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Grit Real Estate Income Group (GR1T)
Full year audited results for the year ended 30 June 2023
31-Oct-2023 / 07:00 GMT/BST
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GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered in Guernsey)
(Registration number: 68739)
LSE share code: GR1T
SEM share codes (dual currency trading): DEL.N0000 (USD) / DEL.C0000 (MUR)
ISIN: GG00BMDHST63
LEI: 21380084LCGHJRS8CN05
("Grit" or the "Company" or the "Group")
FULL YEAR AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2023
The board of Directors (the “Board”) of 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$ and Euro denominated long-term leases with high quality multinational tenants, today announces its
audited consolidated results for the financial year ended 30 June 2023.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:
“The financial year to 30 June 2023 was a transitory year for the Group characterised by disposals of non-core
assets, reducing debt and debt refinancing risks and substantial progress on the acquisition of a majority interest
in GREA, the Group’s development associate. GREA successfully delivered the award-winning Precinct office park and
Artemis Curepipe Hospital developments in the year and is on time and on budget on the ENEO Tatu City call centre
facility, expected to be completed mid 2024.
Global interest rate volatility provided headwinds to our strong property portfolio operating performance, where a
5.7% increase in net operating income (excluding properties sold) was impacted by significantly rising finance
costs. Our focus will remain on sustainably growing distributable income and enhancing capital growth while
continuing to target key portfolio metrics such as lowering the LTV, vacancy and cost factors and further
strengthening the balance sheet and liquidity position through focused asset recycling initiatives.”
Financial & Portfolio highlights as at 30 June 20231
30 June 2023 30 June 2022 Increase/ (Decrease)
IFRS diluted earnings / (loss) per share (US$4.90) cps US$2.62 cps (US$7.52) cps
Adjusted EPRA earnings per share2 US$0.72 cps US$3.13 cps (US$2.41) cps
Distributable earnings per share3 US$4.29 cps US$5.08 cps (US$0.79) cps
Dividend per share US$2.0 cps US$4.50 cps (US$2.5) cps
Contractual rental collected 101.3% 92.8% +8.5%
EPRA NRV per share2 US$72.8 cps US$79.4 cps (US$6.6cps)
Total Income Producing Assets4 US$862.0m US$856.7m US$5.3m
Group LTV 44.3% 46.7% (2.4%)
Weighted average cost of debt 8.4% 7.1% 1.3%
Portfolio highlights
Property net operating income from ongoing operations5 US$52.0m US$49.2m +5.7%
EPRA cost ratio (including associates)6 13.3% 13.0% +0.3ppt
EPRA portfolio occupancy rate7 93.6% 95.3% (1.7ppt)
WALE8 4.4 yrs. 4.8 yrs. (0.4 yrs.)
Revenue earned from multinational tenants9 85.3% 85.6% (0.3ppt)
Income in hard currency10 94.5% 91.5% +3.0ppt
Grit proportionately owned lettable area ("GLA") 298,962m2 366,926m2 (67,964m2)
Weighted average annual contracted rent escalations 3.0% 5.4% (2.4ppt)
Notes
Various alternative performance measures (APMs) are used by management and investors, including a number of
1 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 are derived from IFRS are shown in notes 11 to 13 (unaudited).
3 Distributable earnings per share is an APM derived from IFRS and shown in note 12 (unaudited).
Includes controlled Investment properties with Subsidiaries, Investment Property owned by Associates and Joint
4 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.
Property net operating income (“NOI”) from continuing operations is an APM and is derived from IFRS NOI adjusted
5 for the results of associates and joint ventures, excluding the impact of disposals of BHI and LLR. A full
reconciliation is provided in the Chief Financial Officers Statement
6 Based on EPRA cost to income ratio calculation methodology shown in note 13.
7 Property occupancy rate based on EPRA calculation methodology (Includes associates and excludes direct vacancy
cost). Please see calculation methodology shown in note 13.
8 Weighted average lease expiry (“WALE”).
9 Forbes 2000, Other Global and pan African tenants.
10 Hard (US$ and EUR) or pegged currency rental income.
Summarised results commentary:
Despite economic headwinds facing the global property industry, Grit’s property portfolio performed well with
• revenue increasing 1.9% (Revenue from ongoing operations, which excludes the impact of BHI and LLR, grew 7.3%).
NOI (excluding properties sold) grew 5.7% and the Group collected 101.3% of contractual revenue over the period.
The value of the property portfolio declined by 4.5%, predominantly as a result of asset disposals which offset
• the increased interest in Gateway Real Estate Africa (“GREA”). Excluding the impacts of this corporate activity,
the ongoing property portfolio experienced a 0.8% (US$5.9 million) decline in fair value against a backdrop of
global economic uncertainty, once again demonstrating relative stability in the portfolio.
High interest rates impacted the group with cash WACD increasing from 7.1% to 7.97% for the year. Our hedging
policy protected us from a large part of the c3.6% increase in base rates over the year. Notwithstanding the
• hedges, group finance costs increased by US$11.3 million, representing a 46.5% increase as compared to the prior
year (which includes the full year impact of the Orbit acquisitions and the developments completed during the
year). The US$100.0 million notional interest rate hedge that expired in October 2023 has been replaced – please
refer to post balance sheet events below.
In line with the Grit 2.0 strategy, asset management fee income within the subsidiaries grew to US$1.4 million (an
increase of 219% from the prior year comparative of US$0.48 million). Additionally, the insourcing of property
• management services in Ghana and Kenya resulted in net savings of US$0.16 million (with the current years fees of
US$0.11 million ending during the year). Grit’s proportionate share of on-going asset management and development
management fee income from APDM (treated as a joint venture for the financial year) amounted to US$3.1 million for
the year.
Administrative expenses increased by 40.3% due to a combination of high inflationary pressures, onboarding costs
surrounding the increased investment in APDM and GREA, the full year impact of the income generating Kenyan office
• and the Group’s investment towards future growth (in the setup costs of Bora Africa). The administrative expenses
as a percentage of total income producing assets amounted to 2.4%. This is higher than the medium-term objective
of 1.8%, which the Group aims to achieve through cost reduction initiatives and an expected increase in the asset
base as a result of the acquisition of GREA.
Taking the above into account, Adjusted EPRA earnings dropped by 77.0% to US$0.72cps. Distributable income dropped
15.6% to US$4.29cps as the company continues to obtain significant VAT credits. The 8.3% reduction in EPRA NRV to
• US$72.8cps was driven by a combination of property valuations (US$1.05cps), provisions and write offs against
property projects (US$1.56cps) and transaction costs related to the GREA acquisition and US$306m syndicated loan
(US$0.71cps).
During the financial year over US$90.0 million of cash was utilised in support of the Group’s strategic objectives
of debt reduction and increased ownership in GREA and APDM. While the Board understands the importance of
dividends to our shareholders, it has elected against declaring a second half dividend. Total dividend for the
• year amounts to US$2.00 cps following the interim dividend of US$2.00cps declared for the six months ended 31
December 2022 (46.6% pay-out of distributable earnings). Should sufficient progress be made on implementing the
new GREA dividend policy and dividend normalisation from recently completed GREA developments, the Board will
consider either a special dividend or an increased H1 dividend.
• The Group continued to reduce debt levels with a net reduction of US$28.3 million in the financial year. Group LTV
dropped by 2.4% to 44.3%.
Corporate highlights – execution on strategy
The Board targeted US$160 million of asset disposals by 31 December 2023 and has made significant progress towards
• this target with the disposal of interests in BHI and LLR, at near book value. Capital was redeployed to debt
reduction and to the acquisition of GREA and APDM – please refer to post balance sheet events below.
The Group unveiled its Grit 2.0 strategy and focus areas post the acquisition of GREA and APDM, which includes
• higher targeted fee income strategies and the pursuit of a capital light strategy through industry focused
substructures.
• The Group won several high-profile industry awards for a number of GREA delivered developments and for the
innovative Sustainability linked debt refinance concluded in October 2022.
Notable Post balance sheet events
On the 26th of July 2023 the Group announced the conclusion of the final phase in the acquisition of a majority
interest in GREA and APDM from Gateway Africa Real Estate Limited and Prudential Impact Investments Private Equity
LLC, which resulted in the Group owning a direct interest of 51.48% in GREA and 78.95% in APDM. The transaction
became unconditional, and the share transfer was lodged following receipt of the Mauritius Prime Minister’s Office
consent, which was the final condition precedent. Although the share transfer took place after the end of the
• financial year, beneficial ownership of the 51.48% was attained on 30 June 2023 and as such the Group treated GREA
as a joint venture in preparing its financial statements for the year ended 30 June 2023. The required final
amendments to the Shareholders Agreement (which upon signature will result in control over GREA and therefore
allow for the full consolidation of GREA and APDM - please refer to The Basis of Presentation 1.2 Critical
Judgements and Estimates), are expected imminently. On the 3rd of October 2023 GREA issued shares to APDM in terms
of the Managers Incentive Program and from this date the Group, through its shareholding in APDM, holds a combined
direct and indirect interest of 54.22%.
Bora Africa, a specialist industrial real estate vehicle, was established on 24 October 2023 when 5 Grit owned
industrial assets namely Imperial, Bollore, Orbit and two industrial land assets were transferred to the newly
• established entity. Bora is a wholly owned subsidiary of Grit and has therefore resulted in no change to existing
beneficial interests. The International Finance Corporation, a division of the World Bank, has approved a US$30
million subordinated notes issue by Bora Africa to fund future pipeline and impact focused real estate
acquisitions.
On 16 October 2023, interest rate hedges over US$100.0 million notional against LIBOR rates above 1.58% to 1.85%,
• matured. The Group concluded a new US$100.0 million notional interest rate hedge from this date, with a new
two-year collar and cap instrument providing protection against rates above 4.75% on SOFR rates while allowing
savings up to 3.00% SOFR rate. The Group has therefore maintained its overall hedged position at US$200 million.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Investor Relations +44 779 512 3402
Cavendish Capital Markets Limited – UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Pauline Tribe (Sales) +44 20 3772 4697
Perigeum Capital Ltd – SEM Authorised Representative and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd – Mauritian Sponsoring Broker
Elodie Lan Hun Kuen +230 402 0280
NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate company focused on investing in,
developing and actively managing a diversified portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated
long-term leases with a wide range of blue-chip multinational 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 both
income and capital growth.
The Company holds its primary listing on the main market of the London Stock Exchange (LSE: GR1T) and a dual
currency trading secondary listing on the Stock Exchange of Mauritius (SEM: DEL.N0000 (USD) / DEL.C0000 (MUR)).
Further information on the Company is available at http://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+, Cross Kgosidiile and Lynette
Finlay+.
(* 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 Ltd
UK Transfer secretary: Link Market Services Limited
Mauritian Sponsoring Broker: Capital Markets Brokers Ltd
This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule 15.24 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 on Tuesday, 31st October 2023 at 2:00pm Mauritius / 10:00am UK / 12:00pm South
Africa via the Investor Meet Company platform, with the presentation being open to all existing and potential
shareholders, and can be accessed at the following link:
1 https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor
A playback of the webcast will be accessible on-demand within 48 hours via the Company website:
2 https://grit.group/financial-results/
CHAIRMAN’S STATEMENT
Grit is a prominent, woman-led real estate platform providing property investment and associated real estate
services across the African continent. The Group recognises its role in transforming the design of buildings and
developments for long-term sustainability, especially with Africa rapidly urbanising, and focuses on impact, energy
efficiency and carbon reduction in its activities. In addition to environmental responsibility, the Group prides
itself on achieving more than 40% of women in leadership positions and the significant support it provides to local
communities in Africa through extensive CSR and upliftment programmes. More information on Grit’s Environmental,
Social and Governance initiatives is available in the Responsible Business Committee’s report.
Robust operational performance and record development activity
Operationally and strategically, 2023 was a challenging yet productive year and was characterised by disposals of
non-core assets and substantial progress on the acquisition of a controlling interest GREA. Global interest rate
volatility offset the strong performance from the property portfolio, where net operating income from ongoing
operations increased 5.7%. We enjoyed good leasing and cash collections while GREA successfully delivered the
Precinct office park, the first 5-star green rated development in the Indian Ocean region, and the Artemis Curepipe
Hospital in Mauritius.
We aim to enhance our income and protect value through the active management of our high-quality portfolio. We are
well positioned to deliver the Grit 2.0 strategy which is underpinned by long-term structural African demand drivers
and the need for high quality real estate and infrastructure.
Macroeconomic factors impacting property valuations
A significant adjustment in global interest rates during the year caused a sharp increase in our overall cost of
capital and impacted property yields across the global real estate sector. Our higher quality assets, underpinned by
strong tenant covenants, are more resilient in the face of potentially weaker leasing markets which has largely been
recognised by the valuers in our year-end property valuations. However, there remains near term uncertainty on
market yields and valuations which is only expected to moderate once peak interest rates are reached.
The corporate accommodation and light industrial sectors experienced some valuation pressure which contributed to a
negative 0.8% movement in fair values on the property portfolio, offsetting gains on completed developments. We
expect growth sectors to stabilise, and given the favourable long-term African fundamentals, should continue to see
considerable investment over the medium term.
A high-quality, diverse, and resilient platform
We benefit from having built a business focused on quality real estate assets with strong ESG credentials, long
leases to a resilient and diverse customer base that comprise more than 85% of strong multinational and investment
grade tenants. Revenue from ongoing operations grew by 7.3% in the financial year to 30 June 2023, with contractual
lease escalations, which are predominantly inflation-linked, helping to offset the impacts of rising interest rates
in the portfolio. We notably collected 101.3% (FY22: 92.8%) of the value of contracted revenue. In the financial
year we reduced exposures to the hospitality sector and now have 33 assets across 7 sectors with 94.5% of our leases
in hard currency. This provides a strong foundation to our income generation and a resilient platform from which to
pursue growth opportunities through active management, sector focused development substructures and external fee
generation from our professional services.
Capital recycling
In the prior financial year, the Board set an asset recycling target of 20% of the value of the property portfolio,
equivalent to approximately US$160 million worth of property assets, by 31 December 2023. I am pleased to report
that we have already achieved gross property disposals of US$135.2 million and are making good progress on further
disposals which are hoped to be announced in late 2023 or early 2024. Given the success of the current disposal
programme, the Board is considering extending the targets, including co-investors into sub-structures, and will make
further announcements in due course.
Notable disposals in the financial year included the disposal of the minority interest in 3 hotels to Beachcomber
Hotels International and the exit of the Group’s remaining 25.1% in Letlole la Rona, a listed Botswanan property
company.
Proceeds from asset recycling have principally been applied towards Group debt reduction and to the increased
shareholding in GREA and APDM. Since acquiring an increased interest in APDM and GREA, Grit has combined and
integrated the professional teams and continues to drive operating efficiencies through the establishment of a
centralised treasury programme, shared professional services and integration of other head office support
functions.
Grit 2.0 strategy
At a capital markets day hosted in May 2023, we unveiled the Grit 2.0 strategy, which set our vision for the Group
post the acquisition of GREA and APDM. We described the Group as “moving from income to impactful income”, which is
underpinned by the value we create in new developments and with our various professional services.
Post the acquisition, the Group will continue to deploy its resources within the following principal strategic
areas:
1. Owning and managing a well-diversified portfolio of high-quality real estate assets across the African continent
(excluding South Africa) – which are resilient to macro-economic challenges.
Pursuing limited risk-mitigated real estate developments for existing and target tenants, predominantly focused
on the industrial, embassy accommodation and data centres sectors, driving accelerated NAV growth into the
2. future. Development exposure will not exceed more than 20% of Group gross asset value, and upon completion, will
be included in the income producing portfolio of the Group thereby underpinning future income growth – leading to
an expectation of enhanced yield and income upon completion of the developments.
Generation of additional fee income from real estate, facilities, and development management services to both
3. internal clients and to third party clients and co-investors – expected to result in enhanced income, with a
contribution to earnings for the year of US$4.7 million.
Grit’s strategy is to organise the Group’s real estate assets into logical sector groupings and to pursue
development activities, wherever possible, through GREA, and focusing on the following:
1. Developing industrial and logistics assets across Africa which are then held as investments or sold to other
investors; and
The establishment of a substructure that holds our diplomatic housing portfolio across the African continent for
2. the US Government, other countries and multinational companies which are either held as investments or sold to
investors.
The Group has made substantial progress in recapitalising GREA and have obtained shareholders’ Investment Committee
approval for the cash injection of US$48.5 million. While a number of administrative processes need to be concluded,
the Board is confident that the targeted date of drawdown of December 2023 will be met. The capital injection will
initially be utilised to temporarily reduce debt and associated financing costs before being deployed towards the
Group’s pipeline in due course.
The Group has made significant progress in sourcing funding for growth projects, with the targeted issuance of
financing instruments in Bora to the IFC, a division of the World Bank. The IFC board approved transaction is set to
close imminently providing additional growth capital for Bora to fund industrial and impact focused acquisitions and
developments.
Financial results
The financial results to 30 June 2023 have been impacted by the corporate actions, rising interest rates and
sluggish property valuations. EPRA NRV per share declined 8.3% to US$72.8cps (versus prior year NRV of US$79.4cps)
predominantly due to property valuations, write offs and provisions against delayed property projects and
transaction costs related to the GREA acquisition and the syndicated loan.
Grit’s LTV improved from 46.7% in the prior financial year to 44.3%, predominantly from debt reductions related to
asset disposals and active decisions by management to reduce the more expensive facilities in the face of rising
interest rates. LTV is expected to fall further upon the planned consolidation of GREA.
Interest rates have remained higher, and for longer, than we initially anticipated introducing increased risks to
the Group’s financial performance in the near term. These risks are covered in more detail in the Chief Financial
Officer’s report below but has influenced the Board’s assessment of liquidity risks when assessing current dividend
levels.
Dividends
During the financial year the Group had a number of cash requirements to support the Board’s strategic objectives
and capital projects. The group successfully increased its shareholding in GREA (US$56.4 million), repaid overall
quantum of debt by US$35.1 million and funded the upfront debt costs of the US$306 million syndicated loan (US$7.4
million). The bulk of the capital for these strategic and risk mitigating actions were funded from the asset
recycling program that generated US$86.8 million, while US$12.0 million was funded from operational cashflows. The
current transition from cash generative assets sold in the year to assets within the increased GREA portfolio, has
resulted in a temporary disruption of normalised dividend flows from underlying properties that are expected to
normalise by the end of the year. The current volatility of interest rates and continuing inflationary pressures
combined with the rising tensions in the Middle East have additionally heightened the macro-economic risks faced by
the Group. While we understand the importance of dividends to our shareholders, the Board has elected against
declaring a second half dividend. Therefore the total dividend for the year amounts to US$2.00 cps following the
interim dividend of US$2.00cps declared for the six months ended 31 December 2022. The full year distribution
represents an 46.6% pay-out of distributable earnings.
A number of initiatives, including the implementation of a formal GREA dividend policy, normalisation of dividends
from recently completed GREA portfolio assets and proceeds from further asset recycling, are expected to largely
replenish the operational cashflows utilised to close the strategic objectives discussed above. The Board will
consider either a special dividend later this year or an increased H1 dividend dependant on the progress it makes on
all, or some, of these initiatives.
Changes to the Board
In February 2023 Nomzamo Radebe resigned off the Board. We thank Nomzamo for her valuable input she added to the
Board.
We welcomed Lynette Finlay to the Board in March 2023 as an independent non-executive director. Lynette brings a
wealth of property market experience, and we look forward to further engagements with her.
Outlook
Management and the Board will continue to focus on ongoing reduction in LTV, the asset recycling programme, and the
expansion of Grit’s investments in specialist development focused investment vehicles. The Board has identified a
cost optimisation programme on Group administrative expenses, targeting a sustainable US$4.0 million reduction by
December 2024.
Grit 2.0 positions the Group for growth, and with strong current cash collection, increased leasing activity,
resilient assets and the potential for stronger NAV and fee income growth, the Board affirms the total return target
of between 13% and 15% per annum over the medium term.
Peter Todd
Chairman
CHIEF EXECUTIVE’S STATEMENT
Grit continues to refine its strategy, and as part of Grit 2.0, is looking to increasingly pursue risk mitigated and
pre-leased developments and asset management activities that generate fees to compliment the sustainable property
income we enjoy from our existing high quality property portfolio. Our vision statement summarises our key focus and
activities:
“We are a family of Partnerships,
Setting the Global Benchmark in Africa for
Developing Smart Business Solutions &
Impact Real Estate that goes Beyond Buildings!”
In addition to sound property fundamentals, a significant catalyst for Grit’s growth continues to be our focus on
strong, transparent counterparty and stakeholder relationships. This ability and know-how are what differentiates
Grit and allows us to deliver smart real estate solutions on the African continent.
We identified a number of key focus areas at the start of the year and are pleased to provide the following key
highlights for the period:
• We delivered a strong portfolio performance including leasing and vacancy management, strong cash collections and
growth in operational earnings from ongoing operations;
• We strengthened the Group balance sheet, including reductions in debt balances and Group loan to value and
extended debt maturities through the US$306 million sustainability linked syndicated facility;
• Good progress on the GREA and APDM acquisitions, with beneficial ownership of 51.48% of GREA being obtained on 30
June 2023 and transfer of shares completed shortly after the financial year end;
• Acceleration in our asset recycling strategy with significant disposals that included three Beachcomber hotels and
the remaining stake in Letlole la Rona concluded during the financial year;
• Significant progress in our move towards a low carbon economy and achieving our 25% building efficiency
improvement target by 2025.
Key operational trends
Good leasing activity
During the year, we signed leases over 9,006 m2 of GLA in our investment property portfolio with significant
activity in the office, retail, light industrial and corporate accommodation sectors, with pleasing results in the
Anfa Mall and Ghana office portfolio. Although we increased our shareholding in GREA to 51.48%, the Group has been
operationally controlling the completed assets since April 2022 by undertaking property management and leasing
activities on their behalf via Group companies.
Balance sheet improving
In October 2022 we concluded a US$306 million multi-jurisdictional sustainability linked syndicated debt facility
across Mozambique, Zambia, Kenya, Ghana, and Senegal, which was the largest of its kind in the real estate sector in
Sub Sahara Africa (ex-South Africa).
Interest bearing borrowings were subsequently reduced by US$28.3 million to US$396.7 million in the financial year
through a combination of utilising cashflows raised from asset disposals and from redirecting cash generated from
operations towards debt reductions. The Group’s reported LTV dropped to 44.3% (from 46.7% in FY2022) and is further
expected to reduce upon the consolidation of GREA.
Accelerating fee income generation
Grit's proportionate fee income generation in the year accelerated as the first evidence of the Grit 2.0 fee income
strategies started materialising. While the underlying portfolio continues to be delivered, the fixed asset
management fee income component will increase steadily over time while the development management fees are expected
to be linked to business activity and available growth capital and might vary year to year, with current year
performance being bolstered by one off incentive fees earned by APDM on the delivery of its minimum return hurdles.
Significant liquidity redeployment
Strong cash collections of 101.3% (FY22: 92.8%) continued to support the Group’s liquidity position.
Additionally, proceeds from the disposals of the remaining 25.1% interest in Letlole la Rona and the 44.2% interest
in three hotels operated by Beachcomber Hotels International were applied towards both debt reductions and towards
the completion of the final phases of the GREA and APDM acquisitions (where US$58.3m was deployed towards phases two
and three of the acquisition).
Operational update
Grit’s current portfolio consists of 33 assets located across 11 countries and 7 sector classes. The Group’s
portfolio has a 6.4% EPRA vacancy rate (FY2022: 4.7%) impacted by mix changes in the portfolio post asset disposals,
and a weighted average lease expiry (WALE) of 4.4 years (FY2022: 4.8 years). More than 85% of income is underpinned
by a wide range of blue-chip multinational tenants across a variety of sectors and has a weighted average contracted
lease escalation of 3.0% per annum (FY2022: 5.4% per annum). Most rents are collected monthly, of which 94.5%
(FY2022: 91.5%) are collected in US Dollar, Euro or pegged currencies.
Office
The global work-from-home phenomenon has been less relevant in Africa and has had limited impact on our office
tenants. Office sector valuations in Mozambique remained resilient while the Ghanaian office market continues to be
faced with macroeconomic headwinds despite positive leasing activity in the financial year, driven mainly by
international tenants.
Corporate accommodation
The valuation of the VDE Housing Estate in Mozambique reduced to US$50.2 million (FY2022: US$55.2 million), with
valuers applying conservative leasing assumptions post the current lease maturity in May 2024. The acquisition of
GREA allows the Group to accelerate its provision of diplomatic housing through a strong pipeline of secured
opportunities similar to the recently completed developments in both Kenya and Ethiopia, where the Group has enjoyed
good valuation performance in this financial year.
Light industrial
The continent remains undersupplied for good-quality industrial property.
As part of the Grit 2.0 strategy the Group is consolidating its industrial assets into a single focused entity
called Bora Africa. Bora is expected to generate both rental and capital value growth. The core income generating
asset base and strong development pipeline of Bora Africa is expected to provide co-investment opportunities to our
real estate partners and other equity funders.
Medical
Although a relatively small exposure for the Group at present, the GREA team successfully completed the Artemis
Curepipe hospital in Mauritius in May 2023 at a total cost of US$18.6 million.
Retail assets
The occupancy rates of our retail assets have steadily improved since the height of the pandemic at the end of 2021.
However, this sector is still targeted for further asset disposals. Our strategy of focusing mainly on smaller malls
with non-discretionary food and service retailers have yielded positive results and we are encouraged by new tenant
activity.
Vacancies at AnfaPlace Mall have also experienced an improving trend. This increasing footfall could bode well for
the significant number of turnover linked leases currently in place.
Hospitality assets
Our hospitality portfolio now comprises two hotels post the sale of the interest in BHI – one in Mauritius and one
Club Med resort in Senegal, the refurbishment of which, will be completed in November 2023, before embarking on the
expansion project which is due for completion in late 2024.
Update on acquisitions and development pipeline
The acquisition of a majority stake in GREA was completed shortly after the financial year end. Control over GREA
and its asset manager, Africa Property Development Managers (“APDM”), is pivotal to Grit’s ambitions. These include
further diversifying its asset base into defensive, high-growth real estate sub-sectors and growing fee income
whilst creating positive and sustainable impacts and value to the local people and communities we serve across
Africa.
The finalisation of the amendments to the shareholders agreement are expected shortly, which will result in control
and the consolidation of GREA and APDM into the results of Grit from that date.
Summary of GREA developments and projects
Name Completion date Anchor tenant
OBO Kenya (embassy accommodation) August 2022 US Embassy
The Precinct, Mauritius (office) May 2023 Grit, Dentons, W17
Artemis Curepipe Hospital, Mauritius May 2023 Falcon Group
Eneo, Tatu City, Kenya Q2 2024 CCI
Artemis Coromandel Hospital, Mauritius Q2 2025 Falcon Group
OBO Mali (embassy accommodation) Q2 2025 US Embassy
ESG strategy
The Group’s sustainability efforts focus on community impact, the empowerment of women, energy efficiency and carbon
reduction.
The Board remains committed to a five-year target of a 25% reduction in carbon emissions and a 25% improvement in
our building efficiency against 2019 base figures and has made significant progress in the achievement of these
targets. In addition to environmental responsibility, the Group prides itself on achieving more than 40% of women in
leadership positions at Grit, more than 65% localised employees and significant support to numerous local
communities through extensive CSR and upliftment programmes.
We have made significant progress in our move toward a low carbon economy based on global best practice.
The Group integrated report provides more details on our approach, our strategy, and our achievements against these
targets.
Prospects
The Group has some compelling pipeline opportunities in impact real estate investing. The year-ended 30 June 2023
has been a transitionary year for the Group with significant corporate actions and asset recycling. Our focus will
remain on sustainably growing dividends and enhancing capital growth. This will be done while continuing to target
key portfolio metrics such as lowering the LTV, vacancy, cost factors, maintaining collections and further
strengthening the balance sheet and liquidity position through focused asset recycling initiatives.
The Board have identified a cost optimisation programme on Group administrative expenses and are a targeting a
sustainable US$4.0 million reduction by December 2024. Although rising global interest rates continue to be a
headwind for earnings our focus remains on the long-term sustainable debt strategy and managing the weighted average
cost of debt alongside achieving our contractual lease escalations. The GREA acquisition and recapitalisation as
well as the completion of the IFC financing instrument into Bora Africa positions us well for the Grit 2.0 strategy
and for increased focus on selective impact investing in sectors such as light industrial, diplomatic housing,
medical and data centre.
Bronwyn Knight
Chief Executive Officer
CHIEF FINANCIAL OFFICER’S STATEMENT
Presentation of financial statements
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 notes 11 to 13. 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. Grit Proportionate Interest
Income Statement (including “Distributable Earnings”) are alternative performance measures. In the absence of the
requirement for Distributable Reserves in the domicilium countries of the group, Distributable Earnings is utilised
to determine the maximum amount of operation earnings that would be available for distribution as dividend to
shareholders in any financial period. This factors the various company specific nuances of operating across a number
of diverse jurisdictions across Africa and the investments’ legal structures of externalising cash from the various
regions. 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 12 “Distributable earnings”.
The Group made substantial progress in the current financial year toward disposal of assets accounted for as
associates, and with the anticipated consolidation of GREA and APDM, expects to present largely consolidated asset
results going forward.
Unaudited Unaudited
Audited Unaudited Unaudited
IFRS Extracted from Grit Grit Economic
IFRS Income statement to Associates Proportionate Unaudited Interest Distributable
distribution reconciliation 30 June Income statement Income Earnings
2023 30 June 2023 Non-Controlling Statement
30 June 2023 Interest 30 June 2023
30 June 2023
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross property income 56,249 12,538 68,787 (9,286) 59,501 59,587
Property operating expenses (9,624) (1,798) (11,422) 2,784 (8,638) (9,609)
Net property income 46,625 10,740 57,365 (6,502) 50,863 49,978
Other income 286 22,241 22,527 (3,343) 19,184 18,799
Administrative expenses (22,578) (7,400) (29,978) 4,104 (25,874) (21,419)
Net impairment charge on (3,868) (1,581) (5,449) (59) (5,508) -
financial assets
Profit from operations 20,465 24,000 44,465 (5,800) 38,665 47,358
Fair value adjustment on (4,108) (1,005) (5,113) 1,023 (4,090) -
investment properties
Fair value adjustment on other 3,625 1,948 5,573 (79) 5,494 -
financial liability
Fair value adjustment on other 264 - 264 - 264 -
financial asset
Fair value adjustment on
derivative financial (3,085) - (3,085) - (3,085) -
instruments
Share-based payment expense (354) (7,474) (7,828) - (7,828) -
Share of profits from 14,300 (14,300) - - - -
associates and joint ventures
Loss on disposal of investment (3,240) - (3,240) - (3,240) -
in subsidiary
Loss on disposal of interest in (3,543) - (3,543) - (3,543) -
associate
Impairment of loans and other - (71) (71) (658) (729) -
receivables
Loss on derecognition of loans (3,735) - (3,735) (280) (4,015) -
and other receivables
Foreign currency losses (2,241) (1,640) (3,881) 416 (3,465) -
Loss on extinguishment of loans (1,166) (25) (1,191) 114 (1,077) -
Loss on disposal of property, (888) - (888) - (888) -
plant, and equipment
Other transaction costs (2,156) - (2,156) - (2,156) -
Profit before interest and 14,138 1,433 15,571 (5,264) 10,307 47,358
taxation
Interest income 4,096 5,527 9,623 (40) 9,583 9,582
Finance charges (39,582) (6,088) (45,670) 5,585 (40,085) (36,554)
(Loss) / Profit before taxation (21,348) 872 (20,476) 281 (20,195) 20,386
Taxation (4,225) (487) (4,712) 1,276 (3,436) (3,113)
(Loss) / Profit after taxation (25,573) 385 (25,188) 1,557 (23,631) 17,273
NCI of associates through OCI (385) (385) 385 - -
(Loss) / Profit after taxation (25,573) - (25,573) 1,942 (23,631) 17,273
and after NCI of associates
VAT credits 3,312
Distributable earnings 20,585
Financial and Portfolio summary
The Grit Proportionate Income Statement is further split to produce a Grit Property Portfolio Revenue2, Operating
expenses2 and NOI 2 analysis by sector. Grit’s Property Portfolio revenue has increased by 1.9% after the reduction
of revenue from disposed assets. Revenue from ongoing operations increased 7.3% from prior year on annual
contractual lease escalations and the start of leasing operations on a number of buildings within the GREA portfolio
between January 2023 and May 2023. Net operating income on ongoing operations increased by 5.7% over the
twelve-month period to 30 June 2023.
Revenue Revenue Revenue Revenue Revenue Revenue Change in
FY2023 FY2023 FY2023 FY2022 FY2022 FY2022 Revenue Change in Revenue Rental
Sector Ongoing Collection1
Reported Change in Ongoing Restated4 Change in Ongoing Reported operations FY2023
ownership3 operations ownership3 operations
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 % % %
Retail 19,074 110 18,964 18,310 - 18,310 4.2% 3.6% 95.0%
Hospitality 9,164 3,889 5,275 12,510 7,481 5,029 (26.7%) 4.9% 136.2%
Office 18,163 1,078 17,085 16,577 - 16,577 9.6% 3.1% 98.0%
Light 6,229 - 6,229 3,797 - 3,797 64.1% 64.1% 105.3%
industrial
Corp 14,147 460 13,687 13,620 - 13,620 3.9% 0.5% 96.1%
Accommodation
Medical 53 11 42 - - - 100.0% 100.0% 100.0%
Data Centre 803 135 668 364 - 364 120.6% 83.5% 15.9%
LLR portfolio 1,588 1,588 - 2,788 2,788 - (43.0%) (100.0%) N/A
Corporate 1,444 - 1,444 1,389 - 1,389 4.0% 4.0% N/A
TOTAL 70,665 7,271 63,394 69,355 10,269 59,086 1.9% 7.3% 101.3%
Subsidiaries 56,249 1,001 55,248 51,937 - 51,937 8.3% 6.4%
Associates 12,538 5,810 6,728 16,613 10,269 6,344 (24.5%) 6.1%
SUBTOTAL 68,787 6,811 61,976 68,550 10,269 58,281 0.3% 6.3%
GREA 1,878 460 1,418 805 - 805 133.2% 76.1%
Associates
TOTAL 70,665 7,271 63,394 69,355 10,269 59,086 1.9% 7.3%
NOI NOI FY2023 NOI FY2023 NOI NOI FY2022 NOI FY2022 Change in Change in
NOI NOI
Sector FY2023 Change in Ongoing FY2022 Change in Ongoing
ownership3 operations ownership3 operations Reported Ongoing
Reported Restated4 operations
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 % %
Retail 12,363 70 12,293 11,952 - 11,952 3.4% 2.9%
Hospitality 9,164 3,889 5,275 12,510 7,481 5,029 (26.7%) 4.9%
Office 16,139 870 15,269 14,664 - 14,664 10.1% 4.1%
Light industrial 5,995 - 5,995 3,692 - 3,692 62.4% 62.4%
Corp 11,545 439 11,106 11,558 - 11,558 (0.1%) (3.9%)
Accommodation
Medical 53 11 42 - - - 100.0% 100.0%
Data Centre 148 118 30 324 - 324 (54.3%) (90.7%)
LLR portfolio 1,455 1,455 - 2,507 2,507 - (42.0%) (100.0%)
Corporate 2,023 - 2,023 2,000 - 2,000 1.2% 1.2%
TOTAL 58,885 6,852 52,033 59,207 9,988 49,219 (0.5%) 5.7%
Subsidiaries 46,625 870 45,755 43,281 - 43,281 7.7% 5.7%
Associates 10,740 5,543 5,197 15,181 9,988 5,193 (29.3%) 0.1%
SUBTOTAL 57,365 6,413 50,952 58,462 9,988 48,474 (1.9%) 5.1%
GREA Associates 1,520 439 1,081 745 - 745 104.0% 45.1%
TOTAL 58,885 6,852 52,033 59,207 9,988 49,219 (0.5%) 5.7%
Notes
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 Grit adjusted property portfolio Revenue, Operating expenses and Net Operating Income are unaudited alternative
performance measurements
Change in ownership relate to the impact of the disposal of BHI and LLR as well as the impact of the change in the
3 Group’s proportionate share in GREA from 26.29% to 35.01% during the financial year. On 30 June the Groups
interest increased to 51.4%, with the resulting effect expected to be observed in the 30 June 2024 financial
period.
Prior year comparatives have been restated to reflect a change in accounting policy following clarification by the
4 IFRS Interpretation Committee ("IFRIC") in October 2022 of how lessor should account for the forgiveness of lease
payments. Details of the restatement and impact on prior year comparatives are set out in note 2.3 'Changes in
accounting policies'
The retail sector benefitted from lower vacancies, Covid-19 recovery and from favourable foreign exchange impacts,
particularly on the Zambian portfolio during the year.
The hospitality sector NOI declined as a result of the disposal of the Beachcomber properties during the year. NOI
from ongoing operations grew 4.9% predominantly driven by EBITDA linked rental growth at Tamassa and rentals on
development capex being levied at the Club Med Skirring Resort.
The office sector NOI growth was predominantly attributable to the increased shareholding in Capital Place (50% to
70% from 30 June 2022) and a one-off termination fee relating to Commodity House Phase 1 of US$0.8m. The remainder
of the portfolio was broadly flat over the prior year.
The light Industrial sector NOI growth substantially related to the full year impact of the Orbit Complex
contributing c.US$2.5m to the year-on-year movement.
Corporate accommodation sector and NOI growth predominantly related to new leasing income generated from DH1
Ethiopia and DH3 Kenya completed during the year. The diplomatic housing portfolio positive trends were offset by
lower rentals achieved in the VDE Housing Complex and additional costs being incurred across the portfolio.
Cost control
The financial year-ended 30 June 2023 was a transitionary year for the Group, one in which significant inflationary
pressure and investment for future growth and positioning ahead of GRIT 2.0 resulted in a 40.3% increase in ongoing
administrative expenses. A substantial contributor to the increase were inflationary pressures experienced in items
including insurance, travel, accommodation and staff costs. Additionally, the Group invested for growth, with the
staff compliment increasing during the year and the opening of a new representative office in Kenya. The property
management team added to the headcount growth with new staff in Ethiopia to manage the diplomatic housing projects.
Ongoing administrative costs as a percentage of total income producing assets equate to 2.4%, increasing from 1.7%
in the prior year and against management medium term admin cost ratio target of 1.8%. The group has set a target of
reducing overall administrative costs by US$4.0 million by December 2024. This will be achieved through increased
integration and efficient use of the Grit and APDM staff compliment, further digitisation of business processes,
initiatives surrounding insurance requirements and a more targeted marketing spend that will underpin the growth of
assets under management and the generation of other fee income streams in line with the Grit 2.0 strategy.
Administrative costs for the year included a number of once off items related to the office move to the Precinct and
additional costs related to the completion of phase 2 and 3 of the GREA / APDM acquisition.
Administrative expenses 30 June 2023 30 June 2022 Movement Movement
US$'000 US$'000 US$'000 %
Comparable administrative costs relating to the Group (excluding APDM 21,787 16,944 4,843 28.6%
recharges)
Bora representative office setup costs 532 - 532 100.0%
APDM employee costs recharged to Group 259 - 259 100.0%
Administrative expenses - IFRS 22,578 16,944 5,634 33.3%
Less: Transaction costs (1,706) (2,071) 365 (17.6%)
Total administrative expenses 20,872 14,873 5,999 40.3%
Fee income 1,348 480 868 180.8%
As an offset to the increased administrative costs, asset management fees of the subsidiaries grew to US$1.4 million
(an increase of 180.8% from the prior year comparative of US$0.48 million). Additionally, the insourcing of property
management in Ghana and Kenya resulted in net savings of US$0.16 million (with the current years fees of US$0.11
million ending during the year). These figures are expected to grow in line with the number of new projects
delivered in the medium term and will be significantly bolstered through the deployment of the IFC funding
instrument and GREA recapitalisation.
Material finance costs increases
The continued rise in global interest rates have driven the Group’s cash weighted average cost of debt up to 8.0% at
30 June 2023 and including the full year impact of the Orbit acquisition, resulted in a 46.5% increase in net
finance costs for the year. The increase in ongoing funding costs is partially shielded by annual contractual lease
escalations over the property portfolio which are predominantly linked to US consumer price inflation. The Group
also has hedging instruments in place amounting to US$200.0 million to mitigate the impact of interest fluctuations.
Although base rates increased by c3.6% over the year, our WACD increased by 1.3% as a result of these hedges.
The additional US$11.3 million charge to income resulted in a significant impact on the financial results for the
year. The reported net finance charge includes an amortisation of loan issuance costs and the impact of hedging
activities.
Net finance costs 30 June 2023 30 June 2022 Movement Movement
US$’000 US$’000 US$’000 %
Finance costs as per statement of profit or loss 39,582 26,151 13,431 51.4%
Less: Interest income as per statement of profit or loss (4,096) (1,935) (2,161) 111.7%
Net finance costs - IFRS 35,486 24,216 11,270 46.5%
Interest rate risk exposure and management
The exposure to interest rate risk at 30 June 2023 is summarised below and the table highlights the value of the
Group’s interest-bearing borrowings that are exposed to the base rates indicated:
Lender TOTAL SOFR EURIBOR PLR1 FIXED
US$'000 US$'000 US$'000 US$'000 US$'000
Standard Bank Group 269,147 222,633 46,514 - -
State Bank of Mauritius 35,361 10,000 24,336 1,025 -
Investec Group 34,722 3,152 31,570 - -
Nedbank Group 15,635 15,635 - - -
Maubank 712 - 712 - -
Housing Finance Corporation 4,369 - - - 4,369
NCBA Kenya 17,500 17,500 - - -
Private Equity 4,725 - - - 4,725
International Finance Corporation 16,100 16,100 - - -
TOTAL EXPOSURE – IFRS 398,271 285,020 103,132 1,025 9,094
Less: Hedging instruments in place (200,000) (200,000) - - -
Less: Partner loans offsetting group exposure (21,034) (21,034) - - -
NET EXPOSURE (AFTER HEDGING AND OTHER MITIGATING INSTRUMENTS) - IFRS 177,237 63,986 103,132 1,025 9,094
Notes
1 PLR – Mauritius Prime Lending Rate
Management monitor and manage the business relative to the cash WACD which is the net finance costs before loan cost
amortisation and adjusted for the effects of the hedges. Including the impact of hedges and back-to-back partner
loans, the Group is 78.24% hedged on its US$ SOFR exposure but remains largely unhedged to movements in EURIBOR and
the Mauritian prime lending rate.
On 16 October 2023, interest rate hedges over US$100.0 million notional, which gave protection against LIBOR rates
above 1.58% to 1.85%, matured. The Group re-instated a new US$100.0 million notional interest rate hedge from this
date, with new protection level above 4.75% against SOFR 3-month rates.
A sensitivity of the Group’s expected WACD and cash WACD to further movements in base rates are summarised below:
All debt Cash WACD WACD Movement vs current WACD
At 30 June 2023 (including hedges) 7.97% 8.43%
At 31 October 2023 (including hedges) 9.09% 9.55% 0.00%
+50bps 9.30% 9.76% +21bps
+25bps 9.19% 9.65% +10bps
-50bps 8.88% 9.34% (21bps)
-100bps 8.55% 9.01% (54bps)
-200bps 7.84% 8.30% (125bps)
Asset recycling
During the year the Group continued with its asset recycling strategy and disposed of a minority interest (44.42%)
in 3 hotels to Beachcomber Hotels International and the complete exit of the Group’s remaining 25.1% in Letlole la
Rona, a listed Botswanan property company. The impact on the financial results of the Group of these disposals are
summarised below.
Disposal of Leisure Property Northern (Mauritius) Limited
The Group disposed of its whole equity interests in Leisure Property Northern (Mauritius) Limited ("LPNL"), the
legal beneficial owner of Beachcomber Hospitality Investments Ltd ("BHI") and a wholly owned subsidiary of the Group
during the year. At the beginning of the financial year, Grit via LPNL owned 44.42% of BHI. The following
transactions occurred during the year which resulted in the disposal of LPNL and BHI.
In November 2022, BHI declared a €32.6 million dividend whereby 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 elected a
• cash payout whereas New Mauritius Hotel (“NMH”), the other shareholder of BHI, 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 decreased from 44.42% to 27.01%.
In May 2023, the Group disposed of its wholly owned subsidiary LPNL (which held 27.01% of BHI at the time of
• disposal). Following the disposal of LPNL and the de-consolidation of LPNL in Grit's book, LPNL merged with BHI so
that BHI is the only surviving legal entity that remains in operation.
• Following the disposal, the New Mauritius Hotels option to acquire all of the equity held by LPNL in BHI, expired
and the call option liability that was previously recorded was reversed.
The net impact of the disposal of the LPNL and BHI on the results of the Group during the year is US$’000
summarised as follows
Assets disposed
Investments in associates 51,298
Cash and cash equivalents 1
Total assets disposed 51,299
Liabilities disposed
Interest-bearing borrowings (19,404)
Trade and other payables (28)
Total liabilities disposed (19,432)
Net assets disposed 31,867
Consideration received 28,880
Loss on sale of subsidiary (2,987)
Reclassification of cumulated other comprehensive income movement from foreign currency translation reserve (75)
to profit or loss
Total loss on sale of interest in subsidiary (3,062)
Fair value adjustment through profit or loss on reversal of call option held by New Mauritius Hotels 2,472
Net impact of disposal on profit or loss in the current year (590)
Disposal of equity interest in Letlole La Rona Limited
During the year, Grit Services Limited a wholly owned subsidiary of the Group disposed of its entire equity
interests of 25.10% in Letlole La Rona Limited on the Botswana Stock Exchange for a cash consideration. The disposal
of shares has been completed in tranches. The number of shares disposed of and the trading price at the different
disposal dates were as follows:
Number of shares disposed Trading price per share Percentage interest
BWP %
19,000,000 3.48 6.79%
19,768,068 3.51 7.06%
12,600,000 3.16 4.50%
18,911,932 2.50 6.75%
70,280,000 25.10%
The net impact of the disposal of the interest in Letlole La Rona Limited on the results of the Group during the
year is summarised as follows, with the largest contributor to the loss on disposal being the crystallisation of
foreign currency translation differences that were recognised during the period in which the investment was held,
and which arose due to the movement in the Botswana Pula against the US Dollar during the investment period.
US$’000
Fair value of consideration received 16,853
Less: Carrying amount of Investment in associate to be disposed 17,105
Loss on disposal of interest in associate (252)
Reclassification of cumulative foreign currency translation reserve to profit or loss (3,291)
Total loss on disposal of investment in associate (3,543)
Utilisation of proceeds from disposal of assets
The proceeds on the disposal of the above-mentioned assets had largely been used to partially fund the acquisition
of GREA and the settlement of debt.
Portfolio performance
Income producing assets increased by 0.6% during the year under review. The increase in investment properties is
largely driven by capital expenditure incurred during the year along with the acquisition of the remaining 50%
interest in Buffalo Mall, which resulted in the asset being consolidated in the Group results at 30 June 2023. The
acquisition of a further 25.19% interest in GREA along with an increase of 1% interest in APDM was offset by the
consolidation of Buffalo Mall as described above as well as the impact of the disposal of the entire shareholding in
Beachcomber Hospitality Investments as well as LLR during the year. Other loans receivable decreased through partial
repayments received from partners during the year.
Composition of income producing assets 2023 2022
US$'m US$'m
Investment properties 628.8 604.5
Investment property included within ‘Investment in associates’ 197.1 203.8
825.9 808.3
Deposits paid on investment properties 5.9 8.2
Other investments, Property, plant & equipment, Intangibles & related party loans 30.2 40.2
Total income producing assets 862.0 856.7
Property valuations
Reported property values based on Grit’s proportionate share of the total property portfolio (including joint
ventures and GREA associates) decreased by 4.5% in the period and were principally impacted by “Asset Recycling”
related to the disposal of stakes in BHI and LLR (both accounted for as associates) offset to an extent by increased
stakes in the GREA assets (reflected in their various sectors) as a result of Grit’s increased interest in GREA
(which moved from 26.29% to 51.48%). Additions predominantly related to capex deployed to various development
projects in GREA as well as the Bollore property. Fair value loss on the portfolio amounted to US$5.9m, equating to
-0.8% on the like-for-like portfolio.
Opening Development Fair Closing Total
Sector Property Forex Asset assets completed Additions Change in Other value Property Valuation
Value movement recycling in the year ownership movements Value
Movement
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 %
Retail 197,417 1,330 - - 371 12,322 720 551 212,711 7.7%
Hospitality 164,603 9,235 (100,057) - 2,244 - 8 3,959 79,992 (51.4%)
Office 195,823 - - 11,728 - 5,032 940 1,921 215,444 10.0%
Light 80,414 - - - 7,899 - 655 (9,518) 79,450 (1.2%)
industrial
Data Centres 6,839 - - - - 6,555 338 658 14,390 110.4%
Medical - (140) - 5,633 - 4,626 - 2,108 12,227 100.0%
Corporate 145,884 (520) - - 1,998 16,824 (793) (5,621) 157,772 8.1%
Accommodation
LLR portfolio 20,946 (6,187) (14,909) - - - - 150 - (100.0%)
GREA under 13,214 715 - (17,361) 14,506 5,167 159 (159) 16,241 22.9%
construction
Total 825,140 4,433 (114,966) - 27,018 50,526 2,027 (5,951) 788,227 (4.5%)
Subsidiaries 604,474 4,401 - - 10,531 11,769 1,710 (4,108) 628,777 4.0%
Associates 203,770 552 (114,966) - 15,088 22,576 89 (1,005) 126,104 (38.1%)
SUBTOTAL 808,244 4,953 (114,966) - 25,619 34,345 1,799 (5,113) 754,881 (6.6%)
GREA 16,896 (520) - - 1,399 16,181 228 (838) 33,346 97.4%
Associates
TOTAL 825,140 4,433 (114,966) - 27,018 50,526 2,027 (5,951) 788,227 (4.5%)
Interest bearing borrowings movements
As at 30 June 2023, the Group had a total of US$398.3 million in interest bearing borrowings outstanding as compared
to a total of US$425.1 million that was outstanding at the end of the comparative period. The reduction in these
balances were largely driven by the settlement of interest-bearing borrowings amounting to US$19.4 million held in
Leisure Property Northern (Mauritius) Limited, which was disposed during the year as well as a US$10.0 million
repayment made on the loan facility that the Group holds with the State Bank of Mauritius Limited (other loans
settled during the period amounted to US$5.6 million). During the year the Group acquired the remaining 50% interest
in Buffalo Mall Naivasha Limited and due to the consolidation of this entity at 30 June 2023 the interest-bearing
borrowings that relate to this entity amounting to US$4.4 million was included in the Group balance as at that date.
Movement in reported interest-bearing borrowings for the year (subsidiaries) 30 June 2023 30 June 2022
US$’000 US$’000
Balance at the beginning of the year 425,066 410,588
Proceeds of interest bearing-borrowings 324,459 58,513
Loan reduced through disposal of subsidiary (19,404) (6,624)
Loan acquired through asset acquisition 4,369 6,011
Loan issue costs incurred (7,355) (4,386)
Amortisation of loan issue costs 3,368 2,765
Foreign currency translation differences 3,561 (14,836)
Interest accrued 2,798 751
Debt settled during the year (340,127) (27,716)
As at 30 June 396,735 425,066
For more meaningful analysis, a further breakdown is provided below to better reflect debt related to
non-consolidated associates. At 30 June 2023, the Group had a total of US$457.3 million in interest bearing
borrowings outstanding, comprised of US$398.3 million in subsidiaries (as reported in IFRS balance sheet) and
US$59.0 million proportionately consolidated and held within its associates.
30 June 2023 30 June 2022
Debt in Debt in Total Debt in Debt in Total
Subsidiaries associates Subsidiaries associates
US$’000 US$’000 US$’000 % US$’000 US$’000 US$’000 %
Standard Bank Group 269,147 28,881 298,028 65.18% 183,496 6,516 190,012 40.30%
Bank of China - - - 0.00% 76,405 - 76,405 16.21%
State Bank of 35,361 2,769 38,130 8.34% 57,659 16,375 74,034 15.70%
Mauritius
Investec Group 34,722 - 34,722 7.59% 36,129 - 36,129 7.66%
Absa Group - 14,157 14,157 3.10% 7,913 3,057 10,970 2.33%
ABC Banking - - - 0.00% 7,121 - 7,121 1.51%
Corporation
Afrasia Bank Limited - 21 21 0.00% - - - 0.00%
Nedbank Group 15,635 7,772 23,407 5.12% 21,820 286 22,106 4.69%
Mauritius Commercial - - - 0.00% - 7,774 7,774 1.65%
Bank
Maubank 712 - 712 0.16% 3,345 - 3,345 0.71%
First National Bank - - - 0.00% - 9,013 9,013 1.91%
Housing Finance 4,369 - 4,369 0.96% - 2,316 2,316 0.49%
Corporation
Bank of Gaborone - - - 0.00% - 727 727 0.15%
SBI (Mauritius) Ltd - 2,078 2,078 0.45% - - - 0.00%
Cooperative Bank of - 3,303 3,303 0.72% - - - 0.00%
Oromia
NCBA Bank Kenya 17,500 - 17,500 3.83% 10,700 - 10,700 2.27%
Private Equity 4,725 - 4,725 1.03% 4,725 - 4,725 1.00%
International 16,100 - 16,100 3.52% 16,100 - 16,100 3.41%
Finance Corporation
TOTAL BANK DEBT 398,271 58,981 457,252 100.00% 425,413 46,064 471,477 100.00%
Interest accrued 7,725 4,927
Unamortised loan (9,261) (5,274)
issue costs
As at 30 June 396,735 425,066
Capital commitments
Upcoming capital commitments in the current financial year include:
• Club Med Senegal redevelopment: EUR27.1 million up to January 2025; and
• Drive in Trading guarantee settlement: US$17.5 million by March 2024.
Net Asset Value and EPRA Net Realisable Value
Further reconciliations and details of EPRA earnings per share and other metrics are provided in notes 11 to 13.
Net asset value evolution Unaudited Unaudited
US$'000 US$'cps
IFRS NAV as reported 336,301 70.1
Derivative financial instruments (1,862) (0.4)
Deferred Tax on Properties 46,873 9.7
EPRA NRV at 30 Jun 2022 381,312 79.4
Portfolio valuations (5,113) (1.1)
Other fair value adjustments (873) (0.2)
Other non-cash items (including non-controlling interest) (20,680) (4.3)
Dividend attributable to NCI (2,397) (0.5)
Cash profits 17,267 3.6
Movement through FCTR 4,802 1.1
Dividend paid (19,188) (4.0)
Movement other equity instruments (5,568) (1.2)
EPRA NRV Before Dilution 349,562 72.8
Effect of treasury shares 94 0.0
EPRA NRV at 30 Jun 2023 349,656 72.8
Deferred Tax on Properties (48,217) (10.0)
Derivatives (789) (0.2)
IFRS NRV at 30 Jun 2023 300,650 62.6
Going Concern
The Directors’ assessment of the Group’s and Company’s ability to continue as a going concern is required when
approving the financial statements. As such the Directors have modelled a ‘base case’ and a ‘severe but plausible
downside’ of the Group’s and Company’s expected liquidity and covenant position for a going concern assessment
period through to March 2025, a period of at least 12 months following the approval of these accounts. The Directors
considered the existing structure of the group, where GREA is accounted for as a joint venture, and also the
forecasts under a scenario where GREA is controlled and therefore consolidated which is the stated intention of the
group
The process involved a thorough review of the Group’s risk register, an analysis of the trading performance both pre
and post year-end, extensive discussions with the independent property valuers, a review of the operational
indicators within the Group and economic data available in the countries in which the Group operates. All of this
has been done in the context of the continued global market instability, previous experience of the African real
estate sector and best estimates of expectations in the future.
Base Case model
The base case reflects the Directors’ best expectations of the position going forward. It was modelled on board
approved forecasts over the relevant period with amendments to reflect current changes in the business. The base
case scenario includes the Group’s and Company’s financial projections and the following key assumptions:
1. Management has modelled the proceeds of both the IFC funding instrument (US$30 million) as well as the
recapitalisation of GREA (with a cash injection of US$48.5 million) to be closed from November 2023.
The initial deployment of the IFC instrument shall be utilised to acquire a sale and lease back asset with a
a. value of at least US$15 million (which is a requirement of the IFC instrument) with the remaining balance
being undrawn; and
The US$48.5 million recapitalisation of GREA is to fund new development projects and to unlock the fee income
strategies of the Group as contemplated under “Grit 2.0”. The proceeds of the GREA recapitalisation shall
initially be applied to reduce debt in the short term, through the shared Treasury policy, before being
deployed towards the Group’s pipeline in due course. The applicable development fee income surrounding the
deployment of the cash has been included in the model. As the cash is targeted to be received in December
b. 2023, the Directors have applied significant judgement on the inclusion of the US$48.5 million capital
injection in GREA. The judgement that the cash will be received from the capital injection has been made on
the basis that this has been approved by the Board of GREA and by the investment committee of the third-party
investor. For these reasons the Directors have concluded that they have obtained sufficient evidence that the
cash will be received in due course. The Group is not compelled to inject cash of its own as part of the
recapitalisation of GREA.
2. Modelling the Company’s contractual lease income, which at 30 June 2023 had a weighted average lease expiry of
4.4 years and applying the applicable contractual lease escalations (which averaged 3.0% in the current period);
3. Expected take up of vacancies from ordinary letting activities, updated for any leases concluded post year end;
4. Debt is refinanced in the ordinary course of business, based on the Group’s historical ability to refinance debt
as required;
5. Hedging contracts with a nominal value of US$200 million, which are more fully described in the CFO statement
and have been concluded post year end, are included in the model;
6. Base interest rates increase to 5.38% (in the case of US Dollar SOFR base rates) and 3.92% (in the case of Euro
base rates) before retracing to 3.91% and 1.85% respectively by March 2025;
Depreciation of the various African currencies versus the US Dollar, most notably the Zambian Kwacha
7. depreciating by 19.4% and the New Mozambique Metical depreciating by 21.3% over the period, with the Euro
appreciating by 4.2% over the period;
Property valuations that assume constant discount and exit capitalisation rates to those applied by the
8. independent valuers for the year ended 30 June 2023, while applying the cashflows and currency impacts mentioned
above;
9. Drive in Trading guarantee settlement paid in March 2024 of US$17.5 million;
10. Further progress towards, and extension of, the Company’s stated asset disposal strategy whose proceeds are
deployed to reduce debt facilities and to fund future pipeline opportunities; and
11. Administrative expense reductions of c.$4.6 million during FY24 and FY25.
Severe but plausible downside model
The severe but plausible downside scenario is initially applied to Grit on a standalone basis and then includes
additional overlays of consolidated GREA scenarios to reflect the intention of the Directors to obtain control over
GREA. A summary of the key assumption overlays to the Base Case made in the severe but plausible scenario are as
follows:
As the IFC agreement has not yet been signed by the financial statement date, the initial utilisation of the
funds has therefore not been assumed. The funds from the GREA recapitalisation have been assumed to be held in
debt facilities as the projects to which they will be allocated have not yet reached sufficient finality (most
specifically binding pre-let agreements and specific project debt funding) reducing the Group’s interest costs
1. and improving liquidity. Any fee income related to these projects have also not been modelled. As the cash is
targeted to be received in December 2023, the Directors have applied significant judgement on the inclusion of
the US$48.5 million capital injection in GREA. The judgement that the cash will be received from the capital
injection has been made on the basis that this has been approved by the Board of GREA and by the investment
committee of the third-party investor. For these reasons, the Directors have concluded that they have obtained
sufficient evidence that the cash will be received in due course;
Base interest rates are assumed to continue to increase to levels higher than those assumed in the base case,
2. with base rates staying higher for longer and at levels increasing to c1.25% higher than the base case scenario
and then maintaining this average over the measurement period. The resultant assumed rates are:
• SOFR base rates increase to a maximum of 6.31% up to June 24 before rate retracting
5.16% in March 2025;
• 3 month Euribor rates increase to 5.05% before retracting to 4.55% in June 2024 and
3.48% in March 2025;
All debt facilities that mature during the period to December 2024 are assumed to be repaid on the current
3. maturity date; while those beyond this date, specifically the US$306 million sustainability linked syndicated
loan facility maturing in 2027, the SBM Euro 22.3 million and Nedbank US$8 million facilities maturing in April
2025, are assumed to be refinanced in the ordinary course;
4. Further depreciation of currencies versus the US Dollar, most notably the Euro depreciating by 4.0% over the
period and movements in various African currencies of up to 22.8%;
5. Only contractual preference share coupons are paid;
6. The ongoing refurbishment of the Club Med Cap Skirring Resort in Senegal is reduced to the contractually
obligated spend; and
7. Administrative expense reductions of c.US$4.6 million during FY24 and FY25.
Given the Group’s stated intention to consolidate GREA, further overlays in the severe but plausible downside
scenario are applied to GREA and include:
1. Interest rate and currency sensitivities, as above, are applied to GREA debt, and debt facilities that mature
during the period are assumed to be repaid on the current maturity date;
2. Delays and cancellations to targeted asset disposals are modelled;
3. Potential delays of current development projects underway have been factored in by up to 6 months; and
4. Future projects are ceased, with no additional fee income generation from these projects or related asset
management services.
Where potential risks to covenants have been identified, the Group has received specific condonements from its
financiers should the scenario modelled come to pass. This includes Interest Cover Ratio covenant condonements and
Loan to Value covenant condonements during the going concern period for risks identified at the December 2024
measurement period.
Under both the base case and the severe but plausible scenario, along with certain remedies within management’s
control, which include actions like cuts in dividends, the Company is able to meet its liquidity and covenant
positions through to March 2025. The Board has therefore concluded that it is appropriate to prepare the financial
statements on the going concern basis and have concluded that there is no material uncertainty in forming that view,
noting the significant judgement made in connection with the GREA capital raise.
Leon van de Moortele
Chief Financial Officer
31 October 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 2023 are set out on pages 54 to 57 of the 2023
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 categories and existing mitigating actions and are satisfied that they
remain appropriate to manage the relevant risks.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The responsibility statement has been prepared in connection with the Groups 2023 Integrated Annual Report, extracts
of which are included within this announcement.
The Directors are responsible for preparing financial statements for each financial year which give a true and fair
view, in accordance with applicable Guernsey law and International Financial Reporting Standards, of the state of
affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial
statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any
time the financial position of the Company and enable them to ensure that the financial statements comply with The
Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are
unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make
himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of
that information.
Directors’ confirmations
The Directors consider that the Integrated Report and Accounts, taken as a whole, is fair, balanced, and
understandable and provides the information necessary for shareholders to assess the Group’s position, performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in pages 98 to 99 confirm that, to the best of their
knowledge:
the Group and Company financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board; the Financial Pronouncements as issued
• by Financial Reporting Standards Council, the LSE and SEM Listings Requirements and the requirements of the
Companies (Guernsey) Law 2008, give a true and fair view of the assets, liabilities, financial position and loss
of the Group and profit of the Company; and
• the Strategic report includes a fair review of the development and performance of the business and the position of
the Group and Company, together with a description of the principal risks and uncertainties that it faces.
The financial statements on pages 172 to 272 were approved by the Board of Directors and signed on its behalf by:
On behalf of the Board
Bronwyn Knight Leon van de Moortele
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF INCOME
Audited for the year ended
Audited for the year ended
30 June 2022
30 June 2023
Restated
Notes US$'000 US$'000
Gross property income 56,249 51,937
Property operating expenses (9,624) (8,656)
Net property income 46,625 43,281
Other income 286 80
Administrative expenses (22,578) (16,944)
Net impairment charge on financial assets (3,868) (5,301)
Profit from operations 20,465 21,116
Fair value adjustment on investment properties (4,108) 20,080
Contractual receipts from vendors of investment 2 - (297)
properties
Total fair value adjustment on investment properties (4,108) 19,783
Fair value adjustment on other financial liability 3,625 (11,315)
Fair value adjustment on other financial asset 264 (371)
Fair value adjustment on derivative financial (3,085) 4,501
instruments
Share-based payment expense (354) (1,238)
Share of profits from associates and joint ventures 3 14,300 20,611
Loss on disposal of investment in subsidiary 3 (3,240) (2,051)
Loss on disposal of interest in associate (3,543) (573)
Impairment of loans and other receivables - (3,101)
Loss on derecognition of loans and other receivables (3,735) -
Foreign currency losses (2,241) (5,412)
Loss on extinguishment of borrowings (1,166) -
Loss on disposal of property, plant, and equipment (888) -
Other transaction costs (2,156) -
Profit before interest and taxation 14,138 41,950
Interest income 4,096 1,935
Finance costs (39,582) (26,151)
(Loss) / profit for the year before taxation (21,348) 17,734
Taxation (4,225) (6,621)
(Loss) / profit for the year after taxation (25,573) 11,113
(Loss) / profit attributable to:
Equity shareholders (23,631) 10,443
Non-controlling interests (1,942) 670
(25,573) 11,113
Basic and diluted (losses) / earnings per ordinary share 10 (4.90) 2.62
(cents)
Prior year comparatives have been restated to reflect a change in accounting policy following clarification by the
1 IFRS Interpretation Committee ("IFRIC") in October 2022 of how lessor should account for the forgiveness of lease
payments. Details of the restatement and impact on prior year comparatives are set out in note 2.3 'Changes in
accounting policies'
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited for the year ended
Audited for the year ended
30 June 2022
30 June 2023
Restated1
US$'000 US$'000
(Loss) / profit for the year (25,573) 11,113
Retirement benefit obligation 86 154
Exchange differences on translation of foreign operations2 1,790 (5,445)
Share of other comprehensive expense of associates and joint (43) (4,173)
ventures2
Other comprehensive income / (expense) that may be 1,833 (9,464)
reclassified to profit or loss
Total comprehensive (expense) / income relating to the year (23,740) 1,649
Attributable to:
Equity shareholders (22,109) 2,587
Non-controlling interests (1,631) (938)
(23,740) 1,649
Prior year comparatives have been restated to reflect a change in accounting policy following clarification by the
1 IFRS Interpretation Committee ("IFRIC") in October 2022 of how lessor should account for the forgiveness of lease
payments. Details of the restatement and impact on prior year comparatives are set out in note 2.3 'Changes in
accounting policies'
In the current year, the Group has restated its comparative figures in its statement of comprehensive income in
2 order to split the exchange differences on translation of foreign operations between exchange differences arising
from the operations of its subsidiaries and its shares of other comprehensive (expense)/income from associates and
joint ventures.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited as at Audited as at
30 June 2023 30 June 2022
Notes US$'000 US$'000
Assets
Non-current assets
Investment properties 2 628,777 604,474
Deposits paid on investment properties 2 5,926 8,309
Property, plant and equipment 4,490 2,087
Intangible assets 433 670
Other investments - 1
Investments in associates and joint ventures 3 197,094 206,997
Related party loans receivable 92 515
Other loans receivable 5 21,005 -
Derivative financial instruments 91 -
Trade and other receivables 4 3,448 4,615
Deferred tax asset 12,578 12,544
Total non-current assets 873,934 840,212
Current assets
Trade and other receivables 4 18,578 29,055
Current tax receivable 3,389 1,881
Related party loans receivable 751 298
Other loans receivable 5 - 37,908
Derivative financial instruments 1,828 1,862
Cash and cash equivalents 9,207 26,002
Total current assets 33,753 97,006
Total assets 907,687 937,218
Equity and liabilities
Total equity attributable to ordinary shareholders
Ordinary share capital 535,694 535,694
Treasury shares reserve (16,306) (16,212)
Foreign currency translation reserve (389) (5,191)
Accumulated losses (218,349) (177,990)
Equity attributable to owners of the Company 300,650 336,301
Preference share capital 6 31,596 29,558
Perpetual preference notes 7 26,827 25,741
Non-Controlling interests (25,456) (22,224)
Total equity 333,617 369,376
Liabilities
Non-current liabilities
Redeemable preference shares 12,849 12,840
Proportional shareholder loans 35,733 26,716
Interest-bearing borrowings 8 318,453 242,091
Lease liabilities 3,335 545
Derivative financial instruments 1,425 -
Related party loans payable 7,195 1,205
Deferred tax liability 51,933 49,592
Total non-current liabilities 430,923 332,989
Current liabilities
Interest-bearing borrowings 8 78,282 182,975
Lease liabilities 1,265 864
Trade and other payables 46,366 31,411
Current tax payable 717 763
Derivative financial instruments 1,284 -
Related party loans payable - 1
Other financial liabilities 13,358 16,983
Bank overdrafts 1,875 1,856
Total current liabilities 143,147 234,853
Total liabilities 574,070 567,842
Total equity and liabilities 907,687 937,218
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited as at Audited as at
30 June 2023 30 June 2022
Notes US$'000 US$'000
Net cash generated from operating activities 32,551 11,293
Acquisition of, and additions to investment properties (7,582) (38,996)
Deposits paid on investment properties - (2,500)
Additions to property, plant, and equipment (267) (117)
Additions to intangible assets (28) -
Additions of interests in joint ventures (56,408) (39,613)
Proceeds from disposal of interest in subsidiary 28,880 -
Proceeds from disposal of interest in associates and joint ventures 16,853 3,347
Acquisition of subsidiary, net of cash acquired 127 1,121
Dividends and interest received from associates and joint ventures 22,426 3,985
Proportional shareholder loan repayments from associates and joint ventures 2,684 10,031
Interest received 1,728 668
Proceeds from disposal of property, plant, and equipment 200 49
Related party loans receivable repaid 427 -
Related party loans receivable granted - (765)
Settlement of other financial liabilities - (639)
Deposits received 13,776 6,500
Related party loans payable paid (2,000) -
Related party loans payable received - 467
Other loans receivable repaid by partners 6,092 -
Net cash generated from / (utilised in) investing activities 26,908 (56,462)
Proceeds from the issue of ordinary shares - 54,488
Proceeds from the issue of perpetual preference note - 31,500
Perpetual preference notes issue expenses - (1,606)
Perpetual note dividend paid (2,443) (1,265)
Share issue expenses - (7,943)
Ordinary dividends paid (20,175) (10,535)
Proceeds from interest-bearing borrowings 324,459 53,788
Settlement of interest-bearing borrowings (340,127) (27,716)
Finance costs (39,662) (26,497)
Proportional shareholder loans repaid (4,750) (1,967)
Proceeds from proportional shareholder loans 9,589 5,576
Buy back of own shares (94) -
Payment of premium on derivative instrument (433) -
Payments of leases (1,415) (429)
Net cash (utilised in) / generated from financing activities (75,051) 67,394
Net movement in cash and cash equivalents (15,592) 22,225
Cash at the beginning of the year 24,146 2,314
Effect of foreign exchange rates (1,222) (393)
Total cash and cash equivalents (including overdrafts) at the end of the year 7,332 24,146
The Group has reclassified cash flows arising on cash movement on proportional shareholder loans, previously
categorised as investing activities, to financing activities. The reclassification does not affect the Group’s total
cash and cash equivalents or its overall financial position. Proportional shareholder loans, inherently by virtue of
how the Group structures its acquisitions, form part of the Group’s capital structure. To align the presentation of
proportional shareholder loans which is a financial liability on the face of the statement of financial position,
the Group believes that the classification of the cash movements in the cash flow statements under financing
activities is more representative.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Ordinary Treasury currency Antecedent Accumulated Preference Non-controlling Total
Share shares translation dividend losses share Perpetual interest
capital reserve reserve reserve capital preference equity
notes
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 463,842 (18,406) 1,495 - (176,073) 25,481 - (17,935) 278,404
July 2021
Profit for the - - - - 10,443 - - 670 11,113
year
Other
comprehensive
(expense) / - - (8,010) - 154 - - (1,608) (9,464)
income for the
year
Total
comprehensive - - (8,010) - 10,597 - - (938) 1,649
(expense) /
income
Share based - - - - 138 - - - 138
payments
Antecedent (3,659) - - 3,659 - - - - -
dividend reserve
Ordinary
dividends - - - (3,659) (7,903) - - - (11,562)
declared
Treasury shares - (2,906) - - - - - - (2,906)
Disposal of - 5,100 - - - - - (3,600) 1,500
treasury shares
Ordinary shares 83,454 - - - - - - - 83,454
issued
Perpetual
preference notes - - - - - - 26,775 - 26,775
issued
Preferred
dividend accrued - - - - (1,837) - 572 - (1,265)
on perpetual
notes
Share issue
expenses
relating to - - - - - - (1,606) - (1,606)
issue of
perpetual notes
Preferred
dividend accrued - - - (4,077) 4,077 - - -
on preference
shares
Share issue (7,943) - - - - - - - (7,943)
expenses
Non-controlling
interests on
acquisition of - - - - - - - 1,414 1,414
subsidiary other
than business
combination
Reclassification
of foreign
currency - - 906 - - - - - 906
translation
reserve on sale
of subsidiary
Reclassification
of foreign
currency
translation - - 418 - - - - - 418
reserve on part
sale of
interests in
associate
Dividends
distributable to - - - - 1,165 - - (1,165) -
non-controlling
shareholders
Balance as at 30 535,694 (16,212) (5,191) - (177,990) 29,558 25,741 (22,224) 369,376
June 2022
Balance as at 1 535,694 (16,212) (5,191) - (177,990) 29,558 25,741 (22,224) 369,376
July 2022
Loss for the - - - - (23,631) - - (1,942) (25,573)
year
Other
comprehensive - - 1,436 - 86 - - 311 1,833
income for the
year
Total
comprehensive - - 1,436 - (23,545) - - (1,631) (23,740)
income /
(expense)
Share based - - - - 354 - - - 354
payments
Share of other
changes in - - - - 7,474 - - - 7,474
equity of
associate
Ordinary
dividends - - - - (19,188) - - - (19,188)
declared
Treasury shares - (94) - - - - - - (94)
Preferred
dividend accrued - - - - (3,529) - 1,086 - (2,443)
on perpetual
notes
Preferred
dividend accrued - - - - (2,038) 2,038 - - -
on preference
shares
Transaction with
non-controlling
interests - - - - (796) - - 796 -
without change
in control
Reclassification
of foreign
currency
translation - - 75 - - - - 75
reserve on sale
of interest in
subsidiary
Acquisition of
subsidiary with - - - - (604) - - - (604)
own equity
shares
Acquisition of
additional
interest in - - - - (884) - - - (884)
associate with
own equity
Reclassification
of foreign
currency - - 3,291 - - - - 3,291
translation
reserve on sale
of associates
Dividends
distributable to - - - - 2,397 - - (2,397) -
non-controlling
shareholders
Balance as at 30 535,694 (16,306) (389) - (218,349) 31,596 26,827 (25,456) 333,617
June 2023
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these separate and consolidated financial statements
are set out below. Grit was incorporated in Mauritius and redomiciled to Guernsey as a PLC, while the place of
effective management remains in Mauritius.
1.1 Basis of preparation
The Group and Company financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board; the Financial Pronouncements as issued
by Financial Reporting Standards Council, the LSE and SEM Listings Requirements and the requirements of the
Companies (Guernsey) Law 2008. This approach is consistent to prior years and no applicable new standards or
amendments were applied to the Company during the current financial year. The financial statements have been
prepared on the going-concern basis and were approved for issue by the board on 30 October 2023.
These full year audited consolidated results for the year ended 30 June 2023 do not include all the information
required for full annual statements and should be read in conjunction with the 2023 Integrated Annual Report of Grit
Real Estate Income Group Limited.
Going Concern
The Directors' assessment of the Group's and Company’s ability to continue as a going concern is required when
approving the financial statements. As such the Directors have modelled a 'base case' and a 'severe but plausible
downside' of the Group's and Company’s expected liquidity and covenant position for a going concern assessment
period through to March 2025, a period of at least 12 months following the approval of these accounts. The Directors
considered the existing structure of the group, where GREA is accounted for as a joint venture, and also the
forecasts under a scenario where GREA is controlled and therefore consolidated which is the stated intention of the
group
The process involved a thorough review of the Group's risk register, an analysis of the trading performance both pre
and post year-end, extensive discussions with the independent property valuers, a review of the operational
indicators within the Group and economic data available in the countries in which the Group operates. All of this
has been done in the context of the continued global market instability, previous experience of the African real
estate sector and best estimates of expectations in the future.
Base Case model
The base case reflects the Directors’ best expectations of the position going forward. It was modelled on board
approved forecasts over the relevant period with amendments to reflect current changes in the business. The base
case scenario includes the Group’s and Company’s financial projections and the following key assumptions:
1. Management has modelled the proceeds of both the IFC funding instrument (US$30 million) as well as the
recapitalisation of GREA (with a cash injection of US$48.5 million) to be closed from November 2023.
The initial deployment of the IFC instrument shall be utilised to acquire a sale and lease back asset with a
a. value of at least US$15 million (which is a requirement of the IFC instrument) with the remaining balance
being undrawn; and
The US$48.5 million recapitalisation of GREA is to fund new development projects and to unlock the fee income
strategies of the Group as contemplated under “Grit 2.0”. The proceeds of the GREA recapitalisation shall
initially be applied to reduce debt in the short term, through the shared Treasury policy, before being
deployed towards the Group’s pipeline in due course. The applicable development fee income surrounding the
deployment of the cash has been included in the model. As the cash is targeted to be received in December
b. 2023, the Directors have applied significant judgement on the inclusion of the US$48.5 million capital
injection in GREA. The judgement that the cash will be received from the capital injection has been made on
the basis that this has been approved by the Board of GREA and by the investment committee of the third-party
investor. For these reasons the Directors have concluded that they have obtained sufficient evidence that the
cash will be received in due course. The Group is not compelled to inject cash of its own as part of the
recapitalisation of GREA.
2. Modelling the Company’s contractual lease income, which at 30 June 2023 had a weighted average lease expiry of
4.4 years and applying the applicable contractual lease escalations (which averaged 3.0% in the current period);
3. Expected take up of vacancies from ordinary letting activities, updated for any leases concluded post year end;
4. Debt is refinanced in the ordinary course of business, based on the Group’s historical ability to refinance debt
as required;
5. Hedging contracts with a nominal value of US$200 million, which are more fully described in the CFO statement
and have been concluded post year end, are included in the model;
6. Base interest rates increase to 5.38% (in the case of US Dollar SOFR base rates) and 3.92% (in the case of Euro
base rates) before retracing to 3.91% and 1.85% respectively by March 2025;
Depreciation of the various African currencies versus the US Dollar, most notably the Zambian Kwacha
7. depreciating by 19.4% and the New Mozambique Metical depreciating by 21.3% over the period, with the Euro
appreciating by 4.2% over the period;
Property valuations that assume constant discount and exit capitalisation rates to those applied by the
8. independent valuers for the year ended 30 June 2023, while applying the cashflows and currency impacts mentioned
above;
9. Drive in Trading guarantee settlement paid in March 2024 of US$17.5 million;
10. Further progress towards, and extension of, the Company’s stated asset disposal strategy whose proceeds are
deployed to reduce debt facilities and to fund future pipeline opportunities; and
11. Administrative expense reductions of c.$4.6 million during FY24 and FY25.
Severe but plausible downside model
The severe but plausible downside scenario is initially applied to Grit on a standalone basis and then includes
additional overlays of consolidated GREA scenarios to reflect the intention of the Directors to obtain control over
GREA. A summary of the key assumption overlays to the Base Case made in the severe but plausible scenario are as
follows:
As the IFC agreement has not yet been signed by the financial statement date, the initial utilisation of the
funds has therefore not been assumed. The funds from the GREA recapitalisation have been assumed to be held in
debt facilities as the projects to which they will be allocated have not yet reached sufficient finality (most
specifically binding pre-let agreements and specific project debt funding), reducing the Groups interest costs
1. and improving available liquidity. Any fee income related to these projects have also not been modelled. As the
cash is targeted to be received in December 2023, the Directors have applied significant judgement on the
inclusion of the US$48.5 million capital injection in GREA. The judgement that the cash will be received from the
capital injection has been made on the basis that this has been approved by the Board of GREA and by the
investment committee of the third-party investor. For these reasons the Directors have concluded that the cash
will be received in due course;
Base interest rates are assumed to continue to increase to levels higher than those assumed in the base case,
2. with base rates staying higher for longer and at levels increasing to c1.25% higher than the base case scenario
and then maintaining this average over the measurement period. The resultant assumed rates are:
• SOFR base rates increase to a maximum of 6.31% up to June 24 before rate retracting
5.16% in March 2025;
• 3 month Euribor rates increase to 5.05% before retracting to 4.55% in June 2024 and
3.48% in March 2025;
All debt facilities that mature during the period to December 2024 are assumed to be repaid on the current
3. maturity date; while those beyond this date, specifically the US$306 million sustainability linked syndicated
loan facility maturing in 2027, the SBM Euro 22.3 million and Nedbank US$8 million facilities maturing in April
2025, are assumed to be refinanced in the ordinary course;
4. Further depreciation of currencies versus the US Dollar, most notably the Euro depreciating by 4.0% over the
period and movements in various African currencies of up to 22.8%;
5. Only contractual preference share coupons are paid;
6. The ongoing refurbishment of the Club Med Cap Skirring Resort in Senegal is reduced to the contractually
obligated spend; and
7. Administrative expense reductions of c.US$4.6 million during FY24 and FY25.
Given the Group’s stated intention to consolidate GREA, further overlays in the severe but plausible downside
scenario are applied to GREA and include:
1. Interest rate and currency sensitivities, as above, are applied to GREA debt, and debt facilities that mature
during the period are assumed to be repaid on the current maturity date;
2. Delays and cancellations to targeted asset disposals are modelled;
3. Potential delays of current development projects underway have been factored in by up to 6 months; and
4. Future projects are ceased, with no additional fee income generation from these projects or related asset
management services.
Where potential risks to covenants have been identified, the Group has received specific condonements from its
financiers should the scenario modelled come to pass. This includes Interest Cover Ratio covenant condonements and
Loan to Value covenant condonements during the going concern period for risks identified at the December 2024
measurement period.
Under both the base case and the severe but plausible scenario, along with certain remedies within management’s
control, which include actions like cuts in dividends, the Company is able to meet its liquidity and covenant
positions through to March 2025. The Board has therefore concluded that it is appropriate to prepare the financial
statements on the going concern basis and have concluded that there is no material uncertainty in forming that view,
noting the significant judgement made in connection with the GREA capital raise.
Functional and presentation currency
The consolidated financial statements are prepared and are presented in United States Dollars (US$) which is also
the functional and presentational currency of the Company. Amounts are rounded to the nearest thousand, unless
otherwise stated. Some of the underlying subsidiaries and associates have different functional currencies other than
the US$ which is predominantly determined in the country 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,
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. Alternative Performance Measures are not a substitute for, nor necessarily superior to, statutory
measures.
1.2 Critical Judgements and estimates
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
estimates and assumptions relating to the fair value of investment properties in particular, have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities in the subsequent financial year.
Fair value adjustments do not affect the determination of distributable earnings but have an effect on the net asset
value per share presented on the statement of financial position to the extent that such adjustments are made to the
carrying values of assets and liabilities.
Judgements
Amongst others, some principal areas where such judgements have been applied are:
African Property Development Managers Ltd (“APDM)” as a joint venture
The Group had previously acquired an equity interest of 77.95% in ADPM. Further during the current financial year,
the Group has acquired an additional equity interest of 1% bringing the total shareholding of the Group in ADPM to
78.95%. The Group has concluded that even though it holds a majority shareholding in ADPM, it does not have control
of the latter because it is currently not satisfying the power criteria of control. The design of ADPM 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 favour of the decision.
Currently the Group has the right to appoint four members to the investment committee. The Public Investment
Corporation SOC ('PIC') who holds 21.05% of APDM has the right to appoint two members. Given the seventy five
percent threshold requirement to pass any resolution, the Group and PIC will have to unanimously agree to any
decision before those are formally enacted by management. Therefore, neither the Group nor PIC on their own control
ADPM. Because of the unanimous consent required by both the significant shareholders of ADPM, the Group has
classified the investment in ADPM as an investment in joint venture.
Gateway Real Estate Africa Ltd (“GREA”) as a joint venture
The Group has continued the announce plan to acquire a majority stake in GREA during this financial year. An
additional shareholding of 25.19% has been acquired in GREA by the Group which brings the total shareholding in GREA
to 51.48%. The increase in shareholding has also entitled the Group the right to appoint two additional directors on
GREA board of directors in addition to the one director that the Group was already entitled to appoint. The design
of GREA is such that its relevant activities are directed by its board of directors. Under the current shareholder
agreement, for a decision to be approved, seventy five percent of the directors present need to vote in favour of
the decision. With the Group being entitled to appoint three out the seven directors of the board, the Group will
need the support of the PIC, who is entitled to appoint two directors for any decision to be approved. Therefore,
neither the Group nor the PIC on their own has control over GREA. The Group and PIC will have to unanimously agree
to any decision before those are adopted by GREA. Because of the unanimous consent required by both the Group and
PIC, the investment in GREA has been classified as an investment in joint venture by the Group. Previously the Group
had classified the investment in GREA as an investment in associate. However, with now the exit of Gateway Africa
Real Estate Limited ("GWP") and Prudential Impact Investments Private Equity LLC ("Prudential") being finalized, the
only remaining shareholders in the structure are Grit and PIC and they both have joint control as explained above.
Recapitalisation of GREA
The Directors’ have applied significant judgement with regards to the recapitalisation of GREA. Both the GREA and
Grit Board’s have approved a recapitalisation of not less than US$48.5 million. Significant progress has been made
in this regard, including the approval of the investors’ respective Investment Committees. While a number of
processes remain in progress, they have been carefully considered and having obtained the necessary confirmation,
are deemed to be administrative in nature. The Board has obtained sufficient comfort that the process shall be
completed either on, or close to the targeted date of December 2023. Further details are included in the Going
Concern section in Note 1.1.
Estimates
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
relevant reporting date. Further details of the valuation method are included in note 2.
1.3 Changes in accounting policies
Restatement – IFRIC Agenda Decision – Forgiveness of lease payments
In October 2022, the International Financial Reporting Interpretations Committee (IFRIC) issued a final agenda
decision regarding 'Lessor forgiveness of lease payments (IFRS 9 and IFRS 16),' providing clarification on lessor
accounting for concessions, specifically rental forgiveness, granted to tenants. The IFRIC clarified that when rent
receivables are overdue and subsequently forgiven, lessors are required to apply the expected credit loss (ECL) and
de-recognition principles outlined in IFRS 9. This entails recognizing an income statement charge upon the
recognition of the loss allowance and writing off the gross carrying amount of the rent receivable against the loss
allowance upon forgiving the rent receivable. Historically, the Group accounted for such rental forgiveness using
the lease modification requirements of IFRS 16, recording them as lease incentives assets and spreading them as a
reduction of rental income over the lease term of the respective tenant to whom the rent forgiveness was granted.
The agenda decision further clarified that forgiveness of future rent not yet due qualifies as lease modifications
under IFRS 16. The impact of this forgiveness should be recognized as a reduction of rental income on a
straight-line basis over the lease term, consistent with our Group's existing treatment. In light of the
clarification provided by the IFRIC Agenda decision, the Group reviewed its accounting policy concerning rental
forgiveness for past due amounts.
As a result of this review, the Group has retrospectively applied the requirements of IFRS 9 to the past due rent
receivables that were forgiven. The implementation of this change has resulted to a restatement of the comparative
figures for June 30, 2022, impacting key income statement line items such as Gross property income, Net property
income, Impairment of financial assets, Profit from operations and fair value adjustments on investment properties.
However, it is important to note that the total profit for the year remains unchanged.
The application of the IFRIC clarification did not have any impact on the balance sheet of the Group as lease
incentives are incorporated within the carrying value of investment properties already. Therefore, any movement in
lease incentives will result in an equal and opposite movement in investment property (through fair value
adjustment) to avoid double counting for an asset (lease incentive asset) which is already embedded in the
investment properties valuations.
The following table shows the financial statement line items which have been impacted in the Group Income statement
for the prior years.
30 June 2022 30 June 2022 30 June 2022
Reported Restatement Restated
Extract of group income statement US$’000 US$’000 US$’000
Gross property income 50,766 1,171 51,937
Net operating income 42,110 1,171 43,281
Net impairment on financial assets (4,217) (1,084) (5,301)
Profit from operations 21,029 87 21,116
Fair value adjustment on investment properties 20,167 (87) 20,080
Total fair value adjustments on investment properties 19,870 (87) 19,783
30 June 2021 30 June 2021 30 June 2021
Reported Restatement Restated
Extract of group income statement US$’000 US$’000 US$’000
Gross property income 49,217 1,828 51,045
Net operating income 40,674 1,828 42,502
Net impairment on financial assets (7,119) (3,698) (10,817)
Profit from operations 19,857 (1,870) 17,987
Fair value adjustment on investment properties (51,441) 1,871 (49,570)
Total fair value adjustments on investment properties (51,297) 1,871 (49,426)
2. INVESTMENT PROPERTIES
The following movements in the portfolio occurred in the year
1. Transfer from associate on step up to subsidiary - The Group acquired an additional 50% equity shareholding in
Buffalo Mall Naivasha Limited during the year which has now stepped up from an associate to a subsidiary.
2 Capital expenditure and construction costs incurred in the Club Med Cap Skirring Resort as well as on the Orbit
complex.
Audited Audited
Most recent Valuer (for the
Summary of valuations by reporting date independent most recent Sector Country as at as at
valuation date valuation)
30 June 30 June
2023 2022
US$'000 US$'000
Commodity House Phase I 30 June 2023 REC Office Mozambique 54,094 52,346
Commodity House Phase II 30 June 2023 REC Office Mozambique 19,727 19,264
Hollard Building 30 June 2023 REC Office Mozambique 20,847 21,012
Vodacom Building 30 June 2023 REC Office Mozambique 53,362 51,906
Zimpeto Square 30 June 2023 REC Retail Mozambique 3,303 3,395
Bollore Warehouse 30 June 2023 REC Light industrial Mozambique 10,770 10,410
Anfa Place Mall 30 June 2023 Knight Frank Retail Morocco 73,357 71,532
Tamassa Resort 30 June 2023 AESTIMA Hospitality Mauritius 54,674 48,827
VDE Housing Compound 30 June 2023 REC Corporate Mozambique 50,238 55,180
accommodation
Imperial Distribution Centre 30 June 2023 Knight Frank Light industrial Kenya 20,210 21,620
Mara Viwandani 30 June 2023 Knight Frank Light industrial Kenya 2,330 2,792
Buffalo Mall 30 June 2023 Knight Frank Retail Kenya 11,036 -
Mall de Tete 30 June 2023 REC Retail Mozambique 13,675 13,804
Acacia Estate 30 June 2023 REC Corporate Mozambique 73,120 73,809
accommodation
5th Avenue 30 June 2023 Knight Frank Office Ghana 16,066 16,010
Capital Place 30 June 2023 Knight Frank Office Ghana 20,470 19,320
Mukuba Mall 30 June 2023 Knight Frank Retail Zambia 60,040 56,933
Orbit Complex 30 June 2023 Knight Frank Light industrial Kenya 39,470 38,926
Tatu Warehouse – TIP1 30 June 2023 Knight Frank Light industrial Kenya 6,670 6,666
Club Med Cap Skirring Resort 30 June 2023 Knight Frank Hospitality Senegal 25,318 20,722
Total valuation of investment properties directly held by the Group 628,777 604,474
Deposits paid on Imperial Distribution 2,376 2,259
Centre Phase 2
Deposits paid on Capital Place 3,550 3,550
Deposits paid on Gateway Real Estate - 2,500
Africa Ltd
Total deposits paid on investment properties 5,926 8,309
Total carrying value of investment properties including deposits paid 634,703 612,783
Investment properties held within associates and joint ventures – Group share
Buffalo Mall – Buffalo Mall Naivasha 30 June 2023 Knight Frank Retail Kenya - 6,116
Limited (50%)
Kafubu Mall – Kafubu Mall Limited (50%) 30 June 2023 Knight Frank Retail Zambia 12,865 11,965
CADS II Building – CADS Developers 30 June 2023 Knight Frank Office Ghana 12,300 15,100
Limited (50%)
Cosmopolitan Shopping
Centre – Cosmopolitan Shopping Centre 30 June 2023 Knight Frank Retail Zambia 27,570 27,199
Limited (50%)
Canonniers, Mauricia and Victoria
Resorts and Spas – Beachcomber - - Hospitality Mauritius - 95,055
Hospitality (0.00%) (30 June 2022
-44.42%)
Letlole La Rona Limited (0.00%) (30 June - - Light industrial Botswana - 14,662
2022 - 25.1%) – 19 Investment properties
Letlole La Rona Limited (0.00%) (30 June - - Hospitality Botswana - 155
2022 - 25.1%) – 1 Investment property
Letlole La Rona Limited (0.00%) (30 June - - Retail Botswana - 4,160
2022 - 25.1%) – 2 Investment properties
Letlole La Rona Limited (0.00%) (30 June - - Office Botswana - 1,003
2022 - 25.1%) – 1 Investment property
Letlole La Rona Limited (0.00%) (30 June - - Corporate Botswana - 966
2022 - 25.1%) – 1 Investment property accommodation
Gateway Real Estate Africa Ltd (51.48%) -
(30 June 2022 - 26.29%) consisting of:
- DH4 Bamako 30 June 2023 Directors’ Corporate Mali 8,038 5,733
valuation accommodation
- African Data Centres Phase 1 30 June 2023 Knight Frank Data Centre Nigeria SEZ 14,388 6,839
- Falcon Curepipe Clinic 30 June 2023 AESTIMA Medical Mauritius 12,179 3,076
- Coromondal Hospital 30 June 2023 Directors’ Medical Mauritius 352 -
valuation
- The Precinct 30 June 2023 AESTIMA Office Mauritius 17,039 4,390
- Adumuah Place 30 June 2023 Directors’ Office Ghana 1,539 873
valuation
- Eneo Tatu City - CCI 30 June 2023 Directors’ Office Kenya 8,969 -
valuation
- Metroplex Shopping Centre 30 June 2023 Directors’ Retail Uganda 10,865 6,478
valuation
Total of investment properties acquired through associates and joint ventures 126,104 203,770
Total portfolio 760,807 816,553
Valuation policy and methodology for investment properties held by the Group, associates, and joint ventures
Investment properties are valued at each reporting date by independent professional reputable valuation experts who
have sufficient expertise in the jurisdictions where the properties are located. All valuations that are performed
in the functional currency of a group entity that is not United States Dollars are converted to United States
Dollars at the effective closing rate of exchange. All valuations have been undertaken by the Royal Institute of
Chartered Surveyors' ("RICS's"), accredited and registered valuers, in accordance with the version of the RICS
Valuation Standards that were in effect at the relevant valuation date and are further compliant with International
Valuation Standards. Market values presented by the Group have also been confirmed by the respective valuers to be
fair value in terms of IFRS.
In respect of the majority of the Mozambican investment properties, independent valuations were performed at 30 June
2023 by REC Chartered Surveyors (2022: REC Chartered Surveyors) using the discounted cash flow method (2022:
discounted cash flow method). AESTIMA has been utilised in FY23 to comply with the financiers list of approved
valuers.
In respect of the Mauritian investment properties (including Mauritian investment properties held by associates),
independent valuations were performed at 30 June 2023 by AESTIMA Ltd (2022: Knight Frank Chartered Surveyors) using
the discounted cash flow method (2022: discounted cash flow method).
The remainder of the portfolio including investment properties held by associates was independently valued at 30
June 2023 by Knight Frank Chartered Surveyors (2022: Knight Frank Chartered Surveyors), using the discounted cash
flow method with the exception of freehold land which is valued by comparable method.
The discounted cash flow method is based on estimated rental values with consideration given to the future earnings
potential and applying an appropriate capitalisation rate and/or discount rate to the property and country. The
capitalisation rates (equivalent yield) applied to the Group’s valuations of investment properties at 30 June 2023
ranged between 7.25% and 10.00%. The discount rates applied to the Group valuations that were performed at 30 June
2023 using the discounted cash flow method ranged between 9.25% and 12.00%.
In the current year the valuations include the right of use of land, lease incentives and certain furniture and
fittings.
There have been no material changes to the information used and assumptions applied by the registered valuer.
The fair value adjustments on investment property are included in the income statement.
The Directors consider that the deposit payments and capital expenditure which are carried at cost approximate their
fair value at the relevant reporting date.
3. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Audited as at Audited as at
30 June 2023 30 June 2022
US$’000 US$’000
The following entities have been accounted for using the equity method:
Name of joint venture Country of incorporation and % held
operation
Kafubu Mall Limited1 Zambia 50.00% 12,531 11,761
Cosmopolitan Shopping Centre Limited1 Zambia 50.00% 27,495 27,173
CADS Developers Limited1 Ghana 50.00% 4,482 6,974
Africa Property Development Managers Ltd2 Mauritius 78.95% 29,073 14,247
Gateway Real Estate Africa Ltd3 Mauritius 51.48% 123,513 -
Carrying value of joint ventures 197,094 60,155
Name of associate Country of incorporation and % held
operation
Letlole La Rona Limited4 Botswana 0.00% - 17,353
Buffalo Mall Naivasha Limited5 Kenya 0.00% - 3,753
Gateway Real Estate Africa Ltd3 Mauritius 51.48% - 55,866
Beachcomber Hospitality Investments Limited4 Mauritius 0.00% - 69,870
Carrying value of associates - 146,842
Joint ventures 197,094 60,155
Associates - 146,842
Total carrying value of associates and joint 197,094 206,997
ventures
1 The percentage of ownership interest for 2023 did not change.
2 The Group interest has increased from 77.95% to 78.95% following an additional acquisition made during the year..
The Group interest has increased from 26.29% to 51.48% following acquisition made during the year. The status of
3 the investment in light of these acquisitions changed from an investment in associate to an investment in joint
venture.
The associate status changed to an investment in subsidiary following the acquisition of the remaining share
4 capital that the Group did not own previously. Figures are included in the associate note for comparative
purposes. The Group previously owned 50% of Buffalo Mall Naivasha Limited.
5 The Group has disposed of its entire interests in the associates during the current financial year.
All investment 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, but which has been disposed during
the year.
Set out below is the summarised financial information of each of the Group’s associates together with a
reconciliation of the financial information to the carrying amount of the Group’s interests in each associate. Where
an interest in an associate has been acquired in a reporting period the results are shown for the period from the
date of such an acquisition.
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.
Where associates and joint ventures have non-coterminous financial reporting dates, the Group uses management
accounts to incorporate their results into the consolidated financial statements.
Reconciliation to carrying value in associates and joint ventures
Beachcomber Africa Gateway Cosmopolitan Buffalo
Letlole Kafubu Hospitality Property Real CADS Shopping Mall
La Rona Mall Investments Development Estate Developers Centre Naivasha Total
Limited Limited Limited Managers Ltd Africa Limited Limited Limited
Ltd
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Opening Balance 1 July 17,353 11,761 69,870 14,247 55,866 6,974 27,173 3,753 206,997
2022
(Sold)/Acquired during (17,105) - (51,298) 248 64,631 - - - (3,524)
the period
Profit / (losses) from
associates and joint 1,263 1,832 2,611 14,578 (5,321) (1,999) 2,178 (842) 14,300
ventures
- Revenue 1,588 1,085 3,890 - 1,717 1,321 2,400 281 12,282
- Property operating
expenses and (161) (186) - - (271) (34) (389) (129) (1,170)
construction costs
- Admin expenses and (60) (19) (25) (4,358) 696 (9) (16) (4) (3,795)
recoveries
- Other income - - - 19,3851 - - - - 19,385
- Net impairment charge 28 - - - (2,218) - - (18) (2,208)
on financial assets
- Unrealised foreign 110 - (264) (8) (1,430) 10 (5) (53) (1,640)
exchange gains/(losses)
- Fair value adjustment (738) - - - (738)
on other investments
- Impairments - - - - (71) - - - (71)
- Gain on bargain
purchase from
acquisition of - - - 77 - - - - 77
additional equity
interest
- Transaction costs - - - 2 1 - - - 3
- Loss on extinguishment - - - - - (25) - - (25)
of loans
- Share based payment - - - - (7,474) - - - (7,474)
expense
- Interest income/ 235 1 - 3,020 - 2 - 3,258
(costs)
- Finance charges (429) (5) (848) (71) (1,276) (728) - (296) (3,653)
- Fair value movement on 150 1,034 (1,496) - 2,325 (2,704) 309 (623) (1,005)
investment property
-Fair value adjustment - - 1,948 - - - - - 1,948
on other financial asset
- Current tax (198) (78) (263) (485) (357) - (123) - (1,504)
- Deferred tax (331) 36 1,141 170 - - 1,016
- Other movement in - - - - (386) - - - (386)
profit or loss
Dividends and interest (105) - (21,898) - - (423) - - (22,426)
paid to Group
Other equity movement - - - - 7,474 - - - 7,474
Repayment of
proportionate - (758) - - - (70) (1,856) - (2,684)
shareholders loan
Consolidation - - - - (89) - - - (89)
elimination
Foreign currency (1,406) (304) 715 - 952 - - - (43)
translation differences
Associate step up to - - - - - - - (2,911) (2,911)
subsidiary
Carrying value of
associates and joint - 12,531 - 29,073 123,513 4,482 27,495 - 197,094
ventures
Comprised of a management incentive plan income of US$ 16.6 million, recorded at fair value, representing a 10%
1 free-carry in GREA vested during the year, in addition to US$ 2.7 million in Asset and Development Management
fees.
Investments in the year ended 30 June 2023
Additional equity interest acquired in Gateway Real Estate Africa Limited
The Group has continued its announced plan to acquire a controlling stake in Gateway Real Estate Africa Ltd (“GREA”)
during this financial year. In total, the Group has acquired an additional 25.19% in GREA, and the shareholding of
the Group has increased from 26.29% to 51.48%. The acquisition has been performed into tranches with more details
included in the table below.
Following the series of transactions, the Group obtained joint control of GREA and 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 arising on the acquisition of the additional 25.19% in GREA amounted to US$ 11.88 million. The notional
goodwill element has been included in the carrying amount of the investment in joint venture. The total notional
goodwill element embedded in the carrying amount of the joint venture as of 30 June 2023 is US$14.17 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$11.88 million arising on the acquisition of the 25.19% in GREA during the financial year 2023.
The table below includes the consideration paid by the Group (Both in own equity shares and cash), fair value of the
net identifiable assets acquired, and the notional goodwill recorded by the Group.
Note Tranche 1 Tranche 2 Total
US$’000 US$’000 US$’000
Fair value of consideration paid in cash 19,440 38,852 58,292
Fair value of own equity instruments transferred 2 - 5,971 5,971
Transaction costs - 368 368
Less: Group share of the fair value of net identifiable assets acquired (17,683) (35,060) (52,743)
Notional goodwill 1,757 10,131 11,888
Additional equity interest acquired in GREA by Group 1 8.72% 16.47% 25.19%
The 8.72% additional shareholding in GREA was acquired from Gateway Africa Real Estate Limited (“GWP”).
1.
The 16.47% additional shareholding in GREA was acquired from the following entities:
• 13.62% shareholding has been acquired from GWP.
• 2.85% shareholder has been acquired from Prudential Impact Investments Private
Equity LLC (“Prudential”).
For the GREA shares acquired from Prudential representing a 2.85% shareholding, the Company entered into an
agreement with one of its shareholders, Long Island Property Investments ("LIPI") during the year, to facilitate
the transfer of 15.7 million Grit shares to Prudential on behalf of the Company. LIPI had previously subscribed
to the Company's shares during the December 2021 capital raise but had not fully met the payment obligations
outlined within the Promissory Note.
In the prior financial statements, the Group had recognized an amount receivable from LIPI, which was presented
as part of the listing receivables within trade and other receivables. The Group enforced its legal rights under
the Promissory Note and via a tri-partite agreement between the parties (the Company, LIPI, and Prudential). LIPI
agreed to transfer 15.7 million Grit shares to Prudential when the share price was trading at US$0.38 per share,
equivalent to a total value of US$5.97 million.
The actual transfer of the 15.7 million Grit shares to Prudential by LIPI and the acquisition of the 2.85% stake
in GREA from Prudential by the Company were contingent upon obtaining approval from the Prime Minister's Office
(PMO). As of 30 June, 2023, such approval had not been granted. However, it is important to note that all legally
2. binding agreements were fully executed and signed by the Company, LIPI, and Prudential before the end of the
financial year. As a result, none of the parties could lawfully retract from the agreed shares transfer as of 30
June 2023, without being in breach of their contractual obligations.
This position is supported by a legal opinion obtained from the Company's legal counsel. Therefore, considering
that all the necessary documents to legally execute the transactions were signed before June 30, 2023, and given
evidence from previously submitted applications to the PMO for similar transactions which were approved, the
Group has determined that it is appropriate to account for the 2.85% increase in shareholding in GREA in the
current financial year.
The Group has also determined that the appropriate recording of the transaction would not be as per the legal
form of the transaction where LIPI directly transferred Grit shares to Prudential. Therefore, the transaction has
been recorded in substance as Grit having effectively re-acquired and transferred its own equity instruments to
Prudential for the acquisition of the 2.85% GREA shareholding. The difference between the fair value of the Grit
shares transferred and the sum initially recorded in and subsequently removed from the treasury reserve has been
accounted for in equity, resulting in a reduction of retained earnings.
The table below summarises the impact of this transaction on Group equity.
US$’000
Number of GRIT shares transferred to acquire an additional 2.85% in GREA 15,714
Price per share in US$ 0.38
Fair value of GRIT shares 5,971
Less: GRIT shares re-acquired and transferred from treasury reserve (6,855)
Difference recorded in equity (retained earnings) (884)
Reversal of expected credit loss on the LIPI promissory notes (recorded in Profit or Loss) 2,700
Net impact of the transaction on the Group equity 1,816
During the year, the Group incurred transaction costs amounting to US$ 2.1 million, which were associated with
fund-related commitments that the Group had towards GREA. The transaction costs incurred arose as a consequence of
temporal misalignments between the capital calls issued by GREA and the timing of fund transfers from Grit to GREA.
Additional equity interest acquired in Africa Property Development Managers Ltd
An additional equity interest of 1% has been acquired by the Group in Africa Property Development Managers Ltd
("ADPM") in the year. The equity stake of the Group has increased from 77.95% to 78.95%. A cash consideration of US$
0.25 million has been paid for the additional 1%.
US$’000
Fair value of consideration paid in cash 248
Less: Group share of the fair value of net identifiable assets acquired (325)
Gain on acquisition of additional interest (77)
The excess of the Group's share of the net identifiable assets over the cost the additional investment has been
included as income in the determination of the Group's share of profit during the period.
Additional equity interest acquired in Buffalo Mall Navaisha Limited
During the year, the Group has acquired an additional equity interest of 50% in Buffalo Mall Navaisha Limited
('Buffalo Mall'). The Group now considers Buffalo Mall to be a subsidiary. The additional 50% acquisition has been
finalized on 30th June 2023. Prior to 30 June 2023, Buffalo Mall was treated as an associate and therefore has been
equity accounted. On the 30th of June 2023, the investment status has changed from associate to subsidiary and
therefore the Group consolidated Buffalo Mall in its consolidated financial statements.
Disposal of equity interest in Letlole La Rona Limited
During the year, Grit Services Limited a wholly-owned subsidiary of the Group has disposed of its entire equity
interests of 25.10% in Letlole La Rona Limited on the Botswana Stock Exchange. The disposal of shares has been
completed in tranches. The number of shares disposed of and the trading price at the different disposal dates were
as follows:
Number of shares disposed Trading price per share Percentage interest
BWP %
19,000,000 3.48 6.79%
19,768,068 3.51 7.06%
12,600,000 3.16 4.50%
18,911,932 2.50 6.75%
70,280,000 25.10%
All of the disposal proceeds have been received in cash as at year-end. The impact of the disposal on profit or loss
of the Group is summarised below:
US$’000
Fair value of consideration received 16,853
Less: Carrying amount of Investment in associate to be disposed (17,105)
Loss on disposal of interest in associate (252)
Reclassification of cumulative foreign currency translation reserve to profit or loss (3,291)
Total loss on disposal of investment in associate (3,543)
Disposal of Leisure Property Northern (Mauritius) Limited
The Group has disposed of its whole equity interests in Leisure Property Northern (Mauritius) Limited ("LPNL"), the
legal beneficial owner of Beachcomber Hospitality Investments Ltd ("BHI") and a wholly owned subsidiary of the Group
during the year. BHI owns three hotels in Mauritius which are the Cannoniers, Mauricia and Victoria Hotels. At the
beginning of this financial year, Grit via LPNL owns 44.42% of BHI. The following transactions have occurred during
the year which resulted in the complete disposal of LPNL and BHI during the year.
In November 2022, BHI has declared a dividend amounting to €32.6million. 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 27.01%.
In May 2023, the Group has disposed of its wholly owned subsidiary LPNL (Which held 27.01% of BHI at the time of
• disposal). Following the disposal of LPNL and the de-consolidation of LPNL in Grit's book, LPNL has merged with
BHI so that BHI is the only surviving legal entity that will remain in operation.
Following the disposal of LPNL the option that New Mauritius Hotels held to acquire all of the equity held by LPNL
• in BHI expired and the call option liability that was previously recorded in the records of the Group was
reversed.
The net impact of the disposal of the LPNL and BHI on the results of the Group during the year is US$’000
summarised as follows
Assets disposed
Investments in associates 51,298
Cash and cash equivalents 1
Total assets disposed 51,299
Liabilities disposed
Interest-bearing borrowings (19,404)
Trade and other payables (28)
Total liabilities disposed (19,432)
Net assets disposed 31,867
Consideration received 28,880
Loss on sale of subsidiary (2,987)
Reclassification of cumulated other comprehensive income movement from foreign currency translation reserve (75)
to profit or loss
Total loss on sale of interest in subsidiary (3,062)
4. TRADE AND OTHER RECEIVABLES
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Trade receivables 12,733 10,298
Total allowance for credit losses and provisions (5,682) (4,782)
IFRS 9 – Impairment on financial assets (ECL) (1,496) (1,965)
IFRS 9 - Impairment on financial assets (ECL) Management overlay on specific provisions (4,186) (2,817)
Trade receivables - net 7,051 5,516
Accrued income 2,603 1,934
Deposits paid 77 57
VAT recoverable 10,293 12,186
Purchase price adjustment account 961 963
Deferred expenses and prepayments 3,695 1,781
Listing receivables - 9,900
Deferred rental - 853
Rental guarantee receivable 52 640
Dividends receivable - 506
Sundry debtors 764 798
Cash balance held in escrow account - 4,548
Other receivables 18,445 34,166
IFRS 9 – Impairment on other financial assets (ECL) (3,470) (6,012)
Other receivables - net 14,975 28,154
Trade and other receivables at the end of the period 22,026 33,670
Classification of trade and other receivables:
Non-current assets 3,448 4,615
Current assets 18,578 29,055
Trade and other receivables at the end of the period 22,026 33,670
5. OTHER LOANS RECEIVABLE
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Ndola Investments Limited1 - 5,130
Kitwe Copperbelt Limited1 - 5,640
Syngenta Limited1 - 19,133
African Property Investments Limited1 21,034 -
Healthcare assets - 231
Drift (Mauritius) Limited2 8,637 8,211
Drift (Mauritius) Limited3 2 2,071
Pangea 2 Limited 6 6
IFRS 9 – Impairment on financial assets (ECL) (8,674) (2,514)
Other loans receivable at period end 21,005 37,908
Classification of other loans receivable:
Non-current assets 21,005 -
Current assets - 37,908
Other loans receivable at period end 21,005 37,908
In April 2017 Bank of China provided the Group with a term loan credit facility of $77.0 million for 5 years. The
Group has now re-financed this borrowing facility through the loan syndication with Standard Bank of South Africa.
At inception of the facility, the Group has advanced loans amounting in total up to 50% of the $77.0 million
facility to the other investors in the Zambian investments namely to Ndola Investments Limited ("Ndola"), Kitwe
1 Copperbelt Limited ("Kitwe") and Syngenta Limited ("Syngenta"). Each of these loans at inception had a 5-year
term. During the year, the Group has entered in an agreement with African Property Investments Limited ("API") who
is the parent company of Ndola, Kitwe, and Syngenta. Ndola, Kitwe, and Syngenta have ceded and assign their rights
and obligations in respect of the initial facility to API. As from the 20th of December 2022, the Group has a loan
receivable from API of US$21 million. The term of the loan is 4.5 years as from the 20th of December 2022.
Interest is charged at a fix margin of 5.80% per annum plus a compounded daily SOFR rate.
Project pre-funding 1 - Maputo Housing Project - Loan bears interest at 3-month SOFR plus 6.50%, repayable within
2 24 months or such other time as agreed in writing between the parties. This loan has been fully provided for at 30
June 2023.
3 Project pre-funding 2 - Tete Housing Project - Loan bears interest at 3-month SOFR plus 6.50% and was repayable
within 24 months or such other time as agreed in writing between the parties.
In the opinion of the directors, the carrying values of the above loan’s receivable approximate their fair values at
each reporting date.
6. PREFERENCE SHARE CAPITAL
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Opening balance 29,558 25,481
Preference share dividend accrued 2,038 4,077
Preference share capital at period end 31,596 29,558
During the financial year 2021, the group issued 25,481,240 class B preference shares each at a par value of US$1
through DIF 1 Co Limited, a wholly owned indirect subsidiary of the group to Gateway Real Estate Africa Limited, an
associate of the group. The class B shares shall not carry any voting rights. The class B preference shares are
entitled to a dividend at a fixed rate of 8% per annum. However, the terms of the instrument are such that the group
does not have a contractual obligation to settle the preferred dividend unless shareholder loan capital, interest or
ordinary shares dividends are paid to the holding company of DIF1 Co Limited that is Grit Services Limited. The
preference dividends however if unpaid are cumulative until such point in time that they are settled. The preference
shares are also redeemable at the option of DIF1 Co Limited only. The preference shares have been classified as
equity instruments in the group consolidated financial statements as the group does not have a contractual
obligation to deliver cash to settle the instruments both in terms of the principal and the preferred dividend
portion. As of 30 June 2023, the cumulative preferred dividend accrued on the preference shares amounted to
US$6.11million. Neither the principal nor the preferred dividend have been paid as of 30 June 2023.
7. PERPETUAL PREFERENCE NOTES
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Opening balance 25,741 -
Issue of perpetual preference note classified as equity - 26,775
Preferred dividend accrued 3,529 1,837
Preferred dividend paid (2,443) (1,265)
Less: Incremental costs of issuing the perpetual preference note - (1,606)
Perpetual preference note balance at period end 26,827 25,741
The perpetual preference note carries a preferred dividend at a rate of 9% which is payable half yearly and 4% is
accrued to the note.
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 an 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 redeem 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.
On recognition of the perpetual preference note, the Group has classified eighty five percent of the instrument
that is US$26.8million as equity because for this portion of the instrument the Group at all times will have an
unconditional right to avoid delivery of cash to the noteholders. The remaining fifteen percent of the instrument
that is US$4.7million 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 note 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 deduction into equity i.e.)
reduction of retained earnings.
The incremental costs directly attributable to issuing the equity portion of the note has been recorded as a
• deduction in equity i.e.) in the same equity line where the equity portion of the instrument has been recorded so
that effectively the equity portion of the instrument is recorded net of transaction costs. There were no
transaction costs recorded during the year relating to this instrument (30 June 2022: US$1.6million).
8. INTEREST-BEARING BORROWINGS
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Non-current liabilities 318,453 242,091
Current liabilities 78,282 182,975
Total as at 30 June 396,735 425,066
Currency of the interest-bearing borrowings (stated gross of unamortised loan issue
costs)
United States Dollars 294,114 319,687
Euros 103,132 104,357
Mauritian Rupees 1,025 1,369
398,271 425,413
Interest accrued 7,725 4,927
Unamortised loan issue costs (9,261) (5,274)
Total as at 30 June 396,735 425,066
Movement for the year
Balance at the beginning of the year 425,066 410,588
Proceeds of interest bearing-borrowings 324,459 58,513
Loan reduced through disposal of subsidiary (19,404) (6,624)
Loan acquired through asset acquisition 4,369 6,011
Loan issue costs incurred (7,355) (4,386)
Amortisation of loan issue costs 3,368 2,765
Foreign currency translation differences 3,561 (14,836)
Interest accrued 2,798 751
Debt settled during the year (340,127) (27,716)
Total as at 30 June 396,735 425,066
Analysis of facilities and loans in issue
Audited as at Audited as at
30 June 2023 30 June 2022
Lender Borrower Initial facility US$'000 US$'000
Standard Bank South Africa Commotor Limitada US$140.0m 140,000 140,000
Standard Bank South Africa Zambia Property Holdings US$70.4m 64,400 -
Limited
Standard Bank South Africa Grit Services Limited €33.0m 31,698 -
Standard Bank South Africa Grit Services Limited US$3.6m 3,633 -
Standard Bank South Africa Capital Place Limited US$6.2m 6,200 -
Standard Bank South Africa Casamance Holdings Limited €6.5m 7,198 -
Standard Bank South Africa GRIT Accra Limited US$6.4m 8,400 -
Standard Bank South Africa Casamance Holdings Limited €7.0m 7,618 -
Standard Bank South Africa Zambia Property Holdings US$16.4m - 16,405
Limited
Standard Bank South Africa Grit Services Limited RCF - €26.5m - 27,091
Total Standard Bank Group 269,147 183,496
Bank of China Zambian Property Holdings US$77.0m - 76,405
Limited
Total Bank of China - 76,405
State Bank of Mauritius Leisure Property Northern €9.0m - 9,467
(Mauritius) Limited
State Bank of Mauritius Leisure Property Northern €3.2m - 3,366
(Mauritius) Limited
State Bank of Mauritius Mara Delta (Mauritius) €22.3m 24,336 23,457
Properties Limited
State Bank of Mauritius Grit Real Estate Income Group Equity Bridge 10,000 20,000
Limited US$20.0m
State Bank of Mauritius Mara Delta Properties Mauritius RCF MUR 72m 1,025 1,369
Limited
Total State Bank of Mauritius 35,361 57,659
Investec South Africa Freedom Property Fund SARL €36.0m 31,571 32,950
Investec South Africa Freedom Property Fund SARL US$15.7m 2,722 2,722
Investec Mauritius Grit Real Estate Income Group US$0.5m 430 457
Limited
Total Investec Group 34,723 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 €3.2m - 1,837
Limited
Maubank Mauritius Freedom Asset Management €4.0m 711 1,508
Total Maubank 711 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 Warehousely Limited US$8.6m 8,635 8,635
Nedbank South Africa Capital Place Limited US$6.2m - 6,200
Nedbank South Africa Grit Real Estate Income Group US$7.0m 7,000 6,985
Limited
Total Nedbank South Africa 15,635 21,820
NCBA Bank Kenya Grit Services Limited US$6.5m - 6,542
NCBA Bank Kenya Grit Services Limited US$4.1m - 4,158
NCBA Bank Kenya Grit Services Limited US$6.5m 6,500 -
NCBA Bank Kenya Grit Services Limited US$11.0m 11,000 -
Total NCBA Bank Kenya 17,500 10,700
Ethos Mezzanine Partners GP Grit Services Limited US$2.4m 2,475 2,475
Proprietary Limited
Blue Peak Holdings S.A.R.L Grit Services Limited US$2.2m 2,250 2,250
Total Private Equity 4,725 4,725
International Finance Corporation Stellar Warehousing and US$16.1m 16,100 16,100
Logistics Limited
Total International Finance 16,100 16,100
Corporation
Housing Finance Corporation Buffalo Mall Naivasha Limited US$4.2m 4,369 -
Total Housing Finance Corporation 4,369 -
Total loans in issue 398,271 425,413
plus: interest accrued 7,725 4,927
less: unamortised loan issue costs (9,261) (5,274)
As at year end 396,735 425,066
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. Subsequent events
On the 26th of July 2023 the Group announced the conclusion of the final phase in the acquisition of a majority
interest in GREA and APDM from Gateway Africa Real Estate Limited and Prudential Impact Investments Private Equity
LLC, which resulted in the Group owning a direct interest of 51.48% in GREA and 78.95% in APDM. The transaction
became unconditional, and the share transfer was lodged following receipt of the Mauritius Prime Minister’s Office
consent, which was the final condition precedent. Although the share transfer took place after the end of the
• financial year, beneficial ownership of the 51.48% was attained on 30 June 2023 and as such the Group treated GREA
as a joint venture in preparing its financial statements for the year ended 30 June 2023. The required final
amendments to the Shareholders Agreement (which upon signature will result in control over GREA and therefore
allow for the full consolidation of GREA and APDM - please refer to The Basis of Presentation 1.2 Critical
Judgements and Estimates), are expected imminently. On the 3rd of October 2023 GREA issued shares to APDM in terms
of the Managers Incentive Program and from this date the Group, through its shareholding in APDM, holds a combined
direct and indirect interest of 54.22%.
Bora Africa, a specialist industrial real estate vehicle, was established on 24 October 2023 when 5 Grit owned
industrial assets namely Imperial, Bollore, Orbit and two industrial land assets were transferred to the newly
• established entity. Bora is a wholly owned subsidiary of Grit and has therefore resulted in no change to existing
beneficial interests. The International Finance Corporation, a division of the World Bank, has approved a US$30
million financing instrument issued by Bora Africa to fund future pipeline and impact led real estate
acquisitions.
On 16 October 2023, interest rate hedges over US$100.0 million notional against LIBOR rates above 1.58% to 1.85%,
• matured. The Group re-instated a new US$100.0 million notional interest rate hedge from this date, with a new
two-year collar and cap instrument providing protection against rates above 4.75% on SOFR rates while allowing
savings up to 3.00% as rate retract.
10. EARNINGS PER SHARE
Audited as at Audited as at
30 June 2023 30 June 2022
US$'000 US$'000
Basic and diluted (losses) / earnings (23,631) 10,443
Reconciliation of weighted average number of shares in issue (net of unvested treasury
shares)
30 June 2023 30 June 2022
Shares Shares
'000 '000
Ordinary shares in issue at start of year 495,093 331,236
Unvested treasury shares at start of year (12,702) (10,114)
Total shares issue at start of year 482,391 321,122
Effect of shares issued in the year - 79,986
Effect of treasury shares acquired in the year (141) (2,924)
Effect of treasury shares disposed in the year - 879
Weighted average number of shares at end of year - basic 482,250 399,063
Dilutive effect of awards issued - 276
Weighted average number of shares at end of year - diluted 482,250 399,339
Basic & diluted earnings per share (cents) (4.90) 2.62
11. EPRA FINANCIAL METRICS - UNAUDITED
Non-IFRS measures
Basis of Preparation
The directors of GRIT Real Estate Income Group Limited ("GRIT") ("Directors") have chosen to disclose additional
non-IFRS measures, these include EPRA earnings, adjusted net asset value, EPRA net realisable value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS Financial Information").
EPRA Earnings
Unaudited Unaudited Unaudited Unaudited
30 June 2023 30 June 2023 30 June 2022 30 June 2022
US$'000 Per Share (Diluted) US$'000 Per Share (Diluted)
(Cents Per Share) (Cents Per Share)
EPRA Earnings (4,656) (0.97) 6,332 1.59
Total Company Specific Adjustments 8,092 1.69 6,150 1.54
Adjusted EPRA Earnings 3,436 0.72 12,482 3.13
Total company specific distribution adjustments 17,149 3.57 7,662 1.95
Total distributable earnings before profits 20,585 4.29 20,144 5.08
withheld
Distributable earnings withheld (10,989) (2.29) (2,300) (0.58)
Total distribution 9,596 2.00 17,844 4.50
EPRA NRV 349,656 72.80 381,312 79.4
EPRA NTA 335,918 69.94 366,783 76.3
EPRA NDV 300,650 62.60 336,301 70.0
Shares
Distribution shares ‘000
Weighted average shares in issue 495,093
Less: Weighted average treasury shares for the year (15,381)
Add: Weighted average shares vested in long term incentive scheme 573
EPRA SHARES 480,285
Less Non-entitled shares -
Less Vested shares in consolidated entities (573)
DISTRIBUTION SHARES 479,712
Unaudited
30 June 2023
EPRA EARNINGS Notes US$'000
Basic loss attributable to the owners of the parent (23,631)
Add Back:
Fair value adjustment on investment properties 4,108
Fair value adjustment on investment properties under income from associates 1,005
Fair value adjustment on other investments (1)
Fair value adjustment on other financial assets and liabilities (5,837)
Fair value adjustment on derivative financial instruments 3,085
Changes in fair value of financial instruments and associated close-out costs 3,735
Loss on sale of subsidiary 3,240
Loss of sale of associates 3,543
Impairment of loan 71
Goodwill written off 677
Deferred tax in relation to the above 1,785
Acquisition costs not capitalised 4,162
Non-controlling interest above (598)
EPRA EARNINGS (4,656)
EPRA EARNINGS PER SHARE (DILUTED) (cents per share) (0.97)
Company specific adjustments
Unrealised foreign exchange gains or losses (non-cash) 1 3,881
Straight-line leasing and amortisation of lease premiums (non-cash rental) 2 (149)
Amortisation of right of use of land (non-cash) 3 67
Impairment of loan and other receivables 4 4,541
Profit on sale of property, plant, and equipment 5 888
Non-controlling interest included above 6 (295)
Deferred tax in relation to the above 7 (841)
Total Company specific adjustments 8,092
ADJUSTED EPRA EARNINGS 3,436
ADJUSTED EPRA EARNINGS PER SHARE (DILUTED) (cents per share) 0.72
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 in order to provide a better reflection of underlying property
performance. The add back excludes specific provisions against tenant accounts.
5 Corporate restructure costs
Corporate restructure costs are one off in nature related to corporate actions by the company and not underlying
performance of the portfolio.
6 Non-Controlling interest
Any Non-Controlling interest related to the company specific adjustments.
7. Other deferred tax (non-cash)
Any deferred tax directly related to the company specific adjustments.
12. COMPANY DISTRIBUTION CALCULATION - UNAUDITED
Unaudited
30 June 2023
Notes US$'000
Adjusted EPRA Earnings 3,436
Company specific distribution adjustments:
VAT credits utilised on rentals 1 3,312
Listing and set up costs under administrative expenses 2 438
Depreciation and amortisation 3 1,364
Share based payments 4 7,828
Dividends (not consolidated out) (385)
Right of use imputed leases 280
Amortisation of capital funded debt structure fees 4,708
Deferred tax in relation to the above 186
Non-controlling interest non distributable (582)
Total Company Specific distribution adjustments 17,149
TOTAL DISTRIBUTABLE EARNINGS (BEFORE PROFITS WITHHELD) 20,585
DISTRIBUTABLE INCOME PER SHARE (DILUTED) (cents per share) 4.29
FULL YEAR DIVIDEND PER SHARE (cents) 2.00
Reconciliation to amount payable US$ cents per share
Total distributable earnings to Grit shareholders before profits withheld (cents) 4.29
Profits withheld (cents) (2.29)
Interim dividends already paid (cents) (2.00)
FINAL DIVIDEND PROPOSED (cents) 0.00
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 obtained 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.
13. EPRA FINANCIAL METRICS – UNAUDITED
Glossary Measure Rationale
A key measure of a company’s underlying
EPRA EARNINGS Earnings from operational activities. operating results and an indication of the
extent to which current dividend payments
are supported by earnings.
Adjusts IFRS NAV to provide stakeholders
Net Asset Value adjusted to include properties and with the most relevant information on the
EPRA NAV / NRV other investment interests at fair value and to fair value of the assets and liabilities
exclude certain items not expected to crystallise within a true real estate investment
in a long-term investment property business model. company with a long-term investment
strategy.
Annualised rental income based on the cash rents A comparable measure for portfolio
EPRA NET INITIAL YIELD passing at the balance sheet date, less valuations. This measure should make it
(NIY) non-recoverable property operating expenses, easier for investors to judge themselves,
divided by the market value of the property, how the valuation of portfolio X compares
increased with (estimated) purchasers’ costs. with portfolio Y.
This measure incorporates an adjustment to the A comparable measure for portfolio
EPRA NIY in respect of the expiration of rent-free valuations. This measure should make it
EPRA ‘TOPPED-UP’ NIY periods (or other unexpired lease incentives such easier for investors to judge themselves,
as discounted rent periods and step rents). how the valuation of portfolio X compares
with portfolio Y.
Estimated Market Rental Value (ERV) of vacant A 'pure' (%) measure of investment
EPRA VACANCY RATE space divided by ERV of the whole portfolio. property space that is vacant, based on
ERV.
Administrative & operating costs (including & A key measure to enable meaningful
EPRA COST RATIOS excluding costs of direct vacancy) divided by measurement of the changes in a company’s
gross rental income. operating costs.
The EPRA NAV metrics are EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA Net Disposal
Value (NDV)
EPRA NRV EPRA NTA EPRA NDV
Unaudited Unaudited Unaudited
30 Jun 2023 30 Jun 2023 30 Jun 2023
US$'000 US$'000 US$'000
IFRS Equity attributable to shareholders 300,650 300,650 300,650
i) Hybrid instruments
Preference shares
Diluted NAV 300,650 300,650 300,650
Add
Revaluation of IP (if IAS 40 cost option is used)
Revaluation of IPUC (if IAS 40 cost option is used)
Revaluation of other non-current investments
Revaluation of tenant leases held as leases
Revaluation of trading properties
Diluted NAV at fair value 300,650 300,650 300,650
Exclude*:
Deferred tax in relation to fair value gains of Investment properties 48,217 44,311 -
Fair value of financial instruments 789 789 -
Goodwill as a result of deferred tax - - -
Goodwill as per the IFRS balance sheet - (9,832) -
Intangibles as per the IFRS balance sheet
Include*:
Fair value of fixed interest rate debt
Revaluation of intangibles to fair value
Real estate transfer tax
NAV 349,656 335,918 300,650
Fully diluted number of shares 480,285 480,285 480,285
NAV per share (cents per share) 72.80 69.94 62.60
Shares '000 Shares '000 Shares '000
Total shares in issue 495,093 495,093 495,093
Less: Treasury shares for the period (15,381) (15,381) (15,381)
Add: Share awards and shares vested shares in long term incentive scheme 573 573 573
EPRA SHARES 480,285 480,285 480,285
EPRA Vacancy rate
UNAUDITED UNAUDITED
EPRA Vacancy Rate
30 June 2023 30 June 2022
US$’000 US$’000
Estimated rental value of vacant space A 324 236
Estimated rental value of the whole portfolio B 5,048 5,070
EPRA Vacancy Rate A/B 6.4% 4.7%
OTHER NOTES
The audited consolidated financial statements for the year ended 30 June 2023 have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct Authority, International Financial Reporting
Standards ("IFRS"), the LSE and SEM Listing Rules, the Financial Pronouncements as issued by Financial Reporting
Standards Council. The accounting policies are consistent with those of the previous annual financial statements
with the exception of the change in accounting policy and the significant judgment disclosed in note 1.
The Group is required to publish financial results for the year ended 30 June 2023 in terms of Listing Rule 12.14 of
the SEM and the LSE Listing Rules. The Directors are not aware of any matters or circumstances arising subsequent to
the year ended 30 June 2023 that require any additional disclosure or adjustment to the financial statements. These
audited consolidated financial statements were approved by the Board on 30 October 2023.
PricewaterhouseCoopers have issued their unqualified audit opinion on the Group's financial statements for the year
ended 30 June 2023. Copies of the audited consolidated financial statements for the year ended 30 June 2023, 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 Company's registered address. Contact Person: Ali Joomun.
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.
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Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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ISIN: GG00BMDHST63
Category Code: FR
TIDM: GR1T
LEI Code: 21380084LCGHJRS8CN05
Sequence No.: 281488
EQS News ID: 1760983
End of Announcement EQS News Service
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