Condensed consolidated interim financial statements six month period ended 31 December 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")
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
SIX-MONTH PERIOD ENDED 31 DECEMBER 2018
HIGHLIGHTS
38%
YEAR-ON-YEAR
INCREASE IN
RENTAL INCOME
103%
YEAR-ON-YEAR
INCREASE IN NET
OPERATING INCOME
40%
YEAR-ON-YEAR
INCREASE IN HI
DISTRIBUTABLE
EARNINGS PER
SHARE
73%
YEAR-ON-YEAR
INCREASE IN HI
INVESTMENT
PROPERTY(1)
48%INCREASE SINCE
JUNE 2018
DISTRIBUTION
PER SHARE OF
3.78
EURO CENTS
2-YEAR EXTENSION
TO EXCLUSIVITY
WITH PRIME KAPITAL
UNTIL 2023
(1)Includes acquisitions post 31 December 2018 and assets held for sale
KEY METRICS
Distribution per share
H1 H2 Total
Year Euro Cents Euro Cents Euro Cents
FY 2014 0.60 1.24 1.84
FY 2015 1.15 2.20 3.35
FY 2016 2.27 2.23 4.50
FY 2017 2.66 3.19 5.85
FY 2018 3.58 4.03 7.61
FY 2019 3.78 4.97(1) 8.75(2)
(1) Guidance
(2) 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.
Investment Property (3)
Euro Euro
Year Millions Millions
FY 2014 64.8 n/a
FY 2015 248.5 n/a
FY 2016 310.5 n/a
FY 2017 570.6 n/a
FY 2018 632.8 n/a
H1 2019 769.8 941.0(5)
(3) Includes investment property held for sale
(5) Includes Acquired post 31 December 2018
Passing rent (4)
Euro Euro
Year Millions Millions
FY 2014 2.7 n/a
FY 2015 12.6 n/a
FY 2016 17.3 n/a
FY 2017 32.2 n/a
FY 2018 37.5 n/a
H1 2019 47.0 57.2(6)
(4) MAS' share of the income-generating portfolio's passing rent.
(6) Includes Acquired post 31 December 2018
EPRA NAV PER SHARE
EURO
Year CENTS
FY 2014 104.6
FY 2015 122.1
FY 2016 116.0
FY 2017 125.9
FY 2018 134.9
H1 2019 132.7
MEDIAN DAILY SHARE VOLUME
Thousands
Year of shares
FY 2014 1.1
FY 2015 40.8
FY 2016 76.2
FY 2017 137.5
FY 2018 454.9
H1 2019 427.4
Loan to value
Year Percentage Percentage
FY 2014 -188.8 n/a
FY 2015 -30.0 n/a
FY 2016 -12.7 n/a
FY 2017 16.5 n/a
FY 2018 10.0 n/a
H1 2019 24.9 38.2(7)
(7) Impact of acquisitions post 31 December 2018
DIRECTORS' REPORT
In early 2016, MAS embarked on an ambitious three-year programme to restructure and grow its balance sheet.
The programme had two principal components. The first component was the targeted disposal of assets in
western Europe whose valuations were approaching historic highs relative to their recurring cash flows and which
had muted further organic growth potential. At the same time, we intended to retain the benefits of a
geographically diversified asset portfolio. The second component wasto invest in a mixture of income-
generating assets with high organic growth potential and/or significant potential to add value. This
component would be funded through raising both moderate debt and additional equity. The emphasis was on
developing and owning retail assets in CEE, given strong historical CEE consumption growth trends that we
expect will continue. Direct retail assets in the UK were actively avoided.
In line with this strategy, two joint ventures were established in 2016 with Prime Kapital, whose team has an
exceptional property development and investment track record in CEE markets. The primary focus of the joint
ventures is on developing and acquiring dominant retail assets in strong locations within CEE.
Management also set ambitious distribution growth targets for the financial reporting periods to the end
of the 2019 financial year.
The results for the six month period ended 31 December 2018, and the distribution guidance for the financial
year ending on 30 June 2019, reflect the successful implementation of the group's strategy, which continues at
pace balanced by appropriate execution discipline. The group is on track to meet its distribution target of
8.75 euro cents per share for the financial year ending 30 June 2019, funded entirely from distributable
earnings. This target represents a 15% increase in the full year distribution and a 37.7% year-on-year increase in
distributable earnings. It equates to a compound annual rate of growth in distributable income per share of 25%
since 2016. The group is also well positioned for continued growth in distributable income per share beyond
the end of the 2019 financial year, as a result of exposure to assets with high organic growth potential and the
substantial development pipeline.
DISTRIBUTABLE EARNINGS
The group achieved distributable earnings per share of 3.78 euro cents for the six month reporting period.
The strong improvement of 40.0% in distributable earnings per share over the 2.70 euro cents in the comparative
period was driven by acquisitions of investment property, as well as continued investment into PKM
Developments and distributions received from the REIT portfolio.
INTERIM DISTRIBUTION AND GUIDANCE FOR THE FINANCIAL YEAR ENDING 30 JUNE 2019
Based on the increase in distributable earnings, the board has proposed an
interim distribution per share of 3.78 euro cents for the first half of the 2019
financial year.
Considering the progress made to date, the board is confident that MAS will achieve a distribution of 8.75 euro
cents per share for the full 2019 financial year, covered by distributable earnings. This distribution guidance 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 below 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.
INCOME-GENERATING PORTFOLIO AND NAV
Investment property, including investment property held for sale and acquisitions after period-end, grew by
48.7%, from EUR632.8 million at 30 June 2018 to EUR941.0 million. The portfolio performed strongly, with first half net
rental income growing by 55.6% from EUR15.3 million to EUR23.8 million year on year and net operating income
increasing by 103.2%, from EUR12.6 million to EUR25.6 million. This growth was driven by acquisitions, income-
enhancing asset management initiatives and strong tenant performance.
The EPRA net asset value per share fell by 1.6% to 132.7 euro cents per share, from 134.9 euro cents per share
at the 30 June 2018 year end. The decline was largely the result of fair value adjustments made to the REIT
portfolio, following significant market pressure in late 2018, partially offset by the completion of developments and
valuation gains on assets.
ACQUISITION, DISPOSAL AND DEVELOPMENT UPDATE
Deploying available capital has been a key focus for the group. While opportunities remain, current market
pricing requires us to exercise significant caution when assessing assets, given the competitive
environment and liquidity available in the market. The group is not prepared to overpay for assets in a heated
market and assesses capital deployment carefully to ensure that its longer-term strategic objectives are
not compromised by actions taken in pursuit of short-term goals. MAS remains prudent in its investment
process and continues to focus on acquiring assets with value-adding potential and/or strong long-term
organic growth opportunities.
PREMIER INN AND HUB BY PREMIER INN HOTELS, EDINBURGH, SCOTLAND (DISPOSED OCTOBER 2018)
In October the group disposed of the Premier Inn and Hub by Premier Inn Hotels, with its associated retail units,
at New Waverley, Edinburgh, for GBP38.0 million (about EUR43.4 million). The sale price represented a NOI yield of 4.07%.
This capital was recycled to higher-yielding opportunities, allowing the group to leverage its ability to manage
assets and grow income generated by investments.
UBERIOR HOUSE, EDINBURGH, SCOTLAND (ACQUISITION COMPLETED MAY 2018)
Substantial progress has been made at Uberior House in Edinburgh, Scotland. The asset was acquired with the
intention of re-gearing the leases. This was completed well ahead of schedule, with leases extending to 2030 signed
with Bank of Scotland, significantly increasing the certainty of income from, and value of, the asset. The
contracted rent also increased by 1.3% as a result of settling the outstanding rent reviews as part of the lease
negotiations. There is further potential for rental income growth at the next rent reviews in 2020.
FLENSBURG GALERIE SHOPPING CENTRE, FLENSBURG, GERMANY (ACQUIRED JANUARY 2019)
The Flensburg Galerie shopping centre was built in 2006 with a GLA of 25,540 square metres. The asset was
acquired from a limited life investment fund that was being wound up. Situated on Flensburg's prime
shopping street, the Flensburg Galerie is the only shopping centre in the inner city and is well established with more
than 4.2 million visitors in 2018. The city of Flensburg is located in Schleswig-Holstein in the north of
Germany, bordering Denmark. Flensburg is an important economic and regional centre, both within
Schleswig-Holstein and across the border in Denmark. The total catchment area for the Flensburg
Galerie is more than 500,000 people. Tourists from Denmark are attracted by lower prices in Germany.
The investment offers great value-adding potential, with scope to reduce vacancies and undertake some
reconfiguration and tenant relocations. A food discounter has already been secured and will open shortly. The
acquisition price of EUR62.6 million was agreed outside of a competitive bidding process and is attractive
compared to prevailing market prices. We expect that reducing vacancy levels will contribute positively, not
only to the direct investment return, but also by bringing in additional retail brands not currently located in the city
centre. In addition, the opportunity exists to reduce non-recoverable costs through better asset management.
MILITARI SHOPPING CENTRE, BUCHAREST, ROMANIA (ACQUIRED JULY 2018)
This acquisition, made in association with our CEE partners Prime Kapital, was completed in the current
reporting period and discussed in detail in the directors' commentary accompanying the 2018 year end
results. Trading at the 56,200 square metre GLA centre has been strong since acquisition, with the optimisation
of leases at expiry providing a platform to grow income. Given ongoing residential densification
around the centre, we are considering redeveloping the centre and substantially increasing the GLA to
about 80,000 square metres.
ATRIUM MALL SHOPPING CENTRE, ARAD, ROMANIA (ACQUIRED DECEMBER 2018)
The Atrium Mall ("Atrium"), acquired with Prime Kapital, was part of the secured pipeline disclosed at the 2018
year end. Atrium is the only modern retail destination in Arad and the broader Arad county. The mall is well
established and centrally located, adjacent to main transport hubs, and with good accessibility and visibility.
The city of Arad is situated in western Romania, close to the Hungarian border. It is the administrative capital
of Arad county and forms the principal economic hub of the area. The city has healthy demographics, which are
supported by growing purchasing power, and it benefits from a significant catchment area, with
334,000 people within a 45-minute drive.
The mall has a fashion and entertainment focus, with an approximate GLA of 28,600 square
metres over three floors. It is anchored by strong tenants including large European retailers Carrefour, Inditex,
H&M, C&A, New Yorker, LC Waikiki, Hervis, Deichmann, Media Galaxy, Pepco, CCC and Cinema City with a
10-screen cinema.
MAS aims to improve the quality of the retail offering and customer experience through improved asset
management and the introduction of new entertainment and leisure operators to drive growth in footfall.
Reconfiguration of some parts of the mall will be considered in the medium term to enhance the tenant mix and
increase dwell time.
PKM DEVELOPMENTS
ACQUISITION OF ASSETS DEVELOPED TO DATE AND EXTENSION OF THE DEVELOPMENT JOINT VENTURE WITH PRIME KAPITAL
The first of the larger retail centres developed by PKM Developments, the development joint venture with Prime
Kapital, were completed. Roman opened for trade in November 2018 and Baia Mare opened in December
2018. This brings the total completed GLA by PKM Developments to 67,950 square meters at a net initial yield of
10.6% (after taking into account the cost of preference share finance). This result is ahead of the original
expectations for the developments and bodes well for the current development pipeline.
On 28 February 2019, MAS and Prime Kapital reached agreement that MAS, through the investment joint
venture with Prime Kapital, would acquire the nine completed developments in Romania from PKM
Developments for a price of EUR108.7 million. The purchase price of the entities owning the retail centres, after
adjustments for working capital and development land for extensions, amounts to EUR113.0 million. In addition,
it was agreed that the development joint venture between Prime Kapital and MAS and the accompanying exclusivity
on new developments within the joint venture would be extended by a further two years, taking the exclusivity period
to March 2023. Second-phase developments planned for the centres in Slobozia, Roman and Baia Mare are expected to
add 11,000 square metres of GLA. On completion they will be acquired by MAS at a yield of 7.5%.
The portfolio was independently valued at a net initial yield of 7.5%. Given MAS' interest in PKM
Developments, the cash-on-cash yield (including earnings on preference shares in PKM Developments that it
has subscribed for) on the acquisition is 9.14%, positioning MAS ahead of its peers in relation to developments in
CEE. The consideration for the transaction will be deferred until required by PKM Developments for
further projects. Prime Kapital will continue to manage the properties.
The portfolio of retail assets in Romania currently includes two larger centres, both anchored by Carrefour, in
Roman (18,808 square meters of GLA) and Baia Mare (21,318 square meters of GLA), in addition to seven smaller,
well-located developments adjacent to pre-existing Kaufland mini-hypers in Slobozia, Focsani, Targu Secuiesc,
Ramnicu Sarat, Fagaras, Sebes and Gheorgheni. Of the total GLA, 87% is rented to large international and
national anchors such as Carrefour, New Yorker, C&A, DM, Altex, Takko, CCC, Pepco, Deichmann, Jysk, KFC
and McDonald's. In line with expectations, these newly developed centres already have an occupancy
level of 93.5%, with full occupation expected to be achieved by the end of the 2019 calendar year. PKM
Developments has provided a rental guarantee for the first year to cover the current vacancy level.
DEVELOPMENT PIPELINE
PKM Developments is expected to start the construction of seven developments and complete two of
them by the end of December 2019. The cost of completion for the secured pipeline in CEE is estimated at EUR738.0
million and consists of the projects discussed below.
SILK DISTRICT, IASI
Zoning is ongoing on the 10-hectare site in Iasi where a large-scale, mixed-use project is planned that will
include up to 100,000 square metres of A-class offices, about 2,500 residential units and a hotel. Iasi, with a
population of 369,000 people, is the second-largest city in Romania, the most important industrial centre in the
north-eastern part of the country and the second-largest university city outside Bucharest, with over 53,000
students. The project is near the city centre and within walking distance of the two largest university campuses. It
is highly visible, with 450 metres of frontage on the main boulevard connecting the site to the city centre,
and is easily accessible both by car and public transport. Three public transport hubs (bus and tram) are
located on, or in the immediate vicinity of, the site. Major office tenants and hotel operators have expressed a
strong interest in the planned development. The zoning process is expected to be completed in the
fourth quarter of 2019 and construction is planned to start in the second quarter of 2020. The delivery
of the first residential and office buildings is expected to take place in the third quarter of 2021.
MALL MOLDOVA , MOLDOVA
Zoning approval has been secured and work is currently under way to obtain a building permit for the planned
redevelopment of Era Shopping Park, Iasi, into the 100,000 square metre GLA super-regional Mall Moldova,
which will be the largest retail and leisure development in Romania outside Bucharest. Tenant demand
remains strong with leasing progressing in line with expectations.
AVALON ESTATE, BUCHAREST
Permitting is ongoing on the upmarket, modern housing estate near the new developing central business
district and commercial centre in the affluent northern part of Bucharest. The pre-construction sales process has
commenced and was well received, with pre-construction sales targets achieved within three weeks. The first
units of the planned 767 (previously 550) high-quality houses, townhouses and apartments should be available
for occupation in the second quarter of the 2020 calendar year.
ARGES MALL, PITESTI
Permitting and leasing are ongoing for the planned 50,000 square metres GLA, regionally-dominant mall in a
central, high density location in Pitesti, Romania. The project includes the construction of a bridge and
connecting roads over the railway tracks between the site and town centre that will be funded and
constructed by PKM Developments and donated to the public authorities on completion. Given its substantial
contribution to the local economy, the project has the full support of the local authorities. Permitting is progressing
well, despite attempts by the owners of Jupiter City mall, which is expected to be affected by the development, to
undermine the permitting process.
MARMURA RESIDENCE, BUCHAREST
Zoning approval has been obtained and pre-construction sales have begun for the development, which will consist
of five towers and 468 individual apartments. It will also host 1,700 square metres of supporting retail and
service functions.
DAMBOVITA MALL, TARGOVISTE
A building permit was secured for the 31,000 square metre GLA, regionally-dominant mall in Targoviste, Romania.
Several major anchor tenants, including Carrefour, Cinema City, Altex, Pepco and CCC were secured for the
development. It will be the first mall in the Dambovita county that will form part of, and be complemented by, a
wider urban regeneration project undertaken by the local authorities within two kilometers of the city
centre, in a densely populated residential area. Construction is expected to begin in the second
quarter of the 2019 calendar year, with opening planned for April 2020.
DN1 VALUE CENTRE, BALOTESTI
Zoning approval has been obtained in relation to the 28,000 square metre GLA, convenience value extension of
the existing Hornbach and Lidl units in Balotesti, a rapidly developing affluent residential area, about 25kms north of
Bucharest. Lease agreements were concluded with anchor tenants such as Carrefour (hypermarket), Jysk,
Noriel, Pepco, Animax, DM Drogerie, CCC, Hervis, Sportissimo, Deichmann, New Yorker and Altex. Construction
will start as soon as a building permit is issued and the opening of the first phase of the development is expected
in December 2019.
PLOIESTI VALUE CENTRE, PLOIESTI
Zoning efforts are ongoing for a retail development in Ploiesti on a plot of land in a densely populated residential
area in close proximity to the city's main train, tram and bus stations with high visibility and excellent road
access. Even though leasing has not yet commenced, several major anchor tenants have expressed strong interest
in the development.
ZALAU VALUE CENTRE, ZALAU
The building permit for the development of an 18,000 square metre GLA retail value centre with a
high concentration of anchor tenants in Zalau is expected to be issued in March 2019. The project location is
highly visible, 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. Lease
agreements have been entered with tenants including Carrefour, Noriel, Altex, CCC, Pepco, Jysk, Benvenuti and
Takko and the demolition works have commenced. The centre is expected to open for trade by November 2019.
SEPSI VALUE CENTRE, SFANTU GHEORGHE
About six hectares of land have been secured in Sfantu Gheorghe (54,000 inhabitants and the capital of Covasna
county) with plans to develop and operate a retail value centre of 15,000 square metres GLA with a high
concentration of anchor tenants. The project is in the immediate vicinity of the city centre and easily accessible by
car and public transport, both from the city as well as from the wider region. The catchment area includes
about 172,000 inhabitants within a 45-minute drive. Anchor tenants have expressed strong interest in the
planned development and permitting is ongoing. The centre is planned to open for trade by June 2020.
OTHER DEVELOPMENTS, EXTENSIONS AND LAND BANK
Plans are under way to refurbish and extend the retail assets owned in the investment joint venture with Prime
Kapital in CEE. They are expected to add approximately 57,000 square metres to the aggregate GLA of these
retail assets at a cost of about EUR134.5 million. This will increase the fashion and leisure offering of the centres to
consolidate their regionally dominant position and enhance asset performance. Plans include an
extension of 3,000 square metres GLA at Nova Park in Poland, for which the building permit has been received; an
extension of 15,000 square metres of GLA at Burgas Mall (formerly Galleria Burgas), for which land has been
secured; a refurbishment of Stara Zagora Mall (formerly Galleria Stara Zagora), which is expected to be
completed by July 2019; a major extension and redevelopment of Militari Shopping Centre; and
extensions to the newly developed assets which form part of the transaction with Prime Kapital
discussed above.
NEW WAVERLEY, EDINBURGH, SCOTLAND
The New Waverley development is nearing completion. The 19,000 square metre office development for
the UK government is on track to be completed before the end of the current financial year. In addition, the
southern section of the residential element of the scheme was sold to housebuilder Queensberry on 30
October 2018 for EUR7.5 million (GBP6.7 million).
LANGLEY PARK, CHIPPENHAM, ENGLAND
Planning permission was obtained in 2016 to develop the site for 400 residential units, a Travelodge hotel
with ground floor retail and a discount food store. The sale of the food store to Aldi was completed in June 2018. A
forward sale of the Travelodge was concluded with Torbay Council in 2018 and it is expected to be finalised
before the end of the financial year at the agreed price of EUR6.4 million (GBP5.8 million). Negotiations are at an
advanced stage with two housebuilders for the sale of the rest of the development site. It is
anticipated that legal contracts will be exchanged between the parties in the current financial year with sales
receipts to follow on a phased basis at key points over the development period. The combined gross sale price
for the residential land is EUR13.9 million (GBP12.4 million). To facilitate the sale of the development land, the existing car
park serving the Siemens main facility is being relocated from Langley Park land to the adjacent industrial and
business park, which we have retained. Work is ongoing and is expected to be completed in April 2019.
CAPITAL MANAGEMENT
At period end, the group held EUR52.9 million in cash (30 June 2018: EUR147.8 million); a portfolio of listed securities
valued at EUR149.2 million (30 June 2018: EUR183.1 million); and had access to EUR90.0 million in undrawn secured and
unsecured debt facilities. As a result of the deferred consideration for the post-interim period acquisition of the
Romanian retail asset portfolio, the undrawn facilities remain in place and the group does not expect it will need
to sell down its portfolio of listed securities in the near term.
At 31 December 2018 the group had EUR330.5 million of third-party debt finance in place (30 June 2018: EUR242.7
million). The group loan to value was 24.9% at 31 December 2018 (30 June 2018: 10.0%).
Efficient capital management is an important area of value creation for shareholders. To achieve this, the
board of directors will consider buying back shares as and when it can create value for shareholders, if the trading
price of the Company's shares falls below the intrinsic NAV per share. Such buybacks will be done with care,
since capital is a scarce and valuable resource.
PROSPECTS
MAS' strategy continues to be one of retaining investment discipline in pursuing only good-quality
acquisitions and developments with value-adding potential and attractive long-term growth prospects. MAS
benefits from a strong and increasingly efficient balance sheet with sufficient capital and undrawn
secured and unsecured bank finance facilities to meet its funding obligations. The group has
substantially rebalanced its exposure in favour of assets with potential for value accretive redevelopment and
long-term organic growth. The development pipeline is substantial, has the potential to increase further
and has delivered results well ahead of expectations to date. The group is therefore well positioned for
continued growth beyond the June 2019 financial year.
MAS will continue to pursue profitable growth through further acquisition and development
opportunities in its markets. Further announcements will be made as appropriate.
By order of the board of directors
DIRECTORS AND CHANGES:
Ron Spencer
(Non-Executive Chairman)
Malcolm Levy
(Interim CEO)
Paul Osbourn
(CFO)
Jonathan Knight
(CIO)
Werner Alberts
(Non-Executive Director)
Jaco Jansen
(Non-Executive Director)
Pierre Goosen
(Non-Executive Director)
Glynnis Carthy
(Non-Executive Director)
Melt Hamman
(Non-Executive Director)
Morne Wilken, the former CEO, and Gideon Oosthuizen, former non-executive director, ceased to be directors with effect from
14 December 2018. Paul Osbourn and Werner Alberts were appointed to the board with effect from 7 September
2018. Melt Hamman was appointed to the board with effect from 14 December 2018.
REPORTING CURRENCY
The group's results are reported in euros.
LISTINGS
MAS is listed on the Main Board of the Johannesburg Stock Exchange and is also listed and admitted to trading on
the Euro MTF market of the Luxembourg Stock Exchange.
EXTERNAL AUDITOR
During the period the board of directors with the approval of the shareholders considered the rotation
of auditor and has appointed PricewaterhouseCoopers LLC ("PwC") as group auditor on 27 November 2018.
DATE OF RELEASE
4 March 2019
INDEPENDENT AUDITOR'S REVIEW REPORT
ON INTERIM FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF MAS REAL ESTATE INC.
We have reviewed the condensed consolidated interim financial statements of MAS Real Estate Inc., contained in the
accompanying interim report, which comprise the condensed consolidated statement of financial position as at 31 December
2018 and the condensed consolidated statements of profit or loss, other comprehensive income, changes in equity and cash
flows for the six months then ended, and selected explanatory notes.
DIRECTORS' RESPONSIBILITY FOR THE INTERIM FINANCIAL STATEMENTS
The directors are responsible for the preparation and presentation of these interim financial statements in accordance with
the International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides, as
issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards
Council and for such internal control as the directors determine is necessary to enable the preparation of interim financial
statements that are free from material misstatement, whether due to fraud or error.
AUDITOR'S RESPONSIBILITY
Our responsibility is to express a conclusion on these interim financial statements. We conducted our review in accordance
with International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. ISRE 2410 requires us to conclude whether anything has come to our attention that causes
us to believe that the interim financial statements are not prepared in all material respects in accordance with the applicable
financial reporting framework. This standard also requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying
analytical procedures, and evaluate the evidence obtained.
The procedures performed in a review are substantially less than and differ in nature from those performed in an audit
conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these
financial statements.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed
consolidated interim financial statements of MAS Real Estate Inc. for the six months ended 31 December 2018 are not
prepared, in all material respects, in accordance with the International Financial Reporting Standard, (IAS) 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council.
PricewaterhouseCoopers LLC
Chartered Accountants
Sixty Circular Road
Douglas
Isle of Man
IM1 ISA
1 March 2019
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Six-month period ended 31 December 2018
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Rental income 4 26,144,714 18,974,145 37,452,513
Service charges and other recoveries 4,504,330 2,147,390 5,954,048
Revenue 30,649,044 21,121,535 43,406,561
Service charges and other property operating expenses (6,891,085) (5,859,557) (11,073,518)
Net rental income 23,757,959 15,261,978 32,333,043
Sales of inventory property 27,985,713 6,398,637 26,020,940
Cost of sales of inventory property (23,697,456) (5,339,258) (21,704,016)
Profit on sales of inventory property 5 4,288,257 1,059,379 4,316,924
Other income 6 1,957,207 89,831 8,585,032
Corporate expenses (3,103,013) (2,500,957) (4,946,973)
Investment expenses 7 (1,346,995) (1,335,379) (1,976,096)
Net operating income 25,553,415 12,574,852 38,311,930
Fair value adjustments 8 (24,735,019) (613,755) (15,800,127)
Foreign currency exchange differences 33,700 (586,186) (1,020,787)
Share of profit from equity accounted investee, net of tax 16 6,398,768 1,543,057 3,568,925
Gain on bargain purchase/(goodwill impairment) 11,25 12,263,193 (1,274,346) (1,274,346)
Profit before finance income/costs 19,514,057 11,643,622 23,785,595
Finance income 9 5,148,562 3,950,621 7,975,558
Finance costs 9 (3,854,447) (2,477,372) (5,560,344)
Profit before tax 20,808,172 13,116,871 26,200,809
Current tax 10 (1,994,464) (2,078,633) (5,556,002)
Deferred tax 10 (2,758,191) 1,047,747 (1,311,385)
Profit for the period/year 16,055,517 12,085,985 19,333,422
Attributable to:
Owners of the group 11,086,908 11,703,478 16,856,306
Non-controlling interest 19 4,968,609 382,507 2,477,116
Basic earnings per share (euro cents) 27 1.74 2.25 2.92
Diluted earnings per share (euro cents) 27 1.74 2.25 2.92
CONDENSED CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
Six-month period ended 31 December 2018
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Profit for the period/year 16,055,517 12,085,985 19,333,422
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss
Foreign operations - foreign currency translation differences (1,557,070) (1,187,667) (1,207,816)
Total comprehensive profit for the period/year 14,498,447 10,898,318 18,125,606
Attributable to:
Owners of the group 9,529,838 10,515,811 15,648,490
Non-controlling interest 19 4,968,609 382,507 2,477,116
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Six-month period ended 31 December 2018
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Non-current assets
Investment property 12 752,925,945 489,518,759 579,212,345
Intangible assets 11 22,411,962 22,515,572 22,592,493
Investment in equity accounted investee 16 30,172,990 21,751,615 23,774,222
Financial assets 21 162,558,275 129,103,276 105,394,992
Property, plant and equipment 280,404 548,181 485,620
Deferred tax asset 10 780,574 756,280 607,179
Financial investments 15 - 200,120,816 183,052,263
Total non-current assets 969,130,150 864,314,499 915,119,114
Current assets
Financial assets 21 24,577,732 - 24,507,316
Inventory property 14 2,757,781 - 1,293,501
Investment property held for sale 13 16,841,620 53,647,686 53,588,444
Trade and other receivables 23 22,855,693 7,688,545 16,148,333
Financial investments 15 149,171,912 - -
Cash and cash equivalents 17 52,858,418 187,341,606 147,825,624
Total current assets 269,063,156 248,677,837 243,363,218
Total assets 1,238,193,306 1,112,992,336 1,158,482,332
Equity
Share capital 829,250,399 837,465,772 829,250,399
Geared share purchase plan shares (12,863,010) (21,056,010) (12,863,010)
Retained earnings 34,012,620 60,633,693 48,616,712
Share-based payment reserve 18 1,271,565 702,521 1,031,739
Foreign currency translation reserve (13,325,189) (11,747,970) (11,768,119)
Equity attributable to owners of the group 838,346,385 865,998,006 854,267,721
Non-controlling interest 19 6,293,349 1,030,314 2,527,202
Total equity 844,639,734 867,028,320 856,794,923
Non-current liabilities
Interest bearing borrowings 20 242,267,141 166,657,495 214,407,455
Financial liabilities 22 1,805,669 25,304,748 1,696,005
Deferred tax liability 10 8,515,711 3,761,990 6,139,373
Total non-current liabilities 252,588,521 195,724,233 222,242,833
Current liabilities
Interest bearing borrowings 20 88,255,210 27,929,088 28,305,652
Financial liabilities 22 29,403,839 9,991,544 36,121,577
Trade and other payables 24 23,052,254 12,279,787 14,733,264
Provisions 253,748 39,364 284,083
Total current liabilities 140,965,051 50,239,783 79,444,576
Total liabilities 393,553,572 245,964,016 301,687,409
Total shareholder equity and liabilities 1,238,193,306 1,112,992,336 1,158,482,332
Actual number of ordinary shares in issue 637,493,798 633,915,786 637,493,798
IFRS Net Asset Value per share (euro cents) 131.5 136.6 134.0
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six-month period ended 31 December 2018
Geared
share Equity
purchase Foreign attributable
plan shares Share-based currency to owners Non-
Share (treasury Retained payment translation of the controlling Total
Euro Note capital shares) earnings reserve reserve group interest equity
Balance at 30 June 2017 (audited) 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 period
Profit for the period - - 11,703,478 - - 11,703,478 382,507 12,085,985
Other comprehensive loss - - - - (1,187,667) (1,187,667) - (1,187,667)
Total comprehensive profit/(loss) for the period - - 11,703,478 - (1,187,667) 10,515,811 382,507 10,898,318
Equity transactions
Share-based payment reserve 18 - - - 476,548 - 476,548 - 476,548
Total equity transactions - - - 476,548 - 476,548 - 476,548
Transactions with the owners of the group and
non-controlling interests
Issue of shares 290,334,223 - - - - 290,334,223 - 290,334,223
Distributions (10,424,724) - (6,957,823) - - (17,382,547) (340,256) (17,722,803)
Total transactions with the owners of the group 279,909,499 - (6,957,823) - - 272,951,676 (340,256) 272,611,420
and non-controlling interests
Balance at 31 December 2017 (reviewed) 837,465,772 (21,056,010) 60,633,693 702,521 (11,747,970) 865,998,006 1,030,314 867,028,320
Comprehensive income for the period
Profit for the period - - 5,152,828 - - 5,152,828 2,094,609 7,247,437
Other comprehensive loss - - - - (20,149) (20,149) - (20,149)
Total comprehensive profit/(loss) for the period - - 5,152,828 - (20,149) 5,132,679 2,094,609 7,227,288
Equity transactions
Share-based payment reserve 18 - - - 329,218 - 329,218 - 329,218
Total equity transactions - - - 329,218 - 329,218 - 329,218
Transactions with the owners of the group
Issue of shares 5,501,987 - - - - 5,501,987 - 5,501,987
Shares forfeited and cancelled (8,193,000) 8,193,000 - - - - - -
Distributions (5,524,360) - (17,169,809) - - (22,694,169) (597,721) (23,291,890)
Total transactions with the owners of the group (8,215,373) 8,193,000 (17,169,809) - - (17,192,182) (597,721) (17,789,903)
Balance at 30 June 2018 (audited) 829,250,399 (12,863,010) 48,616,712 1,031,739 (11,768,119) 854,267,721 2,527,202 856,794,923
Comprehensive income for the period
Profit for the period - - 11,086,908 - - 11,086,908 4,968,609 16,055,517
Other comprehensive loss - - - - (1,557,070) (1,557,070) - (1,557,070)
Total comprehensive profit/(loss) for the period - - 11,086,908 - (1,557,070) 9,529,838 4,968,609 14,498,447
Equity transactions
Share-based payment reserve 18 - - - 239,826 - 239,826 - 239,826
Total equity transactions - - - 239,826 - 239,826 - 239,826
Transactions with the owners of the group and
non-controlling interests
Distributions - - (25,691,000) - - (25,691,000) (1,202,462) (26,893,462)
Total transactions with the owners of the group - - (25,691,000) - - (25,691,000) (1,202,462) (26,893,462)
and non-controlling interests
Balance at 31 December 2018 (reviewed) 829,250,399 (12,863,010) 34,012,620 1,271,565 (13,325,189) 838,346,385 6,293,349 844,639,734
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six-month period ended 31 December 2018
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Cash generated from operating activities 17 21,649,309 11,847,042 34,900,798
Adjustments:
Decrease in receivables 516,733 2,235,006 1,029,613
Decrease in payables (539,188) (536,479) (904,406)
(Decrease)/increase in provisions (27,915) (52,441) 192,278
Finance income received - interest on preference shares 4,630,321 - 3,602,861
Tax paid on operating activities 10 (1,010,808) (215,056) (3,434,495)
Net cash from operating activities 25,218,452 13,278,072 35,386,649
Investing activities
Acquisition of investment property 12 (25,000,000) - (79,650,439)
Capitalised expenditure on investment property 12 (8,053,711) (6,606,326) (13,167,161)
Settlement of investment property acquisition retentions - - (225,000)
Proceeds from the sale of investment property 12 - 23,826,034 24,057,746
Capitalised expenditure on investment property held for sale (1,438,992) (95,786) (1,149,597)
Proceeds from the sale of investment property held for sale 13 49,263,427 5,140,745 7,353,427
Expenditure on inventory property (25,771,039) (5,153,579) (17,676,966)
Proceeds from sales of inventory property 23,551,191 5,153,579 17,571,371
Acquisition of subsidiaries net of cash acquired 25 (119,216,499) - -
Investment in PKM preference shares 21 (57,000,000) - -
Capitalised transaction costs of equity-accounted investee - (3,261) -
Acquisition of property, plant and equipment (15,512) (30,251) (25,627)
Disposal of property, plant and equipment 73,145 - -
Capitalised expenditure on intangible assets (31,669) (35,428) (78,679)
Acquisition of financial investments - (198,082,689) (199,557,215)
Finance costs paid - interest incurred on bank deposits 9 (16,439) (146,796) (332,222)
Finance income received - interest earned on bank deposits 9 11,200 3,191 4,223
Settlement of financial liability - (1,318,000) (1,093,000)
Settlement of financial asset - 66,097 66,097
Tax paid on investing activities 10 (1,347,840) - (1,541,766)
Cash used in investing activities (164,992,738) (177,282,470) (265,444,808)
Financing activities
Proceeds from the issue of share capital - 279,909,499 279,917,834
Proceeds from interest-bearing borrowings 20 101,207,794 53,000,000 104,067,925
Transaction costs related to interest-bearing borrowings 20 (897,711) (699,386) (1,431,560)
Repayment of capital on interest-bearing borrowings 20 (25,327,553) (4,409,446) (7,350,266)
Finance costs paid - interest on interest-bearing borrowings 20 (3,448,874) (2,161,092) (4,435,102)
Distributions paid (26,893,462) (6,957,823) (25,096,317)
Cash generated from financing activities 44,640,194 318,681,752 345,672,514
Net (decrease)/increase in cash and cash equivalents (95,134,092) 154,677,354 115,614,355
Cash and cash equivalents at the beginning of the period/year 147,825,624 33,017,502 33,017,502
Effect of movements in foreign exchange rate fluctuations 166,886 (353,250) (806,233)
on cash held
Cash and cash equivalents at the end of the period/year 17 52,858,418 187,341,606 147,825,624
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Six-month period ended 31 December 2018
1. CORPORATE INFORMATION
MAS Real Estate Inc. (the "company" or "MAS") is domiciled in the British Virgin Islands ("BVI") and head quartererd in the Isle
of Man ("IoM"). These condensed consolidated interim financial statements are as at, and for the six-month period ended 31
December 2018 and comprise the company and its subsidiaries (together referred to as the "group"). Comparative figures are
included for both the six-month period ended 31 December 2017 and the year ended 30 June 2018, however the latter are not
directly comparable due to the different length of period.
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 condensed consolidated interim financial statements have been prepared in accordance with International Financial
Reporting Standard ("IFRS") IAS 34: Interim Financial Reporting, the Johannesburg Stock Exchange ("JSE") Listings
Requirements, the Rules and Regulations of the Luxembourg Stock Exchange ("LuxSE") and applicable legal and regulatory
requirements of the BVI Business Companies Act 2004.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
The board has made judgements, estimates and assumptions that affect the application of the group's accounting policies
and the reported amounts in the condensed consolidated interim 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 disclosed in the integrated annual
report for the year ended 30 June 2018 with the addition of the following key judgement made in the period:
Determination of 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'. During the year there were two
acquisitions which are considered business combinations because the strategic management was acquired, refer to note 25.
3. SIGNIFICANT ACCOUNTING POLICIES
Except as described below the accounting policies applied in the preparation of these condensed consolidated interim
financial statements are consistent with those applied in the preparation of the consolidated financial statements for the year
ended 30 June 2018. Accordingly, these financial statements should be read in conjunction with the consolidated financial
statements for the year ended 30 June 2018 as well as any public announcements made by the group during the six-month
period ended 31 December 2018.
During the six-month period ended 31 December 2018, the group adopted the following standards:
- IFRS 9 (2014) - Financial Instruments
- IFRS 15 - Revenue from Contracts with Customers
The adoption of these standards does not affect previously reported numbers, however, there are additional disclosure
requirements. A number of other new standards are effective and have been adopted from 1 July 2018 but they have not had
a material effect on these condensed consolidated interim financial statements.
The changes in the accounting policies will be reflected in the group's consolidated financial statements for the year ended
30 June 2019.
IFRS 9 (2014) - FINANCIAL INSTRUMENTS
The group early adopted IFRS 9 (2013) Financial Instruments for the year ended 30 June 2015, the group has now adopted
IFRS 9 (2014) Financial Instruments. The amendments to this standard introduce an expected credit loss model which
requires expected credit losses to be recognised on financial assets held at amortised cost. The adoption of IFRS 9 (2014)
Financial Instruments has no material impact on these condensed consolidated interim financial statements. The group has
adopted the following policy with effect from 1 July 2018:
IMPAIRMENT OF FINANCIAL ASSETS
The group recognises loss allowances for expected credit losses on: financial assets measured at amortised cost; and contract
assets.
For lease receivables, trade receivables and contract assets the group applies the simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance. For all other financial assets 12 month expected credit
losses are recognised where the financial asset is determined to have a low credit risk and for which the credit risk has not
increased significantly since initial recognition. When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating expected credit losses, the group considers quantitative and
qualitative information that is reasonably available.
Lifetime expected credit losses are expected defaults over the expected life of the financial asset. 12 month expected credit
losses are expected defaults within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months). The maximum period considered when estimating expected credit losses is the maximum
contractual period over which the group is exposed to credit risk.
IFRS 15 - REVENUE FROM CONTRACTS WITH CUSTOMERS
This standard replaces IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. It applies to contracts with
customers except for: lease contracts, finance insurance contracts, financial instruments and non-monetary exchanges
between entities in the same business. The standard establishes a five-step model which determines whether, how much and
when revenue is recognised.
The majority of the group's income is rental income from leases, which are in the scope of IAS 17 Leases and is therefore
not affected by the new standard. The recognition and measurement requirements in IFRS 15 Revenue from Contracts with
Customers are applicable for determining the timing of derecognition and the measurement of consideration (including
applying the requirements for variable consideration) of any gains or losses on disposal of non-financial assets when that
disposal is not in the ordinary course of business. The group has determined that no changes are required on transition to
IFRS 15 Revenue from Contracts with Customers for past disposals of investment properties previously held for rental income.
The group has identified the following revenue streams that are in the scope of IFRS 15 Revenue from Contracts with
Customers:
- Sales of inventory property; and
- Service charges and other recoveries
SALES OF INVENTORY PROPERTY
The group enters into contracts with customers to sell inventory property which is either complete or under development.
Where contracts include development management services and consequently include the provision of a number of goods
and services, the group determines whether the goods and services are not distinct and accounts for them as a single
performance obligation if they are not separately identifiable from other promises in the contract.
The group determines whether control is transferred at a point in time or over time based upon the following:
- Sales of inventory property under development are recognised over time when the group's performance creates an
asset that the customer controls as the asset is created. In these situations, the group recognises sales of inventory
property to the extent that the performance obligations have been satisfied.
- Sales of inventory property under development are recognised on completion when control is transferred at a point
in time.
For contracts where sales of inventory property are recognised over-time the group's performance is measured using the
input method, by reference to the costs incurred as a percentage of the total expected costs required to satisfy the
performance obligation. The group excludes the effect of costs incurred that do not contribute to the group's performance
obligations, such as wastage, and adjusts for costs incurred that are not proportionate to the group's progress in satisfying the
performance obligations, such as uninstalled materials.
Where contracts for the sale of inventory property include a variable consideration, the transaction price is estimated and
includes the impact of constraints. The group uses either the most likely or expected value method depending on which best
predicts the transaction price.
The group does not adjust the transaction price for the effects of a financing component in the contract, where the group
expects, at contract inception, that the period between the time the customer pays for the good or service and when the
group transfers that promised good or service to the customer will be one year or less.
SERVICE CHARGES AND OTHER RECOVERIES
The group has lease agreements that fall within the scope of IAS 17 which also include the provision of common area
maintenance. These services which are specified in the lease agreement are distinct non-lease components and are separately
invoiced. The group allocates the consideration in the lease contract to the lease component and revenue from contracts with
customers component. The group recognises revenue in relation to these services as the performance obligations are
satisfied over time.
The group adopted the standard on 1 July 2018 with effect from 1 July 2017 using the full retrospective method with the
practical expedient of disclosing the amount of the transaction price allocated to the remaining performance obligations or an
explanation of when the group expects to recognise the transaction price for comparative periods. Where the standard does
apply to the group's contracts with its customers there is no effect of adopting the new standard. Accordingly, the
information presented as at and for the six-month period ended 31 December 2017 has not been restated. However, there are
additional disclosure requirements and a reclassification of previously reported numbers, refer to note 23.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Below is a summary of new standards and amendments/improvements to existing standards and interpretations that are not
yet effective, and which are expected to be applicable to the group:
Effective for annual periods
Amendments/improvements to standards and interpretations not yet effective beginning on or after
IFRS 16 - Leases 1 January 2019
IFRS 3 - Amendment to IFRS 3 'Business combinations' 1 January 2021
IFRIC 23 - Uncertainty over income tax treatments 1 January 2020
IAS 28 - Amendments to IAS 28 'Investments in associates' on long term interests 1 January 2020
in an associate or joint venture
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 Leases.
The group will provide additional disclosure on operating leases it enters into as lessor. Other than that, the group is also a
lessee under a lease contract for the group's head office. The group has assessed the impact of this lease and has concluded
that it is unlikely that there will be a significant impact.
The group will adopt the new standard for the year ending 30 June 2020.
IFRS 3 - AMENDMENT TO IFRS 3 'BUSINESS COMBINATIONS'
The amendment clarifies the definition of a business combination to resolve the difficulties that arise when an entity
determines whether it has acquired a business or a group of assets.
The group has not yet assessed the impact of adopting this amendment. The group will adopt the amendment for the year
ending 30 June 2022.
IFRIC 23 - UNCERTAINTY OVER INCOME TAX TREATMENTS
The amendment clarifies the accounting for uncertainties in income taxes.
The group has not yet assessed the impact of adopting this amendment. The group will adopt the amendment for the year
ending 30 June 2021.
IAS 28 - AMENDMENTS TO IAS 28 'INVESTMENTS IN ASSOCIATES' ON LONG TERM INTERESTS IN AN ASSOCIATE OR JOINT VENTURE
IAS 28 clarifies that an entity applies IFRS 9 'Financial Instruments' to long term interests in an associate or joint venture that
form part of the new investment in the associate or joint venture but to which the equity method is not applied.
The group has not yet assessed the impact of adopting this amendment. The group will adopt the amendment for the year
ending 30 June 2021.
4. RENTAL INCOME
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:
Reviewed Reviewed
Six-month Six-month
period period Audited
ended 31 ended 31 Year ended
December December 30 June
Euro 2018 2017 2018
Edeka MIHA AG 2,926,132 2,918,539 5,837,967
The future aggregate minimum rental receivable under non-cancellable operating leases is as follows:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
No later than 1 year 49,933,764 33,942,945 39,501,963
Greater than 1 year and less than 5 years 159,099,210 113,581,661 135,874,939
Greater than 5 years 216,835,901 178,163,445 182,238,453
425,868,875 325,688,051 357,615,355
Turnover rent of EUR1,332,003 (December 2017: EUR1,767,573; June 2018: EUR1,991,196) is included in rental income.
5. PROFIT ON SALES OF INVENTORY PROPERTY
Reviewed Reviewed
Six-month Six-month Audited
period period Year
ended ended ended
31 December 31 December 30 June
Euro 2018 2017 2018
Sales of inventory property 27,985,713 6,398,637 26,020,940
Cost of sales of inventory property (23,697,456) (5,339,258) (21,704,016)
4,288,257 1,059,379 4,316,924
During the period a total profit of EUR4,288,257 (December 2017: EUR1,059,379; June 2018: 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.
6. OTHER INCOME
Reviewed Reviewed Audited
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
Euro 2018 2017 2018
Dividend income earned on financial investments 1,879,863 83,217 8,423,423
Other 77,344 6,614 161,609
1,957,207 89,831 8,585,032
7. INVESTMENT EXPENSES
Note Reviewed Reviewed Audited
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
Euro 2018 2017 2018
Transaction fees on acquisition of subsidiaries 25 839,282 - -
Transaction fees on aborted transactions 451,784 618,423 1,216,370
Transaction fees on listed real estate equity securities 55,929 716,956 759,726
1,346,995 1,335,379 1,976,096
8. FAIR VALUE ADJUSTMENTS
Reviewed Reviewed Audited
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Gain/(loss) on fair value of investment property 12 10,625,741 (4,140,178) (721,387)
(Loss)/gain on fair value of investment property held for sale 13 (467,919) 1,568,735 2,766,206
(Loss)/gain on fair value of financial assets 21 (38,621) - 350,585
(Loss)/gain on fair value of financial liabilities (973,869) 2,778 (1,690,579)
(Loss)/gain on fair value of financial investments 15 (33,880,351) 1,954,910 (16,504,952)
(24,735,019) (613,755) (15,800,127)
Detailed as follows:
Change in fair value of investment property
Income-generating 12 14,854,518 521,643 13,439,408
Development 12 - (5,725,938) (4,559,691)
Land bank 12 (4,228,777) 1,064,117 (9,601,104)
10,625,741 (4,140,178) (721,387)
Fair value movement in investment property held for sale
Investment property held for sale 13 (467,919) 1,568,735 2,766,206
(467,919) 1,568,735 2,766,206
Change in fair value of financial assets
Interest rate swaps 21 (38,621) - 350,585
(38,621) - 350,585
Change in fair value of financial liabilities
Interest rate swaps 22 (90,194) (46,353) (123,226)
Development management fee 22 (299,089) (152,455) (682,956)
Priority participating profit dividend 22 (584,586) 201,586 (884,397)
(973,869) 2,778 (1,690,579)
Change in fair value of financial investments
Listed real estate equity securities 15 (33,880,351) 1,954,910 (16,504,952)
(33,880,351) 1,954,910 (16,504,952)
9. FINANCE INCOME AND FINANCE COSTS
The group's finance income and finance costs comprise:
Reviewed Reviewed Audited
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Finance income
Interest on PKM Developments preference shares 21 4,835,323 3,795,207 7,514,384
Capital contribution - unwind of discount 21 302,039 152,223 456,951
Interest on bank deposits 11,200 3,191 4,223
5,148,562 3,950,621 7,975,558
Finance costs
Interest on interest bearing borrowings 20 (3,535,969) (2,156,911) (4,771,171)
Capital contribution - unwind of discount 22 (302,039) (152,223) (456,951)
Negative interest on bank deposits (16,439) (146,796) (332,222)
Other finance costs - (21,442) -
(3,854,447) (2,477,372) (5,560,344)
10. TAX
The company, which is domiciled in the BVI is not subject to tax in that jurisdiction. Operating subsidiaries of the group,
however, are subject 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 tax includes the following:
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Current tax 1,994,464 2,078,633 5,556,002
Deferred tax expense/(income) 2,758,191 (1,047,747) 1,311,385
Tax expense 4,752,655 1,030,886 6,867,387
The current tax, including under/over-provisions in respect of earlier periods, for each jurisdiction is as follows:
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 2018 31 December 2017 30 June 2018
Applicable Applicable Applicable
Euro rate (%) Tax rate (%) Tax rate (%) Tax
Income/corporation tax
UK - income tax 20.0 284,986 20.0 526,616 20.0 779,132
UK - corporation tax 19.0 813,594 19.0 1,860,399 19.0 2,394,030
Germany 15.8 219,903 15.8 (30,351) 15.8 210,255
Poland 19.0 177,986 19.0 (280,221) 19.0 66,792
Switzerland 26.8 16,379 26.8 32,288 26.8 23,683
Netherlands 20.0 14,170 20.0 - 20.0 25,689
Withholding tax
Poland 5.0 98,853 5.0 - 5.0 (281,974)
UK 20.0 84,826 20.0 - 20.0 144,982
France 30.0 115,940 30.0 - 30.0 2,174,252
Sweden 15.0 - 15.0 - 15.0 55,170
Netherlands 15.0 160,390 15.0 - 15.0 -
Wealth tax
Switzerland 0.2 (5,410) 0.2 887 0.2 19,490
Luxembourg 0.5 12,847 0.5 (30,985) 0.5 (55,499)
1,994,464 2,078,633 5,556,002
The amount of tax paid on operating activities in the period was EUR1,010,808 (December 2017: EUR215,056; June 2018:
EUR3,434,495) and the amount of tax paid on investing activities in the period was EUR1,347,840 (December 2017: EURnil; June 2018:
EUR1,541,766).
The UK corporation tax relates to the following sales at New Waverley, refer to note 14:
- Tax on disposal of office land of EURnil (December 2017: EUR1,659,117, June 2018: EUR1,581,195).
- Tax on sale of inventory property of EUR813,594 (December 2017: EUR201,282 June 2018: EUR812,835).
RECONCILIATION OF DEFERRED TAX:
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Net deferred tax liability brought forward 5,532,194 4,240,319 4,240,319
Current period/year deferred tax movement 2,758,191 (1,047,747) 1,311,385
Acquisition of subsidiaries - deferred tax asset 25 (562,660) -
Disposal of investment property - (156,224) -
Foreign currency translation difference in other comprehensive 7,412 (30,638) (19,510)
income ("OCI")
Net deferred tax liability carried forward 7,735,137 3,005,710 5,532,194
The net deferred tax liability is split as follows:
Reviewed Reviewed
As at As at Audited
31 December 31 December As at 30 June
Euro 2018 2017 2018
Deferred tax asset 780,574 756,280 607,179
Deferred tax liability (8,515,711) (3,761,990) (6,139,373)
Net deferred tax liability (7,735,137) (3,005,710) (5,532,194)
RECONCILIATION OF EFFECTIVE TAX RATE
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro % 2018 % 2017 % 2018
Profit before tax 20,808,172 13,116,871 26,200,809
Tax using the company's domestic rate 0.0 - 0.0 - 0.0 -
Effect of tax rates in foreign jurisdictions (9.6) (2,007,422) (15.8) (2,078,633) (22.5) (5,894,358)
Over provision in respect of year 0.1 12,958 0.0 - 1.3 338,356
Current tax (9.5) (1,994,464) (15.8) (2,078,633) (21.2) (5,556,002)
Change in recognised deductible temporary
differences
Revaluation of investment property (10.3) (2,142,244) 14.0 1,833,632 1.9 488,574
Other temporary differences (3.0) (615,947) (6.0) (785,885) (6.9) (1,799,959)
Deferred tax expense (13.3) (2,758,191) 8.0 1,047,747 (5.0) (1,311,385)
Net tax expense (22.8) (4,752,655) (7.8) (1,030,886) (26.2) (6,867,387)
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 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 decrease in the effective tax rate from
26.2% at the 30 June 2018 to 22.8% is a result of changes in geographical mix of profits.
11. INTANGIBLE ASSETS
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Goodwill 22,083,599 22,265,340 22,292,997
Other intangible assets 328,363 250,232 299,496
22,411,962 22,515,572 22,592,493
IMPAIRMENT
The recoverable amounts of the group's CGUs are the higher of their value-in-use and fair value less costs to sell.
The group's goodwill relates to the internalisation of MAS Property Advisors Limited. As there were no indicators of
impairment at 31 December 2018, no impairment test was performed. Goodwill will be tested for impairment at 30 June 2019.
No impairment charge arose as a result of the group's previous annual impairment test of goodwill at 30 June 2018
(December 2017: nil).
At 31 December 2017 an impairment test was performed in relation to goodwill arising on the New Waverley development
CGU. As a result, an impairment of EUR1,274,346 (June 2018: EUR1,274,346) was recognised resulting in the related goodwill being
written down to nil.
12.INVESTMENT PROPERTY
The group's investment property comprises:
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.
The carrying amount of the group's investment property was as follows:
As at 31 December 2018 (reviewed)
Euro Fair value Cost Total
Income-generating property 731,585,733 - 731,585,733
Development property - - -
Land bank 21,340,212 - 21,340,212
752,925,945 - 752,925,945
As at 31 December 2017 (reviewed)
Euro Fair value Cost Total
Income-generating property 450,304,737 - 450,304,737
Development property - 457,184 457,184
Land bank - 38,756,838 38,756,838
450,304,737 39,214,022 489,518,759
As at 30 June 2018 (audited)
Euro Fair value Cost Total
Income-generating property 546,238,139 - 546,238,139
Development property - - -
Land bank 32,974,206 - 32,974,206
579,212,345 - 579,212,345
As at 31 December 2018 (reviewed)
Income-
Euro Note generating Development Land bank Total
Opening balance 546,238,139 - 32,974,206 579,212,345
Property acquisitions 25,000,000 - - 25,000,000
Property acquisitions as part of acquisition of 25 142,784,946 - - 142,784,946
subsidiaries
Transfer to asset held for sale 13 - - (11,627,589) (11,627,589)
Capitalised expenditure 3,758,784 - 4,294,927 8,053,711
Capitalised interest on general borrowings - - 216,191 216,191
Fair value adjustment 8 14,854,518 - (4,228,777) 10,625,741
Foreign currency translation difference (1,050,654) - (288,746) (1,339,400)
Closing balance 731,585,733 - 21,340,212 752,925,945
As at 31 December 2017 (reviewed)
Income-
Euro generating Development Land bank Total
Opening balance 494,519,173 30,081,795 39,690,960 564,291,928
Property disposals - (23,826,034) - (23,826,034)
Transfer (9,941) (2,738,011) 2,747,952 -
Transfer to investment property held for sale 13 (42,960,539) (531,094) (7,618,037) (51,109,670)
Capitalised expenditure 225,006 3,202,877 3,178,443 6,606,326
Capitalised interest on general borrowings - 220,659 88,245 308,904
Fair value adjustment 8 521,643 (5,725,938) 1,064,117 (4,140,178)
Foreign currency translation difference (1,990,605) (227,070) (394,842) (2,612,517)
Closing balance 450,304,737 457,184 38,756,838 489,518,759
As at 30 June 2018 (audited)
Income-
Euro 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 -
Transfer to investment property held for sale 13 (43,082,065) - (8,246,692) (51,328,757)
Transfer to inventory property 14 - (1,078,030) - (1,078,030)
Capitalised expenditure 2,890,738 2,954,116 7,322,307 13,167,161
Capitalised interest on general borrowings - - 569,031 569,031
Fair value adjustment 8 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
INTEREST BEARING BORROWINGS
Bank borrowings of EUR256,639,557 (December 2017: EUR194,586,583, June 2018: EUR242,713,107) are secured against investment
property. The group has designated bank borrowings drawn down in the period of EUR114,050,163 as general borrowings
(December 2017: EUR53,000,000, June 2018: EUR104,067,925). During the reporting period interest costs on general borrowings of
EUR217,397 (December 2017: EUR308,904, June 2018: EUR570,385, refer to note 20), have been capitalised and are included within
land bank as above EUR216,191 (December 2017: EUR308,904, June 2018: EUR569,031) and inventory property EUR1,206 (December 2017: EURnil,
June 2018 EUR1,354), refer to note 14.
RELATED PARTIES
The group has a development management agreement with the developer New Waverley Advisers Limited, a related party,
for the development and construction of the New Waverley site in Edinburgh. A development management fee and priority
participating profit dividend have been recognised in relation to the New Waverley development, refer to note 22 and note 31.
In addition, the group has capitalised costs of EUR1,532,293 (December 2017: EUR327,635, June 2018: of EUR2,419,958) incurred from
related parties, refer to note 28.
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, by 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. At the interim
reporting date, the fair value of investment property is determined by reviewing the carrying value and assessing if there have
been any material changes to the significant inputs or to other relevant information generated by market transactions ("the
Assessment"). If there has been a material change to the value of the investment property, an external independent valuation
is obtained. Where the directors conclude that there has not been a material change to the value of the investment property,
the carrying value issued, being the most recent external valuation or acquisition price where relevant is used.
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 their expectation of what fair value would be for
individual investment properties. If the asset manager agrees with the valuation, the valuation reports are reviewed by the
finance team to confirm their numerical and methodological accuracy. The valuations and the Assessment are approved by
the Portfolio Management Committee and Investment Committee. Lastly, the investment property valuations and the
Assessment 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 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 techniques used.
VALUATION TECHNIQUES AND SIGNIFICANT UNOBSERVABLE INPUTS
The following table shows the valuation techniques used in measuring the fair value of investment property, as well as the
significant unobservable inputs used.
At 31 December 2018 the method of valuation for investment property of EUR85,093,504 changed from purchase price to
discounted cash flows and the method of valuation for investment property of EUR2,482,856 changed from discounted cash
flows to a firm offer.
As at 31 December 2018, 31 December 2017 and 30 June 2018
Investment Investment Inter-relationship between key
property property Significant unobservable inputs and fair
type Valuation technique value unobservable inputs value measurement
Income- Discounted cash flows: December - Risk adjusted The estimated fair value would
generating The valuation model considers the 2018 discount rates increase/(decrease) if:
property present value of net cash flows to EUR704,102,877 (4.5% - 11.75%) - Expected market rental
be generated from the property, - Estimated rental growth was higher/ (lower)
taking into account expected December value (December - The estimated rental value
rental growth rate, void periods, 2017 2018: EUR51,912,296 was higher/(lower)
occupancy rate, lease incentive EUR450,304,737 p.a., December - The reversionary discount
costs such as rent-free periods and 2017: EUR31,461,564 rate was lower/(higher)
other costs not paid by tenants. June 2018 p.a., June 2018: - The risk adjusted discount
The expected net cash flows are EUR466,114,639 EUR34,178,897 p.a.) rate was lower/(higher)
discounted using risk-adjusted - Net rental growth
discount rates. Among other (1% - 2%)
factors, the discount rate estimation - Reversionary
considers the quality of a building discount rate
and its location, tenant credit (5.25% - 9.5%)
quality and lease terms.
Purchase price: December - Purchase price The estimated fair value would
The valuation model takes into 2018 (December 2018: increase/(decrease) if:
account the recent acquisition price, EUR25,000,000 EUR25,000,000, - The number of the interested
which equals the amount a third December 2017: parties was higher/(lower)
party would be willing to pay. December EURnil, June 2018: - The availability of
2017 EUR80,123,500) comparable properties was
EURnil lower/(higher), thus altering
the acquisition price
June 2018
EUR80,123,500
Firm offers: December - Firm offer The estimated fair value would
The valuation model takes into 2018 (December 2018: increase/(decrease) if:
account the amount a third party is EUR2,482,856 EUR2,482,856, - The number of the interested
willing to pay. December 2017: parties was higher/(lower)
December EURnil, June 2018: and or,
2017 EURnil) - The availability of
EURnil comparable properties lower/
(higher), thus altering the
June 2018 offer price
EURnil
Land bank
Residual value method: December - Residual value The estimated fair value would
The valuation model considers the 2018 (December 2018: increase/(decrease) if:
gross development value of the EUR21,340,212 EUR23,531,795, - The budgeted costs to
property based on an independent December 2017: complete were lower/
view of market values for the December EURnil, June 2018: (higher)
completed development less any 2017 EUR38,094,775) - The residential unit prices
costs to complete. EURnil - Costs to complete were higher/(lower)
(December
June 2018 2018: EUR2,191,583,
EUR32,974,206 December 2017:
EURnil, June 2018:
EUR5,120,569)
13. INVESTMENT PROPERTY HELD FOR SALE
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
United Kingdom
- Hotel - 43,224,089 42,528,044
- Retail - 2,807,872 -
- Land bank 16,841,620 7,615,725 11,060,400
16,841,620 53,647,686 53,588,444
Reconciliation of the group's investment property held for sale were as follows:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Opening balance 53,588,444 6,336,915 6,336,915
Transfer from investment property 12 11,627,589 51,109,670 51,328,757
Disposals (49,263,427) (5,140,745) (7,353,427)
Capitalised expenditure 1,858,268 95,786 1,149,597
Retention release - (275,000) (275,000)
Fair value adjustment 8 (467,919) 1,568,735 2,766,206
Foreign currency translation reserve (501,335) (47,675) (364,604)
Closing balance 16,841,620 53,647,686 53,588,444
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
Investment Inter-relationship between
property Investment Significant key unobservable inputs and
type Valuation technique property value unobservable inputs fair value measurement
Land bank Firm offers less costs to complete: December 2018 - Firm offer The estimated fair value would
Fair value is based on the amount a EUR16,841,620 (December 2018: increase/(decrease) if:
third party is willing to pay less any EUR19,730,935, - The number of the
costs to complete. December 2017 December 2017: interested parties was
EUR7,615,725 EUR9,016,800, June higher/(lower)
2018: EUR13,688,705) - The availability of
June 2018 - Cost to complete comparable properties was
EUR11,060,400 (December lower/(higher), thus altering
2018: EUR2,889,315, the offer price
December 2017: - The budgeted costs to
EUR1,401,075, June complete were lower/
2018: EUR2,628,305) (higher)
Hotel and Firm offers: December 2018 - Firm offer The estimated fair value would
Retail The valuation model takes into EURnil (December 2018: increase/(decrease) if:
account the amount a third party is EURnil, December - The number of the
willing to pay. December 2017 2017: EUR46,031,961, interested parties was
EUR46,031,961 June 2018: higher/(lower) and or,
EUR42,528,044) - The availability of
June 2018 comparable properties
EUR42,528,044 lower/(higher), thus altering
the offer price
14. INVENTORY PROPERTY
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Opening balance 1,293,501 - -
Development expenditure 25,172,672 5,339,258 21,918,133
Disposals (recognised in costs of sales of inventory property) 5 (23,697,456) (5,339,258) (21,704,016)
Transfer from investment property 12 - - 1,078,030
Capitalised interest on general borrowings 1,206 - 1,354
Foreign currency translation reserve (12,142) - -
Closing balance 2,757,781 - 1,293,501
15. FINANCIAL INVESTMENTS
Financial investments have been classified as fair value through profit or loss. Accordingly, they are measured at fair value at
the reporting date with changes in fair value recognised in profit or loss.
As at 31 December 2018 (reviewed) Share price Number of Fair value
(Euro) shares (Euro)
Klepierre SA 26.96 1,626,364 43,846,773
Unibail - Rodamco Westfield SE 135.40 264,618 35,829,277
Hufvudstaden AB 13.35 1,083,000 14,457,884
Eurocommercial Properties NV 26.98 497,333 13,418,044
Covivio SA 84.20 150,300 12,655,260
Land Securities Group PLC 8.99 1,115,000 10,026,562
British Land Company PLC 5.96 1,625,000 9,686,092
Mercialys SA 11.97 772,934 9,252,020
149,171,912
As at 31 December 2017 (reviewed) Share price Number of Fair value
(Euro) shares (Euro)
Klepierre SA 36.66 1,626,364 59,630,636
Unibail - Rodamco Westfield SE 210.00 264,618 55,569,780
Eurocommercial Properties NV 36.31 497,333 18,058,161
Hufvudstaden AB 13.35 1,083,000 14,463,917
Covivio SA 94.48 150,300 14,200,344
Mercialys SA 18.45 697,934 12,873,393
Land Securities Group PLC 11.36 1,115,000 12,663,602
British Land Company PLC 7.79 1,625,000 12,660,983
200,120,816
As at 30 June 2018 (audited) Share price Number of Fair value
(Euro) shares (Euro)
Klepierre SA 32.25 1,626,364 52,450,239
Unibail - Rodamco Westfield SE 188.55 264,618 49,893,724
Eurocommercial Properties NV 36.36 497,333 18,083,028
Covivio SA 89.10 150,300 13,391,730
Hufvudstaden AB 12.28 1,083,000 13,295,975
British Land Company PLC 7.60 1,625,000 12,350,045
Land Securities Group PLC 10.82 1,115,000 12,063,076
Mercialys SA 14.91 772,934 11,524,446
183,052,263
RECONCILIATION OF FINANCIAL INVESTMENTS:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Opening balance 183,052,263 - -
Purchases - 198,165,906 199,557,215
Fair value adjustment 8 (33,880,351) 1,954,910 (16,504,952)
Closing balance 149,171,912 200,120,816 183,052,263
During the period dividend income of EUR1,879,863 was recognised as other income (31 December 2017: EUR83,217; 30 June 2018:
EUR8,423,423), refer to note 6.
FAIR VALUE HIERARCHY
The fair value measurement of all the group's financial investments have been categorised as level 1 in the fair value hierarchy
as they are traded in active markets and are measured on quoted market prices at the end of the reporting period.
INTEREST BEARING BORROWINGS
Bank borrowings of EUR73,882,794 (December 2017: EURnil, June 2018: EURnil) are secured against the listed real estate equity
securities, refer to note 20.
16. INVESTMENT IN EQUITY ACCOUNTED INVESTEE
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
PKM Developments 30,172,990 21,751,615 23,774,222
RECONCILIATION OF INVESTMENT IN EQUITY ACCOUNTED INVESTEE
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Opening balance 23,774,222 20,205,297 20,205,297
Capitalised acquisition costs - 3,261 -
23,774,222 20,208,558 20,205,297
Share of profit 6,398,768 1,543,057 3,568,925
Closing balance 30,172,990 21,751,615 23,774,222
The group has an investment in PKM Developments, 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, refer
to note 21, the group is committed to fund up to EUR300,000,000 by 23 March 2021 through the investment in additional 7.5%
preference shares to be issued by PKM Developments, refer to notes 30 and 31.
The following table summarises the financial information of PKM Developments as included in its own financial statements:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Statement of financial position - PKM Developments
Non-current assets 207,358,645 94,396,995 138,511,061
Cash and cash equivalents 41,782,165 43,123,732 26,990,875
Other current assets 21,321,539 28,096,289 14,873,441
Total assets 270,462,349 165,617,016 180,375,377
Interest-bearing borrowings 162,950,993 105,630,824 105,745,768
Deferred tax liabilities 10,268,644 - 4,084,647
Trade and other payables 16,548,675 5,762,253 8,611,602
Other liabilities 2,173,746 - 337,601
Total liabilities 191,942,058 111,393,077 118,779,618
Net assets 78,520,291 54,223,939 61,595,759
Percentage of the groups ownership interest 40% 40% 40%
Un-adjusted group share of net assets 31,408,118 21,689,576 24,638,304
Elimination of preference share interest capitalised on qualifying assets (1,293,936) - (922,890)
carried at cost
Net assets attributable to the group 30,114,182 21,689,576 23,715,414
Capitalised costs 58,808 62,039 58,808
Carrying amount 30,172,990 21,751,615 23,774,222
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Statement of profit or loss and other comprehensive income - PKM
Developments
Revenue 2,837,816 441,871 2,258,220
Fair value adjustments of investment property 21,180,934 4,507,377 16,372,691
Other income 145,140 99,282 2,128
Corporate expenses (208,620) (286,361) (719,216)
Investment expenses (323,779) (935,331) (2,601,061)
Finance income 29,825 89,806 144,260
Finance expense (833,039) (419) (36,808)
Foreign currency translation differences (19,180) (58,583) (31,399)
Deferred tax (5,832,296) - (4,084,647)
Current tax expense (52,269) - (74,627)
Total profit 16,924,532 3,857,642 11,229,541
Percentage of the groups ownership interest 40% 40% 40%
Total profit and other comprehensive income attributable to the group 6,769,812 1,543,057 4,491,816
Elimination of preference share interest capitalised on qualifying assets (371,044) - (922,891)
carried at cost
Group's share of profit 6,398,768 1,543,057 3,568,925
PKM Developments has no other comprehensive income.
PKM Developments is subject to litigation brought by an unpaid lender which was assumed as part of a business
combination. The payable was recognised at fair value at acquisition and has a carrying amount of EUR700,000 at 31 December
2018. The lender is currently under liquidation and is seeking full repayment of EUR3,500,000 principal as well as the related
accrued interest (amounting to EUR1,595,737 at 31 December 2018). As at the date of this report legal proceedings are underway,
however, it is considered unlikely that the cash outflow will exceed the EUR700,000 already provided because this amount has
been formally agreed with all the lender's creditors as part of its liquidation process.
17. CASH AND CASH EQUIVALENTS
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Bank balances 52,858,418 187,341,606 147,825,624
Reconciliation of cash generated from operating activities:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Profit for the period/year 16,055,517 12,085,985 19,333,422
Adjustments for:
Depreciation 53,654 18,098 100,026
Loss on disposal of property, plant and equipment 90,671 - -
Share-based payment expense 239,826 403,302 805,766
Fair value adjustments 8 24,735,019 613,755 15,800,127
Foregin exchange differences (33,700) 586,186 1,020,787
Finance income 9 (5,148,562) (3,950,621) (7,975,558)
Finance costs 9 3,854,447 2,477,372 5,560,344
Share of profit from equity accounted investees 16 (6,398,768) (1,543,057) (3,568,925)
(Gain on bargain purchase)/goodwill impairment 11,25 (12,263,193) 1,274,346 1,274,346
Tax expense 10 4,752,655 1,030,886 6,867,387
Profit on sales of inventory property 5 (4,288,257) (1,059,379) (4,316,924)
Other income - (89,831) -
Cash generated from operating activities 21,649,309 11,847,042 34,900,798
18. SHARE-BASED PAYMENT RESERVE
The share-based payment reserve relates to the option expense of the group's geared share purchase plan.
RECONCILIATION OF GEARED SHARE PURCHASE PLAN:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Opening balance 1,031,739 225,973 225,973
Recognised during the period/year 305,364 517,701 902,386
Non-forfeitable distribution (65,538) (41,153) (96,620)
Closing balance 1,271,565 702,521 1,031,739
The remaining term of the loans at 31 December 2018 was 8.19 years (December 2017: 9.19 years; June 2018: 8.69 years).
Refer to note 28 for further disclosures of the share-based payment expense included in key management compensation
and directors' remuneration.
19. NON-CONTROLLING INTEREST (NCI)
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Opening balance 2,527,202 988,063 988,063
Share of profit 4,968,609 382,507 2,477,116
Distribution to NCI (1,202,462) (340,256) (937,977)
Closing balance 6,293,349 1,030,314 2,527,202
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. The effective economic interest is earned by and paid to entities that are not owned by the group, but
the group has control, as defined by IFRS 3, of these entities and consolidates them accordingly.
During the period Prime Kapital received a dividend of EUR1,202,462 (December 2017: EUR340,256; June 2018: EUR937,977) in
relation to its participation in the co-investment venture.
20. INTEREST BEARING BORROWINGS
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Non-current
UK investment property 42,893,300 7,604,642 50,650,037
German investment property 132,986,228 102,402,299 108,187,711
Swiss investment property 7,228,780 7,296,148 7,211,257
CEE investment property 59,158,833 49,354,406 48,358,450
242,267,141 166,657,495 214,407,455
Current
UK investment property 8,009,419 23,228,329 23,272,484
German investment property 3,224,788 2,381,698 2,707,840
Swiss investment property 346,086 333,294 337,116
CEE investment property 2,792,123 1,985,767 1,988,212
BVI group facility 73,882,794 - -
88,255,210 27,929,088 28,305,652
330,522,351 194,586,583 242,713,107
The BVI group facility of EUR73,882,794 (December 2017: EURnil, June 2018: EURnil) is secured against the groups listed real estate
equity securities with a value of EUR149,171,912, refer to note 15. The remaining bank borrowings of EUR256,639,557 (December
2017: EUR194,586,583, June 2018: EUR242,713,107) are secured against investment property with a value of EUR514,600,802
(December 2017: EUR361,152,972, June 2018: EUR454,498,545), refer to note 12.
The carrying value of interest-bearing borrowings approximates their fair value.
Reconciliation of the group's carrying amount of interest-bearing borrowings:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro Note 2018 2017 2018
Opening balance 242,713,107 147,213,397 147,213,397
Changes from financing cash flows 84,376,025 45,730,076 90,850,997
Proceeds from interest-bearing borrowings 101,207,794 53,000,000 104,067,925
Acquisition of subsidiaries 25 12,842,369 - -
Transaction costs related to interest-bearing borrowings (897,711) (699,386) (1,431,560)
Repayment of interest-bearing borrowings (25,327,553) (4,409,446) (7,350,266)
Interest paid (3,448,874) (2,161,092) (4,435,102)
Finance costs 3,753,366 2,465,815 5,341,556
Finance costs - expenses 9 3,535,969 2,156,911 4,771,171
Finance costs - general borrowings capitalised 217,397 308,904 570,385
Foreign currency translation difference (320,147) (822,705) (692,843)
Closing balance 330,522,351 194,586,583 242,713,107
Interest on general borrowings of EUR217,397 (December 2017: EUR308,904; June 2018: EUR570,385) was capitalised during the
period at a rate of 2.57% (December 2017: 2.64%; June 2018: 2.69%), refer to notes 12 and 14.
SUMMARY OF INTEREST-BEARING BORROWING TERMS AND COVENANTS
The group is subject to both fixed and variable interest rates on its interest-bearing borrowings:
Reviewed Reviewed Audited
As at As at As at
3 1 December 31 December 30 June
Euro 2018 2017 2018
Fixed/hedged debt 297,212,924 145,605,748 199,289,452
Variable debt 33,309,427 48,980,835 43,423,655
330,522,351 194,586,583 242,713,107
The borrowing terms and covenants are consistent with those disclosed in the 2018 integrated annual report except for the
loans which were drawn down during the period, the terms of which are:
Annual
capital repayment
BORROWING TERMS Term of debt Currency (Euro) Margin Base rate
German investment property
- Fixed debt 5 years Euro 316,950 1.67% Euribor 3M
CEE investment property
- Variable debt 13 years Euro 783,000 3.50% Euribor 3M
BVI group facility On demand Euro n/a 1% Central Bank
base rate
COVENANTS Debt service cover ratio Loan to value
German investment property
- German fixed debt 135% 78%
CEE investment property
- CEE variable debt 115% 65%
21. FINANCIAL ASSETS
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Non-current assets
Preference shares - PKM Developments 162,250,770 104,929,452 105,045,768
Capital contribution - 24,173,824 -
Interest rate swap 307,505 - 349,224
162,558,275 129,103,276 105,394,992
Current assets
Capital contribution 24,577,732 - 24,507,316
24,577,732 - 24,507,316
Total assets 187,136,007 129,103,276 129,902,308
PKM DEVELOPMENTS - PREFERENCE SHARES
The group invested EUR157,000,000 to acquire 157,000,000 preference shares with a coupon rate of 7.5% in PKM Developments.
The preference share asset is held at amortised cost. The expected credit loss allowance is EURnil and the carrying amount
approximates the fair value.
CAPITAL CONTRIBUTION
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. The expected credit loss allowance is EURnil and the carrying amount approximates
the fair value.
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.
FINANCIAL ASSETS AT AMORTISED COST
Reconciliation of the group's financial assets held at amortised cost:
PKM
Developments
preference Capital
Euro Note shares contribution Total
Balance at 30 June 2017 (audited) 101,134,245 - 101,134,245
Finance income 9 3,795,207 - 3,795,207
Capital contribution - 24,022,280 24,022,280
Finance income - unwind of discount 9 - 152,223 152,223
Foreign currency translation reserve - (679) (679)
Balance at 31 December 2017 (reviewed) 104,929,452 24,173,824 129,103,276
Finance income 3,719,177 - 3,719,177
Distribution received (3,602,861) - (3,602,861)
Capital contribution - 29,839 29,839
Finance income - unwind of discount - 304,728 304,728
Foreign currency translation reserve - (1,075) (1,075)
Balance at 30 June 2018 (audited) 105,045,768 24,507,316 129,553,084
Drawdown on preference shares 57,000,000 - 57,000,000
Finance income 9 4,835,323 - 4,835,323
Distribution received (4,630,321) - (4,630,321)
Finance income - unwind of discount 9 - 302,039 302,039
Foreign currency translation reserve - (231,623) (231,623)
Balance at 31 December 2018 (reviewed) 162,250,770 24,577,732 186,828,502
FINANCIAL ASSETS AT FVTPL
Reconciliation of the group's financial assets held at fair value:
Interest rate
Euro Note swap
Balance at 30 June 2017 (audited) -
Balance at 31 December 2017 (reviewed) -
Fair value adjustment 8 350,585
Foreign currency translation reserve (1,361)
Balance at 30 June 2018 (audited) 349,224
Fair value adjustment 8 (38,621)
Foreign currency translation reserve (3,098)
Balance at 31 December 2018 (reviewed) 307,505
The carrying and fair value of the interest rate swap is the same and is level 2 in the fair value hierarchy.
The following table shows the valuation technique used to measure financial instruments held at fair value as well as the
unobservable inputs used for level 2 financial instruments.
As at 31 December 2018 and 30 June 2018
Inter-relationship between
inputs and fair value
Financial instrument Valuation technique Inputs measurement
Interest rate swaps The fair value is based on - 3-month GBP Libor The estimated fair value
discounting future cash - Swap rate would increase/(decrease) if:
flows using the interest rate - Notional loan value - 3-month GBP libor was
swap curves plus the historic - Fixed rate of interest higher/ (lower)
charged credit margin at the - Swap rate was lower/
dates when the cash flows (higher)
will take place. - Notional loan value was
lower/ (higher)
- Fixed rate of interest was
lower/ (higher)
22. FINANCIAL LIABILITIES
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Non-current liabilities
Capital contribution - 24,173,824 -
Interest rate swaps 1,337,051 1,130,924 1,222,944
Deferred consideration 468,618 - 473,061
1,805,669 25,304,748 1,696,005
Current liabilities
Capital contribution 24,577,732 - 24,507,316
Priority participating profit dividend 2,895,216 5,823,594 6,912,756
Development management fee 1,930,891 4,167,950 4,701,505
29,403,839 9,991,544 36,121,577
FINANCIAL LIABILITIES AT AMORTISED COST
CAPITAL CONTRIBUTION
A financial liability and corresponding financial asset have been recognised in respect of the capital contribution due from
Legal & General (buyer), and due to the UK Government (tenant), under the terms of the Pre-let Agreement. Both the
financial asset and financial liability are held at amortised cost.
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.
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 but is 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 2017 (audited) 500,000 -
Purchase price released (500,000) -
Capital contribution - 24,022,280
Finance costs - unwind of discount 9 - 152,223
Foreign currency translation reserve - (679)
Balance at 31 December 2017 (reviewed) - 24,173,824
Purchase price retained 473,061 -
Capital contribution - 29,839
Finance costs - unwind of discount - 304,728
Foreign currency translation reserve - (1,075)
Balance at 30 June 2018 (audited) 473,061 24,507,316
Finance costs - unwind of discount 9 - 302,039
Foreign currency translation reserve (4,443) (231,623)
Balance at 31 December 2018 (reviewed) 468,618 24,577,732
FINANCIAL LIABILITIES AT FVTPL
Reconciliation of the group's financial liabilities held at FVTPL:
Priority
Development participating
Interest rate management profit
Euro Note swaps fee dividend
Balance at 30 June 2017 (audited) 2,251,649 4,052,171 6,078,256
Fair value adjustment 8 46,353 152,455 (201,586)
Foreign currency translation difference in OCI (74,078) (36,676) (53,076)
Settlement (1,093,000) - -
Balance at 31 December 2017 (reviewed) 1,130,924 4,167,950 5,823,594
Fair value adjustment 76,873 530,501 1,085,983
Foreign currency translation difference in OCI 15,147 3,054 3,179
Balance at 30 June 2018 (audited) 1,222,944 4,701,505 6,912,756
Fair value adjustment 8 90,194 299,089 584,586
Foreign currency translation difference in OCI 23,913 (45,573) (67,689)
Transfer to other payables 24 - (3,024,130) (4,534,437)
Balance at 31 December 2018 (reviewed) 1,337,051 1,930,891 2,895,216
The amount transferred to other payables is a portion of the development management fee payable to New Waverley Advisers
Limited and the priority participating dividend payable to New Waverley Holdings Limited that is certain as at 31 December
2018, refer to note 31.
FAIR VALUE HIERARCHY
The following table shows the financial liabilities held at fair value in the fair value hierarchy:
As at 31 December 2018 (reviewed) Fair value
Carrying
Euro amount Level 1 Level 2 Level 3
Non-current liabilities
Interest rate swaps 1,337,051 - 1,337,051 -
1,337,051 - 1,337,051 -
Current liabilities
Development management fee 1,930,891 - - 1,930,891
Priority participating profit dividend 2,895,216 - - 2,895,216
4,826,107 - - 4,826,107
As at 31 December 2017 (reviewed) Fair value
Carrying
Euro amount Level 1 Level 2 Level 3
Non-current liabilities
Interest rate swaps 1,130,924 - 1,130,924 -
1,130,924 - 1,130,924 -
Current liabilities
Development management fee 4,167,950 - - 4,167,950
Priority participating profit dividend 5,823,594 - - 5,823,594
9,991,544 - - 9,991,544
As at 30 June 2018 (audited) Fair value
Carrying
Euro 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
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 20. 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.
DEVELOPMENT MANAGEMENT FEE AND PRIORITY PARTICIPATING PROFIT DIVIDEND
The group has a development management agreement with New Waverley Advisers Limited under which a fee is payable to
New Waverley Advisers Limited in relation to the development of the New Waverley site in Edinburgh.
The priority participating profit dividend is payable to New Waverley Holdings Limited based on the value of the site
following development.
LEVEL 2 FINANCIAL INSTRUMENTS
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
unobservable inputs used for level 2 financial instruments.
As at 31 December 2018, 31 December 2017 and 30 June 2018
Inter-relationship between
inputs and fair value
Financial instrument Valuation technique Inputs measurement
Interest rate swaps The fair value is based on - 3-month EUR/CHF Libor The estimated fair value
discounting future cash - Swap rate would increase/(decrease) if:
flows using the interest rate - Notional loan value - 3-month EUR libor/CHF
swap curves plus the historic - Fixed rate of interest libor was higher/ (lower)
charged credit margin at the - Swap rate was lower/
dates when the cash flows (higher)
will take place. - Notional loan value was
lower/ (higher)
- Fixed rate of interest was
lower/ (higher)
LEVEL 3 FINANCIAL INSTRUMENTS
VALUATION PROCESS OF LEVEL 3 FINANCIAL LIABILITIES
The fair value of the level 3 financial liability in respect of New Waverley Advisers Limited and New Waverley Holdings Limited
is calculated semi-annually. The investment property valuation process, refer to note 12, 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 31 December 2018, 31 December 2017 and 30 June 2018
Inter-relationship between
inputs and fair value
Financial instrument Valuation technique Inputs measurement
Development management Gross development value: - Value of investment The estimated fair value
fee and priority profit Fair value is based on the property would increase/(decrease) if:
dividend value of the properties in the - Value of investment
New Waverley development. property was higher/
(lower)
FAIR VALUE SENSITIVITY ANALYSIS
As at 31 December 2018 (reviewed)
Gross development value
Sensitivity
%
Financial liability Technique Valuation Input (Euro) Change Valuation
+5.00 2,027,436
Development management fee Gross development value 1,930,891 19,304,432
-5.00 1,834,346
+5.00 3,039,977
Priority participating profit dividend Gross development value 2,895,216 19,304,432
-5.00 2,750,455
As at 31 December 2017 (reviewed)
Gross development value
Sensitivity
%
Financial liability Technique Valuation Input (Euro) Change Valuation
+5.00 4,376,348
Development management fee Gross development value 4,167,950 39,976,121
-5.00 3,959,553
+5.00 6,114,774
Priority participating profit dividend Gross development value 5,823,594 39,976,121
-5.00 5,532,414
As at 30 June 2018 (audited)
Gross development value
Sensitivity
%
Financial liability Technique Valuation Input (Euro) Change Valuation
+5.00 4,936,580
Development management fee Gross development value 4,701,505 46,457,049
-5.00 4,466,430
+5.00 7,258,394
Priority participating profit dividend Gross development value 6,912,756 46,457,049
-5.00 6,567,118
23.TRADE AND OTHER RECEIVABLES
Reviewed Audited
Reviewed As at As at
As at 31 December 30 June
31 December 2017 2018
Euro 2018 Reclassified(1) Reclassified(1)
Contract assets 9,697,749 1,059,379 5,134,337
Trade receivables from lessees 6,135,033 4,239,022 3,588,558
Receivables 4,013,308 157,137 4,132,645
VAT receivable 1,208,513 634,516 1,141,499
Prepayments 1,142,253 694,187 1,009,668
Other 497,986 884,304 799,070
Dividends receivable 140,851 - 322,240
Property retentions held in escrow 20,000 20,000 20,316
22,855,693 7,688,545 16,148,333
(1) In the prior year receivables from contracts with customers were not split out, this has been reclassified to Contract assets as a result of the group adopting IFRS 15,
refer to note 3 for further detail regard the adoption of IFRS 15.
Receivables of EUR4,013,308 (December 2017: EUR157,137, June 2018: EUR4,132,645) relate to development costs receivable under the
Forward Funding Agreement on the New Waverley development. This receivable is only conditional on the passage of time
and is therefore a receivable from a contract with the group's customers.
Contract assets of EUR9,697,749 (December 2017: EUR1,059,379, June 2018: EUR5,134,337) relate to the group's right to
consideration for work completed. Contract assets are transferred to receivables when the rights become unconditional.
EUR8,902,922 (December 2017: EUR1,059,379, June 2018: EUR4,338,266) relates to profit receivable under the Forward Funding
Agreement, which will be paid on completion of the development. The profit is conditional on the group's ability to complete
the development on time and within budget. As at 31 December 2018, the development was progressing well and is on
schedule to be completed on time and within budget. EUR794,827 (December 2017: EURnil, June 2018: EUR796,071) relates to a
receivable in relation to the sale of investment property. The contract assets are all classified as current.
Significant changes to contract assets during the period are as follows:
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
Opening balance 5,134,337 - -
Increase in measure of progress 4,563,412 1,059,379 5,134,337
Closing balance 9,697,479 1,059,379 5,134,337
The carrying amount of the group's trade and other receivables approximates the fair value.
24. TRADE AND OTHER PAYABLES
Reviewed Reviewed Audited
As at 31 As at 31 As at
December December 30 June
Euro Note 2018 2017 2018
Trade payables 6,222,207 6,406,362 4,524,420
Priority participating profit dividend 22,31 4,534,437 - -
Construction payables 3,804,885 150,386 4,551,993
Development management fee 22,31 3,024,130 - -
Current tax payable 1,223,791 3,149,540 1,599,942
Deferred income 2,192,101 940,543 1,904,870
VAT payable 1,121,245 785,656 1,765,052
Other 929,458 847,300 386,987
23,052,254 12,279,787 14,733,264
Construction payables relate to amounts owed to developers for the construction of the group's development properties.
25. ACQUISITION OF SUBSIDIARIES
On 5 July 2018, the group acquired 100% of the shares and the voting interests of Militari shopping centre ("Militari") in
Romania and on 5 December 2018, the group acquired 100% of the shares and the voting interests of the Atrium Mall in Arad,
Romania ("Arad").
The group acquired the shares of both entities to gain control over the operations of two investment properties, namely
Militari and Arad both located in Romania. The entities each held and operated a single investment property, Militari shopping
centre and the Atrium Mall respectively. The acquisition is part of the group's strategy and continued investment into central
and eastern Europe to enhance the group's distributions over the immediate, medium and long term. The acquisitions have
both been treated as business combinations as the group substantially acquired all business operations.
From the date of acquisition to 31 December 2018 Militari and Arad contributed revenue of EUR5,569,037 and EUR672,134
respectively and profit of EUR6,833,026 and EUR12,240,735 respectively. If the acquisitions had occurred on 1 July 2018,
management estimates that the revenue up to 31 December 2018 for the acquisitions combined would have been EUR8,773,152
and profit for the period for the acquisitions would have been EUR20,317,618. Included in this profit is fair value movements in
investment property and the gain on bargain purchase below.
CONSIDERATION TRANSFERRED
The following table summarises the acquisition date fair value of the consideration transferred:
Euro Total
Militari 94,472,318
Arad 28,145,360
122,617,678
ACQUISITION RELATED COSTS
The group incurred acquisition-related costs of EUR839,282 on legal and due diligence fees. These costs have been included in
profit or loss within investment expenses.
IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED
The following table summarises the fair value of assets and liabilities that were acquired at the date of acquisition:
Euro Note Militari Arad Total
Investment property 12 93,854,946 48,930,000 142,784,946
Trade and other receivables 1,543,313 1,325,825 2,869,138
Trade and other payables (846,799) (1,047,884) (1,894,683)
Interest-bearing borrowings 20 - (12,842,369) (12,842,369)
Deferred tax (liability)/asset 10 (203,919) 766,579 562,660
Net assets excluding cash 94,347,541 37,132,151 131,479,692
Cash and cash equivalents 124,777 3,276,402 3,401,179
Net assets 94,472,318 40,408,553 134,880,871
Gain on bargain purchase - (12,263,193) (12,263,193)
Cash consideration transferred 94,472,318 28,145,360 122,617,678
Cash and cash equivalents acquired (124,777) (3,276,402) (3,401,179)
Cash consideration transferred, net of cash acquired 94,347,541 24,868,958 119,216,499
The gross contracted value of trade and other receivables of Militari and Arad was EUR1,543,313 and EUR1,325,825. Of this
management expects to receive EUR1,543,313 and EUR1,325,825 respectively.
No goodwill arose on the acquisition of Militari because the consideration paid was equal to the fair value of assets
acquired and liabilities assumed. A gain on bargain purchase of EUR12,263,193 arose on the acquisition of Arad because the
consideration paid was less than the fair value of net assets acquired and liabilities assumed. The transaction price was based
on the offer made at the start of the negotiations, 12 months prior to closing the deal. Within this period the footfall, tenants'
turnover and the net operating income increased significantly, which implicitly lead to an increase in the valuation of the
property.
26. OPERATING SEGMENTS
Segment results that are reported to the executive management team 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 condensed 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.
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 Residential developments and land plots held for schemes that have not yet commenced and
strategic assets listed real estate equity securities.
Corporate Consists of the cash holdings outside of the other reporting segments as well as 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.
31 December 2018 (reviewed)
Reportable segments
Land bank
Income- and other
generating Development strategic
Euro property property assets Corporate Total
Statement of comprehensive income
External revenue 30,428,609 - 220,435 - 30,649,044
Segment profit/(loss) before tax 37,662,102 14,074,490 (37,835,945) 6,907,525 20,808,172
Finance income 10,805 5,137,362 152 243 5,148,562
- Interest earned on preference shares - 4,835,323 - - 4,835,323
Finance costs (3,409,941) (302,039) - (142,467) (3,854,447)
Current tax (456,150) (813,594) (361,156) (363,564) (1,994,464)
Deferred tax (2,758,191) - - - (2,758,191)
Share of profit from investment in equity- - 6,398,768 - - 6,398,768
accounted investee, net of tax
Other material non-cash items
- Fair value adjustments 11,714,738 - (37,491,504) 1,041,747 (24,735,019)
- Gain on bargain purchase 12,263,193 - - - 12,263,193
- Exchange differences 708,119 - (768,354) 93,935 33,700
- Depreciation (32,945) - - (20,709) (53,654)
Statement of financial position
Segment non-current assets 735,228,425 192,388,649 21,465,470 20,047,606 969,130,150
- Investment in equity accounted investee - 30,172,990 - - 30,172,990
Segment current assets 50,921,107 39,863,324 170,532,580 7,746,145 269,063,156
Segment non-current liabilities (252,586,633) - - (1,888) 252,588,521)
Segment current liabilities (36,583,721) (28,839,583) (75,075,917) (465,830) 140,965,051)
31 December 2017 (reviewed)
Reportable segments
Land bank
Income- and other
generating Development strategic
Euro property property assets Corporate Total
Statement of comprehensive income
External revenue 20,980,965 (1,741) 119,486 22,825 21,121,535
Segment profit/(loss) before tax 13,789,374 (1,618,388) 3,826,402 (2,880,517) 13,116,871
Finance income 3,174 3,795,205 152,242 - 3,950,621
- Interest earned on preference shares - 3,795,205 - - 3,795,205
Finance costs (2,178,353) - (152,223) (146,796) (2,477,372)
Current tax (217,206) 139 (1,855,943) (5,623) (2,078,633)
Deferred tax (1,358,739) - 2,406,486 - 1,047,747
Share of profit from investment in equity- - 1,543,057 - - 1,543,057
accounted investee, net of tax
Other material non-cash items
- Fair value adjustments 1,448,741 (5,676,807) 3,614,311 - (613,755)
- Exchange differences (149,616) - - (436,570) (586,186)
- Goodwill impairment - - - (1,274,346) (1,274,346)
- Depreciation - - - (18,098) (18,098)
Statement of financial position
Segment non-current assets 451,061,018 127,138,251 263,051,478 23,063,752 864,314,499
- Investment in equity accounted investee - 21,751,615 - - 21,751,615
Segment current assets 67,278,364 573,059 18,504,267 162,322,147 248,677,837
Segment non-current liabilities (171,550,409) - (24,173,824) - (195,724,233)
Segment current liabilities (36,614,315) (9,994,023) (2,484,870) (1,146,575) (50,239,783)
30 June 2018 (audited)
Reportable segments
Land bank
Income- and other
generating Development strategic
Euro property property assets Corporate Total
Statement of comprehensive income
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)
Share of profit from investment in equity- - 3,568,925 - - 3,568,925
accounted investee, net of tax
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 548,602,766 128,784,871 216,150,430 21,581,047 915,119,114
- 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)
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 assets/liabilities or income/expense.
GEOGRAPHICAL INFORMATION
The group invests in investment property in Europe. The geographical information below analyses the group's rental income
and service charges and other recoveries and non-current assets by the relevant company's country of domicile and the
jurisdiction in which the underlying property assets are held: western Europe (UK, Germany and Switzerland) and central and
eastern Europe (Poland, Bulgaria and Romania) ("CEE").
Revenue
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
BVI - - -
Western Europe 14,841,670 11,957,992 24,865,399
CEE 15,807,374 9,163,543 18,541,162
30,649,044 21,121,535 43,406,561
Non-current assets
Reviewed Reviewed Audited
As at As at As at
31 December 31 December 30 June
Euro 2018 2017 2018
BVI 20,047,609 - 204,633,310
Western Europe 433,522,128 580,745,050 414,204,311
CEE 515,560,413 283,569,449 296,281,493
969,130,150 864,314,499 915,119,114
Income from contracts with customers
Reviewed
Six-month Six-month
period period Year
ended ended ended
31 December 31 December 30 June
Euro 2018 2017 2018
Sales of inventory property 27,985,713 6,398,637 26,020,940
Service charges and other recoveries 4,504,330 2,147,390 5,954,048
32,490,043 8,546,027 31,974,988
DISAGGREGATION
The following table disaggregates the income from contracts with customers by jurisdiction and the timing of income
recognition. The table also includes a reconciliation to the group's reportable segments.
Reviewed
Six-month period ended 31 December 2018
Reportable segments
Income-
generating Development
Euro property property Corporate Total
Jurisdiction
BVI - - - -
Western Europe 712,511 27,985,713 23,761 28,721,985
CEE 3,768,058 - - 3,768,058
4,480,569 27,985,713 23,761 32,490,043
Timing of income recognition
Over a period of time 4,480,569 27,985,713 23,761 32,490,043
4,480,569 27,985,713 23,761 32,490,043
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 six-month period ended 31 December 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.
Six-month period ended 31 December 2018 (reviewed)
STATEMENT OF DIRECT AND INDIRECT RESULT
Direct Indirect
investment investment
Euro result result Total IFRS
Rental income 26,144,714 - 26,144,714
Service charge income and other recoveries 4,504,330 - 4,504,330
Revenue 30,649,044 - 30,649,044
Service charge and other property operating expenses (6,891,085) - (6,891,085)
Net rental income 23,757,959 - 23,757,959
Sale of inventory property - 27,985,713 27,985,713
Cost of sales of inventory property - (23,697,456) (23,697,456)
Profit on sale of inventory property - 4,288,257 4,288,257
Other income 1,957,207 - 1,957,207
Corporate expenses (3,103,013) - (3,103,013)
Investment expenses - (1,346,995) (1,346,995)
Net operating income 22,612,153 2,941,262 25,553,415
Fair value adjustments - (24,735,019) (24,735,019)
Foreign currency exchange differences - 33,700 33,700
Share of profit from equity accounted investee, net of tax - 6,398,768 6,398,768
Gain on bargain purchase - 12,263,193 12,263,193
Profit/(loss) before financing costs 22,612,153 (3,098,096) 19,514,057
Finance income 5,148,562 - 5,148,562
Finance costs (3,854,447) - (3,854,447)
Profit/(loss) before tax 23,906,268 (3,098,096) 20,808,172
Current tax (1,180,870) (813,594) (1,994,464)
Deferred tax - (2,758,191) (2,758,191)
Profit/(loss) for the period 22,725,398 (6,669,881) 16,055,517
Attributable to:
Owners of the group 21,486,625 (10,399,717) 11,086,908
Non-controlling interest 1,238,773 3,729,836 4,968,609
DISTRIBUTABLE EARNINGS AND BASIS OF DISTRIBUTION
Six-month
period ended
31 December
Euro 2018
Direct investment result distributable to shareholders 21,486,625
Company specific adjustments
Net attributable profit on sales of inventory property(1) 2,605,997
Distributable earnings before effect of shares issued during the period 24,092,622
Weighted average number of shares in issue 637,493,798
Distributable earnings per share (euro cents per share) 3.78
Distributable earnings before effect of shares issued during the period 24,092,622
Adjustment relating to shares issued during the period -
Distributable earnings (after effect of shares issued during the period) 24,092,622
Closing number of shares in issue 637,493,798
(1)The profit on sales of inventory property during the year was EUR4,288,257. The tax recognised on these sales was EUR813,594, giving a net amount of profit of EUR3,474,663.
The group has allocated 75% (EUR2,605,997) of this balance as distributable earnings as approximately 25% of profit is payable to the developer.
Six-month
period ended
31 December
Euro cents 2018
Distributable earnings per share 3.78
Adjustment from reserves per share -
Distribution per share 3.78
RECONCILIATION OF CASH FROM OPERATIONS TO DIRECT INVESTMENT RESULT
Six-month
period ended
Euro 31 December
2018
Net cash from operating activities 25,218,452
Finance cost (3,854,447)
Finance cost (3,854,447)
Finance income 518,242
Finance income 5,148,562
Finance income received - interest on preference shares (4,630,321)
Tax (170,062)
Tax expense (1,180,870)
Tax paid on operating activities 1,010,808
Non-cash items (384,151)
Depreciation (53,654)
Loss on disposal of property, plant and equipment (90,671)
Share based payment expenses (239,826)
Working capital movement 50,369
Decrease in receivables (516,733)
Decrease in payables 539,188
Decrease in provisions 27,914
Other 1,346,995
Investment expenses 1,346,995
TOTAL DIRECT INVESTMENT RESULT 22,725,398
Attributable to:
Owners of the group 21,486,625
Non-controlling interest 1,238,773
Six-month period ended 31 December 2017 (reviewed)
STATEMENT OF DIRECT AND INDIRECT RESULT
Direct Indirect
investment investment
Euro result result Total IFRS
Rental income 18,974,145 - 18,974,145
Service charge income and other recoveries 2,147,390 - 2,147,390
Revenue 21,121,535 - 21,121,535
Service charge and other property expenses (5,859,557) - (5,859,557)
Net rental income 15,261,978 - 15,261,978
Sale of inventory property - 6,398,637 6,398,637
Cost of sales of inventory property - (5,339,258) (5,339,258)
Profit on sale of inventory property - 1,059,379 1,059,379
Other income 89,831 - 89,831
Corporate expenses (2,500,957) - (2,500,957)
Investment expenses - (1,335,379) (1,335,379)
Net operating income 12,850,852 (276,000) 12,574,852
Fair value adjustments - (613,755) (613,755)
Foreign currency exchange differences - (586,186) (586,186)
Share of profit from equity accounted investee, net of tax 137,672 1,405,385 1,543,057
Good will impairment - (1,274,346) (1,274,346)
Profit/(loss) before financing costs 12,988,524 (1,344,902) 11,643,622
Finance income 3,950,621 - 3,950,621
Finance costs (2,477,372) - (2,477,372)
Profit/(loss) before tax 14,461,773 (1,344,902) 13,116,871
Current tax (218,234) (1,860,399) (2,078,633)
Deferred tax - 1,047,747 1,047,747
Profit/(loss) for the period 14,243,539 (2,157,554) 12,085,985
Attributable to:
Owners of the group 13,567,227 (1,863,749) 11,703,478
Non-controlling interest 676,312 (293,805) 382,507
DISTRIBUTABLE EARNINGS AND BASIS OF DISTRIBUTION
Six-month
period ended
31 December
Euro 2017
Direct investment result distributable to shareholders 13,567,227
Company specific adjustments
Elimination of direct earnings in associate (137,672)
Net attributable profit on sales of inventory property(1) 643,573
Distributable earnings before effect of shares issued during the period 14,073,128
Weighted average number of shares in issue 520,975,749
Distributable earnings per share (euro cents per share) 2.70
Distributable earnings before effect of shares issued during the period 14,073,128
Adjustment relating to shares issued during the period 3,050,851
Distributable earnings (after effect of shares issued during the period) 17,123,979
Closing number of shares in issue 633,915,786
(1)The profit on sales of inventory property during the year was EUR1,059,379. The tax recognised on these sales was EUR201,282, giving a net amount of profit of EUR858,097.
The group has recognised 75% (EUR643,573) of this balance as distributable earnings as approximately 25% of profit is payable to the developer.
Six-month
period ended
31 December
Euro cents 2017
Distributable earnings per share 2.70
Adjustment from reserves per share 0.88
Distribution per share 3.58
RECONCILIATION OF CASH FROM OPERATIONS TO DIRECT INVESTMENT RESULT
Six-month
period
ended 31
December
Euro 2017
Net cash from operating activities 13,278,072
Finance cost (2,477,372)
Finance cost (2,477,372)
Finance income 3,950,621
Finance income 3,950,621
Tax (3,178)
Tax expense (218,234)
Tax paid on operating activities 215,056
Non-cash items (421,400)
Depreciation (18,098)
Share based payment expenses (403,302)
Working capital movement (1,646,086)
Decrease in receivables (2,235,006)
Decrease in payables 536,479
Decrease in provisions 52,441
Other 1,562,882
Investment expenses 1,335,379
Share of profit from equity accounted investee 137,672
Other income 89,831
TOTAL DIRECT INVESTMENT RESULT 14,243,539
Attributable to:
Owners of the group 13,567,227
Non-controlling interest 676,312
STATEMENT OF DIRECT AND INDIRECT 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
Revenue 43,406,561 - 43,406,561
Service charge and other property expenses (11,073,518) - (11,073,518)
Net rental income 32,333,043 - 32,333,043
Sale 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
Good will impairment - (1,274,346) (1,274,346)
Profit/(loss) before financing costs 35,971,102 (12,185,507) 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 (12,185,507) 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 year 35,406,690 (16,073,268) 19,333,422
Attributable to:
Owners of the group 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
30 June
Euro 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 year 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 year 36,706,250
Adjustment relating to shares issued during the year 3,772,061
Distributable earnings (after effect of shares issued during the year) 40,478,311
Closing number of shares in issue 637,493,798
(1)The profit on sales of inventory property during the year ended 30 June 2018 was EUR4,316,924. The tax recognised on these sales was EUR812,835 (2017: EURnil) giving a net
amount of profit of EUR3,504,089. The group has recognised 75% (EUR2,628,067) of this balance as distributable earnings as approximately 25% of profit is
payable to the developer.
Year ended
30 June
Euro cents 2018
Distributable earnings per share 6.35
Adjustment from reserves per share 1.26
Distribution per share 7.61
RECONCILIATION OF CASH FROM OPERATIONS TO DIRECT INVESTMENT RESULT
Year ended
30 June
Euro 2018
Net cash from operating activities 35,386,649
Finance cost (5,560,344)
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 on operating activities 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 group 34,078,183
Non-controlling interest 1,328,507
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 or several financial and operational performance
indicators relevant to the real estate sector. 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.
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro Note 2018 2017 2018
Equity attributable to owners of the group 838,346,385 865,998,006 854,267,721
Adjustments for:
Fair value of interest rate swaps 1,029,546 1,130,924 873,720
Deferred tax asset (780,574) (756,280) (607,179)
Deferred tax liability 8,545,711 3,761,990 6,139,373
NCI in respect of the above adjustments (1,114,380) (247,180) (616,418)
EPRA NAV 846,026,688 869,887,460 860,057,217
Fully diluted number of shares 637,493,798 634,171,721 637,556,656
Closing number of shares 637,493,798 633,915,786 637,493,798
Effect of share options 27 - 255,935 62,858
EPRA NAV per share (euro cents) 132.7 137.2 134.9
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:
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
2018 2017 2018
Cash 25,691,000 6,957,823 24,127,632
Scrip - 10,424,724 15,949,084
25,691,000 17,382,547 40,076,716
Distributions paid per share (euro cents) 4.03 3.19 6.77
27. EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
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
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Profit for the period/year attributable to the owners of the group 11,086,908 11,703,478 16,856,306
WEIGHTED-AVERAGE NUMBER OF ORDINARY SHARES
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Opening issued ordinary shares 637,493,798 467,366,299 467,366,299
Effect of shares issued for capital raises - 50,858,057 105,128,974
Effect of shares issued for scrip distributions - 2,751,393 5,319,593
Weighted-average number of ordinary shares 637,493,798 520,975,749 577,814,866
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
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Profit attributable to ordinary shareholders 11,086,908 11,703,478 16,856,306
Weighted-average number of ordinary shares 637,493,798 520,975,749 577,814,866
Basic earnings per share (euro cents) 1.74 2.25 2.92
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.
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Weighted-average number of ordinary shares (basic) 637,493,798 520,975,749 577,814,866
Effect of share options - 255,935 62,858
Weighted-average number of ordinary shares (diluted) 637,493,798 521,231,684 577,877,724
DILUTED EARNINGS PER SHARE
Reviewed Reviewed
Six-month Six-month Audited
period ended period ended Year ended
31 December 31 December 30 June
Euro 2018 2017 2018
Profit attributable to ordinary shareholders 11,086,908 11,703,478 16,858,306
Weighted-average number of ordinary shares 637,493,798 521,231,684 577,877,724
Diluted earnings per share (euro cents) 1.74 2.25 2.92
At 31 December 2018, options on 7,850,000 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/(LOSS) AND DILUTED HEADLINE EARNINGS/(LOSS) PER SHARE
Reviewed
Six-month period ended
31 December 2018
Euro Note Gross Net
Profit for the period attributable to ordinary shareholders 11,086,908 11,086,908
Adjusted for:
Fair value gain on investment property 12 (10,625,741) (8,483,497)
Fair value gain on investment property in associate (8,529,274) (5,003,872)
Fair value loss on investment property held for sale 13 467,919 467,919
Recycle of foreign currency exchange through profit and loss (679,015) (679,015)
Loss on disposal of property, plant and equipment 90,671 90,671
Gain on bargain purchase (12,263,193) (12,263,193)
Headline loss (20,451,725) (14,784,079)
Headline loss per share
Weighted-average number of ordinary shares (basic) 637,493,798 637,493,798
Headline loss per share (euro cents) (3.21) (2.32)
Diluted headline loss per share
Weighted-average number of ordinary shares (diluted) 637,493,798 637,493,798
Diluted headline loss per share (euro cents) (3.21) (2.32)
Reviewed
Six-month period ended
31 December 2017
Euro Note Gross Net
Profit for the period attributable to ordinary shareholders 11,703,478 11,703,478
Adjusted for:
Fair value loss on investment property 12 4,140,178 2,306,546
Fair value gain on investment property in associate (1,802,951) (1,802,951)
Fair value gain on investment property held for sale 13 (1,568,735) (1,568,735)
Goodwill impairment 11 1,274,346 1,274,346
Headline earnings 13,746,316 11,912,684
Headline earnings per share
Weighted-average number of ordinary shares (basic) 520,975,749 520,975,749
Headline earnings per share (euro cents) 2.64 2.29
Diluted headline earnings per share
Weighted-average number of ordinary shares (diluted) 521,231,684 521,231,684
Diluted headline earnings per share (euro cents) 2.64 2.29
Audited
Year ended
30 June 2018
Euro Note Gross Net
Profit for the year attributable to ordinary shareholders 16,856,306 16,856,306
Adjusted for:
Fair value loss/(gain) on investment property 12 721,387 232,813
Fair value gain on investment property in associate (6,179,920) (3,878,272)
Fair value gain on investment property held for sale 13 (2,766,206) (2,766,206)
Goodwill impairment 11 1,274,346 1,274,346
Headline earnings 9,905,913 11,718,987
Headline earnings per share
Weighted-average number of ordinary shares (basic) 577,814,866 577,814,866
Headline earnings per share (euro cents) 1.71 2.03
Diluted headline earnings per share
Weighted-average number of ordinary shares (diluted) 577,877,724 577,877,724
Diluted headline earnings per share (euro cents) 1.71 2.03
The JSE Listings Requirements require the calculation of headline (loss)/earnings and diluted headline (loss)/earnings per
share and the disclosure of a detailed reconciliation of headline (loss)/earnings to the earnings numbers used in the
calculation of basic and diluted 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
more relevant measure.
28.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
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 with a board which comprises of four directors. Two of which were directors of Artisan
and MAS until 1 October 2018 when one resigned as a director of Artisan.
NEW WAVERLEY HOLDINGS LIMITED
New Waverley Holdings Limited 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 22.
NEW WAVERLEY ADVISERS LIMITED
New Waverley Advisers Limited is a real estate developer and is a 100% owned subsidiary of New Waverley Holdings Limited. As such
it is controlled by Artisan. Refer to note 22
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 Partner Limited, a service provider to MAS
Property Advisers Limited. The total remuneration paid to Corona in relation to services provided to MAS by Jonathan Knight
was EUR81,432 (December 2017: EUR65,142, June 2018: EUR130,284). Jonathan Knight received a salary of EUR33,696 (December 2017:
EUR33,987, June 2018: EUR67,974) from Corona.
PKM DEVELOPMENTS
PKM Developments is an associate of the group and MAS owns 40% of the ordinary shares, refer to notes 16 and 21.
The group provided EUR157,000,000 to acquire 7.5% preference shares in PKM Developments, refer to notes 16 and 21. The
group has committed to fund up to a further EUR300,000,000 over the next three years.
MOMATS
Momats provides BVI corporate services and is a director on MAS BVI (Holdings) Limited and MAS CEE Investments Limited,
100% owned subsidiaries of the company.
RELATED PARTY TRANSACTIONS
Income/(expenses)
for the period/year ended Capitalised for the period/year ended Balances receivable/(payable) as at
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited
31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December 30 June
Euro Note 2018 2017 2018 2018 2017 2018 2018 2017 2018
NW Advisers
- Oncharged development - - - 1,532,293 230,704 2,287,409 - 163,350 -
costs
- Development management (253,517) (152,455) (682,957) - - - (4,955,021) (4,167,950) (4,701,505)
fee(1)
(253,517) (152,455) (682,957) 1,532,293 230,704 2,287,409 (4,955,021) (4,004,600) (4,701,505)
NW Holdings
- Priority participation profit (516,896) 201,586 (1,042,368) - - - (7,429,653) (5,823,594) (6,912,757)
dividend(1)
(516,896) 201,586 (1,042,368) - - (7,429,653) (5,823,594) (6,912,757)
Corona
- Legal and professional (331,922) (472,760) (804,187) - 96,931 132,549 (138,564) - (124,474)
expenses
(331,922) (472,760) (804,187) - 96,931 132,549 (138,564) - (124,474)
Artisan
- Oncharged administrative 26,063 22,825 46,946 - - - 9,410 8,388 -
expenses
26,063 22,825 46,946 - - - 9,410 8,388 -
PKM Developments
- Equity accounted investee 16 6,398,768 1,543,057 3,568,925 - - - 30,686,286 21,751,615 23,774,222
- Preference shares - PKM 21 4,835,323 3,795,207 7,514,384 - - - 162,250,770 104,929,452 105,045,768
Developments
11,234,091 5,338,264 11,083,309 - - - 192,937,056 126,681,067 128,819,990
Momats
- Directors fees and legal (6,595) (11,840) 12,621 - - - - - 2,180
and professional fees
(6,595) (11,840) 12,621 - - - - - 2,180
10,151,224 4,925,620 (8,613,364) 1,532,293 327,635 2,419,958 180,423,227 116,861,261 117,083,434
(1) Differences between the income/(expense) and the corresponding receivable/(payable) related to foreign exchange movements recognised in other comprehensive income.
TRANSACTIONS WITH KEY MANAGEMENT
Six-months ended 31 December 2018 (reviewed)
IFRS 2
Basic Short-term Long-term option
Euro Role salary Benefits incentive incentive Sub total expense Total
Malcolm Levy Interim CEO - - - - - 149,138 149,138
Paul Osbourn CFO 75,558 - - - 75,558 - 75,558
Jonathan Knight CIO 44,928 - - - 44,928 60,867 105,795
Ron Spencer Chairman 24,250 - - - 24,250 - 24,250
Gideon Oosthuizen NED 18,530 - - - 18,530 - 18,530
Jaco Jansen NED 18,750 - - - 18,750 - 18,750
Pierre Goosen NED 25,750 - - - 25,750 - 25,750
Glynnis Carthy NED 20,000 - - - 20,000 - 20,000
Werner Alberts NED 10,805 - - - 10,805 - 10,805
Melt Hamman NED 1,479 - - - 1,479 - 1,479
Helen Cullen Company secretary 54,873 - 4,777 - 59,650 20,289 79,939
Morne Wilken Former CEO 143,672 112,320(1) - - 255,992 - 255,992
438,595 112,320 4,777 - 555,692 230,294 785,986
(1)The sum of GBP500,000 (approximately EUR564,250) was awarded and paid to Morne Wilken as recognition that he would forfeit in-the money incentive scheme by
becoming CEO of MAS. This amount was repayable on a pro-rata basis should he cease to be employed by the company from 1 January 2018 to 30 June 2020 and accordingly GBP16,667
(approximately EUR18,720) was expensed monthly and recognised as a benefit paid to him. Morne paid back the outstanding amount of GBP300,000 (approximately
EUR369,600) when he ceased to be director.
Six-months ended 31 December 2017 (reviewed)
IFRS 2
Basic Short-term Long-term option
Euro Role salary Benefits incentive incentive Sub total expense Total
Lukas Nakos CEO - - - - - - -
Malcolm Levy CFO - - - - - 242,008 242,008
Jonathan Knight CIO 33,970 - - - 33,970 107,413 141,383
Ron Spencer Chairman 15,000 - - - 15,000 - 15,000
Gideon Oosthuizen NED 13,750 - - - 13,750 - 13,750
Jaco Jansen NED 12,500 - - - 12,500 - 12,500
Morne Wilken NED 10,000 13,163 - - 23,163 - 23,163
Pierre Goosen NED 10,000 - - - 10,000 - 10,000
Glynnis Carthy NED 13,750 - - - 13,750 - 13,750
Helen Cullen Company secretary 48,540 - - - 48,540 35,804 84,344
157,510 13,163 - - 170,673 385,225 555,898
Year ended 30 June 2018 (audited)
IFRS 2
Basic Short-term Long-term option
Euro Role salary Benefits incentive incentive Sub total expense Total
Morne Wilken 188,432 141,613 - - 330,045 - 330,045
CEO 178,432 141,613 - - 320,045 - 320,045
Former NED 10,000 - - - 10,000 - 10,000
Malcolm Levy CFO - - - - - 425,758 425,758
Jonathan Knight 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 secretary 95,778 - - - 95,778 66,441 162,219
Lukas Nakos Former CEO - 157,794 - - 157,794 - 157,794
484,684 299,407 - - 784,091 656,553 1,440,644
29.CONTINGENT LIABILITIES
The group is subject to possible litigation regarding a disputed lease agreement in one of its subsidiaries. The maximum
potential claim is EUR3,000,000, however, at the date of this report there are no current legal proceedings and the success of
the claim is not considered to be probable.
30.CAPITAL COMMITMENTS
INVESTMENT PROPERTY
The group entered into a sale and purchase agreement ("SPA") to acquire a shopping centre located in Flensburg, Germany.
The sale was completed on 14 January 2019 for a purchase price of EUR62,550,000.
INVESTMENT IN EQUITY ACCOUNTED INVESTEE
The group has committed to fund PKM Developments through 7.5% cumulative preference shares issued by PKM
Developments. The group is committed to fund up to a total of EUR300,000,000. The outstanding commitment at the reporting
date was EUR143,000,000 which is expected to be funded by 23 March 2021, subsequently amended, refer to note 31. The loan
commitments have been reviewed and are not considered to be onerous at the reporting date.
31.EVENTS AFTER THE REPORTING PERIOD
ACQUISITION OF INVESTMENT PROPERTY
On 14 January 2019 the group acquired the share capital of a special purpose vehicle that owns a shopping centre located in
Flensburg, Germany ("Flensburg") for the purchase price of EUR62.6million and has a passing rent of EUR4.1million.
On 28 February 2019 the group entered into a sale and purchase agreement to acquire the entire share capital and shareholder
loans of three subsidiaries of PKM Developments for a purchase price of EUR113.0million.
The entities own nine completed retail assets in PKM Developments: Roman Value Centre, Roman; Baia Mare Value Centre, Baia Mare;
and the Kaufland portfolio, being value centres in Slobozia, Focsani, Ramnicu Sarat, Targu Secuiesc, Fagaras, Sebes and Gheorgheni.
The nine assets comprise 67,950 square metres of GLA and are expected to deliver EUR8.1million of net operating income, which
represents a yield of 7.5%.
The payment of the purchase price was off-set by the distribution of profits from PKM Developments and then funded on a short-term
basis by PKM Developments with interest accruing at MAS' marginal cost of borrowing.
PAYMENT TO RELATED PARTY
On 27 February 2019, the group paid EUR4,534,437 of the priority participating dividend to New Waverley Holdings Limited and EUR3,024,130
of the development management fee to New Waverly Advisers Limited. EUR1,930,891 and EUR2,895,216 remains owing to New Waverley Holdings Limited
and New Waverley Advisers Limited respectively and will be paid in the next twelve months.
OTHER INVESTMENTS
On 31 January 2019, the group invested a further 03,000,000 in PKM Development preference shares, bringing the total amount invested in
PKM Development preference shares to 870,000,000 and the outstanding commitment to EUR130,000,000. The expected timeframe to fund PKM Developments
has been amended from 23 March 2021 to 23 March 2023 after the reporting date.
After the reporting date the group made a number of purchases and sales of the listed real estate equity securities portfolio. As at 28 February 2019,
the group's listed real estate equity securities had a fair value of EUR162,384,994.
Sponsor: Java Capital
Date: 04/03/2019 09:30:00
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