a positive €3.4 million value increase in our industrial
portfolio, partially offsetting these losses.
|
Year ended December 31,
|
2023
|
2022
|
|
|
€'m
|
€'m
|
|
Fair value loss on investment
property
|
164.9
|
89.5
|
|
|
|
|
Finance Costs and Income
|
Year ended December 31,
|
2023
|
2022
|
|
Finance Cost & Income
|
€'m
|
€'m
|
|
Finance Cost
|
57.1
|
52.5
|
|
Gain from bond buy-back
|
15.8
|
-
|
|
Income from bank deposits
|
3.8
|
0.7
|
|
Other finance income
|
3.6
|
2.0
|
|
Net
Finance Cost
|
33.9
|
49.8
|
Our financing activity mainly
include interest on bonds, bank loans and other under unsecured
financing sources. In 2023, the total finance cost increased by
€4.6 million to €57.1 million compared to the prior year. The rise
is due to new secured facilities draw down in 2023, €6.8 million
expense recorded, and increase in Euribor base rates particularly
in the latter half of 2023 which also existing secured facilities
(up by €2.0 million as compared to 2022). Also, we recorded in 2023
expense for the entire year on unsecured facilities, up with €3.0
million as compared to 2022 since those were draw down in June
2022.
Interest in secured and unsecured
facilities increased with €11.9 million, however, this was
partially offset by a decrease in other areas:
-
Bond buyback, we repurchased €100 million of our
Eurobond 18/25 bond and repayment of Eurobond 17/22 in prior year,
resulting in €5.7 million less interest expense
-
Reduced debt amortisation costs by €0.6 million
and,
-
Other finance costs decreased slightly up by €1.0
million
The bond buyback, at €83.2 million
(nominal value €100 million) also generated some positive cash flow
resulting in €15.8 million in finance income from this transaction
after adjusting for the associated unamortised debt
costs.
We also received income from other
sources:
-
Joint Venture Loans: Interest earned on loans
provided to our joint ventures increased by €0.6 million to €2.1
million.
-
Cash Deposits: Higher cash balances throughout
the year led to €3.1 million more interest income on deposits,
reaching €3.8 million.
-
Other Financial Income: This category saw a rise
from €0.5 million in 2022 to €1.5 million in 2023 mainly from
charge on consideration receivable on Warta sale that carries an
interest of 13%.
Overall, net finance costs for the
full 2023 came in at €33.9 million, reflecting a 31.9% rise over
2022.
Share in Joint Venture
Our joint ventures in Romania
focus on developing and managing industrial parks. While our share
of profit from these ventures decreased to €2.1 million in 2023
compared to €3.2 million in 2022, this is primarily due to the
effect from a property revaluation.
However, the ventures' underlying
business performance is strong. This is reflected in a significant
55% increase in EBITDA (earnings before interest, taxes,
depreciation, and amortization) by €1.2 million, on a like for like
basis, from €2.4 million in 2022 to €3.6 million, excluding €0.2
million EBITDA in 2023 of Targu Mures joint venture property which
was acquired in Q4 2022. This growth is a result of our continued
investment in the facilities and successful leasing activity as we
fill available space. In other words, even though there was a
decline in profit sharing due to a non-cash accounting adjustment,
the core business of the joint ventures is performing
well.
Income tax expense
During 2023, our current income
tax expense on a like for like basis increased with €1.8 million,
following the increase in fiscal profits and withholding tax has
been paid in amount of €3.9 million. Moreover, following the sale
of Warta Tower, we recorded a capital gain tax of €3.3 million
associated with this transaction and there is €0.7 million one off
tax for another entity.
IFRS and EPRA Earnings
We measure our performance using
two key metrics: IFRS earnings and EPRA earnings. IFRS Earnings
being a standard accounting measure that reflects our overall
profit or loss. However, it can be impacted by non-cash or one-off
costs like property revaluations, gain on bond buy backs and
gain/loss on property disposals. EPRA Earnings adjust for such
non-recurring and non-cash items and reflect a relevant measure for
real estate companies like ours providing a clearer picture of our
ongoing operational performance.
Our 2023 IFRS earnings were
negative €53.8 million (or -23 cents per share), reflecting a
significant drop from 2022's negative €16.1 million (-8 cents per
share). This decline is primarily due to a much larger revaluation
loss recorded in 2023 (€164.9 million vs. €89.5 million in 2022).
Revaluations adjust the carrying value of our properties based on
market changes, but they don't affect actual cash flow.
However, when we adjust for
revaluation losses, related deferred tax and other non-recurring
costs, our underlying profitability improved in 2023. Adjusted IFRS
profit after tax reached €82.7 million, an increase of €9.8 million
compared to 2022.
Our EPRA earnings for 2023 were
€61.3 million (26 cents per share), down 14.4% from the previous
year. This decrease is due to a combination of factors, including
increased administrative of €2.2million and other net costs of €0.9
million, loss from foreign exchange fluctuations of €2.4 million,
and higher income of €8.3 million and deferred tax expenses not
related to investment property valuation of €4.1
million.
|
|
Total
|
Per Share
|
|
IFRS Earnings Vs EPRA
Earnings
|
€'m
|
cents
|
|
IFRS Earnings
|
(54.2)
|
(23)
|
|
FV loss on properties
|
164.9
|
70
|
|
Profit on disposal of investment
properties and related tax
|
(5.5)
|
(3)
|
|
FV gain on financial
instrument
|
(14.4)
|
(6)
|
|
Deferred Tax on investment
property
|
(28.8)
|
(12)
|
|
JVs & Others
|
(0.7)
|
0
|
|
EPRA Earnings
|
61.3
|
26
|
3. Assets
|
|
|
31-Dec-23
|
31-Dec-22
|
|
Assets
|
Note to
the financial statements
|
€'m
|
€'m
|
|
NCA - Investment property
|
3
|
2,843.1
|
2,945.5
|
|
CA - Investment property held for
sale
|
|
50.4
|
126.0
|
|
Total Investment Property
|
|
2,893.5
|
3,071.5
|
|
NCA - Investments in
joint-ventures
|
21
|
70.1
|
68.0
|
|
Cash and cash equivalents
|
14
|
396.3
|
163.8
|
|
Other Assets
|
|
85.3
|
65.7
|
|
Total Assets
|
|
3,445.2
|
3,368.9
|
Our Assets: Primarily Real
Estate
Real estate makes up the bulk of
our assets, with investment properties and cash equivalents
exceeding 95% of our total value.
Investment Property Breakdown (as of December
31st): 2023: €3.0 billion (compared
to €3.1 billion in 2022), this includes both freehold properties
(land and buildings we own outright) and properties held for
sale.
We actively manage our portfolio
through sales and reinvestment in development projects.
2023 Property Transactions:
We successfully sold Warta Tower, a property held for sale, for
€63.4 million, exceeding its book value of €53.3 million.
Additionally, we sold a land plot and residential units for a
combined total of €13.7 million (€7.0 million and €6.8 million
respectively).
Investing in the Future:
Throughout 2023, we invested a significant amount (€50.8 million)
in capital expenditures (CAPEX) for properties under development
and improvements to existing properties, in Poland €30.8 million
and €20.0 million in Romania.
|
Capital expenditure
|
€'m
|
|
HVAC
|
5.2
|
|
Automations
|
5.7
|
|
Electrical & Green
Energy
|
0.6
|
|
Health & Safety
|
2.1
|
|
Operational/ Efficiency
|
6.3
|
|
Common & outdoor
areas
|
13.1
|
|
Tenant improvements
|
17.8
|
|
|
50.8
|
|
Country
|
Segment
|
|
€'m
|
|
Poland
|
Mixed - used (incl.
refurbishment)
|
|
9.1
|
|
|
Regional
|
|
13.7
|
|
|
Warsaw
|
|
8.0
|
|
Total Poland
|
|
|
30.8
|
|
Romania
|
Office
|
|
14.9
|
|
|
Residential
|
|
0.2
|
|
|
Industrial developments
|
|
4.9
|
|
Total Romania
|
|
|
20.0
|
|
|
|
|
50.8
|
Market Impact (2023): Due to
market conditions and lower yields, we experienced a net fair value
loss on our freehold properties of €164.1 million. Additionally,
there was a minor €0.8 million loss on leasehold
properties.
|
|
|
|
Romania
|
Poland
|
Total
|
|
OMV Dec 22
|
|
|
1,572.3
|
1,584.5
|
3,156.8
|
|
JV properties - Dec 22
|
|
119.0
|
-
|
119.0
|
|
Investment Property - Dec
22
|
1,453.3
|
1,584.5
|
3,037.8
|
|
CAPEX
Standing1
|
|
|
20.2
|
25.1
|
45.3
|
|
CAPEX Under
development1
|
|
2.6
|
10.7
|
13.3
|
|
Land acquisition
|
|
|
0.4
|
-
|
0.4
|
|
Fair value loss -
standing
|
|
(70.8)
|
(89.7)
|
(160.5)
|
|
Fair value gain/loss -
dev/refurb.
|
|
(1.1)
|
(2.5)
|
(3.6)
|
|
Apartment Disposals
|
|
(6.8)
|
-
|
(6.8)
|
|
Land Disposal
|
|
|
(7.0)
|
-
|
(7.0)
|
|
Investment Property
disposal
|
|
-
|
(53.3)
|
(53.3)
|
|
Investment Property - Dec
23
|
|
1,390.9
|
1,474.8
|
2,865.7
|
|
JV properties - Dec 23
|
|
129.0
|
-
|
129.0
|
|
OMV Dec 23
|
|
|
1,519.9
|
1,474.8
|
2,994.7
|
1 Including net lease
incentive movement, please refer to note 3
of the condensed consolidated financial
statements for calculation.
We ended the year with a
significant increase in our cash and cash equivalents, reaching
€396.3 million on December 31, 2023, compared to €163.8 million at
the end of 2022. This positive change reflects strong cash flow
generation from our core operations together with successfully
additional secured debts raised in the second half of 2023. Our
cash reserves grew substantially in 2023, demonstrating the
financial strength of our core business and our ability to secure
additional liquidity to address mid-term debt
maturities.
Our investment in joint ventures
totalled €70.1 million at year-ended 31 December 2023, from €68.0
million, with €1.7 million invested during the year and €2.1
million contributed from the share of profit for the year. In terms
of financing, we provided €10.8 million to support properties under
development and recorded €2.1 million interest income from loans
provided. After successfully drawing bank facilities, the joint
ventures repaid to the Group €14.5 million loans and
interest.
Other assets mainly include trade
and other receivables of €23.1 million, equity investments of €7.8
million and consideration receivables from sale of Warta Tower of
€21.2 million with maturity date Q4 2025.
Total assets reached €3,445.2
million at the end of 2023, reflecting a modest increase of 2.3%
compared to €3,368.9 million at the end of 2022.
4. LIABILITIES
|
|
|
31-Dec-23
|
31-Dec-22
|
|
Liabilities
|
Note to
the financial statements
|
€'m
|
€'m
|
|
NCL - Interest-bearing loans and
borrowings
|
14
|
1,574.8
|
1,433.6
|
|
CL - Interest-bearing loans and
borrowings
|
14
|
28.6
|
21.6
|
|
Total Interest-bearing loans and borrowings
|
|
1,603.4
|
1,455.2
|
|
Deferred Tax Liabilities (including
liabilities associated with the assets held for sale)
|
11.1
|
139.3
|
154.9
|
|
Other Current Liabilities
|
|
72.7
|
74.6
|
|
Other Non-Current
Liabilities
|
|
27.2
|
26.8
|
|
Total Liabilities
|
|
1,842.6
|
1,711.5
|
Total Liabilities for the Group
increased by 8% to €1,842.6 million at year-end 2023, compared to
€1,711.5 million at the end of 2022. This rise is mainly due to an
increase in Interest-bearing loans and borrowings, which now make
up 87% of the Group's liabilities (up from 85% in 2022). However, a
decrease in Deferred Tax Liabilities helped offset this growth.
These liabilities went down by €15.5 million, primarily due to a
loss on the revaluation of investment properties.
Other Current and Non-Current
Liabilities, such as tenant deposits, lease obligations, and other
debts, account for a smaller portion (5.4%) of the total. These
liabilities increased slightly by €1.4 million during the
year.
5. Interest-bearing Loans and
Borrowings
Overview and Select Initiatives
The total consolidated debt for
the Group on 31 December 2023 was €1,603.4 million (31 December
2022: €1,455.2 million) comprising of long-term secured debt and
medium-term unsecured Eurobond, denominated entirely in
Euro.
In 2023, we bought back €100m
nominal value of our €550 million Eurobond by paying a cash
consideration of €83.2m thus reducing the debt maturing March
2025.
In addition, during 2023
we:
·
paid the annual coupon of the 2025
Eurobond,
·
drew the €110 million ten-year term secured debt
facility which was signed with Erste Group Bank AG and Banca
Comerciala Romana SA in December 2022 for refinancing of the
Company's logistics / light industrial portfolio in Romania. Out of
the €110 million, €96.5 million was made available to the Group and
the difference to one of the Group's joint ventures
companies,
·
repaid the €60 million outstanding balance on the
RCF,
·
drew the €145 million seven-year term secured
debt facility which was signed with Aareal Bank AG secured with 2
properties in Warsaw,
·
drew the €55 million ten-year term secured
facility (€1 million available for further drawdown until June
2024),
·
drew the €45m 7-year term secured debt facility
from BCR (out of which €33m is refinancing of existing debt
maturing in Dec 24),
·
extended the €11 million bank facility held with
Unicredit Bank until March 2031.
It is important to note that there
is no debt maturing within 12 months other than normal amortisation
of principal.
Interest-bearing Loans and Borrowings
Profile
Most of the debt remained in
unsecured facilities, which accounted for 58.4% (31 December 2022:
75.4%) of the total debt outstanding. Unsecured facilities included
the two Eurobonds maturing in March 2025 and July 2026 accounting
for €850.0 million and the €85.0 million facility from the IFC. The
remainder debt (41.6%) is secured with real estate mortgages,
pledges on shares, receivables, and loan subordination agreements
in favour of the financing banks.
The weighted average interest rate
cost for the Group increased marginally by end of the year due to
additional secured facilities from Q4 2023. However, as of 31
December 2023 majority or our debt (76.1%) carry fixed interest
rate and 5.6% of debt facilities are hedged through interest rates
caps and swaps, therefore the weighted average cost of debt on 31
December 2023 reached to 3.70% (from 2.89% in 2022).
The high level of fixed interest
rate debt ensures 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 on 31 December 2023, an increase
of 100 basis points in the Euribor would result in a higher
interest expense of €2.9 million per annum.
The average maturity period of our
debt remained above 3.0 years reaching 3.7 years (2022: 3.3
years)
Interest charges for secured loans
is based either on three months or six months Euribor plus a
margin. As of 31 December 2023, 18.3% of the outstanding balance is
exposed to changes in Euribor (compared to 19.3% at 31 December
2022).
|
|
30 Jun 21
|
31 Dec 21
|
30 Jun 22
|
31 Dec 22
|
30 Jun 23
|
31 Dec 23
|
|
Weighted average interest rate
|
2.73%
|
2.73%
|
2.55%
|
2.89%
|
3.29%
|
3.70%
|
|
Weighted average duration to maturity
|
4.0
|
3.5
|
3.8
|
3.3
|
3.4
|
3.7
|
During 2023, we repaid €5.5
million in bank debt principal amounts, we bought back €100m
nominal value of our €550 million bond by paying a cash
consideration of €83.2m, and €45.7 million of accrued interest on
the Group's outstanding debt facilities, including €37.6 million in
relation to the full annual coupon for the Eurobonds of the
Company. Maturity Profile (by year) of the Principal Loan
Outstanding at 31 December 2023 (€ million)
|
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030
|
2031
|
2032
|
2033
|
2034
|
Total
|
|
Bonds
|
|
450.0
|
400.0
|
|
|
|
|
|
|
|
|
850.0
|
|
Unsecured
|
|
|
|
|
85.0
|
|
|
|
|
|
|
85.0
|
|
Bank Loans
|
10.3
|
111.5
|
12.0
|
75.0
|
13.1
|
148.3
|
190.1
|
9.0
|
65.8
|
4.9
|
25.2
|
665.3
|
|
Minority Shareholder Debt
|
|
|
|
|
|
0.6
|
|
|
|
|
|
0.6
|
|
Total
|
10.3
|
561.5
|
412.0
|
75.0
|
98.1
|
148.8
|
190.1
|
9.0
|
65.8
|
4.9
|
25.2
|
1,600.8
|
Debt Covenants
As of 31 December 2023, the Group
was 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 31 December 2023 being the following:
Unsecured Eurobonds, RCF and IFC
loan
·
the Consolidated Coverage Ratio, with minimum
value of 200% (150% applicable for the RCF 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 RCF 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 45% to 83%.
There have been no breaches of the
aforementioned covenants occurring during the period ended 31
December 2023.
6. Liquidity & Loan to value ratio
(LTV")
Managing our liquidity has been a
key area of focus for the Group, especially since the COVID-19
pandemic outbreak, and medium-term debt maturities. This careful
management has carried on throughout this period of higher
volatility.
As of 31 December, 2023, the Group
had cash and cash equivalents of €396.3.million (31 December 2021:
€163.7 million), of which €20 million was restricted due to various
conditions imposed by the financing Banks.
In addition, the Group had undrawn
borrowing facilities of €272 million, out of which €50 million in
available until December 2025. The RCF of €215 million is no longer
available after March 2024.
The Group's loan-to-value ratio on
31 December 2023 was 42.2%, compared to 42.7% on 31 December 2022,
mainly due to the impact of negative revaluations in our standing
properties, and positive effect from bond buy back at a discounted
price.
7. EPRA NRV
EPRA NRV is a metric that reflects
the estimated long-term value of a company's net assets, assuming
the company keeps its properties and doesn't sell them.
The EPRA Net Reinstatement Value
("NRV") is a metric that reflects the estimated long-term value of
a company's net assets, assuming the company keeps its properties
and doesn't sell them.
EPRA NRV reached €1,750.6 million
at year ended 2023. This represents a 4.6% decrease to €1,835.5
million at the end of 2022. EPRA NRV per share also reflects this
decline, going down to €6.94 per share at the end of 2023 (compared
to €8.29 per share at the end of 2022). The main factor behind the
decrease in EPRA NRV was primarily due to negative revaluations
that occurred throughout 2023 of €164.9 million offset by EPRA
Earnings and one off gain on Eurobonds.
|
|
€m
|
€
|
|
EPRA NRV Dec-22
|
1,835.5
|
8.29
|
|
EPRA Earnings
|
61.3
|
0.26
|
|
Bond gain
|
15.8
|
0.06
|
|
FV loss on Property
portfolio
|
(164.9)
|
(0.70)
|
|
Scrip shares
|
(1.0)
|
(0.98)
|
|
Others
|
3.9
|
0.01
|
|
EPRA NRV Dec-23
|
1,750.6
|
6.94
|
8. Cash Flows
|
|
2023
|
2022
|
|
Year ended December 31,
|
€'m
|
€'m
|
|
Operating Profit before Changes in Working
Capital
|
132.7
|
126.4
|
|
Changes in Working Capital
|
(45.4)
|
(63.3)
|
|
Cash Flows from Operating
Activities
|
87.3
|
63.1
|
|
Cash Flows used in Investing
Activities
|
(11.0)
|
(73.8)
|
|
Cash Flows from/(used) in Financing
Activities
|
153.8
|
(243.9)
|
|
Net
Increase in Cash and Cash Equivalents
|
235.0
|
(254.6)
|
|
Effect of foreign exchange fluctuations
|
2.5
|
0.0
|
|
Cash and Cash Equivalents at Year End
|
396.3
|
163.8
|
Note: The total in the table
do not add up due to roundings
Our cash flow from operations
before working capital changes increased by 5% to €132.7 million in
2023, mirroring the rise in Net Operating Income (NOI) for the
year.
Overall, cash inflow from
operations reached €87.3 million in 2023, a significant €24.2
million improvement compared to 2022. This growth is primarily due
to increase in NOI of €7.3 million, €6.3 million from improving
collection of outstanding receivables, €3.9 million increase in
advances received for rent and service charges, €3.1 million
interest received on cash deposits and €3.6 million from other
working capital movements.
In 2023, our net cash used in
investments was €11.0 million. This includes €62.5 million spent on
capital expenditures for our properties, netted off by the €50.4
million proceeds from selling investment properties and €1.4
million from net investments and loans provided to joint
ventures.
Cash generated from financing
activities significantly improved in 2023, reaching €153.8 million
(compared to a net cash outflow of €243.9 million in 2022). This
positive change represents our focus to enhance the liquidity by
successfully drawing down funds from new credit facilities secured
in 2023 (€344.8 million). Also, we repaid part of existing debts,
including €83.2 million on the 18/25 Eurobond, €60 million on the
RCF facility, and €39.5 million in amortizations and principal on
other loans. Other financing activities in 2023, such as interim
dividend payments, lease liabilities and loan arrangement fees,
totalled €8.3 million.
9. Dividends
|
|
|
|
|
Year ended December 31,
|
2023
|
2022
|
|
|
€ m
|
€
m
|
|
Dividends declared
|
66.3
|
59.8
|
|
Share capital increase - scrip shares
|
(65.2)
|
-
|
|
Dividends paid
|
1.1
|
59.8
|
|
|
|
|
|
Dividends per Share - Cents
|
29
|
27
|
Globalworth distributes
bi-annually at least 90% of its EPRA Earning to its shareholders.
During 2023, the distributions included the option to a scrip
dividend alternative so that qualifying shareholders can elect to
receive new ordinary shares in the Company instead of cash in
respect of all or part of their entitlement to the Dividend.
Qualifying shareholders who validly elect to receive the Scrip
Dividend Alternative become entitled to a number of Scrip Dividend
Shares in respect of their entitlement to the Dividend that is
based on a price per Scrip Dividend Share calculated on the basis
of a discount of 20% to the average of the middle market quotations
for the Company's shares on the five consecutive dealing days from
and including the Ex-Dividend Date, the "Reference
Price".
The dividend declared for the
six-month period ended 31 December 2022 was 15 cents per share and
14 cents per share for the six-month period ended 30 June
2023.
Following the election of scrip
dividend 14.3 million new shares were issued in Aprill and 16.3
million shares were issued in October 2023, while the Group paid in
total €1.1 million as cash dividend, resulting in 98.4%
shareholders opted to reinvest in the Company.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE
YEAR ENDED 31 DECEMBER 2023
Consolidated statement
of
comprehensive income
|
For the
year ended 31 December 2023
|
|
|
|
Note
|
31 December
2023
€'000
|
31 December
2022
€'000
|
|
Revenue
|
7
|
240,429
|
239,251
|
|
Operating
expenses
|
8
|
(93,471)
|
(99,571)
|
|
Net operating income
|
|
146,958
|
139,680
|
|
Administrative expenses
|
|
(15,948)
|
(13,712)
|
|
Acquisition costs
|
|
-
|
(7)
|
|
Fair
value loss on investment property
|
3
|
(164,908)
|
(89,471)
|
|
Share-based payment expense
|
18
|
(502)
|
-
|
|
Loss on
disposal of subsidiary
|
|
(474)
|
-
|
|
Profit on
disposal of investment property
|
3.5
|
9,579
|
-
|
|
Depreciation and amortisation expense
|
|
(588)
|
(673)
|
|
Other
expenses
|
|
(2,916)
|
(2,013)
|
|
Other
income
|
|
2,056
|
524
|
|
Foreign
exchange (loss)/gain
|
|
(1,533)
|
851
|
|
(Loss)/profit from fair value of financial instruments at
fair value through profit or loss
|
|
(1,393)
|
222
|
|
(Loss)/Profit before net
financing cost
|
|
(29,669)
|
35,401
|
|
Finance
cost
|
9
|
(57,146)
|
(52,532)
|
|
Finance
income
|
9.2
|
23,220
|
2,694
|
|
Share of
profit of equity-accounted investments in joint ventures
|
21
|
2,063
|
3,219
|
|
Loss before tax
|
|
(61,532)
|
(11,218)
|
|
Income
tax income/(expense)
|
1 0
|
7,692
|
(4,886)
|
|
Loss for the year
|
|
(53,840)
|
(16,104)
|
|
Items that will not be
reclassified to profit or loss
|
|
|
|
|
Loss on
equity instruments designated at fair
value through other comprehensive income
|
|
-
|
(5,391)
|
|
Total comprehensive income
for the year
|
|
(53,840)
|
(21,495)
|
|
Loss attributable
to:
|
|
(53,840)
|
(16,104)
|
|
- ordinary equity holders of
the Company
|
|
(54,152)
|
(16,961)
|
|
- non-controlling
interests
|
|
312
|
857
|
|
Total comprehensive income
attributable to:
|
|
(53,840)
|
(21,495)
|
|
- ordinary equity holders of
the Company
|
|
(54,152)
|
(22,352)
|
|
- non-controlling
interests
|
|
312
|
857
|
|
|
|
|
|
|
Earnings per share (€
cents)
|
|
|
Restated*
|
|
- Basic
|
11
|
(23)
|
(7)
|
|
- Diluted
|
11
|
(23)
|
(7)
|
*The IFRS earnings per share for
the year 2022 have been restated following the IAS 33 "Earnings per
share" requirements regarding accounting for scrip dividend shares
issued in 2023.
Consolidated statement
of
financial position
|
As at 31
December 2023
|
|
|
|
Note
|
2023
€'000
|
2022
€'000
|
|
ASSETS
|
|
|
|
|
Investment property
|
3
|
2,843,085
|
2,945,460
|
|
Goodwill
|
20
|
12,039
|
12,349
|
|
Advances
for investment property
|
5
|
7,175
|
4,393
|
|
Investments in joint ventures
|
21
|
70,098
|
67,967
|
|
Equity
investments
|
13
|
7,844
|
7,521
|
|
Other
long-term assets
|
|
1,780
|
1,784
|
|
Other
receivables
|
3.5
|
21,182
|
-
|
|
Prepayments
|
|
448
|
226
|
|
Deferred
tax asset
|
10.1
|
1,423
|
161
|
|
Non-current assets
|
|
2,965,074
|
3,039,861
|
|
Financial
assets at fair value through profit or loss
|
|
197
|
3,554
|
|
Trade and
other receivables
|
|
23,122
|
22,337
|
|
Contract
assets
|
|
6,985
|
9,967
|
|
Guarantees retained by tenants
|
|
99
|
98
|
|
Income
tax receivable
|
|
1,084
|
840
|
|
Prepayments
|
|
2,002
|
2,430
|
|
Cash and
cash equivalents
|
14
|
396,259
|
163,767
|
|
|
|
429,748
|
202,993
|
|
Investment property held for
sale
|
3.3
|
50,352
|
126,009
|
|
Total current assets
|
|
480,100
|
329,002
|
|
Total
assets
|
|
3,445,174
|
3,368,863
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
Issued
share capital
|
16
|
1,769,456
|
1,704,476
|
|
Treasury
shares
|
|
(4,797)
|
(4,859)
|
|
Fair
value reserve of financial assets at FVOCI
|
|
(5,469)
|
(5,469)
|
|
Share-based payment reserve
|
|
-
|
156
|
|
Retained
earnings
|
|
(158,066)
|
(37,798)
|
|
Equity attributable to
ordinary equity holders of the Company
|
|
1,601,124
|
1,656,506
|
|
Non-controlling interests
|
|
1,411
|
862
|
|
Total
equity
|
|
1,602,535
|
1,657,368
|
|
Interest-bearing loans and borrowings
|
12
|
1,574,771
|
1,433,631
|
|
Deferred
tax liability
|
10.1
|
139,299
|
154,866
|
|
Lease
liabilities
|
3.2
|
20,482
|
19,861
|
|
Deposits
from tenants
|
|
3,774
|
3,897
|
|
Guarantees retained from contractors
|
|
2,902
|
1,995
|
|
Trade and
other payables
|
|
78
|
1,034
|
|
Non-current liabilities
|
|
1,741,306
|
1,615,284
|
|
Interest-bearing loans and borrowings
|
12
|
28,609
|
21,600
|
|
Guarantees retained from contractors
|
|
5,594
|
3,652
|
|
Trade and
other payables
|
|
36,051
|
35,679
|
|
Contract
liability
|
|
3,289
|
1,743
|
|
Other
current financial liabilities
|
|
1,311
|
67
|
|
Current
portion of lease liabilities
|
3.2
|
1,956
|
1,669
|
|
Deposits
from tenants
|
|
18,018
|
17,477
|
|
Income
tax payable
|
|
807
|
382
|
|
|
|
95,635
|
82,269
|
|
Liabilities directly
associated with the assets held for sale
|
3.3
|
5,698
|
13,942
|
|
Total current liabilities
|
|
101,333
|
96,211
|
|
Total equity and
liabilities
|
|
3,445,174
|
3,368,863
|
Consolidated statement
of
cash flows
For the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
€'000
|
€'000
|
|
Loss before tax
|
|
(61,532)
|
(11,218)
|
|
Adjustments to reconcile
profit/(loss) before tax to cash flows
from operating activities
|
|
|
|
|
Fair
value loss on investment property
|
3.4
|
164,908
|
89,471
|
|
Loss on
sale of residential properties
|
|
269
|
1,851
|
|
Share-based payment expense
|
18
|
502
|
-
|
|
Depreciation and amortisation expense
|
|
588
|
673
|
|
Net
increase in allowance for expected credit losses
|
|
2,283
|
44
|
|
Foreign
exchange loss/(gain)
|
|
1,533
|
(851)
|
|
Loss/(gain) from fair valuation of financial instrument at
fair value
|
|
|
|
|
through
profit or loss
|
|
1,393
|
(222)
|
|
Loss on
disposal of subsidiary
|
|
474
|
-
|
|
Profit on
disposal of investment property
|
3.5
|
(9,579)
|
-
|
|
Share of
profit of equity-accounted joint ventures
|
21
|
(2,063)
|
(3,219)
|
|
Finance
income
|
9.2
|
(23,220)
|
(2,694)
|
|
Financing
cost
|
9
|
57,146
|
52,532
|
|
Operating profit before
changes in working capital
|
|
132,702
|
126,367
|
|
Decrease/(Increase) in contract assets, trade and other
receivables
|
|
5,418
|
(10,547)
|
|
Increase/(Decrease) in contract liabilities, trade and other
payables
|
|
5,305
|
(6,435)
|
|
Interest
paid
|
|
(47,836)
|
(45,662)
|
|
Interest
received
|
|
3,801
|
723
|
|
Income
tax paid
|
|
(12,734)
|
(2,168)
|
|
Interest
received from joint ventures
|
|
614
|
797
|
|
Cash flows from operating
activities
|
|
87,270
|
63,075
|
|
Investing activities
|
|
|
|
|
Expenditure on investment property completed and under development or refurbishment
|
|
(62,463)
|
(71,235)
|
|
Payment
for land acquisitions
|
|
(435)
|
(1,732)
|
|
Advances
received for sale of investment property
|
|
1,200
|
4,100
|
|
Proceeds
from sale of land
|
|
4,000
|
502
|
|
Payment
for acquisition of investment property
|
|
-
|
(5,584)
|
|
Proceeds
from sale of investment property
|
|
46,440
|
12,411
|
|
Investment in financial assets at fair value through profit
or loss
|
|
-
|
(38)
|
|
Proceeds
from sale of financial assets through profit and loss
|
|
-
|
4,030
|
|
Payments
for investment in equity investments
|
13
|
(323)
|
(803)
|
|
Investment in and loans given to joint ventures
|
21
|
(12,500)
|
(28,510)
|
|
Repayment
of loan from joint ventures
|
21
|
13,893
|
13,429
|
|
Payment
for purchase of other long-term assets
|
|
(847)
|
(371)
|
|
Cash flows used in investing
activities
|
|
(11,035)
|
(73,801)
|
|
Financing activities
|
|
|
|
|
Payment
of transaction costs on issuance of scrip dividend shares
|
|
(154)
|
-
|
|
Proceeds
for issuance of new shares in subsidiary
from non-controlling interest
|
|
-
|
5
|
|
Proceeds
from interest-bearing loans and borrowings
|
12
|
344,794
|
146,825
|
|
Repayment
of interest-bearing loans and borrowings
|
12
|
(182,727)
|
(325,963)
|
|
Payment
of interim dividend to equity holders of the Company
|
22
|
(1,076)
|
(59,771)
|
|
Payment
for lease liability obligations
|
3.2
|
(1,986)
|
(2,289)
|
|
Payment
of bank loan arrangement fees and other financing costs
|
|
(5,081)
|
(2,725)
|
|
Cash flows used in financing
activities
|
|
153,770
|
(243,918)
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
230,005
|
(254,644)
|
|
Effect of
exchange rate fluctuations on cash and bank deposits
held
|
|
2,487
|
(337)
|
|
Cash and
cash equivalents at the beginning of the year
|
|
163,767
|
418,748
|
|
Cash and cash equivalents at
the end of the year
|
|
396,259
|
163,767
|
Consolidated statement
of
changes in
equity
For the year ended 31 December
2023
|
|
|
Issued share capital
|
Treasury shares
|
Share-based
payment reserve
|
Fair value reserve of financial assets at
FVOCI
|
Retained earnings
|
Total
|
Non-controlling interests
|
Total Equity
|
|
|
Note
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
As at 1 January 2022
|
|
1,704,476
|
(4,917)
|
156
|
-
|
38,914
|
1,738,629
|
-
|
1,738,629
|
|
Interim
dividends
|
17
|
-
|
58
|
-
|
-
|
(59,829)
|
(59,771)
|
-
|
(59,771)
|
|
Shares
issued in a newly acquired subsidiary
|
|
-
|
-
|
-
|
-
|
-
|
-
|
5
|
5
|
|
Settlement of fair value reserve of equity instruments
designated at FVOCI in cash
|
|
-
|
-
|
-
|
(78)
|
78
|
-
|
-
|
-
|
|
Total
comprehensive income for the year
|
|
-
|
-
|
-
|
(5,391)
|
(16,961)
|
(22,352)
|
857
|
(21,495)
|
|
As at 31 December
2022
|
|
1,704,476
|
(4,859)
|
156
|
(5,469)
|
(37,798)
|
1,656,506
|
862
|
1,657,368
|
|
Interim
dividends paid in cash and scrip dividend
|
17
|
65,134
|
62
|
-
|
-
|
(66,272)
|
(1,076)
|
-
|
(1,076)
|
|
Transaction costs on issuance of shares for cash
|
|
(154)
|
-
|
-
|
-
|
-
|
(154)
|
-
|
(154)
|
|
Transfer
from reserve to retained earnings
|
|
-
|
-
|
(156)
|
-
|
156
|
-
|
-
|
-
|
|
Shares
issued in subsidiary with NCI
|
|
-
|
-
|
-
|
-
|
-
|
-
|
237
|
237
|
|
Total
comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
(54,152)
|
(54,152)
|
312
|
(53,840)
|
|
As at 31 December
2023
|
|
1,769,456
|
(4,797)
|
-
|
(5,469)
|
(158,066)
|
1,601,124
|
1,411
|
1,602,535
|
1 Basis of Preparation
Corporate Information
Globalworth Real Estate
Investments Limited (the "Company" or "Globalworth") is a company
with liability limited by shares (domiciled in Guernsey) 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.
On 23 July 2021 Zakiono
Enterprises Limited, a company wholly owned by Tevat Limited,
become a controlling shareholder by holding 60.6% share capital of
the company through public offer. Tevat Limited is a joint venture
between CPI Property Group S.A. and Aroundtown SA.
The Company's Eurobonds have been
admitted to trading on the Official List of the Irish Stock
Exchange in March 2018 and July 2020, respectively. In addition,
the Company's Eurobonds maturing in March 2025 have been admitted
to trading on the Bucharest Stock Exchange in May 2018. The main
country of operation of the Company is Guernsey. The Group's
principal activities and nature of its operations are mainly
investments in real estate properties, through both acquisition and
development, as set out in the Strategic Report section of the
Annual Report 2022.
Basis of Preparation and
Compliance
These consolidated financial
statements have been prepared in conformity with the International
Financial Reporting Standards ("IFRS"), as adopted by the European
Union ("EU"), give a true and fair view of the state of affairs as
at 31 December 2023 and 2022 and of the profit or loss and other
comprehensive income for the year then ended 31 December 2023 and
31 December 2022, and are in compliance with The Companies
(Guernsey) Law, 2008, as amended.
These consolidated financial
statements ("financial statements") have been prepared on a
historical cost basis, except for investment property, financial
assets at fair value through other comprehensive income and
financial assets at fair value through profit or loss which are
measured at fair value.
The material accounting policies
adopted are set out in the relevant notes to the financial
statements and consistently applied throughout the periods
presented except for the new and amended IFRS (see note 25), which
were adopted on 1 January 2023. These consolidated financial
statements are presented in Euro ("EUR" or "€"), rounded to the
nearest thousand ('000) unless otherwise indicated, being the
functional currency and presentation currency of the
Company.
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 cash flow projections for the period up to 30 June 2025.
These projections consider available cash resources of the Group of
c.€396 million, the undrawn financing facilities of €50 million,
the latest contracted rental income, anticipated additional rental
income from new possible lease agreements
during the period covered by the projections, secured bank
financing and SPA signed subsequent to the year-end 2023 for the
disposal of investment property, as well as the repayment of debt
financing maturing within the projected period, CAPEX, and other
commitments. The projections and related sensitivity analysis
carried out show that in the period up to 30 June 2025, the Company
anticipates having sufficient liquid resources to continue to fund
ongoing operations without the need to raise any additional debt or
equity financing.
Basis of Consolidation
These consolidated financial
statements comprise the financial statements of the Company and its
subsidiaries (the "Group") as of and for the year ended 31 December
2023 and 31 December 2022. Subsidiaries are fully consolidated
(refer to note 22) from the date of acquisition, being the date on
which the Group obtains control, and continue 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 31 December, using consistent accounting
policies. All intra-group balances, transactions and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full. Non-controlling interest represents the portion
of profit or loss, other comprehensive income and net assets not
held by the Group and is presented separately in the income
statement and within equity in the consolidated statement of
financial position, separately from net assets and profit and loss
attributable to the equity holders of the Company.
Foreign Currency Transactions and
Balances
Foreign currency transactions
during the year 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 the 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 judgement, 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 (€) 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 material
accounting judgements, estimates and assumptions are disclosed in
the following notes to the financial statements.
• Investment Property,
see note 3;
• Commitments
(operating leases commitments - Group as lessor), see note
6;
• Taxation, see note
10;
• Equity Investments, see note
13;
• Share-Based Payment
Reserve, see note 18;
• Goodwill, see note
20;
• Investment in Joint
Ventures, see note 21; and
• Investment in
Subsidiaries, see note 22.
3 Investment
Property
3.1
Investment
property - freehold
|
|
|
Investment property - freehold
|
|
|
|
|
|
Completed investment property
|
Investment property under refurbishment
|
Investment property under development
|
Land for further
development
|
Sub-total
|
Investment property
leasehold - Right of usufruct of land
|
Total
|
|
|
Note
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
1
January 2022
|
|
2,718,260
|
156,001
|
30,850
|
39,300
|
2,944,411
|
21,669
|
2,966,080
|
|
Investment property acquisition
|
|
5,584
|
-
|
-
|
-
|
5,584
|
-
|
5,584
|
|
Land acquired during the
year
|
|
-
|
-
|
-
|
1,785
|
1,785
|
-
|
1,785
|
|
Subsequent expenditure
|
|
24,897
|
11,512
|
12,430
|
1,258
|
50,097
|
-
|
50,097
|
|
Net lease incentive movement
|
|
15,411
|
1,664
|
134
|
-
|
17,209
|
-
|
17,209
|
|
Capitalised borrowing costs
|
|
-
|
119
|
46
|
-
|
165
|
-
|
165
|
|
Transfer to completed investment
property
|
|
18,600
|
-
|
(14,700)
|
(3,900)
|
-
|
-
|
-
|
|
Disposal during the year
|
|
(14,120)
|
-
|
-
|
-
|
(14,120)
|
-
|
(14,120)
|
|
Additions to nominal lease
liability
|
|
-
|
-
|
-
|
-
|
-
|
2,814
|
2,814
|
|
Fair value gain/(loss) on
investment property
|
|
(69,078)
|
(16,915)
|
690
|
1,757
|
(83,546)
|
(608)
|
(84,154)
|
|
31 December 2022
|
|
2,699,554
|
152,381
|
29,450
|
40,200
|
2,921,585
|
23,875
|
2,945,460
|
|
Land acquired during the
year
|
|
-
|
-
|
435
|
-
|
435
|
-
|
435
|
|
Subsequent expenditure
|
|
40,618
|
8,584
|
1,569
|
33
|
50,804
|
-
|
50,804
|
|
Net lease incentive
movement
|
|
4,886
|
3,035
|
(43)
|
-
|
7,878
|
-
|
7,878
|
|
Capitalised borrowing
costs
|
9.1
|
6
|
-
|
144
|
-
|
150
|
-
|
150
|
|
Transfer to completed investment
property
|
|
15,740
|
-
|
(4,000)
|
-
|
11,740
|
-
|
11,740
|
|
Disposal during the
year
|
3.5
|
(6,792)
|
-
|
-
|
(7,000)
|
(13,792)
|
-
|
(13,792)
|
|
Fair value loss on investment
property
|
|
(155,394)
|
(1,000)
|
(385)
|
(2,233)
|
(159,012)
|
(578)
|
(159,590)
|
|
31 December 2023
|
|
2,598,618
|
163,000
|
27,170
|
31,000
|
2,819,788
|
23,297
|
2,843,085
|
|
|
|
|
|
|
|
|
|
|
3.2
Investment
Property - Leasehold
|
Key inputs to determine the
present value
|
|
31 December 2023
|
31 December 2022
|
|
Gross
operating lease commitments (€'000)
|
|
100,590
|
126,549
|
|
Remaining
individual lease term (years)
|
|
67-83
|
67-84
|
|
Discount
rate (%)
|
|
5.77
|
5.77
|
|
|
|
|
|
|
|
Note
|
31 December 2023
|
31 December 2022
|
|
Investment property -
leasehold
|
|
€'000
|
€'000
|
|
Opening balance
|
|
23,875
|
21,669
|
|
Additions
to nominal lease liabilities
|
|
-
|
2,814
|
|
Transferred to assets held for sale
|
|
-
|
-
|
|
Fair
value loss on investment property
|
3.1
|
(578)
|
(608)
|
|
Closing
balance
|
|
23,297
|
23,875
|
The Group measures the lease
liability at the present value of the lease payments that are not
paid until the statement of financial position date. The lease
payments are discounted at 5.77% after deducting from the opening
carrying value the annual rental payments and translating at the
closing exchange rate into Euro resulted in a foreign exchange
loss. The interest expense for the unwinding effect of the present
value of the lease liability for an amount of €1.8 million (2022:
€2.4 million) was presented in the statement of comprehensive
income under the line "Finance expense".
Additions to nominal lease
liabilities represents the parking spaces leased from third-party
lessor on a long-term basis. Considering the insignificant nominal
amount contributed by these parking leases, as compared to the
outstanding nominal lease liability amount, there was no
significant change in discount rate applied as compared to the
prior year.
|
Lease liability
|
31 December 2023
|
31 December 2022
|
|
|
€'000
|
€'000
|
|
Opening balance
|
21,530
|
20,065
|
|
Additions
to nominal lease liabilities
|
-
|
2,814
|
|
Payment
during the year
|
(1,381)
|
(1,684)
|
|
Interest
expense on lease liability
|
1,366
|
1,819
|
|
Foreign
exchange loss/(gain)
|
923
|
(1,484)
|
|
Closing balance
|
22,438
|
21,530
|
|
-
Current portion
|
1,956
|
1,669
|
|
-
Non-current portion
|
20,482
|
19,861
|
|
|
|
|
|
|
31 December 2023
|
31 December 2022
|
|
Lease liability - held for
sale
|
€'000
|
€'000
|
|
Opening balance
|
8,877
|
9,141
|
|
Liabilities directly associated with the assets held for
sale
|
(4,889)
|
-
|
|
Payment
during the year
|
(605)
|
(605)
|
|
Interest
expense on lease liability
|
411
|
568
|
|
Foreign
exchange loss/(gain)
|
525
|
(227)
|
|
Net
movement
|
(4,558)
|
(264)
|
|
Closing balance
|
4,319
|
8,877
|
3.3
Assets Held for
Sale
In 2021, the Group entered into a
preliminary agreement to sell the properties namely Batory Building
I , Bliski Centrum, Philips House, Nordic Park and Warta Tower
(held by Dolfia sp. z o.o., Ebgaron sp. z
o.o., Lamantia sp. z o.o., Nordic Park Offices sp. z o.o. and Warta
Tower sp. z o.o.), for a total consideration of €125.2
million.
In July 2023 Warta Tower sale was
concluded (please refer to note 3.5 for further details) and
terminated the original SPA for remaining four
properties.
In November 2023 the Group signed
SPAs for the sale of properties namely Philips House and Nordic
Park with a new buyer for amount of €12.9 million and €22.9
million, the sale is expected to be completed by end of March and
June 2024, respectively.
At 31 December 2023, the
properties classified as held for sale were valued at €45.9
million.
|
|
|
31 December 2022
|
CAPEX
|
Fair value loss
|
Disposal during the year
|
Transfer to investment property
|
Movement during
the period
|
31 December 2023
|
|
|
Note
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Completed
investment property
|
3.1
|
116,199
|
(165)
|
(5,124)
|
(53,270)
|
(11,740)
|
(70,299)
|
45,900
|
|
Investment property - leasehold
|
3.2
|
9,810
|
-
|
(194)
|
(5,164)
|
-
|
(5,358)
|
4,452
|
|
Investment property held for
sale
|
|
126,009
|
(165)
|
(5,318)
|
(58,434)
|
(11,740)
|
(75,657)
|
50,352
|
|
Lease
liabilities
|
3.2
|
8,877
|
-
|
-
|
-
|
-
|
(4,558)
|
4,319
|
|
Deferred
tax liability
|
10.1
|
5,065
|
-
|
-
|
-
|
-
|
(3,686)
|
1,379
|
|
Liabilities directly
associated with the assets held for sale
|
|
13,942
|
-
|
-
|
-
|
-
|
(8,244)
|
5,698
|
|
Net assets held for
sale
|
|
112,067
|
-
|
-
|
-
|
-
|
67,413
|
44,654
|
3.4 Fair Value Loss on Investment
Property
|
|
|
31 December 2023
|
31
December 2022
|
|
|
Note
|
€'000
|
€'000
|
|
Fair value loss on
investment property
|
|
(164,908)
|
(89,471)
|
|
- Related
to investment property − freehold
|
3.1
|
(159,590)
|
(84,154)
|
|
- Related
to investment property − held for sale
|
3.3
|
(5,318)
|
(5,317)
|
3.5 Sale of investment
property
In March 2023, the Group sold a
fully owned subsidiary, Nord 50 Herastrau Premium SRL, owning a
non-core plot of land of 3.2k sqm located in the northern part of
Bucharest for total consideration of €7.0 million out of which €4.0
million was paid in cash on disposal date and remaining €3.0
million was collected on 7th March 2024. At the disposal
date, the Group derecognised net asset of €7.2 million and recorded
€0.5 million net loss (including €0.3 million for derecognition of
goodwill recognised for deferred tax liability at initial
acquisition date (note 20).
In July 2023 the Company sold the
Warta Tower office building, a fully vacant building, in Warsaw to
a company from the Cornerstone Investment Management platform. The
transaction was valued €63.4 million, out of which €20 million are
deferred and will be received in October 2025. The receivable
carries an interest of 13% p.a., total interest receivables as of
31 December 2023 was €1.1 million. At the disposal date, the Group
recognised in the income statement €9.5 million profit after
adjusting incidental costs.
4. Investment Properties Owned by Joint
Ventures
|
|
Completed investment property
|
Investment property
under development
|
Land for further development
|
TOTAL
|
|
€'000
|
€'000
|
€'000
|
€'000
|
|
1 January
2022
|
37,400
|
13,700
|
35,600
|
86,700
|
|
Land
acquisition
|
8
|
1,592
|
802
|
2,402
|
|
Subsequent expenditure
|
964
|
22,167
|
92
|
23,223
|
|
Net lease
incentive movement
|
(17)
|
155
|
-
|
138
|
|
Capitalised borrowing costs
|
92
|
336
|
-
|
428
|
|
Transfer
to completed investment property
|
34,700
|
(34,700)
|
-
|
-
|
|
Disposal
during the year
|
-
|
-
|
(28)
|
(28)
|
|
Fair
value gain on investment property
|
553
|
5,150
|
434
|
6,137
|
|
31 December 2022
|
73,700
|
8,400
|
36,900
|
119,000
|
|
Subsequent expenditure
|
7,037
|
-
|
382
|
7,419
|
|
Net lease
incentive movement
|
251
|
-
|
-
|
251
|
|
Transfer
to completed investment property
|
8,400
|
(8,400)
|
-
|
-
|
|
Fair
value gain/(loss) on investment property
|
2,412
|
-
|
(35)
|
2,377
|
|
31 December 2023
|
91,800
|
-
|
37,247
|
129,047
|
5. Advances for Investment
Property
|
|
2023
€'000
|
2022
€'000
|
|
Advances
for land and other property acquisitions
|
2,000
|
2,000
|
|
Advances
to contractors for completed and under development/refurbishment properties
|
5,175
|
2,393
|
|
|
7,175
|
4,393
|
6. Commitments
Commitments for Investment
Property
As at 31 December 2023 the Group
had agreed to construction contracts with third parties and is
consequently committed to future capital expenditure in respect of
completed investment property of €8.2 million (2022: €10.9
million), investment property under development of nil (2022: €0.7
million) and had committed with tenants to incur incentives (such
as fit-out works and other lease incentives) of €11.8 million
(2022: €10.3 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 (2022: 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:
|
|
2023
€'000
|
2022
€'000
|
|
Not later
than 1 year
|
181,839
|
169,880
|
|
Later
than 1 year and not later than 5 years
|
507,919
|
426,748
|
|
Later
than 5 years
|
175,006
|
152,843
|
|
|
864,764
|
749,471
|
7. Revenue
Rendering of
Services
Revenue from asset management
fees, marketing and other income which are recognised at the time
the service is provided.
|
|
2023
€'000
|
2022
€'000
|
|
Contracted rent
|
191,913
|
180,920
|
|
Adjustment for lease
incentives
|
(31,548)
|
(31,093)
|
|
Rental income
|
160,365
|
149,827
|
|
Revenue from contracts with
customers
Service
charge income
|
75,056
|
86,809
|
|
Fit-out
services income
|
4,185
|
2,374
|
|
Asset
management fees
|
122
|
66
|
|
Marketing
and other income
|
701
|
175
|
|
|
80,064
|
89,424
|
|
|
240,429
|
239,251
|
The adjustment for lease
incentives includes no amortisation impact for COVID-19-related
rent concession given during the year-ended 2023 (2022: €0.1
million).
The total contingent rents and
surrender premia recognised as rental income during the year amount
to €2.3 million (2022: €1.9 million)
and €1.1 million (2022: €0.2 million),
respectively.
8. Operating Expenses
|
|
2023
€'000
|
2022
€'000
|
|
Property
management, utilities and insurance
|
86,722
|
96,433
|
|
Property
maintenance costs and other non-recoverable costs
|
2,087
|
746
|
|
Property expenses arising
from investment property that generate rental
income
|
88,809
|
97,179
|
|
Property
expenses arising from investment property that did not generate
rental income
|
19
|
19
|
|
Fit-out
services costs
|
4,643
|
2,373
|
|
|
93,471
|
99,571
|
9. Finance Cost
|
|
Note
|
2023
€'000
|
2022
€'000
|
|
Interest
on secured loans
|
|
15,929
|
7,054
|
|
Interest
on the unsecured revolving facility
|
|
4,683
|
1,588
|
|
Interest
on fixed-rate bonds
|
|
26,779
|
32,496
|
|
Debt cost
amortisation and other finance costs
|
9.1
|
7,742
|
8,305
|
|
Interest
on lease liability
|
3.2
|
1,777
|
2,387
|
|
Bank
charges
|
|
236
|
702
|
|
|
|
57,146
|
52,532
|
|
9.1 Debt Cost Amortisation
and Other Finance Costs
|
|
|
|
|
|
|
2023
€'000
|
2022
€'000
|
|
Debt
issue cost amortisation - secured bank loans
|
|
712
|
930
|
|
Debt
issue cost amortisation - unsecured revolving facility
|
|
1,856
|
1,461
|
|
Debt
issue cost amortisation - fixed rate bonds
|
|
5,174
|
5,914
|
|
|
|
7,742
|
8,305
|
The Company capitalised borrowing
costs in the value of investment property, amounting to €0.2
million (2022: €0.2 million), using a capitalisation weighted average rate
of 3.33% (2022: 3.33%).
9.2 Finance
income
|
|
Note
|
2023
|
2022
|
|
|
|
€'000
|
€'000
|
|
Gain on Bond buyback
|
|
15,809
|
-
|
|
Income from bank
deposits
|
|
3,801
|
722
|
|
Interest income from joint venture
loans
|
|
2,075
|
1,526
|
|
Interest income on other
receivables
|
3.5
|
1,284
|
-
|
|
Other financial income
|
|
251
|
446
|
|
|
|
23,220
|
2,694
|
10.
Taxation
|
|
2023
€'000
|
2022
€'000
|
|
Current
income tax expense
|
12,908
|
1,264
|
|
-
Related to the current year
|
13,554
|
3,253
|
|
-
Related to the prior year
|
(646)
|
(1,989)
|
|
Deferred
income tax expense
|
(20,600)
|
3,622
|
|
|
(7,692)
|
4,886
|
Current Income Tax Expense
The subsidiaries in Romania,
Poland and Cyprus are subject to tax on local sources of income.
The current income tax expense of €12.9 million (2022: €1.3
million) represents the profit tax for the Group. The taxable
income arising in each jurisdiction is subject to the following
standard corporate income tax rates: Poland at 19% (however small
entities with revenue up to €2 million in the given tax year and
entities starting a new business for their first tax year of
operation, under certain conditions, are charged a reduced rate of
9%), Romania at 16% and Cyprus at 12.5%.
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 vacant space
in partially occupied buildings. Due to the COVID-19 pandemic, the
minimum tax scheme was suspended from 1 March 2020 until 31 May
2022 and the Group's subsidiaries are subject to corporate income
tax.
Starting 1 January 2024, there is
a minimum tax on turnover introduced in Romania and it applies to
entities which have a turnover over certain limit. Therefore, some
Romanian entities which are part of the tax consolidation will be
captured by this new rule and they will be paying the higher amount
between corporate income tax or a minimum tax on turnover, which is
1% applicable on certain adjusted elements of income.
The Group's subsidiaries
incorporated and tax resident in Cyprus need to comply with the tax
regulations in their country of incorporation. The income generated
by subsidiaries located in Cyprus is represented by dividend and
interest income which are the most significant sources of income.
Dividend income is tax-exempt under certain conditions, while
interest income 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, frequent
changes in tax laws and lack of predictability over these tax changes with possible impact on the
amount and timing of future taxable income. Differences arising
between the actual results and the assumptions made, or 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 and withholding tax settlements for the fiscal
year 2018, 2019, 2020 and 2021.
10.1 Deferred Tax
(asset)/liabilities
|
|
|
2023
€'000
|
2022
€'000
|
|
Deferred
tax asset
|
|
(1,423)
|
(161)
|
|
Deferred
tax liabilities directly associated with the assets held for
sale
|
|
1,379
|
5,065
|
|
Deferred
tax liabilities
|
|
139,299
|
154,866
|
|
|
|
139,255
|
159,770
|
|
Deferred Income Tax Expense
|
Consolidated statement of financial position
|
Consolidated statement of comprehensive income
|
|
Net
Deferred Tax
|
2023
€'000
|
2022
€'000
|
2023
€'000
|
2022
€'000
|
|
Valuation
of investment property at fair value
|
152,280
|
181,070
|
(28,790)
|
(472)
|
|
Deductible temporary differences
|
(2,397)
|
(1,247)
|
(1,150)
|
1,340
|
|
Interest expense and foreign exchange loss
|
|
|
|
|
|
on
intra-group loans
|
(8,803)
|
(18,743)
|
9,940
|
866
|
|
Discounting of tenant deposits and long-term
|
|
|
|
|
|
deferred
costs
|
118
|
68
|
50
|
(4)
|
|
Share
issue cost recognised in equity
|
(7)
|
(7)
|
-
|
-
|
|
Valuation
of financial instruments at fair value
|
48
|
72
|
(24)
|
(67)
|
|
Recognised unused tax losses
|
(2,069)
|
(1,443)
|
(626)
|
1,959
|
|
Derecognised on subsidiary disposal
|
85
|
-
|
-
|
-
|
|
|
139,255
|
159,770
|
(20,600)
|
3,622
|
The Group has unused assessed tax
losses carried forward of €32.3 million (2022: €49.7 million) in
Romania and €14.7 million (2022: €19.1 million) in Poland that are
available for offset against future taxable profits of the entity
which has the tax losses. The tax losses recorded by Romanian
subsidiaries before 1st January 2024 can be carried forward for
seven years from the year of generation. However, starting 2024,
tax losses can be used up to the 70% of the taxable income computed
by the entity. Also, the tax losses incurred starting with 1st
January 2024 can be carried forward only for five consecutive years
and within the 70% limit mentioned above.
The tax losses in Poland can be
carried forward for a period of five consecutive tax years from the
year of origination. 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 greater than PLN 5 million or 50% of
tax loss of a given fiscal year in the following five fiscal
years.
As of the statement of financial
position date the Group recognised deferred tax assets of €1.9
million (2022: €1.4 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 €8.0million (2022:
€10.7 million), calculated at the corporate income tax rates of 16%
in Romania and 19% (9% for small entities) in Poland. Therefore,
the available deferred tax assets, €6.0 million (2022: €9.2
million) deferred tax asset 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.
|
Expiry
year
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030
|
TOTAL
|
|
Total available deferred tax
assets (€m)
|
4.0
|
0.6
|
1.5
|
0.7
|
1.1
|
0.1
|
0.0
|
8.0
|
There are also temporary
non-deductible interest expenses and net foreign exchange losses of
€215.6 million, of which €41.2 million in Romania and €174.4
million in Poland (2022: €276.5 million, of which €38.9 million in
Romania and €237.6 million in Poland) related to intercompany and
bank loans. Each year an amount up to 30% of tax EBITDA (plus PLN 3
million in Poland based on the recent Supreme Court sentence for
the periods 2019-2021) and for 2022 not less than PLN 3 million
would become tax-deductible, for which €8.8 million (€1.1 million
in Romania and €7.7 million in Poland) deferred tax asset was
recorded (2022: €18.7 million, €1.1 million in Romania and €17.7
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.
Nevertheless, starting 1st January 2024, the threshold for
deductibility of interest expense which will be subject to 30% of
tax EBIDTA is decreased from EUR 1 million to EUR 500 thousand. On
the other hand in Poland, the interest expense which was already
paid prior to the 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. As of 31 December 2023, out of the total
€7.7 million (2022: €17.7 million) deferred tax asset on interest
expense and foreign exchange loss recognised in Poland, €1.5
million (2022: €2.6 million) is available for utilisation in five
years from the origination.
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.
Based on the above assessment, the Group recognised deferred tax
expense related to deferred tax asset for fiscal losses carried
forward for an amount of €0.6 million (2022: deferred tax expense
of €2.0 million) representing derecognition of deferred tax assets
of nil (2022: derecognition of €1.5 million) in Romania, due to
improved actual tax results and transition of some subsidiaries to
a taxable profit position, and derecognition of deferred tax assets
of €0.6 million (2022: derecognition of €0.5 million) in Poland,
due to improved actual tax results.
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.
11. 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 issued
|
% of
the
|
Weighted
average
|
|
Date
|
Event
|
('000)
|
year
|
('000)
|
|
01-Jan-2022
|
At the beginning of the
year
|
221,373
|
|
221,373
|
|
|
Bonus
effect of scrip dividend shares (Apr-23)*
|
2,861
|
|
2,861
|
|
|
Bonus
effect of scrip dividend shares (Oct-23)*
|
3,252
|
|
3,252
|
|
2022
|
Shares in
issue at year-end (basic)
|
227,486
|
|
227,486
|
|
Jan- Dec
2022
|
Effect of
dilutive shares
|
97
|
77%
|
75
|
|
2022
|
Shares in issue at year-end
(diluted)
|
227,583
|
|
227,561
|
|
Jan-2023
|
At the
beginning and end of the year
|
227,486
|
|
227,486
|
|
Apr-23
|
Shares issued for scrip
dividend (excluding bonus
effect)
|
11,445
|
74%
|
8,521
|
|
Oct-23
|
Shares issued for scrip
dividend (excluding bonus
effect)
|
13,007
|
23%
|
2,930
|
|
2023
|
Shares in issue at year-end
(basic)
|
251,937
|
|
238,936
|
|
Jan-Dec 2023
|
Effect of dilutive
shares
|
150
|
91%
|
137
|
|
2023
|
Shares in issue at year-end
(diluted)
|
252,087
|
|
239,073
|
|
|
2023
€'000
|
2022
€'000
|
|
Loss
attributable to equity holders of the Company for the basic and
diluted earnings per share
|
(54,152)
|
(16,961)
|
|
|
|
Restated*
|
|
IFRS
earnings per share
|
Cents
|
Cents
|
|
-
Basic
|
(23)
|
(7)
|
|
-
Diluted
|
(23)
|
(7)
|
*The IFRS earnings per share for
the year 2022 have been restated following the IAS 33 "Earnings per
share" requirements regarding accounting for scrip dividend issued
in 2023, the number of Scrip Dividend Share being calculated based
on a discount of 20%.
Key Alternative Performance
Measures
The Company distributes on a
semi-annual basis a dividend to its shareholders of not less than
90% of the Company's funds from operations, estimated using EPRA
Earnings, subject to solvency and other legal requirements. EPRA
Earnings is a non-IFRS measure.
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):
|
|
Note
|
2023
€'000
|
2022
€'000
|
|
Earnings
attributable to equity holders of the Company (IFRS)
|
|
(54,152)
|
(16,961)
|
|
Changes in fair value of financial instruments and associated close-out costs
|
|
-
|
(429)
|
|
Fair value loss on investment property
|
3.4
|
164,908
|
89,471
|
|
Profit on disposal of investment
property and related tax credit
|
|
(5,794)
|
-
|
|
Loss on sale of residential properties
|
|
269
|
1,851
|
|
Loan close-out costs
|
|
(15,809)
|
-
|
|
Changes in the value of financial assets at fair value through profit or loss
|
|
1,393
|
(222)
|
|
Acquisition costs
|
|
-
|
7
|
|
Deferred tax charge in respect of above adjustments
|
|
(28,814)
|
(539)
|
|
Non-controlling interests
share of
above
|
|
284
|
783
|
|
Adjustments in respect of joint ventures
|
|
(975)
|
(2,376)
|
|
EPRA Earnings attributable to
equity holders of the Company
|
|
61,310
|
71,585
|
|
EPRA
Earnings per share
|
|
cents
|
cents
|
|
Basic
|
|
26
|
32
|
|
Diluted
|
|
26
|
32
|
12. Interest-Bearing
Loans and Borrowings
|
|
2023
€'000
|
2022
€'000
|
|
Current portion of:
Secured
loans and accrued interest
|
13,086
|
3,845
|
|
Unsecured
fixed-rate bonds and accrued interest
|
15,523
|
17,755
|
|
Sub-total
|
28,609
|
21,600
|
|
Non-current
|
|
|
|
Secured
loans
|
650,460
|
353,978
|
|
Unsecured
fixed rate bonds
|
924,311
|
1,079,653
|
|
Sub-total
|
1,574,771
|
1,433,631
|
|
TOTAL
|
1,603,380
|
1,455,231
|
12.1 Key Terms and
Conditions of Outstanding Debt
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
Face value
|
Carrying
value
|
Face
value
|
Carrying
value
|
|
Facility
|
Currency
|
Nominal
interest rate
|
Maturity
date
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Loan
16
|
EUR
|
EURIBOR
3-month + margin
|
March
2031
|
11,000
|
10,999
|
12,220
|
12,218
|
|
Loan
37
|
EUR
|
Fixed
rate Bond
|
March
2025
|
460,247
|
458,649
|
562,522
|
558,569
|
|
Loan
38
|
EUR
|
Fixed
rate & Floating rate EURIBOR 3-month + margin
|
May
2025
|
100,121
|
100,083
|
100,115
|
99,874
|
|
Loan
41
|
EUR
|
EURIBOR
3-month + margin
|
March
2029
|
85,991
|
85,503
|
85,552
|
84,959
|
|
Loan
43
|
EUR
|
EURIBOR
3-month + margin
|
December
2024
|
-
|
-
|
34,522
|
34,423
|
|
Loan
44/45
|
EUR
|
Fixed
rate
|
February
2027
|
62,295
|
62,122
|
62,295
|
62,062
|
|
Loan
46
|
EUR
|
Fixed
rate
|
November
2029
|
65,043
|
64,542
|
65,045
|
64,462
|
|
Loan
47
|
EUR
|
EURIBOR
3-month + margin
|
April
2024
|
-
|
-
|
60,060
|
60,060
|
|
Loan
48
|
EUR
|
Fixed
rate Bond
|
July
2026
|
405,011
|
396,120
|
405,011
|
392,658
|
|
Loan
49
|
EUR
|
Fixed
rate
|
March
2029
|
272
|
272
|
449
|
449
|
|
Loan
50
|
EUR
|
Fixed
rate
|
March
2029
|
380
|
380
|
1,429
|
1,421
|
|
Loan
51
|
EUR
|
EURIBOR
6-month + margin
|
May
2028
|
85,217
|
84,413
|
85,162
|
84,076
|
|
Loan
53
|
EUR
|
EURIBOR
3-month + margin
|
December
2032
|
94,860
|
93,663
|
-
|
-
|
|
Loan
54
|
EUR
|
EURIBOR
3-month + margin
|
September
2034
|
3,206
|
3,151
|
-
|
-
|
|
Loan
55
|
EUR
|
EURIBOR
3-month + margin
|
October
2030
|
145,351
|
143,811
|
-
|
-
|
|
Loan
56
|
EUR
|
EURIBOR
3-month + margin
|
December
2030
|
45,033
|
44,741
|
-
|
-
|
|
Loan
57
|
EUR
|
EURIBOR
3-month + margin
|
June
2034
|
55,155
|
54,931
|
-
|
-
|
|
Total
|
|
|
|
1,619,182
|
1,603,380
|
1,474,382
|
1,455,231
|
Unsecured Corporate Bonds
In March 2018, the Group issued a
€550 million unsecured Eurobond (Loan 37). The seven-year
Euro-denominated Bond matures on 29 March 2025 and carries a fixed
interest rate of 3.0%. In June 2023 a buyback of €100 million
nominal value was successfully completed, by paying a cash
consideration of €83.2 million, resulting in a net gain of €15.8
million.
In July 2020 the Group completed
under its €1.5 billion Euro Medium Term Notes Programme the
issuance of €400 million new notes, due in 2026, by exchanging
€226.9 million of the €550 million notes due in June 2022
(subsequently repaid at maturity) and the remaining amount of
€158.7 million, after deduction of buy-back premium and issuance
fees, was received in cash.
Financial Covenants
Financial covenants on unsecured
fixed-rate bonds are calculated on a semi-annual basis at 30 June
and 31 December each year and include the Consolidated Coverage
Ratio, with a minimum value of 200%, the Consolidated Leverage
Ratio, with a maximum value of 60%, and the Consolidated Secured
Leverage Ratio, with a maximum value of 30%.
Unsecured Revolving Credit
Facility ("RCF")
On 16 June 2022, the amount of €60
million was drawn down to strengthen the liquidity of the Group
(Loan 47) until 27 March 2023 when it was repaid in full. As of 31
December 2023, the amount of €215 million was available for
utilisation under the RCF. The facility is no longer available for
drawdown after March 2024.
At the end of December 2022, the
Group entered a new three-year term unsecured Revolving Credit
Facility for €50 million with Erste Group Bank AG, the new
liquidity being available to be drawn until December 2025. The RCF
loan terms have been structured to, generally, align with the
Company's existing Euro Medium Term Note ("EMTN") programme for
fixed-rate bonds. In addition to the financial covenants applicable
for unsecured fixed-rate bonds, the RCF contains a supplementary
financial covenant of the Total Unencumbered Assets Ratio with a
minimum value of 125%.
Unsecured International Finance
Corporation ("IFC") Loan
At the end of May 2022, the Group
entered into a six-year term unsecured loan agreement for €85
million with IFC (loan 51). The IFC loan terms have been aligned
with the Company's Revolving Credit Facility terms including
financial covenants.
Secured Facilities
In December 2022, the Group
entered into a ten-year term secured loan agreement for €110
million with Erste Group Bank AG and Banca Comerciala Romana for
refinancing of the Company's logistics/light- industrial portfolio
in Romania. Out of the €110 million, €96.5 million was available to
the Group and the difference was available to Black Sea Vision SRL,
one of the Group's joint venture companies, to refinance the
existing debt held with Banca Comerciala Romana and to obtain
additional liquidity. The loan was drawn in full in March 2023
(Loan 53).
In October 2023, the Group:
• entered
into a eleven-year term secured loan agreement of €9.5 million with
Banca Transilvania (Loan 54) for refinancing of industrial
property. Out of this facility, at 31 December 2023 €6.3 million
was available for further drawdown until October 2024.
• entered
a seven-year bank financing of €145 million (Loan 55) with Aareal
Bank AG secured against two office properties in Poland.
In December 2023 the Group:
• entered
a seven-year bank facility of €45 million (Loan 56) secured against
an office property in Romania. This facility was drawdown to
refinance the existing debt held with Banca Comerciala Romana (Loan
43) and to obtain additional liquidity.
• entered
a ten and a half-year facility (Loan 57) with Banca Transilvania
secured against three office properties in Romania.
• extended the €11 million bank facility held with Unicredit
Bank (Loan 16) until March 2031.
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
45%-83% (2022: 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% (2022:
120%). DSCR is calculated, depending on the respective credit
facility, on the preceding 12-month historical ratio or projected
future 12-month period ratio;
• minimum
interest cover ratio ("ICR"), historic with minimum values from
350% and projected with minimum values from 140% (2022: 250%),
which was applicable to two properties as
at 31 December 2023 (31 December 2022: two). Historic ICR is
calculated as Actual Net Rental Income as a percentage of the
Actual Interest Costs for the 12 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 12-month period commencing immediately after the date of the
calculation; and
• debt
yield ratio ("DYR") with minimum values of 5%. DYR is calculated as
the 12-month projected Net Operating Income divided by the loan
outstanding value at a relevant calculation date.
Secured bank loans are secured by
investment properties which were recognised in the statement of
financial position at the fair value of €1,427 million at 31
December 2023 (2022: €794.4 million) and also carry pledges on rent
receivable balances of €8.5 million (2022: €7.4 million), VAT
receivable balances of €0.4 million (2022: €0.8 million) and a
moveable charge on the respective bank accounts (refer to note
12).
The Group is in compliance with
all financial covenants and there were no payment defaults during
the year 2023 (2022: no). As of 31 December 2023, the Group had
undrawn borrowing facilities of €272 million (2022: €300 million),
however the RCF of €215 million is no longer available to draw
after March 2024.
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 €0.4 million and €1.4 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. During 2023 the loan outstanding decreased to €0.2
million and respectively €0.4 million with keeping the proportion
of the equity interest in the Company. The loans are unsecured and
carry a fixed interest of 4%.
13. Equity
Investments
|
|
31-Dec-23
€'000
|
31-Dec-22
€'000
|
|
Name of
investees
|
|
|
|
Mindspace
Ltd
|
4,254
|
4,254
|
|
Early
Game Venture Fund I Coöperatief U.A.
|
1,668
|
1,464
|
|
Gapminder
Fund Coöperatief U.A.
|
1,922
|
1,803
|
|
Equity investments
(unquoted)
|
7,844
|
7,521
|
Investment in Mindspace
Ltd
In 2018, the Group entered into an
agreement with Mindspace Ltd, receiving a 4.99% stake in Mindspace
Ltd (which was subsequently decreased to 3.69% following an equity
raise in 2021) in return for investing €8.6 million in the
company's Preferred A-2 class shares. At 31 December 2023 the Group
hold 3.77% of total equity.
Mindspace Ltd commenced its
operations in 2013 with subsidiaries in Cyprus, Poland, Germany,
the UK, the USA, the Netherlands and Romania. The company leases
office spaces for long-term periods, renovates them and turns them
into modern shared offices/coworking spaces while providing its
customers with office spaces and additional services. The company
is also a tenant of the Group, in Poland and Romania.
Fair value measurement
The fair value of the Group's
participation in Mindspace Ltd was calculated based on a
third-party valuation (Level 3 under IFRS 13) organised by the
investee.
The fair value of the Group's
participation in Mindspace Ltd was calculated, internally by the
management (2022: based on third party valuation), based on the net
present value of estimated future cash flows, using a discounted
cash flows model. The valuation methodology requires to make
certain assumptions about the key inputs used, including forecasted
discounted cash flows (which were based on the investee's forecast
earnings as per business plan, the discount rate of 7.5% and EBITDA
multiple of 13.4 (based on the 3-year EBITDA multiple of a
comparable quoted global company operating in a similar industry).
Based on the above analysis as at 31 December 2023, the fair value
amount was marginally higher than the carrying value therefore no
fair value gain or loss was recorded in the other comprehensive
income (2022: €5.5 million fair value loss).
Furthermore, as at 31 December
2023, a 10% change in EBITDA multiple or 83 bps change in the
discount rate would have an insignificant impact on the carrying
value. Since, the capital gains or losses on the underlying
investments are subject to 0% capital gains taxes in Cyprus
therefore no deferred tax asset was recorded in other comprehensive
income related to fair value loss.
As at 31 December 2022, a 1%
increase or (decrease) in fair value of equity share in the
investee would have increased/(decreased) the fair value
loss/(gains) on the investment by €0.08 million (2022: €43
million).
Investment in Venture
Funds
Early Game Venture Fund I
Coöperatief U.A.
Early Game is a venture fund that
invests in tech start-ups in Romania through the Competitiveness
Operational Program and is co-funded by the European Regional
Development Fund. Globalworth Tech Limited, a fully owned
subsidiary of the Group, is committed to investing in total €2.0
million in this fund.
Globalworth Tech Limited invested
€1.4 million in Early Game Venture Fund I Coöperatief U.A. ("Early
Game") in the prior years. During 2023, the subsidiary participated
in further equity calls and invested another €0.2 million (2022:
€0.3 million).
Gapminder Fund Coöperatief
U.A.
In the prior years, Globalworth
Tech Limited invested €1.8 million in Gapminder Fund Coöperatief
U.A. ("Gapminder") and participated in further equity calls of €0.1
million during 2023 (2022: €0.6 million). Gapminder is a venture
fund that invests in tech start-ups in Romania through the
Entrepreneurship Accelerator and Seed Fund Financial Instrument in
Romania and is co-funded by the European Investment Fund. The Group
is committed to investing in total €2.4 million out of the fund's
total planned investment value of €50 million.
At 31 December 2023, the Group
assessed the fair value of its investments based on the latest
available management accounts of both funds and the underlying
enterprise value of each tech start up and seed investments by
Early Game and Gapminder. The enterprise value of underlying
investments is based on last capital raises initiated by such seed
investment and pre-seed investment which is participated in by
third parties.
Based on this analysis, no fair
value gain was recognised in other comprehensive income as the
change in the value of both investments was insignificant to the
cost of the initial investment (2022: €0.07 million).
14. Cash and Cash
Equivalents
|
|
2023
€'000
|
2022
€'000
|
|
Cash at
bank
|
171,596
|
143,515
|
|
Short-term deposits
|
224,663
|
20,252
|
|
Cash and cash equivalents as
per statement of financial position
|
396,259
|
163,767
|
Cash at bank and in hand includes
restricted cash balances of €5.7 million (2022: €7.8 million) and
short-term deposits include restricted deposits of €14.9 million
(2022: €0.1 million). The restricted cash balance can be used to
repay the outstanding debts and repayment of deposits to
tenants.
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 0.6% to positive 3.9% (2022: minus 0.60% to positive 0.01%)
per annum, for PLN deposits from 1.83% to 4.70% (2022: 0.24% to
4.56%) per annum and for RON deposits from 5.3% to 5.8% (2022:
0.68% to 6.25%) per annum. For RON deposits the highest interest
rate was earned on overnight deposits.
15. 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 (the Group's debt balance plus 50% of
joint ventures' debt balance), less cash and cash equivalents (the
Group's cash balance plus 50% of joint ventures' cash balance),
divided by the open market value of its investment property
portfolio (the 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 debt
issuance are influenced, in addition to other factors, by the
prevailing LTV ratio.
|
|
Note
|
2023
€'000
|
2022
€'000
|
|
Interest-bearing loans and borrowings (face value)
|
12
|
1,619,182
|
1,474,382
|
|
Less:
|
|
|
|
|
Cash and
cash equivalents
|
14
|
396,259
|
163,767
|
|
Group interest-bearing loans
and borrowings (net of cash)
|
|
1,222,923
|
1,310,615
|
|
Add:
|
|
|
|
|
50% share
of joint ventures' interest-bearing loans and borrowings
|
|
17,513
|
11,764
|
|
50% share
of joint ventures' cash and cash equivalents
|
|
(2,506)
|
(1,524)
|
|
Combined interest-bearing
loans and borrowings (net of cash)
|
|
1,237,931
|
1,320,855
|
|
Group
open market value as of financial position date
|
|
2,865,688
|
3,037,784
|
|
Add:
|
|
|
|
|
50% share
of joint ventures' open market value as of financial position
date
|
21
|
64,524
|
59,500
|
|
Open market value as of
financial position date
|
|
2,930,212
|
3,097,284
|
|
Loan-to-value ratio
("LTV")
|
|
42.2%
|
42.7%
|
16. Issued Share
Capital
|
|
2023
|
2022
|
|
|
€'000
|
Number
('000)
|
€'000
|
Number
('000)
|
|
Opening balance
|
1,704,476
|
222,427
|
1,704,476
|
222,427
|
|
Shares
issued for scrip dividend
|
65,134
|
30,563
|
-
|
-
|
|
Transaction costs on the issuance of shares
|
(154)
|
-
|
-
|
-
|
|
Balance at 31 December
|
1,769,456
|
252,990
|
1,704,476
|
222,427
|
17.
Dividends
|
|
2023
|
2022
|
|
|
€'000
|
€'000
|
|
Declared and paid during the
year
|
|
|
|
Interim dividend: €0.29 per share
(2022: €0.27 per share)
|
66,272
|
59,771
|
On 8 March 2023, the Board of
Directors of the Company approved the distribution of an interim
dividend in respect of the six-month financial period ended 31
December 2022 of €0.15 per ordinary share.
On 30 August 2023, the Board of
Directors of the Company approved the distribution of an interim
dividend in respect of the six-month financial period ended 30 June
2023 of €0.14 per ordinary share.
18. Share-Based Payment
Reserve
|
Share-based payments
reserve
|
|
2023
€'000
|
Number
('000)
|
2022
€'000
|
Number
('000)
|
|
Executive
share option plan
|
|
-
|
-
|
156
|
-
|
Executive Share Option
Plan
Under the plan, the Directors of
the Group were awarded share option warrants as remuneration for
services performed.
In 2013, the Group granted
warrants to the Founder and the Directors which entitle each holder
to subscribe for ordinary shares in the Company at an exercise
price of €5.00 per share if the market price of an ordinary share,
on a weighted average basis over 60 consecutive days, exceeds
€10.00 per share and €12.50 per share for each tranche respectively
and the holder is employed on such date. The fair value of the
warrants was estimated at the grant date (i.e. July 2013) at €0.073
per share. 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 €5.00 per share.
The contractual term of each
warrant granted was 10 years. Therefore at 31 July 2023, subsequent
to 10 years anniversary the share option warrants were
expired.
Share-based payments
expense
|
|
2023
|
2022
|
|
Share-based payments expense
|
€'000
|
€'000
|
|
Subsidiaries' employees share
based payment expense
|
502
|
-
|
During 2023 the Group reward the
performance of employees through an annual performance bonus with a
total amount of €2.0 million in the form of either cash or shares.
Out of this, the Group recorded salary expenses of €0.5 million,
share based payment expense of €0.5 million and capitalised €0.8
million.
In Romania, the expense recorded
in 2023 is €0.5 million, for shares assigned to employees with a
vested period of one year and a further €0.2 million will be
expensed in 2024 until vesting date. Under the bonus letter the
employees have option to receive cash by selling the shares at a
pre- determined fixed price. The Company estimate that all
employees will opt to place the shares for cash once the vesting
period ended.
19. Treasury
Shares
|
|
|
2023
|
2022
|
|
|
|
Amount
€'000
|
Number ('000)
|
Amount
€'000
|
Number ('000)
|
|
Opening
balance
|
|
(4,859)
|
(1,053)
|
(4,917)
|
(1,053)
|
|
Dividend
on treasury shares held by a subsidiary
|
|
62
|
-
|
58
|
-
|
|
Closing balance
|
|
(4,797)
|
(1,053)
|
(4,859)
|
(1,053)
|
The Company has 838,118 shares in
treasury, and further 214,822 shares are held by one of the
subsidiaries.
20.
Goodwill
|
|
2023
|
2022
|
|
€'000
|
€'000
|
|
Balance at 31 December
|
12,039
|
12,349
|
In 2023 the Group has derecognised
of €0.3 million related to a sale of a land plot during 2023 (note
3.5) related to deferred tax liability arise from business
combination at initial acquisition in 2014. The charge is recorded within loss on disposal of subsidiary
in the statement of profit or loss.
21. Investment in Joint
Ventures
|
|
|
|
Investments
|
31-Dec-23
€'000
|
31-Dec-22
€'000
|
|
Opening
balance
|
20,643
|
16,917
|
|
Investments in the joint ventures
|
1,660
|
507
|
|
Share of
profit during the year
|
2,063
|
3,219
|
|
Equity investment in joint
venture
|
24,366
|
20,643
|
|
Opening
balance
|
47,324
|
31,991
|
|
Loan
provided to the joint ventures
|
10,840
|
28,033
|
|
Loan
repayments from the joint ventures
|
(13,893)
|
(13,429)
|
|
Interest
repayment from the joint ventures
|
(614)
|
(797)
|
|
Interest
income on the loans to joint ventures
|
2,075
|
1,526
|
|
Loans receivable from joint
ventures
|
45,732
|
47,324
|
|
TOTAL
|
70,098
|
67,967
|
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 (€0.09 million
investment) in Global Logistics Chitila SRL ("Chitila Logistics
Hub"), an unlisted company in Romania, owning land for further
development, at the acquisition date, in Chitila,
Romania.
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 (€6.36 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.
In September 2022, the Group's
subsidiary, Globalworth Holdings Cyprus Limited, entered into a
joint venture agreement with Global Vision Business Development SRL
through which it acquired a 50% shareholding interest (€0.07
million investment) in Targu Mures Logistics Hub SRL ("Targu Mures
Logistics Hub"), an unlisted company in Romania, owning land for
further development, at acquisition date, in Mures,
Romania.
As at 31 December 2023 and 31
December 2022 the investment properties owned by the joint ventures
entities was classified as an industrial segment for the
Group.
22.
Investment in
Subsidiaries
Key Judgements
and Assumptions
Used in
Determining the
Control Over
an
Entity:
· Power over the investee (i.e. existing rights, directly or
indirectly, in the investee that gives it the current ability to
direct the relevant activities of the investee). If the Group has
less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances
in assessing whether it has power over an investee, including the
contractual arrangement with the other vote holders of the
investee, rights arising from other contractual arrangements and
the Group's voting rights and potential voting rights.
· Exposure, or rights, to variable returns from its involvement
with the investee.
· The
ability to use its power over the investee to affect its returns
(such as the appointment of an administrator or director in the
subsidiary or investee).
Details on all direct and indirect
subsidiaries of the Company, over which the Group has control and
consolidated as of 31 December 2023 and 31 December 2022, 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 31 December 2023, the Group
consolidated the following subsidiaries, being holding companies,
as principal activities.
|
|
|
31 December 2023
|
31
December 2022
|
|
|
Subsidiary
|
Note
|
Shareholding interest (%)
|
Shareholding interest (%)
|
Place of
incorporation
|
|
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
|
|
100
|
100
|
Cyprus
|
|
Kifeni
Investments Limited
|
|
|
|
|
|
Casalia
Holdings Limited
|
|
|
|
|
|
Pieranu
Enterprises Limited
|
|
|
|
|
|
Oystermouth Holding Limited
|
|
|
|
|
|
Minory
Investments Limited
|
|
|
|
|
|
Globalworth Tech Limited
|
|
|
|
|
|
IB 14
Fundusz Inwestycyjny Zamkniety Aktywow Niepublicznych
|
|
100
|
100
|
Poland
|
Key Judgements and Assumptions
Used in Determining the Control Over an Entity continued
As of 31 December 2023, 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 non-profit
organisations with corporate social responsibility
activities
|
|
|
31 December 2023
|
31
December 2022
|
|
|
Subsidiary
|
Note
|
Shareholding interest (%)
|
Shareholding interest (%)
|
Place of incorporation
|
|
Aserat Properties SRL
|
|
|
|
|
|
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
|
|
|
100
|
Romania
|
|
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
|
|
|
|
|
|
Otopeni
Logistics Hub SRL
|
|
|
|
|
|
West
Logistics Hub SRL
|
|
|
|
|
|
Nord 50
Herastrau Premium SRL
|
3.5
|
-
|
100
|
Romania
|
|
North
Logistics Hub SRL
|
|
75
|
75
|
Romania
|
|
Logistics
Hub Chitila SRL
|
|
75
|
75
|
Romania
|
|
DH
Supersam Katowice Sp. z o.o.
|
|
|
|
|
|
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
Management Sp. z o.o.
|
|
|
|
|
|
GPRE
Property Management Sp. z o.o.
|
|
|
|
|
|
Lima 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.
|
|
100
|
100
|
Poland
|
|
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
|
|
|
|
|
|
GW Tech
sp. z o.o.
|
|
100
|
-
|
Poland
|
22.
Changes in Group
Structure
22.1
Subsidiaries
Under Liquidation Process
•
The following companies are dormant and have applied for voluntary
liquation during 2020: Zaggatti Holdings Limited, Kifeni
Investments Limited, Casalia Holdings Limited, Oystermouth Holding
Limited, Pieranu Enterprises Limited, Ramoro Limited and Vaniasa
Holdings Limited.
•
Fundacja Globalworth w likwidacji was liquidated on 2 November 2023
and subsequently was struck off from the Registrar of Companies in
Poland on 12 February 2024.
22.2
New
Subsidiaries
•
GW Tech z o.o was incorporated on 7 September 2023, with 100%
effective interest, having services as principal
activity.
•
In February 2024 Belfield sp. z o.o an empty SPV bought for €3,000
as a new service
company.
23.
Segmental
Information
The Board of Directors is of the
opinion that the Group is engaged mainly in real estate business,
comprising offices, mixed-use, industrial and residential
investment properties segments and property management services, in
two geographical areas, Romania and Poland.
Operating segments are reported in
a manner consistent with the internal reporting provided to the
chief operating decision-makers. The chief operating
decision-makers who are responsible for allocating resources and
assessing the performance of the operating segments have been
identified as the Executive Directors.
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) on a quarterly basis 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.
The industrial property segment
and head office segments are presented on a collective basis as
Others in the table on the next page 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 are disclosed separately as these
meet the 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 the Group level. Segment assets and liabilities reported
to Executive Management on a segmental basis are set out
below
|
|
|
|
2023
|
|
|
|
|
|
Office
|
Mixed-use
|
Residential
|
Other
|
Inter- segment eliminations
|
Total
|
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Rental income - Total
|
132,932
|
12,387
|
1,472
|
13,861
|
(287)
|
160,365
|
|
Romania
|
67,675
|
-
|
1,472
|
13,861
|
(281)
|
82,727
|
|
Poland
|
65,257
|
12,387
|
-
|
-
|
(6)
|
77,638
|
|
Revenue from contract with
customers - Total
|
68,844
|
8,104
|
760
|
5,668
|
(3,312)
|
80,064
|
|
Romania
|
37,046
|
-
|
760
|
5,668
|
(1,007)
|
42,467
|
|
Poland
|
31,798
|
8,104
|
-
|
-
|
(2,305)
|
37,597
|
|
Revenue - Total
|
201,776
|
20,491
|
2,232
|
19,529
|
(3,599)
|
240,429
|
|
Operating
expenses
|
(77,704)
|
(9,660)
|
(886)
|
(6,247)
|
1,026
|
(93,471)
|
|
Segment NOI
|
124,072
|
10,831
|
1,346
|
13,282
|
(2,573)
|
146,958
|
|
NOI - Romania
|
64,086
|
-
|
1,346
|
13,503
|
(1,039)
|
77,896
|
|
NOI - Poland
|
59,765
|
10,831
|
-
|
-
|
(1,534)
|
69,062
|
|
Administrative expenses
|
(11,275)
|
(1,023)
|
(45)
|
(3,605)
|
-
|
(15,948)
|
|
Acquisition costs
|
|
|
|
|
|
|
|
Fair
value loss on investment property
|
(164,329)
|
(3,025)
|
292
|
2,154
|
|
(164,908)
|
|
Depreciation and amortisation expense
|
(546)
|
(1)
|
(15)
|
(26)
|
|
(588)
|
|
Other
expenses*
|
(2,511)
|
(184)
|
(107)
|
(114)
|
|
(2,916)
|
|
Other
income
|
40
|
2,059
|
-
|
-
|
(43)
|
2,056
|
|
Loss on
disposal of subsidiary
|
-
|
-
|
-
|
(474)
|
|
(474)
|
|
Profit on
disposal of investment property
|
9,579
|
-
|
-
|
-
|
|
9,579
|
|
Foreign
exchange gain/(loss)
|
(740)
|
(393)
|
(10)
|
(390)
|
|
(1,533)
|
|
Segment result
|
(45,931)
|
8,264
|
1,461
|
11,048
|
(2,616)
|
(27,774)
|
|
Finance
cost
|
(13,396)
|
(855)
|
(1)
|
(42,894)
|
-
|
(57,146)
|
|
Finance
income
|
3,339
|
122
|
66
|
19,693
|
-
|
23,220
|
|
Share-based payment expense
|
-
|
-
|
-
|
(502)
|
|
(502)
|
|
Loss from
fair value of financial instruments
|
(85)
|
-
|
-
|
(1,308)
|
|
(1,393)
|
|
Share of
profit of equity-accounted investments in joint ventures
|
-
|
-
|
-
|
2,063
|
|
2,063
|
|
Profit before tax
|
(56,073)
|
7,531
|
1,526
|
(11,900)
|
(2,616)
|
(61,532)
|
*
Other expenses include a loss on sale of non-core investment
property (apartments) and other one-off expenses.
|
|
|
|
2022
|
|
|
|
|
|
Office
|
Mixed-use
|
Residential
|
Other
|
Inter- segment eliminations
|
Total
|
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Rental income - Total
|
127,028
|
10,503
|
1,623
|
11,137
|
(464)
|
149,827
|
|
Romania
|
61,459
|
-
|
1,623
|
11,137
|
(300)
|
73,919
|
|
Poland
|
65,569
|
10,503
|
-
|
-
|
(164)
|
75,908
|
|
Revenue from contract with
customers - Total
|
73,455
|
7,747
|
764
|
10,405
|
(2,947)
|
89,424
|
|
Romania
|
32,891
|
-
|
764
|
10,405
|
(771)
|
43,289
|
|
Poland
|
40,564
|
7,747
|
-
|
-
|
(2,176)
|
46,135
|
|
Revenue - Total
|
200,483
|
18,250
|
2,387
|
21,542
|
(3,411)
|
239,251
|
|
Operating
expenses
|
(78,926)
|
(9,529)
|
(957)
|
(10,991)
|
832
|
(99,571)
|
|
Segment NOI
|
121,557
|
8,721
|
1,430
|
10,551
|
(2,579)
|
139,680
|
|
NOI - Romania
|
58,390
|
-
|
1,430
|
10,551
|
(976)
|
69,395
|
|
NOI - Poland
|
63,167
|
8,721
|
-
|
-
|
(1,603)
|
70,285
|
|
Administrative expenses
|
(9,329)
|
(405)
|
(53)
|
(3,925)
|
-
|
(13,712)
|
|
Acquisition costs
|
-
|
-
|
-
|
(7)
|
-
|
(7)
|
|
Fair
value loss on investment property
|
(81,549)
|
(21,379)
|
1,062
|
12,395
|
-
|
(89,471)
|
|
Depreciation and amortisation expense
|
(628)
|
-
|
(17)
|
(28)
|
-
|
(673)
|
|
Other
expenses*
|
(198)
|
36
|
(1,851)*
|
-
|
-
|
(2,013)
|
|
Other
income
|
515
|
29
|
1
|
8
|
(29)
|
524
|
|
Loss on
disposal of subsidiary
|
|
|
|
|
|
|
|
Profit on
disposal of investment property
|
|
|
|
|
|
|
|
Foreign
exchange gain/(loss)
|
755
|
85
|
24
|
(13)
|
-
|
851
|
|
Segment result
|
31,123
|
(12,913)
|
596
|
18,981
|
(2,608)
|
35,179
|
|
Finance
cost
|
(9,923)
|
(409)
|
(3)
|
(42,197)
|
-
|
(52,532)
|
|
Finance
income
|
1,016
|
4
|
81
|
1,593
|
-
|
2,694
|
|
Share-based payment expense
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Loss from
fair value of financial instruments
|
222
|
-
|
-
|
-
|
-
|
222
|
|
Share of
profit of equity-accounted investments in joint ventures
|
-
|
-
|
-
|
3,219
|
-
|
3,219
|
|
Profit
before tax
|
22,438
|
(13,318)
|
674
|
(18,404)
|
(2,608)
|
(11,218)
|
|
|
|
|
|
|
|
|
|
*
Other expenses include a loss on sale of non-core investment
property (apartments) and other one-off expenses.
|
|
|
|
2023
|
|
|
|
|
Office
|
Mixed-use
|
Residential
|
Other
|
Inter segment eliminations
|
Total
|
|
Segments
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Segment
non-current assets
|
|
2,301,312
|
288,822
|
46,493
|
208,974
|
(2,516)
|
2,843,085
|
|
Romania
|
|
1,136,100
|
-
|
46,493
|
208,974
|
(639)
|
1,390,928
|
|
Poland
|
|
1,165,212
|
288,822
|
-
|
-
|
(1,877)
|
1,452,157
|
|
Assets
held for sale
|
|
50,352
|
-
|
-
|
-
|
|
50,352
|
|
Total assets
|
|
2,874,424
|
299,917
|
47,935
|
226,045
|
(3,147)
|
3,445,174
|
|
Total liabilities
|
|
705,685
|
79,421
|
3,793
|
1,054,244
|
(504)
|
1,842,639
|
|
Additions to non-current
assets
|
|
|
|
|
|
|
|
|
-
Romania
|
|
17,898
|
-
|
(23)
|
5,396
|
|
23,271
|
|
-
Poland
|
|
23,911
|
12,085
|
|
|
|
35,996
|
|
|
|
|
2022
|
|
|
Office
|
Mixed-use
|
Residential
|
Other
|
Inter segment
eliminations
|
Total
|
|
Segments
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Segment
non-current assets
|
|
2,414,875
|
279,612
|
53,067
|
199,930
|
(2,024)
|
2,945,460
|
|
Romania
|
|
1,200,703
|
-
|
53,067
|
199,930
|
(395)
|
1,453,305
|
|
Poland
|
|
1,214,172
|
279,612
|
-
|
-
|
(1,629)
|
1,492,155
|
|
Assets
held for sale
|
|
126,009
|
-
|
-
|
-
|
-
|
126,009
|
|
Total assets
|
|
2,812,401
|
289,743
|
56,821
|
212,445
|
(2,547)
|
3,368,863
|
|
Total liabilities
|
|
557,192
|
23,334
|
3,983
|
1,113,450
|
(406)
|
1,697,553
|
|
Additions to non-current
assets
|
|
|
|
|
|
|
|
|
-
Romania
|
|
15,377
|
-
|
74
|
21,204
|
-
|
36,655
|
|
-
Poland
|
|
27,651
|
13,348
|
-
|
-
|
-
|
40,999
|
24.
Transactions
with Related Parties
The Group's immediate parent is
Zakiono Enterprises Limited (2023: 60.8%), a wholly owned
subsidiary of Tevat Limited. Tevat Limited is jointly owned by
Aroundtown SA (indirectly) and CPI Property Group S.A. The Group's
related parties are Aroundtown SA and CPI Property Group S.A, the
Company's 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
|
|
|
|
2023
|
2022
|
2023
|
2022
|
|
Name
|
Nature of transactions/balances amounts
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Global Logistics Chitila
SRL
|
Shareholder loan receivable
|
-
|
-
|
26,383
|
25,138
|
|
(50% Joint Venture)
|
Finance income
|
885
|
1,003
|
-
|
-
|
|
|
Office rent
|
12
|
12
|
-
|
-
|
|
|
Asset management fees
|
62
|
41
|
-
|
-
|
|
Black Sea Vision SRL
|
Shareholder loan receivable
|
-
|
-
|
11,346
|
14,209
|
|
(50% Joint Venture)
|
Finance income
|
505
|
451
|
-
|
-
|
|
|
Office rent
|
12
|
12
|
-
|
-
|
|
|
Asset management fees
|
52
|
24
|
-
|
-
|
|
Targu Mures Logistics Hub
SRL
|
Shareholder loan receivable
|
-
|
-
|
8,004
|
7,976
|
|
(50% Joint Venture)
|
Finance income
|
700
|
77
|
-
|
-
|
|
|
Office rent
|
6
|
1
|
-
|
-
|
|
|
Asset management fees
|
9
|
-
|
-
|
-
|
|
Mr.
Dimitris Raptis
(Chief Executive Officer until 31
Dec. 2022)
|
Rent revenue
|
-
|
2
|
-
|
-
|
|
Mr.
Adrian Danoiu (Chief Operating Officer until March 2024)
|
Revenue from sale of residential
property
|
-
|
400
|
-
|
-
|
25. New and Amended
Standards
Starting from 1 January 2023 the
Group adopted the following new and amended standards and
interpretations. The new standards and amendments had no
significant impact on the Group's financial position and
performance.
|
|
Effective
Date
|
|
Narrow scope amendments and new Standards
|
(EU endorsement)
|
|
Amendments to IAS 12 Income taxes:
International Tax Reform - Pillar Two Model Rules (issued on 23 May 2023)
|
Jan-23
|
|
Amendments to IFRS 17 Insurance
contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information
|
Jan-23
|
|
Amendments to IAS 12 Income Taxes:
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
|
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
|
For other standards issued but not
yet effective and not early adopted by the Group, management
believes that there will be no significant impact on the Group's
consolidated financial statements.
|
|
Effective
Date
|
|
Narrow scope amendments and new Standards
|
(EU endorsement)
|
|
Amendments to IAS 21 The Effects
of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15
August 2023)
|
Jan-25
|
|
Amendments to IAS 7 Statement of
Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (issued on 25 May 2023)
|
Jan-25
|
|
Amendments to IAS 1 Presentation
of Financial Statements:
• Classification of Liabilities as Current or Non-current
(issued on 23 January 2020);
• Classification of Liabilities as Current or Non-current -
Deferral of Effective Date (issued on
15 July 2020); and Non-current
Liabilities with Covenants (issued on 31 October 2022)
|
Jan-25
|
|
Amendments to IFRS 16 Leases:
Lease Liability in a Sale and Leaseback (issued on 22 September 2022)
|
Jan-25
|
26.
Contingencies
Taxation
All amounts due to State
authorities for taxes have been paid or accrued at the balance
sheet date. There might be inconsistent interpretations of the tax
law and frequent changes of tax law which creates unpredictability
and may trigger the risk of additional taxes and penalties. Where
the State authorities have findings from tax audits relating to
misinterpretation of tax laws, and related regulations, these may
result in confiscation of the amounts in case; additional tax
liabilities are payable; fines and penalties (that are applied on
the total outstanding amount). As a result, the fiscal penalties
resulting from misinterpretation 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 interests in the applicable
extent.
Transfer Pricing
According to applicable relevant
tax legislation in Cyprus, 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
prices applicable for intra-group transactions reflect the market
value 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 to assess whether the transfer pricing policy observes the
"arm's length principle".
Legal Proceedings
In recent years the Romanian State
Authorities have 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 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.