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Summarised audited consolidated financial statements for the year ended 30 September 2016
GREENBAY PROPERTIES LIMITED
(previously Green Flash Properties Ltd)
Incorporated in the Republic of Mauritius
Reg no C124756 C1/GBL & ISIN MU0461N00007
Primary listing SEM (SEM share code: GFP.N0000) and secondary listing AltX
JSE (JSE share code: GRP)
("Greenbay" or "the company" or "the group")
DIRECTORS' COMMENTARY
STRUCTURE AND LISTING
Greenbay is a Category One Global Business Licence company registered in
Mauritius. The company has a primary listing on the Stock Exchange of
Mauritius Ltd ("SEM") and a secondary listing on the Alternative Exchange
of the Johannesburg Stock Exchange Ltd ("JSE"). Greenbay invests globally
in direct property as well as in listed real estate and infrastructure
companies.
Greenbay successfully raised GBP296,4 million by issuing 4 895 833 333
shares in two well oversubscribed placements, one
during June 2016 and the other in September 2016. The number of
shareholders and trading liquidity of the company's
shares have increased significantly.
DISTRIBUTABLE EARNINGS AND COMMENTARY ON RESULTS
The company's portfolio performed in line with guidance provided in the
June 2016 quarterly results and the board has declared a cash dividend of
0,0999 GBP pence per share as Greenbay's maiden distribution. This
distribution represents a 6,1% annualised yield on the capital raised on
8 June 2016.
Subject to final regulatory approvals, shareholders will be given the
option to receive their dividend either in cash or as a
scrip dividend. A circular containing details of this election,
accompanied by announcements on the Stock Exchange News
Service of the JSE as well as the website of the SEM, will be issued in
due course.
The increased attraction of property investments internationally can be
linked to the policies adopted by Central Banks over the past few years.
Due to low interest rates and low government bond yields, investors have
been driven towards alternative, "near bond-like" assets that offer
similar characteristics to fixed income investments.
The rise of online shopping has prompted some retailers to opt for fewer
but more iconic stores that also support online operations. The location
of these high-profile stores matters more than ever and these prime
properties have outperformed. As a result, capitalisation rates of prime
property have compressed more than those of secondary properties.
The outcome of the referendum in the United Kingdom negatively affected
sentiment across Europe. The pound has fallen to a 31-year low to the US
dollar and continues to trade at these levels. Consumer confidence and the
challenging political environment globally remain a concern and has
resulted in investors remaining cautious given increased levels of
volatility. Greenbay is well positioned to take advantage of the resulting
opportunities.
Greenbay's listed portfolio performed well and resulted in an increase in
the net asset value per share from 5,72 GBP pence at June 2016 to 6,76 GBP
pence at September 2016. The September 2016 capital raise resulted in
Greenbay having no gearing at year end.
DIRECT PROPERTY
Greenbay acquired Planet Tus shopping centre situated in Koper, Slovenia,
for EUR56 million at a yield of 8%. This 31 625m2 GLA shopping centre
opened for trading in 2010 and will be rebranded to "Koper Center".
The mall layout and tenant mix will be improved which will further strengthen
the mall's dominance and enable it to grow its income. Greenbay has accepted
a 10-year property finance facility at an interest rate of Euribor plus
2,75%.
Greenbay concluded an agreement with Tivoli Projekt d.o.o. to acquire
9 932m2 of zoned land for development. This land is situated in Ljubljana,
Slovenia, and will be developed into a multi-purpose development
comprising 127 premium apartments, 3 257m2 GLA of high street retail and
3 864m2 GLA of A-grade offices. The completed project is estimated to
cost EUR70 million with a projected internal rate of return of 15%.
The majority of retail markets across Europe have seen positive sales
growth in 2016 and the EU average sales growth is a healthy 3,2%. The
fastest growth rates have been recorded in Central European countries.
Spain and Portugal are experiencing cyclical recoveries.
Greenbay remains focused on dominant assets supported by strong local
consumer markets. Assets are selected on a risk adjusted return basis with
an emphasis on defensive assets in strong locations with barriers to
entry. As in the instance of the Tivoli Projekt, higher return
developments are combined with a defensive portfolio to enable the company
to outperform.
Greenbay has an acquisition and development pipeline of
approximately EUR150 million with a strong balance sheet to minimise
execution risks.
LISTED INVESTMENTS
The listed portfolio is well diversified across the real estate and
infrastructure sectors. The company's strategy of investing in
infrastructure has proven defensive during the recent period of market
volatility.
Infrastructure provides the backbone to many modern economies, be it
through the provision of electricity (generation,transmission and
distribution), natural gas (transmission and distribution or supply),
water, waste management and various transport infrastructure (roads,
airports, rail networks, harbours, toll roads). More recent additions to
this sector include telecommunication towers, broadband and Wi-Fi
services. Retail real estate and infrastructure assets share similar
characteristics.
The table below compares these sectors:
Key description Retail REITs Infrastructure assets
Type of consumer Discretionary consumer Non-discretionary
spending spending. consumer spending,
required utilities and
services.
Impact of government Low interest rates may Low interest rates
have assisted may have assisted
consumers and supported consumers and fiscal
valuations of REITs. policy may
increasingly boost this
sector.
Asset duration Long duration assets. Long duration assets.
Driver of return ROE generated primarily ROE generated primarily
on equity margins and leverage, through net margins
("ROE") not asset sales and leverage,
not asset sales.
Dividend policy Large proportion of net Large proportion
operating income paid as of net operating
dividends. income paid as
dividends.
Valuation metric Free funds from Adjusted free cash
operations ("FFO"), an flow from
operational cash flow operations,
measure. an operational cash
flow measure.
Debt-to-enterprise Typically between 30%-40%.Typically between
35%-50%.
Income tax REITs exempt. Sometimes exempt,
frequently incentivised
through up-front tax
deductions.
Research coverage Established, well- Under-researched
researched sector. sector.
Commodity price Indirect exposure to More direct
sensitivity prices of energy. exposure to various
forms of energy.
The low gearing level of Greenbay has provided substantial protection from
market volatility. This has also enabled the company to take advantage of
attractive opportunities while retaining the focus on sustainable earnings
growth. Greenbay established a prime broking relationship with Bank of
America Merrill Lynch.
Sectoral profile based on fair value of assets
Listed real estate 40,8%
Listed infrastructure 40,5%
Direct property 18,7%
Geographical profile based on fair value of assets
USA 41,5%
Europe 38,1%
UK 8,1%
Canada 6,4%
Singapore 3,2%
Australia 2,7%
The following table indicates the group's top 10 investments (including
equity derivatives and direct property) by fair value as at September
2016:
Investment Sector Jurisdiction Fair value as
at Sep 2016
GBP'000
Planet Tus Direct property Europe 49 152
Unibail-Rodamco SE Listed real estate Europe 16 109
Hammerson plc Listed real estate UK 12 333
Tivoli Projekt Direct property Europe 11 509
Klepierre Listed real estate Europe 11 308
British Land Co plc Listed real estate UK 10 120
Enagas SA Listed infrastructure Europe 8 174
Ferrovial SA Listed infrastructure Europe 7 714
Enterprise Products Listed infrastructure USA 7 664
Partners
EQT Midstream Listed infrastructure USA 7 632
Partners LP
SUMMARY OF FINANCIAL PERFORMANCE
Sep 2016 Sep 2015
Dividend per share (GBP pence) 0,0999 -
Shares in issue 4 920 833 333 15 234 790
Net asset value per share (GBP pence) 6,76 6,37
Loan-to-value ratio* - 34,8%
*The loan-to-value ratio is calculated by dividing interest-bearing
borrowings adjusted for cash on hand by the total of investments in
property, listed securities and loans advanced.
The board's policy is not to exceed a loan-to-value ratio of 35%.
CHANGES TO THE BOARD DURING THE QUARTER
Mrs Karen Bodenstein was appointed as an independent non-executive
director on 27 September 2016. Mr Jorge da Costa resigned as a director on
27 September 2016.
OUTLOOK
Greenbay intends transferring its listing to the main board of the JSE and
is also exploring a listing on a major stock exchange in Europe.
At the upcoming annual general meeting shareholders will be requested to
vote on changing Greenbay's reporting and trading currency to Euro to more
accurately align the financial reporting with the group's asset base.
The board forecasts dividends of approximately 0,40 GBP pence for the year
to September 2017 based on the assumption of 25% gearing and no direct
property acquisitions. This forecast and the assumptions on which it is
based is the responsibility of the board and have not been reviewed or
reported on by the company's external auditors. The forecast assumes that
a stable global macro-economic environment will prevail and that no
failures of listed REITs or infrastructure companies, in which Greenbay is
invested, will occur.
By order of the board
Intercontinental Trust Limited
Company secretary
Mauritius - 11 November 2016
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Restated*
GBP Sep 2016 Sep 2015
ASSETS
Non-current assets 65 550 167 1 621 187
Investment property 49 150 653 1 175 000
Straight-lining of rental revenue adjustment 1 281 -
Greenbay management incentive loans 2 208 060 -
Investments 2 681 076 446 187
Investment property under development 11 509 097 -
Current assets 268 535 063 300 737
Equity derivative margin 74 679 340 -
Trade and other receivables 6 525 350 25 818
Cash and cash equivalents 187 330 373 274 919
Total assets 334 085 230 1 921 924
EQUITY AND LIABILITIES
Total equity attributable to
equity holders 332 493 118 971 161
Stated capital 297 973 130 882 457
Non-distributable reserve 17 590 747 22 215
Currency translation reserve 2 695 -
Retained earnings 16 926 546 66 489
TOTAL LIABILITIES 1 592 112 950 763
Non-current liabilities - 794 922
Interest-bearing borrowings - 794 922
Current liabilities 1 592 112 155 841
Interest-bearing borrowings - 43 778
Trade and other payables 1 477 809 112 046
Income tax payable 114 303 -
Bank overdraft - 17
Total equity and liabilities 334 085 230 1 921 924
Total number of shares in issue 4 920 833 333 15 234 790
Net asset value per share (GBP pence) 6,76 6,37
*The restated figures are based on the audited financial statements for
the period ended September 2015
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Restated
for the year for the thirteen
ended months ended
Sep 2016 Sep 2015*
Net rental and related revenue 359 449 84 366
Recoveries and contractual rental revenue 480 661 112 705
Straight-lining of rental revenue 1 261 -
adjustment
Rental revenue 481 922 112 705
Property operating expenses (122 473) (28 339)
Income from equity derivatives 3 833 842 -
Fair value gain on investment property,
investments and equity derivatives 12 827 496 -
Adjustment resulting from straight-
lining of rental revenue (1 261) -
Fair value loss on investments (184 168) -
Fair value gain on equity derivatives 13 012 925 -
Operating expenses (208 224) (28 313)
Listing costs (259 534) -
Loss on sale of subsidiary (24 635) -
Foreign exchange gain 17 590 747 -
Operating profit 34 119 141 56 053
Net finance income/(costs) 431 655 (37 511)
Finance income 473 413 15 727
Interest on Greenbay management
incentive loans 116 342 -
Interest received 357 071 15 727
Finance costs (41 758) (53 238)
Interest on borrowings (41 758) (53 238)
Other income - 47 947
Profit before income tax 34 550 796 66 489
Income tax (122 207) -
Profit for the year/period attributable
to equity holders of the company 34 428 589 66 489
Other comprehensive income net of tax
Items that may subsequently be reclassified
to profit or loss
Exchange differences on translation of
foreign operations 2 695 -
Other comprehensive income
realised through profit or loss - 22 215
2 695 22 215
Total comprehensive income for the year/period
attributable to equity holders
of the company 34 431 284 88 704
RECONCILIATION OF PROFIT FOR THE YEAR/PERIOD TO HEADLINE EARNINGS
Restated for the
Audited for the thirteen months
year months ended ended
GBP Sep 2016 Sep 2015*
Basic earnings - profit for the year/period
attributable to equity holders 34 428 589 66 489
Adjusted for:
- Bargain purchase - (47 947)
- Loss on sale of subsidiary 24 635 -
Headline earnings 34 453 224 18 542
Weighted average shares in issue 1 079 376 274 8 022 071
Basic earnings per share (GBP pence) 3,19 0,83
Headline earnings per share (GBP pence) 3,19 0,23
Greenbay has no dilutionary instruments in issue.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non- Currency
distri- trans-
Stated butable lation Retained Total
GBP capital reserve reserve earnings equity
Issue of shares 882 457 882 457
Profit for the
period 66 489 66 489
Fair value adjustment 22 215 - 22 215
Balance at
30 Sep 2015 882 457 22 215 - 66 489 971 161
Issue of shares:
- 9 765 210 shares
on 27 Nov 2015 679 953 679 953
- 3 333 333 333
shares on
8 Jun 2016 173 089 006 173 089 006
- 1 562 500 000
shares on
29 Sep 2016 123 321 714 123 321 714
Exchange differences
on translation of
foreign operations 2 695 2 695
Profit for the year 34 428 589 34 428 589
Transfer to non-distributable
reserve 17 590 747 (17 590 747) -
Other comprehensive income realised
through profit or loss (22 215) 22 215 -
Balance at
30 Sep 2016 297 973 130 17 590 747 2 695 16 926 546 332 493 118
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited for the Restated for the
year ended thirteen months
GBP Sep 2016 ended Sep 2015*
Cash inflow from operating activities 1 510 142 81 527
Cash (outflow)/inflow from investing
activities (117 216 182) 381 811
Cash inflow/(outflow) from
financing activities 302 761 511 (188 436)
Increase in cash and cash equivalents 187 055 471 274 902
Cash and cash equivalents at beginning of
the year/period 274 902 -
Cash and cash equivalents at end of
the year/period 187 330 373 274 902
Directors Terry Warren (chairman); Stephen Delport (CEO)*;
Paul May*; Jan Wandrag*; Karen Bodenstein; Teddy Lo Seen Chong; Ronnie
Porter; Mark Olivier (*executive director)
Company secretary Intercontinental Trust Limited
Registered address c/o Intercontinental Trust Limited, Level 3, Alexander
House,35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary in South Africa Link Market Services South Africa
Proprietary Limited
JSE sponsor Java Capital
SEM authorised representative and sponsor Perigeum Capital Ltd
www.greenbayprop.mu
SEGMENTAL ANALYSIS
Audited Restated
Sep 2016 Sep 2015*
Total assets GBP GBP
UK 202 111 466 1 920 958
USA 59 419 479 -
Canada 794 609 -
Singapore 86 846 -
Europe 66 176 192 -
Australia (90 863) -
Corporate 5 587 501 966
334 085 230 1 921 924
Audited for the Restated for the
year ended thirteen months
Sep 2016 ended Sep 2015*
Profit before income tax GBP GBP
UK 2 672 606 26 745
USA 9 363 325 -
Canada 1 654 554 -
Singapore 671 002 -
Europe 2 539 527 -
Australia 206 654 -
Corporate 17 443 128 39 744
34 550 796 66 489
Unaudited for the
year ended
Sep 2016
Reconciliation of profit for the year GBP
to dividend declared
Profit for the year 34 428 589
Foreign exchange gain (17 590 747)
Fair value gain on equity derivatives (13 012 925)
Dividends accrued (215 515)
Fair value loss on investments 184 168
Interest on equity derivatives (697 373)
Listing costs 259 534
Loss on sale of subsidiary 24 635
Antecedent dividend 1 535 546
Distributable earnings for the year 4 915 912
Dividend declared (4 915 912)
-
NOTES
1 PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The summarised audited consolidated financial statements for the year
ended 30 September 2016 ("financial statements") have been prepared in
accordance with the measurement and recognition requirements of IFRS, the
requirements of IAS 34: Interim Financial Reporting, the JSE Listings
Requirements, the SEM Listing Rules and the Securities Act of Mauritius
2005.
The company is required to publish financial results for the year ended 30
September 2016 in terms of Listing Rule 12.14 of the SEM. This report was
compiled under the supervision of Paul May CA(SA), the chief financial
officer.
On 17 March 2016, the company announced that it had changed its reporting
and functional currency from Euro("EUR") to pounds sterling ("GBP") as
approved by the Mauritian Registrar of Companies effective from 16 March
2016.
As per IAS 21, the financial results of the company will subsequently be
presented in GBP.
In order to satisfy the requirement of IAS 21 with respect to a change in
presentation currency, the comparative financial information has been
restated from EUR to GBP and the following exchange rate was used:
Sep 2015
Euro/GBP exchange rate
Closing rate 0,7415
The comparative results included in the financial statements for the
period ended September 2015 cover a period of just over 13 months from the
date of incorporation (14 August 2014) to 30 September 2015.
These financial statements were approved by the board on 10 November 2016.
BDO & Co have issued their unmodified audit opinion on the group's
financial statements for the year ended 30 September 2016. These
summarised consolidated financial statements have been derived from the
consolidated financial statements and are, in all material respects,
consistent with the consolidated financial statements. A copy of
their audit report is available for inspection at Greenbay's registered
address.
This communique is issued pursuant to SEM Listing Rule 12.14 and Section
88 of the Securities Act of Mauritius 2005. The board accepts full
responsibility for the accuracy of the information contained in these
financial statements. The directors are not aware of any matters or
circumstances arising subsequent to 30 September 2016 that require any
additional disclosure or adjustment to the financial statements.
Copies of the audit report and consolidated financial statements and the
statement of direct and indirect interests of each officer of the company,
pursuant to rule 8(2)(m) of the Securities (Disclosure Obligations of
Reporting Issuers) Rules 2007,are available free of charge, upon request
at Greenbay's registered address.
Contact person: Ms Smitha Algoo.
2. EQUITY DERIVATIVE POSITIONS
Greenbay utilises equity derivatives to obtain exposure to listed real
estate and infrastructure companies. The equity derivative
margin of GBP74 679 340 included in current assets provided the group with
exposure to investments of GBP260 520 579 at September 2016. The fair
value gain on equity derivatives of GBP13 012 925 includes interest of
GBP697 373 on the implied interest-bearing borrowings of GBP185 841 239.
Date: 11/11/2016 11:45:00 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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