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Preliminary summarised audited consolidated financial statements for the year ended 30 September 2017
Greenbay Properties Ltd
Incorporated in the Republic of Mauritius
Reg No C124756 C1/GBL
ISIN MU0461N00007
SEM share code: GFP.N0000 and JSE share code: GRP
("Greenbay" or "the company" or "the group")
Preliminary summarised audited consolidated financial statements for the
year ended 30 September 2017
Directors' commentary
Nature of the business
Greenbay is a Category One Global Business Licence company registered in
Mauritius. The company has primary listings on both the Official Market of
the Stock Exchange of Mauritius Ltd ("SEM") and the Main Board of the
Johannesburg Stock Exchange Limited ("JSE"). Greenbay’s strategy is to
invest in direct property and infrastructure assets as well as in listed
real estate and infrastructure securities.
Distributable earnings and commentary on results
Greenbay achieved 0,2589 EUR cents in distributable earnings per share for
the second half of the 2017 financial year. The board's dividend policy
allows for retaining distributable earnings and, for the six months ended
September 2017, the board intends, subject to any required approvals and
regulatory compliance, to declare a dividend of 0,236 EUR cents per share
and to afford shareholders the option to receive the dividend in cash or
as a scrip dividend. The circular with relevant details and accompanying
announcements on the Stock Exchange News Service of the JSE and the
website of the SEM will follow in due course.
The net asset value per share increased from 7,80 EUR cents at September
2016 to 9,59 EUR cents at September 2017, an increase of 22,9%. During this
financial year, Greenbay raised EUR507,8 million by issuing 4 228 767 270
shares in three oversubscribed placements. In addition to these placements,
two scrip dividend issues increased the number of shares in issue by
172 575 922. At September 2017, the loan-to-value ratio was 10,1%, well
below the board’s limit of 45%.
At 30 September 2017, Greenbay's portfolio comprised: Sectoral profile
based on fair value of assets
49,1% Listed infrastructure
32,7% Listed real estate
18,2% Direct property
Geographical profile based on fair value of assets
42,7% USA
37,3% Europe
9,9% Canada
7,0% Australia
1,2% Singapore
1,0% Hong Kong
0,9% UK
The following table indicates the top ten investments by fair value as at
September 2017:
Fair value
as at
Sep 2017
Investment Sector Jurisdiction (EUR '000)
Forum Coimbra Direct property Europe 94 896
Planet Koper Direct property Europe 57 500
Unibail-Rodamco SE Listed real estate Europe 55 553
Enbridge Inc Listed infrastructure Canada 44 224
Enterprise Products
Partners Listed infrastructure USA 36 629
Klepierre Listed real estate Europe 35 867
TransCanada Corp Listed infrastructure Canada 35 164
Nextera Energy Inc Listed infrastructure USA 31 010
E.ON SE Listed infrastructure Europe 27 770
Kinder Morgan Inc Listed infrastructure USA 27 598
Direct investments
The acquisition of the 50% indirect interests in Forum Coimbra and Forum
Viseu was effected on 31 May 2017. Forum Coimbra is the dominant regional
mall in the Centro Region of Portugal and has a GLA of 51 489m2, inclusive
of a 17 700m2 hypermarket that is separately owned. Forum Viseu is a
19 145m2 GLA shopping centre in the city centre of Viseu, Portugal.
Greenbay’s interests were acquired for EUR109,625 million at a property
yield of 6%. Greenbay and Resilient REIT Limited are joint venture partners
in these assets.The joint venture is exploring expansion opportunities at
Forum Coimbra to extend the mall, right-size the international fashion
retailers and to improve the entertainment offering.
Portugal's economic outlook is improving. During the past six months,
Portuguese bond yields compressed significantly. Portugal's harmonised
index of consumer price inflation was 1,6% for September 2017. The year-
on-year growth in retail sales to the end of October 2017 was 4,1% and
the second quarter GDP growth for 2017 was 3,0% against the previous year.
The reconfiguration of Planet Koper in Koper, Slovenia to accommodate new
international brands is currently underway. A number of tenants including
three Inditex brands have requested additional space and the expansion of
the H&M store has been completed. Total vacancies, including the area being
reconfigured at Planet Koper, increased to 7,3% at September 2017. Greenbay
is awaiting planning approval for the mixed-use Tivoli development in
Ljubljana, Slovenia.
Greenbay has identified a substantial property acquisition and discussions
with the relevant parties are in progress.
During October 2017, Greenbay made a firm cash offer to acquire the European
concession stakes, Bulgarian assets and Intertoll Europe operations and
maintenance contracts ("target assets") of Group Five Limited ("Group Five")
for R1,6 billion. Greenbay’s rationale for the offer included that it is
positioned to offer the target assets substantial additional capital and
management support to enable them to serve as a platform to access attractive
growth opportunities. However, the Group Five board was unreceptive to the
offer and allowed it to lapse, announcing that it "substantially undervalues"
the target assets. Greenbay continues to evaluate other direct infrastructure
opportunities available in Europe.
Listed investments
The listed portfolio is well diversified across and within the real estate
and infrastructure sectors. Greenbay changed its functional and reporting
currency to the Euro in April 2017. Despite the fact that the majority of
the portfolio is denominated in currencies that have weakened against the
Euro during the year, the portfolio has performed well in the respective
currencies. It is not the company’s policy to hedge its
capital exposure.
Greenbay's strategy of investing in the infrastructure sector has been
particularly successful. The fundamental drivers supporting the global
listed infrastructure sector remain promising. Most of the infrastructure
securities in which Greenbay is invested have exceeded their guidance and
market growth expectations. The sector was characterised by continued merger
and acquisition activity. Greenbay remains opportunistic and has increased
its listed infrastructure exposure. Enbridge, TransCanada, E.ON and Kinder
Morgan, all infrastructure investments, now form part of the top ten
holdings. These companies have strong operating platforms to drive dividend
growth over time.
Listed real estate remains attractively valued when compared with direct
real estate investments on a global weighted average basis with disparities
amongst geographies and property sectors. Whilst rising interest rates may
typically cause short-term dislocation amongst yield-sensitive asset
classes, history suggests that they ultimately benefit from positive
economic growth With the uncertainty following Brexit, Greenbay sold all
its UK listed real estate stocks.
Facilities, hedges and derivatives
A five-year facility of EUR102,7 million was accepted by the joint venture
partners secured by the Portuguese assets. The interest rate on this facility
was fixed for five years at 2,4%.
Greenbay has a EUR27,5 million facility at 2,75% over Euribor secured by
Planet Koper. This facility expires in December 2026. A five-year
interest rate cap at zero percent, expiring in January 2022, is linked to
this facility.
The board's policy is to hedge 90% of non-EUR denominated distributable
income receivable over the forecast period, currently being three years.
In line with this policy the following hedges are currently in place:
Forward rate
against EUR USD GBP AUD CAD HKD SGD
Mar 2018 0,8543 1,1026 0,6635 0,6698 0,1081 0,6285
Sep 2018 0,8298 1,1282 0,6522 0,6665 0,1069 0,6142
Mar 2019 0,8306 1,1041 0,6352 0,6495 0,1071 0,6132
Sep 2019 0,8199 1,0981 0,6353 0,6420 0,1058 0,6055
Mar 2020 0,8101 1,0905 0,6172 0,6387 0,1046 0,6010
Sep 2020 0,8025 1,0893 0,6114 0,6335 0,1038 0,5949
Summary of financial performance
Net asset
Dividend value Loan-
per share Shares in per share to-value
EUR cents issue EUR cents ratio*
Sep 2016 0,1136 4 920 833 333 7,80 0,0%
Dec 2016 - 4 977 795 757 7,73 32,5%
Mar 2017 0,2308 6 302 299 068 8,66 6,5%
Jun 2017 - 7 037 912 566 8,74 20,7%
Sep 2017 0,2360 9 322 176 525 9,59 10,1%
* The loan-to-value ratio is calculated by dividing total interest-
bearing borrowings adjusted for cash on hand by the total of investments
in property, listed securities and loans advanced. Refer note 2.
Outlook
Greenbay's dividends are forecast to increase by 25% per year for the
2018 and 2019 financial years and by at least 20% for the 2020 financial
year. Forecasts indicate that the distributable earnings will exceed the
dividends in both the 2018 and 2019 financial years, which will result in
retained earnings in both those years.
The dividend growth is based on the following assumptions:
- That a stable global macro-economic environment will prevail;
- That there will be no failures of listed real estate or infrastructure
investments or of investment counterparties;
- That no further direct property and infrastructure investments will be
made;
- That further investments in listed real estate and infrastructure
securities will be made in line with the investment policy; and
- That the additional investments in listed securities will be funded by
debt (with a maximum loan-to-value ratio of 45%).
This forecast statement and the forecasts underlying such statement are
the responsibility of the board and have not been reviewed or reported on
by the company's external auditors.
By order of the board
Intercontinental Trust Limited
Company secretary
Mauritius - 14 November 2017
www.greenbayprop.mu
Summarised consolidated statement of comprehensive income
Audited Restated1
for the for the
year ended year ended
Sep 2017 Sep 2016
Income statement EUR EUR
Net rental and related revenue 3 930 167 424 942
Recoveries and contractual rental
revenue 5 964 147 567 077
Straight-lining of rental revenue
adjustment 1 162 1 479
Rental revenue 5 965 309 568 556
Property operating expenses (2 035 142) (143 614)
Income from equity derivatives 27 803 793 4 712 857
Income from investments 255 367 -
Fair value (loss)/gain on investment
property, investments and derivatives (12 402 800) 16 625 894
Adjustment resulting from straight-
lining of rental revenue (1 162) (1 479)
Fair value gain on investment
property 766 017 -
Fair value loss on investments (4 108 359) (226 394)
Fair value gain on currency
derivatives 303 668 -
Fair value loss on equity
derivatives (9 362 964) 16 853 767
Operating expenses (2 432 819) (255 801)
Listing costs – (319 039)
Loss on sale of subsidiary – (30 283)
Foreign exchange (loss)/gain (22 377 572) 19 034 695
Income from joint venture 1 579 188 -
(Loss)/profit before net finance
costs (3 644 676) 40 193 265
Net finance costs (1 985 705) (274 826)
Finance income 5 571 105 633 771
Interest on Greenbay management
incentive loans 65 748 143 017
Fair value gain on interest rate
derivatives 267 437 -
Interest received 5 237 920 490 754
Finance costs (7 556 810) (908 597)
Interest on borrowings (7 556 810) (908 597)
(Loss)/profit before income tax (5 630 381) 39 918 439
Income tax (1 414 429) (149 606)
(Loss)/profit for the year
attributable to equity holders of
the company (7 044 810) 39 768 833
Other comprehensive loss net of tax:
Items that may subsequently be
reclassified to profit and loss
Exchange differences on translation of
foreign operations – subsidiaries (14) -
(14) -
Total comprehensive (loss)/income for
the year attributable to equity holders
of the company (7 044 824) 39 768 833
Basic (loss)/earnings per share
(EUR cents) (0,12) 3,68
1 The restated figures are based on the audited consolidated financial
statements for the year ended September 2016 and were translated from GBP
to EUR.
Summarised consolidated statement of financial position
Audited Restated1 Audited
Sep 2017 Sep 2016 Sep 2015
EUR EUR EUR
Assets
Non-current assets 290 757 701 75 716 763 2 186 332
Investment property 57 498 838 56 750 707 1 584 605
Straight-lining of rental
revenue adjustment 1 162 1 479 -
Investment property under
development 13 942 548 13 319 446 -
Investment in and loans
to joint venture 59 361 010 - –
Greenbay management
incentive loans 505 679 2 549 487 -
Investments 159 448 464 3 095 644 601 727
Current assets 644 871 133 310 058 034 405 575
Equity derivative margin 233 825 666 86 226 838 -
Trade and other
receivables 4 457 081 7 534 350 34 819
Cash and cash
equivalents 406 588 386 216 296 846 370 756
Total assets 935 628 834 385 774 797 2 591 907
Equity and liabilities
Total equity attributable
to equity holders 893 778 890 383 936 503 1 309 707
Stated capital 892 382 767 364 806 890 1 190 082
Non-distributable
reserve (36 075 289) 19 034 395 (25 373)
Currency translation
reserve (11 028 779) (20 758 845) 55 331
Retained earnings 48 500 191 20 853 763 89 667
Total liabilities 41 849 944 1 838 294 1 282 200
Non-current liabilities 25 144 714 - 1 072 032
Interest-bearing
borrowings 24 714 857 - 1 072 032
Deferred tax 429 857 - -
Current liabilities 16 705 230 1 838 294 210 168
Interest-bearing
borrowings 1 374 996 – 59 039
Trade and other payables 14 670 411 1 706 317 151 106
Income tax payable 659 823 131 977 -
Bank overdraft - - 23
Total equity and
liabilities 935 628 834 385 774 797 2 591 907
Total number of shares
in issue 9 322 176 525 4 920 833 333 15 234 790
Net asset value per
share (EUR cents) 9,59 7,80 8,60
Summarised consolidated statement of cash flows
Audited Restated1
for the for the
year ended year ended
Sep 2017 Sep 2016
EUR EUR
Operating activities
Cash generated from operations 23 877 566 368 521
Interest received 5 237 920 490 754
Finance costs (7 556 810) (908 597)
Income tax paid (525 847) (9 324)
Dividends paid (687 939) -
Cash inflow/(outflow) from
operating activities 20 344 890 (58 646)
Investing activities
Greenbay management incentive loans
settled 2 109 556 7 122 909
Acquisition of listed security
investments (160 461 179) (2 861 784)
Acquisition of investment property - (68 554 077)
Development of investment property (623 102) (399 351)
Disposal of subsidiary - 324 500
Loans to joint venture advanced (13 655 684) -
Investment in joint venture (44 126 138) -
Increase in equity derivative
position (156 961 806) (69 058 990)
Cash outflow from investing
activities (373 718 353) (133 426 793)
Financing activities
Increase in interest-bearing
borrowings 26 089 853 -
Proceeds from share issuances 517 575 150 349 411 552
Cash inflow from financing 543 665 003 349 411 552
activities
Increase in cash and cash
equivalents 190 291 540 215 926 113
Cash and cash equivalents at
beginning of the year 216 296 846 370 733
Cash and cash equivalents at end of
the year 406 588 386 216 296 846
Cash and cash equivalents consist of:
Current accounts 406 588 386 216 296 846
Summarised consolidated statement of changes in equity
Non- Currency
Stated distributable translation
capital reserve reserve
EUR EUR EUR
Balance at Sep 2015 1 190 082 29 958 -
Issue of shares 363 616 808
Transfer from non-
distributable reserve (29 958)
Translation of historical
equity on change of
reporting currency (20 758 845)
Profit for the year
Transfer to non-
distributable reserve 19 034 695
Restated1 at Sep 2016 364 806 890 19 034 695 (20 758 845)
Issue of shares: 507 845 070
- 1 324 503 311 shares
on 27 Mar 2017 144 979 034
- 620 000 000 shares
on 12 Jun 2017 75 747 807
- 2 284 263 959 shares
on 22 Aug 2017 287 118 229
Translation of
historical equity on
change of reporting
currency 9 730 080
Exchange differences on
translation of foreign
operations (14)
Loss for the year
Dividend paid - Dec 2016 5 588 558
- scrip issue - 56 962
424 shares on 6 Dec 2016 5 588 558
- cash
Dividend paid - Jun 2017 14 142 249
- scrip issue - 115 613
498 shares on 14 Jun 2017 14 142 249
- cash
Transfer from non-
distributable reserve (55 109 984) -
Balance at Sep 2017 892 382 767 (36 075 289) (11 028 779)
Retained Total
earnings equity
EUR EUR
Balance at Sep 2015 89 667 1 309 707
Issue of shares 363 616 808
Transfer from non-distributable reserve 29 958 -
Translation of historical equity on
change of reporting currency (20 758 845)
Profit for the year 39 768 833 39 768 833
Transfer to non-distributable reserve (19 034 695) -
Restated1 at Sep 2016 20 853 763 383 936 503
Issue of shares: 507 845 070
- 1 324 503 311 shares on 27 Mar 2017 144 979 034
- 620 000 000 shares on 12 Jun 2017 75 747 807
- 2 284 263 959 shares on 22 Aug 2017 287 118 229
Translation of historical equity on
change of reporting currency 9 730 080
Exchange differences on translation of
foreign operations (14)
Loss for the year (7 044 810) (7 044 810)
Dividend paid - Dec 2016 (5 873 040) (284 482)
- scrip issue - 56 962 424 shares on
6 Dec 2016 (5 588 558) -
- cash (284 482) (284 482)
Dividend paid - Jun 2017 (14 545 706) (403 457)
- scrip issue - 115 613 498 shares on
14 Jun 2017 (14 142 249) -
- cash (403 457) (403 457)
Transfer from non-distributable reserve 55 109 984 -
Balance at Sep 2017 48 500 191 893 778 890
Notes
1. Preparation, accounting policies and audit opinion
The preliminary summarised audited consolidated financial statements for
the year ended 30 September 2017 have been prepared in accordance with the
measurement and recognition requirements of IFRS, the JSE Listings
Requirements, the SEM Listing Rules and the Securities Act of Mauritius 2005.
The accounting policies applied in the preparation of the consolidated
financial statements, from which the summarised consolidated financial
statements were derived, are in terms of IFRS and are consistent with
the accounting policies applied in the preparation of the previous
consolidated financial statements, with the exception of the adoption of
new and revised standards which became effective during the year.
The company is required to publish financial results for the year ended
30 September 2017 in terms of Listing Rule 12,14 of the SEM. This report
was compiled under the supervision of Kobus van Biljon CA(SA), the chief
financial officer.
On 13 April 2017, the company announced that it had changed its reporting
and functional currency from Pounds Sterling ("GBP") to Euro ("EUR") as
approved by the Mauritian Registrar of Companies effective from 11 April
2017. As per IAS 21, the financial results of the company will
subsequently be presented in EUR.
In order to satisfy the requirement of IAS 21 with respect to a change
in presentation currency, the comparative financial information was
restated from GBP to EUR using the following exchange rates:
Sep 2016
EUR/GBP exchange rate
Closing 0,8661
Average 0,8135
Share capital was translated at the historic rates prevailing at the
dates of the underlying transactions.
These financial statements were approved by the board of Greenbay on
13 November 2017.
BDO & Co have issued their unmodified audit opinion on the group's
consolidated financial statements for the year ended 30 September 2017.
These preliminary summarised consolidated financial statements have been
derived from the consolidated financial statements and are, in all
material respects, consistent with the audited consolidated financial
statements.
This preliminary report has been audited by BDO & Co and an unmodified
audit opinion has been issued. Copies of their audit reports and the
consolidated financial statements are available for inspection at
Greenbay's registered address.
The auditor's report does not necessarily report on all of the information
contained in this announcement. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditor's
engagement, they should obtain a copy of that report together with the
accompanying financial information from 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 2017 that require any
additional disclosure or adjustment to the financial statements.
Copies of the 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 office address.
Contact person: Jan Wandrag
2. Greenbay utilises equity derivatives to obtain exposure to listed
real estate and infrastructure securities. The equity derivative
margin of EUR233 825 666 included in current assets provided the
group with exposure to investments of EUR669 411 060 at September 2017.
The interest on borrowings of EUR7 556 810 includes interest on the
implied interest-bearing borrowings of EUR435 585 394.
The loan-to-value ratio is adjusted for the above grossed up
amounts and investment property of EUR113 000 000, cash on hand of
EUR2 779 828 and interest-bearing debt of EUR50 588 491, being
Greenbay's 50% share of the Portuguese investment on a proportionate
basis.
3. Segmental analysis
Audited Restated1 Audited
Sep 2017 Sep 2016 Sep 2015
Total assets EUR EUR EUR
UK 4 738 221 233 382 091 2 590 605
USA 110 977 339 68 612 843 -
Canada 1 344 166 917 551 -
Hong Kong 9 656 029 - -
Singapore 1 466 401 100 283 -
Europe 797 174 578 76 414 953 -
Australia 1 781 607 (104 921) -
Corporate 8 490 493 6 451 997 1 302
935 628 834 385 774 797 2 591 907
Audited Restated1
for the for the
year ended year ended
(Loss)/profit for Sep 2017 Sep 2016
the year EUR EUR
UK 986 312 3 076 237
USA 2 719 287 10 777 422
Canada 1 499 142 1 904 433
Hong Kong 147 791 -
Singapore 354 860 772 340
Europe 6 001 006 2 923 059
Australia 2 007 426 237 864
Corporate (20 760 634) 20 077 478
(7 044 810) 39 768 833
Unaudited
for the
year ended
Reconciliation of loss for the year to Sep 2017
dividend proposed EUR
Loss for the year (7 044 810)
Foreign exchange loss 22 377 572
Fair value gain on investment property (766 017)
Fair value loss on equity derivatives 9 362 964
Fair value loss on investments 4 108 359
Fair value gain on currency derivatives (303 668)
Fair value gain on interest rate derivatives (267 437)
Dividends accrued 2 794 275
Antecedent dividend - six months ended 31 March 2017 3 127 867
Antecedent dividend - six months ended 30 September 2017 5 290 796
Distributable earnings for the year 38 679 901
Interim dividend paid - June 2017 (14 545 706)
Final dividend proposed (22 000 337)
Distributable earnings retained 2 133 858
4. Headline earnings
Audited Restated1
for the for the
Reconciliation of (loss)/profit for year ended year ended
the year to headline Sep 2017 Sep 2016
(loss)/earnings EUR EUR
Basic earnings – (loss)/profit for
the year attributable to equity
holders (7 044 810) 39 768 833
Adjusted for:
- loss on sale of subsidiary - 30 283
- fair value gain on investment
property (766 017) -
- income tax effect 145 543 -
Headline (loss)/earnings (7 665 284) 39 799 116
Weighted average shares in issue 6 123 109 544 1 079 376 274
Headline (loss)/earnings per share
(EUR cents) (0,13) 3,69
Greenbay has no dilutionary instruments in issue.
Directors: Terry Warren (chairman); Stephen Delport (CEO)*;
Kobus van Biljon*; Jan Wandrag*; Karen Bodenstein; Teddy Lo Seen Chong;
Barry Stuhler; Mark Olivier (*executive director)
Changes to the board of directors during the quarter: Barry Stuhler
(independent non-executive director) and Kobus van Biljon
(chief financial officer) were appointed to the board on 16 August 2017.
Ronnie Porter and Paul May resigned from the board effective 16 August
2017.
Company secretary: Intercontinental Trust
Registered address: C1-401, 4th Floor, La Croisette, Grand Baie, Mauritius
Transfer secretary in South Africa: Link Market Services South Africa
Proprietary Ltd
JSE sponsor: Java Capital
SEM authorised representative and sponsor: Perigeum Capital Ltd
Date: 15/11/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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