Wrap Text
Reviewed condensed consolidated interim financial results for the six months to 31 December 2022
MAS P.L.C.
Registered in Malta
Registration number: C99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
(MAS, the Company or the Group)
SHORT-FORM ANNOUNCEMENT: REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2022
INTRODUCTION AND BACKGROUND
MAS (hereafter referred to as the Group or Company) performed very well in the six months to 31 December 2022, achieving
adjusted total earnings of EUR50.2million and adjusted distributable earnings per share of 4.42eurocents per share (a 14.3% increase
compared to the previous six months) and is on course to achieve the strategic objectives set by the end of 2026 financial year.
During this period, the Group's retail operations have performed admirably, no longer affected by the pandemic, and its financial
results were further enhanced by the acquisition of six assets from the development joint venture (DJV)1 with effect from 30
June 2022. The Group's financial results and progress with strategic matters are discussed within.
In addition to the reported International Financial Reporting Standards (IFRS) results, this commentary also includes segmental
reporting prepared on a proportionate consolidated basis, to assist in the interpretation of the former rather than replacing it.
Detailed financial results and Company Profile (updated on 31 December 2022), including highlights and supplemental operational
information, are available on MAS' corporate website. Unless otherwise stated, all amounts included in this commentary are
presented on an adjusted proportionate consolidated basis.
MAS primarily invests in, and operates, retail assets in Central and Eastern Europe (CEE). The Group is well positioned to leverage
the region's long-term, continual, high growth in consumption and generate strong like-for-like (LFL) net rental income (NRI)
growth from retail holdings through increasing tenants' sales and implementing asset management initiatives. MAS benefits from
downside-protected exposure to retail and residential developments via the DJV with developer Prime Kapital.
FINANCIAL RESULTS
Group adjusted total earnings are, on a segmented basis, the combined return of: (i) directly-owned income property and
operations in CEE; (ii) Central and Eastern European investments with Prime Kapital in the DJV (including earnings from a
proportion of completed DJV-owned income properties, net results of residential sales and development activities); (iii) remaining
directly-owned Western European income property operations, and (iv) investments in listed securities (including other elements
disclosed as Corporate).
Adjusted total earnings for the six months to 31 December 2022 were EUR50.2million, consisting of adjusted distributable earnings
of EUR29.2million (EUR26.1million for the previous six months) and adjusted non-distributable earnings of EUR21.0million (EUR50.6million
for the previous six months). Tangible net asset value (NAV) on 31 December 2022 was EUR1.44 per share (EUR1.40 per share on
30 June 2022).
Financial results for the six months to 30 June 2022 included the six assets acquired by MAS, as a result of the transaction with the
DJV, at 40% ownership while financial results for the six months to 31 December 2022 incorporate these at 100% ownership (as their
assets and liabilities transferred on 30 June 2022). Tangible NAV figures for the two periods are comparable.
MAS' adjusted total earnings compared to the preceding six months (to 30 June 2022), benefitted from:
(i) exceptional operational performance of, and increased trading in, the Group's retail properties in CEE, achieving further LFL increases
in passing NRI of 5.6% and excellent rental and service charge collections, combined with the positive impact of additional NRI from the
six properties acquired from the DJV (effective from 30 June 2022);
(ii) improvements in the Group's interest rate derivatives' valuations (cap assets) due to increases in reference interest rates,
more than offsetting a lower preferred equity income and an increase in overall finance costs, resulting from the acquisition of the
six properties from the DJV and transfer of their associated secured, hedged, debt, with effect from 30 June 2022;
(iii) increases in dividends and fair value of MAS’ investment in listed securities, and
(iv) (realised) gains on MAS bonds repurchased during the six months to 31 December 2022.
These positives partially offset unfavourable earnings variances compared to the six months to 30 June 2022, mainly due to
(i) significant earnings in the current period, resulting from improvements in Central and Eastern European asset
valuations, albeit not repeating the exceptional levels in the previous period; (ii) an increase in estimated disposal realisation costs and
losses for the remaining Western European assets, in light of offers for Flensburg Galerie (Germany), and (iii) substantial income from
residential sales in the previous period not replicated at similar levels in the current period, due to the non-linear pattern of
residential unit deliveries, as the DJV is building residential capacity while completing its first residential projects.
OPERATIONS
Information regarding MAS' Central and Eastern European LFL footfall and tenants' sales (compared to the same period in 2021),
and collection rates for the six months to 31 December 2022, is detailed in Table 1. All figures are reported on 1 March 2023.
Table 1
Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 Total
Footfall (2022 compared to 2021) % 108 109 108 126 172 148 125
Open-air malls % 107 107 104 122 171 149 124
Enclosed malls % 109 112 116 133 175 145 128
Tenants' sales per m(2) (2022 compared to 2021) % 114 117 114 122 150 129 124
Open-air malls % 111 114 109 118 143 126 120
Enclosed malls % 119 120 122 130 164 134 130
Collection rate % 100 100 100 100 100 99 100
Trading and footfall in the Group's properties in CEE were exceptional for the six months to 31 December 2022, and were unaffected by
social distancing or other Covid-19 related trading restrictions. As a result, collection rates were exemplary and the Group did not
provide any support to tenants (deferred or waived rentals).
Tenants' sales on a LFL basis were excellent compared to the six months to 31 December 2021. Overall, sales outperformed the
comparative period by 20% in open-air malls and 30% in enclosed malls. Most categories performed remarkably well, similarly
to the overall growth. Noteworthy outperformance was achieved by entertainment, specialist, services, food service, shoes and
clothing tenants' categories. Conversely, toys tenants' sales were commensurate with the comparative period. LFL tenants' sales
outperformed pre-pandemic levels by 18%, both in enclosed malls (16% increase) and open-air malls (20% increase).
Passing NRI increased by 5.6% during the six months to 31 December 2022 and 10.9% year-on-year, partly attributable to higher
rent indexation due to Euro inflation, as well as rental from overage. MAS' properties benefit from Euro-based, triple-net, leases,
with full Euro indexation to base (minimum) rents and turnover clauses, therefore, indexation is passed on in full to tenants. Due to
continued robust tenants' sales, occupancy cost ratios are expected to remain healthy, and it is anticipated tenants will be able to
comfortably absorb higher rents.
Occupancy cost ratios (excluding certain tenant categories: supermarkets, DIY stores, entertainment and services) decreased to
10.6% to 31 December 2022, improving from 11.1% (to 30 June 2022), despite an increase in absolute occupancy costs due to
increased rentals and service charges, outweighed by tenants' excellent sales.
On 31 December 2022, overall occupancy of Central and Eastern European assets remained stable at 96.3% and increased to 96.8%
on a LFL basis.
Operations in Western Europe (WE) benefitted from asset management initiatives implemented at Flensburg Galerie (Germany).
Occupancy increased to 87.7% (81.5% on 30 June 2022) and the tenant mix was diversified by opening a modern health and wellness
centre, improved fashion offering, and a refurbished food court. As a result, footfall (21% increase) and tenants' sales (14% increase)
have outperformed those in the six months to 31 December 2021.
PROPERTY VALUATIONS
The overall EUR21.7million income property fair value uplift was the result of positive fair value adjustments of EUR23.9million
to income property in CEE (an improvement of 3% compared to valuations on 30 June 2022) and a decrease of EUR2.2million in WE
(a decrease of 1.9% compared to valuations on 30 June 2022, driven mainly by an increase in the valuation discount rate used
for Flensburg Galerie). Valuation of MAS' properties is determined biannually by external, independent professional valuers,
with appropriate, recognised qualifications and recent experience in the relevant location and property category. Valuations are
primarily based on discounted forecast cash flows and are therefore forward-looking.
The excellent operational performance during the six months to 31 December 2022, resulted in LFL passing NRI increases,
had a positive impact on fair value. However, this was muted by an increase in valuation discount rates, primarily due to an
increased risk premium associated with macroeconomic uncertainty. Compared to valuations on 30 June 2022, the weighted average
unlevered discount rate for income property in CEE increased to 9.91% from 9.71%.
ASSET SALES IN WE
After the completion of the Langley Park (UK) land sale in December 2022, Flensburg Galerie (Germany) and Arches street retail
units (UK) remain the last of MAS' Western European properties held for sale. On 31 December 2022, they had a combined book
value of EUR59.6million with EUR33.8million secured bank debt outstanding, and are undergoing competitive sales processes, which are
expected to conclude in the second half of the 2023 financial year.
At Flensburg Galerie, substantial progress has been achieved with asset management initiatives to protect shareholder value
and position the asset for optimal disposal. Occupancy on 31 December 2022 increased to 87.7% (81.5% on 30 June 2022), centre
management and parking operations were internalised, and part of the planned changes to the centre's tenant mix and food court
refurbishment have been finalised. Following a competitive sales process, which commenced during the six months to 31 December
2022, and based on existing offers currently under negotiation, management's estimation for Western European disposal realisation
costs and losses has been re-assessed to EUR21.3million on 31 December 2022, from EUR4.2million on 30 June 2022. These latest
estimates include the expected result on sales, punitive fixed-interest arrangements on secured debt, early bank debt repayment
penalties, agency fees and other related costs to be incurred in completing the sales processes of remaining assets held for sale.
RESIDENTIAL SALES
MAS' adjusted distributable earnings for the six months to 31 December 2022 include its proportion of net profits on residential
sales of EUR0.3million achieved by the DJV through additional deliveries in its first residential development, Marmura Residence. This
project was substantially handed over to clients by 30 June 2022, and net profits of EUR3.0million were included in MAS' adjusted
distributable earnings for the previous six months as revenue, and corresponding net profits, on residential sales is recognised when
units are handed over to customers.
LISTED SECURITIES
On 31 December 2022, MAS held listed securities to the value of EUR101.1million, an investment of 17,753,418 shares in NEPI
Rockcastle N.V. (NRP). Total adjusted returns for the six months to 31 December 2022 on this investment comprise EUR5.3million
in accrued dividend for the period, realised gains of EUR0.9million (compared to 30 June 2022) on a partial disposal for EUR7.7million,
and EUR9.3million unrealised fair value gains, but also account for a loss of EUR0.7million as a result of withholding tax on the NRP cash
dividend for the six-month period to 30 June 2022.
To date, further disposals of EUR21.4million were completed, at a realised profit of EUR0.5million (compared to 31 December 2022;
EUR2.6million compared to 30 June 2022).
DEVELOPMENTS, EXTENSIONS AND REFURBISHMENTS IN THE DJV
Progress with developments and changes to DJV's secured pipeline are detailed below.
Commercial developments
The extensions to Baia Mare and Roman Value Centres were completed, and opened on 29 September and 1 December 2022,
respectively. They complement the existing open air malls' retail offering with 7,700m(2) additional retail GLA and safeguard their
dominant position for the foreseeable future. Construction and leasing for the 4,300m(2) GLA extension at Slobozia Value Centre are
progressing as scheduled, and the additional retail units are planned to open May 2023.
Construction and leasing at Alba Iulia Mall are progressing well, with opening scheduled for September 2023. Over 91% of the
29,000m(2) GLA is currently leased to national and international tenants.
At Arges Mall construction of the bridge infrastructure continues and works on the 51,400m(2) enclosed mall have commenced.
Leasing is progressing very well, and there is continued significant interest from national and international tenants.
Construction of Mall Moldova, previously planned to start November 2022, is delayed as the existing permitting is being enhanced
to incorporate a revised layout and reconfigured infrastructure. Construction is expected to begin April 2023, and will involve
extending and redeveloping Era Shopping Centre (29,600m(2) GLA) into a super-regional enclosed mall and retail node incorporating
approximately 107,300m(2) of destination GLA. Retailer interest remains strong and significant progress has been achieved in leasing
the project to national and international tenants.
Construction and leasing for Silk District office's first phase and permitting for the next two phases remain on schedule. The first
phase is expected to be completed during the second half of 2023 calendar year.
Zoning is progressing for the DJV's commercial projects in Brasov (24,400m(2) GLA open-air mall) and Cluj (73,300m(2) GLA enclosed
mall and 49,200m(2) GLA office components on a 17ha site where the DJV plans a large-scale mixed-use urban regeneration project).
Interest in these projects from national and international tenants is strong. In line with the current practice of the local administration
in Bucharest, the zoning of the mixed-use urban regeneration project in Bucharest that includes an approximately 28,000(2) GLA
open-air mall component on a 54ha former industrial site is delayed.
Residential developments
At Marmura Residence, by 31 December 2022, handover was completed for 362 units of the project's total 458 units, with 308
occurring during the six months to 30 June 2022. Remaining units are marketed in accordance with the sales strategy and are
expected to be sold over the next 12-24 months.
At Avalon Estate, the first buildings are complete, and units will be delivered to clients over the following months. Construction
and sales continue for the balance of the first phase, comprising approximately half of the 746 dwellings development. Of the 352
residential units released for sale, 71% have been sold. Four show units were fitted out, to illustrate the high quality of the dwellings.
Construction of the first and second phases of Silk District's residential component (315 units; 71% sold and 346 units; 69% sold,
respectively) is progressing well. Handovers to clients for first phase units are expected to commence in the second half of 2023
calendar year and in the first half of 2024 calendar year for the second phase units. Permitting for the third phase (312 units; 25%
reserved) has been obtained and construction is planned to begin in January 2024, subject to adequate progress being made in
terms of construction and delivery of the first two phases.
Construction and sales of Pleiades Residence's first phase are progressing well. Of the 142 units in two of the seven residential
buildings planned for the 10.1ha mixed-use urban regeneration project in downtown Ploiesti, 29% have been sold to date. Re-zoning
of the remaining land continues in parallel with permitting for the planned extension on Prahova Value Centre.
Zoning is underway for DJV's residential projects in Timisoara, Elba Residential (approximately 1,400 apartments) and Spumotim
Residential (approximately 2,100 apartments) as well as for the residential components of the large-scale, mixed-use projects
mentioned above in Bucharest (approximately 3,100 apartments) and Cluj (approximately 1,500 apartments).
Changes in pipeline
The DJV has secured additional pipeline, and is currently undertaking due diligence for a 48,900m(2) GLA dominant regional enclosed
mall and a 13,200m(2) GLA open-air mall. Both would benefit from strong fundamentals due to their respective locations, in cities that
are seats of their respective Romanian counties. Further details will be provided in due course.
The previously disclosed Giurgiu Value Centre (approximately 14,200m(2) GLA open-air mall), Roman Residential (approximately
2,100 apartments in Brasov) and a large-scale enclosed residential estate of approximately 920 apartments in a major secondary
city in Romania were removed from the DJV's residential development pipeline due to unsatisfactory due diligence findings and
unsatisfactory progress with regard to zoning required to implement the envisaged development plans.
EXTENSIONS AND REFURBISHMENTS TO DIRECTLY-OWNED ASSETS
Zoning with respect to Galleria Burgas' planned refurbishment is progressing as scheduled, as is leasing for the planned asset
management initiatives aimed at reconfiguring and extending the food court and improving the centre's overall leisure and
entertainment facilities. The seating capacity in the food court area will be significantly increased, to accommodate the larger and
more diverse food offering, which is planned to include a restaurant, casual diners as well as fast food operators.
Further updates regarding other extension and refurbishment projects, including Militari Shopping, Nova Park, Prahova Value
Centre, and Barlad Value Centre, will be provided when appropriate.
DEBT, COST OF DEBT AND LIQUIDITY
On 31 December 2022, MAS had EUR187.3million in cash, listed securities and undrawn credit facilities (figure not proportionally
consolidated). The Group has an ongoing undrawn preferred equity investment commitment of EUR223.9million, as well as a
EUR9.5million undrawn committed revolving facility to the DJV (figures not proportionally consolidated).
Except for MAS' undrawn revolving credit facility, interest rates on the Group's debt are hedged. The weighted average cost of debt
for the period decreased to 4.34% per annum (4.41% for the financial year ended 30 June 2022), mainly resulting from the transfer of
hedged, secured, debt via the acquisition of six assets from the DJV (effective 30 June 2022). Also, during October 2022, the Group
repurchased bonds issued by its subsidiary, MAS Securities BV, for a consideration of EUR5.2million at a 20.5% discount to their nominal
value of EUR6.6million. As such, on 31 December 2022, the Group had EUR455.9million of outstanding debt (bonds and bank loans) and
the loan-to-value (LTV) ratio was 28.5%.
The self-imposed, long-term Group overall debt limit, which is considerably more restrictive than its covenant tolerances, is a
maximum LTV ratio of 40%, or, on a forward-looking basis, seven times net rental income. On 31 December 2022, the Group's bond
and unsecured facility ratios demonstrated significant headroom compared to covenant tolerances, on both IFRS and proportionate
consolidation bases.
Tolerance Actual IFRS Actual proportionate consolidated basis
Solvency ratio Shall not exceed 0.6 0.31 0.30
Consolidated coverage ratio At least 2.5:1 3.87 4.80
Unencumbered consolidated total assets/ Minimum 180% 364% 367%
unsecured consolidated total debt
LONG-TERM STRATEGY UPDATE
MAS remains committed to maximising total long-term returns from property investments on a per share basis, aimed to be
achieved by continued focus on capital allocation, operational excellence, sensible leveraging, and cost efficiency, thereby
sustainably growing distributable earnings per share. The Group operates directly-owned income property and employs capital in
commercial and residential developments owned indirectly via the DJV with co-investor and developer Prime Kapital. Benefiting
from the continual high growth in consumption in CEE, and leveraging on its strong asset prospects and asset management
capabilities, as well as its downside-protected exposure to high-quality commercial and residential developments via the DJV, MAS
is well positioned to provide its shareholders with best in class returns.
Along with the release of the Group's 30 June 2021 financial statements, MAS published four quantified strategic objectives to be
achieved over five years (by the end of the 2026 financial year), using its existing capital base (at the time) and maintaining a full
pay-out of distributable earnings to shareholders without breaching self-imposed gearing limitations, and is committed to periodic
progress reporting.
In the absence of unforeseen circumstances, MAS intends to maintain a full pay-out of distributable earnings during this period and
provided that the Company's long-term objectives, including self-imposed gearing limitations, are not considered at any point to be
at undue risk. However, if this is the case, or if attractive investment opportunities expected to substantially enhance total long-term
returns per share become available, which cannot be otherwise more efficiently funded (for instance by selling assets, taking on
additional gearing or issuing new share capital), then dividends relative to distributable earnings will be reduced.
Current progress with strategic objectives is detailed below.
Asset management
MAS aims to maximise property values by implementing sustainable asset management initiatives, improving occupancy rates for
current Central and Eastern European retail assets to 99% by 30 June 2026 and achieving LFL NRI growth of at least 4% per annum
(from a normalised post Covid-19 base).
On 31 December 2022, occupancy for Central and Eastern European assets was 96.3% (96.3% on 30 June 2022, 96.8% on a LFL
basis) and annualised LFL passing NRI in CEE 5.6% higher than on 30 June 2022 (10.9% higher than on 31 December 2021).
Commercial developments
The Group expects to increase its investment in newly developed, high-quality, income properties rolled-out by joint venture
partner Prime Kapital, and the DJV aims to complete commercial developments to the cost of approximately EUR600million at a
weighted initial yield of more than 9% over the relevant five years (figure not proportionally consolidated).
The DJV is well positioned to achieve this target by June 2026. Secured commercial projects in excess of EUR550.3million are currently
estimated to be complete by 30 June 2026.
Residential developments
MAS aims to benefit from a sustainable and growing distributable income stream, through DJV's residential sales and deliveries of
approximately EUR200million per annum by the 2026 financial year (figure not proportionally consolidated) at net after tax margins
of approximately 20%.
A significant residential pipeline of approximately EUR1billion has been secured for the DJV, which is expected to achieve close to the
EUR200million targeted annual sales by 2026.
Direct acquisitions
MAS aimed to complete direct acquisitions of high-quality, Central and Eastern European commercial assets of at least EUR150million
during the 2022 financial year and a further EUR50million by the end of the 2023 financial year. MAS has exceeded these targets by
completing the acquisition of six assets from the DJV on 30 June 2022, as well as via its initial investment in NRP during the financial
year to 30 June 2022. MAS continues to concentrate on capital allocation, including assessing the appropriateness of further direct
acquisition opportunities in CEE.
The Company is well positioned to accomplish the ambitious, but achievable, strategic targets adopted, which are expected to
generate maximised long-term total shareholder returns. It is expected that, Central and Eastern European fundamentals, real GDP
and consumption growth in Romania and other CEE countries will remain robust and outperform Western European countries in
terms of growth for the foreseeable future.
LONG-TERM EARNINGS TARGETS UPDATE
MAS expects that delivery on its strategic objectives will result in significant per share distributable earnings (and dividend) growth,
while maintaining a close focus on maximising total long-term shareholders' returns. With the release of its 30 June 2021 financial
statements, and setting out its strategic objectives, a long-term distributable earnings range of 14.50-15.00eurocents per share
was also set as a target to be achieved by the end of the 2026 financial year.
The Group continues to focus on achieving its long-term strategic targets then set. Even though circumstances have changed since
then, mainly due to macroeconomic disruption, affecting the underlying assumptions considered at the time, management remains
confident that execution of its four strategic objectives, with retaining focus on sensible capital allocation, and by leveraging on
the strong fundamentals of Central and Eastern European markets in which it operates, is likely to maximise returns for
shareholders.
CEE's persistently strong fundamentals are expected to continue reflecting positively on MAS' operations through tenants' robust
sales. This in turn should translate into sustained healthy occupancy cost ratios, as tenants are likely to comfortably absorb higher
rents, due to passing on inflation through rent indexation. MAS' prospects are further enhanced by its strong balance sheet and
levels of liquidity, supported by its debt capacity headroom.
To achieve the targeted long-term earnings results, it is assumed that, amongst others, (i) the remaining Western European
assets are sold as per management's estimates; (ii) stated asset management targets are achieved; (iii) secured commercial and
residential development pipeline is permitted and rolled out as planned; (iv) NRP performs as expected and that its shares trade
at the projected Tangible NAV per share; (v) no further MAS shares are issued, during this period, and (vi) no major economic
disruptions occur before 30 June 2026.
EARNINGS GUIDANCE AND PROSPECTS
Earnings guidance for the 2023 financial year resulting from the Group’s commercial and corporate operations,
which currently contribute the vast majority of diluted adjusted distributable earnings per share, remains unchanged at 8.75
to 9.00eurocents per share.
Guidance for the total diluted adjusted distributable earnings per share for the same period has been
conservatively adjusted to a range of 8.85-9.34eurocents per share (previously 9.40-10.10eurocents per share) to account for a potential
delay in the administrative process of completing residential sales. This may cause a number of transactions previously scheduled for
completion by June 2023 to be recognised in the following six-month period, thus reducing the residential earnings guidance range for
the 2023 financial year to 0.10-0.34eurocents per share (previously 0.65-1.10eurocents per share) with a corresponding increase in expected
residential earnings for the six-month period to 31 December 2023.
This guidance is further based on the assumptions that no additional material macroeconomic disruption occurs, a stable political environment
prevails in Groups' markets, developments continue as scheduled, and no major corporate failures ensue.
Economic sentiment has continued improving on the basis of a mild 2022 European winter, leading to lower energy demand, driving utilities
costs downwards on European markets. Uncertainty remains with respect to the length and severity of further policy incentives aimed at reducing
consumer demand, diversifying European energy supply, or other measures aimed at reducing inflationary pressure on economies to still be
adopted by European governments and central banks. Growth in Central and Eastern European countries, and in particular those in which MAS
currently invests, is expected to continue to outperform Western European growth prospects.
Shareholders should note that MAS' estimates and distributable earnings per share targets have not been audited and are subject
to change. Inevitably, some assumptions will not materialise, plans will change, and unanticipated events and circumstances may
affect eventual financial results. MAS will not hesitate to adopt changes in strategy, or to take action that will impact negatively on
distributable income per share, if this is considered appropriate from a long-term, risk-adjusted, total return perspective.
This forecast has not been audited or reviewed by MAS' auditors and is the responsibility of the Board of Directors.
DIVIDEND DECLARATION
The Company achieved 4.42eurocents adjusted distributable earnings per share, and 4.36eurocents diluted adjusted distributable
earnings per share (taking account of share purchase plan issued shares) in respect of the six-month period to 31 December 2022.
The Board has consequently declared a cash dividend of 4.36eurocents per share for the six months to then. Payment is expected
by 3 April 2023 and further details will be announced separately.
Irina Grigore
Chief Executive Officer
Nadine Bird
Chief Financial Officer
2 March 2023, Malta
Released on 6 March 2023
1 DJV is an abbreviation for a separate corporate entity named PKM Development Limited (PKM Development), an associate of MAS since 2016
with independent governance. MAS owns 40% of the ordinary share capital of PKM Development (EUR20million), an investment conditional on
it irrevocably undertaking to provide preferred equity to PKM Development on notice of drawdown. On 31 December 2022, MAS invested
EUR246.1million in preferred equity and had an obligation of EUR223.9million outstanding. In addition, MAS has committed to provide
PKM Development a revolving credit facility of EUR30million at a 7.5% fixed rate, of which EUR20.5million was drawn on 31 December 2022.
The balance of the ordinary share capital in PKM Development (EUR30million) was taken up by Prime Kapital in 2016 in cash, and, in terms
of applicable contractual undertakings and restrictions, Prime Kapital:
(i) is not permitted to undertake real estate development in CEE outside of PKM Development until the DJV's capital commitments are
fully drawn and invested or 2030 (end of exclusivity period);
(ii) contributes secured development pipeline to PKM Development at cost;
(iii) takes responsibility for sourcing further developments, and
(iv) provides PKM Development with all necessary construction and development services via an integrated in-house platform.
All amounts in EUR thousand unless otherwise stated.
CONDENSED CONSOLIDATED STATEMENT Reviewed Reviewed Audited
OF FINANCIAL POSITION 31 Dec 22 31 Dec 21 30 Jun 22
Non-current assets 1,219,323 853,461 1,141,198
Current assets 264,005 424,331 388,402
Total assets 1,483,328 1,277,792 1,529,600
Equity attributable to owners of the Group 967,069 895,039 928,150
Total equity 967,069 895,039 928,150
Non-current liabilities 442,989 321,318 450,826
Current liabilities 73,270 61,435 150,624
Total liabilities 516,259 382,753 601,450
Total shareholder equity and liabilities 1,483,328 1,277,792 1,529,600
Reviewed Reviewed Audited
CONDENSED CONSOLIDATED 6 months to 6 months to Year to
STATEMENT OF PROFIT OR LOSS 31 Dec 22 31 Dec 21 30 Jun 22
Continuing operations
Rental income 30,754 17,947 36,344
Service charge income and other recoveries 9,312 5,608 11,575
Gross revenue 40,066 23,555 47,919
Reversal of impairment/(Impairment) of receivables 88 (335) (338)
Service charge and other property operating expenses (11,099) (6,429) (13,478)
Net rental income 29,055 16,791 34,103
Corporate expenses (3,433) (3,273) (6,564)
Other income 5,914 1,032 5,006
Investment expenses (517) (908) (1,858)
Fair value adjustments 35,821 24,898 61,223
Foreign currency exchange differences (2,066) (262) (770)
Share of profit from equity-accounted investee, net of tax 1,953 14,616 40,901
Profit before finance income/(costs) 66,727 52,894 132,041
Finance income 9,678 10,774 21,733
Finance costs (9,438) (7,656) (15,256)
Profit before tax 66,967 56,012 138,518
Current tax (1,983) (349) (872)
Deferred tax (3,046) 316 (6,832)
Profit from continuing operations 61,938 55,979 130,814
Discontinued operations
Profit from discontinued operations, net of tax 2,204 10,932 10,357
Profit for the period/year 64,142 66,911 141,171
Attributable to:
Owners of the Group 64,142 66,911 141,171
Profit for the period/year 64,142 66,911 141,171
FINANCIAL PERFORMANCE 31 Dec 22 31 Dec 21 % Change
IFRS Net Asset Value attributable to 967,069 895,039 8.05%
owners of the Group (EUR thousand)
IFRS Net Asset Value per share (eurocents) 140.6 127.0 10.65%
IFRS Gross revenue from continuing 40,066 23,555 70.10%
operations (EUR thousand)
IFRS Earnings per share (eurocents) 9.32 9.50 -1.83%
Adjusted distributable earnings (EUR thousand) 29,168 20,022 45.68%
Adjusted distributable earnings per share (eurocents) 4.42 2.96 49.42%
Cash dividend (eurocents) 4.36 2.96 47.30%
Headline earnings (EUR thousand) 41,601 22,969 81.12%
Headline earnings per share (eurocents) 6.05 3.26 85.49%
Closing number of shares in issue* 687,906,892 704,493,798 -2.35%
* Excluding treasury shares.
SEGMENTAL ANALYSIS Proportionate accounts
INCOME STATEMENT (JUL - DEC 2022) Six months to 31 Dec 2022
Total CEE DJV WE Co**
EARNINGS 64,142 45,340 11,566 2,097 5,139
DISTRIBUTABLE EARNINGS 29,200 25,170 9,185 239 (5,394)
Net rental income - income property 30,802 29,055 704 1,043 -
Net margin - residential sales 331 - 331 - -
Net income - preferred equity and revolving credit facility 5,767 - 5,767 - -
Net dividends - listed securities 4,811 - 1,085 - 3,726
Net corporate expenses (3,437) (953) (157) (299) (2,028)
Interest on debt financing (9,762) (2,172) (11) (459) (7,120)
Interest capitalised on developments 1,892 - 1,892 - -
Other distributable net income/(cost) 169 (17) (55) (21) 262
Income tax (1,373) (743) (371) (25) (234)
NON-DISTRIBUTABLE EARNINGS 34,942 20,170 2,381 1,858 10,533
Fair value adjustments - income property 27,040 20,945 2,948 3,147 -
Fair value adjustments - interest rate derivatives 4,099 3,727 372 - -
Fair value adjustments - listed securities 11,149 - - - 11,149
Foreign currency exchange differences (2,079) - - - (2,079)
Investment expenses (1,422) (199) (318) (695) (210)
Share-based payment expense (452) (137) - - (315)
Other non-distributable income/(cost) 879 - 11 - 868
Tax on sale of property (1,104) - - (1,104) -
Deferred tax (3,168) (4,166) (632) 510 1,120
Estimation for WE disposal realisation costs and losses - - - - -
Weighted average adjusted number of shares (million)
Diluted weighted average adjusted number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Diluted adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
INCOME STATEMENT (JUL - DEC 2022) Six months to 31 Dec 2022
Total CEE DJV WE Co
EARNINGS (13,949) 4,303 (453) (17,167) (632)
DISTRIBUTABLE EARNINGS (32) - (1,085) - 1,053
Net rental income - income property - - - - -
Net margin - residential sales - - - - -
Net income - preferred equity and revolving credit facility - - - - -
Net dividends - listed securities (205) - (1,085) - 880
Net corporate expenses - - - - -
Interest on debt financing - - - - -
Interest capitalised on developments - - - - -
Other distributable net income/(cost) 173 - - - 173
Income tax - - - - -
NON-DISTRIBUTABLE EARNINGS (13,917) 4,303 632 (17,167) (1,685)
Fair value adjustments - income property (5,380) - - (5,380) -
Fair value adjustments - interest rate derivatives - - - - -
Fair value adjustments - listed securities (880) - - - (880)
Foreign currency exchange differences - - - - -
Investment expenses 639 - - 639 -
Share-based payment expense 452 137 - - 315
Other non-distributable income/(cost) - - - - -
Tax on sale of property - - - - -
Deferred tax 3,678 4,166 632 - (1,120)
Estimation for WE disposal realisation costs and losses (12,426) - - (12,426) -
Weighted average adjusted number of shares (million)
Diluted weighted average adjusted number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Diluted adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
INCOME STATEMENT (JUL - DEC 2022) Six months to 31 Dec 2022
Total CEE DJV WE Co
EARNINGS 50,193 49,643 11,113 (15,070) 4,507
DISTRIBUTABLE EARNINGS 29,168 25,170 8,100 239 (4,341)
Net rental income - income property 30,802 29,055 704 1,043 -
Net margin - residential sales 331 - 331 - -
Net income - preferred equity and revolving credit facility 5,767 - 5,767 - -
Net dividends - listed securities 4,606 - - - 4,606
Net corporate expenses (3,437) (953) (157) (299) (2,028)
Interest on debt financing (9,762) (2,172) (11) (459) (7,120)
Interest capitalised on developments 1,892 - 1,892 - -
Other distributable net income/(cost) 342 (17) (55) (21) 435
Income tax (1,373) (743) (371) (25) (234)
NON-DISTRIBUTABLE EARNINGS 21,025 24,473 3,013 (15,309) 8,848
Fair value adjustments - income property 21,660 20,945 2,948 (2,233) -
Fair value adjustments - interest rate derivatives 4,099 3,727 372 - -
Fair value adjustments - listed securities 10,269 - - - 10,269
Foreign currency exchange differences (2,079) - - - (2,079)
Investment expenses (783) (199) (318) (56) (210)
Share-based payment expense - - - - -
Other non-distributable income/(cost) 879 - 11 - 868
Tax on sale of property (1,104) - - (1,104) -
Deferred tax 510 - - 510 -
Estimation for WE disposal realisation costs and losses (12,426) - - (12,426) -
Weighted average adjusted number of shares (million) 659.5
Diluted weighted average adjusted number of shares (million) ~ 669.7
Adjusted distributable earnings per share (eurocents) 4.42
Diluted adjusted distributable earnings per share (eurocents) 4.36
Dividend per share (eurocents) 4.36
SEGMENTAL ANALYSIS Proportionate accounts
BALANCE SHEET (DEC 2022) 31 Dec 2022
Total CEE DJV WE Co**
NET ASSET VALUE 967,069 768,044 298,634 57,472 (157,081)
ASSETS 1,508,580 942,734 323,893 101,873 140,080
Income property 962,583 882,793 20,168 59,622 -
Developments - income property 54,630 4,573 50,057 - -
Developments - residential property 59,970 - 59,970 - -
Preferred equity and revolving credit facility 165,320 - 165,320 - -
Listed securities 120,674 - 19,570 - 101,104
Goodwill 1,696 1,696 - - -
Deferred tax asset 4,399 1,268 120 1,891 1,120
Interest rate derivative financial assets 9,183 8,307 876 - -
Other assets 2,950 16 2,436 132 366
VAT receivable 2,836 264 2,374 155 43
Share-based payment prepayments 11,150 11,150 - - -
Trade and other receivables 45,537 15,260 1,575 27,591 1,111
Cash and cash equivalents 67,652 17,407 1,427 12,482 36,336
LIABILITIES 541,511 174,690 25,259 44,401 297,161
Debt financing 455,916 119,203 6,441 33,819 296,453
Other liabilities 108 - 108 - -
Deferred tax liability 35,947 33,638 2,309 - -
Trade and other payables 49,540 21,849 16,401 10,582 708
Estimation for WE disposal realisation costs and losses - - - - -
Adjusted number of shares in issue (million)
Tangible net asset value per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
BALANCE SHEET (DEC 2022) 31 Dec 2022
Total CEE DJV WE Co
NET ASSET VALUE (17,799) 20,792 (17,261) (21,330) -
ASSETS (32,416) (12,846) (19,570) - -
Income property - - - - -
Developments - income property - - - - -
Developments - residential property - - - - -
Preferred equity and revolving credit facility - - - - -
Listed securities (19,570) - (19,570) - -
Goodwill (1,696) (1,696) - - -
Deferred tax asset - - - - -
Interest rate derivative financial assets - - - - -
Other assets - - - - -
VAT receivable - - - - -
Share-based payment prepayments (11,150) (11,150) - - -
Trade and other receivables - - - - -
Cash and cash equivalents - - - - -
LIABILITIES (14,617) (33,638) (2,309) 21,330 -
Debt financing - - - - -
Other liabilities - - - - -
Deferred tax liability (35,947) (33,638) (2,309) - -
Trade and other payables - - - - -
Estimation for WE disposal realisation costs and losses 21,330 - - 21,330 -
Adjusted number of shares in issue (million)
Tangible net asset value per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
BALANCE SHEET (DEC 2022) 31 Dec 2022
Total CEE DJV WE Co
NET ASSET VALUE 949,270 788,836 281,373 36,142 (157,081)
ASSETS 1,476,164 929,888 304,323 101,873 140,080
Income property 962,583 882,793 20,168 59,622 -
Developments - income property 54,630 4,573 50,057 - -
Developments - residential property 59,970 - 59,970 - -
Preferred equity and revolving credit facility 165,320 - 165,320 - -
Listed securities 101,104 - - - 101,104
Goodwill - - - - -
Deferred tax asset 4,399 1,268 120 1,891 1,120
Interest rate derivative financial assets 9,183 8,307 876 - -
Other assets 2,950 16 2,436 132 366
VAT receivable 2,836 264 2,374 155 43
Share-based payment prepayments - - - - -
Trade and other receivables 45,537 15,260 1,575 27,591 1,111
Cash and cash equivalents 67,652 17,407 1,427 12,482 36,336
LIABILITIES 526,894 141,052 22,950 65,731 297,161
Debt financing 455,916 119,203 6,441 33,819 296,453
Other liabilities 108 - 108 - -
Deferred tax liability - - - - -
Trade and other payables 49,540 21,849 16,401 10,582 708
Estimation for WE disposal realisation costs and losses 21,330 - - 21,330 -
Adjusted number of shares in issue (million) 659.5
Tangible net asset value per share (eurocents) 144
** Corporate (Co), other assets, liabilities and activities related to the Group's management, including investments in listed securities,
Group level financing, as well as corporate level administration.
~ Diluted weighted average adjusted number of shares in issue are computed by elimination of MAS' 40% proportion of shares owned by the DJV in
MAS and increased by the number of share purchase plan shares (on a proportionate consolidation basis).
This short-form announcement is the responsibility of the Directors and is only a summary of the information contained in the full announcement
released on SENS on Monday, 6 March 2023 and available at: https://senspdf.jse.co.za/documents/2023/jse/isse/msp/MASHYFS23.pdf or on the Company's
website: https://www.masrei.com/investors/financials. This short-form announcement does not contain full or complete details, any investment decisions
by investors and/or shareholders should be based on consideration of the full announcement. The full announcement is available for inspection
or may be requested and obtained in person, at no charge, at the head office of the Company on Suite 11, Marina Business Centre, Abate Rigord Street,
Ta' Xbiex, XBX1129, Malta, and at the offices of our sponsor, Java Capital Trustees and Sponsors Proprietary Limited, at 6th Floor, 1 Park Lane,
Wierda Valley, Sandton, Johannesburg, 2196, South Africa, during office hours from 6 March 2023 to 20 March 2023. The condensed consolidated
interim financial statements have been reviewed by the Company's auditors, PricewaterhouseCoopers (Malta), who expressed an unmodified review
opinion thereon.
The opinion, together with the condensed consolidated interim financial statements are available on the Company's website at the above link.
Date: 06-03-2023 08:00:00
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