Abridged Unaudited Interim results ended 31/12/22

RNS Number : 9194Q
Grit Real Estate Income Group
24 February 2023
 

GRIT REAL ESTATE INCOME GROUP LIMITED

(Registered in Guernsey)

(Registration number: 68739)

LSE share code: GR1T

SEM share code: DEL.N0000

ISIN: GG00BMDHST63

LEI: 21380084LCGHJRS8CN05

("Grit" or the "Company" or the "Group")

 

ABRIDGED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022

 

Strong cash collection, Group LTV reduced to 45.5% and

substantial progress on asset disposal strategy`

 

Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets underpinned by predominantly US Dollar and Euro denominated long-term leases with high quality multi-national tenants, today announces its results for the six months ended 31 December 2022 .

Financial and Portfolio highlights

 

6 Months ended

31 Dec 2022

6 Months ended

31 Dec 2021

Increase/ Decrease

Contractual rental collected 10

108.4%

94.9% 

+13.5ppt

Gross property income (proportionate9)

US$35.0m

US$32.6m

+7.52%

Property portfolio net operating income (IFRS)

US$22.1m

US$19.2m

+15.10%

Property portfolio net operating income (proportionate9)

US$29.6m

US$27.1m

+9.14%

EPRA cost ratio (including associates) 3

12.7%

13.5%

-0.8ppt

Finance costs

US$18.2m

US$12.5m

+45.60%

Adjusted EPRA earnings2

US$4.94m

US$5.92m

-16.55%

Distributable earnings per share1

US$2.56 cps

US$3.08 cps

-16.88%

Dividend per share

US$2.00 cps

US$2.50 cps

-20.00%

Adjusted EPRA earnings per share2

US$1.02 cps

US$1.80 cps

-43.33%


As at 31 Dec 2022

As at 30 June 2022

Increase/ Decrease

EPRA NRV per share2

US$78.8 cps

US$79.4 cps

-0.75%

Total Income Producing Assets4

US$832.8m

US$856.7m

-2.79%

WALE5

4.6 yrs

4.8 yrs

-0.2 yrs

EPRA portfolio occupancy rate6

95.7%

95.3%

+0.4 ppt

Group LTV

45.5%

46.7%

-1.2 ppt

On 22 August 2022, Grit increased its stake in Gateway Real Estate Africa Limited ("GREA") to 35.01% and in conjunction with its interest in Africa Property Development Managers Limited ("APDM"), is expected to materially accelerate the Group's ability to access development returns from risk mitigated development projects and introduce the potential for new revenue and fee income streams. Grit has the option to acquire a further 13.61% interest in GREA and an additional 1% of APDM by 15 May 2023, giving it control over both entities at that date.

The Group also made substantial progress on further asset sales in support of its 20% recycling target by 31 December 2023, disposing of interest in assets amounting to US$53.3m in the period and a further US$56.7m announced after the Balance sheet date. Aggregate announced asset disposals (including the potential Beachcomber Hospitality Investment ("BHI") exit) are now in excess of US$126.3m which represents 15.8% of the targeted 20% by 31 December 2023.

Key commentary

EPRA net r einstatement value ("NRV") per share of US$78.8 cents per share (30 June 2022: US$79.4 cents per share).

The Group independently values all its assets at the financial year-end and at least 50%, by value, at the interim reporting date. For the six months ended 31 December 2022, 60% of the portfolio was independently valued with total income producing assets valued at US$832.8m (30 June 2022: US$856.7 m), including positive local currency like-for-like fair value gains of US$3.0m, net disposals of US$27.6m and additions and capital expenditure of US$13.7m.

On 20 December 2022, the Group finalised its US$306 million sustainability linked debt refinance, the largest of its kind in sub-Saharan real estate sector, which significantly reduces Grit's refinance risk amidst turbulent global financial markets. Group LTV decreased to 45.5% at 31 December 2022 and WADE is 3.6 years. The Board remains committed to reducing LTV to its medium-term target of between 35% to 40% through capital recycling initiatives, select NAV accretive acquisitions and through the consolidation of GREA upon gaining control.

Rising global interest rates have resulted in the Group WACD increasing from 5.7% in December 2021 to 8.1% currently, which resulted in a US$5.7m increase (+45.6%) in finance costs. The impact has been offset by good leasing activity and inflation linked lease escalations which drove growth in net operating income during the period. The Group has interest rates hedges over c.US$200 million worth of notional debt, which has now materially reduced Grit's exposure to further movements in base rates.

Earnings and distribution per share calculations were impacted by the weighted average share count that increased to 482.4m at 31 December 2022 (31 December 2021: 328.8m) because of the new ordinary share issuance in December 2021 and April 2022.

Cash collection as a percentage of contractual revenue, improved by 13.5 percentage points from 94.9% to 108.4%, specifically impacted by improved collections from hospitality sector assets in the six months.

Operational highlights

The property portfolio now comprises a total of 60 investments, across twelve countries and seven asset classes.

Net operating income in the six months to 31 December 2022 grew 9.1% versus the comparable period, positively impacted by leasing activity and rent escalations achieved.

85.9% (30 June 2022: 85.6%) of revenue is earned from multinational tenant s7.

92.4% (30 June 2022: 91.5%) of income is produced in hard currency 8 .

EPRA portfolio occupancy rate of 95.4% (30 June 2022: 95.3%).

Total Grit proportionately owned lettable area ("GLA") is 343,038m 2 .

Weighted average contracted annual rent escalations at 4.1% (30 June 2022: 5.4%).

ESG and Sustainability highlights

R emains on track to achieve sustainability targets of a 25% reduction in carbon emissions and a 25% improvement in its building efficiency by 2025 11

40% of women in leadership positions.

79% localised employees.

80% employee satisfaction.

Post period end

The Board today declares an interim dividend, out of operating profits, of US$2.0 cents per share ("cps") for the six months ended 31 December 2022 (31 December 2021: US$2.50 cps). The Board continues to target paying a dividend in the current financial year of between US$ 4.5 cps to US$ 5.0 cps distributing out of net operating income generated from its existing property assets, in line with its stated policy of paying out at least 80 per cent. of distributable earnings.

In January 2023, in anticipation of potentially acquiring the remaining 13.61% of GREA from Gateway Africa Real Estate Limited, the Group has paid a deposit of US$ 10 million, with a further deposit of US$10 million to be paid in March 2023. On final execution of the option on the GREA shares, a final payment of US$14.1 million will be paid in May 2023.

The BHI board has approved a merger agreement which includes a listed preference share issuance that will facilitate an exit of Grit's remaining 27.1% interest in BHI for an expected net cash payment of EUR 25.8 million (US$27.5 million).

Notes

1

Various alternative performance measures (APMs) are used by management and investors, including a number of European Public Real Estate Association ("EPRA") metrics, Distributable Earnings, Total Income Producing Assets and Property portfolio net operating income. APMs are not a substitute, and not necessarily better for measuring performance than statutory IFRS results and where used, full reconciliations are provided.

2

Explanations of how EPRA figures and Distributable earnings per share are derived from IFRS are shown in note 17 (unaudited).

3

Based on EPRA cost to income ratio calculation methodology which includes the proportionately consolidated effects of LLR and other associates.

4

Includes controlled Investment properties with Subsidiaries, Investment Property owned by Associates and Joint Ventures, Deposits paid on Investment properties and other investments, property plant and equipment, intangibles, and related party loans - Refer to Chief Financial Officer's Statement for reconciliation and analysis .

5

Weighted average lease expiry ("WALE") .

6

Property occupancy rate based on EPRA calculation methodology - Includes associates.

7

Forbes 2000, Other Global and pan African tenants.

8

Hard (US$ and EUR) or pegged currency rental income.

9

Property portfolio revenue and net operating income ("NOI") are APM's and is derived from IFRS revenue and NOI adjusted for the results of associates and joint ventures and further includes the results of the GREA associates. A full reconciliation is provided in the Chief Financial Officers Statement.

10

Contractual rental collection was positively impacted by the recovery of COVID-19 back-rentals, that was recovered from tenants in the hospitality sector.

11

Sustainability targets use 2019 as the base year.

Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:

"Grit produced a robust operating performance, including strong cash collections of 108.4% of contracted revenue, and is increasingly well placed to deliver further positive sustainable value for our shareholders and positive impact for the people of Africa. Our resilient and defensive business and investment potential is backed by our high-quality assets, strong cash collection, increasing leasing activity, successful delivery of development projects and the potential for progressive dividends and stronger NAV growth going forward.

 

The Group made substantial progress towards its stated strategy of asset recycling 20% of the value of its portfolio by 31 December 2023 with the announced disposals in the hospitality and industrial asset sectors. Furthermore, Grit's targeted acquisition of a controlling interest in Gateway Real Estate Africa in May 2023 is expected to be a key milestone for the Group, reinforcing our solid growth and positive impact strategy with a high-quality team and attractive accretive pipeline of developments, whilst also further reducing Grit's LTV .

 

The Grit Group is committed to, and passionate about, developing smart business solutions through impact real estate that goes beyond buildings. Our team have made great strides in achieving our target of reducing carbon emission across our portfolio by 25% by 2025 and we're proud of continuing to exceed our gender equality targets. As a team of spirited warriors we always find the way."

 

FOR FURTHER INFORMATION, PLEASE CONTACT:

Grit Real Estate Income Group Limited


Bronwyn Knight, Chief Executive Officer

+230 269 7090

Darren Veenhuis, Investor Relations

+44 779 512 3402



Maitland/AMO - Communications Adviser


James Benjamin

+44 7747 113 930 / +44 20 7379 5151

Alistair de Kare-silver

Grit-maitland@h-advisors.global



finnCap Ltd - UK Financial Adviser


William Marle/Teddy Whiley (Corporate Finance)

+44 20 7220 5000

Mark Whitfeld/Pauline Tribe (Sales)

+44 20 3772 4697

Monica Tepes (Research)

+44 20 3772 4698



Perigeum Capital Ltd - SEM Authorised Representative and Sponsor


Shamin A. Sookia

+230 402 0894

Kesaven Moothoosamy

+230 402 0898



Capital Markets Brokers Ltd - Mauritian Sponsoring Broker


Elodie Lan Hun Kuen

+230 402 0280

NOTES:

Grit Real Estate Income Group Limited is the leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip multi-national tenant covenants across a diverse range of robust property sectors.

The Company is committed to delivering strong and sustainable income for shareholders, with the potential for income and capital growth.

The Company holds its primary listing on the Main Market of the London Stock Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius (SEM: DEL.N0000).

Further information on the Company is available at www.grit.group

Directors:

Peter Todd (Chairman), Bronwyn Knight (Chief Executive Officer) *, Leon van de Moortele (Chief Financial Officer) *, David Love+, Sir Samuel Esson Jonah+, Catherine McIlraith+, Jonathan Crichton+ and Cross Kgosidiile .

(* Executive Director) (+ independent Non-Executive Director)

Company secretary : Intercontinental Fund Services Limited

Registered office address : PO Box 186, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 4HP

Registrar and transfer agent (Mauritius) : Intercontinental Secretarial Services Limited

SEM authorised representative and sponsor : Perigeum Capital Limited

UK Transfer secretary : Link Assets Services Limited

Mauritian Sponsoring Broker : Capital Markets Brokers Limited

 

This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule 15.24 and 15.36A and the Mauritian Securities Act 2005. The Board of the Company accepts full responsibility for the accuracy of the information contained in this communiqué.

A Company presentation for all investors and analysts via live webcast and conference call

The Company will host a live webcast and conference call on Friday, 24 February 2023 at 13:00 Mauritius time / 09:00 UK time / 11:00 SA time via the Investor Meet Company platform, with the presentation being open to all existing and potential shareholders.

Pre-registration is advised via:

https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor  

Investors who already follow Grit Real Estate Income Group Limited on the Investor Meet Company platform will automatically be invited.

A playback will be accessible on-demand within 48 hours via the Company website: https://grit.group/financial-results/

CHIEF EXECUTIVE OFFICER'S STATEMENT

I ntroduction

Grit was in a transitionary phase in 2022, characterised by a continuing recovery of the Group's property portfolio and strong cash collections while we made substantial strides in refinancing the Group's debt facilities, managing interest rate risk, and securing the Group's long-term growth with the phased acquisitions of controlling interests in GREA and APDM. These actions have collectively laid the foundations of the Grit 2.0 growth strategy, which will be further discussed at our upcoming capital markets day to be held at our new corporate head office in Mauritius on 10 & 11 May 2023.

In the six months to 31 December 2022, Grit's portfolio in the office, light industrial and corporate accommodation sectors remained resilient, whilst recovery in the hospitality and retail sector (which benefitted from strong leasing activity) and net acquisitions in the period, contributed to Net operating income growth of 9.1%. Highlights included:

Cash collections improved to 108% of contracted lease income, up from 94.9% in the corresponding 6-month period ended 31 December 2021, driven in part by the collection of Covid period back-rents on hospitality assets;

The weighted average EPRA portfolio occupancy rate increased from 95.7% in June 2022 to 95.4% with encouraging leasing in the retail sector and lease renewals over the office and corporate accommodation assets;

Property fair value increased a modest 0.4% (or US$3.0 million) indicative of stabilising valuations as the impacts of the pandemic reside, although headwinds because of rising interest rates continued in this period;

GREA completed the Rosslyn Grove development in Nairobi, Kenya, an asset fully leased as diplomatic housing to the US government. The project was awarded the "Best High-end residential development of 2022" at the recent African Property Investment Awards; and

92.4% of lease income for the period was produced in US$, Euro or pegged currencies (30 June 2022: 91.5%).

Performance against strategy

The ongoing recovery of our portfolio contributes to the Board's target of reducing Group LTV, which reached 45.5% as at 31 December 2022 (from 46.7% in June 2022) with the US$15.2 million reduction in Group debt in the period.

In October 2022 Grit successfully refinanced up to US$306 million in a syndicated sustainability-linked term loan and revolving credit facility aligned to its ESG goals. The transaction represents the largest real estate refinance agreement of its kind to date in sub-Saharan Africa (excluding South Africa) and cross-collateralises assets in multiple jurisdictions whilst significantly streamlining Grit's loan management processes. This, and detail on our interest rate risk management actions, are further covered in the CFO's commentary below.

Grit is also furthering its ongoing capital recycling strategies out of non-core assets, including large-format metropolitan retail, hospitality and other assets and is making steady progress towards the Board's target of 20% portfolio recycling (equivalent to US$160 million worth of property asset sales) by 31 December 2023. Aggregate announced asset disposals (including the potential BHI exit) are now more than US$126.3m, which represents 15.8% of the targeted 20% by 31 December 2023 and include the following:

Sale of 100% interest in ABSA house in June 2022, for US$12.2 million property value, a discount of 6.9% to book value;

Sale of a 4.9% interest Letlole La Rona ("LLR") in June 2022 with an implied property valuation of US$4.1 million, at an 8% premium to NAV;

Sale of 30% interest in Orbit warehouse project in July 2022, at a US$38.9 million property value, which was the book value at that time, resulting in a deemed disposal amounting to US$11.7 million;

A disposal of a further 6.79% interest in LLR in December 2022, representing an implied property valuation of US$5.2 million, at a 15% premium to NAV at that time;

Deemed disposal of a portion of the Group's minority interest in Beachcomber Hospitality Investments ("BHI"), the owner of three luxury resorts in the north of Mauritius, which reduced Grit's stake from 44.42% to 27.1% through receipt of a cash dividend of EUR19.3 million (US$19.7 million). The implied property valuation of the deemed disposal is US$36.4 million; and

Post balance sheet date, the Board has approved a merger agreement, which provides for a preference note issuance in BHI that will facilitate the possible exit of Grit's remaining 27.1% interest for an expected net cash payment of EUR 25.8 million (US$ 27.51 million), representing a 1.7% discount to the property value within the BHI associate. The implied property valuation of the deemed disposal is US$56.7 million.

The asset recycling strategy not only underpins the Group's independent property valuations but also positions Grit for its ongoing re-investment towards infrastructure and impact assets (comprising light industrial & logistics, corporate & consular accommodation, healthcare, and data centres). Recycled capital is being deployed into completing the acquisitions of GREA and APDM and to funding new Grit projects and initiatives. These Grit 2.0 initiatives will not only have an immediate positive impact on Grit's balance sheet but will further bolster the Group's growth in net asset value (NAV), net operating income (NOI), and provide opportunities to generate fee income into the future.

GREA & APDM acquisition update

In August 2022, Grit increased its holdings in GREA to 35.01% and retains an option to acquire a further 13.61% by 15 May 2023, which is in addition to the option to acquire a further 1% of APDM at that same date, for a combined value of US$ 34.1 million. Through the exercise of its option and with the APDM management incentive, Grit has a clear pathway to a controlling interest in GREA before the end of the financial year ending 30 June 2023, and whose consolidation will bring a wide range of benefits to Grit, including:

A fully funded existing pipeline which is further expected to deliver strong NAV growth as projects complete over the next 24 to 36 months;

Access to GREA's further extensive pipeline of resilient, income producing and NAV accretive US Bureau of Overseas Building Operations ("OBO") diplomatic housing and data centre development opportunities;

Immediate balance sheet improvement for Grit, materially reducing the Group's loan-to-value (LTV) by up to 3 percentage points because of the consolidation of GREA's current low leverage; and

Opportunities for the Group to leverage its deep African real estate insights and in-country expertise to offer unique real estate solutions in property development, asset, and property management as well as selected co-investment opportunities for qualifying counterparties, generating additional fee income.

Environmental, Social and Governance (ESG)

We continue to advance in our sustainability journey and remain convinced that our strength remains our employees, without whom, progress and value creation would not be possible. We have consistently improved and built on our sustainability agenda to deliver meaningful value to the society. In October 2022, we released our first Sustainability Report, which is a testament to our commitment to increased transparency and accountability towards our stakeholders.

Climate change is a critical topic for businesses in the real estate sector. We are acutely aware of how we contribute to climate change and are actively looking for ways to mitigate same. At the same time, we also understand the need to future-proof our portfolio and assets. In this vein we are committed to the Task Force on Climate Related Financial Disclosures and have released our first report covering our climate related risks and opportunities, which can be found in our Sustainability Report 2022.

We are proud of the progress made against our ESG targets of a 25% reduction in carbon emissions and a 25% improvement in building efficiencies by 2025, using 2019 as a base year. The Group aims to accelerate its carbon emission reduction performance with the installation of solar generated power to several of our assets in the coming year.

Grit remains well diversified from a gender and employee perspective, with more than 40% of women in leadership positions and 65% localised employees.

Drive in Trading ("DiT") guarantee update

The DiT structure and related guarantee is currently being wound up. Grit's obligations under the Guarantee Agreement to the PIC are expected to be fulfilled and the Guarantee Agreement terminated upon the expected completion in the second quarter of calendar year 2023.

Distributions

The Board declared an interim dividend of US$2.0 cents per share, distributing out of net operating income generated from its existing property assets, in line with its stated policy of paying out at least 80 per cent. of distributable earnings. The Board anticipates paying a total dividend in the current financial year of between US$4.5 and 5 cents per share.

In addition to the interim dividend, the Board anticipates further complementing the return of cash to shareholders with the ongoing buyback of shares equivalent to US$0.05cps over the second half of the financial year.

Change to the Board of Directors

On 6 February 2023, Nomzamo Radebe stepped down from the Board following her appointment as Chief Operating Officer for a listed South African real estate business. The Board would like to express its gratitude to Nomzamo for her meaningful contribution to Grit over the years and wishes her well for the future.

Outlook

As outlined in the strategic review above, we will continue to pursue the Board's mandated target of reducing LTV, recycling 20% of the value of Grit's portfolio by 31 December 2023 and transitioning the Group towards a more resilient, higher-growth asset base. Grit will increasingly focus on co-investment opportunities within selected high-growth asset classes where it is able to leverage its considerable experience in asset, property, and development management to generate additional fee income.

The expected conclusion of the GREA acquisition is seen as a significant catalyst for immediate balance sheet optimisation and ongoing NAV and NOI growth in the medium to longer term.

We want to thank our shareholders for their ongoing support as we transition to an even more resilient portfolio with near- and longer-term growth opportunities in Net asset value and income which will benefit all our stakeholders, including the people of Africa.

Bronwyn Knight

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S STATEMENT

Presentation of financial results

The consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. Alternative performance measures (APMs) have also been provided to supplement the IFRS financial statements as the Directors believe that this adds meaningful insight into the operations of the Group and how the Group is managed. European Public Real Estate Association ("EPRA") Best Practice Recommendations have been adopted widely throughout this report and are used within the business when considering the operational performance of our properties. Full reconciliations between IFRS and EPRA figures are provided in note 17. Other APMs used are also reconciled below.

"Grit Proportionate Interest" income statement, presented below, is a management measure to assess business performance and is considered meaningful in the interpretation of the financial results. The IFRS statement of comprehensive income is adjusted for the component income statement line items of properties held in joint ventures and associates.

This measure, in conjunction with adjustments for non-controlling interests (for properties consolidated by Grit, but part-owned by minority partners), form the basis of the Group's distributable earnings build up, which is alternatively shown in Note 8 "Distributable earnings".


 IFRS YTD

Extracted from Associates

GRIT Proportionate Income statement

 Split NCI

 GRIT Economic IS

YTD Distributable earnings

 

 US$'000

 US$'000

US$'000

 US$'000

 US$'000

US$'000

Gross rental income

26,914

7,340

34,254

(4,397)

29,857

30,373

Property operating expenses

(4,797)

(578)

(5,375)

1,080

(4,295)

(4,240)

Net operating profit

22,117

6,762

28,879

(3,317)

25,562

26,133

Other income

120

9,017

9,137

(386)

8,751

8,874

Administration expenses

(9,408)

(3,177)

(12,585)

621

(11,964)

(11,184)

Net impairment charge on financial assets

903

-

903

(180)

723

-

Profit from operations

13,732

12,602

26,334

(3,262)

23,072

23,823

Fair value adjustment on investment properties

3,139

775

3,914

79

3,993

-

Transaction costs

-

272

272

9

281

-

Fair value adjustment on other financial asset

47

1,948

1,995

(23)

1,972

-

Fair value adjustment on investment in subsidiary

-

1

1

-

1

-

Fair value adjustment on derivative financial instruments

(1,007)

-

(1,007)

-

(1,007)

-

Impairment of loans

-

(12)

(12)

(657)

(669)

-

Loss on extinguishment of loans

(1,166)

(25)

(1,191)

41

(1,150)

-

Share-based payment

(413)

(2,620)

(3,033)

-

(3,033)

-

Share of profits from associates

12,008

(12,008)

-

-

-

-

Loss on partial disposal of associate

(295)

-

(295)

-

(295)

-

Foreign currency (losses) / gains

(3,381)

(396)

(3,777)

882

(2,895)

-

Profit before interest and taxation

22,664

537

23,201

(2,931)

20,270

23,823

Interest income

1,738

3,596

5,334

(13)

5,321

5,321

Finance costs - Intercompany

-

(19)

(19)

1,829

1,810

1,810

Finance charges

(18,210)

(3,823)

(22,033)

1,330

(20,703)

(18,543)

Profit before taxation

6,192

291

6,483

215

6,698

12,411

Current tax

(880)

(510)

(1,390)

271

(1,119)

(1,118)

Deferred tax

(1,707)

219

(1,488)

441

(1,047)

-

Profit after taxation

3,605

-

3,605

927

4,532

11,293

RBO OCI

-

-

-

-

-

-

Total comprehensive income

3,605

-

3,605

927

4,532

11,293

VAT credits

-

-

-

-

-

1,046

Distributable earnings

3,605

-

3,605

927

4,532

12,339

Portfolio financial performance

Sector

Revenue HY2023

Revenue HY2022

Movement

Opex HY2023

Opex HY2022

Movement

NOI HY2023

NOI HY2022

Movement

Rental Collections1 HY2023

 

US$'000

US$'000

%

US$'000

USD'000

%

US$'000

US$'000

%

%

Retail

8,981

8,870

1.3%

(3,205)

(3,825)

-16.2%

5,776

5,045

14.5%

96.2%

Hospitality

5,192

6,125

-15.2%

-

-

0.0%

5,192

6,125

-15.2%

167.0%

Office

8,903

8,170

9.0%

(1,046)

(922)

13.5%

7,857

7,248

8.4%

105.6%

Industrial

3,141

1,289

143.7%

(119)

(41)

190.2%

3,022

1,248

142.1%

93.0%

Data Centres

383

89

330.3%

-

(40)

100%

383

49

681.6%

27.2%

Corporate Accommodation

6,719

6,618

1.5%

(1,249)

(998)

25.2%

5,470

5,620

-2.7%

97.0%

LLR portfolio

1,090

1,417

-23.1%

(93)

(140)

-33.6%

997

1,277

-21.9%

n/a

Corporate3

626

8

7,700.0%

237

464

-48.5%

863

472

82.8%

n/a

TOTAL

35,035

32,586

7.5%

(5,475)

(5,502)

-0.5%

29,560

27,084

9.1%

108.4%

Subsidiaries

26,914

24,147

11.5%

(4,797)

(4,950)

-3.1%

22,117

19,197

15.2%


Associates

7,340

8,097

-9.3%

(578)

(544)

6.3%

6,762

7,553

-10.5%


SUBTOTAL

34,254

32,244

6.2%

(5,375)

(5,494)

-2.2%

28,879

26,750

8.0%


GREA Associates2

781

342

128.4%

(100)

(8)

1,150.0%

681

334

104.2%


TOTAL

35,035

32,586

7.5%

(5,475)

(5,502)

-0.5%

29,560

27,084

9.1%

108.4%

 

1

Rental collections represents the amount of cash received as a percentage of contractual income. Contractual income is stated before the effects of any rental deferment and concessions provided to tenants.

2

GREA Associates represents legal entities in which GREA does not have control.

3

Includes consolidation entries and property management fees.

The year-on year movement in revenue generated is made up by the following:

Sector

Revenue HY2022

Foreign exchange movement

Capital movements 1

Other income

Non-cash movements 2

Recoveries movements

Leasing activities

Revenue HY2023

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Retail

8,870

(19)

36

(22)

(445)

26

535

8,981

Hospitality

6,125

(687)

(212)

-

(721)

-

687

5,192

Office

8,170

-

(48)

650

(552)

248

435

8,903

Industrial

1,289

-

1,548

23

283

(118)

116

3,141

Data Centres

89

-

294

-

-

-

-

383

Corporate Accommodation

6,618

-

278

-

(521)

151

193

6,719

LLR portfolio

1,417

(176)

(218)

-

7

(11)

71

1,090

Corporate

8

-

-

618

-

-

-

626

TOTAL

32,586

(882)

1,678

1,269

(1,949)

296

2,037

35,035

Subsidiaries

24,147







26,914

Associates

8,097







7,340

SUBTOTAL

32,244

 

 

 

 

 

 

34,254

GREA Associates 3

342







781

TOTAL

32,586

(882)

1,678

1,269

(1,949)

296

2,037

35,035

 

1

Capital movements include changes in ownership, disposals, acquisitions and completed projects.

2

Non-cash movements include straight-line adjustments and lease incentives.

3

GREA Associates represents legal entities in which GREA does not have control.

 

Property valuations

Sector

Property Value

30 June 2022

Foreign exchange movement

Additions / Completed projects

Change in ownership

Other movements

Fair value movement

Property Value

31 Dec 2022

Total Valuation Movement


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

%

Retail

197,417

(3,565)

2,005

2,151

111

540

198,659

0.6%

Hospitality

164,603

659

540

(36,436)

68

(261)

129,173

-21.5%

Office

195,823

-

24

-

(97)

2,372

198,122

1.2%

Industrial

80,414

-

641

-

340

(506)

80,889

0.6%

Data Centres

6,839

-

2,140

-

-

208

9,187

34.3%

Corporate Accommodation

145,883

(182)

933

5,651

(99)

(381)

151,805

4.1%

LLR portfolio

20,946

(3,374)

1,224

(4,064)

9

150

14,891

-28.9%

GREA under construction

13,214

-

5,838

5,070

-

917

25,039

89.5%

TOTAL

825,139

(6,462)

13,345

(27,628)

332

3,039

807,765

-2.1%

Subsidiaries

604,474

(1,309)

2,527

-

184

3,140

609,016

0.8%

Associates

203,770

(4,973)

9,776

(33,280)

62

774

176,129

-13.6%

SUBTOTAL

808,244

(6,282)

12,303

(33,280)

246

3,914

785,145

-2.9%

GREA Associates

16,895

(180)

1,042

5,652

86

(875)

22,620

33.9%

TOTAL

825,139

(6,462)

13,345

(27,628)

332

3,039

807,765

-2.1%

Movements in Property valuations in the period were principally impacted by "Changes in ownership" related to the disposal of stakes in BHI and LLR (both accounted for as associates) against increased stakes in the GREA assets (reflected in their various sectors) because of Grit's increased interest in GREA that moved from 26.29% to 35.01%. Additions predominantly related to capex deployed to various development projects in GREA. Like-for-like local currency fair value movements of US$3.0m. This measure, in conjunction with adjustments for non-controlling interests (for properties consolidated by Grit, but part-owned by minority partners), form the basis of the Group's distributable earnings build up, which is alternatively shown in Note 17b "Company distribution calculation".

Income producing assets

Composition of income producing assets

31 Dec 2022

30 June 2022

 

US$'m

US$'m

Investment properties

609.0

604.5

Investment properties included within 'Investment in associates and joint ventures'

149.6

190.6

Properties under development within 'Investment in associates and joint ventures'

26.5

13.2


785.1

808.3

Deposits paid on investment properties

10.9

8.2

Other investments, Property, plant & equipment, Intangibles & related party loans

36.8

40.2

Total income producing assets

832.8

856.7

Cost control

Administrative costs

31 December 2022

31 December 2021

Movement

Movement


US$'000

US$'000

US$'000

%

Ongoing administrative costs

9,377

6,542

2,835

43.34%

Transaction costs

31

32

(1)

(3.1%)

Total administrative expenses

9,408

6,574

2,834

43.11%

Administrative expenses increased 43.3% on the comparative period year. During the period Grit has established a full operational office in Kenya (to service the increased portfolio in the East Africa region as well as a representative office in Dubai). In line with the above and to continue servicing the growth initiatives of the Group, the Group increased headcount from 84 to 105 staff over the comparative period. The combination of high inflationary pressures, which has impacted costs across the globe, and the full resumption of travel and pre-covid business practices during the six months to December 2022 also contributed to the increased administrative expenses. During the period the Group earned fees amounting to US$0.7 million to offset these addition costs, with such fees expected to increase as the operational base increases. On an annualised basis, administrative expenses amount to 2.2% of the total incoming producing asset value as compared to 1.5% in the comparative period, with the increase due to the factors described above.

Material finance cost increases

Rising global interest rates have driven the Group's weighted average cost of debt up from 5.7% in December 2021 to 8.1% at 31 December 2022 and resulted in 45.6% increase in finance charges for the six-month period. Included in this charge however are a number of non-recurring items, most notably loan write off fees of US$1.0 million. The reported WACD of 8.1% also includes amortisation of loan issuance costs related to the debt refinance concluded in the period, which if excluded, reflects an ongoing cash WACD of 7.5%.

The increase in ongoing funding costs is somewhat shielded by annual contractual lease escalations over the property portfolio, which are predominantly linked to US consumer price inflation. Additionally, during the period under review, Grit entered into US$100m notional new interest rate hedges to complement the existing US$100 million of hedging in place at the beginning of the financial period. The hedges have become increasingly more effective as base interest rates have risen and are now largely shielding Grit from further material increases in base rates. A sensitivity of Grit's expected WACD to further moves in base rates as well as impact of non-cash elements (cash WACD) included in reported WACD is shown below:

All debt

WACD

Movement vs current WACD

Cash WACD

8.1%

0.0%

7.5%

+200bps

9.0%

0.9%

8.4%

+100bps

8.5%

0.5%

7.9%

+50bps

8.3%

0.2%

7.6%

-100bps

7.0%

-1.1%

6.4%

-200bps

6.5%

-1.5%

5.9%





US$ denominated debt

WACD

Movement vs current WACD

Cash WACD

Current

8.3%

0.0%

7.8%

+200bps

8.8%

0.5%

8.3%

+100bps

8.5%

0.2%

8.0%

+50bps

8.4%

0.1%

7.9%

-100bps

7.2%

-1.1%

6.7%

-200bps

6.9%

-1.4%

6.4%

Net Asset Value and EPRA earnings per share


UNAUDITED
31 December 2022

UNAUDITED
31 December 2022

UNAUDITED
31 December 2021

UNAUDITED
31 December 2021


US$'000

Per Share (Diluted)
(Cents Per Share)

US$'000

Per Share (Diluted)
(Cents Per Share)

EPRA Earnings

2,202

0.46

8,413

2.56

Total Company Specific Adjustments

2,737

0.56

(2,493)

(0.76)

Adjusted EPRA Earnings

4,939

1.02

5,920

1.80

Total Company Specific Distribution Adjustments

7,400

1.54

4,122

1.28

TOTAL DISTRIBUTABLE EARNINGS

12,339

2.56

10,042

3.08






DIVIDEND DECLARED OUT OF PROFITS

9,902

2.00

8,158

2.50

 

 

 

 

 


UNAUDITED
31 December 2022

UNAUDITED
31 December 2022

AUDITED
30 June 2022

AUDITED
30 June 2022


US$'000

Per Share (Diluted)
(Cents Per Share)

US$'000

Per Share (Diluted)
(Cents Per Share)






EPRA NRV

380,865

78.77

381,307

79.35

EPRA NTA

366,736

75.84

366,805

76.33

EPRA NDV

333,297

68.93

336,296

69.98

Net asset value evolution

NET ASSET VALUE EVOLUTION

US$'000

US$ cps

June 2022 as reported - IFRS

336,296

69.98

Derivative financial instruments

(1,863)

(0.39)

Deferred Tax on Properties

46,873

9.75

EPRA NRV at 30 Jun 2022

381,306

79.34

Cash Profits

11,293

2.34

Fair Value - Retail Assets

540

0.11

Fair Value - Office

2,372

0.49

Fair Value - Corporate Accommodation

(381)

(0.08)

Fair Value - Hospitality

(261)

(0.05)

Fair Value - Light Industrial

(506)

(0.10)

Fair Value - Data centres

208

0.04

Fair Value - LLR portfolio

150

0.03

Fair Value - GREA under construction

917

0.19

Fair Value - Non-controlling interests

(180)

(0.04)

Fair value of financial Assets

1,135

0.23

Other non-cash profits and movements

(8,199)

(2.19)

Movement in Foreign Currency Translation reserve

(475)

(0.10)

Dividend attributable to NCI

2,397

0.50

Dividends paid

(9,599)

(1.99)

Preference share capital

(1,019)

(0.21)

Perpetual preference notes

(1,779)

(0.37)

Share based payment via equity

3,033

0.63

Transfers to non-controlling interests

(87)

(0.02)

EPRA NRV before dilution

380,865

78.75

Issue of shares / Treasury shares

-

0.02

EPRA NRV at 31 Dec 2022

380,865

78.77

Deferred Tax on Properties

(47,592)

(9.84)

Derivative financial instruments

28

0.01

IFRS NRV at 31 Dec 2022

333,301

68.94

Interest-bearing borrowings

The Group has successfully refinanced the bulk of its short-dated debt, and with the SBSA syndication has increased the Group's Weighted Average Debt Expiry (WADE) from 1.8 years as at June 2022 to 3.6 years as at December 2022.

The Board continues to target a Group LTV of 35% to 40% and has defined actions to achieve this target including the consolidation of GREA and further reductions in absolute levels of debt. In the six-month period to 31 December 2022, the Group decreased total reported interest-bearing borrowings from US$425.0m to US$409.8m.

Movement in Debt for the period

As at 31 December 2022

As at 30 June 2022


US$'000

US$'000

Balance at the beginning of the period

425,066

410,588

Proceeds of interest bearing-borrowings

280,707

58,513

Loan reduced through disposal of subsidiary

-

(6,624)

Loan acquired through asset acquisition

-

6,011

Loan issue costs incurred

(7,939)

(4,386)

Amortisation of loan issue costs

2,532

2,765

Costs associated with extinguishment of loans

1,166

-

Foreign currency translation differences

1,389

(14,836)

Interest accrued

221

751

Debt settled during the year

(293,325)

(27,716)

As at period end

409,817

425,066

The following debt transactions were concluded during the period under review:

The refinance of the Bank ABC Club Med Facility in Casamance Holdings Limited by Nedbank, this facility was then wrapped up within the SBSA Syndication. Pushing out the maturity date to June 2027. Additionally, an Asset Refurbishment facility was secured as part of the syndication.

The Zambia (US$76.4m), Ghana (US$14.1m), Mozambique (US$140m) and Senegal Facilities (EUR 6.6m) with the addition of the SBSA Mauritian RCF (EUR 26.5) were refinanced through the Standard Bank lead Syndication. Participant banks were SBSA, ABSA and Nedbank. Refer - Note 8.

The remaining Maubank (US$1.8m) and ABC (US$2.4m) Bridge / Term Loan facilities at Grit Real Estate Income Group Limited and Grit Services Limited were fully repaid.

A US$6.5m Bridging loan was availed from SBM to partially fund the increase in shareholding of GREA.

Amortization of $1.5m of the Investec Anfa Loan, which extended the maturity date of the facility to April 2024.

The total capital exposure to debt providers (net of interest accrued and unamortised loan issue costs) as at 31 December 2022 is as follows:


31 December 2022


30 June 2022



Debt in Subsidiaries

Debt in associates

Total


Debt in Subsidiaries

Debt in 

associates

Total



US$'000

US$'000

US$'000

%

US$'000

US$'000

US$'000

%

Standard Bank Group

267,640

14,859

282,499

59.7%

183,496

6,516

190,012

40.3%

Bank of China

-

-

-

0.0%

76,405

-

76,405

16.2%

State Bank of Mauritius

64,497

2,701

67,198

14.2%

57,659

16,375

74,034

15.7%

Investec Group

34,254

-

34,254

7.2%

36,129

-

36,129

7.7%

Absa Group

-

-

-

0.0%

7,913

3,057

10,970

2.3%

ABC Banking Corporation

-

-

-

0.0%

7,121

-

7,121

1.5%

Nedbank CIB

15,620

3,544

19,164

4.1%

21,820

286

22,106

4.7%

Mauritius Commercial Bank

-

-

-

0.0%

-

7,774

7,774

1.7%

Maubank

648

-

648

0.1%

3,345

-

3,345

0.7%

First National Bank

-

35,104

35,104

7.4%

-

9,013

9,013

1.9%

Housing finance corporation

-

-

-

0.0%

-

2,316

2,316

0.5%

Bank of Gaborone

-

2,676

2,676

0.6%

-

727

727

0.2%

NCBA Bank Kenya

10,700

-

10,700

2.3%

10,700

-

10,700

2.2%

Private Equity

4,725

-

4,725

1.0%

4,725

-

4,725

1.0%

International Finance Corporation

16,100

-

16,100

3.4%

16,100

-

16,100

3.4%

TOTAL BANK DEBT

414,184

58,884

473,068

100.0%

425,413

46,064

471,477

100.0%

Interest accrued

5,148




4,927




Unamortised loan issue costs

(9,515)




(5,274)




TOTAL DEBT

409,817




425,066




Dividend

An interim dividend per share has been declared for the six-month period ended 31 December 2022 of US$2.0 cents per share, paying out at least 80 percent of distributable earnings.

Leon van de Moortele

Chief Financial Officer

 

24 February 2023

PRINCIPAL RISKS AND UNCERTAINTIES

Grit has a detailed risk management framework in place that is reviewed annually and duly approved by the Risk Committee and the Board. Through this risk management framework, the Company has developed and implemented appropriate frameworks and effective processes for the sound management of risk.

The principal risks and uncertainties facing the Group as at 30 June 2022 are set out on pages 24 to 29 of the 2022 Integrated Annual Report together with the respective mitigating actions and potential consequences to the Group's performance in terms of achieving its objectives. These principal risks are not an exhaustive list of all risks facing the Group but are a snapshot of the Company's main risk profile as at year end.

The Board has reviewed the principal risks and existing mitigating actions in the context of the second half of the current financial year. The Board believes there has been no material change to the risk categories and are satisfied that the existing mitigation actions remain appropriate to manage them.

STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The directors confirm that the abridged consolidated half year financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ("IASB") and that the half year management report includes a fair review of the information required by the Disclosure Guidance and Transparency Rules ("DTR") 4.2.7R and DTR 4.2.8R, namely:

Important events that have occurred during the first six months and their impact on the abridged set of half year unaudited financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

Material related party transactions in the first six months and a fair review of any material changes in the related party transactions described in the last Annual Report.

The maintenance and integrity of the Grit website is the responsibility of the directors.

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from the legislation in other jurisdictions. The directors of the Group are listed in its Annual Report for the year ended 30 June 2022. A list of current directors is maintained on the Grit website: www.grit.group.

On behalf of the Board

Bronwyn Knight

Leon van de Moortele

Chief Executive Officer

Chief Financial Officer

 

ABRIDGED CONSOLIDATED STATEMENT OF INCOME STATEMENT


 

Unaudited

six months ended

31 Dec 2022

Unaudited

six months ended

31 Dec 2021


Notes

US$'000

US$'000

Gross property income

9

26,914

24,147

Property operating expenses


(4,797)

(4,950)

Net property income


22,117

19,197

Other income


120

568

Administrative expenses


(9,408)

(6,542)

Net impairment charge on financial assets


903

1,100

Profit from operations


13,732

14,323

Fair value adjustment on investment properties


3,139

3,256

Corporate restructure costs


-

(32)

Fair value adjustment on other financial liability


-

(6,716)

Fair value adjustment on other financial asset


47

-

Fair value adjustment on derivative financial instruments


(1,007)

1,252

Share-based payment expense


(413)

(1,162)

Loss on extinguishment of loans


(1,166)

-

Share of profits from associates and joint ventures

3

12,008

10,286

Loss on disposal of interest in associate

3a

(295)

-

Foreign currency losses


(3,381)

(1,132)

Profit before interest and taxation

 

22,664

20,075

Interest income

10

1,738

923

Finance costs

11

(18,210)

(12,536)

Profit for the period before taxation

 

6,192

8,462

Taxation


(2,587)

(3,615)

Profit for the period after taxation

 

3,605

4,847

 

 



Profit / (loss) attributable to:

 



Owners of the parent


4,741

4,278

Non-controlling interests


(1,136)

569

 

 

3,605

4,847

 

 

 

 

Basic and diluted earnings per share (cents)

14

0.98

1.30

 

ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


Unaudited

six months ended

31 Dec 2022

Unaudited

six months ended

31 Dec 2021

 

US$'000

US$'000

Profit for the year

3,605

4,847

Retirement benefit obligation

-

-

Loss on translation of functional currency

(1,464)

(2,626)

Other comprehensive expense that may be reclassified to profit or loss

(1,464)

(2,626)

Total comprehensive income relating to the period

2,141

2,221

 


 

Total comprehensive income/ (expense) attributable to:


 

Owners of the parent

3,495

2,133

Non-controlling interests

(1,354)

88

 

2,141

2,221

 

ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION


 

Unaudited as at

31 Dec 2022

Audited as at

30 June 2022

Unaudited as at

31 Dec 2021


Notes

US$'000

US$'000

US$'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Investment properties

2

609,016

604,474

549,887

Deposits paid on investment properties

2

10,867

8,309

5,753

Property, plant and equipment


2,095

2,087

2,260

Intangible assets


561

670

770

Other investments


1

1

1

Investments in associates and joint ventures

3

212,317

206,997

188,079

Related party loans receivable


1,313

515

92

Trade and other receivables

5

1,829

4,615

1,246

Deferred tax


12,698

12,544

21,042

Total non-current assets

 

850,697

840,212

769,130

 

 

 



Current assets

 

 


 

Trade and other receivables

5

31,760

29,055

36,058

Current tax receivable


2,070

1,881

1,397

Related party loans receivable


988

298

248

Other loans receivable

4

34,477

37,908

37,050

Derivative financial instruments


3,003

1,862

46

Cash and cash equivalents


12,580

26,002

34,949

Total current assets

 

84,878

97,006

109,748

Total assets

 

935,575

937,218

878,878

 

 

 



Equity and liabilities

 

 


 

Total equity attributable to ordinary shareholders

 

 


 

Ordinary share capital


535,694

535,694

528,670

Treasury shares reserve


(16,212)

(16,212)

(21,312)

Foreign currency translation reserve


(5,666)

(5,191)

(650)

Antecedent dividend reserve


-

-

3,659

Accumulated losses


(180,515)

(177,990)

(170,568)

Equity attributable to owners of the Company

 

333,301

336,301

339,799

Preference share capital

6

30,577

29,558

25,481

Perpetual preference notes

7

26,289

25,741

25,169

Non-controlling interests


(25,675)

(22,224)

(19,012)

Total equity

 

364,492

369,376

371,437

 

 

 

 

 

Liabilities

 

 


 

Non-current liabilities

 

 


 

Redeemable preference shares


12,840

12,840

12,840

Proportional shareholder loans


40,989

26,716

17,725

Interest-bearing borrowings

8

371,549

242,091

259,904

Derivative financial instruments


2,976

-

-

Lease liabilities


750

545

750

Related party loans payable


1,454

1,205

848

Deferred tax liability


51,480

49,592

55,535

Total non-current liabilities

 

482,038

332,989

347,602

 

 

 

 

 

Current liabilities

 

 


 

Interest-bearing borrowings

8

38,268

182,975

103,016

Lease liabilities


589

864

57

Trade and other payables


31,269

31,411

23,305

Current tax payable


1

763

1,215

Derivative financial instruments


-

-

1,424

Related party loans payable


1

1

17,799

Other financial liabilities


16,983

16,983

13,023

Bank overdrafts


1,934

1,856

-

Total current liabilities

 

89,045

234,853

159,839

Total liabilities

 

571,083

567,842

507,441

Total equity and liabilities

 

935,575

937,218

878,878

 

ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS


 

Unaudited

six months ended

31 Dec 2022

Unaudited

six months ended

31 Dec 2021

 

Notes

US$'000

US$'000

Cash generated from operations

 

 

 

Profit before taxation for the period

 

6,192

8,462

Adjusted for:

 


 

Depreciation and amortisation


282

320

Interest income

10

(1,738)

(923)

Share of profits from associates and joint ventures

3

(12,008)

(10,286)

Finance costs

11

18,210

12,536

IFRS 9 charges


(481)

(1,100)

Foreign currency gains


3,381

1,132

Straight-line rental income accrual


(186)

(352)

Amortisation of lease premium


708

(1,000)

Share based payment expense


413

1,162

Loss on disposal of interest in associate

3a

295

-

Loss on extinguishment on loan


1,166

-

Fair value adjustment on investment properties

2

(3,139)

(3,256)

Fair value adjustment on other financial liability


(47)

6,716

Fair value adjustment on derivative financial instruments


1,007

(1,252)

 

 

14,055

12,159

Changes to working capital



 

Movement in trade and other receivables


(1,815)

870

Movement in trade and other payables


248

(2,596)

Cash generated from operations


12,488

10,433

Taxation paid


(1,814)

(887)

Net cash generated from operating activities


10,674

9,546





Cash utilised on investing activities




Acquisition of, and additions to investment properties

2

(2,875)

(2,542)

Deposits paid on investment properties

2

(2,558)

-

Additions to property, plant and equipment


(184)

(36)

Additions to intangible assets


-

(378)

Acquisition of associates and joint ventures

3b

(19,440)

-

Proceeds from partial disposal of associates and joint ventures

3a

5,102

-

Dividends and interest received from associates and joint ventures

3

21,337

2,093

Interest received


1,739

1,047

Proceeds from partial disposal of investment in subsidiaries

12

1

-

Related party loans advanced


-

(226)

Related party loans received


1,488

456

Other loans advanced


(2,189)

-

Proportional shareholder loans received from associates

3

1,507

2,002

Proportional shareholder loans repaid


-

(472)

Proceeds from proportional shareholder loans


14,273

393

Other loans repayment received


4,378

-

Net cash generated in investing activities

 

22,579

2,337

Proceeds from the issue of equity instruments


-

83,767

Equity issuance costs


-

(9,217)

Dividends paid to non-controlling shareholders


-

(1)

Ordinary dividends paid


(7,377)

-

Perpetual preferences note dividend paid


(1,228)

-

Proceeds from interest bearing borrowings

8

280,707

6,522

Settlement of interest-bearing borrowings

8

(293,325)

(47,024)

Finance costs


(17,137)

(12,942)

Loan issue costs incurred


(7,939)

-

Payments of leases


(70)

(173)

Net cash (utilised in) / generated from financing activities

 

(46,369)

20,932

Net movement in cash and cash equivalents

 

(13,116)

32,815

Cash at the beginning of the year

 

24,146

2,314

Effect of foreign exchange rates

 

(384)

(180)

Total cash and cash equivalents at the end of the period

 

10,646

34,949

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Ordinary share capital

Treasury shares reserve

Foreign currency translation reserve

Antecedent Dividend reserve

Accumulated losses

Preference share capital

Perpetual preference notes

Non-controlling interests

Total

Equity


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance as at 1 July 2021

463,842

 (18,406)

1,495

-

(176,073)

25,481

-

 (17,935)

278,404

Profit / (loss) for the year

-

-

-

-

10,443

-

-

670

11,113

Other comprehensive income for the year

-

-

(8,010)

-

154

-

-

(1,608)

(9,464)

Total comprehensive income / (expense)

-

-

(8,010)

-

10,597

-

-

(938)

1,649

Share based payments

-

-

-

-

138

-

-

-

138

Antecedent dividend reserve

(3,659)

-

-

3,659

-

-

-

-

-

Ordinary dividends declared

-

-

-

(3,659)

(7,903)

-

-

-

(11,562)

Treasury shares

-

(2,906)

-

-

-

-

-

-

(2,906)

Disposal of treasury shares

-

5,100

-

-

-

-

-

(3,600)

1,500

Ordinary shares issued

83,454

-

-

-

-

-

-

-

83,454

Perpetual preference notes issued

-

-

-

-

-

-

26,775

-

26,775

Preferred dividend accrued on perpetual notes

-

-

-

-

(1,837)

-

572

-

(1,265)

Share issue expenses relating to issue of perpetual notes

-

-

-

-

-

-

(1,606)

-

(1,606)

Preferred dividend accrued on preference shares

-

-

-

-

(4,077)

4,077

-

-

-

Share issue expenses

(7,943)

-

-

-

-

-

-

-

(7,943)

Non-controlling interests on acquisition of subsidiary other than business combination

-

-

-

-

-

-

-

1,414

1,414

Reclassification of foreign currency translation reserve on sale of subsidiary

-

-

906

-

-

-

-

-

906

Reclassification of foreign currency translation reserve on part sale of interests in associate

-

-

418

-

-

-

-

-

418

Dividends distributable to non-controlling shareholders

-

-

-

-

1,165

-

-

(1,165)

-

Balance as at 30 June 2022 (audited)

535,694

(16,212)

(5,191)

-

(177,990)

29,558

25,741

(22,224)

369,376











Balance as at 1 July 2021

463,842

(18,406)

1,495

-

(176,073)

25,481

-

(17,935)

278,404

Profit for the period

-

-

-

-

4,278

-

-

569

4,847

Other comprehensive expense for the period

-

-

(2,145)

-

-

-

-

(481)

(2,626)

Total comprehensive income

-

-

(2,145)

-

4,278

-

-

88

2,221

Share based payments

-

-

-

-

62

-

-

-

62

Treasury shares

-

(2,906)

-

-

-

-

-

-

(2,906)

Ordinary shares issued

76,098

-

-

-

-

-

-

-

76,098

Transfer to antecedent dividend reserve

(3,659)

-

-

3,659

-

-

-

-

-

Perpetual preference note issued

-

-

-

-

-

-

26,775

-

26,775

Perpetual preference notes issue expenses

-

-

-

-

-

-

(1,606)

-

(1,606)

Share issue expenses

(7,611)

-

-

-

-

-

-

-

(7,611)

Dividends distributable to non-controlling shareholders

-

-

-

-

1,165

-

-

(1,165)

-

Balance as at 31 December 2021 (unaudited)

528,670

(21,312)

(650)

3,659

(170,568)

25,481

25,169

(19,012)

371,437

 

 

 

 

 

 

 

 

 

 

Balance as at 1 July 2022

535,694

(16,212)

(5,191)

-

(177,990)

29,558

25,741

(22,224)

369,376

Profit / (Loss) for the period

-

-

-

-

4,741

-

-

(1,136)

3,605

Other comprehensive expense for the period

-

-

(1,246)

-

-

-

-

(218)

(1,464)

Total comprehensive (expense) / income

-

-

(1,246)

-

4,741

-

-

(1,354)

2,141

Share based payments

-

-

-

-

413

-

-

-

413

Share of other changes in equity of associate

-

-

-

-

2,620

-

-

-

2,620

Reclassification of foreign currency translation reserve on part sale of interests in associate

-

-

771

-

-

-

-

-

771

Preferred dividend accrued on preference shares

-

-

-

-

(1,019)

1,019

-

-

-

Preferred dividend accrued on perpetual notes

-

-

-

-

(1,779)

-

548

-

(1,231)

Ordinary dividends paid

-

-

-

-

(9,599)

-

-

-

(9,599)

Transaction with non-controlling interests without change in control

-

-

-

-

(299)

-

-

300

1

Dividends distributable to non-controlling shareholders

-

-

-

-

2,397

-

-

(2,397)

-

Balance as at 31 December 2022 (unaudited)

535,694

(16,212)

(5,666)

-

(180,515)

30,577

26,289

(25,675)

364,492

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of this abridged consolidated financial statements are set out below.

1.1 Basis of preparation

The unaudited abridged consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, interpretations issued by the IFRS Interpretations Committee (IFRIC); the Financial Pronouncements as issued by Financial Reporting Standards Council and the LSE and SEM Listings Rules. The unaudited abridged consolidated financial statements have been prepared on the going-concern basis and were approved for issue by the Board on 23 February 2023.

Going Concern

The directors are required to consider an assessment of the Group's ability to continue as a going concern when producing the interim abridged unaudited consolidated financial statements.

The Directors are of the opinion that after reconsideration of the items highlighted in the Integrated Annual Report published on 28 October 2022 (see pages 152 to 153), the risks assessed are being managed and the Group continues to perform within the parameters of the going concern models prepared. The directors therefore concluded that it remains appropriate to prepare the financial statements on a going concern basis.

Functional and presentation currency

The abridged unaudited consolidated half year financial statements are prepared and are presented in United States Dollars (US$). Amounts are rounded to the nearest thousand, unless otherwise stated. Some of the underlying subsidiaries and associates have functional currencies other than the US$. The functional currency of those entities reflects the primary economic environment in which they operate.

Presentation of alternative performance measures

The Group presents certain alternative performance measures on the face of the income statement. Revenue is shown on a disaggregated basis, split between gross rental income and the straight-line rental income accrual. Additionally, if applicable, the total fair value adjustment on investment properties is presented on a disaggregated basis to show the impact of contractual receipts from vendors separately from other fair value movements. These are non IFRS measures and supplement the IFRS information presented. The directors believe that the presentation of this information provides useful insight to users of the financial statements and assists in reconciling the IFRS information to industry wide EPRA metrics.

1.2 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is a person or group that is responsible for allocating resources and assessing performance of the operating segments. The Group has determined the board as its chief operating decision-maker as it is the board that makes the Group's strategic decisions. Each operating entity has its own segmental and geographical allocation, and it is not allocated to more than one sector. Depreciation and amortization are not shown separately due to the immaterial nature thereof.

1.3 Critical Judgements and estimates

The preparation of these abridged consolidated half year financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in applying the Group's accounting policies. Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectation of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements.

Unconsolidated structured entity

Drive in Trading (DiT), a B-BBEE consortium, secured a facility of US$33.4 million from the Bank of America N.A (UK Branch) ("BoAML") to finance its investment in Grit. The BoAML facility was granted to DiT after South Africa's Government Employees Pension Fund (GEPF), represented by Public Investment Corporation SOC Limited ("PIC"), provided a guarantee to BoAML in the form of a Contingent Repurchase Obligation ("CRO") for up to US$35 million. The terms of the CRO obligate PIC to acquire the loan granted to DiT should DiT default under the BoAML facility.

In order to facilitate the above, the Group agreed to de-risk 50% of PIC's US$35 million exposure to the CRO, by granting PIC a guarantee whereby should BoAML enforce the CRO, the Group would indemnify PIC for up to 50% of the losses, capped at US$17.5 million, following the sale of the underlying securities, being the shares held by DiT in Grit.

Given the unusual structure of the transaction, the Group has determined that DiT has limited and predetermined activities and can be considered a structured entity under IFRS 12 as the design and purpose of DiT was to fund Grit rights issue and at the same time enable Grit to obtain B-BBEE credentials.

As the Group does not have both, power to direct the activities of DiT and an exposure to variable returns, the Group has exercised judgement on not to consolidate DiT but instead treat it as an unconsolidated structured entity due to DiT being a related party.

Freedom Asset Management (FAM) as a subsidiary

The Group has considered Freedom Asset Management (FAM) to be its subsidiary for consolidation purposes due to the Group's implied control of FAM, as the Group has ability to control the variability of returns of FAM and has the ability to affect returns through its power to direct the relevant activities of FAM. The Group does not own any interest in FAM however it has exposure to returns from its involvement in directing the activities of FAM.

Grit Executive Share Trust (GEST) as a subsidiary

The Group has considered Grit Executive Share Trust (GEST) to be its subsidiary for consolidation purposes due to the Group's implied control of GEST, as the Group's ability to appoint the majority of the trustees and to control the variability of returns of GEST. The Group does not own any interest in GEST but is exposed to the credit risk and losses of (GEST) as the Group shall bear any losses sustained by GEST and shall be entitled to receive and be paid any profits made in respect of the purchase, acquisition, sale or disposal of unawarded shares in the instance where shares revert back to GEST. No non-controlling interest has been accounted for in the current year.

Grit Executive Share Trust II (GEST II) as a subsidiary

During the financial year 2022, Grit Executive Share Trust II has been incorporated to act as trust for the new long term incentive plan of the Group. The trust will hold Grit shares to service the new scheme when the shares will vest to the employees in the future. The corporate set-up of GEST II is like GEST and the Group has considered GEST II to be a subsidiary the Group's implied control on GEST II.

African Development Managers Ltd (APDM) as a joint venture

The Group has acquired an equity interest of 77.95% in African Development Managers Ltd. The Group has concluded that even though it holds a majority shareholding in African Development Managers Ltd, it does not have control of the latter because it is currently not satisfying the power criteria of control. The design of African Development Managers Ltd is such that decisions about the relevant activities need to be approved by the investment committee of the company. For a decision to be approved, seventy five percent of the members present need to vote in favor of the decision. Currently the Group has the right to appoint two members to the investment committee. Prudential Impact Investments Private Equity LLC who holds 21.05% of African Development Managers Ltd also has the right to appoint two members and Gateway Africa Real Estate Limited with a current shareholding of 1% can appoint one member. Given the seventy five percent threshold requirement to pass any resolution, the Group and Prudential Impact Investments Private Equity LLC will have to unanimously agree to any decision before those are formally enacted by management. Therefore, neither the Group nor Prudential Impact Investments Private Equity LLC on their own control African Development Managers Ltd. Because of the unanimous consent required by both the significant shareholders of African Development Managers Ltd, the Group has classified the investment in African Development Managers Ltd as an investment in joint venture.

Gateway Real Estate Africa Ltd (GREA) as an associate

The Group has considered Gateway Real Estate Africa Ltd (GREA) to be its associate for consolidation purposes due to the Group's significant influence over the latter. During the six months period ended 31 December 2022, the Group has acquired an additional 8.72% equity interests in GREA which brings the total shareholding of Grit in GREA to 35.01%. However, the increase in shareholding has not resulted in Grit being able to exercise control over GREA. As at 31 December 2022, the Group has accounted GREA as an associate.

Estimates

The principal areas where such estimations have been made are:

Fair value of investment properties

The fair value of investment properties is determined using a combination of the discounted cash flows method and the income capitalisation valuation method, using assumptions that are based on market conditions existing at the end of the relevant reporting date. For further details on the valuation method, judgements and assumptions made, refer to note 2.

Taxation

Judgements and estimates are required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax inspection issues in the jurisdictions in which it operates based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made.

The Group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred tax assets requires the Group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each relevant jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the end of the reporting period could be impacted.

2. INVESTMENT PROPERTIES


As at

31 Dec 2022

As at

30 June 2022


US$'000

US$'000

Net carrying value of properties

609,016

604,474

Movement for the year excluding straight-line rental income accrual, lease incentive and right of use of land

 


Investment property at the beginning of the year

584,768

535,433

Acquisition through subsidiary other than business combination

-

33,050

Transfer from associate on step up to subsidiary

-

19,343

Disposal of subsidiary

-

(10,975)

Other capital expenditure and construction

2,875

5,946

Foreign currency translation differences

(1,173)

(18,196)

Revaluation of properties at end of period

3,139

19,870

Contractual receipts from vendors of investment properties (reduction in purchase price)

-

297

As at period end

589,609

584,768

 

 

 

Reconciliation to consolidated statement of financial position and valuations

 


Investment properties carrying amount per above

589,609

584,768

Right of use of land

6,633

6,666

Lease incentive

6,635

7,053

Straight-line rental income accrual

6,139

5,987

Total valuation of properties

609,016

604,474

Lease incentive asset included in investment property

In accordance with IFRS 16, rental income is recognised in the Group income statement on a straight-line basis over the lease term. This includes the effect of lease incentives given to tenants. The Group has granted lease incentives to tenants (in the form of rent-free periods). The result is a receivable balance included within investment property in the balance sheet as those are balances that must be considered when reconciling to valuation figures to prevent double counting of assets. This balance is subject to impairment testing under IFRS 9 using the simplified approach to expected credit loss of IFRS 9.


As at

31 Dec 2022

As at

30 June 2022


US$'000

US$'000

Lease incentive receivables before impairment

7,158

7,993

Impairment of lease incentive receivables

(523)

(940)

Net lease incentive included within investment property

6,635

7,053

Investment property pledged as security

Certain of the Group's investment property has been pledged as security for interest-bearing borrowings (note 8) as follows:

Mozambican investment properties with a market value of US$305.1 million are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$140.0 million (June 2022: Mozambican investment properties with a market value of US$301.1 million are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$140.0 million).

Moroccan investment property with a market value of US$67.5 million (June 2022: US$71.5 million) is mortgaged to Investec Bank South Africa to secure debt facilities amounting to US$33.8 million (June 2022: US$35.7 million).

Mauritian investment property with a market value of US$48.3 million (June 2022: US$48.8 million) is mortgaged to State Bank of Mauritius to secure debt facilities amounting to US$25.0 million (June 2022: US$24.8 million).

Kenyan investment properties with a market value of US$60.6 million (June 2022: US$60.5 million) are mortgaged to Nedbank South Africa to secure debt facilities amounting to US$8.6 million (June 2022: US$8.6 million) and International Finance Corporation to secure debt facilities amounting to US$ 16.1 million (June 2022: US$16.1 million).

Zambian investment property with a market value of US$57.2 million (June 2022: US$56.9 million) is mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$28.1 million (June 2022: Bank of China  US$34.8 million).

Senegalese investment property with a market value of US$24.1 million (June 2022: US$20.7 million) is mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$7.0 million (June 2022: ABC Banking Corporation: US$4.6 million).

Ghanaian investment properties with a market value of US$36.6 million (June 2022: US$35.3 million) are mortgaged to Standard Bank of South Africa to secure debt facilities amounting to US$14.6 million (June 2022- Nedbank South Africa: US$6.2million and ABSA Bank Ghana Limited: US$7.9 million).

 

Summary of valuations by reporting date

Most recent independent valuation date

Valuer (for the most recent valuation)

Sector

Country

As at

31 Dec 2022

US$'000

As at

30 June 2022

US$'000

Commodity House Phase I

31-Dec-22

REC

Office

Mozambique

52,513

52,346

Commodity House Phase II

31-Dec-22

Directors' valuation

Office

Mozambique

20,008

19,264

Hollard Building

31-Dec-22

Directors' valuation

Office

Mozambique

21,179

21,012

Vodacom Building

31-Dec-22

REC

Office

Mozambique

52,497

51,906

Zimpeto Square

31-Dec-22

Directors' valuation

Retail

Mozambique

4,038

3,395

Bollore Warehouse

31-Dec-22

Directors' valuation

Light industrial

Mozambique

10,791

10,410

Anfa Place Mall

31-Dec-22

Knight Frank

Retail

Morocco

67,473

71,532

Tamassa Resort

31-Dec-22

Knight Frank

Hospitality

Mauritius

48,262

48,827

VDE Housing Compound

31-Dec-22

REC

Accommodation

Mozambique

54,177

55,180

Imperial Distribution Centre

31-Dec-22

Knight Frank

Light industrial

Kenya

20,140

21,620

Mara Viwandani

31-Dec-22

Directors' valuation

Light industrial

Kenya

2,792

2,792

Mall de Tete

31-Dec-22

Directors' valuation

Retail

Mozambique

14,940

13,804

Acacia Estate

31-Dec-22

REC

Accommodation

Mozambique

75,008

73,809

5th Avenue

31-Dec-22

Directors' valuation

Office

Ghana

17,099

16,010

Capital Place

31-Dec-22

Directors' valuation

Office

Ghana

19,540

19,320

Mukuba Mall

31-Dec-22

Knight Frank

Retail

Zambia

57,270

56,933

Orbit Complex

31-Dec-22

Directors' valuation

Light industrial

Kenya

40,534

38,926

Copia Land

31-Dec-22

Directors' valuation

Light industrial

Kenya

6,633

6,666

Club Med Cap Skirring Resort

31-Dec-22

Directors' valuation

Hospitality

Senegal

24,122

20,722

Total valuation of investment properties directly held by the Group

 

609,016

604,474

Deposits paid on Imperial Distribution Centre Phase 2





2,317

2,259

Deposits paid on Capital Place Limited





3,550

3,550

Deposit paid on Gateway Real Estate Africa Limited





5,000

2,500

Total deposits paid on investment properties

 

10,867

8,309

Total carrying value of investment properties including deposits paid

 

619,883

612,783








Investment properties held within associates and joint ventures - Group share

 

 

Buffalo Mall - Buffalo Mall Naivasha Limited (50%)

31-Dec-22

Knight Frank

Retail

Kenya

5,805

6,116

Kafubu Mall - Kafubu Mall Limited (50%)

31-Dec-22

Directors' valuation

Retail

Zambia

12,398

11,965

CADS II Building - CADS Developers Limited (50%)

31-Dec-22

Directors' valuation

Office

Ghana

14,420

15,100

Cosmopolitan Shopping Centre - Cosmopolitan Shopping Centre Limited (50%)

31-Dec-22

Directors' valuation

Retail

Zambia

28,113

27,199

Canonniers, Mauricia and Victoria Resorts and Spas - Beachcomber Hospitality (27.1%) (30 June 2022 - 44.42%)

31-Dec-22

Directors' valuation

Hospitality

Mauritius

56,789

95,055

Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%)- 20 Investment properties

31-Dec-22

Knight Frank

Light industrial

Botswana

10,432

14,662

Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property

31-Dec-22

Knight Frank

Hospitality

Botswana

107

155

Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 2 Investment properties

31-Dec-22

Knight Frank

Retail

Botswana

2,969

4,160

Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property

31-Dec-22

Knight Frank

Office

Botswana

706

1,003

Letlole La Rona Limited (18.31%) (30 June 2022 - 25.1%) - 1 Investment property

31-Dec-22

Knight Frank

Accommodation

Botswana

676

966

Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) consisting of:







DH4 Bamako

31-Dec-22

Directors' valuation

Corporate accommodation

Mali

5,460

5,733

ADC - Phase 1

31-Dec-22

Knight Frank

Data Centre

Nigeria SEZ

9,187

6,839

St Helene

31-Dec-22

Knight Frank

Medical

Mauritius

5,753

3,076

The Precinct

31-Dec-22

Knight Frank

Office

Mauritius

9,868

4,390

Appolonia Ph1

31-Dec-22

Directors' valuation

Office

Ghana

1,202

873

CCI House

31-Dec-22

Directors' valuation

Office

Kenya

3,614

-

Metroplex

31-Dec-22

Directors' valuation

Retail

Uganda

8,630

6,478

Total of investment properties acquired through associates and joint ventures

176,129

203,770

Gateway Real Estate Africa Ltd (35.01%) (30 June 2022 - 26.29%) - Associates - consisting of:

31-Dec-22






DH1 Elevation

31-Dec-22

Knight Frank

Corporate accommodation

Ethiopia

12,800

9,806

DH3 Roslyn Grove

31-Dec-22

Knight Frank

Corporate accommodation

Kenya

9,820

7,089

Total of investment properties acquired through GREA Associates

22,620

16,895








Total portfolio

 

 

 

 

818,632

833,448

 

 

 

 

 

 

 

Functional currency of total investment property portfolio

 

 

United States Dollars





586,153

558,533

Euros





134,927

167,680

Moroccan Dirham





67,473

71,532

Botswanan Pula





14,890

20,946

Kenyan Shilling





2,792

2,792

Zambian Kwacha





12,397

11,965

Total portfolio

 

 

 

 

818,632

833,448

Valuation policy and methodology for investment properties held by the Group and by associates and joint ventures

For this interim reporting period, investment properties have been valued by reputable RICS accredited valuation experts who have su cient expertise in the jurisdictions where the properties are located. As per the valuation policy, external valuations are obtained for the top 50% of the portfolio or where any property specific changes may have affected the property valuation. For December 2022, a total of 60% of the property portfolio was externally valued and directors' valuation were utilized for the following properties:

CADS II Building

Capital Place

5th Avenue Building

Orbit Complex

Mara Viwandani

Copia Land

BHI- Cannonier, Victoria, Mauritia Hotels

Hollard Building

Commodity House Phase II building

Mall de Tete

Bollore Warehouse

Zimpeto Square

Club Med Cap Skirring Resort

Kafubu Mall

Investment Properties under the GREA Portfolio

Appolonia Ph1

DH4 Bamako

CCI House

Metroplex Shopping Mall

All valuations that are performed in the functional currency of the relevant property company are converted to United States Dollars at the e ective closing rate of exchange. All independent valuations have been undertaken in accordance with the RICS Valuation Standards that were in e ect at the relevant valuation date and are further compliant with International Valuation Standards. Market values presented by valuers have also been confirmed by the respective valuers to be fair value in terms of IFRS.

Independent valuations were performed at 31 December 2022 by REC, Chartered Surveyors and Knight Frank, Chartered Surveyors, using the discounted cash flow method for all building valuations and using the comparable method for all land parcel valuations.

3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The following entities have been accounted for as associates and joint ventures in the current and comparative consolidated financial statements using the equity method:




As at

31 Dec 2022

As at

30 June 2022

Name of joint venture

Country 

% Held

US$'000

US$'000

Kafubu Mall Limited 1

Zambia

50.00%

12,222

11,761

Cosmopolitan Shopping Centre Limited 1

Zambia

50.00%

28,101

27,173

CADS Developers Limited 1

Ghana

50.00%

6,521

6,974

Africa Property Development Managers Ltd 1

Mauritius

77.95%

19,762

14,247

Carrying value of joint ventures

 

 

66,606

60,155

 

 

 



 

 

 

As at

31 Dec 2022

As at

30 June 2022

Name of associate

Country of incorporation and operation

% Held

US$'000

US$'000

Buffalo Mall Naivasha Limited 1

Kenya

50.00%

12,390

3,753

Letlole La Rona Limited 2

Botswana

18.31%

3,354

17,353

Gateway Real Estate Africa Ltd 3

Mauritius

35.01%

79,116

55,866

Beachcomber Hospitality Investments Limited 4,5

Mauritius

27.10%

50,851

69,870

Carrying value of associates

 

 

145,711

146,842






Joint ventures



66,606

60,155

Associates



145,711

146,842

Total carrying value of associates and joint ventures



212,317

206,997

 

1

The percentage ownership of the Group during the six months period ended 31st December 2022 did not change.

2

The Group interests in the associate has decreased from 25.10% to 18.31% following the part disposal made during the six months period ended 31st December 2022.

3

The Group interests in the associate has increased from 26.29% to 35.01% following acquisition made during the six months period ended 31st December 2022.

4

Beachcomber Hospitality Investments Limited ("BHI") has declared dividend amounting to €32.6 million towards the end of the reporting period. The dividends declared were scrip dividend where the shareholders had the option to elect to receive the dividend in cash or additional shares in BHI in proportion to their current shareholding. The Group has elected for a cash payout whereas New Mauritius Hotel ("NMH"), the other shareholder of BHI has elected to convert the dividend payout into additional BHI shares. Following the increase in shareholding of NMH in BHI, the Group interests in the associate has decreased from 44.42% to 27.10%.

5

The carrying value of Beachcomber Hospitality Investments at 31 December 2022 includes an unsecured loan of €37.5 million (30 June 2022: €37.5 million), from the Group to the associate, which bears interest at 6.25% (30 June 2022: 6.25%).

All investments in associates are private entities and do not have quoted prices available with the exception of Letlole La Rona Limited who is a listed entity on the Botswana Stock Exchange.

3a. Disposal of equity interest in Letlole La Rona Limited

During the six months period ended 31st December 2022, Grit Services Limited a wholly owned subsidiary of the Group has disposed of 6.79% equity interests in Letlole La Rona Limited on the Botswana Stock Exchange. The trading price as at the date of disposal was BWP 3.48. The total number of shares disposed was 19 million shares. Following the disposal transaction, the equity interests of the Group in Letlole La Rona Limited has been reduced to 18.31%.


US$'000

Fair value of consideration received

5,102

Less: Carrying amount of investment in associate disposed

(4,626)

Gain on part disposal of interest in associate

476

Reclassification of cumulated foreign currency translation reserve to profit or loss

(771)

Total loss on part disposal of investment in associate

(295)

Note: the reclassification of cumulated foreign currency translation reserve to profit or loss has no impact on the NAV.

3b. Additional equity interest acquired in Gateway Real Estate Africa Ltd

During the six-months period ended 31st December 2022, the Group has continued its announced plan to acquire a controlling stake in Gateway Real Estate Africa Ltd ("GREA"). The Group has acquired an additional equity interest of 8.72% in GREA. The shareholding of the Group has increased from 26.29% to 35.01%. A cash consideration of US$19.4million has been paid to the selling shareholder Gateway Africa Real Estate Limited. Following the transaction, the Group kept exercising significant influence over GREA and therefore continues to account for GREA using the equity method. The increase of the investment in GREA has been split notionally between goodwill and the additional interest in the fair value of the net identifiable assets of the associate acquired. The notional goodwill on the acquisition of the additional 8.72% in GREA amounted to US$1.75 million. The notional goodwill element has been included in the carrying amount of the associate. The total notional goodwill element embedded in the carrying amount of the associate as at 31st December 2022 is US$4.04 million which is made up of US$2.29 million goodwill on acquisition of the additional 6.31% in GREA in the financial year 2022 and US$1.75 million arising on the acquisition of the 8.72% in GREA during the period ended 31st December 2022.


US$'000

Fair value of net identifiable assets acquired (8.72% additional interests in GREA)

17,683

Notional goodwill

1,757

Fair value of consideration paid (in cash)

19,440

Each of the acquisitions referred to below have given the Group access to high quality African real estate in line with the Group's strategy.

In circumstances where an associate or joint venture has the same reporting date as the Group, the Group will use the IFRS financial statements of the associate or joint venture. However, if the associate or joint venture has a different reporting date to the Group, the latter will use the IFRS reporting pack of the associate or joint venture to incorporate their results in the consolidated financial statements. Where necessary, the financial information has been amended to reflect adjustments made by the Group when using the equity method due to the differences in accounting policies.

Included below is a reconciliation of the carrying amount of the Group's interests in each associate and joint venture to the Group share of net assets of the associate and joint venture.

Reconciliation to carrying value in associates and joint ventures


Letlole La Rona Limited

Kafubu Mall Limited

Beachcomber Hospitality Investments Limited

Africa Property Development Managers Ltd

Gateway Real Estate Africa Ltd

CADS Developers Limited

Cosmopolitan Shopping Centre Limited

Buffalo Mall Naivasha Limited

Total


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Opening Balance 1 July 2022

17,353

11,761

69,870

14,247

55,866

6,974

27,173

3,753

206,997

(Disposed) / acquired during the period

(4,626)

 - 

-

-

19,440

-

 - 

 - 

14,814

Profit / (losses) from associates and joint ventures










Revenue

1,090

553

2,879

-

617

732

1,195

149

7,215

Asset and development fees

-

-

-

1,705

-

-

-

-

1,705

Property operating expenses

(93)

(96)

-

-

(100)

(14)

(192)

(83)

(578)

Admin expenses and recoveries

(23)

(6)

(15)

(2,021)

(562)

-

(6)

(5)

(2,638)

Other income

-

-

-

5,834

1,215

-

-

-

7,049

Net impairment charge on financial assets

-

-

-

-

(16)

-

-

-

(16)

Unrealised foreign exchange gains/(losses)

92

46

(261)

-

(33)

12

-

(19)

(163)

Share based payment expense

-

-

-

-

(2,620)

-

-

-

(2,620)

Interest income

144

-

-

-

2,046

-

2

-

2,192

Loss on extinguishment of loans

-

-

-

-

-

(25)

-

-

(25)

Finance charges

(301)

(3)

(805)

(3)

(812)

(497)

-

(127)

(2,548)

 Fair value movement on investment property

150

1,090

(1,523)

-

1,135

(666)

903

(314)

775

Fair value adjustment on other financial asset

-

-

1,948

-

-

-

-

-

1,948

Current tax

(197)

(25)

(199)

-

(52)

-

(35)

-

(508)

Deferred tax

-

-

(322)

-

372

170

-

-

220

Total profits/(losses) from associates and joint ventures

862

1,559

1,702

5,515

1,190

(288)

1,867

(399)

12,008

Dividends and interest paid to Group

(356)

-

(20,981)

-

-

-

-

-

(21,337)

Other equity movement

-

-

-

-

2,620

-

-

-

2,620

Repayment of proportionate shareholders loan

-

(403)

-

-

-

(165)

(939)

-

(1,507)

Effect of dilution

-

-

(71)

-

-

-

-

-

(71)

Foreign currency translation differences

(843)

(695)

331


-

-

-

-

(1,207)

Carrying value of associates and joint ventures- 31 December 2022

12,390

12,222

50,851

19,762

79,116

6,521

28,101

3,354

212,317

4. OTHER LOANS RECEIVABLE


As at

31 Dec 2022

As at

30 Jun 2022


US$'000

US$'000

Ndola Investments Limited

5,073

5,130

Kitwe Copperbelt Limited

5,404

5,640

Syngenta Limited

18,265

19,133

Healthcare assets

239

231

Drift (Mauritius) Limited

6,210

8,211

Drift (Mauritius) Limited

1,794

2,071

Pangea 2 Limited

6

6

IFRS 9 - Impairment on financial assets (ECL)

(2,514)

(2,514)

As at period end

34,477

37,908

 

 

 

Classification of other loans:

 

 

Non-current assets

-

Current assets

34,477

37,908

As at period end

34,477

37,908

5. TRADE AND OTHER RECEIVABLES


As at

31 Dec 2022

As at

30 Jun 2022


US$'000

US$'000

Trade receivables

8,952

10,298

Total allowance for credit losses and provisions

(4,201)

(4,782)

IFRS 9 - Impairment on financial assets (ECL)

(1,527)

(1,965)

IFRS 9 - Impairment on financial assets (ECL) Management overlay on specific provisions

(2,674)

(2,817)

Trade receivables - net

4,751

5,516

Accrued Income

2,386

1,934

Loan interest receivable

2,869

-

Deposits paid

56

57

VAT recoverable

11,530

12,186

Deferred expenses and prepayments 

3,976

1,781

Sundry debtors

13,570

13,660

Cash balance held in escrow account

346

4,548

Other receivables

34,733

34,166

IFRS 9 - Impairment on other financial assets (ECL)

(5,895)

(6,012)

Other receivables - net

28,838

28,154

As at period end

33,589

33,670

 

 

 

Classification of trade and other receivables:

 

 

Non-current assets

1,829

4,615

Current assets

31,760

29,055

As at period end

33,589

33,670

6. PREFERENCE SHARE CAPITAL


As at

31 Dec 2022

As at

30 Jun 2022


US$'000

US$'000

Opening balance

29,558

25,481

Preference shares dividend accrued

1,019

4,077

As at period end

30,577

29,558

7. PERPETUAL PREFERENCE NOTES


As at

31 Dec 2022

As at

30 Jun 2022


US$'000

US$'000

Opening balance

25,741

-

Issue of perpetual preference note classified as equity

-

26,775

Preferred dividend accrued

1,779

1,837

Preferred dividend paid

(1,231)

(1,265)

Less: Incremental costs of issuing the perpetual preference note

-

(1,606)

As at period end

26,289

25,741

Perpetual Preference Note

The Group through its wholly-owned subsidiary, Grit Services Limited has issued perpetual preference note to two investors Ethos Mezzanine Partners GP Proprietary Limited and Blue Peak Private Capital GP. The total cash proceeds received from the two investors for the issuance of the perpetual note amounted to US$31.5million.

Included below are salient features of the notes:

The Note has a cash coupon of 9% per annum and a 4% per annum redemption premium. The Group at its sole discretion may elect to capitalise cash coupons.

Although perpetual in tenor, the note carries a material coupon step-up provision after the fifth anniversary that is expected to result in economic maturity and redemption by the Group on or before that date.

The Note may be voluntarily redeemed by the Group at any time, although there would be call-protection costs associated with doing so before the third anniversary.

The Note, if redeemed in cash by the Group, can offer the noteholders an additional return of not more than 3% per annum, linked to the performance of Grit ordinary shares over the duration of the Note.

The noteholders have the option to convert the outstanding balance of the note into Grit equity shares. If such option is exercised by the noteholders, the number of shares to be issued shall be calculated based on a pre-defined formula as agreed between both parties in the note subscription agreement.

The Group has classified eighty-five percent of the instrument as equity because for this portion of the instrument, the Group always will have an unconditional right to avoid delivery of cash to the noteholders. The remaining fifteen percent of the instrument has been classified as debt and included as part of interest-bearing borrowings. The debt portion arises because the note contains terms that can give the noteholders the right to ask for repayment of fifteen percent of the outstanding amount of the notes on the occurrence of some future events that are not wholly within the control of the Group. The directors believe that the probability that those events will happen are remote but for classification purposes, because the Group does not have an unconditional right to avoid delivering cash to the noteholders on fifteen percent of the notes, this portion of the instrument has been classified as liability.

The accrued dividend on the equity portion of the note has been recognised as a deduction into equity i.e., reduction of retained earnings.

8. INTEREST-BEARING BORROWINGS

The following debt transactions were concluded during the period under review

During the period under review the Group completed a sustainability-linked term loan and revolving credit facility amounting to US$ 306 million, making it the largest real estate sector transaction to date in Sub-Saharan Africa (excluding South Africa). Standard Bank of South Africa acted as sole lead arranger and bookrunner for the multi-jurisdictional debt syndication covering Grit's assets and debt facilities in Mozambique, Zambia, Ghana and Senegal and a corporate level revolving credit facility. The facility refinanced debt amounting to c. US$ 280 million and pushed out the average debt expiry profile to approximately 3.6 years as of December 2022 as well as securing a development facility of US$23 million for the refurbishment and extension of its Club Med Cap Skirring Resort in Senegal. The main benefits of this loan syndication are the increase in loan tenor, locking a competitive interest margin despite the market's upward pricing pressure, and 7 different facilities being consolidated streamlining the management process and creating scalable solutions for the future.

During the period the Nedbank RCF facility held at Grit Real Estate Income Group Limited was increased from an US$ 7 million facility to an US$ 7 million plus Euro 6.6 million facility. This loan was used to refinance the Bank ABC Casamance Holdings Limited debt while the syndication was being completed.

An SBM bridging facility of US$ 6.5 million was implemented that was used to fund Phase 2 of the acquisition of GREA.

The following facilities were settled during the period under review:

The Bank ABC facility held by Casamance Holdings of US$ 4.7 million.

 

The Bank ABC facility held by Grit Services Limited of US$ 2.4 million.

 

The Maubank facility held by Grit Real Estate Income Group Limited of EUR 1.7 million

 


As at

31 Dec 2022

As at

30 Jun 2022


US$'000

US$'000

Non-current liabilities

371,549

242,091

Current liabilities

38,268

182,975


409,817

425,066

 


 

Currency of the interest-bearing borrowings (stated gross of unamortised loan issue costs)


 

United States Dollars

337,418

319,687

Euros

75,549

104,357

Mauritian Rupees

1,217

1,369

 

414,184

425,413

Interest accrued

5,148

4,927

Unamortised loan issue costs

(9,515)

(5,274)

As at period end

409,817

425,066

 


 

Movement for the period


 

Balance at the beginning of the year

425,066

410,588

Proceeds of interest bearing-borrowings

280,707

58,513

Loan reduced through disposal of subsidiary

-

(6,624)

Loan acquired through asset acquisition

-

6,011

Loan issue costs incurred

(7,939)

(4,386)

Amortisation of loan issue costs

2,532

2,765

Costs associated with extinguishment of loan

1,166


Foreign currency translation differences

1,389

(14,836)

Interest accrued

221

751

Debt settled during the period

(293,325)

(27,716)

As at period end

409,817

425,066

Analysis of facilities and loans in issue

 



As at

31 Dec 2022

As at

30 Jun 2022

Lender

Borrower

Initial facility

US$'000

US$'000

Financial institutions





Standard Bank South Africa

Commotor Limitada

US$140.0m

140,000

140,000

Standard Bank South Africa

Zambian Property Holdings Limited

US$70.4m

70,400

-

Standard Bank South Africa

Grit Services Limited

€33m

35,609

-

Standard Bank South Africa

Capital Place Limited

US$6.2m

6,200

-

Standard Bank South Africa

Casamance Holdings Limited

€6.5m

7,031

-

Standard Bank South Africa

Grit Accra Limited

US$8.4m

8,400

-

Standard Bank South Africa

Zambian Property Holdings Limited

US$16.4m

-

16,405

Standard Bank South Africa

Grit Services Limited

RCF - €26.5m

-

27,091

Total Standard Bank Group

 

 

267,640

183,496

Bank of China

Zambian Property Holdings Limited

US$77.0m

-

76,405

Total Bank of China

 

 

-

76,405

State Bank of Mauritius

Leisure Property Northern (Mauritius) Limited

€9.0m

9,595

9,467

State Bank of Mauritius

Leisure Property Northern (Mauritius) Limited

€3.2m

3,412

3,366

State Bank of Mauritius

Leisure Property Northern (Mauritius) Limited

US$6.5m

6,500

-

State Bank of Mauritius

Mara Delta Properties Mauritius Limited

€22.3m

23,774

23,457

State Bank of Mauritius

Grit Real Estate Income Group Limited

Equity Bridge US$20.0m

20,000

20,000

State Bank of Mauritius

Mara Delta Properties Mauritius Limited

RCF Mur 72m

1,217

1,369

Total State Bank of Mauritius

 

 

64,498

57,659

Investec South Africa

Freedom Property Fund SARL

€36.0m

31,089

32,950

Investec South Africa

Freedom Property Fund SARL

US$8.7m

2,722

2,722

Investec Mauritius

Grit Real Estate Income Group Limited

US$0.5m

442

457

Total Investec Group

 

 

34,253

36,129

ABSA Bank Ghana Limited

Grit Accra Limited

US$9.0m


7,913

Total ABSA Group

 

 

-

7,913

Maubank Mauritius

Grit Real Estate Income Group Limited

€3.2m

-

1,837

Maubank Mauritius

Freedom Asset Management

€4.0m

648

1,508

Total Maubank

 

 

648

3,345

ABC Banking Corporation

Grit Services Limited

Equity bridge US$ 8.5m

-

2,440

ABC Banking Corporation

Casamance Holdings Limited

€6.4m

-

4,681

Total ABC Banking Corporation

 

 

-

7,121

Nedbank South Africa

Warehously Limited

US$8.5m

8,635

8,635

Nedbank South Africa

Grit Real Estate Income Group Limited

US$7m

6,985

6,985

Nedbank South Africa

Capital Place Limited

US$6.2m

-

6,200

Total Nedbank South Africa

 

 

15,620

21,820

NCBA Bank Kenya

Grit Services Limited

US$6.5m

6,542

6,542

NCBA Bank Kenya

Grit Services Limited

US$4.1m

4,158

4,158

Total NCBA Bank Kenya

 

 

10,700

10,700

Ethos Private Equity

Grit Services Limited

US$2.4m

2,475

2,475

Blue Peak Private Equity

Grit Services Limited

US$2.2m

2,250

2,250

Total Private Equity

 

 

4,725

4,725

International Finance Corporation

Stellar Warehousing and Logistics Limited

US$16.1m

16,100

16,100

Total International Finance Corporation

 

 

16,100

16,100

Total loans in issue

 

 

414,184

425,413

plus: interest accrued

 

 

5,148

4,927

less: unamortised loan issue costs



(9,515)

(5,274)

As at period end

 

 

409,817

425,066

Fair value of borrowings is not materially different to their carrying value amounts since interest payable on those borrowings are either close to their current market rates or the borrowings are of short-term in nature.

9 . GROSS PROPERTY INCOME

 

Six months ended

31 Dec 2022

Six months ended

31 Dec 2021

 

US$'000

US$'000

Contractual rental income

22,600

19,270

Retail parking income

856

809

Straight-line rental income accrual

186

352

Other rental income (Lease incentives)

(58)

1,008

Gross rental income

23,584

21,439

Asset management fees

526

-

Recoverable property expenses

2,804

2,708

Total revenue

26,914

24,147

10. INTEREST INCOME


Six months ended

31 Dec 2022

Six months ended

31 Dec 2021


US$'000

US$'000

Interest on loans to partners

1,653

890

Interest on loans to related parties

7

28

Other Interest

78

5

Total interest income

1,738

923

11. FINANCE COSTS


Six months ended

31 Dec 2022

Six months ended

31 Dec 2021


US$'000

US$'000

Interest-bearing borrowings - financial institutions

15,061

10,499

Early settlement charges

46

36

Amortisation of loan issue costs

2,307

1,318

Preference share dividends

462

410

Interest on obligations under leases

16

27

Interest on loans to proportional shareholders

275

222

43

24

Total finance costs

18,210

12,536

12. Part disposal of subsidairy

On 18th July 2022, Grit disposed of an indirect interest of 30% in its Orbit Africa asset ("Orbit") located in Kenya by disposing of 30% equity interest in Orbit Africa Logistics ("OAL"), the beneficial owner of Orbit to Letlole La Rona Limited ("LLR"). The total acquisition value was US$7.23 million split between an equity subscription of US$1,000 and shareholder loan of US$7.23 million. For the portion of the shareholder loan received by LLR of US$7.23 million, the Group has recorded a corresponding liability of the same amount which is being presented as part of proportional shareholder loans on the face of the Group statement of financial position.

The consideration received by the Group for the actual share disposal transactions amounted to US$ 1,000. Prior to the disposal of interests, the carrying amount of existing non-controlling interests which have been disposed of was US$0.30 million. The Group recognized an increase in non-controlling interest of US$0.30 million and a decrease in equity attributable to owners of the parent of US$ 0.299 million. The effect on the equity attributable to the owners of Grit during the financial period ended 31 December 2022 is summarized as follows:


US$'000

Carrying amount of non-controlling interests disposed

(300)

Consideration received from non-controlling interests

1

Decrease in equity attributable to owner

(299)

13. Segmental reporting

Consolidated segmental analysis

The Group reports on a segmental basis in terms of geographical location and type of property. Geographical location is split between Botswana, Senegal, Morocco, Mozambique, Zambia, Kenya, Ghana, and Mauritius, as relevant to each reporting period. In terms of type of property, the Group has investments in the hospitality, retail, office, and various other sectors.


Botswana

Senegal

Morocco

Mozambique

Zambia

Kenya

Ghana

Mauritius

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Geographical location 31 Dec 2022

 

 

 

 

 

 

 

 

 

Gross property income

-

807

3,220

13,768

2,815

2,680

1,594

2,030

26,914

Property operating expenses

-

-

(1,846)

(1,918)

(383)

(80)

(257)

(313)

(4,797)

Net property income

-

807

1,374

11,850

2,432

2,600

1,337

1,717

22,117

Other income

-

-

-

(5,011)

-

-

(8)

5,139

120

Administrative expenses

-

(75)

(425)

(796)

(13)

(249)

(233)

(7,617)

(9,408)

Net impairment (charge) / credit on financial assets

-

-

486

(162)

-

218

(31)

392

903

Profit/(loss) from operations

-

732

1,435

5,881

2,419

2,569

1,065

(369)

13,732

Fair value adjustment on investment properties

-

2,485

(3,183)

3,956

314

(657)

1,448

(1,224)

3,139

Fair value adjustment on other financial asset

-

-

-

-

-

47

-

-

47

Fair value adjustment on derivatives financial instruments

-

-

-

-

-

-

-

(1,007)

(1,007)

Share based payment expense

-

-

-

-

-

-

-

(413)

(413)

Loss on extinguishment of loans

-

-

-

(813)

-

-

(176)

(177)

(1,166)

Share of profits / (losses) from associates and joint ventures

862

-

-

-

3,426

(399)

(288)

8,407

12,008

Loss on disposal of interest in associate

-

-

-

-

-

-

-

(295)

(295)

Impairment of loans and other receivables

-

-

-

93

-

-

-

(93)

-

Foreign currency gains / (losses)

-

(8)

(1,925)

88

13

(290)

(325)

(934)

(3,381)

Profit/(loss) before interest and taxation

862

3,209

(3,673)

9,205

6,172

1,270

1,724

3,895

22,664

Interest income

-

-

(610)

(24)

3

(421)

-

2,790

1,738

Finance costs

-

-

(1,155)

(6,109)

-

(1,211)

(911)

(8,824)

(18,210)

Profit / (loss) for the year before taxation

862

3,209

(5,438)

3,072

6,175

(362)

813

(2,139)

6,192

Taxation

-

-

(124)

(1,859)

(82)

154

(73)

(603)

(2,587)

Profit / (loss) for the year after taxation

862

3,209

(5,562)

1,213

6,093

(208)

740

(2,742)

3,605

Reportable segment assets and liabilities










Non-current assets










Investment properties

-

24,122

67,473

305,151

57,270

70,099

36,639

48,262

609,016

Deposits paid on investment properties

-

-

-

-

-

-

-

10,867

10,867

Property, plant and equipment

-

2

9

245

-

151

26

1,662

2,095

Intangible assets

-

-

25

-

-

-

-

536

561

Other investments

-

-

-

1

-

-

-

-

1

Investment in associates and joint ventures

12,390

-

-

-

40,323

3,354

6,521

149,729

212,317

Derivative financial instruments

-

-

-

-

-

-

-

-

-

Related party loans receivable

-

-

-

-

-

-

-

1,313

1,313

Trade and other receivables

-

-

1,348

-

-

481

-

-

1,829

Deferred tax

-

-

1,389

7,289

-

187

2,272

1,561

12,698

Total non-current assets

12,390

24,124

70,244

312,686

97,593

74,272

45,458

213,930

850,697

Current assets










Trade and other receivables

-

107

4,835

6,071

(130)

5,573

592

14,712

31,760

Current tax receivable

-

-

(16)

609

-

472

747

258

2,070

Related party loans receivable

-

-

-

-

-

-

-

988

988

Other loans receivable

-

-

-

-

-

-

-

34,477

34,477

Derivative financial instruments

-

-

-

-

-

-

-

3,003

3,003

Cash and cash equivalents

-

47

383

3,633

288

370

134

7,725

12,580

Total assets

12,390

24,278

75,446

322,999

97,751

80,687

46,931

275,093

935,575

Liabilities










Total liabilities

-

199

58,201

208,425

4,444

31,644

21,334

246,836

571,083

Net assets

12,390

24,079

17,245

114,574

93,307

49,043

25,597

28,257

364,492

 

Type of property

Other investments

Hospitality

Retail

Office

Light industrial

Accommodation

Corporate

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

31 Dec 2022

 

 

 

 

 

 

 

 

Gross property income

-

2,313

6,885

8,135

3,117

5,939

525

26,914

Property operating expenses

-

-

(2,600)

(1,029)

(112)

(1,150)

94

(4,797)

Net property income

-

2,313

4,285

7,106

3,005

4,789

619

22,117

Other income

-

-

-

(135)

-

(4,421)

4,676

120

Administrative expenses

-

(211)

(660)

(524)

(113)

(435)

(7,465)

(9,408)

Net impairment (charge) / credit on financial assets

-

-

430

(144)

218

7

392

903

Profit/(loss) from operations

-

2,102

4,055

6,303

3,110

(60)

(1,778)

13,732

Fair value adjustment on investment properties

-

1,262

(1,147)

3,038

(506)

492

-

3,139

Fair value adjustment on other financial asset

-

-

-

-

47

-

-

47

Fair value adjustment on derivatives financial instruments

-

-

-

-

-

-

(1,007)

(1,007)

Share based payment expense

-

-

-

-

-

-

(413)

(413)

Loss on extinguishment of loans

-

-

(62)

(665)

-

(261)

(178)

(1,166)

Share of profits / (losses) from associates and joint ventures

7,567

1,702

3,027

(288)

-

-

-

12,008

Loss on disposal of interest in associate

-

-

-

-

-

-

(295)

(295)

Impairment of loans and other receivables

-

-

93

-

-

-

(93)

-

Foreign currency gains / (losses)

-

919

(1,904)

(309)

(293)

83

(1,877)

(3,381)

Profit/(loss) before interest and taxation

7,567

5,985

4,062

8,079

2,358

254

(5,641)

22,664

Interest income

-

(1,126)

(769)

2,102

(775)

(1,610)

3,916

1,738

Finance costs

-

(1,651)

(1,191)

(6,907)

(1,211)

(78)

(7,172)

(18,210)

Profit / (loss) for the year before taxation

7,567

3,208

2,102

3,274

372

(1,434)

(8,897)

6,192

Taxation

-

(74)

(206)

(957)

164

(917)

(597)

(2,587)

Profit / (loss) for the year after taxation

7,567

3,134

1,896

2,317

536

(2,351)

(9,494)

3,605

Reportable segment assets and liabilities









Non-current assets









Investment properties

-

72,384

143,721

182,836

80,890

129,185

-

609,016

Deposits paid on investment properties

-

-

-

-

-

-

10,867

10,867

Property, plant and equipment

-

2

9

17

-

157

1,910

2,095

Intangible assets

-

-

25

-

-

-

536

561

Other investments

-

-

-

1

-

-

-

1

Investment in associates and joint ventures

111,268

50,851

43,677

6,521

-

-

-

212,317

Derivative financial instruments

-

-

-

-

-

-

-

-

Related party loans receivable

-

-

-

-

-

-

1,313

1,313

Other loans receivable

-

-

-

-

-

-

-

-

Trade and other receivables

-

-

1,348

-

481

-

-

1,829

Deferred tax

-

1,560

4,041

3,993

452

2,638

14

12,698

Total non-current assets

111,268

124,797

192,821

193,368

81,823

131,980

14,640

850,697

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

-

638

4,615

1,300

6,334

4,551

14,322

31,760

Current tax refundable

-

190

275

1,270

609

(306)

32

2,070

Related party loans receivable

-

-

-

-

-

-

988

988

Other loans receivable

-

-

-

-

-

-

34,477

34,477

Derivative financial instruments

-

-

-

-

-

-

3,003

3,003

Cash and cash equivalents

-

221

875

2,157

464

1,159

7,704

12,580

Total assets

111,268

125,846

198,586

198,095

89,230

137,384

75,166

935,575

Liabilities









Total liabilities

-

64,446

59,999

194,194

32,398

30,910

189,136

571,083

Net assets

111,268

61,400

138,587

3,901

56,832

106,474

(113,970)

364,492

Major customers

Rental income stemming from Vulcan represented approximately 9.4% of the Group's total contractual rental income for the period, with Total 9.4%, US Embassy 8.7%, Vodacom Mozambique 6.5%, and Beachcomber 6.5% of the Group's total contractual rental income for the period, making up the top 5 tenants of the Group.

14. Basic and diluted earnings per ordinary share

 

Attributable earnings

Weighted average number of shares

Cents per share


Six months ended

31 Dec 2022

Six months ended

31 Dec 2021

Six months ended

31 Dec 2022

Six months ended

31 Dec 2021

Six months ended

31 Dec 2022

Six months ended

31 Dec 2021


US$'000

US$'000

Shares '000

Shares '000

US Cents

US Cents

Earnings per share - Basic

4,741

4,278

482,373

328,771

0.98

1.30

Earnings per share - Diluted

4,741

4,278

482,373

328,771

0.98

 1.30

15. sUBSEQUENT EVENTS

In January 2023, as part of acquiring the remaining 13.61% of Gateway Real Estate Africa from Gateway Africa Real Estate, the Group has made a deposit of US$ 10 million. The remaining cash commitment of the group to complete the transaction has been disclosed in note 16.

Post balance sheet date, the Board has approved a merger agreement, which provides for a preference note issuance in BHI that will facilitate the possible exit of Grit's remaining 27.1% interest for an expected net cash payment of EUR 25.8 million (US$ 27.51 million),

16. CAPITAL COMMITMENTS

Club Med Senegal: Euro 24.4 million (US$26.01 million) over the next 22 months.

Acquisition of an additional 50% stake in Buffalo Mall amounting to c. US$2 million.

Acquisition of remaining 13.61% in Gateway Real Estate Africa and 1% in African Development Managers Limited- US$ 34.1 million, out of which a US$10 million deposit has been paid in January 2023, an additional US$10 million deposit is to be paid in March 2023 and the balance of US$ 14.1 million is to be paid in May 2023.

Orbit Africa phase 2 redevelopment: expected to be US$15.5 million (inclusive of VAT) to be completed by April 2024.

17. EPRA financial metrics

17a. EPRA earnings

Basis of Preparation

The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors") have chosen to disclose additional non-IFRS measures, these include EPRA earnings, adjusted net asset value, EPRA net asset value, adjusted profit before tax and funds from operations (collectively "Non-IFRS Financial Information").

The Directors have chosen to disclose:

EPRA earnings to assist in comparisons with similar businesses in the real estate sector. EPRA earnings is a definition of earnings as set out by the European Public Real Estate Association. EPRA earnings represents earnings after adjusting for fair value adjustments on investment properties, gain from bargain purchase on associates, fair value adjustments included under income from associates, ECL provisions, fair value adjustments on other investments, fair value adjustments on other financial assets, fair value adjustments on derivative financial instruments, and non-controlling interest included in basic earnings (collectively the "EPRA earnings adjustments") and deferred tax in respect of these EPRA earnings adjustments. The reconciliation between basic and diluted earnings and EPRA earnings is detailed in the table below;

EPRA net asset value to assist in comparisons with similar businesses in the real estate sector. EPRA net asset value is a definition of net asset value as set out by the European Public Real Estate Association. EPRA net asset value represents net asset value after adjusting for net impairment on financial assets (ECL), fair value of financial instruments, and deferred tax relating to revaluation of properties (collectively the "EPRA net asset value adjustments"). The reconciliation for EPRA net asset value is detailed in the table below;

adjusted EPRA earnings to provide an alternative indication of GRIT and its subsidiaries' (the "Group") underlying business performance. Accordingly, it excludes the effect of non-cash items such as unrealised foreign exchange gains or losses, straight-line leasing adjustments, amortisation of right of use land, impairment of loans and deferred tax relating to the adjustments. The reconciliation for adjusted EPRA earnings is detailed in the table below; and

total distributable earnings to assist in comparisons with similar businesses and to facilitate the Group's dividend policy which is derived from total distributable earnings. Accordingly, it excludes VAT credit utilised on rentals, Listing and set-up costs, depreciation, and amortisation, share based payments, antecedent dividends, operating costs relating to AnfaPlace Mall's refurbishment costs, amortisation of lease premiums and profits withheld/released. The reconciliation for total distributable earnings is detailed in the table below.

In this note, Grit presents European Real Estate Association (EPRA) earnings and other metrics which is non-IFRS financial information.


UNAUDITED
31 Dec 2022

UNAUDITED
31 Dec 2022

UNAUDITED
31 Dec 2021

UNAUDITED
31 Dec 2021


$'000

Per Share (Diluted)
(Cents Per Share)

$'000

Per Share (Diluted)
(Cents Per Share)

EPRA Earnings

2,202

0.46

8,413 

2.56

Total Company Specific Adjustments

2,737

0.56

(2,493) 

(0.76)

Adjusted EPRA Earnings

4,939

1.02

5,920 

1.80

Total Company Specific Distribution Adjustments

7,400

1.54

4,122

1.28

TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD)

12,339

2.56

10,042

3.08

Profits Withheld

(2,437)

(0.56)

(1,884)

(0.58)

TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS

9,902

2.00

8,158

2.50







UNAUDITED
31 Dec 2022

UNAUDITED
31 Dec 2022

AUDITED
30 June 2022

AUDITED
30 June 2022


$'000

Per Share (Diluted)
(Cents Per Share)

$'000

Per Share (Diluted)
(Cents Per Share)

EPRA NRV

380,865

78.77

381,307

79.35

EPRA NTA

366,736

75.84

366,805

76.33

EPRA NDV

333,297

68.93

336,296

69.98


 

 



Distribution shares

UNAUDITED
31 Dec 2022


Shares '000

Weighted average shares in issue

495,092

Less: Weighted average treasury shares for the year

(12,719)

Add: Weighted average shares vested shares in long term incentive scheme

573

EPRA SHARES

482,946

Less: Vested shares in consolidated entities

(573)

DISTRIBUTION SHARES

482,373

In this note, Grit presents European Real Estate Association (EPRA) earnings and other metrics which is non-IFRS financial information.

 

UNAUDITED
31 Dec 2022


US$'000

EPRA Earnings Calculated as follows:


Basic Earnings attributable to the owners of the parent

4,535

Add Back:


 - Fair value adjustment on investment properties

(3,139)

 - Fair value adjustments included under income from associates

(775)

 - Change in value on other investments

(1)

 - Change in value on other financial asset

(1,994)

 - Change in value on derivative financial instruments

1,007

 - Impairment of loan

11

 - Profit on partial disposal of associate

295

 - Acquisition costs not capitalized

912

 - Deferred tax in relation to the above

1,365

 - Non-controlling interest included in basic earnings

(14)

EPRA EARNINGS

2,202

EPRA EARNINGS PER SHARE (DILUTED) (cents per share)

0.46

Company specific adjustments


 - Unrealised foreign exchange gains or losses (non-cash)

3,777

 - Straight-line leasing and amortisation of lease premiums (non-cash rental)

443

 - Profit or loss on disposal of property, plant and equipment

(9)

 - Amortisation of right of use of land (non-cash)

34

 - Impairment of loan and other receivables

(889)

 - Non-controlling interest included above

(659)

 - Deferred tax in relation to the above

40

Total Company Specific adjustments

2,737

ADJUSTED EPRA EARNINGS

4,939

ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share)

1.02

 

COMPANY SPECIFIC ADJUSTMENTS TO EPRA EARNINGS

1.

Unrealised foreign exchange gains or losses


The foreign currency revaluation of assets and liabilities in subsidiaries gives rise to non-cash gains and losses that are non-cash in nature. These adjustments (similar to those adjustments that are recorded to the foreign currency translation reserve) are added back to provide a true reflection of the operating results of the Group.

2.

Straight-line leasing (non-cash rental)


Straight-line leasing adjustment and amortised lease incentives under IFRS relate to non-cash rentals over the period of the lease. This inclusion of such rental does not provide a true reflection of the operational performance of the underlying property and are therefore removed from earnings.

3.

Amortisation of intangible asset (right of use of land)


Where a value is attached to the right of use of land for leasehold properties, the amount is amortised over the period of the leasehold rights. This represents a non-cash item and is adjusted to earnings.

4

Impairment on loans and other receivables


Provisions for expected credit loss are non-cash items related to potential future credit loss on non- property operational provisions and is therefore added back to provide a better reflection of underlying property performance. The add back excludes and specific provisions for against tenant accounts.

5

Non-Controlling interest


Any Non-Controlling interest related to the company specific adjustments.

6.

Other deferred tax (non-cash)


Any deferred tax directly related to the company specific adjustments.

 

17b. Company distribution calculation

 

UNAUDITED
31 Dec 2022


US$'000

Adjusted EPRA Earnings

4,939

Company specific distribution adjustments


 - VAT Credits utilised on rentals

1,046

 - Listing and set-up costs under administrative expenses

40

 - Depreciation and amortisation

758

 - Share based payments

3,033

 - Dividends

132

 - Retirement fund & PRGF

-

 - Right of use imputed leases

40

 - Amortisation of capital funded debt structure fees

2,414

 - Deferred tax in relation to the above

82

 - Non-controlling interest included above

(145)

Total company specific distribution adjustments

7,400

TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHELD)

12,339

DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share)

2.56

 - Profits withheld

(2,437)

TOTAL DISTRIBUTABLE EARNINGS TO GRIT SHAREHOLDERS

9,902

DIVIDEND PER SHARE (cents)

2.00



Reconciliation to amount payable


Total distributable earnings to Grit shareholders before profits withheld (cents)

2.56

Profits withheld (cents)

(0.56)

INTERIM DIVIDEND PROPOSED (cents)

2.00

 

COMPANY DISTRIBUTION NOTES IN TERMS OF THE DISTRIBUTION POLICY

1.

VAT credits utilised on rentals


In certain African countries, there is no mechanism to obtain refunds for VAT paid on the purchase price of the property. VAT is recouped through the collection of rentals on a VAT inclusive basis. The cash generation through the utilisation of the VAT credit obtain on the acquisition of the underlying property is thus included in the operational results of the property.

2.

Listing and set-up costs under administrative expenses


Costs associated with the new listing of shares, setup on new companies and structures are capital in nature and is added back for distribution purposes.

3.

Depreciation and amortisation


Non-cash items added back to determine the distributable income.

4.

Share based payments


Non-cash items added back to determine the distributable income.

5.

Retirement fund & PRGF


Non- cash item held as a provision.

6.

Amortisation of capital funded debt structure fees


Amortisation of upfront debt structuring fees.

 

OTHER NOTES

The abridged unaudited consolidated financial statements for the six months period ended 31 December 2022 ("abridged unaudited consolidated financial statements") have been prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), the FCA Listing Rules and the SEM Listing Rules. The accounting policies are consistent with those of the previous annual financial statements except for the change in accounting policy and the significant judgement disclosed in note 1.

The Group is required to publish financial results for the six months ended 31 December 2022 in terms of SEM Listing Rule 15.36A and the FCA Listing Rules. The Directors are not aware of any matters or circumstances arising subsequent to the period ended 31 December 2022 that require any additional disclosure or adjustment to the financial statements. These abridged unaudited consolidated financial statements were approved by the Board on 23 February 2023.

Copies of the abridged unaudited consolidated financial statements, and the statement of direct and indirect interests of each officer of the Company pursuant to rule 8(2)(m) of the Mauritian Securities (Disclosure Obligations of Reporting Issuers) Rules 2007, are available free of charge, upon request at the Mauritian office of the Company at 3rd Floor, Unity Building, The Precinct, Grand Baie, Mauritius. Contact Person: Leon van de Moortele.

Forward-looking statements

This document may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by, or on behalf of, Grit speak only as of the date they are made, and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Grit does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions, or circumstances on which any such statement is based.

Information contained in this document relating to Grit or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of directors and have not been reviewed or reported on by the Company's external auditors.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR EAFADALNDEAA
UK 100