Consolidated Preliminary Financial Statements 2018
MAS REAL ESTATE INC
Registered in British Virgin Islands
Registration number 1750199
ISIN: VGG5884M1041
SEDOL (EMTF): B96VLJ5
SEDOL (JSE): B96TSD2
JSE share code: MSP
("MAS" or "the company")
CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS 2018
KEY METRICS
Distribution per share
H1 distribution per share H2 distribution per share Total
Year (euro cents) (euro cents) (euro cents)
2014 0.60 1.24 1.84
2015 1.15 2.20 3.35
2016 2.27 2.23 4.50
2017 2.66 3.19 5.85
2018 3.58 4.03 7.61
Investment property
Investment property
Year (Euro million)
2014 64.8
2015 248.5
2016 310.5
2017 570.6
2018 632.8
2018 plus acquired post 30 June 2018 752.8
Passing rent(2)
Passing rent
Year (Euro million)
2014 2.7
2015 12.6
2016 17.3
2017 32.2
2018 37.5
2018 plus acquired post 30 June 2018 44.9
EPRA NAV per share
EPRA NAV per share
Year (Euro cents)
2014 104.6
2015 122.1
2016 116.0
2017 125.9
2018 134.9
Median daily share volume
Median daily share volume
Year (thousands of shares)
2014 1.1
2015 40.8
2016 76.2
2017 137.5
2018 454.9
Loan to value
Loan to value
Year (percentage)
2014 -188.8%
2015 -30.0%
2016 -12.7%
2017 16.5%
2018 10.0%
2018 plus impact of acquisitions post 30 June 2018 20.2%
DIRECTORS' REPORT
7%
YEAR-ON-YEAR INCREASE IN
EPRA NAV PER SHARE
32%
YEAR-ON-YEAR
INCREASE IN INCOME-
GENERATING PROPERTY(1)
35%
INCREASE IN NET RENTAL INCOME
90% INCREASE IN NET OPERATING INCOME
ANNUAL 2018
DISTRIBUTION PER SHARE OF
7.61
EURO CENTS
4.03 EURO CENTS DISTRIBUTION
PER SHARE PROPOSED FOR H2
PKM DEVELOPMENTS
21,000 SQM COMPLETED
634,000 SQM UNDER DEVELOPMENT
(1) Includes investment property held for sale and
acquisitions post 30 June 2018.
(2) MAS'share of the income-generating portfolio's passing rent.
DISTRIBUTABLE EARNINGS
The group achieved 29.6% growth in
distributable earnings per share for
the year, to 6.35 euro cents compared
with 4.90 euro cents for 2017. This
significant improvement in
distributable earnings per share was
driven by the strong performance and
accretive acquisitions of investment
property, completion of assets in the
development pipeline, investment in
PKM Developments and distributions
received from the investment in the
REIT portfolio.
FINAL DISTRIBUTION
As a result of the increase in
distributable earnings and strong
pipeline of investments and
developments, the board has proposed a final
distribution of 4.03 euro cents per share
for the second half of the 2018 financial
year, which includes 0.38 euro cents per
share from reserves. This brings the cumulative
annual distribution to 7.61 euro cents
per share for 2018, an increase of 30%
over last year's distribution of 5.85 euro
cents per share. This dividend will be
paid in cash, with no scrip alternative
offered to shareholders. An announcement
containing further details will be released
in due course.
The outlook for 2019 is discussed
under Prospects below.
CASH MANAGEMENT AND DEBT
A strategic priority has been to
mitigate the group's future funding
obligations towards PKM
Developments. Accordingly, during the
year, the group took advantage of the
opportunity to raise adequate equity
to fully meet its commitments to PKM
Developments and to finance suitable
acquisition opportunities.
To manage its funding ahead of
fulfilling its commitments to PKM
Developments, the group invested
EUR200 million in a portfolio of liquid
European REITs, that focus
predominantly on retail. This strategy
achieves many objectives for the
group as it:
- generates a return on funds
earmarked for PKM Developments
before drawdown, since euro
interest rates on cash are
negative;
- efficiently matches the asset/
liability profile of the group;
- provides a collateral pool for debt
facilities at extremely low margins,
thereby facilitating substantial
flexibility in acquiring investments;
and
- provides exposure to high quality
businesses with similar risk
profiles to those of the group.
This strategy exposes the portfolio to
some capital volatility. At year-end the REIT
portfolio has declined in value to EUR183.1
million, in line with the performance of
retail-focused stocks in Western
Europe that have come under pressure
in the first half of 2018. Dividend
income of EUR8.4 million has been earned
on this portfolio since acquisition.
At year-end, the group held EUR147.8
million in cash (2017: EUR33.0 million),
excluding the cash held in PKM
Developments. In addition, the group
had EUR242.7 million of third-party debt
finance at 30 June 2018 (2017: EUR147.2
million), resulting in a group loan to
value of 10.0% (2017: 16.5%), with a
weighted average cost of debt of
2.69% of which 82% is fixed/hedged.
After year-end, the group completed
the acquisition of the Militari Shopping
Centre and the Braunschweig
properties as discussed below.
ACQUISITION AND
DEVELOPMENT UPDATE
INCOME-GENERATING PORTFOLIO
The portfolio performed strongly
during the reporting period, with net
operating income growing by 89.6%
year on year from EUR20.2 million to
EUR38.3 million. The EPRA net asset
value per share increased by 7.1% to
134.9 euro cents per share (IFRS NAV
2018: 134.0) from 125.9 euro cents per
share at the previous year-end (IFRS
NAV 2017: 124.5), driven by the impact
of the capital raises undertaken during
the year.
Work is in progress on reconfiguring
and adding about 18,000 square
metres to the aggregate GLA of the
CEE retail assets. This will increase the
fashion and leisure offering of the
centres to consolidate their regionally
dominant position and enhance the
performance of the portfolio.
Management's key focus is to deploy
the capital on the balance sheet.
Although opportunities are available,
strong investment discipline is needed
when assessing assets at current prices,
given the competitive environment and
liquidity in the market. The group is
focused on not overpaying for assets in
a heated market and assesses capital
deployment carefully to ensure that the
longer term strategy is not
compromised by shorter term goals.
Notwithstanding this, the group has
successfully acquired the following:
UBERIOR HOUSE, EDINBURGH, SCOTLAND
(ACQUISITION COMPLETED MAY 2018)
Uberior House was bought for GBP71
million (EUR80.1 million). The property
consists of grade A offices,
prominently positioned in the heart of
Edinburgh's Exchange financial district.
The property has an aggregate
GLA of 14,700 square metres, leased
to Bank of Scotland on several leases
that expire in 2025, at a current
passing rent of GBP4.15 million a year
(about EUR4.68 million). This will be
topped up by the vendor to GBP4.20
million a year (about EUR4.74 million) to
reflect the anticipated settlement of
outstanding rent reviews. The annual
net operating income of the property
is GBP4.10 million (about EUR4.63
million). Bank of Scotland is a
subsidiary of the Lloyds Banking
Group PLC, a FTSE 100-listed financial
institution.
The acquisition represents a unique
opportunity to grow the rental income
of the property from current levels
through active asset management.
Edinburgh has a structural
undersupply of grade A office space,
compounded by growing demand and
declining supply dynamics. The
current lease has a rent review in 2020
which will make it possible to
negotiate a market-related payment,
creating upside for MAS. This, together
with the age of the lease, presents the
opportunity to re-gear what is an
under-rented property at a higher
rent-roll. The acquisition also enables
MAS to leverage its significant
experience in the Edinburgh property
market, after delivering the award-
winning New Waverley mixed-use
development of hotels, retail,
residential and a 19,000 square metre
office building.
MILITARI SHOPPING CENTRE, BUCHAREST, ROMANIA
(ACQUISITION COMPLETED JULY 2018)
The Militari Shopping Centre was
acquired in conjunction with Prime
Kapital, in which MAS has an 80%
direct participation, for a purchase
price of EUR95.0 million. Militari is located
in the west of Bucharest, the capital of
Romania, and draws footfall from an
aggregate catchment of
approximately 365,000 people within
a 15-minute drive. The centre benefits
from ongoing extensive residential
densification in its immediate
surroundings. Residential schemes
currently under construction will add
about another 4,000 apartments in
the vicinity and are expected to keep
the strong growth in footfall in the
near term.
Militari has 57 tenants spread across
about 56,400 square metres of GLA,
of which 53,700 square metres is retail
and 2,700 square metres is offices, in
addition to 2,500 parking spaces. The
annual net operating income of Militari
is EUR7.1 million at a weighted average
rental of EUR10.6 per square metre per
month. The centre is anchored by
Auchan (hypermarket), Praktiker (DIY),
Decathlon (sports goods) as well as
various international fashion brands
such as H&M, C&A, Reserved, New
Yorker, LC Waikiki, Pepco, Deichmann,
Hervis, Humanic, Koton and Takko. The
current retail tenant mix has a
weighted average lease term to first
break option of 6.5 years and the
property is fully occupied. Fashion and
lifestyle tenants contribute 43% of
passing rent while food and grocery
tenants contribute 29%.
The asset provides stable
underlying income with good
prospects for future growth. This will
come from optimisation at lease
expiry and an extension of the lettable
area to match growing footfall, driving
the direct investment return.
Significant redevelopment
opportunities are expected to be
available in the medium and long term.
BRAUNSCHWEIG, GERMANY (ACQUISITION
COMPLETED AUGUST 2018)
A retail park and convenience centre
in Braunschweig, Germany, were
acquired for EUR25.0 million.
The retail park, known as
"Gewerbehof Celler Str.", is located in
the northern part of the city of
Braunschweig, on one of the main
arterial roads leading from the inner
city to the Autobahn. Braunschweig,
with 250,000 inhabitants, is the
second-largest city in Lower Saxony.
Its population is expected to grow by
about 5% by 2030.
The retail park has a GLA of about
16,400 square metres, 540 parking
spaces and a current rental income of
EUR1.5 million a year. The centre has 22
tenants and is focused on large-scale
retail schemes such as food
discounters (Aldi & Lidl, HolAb!),
furniture, textile and interior shops
(Tedox, Christiansen, Dänisches
Bettenlager), complemented by
specialist shops such as Fressnapf
(pet shop) and Staples (office
equipment). In addition, the retail park
contains a development plot with
4,600 square metres of retail potential.
The current WALT is 6 years.
The convenience centre, known as
"Welfenplatz", is located in southern
Braunschweig and is anchored by an
Edeka supermarket with a long-term
lease until 2030. The asset has a GLA
of 2,500 square metres and current
rental income of EUR163,000 a year.
Both assets are well established
and provide strong prospects for
future growth, supporting the group's
drive for direct investment returns
delivering a return on equity of more
than 8%. In the short to medium term,
extending the retail park will further
increase direct investment returns.
DEVELOPMENTS AND LAND BANK
NEW WAVERLEY, EDINBURGH, SCOTLAND
The New Waverley development is
nearing completion. As previously
announced, the office component,
pre-let to the UK government on a
25-year lease, was forward-sold under
a funding agreement to Legal and
General for about EUR23.5 million.
Further development profits will be
paid when construction is complete.
The UK government has expressed
interest in exercising its option over
the adjacent residential development
site. It will make a decision in the first
half of the 2019 calendar year.
The last remaining undeveloped
component of New Waverley is the
residential element. Offers to acquire
both the northern and southern parts of
the site have been received and
accepted, subject to due diligence and
the finalisation of the government's
option over the northern part of the site.
LANGLEY PARK, CHIPPENHAM, ENGLAND
The development site with residential
planning consent at Langley Park in
Chippenham, UK, is in the last stages
of disposal. Final offers from home
builders are being considered. The
construction of the hotel, pre-let to
Travelodge, is well advanced and the
sale of the supermarket land site to
Aldi has been finalised. This will
complete the acquisition business plan
for this property. Steady income is
being generated from tenants,
including Siemens, on the adjacent
retained Technology Park, where
further extensions are under
consideration.
NORTH STREET QUARTER, LEWES, ENGLAND
Progress continues to be made on the
complex and large scale North Street
Quarter regeneration development
project in Lewes. The majority of
pre-commencement building permit
conditions have now been cleared and
the Land Collaboration Agreement
with the joint landowner, Lewes
District Council is close to being
finalised. Due to the complexity of the
project and the need to work with a
number of stakeholders, including the
local government as joint landowners,
the scheme has taken longer to
progress than originally budgeted.
Although there remains a structural
shortfall, the residential market in
the UK seems to be less dynamic at present
than in previous periods but initial discussions
with developers indicate that there is
demand for the planned development, given
the site's unique character and location
within a National Park. Discussions are
ongoing with the aim to appoint a
specialist developer by the end of the
2018 calendar year.
PKM DEVELOPMENTS
PKM Developments has made good
progress on its development pipeline
completing its first six
convenience value extensions of
Kaufland mini-hypermarkets with an
aggregate GLA of about 21,000 square
metres on time and within budget.
Construction has started of two value
centres and a convenience value extension
with an aggregate GLA of about
48,000 square metres, which will be
completed by the end of the 2018 calendar
year. In addition, the secured development
pipeline in CEE has expanded significantly to
approximately EUR755 million and consists
of the projects discussed below.
MALL MOLDOVA
Permitting is under way for the
planned redevelopment of Era
Shopping Park, Iasi, into the super-
regional Mall Moldova with 100,000
square metres GLA. Mall Moldova will
be the largest retail and leisure
development in Romania outside
Bucharest. With design work
substantially completed, pre-
construction leasing work in respect of
the extension has commenced and is
progressing well, as has been
anticipated.
ARGES MALL
Permitting for the planned regionally
dominant mall with 50,000 square
metres GLA and for the
accompanying public infrastructure in
a central, high-density location in
Pitesti, Romania is making good
progress. Tenant interest in the
planned retail consolidation for the
Pitesti and wider Arges region is
strong and pre-construction leasing
work is progressing well.
DAMBOVITA MALL
Permitting is under way for the
regionally dominant mall with 31,000
square metres GLA in Targoviste,
Romania. Despite the lease process
not having commenced, several major
anchor tenants have expressed strong
interest in the development. It will be
the first mall in the Dambovita county
and forms part of a wider urban
regeneration project undertaken by
the local authorities within 2km of the
city centre, in a densely populated
residential area.
PLOIESTI VALUE CENTRE
Permitting is underway for the retail
value centre with 25,600 square
metres GLA and a high concentration
of anchor tenants. The centre is
located in a densely populated
residential area in close proximity to
the city's main train, tram and bus
stations, with high visibility and good
road access. Despite the lease process
not yet having commenced, several
major anchor tenants have expressed
strong interest in the development.
DN1 VALUE CENTRE
Pre-construction leasing is progressing
well for the convenience value
extension of 28,000 square metres
GLA to the existing Hornbach and Lidl
units in Balotesti, a rapidly-developing,
affluent residential area about 25km
north of Bucharest. The first phase of
development is expected to open by
the end of the 2019 calendar year.
BAIA MARE VALUE CENTRE
Construction of about 22,000 square
metres GLA is advancing and the
centre is on schedule to open for trade
in December 2018.
ROMAN VALUE CENTRE
Construction of 19,000 square metres
GLA is progressing and the centre is
on schedule to open for trade in
November 2018.
KAUFLAND VALUE CENTRE EXTENSIONS (31,000
SQUARE METRES AGGREGATE GLA)
During the course of the 2018 financial
year the first six convenience value
extensions of existing Kaufland mini-
hypermarkets have been completed
on time and within budget. The first
phase (7,000 square metres GLA) of a
further development is expected to
complete by the end of the 2018
calendar year.
ZALAU VALUE CENTRE
About five hectares of land have been
secured in Zalau with plans to develop
and operate a retail value centre of
18,000 square metres GLA with a high
concentration of anchor tenants.
Zalau, with 56,000 inhabitants, is the
capital of Salaj county and an
important manufacturing centre in the
north west of Romania. The project is
highly visible. It is in the immediate
vicinity of a dense residential area and
the city's regional bus terminal, on the
main road connecting Zalau with the
other major cities in the county and
wider Transylvania area. The
catchment includes about 166,000
inhabitants within a 45-minute drive.
Anchor tenants have expressed strong
interest in the planned development
and permitting is ongoing. The centre
is expected to open for trade by the
end of the 2019 calendar year.
AVALON ESTATE
Permitting is ongoing on the
upmarket, modern housing estate
near the developing central business
district and commercial centre in the
affluent northern part of Bucharest.
The project was publicly launched in
June 2018 and received very positive
feedback. The pre-construction sales
process is planned to commence by
the end of this calendar year and the
first units of the planned 767 high
quality houses, townhouses and
apartments will be available for
occupation in the second quarter of
the 2020 calendar year.
MARMURA APARTMENTS
Since the date of the last report,
substantial additional design work has
been done on the large-scale
residential block development planned
for the 1.5-hectare site in the
expanding north west area of
Bucharest. The number of individual
units has been increased from 380 to
460. Permitting is in progress and the
pre-construction sales process is
expected to start by the end of the
2018 calendar year. The first units will
be available for occupation by the
third quarter of the 2020 calendar
year.
TEBA IASI
About 10 hectares of land have been
secured in Iasi with plans to develop a
large-scale, mixed-use project that will
include up to 100,000 square metres
of A-grade offices, over 2,500
residential units and a hotel. Iasi, with a
population of 369,000 inhabitants, is
the second-largest city in Romania,
the most important industrial centre in
the north east and the second-largest
university centre outside Bucharest,
with over 53,000 students. The project
is close to the city centre and within
walking distance of the two largest
university campuses in Iasi. This site is
highly visible, with 450 metres of
frontage on a main boulevard
connecting the site to the city centre,
and easily accessible both by car and
public transport since three public
transport hubs (bus and tram) are in
the immediate vicinity. Due diligence
and project planning work is currently
in progress. Major office tenants and
hotel operators have expressed strong
interest in the planned development.
PROSPECTS
MAS continues to benefit from a
strong balance sheet with sufficient
capital to meet its obligations, as well
as a healthy development and
acquisition pipeline. The group has
access to a development partner with
demonstrated competitive advantages
in identifying and executing
exceptional opportunities.
The board is cognisant of heated
property markets fuelled by liquidity
and owners and developers eager to
dispose of over-rented properties at
prices that are high by historical
standards. As a result, the board is
determined to retain strong
investment discipline and pursue only
quality developments and acquisitions
with value-adding potential and strong
long-term growth prospects. It has
previously been stated, and remains the
view of the board, that longer-term
prospects will not be sacrificed to
meet shorter term distribution growth
targets and the implementation of
transactions is not being rushed.
The board is committed to
distributing quality earnings to
shareholders on a sustainable basis
and do not intend to subsidise the
2019 distribution from reserves, but to
fund it from distributable earnings.
Accordingly, the directors consider
that a distribution growth target of
15% for the 2019 financial year is
appropriate. This target is based on
the acquisition and development
pipeline in place and further
opportunities being pursued. It also
assumes that a stable macro-
economic environment will prevail, no
major corporate failures will occur, the
investments and developments
reported on above will progress as
expected and budgeted rental income
based on contractual escalations as
well as market-related renewals will be
collected. This target has not been
reviewed or audited by the group's
auditors.
Capital management is an
important area of value creation for
shareholders. The board will consider
buying back shares as and when it can
create value for shareholders, if the
trading price is below the intrinsic
NAV per share of the business.
Such buybacks will be done with care,
since capital is a scarce and valuable
resource and there remains opportunities
to grow shareholder value by investing and
developing at rates in excess of the
cost of capital.
MAS will continue to pursue
profitable growth through exploiting
further acquisition and development
opportunities in its markets, as well as
by optimising its balance sheet.
Further announcements will be made
as appropriate.
By order of the board of directors:
DIRECTORS:
Ron Spencer
(Non-Executive Chairman)
Morné Wilken
(Chief Executive Officer)
Malcolm Levy
(Chief Financial Officer)
Jonathan Knight
(Chief Investment Officer)
Gideon Oosthuizen
(Non-Executive Director)
Jaco Jansen
(Non-Executive Director)
Pierre Goosen
(Non-Executive Director)
Glynnis Carthy
(Non-Executive Director)
Lukas Nakos, the former CEO, ceased
to be a director with effect from
31 December 2017. Morné Wilken,
previously a non-executive director,
took over as CEO with effect from
1 January 2018.
REPORTING CURRENCY
The group's results are reported in
euros.
ASSURANCE
These preliminary consolidated
financial statements for the year
ended 30 June 2018 have been
reviewed by KPMG Audit LLC who
expressed an unmodified review
conclusion. The auditor's report does
not necessarily report on all of the
information contained in this
announcement. Shareholders are
advised that in order to obtain a full
understanding of the nature of the
auditor's engagement they should
obtain a copy of the auditor's review
report from the company's head office
together with the financial statements
identified in the auditor's report.
TRADING STATEMENT
The group uses distribution per share
as its most relevant unit of
measurement for trading statement
purposes.
LISTINGS
MAS is listed on the Main Board of the
Johannesburg Stock Exchange and is
listed and admitted trading on the
Euro MTF market of the Luxembourg
Stock Exchange.
CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2018
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Rental income 5 37,452,513 27,032,238
Service charge income and other recoveries 7 5,954,048 4,550,190
Revenue 43,406,561 31,582,428
Service charge and other property operating expenses 8 (11,073,518) (7,598,036)
Net rental income 32,333,043 23,984,392
Sales of inventory property 26,020,940 -
Cost of sales of inventory property 18 (21,704,016) -
Profit on sales of inventory property 6 4,316,924 -
Other income 11 8,585,032 -
Corporate expenses 12 (4,946,973) (3,498,209)
Investment expenses 9 (1,976,096) (281,061)
Net operating income 38,311,930 20,205,122
Fair value adjustments 10 (15,800,127) 25,592,290
Foreign currency exchange differences 13 (1,020,787) (4,684,895)
Share of profit from equity accounted investees, net of tax 20 3,568,925 178,397
Goodwill impairment 16 (1,274,346) -
Profit before finance costs 23,785,595 41,290,914
Finance income 14 7,975,558 1,207,196
Finance costs 14 (5,560,344) (2,238,497)
Profit before tax 26,200,809 40,259,613
Current tax 15 (5,556,002) (1,741,449)
Deferred tax 15 (1,311,385) (3,942,153)
Profit for the year 19,333,422 34,576,011
Attributable to:
Owners of the parent 27 16,856,306 33,587,948
Non-controlling interest 2,477,116 988,063
Profit for the year 19,333,422 34,576,011
Basic earnings per share (euro cents) 37 2.92 8.43
Diluted earnings per share (euro cents) 37 2.92 8.43
The notes form part of these consolidated preliminary financial statements.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2018
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Profit for the year 19,333,422 34,576,011
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences 26 (1,207,816) (5,371,692)
Total comprehensive income for the year 18,125,606 29,204,319
Attributable to:
Owners of the parent 15,648,490 28,216,256
Non-controlling interest 27 2,477,116 988,063
Total comprehensive income for the year 18,125,606 29,204,319
The notes form part of these consolidated preliminary financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
As at As at
Euro Note 30 June 2018 30 June 2017
Non-current assets
Investment property 17 579,212,345 564,291,928
Intangible assets 16 22,592,493 23,967,355
Investment in equity-accounted investees 20 23,774,222 20,205,297
Financial assets 29 105,394,992 101,134,245
Property, plant and equipment 485,620 560,019
Deferred tax asset 15 607,179 758,055
Financial investments 19 183,052,263 -
Total non-current assets 915,119,114 710,916,899
Current assets
Financial assets 29 24,507,316 66,097
Inventory property 18 1,293,501 -
Investment property held for sale 23 53,588,444 6,336,915
Trade and other receivables 21 16,148,333 8,707,035
Cash and cash equivalents 22 147,825,624 33,017,502
Total current assets 243,363,218 48,127,549
Total assets 1,158,482,332 759,044,448
Equity
Share capital 24 829,250,399 557,556,273
Geared share purchase plan shares 24 (12,863,010) (21,056,010)
Retained earnings 48,616,712 55,888,038
Share-based payment reserve 25 1,031,739 225,973
Foreign currency translation reserve 26 (11,768,119) (10,560,303)
Equity attributable to owners of the parent 854,267,721 582,053,971
Non-controlling interest 27 2,527,202 988,063
Total equity 856,794,923 583,042,034
Non-current liabilities
Interest-bearing borrowings 28 214,407,455 141,751,953
Financial liabilities 30 1,696,005 1,670,086
Deferred tax liability 15 6,139,373 4,998,374
Total non-current liabilities 222,242,833 148,420,413
Current liabilities
Interest-bearing borrowings 28 28,305,652 5,461,444
Financial liabilities 30 36,121,577 11,211,990
Trade and other payables 31 14,733,264 10,816,762
Provisions 284,083 91,805
Total current liabilities 79,444,576 27,582,001
Total liabilities 301,687,409 176,002,414
Total shareholders' equity and liabilities 1,158,482,332 759,044,448
Ordinary shares in issue 24 637,493,798 467,366,299
IFRS Net Asset Value per share (euro cents) 134.0 124.5
The notes form part of these consolidated preliminary financial statements.
These consolidated preliminary financial statements were approved by the Board and signed on 3 September 2018 on their
behalf by:
Ron Spencer Malcolm Levy
Chairman Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Geared share
purchase Foreign Equity
plan shares Share-based currency attributable Non-
Share (treasury Retained payment translation to owners of controlling
Euro Note capital shares) earnings reserve reserve the parent interest Total equity
Balance at 30 June 2016 378,530,556 - 27,503,007 - (5,188,611) 400,844,952 - 400,844,952
Comprehensive income for the year
Profit for the year - - 33,587,948 - - 33,587,948 988,063 34,576,011
Other comprehensive income - - - - (5,371,692) (5,371,692) - (5,371,692)
Total comprehensive income - - 33,587,948 - (5,371,692) 28,216,256 988,063 29,204,319
for the year
Equity transactions
Share-based payment reserve 25 - - - 225,973 - 225,973 - 225,973
- - - 225,973 - 225,973 - 225,973
Transactions with the owners of the
parent
Issue of shares 24 192,292,442 (21,056,010) - - - 171,236,432 - 171,236,432
Distributions 24 (13,266,725) - (5,202,917) - - (18,469,642) - (18,469,642)
Total other transactions with 179,025,717 (21,056,010) (5,202,917) - - 152,766,790 - 152,766,790
the owners of the parent and
non-controlling interests
Balance at 30 June 2017 557,556,273 (21,056,010) 55,888,038 225,973 (10,560,303) 582,053,971 988,063 583,042,034
Comprehensive income for the year
Profit for the year - - 16,856,306 - - 16,856,306 2,477,116 19,333,422
Other comprehensive income - - - - (1,207,816) (1,207,816) - (1,207,816)
Total comprehensive income - - 16,856,306 - (1,207,816) 15,648,490 2,477,116 18,125,606
for the year
Equity transactions -
Share-based payment reserve 25 - - - 805,766 - 805,766 - 805,766
- - - 805,766 - 805,766 - 805,766
Transactions with the owners of the
parent
Issue of shares 24 295,836,210 - - - - 295,836,210 - 295,836,210
Shares forfeited and cancelled 24 (8,193,000) 8,193,000 - - - - - -
Distributions 24,27 (15,949,084) - (24,127,632) - - (40,076,716) (937,977) (41,014,693)
Total other transactions with 271,694,126 8,193,000 (24,127,632) - - 255,759,494 (937,977) 254,821,517
the owners of the parent and
non-controlling interest
Balance at 30 June 2018 829,250,399 (12,863,010) 48,616,712 1,031,739 (11,768,119) 854,267,721 2,527,202 856,794,923
The notes form part of these consolidated preliminary financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Cash generated from operating activities 22 34,900,798 20,478,405
Adjustments:
Decrease in receivables 1,029,613 2,557,048
(Decrease)/increase in payables (904,406) 2,520,565
Increase in provisions 192,278 -
Finance income received - interest on preference shares 14 3,602,861 -
Tax paid on operating activities 15 (3,434,495) (1,066,198)
Net cash from operating activities 35,386,649 24,489,820
Investing activities
Acquisition of investment property 17 (79,650,439) (156,414,516)
Capitalised expenditure on investment property 17 (13,167,161) (21,900,594)
Settlement of investment property acquisition retentions (225,000) (3,318,865)
Proceeds from the sale of investment property 17 24,057,746 7,999,160
Capitalised expenditure on investment property held for sale 23 (1,149,597) -
Proceeds from the sale of investment property held for sale 23 7,353,427 -
Expenditure on inventory property (17,676,966) -
Proceeds from sale of inventory property 17,571,371 -
Acquisition of subsidiary net of cash acquired - (61,326,012)
Acquisition of PKM preference shares 29 - (100,000,000)
Capitalised transaction costs of equity-accounted investee 20 - (35,184)
Acquisition of property, plant and equipment (25,627) (34,425)
Capitalised expenditure on intangible assets (78,679) (222,519)
Proceeds from the sale of financial investments 19 - 47,045,042
Acquisition of financial investments 19 (199,557,215) -
Finance cost paid - interest incurred on bank deposits 14 (332,222) (6,830)
Finance income received - interest earned on bank deposits 14 4,223 72,951
Settlement of financial liability (1,093,000) (3,327,225)
Settlement of financial asset 66,097 -
Tax paid on investing activities 15 (1,541,766) -
Cash used in investing activities (265,444,808) (291,469,017)
Financing activities
Proceeds from the issue of share capital 24 279,917,834 157,984,909
Proceeds from interest-bearing borrowings 28 104,067,925 111,657,786
Transaction costs relating to interest-bearing borrowings 28 (1,431,560) (2,168,837)
Repayment of capital on interest bearing-borrowings 28 (7,350,266) (7,098,329)
Finance cost paid - interest on interest-bearing borrowings 14,28 (4,435,102) (2,470,916)
Distributions paid (25,096,317) (5,202,917)
Cash generated from financing activities 345,672,514 252,701,696
Net increase/(decrease) in cash and cash equivalents 115,614,355 (14,277,501)
Cash and cash equivalents at the beginning of the year 33,017,502 47,997,978
Effect of movements in foreign exchange rate fluctuations on cash held (806,233) (702,975)
Cash and cash equivalents at the end of the year 22 147,825,624 33,017,502
The notes form part of these consolidated preliminary financial statements.
NOTES TO THE CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS
For the year ended 30 June 2018
1. CORPORATE INFORMATION
The Company is domiciled in the British Virgin Islands. These financial statements as at, and for the year ended,
30 June 2018 comprise the consolidated financial statements of the group.
MAS is a real estate investment group with a portfolio of real estate investments across Europe. The group aims to
deliver sustainable and growing distributions to shareholders over time.
2. BASIS OF PREPARATION
STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
("IFRS") as issued by the IASB, the JSE Listings Requirements, the Rules and Regulations of the Luxembourg Stock
Exchange and applicable legal and regulatory requirements of the BVI Business Companies Act 2004.
BASIS OF MEASUREMENT
These consolidated financial statements are prepared on the historical cost basis except for the following items that are
measured on the fair value basis:
- Financial instruments classified as at fair value through profit or loss FVTPL, refer to notes 29 and 30;
- Financial investments, refer to note 19;
- Share-based payments, refer to 25;
- Investment property, refer to note 17; and
- Investment property held for sale, refer to note 23
The group uses observable market data as far as it is available to measure the fair values of assets and liabilities. Fair values
are categorised into different levels in a fair value hierarchy based upon the inputs used in the valuation technique as
follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data.
Where the inputs used in the valuation technique fall into more than one category in the fair value hierarchy, the asset or
liability is categorised into the lowest level input that is significant in the valuation of that asset or liability.
The group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which
the change occurred.
USE OF JUDGEMENT AND ESTIMATION UNCERTAINTY
The board has made judgements, estimates and assumptions that affect the application of the group's accounting policies
and the reported amounts in the financial statements. The directors continually evaluate these judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses based upon historical experience and on other
factors that they believe to be reasonable under the circumstances. Actual results may differ from the judgements,
estimates and assumptions.
The key areas of judgement are:
- Whether the acquisition of an investment property is a business combination: The group applies judgement to the
acquisition of investment property to determine whether the acquisition is the acquisition of an asset, a group of assets
or a business combination in the scope of IFRS 3 'Business Combinations'. The acquisitions during the year were not
business combinations as the group did not acquire the strategic management. For property acquisitions refer to note 17.
- Sales of inventory property: Once a sale agreement contract is negotiated and a sale of investment property is agreed, the
group assesses whether it is a continuous-sale transaction or a sale of goods transaction. The judgement is based on the
terms and conditions of the sale agreement, which are comparable to the criteria set out in IFRIC 15 'Agreements for the
Construction of Real Estate' and IAS 18 'Revenue', notwithstanding that the sale of inventory property is not income that
arises in the ordinary activities of the group, refer to note 18.
- Preference shares - PKM Developments: The group is required to make judgements whether there is objective evidence that
the preference shares may be impaired. The group has concluded there is no objective evidence that the preference
shares are impaired, refer to note 29.
The key areas of estimation uncertainty are:
- Investment property and Investment property held for sale: External property valuation experts or, where relevant, firm
offers from market participants are used to determine the fair value of investment property. The external property
valuation experts use recognised valuation techniques and apply the principles of IFRS 13: Fair Value Measurement. The
significant methods and assumptions used by the valuers in estimating fair value are set out in notes 17 and 23.
- Loan commitments: The group committed to acquire PKM Developments preference shares, refer to note 20.
Judgements are made to assess the market related rate of these loan commitments. The group applies judgement in
reviewing the loan commitments made and determined that the cost of funding the loan commitment is lower than the
rate to be charged; accordingly the loan commitment is neither onerous nor impaired.
- Continuous-sale transaction: The group entered into an agreement to dispose of the land that is designated for offices at
New Waverley in Edinburgh, Scotland to Legal & General and to develop the office on a forward funding basis for Legal &
General. The transaction has been accounted for as a continuous-sale transaction and the following assumptions have
been made to estimate the costs of completion to determine the amounts of revenue recognised:
- Construction costs; and
- Stage of completion.
The significant methods and assumptions are set out in note 18.
- Financial instruments: In determining the fair value of financial instruments and financial investments measured at fair
value through profit or loss, the group is required to make estimations of unobservable inputs in determining fair value.
The significant methods and assumptions used in estimating fair value are set out in note 30.
PRESENTATION CURRENCY
These consolidated financial statements are presented in euro which is the group's presentation currency.
3. ADOPTION OF NEW AND REVISED STANDARDS
The group adopted the following amendments to standards:
Amendments/improvements to standards and interpretations adopted Description
IAS 7 (Amendments) 'Statement of Cash Flows' - Disclosure initiatives
IAS 12 (Amendments) 'Income taxes' - Recognition of deferred tax
assets for unrealised losses
IFRS 12 (Amendments) 'Disclosure of Interests in Other Entities' - Clarification of scope
There has been no impact on the numbers reported or to the disclosures as a result of the adoption of the amendments to
these standards.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Below is a summary of amendments/improvements to standards and interpretations that are not yet effective and were
not early adopted:
IASB effective for annual
Amendments/improvements to standards and interpretations not yet effective periods beginning on or after
IFRS 9 (2014) 'Financial Instruments' 1 January 2018
IFRS 15 'Revenue from Contracts with Customers' 1 January 2018
IAS 40 - 'Amendment to Clarify Transfers of Property to, or from, Investment Property' 1 January 2018
IFRS 16 'Leases' 1 January 2019
IFRS 9 (2014) - 'FINANCIAL INSTRUMENTS'
The group early adopted IFRS 9 (2013) in the financial year ended 30 June 2015. The changes to IFRS 9 (2014) relate to the
impairment model, which is based on the premise of recognising expected credit losses and will apply to financial assets
measured at amortised cost, fair value through other comprehensive income and loan commitments. The standard requires
financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk
at the reporting date to recognise 12-month expected credit losses, being the expected credit losses that result from default
events that are possible within 12 months after the reporting date.
At 30 June 2018 the group held the following financial instruments that are in the scope of the impairment model:
financial assets at amortised cost; cash and cash equivalents; and trade and other receivables (except prepayments). The
group has assessed the potential impact resulting from the amendments and does not expect there to be any impact at
this time as credit risk has not increased significantly since initial recognition and is assessed to be low, and no 12-month
expected credit loss is likely. The group will adopt the new standard for the reporting period ending 30 June 2019.
IFRS 15 - 'REVENUE FROM CONTRACTS WITH CUSTOMERS'
The standard applies to all contracts with customers except for: lease contracts, financial insurance contracts, financial
instruments and non-monetary exchanges between entities in the same business.
The majority of the group's income is rental income from leases, which are in the scope of IAS 17 and will not be affected
by the change in this standard.
The sale of certain assets will be affected by the change in the standard. The accounting treatment for these sales has
been considered under the existing IAS 18 and IFRIC 15 as well as the new IFRS 15 standards. The same conclusions have
been made. It has been concluded that revenue will be recognised over a period of time using the input method as the
measure of progress - with the performance obligations being the sale of the land and the development of the building.
The group will adopt the new standard for the year ending 30 June 2019.
IAS 40 - AMENDMENT TO CLARIFY TRANSFERS OF PROPERTY TO, OR FROM, INVESTMENT PROPERTY
The amendment clarifies whether a property under construction or development that was previously classified as inventory
could be transferred to investment property when there is evidence of a change in use.
The group has assessed the impact of adopting the amendment to IAS 40 in respect of transfer to and from investment
property and does not expect any impact.
The group will adopt the new amendment for the year ending 30 June 2019.
IFRS 16 - 'LEASES'
The standard applies to all lease contracts. The changes require lessees to recognise assets and liabilities for all leases
unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as
operating or finance, substantially unchanged from IAS 17.
The group has a number of small leases in the scope of the new standard which are required to be recognised as right-
of-use assets with corresponding lease liabilities in the group's statement of financial position. The impact is deemed to
be immaterial.
The group will adopt the new standard for the year ending 30 June 2020.
4. SIGNIFICANT GENERAL ACCOUNTING POLICIES
For specific accounting policies please refer to the corresponding notes.
FINANCIAL INSTRUMENTS
i FINANCIAL ASSETS
The group classifies its financial assets into the following categories: financial assets at amortised cost and financial assets at fair
value through profit or loss. Financial assets are recognised when the group becomes party to the contractual terms of the asset.
FINANCIAL ASSETS AT AMORTISED COST
Financial assets are classified as financial assets at amortised cost only if both the following criteria are met:
the financial asset is held within a business model whose objective is to hold 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. Interest is the consideration for the time value of money and
credit risk associated with the principal amount outstanding.
Financial assets classified as financial assets at amortised cost are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, these financial assets are measured at amortised cost using
the effective interest method, less any impairment losses.
DERECOGNITION OF FINANCIAL ASSETS
The group derecognises a financial asset when the contractual terms of the asset expire.
IMPAIRMENT
A financial asset measured at amortised cost is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if objective evidence indicates that an incurred loss event has
occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash
flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective
interest rate. Losses are recognised in profit or loss and reflected as either a direct impairment against the financial asset or
in the case of trade and other receivables, in an allowance account against trade and other receivables. Interest on the
impaired asset continues to be recognised to the extent that it is probable that the interest will be collected.
When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
A financial asset is classified as fair value if it does not meet either criteria for classification of a financial asset at amortised
cost. The group initially recognises these financial assets at fair value at the trade date and attributable transaction costs
are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are subsequently measured at
fair value and changes therein are recognised in profit or loss in the period in which they occur.
ii. FINANCIAL LIABILITIES
The group classifies its financial liabilities into the following categories: financial liabilities at amortised cost and financial
liabilities at fair value through profit or loss. Financial liabilities are recognised when the group becomes party to the
contractual terms of the liability.
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial liabilities are classified as financial liabilities at fair value if they are: financial liabilities that are held for trading;
derivative financial instruments; financial liabilities designated as fair value; financial liabilities that arise when a transfer of a
financial liability does not qualify for derecognition or when the continuing involvement applies; financial guarantees; and
commitments to provide loans at a below-market interest rate.
The group may elect to designate financial liabilities as financial liabilities at fair value that would otherwise meet the criteria
to be classified as a financial liability at amortised cost, if doing so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise if the financial liability were measured at amortised cost.
The group initially recognises financial liabilities at fair value at trade date and attributable transaction costs are recognised
in profit or loss as incurred. Financial liabilities at fair value through profit or loss are subsequently measured at fair value
and changes therein are recognised in profit or loss in the period in which they occur.
FINANCIAL LIABILITIES AT AMORTISED COST
All financial liabilities are classified as financial liabilities at amortised cost unless they meet the criteria for classification as
financial liabilities at fair value through profit or loss.
These financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
DERECOGNITION OF FINANCIAL LIABILITIES
The group derecognises a financial liability when the contractual obligations of the liability expire, for example when the
obligation specified in the contract is discharged, cancelled or expires.
BORROWING COSTS
Interest-bearing borrowings are allocated to either specific or general borrowings. Specific or general borrowing costs are
capitalised if they are directly attributable to the acquisition, construction or production of qualifying assets which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale. These are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income
earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
EMPLOYEE COSTS
Employee benefits comprise the total costs of employment to the group, mainly consisting of; salary, annual leave,
employment taxes, and the current expense in relation to the geared share purchase plan. These short-term employee
benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the
group has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
5. RENTAL INCOME
ACCOUNTING POLICY
Rental income from investment properties leased out under operating leases is recognised in profit or loss on a straight-line
basis over the term of the lease. Initial direct costs incurred in negotiating and arranging an operating lease are recognised
as an expense over the lease term on the same basis as the lease income.
Tenant lease incentives are recognised as a reduction of rental income on a straight-line basis over the term of the lease.
The term of the lease is the non-cancellable period together with any further term for which the tenant has the option to
continue the lease, where, at the inception of the lease, there is reasonable certainty that the tenant will exercise that
option.
Turnover rent is contingent on the underlying performance of the tenant, as such it is recognised as incurred.
DISCLOSURE
Year ended Year ended
Euro 30 June 2018 30 June 2017
Rental income 35,461,317 25,322,178
Turnover rent 1,991,196 1,710,060
37,452,513 27,032,238
Rental income derived from the following tenants represents more than 10% of the group's rental income and is included
within the income-generating segment of the group:
Year ended Year ended
Euro 30 June 2018 30 June 2017
Edeka MIHA AG 5,837,967 5,316,024
The future aggregate minimum rental receivable under non-cancellable operating leases, excluding turnover based and
contingent rent is as follows:
As at As at
Euro 30 June 2018 30 June 2017
No later than 1 year 39,501,963 34,403,438
Greater than 1 year and less than 5 years 135,874,939 116,200,143
Greater than 5 years 182,238,453 190,513,803
357,615,355 341,117,384
6. PROFIT ON SALES OF INVENTORY PROPERTY
ACCOUNTING POLICY
When the group enters into a contract to sell completed property, revenue is recognised when the significant risks and
rewards of ownership are transferred from the group. Where the terms of the contract represent a continuous transfer of
work in progress to the purchaser, revenue is recognised using the percentage of completion method as work progresses.
Continuous transfer of work in progress is applied when:
- the land on which the property is being developed is owned by the purchaser;
- the buyer carries the risks and rewards of the incomplete property; and
- when the buyer cannot put the incomplete property back to the group.
The percentage of work completed is estimated based on the costs incurred to the end of the reporting period as a
proportion of total costs expected to be incurred.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Sales of inventory property 26,020,940 -
Cost of sales of inventory property 18 (21,704,016) -
22 4,316,924 -
During the period a total profit of EUR4,316,924 in relation to inventory property was recognised, which derives from the pre-let
agreement and disposal of land agreement for the office component of the New Waverley development, refer to note 18.
7. SERVICE CHARGE INCOME AND OTHER RECOVERIES
ACCOUNTING POLICY
The group's service charge income and other recoveries include service charges received under operating leases and
income for the recovery of direct expenses paid by the group. The income is recognised in profit or loss in the period in
which it is earned and incurred.
DISCLOSURE
Year ended Year ended
Euro 30 June 2018 30 June 2017
Service charge income 5,711,794 4,136,662
Other recoverable expenses 242,254 413,528
5,954,048 4,550,190
8. SERVICE CHARGE AND OTHER PROPERTY OPERATING EXPENSES
ACCOUNTING POLICY
Service charge and other property operating expenses are expenses which are incurred in relation to the properties held by
the group. These expenses comprise of direct expenses in relation to income-generating properties and indirect expenses
in relation to development properties and land bank. These expenses are recognised in profit or loss in the period in which
they are incurred.
Employee costs which relate to the operating of investment properties are also recognised in property operating
expenses to the extent that they relate to income-generating property. They are capitalised where they relate to
development property.
DISCLOSURE
Year ended Year ended
Euro 30 June 2018 30 June 2017
Property expenses 4,291,513 4,153,918
Building repairs and maintenance 1,773,243 1,371,218
Management expense 2,619,665 1,048,072
Marketing fees 827,768 138,207
Insurance expense 627,121 499,458
Legal fees 587,102 272,005
Other expenses 347,106 115,158
11,073,518 7,598,036
9. INVESTMENT EXPENSES
ACCOUNTING POLICY
Investment expenses relate to expenses incurred in the process of acquiring investment property and listed real estate
equity securities that cannot be capitalised. These expenses are recognised in profit or loss in the period in which they are
incurred.
Year ended Year ended
Euro 30 June 2018 30 June 2017
Transaction fees on investment property 1,216,370 281,061
Transaction fees on listed real estate equity securities 759,726 -
1,976,096 281,061
10. FAIR VALUE ADJUSTMENTS
ACCOUNTING POLICY
Fair value adjustments comprise:
FAIR VALUE ADJUSTMENTS ON INVESTMENT PROPERTY
Investment property is measured at fair value at the reporting date and changes therein are recognised within fair value
adjustments in profit or loss in the period in which they occur, refer to note 17.
FAIR VALUE ADJUSTMENTS ON INVESTMENT PROPERTY HELD FOR SALE
Investment property held for sale is measured at fair value at the reporting date under IAS 40 and changes therein are
recognised within fair value adjustments in profit or loss in the period in which they occur, refer to note 23.
FAIR VALUE ADJUSTMENTS ON FINANCIAL INVESTMENTS
Financial investments held at fair value through profit or loss are measured at fair value at the reporting date and changes
therein are recognised within fair value adjustments in profit or loss in the period in which they occur, refer to note 19.
FAIR VALUE ADJUSTMENTS ON FINANCIAL LIABILITIES
Financial liabilities held at fair value through profit or loss are measured at fair value at the reporting date and changes
therein are recognised within fair value adjustments in profit or loss in the period in which they occur, refer to note 30.
FAIR VALUE ADJUSTMENTS ON FINANCIAL ASSETS
Financial assets held at fair value through profit or loss are measured at fair value at the reporting date and changes therein
are recognised within fair value adjustments in profit or loss in the period in which they occur, refer to note 29.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Fair value adjustments
(Loss)/gain on fair value of investment property (721,387) 36,763,196
Gain on fair value of investment property held for sale 2,766,206 786,795
Loss on fair value of financial investments (16,504,952) (4,569,026)
Gain on fair value of financial assets 350,585 -
Loss on fair value of financial liabilities (1,690,579) (7,388,675)
22 (15,800,127) 25,592,290
Detailed as follows:
Change in fair value of investment property
Income-generating 17 13,439,408 19,437,659
Development 17 (4,559,691) 17,325,537
Land bank 17 (9,601,104) -
(721,387) 36,763,196
Change in fair value of investment property held for sale
Investment property held for sale 23 2,766,206 786,795
2,766,206 786,795
Change in fair value of financial investments
Listed real estate equity securities 19 (16,504,952) -
Sirius Real Estate Limited 19 - (4,569,026)
(16,504,952) (4,569,026)
Change in fair value of financial assets
Interest rate swaps 29 350,585 -
350,585 -
Change in fair value of financial liabilities
Interest rate swaps 30 (123,226) 769,594
Development management fee 30 (682,956) (1,885,457)
Priority participating profit dividend 30 (884,397) (6,272,812)
(1,690,579) (7,388,675)
11. OTHER INCOME
ACCOUNTING POLICY
Other income includes dividend income from financial investments. Dividend income is recognised in profit or loss on the
date on which the group's right to receive payment is established.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Dividend income earned on financial investments 19 8,423,423 -
Other 161,609 -
8,585,032 -
12. CORPORATE EXPENSES
ACCOUNTING POLICY
Corporate expenses are expenses incurred that are not directly related to property. These expenses are recognised in profit
or loss in the period in which they are incurred.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Employee costs 2,526,935 1,759,997
Office and administration expenses 1,288,761 1,018,974
Legal and professional 374,986 175,199
Audit and accounting fees 352,282 171,139
Investor communications 176,886 226,385
Listing fees 127,097 118,651
Depreciation 22 100,026 27,864
4,946,973 3,498,209
13. FOREIGN CURRENCY EXCHANGE DIFFERENCES
ACCOUNTING POLICY
Transactions in foreign currencies are translated into the presentation currency of the group at the rate of exchange
prevailing at the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in
foreign currencies are translated into the presentation currency at the rates prevailing at that date.
Non-monetary assets and liabilities measured at fair value that are denominated in foreign currencies are translated at
the rate at the date the fair value was determined. Non-monetary items that are measured based on the historical cost in a
foreign currency are not translated.
Foreign currency differences are recognised in profit or loss.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the group's foreign
operations are expressed in euros using exchange rates prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the period. Exchange differences arising, if any, are recognised in other
comprehensive income and presented in equity in the foreign currency translation reserve, except to the extent that the
translation difference is allocated to non-controlling interest. Such exchange differences are reclassified to profit or loss in
the period in which the foreign operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Foreign currency exchange differences 22 1,020,787 4,684,895
The group has loans between group entities which are eliminated on consolidation. The translation differences arising on
these intra-group loans are not eliminated and are recognised in profit or loss because they are not deemed to form part of
the net investment in a foreign operation.
Where intra-group loans are denominated in the non-euro functional currency of the foreign operation and are from
group entities with a euro functional currency, there is no translation difference recognised in profit or loss of the foreign
operation. However, there is a translation difference recognised in profit or loss of the group entity with a euro functional
currency. A translation difference on the foreign operation is recognised in other comprehensive income and accumulated
in the foreign currency translation reserve when the intra-group loans of the foreign operation are translated into euros, the
presentation currency of the group.
Exchange gains and losses arise from the revaluation of monetary assets and liabilities. It is not the policy of the group
to hedge currencies held between euro, sterling, Swiss franc, Polish zloty and Bulgarian lev. As a result, translation
differences arise predominantly from the intra-group loans to foreign operations.
14. FINANCE INCOME AND FINANCE COSTS
ACCOUNTING POLICY
Finance income and finance costs include the following:
- Interest income from financial assets held at amortised cost; and
- Interest expense from financial liabilities held at amortised cost
Finance income and costs are recognised using the effective interest method.
DISCLOSURE
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Finance income
Interest earned on preference shares 29 7,514,384 1,134,245
Amortisation of capital contribution - asset 29 456,951 -
Interest earned on bank deposits 4,223 72,951
22 7,975,558 1,207,196
Finance costs
Interest on interest bearing borrowings 28 (4,771,171) (2,231,667)
Amortisation of capital contribution - liability 30 (456,951) -
Interest incurred on bank deposits (332,222) (6,830)
22 (5,560,344) (2,238,497)
The group received EUR3,607,084 (2017: EUR72,951) of finance income during the reporting period. The amount relates to
EUR3,602,861 (2017: EURnil) of finance income received from operating activities and EUR4,223 (2017: EUR72,951) of finance income
received from investing activities.
The group paid EUR4,767,324 (2017: EUR2,477,746) of finance costs during the reporting period. The amount relates to EUR332,222
(2017: EUR6,830) of finance costs paid from investing activities and EUR4,435,102 (2017: EUR2,407,916) of finance costs paid from
financing activities.
15. TAX
ACCOUNTING POLICY
Income tax for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in
other comprehensive income or equity.
CURRENT TAX
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the reporting period plus/
minus any adjustments to the tax payable or receivable in respect of previous years. It is measured using enacted or
substantively enacted tax rates at the reporting date.
DEFERRED TAX
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the fiscal values used for tax purposes, except for the following temporary differences
which are not provided for:
- Those arising from goodwill not deductible for tax purposes;
- Those arising from the initial recognition of assets or liabilities that affect neither accounting or taxable profit, and are not
part of a business combination; and
- Those arising on investments in subsidiaries and associates where the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. For purposes of calculating
deferred tax on investment property there is a rebuttable presumption that the carrying amount is realised through sale.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised and is reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
DISCLOSURE
CURRENT TAX
The company is domiciled in the BVI and is not subject to tax in that jurisdiction. Operating subsidiaries of the group,
however, are exposed to tax in the jurisdictions in which they operate and, potentially, in the jurisdictions through which the
subsidiary investment companies are held.
The group's taxation includes the following:
Year ended Year ended
Euro 30 June 2018 30 June 2017
Current tax 5,556,002 1,741,449
Deferred tax expense 1,311,385 3,942,153
Tax expense 6,867,387 5,683,602
The current tax, including under/over-provisions in respect of earlier periods, for each jurisdiction is as follows:
Year ended Year ended
30 June 2018 30 June 2017
Applicable Tax Applicable Tax
rate (%) Euro rate (%) Euro
Income tax
UK - income tax 20.0 779,132 20.0 420,835
UK - corporation tax 19.0 2,394,030 19.0 -
Germany 15.8 210,255 15.8 623,902
Poland 19.0 66,792 19.0 194,812
Switzerland 26.8 23,683 26.8 -
Netherlands 20.0 25,689 20.0 -
Withholding tax
Poland 5.0 (281,974) 5.0 448,612
UK 20.0 144,982 20.0 -
France 30.0 2,174,252 30.0 -
Sweden 15.0 55,170 15.0 -
Wealth tax
Switzerland 0.2 19,490 0.2 5,944
Luxembourg 0.5 (55,499) 0.5 47,344
5,556,002 1,741,449
The UK corporation tax relates to the following sales at New Waverley, refer to note 18:
- Tax on disposal of office land of EUR1,581,195.
- Tax on sale of inventory property of EUR812,835.
The group paid EUR4,976,261 (2017: EUR1,066,198) in total tax during the reporting period. The amount relates to EUR3,434,495
(2017: EUR1,066,198) for tax paid on operating activities and EUR1,541,766 (2017: EURnil) for tax paid on investing activities.
RECONCILIATION OF DEFERRED TAX:
Year ended Year ended
Euro 30 June 2018 30 June 2017
Net deferred tax liability brought forward 4,240,319 521,449
Current year deferred tax movement 1,311,385 3,942,153
Acquisition of subsidiary - deferred tax asset - 380,711
Disposal of investment property - (178,924)
Foreign currency translation difference in OCI (19,510) (425,070)
Net deferred tax liability carried forward 5,532,194 4,240,319
The net deferred tax liability is split as follows:
As at As at
Euro 30 June 2018 30 June 2017
Deferred tax asset 607,179 758,055
Deferred tax liability (6,139,373) (4,998,374)
Net deferred tax liability (5,532,194) (4,240,319)
The group recognises deferred tax assets to the extent that it is probable that future taxable profits will be available against
which the unused tax losses and unused tax credits can be utilised.
RECONCILIATION OF EFFECTIVE TAX RATE
Year ended Year ended
30 June 2018 30 June 2017
% Euro % Euro
Profit before tax 26,200,809 40,259,613
Tax using the company's domestic rate 0.0 - 0.0 -
Effect of tax rates in foreign jurisdictions (22.5) (5,894,358) (4.3) (1,741,449)
Over provision in respect of prior years 1.3 338,356 0.0 -
Current tax (21.2) (5,556,002) (4.3) (1,741,449)
Change in recognised deductible temporary differences
Revaluation of investment property 1.9 488,574 (9.4) (3,767,882)
Other temporary differences (6.9) (1,799,959) (0.4) (174,271)
Deferred tax expense (5.0) (1,311,385) (9.8) (3,942,153)
Net tax expense (26.2) (6,867,387) (14.1) (5,683,602)
The Isle of Man domestic tax rate of 0% was considered the most meaningful rate on the basis that the profits are earned
across several jurisdictions and none of those jurisdictions dominates the group's portfolio.
The other temporary differences relate to timing differences between the tax base and the carrying amount of the
assets due to depreciation allowable for tax purposes and unused tax losses.
There has been no change in the applicable tax rates. The primary reason for the increase in the effective tax rate from
14.1% to 26.2% is as a result of changes in the geographical mix of profits.
16. INTANGIBLE ASSETS
ACCOUNTING POLICY
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the fair value of net identifiable assets acquired
and liabilities assumed.
Goodwill impairment reviews are undertaken at each reporting date or more frequently if events or changes in
circumstances indicate a potential impairment. For impairment testing, assets are grouped together into the smallest
groups of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other
CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit
from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in
use is based on estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of the CGU exceeds its recoverable amount. Impairment losses
are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU,
and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect
of goodwill is not reversed.
Other intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
They are amortised on a straight-line basis over a useful life of 10 years.
DISCLOSURE
As at As at
Euro 30 June 2018 30 June 2017
Goodwill 22,292,997 23,744,836
Other intangible assets 299,496 222,519
22,592,493 23,967,355
GOODWILL
New
Euro MAS Prop Waverley Total
Balance at 30 June 2016 23,901,016 1,361,802 25,262,818
Foreign currency translation difference in OCI (1,436,155) (81,827) (1,517,982)
Balance at 30 June 2017 22,464,861 1,279,975 23,744,836
Foreign currency translation difference in OCI (171,864) (5,629) (177,493)
Impairment - (1,274,346) (1,274,346)
Balance at 30 June 2018 22,292,997 - 22,292,997
NEW WAVERLEY
The initial goodwill arising on New Waverley was allocated to the New Waverley development CGU and represented a
portion of the estimated future value above the carrying amount of the New Waverley development. At acquisition the fair
value of the New Waverley development could not be reliably determined. Accordingly, it was carried at cost. As
construction progressed and a fair value became reliably determinable, the group measured the investment property in the
New Waverley development CGU at fair value.
An impairment test was performed at 31 December 2017, as a result of the group fair valuing the investment property in
the New Waverley development CGU. The carrying amount of the CGU, which included the goodwill, exceeded its
recoverable amount, which resulted in all the goodwill attributable to the CGU being impaired.
An impairment of EUR1,274,346 (2017: EURnil) was recognised as a result of the group's impairment test of the New Waverley
goodwill.
The recoverable amount of the New Waverley goodwill was calculated using the fair value less costs to sell of the New
Waverley business and is classified as level 3 in the fair value hierarchy. The majority of New Waverley net assets comprise
investment property and investment property held for sale. The valuation techniques have been disclosed in note 17.
MAS PROP
No impairment loss was recognised as a result of the group's annual impairment test of goodwill in relation to MAS Prop
(2017: EURnil).
The recoverable amount of the MAS Prop CGU was based on the value in use, using a discounted cash flow
methodology. Under the investment advisory agreement MAS Prop is entitled to a fee based upon the net asset value of
the group. As a result of the significant growth in the group's net asset value, the cash flows over the remaining forecast
period are substantially in excess of those originally forecast at the time of acquisition. Consequently, the value in use of the
MAS Prop CGU is significantly higher than the carrying value of goodwill.
All cash flows in the value in use calculation were forecast for a period of 6 years (2017: 7 years) which is more than a
5 year projection as the cash flow forecasts are prepared for the remaining term of the pre-existing investment advisory
agreement. Budgeted EBITDA was based on expectations of future outcomes taking into account past experience adjusted
for anticipated net asset growth of the group and increases in operating expenses.
The following key assumptions were used to estimate value in use calculations as follows:
As at As at
Inputs 30 June 2018 30 June 2017
Pre-tax discount rate 6.49% 6.44%
Annual increase in revenue 2.00% - 3.00% 7.00% - 9.00%
Annual increase in operating expenses 2.00% - 4.00% 4.00% - 6.00%
Budgeted period 6 years 7 years
The key assumptions were derived from the following:
PRE-TAX DISCOUNT RATE
Derived from the weighted average cost of capital of MAS Prop.
ANNUAL INCREASE IN REVENUE
Derived from the operating budgets of MAS Prop.
ANNUAL INCREASE IN OPERATING EXPENSES
Derived from the operating budgets of MAS Prop.
BUDGETED PERIOD
Derived from the remaining term of the pre-existing investment advisory agreement.
No cash flows have been assumed beyond the budgeted period, and accordingly no growth is assumed beyond the
forecast period. Management has determined that a reasonably possible change to the key assumptions would not result in
an impairment.
17. INVESTMENT PROPERTY
ACCOUNTING POLICY
Investment property comprises freehold land, leasehold land, buildings and installed equipment held for the purpose of
earning rental income and for capital appreciation. Investment property also includes property under construction for
future use as investment property and property which has a currently undetermined use.
Investment property is treated as a long-term investment and is initially recognised at cost (including related transaction
costs unless acquired as part of a business combination). It is subsequently measured at fair value, with any changes therein
recognised in profit or loss. Subsequent expenditure that produces future economic benefit to the group is capitalised.
Fair value is based on a number of assumptions and inputs utilising the below methods;
- The market approach is based on comparing the subject asset with identical or similar assets for which price information
is available, such as a comparison with market transactions in the same, or closely similar, type of asset within an
appropriate time horizon.
- The income approach is based on capitalisation or conversion of present and predicted income (cash flows), which may
take a number of different forms, to produce a single current capital value. Among the forms taken, capitalisation of a
conventional market-based income or discounting of a specific income projection can both be considered appropriate
depending on the type of asset and whether such an approach would be adopted by market participants.
- The cost approach is based on the economic principle that a purchaser will pay no more for an asset than the cost to
obtain one of equal utility whether by purchase or construction.
External valuations, where applicable, are performed by independent professional valuers who hold recognised and relevant
professional qualifications and have recent experience of valuing that type and location of investment property.
Development property and land bank are initially recognised at cost and subsequently remeasured to fair value. The fair
value of development property and land bank is not always reliably determinable due to the properties being in the early
stages of construction or where construction has not yet begun. Where fair value cannot be reliably determined, but the
group expects that the fair value will be reliably determinable when construction is further progressed, the group measures
such properties at cost less impairment until such point in time that the fair value can be reliably determined. Where fair
value cannot be reliably determined and there are indicators of impairment the recoverable amount is estimated. In this
situation, the recoverable amount is determined using a value in use calculation, because the fair value less costs to sell
cannot be reliably determined. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss.
Any gains or losses arising from changes in fair value are included in profit or loss. Gains or losses arising from the
disposal of investment property, being the difference between the net disposal proceeds and the carrying amount, are
recognised in profit or loss.
DISCLOSURE
The group's investment property comprises income-generating property, development property and land bank:
Segment Detail
Income-generating property Property that is currently producing income and held for the purpose of earning a yield.
There may be further asset management opportunities on these properties, which could
further enhance income returns.
Development property Property that is being developed in order to create income producing property held for the
purpose of earning a better yield than by acquiring standing property.
Land bank Residential developments and land plots held for schemes that have not yet commenced.
As at 30 June 2018 As at 30 June 2017
Euro Fair value Cost Total Fair value Cost Total
Income-generating property 546,238,139 - 546,238,139 494,519,173 - 494,519,173
Development property - - - 26,413,036 3,668,759 30,081,795
Land bank 32,974,206 - 32,974,206 - 39,690,960 39,690,960
579,212,345 - 579,212,345 520,932,209 43,359,719 564,291,928
As at 30 June 2018
Income-
Euro Note generating Development Land bank Total
Opening balance 494,519,173 30,081,795 39,690,960 564,291,928
Property acquisitions 80,123,500 - - 80,123,500
Property disposals - (24,057,746) - (24,057,746)
Transfers (3,434,151) 3,434,151 -
Capitalised expenditure 2,890,738 2,954,116 7,322,307 13,167,161
Capitalised interest on general borrowings 28,18 - - 569,031 569,031
Transfer to investment property held for sale 23 (43,082,065) - (8,246,692) (51,328,757)
Transfer to inventory property 18 - (1,078,030) - (1,078,030)
Fair value adjustment 10 13,439,408 (4,559,691) (9,601,104) (721,387)
Foreign currency translation difference (1,652,615) 93,707 (194,447) (1,753,355)
Closing balance 546,238,139 - 32,974,206 579,212,345
As at 30 June 2017
Income-
Euro Note generating Development Land bank Total
Opening balance 242,625,172 22,430,253 41,940,654 306,996,079
Property acquisitions 156,414,516 - - 156,414,516
Property acquired in business combinations 61,330,722 - - 61,330,722
Capitalised acquisition costs 3,993,439 - - 3,993,439
Property disposals (7,737,076) (262,084) - (7,999,160)
Transfers 24,786,917 (23,276,980) (1,509,937) -
Capitalised expenditure 840,436 15,407,910 1,658,809 17,907,155
Capitalised interest on general borrowings 28 - 447,749 121,549 569,298
Transfer to investment property held for sale 23 (2,180,000) (115,378) - (2,295,378)
Fair value adjustment 10 19,437,659 17,325,537 - 36,763,196
Foreign currency translation difference (4,992,612) (1,875,212) (2,520,115) (9,387,939)
Closing balance 494,519,173 30,081,795 39,690,960 564,291,928
ACQUISITIONS
On 3 May 2018 the group acquired the entire issued share capital of New Uberior House Limited, which owns two adjoining
commercial buildings known as Princes Exchange and New Uberior House in Edinburgh, United Kingdom. The acquisition
price was EUR80,123,500 but the group paid EUR79,650,439 as the group retained EUR473,061, which will be released to the
vendor conditional upon future rent reviews, refer to note 30. The fair value of the net assets acquired at acquisition were:
Investment property EUR80,123,500; trade and other receivables EUR141,030; cash and cash equivalents EUR1,502,600; and trade
payables EUR2,223,955. The acquisition was not accounted for as a business combination as the group did not acquire the
strategic management of New Uberior House Limited.
INTEREST-BEARING BORROWINGS
Bank borrowings of EUR242,713,107 (2017: EUR147,213,397) are secured against investment property, refer to note 28. The group
has designated bank borrowings drawn down in the period of EUR104,067,925 as general borrowings (2017: EUR111,657,786).
During the reporting period interest costs on general borrowings of EUR570,385 (2017: EUR569,298), refer to note 28, have been
capitalised and are included within land bank and inventory property, refer to note 18.
CAPITAL COMMITMENTS
The group has capital commitments of EUR64,866,015 (2017: EUR78,840,105) in respect of capital expenditures contracted for at
the reporting date, refer to note 39. In addition, EUR118,800,000 has been committed for the purchase of investment property
after the reporting date, refer to note 39.
RELATED PARTIES
The group has a development management arrangement with New Waverley Advisers, a related party, for the development
and construction of the New Waverley site in Edinburgh. A cumulative development management fee of EUR4,701,505 (2017:
EUR4,052,171) and priority participating dividend of EUR6,912,756 (2017: EUR6,078,256) have been recognised in relation to the New
Waverley development, refer to note 30.
MEASUREMENT OF FAIR VALUES
VALUATION PROCESS FOR LEVEL 3 INVESTMENT PROPERTY
On an annual basis the fair value of investment property is determined, where applicable, by external independent property
valuation experts or, where relevant, firm offers from market participants. External valuers have appropriate recognised
professional qualifications and recent experience in the location and category of the property being valued. For details of
the respective valuers used refer to company information and advisors.
For all investment properties their current use equates to the highest and best use. The external valuations received are
initially reviewed by the relevant internal asset manager and compared to the expectation of what fair value would be for
individual investment properties. If the asset manager agrees with the valuation, the valuation reports are then checked by
the finance team to confirm their numerical and methodological accuracy. The reports are then passed to the Portfolio
Management Committee and Investment Committee for approval. Lastly, the investment property valuations are reviewed
by the Audit and Risk Committee prior to the finalisation of the financial statements.
FAIR VALUE HIERARCHY
The fair value measurement of all of the group's investment properties has been categorised as level 3 in the fair value
hierarchy based upon the significant unobservable inputs into the valuation technique used.
As at 30 June 2018 Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 546,238,139 - - 546,238,139
Land bank 32,974,206 - - 32,974,206
579,212,345 - - 579,212,345
As at 30 June 2017 Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Income-generating property 494,519,173 - - 494,519,173
Development property 26,413,036 - - 26,413,036
520,932,209 - - 520,932,209
VALUATION TECHNIQUE AND SIGNIFICANT UNOBSERVABLE INPUTS
The following table shows the valuation technique used in measuring the fair value of investment property, as well as the
significant unobservable inputs used.
As at 30 June 2018
Investment Inter-relationship between
property Significant key unobservable inputs and
type Valuation technique unobservable inputs fair value measurement
Income- Discounted cash flows: -Risk adjusted discount rates The estimated fair value would
generating The valuation model considers the present -Estimated rental value increase/(decrease) if:
property value of net cash flows to be generated -Net rental growth -Expected market rental
from the property, taking into account -Reversionary discount rate growth was higher/ (lower)
expected rental growth rates, void periods, -The estimated rental value
occupancy rates, lease incentive costs such was higher/(lower)
as rent-free periods and other costs not -The reversionary discount rate
paid by tenants. The expected net cash was lower/(higher)
flows are discounted using risk-adjusted -The risk adjusted discount
discount rates. Among other factors, the rate was lower/(higher)
discount rate estimation considers the
quality of a building and its location, tenant
credit quality and lease terms.
Purchase price: -Purchase price The estimated fair value would
The valuation model takes into account the increase/(decrease) if:
recent acquisition price no earlier than -The number of the interested
three months before the reporting date, parties was higher/(lower)
equivalent to the amount a third party and/or,
would be willing to pay. -the availability of comparable
properties was lower/(higher),
thus altering the acquisition
price
Land bank Firm offers less costs to complete: -Firm offer The estimated fair value would
Fair value is based on the amount a third -Cost to complete increase/(decrease) if:
party is willing to pay less any costs to -The number of the interested
complete. parties was higher/(lower)
and/or
-the availability of comparable
properties was lower/(higher),
thus altering the offer price
-The budgeted costs to
complete was lower/(higher)
Residual value method: -Cost to complete The estimated fair value would
The valuation model considers the gross -Residential unit prices increase/(decrease) if:
development value of the property based -Valuation yield -The budgeted cost to
on an independent view of market values -Funding yield complete was lower/(higher)
for the completed development less any and/or
costs to complete. -the residential unit prices was
higher/(lower),
As at 30 June 2017
Investment Inter-relationship between
property Significant key unobservable inputs and
type Valuation technique unobservable inputs fair value measurement
Income- Discounted cash flows: -Risk adjusted discount rates The estimated fair value would
generating The valuation model considers the present -Estimated rental value increase/(decrease) if:
property value of net cash flows to be generated -Net rental growth -Expected market rental
from the property, taking into account -Reversionary discount rate growth was higher/ (lower)
expected rental growth rates, void periods, -The estimated rental value
occupancy rates, lease incentive costs such was higher/(lower)
as rent-free periods and other costs not -The reversionary discount rate
paid by tenants. The expected net cash was lower/(higher)
flows are discounted using risk-adjusted -The risk adjusted discount
discount rates. Among other factors, the rate was lower/(higher)
discount rate estimation considers the
quality of a building and its location, tenant
credit quality and lease terms.
Capitalisation rate: -Capitalisation rate The estimated fair value would
The valuation model considers the value of -Market rent increase/(decrease) if:
the property based on actual location, size -the capitalisation rate was
and quality of the properties taking into lower/(higher)
account market data and the capitalisation -the passing rent was higher/
rate of future income streams at the (lower)
valuation date. -the market rent was higher/
(lower)
Development Firm offers: -Firm offer The estimated fair value would
property The valuation model takes into account the increase/(decrease) if:
amount a third party is willing to pay. -The number of the interested
parties was higher/(lower)
and or, the availability of
comparable properties lower/
(higher), thus altering the
offer price
FAIR VALUE SENSITIVITY ANALYSIS
As at 30 June 2018
INCOME-GENERATING PROPERTY
Significant unobservable inputs
Discount rate Net rental growth Reversionary discount rate Estimated rental value
Sensitivity Sensitivity Sensitivity Sensitivity
Technique Valuation Input Input Change Valuation Input Change Valuation Input p.a. Change Valuation
0.5% EUR441,185,461 2.5% EUR499,013,575 0.5% EUR449,480,278 10% EUR492,645,582
DCF EUR466,114,639 4.50%-11.75% 1%-2% 5.25%-9.50% EUR34,178,897
-0.5% EUR489,817,223 -2.5% EUR442,139,843 -0.5% EUR519,673,413 -10% EUR437,771,688
Purchase price
Sensitivity
Technique Valuation Input Change Valuation
Purchase EUR84,129,674
EUR80,123,499 EUR80,123,499 5%
price EUR76,117,324
EUR546,238,139
LAND BANK
Firm offer Costs to complete
Sensitivity Sensitivity
Technique Valuation Input Change Valuation Input Change Valuation
Firm offers
less costs to EUR32,974,206 EUR38,094,775 5% EUR34,878,944 (EUR5,120,569) 5% EUR32,718,177
complete -5% EUR31,069,467 -5% EUR33,230,234
As at 30 June 2017
INCOME-GENERATING PROPERTY
Significant unobservable inputs
Discount rate Net rental growth Reversionary discount rate Estimated Rental Value
Sensitivity Sensitivity Sensitivity Sensitivity
Technique Valuation Input % Change Valuation Input % Change Valuation Input % Change Valuation Input p.a Change Valuation
0.50% EUR405,583,114 2.50% EUR433,652,067 0.50% EUR394,024,086 10.00% EUR444,161,124
DCF(1) EUR417,844,894 4.75%-12.00% 1.%-6.75% 4.42%-9% 31,461,564
-0.50% EUR444,334,644 -2.50% EUR414,046,319 -0.50% EUR418,742,092 -10.00% EUR401,386,474
Capitalisation rate
Sensitivity
Technique Valuation Input % Change Valuation
Capitalisation 0.50% EUR66,628,548
EUR76,674,279 4.25%-7.00%
rate -0.50% EUR83,572,828
EUR494,519,173
DEVELOPMENT PROPERTY
Market offer
Sensitivity
Technique Valuation Input Change Valuation
Market 5% EUR27,733,687
EUR26,413,036 EUR26,413,036
transaction -5% EUR25,092,384
(1) DCF less costs to complete.
18. INVENTORY PROPERTY
ACCOUNTING POLICY
Inventory property is measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs to make the sale. The cost of inventory comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventory to its present location and condition.
DISCLOSURE
As at As at
Euro Note 30 June 2018 30 June 2017
Opening balance - -
Development expenditure 21,918,133 -
Disposals (recognised in cost of sales of inventory property) 6 (21,704,016) -
Transfer from investment property 17 1,078,030 -
General borrowings capitalised 28 1,354 -
Closing balance 1,293,501 -
On 13 July 2017 the group entered into a lease with the UK Government ("the Pre-let Agreement") for the office component
of the New Waverley development in Edinburgh, Scotland ("the Pre-let Office"). The Pre-let Agreement encompasses a lease
with a UK Government guarantee, for a term of 25 years commencing upon practical completion of the development.
Under the terms of the Pre-let Agreement, the group is obligated to pay GBP21,593,520 (approx. EUR24,368,287) for the office
fit-out when the UK Government takes occupation of the Pre-let Office. This is referred to as the capital contribution to the
UK Government in relation to the office fit-out ("capital contribution"). The group is also committed to granting the UK
Government a rent-free period of 7 months.
On 17 October 2017, the group entered into an agreement to dispose of the office land at New Waverley to Legal &
General ("Disposal of Land") and to develop the Pre-let Office on a forward-sold basis for Legal & General ("the Forward
Funding Agreement"). In terms of the Forward Funding Agreement, the group has sold the rights and obligations of the
Pre-let Agreement to Legal & General. Therefore, Legal & General has acquired the land, the Pre-let Agreement and the
obligations for the rent-free period and the capital commitment from MAS and appointed MAS to develop the Pre-let Office
under the Forward Funding Agreement. The Forward Funding Agreement provides for funds to be drawn down by the
group, as developer, from Legal & General against development costs incurred. The group received GBP20,841,671
(EUR23,490,647) for the sale of the office land.
The amounts relating to the rent-free period and the capital contribution are included in the development costs and are
funded by Legal & General under the Forward Funding Agreement subject to there being sufficient developer profits.
Accordingly, the group has recognised:
- a financial liability of EUR24,507,316 due to the UK Government in respect of the capital contribution, refer to note 30; and
a financial asset of EUR24,507,316 due from Legal & General in respect of the capital contribution, refer to note 29. The
financial liability and financial asset have not been offset because the offsetting criteria in IAS 32 - Financial Instruments:
Presentation, have not been met.
- a financial liability due to Legal & General in respect of the reimbursement of a pre-negotiated lease incentive, payable to the
purchaser; and financial asset due from Legal & General in respect of the reimbursement. The financial liability and a financial
asset have been offset because the offsetting criteria in 'IAS 32 - Financial Instruments: Presentation' have been met. The
group expects to settle these financial instruments on a net basis under the terms of the Forward Funding Agreement.
The financial assets and financial liabilities referred to above have been discounted at a market related interest rate as they
are only due upon practical completion. This has resulted in the recognition of finance income and finance expense as the
amortisation of the capital contribution on financial assets and financial liabilities respectively, refer to note 14.
Although the Forward Funding Agreement is not a typical construction contract, the legal terms are such that the
development project undertaken by the group on behalf of Legal & General represents a continuous transfer of work in
progress to Legal & General. Accordingly, this aspect of the accounting for the Forward Funding Agreement has been
determined by applying IAS 11 by analogy even though the contract is not part of the normal operations of the group.
Income is recognised based on the stage of completion. The stage of completion is determined based on the proportion
that costs incurred to date bear to the estimated total costs of the transaction. Development expenditure incurred in
respect of inventory property is recognised in profit or loss and classified as cost of sales of inventory property.
Included in the development costs in the Forward Funding Agreement is the land and buildings transaction tax ("LBTT")
on the office land sale. The group is obliged to settle these costs with Legal & General on practical completion and may use
the funding provided by Legal & General to do so, subject to there being sufficient developer profits. The financial liabilities
due to Legal & General in respect of the LBTT have been offset by the financial asset due from Legal & General in respect of
the funding available under the Forward Funding Agreement. The group expects to settle these financial instruments on a
net basis under the terms of the Forward Funding Agreement.
19. FINANCIAL INVESTMENTS
ACCOUNTING POLICY
Refer to note 4 for the group's general accounting policy for financial instruments.
DISCLOSURE
Financial investments have been classified as fair value through profit or loss under IFRS 9. Accordingly, they are measured
at fair value at the reporting date with changes in fair value recognised in profit or loss.
As at 30 June 2018
Share price Number of Fair value
Financial investment (Euro) shares (Euro)
Eurocommercial Properties NV 36.36 497,333 18,083,028
Unibail - Rodamco Westfield SE 188.55 264,618 49,893,724
British Land Company PLC 7.60 1,625,000 12,350,045
Covivio SA 89.10 150,300 13,391,730
Hufvudstaden AB 12.28 1,083,000 13,295,975
Klepierre SA 32.25 1,626,364 52,450,239
Land Securities Group PLC 10.82 1,115,000 12,063,076
Mercialys SA 14.91 772,934 11,524,446
183,052,263
There were no financial investments held as at 30 June 2017.
On 21 November 2017 the group invested in a portfolio of listed real estate equity securities in order to generate a return
on euro deposits awaiting investment into new acquisition opportunities and avoid negative interest on euro cash deposits.
RECONCILIATION OF FINANCIAL INVESTMENTS AT FAIR VALUE
As at 30 June 2018
As at As at
Euro Note 30 June 2018 30 June 2017
Opening balance - 51,614,068
Purchases 199,557,215 -
Disposal - (47,045,042)
Fair value adjustment 10 (16,504,952) (4,569,026)
Closing balance 183,052,263 -
During the year dividend income of EUR8,423,423 (2017: EURnil) was received and EUR8,423,423 (2017: EURnil) was recognised as
other income, refer to note 11.
The financial instrument and fair value disclosures are in notes 33 and 34.
FAIR VALUE HIERARCHY
The following table shows the carrying amount and fair value of the group's investments in the fair value hierarchy:
As at 30 June 2018
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Listed real estate equity securities 183,052,263 183,052,263 - -
183,052,263 183,052,263 - -
20. INVESTMENT IN EQUITY ACCOUNTED INVESTEES
ACCOUNTING POLICY
Equity accounted investees comprise investments in associates. Associates are entities in which the group has significant
influence, which is the power to participate in the financial and operating policy decisions of the investee but does not
result in control or joint control of those entities.
Interests in associates are initially recognised at cost including transaction costs. Subsequently, they are accounted for
using the equity method. The group recognises its share of profit or loss and other comprehensive income of the associate
from the date on which significant influence commences, until the date on which significant influence ceases.
The group's share of interest charge by the group to the associate and capitalised against qualifying assets that are not
subsequently measured at fair value in the equity accounted investee is deducted from its share of earnings in the equity
accounted investee.
Unrealised losses on transactions are eliminated in the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
When the group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of the
investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further
losses is discontinued except to the extent that the group has an obligation or has made payments on behalf of the
investee.
Interests in associates are assessed for impairment if there is an impairment indicator. An impairment loss in respect of
an equity accounted investee is measured by comparing the recoverable amount of the investment with its carrying
amount. An impairment loss is recognised in profit or loss and is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount.
DISCLOSURE
As at As at
Euro 30 June 2018 30 June 2017
PKM Developments 23,774,222 20,205,297
RECONCILIATION OF INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
As at As at
Euro 30 June 2018 30 June 2017
Opening balance 20,205,297 19,991,716
Share of profit, net of tax 3,568,925 178,397
23,774,222 20,170,113
Capitalised acquisition costs - 35,184
Closing balance 23,774,222 20,205,297
The group has an investment in PKM Developments Limited, a development property group which develops investment
property predominately in Romania and other central and eastern European countries. PKM Developments is an associate
of the group, MAS owns 40% of the ordinary shares and therefore has significant influence over the entity. The remaining
60% of the ordinary shares of PKM Developments are owned by Prime Kapital, who acts as the developer.
In addition to the investment in the ordinary shares, and the investment in PKM Developments 7.5% preference shares,
the group intends to fund up to a further EUR250,000,000 over 3 years through the investment in additional 7.5% preference
shares to be issued by PKM Developments, refer to note 39. The preference shares issued by PKM Developments are not
considered to be part of the long-term interest that the group has in PKM Developments.
The following table summarises the financial information of PKM Developments as included in its own financial
statements:
As at As at
Euro 30 June 2018 30 June 2017
Statement of financial position - PKM Developments
Non-current assets 138,511,061 48,139,879
Current assets 41,864,316 105,905,277
Total assets 180,375,377 154,045,156
Non-current liabilities 109,468,016 101,134,247
Current liabilities 9,311,602 2,544,687
Total liabilities 118,779,618 103,678,934
Net assets 61,595,759 50,366,222
Percentage ownership interest 40% 40%
Un-adjusted group share of net assets 24,638,304 20,146,489
Elimination of preference share interest capitalised on qualifying assets carried at cost (922,890) -
Net assets attributable to the group 23,715,414 20,146,489
Capitalised costs 58,808 58,808
Carrying amount 23,774,222 20,205,297
Year ended Year ended
Euro 30 June 2018 30 June 2017
Statement of profit or loss and other comprehensive income - PKM Developments
Revenue 2,258,220 2,009
Fair value adjustments 16,372,691 -
Other income 2,128 284,363
Corporate expenses (719,216) (131,992)
Investment expenses (2,601,061) (1,235)
Finance income 144,260 190,867
Finance costs (36,808) (13,739)
Translation differences (31,399) 115,719
Tax expense (4,159,274) -
Total profit 11,229,541 445,992
Percentage ownership interest 40% 40%
Total profit and other comprehensive income attributable to the group 4,491,816 178,397
Elimination of preference share interest capitalised on qualifying assets carried at cost (922,891) -
Group's share of profit 3,568,925 178,397
PKM Developments has no other comprehensive income.
21. TRADE AND OTHER RECEIVABLES
ACCOUNTING POLICY
The group's trade and other receivables include financial instruments and non-financial instruments. The financial
instruments are classified as financial assets at amortised cost. Refer to note 4 for the group's general accounting policy for
financial instruments. The non-financial instruments include prepayments and VAT.
DISCLOSURE
As at As at
Euro 30 June 2018 30 June 2017
Receivable from sale of inventory property 8,470,911 -
Receivables from lessees 4,384,629 4,964,146
VAT receivable 1,141,499 947,766
Prepayments 1,009,668 854,941
Other 799,070 940,235
Dividends receivable 322,240 -
Property retentions held in escrow 20,316 500,000
Collateral receivable - 499,947
16,148,333 8,707,035
The receivable from sale of inventory property relates to the New Waverley development and comprises EUR4,132,645 relating
to development costs receivable under the Forward Funding Agreement, which has been paid post year end, and
EUR4,338,266 relating to profit receivable under the Forward Funding Agreement, which will be paid on completion of the
development, refer to note 18.
The financial instrument and fair value disclosures are in notes 33 and 34.
22. CASH AND CASH EQUIVALENTS
ACCOUNTING POLICY
The group's cash and cash equivalents are financial instruments and are classified as financial assets at amortised cost.
Refer to note 4 for the group's general accounting policy for financial instruments
DISCLOSURE
As at As at
Euro 30 June 2018 30 June 2017
Bank balances 147,825,624 33,017,502
The financial instrument and fair value disclosures are in notes 33 and 34.
RECONCILIATION OF CASH GENERATED FROM OPERATING ACTIVITIES:
Year ended Year ended
Euro Note 30 June 2018 30 June 2017
Profit for the year 19,333,422 34,576,011
Adjustments for:
Depreciation 12 100,026 27,864
Share-based payment expense 805,766 245,419
Fair value adjustments 10 15,800,127 (25,592,290)
Exchange differences 13 1,020,787 4,684,895
Finance income 14 (7,975,558) (1,207,196)
Finance costs 14 5,560,344 2,238,497
Share of profit from equity accounted investees 20 (3,568,925) (178,397)
Goodwill impairment 16 1,274,346 -
Tax expense 15 6,867,387 5,683,602
Profit on sales of inventory property 6 (4,316,924) -
Cash generated from operating activities 34,900,798 20,478,405
23.INVESTMENT PROPERTY HELD FOR SALE
ACCOUNTING POLICY
Investment property is classified as held for sale if it is highly probable that the carrying value of the property will be
recovered primarily through its sale rather than through continuing use, and the following criteria are met:
- Management has intent and a plan to sell;
- The asset is available for immediate sale and an active programme to locate a buyer is initiated;
- The sale is highly probable, within 12 months of classification as held for sale;
- The asset is being actively marketed for a reasonable sale price in relation to its fair value; and
- Actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn.
The measurement requirements of IFRS 5 - 'Non-current Assets Held for Sale and Discontinued Operations', do not apply
to investment property, as such investment property continues to be measured at fair value once transferred to investment
property held for sale, in accordance with group's accounting policy for investment property.
DISCLOSURE
As at As at
30 June 2018 30 June 2017
United Kingdom
- Hotel 42,528,044 1,137,200
- Retail - 3,019,715
- Land bank 11,060,400 -
53,588,444 4,156,915
Germany
- Retail - 2,180,000
53,588,444 6,336,915
RECONCILIATION OF THE GROUP'S INVESTMENT PROPERTY HELD FOR SALE:
As at As at
Euro Note 30 June 2018 30 June 2017
Opening balance 6,336,915 3,515,237
Transfer from investment property 17 51,328,757 2,295,378
Disposals (7,353,427) -
Capitalised expenditure 1,149,597 -
Retention release (275,000) -
Fair value adjustment 10 2,766,206 786,795
Foreign currency translation difference (364,604) (260,495)
Closing balance 53,588,444 6,336,915
MEASUREMENT OF FAIR VALUES
FAIR VALUE HIERARCHY
The fair value measurement of all the group's investment property held for sale has been categorised as level 3 in the fair
value hierarchy based upon the significant unobservable inputs into the valuation technique used.
VALUATION TECHNIQUE AND SIGNIFICANT UNOBSERVABLE INPUTS
The table in note 17 shows the valuation techniques used in measuring the fair value of investment property and investment
property held for sale, as well as the significant unobservable inputs used.
24.SHARE CAPITAL AND GEARED SHARE PURCHASE PLAN SHARES (TREASURY SHARES)
ACCOUNTING POLICY
ORDINARY SHARES
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised
as a deduction from equity.
The group's policy is to maintain a strong capital base to allow sustainable growth in the development of the group.
GEARED SHARE PURCHASE PLAN SHARES (TREASURY SHARES)
Geared purchase plan shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
are recognised as a deduction from equity, net of any tax effects. When geared share purchase plan shares are sold or
issued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the
transaction is recognised within share capital.
DISCLOSURE
The ordinary share capital of the company has no par value. The reconciliation of share capital is as follows:
Geared share
purchase plan shares
Share capital (treasury shares) Total
Number of Number of Number of
Shares Euro shares Euro Shares Euro
Balance at 30 June 2016 348,625,219 378,530,556 - - 348,625,219 378,530,556
Issued during the period
- Issue of share capital 108,974,358 157,984,909 - - 108,974,358 157,984,909
- Geared share purchase 12,850,000 21,056,010 (12,850,000) (21,056,010) - -
plan shares
- Distributions reinvested 9,766,722 13,251,523 - - 9,766,722 13,251,523
480,216,299 570,822,998 (12,850,000) (21,056,010) 467,366,299 549,766,988
Distributed during the year
- Scrip distributions - (13,266,725) - - - (13,266,725)
Balance at 30 June 2017 480,216,299 557,556,273 (12,850,000) (21,056,010) 467,366,299 536,500,263
Issued during the period
- Issue of share capital 160,299,409 279,917,834 - - 160,299,409 279,917,834
- Distributions reinvested 9,828,090 15,918,376 - - 9,828,090 15,918,376
- Shares forfeited and (5,000,000) (8,193,000) 5,000,000 8,193,000 - -
cancelled
645,343,798 845,199,483 (7,850,000) (12,863,010) 637,493,798 832,336,473
Distributed during the year
- Scrip distributions - (15,949,084) - - - (15,949,084)
Balance at 30 June 2018 645,343,798 829,250,399 (7,850,000) (12,863,010) 637,493,798 816,387,389
On 28 September 2017 the group issued 77,541,988 shares at an issue price of EUR1.63 (ZAR25.50) as part of an accelerated
book build, raising cash of EUR125,926,058. On 6 December 2017 a further 82,757,421 shares were issued by the group at an
issue price of EUR1.90 (ZAR31.00) as part of a further accelerated book build, raising cash of EUR154,764,328. The group incurred
expenses of EUR772,552 in relation to shares issued during the period, which were offset against share
capital.
In the prior year on 29 July 2016 the group issued 25,641,026 shares at an issue price of EUR1.24 (ZAR19.50) as part of an
accelerated book build, raising cash of EUR31,781,847. On 30 March 2017 a further 83,333,332 shares were issued by the group
at an issue price of EUR1.53 (ZAR21.00) as part of a further accelerated book build, raising cash of EUR127,145,970. The group
incurred expenses of EUR942,908 in relation to shares issued during the period, which were offset against share capital.
24.SHARE CAPITAL AND GEARED SHARE PURCHASE PLAN SHARES (TREASURY SHARES)
GEARED SHARE PURCHASE PLAN SHARES
As at As at
30 June 2018 30 June 2017
Opening balance 12,850,000 -
Geared share purchase plan shares issued - 12,850,000
Geared share purchase plan shares forfeited (5,000,000) -
Closing balance 7,850,000 12,850,000
On 15 June 2017 it was announced that Lukas Nakos, the former CEO, would be leaving the group. Lukas Nakos ceased to
be a director on 31 December 2017, with a condition of his departure being his exit from the geared share purchase plan
with no vesting of shares occurring, refer to note 32 for cancelled shares. On 24 April 2018, the group cancelled all of Lukas
Nakos' 5,000,000 shares in relation to the geared share purchase plan. The shares were forfeited and cancelled in
accordance with the terms of the rules of the MAS share purchase scheme.
Refer to note 36 for further information on the lump sum amount paid to Lukas Nakos.
Distributions on the geared share purchase plan shares are referred to in note 32.
DISTRIBUTIONS
The holders of the company's shares are entitled to distributions as declared and to one vote per share at general meetings
of the company. Distributions of the company can be paid from retained earnings and share capital in accordance with the
BVI Business Companies Act 2004.
The following distributions were paid by the group:
Year ended 30 June 2018
Distribution
per share
Euro Scrip Cash Total (euro cents)
11 November 2017 10,424,724 6,957,823 17,382,547 3.19
6 April 2018 5,524,360 17,169,809 22,694,169 3.58
Year ended 30 June 2017
Distribution
per share
Euro Scrip Cash Total (euro cents)
2 November 2016 7,994,090 352,016 8,346,106 2.23
30 March 2017 5,272,635 4,850,901 10,123,536 2.66
The directors are pleased to propose a final distribution to shareholders of 4.03 euro cents per share (2017: 3.19 euro cents
per share).
25. SHARE-BASED PAYMENT RESERVE
ACCOUNTING POLICY
Refer to note 32 for the accounting policy for share-based payment arrangements.
DISCLOSURE
Reconciliation of geared share purchase plan:
As at As at
Euro 30 June 2018 30 June 2017
Opening balance 225,973 -
Recognised during the year 902,386 319,248
Non-forfeitable distribution (96,620) (93,275)
805,766 225,973
Closing balance 1,031,739 225,973
SHARE BASED PAYMENT ARRANGEMENTS
The remaining term of the loans at 30 June 2018 was 8.69 years (2017: 9.69 years).
Refer to note 36 for further disclosures of the share-based payment expense included in key management
compensation and directors' remuneration.
26. FOREIGN CURRENCY TRANSLATION RESERVE
ACCOUNTING POLICY
Refer to note 13 for the accounting policy for foreign currency translation reserve.
DISCLOSURE
The group recognised a foreign currency translation loss of EUR1,207,816 (2017: EUR5,371,692 loss) resulting in a foreign currency
translation deficit at the reporting date of EUR11,768,119 (2017: EUR10,560,303 deficit).
27. NON-CONTROLLING INTEREST
ACCOUNTING POLICY
The group recognises the non-controlling interests in the net assets of consolidated subsidiaries separately from the group's
interest, within equity. Profits or losses of subsidiaries attributable to non-controlling interests are allocated to the non-
controlling interest even if this results in a debit balance being recognised for the non-controlling interest.
DISCLOSURE
As at As at
Euro 30 June 2018 30 June 2017
Opening balance 988,063 -
Share of profit for the year 2,477,116 988,063
Distribution to NCI (937,977) -
Closing balance 2,527,202 988,063
The non-controlling interest relates to the participation by Prime Kapital in the co-investment venture entered into with the
group. This co-investment arrangement is focused on investing in income-generating properties in CEE. Under the terms of
the co-investment agreement, Prime Kapital's effective economic interest is equivalent to a 20% direct participation in the
co-investment venture, less the interest cost on the participation funding that is provided by MAS. The effective interest on
this participation funding is equivalent to the weighted average cost of external funding achieved by the co-investment
venture.
During the period, Prime Kapital received a dividend of EUR937,977 (2017: EURnil) in relation to its participation in the
co-investment venture.
28. INTEREST-BEARING BORROWINGS
ACCOUNTING POLICY
The group's interest-bearing borrowings are financial instruments and are classified as financial liabilities at amortised cost.
Refer to note 4 for the group's general accounting policy for financial instruments.
DISCLOSURE
The carrying amount of the group's interest-bearing borrowings was as follows:
As at As at
Euro 30 June 2018 30 June 2017
Non-current
UK 50,650,037 30,284,516
German 108,187,711 103,478,073
Swiss 7,211,257 7,989,364
CEE 48,358,450 -
214,407,455 141,751,953
Current
UK 23,272,484 1,489,732
German 2,707,840 3,614,901
Swiss 337,116 356,811
CEE 1,988,212 -
28,305,652 5,461,444
242,713,107 147,213,397
The carrying value of interest-bearing borrowings approximates the fair value.
Included within current UK interest-bearing borrowing is EUR22,225,094 of debt which is associated with investment
property classified as held for sale.
RECONCILIATION OF THE GROUP'S CARRYING AMOUNT OF INTEREST-BEARING BORROWINGS:
As at As at
Euro 30 June 2018 30 June 2017
Opening balance 147,213,397 44,578,595
Changes from financing cash flows 90,850,997 99,919,704
Proceeds from interest-bearing borrowings 104,067,925 111,657,786
Transaction costs related to interest-bearing borrowings (1,431,560) (2,168,837)
Repayment of interest-bearing borrowings (7,350,266) (7,098,329)
Interest paid (4,435,102) (2,470,916)
Finance costs 5,341,556 2,800,965
Finance costs - expense 4,771,171 2,231,667
Finance costs - general borrowings capitalised 570,385 569,298
Foreign currency translation difference (692,843) (85,867)
Closing balance 242,713,107 147,213,397
Interest from general borrowings of EUR570,385 (2017: EUR569,298) was capitalised during the year at a capitalisation rate of
2.60% (2017: 2.65%).
The financial instrument and fair value disclosures are in notes 33 and 34.
FIXED AND VARIABLE DEBT
The group is subject to both fixed and variable interest rates on its interest-bearing borrowings:
As at As at
Euro 30 June 2018 30 June 2017
Fixed/hedged debt 199,289,452 112,857,253
Floating rate debt 43,423,655 34,356,144
242,713,107 147,213,397
SUMMARY OF INTEREST BEARING BORROWING TERMS AND COVENANTS
As at 30 June 2018
BORROWING TERMS
Weighted
average Weighted
remaining term average interest Significant terms
Jurisdiction Currency of debt rate and conditions
UK
- Floating/hedged debt GBP 3.44 years 1.70% + 3M UK
Libor(1) - All loans were utilised to
purchase properties or to
German
invest in shares of
- Fixed debt EUR 7.09 years 1.87%
property owning entities
- Some loans have
Swiss
covenants as reported
- Hedged debt CHF 7.00 years 1.29% + 3M Swiss Libor(1) below
- All loans are secured
CEE against specific properties
- Hedged debt EUR 6.58 years 2.50%+12M Euro Libor(1)
(1) The group has entered into interest rate swaps to hedge some of the group's exposure to the applicable Libor, refer to note 29 and 30 for
further information.
As at 30 June 2017
BORROWING TERMS
Weighted
average Weighted
remaining term average interest Significant terms
Jurisdiction Currency of debt rate and conditions
UK
- Floating debt GBP 3.83 years 2.00% + 3M UK - All loans were utilised to
Libor(2) purchase properties or to
German invest in shares of
- Fixed debt EUR 8.24 years 1.38% property owning entities
- Some loans have
- Hedged debt EUR 12.26 years 0.95% + 3M Euro covenants as reported
Libor(2) below
Swiss - All loans are secured
- Hedged debt CHF 8.01 years 1.29% + 3M Swiss against specific properties
Libor(2)
(2) The group has entered into interest rate swaps to hedge some of the group's exposure to the applicable Libor, refer to note 29 and 30 for
further information.
COVENANTS
The group was compliant with its loan covenants during the current and prior reporting periods.
29.FINANCIAL ASSETS
ACCOUNTING POLICY
The group's financial assets are classified as financial assets at amortised cost and financial assets at fair value through
profit or loss. Refer to note 4 for the group's general accounting policy for financial instruments.
DISCLOSURE
As at As at
Euro Note 30 June 2018 30 June 2017
Non-current assets
Preference shares - PKM Developments 105,045,768 101,134,245
Interest rate swap 349,224 -
105,394,992 101,134,245
Current assets
Forward currency contract - 66,097
Capital contribution 18 24,507,316 -
24,507,316 66,097
129,902,308 101,200,342
PREFERENCE SHARES - PKM DEVELOPMENTS
In 2017, the group invested EUR100,000,000 to acquire 7.5% preference shares in PKM Developments. The preference share
asset is held at amortised cost.
CAPITAL CONTRIBUTION
As described in note 18, a financial asset and corresponding financial liability have been recognised in respect of the capital
contribution due from Legal & General, and due to the UK Government, under the terms of the Pre-Let Agreement. Both
the financial asset and financial liability are held at amortised cost, refer to note 33.
INTEREST RATE SWAP
The group entered into an interest rate swap on 9 May 2018. The interest rate swap is held at fair value, with any changes in
fair value recognised in profit or loss in the period in which it occurs.
RECONCILIATION OF THE GROUP'S FINANCIAL ASSETS HELD AT AMORTISED COST:
PKM
Developments
preference Capital
Euro shares contribution Total
Balance at 30 June 2016 - - -
Purchase of shares 100,000,000 - 100,000,000
Finance income 1,134,245 - 1,134,245
Balance at 30 June 2017 101,134,245 - 101,134,245
Capital contribution - 24,052,119 24,052,119
Finance income 7,514,384 - 7,514,384
Distribution received (3,602,861) - (3,602,861)
Finance income - amortisation of capital contribution - 456,951 456,951
Foreign currency translation reserve - (1,754) (1,754)
Balance at 30 June 2018 105,045,768 24,507,316 129,553,084
RECONCILIATION OF THE GROUP'S FINANCIAL ASSETS HELD AT FVTPL:
Interest rate
Euro swaps
Balance at 30 June 2016 -
Balance at 30 June 2017 -
Fair value adjustment 350,585
Foreign currency translation difference in other comprehensive income (1,361)
Balance at 30 June 2018 349,224
30. FINANCIAL LIABILITIES
ACCOUNTING POLICY
The group's financial liabilities are classified as financial liabilities at amortised cost and financial liabilities at fair value
through profit or loss. Refer to note 4 for the group's general accounting policy for financial instruments.
DISCLOSURE
As at As at
Euro Note 30 June 2018 30 June 2017
Non-current liabilities
Interest rate swaps 1,222,944 1,170,086
Deferred consideration 473,061 500,000
1,696,005 1,670,086
Current liabilities
Capital contribution 18 24,507,316 -
Priority participating profit dividend 17 6,912,756 6,078,256
Development management fee 17 4,701,505 4,052,171
Interest rate swap - 1,081,563
36,121,577 11,211,990
37,817,582 12,882,076
FINANCIAL LIABILITIES AT AMORTISED COST
CAPITAL CONTRIBUTION
As described in note 18, a financial liability and corresponding financial asset have been recognised in respect of the capital
contribution due from Legal & General, and due to the UK Government, under the terms of the Pre-let Agreement. Both the
financial asset and financial liability are held at amortised cost, refer to note 33.
DEFERRED CONSIDERATION
Where settlement of any part of cash consideration is deferred, deferred consideration is classified as a financial liability and
is held at amortised cost. The amounts payable in the future are discounted to their present value if the impact of
discounting is material.
During the year the group paid EUR225,000 of the deferred consideration in relation to Heppenheim Park. The remaining
deferred consideration amount of EUR275,000 was released due to the vendor not completing the agreed retention works.
The deferred consideration was originally recognised as part of the purchase price of the asset, and accordingly, the
EUR275,000 release of the retention has been recognised as a fair value adjustment to investment property in profit or loss.
On the acquisition of Uberior House, the group retained a portion of the purchase price per the sale and purchase
agreement, which will be released to the vendor conditional upon future rent reviews.
RECONCILIATION OF THE GROUP'S FINANCIAL LIABILITIES HELD AT AMORTISED COST:
Deferred Capital
Euro Note consideration contribution
Balance at 30 June 2016 2,203,865 -
Purchase price released (1,703,865) -
Balance at 30 June 2017 500,000 -
Purchase price released (500,000) -
Purchase price retained 473,061
Capital contribution 18 - 24,052,119
Finance cost - amortisation of capital contribution 18 - 456,951
Foreign currency translation reserve - (1,754)
Balance at 30 June 2018 473,061 24,507,316
FINANCIAL LIABILITIES AT FVTPL
RECONCILIATION OF THE GROUP'S FINANCIAL LIABILITIES HELD AT FVTPL:
Priority
Development participating
Interest rate management profit
Euro swaps fee dividend
Balance at 30 June 2016 3,029,495 2,367,448 -
Fair value adjustment (769,594) 1,885,457 6,272,812
Foreign currency translation difference recognised in other comprehensive (8,252) (200,734) (194,556)
income
Balance at 30 June 2017 2,251,649 4,052,171 6,078,256
Fair value adjustment 123,226 682,956 884,397
Foreign currency translation difference recognised in other comprehensive (58,931) (33,622) (49,897)
income
Settlement (1,093,000) - -
Balance at 30 June 2018 1,222,944 4,701,505 6,912,756
FAIR VALUE HIERARCHY
The following table shows the carrying and fair value of the group's financial liabilities held at fair value in the fair value
hierarchy:
As at 30 June 2018
Fair value
Euro Carrying amount Level 1 Level 2 Level 3
Non-current liabilities
Interest rate swaps 1,222,944 - 1,222,944 -
1,222,944 - 1,222,944 -
Current liabilities
Development management fee 4,701,505 - - 4,701,505
Priority participating profit dividend 6,912,756 - - 6,912,756
11,614,261 - - 11,614,261
As at 30 June 2017
Fair value
Carrying amount Level 1 Level 2 Level 3
Non-current liabilities
Interest rate swaps 1,170,086 - 1,170,086 -
1,170,086 - 1,170,086 -
Current liabilities
Development management fee 4,052,171 - - 4,052,171
Priority participating profit dividend 6,078,256 - - 6,078,256
Interest rate swaps 1,081,563 - 1,081,563 -
11,211,990 1,081,563 10,130,427
INTEREST RATE SWAPS
The group has hedged some of the interest rate exposure on the interest-bearing borrowings using interest rate swaps,
refer to note 28. These interest rate swaps are classified as FVTPL. Accordingly, they are measured at fair value at the
reporting date with changes in fair value being recognised in profit or loss. During the period the remaining Aldi store in the
Aldi portfolio was sold, consequently the interest-bearing borrowings secured against the portfolio were repaid and the
interest rate swap was settled on 6 July 2017.
DEVELOPMENT MANAGEMENT FEE AND PRIORITY PARTICIPATING PROFIT DIVIDEND
The group has a development management agreement with New Waverley Advisers and New Waverley Holdings ("the
developer") under which a fee and a priority participating profit dividend is payable to the developer in relation to the
development of the New Waverley site in Edinburgh, refer to note 17. Under the terms of the agreement, MAS is entitled to a
7.5% annualised preferred return on invested capital. The developer then earns one third of this annualised return and
thereafter is entitled to a fee or profit dividend that together approximate 25% of any further development profit.
These financial liabilities were designated and classified on initial recognition as FVTPL. Accordingly, they are measured at
fair value at the reporting date with changes in fair value being recognised in profit or loss. There has been no change to
the fair value of the financial liabilities as a result of the group's own credit risk.
LEVEL 2 FINANCIAL LIABILITIES
VALUATION TECHNIQUES AND UNOBSERVABLE INPUTS
The following table shows the valuation technique used to measure financial liabilities held at fair value as well as the
unobservable inputs used for level 2 financial liabilities.
As at 30 June 2018 and 30 June 2017
Financial Inter-relationship between inputs and fair value
liability Valuation technique Inputs measurement
Interest rate The fair value is based on discounting -3-month EUR/ The estimated fair value would increase/
swaps future cash flows using the interest GBP/CHF (decrease) if:
rate swap curves plus the historic LIBOR -3-month Euro libor/Swiss libor was higher/
charged credit margin at the dates -Swap rate (lower)
when the cash flows will take place. -Notional loan -Swap rate was lower/ (higher)
value -Notional loan value was lower/ (higher)
-Fixed rate of -Fixed rate of interest was lower/ (higher)
interest
LEVEL 3 FINANCIAL LIABILITIES
VALUATION PROCESS OF LEVEL 3 FINANCIAL LIABILITIES
The fair value of the level 3 financial liabilities in respect of New Waverley Advisers Limited and New Waverley Holdings
Limited is calculated semi-annually. The investment property valuation process, refer to note 17, is part of this valuation
process as the financial liability is derived from the fair value of New Waverley investment property.
VALUATION TECHNIQUES AND UNOBSERVABLE INPUTS
The following table shows the valuation technique used to measure financial instruments held at fair value as well as the
significant unobservable inputs used for level 3 financial instruments:
As at 30 June 2018 and as at 30 June 2017
Financial Inter-relationship between inputs and fair value
instrument Valuation technique Inputs measurement
Development Gross development value: -Value of The estimated fair value would increase/
management Fair value is based on the value of investment (decrease) if:
fee and priority the properties in the New Waverley property -Value of investment property was higher/(lower)
participating development.
profit dividend
FAIR VALUE SENSITIVITY ANALYSIS
As at 30 June 2018
Gross development value
Sensitivity
%
Financial liability Technique Valuation Input (Euro) Change Valuation
+5.00 4,936,580
Development
Gross development value 4,701,505 46,457,049
management fee
-5.00 4,466,430
+5.00 7,258,394
Priority participating
Gross development value 6,912,756 46,457,049
profit dividend
-5.00 6,567,118
As at 30 June 2017
Gross development value
Sensitivity
%
Financial liability Technique Valuation Input (Euro) Change Valuation
+5.00 4,254,779
Development
Gross development value 4,052,171 40,521,708
management fee
-5.00 3,849,562
+5.00 6,382,169
Priority participating
Gross development value 6,078,256 40,521,708
profit dividend
-5.00 5,774,343
31. TRADE AND OTHER PAYABLES
ACCOUNTING POLICY
The group's trade and other payables include financial instruments and non-financial instruments. The financial instruments
are classified as financial liabilities at amortised cost. Refer to note 4 for the group's general accounting policy for financial
instruments. The non-financial instruments include: deferred income, income tax and VAT.
DISCLOSURE
The group's trade and other payables comprise:
As at As at
Euro 30 June 2018 30 June 2017
Construction payables 4,551,993 1,229,375
Trade payables 4,524,420 6,722,430
Deferred income 1,904,870 854,603
Current tax payable 1,599,942 1,020,201
VAT payable 1,765,052 984,790
Other 386,987 5,363
14,733,264 10,816,762
Construction payables relate to amounts owed to developers from the construction of the group's development properties.
The financial instrument and fair value disclosures are in notes 33 and 34.
32. SHARE-BASED PAYMENT ARRANGEMENTS
ACCOUNTING POLICY
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of
the equity instrument at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the group's estimate of shares that will eventually vest. A corresponding increase is
recognised in the share-based payment reserve.
Non-forfeitable distributions paid as part of the share-based payment awards are included within the fair value at the
grant date of the share-based payment.
Options are forfeited if the employee leaves the group before the options vest.
DISCLOSURE
The group has two geared share purchase plans - a Salaried and a Non-Salaried purchase plan. In terms of these, the group
granted participants a loan to acquire shares issued by the company. The loans accrue interest at the weighted average
cost of debt of the group. If distributions are declared, the participants are entitled to distributions on all their shares,
irrespective of vesting. A portion of any distribution received must be used to settle the interest that accrued on the loan.
Recourse on the loans is limited to the value of the shares acquired plus any unpaid interest accrued, and the shares are
pledged as security for repayment of the loan.
Salaried plan participants continue to receive basic salary and normal employment benefits from the group. The
participants are entitled to retain the surplus of any distributions received on their shares less the cost of interest on the loans.
The non-salaried variant participant ceased to receive any remuneration or employment benefits from the group from
9 March 2017. The participant does not receive any distributions on the participants shares - instead the distributions are
applied, firstly, to reduce the interest cost on the loans and, thereafter, to reduce the loan balance.
The key terms and conditions related to participation in the plans are as follows:
Shares Initial term of loan
Grant Issue Vesting Initial
date Number price Vesting period conditions Interest rate term
Salaried variant 9 March 3,850,000 EUR1.64 20% annually Service until WACD of the 10 years
2017 vesting dates group 2.60%
Non-salaried 9 March 4,000,000 EUR1.64 15% annually for Service until WACD of the 10 years
variant 2017 4 years, and then vesting dates group 2.60%
20% annually
7,850,000
The total number of shares issued in relation to the geared share purchase plan is 7,850,000 (2017: 12,850,000) as at 30
June 2018. Since the grant date, 5,000,000 shares have been forfeited, refer to note 24.
The loans to acquire shares are, in substance, call options in terms of IFRS 2: 'Share-based Payments'. The options were
valued at the grant date. The cost thereof is recognised over the vesting period as an employment benefit, with a
corresponding increase in the share-based payment reserve. During the year EUR902,386 (2017: EUR319,248) was recognised in
the share-based payment reserve in relation to the options, refer to note 25.
As the options relate to multiple service periods, the awards have a graded vesting pattern whereby each tranche
relating to a particular service period is recognised as an expense in profit or loss over that service period.
MEASUREMENT OF FAIR VALUE
The fair value of the options of the Salaried and Non-salaried share option plans have been determined by using the Black-
Scholes-Merton model. The participants' service related vesting conditions have not been considered in the valuation of the
options. Instead, the expense has been recognised based on the group's estimate of shares that will eventually vest.
The valuation assumptions used to measure the grant date fair value of the options of the equity settled share-based
payments were as follows:
As at
Salaried and Non-salaried plan grant date
Share price at grant date EUR1.64
Exercise price EUR2.10
Expected volatility 21.16%
Risk free rate 0.43%
Expected distribution 0.00%
Time to expiration 10 years
Fair value of option EUR0.31
As participants are effectively entitled to distributions, or distribution equivalents, between grant date and exercise date, the
options are valued as if no distributions will be paid on the underlying share. The input for expected distributions is
accordingly zero. In addition, the interest on the loan effectively increases the exercise price of the option from EUR1.64 to EUR2.10.
Expected volatility has been based upon the evaluation of the company's historic volatility and market conditions to
determine the future implied volatility of the company's share price over the term of the options in the geared purchase plans.
RECONCILIATION OF OUTSTANDING LOAN AND SHARES
The number of shares and the loan value of the employee incentive plans were as follows:
As at 30 June 2018
Non-Salaried purchase plan Salaried purchase plan
Number of Weighted Weighted Number of Weighted Weighted
shares average share average loan shares average share average loan
price per share price per share
Opening outstanding 9,000,000 EUR1.5750 EUR1.6270 3,850,000 EUR1.5750 EUR1.6512
balance
Forfeited (5,000,000) - - - - -
Interest - - EUR0.0392 - - EUR0.0426
Interest repayment - - (EUR0.0417) - - (EUR0.0448)
Capital repayment - - (EUR0.0260) - - -
Share price movement - (EUR0.2667) - - (EUR0.2667) -
Closing outstanding 4,000,000 EUR1.3083 EUR1.5985 3,850,000 EUR1.3083 EUR1.6490
balance
Exercisable 666,667 EUR1.3083 EUR1.5985 770,000 EUR1.3083 EUR1.6490
As at 30 June 2017
Non-Salaried purchase plan Salaried purchase plan
Number of Weighted Weighted Number of Weighted Weighted
shares average share average loan shares average share average loan
price per share price per share
Opening outstanding - - - - - -
balance
Granted 9,000,000 EUR1.6386 EUR1.6386 3,850,000 EUR1.6386 EUR1.6386
Interest - - EUR0.0150 - - EUR0.0150
Interest repayment - - (EUR0.0024) - - (EUR0.0024)
Capital repayment - - (EUR0.0242) - - -
Share price movement - (EUR0.0636) - - (EUR0.0636) -
Closing outstanding 9,000,000 EUR1.5750 EUR1.6270 3,850,000 EUR1.5750 EUR1.6512
balance
Exercisable - - - - - -
The remaining term of the loans as at 30 June 2018 was 8.69 years (2017: 9.69 years). The call options on the vested and
unvested shares are out of the money at 30 June 2018.
Refer to note 36 for further disclosures of the share-based payment expense included in key management
compensation and directors' remuneration.
33.ACCOUNTING CLASSIFICATION AND FAIR VALUES
As at 30 June 2018
FVTPL
Amortised Non-financial
Euro Note Level 1 Level 2 Level 3 Total FVTPL cost instruments Total
Financial assets
Non-current financial investments 19 183,052,263 - - 183,052,263 - - 183,052,263
Non-current financial assets 29 - 349,224 - 349,224 105,045,786 - 105,394,992
Current financial asset 29 - - - - 24,507,316 - 24,507,316
Trade and other receivables 21 - - - - 13,997,166 2,151,167 16,148,333
Cash and cash equivalents 22 - - - - 147,825,624 - 147,825,624
183,052,263 349,224 - 183,401,487 291,375,874 2,151,167 476,928,528
Financial liabilities
Non-current financial liabilities 30 - 1,222,944 - 1,222,944 473,061 - 1,696,005
Non-current interest-bearing borrowings 28 - - - - 214,407,455 - 214,407,455
Current financial liabilities 30 - - 11,614,261 11,614,261 24,507,316 - 36,121,577
Current interest-bearing borrowings 28 - - - - 28,305,652 - 28,305,652
Trade and other payables 31 - - - - 9,463,400 5,269,864 14,733,264
- 1,222,944 11,614,261 12,837,205 277,156,884 5,269,864 295,363,953
As at 30 June 2017
FVTPL
Amortised Non-financial
Euro Note Level 1 Level 2 Level 3 Total FVTPL cost instruments Total
Financial assets
Non-current financial assets 29 - - - - 101,134,245 - 101,134,245
Current financial assets 29 - 66,097 - 66,097 - - 66,097
Trade and other receivables 21 - - - - 6,404,381 2,302,654 8,707,035
Cash and cash equivalents 22 - - - - 33,017,502 - 33,017,502
- 66,097 - 66,097 138,556,128 2,302,654 142,924,879
Financial liabilities
Non-current financial liabilities 30 - 1,170,086 - 1,170,086 500,000 - 1,670,086
Non-current interest-bearing borrowings 28 - - - - 141,751,953 - 141,751,953
Current financial instruments 30 - 1,081,563 10,130,427 11,211,990 - - 11,211,990
Current interest-bearing borrowings 28 - - - - 5,461,444 - 5,461,444
Trade and other payables 31 - - - - 7,957,167 2,859,595 10,816,762
- 2,251,649 10,130,427 12,382,076 155,670,564 2,859,595 170,912,235
The group has not disclosed the fair values for financial instruments such as cash and cash equivalents, trade and other receivables and payables and
interest-bearing borrowings because their carrying amounts are a reasonable approximation of fair values. The disclosures for level 2 and level 3 can be
found in the relevant note to each line item.
34. FINANCIAL RISK MANAGEMENT
OVERVIEW
The group has exposure to the following risks from its use of financial instruments:
- Liquidity risk
- Market price risk
- Interest rate risk: fair value interest rate risk and cash flow interest rate risk
- Foreign exchange risk
- Credit risk
LIQUIDITY RISK - The risk that the group will encounter difficulty meeting its obligations associated with its financial liabilities
that arises when the maturity of assets and liabilities do not match. An unmatched position potentially enhances
profitability but can also increase the risk of losses.
The group has internal procedures focused on ensuring the efficient but prudent use of cash and availability of working
capital. The liquidity risk inherent in the business is mainly as a result of the tenant risk in the property portfolio. Should a
tenant default, liquidity risk may result in the inability of the group to cover the interest and capital payments. As a result,
adequate cash buffers are maintained, and tenant strength is reviewed on a continual basis. The group intends to invest up
to a further EUR250,000,000 in PKM Developments, refer to note 39. The group has no significant concentration of liquidity
risk on the basis that the group holds all cash and cash equivalents on demand.
The following are the contractual maturities, including interest payments:
As at 30 June 2018
Euro Note 1-6 months 6-12 months 1-3 years >3 years Total
Capital commitments 39 242,754,299 30,103,744 160,807,972 - 433,666,015
- Investment property 118,800,000 - - - 118,800,00
- Inventory property 23,954,299 30,103,744 10,807,972 - 64,866,015
- Preference shares - 100,000,000 - 150,000,000 - 250,000,000
PKM Developments
Interest-bearing borrowings 6,732,069 6,225,490 30,293,331 229,009,978 272,260,868
Trade and other payables 14,733,264 - - - 14,733,264
Financial instruments - 36,121,577 473,061 1,222,944 37,817,582
- Current financial liabilities - 36,121,577 - - 36,121,577
- Non-current financial liabilities - - 473,061 - 473,061
- Non-current derivative - - - 1,222,944 1,222,944
financial instruments
264,219,632 72,450,811 191,574,364 230,232,922 758,477,729
As at 30 June 2017
Euro Not 1-6 months 6-12 months 1-3 years >3 years Total
Capital commitments 39 8,436,573 118,867,033 51,536,499 - 178,840,105
- Investment property 8,436,573 18,867,033 51,536,499 - 78,840,105
- Preference shares - - 100,000,000 - - 100,000,000
PKM Developments
Interest bearing borrowings 4,898,417 3,604,308 21,278,990 138,679,395 168,461,110
Trade and other payables 10,816,762 - - - 10,816,762
Financial instruments 1,081,563 10,130,427 500,000 1,170,086 12,882,076
- Current financial liabilities - 10,130,427 - - 10,130,427
- Non-current financial liabilities - - 500,000 - 500,000
- Current derivative financial 1,081,563 - - - 1,081,563
instruments
- Non-current derivative - - - 1,170,086 1,170,086
financial instruments
25,233,315 132,601,768 73,315,489 139,849,481 371,000,053
MARKET PRICE RISK - The risk that the market price of an investment or financial instrument will fluctuate due to changes in
foreign exchange rates, market interest rates, market factors specific to the security or its issuer or factors generally
affecting all such investments.
The risk to the group arises due to an imbalance between demand and supply for the relevant investments and financial
instruments in the portfolio, which could potentially result in a disorderly market. The concentration of market risk is
mitigated through the regular monitoring of the share price of financial investments.
The assets and liabilities affected by market price risk are as follows:
As at As at
Euro 30 June 2018 30 June 2017
Assets
Financial investments 183,052,263 -
Derivative financial instruments 349,224 66,097
183,401,487 66,097
Liabilities
Financial liabilities 11,614,261 10,130,427
Derivative financial instruments 1,222,944 2,251,649
12,837,205 12,382,076
At 30 June 2018, if market prices at that date had been 5% (2017: 5%) higher/lower with all other variables held constant,
post-tax profit for the year would have been EUR8,528,214 (2017: EUR729,023) higher/lower. This sensitivity analysis assumes that
all other variables remain constant.
INTEREST RATE RISK - A significant part of the funding of the group's portfolio derives from debt. Debt is managed on an active basis, sometimes hedging against
adverse movements in interest rates. Details of the hedging arrangements of the group are disclosed in note 29.
The carrying value of assets and liabilities affected by interest risk are as follows:
As at 30 June 2018 As at 30 June 2017
Non- Non-
No financial No financial
Euro Fixed rate Variable exposure instruments Total Fixed rate Variable exposure instruments Total
Assets
Financial assets 349,224 24,507,316 - 105,045,768 129,902,308 - - 66,097 101,134,245 101,200,342
Trade and other - - 13,997,166 2,151,167 16,148,333 - - 8,707,035 - 8,707,035
receivables
Cash and cash - 147,825,624 - - 147,825,624 - 33,017,502 - - 33,017,502
equivalents
349,224 172,332,940 13,997,166 107,196,935 293,876,265 - 33,017,502 8,773,132 101,134,245 142,924,879
Liabilities
Interest bearing 199,289,452 43,423,655 - - 242,713,107 112,857,253 34,356,144 - - 147,213,397
borrowings
Financial 1,222,944 24,980,377 11,614,261 - 37,817,582 2,251,649 500,000 10,130,427 - 12,882,076
instruments
- Derivative 1,222,944 - - - 1,222,944 2,251,649 - - - 2,251,649
financial
instruments
- Financial - 24,980,377 11,614,261 - 36,594,638 - 500,000 10,130,427 - 10,630,427
liabilities
Trade and other - - 14,733,265 - 14,733,265 - 7,951,805 2,864,957 - 10,816,762
payables
200,512,396 68,404,032 26,347,526 - 295,263,954 115,108,902 42,807,949 12,995,384 - 170,912,235
FAIR VALUE SENSITIVITY FOR FIXED-RATE INSTRUMENTS
The group does not account for any fixed rate interest bearing borrowings at fair value through profit or loss and the group
does not designate derivative financial instruments as hedging instruments. Therefore, a change in interest rates on fixed
rate interest-bearing borrowings would not affect profit or loss.
CASH FLOW SENSITIVITY FOR VARIABLE RATE INSTRUMENTS
At 30 June 2018, if interest rates at that date had been 25 basis points higher/lower (2017: 25 basis points) with all other
variables held constant, post-tax profit for the year would have been EUR330,003 (2017: EUR49,106) lower/higher, arising mainly
as a result of the higher/lower interest expense on variable borrowings. This sensitivity analysis assumes that all other
variables remain constant.
FOREIGN EXCHANGE RISK - The group is exposed to currency risk because it holds both assets and liabilities denominated in
currencies other than euro, the presentation currency. It is therefore exposed to currency risk, as the value of assets and
liabilities denominated in other currencies will fluctuate due to changes in exchange rates.
As at 30 June 2018 the group had the following currency exposures:
CURRENCY RISK EXPOSURES
GBP CHF ZAR USD PLN SEK BGN
Closing exchange rate 0.8861 1.1569 16.0514 1.1658 4.3725 10.4560 1.9560
FINANCIAL INSTRUMENTS - ASSETS
Financial investments
Foreign currency 21,633,249 - - - - 139,022,719 -
Euro equivalent 24,413,121 - - - - 13,295,975 -
Financial instruments
Foreign currency 22,026,176 - - - - - -
Euro equivalent 24,856,540 - - - - - -
Trade and other receivables
Foreign currency 10,736,098 53,258 - - 3,909,118 - 3,508,951
Euro equivalent 12,115,687 46,036 - - 894,015 - 1,794,098
Cash and cash equivalents
Foreign currency 15,417,936 844,729 154,061 14,623 1,546,070 - 5,479,690
Euro equivalent 17,399,141 730,184 9,598 12,544 353,586 - 2,801,721
FINANCIAL INSTRUMENTS - LIABILITIES
Financial instruments
Foreign currency 32,427,681 1,054,990 - - 1,359,909 - -
Euro equivalent 36,594,639 911,933 - - 311,011 - -
Interest bearing borrowings
Foreign currency 65,513,444 8,732,500 - - - - -
Euro equivalent 73,931,921 7,548,373 - - - - -
Trade and other payables
Foreign currency 8,764,932 53,924 - - 1,338,840 - 3,790,847
Euro equivalent 9,891,226 46,612 - - 306,193 - 1,938,229
Total net financial
(liability)/asset exposure
Foreign currency (36,892,598) (8,943,427) 154,061 14,623 2,756,439 139,022,719 5,197,794
Euro equivalent (41,633,297) (7,730,698) 9,598 12,544 630,397 13,295,975 2,657,590
As at 30 June 2017 the group had the following currency exposures:
CURRENCY RISK EXPOSURES
GBP CHF ZAR USD PLN
Closing exchange rate 0.8794 1.0930 14.9254 1.1412 4.2265
FINANCIAL INSTRUMENTS - ASSETS
Financial instruments
Foreign currency - - - - 279,362
Euro equivalent - - - - 66,097
Trade and other receivables
Foreign currency 2,794,851 39,650 - - -
Euro equivalent 3,178,304 36,276 - - -
Cash and cash equivalents
Foreign currency 2,628,385 512,562 22,241 821 122
Euro equivalent 2,989,000 468,943 1,518 720 29
FINANCIAL INSTRUMENTS - LIABILITIES
Financial instruments
Foreign currency 10,783,254 1,278,922 - - -
Euro equivalent 12,262,716 1,170,086 - - -
Interest bearing borrowings
Foreign currency 27,952,244 9,122,500 - - -
Euro equivalent 31,787,292 8,346,175 - - -
Trade and other payables
Foreign currency 3,948,749 55,448 108,433 - -
Euro equivalent 4,490,517 50,729 7,265 - -
Total net (liability)/asset exposure
Foreign currency (37,261,011) (9,904,658) (86,192) 821 279,484
Euro equivalent (42,373,221) (9,061,771) (5,747) 720 66,126
As at 30 June 2018, if the euro had strengthened/weakened against other currencies used by the group with all other
variables held constant, post-tax profit for the period would have been:
30 June 2018 30 June 2017
Profit or loss Profit or loss
Euro Movement Strengthening Weakening Strengthening Weakening
GBP 5% 2,081,665 (2,081,665) 2,114,749 (2,114,749)
CHF 5% 386,535 (386,535) 453,089 (453,089)
ZAR 10% (960) 960 606 (606)
USD 5% (627) 627 (36) 36
PLN 5% (31,520) 31,520 (3,306) 3,306
SEK 5% (664,799) 664,799 - -
BGN1 0% - - - -
1,770,294 (1,770,294) 2,565,102 (2,565,102)
This sensitivity analysis assumes that all other variables, particularly interest rates, remain constant.
(1) The Bulgarian Lev is fixed to the euro exchange rate therefore there was no currency risk exposure.
CREDIT RISK - The group is exposed to credit risk primarily as a result of its banking relationships, trade receivables owed by tenants, listed real estate equity
securities and the investment in the PKM Developments preference shares. In addition, the credit exposure arises due to potential default on derivative
instruments if the counterparty defaults as a result of a deteriorating credit rating. Credit risk is initially monitored by management with reference to external
credit ratings.
The carrying amount of financial assets represents the maximum credit risk exposure, as follows:
As at 30 June 2018 As at 30 June 2017
Credit risk Non-financial Credit risk Non-financial
Euro exposure No exposure instruments Total exposure No exposure instruments Total
Non-current financial assets
Financial investments 183,052,263 - - 183,052,263 - - - -
Financial instruments 105,394,992 - - 105,394,992 101,134,245 - - 101,134,245
288,447,255 - - 288,447,255 101,134,245 - - 101,134,245
Current financial assets
Financial instruments - 24,507,316 - 24,507,316 66,097 - - 66,097
Trade and other receivables 13,997,166 - 2,151,167 16,148,333 6,904,328 1,802,707 - 8,707,035
Cash and cash equivalents 147,825,624 - - 147,825,624 33,017,502 - - 33,017,502
161,822,790 24,507,316 2,151,167 188,481,273 39,987,927 1,802,707 - 41,790,634
450,270,045 24,507,316 2,151,167 476,928,528 141,122,172 1,802,707 - 142,924,879
Management reviews the credit quality on a quarterly basis by reviewing management accounts, including those of PKM Developments. Cash and cash
equivalents are held with banks and financial institution counterparties which are rated B+ or better by Moody's rating agency. The share price of the listed
real estate equity securities is monitored by management on a regular basis. The credit quality of trade and other receivables is reviewed by MAS Prop as
investment advisors to the group, no impairment indications have been found. If there are any significant changes to credit quality these are escalated to
the Audit and Risk Committee.
There is no significant concentration credit risk with respect to trade and other receivables as the group does not place reliance on one single
counterparty. The group reviews the financial status and risk profile of its tenants and has found no impairment indications. No financial assets are impaired
and none are past due dates.
35. OPERATING SEGMENTS
ACCOUNTING POLICY
Segment results that are reported to the executive board include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly central costs that relate to the group
structure and operations not related to specific investments. In addition, unallocated items in the consolidated statement of
financial position relate predominantly to cash that has not been allocated to specific investments.
The risks and rewards faced by the group relate primarily to the business segment of the assets and therefore this forms
the basis of the reporting segment.
DISCLOSURE
Reportable segment Description
Income-generating property Property that is currently producing income and held for the purpose of earning a
yield. There may be further asset management opportunities on these properties,
which could further enhance income returns.
Development property Property that is being developed in order to create income producing property held
for the purpose of earning a better yield than by acquiring standing property.
Land bank and other strategic assets Residential developments and land plots held for schemes that have not yet
commenced, and listed real estate equity securities.
Corporate Consists of the cash holdings outside of the other reporting segments and goodwill.
The executive management team analyses the performance and position of the group by aggregating the group into the
four reportable segments. These reportable segments have different risk profiles and generate revenue/income from
different sources. Accordingly, it allows the executive management team to make better informed strategic decisions for
the group. Management reports are prepared and reviewed on a quarterly basis by the executive management team to
facilitate this process.
As at and for the year ended 30 June 2018
Reportable segments
Land bank
Income- and other
generating Development strategic
Euro property property assets Corporate Total
Statement of profit or loss
External revenue 43,010,408 - 396,153 - 43,406,561
Segment profit/(loss) before tax 37,329,217 9,938,530 (18,696,118) (2,370,820) 26,200,809
Finance income 3,744 7,971,335 479 - 7,975,558
Interest earned on preference shares - 7,514,384 - - 7,514,384
Finance costs (4,944,538) (456,951) - (158,855) (5,560,344)
Current tax (788,830) (2,394,030) (2,369,785) (3,357) (5,556,002)
Deferred tax (3,730,148) 2,418,763 - - (1,311,385)
Investment in equity-accounted investee - 3,568,925 - - 3,568,925
Other material non-cash items
- Fair value adjustments 12,357,437 (5,388,602) (22,921,758) 152,796 (15,800,127)
- Exchange differences (837) - - (1,019,950) (1,020,787)
- Goodwill impairment - - - (1,274,346) (1,274,346)
Depreciation (85,088) - - (14,938) (100,026)
Statement of financial position
Segment non-current assets 548,602,766 105,010,649 216,150,430 21,581,047 891,344,892
Investment in equity-accounted investee - 23,774,222 - - 23,774,222
- Segment current assets 72,949,162 37,001,253 15,532,543 117,880,260 243,363,218
Segment non-current liabilities (222,239,291) - - (3,542) (222,242,833)
Segment current liabilities (47,772,895) (29,887,847) (1,419,996) (363,838) (79,444,576)
As at and for the year ended 30 June 2017
Reportable segments
Land bank
Income- and other
generating Development strategic
Euro property property assets Corporate Total
Statement of profit or loss
External revenue 31,532,298 - 34,632 15,498 31,582,428
Inter-segment revenue - - - - -
Segment profit/(loss) before tax 49,460,087 872,805 (5,003,657) (5,069,622) 40,259,613
Finance income 1,350 1,134,247 16 71,583 1,207,196
Finance costs (2,235,473) - - (3,024) (2,238,497)
Current tax (1,749,449) - - - (1,749,449)
Deferred tax (3,942,153) - - - (3,942,153)
Investment in equity-accounted investee - 178,397 - - 178,397
Other material non-cash items
- Fair value adjustments 30,161,319 - (4,569,029) - 25,592,290
- Exchange differences (819,456) 18 - (3,865,457) (4,684,895)
- Depreciation (23,977) (1,963) (1,924) - (27,864)
Statement of financial position
Segment non-current assets 495,615,079 152,701,312 39,690,960 22,909,548 710,916,899
Investment in equity accounted investee - 20,205,297 - - 20,205,297
- Segment current assets 20,171,923 1,708,107 2,347,199 23,900,320 48,127,549
Segment non-current liabilities 147,306,309 881,180 232,924 - 148,420,413
Segment current liabilities 14,450,775 11,975,661 545,684 609,881 27,582,001
Where assets/liabilities and income/expense are shared by reportable segments they are allocated to each respective
reportable segment based on a rational driver of use or ownership of the asset/liabilities, income/expense.
GEOGRAPHICAL INFORMATION
The group invests in investment property in Europe. The geographical information below analyses the group's rental income
and service charge income and other recoveries and non-current assets by the company's country of domicile and the
jurisdiction in which the underlying assets are held: Western Europe (UK, Germany and Switzerland) and Central and Eastern
Europe (Poland, Bulgaria and Romania) as a result of the investment in associate, refer to note 20.
Revenue
Year ended Year ended
Euro 30 June 2018 30 June 2017
BVI - -
Western Europe 24,865,399 25,328,584
CEE 18,541,162 6,253,844
43,406,561 31,582,428
Non-current assets
As at As at
Euro 30 June 2018 30 June 2017
BVI 204,633,310 -
Western Europe 414,204,311 433,123,317
CEE 296,281,493 277,793,582
915,119,114 710,916,899
DIRECT AND INDIRECT INVESTMENT RESULTS
In order to provide information of relevance to investors and a meaningful basis of comparison for users of the financial
information, a statement of direct and indirect investment results for the year ended 30 June 2018 has been prepared and
presented below. It allocates the IFRS result between direct and indirect investment result respectively.
The directors consider that the distribution statement is useful in interpreting the performance of the group.
STATEMENT OF DIRECT AND INDIRECT INVESTMENT RESULT
Direct Indirect
investment investment
Euro result result Total IFRS
Rental income 37,452,513 - 37,452,513
Service charge income and other recoveries 5,954,048 - 5,954,048
43,406,561 - 43,406,561
Service charge and other property operating expenses (11,073,518) - (11,073,518)
Net rental income 32,333,043 - 32,333,043
Sales of inventory property - 26,020,940 26,020,940
Cost of sales of inventory property - (21,704,016) (21,704,016)
Profit on sale of inventory property - 4,316,924 4,316,924
Other income 8,585,032 - 8,585,032
Corporate expenses (4,946,973) - (4,946,973)
Investment expenses - (1,976,096) (1,976,096)
Net operating income 35,971,102 2,340,828 38,311,930
Fair value adjustments - (15,800,127) (15,800,127)
Foreign currency exchange differences - (1,020,787) (1,020,787)
Share of profit from equity accounted investee, net of tax - 3,568,925 3,568,925
Goodwill impairment - (1,274,346) (1,274,346)
Profit/(loss) before net financing costs 35,971,102 (12,185,107) 23,785,595
Finance income 7,975,558 - 7,975,558
Finance costs (5,560,344) - (5,560,344)
Profit/(loss) before tax 38,386,316 (12,185,107) 26,200,809
Current tax (2,979,626) (2,576,376) (5,556,002)
Deferred tax - (1,311,385) (1,311,385)
Profit/(loss) for the period 35,406,690 (16,073,268) 19,333,422
Attributable to:
Owners of the parent 34,078,183 (17,221,877) 16,856,306
Non-controlling interest 1,328,507 1,148,609 2,477,116
DISTRIBUTABLE EARNINGS AND BASIS OF DISTRIBUTION
Year ended
Euro 30 June 2018
Direct investment result distributable to shareholders 34,078,183
Company specific adjustments
Net attributable profit on sales of inventory property(1) 2,628,067
Distributable earnings before effect of shares issued during the period 36,706,250
Weighted average number of shares in issue 577,814,866
Distributable earnings per share (euro cents per share) 6.35
Distributable earnings before effect of shares issued during the period 36,706,250
Adjustment relating to shares issued during the period 3,772,061
Distributable earnings (after adjustment for shares issued during the period) 40,478,311
Closing number of shares in issue 637,493,798
(1) The profit on sales of inventory property during the year was EUR4,316,924 (2017: EURnil). The tax recognised on these sales was EUR812,835 (2017: EURnil), refer
to note 15, giving a net amount of profit of EUR3,504,089 (2017: EURnil). The group has recognised 75% (2018: EUR2,628,067; 2017: EURnil) of this balance as
distributable earnings as approximately 25% of profit is payable to the developer, refer to note 30.
Six-month Six-month
period ended period ended Year ended
Euro cents 31 December 2017 30 June 2018 30 June 2018
Distributable earnings per share 2.70 3.65 6.35
Adjustment from reserves per share 0.88 0.38 1.26
Distribution per share 3.58 4.03 7.61
RECONCILIATION OF CASH FROM OPERATIONS TO DIRECT INVESTMENT RESULT
Year ended
Euro 30 June 2018
Net cash from operating activities 35,386,649
Finance cost (5,560,344)
Finance income 4,372,697
Finance income 7,975,558
Finance income received - interest on preference shares (3,602,861)
Tax 454,869
Tax expense (2,979,626)
Tax paid 3,434,495
Non-cash items (905,792)
Depreciation (100,026)
Share-based payment expenses (805,766)
Working capital movement (317,485)
Decrease in receivables (1,029,613)
Decrease in payables 904,406
Increase in provisions (192,278)
Other 1,976,096
Investment expenses 1,976,096
TOTAL DIRECT INVESTMENT RESULT 35,406,690
Attributable to:
Owners of the parent 34,078,183
Non-controlling interest 1,328,507
STATEMENT OF DIRECT AND INDIRECT INVESTMENT RESULT
Direct Indirect
investment investment
Euro result result Total IFRS
Rental income 27,032,238 - 27,032,238
Service charge income and other recoveries 4,550,190 - 4,550,190
31,582,428 - 31,582,428
Service charge and other property operating expenses (7,597,216) (820) (7,598,036)
Net rental income 23,985,212 (820) 23,984,392
Sales of inventory property - - -
Cost of sales of inventory property - - -
Profit on sale of inventory property - - -
Other income - - -
Corporate expenses (3,253,610) (244,599) (3,498,209)
Investment expenses - (281,061) (281,061)
Net operating income/(loss) 20,731,602 (526,480) 20,205,122
Fair value adjustments - 25,592,290 25,592,290
Foreign currency exchange differences - (4,684,895) (4,684,895)
Share of profit from equity-accounted investee, net of taxation 132,602 45,795 178,397
Goodwill impairment - - -
Profit before net financing costs 20,864,204 20,426,710 41,290,914
Finance income 1,207,196 - 1,207,196
Finance costs (2,238,497) - (2,238,497)
Profit before tax 19,832,903 20,426,710 40,259,613
Current tax (1,741,449) - (1,741,449)
Deferred tax - (3,942,153) (3,942,153)
Profit for the period 18,091,454 16,484,557 34,576,011
Attributable to:
Owners of the parent 17,899,178 15,688,770 33,587,948
Non-controlling interest 192,276 795,787 988,063
DISTRIBUTABLE EARNINGS AND BASIS OF DISTRIBUTION
Year ended
Euro 30 June 2017
Direct investment result distributable to shareholders 17,899,178
Company specific adjustments
Sirius earnings 1,137,215
Capitalisation of borrowing costs 240,658
Other adjustments 438,407
Distributable earnings before effect of shares issued during the period 19,715,458
Weighted average number of shares in issue(1) 402,059,173
Distributable earnings per share (euro cents per share) 4.90
Distributable earnings before effect of shares issued during the period 19,715,458
Adjustment relating to shares issued during the period 3,832,529
Distributable earnings (after adjustment for shares issued during the period) 23,547,987
Closing number of shares in issue(1) 480,216,299
Six-month
period ended Six-month
31 December period ended Year ended
Euro cents 2016 30 June 2017 30 June 2017
Distributable earnings per share 2.27 2.63 4.90
Adjustment from reserves per share 0.39 0.56 0.95
Distribution per share 2.66 3.19 5.85
(1) In the prior period, distributable earnings per share was calculated on the total number of shares in issue, which includes the geared share purchase
plan shares. In the current period, the IFRS approach of treating the geared share purchase plan shares as unissued treasury shares is adopted.
RECONCILIATION OF CASH FROM OPERATIONS TO DIRECT INVESTMENT RESULT
Year ended
Euro 30 June 2017
Net cash from operating activities 24,489,820
Finance cost (2,238,497)
Finance cost (2,238,497)
Finance income 1,207,196
Finance income 1,207,196
Tax (675,251)
Tax expense (1,741,449)
Tax paid 1,066,198
Non-cash items (104,738)
Depreciation (27,864)
Share based payment expenses (245,419)
Earnings in associate 132,602
IFRS 2 expense 245,419
Working capital movement (5,077,613)
Decrease in receivables (2,557,048)
Increase in payables (2,520,565)
Other 281,061
Investment expenses 281,061
TOTAL DIRECT INVESTMENT RESULT 18,091,454
Attributable to:
Owners of the parent 17,899,178
Non-controlling interest 192,276
EPRA NAV
The European Public Real Estate Association (EPRA) is an organisation that promotes, develops and represents the
European public real estate sector. EPRA sets out best practice reporting guidelines on a number of financial and
operational performance indicators relevant to the real estate sector. As the business of the group matures, the board
intends to adopt the EPRA performance measures on a comprehensive basis. However, as the business goes through the
current stage of rapid change and growth, some of the metrics are currently considered not to be relevant. Initially, EPRA
NAV and EPRA NAV per share have been computed, which provides an industry standard methodology for the
computation of the net asset value per share of the group.
RECONCILIATION OF IFRS NAV TO EPRA NAV
As at As at
Euro Note 30 June 2018 30 June 2017
Equity attributable to owners of the parent 854,267,721 582,053,971
Adjustments for:
Fair value of interest rate swaps 873,720 2,251,649
Deferred tax asset (607,179) (758,055)
Deferred tax liability 6,139,373 4,998,374
NCI in respect of the above adjustments (616,418) (102,479)
EPRA NAV 860,057,217 588,443,460
Fully diluted number of shares 637,556,656 467,366,299
Closing number of shares 637,493,798 467,366,299
Effect of share options 37 62,858 -
EPRA NAV per share (euro cents) 134.90 125.91
36.RELATED PARTIES
PARENT AND ULTIMATE CONTROLLING PARTY
The group has no ultimate controlling party but is controlled by its ordinary shareholders in aggregate.
KEY MANAGEMENT - TRANSACTIONS
Year ended 30 June 2018
IFRS 2
Basic Short-term Long-term option
Euro Role salary Benefits incentive incentive Sub total expense Total
Morné Wilken(1) 188,432 141,613 330,045 330,045
CEO 178,432 141,613 - - 320,045 - 320,045
Former 10,000 - - - 10,000 - 10,000
NED
Malcolm Levy CFO - - - - - 425,758 425,758
Jonathan Knight(2) CIO 67,974 - - - 67,974 164,354 232,328
Ron Spencer Chairman 30,000 - - - 30,000 - 30,000
Gideon Oosthuizen NED 27,500 - - - 27,500 - 27,500
Jaco Jansen NED 25,000 - - - 25,000 - 25,000
Pierre Goosen NED 22,500 - - - 22,500 - 22,500
Glynnis Carthy NED 27,500 - - - 27,500 - 27,500
Helen Cullen Company 95,778 - - - 95,778 66,441 162,219
Secretary
Lukas Nakos(3) Former - 157,794 - - 157,794 - 157,794
CEO
484,684 299,407 - - 784,091 656,553 1,440,644
(1) During the year, the group paid GBP25,000 (approximately EUR28,323) in relation to Morné Wilken's relocation. In addition, in order to secure the services of
Morné Wilken on a full-time basis, the sum of GBP500,000 (approximately EUR564,250) was awarded and paid as recognition that he would forfeit in-the-
money incentive scheme benefits by becoming CEO of MAS. This amount is repayable on a pro-rata basis should he cease to be employed by the
company from 1 January 2018 and accordingly GBP16,667 (approximately EUR18,809) (GBP500,000 (approximately EUR564,250) divided by 30 months) is
expensed monthly and recognised as a benefit paid to him.
(2) Jonathan Knight has a contract of employment with Corona Real Estate Partners Limited, a service provider to MAS Property Advisors Limited. The
total remuneration paid to Corona in relation to services provided to MAS by Jonathan Knight was EUR130,284 (2017: EUR216,068). Jonathan Knight
received a salary of EUR67,974 (2017: EUR68,232) from Corona.
(3) During January 2018 the Board of Directors approved an exit payment of GBP140,000 (EUR157,794) to Lukas Nakos.
Year ended 30 June 2017
IFRS 2
Basic Short-term Long-term option
Euro Role salary Benefits incentive incentive Sub total expense Total
Lukas Nakos CEO 125,000 - 181,952 - 306,952 - 306,952
Malcolm Levy CFO 117,656 - 170,580 - 288,236 149,237 437,473
Jonathan Knight CIO 68,232 - 85,290 - 153,522 66,238 219,760
Ron Spencer Chairman 30,000 - - - 30,000 - 30,000
Gideon Oosthuizen NED 27,500 - - - 27,500 - 27,500
Jaco Jansen NED 27,500 - - - 27,500 - 27,500
Morné Wilken NED 20,000 - - - 20,000 - 20,000
Pierre Goosen NED 20,000 - - - 20,000 - 20,000
Glynnis Carthy NED - - - - - - -
Helen Cullen Company 96,822 - 20,538 - 117,360 22,079 139,439
Secretary
532,710 - 458,360 - 991,070 237,554 1,228,624
KEY MANAGEMENT - SHAREHOLDINGS
As at 30 June 2018
Euro Direct Indirect Associate Total
Morné Wilken 284,039 - - 284,039
Malcolm Levy 11,633 4,000,000 1,568,928(2) 5,580,561
Jonathan Knight 626,525 1,500,000 - 2,126,525
Ron Spencer 12,061 - - 12,061
Gideon Oosthuizen - 240,000(1) - 240,000
Jaco Jansen - - - -
Pierre Goosen - - 46,679(2) 46,679
Glynnis Carthy - - - -
Helen Cullen 14,936 500,000 - 514,936
949,194 6,240,000 1,615,607 8,804,801
(1) Associate company
(2) Non-beneficial to director
5,000,000 shares have been forfeited and cancelled during the year in respect of the geared share purchase plan, refer to
note 32. No new shares have been issued during the year to 30 June 2018 and the number of shares in the scheme at year
end is 7,850,000.
As at 30 June 2017
Euro Direct Indirect Associate Total
Lukas Nakos 85,143 5,000,000 100,659(3) 5,185,802
Malcolm Levy 11,633 4,000,000 1,568,928(3) 5,580,561
Jonathan Knight 616,342 1,500,000 - 2,116,342
Ron Spencer 11,567 - - 11,567
Gideon Oosthuizen - 240,000(1) - 240,000
Jaco Jansen - - - -
Morné Wilken 61,804 250,280(2) - 312,084
Pierre Goosen - - 44,766(3) 44,766
Glynnis Carthy - - - -
Helen Cullen 14,656 500,000 - 514,656
801,145 11,490,280 1,714,353 14,005,778
(1) Associate company
(2) Associate family trust
(3) Non-beneficial to director
There has been no change in the shareholding of the directors or key management from 30 June 2018 to the date of
approval of these annual financial statements.
OTHER RELATED PARTY TRANSACTIONS:
Income/(expenses) Capitalised Balances
for the year ended for the year ended assets/(liabilities) as at
Euro Note 30 June 2018 30 June 2017 30 June 2018 30 June 2017 30 June 2018 30 June 2017
NW Advisers
- On-charged development costs - (293) 2,287,409 12,860,460 - (214,680)
- Development management fee(1) (682,957) (1,684,723) - - (4,701,505) (4,052,171)
(682,957) (1,685,016) 2,287,409 12,860,460 (4,701,505) (4,266,851)
NW Holdings
- Development profit participation fee(1) (1,042,368) (6,078,256) - - (6,912,757) (6,078,256)
(1,042,368) (6,078,256) - - (6,912,757) (6,078,256)
Corona
-- Legal and professional expenses (804,187) (889,482) 132,549 176,266 (124,474) (83,857)
(804,187) (889,482) 132,549 176,266 (124,474) (83,857)
Artisan
-- On-charged administrative expenses 46,946 (13,583) - - - -
46,946 (13,583) - - - -
PKM Developments
- Equity accounted investee 20 3,568,925 178,397 - - 23,774,222 20,205,297
- Preference shares - PKM Developments 29 7,514,384 1,134,245 - - 105,045,768 101,134,245
11,083,309 1,312,642 - - 128,819,990 121,339,542
Momats
- Directors Fee and Legal and professional 12,621 - - - 2,180 -
expenses
12,621 - - - 2,180 -
8,613,364 (7,353,695) 2,419,958 13,036,726 117,083,434 110,910,578
(1)Differences between the income/(expense) and the corresponding receivable/(payable) related to foreign exchange movements recognised in other comprehensive income.
KEY MANAGEMENT
Key management consists of the executive and non-executive directors as well as the company secretary.
RELATED PARTY RELATIONSHIPS
ARTISAN
Artisan is a real estate management company, the board of which comprises four directors, two of which are common with
MAS.
NW HOLDINGS
NW Holdings is a real estate development holding company and is a 60% owned subsidiary of Artisan. As such it is
controlled by Artisan. Refer to note 30.
NW ADVISERS
NW Advisers is a real estate developer and is a 100% owned subsidiary of New Waverley Holdings. As such it is controlled
by Artisan. Refer to note 30.
CORONA
Corona is a real estate management company with five staff members and is owned 100% by Jonathan Knight who is the
chief investment officer of the group.
Jonathan Knight has a contract of employment with Corona Real Estate Partners Limited, a service provider to MAS
Property Advisors Limited. The total remuneration paid to Corona in relation to services provided to MAS by Jonathan
Knight was EUR130,284 (2017: EUR216,068). Jonathan Knight received a salary of EUR67,974 (2017: EUR68,232) from Corona.
PKM DEVELOPMENTS
PKM Developments is an associate of the group and MAS owns 40% of the ordinary shares, refer to note 20.
In 2017, the group provided EUR100,000,000 to acquire 7.5% preference shares in PKM Developments, refer to note 29. The
group has committed to fund up to a further EUR250,000,000 over the next three years.
MOMATS
Momats provides BVI corporate services and is a director of MAS BVI (Holdings) Limited and MAS CEE Investments Limited,
100% owned subsidiaries of the company.
37. EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
BASIC AND DILUTED EARNINGS PER SHARE
ACCOUNTING POLICY
The group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary
shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.
DISCLOSURE
The calculation of basic earnings per share has been based on the following profit attributable to ordinary shareholders and
the weighted-average number of ordinary shares outstanding.
PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
Year ended Year ended
Euro 30 June 2018 30 June 2017
Profit for the year attributable to the owners of the group 16,856,306 33,587,948
WEIGHTED-AVERAGE NUMBER OF ORDINARY SHARES
Year ended Year ended
Note 30 June 2018 30 June 2017
Opening issued ordinary shares 24 467,366,299 348,625,219
Effect of shares issued for capital raise 105,128,974 44,608,360
Effect of shares issued for scrip distributions 5,319,593 5,023,402
Weighted-average number of ordinary shares 577,814,866 398,256,981
The shares issued as part of the geared share purchase plans are not included in the calculation of the weighted-average
number of ordinary shares as they are deemed to be unissued (treasury shares).
BASIC EARNINGS PER SHARE
Year ended Year ended
30 June 2018 30 June 2017
Profit attributable to ordinary shareholders (euro) 16,856,306 33,587,948
Weighted-average number of ordinary shares 577,814,866 398,256,981
Basic earnings per shares (euro cents) 2.92 8.43
DILUTED EARNINGS PER SHARE
The calculation of diluted earnings per share has been based on the following weighted-average number of ordinary shares
outstanding after adjusting for the effects of all dilutive potential ordinary shares.
Year ended Year ended
30 June 2018 30 June 2017
Weighted-average number of ordinary shares (basic) 577,814,866 398,256,981
Effect of share options 62,858 -
Weighted-average number of ordinary shares (diluted) 577,877,724 398,256,981
DILUTED EARNINGS PER SHARE
Year ended Year ended
30 June 2018 30 June 2017
Profit attributable to ordinary shareholders (euro) 16,856,306 33,587,948
Weighted-average number of ordinary shares 577,877,724 398,256,981
Diluted earnings per share (euro cents) 2.92 8.43
At 30 June 2018, options on 5,080,000 shares were excluded from the diluted weighted-average number of ordinary shares
because their effect would have been anti-dilutive.
The average market value of the company's shares for the purpose of calculating the dilutive effect of the share options
was based on quoted market prices for the period during which the options were outstanding.
HEADLINE EARNINGS AND HEADLINE EARNINGS PER SHARE
ACCOUNTING POLICY
Headline earnings is derived from basic earnings adjusted for re-measurements that relate to the capital platform of the
group per Circular 4/2018 issued by the South African Institute of Chartered Accountants.
DISCLOSURE
Headline earnings and headline earnings per share was as follows:
Year ended 30 June 2018 Year ended 30 June 2017
Euro Note Gross Net Gross Net
Profit attributable to ordinary shareholders 16,856,306 16,856,306 33,587,948 33,587,948
Adjusted for:
Fair value loss/(gain) on investment property 17 721,387 232,813 (36,763,196) (32,995,314)
Fair value gain on investment property in (6,179,920) (3,878,272) - -
associate
Fair value gain on investment property held for 23 (2,766,206) (2,766,206) (786,795) -
sale
Goodwill impairment 16 1,274,346 1,274,346 - -
Headline earnings 9,905,913 11,718,987 (3,962,043) (592,634)
Basic headline earnings per share
Weighted-average number of ordinary shares 577,814,866 577,814,866 398,256,981 398,256,981
(basic)
Headline earnings per share 1.71 2.03 (0.99) 0.15
(euro cents)
Diluted headline earnings per share
Weighted-average number of ordinary shares 577,877,724 577,877,724 398,256,981 398,256,981
(diluted)
Diluted headline earnings per share (euro cents) 1.71 2.03 (0.99) 0.15
The JSE Listings Requirements require the calculation of headline earnings and diluted headline earnings per share and the
disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings
per share, as required by IAS 33 - 'Earnings per Share'. Disclosure of headline earnings is not an IFRS requirement. The
directors do not use headline earnings or headline earnings per share in their analysis of the group's performance, and do
not consider it to be a useful or relevant metric for the group. The directors make no reference to headline earnings or
headline earnings per share in their commentaries, instead, the directors use distributable earnings as a measure, refer to
note 35.
38. SIGNIFICANT SHAREHOLDERS
The significant shareholders of the group are:
Number of Percentage of
shares as at shares as at
30 June 2018 30 June 2018
Attacq Limited 146,818,251 22.75%
Argosy 55,841,264 8.65%
Public Investment Corporation 49,504,171 7.67%
252,163,686 39.07%
Number of Percentage of
shares as at shares as at
30 June 2017 30 June 2017
Attacq Limited 146,818,251 30.57%
Argosy 58,550,056 12.19%
STANLIB Asset Management 35,577,283 7.40%
240,945,590 50.16%
39. CAPITAL COMMITMENTS
INVENTORY PROPERTY
The group entered into contracts for the construction and development of the New Waverley office, refer to note 18. These
contracts will give rise to committed expenses of GBP53,092,275 (approximately EUR59,914,632) (2017: GBP69,328,267
(approximately EUR78,840,105) over the next 12 months, which will be capitalised as part of the New Waverley development.
The group entered into contracts for the construction and development of Travelodge at Langley. These contracts will
give rise to committed expenses of GBP4,387,579 (approximately EUR4,951,383) (2017: GBPnil) over the next 12 months, which will be
capitalised as part of the Langley development.
INVESTMENT PROPERTY
The group entered into a sale and purchase agreement ("SPA") to acquire the entire share capital of a special purpose
vehicle that owns the retail centre known as Militari Shopping Centre ("Militari"), located in Bucharest, Romania. The sale was
completed on 5 July 2018 for a purchase price of EUR95,000,000, only EUR93,800,000 is payable as at the reporting date and
the remaining amount of EUR1,200,000 is payable upon fulfilment of certain conditions precedent to the SPA.
The group entered into a sale and purchase agreement ("SPA") to acquire a retail park and a neighbourhood value centre,
both located in Braunschweig, Germany. The sale was completed on 1 August 2018 for a purchase price of EUR25,000,000.
INVESTMENT IN EQUITY ACCOUNTED INVESTEE
The group has committed to fund PKM Developments through 7.5% cumulative preference shares issued by PKM
Developments. During the current year, the group committed to funding up to a total of EUR350,000,000 (2017:
EUR350,000,000). The outstanding commitment at the reporting date was EUR250,000,000 (2017: EUR100,000,000) which is
expected to be funded over the next 3 years. The loan commitments have been reviewed and are not considered to be
onerous at the reporting date.
40. EVENTS AFTER THE REPORTING DATE
ACQUISITION OF INVESTMENT PROPERTY
On 5 July 2018 the group acquired the share capital of a special purpose vehicle that owns the retail centre known as Militari
Shopping Centre ("Militari") for the purchase price of EUR95,000,000 Militari is located in Bucharest, Romania and has a
passing rent of EUR7,300,000.
On 1 August 2018 the group acquired a retail park and a neighbourhood value centre, both located in Braunschweig,
Germany for the purchase price of EUR25,000,000. Braunschweig has a passing rent of EUR1,510,000.
41. OTHER JSE DISCLOSURES
UNAUDITED PROPERTY PROFILE
Passing
Rentable Vacancy rent per
area area sqm
Property Property address Type (sqm) (sqm) (Euro) WALT
Bulgaria
Galleria portfolio - Burgas Yanko Komitov Str. 6, Burgas, Bulgaria Retail 38,222 2,810 138.4 5.9
Galleria portfolio - Stara Ulitsa Han Asparuh 30, Stara Zagora, Retail 25,147 2,273 85.1 3.8
Zagora Bulgaria
Germany
Bruchsal Kaiserstrasse 66, Bruchsal, Germany Retail 7,103 - 205.8 4.1
Donaueschingen Bregstrasse, Donauschingen, Germany Retail 8,235 - 87.4 10.6
Edeka portfolio - Miha Heidelberger Straße 90, Berlin, Germany Retail 1,674 - 173.8 13.2
Edeka portfolio - Miha Flankenschnze 32, Berlin, Germany Retail 1,432 - 170.4 13.2
Edeka portfolio - Miha Waldring 190, 110, Haldensleben, Germany Retail 1,470 - 88.4 13.2
Edeka portfolio - Miha Bahnhofstraße 12, Holzminden, Germany Retail 1,924 - 129.4 13.2
Edeka portfolio - Miha Alte Poststraße 1, Müllrose, Germany Retail 1,676 - 155.7 13.2
Edeka portfolio - Miha Erlenweg 3, Nebra, Germany Retail 1,423 - 98.4 13.2
Edeka portfolio - Miha Händelstraße 1-2, Zepernick-Panketal, Retail 1,656 - 140.7 13.2
Germany
Edeka portfolio - Miha Rudolf-Breitscheid-Straße 193, Potsdam, Retail 2,012 - 119.9 10.2
Germany
Edeka portfolio - Miha Platz des Friedens 10, Sandersdorf, Retail 1,630 - 130.7 13.2
Germany
Edeka portfolio - Miha Goethepromenade 13, Gröningen, Retail 1,170 - 78.6 13.3
Germany
Edeka portfolio - Miha Adolf-Meyer-Straße 15, Neinburg, Retail 989 - 100.1 13.3
Germany
Edeka portfolio - Miha Marktstraße 6, Oldisleben, Germany Retail 965 - 113.0 13.3
Edeka portfolio - Miha Hallesche Straße 51 A, Raguhn, Germany Retail 859 - 101.3 13.3
Edeka portfolio - Miha Bahnhofstraße 21, Sangerhausen, Retail 888 - 102.5 13.3
Germany
Edeka portfolio - Miha Haupstraße 29, Thale-Neinstedt, Germany Retail 709 - 112.8 13.3
Edeka portfolio - Miha Am Wiesenhof 147-148, Wilelmshaven, Retail 995 - 85.4 13.3
Germany
Edeka portfolio - Miha August-Bebel-Damm 25, Magdeburg, Retail 8,428 - 38.0 13.3
Germany
Edeka portfolio - Miha Otto-von-Guericke-Straße 1A, Retail 6,455 - 46.5 13.3
Magdeburg, Germany
Edeka portfolio - Miha Westringstraße 179, 181, 193, Dölzig- Retail 9,167 - 40.9 13.3
Schkeuditz, Germany
Edeka portfolio - Miha Vor dem Weiherbusch 9, Soltau- Retail 5,442 - 36.8 13.3
Tetendorf, Germany
Edeka portfolio - Thales Alte Schmelze 23, 65201 Wiesbaden Retail 11,502 - 105.2 12.5
Edeka portfolio - Thales In der Teichmatt 6, 79689 Maulburg Retail 4,435 - 78.9 12.5
Edeka portfolio - Thales Rudolf-Diesel-Strasse 6, 72250 Retail 5,908 925 74.5 12.5
Freudenstadt
Gotha Schubert-strsse 20, Gotha, Germany Retail 9,442 - 105.0 8.0
Heppenheim retail park Tiergartenstrasse 7, Heppenheim, Retail 16,978 - 111.1 9.5
Germany
Lehrte Germaniastrasse 18, Lehrte, Germany Retail 9,203 - 82.5 8.6
Munich Wasserburger, Landstraße 133, Munich Industrial 13,090 - 67.7 5.5
Toom Portfolio - Eisenbahnstrasse 77, Frankenthal, Retail 7,452 - 73.8 10.8
Frankenthal Germany
Toom Portfolio - Vollmerhauser Strasse 36, Gummersbach, Retail 10,937 - 100.6 10.8
Gummersbach Germany
Toom Portfolio - Hallesche Strasse 141, Nordhausen, Retail 6,902 - 79.7 10.8
Nordhausen Germany
Poland
Nova Park Przemyslowa 2, 66-400 Gorzow Retail 32,683 1,201 179.9 4.3
Wielkopolski, Poland
Switzerland
Zurich Mulbachstrasse 41, Zurich, Switzerland Logistics 5,699 - 197.8 6.3
United Kingdom
Adagio New Waverley, Edinburgh (NW), United Hotel/retail 8,499 880 180.3 18.4
Kingdom
Braehead Old Govan Road, Glasgow (BL), United Industrial 18,476 - 42.6 6.6
Kingdom
Chippenham Langley Park, Chippenham (CL), United Industrial 39,839 3,476 46.8 7.1
Kingdom
Langley park Langley Park, Chippenham (LPL), United Residential/ 9,184 5,751 9.2 1.0
Kingdom Hotel
Whitbread and Arches New Waverley, Edinburgh (NW), United Hotel/retail 8,868 - 239.8 25.2
Kingdom
New Uberior House 9 Earl Grey Street, Edinburgh, United Office 14,718 - 318.1 7.5
Kingdom
North Street Quarter Phoenix Works, Lewes, United Kingdom Residential 15,273 7,112 22.6 0.8
UNAUDITED PROPERTY PROFILE
UNAUDITED GEOGRAPHICAL PROFILE
Passing rent
Rentable area Rental income Vacancy area per sqm
Jurisdiction (sqm) (Euro) (sqm) (Euro)
Bulgaria 63,369 8,162,439 5,083 117.3
Germany 162,151 14,758,093 925 100.2
Poland 32,683 5,887,000 1,201 179.9
Switzerland 5,699 1,163,780 - 197.8
UK 114,935 7,481,201 17,551 98.0
378,837 37,452,513 24,760 110.8(1)
UNAUDITED SECTOR PROFILE
Passing rent
Rentable area Rental income Vacancy area per sqm
Sector (sqm) (Euro) (sqm) (Euro)
Hotel 15,272 3,259,753 - 216.3
Industrial 65,299 2,830,342 8,542 38.7
Logistics 18,789 2,049,472 - 107.1
Office 16,918 757,736 685 285.2
Residential 16,099 370,870 7,444 19.2
Retail 246,460 28,184,340 8,089 117.6
378,837 37,452,513 24,760 110.8(1)
(1) Total rentable area divided by total passing rent.
UNAUDITED TENANT PROFILE
Category Number
A 76
B 151
C 439
666
"A": large national tenants, large listed tenants, government and major franchisees;
"B": national tenants, listed tenants, franchisees, medium to large professional firms; and
"C": other
UNAUDITED PORTFOLIO YIELD
Yield %
Average annualised property yield 7.17
Rental escalations are predominantly index linked or as a percentage of inflation and are not reliably determinable.
Accordingly, the group has not provided a weighted average rental escalation profile.
SHAREHOLDING DISCLOSURES
MAS Real Estate Inc. (the "company")
No of Percentage of Percentage of
Public and non-public shareholders total No of shares total
Public 10,033 99.84% 481,870,746 75.60%
Non-public
Significant shareholders 1 0.01% 146,818,251 22.75%
Directors and their associates 11 0.11% 8,804,801 1.36%
Share scheme participants 4 0.04% 7,850,000 0.29%
Total shareholders 10,049 100% 645,343,798 100%
MAJOR SHAREHOLDERS
Number of Percentage of
shares as at shares as at
Name 30 June 2018 30 June 2018
Attacq Limited 146,818,251 22.75%
Argosy 55,841,264 8.65%
Public Investment Corporation 49,504,171 7.67%
252,163,686 39.07%
Number of Percentage of
shares as at shares as at
Name 30 June 2017 30 June 2017
Attacq Limited 146,818,251 30.57%
Argosy 58,550,056 12.19%
STANLIB Asset Management 35,577,283 7.40%
240,945,590 50.16%
COMPANY INFORMATION AND ADVISORS
REGISTERED OFFICE IN THE BVI REGISTRAR/ TRANSFER SECRETARIES PROPERTY VALUERS
MAS Real Estate Inc.
Craigmuir Chambers BRITISH VIRGIN ISLANDS BULGARIA
Road Town, Tortola VG1110 Computershare Investor Services Forton international (Cushman &
British Virgin Islands (BVI) Limited Wakefield LLP)
Registration number 003287V Polygraphia Office Center
CORRESPONDENCE ADDRESS Woodbourne Hall 47A Tsarigradsko Shose Blvd
MAS Real Estate Inc. PO Box 3162 1124 Sofia
2nd Floor Road Town, Tortola Bulgaria
Clarendon House British Virgin Islands
Victoria Street GERMANY
Douglas SOUTH AFRICA Cushman & Wakefield LLP
Isle of Man Computershare Investor Services Rathenauplatz 1
IM1 2LN Proprietary Limited D-60313 Frankfurt am Main
Registration number Germany
COMPANY SECRETARY 2004/003647/07
Helen Cullen ACIS Rosebank Towers JLL
(Associate of the Institute of 15 Biermann Avenue Wilhelm-Leuschner-Strasse 78
Chartered Secretaries & Rosebank, 2196 D-60329 Frankfurt am Main
Administrators) PO Box 61051 Marshalltown 2107 Germany
INDEPENDENT AUDITOR DEPOSITORY POLAND
KPMG Audit LLC Computershare Investor Services Cushmann & Wakefeild LLP
Heritage Court PLC Metropolitan
41 Athol Street The Pavilions Plac Pilsudskiego 1
Douglas Bridgewater Road Warsaw, 00-078
Isle of Man Bristol, Poland
IM99 1HN BS13 8AE
ROMANIA
JSE SPONSOR Cushmann & Wakefeild LLP
Java Capital Banu Antonache Street
2nd Floor No 40-44, 3rd Floor Sector 1,
6a Sandown Valley Crescent Bucharest
Sandown
Sandton, 2196 SWITZERLAND
Johannesburg Wüest & Partner AG
South Africa Bleicherweg 5
CH-8001
Zürich
LUXEMBOURG STOCK EXCHANGE LISTING AGENT Switzerland
M Partners
56, rue Charles Martel UK
L-2134 Luxembourg CBRE
Grand Duchy of Luxembourg 7 Castle Street, Edinburgh,
EH2 3AH
LUXEMBOURG ADMINISTRATOR
Hoche Partner Trust Services SA GVA Grimley Limited
121, Avenue de la Faiencerie Quayside House
L-1511 Luxembourg 127 Fountainbridge
Grand Duchy of Luxembourg Edinburgh, EH3 9QG
BVI ADMINISTRATOR Montagu Evans LLP
Harneys Corporate and Trust 4th Floor Exchange Tower,
Services Limited 19 Canning Street, Edinburgh,
Craigmuir Chambers EH3 8EG
Road Town, Tortola VG1110
British Virgin Islands
SHAREHOLDER INFORMATION
Registered in the British Virgin Islands Company number 1750199
JSE share code MSP
SEDOL (XLUX) B96VLJ5
SEDOL (JSE) B96TSD2
ISIN VGG5884M1041
LEI code 213800T1TZPGQ7HS4Q13
Number of shares in issue as at 30 June 2018 645,343,798
DEFINITIONS AND ABBREVIATIONS
BVI British Virgin Islands
CEE Central and Eastern Europe
CGU Cash-generating unit
Company MAS Real Estate Inc.
Development property Property that is being developed in order to create income-producing property held for
the purpose of earning a better yield than by acquiring standing property
Direct investment result The underlying earnings of the group that derive from investment into property and
related assets and entities. This includes: net rental income, dividends received, finance
income on preference shares, and the related taxation and non-controlling interest
adjustments. This excludes: profit on sales of inventory property, exchange differences,
changes in fair value, goodwill impairment, investment/transaction expenses not
capitalised, related taxation and non-controlling interest adjustments, and deferred
taxation. Other adjustments may be made in order to reflect the underlying earnings of
the group.
Distributable earnings Distributable earnings is the Direct investment result, adjusted for company specific
adjustments made to reflect the underlying earnings of the group. This final number is
adjusted for the dilutionary impact of shares issued during the period.
Distributable earnings per share Distributable earnings before the impact of shares issued during the period divided by
the basic weighted average number of shares in issue.
Distribution per share The distribution per share to be paid to shareholders as determined by the directors at
their discretion. The group's policy is to pay out all distributable earnings per share on a
semi-annual basis, as well as capital or other profits as the directors may, at their
discretion, determine.
EPRA European Public Real Estate Association
EPRA Net Asset Value IFRS net assets adjusted for the dilutive impact of share options, deferred taxation on
property and derivative valuations and the mark-to-market of effective cash flow hedges
and related adjustments, as prescribed by EPRA.
EPRA NAV per share EPRA Net Asset Value divided by the IFRS diluted number of shares in issue at the end
of the period
ERV Estimated rental value
FVTPL Fair value through profit and loss
GLA Gross leasable area
Group MAS Real Estate Inc. and its subsidiaries
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards as issued by the IASB
IFRS NAV per share IFRS Net Asset Value divided by the IFRS basic number of shares in issue at the end of
the period. For clarity ths excludes the geared share purchase plan shares
Income-generating property Property that is currently producing income and held for the purpose of earning a yield.
There may be further asset management opportunities on these properties, which could
further enhance income returns.
Indirect investment result The earnings of the group that do not relate to underlying operational activities. This
includes the earnings excluded from the Direct investment result, including profit on sales
of inventory property, exchange differences, changes in fair value, goodwill impairment,
investment/transaction expenses not capitalised, related taxation and non-controlling
interest adjustments, and deferred taxation.
Investment property Income-generating property, Development property and Land-Bank
IOM Isle of Man
JSE Johannesburg Stock Exchange
Land bank Land plots held for schemes that have not yet commenced and residential developments
Land bank and inventory Land plots held for schemes that have not yet commenced, residential developments
and Inventory property
Lease incentives Incentives offered to lessees to enter into a lease, typically in the form of a rent-free
period or cash contribution towards fit-out costs
Loan to value (LTV) Loan to value (LTV) is the ratio of the nominal value of debt net of cash and equivalents
to the aggregate value of property assets, including investment property held for sale,
equity accounted investments, preference share investments and listed investments
(REIT portfolio).
LuxSE Luxembourg Stock Exchange
Median daily share volume The median number of shares traded per day during the financial period on the JSE
NAV Net asset value
PKM Developments PKM Development Limited
REIT Investment in listed real estate equity securities
Scrip distribution Distributions elected to be received in the form of shares in the company, typically paid
as a return of capital
WE Western Europe
WALT Weighted average lease term across the portfolio weighted by passing rent
WACD Weighted average cost of debt
Date: 07/09/2018 08:00:00
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