Wrap Text
Unaudited Abridged Consolidated Financial Statements For The Three Months Ended 30 September 2017
GRIT REAL ESTATE INCOME GROUP LIMITED
(previously Mara Delta Property Holdings Limited)
(Registered by continuation in the Republic of Mauritius)
(Registration number 128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: GTR
ISIN: MU0473N00036
("Grit" or "the Company" or "the Group")
UNAUDITED ABRIDGED CONSOLIDATED
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2017
(the "financial statements")
FORWARD DIVIDEND YIELD:
9% ON SEM AND 10.9% ON JSE
PROPERTY ASSET VALUE INCREASED
FROM $507 MILLION TO $570 MILLION
WACD - 5.53%
(2017: 5.78%)
PORTFOLIO OCCUPANCY
OF 97%
DIRECTORS' COMMENTARY
NATURE OF THE BUSINESS
Grit is a pan African property income fund
focusing on African real estate assets
(excluding South Africa), underpinned
by predominantly US Dollar and Euro
denominated medium- to long-term leases
with high quality counterparties delivering
sustainable income. Listed in July 2014, the
Company holds dual primary listings on the
Official Market of the Stock Exchange of Mauritius ("SEM")
and the Main Board of the Johannesburg Stock Exchange ("JSE").
The Group's strategy remains to expand
its property portfolio throughout targeted
countries in Africa, with assets that will
provide sustainable long term, hard
currency based income from high quality
counterparties with a core focus on
enhancing shareholder value and dividend yield.
REVIEW
The financial results of the first quarter of
the 2018 financial year reflects deployment
of the proceeds of the recently concluded
rights offer and the positive financial impact
of the resultant assets transferred, together
with the consistent performance from the
current property portfolio during the quarter.
Total Property related investment have
increased from US$507m in June 2017 to
US$570m in September 2017. Details of the
assets transferred are as follows:
- Imperial Health Sciences Logistics
Warehouse located in Nairobi, Kenya
transferred on the 16th of August (total
asset value of US$20.99m);
- On 11 August 2017, following receipt of
the required regulatory approvals, the
Company exercised its convertible loan
and was issued 44.428% of the share
capital of Beachcomber Hospitality
Investments Limited ("BHI"). (Total value
of the 44.428% in associated company is
US$55.4m, comprising primarily three
hotel assets of US$183.8m and debt of
US$59.1m)
- On 18 August 2017, the Company
acquired a minority stake in Letlole La
Rona Limited. The investment provides a
soft entrance into the Botswana market
and a base for developing the necessary
expertise to expand investments into
Botswana. Total value of the investment
value is US$3.7m.
Material changes to the debt facilities were
as follows:
- Bank of China paid out the long-term
debt of US$37.56m for the acquisition
of Cosmopolitan Mall in Lusaka, Zambia,
the proceeds of the loan was utilised to
settle the existing debt with Rockcastle
and Standard Bank. The loan was priced
at Libor + 4.0%.
- Bank of China disbursement of a loan
of US$8.55m for the settlement of
the Imperial Health Sciences Logistics
Warehouse acquisition in Nairobi, Kenya.
The loan was priced at Libor + 4.0%
- As part of Grit's hedging strategy to
convert the Revolving Credit Facility
from USD to EUR, the Company secured
a dual-currency facility from Barclays
Mauritius amounting to US$20.0m (or
EUR17.1m). Post the period-end an
AfrAsia Revolving Credit Facility of
Eur10m was granted. The above loans
attract interest at Euro Libor plus 3.5%
and 3.8% respectively.
The result of the above was a reduction in the
weighted average cost of debt from 5.78% at
30 June 2017 to 5.53% at 30 September 2017.
Grit expects this to reduce further as the full
effect of the lower cost Euro facilities come
into effect through the remaining period of
the 2018 financial year.
The loan to value normalised to 48.38%
after the cash held from the capital raise at
30 June 2017 was effectively deployed.
Unaudited Audited Unaudited
for the three for the year for the three
months ended ended months ended
30 September 30 June 30 September
2017 2017 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME US$ US$ US$
Gross rental income 7,381,946 24,329,570 5,703,841
Straight-line rental income accrual 481,160 1,132,143 481,833
Revenue 7,863,106 25,461,713 6,185,674
Income from associates 2,776,250 7,621,227 1,984,547
Property operating expenses (1,411,633) (7,170,116) (1,535,557)
Net property income 9,227,723 25,912,824 6,634,664
Other income 811,061 3,274,668 617,001
Administrative expenses (1,442,545) (5,601,436) (1,468,620)
Profit from operations 8,596,239 23,586,056 5,783,045
Acquisition fees and set-up costs (254,496) (1,166,356) (177,389)
Fair value adjustment on investment property(1) - 2,936,120 (47,548)
Fair value adjustment on financial instruments (54,518) 103,624 39,998
Gain from bargain purchase - 957,837 -
Foreign currency gains/(losses) 1,123,789 778,640 29,306
Profit before interest and taxation 9,411,014 27,195,921 5,627,412
Interest income 1,308,658 1,993,516 119,225
Finance costs (4,099,145) (10,970,561) (1,778,684)
Profit for the period before tax 6,620,527 18,218,876 3,967,953
Current tax expense - (32,326) (835,313)
Deferred tax income/(expense) 322,253 (454,865) 1,211,518
Profit for the period after tax 6,942,780 17,731,685 4,344,158
Profit/(loss) on translation of functional currency 47,563 1,065,619 (34,087)
Other comprehensive income - - -
Total comprehensive income 6,990,343 18,797,304 4,310,071
(1) Fair value adjustment on investment property relates to revaluing investment properties which is performed on a six monthly basis.
Unaudited Audited Unaudited
for the three for the year for the three
months ended ended months ended
30 September 30 June 30 September
2017 2017 2016
Reconciliation of basic earnings and headline earnings US$ US$ US$
Basic earnings 6,942,780 17,731,685 4,344,158
Less: Fair value adjustments on investment property (net of deferred taxation) - (2,936,120) 47,548
Gain from bargain purchase - (957,837) -
Share of value adjustment on investment property accounted by associate - (4,181,162) -
Fair value adjustments on financial instruments 54,518 (103,624) (39,998)
Headline earnings/(loss) attributable to shareholders 6,997,298 9,552,942 4,351,708
Number of shares in issue at interim 208,514,261 111,787,042 100,061,130
Number of shares in issue at quarter/year-end 208,514,261 208,514,261 100,706,571
Weighted average number of shares 208,514,261 110,435,576 100,341,757
Earnings per share
Basic and diluted profit per share (cents) 3.33 16.06 4.33
Headline and diluted headline earnings/(loss) per share (cents) 3.36 8.65 4.34
Unaudited Audited Unaudited
as at as at as at
30 September 30 June 30 September
2017 2017 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION US$ US$ US$
Assets
Non-current assets
Total property related investments 569,898,152 507,611,637 299,036,330
Fair value of property portfolio 371,538,567 345,850,499 246,755,977
Straight-line rental income accrual 8,695,712 5,971,837 5,207,723
Investment in associates 145,191,649 89,049,264 47,072,630
Investment in listed shares: Available-for-sale 3,848,722 - -
Other financial assets 40,623,502 66,740,037 -
Property, plant and equipment 2,092,268 1,932,521 789,696
Intangible assets 5,687,349 5,692,190 5,575,562
Related party loans 12,479,807 12,722,604 -
Deferred tax 6,827,267 6,174,482 7,025,055
Total non-current assets 596,984,843 534,133,434 312,426,643
Current assets
Trade and other receivables 22,390,964 18,656,708 14,893,140
VAT 9,716,148 7,259,812 5,145,410
Current tax receivable 435,826 438,831 -
Financial instruments 8,637 - -
Cash and cash equivalents 7,345,730 24,666,676 7,663,609
Total current assets 39,897,305 51,022,027 27,702,159
Total assets 636,882,148 585,155,461 340,128,802
Equity and liabilities
Total equity attributable to equity holders
Share capital 319,978,513 319,978,512 173,060,368
Foreign currency translation reserve 1,111,284 1,063,721 (35,985)
Antecedent dividend reserve - 1,260,656 -
Retained (loss)/profit (2,252,233) (7,578,169) (9,896,220)
Total equity attributable to equity holders 318,837,564 314,724,720 163,128,163
Liabilities
Non-current liabilities
Preference shares: Non-redeemable 12,840,000 12,840,000 -
Interest-bearing borrowings 235,391,070 187,447,310 111,148,224
Secured finance leases 165,946 171,247 -
Deferred tax 961,199 898,773 665,041
Total non-current liabilities 249,358,215 201,357,330 111,813,265
Current liabilities
Interest-bearing borrowings 47,018,449 47,959,452 44,600,000
Secured finance leases 43,873 44,566 -
Trade and other payables 16,669,161 19,201,998 11,346,980
Related party loans 1,365,000 1,365,000 1,365,000
Shareholders for dividend 2,877,497 - 5,613,322
Withholding tax payable 66,928 45,460 21,147
Current tax payable - - 1,469,649
Financial instruments - 18,724 319,334
Cash and cash equivalents 645,461 438,212 451,942
Total current liabilities 68,686,369 69,073,412 65,187,374
Total liabilities 318,044,584 270,430,742 177,000,639
Total equity and liabilities 636,882,148 585,155,462 340,128,802
Loan to value 48.38% 41.60% 49.58%
Net asset value per share (cents) 152.91 150.94 161.98
Net asset value per share (excluding deferred taxation) (cents) 150.10 148.41 155.67
Unaudited Audited Unaudited
for the three for the year for the three
months ended ended months ended
30 September 30 June 30 September
2017 2017 2016
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS US$ US$ US$
Cash generated from operating activities 4,291,195 7,663,526 3,581,845
Changes in working capital (9,662,103) (1,479,843) (5,619,259)
Dividends paid - (17,649,138) -
Net cash utilised in investing activities (58,663,668) (177,216,553) (3,706,773)
Net cash generated from financing activities 46,506,381 195,138,651 (4,815,967)
Net movement in cash and cash equivalents (17,528,195) 6,456,643 (10,560,154)
Cash at the beginning of the year 24,228,464 17,771,821 17,771,821
Total cash at the end of the year 6,700,269 24,228,464 7,211,667
Represented by:
Cash at bank 7,345,730 24,666,676 7,663,609
Bank overdraft (645,461) (438,212) (451,942)
Total cash at the end of the year 6,700,269 24,228,464 7,211,667
Foreign
currency Antecedent
Share translation dividend Retained Total equity
CONSOLIDATED STATEMENT OF capital reserve reserve earnings holders
CHANGES IN EQUITY US$ US$ US$ US$ US$
Balance as at 1 July 2016 171,995,297 (1,898) 635,547 (9,256,498) 163,372,448
Profit for the period - - - 17,731,685 17,731,685
Dividends paid - - (1,595,780) (16,053,358) (17,649,138)
Foreign currency translation reserve
movement - 1,065,619 - - 1,065,619
Shares issued 155,534,757 - - - 155,534,757
Share issue expenses (5,330,652) - - - (5,330,652)
Transfer from share issues (2,220,889) - 2,220,889 - -
Balance as at 30 June 2017 319,978,513 1,063,721 1,260,656 (7,578,171) 314,724,719
Unaudited for the three months ended
Profit for the period - - - 6,942,780 6,942,780
Dividends paid - - (1,260,656) (1,616,841) (2,877,497)
Foreign currency translation reserve
movement - 47,562 - - 47,562
Balance as at 30 September 2017 319,978,513 1,111,283 - (2,252,232) 318,837,564
Unaudited Audited Unaudited
for the three for the year for the three
months ended ended months ended
30 September 30 June 30 September
CONDENSED CONSOLIDATED 2017 2017 2016
SEGMENTAL ANALYSIS BY REGION US$ US$ US$
Profit/(loss) before income tax expense
Morocco 1,140,729 (204,659) 323,616
Mozambique 2,206,953 17,341,850 3,760,435
Kenya 172,141 (2,116,813) (11,983)
Mauritius 934,345 (5,730,603) (1,855,632)
Zambia 2,166,359 8,929,101 1,751,517
6,620,527 18,218,876 3,967,953
Total assets
Morocco 121,188,663 117,459,022 114,722,085
Mozambique 210,009,318 185,543,263 142,270,432
Kenya 27,526,422 3,147,968 4,517,036
Mauritius 191,684,106 193,103,912 32,798,773
Zambia 86,473,639 85,901,296 45,820,476
636,882,148 585,155,461 340,128,802
Unaudited Audited Unaudited
for the three for the or the three
months ended year ended months ended
30 September 30 June 30 September
CONDENSED CONSOLIDATED 2017 2017 2016
SEGMENTAL ANALYSIS BY SECTOR US$ US$ US$
Profit/(loss) before income tax expense
Office 1,083,315 12,318,688 1,923,984
Retail 3,727,604 10,435,640 2,752,494
Corporate accommodation 810,000 3,204,555 544,500
Light industrial 336,324 (1,559,922) 222,750
Hospitality 2,302,321 712,132 -
Corporate (1,639,037) (6,892,217) (1,475,775)
6,620,527 18,218,876 3,967,953
Total assets
Office 145,967,590 145,084,718 123,580,222
Retail 249,963,114 249,654,006 192,202,587
Corporate accommodation 31,403,722 5,191,890 3,916,835
Light industrial 31,595,859 7,056,953 15,745,750
Hospitality 102,011,191 92,302,049 -
Corporate 75,940,672 85,865,845 4,683,408
636,882,148 585,155,461 340,128,802
SUBSEQUENT EVENTS
Other than those items mentioned above, the following material event occurred subsequent to the end of the
reporting period:
a) On 26 October 2017, Grit has paid distribution of US$1.38 cents per share. This took the full year distribution of
the 2017 financial year to a total of US$12.07 cents per share, a growth of 2.72% on 2016's full year distribution of
US$11.75 cents per share.
OUTLOOK
Whilst the Board recognises the complexity and risk in Africa, the Group has positioned itself with a skilled and
experienced management team and platform to capitalise on the significant opportunities on the continent.
The distribution growth for the 2018 financial year is forecast to be between 3% to 5% in US Dollars.
Any forecast included above has been based on the assumption of stable regional, political and economic
environments as well as a stable global macroeconomic environment.
This forecast is the responsibility of the Grit Board and has not been reviewed or reported on by the auditors of
the Company.
GOING CONCERN
Having considered the Group's budget and cash flow, the directors are of the opinion that the Group has adequate
resources to continue operating for the foreseeable future and that it is appropriate to adopt the going-concern basis
in preparing the Group's financial statements. The directors have satisfied themselves that the Group is in a sound
financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements.
DIVIDENDS
No dividends were declared or paid for the three month period ended 30 September 2017
NOTES
The Group is required to publish interim reports in accordance with the Listing Rule 12.19 of the SEM. Accordingly,
this announcement presents the unaudited consolidated financial results of the Group in respect of the three months
period from 1 July 2017 to 30 September 2017.
The accounting policies which have been applied are consistent with those used in the preparation of the audited
financial statements for the year ended 30 June 2017.
The financial statements for the three months ended 30 September 2017 have been prepared in accordance with
the measurement and recognition requirements of IFRS, the requirements of IAS 34: Interim Financial Reporting, the
SEM Listing Rules, the JSE Listings Requirements, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Accountants
Council and the Securities Act of Mauritius 2005.
The financial statements have not been reviewed or reported on by the Group's external auditors. These financial
statements were approved by the Board on 14 November 2017. Copies of the financial statements and the Statement
of direct and indirect interests of each officer of the Group, pursuant to rule 8(2)(m) of the Securities (Disclosure
Obligations of Reporting Issuers) Rules of Mauritius 2007, are available free of charge, upon request at the Company's
registered address. Contact person: Mrs Smitha Algoo.
By order of the board
14 November 2017
JSE sponsor and corporate advisor to Grit
PSG CAPITAL
SEM Authorised Representative and Sponsor to Grit
Perigeum Capital
Directors: Sandile Nomvete (chairman), Bronwyn Corbett*, Peter Todd (lead independent), Chandra Gujadhur,
Ian Macleod, Leon van de Moortele*, Jacqueline van Niekerk, Matshepo More and Maheshwar Doorgakant(#)
(*executive director) ((#)alternate to Mr Gujadhur)
Company secretary: Intercontinental Fund Services Limited
Registered address: Level 5, Alexander House, 35 Cybercity, Ebène, 72201, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited
Sponsoring Broker: Axys Stockbrokering Limited
SEM authorised representative and sponsor: Perigeum Capital Limited
Results released to market
14 November 2017
This communiqué is issued pursuant to SEM Listing Rule 11.3 and 12.19 and section 88 of the Mauritian Securities Act
2005 and the JSE Listings Requirements. The board accepts full responsibility for the accuracy of the information
contained in these abridged audited consolidated financial statements and this communiqué.
Date: 14/11/2017 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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