Wrap Text
Half Year Results For The Six Months Ended 31 December 2018
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered by continuation in the Republic of Mauritius)
(Registration number: C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: GTR
LSE share code: GR1T
ISIN: MU0473N00036
(“Grit” or the “Company” or the “Group”)
Date: 14 February 2019
Half Year abridged unaudited results for the six months ended 31 December 2018
Grit Real Estate Income Group Limited, is a real estate income group operating in carefully selected African countries and is currently listed on the
Main Market of the London Stock Exchange (“LSE”), the Main Board of the Johannesburg Stock Exchange Limited (“JSE”) and the Official Market of the Stock
Exchange of Mauritius Ltd (“SEM”). Grit has a robust property portfolio with diversification across sectors and geography, backed by comprehensive risk
mitigation policies and procedures.
Grit optimises its structured investments underpinned by solid property fundamentals to achieve compelling US Dollar returns and its ability to sustain
distribution is supported by predominantly US Dollar and EURO-denominated long-term leases, with blue chip multinational tenants delivering strong
sustainable income.
Forward-looking statements
This document may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such
forward-looking statements.
Any forward-looking statements made by, or on behalf of, Grit speak only as of the date they are made and no representation or warranty is given in
relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Grit does not undertake to update
forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which
any such statement is based.
Information contained in this document relating to Grit or its share price, or the yield on its shares, should not be relied upon as an indicator of
future performance.
Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of directors and have not been reviewed
or reported on by the Company's external auditors.
Results for period ended 31 December 2018
Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of
assets underpinned by predominantly US$ and Euro denominated long-term leases with high quality multi-national tenants, today announces its results for
the six months ended 31 December 2018.
Financial highlights
· Distributable earnings of US$6.06 cps for the period (Dec 2017: US$6.07 cps)
· Half year dividend per share declared of US$5.25 cps representing 87% of distributable earnings generated (Dec 2017:US$ 6.07cps)
· European Public Real Estate Association ("EPRA") NAV1 portfolio performance increased by 5.15% to US$143.1 cps
· Gross rental income increased by 25.9% to US$18.7 million (Dec 2017: US$14.9 million)
· Profit from operations increased by 75.7% to US$7.3 million (Dec 2017: US$4.1 million)
· Operating cost to income ratio (including associates) of 15.2% (30 June 2018: 18.6%)
· Weighted average cost of debt at 6.31% (30 June 2018: 5.75%) versus a 1.26% increase in Libor
· Loan-to-value ratio of 43.4% (30 June 2018: 51.4%)
· Adjusted2 administration cost to income producing asset value equates to 1.3% (30 June 2018: 1.4%)
· Successful admission to the Main Market of the London Stock Exchange on 31 July 2018, raising gross capital amounting to US$132.2 million
Portfolio highlights
· Property portfolio now comprises a total of 25 investments
· Portfolio Weighted Average Lease Expiry (WALE) of 6.5 years (June 2018: 7.4 years)
· Weighted average annual rent escalations at 3.1% (30 June 2018: 3.1%)
· EPRA portfolio occupancy rate at 96.0% as at 31 Dec 2018 (30 June 2018: 96.7%), 96.6% at 31 January 2019
1 See note 16 for EPRA NAV calculations
2 See note 15
Bronwyn Corbett, Chief Executive Officer of GRIT Real Estate Income Group Limited, commend:
"This has been another busy and successful period in which the Group continued to implement its investment strategy, delivering a robust operational,
strategic and financial performance following our successful listing on the main board of the London Stock Exchange on the 31 July 2018.
The Company continues to deliver on its targets of annual income distribution and total annual return growth and is well positioned to capitalise on
significant potential growth from its unique high quality portfolio of properties as well as further attractive investment opportunities across the
African continent. Given the strength of the Group’s existing portfolio the it expects to continue to deliver annual rental growth as well as possible
capital value increases through yield compression.
Through opportunities presented by the Group’s recent LSE listing, the Company is well positioned to continue to add high quality assets to its portfolio
selectively, focused on assets leased to multinational corporates and attracting hard currency rental streams, ensuring that potential investments are
value accretive. The Company is well placed to continue to benefit from its strong position in the market and deliver attractive returns to our
shareholders over the short and longer term."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer +230 269 7090
Darren Veenhuis, Head of Investor Relations +44 779 512 3402
Morne Reinders, Investor Relations +27 82 480 4541
Maitland/AMO – Communications Adviser
James Benjamin +44 20 7379 5151
Vikki Kosmalska Grit-maitland@maitland.co.uk
Jason Ochere
finnCap Ltd – UK Financial Adviser
William Marle / Scott Mathieson / Matthew Radley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd – SEM authorised representative and sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
PSG Capital – JSE Sponsor
David Tosi +27 21 887 9602
The Company’s LEI is: 21380084LCGHJRS8CN05
NOTES:
Grit Real Estate Income Group Limited is a leading pan-African real estate company focused on investing ina and actively managing a diversified
portfolio of assets in carefully selected African countries (excluding South Africa). These high quality assets are underpinned by predominantly
US$ and Euro denominated long-term leases with a wide range of blue-chip multi-national tenant covenants across a diverse range of robust
property sectors.
The Company is committed to delivering strong sustainable income for shareholders, with the potential for income and capital growth.
The Company is targeting am annual dividend yield in USD of 8%+ and a net total shareholder return inclusive of NAV growth of 12%+ p.a*
Grit is listed on the London Stock Exchange main market (LSE: GR1T), the Johannesburg Stock Exchange main board (JSE: GTR) and the Stock
Exchange of Mauriius Ltd official market (SEM: DEL.N0000).
Further information on the Company is available at http://grit.group/
*These are targets only and not a profit forecast and there can be no assurance thet they will be met.
Directors: Peter Todd+ (Chairman), Bronwyn Corbett (Chief Executive Officer)*, Leon van de Moortele (Chief Financial Officer)*, Ian Macleod+, David Love+
Faith Matshepo More, Nomzamo Radebe, Bright Laaka (Permanent Alternate Director to Nomzano Radebe)and Catherine McIlraith+
(* executive director) (+ independent non-executive director)
Company secretary: Intercontinental Fund Services Limited
Registered address: c/o Intercontinental Fund Services Limited, 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
JSE sponsor: PSG Capital Proprietary Limited
Sponsoring Broker: Axys Stockbroking Ltd
SEM authorised representative and sponsor: Perigeum Capital Ltd
This notice is issued pursuant to the LSE Listing Rules, the JSE Listings Requirements, SEM Listing Rule 11.3 and the Mauritian Securities Act 2005. The
Board of Directors of the Company accepts full responsibility for the accuracy of the information contained in this communiqué.
CHIEF EXECUTIVE’S STATEMENT
This has been another busy and successful period in which the Group continued to implement its investment strategy, delivering a robust operational,
strategic and financial performance following our successful listing on the main board of the London Stock Exchange on the 31 July 2018.
15% of our shareholders are currently new institutional shareholders from the UK following our main market LSE listing where we raised US$132.2 million
of new equity, further diversifying the shareholder base and improving liquidity. The Group is targeting its inclusion on a number of additional major
indices, and while we are already the fourth largest company in the Mauritius SEM 10, we are targeting inclusion to a number of others including the SAPY
Index in South Africa.
The Group is continuing to focus on delivering on its investment strategy and remains on track to meet its full year target annual income distribution
growth of between 3% and 5% and a minimum total annual net shareholder return target of 12%+ in US Dollars. The Group’s earnings and dividends are
underpinned by the secure and growing income of our high quality portfolio. The Group has delivered good growth in the valuations of our investment
assets and continues to focus on delivering on a target loan to value ratio of between 35% and 40% at the end of the financial year. The Group is
currently in the process of refinancing a number of the debt facilities which will see an overall reduction in financing costs and the delivery of a
longer tenure debt profile. With the deployment of the capital raise there has been a significant reduction in the gearing of the Group at the period end
to 43.4% (30 June 2018: 51.4%).
As the Group has continued to grow and diversify the portfolio both geographically and by sector, we have continued to strengthen the Company’s
management and reporting. The highly skilled team and infrastructure that is now in place has the capacity to manage not only the current asset base of
over US $700 million, but also absorb significant future growth. The Company’s administration cost to asset value is currently at 1.3% and will continue
to be further reduced to a target of 0.7%.
The Group has successfully deployed the US$132.2m capital raised from the London Stock Exchange Listing in July 2018 to complete strategic acquisitions
in Ghana and Mozambique. The acquisition in Mozambique, being the corporate accommodation residence to both a global petroleum company and an US
government agency, had a positive impact on net asset value in the period notwithstanding the fact that the capital raise had an offsetting dilutive
impact as a result of being pregnant with distribution.
The Company has access to a significant and growing pipeline of potential investments that meet its strict investment criteria set out beloow:
1) Geographic and asset class diversification, which is delivered by our expansion into Ghana. The Group's portfolio is now situated between North, West,
East and SADAC Africa. These regions are all driven by different economic drivers and do not track the same cycles. The Group is not heavily reliant on
the commodity cycle and is exposed to other industries/sectors including retail, hospitality and financial services. The Group has a soft hurdle of not
being more than 25% exposed to one geography. The expansion of the Ghanaian office portfolio and further investment into corporate accommodation further
diversified the asset classes of the Group.
2) The Group targets to have 50% of its portfolio located in investment grade countries in Africa, being Botswana, Morocco and Mauritius, characterised
by the ease of doing business and more sophisticated capital markets. The Company remains focused on continuing to identify further potential investment
pipeline in these markets.
3) The investment pipeline remains focused on assets with multinational tenants and on securing revenues in hard currencies. The Company currently has
92.3% of its rental income from multinational tenants and collects 93.2% of the revenue stream in hard currency (including pegged currencies).
In a challenging retail market, shareholder value has been protected through active management of the day to day operational activities including the
tenant mix, extension of leases and exiting of non-performing brands, whilst at the same time progressing our strategy of focusing on convenience retail
that services the basic needs of the underlying communities. This can be seen in the asset valuations.
The Group current vacancy rate of 3.4% is expected to be significantly reduced with the completion of Anfa which is targeted for mid-2019. The
redevelopment is on track and on budget and we expect to see a valuation uplift at completion, which will deliver a prime, family focused and affordable
retail centre in the catchment area of Casablanca. The weighted average lease expiry of 6.5 years in the period was impacted by the lease lengths of
the recent acquisitions, but the Company continues actively to renew leases and actively pursuing various asset management initiatives, which are
expected to drive longer lease lengths and higher quality tenants. Our tenant relationships are important to the long term success of the Company and the
executive team and founders manage this very closely. Currently close to 70% of the revenue is collected from the Company’s top 15
tenants.
The countries on which the Company focuses its investment continue to see good GDP growth, including Mozambique, which despite a number of macro
challenges over the previous years, is now growing off a lowered base. We are seeing a significant improvements in the economic environment with major
contracts being signed with international global players for foreign investment into Mozambique. This has had a direct impact on the demand for office
space specifically in Maputo, the capital of Mozambique, and we have seen significant lease uptake and interest in office space by these global
organisations.
The Group has access to a large attractive pipeline of potential investments, which we continue to grow selectively. The Company continues to maintain
strong capital discipline by turning down a number of these opportunities as a result of the Group’s detailed due diligence process and not meeting our
strict investment criteria and/or risk mitigation requirements. The Group’s ability to source high quality investment opportunities is significant and we
remain focusing on assets let to high quality multinational tenants on hard currency leases that will deliver further value to our shareholders over the
short and longer term.
The Group has a well established compliance and risk management team that not only manages the complex regulatory environments but also the continuous
monitoring of the countries of investment.
During the period, the Company implemented a fully integrated and automated property management system.
Outlook
The Company continues to deliver on its targets of annual income distribution and total annual return growth and is well positioned to capitalise on
significant potential growth from its unique high quality portfolio of properties as well as further attractive investment opportunities across the
African continent. Given the strength of the Group’s existing portfolio the it expects to continue to deliver annual rental growth as well as possible
capital value increases through yield compression.
The Group is on track to move trading in its shares to the premium listing segment of the main market of the London Stock Exchange in the last quarter of
2019 as well as inter posing a UK Holdco structure, which is expected to facilitate the Group’s eligibility for inclusion in the FTSE UK Index Series,
which, in turn, is anticipated to improve significantly the liquidity in the Company’s shares and further diversify the Company’s shareholder base.
The Group is continuing to focus on cost optimization both at a property and corporate level to reduce the overall cost base and deliver further value to
our shareholders. We will continue to focus on identifying potential investments where the Company has the current infrastructure cost base in place as
well as the potential for the full internalization of the Company’s property management function across all markets.
We expect retail to remain challenging in both the occupier and investment markets against the backdrop of an uncertain economic outlook, but we expect
to deliver value by continuing to focus on maximising the yield of the current portfolio and unlocking value through the Company’s operational
expertise, financial strength and proactive asset management.
Through opportunities presented by the Group’s recent LSE listing, the Company is well positioned to continue to add high quality assets to its portfolio
selectively, focused on assets leased to multinational corporates and attracting hard currency rental streams, ensuring that potential investments are
value accretive. The Company is well placed to continue to benefit from its strong position in the market and deliver attractive returns to our
shareholders over the short and longer term.
Bronwyn Corbett
Chief Executive Officer
BUSINESS REVIEW
Property diversification
The Group has continued to diversify its geographical and sectoral splits with two new acquisitions in Ghana (office) and one acquisition in Mozambique
(corporate accommodation) during the period. The Group is strategically re-positioning itself with a more balanced geographic and sectoral
profile.
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Geographical split by property value 31 Dec 2017 31 Dec 2018
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Mozambique 31.4% 38.1%
Mauritius 26.9% 22.7%
Morocco 15.3% 13.2%
Kenya 3.8% 4.9%
Zambia 22.5% 12.8%
Botswana 0.1% 0.4%
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Total 100% 100.0%
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Sector split by property value 31 Dec 2017 31 Dec 2018
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Office 32.4% 28.7%
Retail 37.7% 31.6%
Light industrial 5.0% 4.6%
Hospitality 24.2% 20.5%
Held for sale 0.0% 0.5%
Corporate accommodation 0.0% 13.7%
Other 0.7% 0.4%
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Total 100.0% 100.0%
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WALE
WALE has reduced from 7.4 years at June 2018 to 6.5 years at December 2018. The WALE was reduced by the acquisitions of 5th Avenue and CADS II commercial
offices due to the remaining period of the initital five year lease at acquisition date. The Group has however identified future potential NAV
opportunities due to the strength of the counterparties occupying these properties and believes that it will have the opportunity to extend the leases on
the properties to create future revenue growth.
Asset management
The Group has reduced the operating cost to income ratio (including associates) from 18.6% in 2018 to 15.2% for the period ending December 2018. This
ratio is primarily the result of the triple net and double net lease structures within the portfolio and active asset management with regards to cost
efficiencies has started to show results, particularly in Mozambique.
The challenging retail market conditions across the African continent had an adverse impact on the Group's EPRA occupancy rates resulting in the
occupancy rates dropping by 0.7% to 96% for the period ended December 2018. The primary contributor to the slight reduction in occupancy rate was the
liquidation of the anchor supermarket tenancy, at Zimpeto Shopping Centre. Subsequent to our interim period end, the anchor has been successfully
replaced with a strong global supermarket anchor brand, Spar, on an initial five year lease. The occupancy rate of 96.6% at 31 January 2019 demonstrates
that the Group is actively managing the portfolio through proactive lease renewals with high quality tenants. The breakdown of the tenant mix below
illustrates Grit's continuous ability to partner with high quality tenants across the portfolio.
Classification %GLA % Rentals
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Forbes 2000 24.0% 34.7%
Other Global 17.8% 43.4%
Pan African 51.4% 14.5%
National 4.7% 5.3%
Local 2.1% 2.2%
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Total Classified 100.0% 100.0%
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Whilst the portfolio has experienced a challenging retail environment in general, lease negotiations (renewals, new leases and lease extensions) have
successfully introduced new global counterparties into the portfolio tenancy mix and/or lengthened some of our lease periods – the benefits of which is
reflected in a positive valuation uplift of 2.5%.
Notable new leases entered into by the Group during the period includes:
Mozambique:
Global Petroleum Company Leased premises expansion on remaining ten year lease
Swiss Embassy New five year lease
Spar New supermarket anchor at Zimpeto for five years
ENI Three Units at Acacia Estate
Morocco:
Marks & Spencer Five year extension in final negotiations (9 years remaining on current lease)
Terranova New nine year lease
FINANCIAL REVIEW
Financial overview
The financial results for the six months ended 31 December 2018 have shown a solid return delivering a distributable earnings per share of US$6.06 cps
(Dec 2017: US$6.07 cps). The results reflect the resilient property portfolio’s robust performance in challenging African market conditions,
particularly in relation to retail performance. The EPRA NAV return from operations showed an increase of US$7.5 cps although this was diluted by the
impact of the $132.2m capital raised in July 2018, which resulted in a net decrease of US$3.8 cps (being the reduction due to the capital raise of US$4.6
cps less the resultant value uptick, net of costs, from the acquired properties of US$0.6 cps). A further reduction in the NAV was due to the US$6.3 cps
dividend paid in the period. Included in the above is the impact of the Euro vs the US Dollar amounting to (US$ 1.1 cps).
The Group utilised the proceeds of the capital raised to complete the asset acquisitions of 80.1% of Acacia Estate (a housing compound in Maputo,
Mozambique leased to the US State Department and a global petroleum company on long term corporate leases - US$38.8 million), 5th Avenue (an office
complex in Accra Ghana anchored by the American Tower Corporation and GCNet - US$11.5 million) and 50% of CADS II Office Building (in Accra, Ghana fully
let to Tullow Oil - US$8.5 million) in 2018. The Group also settled the debt amounting to US$46.4 million which resulted in a material reduction in the
Group’s LTV position to 43.4% at 31 December 2018 compared to 51.7% at 30 June 2018. The balance of the proceeds was utilised to pay a construction
deposit on a warehouse in Nairobi, Kenya and for capital calls for Gateway Delta (a development company which the Group owns 19.98%).
Presentation of financial results
The financial statements have been prepared in accordance with IFRS, in accordance with best practice in the sector, alternative performance measures
have also been provided to supplement IFRS, based on the recommendations of European Public Real Estate Association (“EPRA”). EPRA’s Best Practice
Recommendations have been adopted widely throughout this report and are used within the business when considering our operational performance of the
properties. Full reconciliations between IFRS and EPRA figures are provided in note 16.
To ensure consistent and comparable information, the Group has elected to adjust the amounts for the six months ended 31 December 2017 to reflect the
impact of the restatements to the financial statements and the change in accounting policy adopted as part of the Historic Financial Information as
disclosed in the prospectus for the London Stock Exchange listing . Full information regarding the restatements can be found within note 42 of the 2018
Annual Report of the Group.
Income statement
Gross rental income, including associates, increased by US$8.4 million to US$29.9 million (six months ending December 2017: US$21.5 million). This
increase is attributable to escalations and new leases from the portfolio US$0.8 million, the impact of the retail vacancies (US$0.4 million), the full
period impact of assets acquired in 2018 (US$5.3 million) and assets acquired in this current financial period (US$2.7 million). Property operating
expenses, including associates, increased by US$0.6 million, attributable to decreases from the portfolio (US$0.1 million), increase from the full
period impact of assets acquired in 2018 (US$0.5 million) and assets acquired in the current financial period (US$0.2 million). Net property income
including associates increased to US$25.4 million from US$17.5 million in the prior year.
Despite vacancies across the portfolio remaining low, the strategic vacancies within Anfa Place Shopping Centre (in line with the upgrade to the centre)
limited the increase in overall revenue. The final phase of the redevelopment is expected to be completed by 30 June 2019 when operations are expected
to normalise and vacancies to reduce to less than 5% at Anfa.
Operating costs on the entire portfolio (included assets held in associated companies) as a percentage of revenue decreased in the period from 18.6% for
the period ended December 2017 to 15.2% in the period ended December 2018. This has been achieved through the acquisition of triple net lease assets and
cost savings initiatives and synergies across the geographical locations.
Revised six Revised six Revised six Revised six Revised six Revised six
months ended months ended months ended months ended months ended months ended
31 Dec 2017 31 Dec 2017 31 Dec 2017 31 Dec 2018 31 Dec 2018 31 Dec 2018
Subsidiaries Associates Total Subsidiaries Associates Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
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Revenue 15,287 6,178 21,465 19,375 10,560 29,935
Operating expenses (3,280) (706) (3,986) (3,977) (577) (4,554)
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Net operating income 12,007 5,473 17,480 15,398 9,983 25,381
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Operating costs ratio 21.5% 11.4% 18.6% 20.5% 5.5% 15.2%
The Group incurred a 4.5% comparable increase in administration expenses during the period to US$8.1 million, largely attributable to costs associated
with the Group’s admission to the LSE, costs within Freedom Asset Management (a company controlled by the Group, but with no ownership interests) and
transactional fees incurred. Adjusted administration costs1 attributable to the shareholders of the Group increased by 35.4% to US$5.4 million.
The Group has delivered on its commitment to ensure the staffing complement is sufficient to absorb the recent and future expected growth of the
portfolio. This is demonstrated by the comparative head count of staff. Staff in all departments have been bolstered prior to the LSE listing and has
been structured to absorb additional growth in assets. Staff increases are attributable to the on boarding of Ghana as an investment destination, the
internalizing of the property management in Mozambique and to ensure continued compliance with the financial reporting and strict corporate governance
requirements with additional staff in the compliance and finance functions.
1 Adjusted administration costs are defined and calculated as administration costs less non-controlling administration costs, acquisition cost and
initial setup costs is disclosed in note 15.
as at as at
DEPARTMENT 31 Dec 2017 31 Dec 2018 Movement
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Legal & Compliance 1 4 3
Operations 7 18 11
Communications 1 2 1
Finance 9 17 8
Investment 5 8 3
Admin 6 9 3
Management 4 5 1
Business Development - 1 1
Human Resources - 1 1
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35 65 30
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With the Group’s active on-site approach to asset and property management in the various jurisdictions, it has attracted a number of highly skilled and
experienced staff to manage the portfolio. The annualised adjusted administration costs as a percentage of income producing assets have reduced from
1.4% in 2018 to 1.3% for the period ended 31 December 2018, showing the commitment by the Group to proactively manage the cost base.
Total profit for the period attributable to shareholders was US$20.6 million compared with US$18.1 million for the previous period.
Dividend
The robust financial performance has resulted in distributable earnings of US$6.06 cps for the period (Dec 2017: US$6.07 cps).
Considering the importance of the completion of the Anfa Place Shopping Centre’s redevelopment, the Board has elected to take a prudent approach and retain a
portion of the distribution to the end of year to ensure there is sufficient cash reserves should any unforeseen overruns occur on the redevelopment. The
Board has thus declared an interim distribution of US$5.25 cps (i.e. 87% of distributable earnings). The Group maintains its targeted annual dividend
growth of 3% - 5% in 2019.
Net asset value
NAV per share decreased by 0.8% year-on-year, or US$1.1 cps, from US$135.6 cps to US$134.5 cps. EPRA NAV decreased by 1.8% or US$2.6 cps from US$145.7
cps to US$143.1 cps. The movement in net asset value per share is shown in the table below:
IFRS EPRA
Net Asset Value Movement US$ cps US$ cps
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Opening Balance 1 June 2018 135.6 145.7
Dividend paid (6.3) (6.3)
Capital raise impact
- Share issue at US$1.43 (0.8) (0.8)
- Share issue costs (3.6) (3.6)
- Valuation impact of new acquisitions net of costs (0.7) 0.6
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Total Capital raise impact (5.1) (3.8)
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Portfolio performance
- Distributable earnings 5.5 5.5
- Fair value adjustments 4.6 3.3
- Other non-cash items 0.2 (1.3)
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Total Portfolio performance impact 10.2 7.5
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Closing Balance 31 December 2018 134.5 143.1
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(0.8%) (1.8%)
Valuations including associates
Fair Value Movement excluding Light Corporate % Increase/
contractual receipts from vendors Retail Office Hospitality IndustrialAccommodation Land TOTAL (decrease)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
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Mauritius - (101) 5,608 - - - 5,507 3.5%
Mozambique (932) 4,002 - - 3,848 - 6,918 2.6%
Morocco (656) - - - - - (656) (0.7%)
Zambia (147) - - - - - (147) (0.2%)
Kenya - - - 998 - 20 1,018 3.7%
Ghana - 1,657 - - - - 1,657 3.3%
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TOTAL (1,735) 5,558 5,608 998 3,848 20 14,297 2.5%
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% Increase / (decrease) (0.8%) 3.6% 4.0% 3.9% 3.9% 0.6% 2.5% 0.0%
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Retail
Retail assets decline is in line with the retail market in general. The outlook for the retail sector remain under pressure in the coming months although
the upgrade to Anfa Place Shopping Centre should produce positive valuation growth by year end.
Office
Mozambique assets have benefited from securing long term global tenancies and the increased demand for office space consequent to the commencement of the
LNG construction phase in the Rovuma Basin.
Hospitality
Increased sale activity in the Mauritian market at 7% cap rates has provided additional market comparisons to underpin recent valuations.
Light Industrial
Normal lease escalations in Kenya are driving the uptick in the property value.
Corporate accommodation
Acquisition value upside driven by the letting activities and the full occupancy following the transfer date.
Impact of the Euro vs United States Dollar
The Net exposure of Group to the Euro is US$66.6 million (being total Euro based assets of US$180.6 million versus debt of US$114.0 million) compared to
June 2018 of US$54.9 million (being total Euro based assets of US$180.7 million versus debt of US$ 125.8 million). The 2.1% movement of the Euro versus
the US Dollar from 30 June 2018 to 31 December 2018 has reduced the NAV growth of the Group by US$ 1.1 cps during the period.
Total investment in income generating assets has increased from US$642.3 million in June 2018 to US$796.4 million in December 2018. This include the
impact of the change in accounting of the Makubu Mall. The Group obtained effective control over the asset on 31 December and have consolidated the
asset as per the relevant IFRS accounting standards and have recognised the minority stake as a movement in the non-controlling interest in the period.
The impact, based on the fair value of the assets on 31 December 2018, amounted to an increase in income generating assets of US$37.7 million. Additional
material movements include the acquisitions of Acacia Estate (80.1%), 5th Avenue and CADS II (50%).
30 Jun 2018 31 Dec 2018
COMPOSITION OF INCOME PRODUCING ASSETS US$'m US$'m
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Investment properties 383.1 552.8
Deposits paid on investment properties 11.1 15.4
Other investments 4.2 4.2
Investment property included within ‘Investment of associates’ 201.3 174.0
Other loans receivable* 42.1 42.1
Intangible assets (right of use of land) 0.5 0.5
Current assets including non-current assets held sale - 7.4
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642.3 796.4
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* This includes receivable balances from partners in Zambia relating to the back-to-back loan from Bank of China of $77m used to fund the acquisition and
loans advanced to Gateway Delta.
Net debt, cash flow and financing
The Group raised an additional US$98.3 million of debt in the period to fund acquisitions. As financing is integral to our business model, the Group has
continued to develop strong relationships with financiers. The multi-bank approach adopted by Grit has continued, with the main banking partners being
Bank of China, Standard Bank, Barclays Bank and SBM (Mauritius) Ltd. The breakdown of the interest-bearing borrowings is listed in note 7.
The Group’s loan-to-value (“LTV”) has decreased to 43.4% in six months ended December 2018 (30 June 2018: 51.4%). This was driven by the settlement of
the short-term funding facilities from the proceeds of the successful fundraising in July 2018. Gearing has also been impacted by the new debt raised
relating to the acquisitions of Acacia Estate, 5th Avenue and CADS II, a revolving credit facility with Standard Bank and the consolidation of Makubu
Mall.
In the year, the Group refinanced debt of US$51.3 million held with Standard Bank South Africa and SBM (Mauritius) Ltd to ensure the Group manages the
weighted average costs of debt (“WACD”). The 3 month USD Libor rates increased from 1.49% at 30 June 2018 to 2.75% at 31 December 2018. The 1.26%
increase in USD Libor rates in the period resulted in the Group’s WACD increased to 6.31% (2018: 5.69%). The increase in WACD was also driven by the
repayment of low interest rate Euro based revolving credit facilities in August 2018. Euro based exposures are entered into to match the currency of the
underlying assets with the funding source.
The Group has embarked on various refinance initiatives, most notably the increase in gearing of Euro based assets (which will reduce the net exposure to
Euro Dollar fluctuations) and to refinance the Mozambique portfolio through a syndicated loan structure resulting in an estimated reduction in cost of
funding of approximately 1% on the Mozambique portfolio.
Leon van de Moortele
Chief Financial Officer
PRINCIPAL RISKS AND UNCERTAINTIES
Grit maintain a Key Risk Register which is shared with the Risk Committee on a quarterly basis. The key risks are well managed and monitored regularly as
the risks could change with changes in the industry, economy and stakeholders, amongst others.
The principal risks of the business are set out on pages 41-45 of the 2018 Annual Report alongside their potential impact and related mitigations. These
risks fall into four categories: compliance; strategic; financial and operational.
The Board has reviewed the principal risks in the context of the second half of the current financial year. The Board believes there has been no material
change to the risk categories outlined in the 2018 Annual Report of the Group and that the existing mitigation actions remain appropriate to manage
them.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors confirm that the condensed consolidated half year financial statements have been prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ as issued by the International Accounting Standards Board (“IASB”) and that the half year management report includes a fair review of the
information required by the Disclosure Guidance and Transparency Rules ("DTR") 4.2.7R and DTR 4.2.8R, namely:
· important events that have occurred during the first six months and their impact on the condensed set of half year financial statements, and a
description of the principal risks and uncertainties for the remaining six months of the financial year; and
· material related party transactions in the first six months and a fair review of any material changes in the related party transactions
described in the last Annual Report.
The maintenance and integrity of the Grit website is the responsibility of the directors.
Legislation in Mauritius governing the preparation and dissemination of financial statements may differ from legislations in other jurisdictions. The
directors of the Group are listed in its Annual Report for the year ended 30 June 2018. A list of current directors is maintained on the Grit website:
www.grit.group.
On behalf of the Board
Bronwyn Corbett Leon van de Moortele
Chief Executive Officer Chief Financial Officer Unaudited Unaudited
Revised six six months
months ended ended
31 Dec 2017 31 Dec 2018
Consolidated statement of comprehensive income Notes US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Gross rental income 8 14,868 18,733
Straight-line rental income accrual 419 642
----------------------------------------------------------------------------------------------------------------------------------------------------------
Revenue 15,287 19,375
Property operating expenses (3,280) (3,977)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net property income 12,007 15,398
Other income 1 101
Administrative expenses (including corporate structuring costs) 15 (7,868) (8,223)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit from operations 4,140 7,276
----------------------------------------------------------------------------------------------------------------------------------------------------------
Fair value adjustment on investment properties 1,540 12,373
Contractual receipts from vendors of investment properties 3 7,612 2,652
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total fair value adjustment on investment properties 9,152 15,025
Fair value adjustment on other investments 53 26
Fair value adjustment on other financial assets (80) -
Fair value adjustment on derivative financial instruments (52) -
Share-based payment expense (183) (78)
Share of profits from associates 4 5,851 7,720
Foreign currency gains / (losses) 5,582 (1,084)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit before interest and taxation 24,463 28,885
Interest income 9 2,368 6,669
Finance costs 10 (9,362) (10,999)
Profit for the period before tax 17,469 24,555
Taxation (161) (3,605)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit for the period after tax 17,308 20,950
----------------------------------------------------------------------------------------------------------------------------------------------------------
Gain / (loss) on translation of functional currency 2,339 (1,290)
Non-controlling interest - -
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income 19,647 19,660
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit / (loss) attributable to:
Owners of the parent 18,109 20,643
Non-controlling interests (801) 307
----------------------------------------------------------------------------------------------------------------------------------------------------------
17,308 20,950
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income/ (loss) attributable to:
Owners of the parent 20,448 19,353
Non-controlling interests (801) 307
----------------------------------------------------------------------------------------------------------------------------------------------------------
19,647 19,660
----------------------------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------------------------------
Audited as Unaudited
as at as at
30 Jun 2018 31 Dec 2018
Consolidated statement of financial position Notes US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Assets
Non-current assets
Investment properties 3 383,132 552,763
Deposits paid on investment properties 3 11,117 15,382
Property, plant and equipment 1,749 1,847
Intangible assets 485 492
Investments in associates 4 165,311 135,695
Other investments 5 4,154 4,180
Related party loans receivable 802 802
Other loans receivable 6 42,863 42,863
Deferred tax 8,999 10,059
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total non-current assets 618,612 764,083
----------------------------------------------------------------------------------------------------------------------------------------------------------
Current assets
Non-current assets held for sale - 4,282
Trade and other receivables 29,786 57,771
Related party loans receivable 77 2,000
Current tax receivable - 402
Cash and cash equivalents 3,086 5,698
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total current assets 32,949 70,153
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total assets 651,561 834,236
----------------------------------------------------------------------------------------------------------------------------------------------------------
Equity and liabilities
Total equity attributable to equity holders
Ordinary share capital 328,394 443,242
Treasury shares reserve (14,811) (14,811)
Foreign currency translation reserve 1,780 490
Antecedent dividend reserve - 927
Retained loss (35,980) (28,776)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Equity attributable to owners of the Company 279,383 401,072
----------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Controlling interests (3,940) 16,655
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total equity 275,443 417,727
----------------------------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Non-current liabilities
Redeemable preference shares 12,840 12,840
Interest-bearing borrowings 7 207,106 201,462
Interest free shareholder loans from property co-owners - 19,230
Obligations under finance leases 124 89
Deferred tax 20,791 25,463
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total non-current liabilities 240,861 259,084
----------------------------------------------------------------------------------------------------------------------------------------------------------
Current liabilities
Interest-bearing borrowings 7 99,038 123,415
Obligations under finance leases 51 50
Trade and other payables 26,151 25,334
Current tax payable 969 -
Derivative financial instruments 22 (3)
Other financial liability 128 128
Bank overdrafts 8,898 8,501
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 135,257 157,425
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 376,118 416,509
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total equity and liabilities 651,561 834,236
----------------------------------------------------------------------------------------------------------------------------------------------------------
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
Consolidated statement of cashflows Notes US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Cash generated from operations
Profit before tax for the period 17,469 24,555
Adjusted for:
Depreciation and amortisation 137 167
Interest income (2,368) (6,669)
Share of profits from associates 3 (5,851) (7,720)
Finance costs 10 9,362 10,999
Allowance for credit losses - 135
Foreign currency losses/(gains) (5,582) 1,084
Straight-line rental income accrual (419) (642)
Share based payment expense 183 78
Fair value adjustment on investment properties 3 (9,152) (12,373)
Fair value adjustment on other investments (53) (26)
Fair value adjustment on other financial asset 80 -
Fair value adjustment on derivative financial instruments 52 -
----------------------------------------------------------------------------------------------------------------------------------------------------------
3,993 9,453
----------------------------------------------------------------------------------------------------------------------------------------------------------
Changes to working capital
Movement in trade and other receivables (10,156) (23,768)
Movement on deposits paid on investment properties 3 20,323 (6,266)
Movement in trade and other payables (5,554) (4,953)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Cash generated / (utilised in) from operations 8,606 (25,534)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Taxation paid 111 (569)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash generated from / (utilised in) operating activities 8,717 (26,103)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Cash utilised on investing activities
Acquisition of investment properties 3 (44,158) (80,958)
Acquisition of property, plant and equipment (49) (105)
Acquisition of other investments 5 (3,849) -
Net cash outflow on acquisition of associates 4 (15,738) (10,500)
Dividends received from associates 3,972 3,681
Interest received 9 3,849 4,864
Related party loans (advanced) / repaid (458) -
Other loans (advanced) / repaid (19,532) (1,923)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash utilised in investing activities (75,963) (84,941)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Proceeds from the issue of ordinary shares - 132,094
Share issue expenses - (10,666)
Ordinary dividends paid (2,739) (18,749)
Proceeds from interest bearing borrowings 123,157 98,269
Settlement of interest-bearing borrowings (49,287) (81,135)
Finance costs paid 10 (7,208) (5,738)
Settlement of obligations under finance leases (20) (37)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash generated from financing activities 63,903 114,038
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net movement in cash and cash equivalents (3,343) 2,994
Cash at the beginning of the year 24,230 (5,812)
Effect of foreign exchange rates (212) (15)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents at the end of the period 20,675 (2,803)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign Foreign
currency Antecedent Non- Total
Share Treasury translation dividend Retained controlling equity
Capital Shares reserve reserve earnings interest holders
Consolidated statement of changes in equity US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance as at 1 July 2017
- As previously reported - - 319,979 1,063 1,261 (7,578) 314,725
- effect of prior year adjustments - (15 031) 2 212 - (43 599) (1 123) (57 541)
----------------------------------------------------------------------------------------------------------------------------------------------------------
- as adjusted 319,979 - 1,063 1,261 (7,578) - 314,725
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit for the period - - - - 18,109 (801) 17,308
Foreign currency translation differences - - - - - 2,339 2,339
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income - - 2,339 - 18,109 (801) 19,647
----------------------------------------------------------------------------------------------------------------------------------------------------------
Ordinary dividends paid - - - - (1,261) (1,478) (2,739)
Share based payments - - - - - 214 214
Treasury shares - - - - - 220 220
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance as at 31 December 2017 319,979 220 3,402 - 9,267 (801) 332,067
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance as at 1 July 2018
- As previously reported 328,394 (14,811) 1,780 - (35,980) (3,940) 275,443
Adoption of IFRS 9 - - - - (265) - (265)
Profit for the year - - - - 20,643 307 20,950
Foreign currency translation differences - - (1,290) - - - (1,290)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income - - (1,290) - 20,643 307 19,660
Ordinary shares issued 132,094 - - - - - 132,094
Ordinary shares issue expenses (10,666) - - - - - (10,666)
Transfer to antecedent dividend reserve (6,580) - - 6,580 - - -
----------------------------------------------------------------------------------------------------------------------------------------------------------
Ordinary dividends paid - - - (5,653) (13,096) - (18,749)
Share based payments - - - - (78) - (78)
Minority interest acquired through effective control - - - - - 20,288 20,288
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance as at 31 December 2018 443,242 (14,811) 490 927 (28,776) 16,655 417,727
----------------------------------------------------------------------------------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
This condensed consolidated interim financial information (financial statements) for the six months ended 31 December 2018 has been prepared on a going
concern basis and in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 ‘Interim Financial Reporting’
as issued by the IASB, the JSE, LSE and SEM 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.
In order to satisfy themselves that the Group has adequate resources to continue in operational existence for the foreseeable future, the Directors have
reviewed an 18-month cash flow target includes assumptions about future trading performance and debt requirements, and an assessment of the potential
impact of significant changes to those cash flows. This, together with available market information, headroom under the financial covenants, and
experience of the Group's property portfolio and markets, has given the Directors sufficient confidence to adopt the going concern basis in preparing the
financial statements.
The condensed consolidated interim financial information does not comprise statutory accounts. Statutory accounts for the year ended 30 June 2018,
presented in accordance with International Financial Reporting Standards (“IFRS”), were approved by the Board of Directors on 26 September 2018 and
delivered to the Registrar of Companies in Mauritius. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter
paragraph. The condensed consolidated interim financial information should be read in conjunction with the Group’s annual financial statements for the
year ended 30 June 2018. This condensed consolidated interim financial information was approved for issue on 13 February 2018.
Significant Judgements
The preparation of these financial statements requires the Board to make judgements, assumptions and estimates that affect amounts reported in the
Statement of Comprehensive Income and Balance Sheet. The directors consider the valuation of investment property to be a critical judgement because of
the level of complexity, judgement or estimation involved and its impact on the financial statements. This is consistent with the financial statements
for the previous year end. Full disclosure of the critical judgements, assumptions and estimates is included in the 2018 financial statements.
The condensed consolidated interim financial information has not been reviewed or reported on by the Group’s auditors.
2. Changes in accounting policies
The condensed consolidated interim financial information has been prepared on the basis of the accounting policies, significant judgements, key
assumptions and estimates as set out in the notes to the Group’s annual financial statements for the year ended 30 June 2018, as amended where relevant
to reflect the new standards, amendments and interpretations which became effective in the period.
New accounting standards and interpretations
a) The following amendment to an existing Standard was relevant to the Group and mandatory for the first time for the financial year beginning 1
July 2018:
Effective
Standard or Interpretation from
----------------------------------------------------------------------------------------------------------------------------------------------------------
Amendments to IAS 7 Statement of cash flows – disclosure initiative 01 Jan 2017
Annual Improvements 2014-2016 01 Jan 2018
Amendments to IFRS 2 Classification of share-based payment transactions 01 Jan 2018
IFRS 15 Revenue from contracts with customers 01 Jan 2018
IFRS 9 Financial instruments 01 Jan 2018
----------------------------------------------------------------------------------------------------------------------------------------------------------
IFRS 9 – Financial Instruments
In the current period, the Group has applied IFRS 9 Financial Instruments and the related consequential amendments to other IFRSs. IFRS 9 introduces new
requirements for 1) the classification and measurement of financial assets and financial liabilities, 2) expected credit losses (“ECL”) for financial
assets and other items (for example, lease receivables) and 3) general hedge accounting.
The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9. i.e. applied the classification and measurement requirements
(including impairment) retrospectively to instruments that have not been derecognised as at 1 July 2018 (date of initial application) and has not
applied the requirements to instruments that have already been derecognised as at 1 July 2018.
KEY CHANGES IN ACCOUNTING POLICIES RESULTING FROM APPLICATION OF IFRS 9
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
All recognised financial assets that are within the scope of IFRS 9 are subsequently measured at amortised cost or fair value.
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)
Financial assets that do not meet the criteria for being measured at amortised cost or fair value through other comprehensive income (“FVTOCI”) or
designated as FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or
loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset and is included in the “other
gains and losses” line item.
For non-substantial modifications of financial liabilities that do not result in derecognition, the carrying amount of the relevant financial liabilities
will be calculated at the present value of the modified contractual cash flows discounted at the financial liabilities’ original effective interest
rate. Transaction costs or fees incurred are adjusted to the carrying amount of the modified financial liabilities and are amortised over the remaining
term. Any adjustment to the carrying amount of the financial liability is recognised in profit or loss at the date of modification.
The Group reviewed and assessed its financial assets and liabilities as at 1 July 2018 based on the facts and circumstances that existed at that date.
There would be no impact on initial application of IFRS 9 as all other financial assets and financial liabilities will continue to be measured on the
same basis as are currently measured under IAS 39.
IMPAIRMENT UNDER ECL MODEL
The Group recognises a loss allowance for ECL on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables and
bank balances and cash). The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial reco
gnition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast,
12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after
the reporting date. Assessment are done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future
conditions.
The Group recognises lifetime ECL for trade receivables. The ECL on these assets are assessed individually for debtors with significant balances and/or
collectively using a provision matrix with appropriate groupings.
For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since
initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in
the likelihood or risk of a default occurring since initial recognition. When the financial instrument is determined to have low credit risk, the Group
assumes that the credit risk on a financial instrument has not increased significantly since initial recognition.
SIGNIFICANT INCREASE IN CREDIT RISK
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition.
The Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due,
unless the Group has reasonable and supportable information that demonstrates otherwise.
The Group considers that default has occurred when the instrument is more than 90 days past due unless the Group has reasonable and supportable
information to demonstrate that a more lagging default criterion is more appropriate.
MEASUREMENT AND RECOGNITION OF ECL
The ECL is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash
flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition. For a lease receivable, the cash
flows used for determining the ECL is consistent with the cash flows used in measuring the lease receivable in accordance with IAS 17
Leases.
The Group adopted the practical expedient to determine ECL on account receivables using a provision matrix based on historical credit loss experiences to
estimate lifetime ECL. The ECL model applied to other financial assets also required judgment, assumptions and estimations on changes in credit risks,
forecasts of future economic conditions and historical information on the credit quality of the financial asset. The Group uses three main components to
measure ECL on long-term loans. These are probability of default (PD), loss given default (LGD) and exposure at default (EAD). The Group has leveraged
existing parameters used for determining capital demands under the Basel guidance and internal risk management practices as much as possible to calculate
ECL. The provision matrix and ECL model applied do not have a significant impact on the Group’s financial assets measured at amortized costs.
The Group recognises an impairment gain or loss in profit or loss (general and administrative expenses line) for all financial instruments by adjusting
their carrying amounts, except for trade and other receivables where the corresponding adjustment is recognised through a loss allowance
account.
Impairment loss reversals are also through the profit or loss. The impairment reversal is limited to the lesser of the decrease in impairment or the
extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortized cost would have been
had the impairment not been recognized, after the reversal.
Impairment allowance reconciliations
Reconciliation from IAS 39 to IFRS 9 - financial assets under IFRS 9 subject to an increase in impairment allowance
The table below, reconciles the closing impairment allowances for financial assets in accordance with IAS 39 as at 30 June 2018 and the opening
impairment allowances determined in accordance with IFRS 9 as at 1 July 2018.
Impairment allowance reconciliations
Reconciliation from IAS 39 to IFRS 9 - financial assets under IFRS 9 subject to an increase in impairment allowance
The table below, reconciles the closing impairment allowances for financial assets in accordance with IAS 39 as at 30 June 2018 and the opening
impairment allowances determined in accordance with IFRS 9 as at 1 July 2018.
Impairment Additional Impairment
allowance Reclass- IFRS 9 allowance
under ification impairment under
Reconciliation of impairment allowance and provisions IAS 39 impact allowance IFRS 9
US$000 US$000 US$000 US$000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Related party loans receivable - - 2 2
Other loans receivable - - 138 138
Trade and other receivables - - 125 125
Cash and cash equivalents - - - -
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total impairment and provision - - 265 265
----------------------------------------------------------------------------------------------------------------------------------------------------------
The introduction of IFRS 9 has increased the total impairment allowance by approximately US$265k, from $0 on date of initial application. No
reclassification impact on adoption of IFRS 9.
IFRS 15, Revenue from Contracts with Customers
IFRS 15, Revenue from Contracts with Customers, is effective for annual periods beginning on or after January 1, 2018, replacing all existing guidance in
IFRS related to revenue, including (but not limited to) IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 15 Agreements for the Construction of Real
Estate.
IFRS 15 contains a single, control-based model that applies to contracts with customers and provides two approaches to recognizing revenue: at a point in
time or over time. The model features a contract-based five-step analysis of transactions giving guidance on revenue recognition. IFRS 15 also includes
additional disclosure requirements for revenue accounted for under the standard.
Revenue from lease components includes rent, recoveries of property tax and property insurance, and revenue recognition remains consistent with the
accounting policies outlined in the most recent audited annual consolidated financial statements.
Revenue related to the services component of the Group’s leases are accounted for in accordance with IFRS 15. These services consist primarily of
operating costs recoveries for which the revenue is recognized over time, typically as the costs are incurred, which is when the services are provided.
This IFRS 15 treatment is the same as that applied previously under IAS 18.
The Group has applied IFRS 15 for the first time in the current interim period. The Group has applied IFRS 15 modified retrospective approach with the
cumulative effect of initially applying this Standard recognised at the date of initial application, 1 July 2018, in opening retained earnings, with no
restatement of comparative periods.
The adoption of IFRS 15 did not have an impact on the timing of recognition or measurement of revenue and was limited to additional disclosure on the
disaggregation of the Group’s various revenue streams.
b) The following new Standards and amendments to existing Standards are relevant to the Group, are not yet effective in the year ending 30 June
2019 and are not expected to have a significant impact on the Group’s financial statements:
Standard or Interpretation
IFRS 16 Leases
(Effective from 1 January 2019)
IFRS 16 - Leases
For operating leases in excess of one year, this standard requires lessees to recognise a right-of-use asset and a related lease liability representing
the obligation to make lease payments. The right-of-use asset is assessed for impairment annually and is amortised on a straight-line basis. The lease
liability is amortised using the effective interest method.
Lessor accounting is substantially unchanged from current accounting. Therefore, since the Group is primarily a lessor, this standard does not
significantly impact the Group’s financial statements.
c) There are no other Standards or Interpretations that are not yet effective that would be expected to have a material impact on the Group
Segmental information
IFRS 8 requires operating segments to be reported in a manner consistent with the internal financial reporting reviewed by the chief operating decision
maker. The chief operating decision maker of the Group is the Board. The Board is responsible for reviewing the Group’s internal reporting in order to
assess performance. The information reviewed by the Board is prepared on a basis consistent with these financial statements. That is, the information is
provided at a Group level and includes both the IFRS reported results and EPRA measures. Refer to note 11 for segmental reporting.
As at As at
30 Jun 2018 31 Dec 2018
3. Investment properties US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net carrying value of properties excluding straight-line rental income accrual
Cost of investment properties 390,782 545,254
Cumulative foreign currency translation differences (11,808) (13,193)
Cumulative fair value (deficit) / surplus (2,252) 13,461
----------------------------------------------------------------------------------------------------------------------------------------------------------
376,722 545,522
----------------------------------------------------------------------------------------------------------------------------------------------------------
Movement for the period excluding straight-line rental income accrual
Investment property at the beginning of the period 302,495 376,722
Acquisitions and construction of investment properties 64,976 81,313
Transaction costs capitalised 1,235 -
Other capital expenditure - 1,265
Foreign currency translation differences 2,944 (1,384)
Contractual receipts from vendors of investment properties included within interest income - (167)
Transfer of properties from Investment in associates - 75,400
Revaluation of properties at end of period 13,761 15,025
Contractual receipts from vendors of investment properties (reduction in purchase price) (8,689) (2,652)
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at period end 376,722 545,522
----------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation to consolidated statement of financial position and valuations
Investment properties carrying amount per above 376,722 545,522
Straight-line rental income accrual 6,410 7,241
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total valuation of properties 383,132 552,763
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment property pledged as security
Investment property pledged as security as follows:
Mozambican investment properties with a market value of $266.6 million (2018: $198.0 million) are mortgaged to Standard Bank of Mozambique to secure debt
facilities amounting to $10.4 million (2018: $10.4 million), Standard Bank of South Africa to secure debt facilities amounting to $77.8 million (2018:
$50.0 million) and Banco Unico of Mozambique to secure debt facilities amounting to $2.8 million (2018: $2.9 million), Bank of China to secure debt
facilities amounting to $13.3 million (2018: $13.3 million) and Standard Bank (Mauritius) Limited to secure debt facilities amounting to $10.4 million
(2018: $11.0 million).
Moroccan investment properties with a market value of $92.2 million (2018: $92.6 million) are mortgaged to Investec South Africa to secure debt
facilities amounting to $47.5 million (2018: $48.5 million).
Mauritian investment properties with a market value of $67.2 million (2018: $63.7 million) are mortgaged to Barclays Bank of Mauritius to secure debt
facilities amounting to $7.4 million (2018: $7.4 million) and State Bank of Mauritius to secure debt facilities amounting to $25.5 million (2018: $26.0
million).
Kenyan investment properties with a market value of $19.9 million (2018: $18.8 million) are mortgaged to Bank of China to secure debt facilities
amounting to $8.5 million (2018: $8.5million).
Zambian investment properties with a gross market value of $179.3 million (2018: $183.9 million) are mortgaged to Bank of China to secure debt facilities
amounting to $76.4 million (2018: $76.4million). This includes the properties of Cosmopolitan Shopping Centre and Kafubu Mall that is disclosed within
Investments in associates. The Group's share of these properties are disclosed within note 4 as well as in the table below.
Valuation policy and methodology for investment properties held by the Group and by associates
For this interim reporting period, the top 50% of investment properties are valued by reputable RICS accredited valuation experts who have sufficient
expertise in the jurisdictions where the properties are located. The Group also obtained independent external valuation where the significant changes in
the property lease stream or market conditions have been observed in the reporting period. The Group uses Directors valuation for the remainder of the
portfolio for the interim reporting period. All valuations that are performed in the functional currency of the relevant property company and are
converted to United States Dollars at the effective closing rate of exchange. All independent valuations have been undertaken in accordance with the
RICS Valuation Standards that were in effect at the relevant valuation date and are further compliant with International Valuation Standards. Market
values presented by valuers have also been confirmed by the respective valuers to be fair value in terms of IFRS.
In respect of a proportion of the Mozambican investment properties, independent valuations were performed at 31 December 2018 by Jones Lang LaSalle
Proprietary Limited (JLL), Chartered Surveyors, using either the income capitalisation (yield) or the discounted cash flow method. Valuations performed
by REC, Chartered Surveyors and part of the Meridian Group, at 31 December 2018 used the discounted cash flow method.
The Moroccan investment property was independently valued at 31 December 2018 by Knight Frank, Chartered Surveyors, using the term and reversion
approach.
Buffalo Mall has been classified as non-current assets held for sale and carried at the lower of cost of net realisable value (less costs to sell). The
net realisable value less cost to sell was utilised as a base on which the Directors made fair value adjustments as at 31 December 2018.
Mauritian investment properties held by the Group and its associates that were independently valued at 31 December 2018 by Broll Indian Ocean (Pty) Ltd,
Chartered Surveyors, used the discounted cash flow method.
Most recent As at As at
Summary of valuations valuation 30 Jun 2018 31 Dec 2018
by reporting date date US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Commodity House Phase I building (Directors valuation) 30 Jun 2018 43,190 49,000
Commodity House Phase II building (REC) 31 Dec 2018 17,270 15,464
Hollard Building (Directors valuation) 30 Jun 2018 19,600 19,600
Vodacom Building (JLL Sub Saharan Africa) 31 Dec 2018 45,900 46,200
Zimpeto Square (JLL Sub Saharan Africa) 31 Dec 2018 9,200 8,600
Bollore Warehouse (Directors valuation) 30 Jun 2018 6,500 6,600
Barclays House (Directors valuation) 30 Jun 2018 14,840 15,069
Anfa Place Mall (Knight Frank) 31 Dec 2018 92,632 92,164
Tamassa Resort (Broll Indian Ocean) 31 Dec 2018 48,900 52,176
Vale Housing Compound (Directors valuation) 30 Jun 2018 37,300 37,500
Imperial Distribution Centre (Directors valuation) 30 Jun 2018 18,780 19,900
Imperial Phase II Land (Directors valuation) 30 Jun 2018 3,420 3,420
Mukuba Mall Limited (50%) (Directors valuation) 30 Jun 2018 - 75,400
Acacia Estate (80.1%) (JLL Sub Saharan Africa) 31 Dec 2018 - 64,700
5th Avenue (Broll South Africa) 30 Jun 2018 - 21,470
Mall de Tete (Directors valuation) 30 Jun 2018 25,600 25,500
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total valuation of investment properties directly held by the Group 383,132 552,763
Deposits paid on Imperial Phase 2 - 5,500
Deposits paid on VALE Housing Compound 4,117 6,882
Deposits paid on CADS II - 2,000
Deposits paid on Capital Place Limited 5,000 3,000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total deposits paid on investment properties 11,117 15,382
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total carrying value of investment properties including deposits paid 394,249 568,145
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment properties held within associates - Group share
Buffalo Mall Naivasha (50%) includes Broll South
Africa Valuation of US$4.7m and a company adjustment of US$0.6m for June 2018. (Broll South Africa) 30 Jun 2018 - 5,200
Mukuba Mall Limited (50%) 1 (Broll South Africa) 30 Jun 2018 - 38,450
Kafubu Mall Limited (50%) (Broll South Africa) 30 Jun 2018 13,000 11,478
Cosmopolitan Shopping Centre Limited (50%) (Broll South Africa) 30 Jun 2018 40,500 40,500
Beachcomber Hospitality (44.42%) (Broll Indian Ocean) 31 Dec 2018 91,903 91,253
CADS II (50%) (Directors valuation) 30 Jun 2018 - 18,550
Capital Place Limited (47.5%) (Directors valuation) 30 Jun 2018 12,217 12,217
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total of investment properties acquired through associates 201,270 173,998
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment properties held within non-current assets held for sale
Buffalo Mall Naivasha (50%) includes Broll South 30 Jun 2018 - 5,400
Africa Valuation of US$4.7m and a company adjustment of US$0.6m for June 2018. (Broll South Africa)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total of investment properties held within non-current assets held for sale - 5,400
----------------------------------------------------------------------------------------------------------------------------------------------------------
Right of use of land
Barclays House vacant land recognised as an intangible asset 508 492
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total portfolio 596,027 748,035
----------------------------------------------------------------------------------------------------------------------------------------------------------
Note 1: Following changes to the shareholder agreement on 31 December 2018, Grit has effective control over the Makubu Mall. Grit has therefore
recognised the investment on a consolidation basis and have derecognised the investment in associate. Outside shareholder interest has been disclosed as
non-controlling interest as at 31 December 2018.
As at As at
30 Jun 2018 31 Dec 2018
4. Investments in associates US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
The following entities have been accounted for as associates in the current and comparative consolidated financial statements using the equity
method:
Name of associate Country % held
Mukuba Mall Limited Zambia 50.0% 38,355 -
Kafubu Mall Limited Zambia 50.0% 12,746 11,246
Buffalo Mall Naivasha Limited Kenya 50.0% 3,294 -
Cosmopolitan Shopping Centre Limited Zambia 50.0% 40,526 40,587
Capital Place Limited Ghana 47.5% 7,960 9,501
CADS II Ghana 50.0% - 11,330
Beachcomber Hospitality Investments Limited1 Mauritius 44.4% 62,430 63,031
----------------------------------------------------------------------------------------------------------------------------------------------------------
Carrying value of associates 165,311 135,695
----------------------------------------------------------------------------------------------------------------------------------------------------------
Beachcomber Capital Cosmopolitan
Mukuba Mall Kafubu Mall Hospitality Place Mall CADS II Buffalo Mall Total
U$'000 U$'000 U$'000 U$'000 U$'000 U$'000 U$'000 U$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation to carrying
----------------------------------------------------------------------------------------------------------------------------------------------------------
value in associates
Opening Balance 1 July 2018 38,355 12,746 62,430 7,960 40,526 - 3,294 165,311
Acquired during the period - - - - - 10,500 - 10,500
Profit from associates
- Revenue 1,516 587 3,569 1,614 1,667 595 1,012 10,560
- Property operational expenses (130) (60) - (68) (141) (87) (91) (577)
- Administrative expenses (101) (61) (10) (5) (195) (15) (14) (401)
- Fair value movement in property (750) 603 1,321 - - 550 200 1,924
- Foreign exchange gains / (losses) - (1,181) - - - - - (1,181)
- Interest Income 1 1 - - 2 48 - 52
- Finance Charges - - (1,971) - - (261) (119) (2,351)
- Tax - - (306) - - - - (306)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total profits from associates 536 (111) 2,603 1,541 1,333 830 988 7,720
Dividends Received (1,233) (449) (727) - (1,272) - - (3,681)
Foreign currency translation differences - (940) (1,275) - - - - (2,215)
Transfers to non-current assets held for sale - - - - - - (4,282) (4,282)
Accounted for as subsidiaries (37,658) - - - - - - (37,658)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Carrying value of associates - 11,246 63,031 9,501 40,587 11,330 - 135,695
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment in the period ended 31 December 2018
The Group acquired a 50% interest in CADS Developments Limited on 3 September for a net purchase consideration of $10.5 million. Grit Accra Limited, a
company incorporated in Mauritius, is 100% owned by the Group and owns 50% of the share capital of CADS Development Limited, a company incorporated in
Ghana.
The Group received a non-binding offer for the shares held in Buffalo Mall and have classified the investment as held for sale and disclosed separately
in the Statement of Financial Position. The investment is carried at the lower of cost and net realisable value (less costs to sell).
The Group has included 100% of the assets and liabilities of Mukuba Mall in the statement of Financial Position for the period ended 31 December 2018 due
to changes in the effective control with an effective date 31 December 2018. The profit for the period were accounted for as Income from Associates as
effective date of the change of control was on 31 December 2018. The Group recognised the minority interest through the non-controlling interest and
Interest free shareholder loans from associate partners.
As at As at
30 Jun 2018 31 Dec 2018
5. Other investments US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the period - 4,154
Additions 4,911 -
Fair value adjustments (757) 26
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total 4,154 4,180
----------------------------------------------------------------------------------------------------------------------------------------------------------
Fair value hierarchy at Level 1 Level 2 Level 3 Total
31 December 2018 U$'000 U$'000 U$'000 U$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment in Letlole La Rona 3,117 - - 3,117
Investment in Gateway Delta Developments Holdings Limited - - 1,063 1,063
----------------------------------------------------------------------------------------------------------------------------------------------------------
Level 1 investment comprise of listed equity investment valued at market prices. If all significant inputs required to fair value an investment are
observable, the investment is included in level 2. If one or more of the significant inputs are not based on observable market data, the investment is
included in level 3.
Listed investments
The Group owns 17,500,000 shares, representing 6.25% of the issued equity capital, in the listed company Letlole La Rona. This company is incorporated in
Botswana and listed on the Botswana Stock Exchange.
Unlisted investments
The Group invested in an unlisted development company, Gateway Developments Holdings Limited, incorporated in Mauritius, in the period as part of its
strategy to secure future investment pipeline on the African continent. The directors are satisfied that this level 3 investment is carried at fair
value at 31 December 2018 after considering the future cash flows associated with the business. During the period ending December 2018, the Group
provided a loan for US$2.0m to related to a capital call in the period.
As at As at
30 Jun 2018 31 Dec 2018
6. Other loans receivable US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Ndola Investments Limited 5,073 5,073
Paxton Investments Limited 8,723 8,723
Kitwe Copperbelt Limited 5,577 5,577
Syngenta Limited 18,690 18,690
Transformers Investment Limited 4,000 4,000
Lifostax Proprietary Limited 800 800
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at 31 December 42,863 42,863
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at As at
30 Jun 2018 31 Dec 2018
7. Interest-bearing borrowings US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Non-current liabilities
At amortised cost 207,106 201,462
Current liabilities
At amortised cost 99,038 123,415
----------------------------------------------------------------------------------------------------------------------------------------------------------
306,144 324,877
----------------------------------------------------------------------------------------------------------------------------------------------------------
Currency of the interest-bearing borrowings (stated gross of unamortised loan issue costs)
United States Dollars 189,094 229,168
Euros 115,719 94,856
Mozambican Meticais 2,913 2,746
----------------------------------------------------------------------------------------------------------------------------------------------------------
307,726 326,770
Unamortised loan issue costs (1,582) (1,893)
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at period end 306,144 324,877
----------------------------------------------------------------------------------------------------------------------------------------------------------
Movement for the period
Balance at the beginning of the year 233,010 306,144
Proceeds of interest bearing-borrowings
- Proceeds from loans refinanced in the period - 51,295
- Loans acquired through property acquisitions - 27,974
- Other new loans advanced 145,406 19,000
Loan issue costs incurred (571) (380)
Amortisation of loan issue costs 1,386 68
Foreign currency translation differences 1,858 1,911
Debt settled during the period (74,945) (81,135)
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at period end 306,144 324,877
----------------------------------------------------------------------------------------------------------------------------------------------------------
Analysis of facilities and loans in issue
As at As at
Initial 30 Jun 2018 31 Dec 2018
Lender facility US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Financial institutions
Standard Bank Mozambique $10.4m 10,451 10,451
Standard Bank Mozambique $27.8m - 27,783
Standard Bank South Africa Revolver - 10,000
Standard Bank South Africa $12m 12,000 12,000
Standard Bank South Africa $38.0m 38,000 38,000
Standard Bank (Mauritius) Limited $11.7m 11,047 10,363
Bank Unico of Mozambique MZN182.7m 2,913 2,746
Investec South Africa $15.7m + €36m 48,529 47,502
Barclays Bank Mauritius €7.4m 7,374 7,400
Barclays Bank Mauritius €20m 19,669 -
Bank of China $77m + $8.5m 98,260 98,260
State Bank of Mauritius €3.2m + $20m 58,997 52,818
Investec Mauritius $0.5m 486 447
Barclays Bank Ghana $9.1m - 9,000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total loans in issue 307,726 326,770
less: unamortised loan issue costs (1,582) (1,893)
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at period end 306,144 324,877
----------------------------------------------------------------------------------------------------------------------------------------------------------
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
8. Revenue US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Contractual rental income (IAS 17) 12,570 15,450
Retail parking income (IAS 17) 499 791
Recoverable property expenses (IFRS 15) 1,799 2,492
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total revenue 14,868 18,733
----------------------------------------------------------------------------------------------------------------------------------------------------------
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
9. Interest income US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Bank interest receivable 1 121
Interest on loans to co-owners of properties 1,625 5,009
Interest on loans to related parties 35 30
Interest on property deposits paid 672 1,399
Interest on convertible shareholder loans - 110
Interest on tenant rental arrears 35 -
----------------------------------------------------------------------------------------------------------------------------------------------------------
2,368 6,669
----------------------------------------------------------------------------------------------------------------------------------------------------------
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
10. Finance costs US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing borrowings - financial institutions 8,107 9,445
Amortisation of loan issue costs 799 614
Preference share dividends 420 401
Interest on finance leases 11 -
Interest on bank overdraft 13 149
Other interest payable 12 390
----------------------------------------------------------------------------------------------------------------------------------------------------------
9,362 10,999
----------------------------------------------------------------------------------------------------------------------------------------------------------
11. Segmental reporting
Condensed consolidated segmental Botswana Morocco Mozambique Zambia Kenya Ghana Mauritius Total
----------------------------------------------------------------------------------------------------------------------------------------------------------
Geographical location 31 December 2018 - US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Gross rental income - 4,122 11,290 - 771 - 2,550 18,733
Gross rental income - 4,122 11,290 - 771 - 2,550 18,733
Straight-line rental income accrual - (40) 215 - 198 - 269 642
Property operating expenses - (1,762) (1,539) - (23) - (653) (3,977)
Share of profit from Associates - - - 1,757 989 2,372 2,602 7,720
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net property rental and related income - 2,320 9,966 1,757 1,935 2,372 4,768 23,118
----------------------------------------------------------------------------------------------------------------------------------------------------------
Fair value adjustment on investment property - (656) 8,654 - 922 1,589 4,516 15,025
----------------------------------------------------------------------------------------------------------------------------------------------------------
Investment Property vehicles
Investment property at fair value - 92,164 273,163 75,401 23,320 21,468 67,247 552,763
Deposits paid on investment properties - - - - - - 15,382 15,382
Investment in associates - - - 51,799 - 20,831 63,065 135,695
Other investments 3,117 - - - - - 1,063 4,180
Non-current assets held for sale - - - - 4,282 - - 4,282
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total Investment Property vehicles 3,117 92,164 273,163 127,200 27,602 42,299 146,757 712,302
----------------------------------------------------------------------------------------------------------------------------------------------------------
Condensed consolidated segmental Equity Light Corporate
investment Hospitality Retail Office industrial accommodation Corporate Total
----------------------------------------------------------------------------------------------------------------------------------------------------------
Type of property 31 December 2018 - US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Gross rental income - 2,105 5,414 5,917 1,133 4,164 - 18,733
Straight-line rental income accrual - - 25 366 198 53 - 642
Property operating expenses - - (2,130) (613) (37) (562) (635) (3,977)
Share of profit from Associates - 2,602 2,746 2,372 - - - 7,720
----------------------------------------------------------------------------------------------------------------------------------------------------------
Net property rental and related income - 4,707 6,055 8,042 1,294 3,655 (635) 23,118
----------------------------------------------------------------------------------------------------------------------------------------------------------
Fair value adjustment on investment property - 4,287 (1,235) 6,728 1,022 4,223 - 15,025
Investment Property vehicles
Investment property at fair value - 52,178 201,665 166,800 29,920 102,200 - 552,763
Deposits paid on investment properties - - - - - - 15,382 15,382
Investment in associates - 63,065 51,799 20,831 - - - 135,695
Equity investments: Available-for-sale 4,180 - - - - - - 4,180
Non-current assets held for sale - - 4,282 - - - - 4,282
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total Investment Property vehicles 6,180 115,271 309,904 187,632 29,920 102,200 15,382 712,302
----------------------------------------------------------------------------------------------------------------------------------------------------------
12. Subsequent events
The Group has not identified any material matter arising in the period 31 December 2018 to 14 February 2019 that required additional disclosures.
13. Revision of comparative information
For full details of the Groups restatements as previously disclosed, refer to the Company website www.grit.group
Six months
ended
31 Dec 2018
14. Distribution calculation 1 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Basic Earnings attributable to the owners of the parent 20,643
Add Back non-cash items:
- Straight-line leasing (non-cash rental) (642)
- Total fair value adjustment on investment properties attributable to the owners of the parent (11,711)
- Fair value adjustments included under income from associates (1,925)
- Fair value adjustment on other investments (26)
- Unrealised foreign exchange gains or losses (non-cash) 3,032
- Unrealised foreign exchange gains or losses included in associates (non-cash) 1,181
- Share based payments 78
- Movement in deferred tax attributable to the owners of the parent 4,331
- Depreciation and amortisation 167
Items added back
- Acquisition costs not capitalised 2,007
- Current tax provision (1,459)
Other cash generation
- VAT and tax credits utilised 997
- Rental concessions for capital projects 288
----------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTABLE EARNINGS 16,961
----------------------------------------------------------------------------------------------------------------------------------------------------------
Distributable earnings PER SHARE (US$ cps) 5.25
Shares '000
Weighted average shares in issue 279,673
Distribution declared:
Interim US$5.25 cps 15,858,838
1 The distribution calculation is disclosed to provide clarity regarding the interim dividend distribution of US$5.25 per share and to reconcile
‘Distributable earnings’ to ‘Basic Earnings attributable to the owner of the parent’.
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
15. Adjusted administration expenses US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Administrative expenses (including corporate structuring costs) 7,868 8,223
Less Admin expenses (non-controlling interest) (258) (706)
Less Acquisition and setup costs (3,619) (2,113)
----------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted administration expenses 3,991 5,404
----------------------------------------------------------------------------------------------------------------------------------------------------------
16. EPRA earnings and NAV calculations
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
EPRA earnings US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Basic Earnings per above 17,127 20,950
Add Back:
- Total fair value adjustment on investment properties (1,540) (12,373)
- Fair value adjustments included under income from associates (12,822) (1,925)
- Fair value adjustment on other investments (53) (26)
- Fair value adjustment on other financial asset 80 -
- Fair value adjustment on derivative financial instruments 52 -
- Deferred tax in relation to the above 2,665 4,331
- Acquisition costs not capitalised 1,740 2,007
- Non-controlling interest included in basic earnings (801) (307)
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA EARNINGS 6,448 12,657
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA EARNINGS PER SHARE (DILUTED) 3.35 4.04
Company specific adjustments
- Unrealised foreign exchange gains or losses (5,582) 4,213
- Straight-line leasing (non-cash rental) (419) (642)
- Amortisation of Right of use of land (non-cash) 160 167
----------------------------------------------------------------------------------------------------------------------------------------------------------
Total Company Specific adjustments (5,841) 3,737
----------------------------------------------------------------------------------------------------------------------------------------------------------
ADJUSTED EPRA EARNINGS 607 16,394
----------------------------------------------------------------------------------------------------------------------------------------------------------
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED)US$ cps 0.32 5.36
Shares '000 Shares '000
Weighted average shares in issue 200,371 291,971
Less: Non-entitled shares - (4,301)
Less: Weighted average treasury shares for the period (10,062) (9,940)
Add: Weighted average share awards and shares vested shares in Long term incentive scheme 1,943 1,943
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA SHARES 192,253 279,673
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at As at
30 Jun 2018 31 Dec 2018
EPRA NAV US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO THE OWNERS OF THE COMPANY 279,383 401,072
ADD BACK:
Fair value of financial instruments 22 128
IFRS 9 expected credit losses - 265
Deferred tax from revaluation of properties 20,791 25,463
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA NAV 300,196 426,927
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA NAV PER SHARE (cents per share) 145.7 143.1
Shares'000 Shares'000
Total shares in issue 214,022 306,396
Less: Treasury shares for the period (9,941) (9,941)
Add: Share awards and shares vested shares in Long term incentive scheme 1,944 1,943
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA SHARES 206,025 298,399
----------------------------------------------------------------------------------------------------------------------------------------------------------
As at As at
17. EPRA metrics 30 Jun 2018 31 Dec 2018
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA Net initial yield 7.0% 7.4%
EPRA topped-up net initial yield 7.1% 7.4%
EPRA occupancy rate 96.7% 96.0%
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
----------------------------------------------------------------------------------------------------------------------------------------------------------
EPRA cost ratio (including direct vacancy) 16.2% 15.6%
EPRA cost ratio (excluding direct vacancy) 15.6% 14.9%
OTHER NOTES
Revised six Six months
months ended ended
31 Dec 2017 31 Dec 2018
18. Headline Earnings Notes US$'000 US$'000
----------------------------------------------------------------------------------------------------------------------------------------------------------
Profit after tax attributable to equity owners of the parent 18,109 20,643
Fair value adjustments on investment property 3 (9,152) (15,025)
Deferred taxation on investment property revaluation 2,219 4,331
Fair value adjustment on other investments (53) (26)
Fair value adjustment on other financial assets 80 -
Fair value adjustment on derivative financial instruments 52 -
Share of fair value adjustment on investment property accounted by associate 4 (1,540) (1,924)
Share-based payment expense 183 78
----------------------------------------------------------------------------------------------------------------------------------------------------------
Headline earnings attributable to shareholders 9,898 8,076
----------------------------------------------------------------------------------------------------------------------------------------------------------
Number of shares in issue at the beginning of the period 200,364 214,022
Number of shares in issue at the end of the period 200,371 306,396
----------------------------------------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares * 200,371 291,971
----------------------------------------------------------------------------------------------------------------------------------------------------------
Earnings per share 8.95 7.07
Basic and diluted earnings per share (cents) 8.95 7.07
----------------------------------------------------------------------------------------------------------------------------------------------------------
Headline diluted earnings per share (cents) 4.85 2.77
The abridged unaudited consolidated financial statements for the six months period ended 31 December 2018 ("abridged unaudited consolidated financial
statements")have been prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”),
the JSE Listings Requirements, the LSE Listing Rules, the SEM Listing Rules and the requirements of the Mauritian Companies Act 2001 and the method of
computation followed per the abridged audited financial statements for the period ended 30 June 2018.
The Group is required to publish financial results for the six months ended on 31 December 2018 in terms of Listing Rule 12.19 of the SEM, the JSE
Listing Requirements and the LSE Listing Rules. The Directors are not aware of any matters or circumstances arising subsequent to the period ended 31
December 2018 that require any additional disclosure or adjustment to the financial statements. These abridged consolidated financial statements were
approved by the Board on 13 February 2018.
Copies of the abridged unaudited 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 the
Company’s registered address. Contact Person: Mrs. Smitha Algoo-Bissonauth.
Following a successful capital raise, UK institutional investors now make up 15% of Grit’s shareholder base on the LSE, with the balance held on the JSE
(22%) and SEM (63%).
Changes to the Board
Mr. Paul Huberman did not put himself up for re-election to the Grit Board at the Annual General Meeting of shareholders held on 29 November 2018.
Mr. David Love has been appointed as Independent Non-Executive Director of the Company with effect from 4 December 2018.
Top five shareholders for Grit as at 31 December 2018 are as follows:
Anchor shareholders (>5%) %
----------------------------------------------------------------------------------------------------------------------------------------------------------
Government Employees Pension Fund (PIC) 28.0%
Delta Property Fund 8.0%
Drive In Trading Limited 8.0%
Management & Staff 6.0%
Transformers Investment Ltd 5.0%
----------------------------------------------------------------------------------------------------------------------------------------------------------
Interim dividend declaration
Shareholders are advised that dividend number 10 of US$ 5.2500 cents per share for the six months ended 31 December 2018 has been approved and declared
by the Board of the Company. The source of the cash dividend is from rental income and cum-dividend reserve.
----------------------------------------------------------------------------------------------------------------------------------------------------------
For shareholders on the Mauritian Register 2019
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of cash dividend on JSE, SEM and LSE Thursday, 14 February
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of US$ to Rand conversion rate releassed on SEM website by no later than 13:00 Tuesday, 26 February
----------------------------------------------------------------------------------------------------------------------------------------------------------
Last date to trade cum dividend Tuesday, 5 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Shares trade ex-dividend Wednesday, 6 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Record date of dividend on the SEM Friday, 8 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Payment date of dividend Friday, 5 April
----------------------------------------------------------------------------------------------------------------------------------------------------------
Notes
1. All dates and times quoted above are local dates and times in Mauritius. The above dates and times are subject to change. Any changes will be
released on the SEM website.
2. No dematerialisation or rematerialisation of share certificates may take place between Wednesday, 6 March 2019 and Friday, 8 March 2019, both
days inclusive.
3. No transfer of shares between sub-registers in Mauritius, South Africa and the UK may take place between Tuesday, 26 February 2019 and Friday, 8
March 2019, both days inclusive.
----------------------------------------------------------------------------------------------------------------------------------------------------------
For shareholders on the South African Register 2019
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of cash dividend on JSE, SEM and LSE Thursday, 14 February
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of US$ to Rand conversion rate released on SENS by no later than 11:00 Tuesday, 26 February
----------------------------------------------------------------------------------------------------------------------------------------------------------
Last date to trade cum dividend Tuesday, 5 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Shares trade ex-dividend Wednesday, 6 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Record date of dividend on the JSE Friday, 8 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Payment date of dividend Friday, 5 April
----------------------------------------------------------------------------------------------------------------------------------------------------------
Notes
1. All dates and times quoted above are local dates and times in South Africa. The above dates and times are subject to change. Any changes will be
released on SENS.
2. No dematerialisation or rematerialisation of share certificates may take place between Wednesday, 6 March 2019 and Friday, 8 March 2019, both days
inclusive
3. No transfer of shares between sub-registers in Mauritius, South Africa and the UK may take place between Tuesday, 26 February 2019 and Friday, 8 March
2019, both days inclusive.
4. Shareholders on the South African sub-register will receive dividends in South African Rand, based on the exchange rate to be obtained by the Company
on or before Tuesday, 26 February 2019. A further announcement in this regard will be made on Tuesday, 26 February 2019.
----------------------------------------------------------------------------------------------------------------------------------------------------------
For shareholders on the UK Register 2019
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of cash dividend on JSE, SEM and LSE Thursday, 14 February
----------------------------------------------------------------------------------------------------------------------------------------------------------
Announcement of US$ to Rand conversion rate released on the Tuesday, 26 February
Regulatory Information Service of the LSE by no later than 10:00
----------------------------------------------------------------------------------------------------------------------------------------------------------
Last date to trade cum dividend Tuesday, 6 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Shares trade ex-dividend Wednesday, 7 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Record date of dividend on the LSE Friday, 8 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Last date for receipt of currency election forms Friday, 8 March
----------------------------------------------------------------------------------------------------------------------------------------------------------
Payment date of dividend Friday, 5 April
----------------------------------------------------------------------------------------------------------------------------------------------------------
Notes
1. All dates and times quoted above are local dates and times in the UK. The above dates and times are subject to change. Any changes will be released on
the Regulatory Information Service of the LSE.
2. No dematerialisation or rematerialisation of share certificates may take place between Wednesday, 6 March 2019 and Friday, 8 March 2019, both days
inclusive
3. No transfer of shares between sub-registers in Mauritius, South Africa and the UK may take place between Tuesday, 26 February 2019 and Friday, 8 March
2019, both days inclusive.
4. Shareholders on the UK sub-register will receive dividends in US$. However, shareholders can elect to have dividends paid in sterling (GBP) and the
option to elect a sterling dividend payment for this dividend will be available to shareholders until Friday, 8 March 2019 (the "Election Date").
5. Further details together with a copy of the Dividend Currency Election Form, which should be sent to Link Asset Services, The Registry, 34 Beckenham
Road, Beckenham, Kent, BR3 4TU when completed, will be available on the Company's website shortly at http://grit.group/. CREST shareholders must elect
via CREST.
In terms of the JSE Listings Requirements regarding Dividends Tax, the following information is only of direct application to shareholders on the South
African share register, as the dividend is regarded as a foreign dividend for shareholders on the South African register:
- the interim dividend is subject to South African Dividends Tax;
- the local dividend tax rate is 20%;
- there is no withholding tax payable in Mauritius;
- the number of ordinary shares in issue is 306 396 035 and
- the Mauritian income tax reference number of the Company is 27331528.
Date: 14/02/2019 09:00:00 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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