Wrap Text
Reviewed condensed consolidated interim financial results for the six months to 31 December 2021
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 2021
INTRODUCTION AND BACKGROUND
MAS (hereafter referred to as the Group or Company) performed exceptionally during the six months to 31 December 2021, and has achieved
adjusted total earnings of EUR91.4million. The Group's financial results and strategic progress are discussed below.
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 the interpretation of the former, rather than replacing it. Detailed financial results
and Company Profile, updated on 31 December 2021, including highlights and supplemental operational information, are available on the
Company's website. Unless otherwise stated, all amounts are presented on an adjusted proportionate consolidated basis.
MAS' primary business is the investment in, and operation of, green, high-quality retail assets in Central and Eastern Europe (CEE). The
Group is internally managed, benefits from a multidisciplinary team of approximately 200 real estate professionals and is well positioned
to leverage the region's continual high growth in consumption by generating significant like-for-like (LFL) net rental income (NRI) growth
from retail properties through increasing tenants' sales and implementing asset management initiatives. MAS additionally benefits from
exposure to retail and residential developments, on a downside protected basis, via the Development Joint Venture (DJV)1 with developer
Prime Kapital. The Group published and is focused on achieving, ambitious, quantified strategic growth targets aimed at maximising total
long-term shareholders' returns.
FINANCIAL RESULTS
Group adjusted total earnings are, on a segmented basis, the combined result 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 and development activities); (iii) directly-owned income property operations in Western Europe (WE) which MAS has
mostly disposed of, and (iv) investments in listed securities (including other elements disclosed as Corporate).
Adjusted total earnings of EUR91.4million for the six months to 31 December 2021 (compared to adjusted total earnings of EUR47.4million for
the previous six months) consist of adjusted distributable earnings of EUR20.0million and adjusted non-distributable earnings of EUR71.4million.
Tangible net asset value (Tangible NAV) on 31 December 2021 was EUR1.31 per share, 5.6% higher than EUR1.24 per share on 30 June 2021.
Adjusted distributable earnings for this period were 2.96eurocents per share, 5.3% above the 2.81eurocents per share for the preceding six
months.
This exceptional financial performance is the result of a number of factors, including:
(i) excellent operational performance of, and increase in NRI from, standing Central and Eastern European retail assets, which, combined
with income increases from the Group's preferred share investments and listed securities, more than offset the negative impact to NRI
resulting from asset sales in WE and higher financing costs incurred due to the bond issue in May 2021;
(ii) significant improvements in Central and Eastern European asset valuations due to their excellent operational performance and the DJV
completing commercial developments in Barlad and Ploiesti (both in Romania);
(iii) a reduction in management's estimate for disposal realisation costs and losses for Western European assets remaining to be sold in light
of ongoing implementation of asset management initiatives at Flensburg Galerie (Germany) and purchase offers received for Langley
Park land holding (UK), and
(iv) further Western European asset sales at considerable premiums to book value on 30 June 2021.
OPERATIONS
Covid-19 continued to impact MAS' operations for the six months to 31 December 2021. Information regarding Central and Eastern
European gross leasable area (GLA) affected by restrictions, LFL footfall (compared to 2019), LFL tenants' sales (compared to 2019), income
entitlements (including invoicing, waivers and deferrals), collection rates (collections compared to invoicing) and pro forma collection rates
(collections compared to the total expected income disregarding the pandemic's impact) for the six months to 31 December 2021, is detailed
in Table 1 - Operational performance (all figures reported 28 February 2022).
Table 1 - Operational performance
Jul 21 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Total
Open GLA (2) % 97 97 96 71 9 8 62
Restricted GLA (3) % 3 3 4 29 91 92 38
Closed GLA (4) % - - - - - - -
Footfall (2021 compared to 2019) % 96 94 93 86 60 71 83
Open-air malls % 108 102 101 92 64 73 89
Enclosed malls % 84 86 84 78 55 67 76
Tenants' sales per m2 (2021 compared to 2019) % 107 107 105 102 74 89 97
Open-air malls % 118 113 115 111 78 92 103
Enclosed malls % 96 99 93 90 69 84 88
Total pre-pandemic income expectation EURm 4.1 4.1 4.1 4.1 4.1 4.5 25.0
Income waived, deferred, or suspended EURm - - - - 0.1 0.2 0.3
Due income (invoiced) EURm 4.1 4.1 4.1 4.1 4.0 4.3 24.7
Collection rate % 99 99 99 99 99 99 99
Pro forma collection rate % 98 98 98 98 97 97 98
Trading in the Group's Central and Eastern European markets was predominantly unaffected by social distancing until October 2021. Due
to Romanian and Bulgarian vaccination rates being amongst the lowest in the European Union, following an increase in infections during
September, both countries introduced significant restrictions on 25 October necessitating customers to present a valid Covid-19 certificate
(proving either vaccination or recovery) prior to entering a shopping centre. During November, Romanian infection rates decreased and
restrictions were eased on 9 December 2021, allowing customers presenting a negative Covid-19 test to visit shopping centres.
Total Central and Eastern European occupancy on 31 December 2021, improved to 95.3% (93.2% on 30 June 2021) due to ongoing asset
management initiatives and developments opening with high occupancies.
Until September 2021, footfall in CEE was satisfactory, with open-air malls consistently performing better than the same period in 2019.
The additional access restrictions, introduced in October 2021, significantly affected footfall in the Group's retail centres during November
and December 2021. Open-air malls were substantially less affected (11% decrease) than enclosed malls (24% decrease) compared to pre-
pandemic levels (the same period in 2019).
Tenants' sales were almost on par with pre-pandemic (2019) levels for the six months to 31 December 2021. The distinction between open-
air and enclosed malls' performance observed in previous periods, remained relevant during the first half of the 2022 financial year, as sales
in the former increased by 3% and those in the latter decreased by 12% compared to pre-pandemic levels (the same period in 2019). DIY, pet
store, toys and grocery tenants' sales continued to outperform. Leisure, specialist, home appliances, furnishing and fashion (clothing and
shoes) tenants' sales continued to be negatively affected by restrictions.
Overall, pro forma collection rates for the six months to December 2021 were an excellent 98%, driven by tenants' solid operational
performance, as well as MAS' high proportion of anchor tenants (82% of GLA). Limited tenant support was granted by the Group during
the first half of the financial year. Properties the DJV opened during the pandemic have achieved collection rates similar to standing assets.
PROPERTY VALUATIONS
The fair value uplift of EUR35.6million to income property, based on independent external valuations, is due to positive fair value adjustments
of EUR40.2million in CEE (an improvement of 7.2% compared to valuations on 30 June 2021) and reductions of EUR4.6million for unsold Western
European assets (a decrease of 4.2% compared to valuations on 30 June 2021).
MAS' properties are valued biannually by external, independent professional valuers with appropriate and recognised qualifications
and recent experience in the location and category of property. Valuations are primarily based on discounted forecasted cash flows and
are therefore forward-looking. Central and Eastern European properties' significant uplift in fair value was primarily driven by excellent
operational performance (passing LFL NRI on 31 December 2021 is 8.7% higher than on 30 June 2021), as well as by a slight decrease in
weighted average unlevered discount rate from 10.17% to 10.01% compared to valuations for the six months to 30 June 2021.
WESTERN EUROPEAN ASSET SALES
By 31 December 2021, sales of assets in WE with an aggregate value of EUR145.3million have been contracted, compared to book values of
EUR128.9million on 30 June 2021. This includes the completed disposals of Adagio Hotel (UK) and Malling Brooks land holding (UK), and
contracting the Gotha retail asset (Germany), where closing was only subject to the ordinary waiver of German statutory pre-emption rights
(completed 23 February 2022), and the New Uberior House office (UK), that was contracted prior to 30 June 2021 (completed 26 August 2021).
MAS' remaining Western European assets held for sale are Flensburg Galerie, Arches street retail units (UK) and the Langley Park. These
assets, which will be disposed of opportunistically, had a combined book value of EUR81.2million with EUR34.4million secured bank debt
outstanding on 31 December 2021. Valuations of these income properties for sale in WE, held by the Group on 30 June 2021, have decreased
to levels closer to management's estimated disposal values. This, combined with the successful results of sales completed in the first six
months of the financial year, as well as progress with asset management initiatives implemented at Flensburg Galerie, aimed at protecting
shareholder value and preparing the asset for disposal, and offers received to date in respect of Langley Park, prompted management to
re-assess its estimation for costs and losses regarding remaining assets to be sold from EUR27.1million on 30 June 2021, to EUR3.9million on
31 December 2021. This estimation assumes that Western European assets will be disposed of at fair value and takes into account 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.
DEVELOPMENTS, EXTENSIONS, AND REFURBISHMENTS IN THE DJV
Two commercial developments were completed and opened during the six months to 31 December 2021, and substantial new development
projects, at an estimated total cost of EUR752.1million, have been secured in Bucharest, Cluj and Brasov. As a result, the DJV's secured
estimated commercial and residential development pipelines increased to EUR717million and EUR932.4million, respectively, at cost (figures not
proportionally consolidated). Progress with developments and secured pipeline additions are detailed within.
Commercial developments
The DJV completed two projects in Romania during the six months to 31 December 2021, its third (Barlad Value Centre) and fourth (Prahova
Value Centre) commercial developments since the pandemic started. The high proportion of anchor tenants (90% of GLA), high occupancy
levels on opening and impressive NRI yields on cost achieved (9.8% and 9.9%, respectively) illustrate the developments' success.
Barlad Value Centre opened on 30 November 2021 with an exceptional occupancy of 99%. The 16,400m2 GLA open-air mall is located in
Barlad, Vaslui county's second largest city, with a population of 68,300. The centre is part of a 40,600m2 GLA retail destination which is set
to become the dominant commercial node in the wider region, totaling approximately 158,000 inhabitants. The centre includes the region's
first Carrefour hypermarket, as well as a service area, fashion tenants, cafes with outdoor terraces and small food court. A significant leisure
and food court extension of 1,300m2 GLA is planned.
The first phase of Prahova Value Centre opened on 3 December 2021, with 96% of the 21,700m2 GLA occupied. The centre is located in one
of Ploiesti's densely populated residential areas, and has exceptional visibility from, and access to, the city's main transport nodes. The city
has 220,000 inhabitants, while the catchment area consists of 759,000 inhabitants. The centre is anchored by a Carrefour hypermarket,
hosts a mix of international and national tenants and includes a modern food court. The project's planned second phase encompasses a
large-scale entertainment and leisure amenity which will position Prahova Value Centre as the city's major entertainment and leisure hub.
Further details on the project's second phase will be provided in due course. The development will be integrated into the city's best (and
greenest) residential development, Pleiades Residence (details below).
Construction of Alba Iulia Mall commenced, and the enclosed mall is expected to open by December 2022. The city's first and only modern
retail centre, it will be integrated with an adjacent riverside park, with access to an impressive entertainment and leisure facility with generous
outdoor terraces. Leasing is progressing well, with 63% of the project's 28,900m2 currently leased to national and international tenants,
including Altex, Carrefour, Colin's, Cropp, Deichmann, dm, House, KFC, LC Waikiki, Mesopotamia, New Yorker, Noriel, Sinsay, Spartan, and
Sportissimo.
Leasing for the Silk District office development has recommenced and demolition is underway.
Construction of Mall Moldova, extending and redeveloping Era Shopping Centre (29,600m2 GLA) into a super-regional enclosed mall and
retail node incorporating approximately 106,200m2 of destination GLA, is scheduled to begin in November 2022, subject to permitting
renewals. This development is located in a densely populated residential and industrial area of Iasi, Romania's second largest city, with an
approximate population of 391,000 inhabitants. Mall Moldova is well connected and will serve eastern Romania and neighbouring Republic of
Moldova, an estimated catchment area with approximately 644,000 inhabitants within a 60-minute drive. The centre will include the region's
largest hypermarket, over 200 stores including a selection of fashion anchors, a large entertainment and leisure facility, and a dedicated
home furnishing hub. The project's leasing is ongoing with outstanding interest from national and international tenants.
As previously reported, the contractual breach by one of the two sellers of Arges Mall development was settled in the DJV's favour. The
planned, regionally-dominant enclosed mall is centrally located in a densely populated residential area of Pitesti, Arges county's capital and
largest city, with an approximate population of 170,000. The mall will cater to an estimated catchment area with approximately 621,000
inhabitants within a 60-minute drive. Leasing continues, and currently national and international tenants have shown significant interest.
Permitting and leasing is progressing well at Roman Value Centre and Slobozia Value Centre extensions, while construction for the extension
of Baia Mare Value Centre is scheduled to start in due course.
Residential developments
Construction at Marmura Residence, Bucharest, the DJV's first residential development, is progressing well. The first four buildings were
substantially complete end of December 2021. Internal works on green spaces, infrastructure, common areas and finishings as well as works
on the fifth building are ongoing. Handover inspection procedures with clients commenced in February 2022 for the 329 units sold to date
in the completed buildings (88% of the units in the first four buildings) and it is expected that most of these sales will be completed by
30 June 2022.
At Avalon Estate, construction and sales continue for 47% of the development comprising 746 dwellings on the 8ha, low-height, low-density
residential project. Similarly, work is ongoing on the perimeter walls, main gatehouse, clubhouse, approximately 50% of the extensive
landscaped parks and green areas, as well as internal and external infrastructure. To date, 67% of the 352 residential units currently released
for sale have been sold. Construction works on the first buildings are expected to be completed April 2022. Works on the main access road
and gatehouse have been completed and the sales office moved on site.
Site set-up works are completed, and demolition works for Silk District residential Phase One (315 units) are advanced. The on-site sales
office has operated since February 2021. Permitting for Phase Two (346 units) and Phase Three (312 units) is ongoing. The first two phases
of the residential project have achieved strong sales, with 71% and 63% units sold, respectively. Phase Three was released for sale first half of
December 2021 and (pre-permitting) reservations are progressing very well (26% of units).
Permitting for the first phase of Pleiades Residence, Ploiesti, which will be integrated with the large-scale entertainment and leisure hub
planned at Prahova Value Centre, is ongoing. This work is taking place in parallel with the rezoning of the remaining land, so that permitting
for the planned retail extension, as well as the balance of Pleiades Residence, can occur. This will be the residential development with the
largest proportion of car-free green areas in Ploiesti and will be connected to an efficient structured parking solution for residents via a grid
of covered walkways through the car-free green areas. Of the total 498 units, the sales process has commenced for 70 units (starting at the
same time the value centre opened), and, in line with expectations, 34% of units are reserved.
Zoning for Elba Residential (Timisoara, Romania) is currently delayed due to recent changes in the local administration adversely impacting
the process' length and complexity.
New Pipeline
Cesarom, a large 17.1ha industrial site, with ongoing industrial activity (to be relocated), has been secured for a large-scale mixed-use
development near the city centre, in northern Cluj-Napoca (Cluj). Cluj is Romania's third largest city with over 328,000 inhabitants, the
country's second-largest economic centre and a major IT hub in CEE. The planned development consists of a super-regional mall with
approximately 73,300m2 GLA, a residential complex of approximately 1,460 apartments and approximately 49,200m2 GLA of offices, with
flexibility to re-allocate built areas between the project's components, based on demand. The project's surroundings are characterised by
adequate current and planned infrastructure with large streets and sidewalks, low traffic, public transport interchange hub, and multiple
access points, including convenient and direct connections to the city's other main attractions. In addition to the strong purchasing power
offered by its unique location, the retail component will benefit from a catchment area of 651,000 inhabitants within a 60-minute drive. The
residential component will benefit from access to the office and retail developments through an integrated masterplan providing significant
car-free, green and leisure areas.
In Bucharest, the 17.8ha former IMGB industrial site was secured for an approximately 28,000m2 GLA open-air mall and a residential project
of approximately 3,150 apartments. Bucharest (population approximately 2.2million) is Romania's capital and largest city, the country's
economic centre and seat of its major universities. The city enjoys Romania's highest wealth concentration, purchasing power, mobility,
labour force dynamics, and gross domestic product (GDP). The project will benefit from southern Bucharest's growing demand for modern
retail and quality residential projects. This large-scale, mixed-use development optimises the substantial land plot, integrating green and
leisure facilities with new and existing infrastructure. In addition, the residential component will have extensive green areas, a spacious,
exclusive community centre for residents, and will include approximately 3,800 affordable high-quality parking places in free-standing
structures connected via walkways. The residences will also have pedestrian and vehicular access to the open-air mall. There is also a large,
and modern new kindergarten, within walking distance of Berceni metro station (approximately five minutes from the development). The
planned open-air mall benefits from a large catchment area of 383,000 inhabitants within a 45-minute drive.
A 9ha site was secured in south-eastern Brasov, Romania, in a former industrial zone, for a new residential development, consisting of
approximately 2,140 apartments and support functions. Brasov is southern Transylvania's major city, with approximately 287,000
inhabitants. The municipality hosts many large multinational companies (Accenture, IBM, Schaeffler, Siemens, Vodafone) and benefits
from private, direct investments supporting its development into a major Romanian economic hub. As a result, Brasov's wider metropolitan
area outperforms other Romanian regions in terms of employment and GDP, which, consequently, creates increasing purchasing power.
This economic advantage, coupled with favourable demographics, produces a strong demand for residential properties. The site is in close
proximity to Brasov's historic city centre, with its numerous entertainment and recreational facilities, as well as a well-preserved natural
forest to the east.
In addition to the residential development, the DJV has secured a 6.6ha site north-west of Brasov, a 15-minute drive from the city centre,
where it plans to develop a 19,800m2 GLA open-air mall. The catchment area is estimated to include approximately 504,000 residents
within a 60-minute drive, and the project will benefit from the strong regional economy and the regular influx of a large number of tourists
(approximately 725,000 people visit the city and its environs annually). The open-air mall will have exceptional visibility from, and access to,
modern infrastructure, and is located adjacent to an existing DIY retailer serving the city and towns to the north and in close proximity to a
densely populated residential area.
EXTENSIONS AND REFURBISHMENTS TO DIRECTLY-OWNED ASSETS
Atrium Mall's refurbishment and reconfiguration is complete, including a food court reconfiguration, refurbished bathrooms and improved
tenant mix. Work on the centre's upgraded facades is ongoing and will be finalised in due course. Twenty-five new retail concepts have
opened either new brands (not previously present in the city) or updated configurations and offerings from existing tenants. Occupancy
increased to 93.6% on 31 December 2021 (83.7% on 30 June 2021 due to ongoing refurbishment works).
The planned extension to Galleria Burgas was reconsidered, and instead will undergo a major refurbishment and reconfiguration. These
plans, as well as internal analysis regarding previously planned extensions at Militari Shopping and Nova Park, are not finalised. Updates will
be provided in due course.
DEBT, COST OF DEBT AND LIQUIDITY
On 31 December 2021, MAS had a combined EUR324.3million in cash, listed securities and undrawn credit facilities (figure not proportionally
consolidated). This is the result of the Group holding EUR193.7million in cash, EUR110.6million in listed securities and a EUR20million, currently
undrawn, committed facility. The Group's existing credit facility can be increased up to EUR60million. On 31 December 2021, the Group had an
ongoing undrawn preferred share investment commitment of EUR137million to the DJV (figure not proportionally consolidated).
The Group's bond and unsecured facility ratios on 31 December 2021, shown in Table 2 - Debt tolerances and ratios, continued to demonstrate
significant headroom compared to covenant tolerances, on both IFRS and proportionate consolidated bases.
Table 2 - Debt tolerances and ratios
Tolerance Actual IFRS Actual proportionate consolidated basis
Solvency ratio Shall not exceed 0.6 0.27 0.27
Consolidated coverage ratio At least 2.5:1 3.63 4.12
Unencumbered consolidated total assets/
unsecured consolidated total debt Minimum 180% 397% 331%
The self-imposed, long-term Group overall debt limit, which is considerably more restrictive than covenant tolerances, is a maximum loan-to-
value (LTV) ratio of 40%, or, on a forward-looking basis, seven times NRI. On 31 December 2021, the Group had EUR363.1million of outstanding
debt (bonds and bank loans) and an LTV ratio of 14.9%. The weighted average cost of debt was 4.34% per annum for the six-month period to
31 December 2021. MAS' increase in weighted average cost of debt is partially the result of the issue, in May 2021, of a EUR300million
unsecured, five-year Eurobond, carrying a 4.25% fixed coupon and partially used proceeds to repay, by 30 June 2021, bank loans secured
against directly-owned Central and Eastern European investment properties. The Eurobond issue was one of the strategic initiatives achieved
in the previous six months, which positioned the Group to optimise future total returns. Additionally, the Group's access to debt capital
markets allows flexibility in attracting additional capital resources and the ability to issue unsecured group-level funding.
STRATEGY UPDATE AND LONG-TERM EARNINGS TARGETS
MAS remains committed to maximising total long-term returns from property investments on a per share basis. The Group aims to achieve
this by concentrating on capital allocation, operational excellence, sensible leveraging, and cost efficiency, thereby sustainably growing
distributable earnings per share. Benefiting from the continual high growth in Central and Eastern European consumption, 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.
In the absence of unforeseen circumstances, MAS intends to maintain a full pay-out of distributable earnings and provided that the
Company's long-term objectives, including self-imposed gearing limitations and achieving an investment-grade credit rating by the end
of the 2026 financial year at the latest, are not considered at any point during this period to be at undue risk. However, if this is the case,
or if attractive investment opportunities that are expected to substantially enhance total returns per share that cannot be otherwise more
efficiently funded (for instance by selling assets, taking on additional gearing or issuing new share capital) become available, then dividends
relative to distributable earnings will be reduced.
MAS has published, with the release of the Group's 30 June 2021 financial statements, four quantified strategic objectives set to be achieved
over five years (by the end of the 2026 financial year), using the current capital base and maintaining a full payout of distributable earnings
to shareholders without breaching self-imposed gearing limitations, and is committed to periodic reporting. Achieving these targets is
expected to lead to substantial improvements in total returns per share, and implies an increase in scale that will position the Company well
for an investment-grade credit rating, which will enable further flexible access to debt finance at optimal cost. Current progress is detailed
below.
Asset management
MAS aims to maximise property values through sustainable asset management initiatives. The Group plans to achieve this through specific
asset management initiatives to improve 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).
Current progress is excellent. On 31 December 2021, occupancy for Central and Eastern European assets increased to 95.3% (93.2% on 30 June
2021) and annualised LFL passing NRI in CEE is 8.7% higher than six months earlier on 30 June 2021.
Commercial developments
The Group expects to enlarge 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 completion of recently opened projects in Barlad and Ploiesti, worth EUR50.8million at cost with initial yields of 9.8% and 9.9%, respectively,
as well as new and existing pipeline projects, of which commercial projects to the value of EUR578.9million are expected to be completed by
30 June 2026 at a weighted average initial yield of 9.1% (detailed in Developments, extensions, and refurbishments in the DJV and in the
Company Profile on 31 December 2021, the latter presentation available on the Company's corporate website), demonstrate the DJV's ability
to achieve these targets.
Residential developments
MAS aims to benefit from a sustainable and growing distributable income stream, through residential sales and deliveries by the DJV
of approximately EUR200million per annum by the 2026 financial year (figure not proportionally consolidated) at net after tax margins of
approximately 20%.
An adequate residential pipeline has been secured for the DJV and is expected to achieve close to EUR200million in annual sales by 2026
(detailed in Developments, extensions, and refurbishments in the DJV and in the Company Profile on 31 December 2021, the latter
presentation available on the Company's corporate website).
Direct acquisitions
MAS aims to complete direct acquisitions of high-quality, Central and Eastern European commercial assets to the value of at least EUR150million
during the 2022 financial year and a further EUR50million by the end of the 2023 financial year.
MAS has identified and is analysing several direct acquisition opportunities in CEE. Even though the Group did not complete any Central and
Eastern European acquisitions during the current financial year, it did invest in NEPI Rockcastle plc (NRP) during this period. The cost of MAS'
investment in NRP, of EUR105.2million, can be equated to direct property acquisitions worth EUR137.7million (grossed up for NRP's gearing) at an
implied property income yield of 7.7%. The Group has therefore substantially met the earnings target accompanying its strategic acquisition
target for the 2022 financial year, while the listed securities provide appropriate cash warehousing until direct property acquisitions are
available.
MAS extensively researched NRP, including a detailed assessment of over 95% of retail GLA of the company's income assets and competing
assets, the three retail developments, prospects and associated risks. A summarised research report is available on MAS' corporate website.
NRP shares are liquid, and provide an attractive investment alternative compared to short or medium-term options to lower cash drag to
acceptable levels of risk. MAS expects that the investment in 18,849,607 NRP shares, at the average price of EUR5.58 per share, should generate
total annual returns ranging between 11.5% and 13.0%.
Long-term earnings targets
MAS expects delivery on its strategic objectives to result in significant per share distributable earnings (and dividend) growth, with targeted
distributable earnings ranging between 14.5eurocents and 15eurocents per share for the 2026 financial year. Of this, approximately
3eurocents per share is expected to result from residential sales. To achieve these results, it is assumed that, amongst others,
(i) the remaining Western European assets are sold at book value;
(ii) stated asset management targets are achieved;
(iii) secured commercial and residential development pipeline is permitted and rolled out as planned (see Company Profile on 31 December 2021,
available on the Company's corporate website, for details);
(iv) NRP performs as expected and that its shares trade at the projected Tangible NAV per share, (see 'NEPI Rockcastle plc - property analysis,
return expectations and views on strategy' report detailing MAS' expectations);
(v) the remaining directly-owned assets acquisitions targeted for 2023 are achieved;
(vi) no further MAS shares are issued, or bought back, during this period;
(vii) the economic environment remains stable with no major disruptions occurring before 30 June 2026, and
(viii) no current and new income assets in CEE are disposed of by MAS, or the DJV, during this period.
Shareholders should note that the Company's 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 the
ultimate financial results. The recent Russian invasion of Ukraine and the sanctions imposed by the European Union, amongst others, may
affect MAS' growth plans, especially in light of higher energy prices, that are expected to put downward pressure on disposable income in the
Group's markets. It is difficult to foresee the likely trajectory and extent of this at present. Moreover, the Company 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.
MANAGEMENT SUCCESSION
Excellent progress has been made with MAS' transition towards a fully focused Central and Eastern European property investor and
operator since the transaction with Prime Kapital in November 2019, and the appointment of Prime Kapital founders Martin Slabbert and
Victor Semionov as Executive Directors of MAS. The terms of the transaction included a mandate of up to three years for the appointed
executives to oversee the re-positioning and transitioning of the business, prior to them returning to Prime Kapital full-time. Executive
Director appointments of Raluca Buzuleac, Irina Grigore, and Dan Petrisor, have positioned the Group to ensure a seamless succession to a
management team with no affiliation to, or interest in, Prime Kapital by the end of the mandate.
DIVIDEND DECLARATION
The Company achieved 2.96eurocents distributable earnings per share in respect of the first half of the financial year to 30 June 2022, and
the Board consequently declared a cash dividend of 2.96eurocents per share in respect of the six-month period. Payment is expected by
4 April 2022 and further details will be announced separately.
EARNINGS GUIDANCE
Distributable earnings per share for the six months to 30 June 2022 are expected to be approximately 3.70eurocents per share (this includes
approximately 0.58eurocents per share from residential sales). Distributable earnings per share for the 2023 financial year is expected to
range from 8.60eurocents to 9.30eurocents per share (of which 0.65 to 1.10eurocents per share is expected to be from residential sales).
This guidance is based, and provided, on the assumptions that additional trading restrictions caused by the Covid-19 pandemic and Russian
invasion of Ukraine will not result in material macroeconomic disruption, a stable political environment prevails in the Groups' markets,
developments continue as scheduled, and no major corporate failures occur.
This forecast has not been audited or reviewed by MAS' auditors and is the responsibility of the Board of Directors.
Martin Slabbert Irina Grigore
CEO CFO (Deputy CEO)
3 March 2022, Malta Released on 7 March 2022
1 DJV is an abbreviation for a separate corporate entity named P K M Development Limited (PKM Development), an associate of MAS since 2016 with
independent governance. MAS owns 40% of PKM Development's ordinary share capital, an investment conditional on it irrevocably undertaking to
provide preference share capital to PKM Development on notice of drawdown. MAS' undertakings to PKM Development arose prior to Prime Kapital's
founders joining MAS' Board in November 2019 and are unaffected. On 31 December 2021, MAS had invested EUR283million in preference shares and
had an obligation of EUR137million outstanding (figures not proportionally consolidated). The balance of the ordinary share capital in PKM
Development was taken up by Prime Kapital in 2016 for EUR30million in cash, and, in terms of applicable contractual undertakings and restrictions:
(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 2025 (end of exclusivity period); (ii) contributed 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 integrated
in-house platform.
2 GLA open for trade without restrictions.
3 GLA open for trade subject to restrictions (pro-rated to reflect days with restrictions).
4 GLA closed for trade (pro-rated to reflect closures).
All amounts in EUR thousand unless otherwise stated. Reviewed Reviewed Audited
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 Dec 21 31 Dec 20 30 Jun 21
Non-current assets 853,461 689,324 758,253
Current assets 424,331 519,070 568,327
Total assets 1,277,792 1,208,394 1,326,580
Equity attributable to owners of the Group 895,039 816,098 869,423
Total equity 895,039 816,098 869,423
Non-current liabilities 321,318 160,705 321,059
Current liabilities 61,435 231,591 136,098
Total liabilities 382,753 392,296 457,157
Total shareholder equity & liabilities 1,277,792 1,208,394 1,326,580
Reviewed Reviewed Audited
6 months to 6 months to Year to
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS 31 Dec 21 31 Dec 20 30 Jun 21
Continuing operations
Rental income 17,947 17,952 34,864
Service charge income and other recoveries 5,608 5,081 10,499
Gross revenue 23,555 23,033 45,363
Impairment of receivables (335) (3,003) (6,090)
Service charge and other property operating expenses (6,429) (6,282) (12,355)
Net rental income 16,791 13,748 26,918
Corporate expenses (3,273) (2,418) (5,700)
Other income 1,032 1,728 2,690
Investment expenses (908) (799) (631)
Fair value adjustments 24,898 8,539 28,432
Foreign currency exchange differences (262) 759 3,100
Share of profit from equity-accounted investee, net of tax 14,616 3,412 10,629
Profit before finance income/(costs) 52,894 24,969 65,438
Finance income 10,774 7,197 15,397
Finance costs (7,656) (3,781) (9,401)
Profit before tax 56,012 28,385 71,434
Current tax (349) (92) (180)
Deferred tax 316 (3,150) (5,443)
Profit from continuing operations 55,979 25,143 65,811
Discontinued operations
Profit/(loss) from discontinued operations, net of tax 10,932 (3,878) 5,931
Profit for the period/year 66,911 21,265 71,742
Attributable to:
Owners of the Group 66,911 21,265 71,742
Profit for the period/year 66,911 21,265 71,742
Reviewed Reviewed Audited
FINANCIAL PERFORMANCE 31 Dec 21 31 Dec 20 30 Jun 21
IFRS Net Asset Value attributable 895,039 816,098 869,423
to owners of the Group
IFRS Net Asset Value per share (eurocents) 127.0 115.8 123.4
IFRS Gross revenue from continuing operations 23,555 23,033 45,363
Earnings per share (eurocents)* 9.50 3.02 10.18
Adjusted distributable earnings per share (eurocents) 2.96 - 5.93
Cash dividend (eurocents) 2.96 - 5.93
Gross headline earnings 15,091 17,258 36,744
Net headline earnings 22,969 18,059 48,414
Gross headline earnings per share (eurocents) 2.14 2.45 5.22
Net headline earnings per share (eurocents) 3.26 2.56 6.87
Gross diluted headline earnings per share (eurocents) 2.14 2.45 5.19
Net diluted headline earnings per share (eurocents) 3.25 2.56 6.84
Closing number of shares in issue** 704,493,798 704,493,798 704,493,798
* The Group's earnings per share have increased by 215% vs. 31 Dec 2020.
** Excluding treasury shares.
SEGMENTAL ANALYSIS Proportionate accounts
INCOME STATEMENT (JUL - DEC 2021) Six months to 31 Dec 2021
Total CEE DJV WE Co***
EARNINGS 66,911 39,518 25,331 10,519 (8,457)
Distributable earnings 21,019 15,075 12,020 953 (7,029)
Net rental income - income property 21,961 16,347 3,330 2,284 -
Net income - preference shares 6,430 - 6,430 - -
Net dividends - listed securities 2,716 - 1,684 - 1,032
Net corporate expenses (2,691) (962) (454) (181) (1,094)
Interest on debt financing (8,333) - (214) (910) (7,209)
Interest capitalised on developments 1,269 - 1,269 - -
Other distributable net income/(cost) 161 (166) (2) (25) 354
Income tax (494) (144) (23) (215) (112)
Non-distributable earnings 45,892 24,443 13,311 9,566 (1,428)
Fair value adjustments - income property 49,757 24,886 15,295 9,576 -
Fair value adjustments - interest rate derivatives 88 - - 88 -
Fair value adjustments - listed securities 12 - - - 12
Foreign currency exchange differences 2,214 - - 2,625 (411)
Investment expenses (1,723) - - (1,538) (185)
Share-based payment expense (1,217) (759) - - (458)
Other non-distributable income/(cost) (308) - 78 - (386)
Tax on sale of property (93) - - (93) -
Deferred tax (2,838) 316 (2,062) (1,092) -
Estimation for WE disposal realisation costs and losses - - - - -
Weighted average number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
INCOME STATEMENT (JUL - DEC 2021) Six months to 31 Dec 2021
Total CEE DJV WE Co
EARNINGS 24,509 443 378 23,230 458
Distributable earnings (997) - (1,684) - 687
Net rental income - income property - - - - -
Net income - preference shares - - - - -
Net dividends - listed securities (997) - (1,684) - 687
Net corporate expenses - - - - -
Interest on debt financing - - - - -
Interest capitalised on developments - - - - -
Other distributable net income/(cost) - - - - -
Income tax - - - - -
Non-distributable earnings 25,506 443 2,062 23,230 (229)
Fair value adjustments - income property (14,192) - - (14,192) -
Fair value adjustments - interest rate derivatives - - - - -
Fair value adjustments - listed securities (687) - - - (687)
Foreign currency exchange differences - - - - -
Investment expenses 1,489 - - 1,489 -
Share-based payment expense 1,217 759 - - 458
Other non-distributable income/(cost) - - - - -
Tax on sale of property - - - - -
Deferred tax 1,746 (316) 2,062 - -
Estimation for WE disposal realisation costs and losses 35,933 - - 35,933 -
Weighted average number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
INCOME STATEMENT (JUL - DEC 2021) Six months to 31 Dec 2021
Total CEE DJV WE Co
EARNINGS 91,420 39,961 25,709 33,749 (7,999)
Distributable earnings 20,022 15,075 10,336 953 (6,342)
Net rental income - income property 21,961 16,347 3,330 2,284 -
Net income - preference shares 6,430 - 6,430 -
Net dividends - listed securities 1,719 - - - 1,719
Net corporate expenses (2,691) (962) (454) (181) (1,094)
Interest on debt financing (8,333) - (214) (910) (7,209)
Interest capitalised on developments 1,269 - 1,269 - -
Other distributable net income/(cost) 161 (166) (2) (25) 354
Income tax (494) (144) (23) (215) (112)
Non-distributable earnings 71,398 24,886 15,373 32,796 (1,657)
Fair value adjustments - income property 35,565 24,886 15,295 (4,616) -
Fair value adjustments - interest rate derivatives 88 - - 88 -
Fair value adjustments - listed securities (675) - - - (675)
Foreign currency exchange differences 2,214 - - 2,625 (411)
Investment expenses (234) - - (49) (185)
Share-based payment expense - - - - -
Other non-distributable income/(cost) (308) - 78 - (386)
Tax on sale of property (93) - - (93) -
Deferred tax (1,092) - - (1,092) -
Estimation for WE disposal realisation costs and losses 35,933 - - 35,933 -
Weighted average number of shares (million) ~ 676.1
Adjusted distributable earnings per share (eurocents) 2.96
Dividend per share (eurocents) 2.96
SEGMENTAL ANALYSIS Proportionate accounts
BALANCE SHEET (DEC 2021) 31 Dec 2021
Total CEE DJV WE Co***
NET ASSET VALUE 895,039 486,165 352,045 79,337 (22,508)
Assets 1,337,805 520,934 412,061 124,567 280,243
Income property 700,034 486,855 124,456 88,723 -
Developments - income property 27,522 713 26,809 - -
Developments - residential property 48,306 - 48,306 - -
Preference shares 180,005 - 180,005 - -
Listed securities 130,189 - 19,570 - 110,619
Goodwill 1,696 1,696 - - -
Deferred tax asset 2,505 1,428 129 948 -
Other assets 1,009 154 717 132 6
VAT receivable 3,078 522 1,911 429 216
Share-based payment prepayments 11,895 11,895 - - -
Trade and other receivables 30,092 7,478 2,396 19,482 736
Cash and cash equivalents 201,474 10,193 7,762 14,853 168,666
Liabilities 442,766 34,769 60,016 45,230 302,751
Debt financing 363,056 - 23,893 37,395 301,768
Other liabilities 1,071 - 1,071 - -
Deferred tax liability 30,084 23,866 6,218 - -
Trade and other payables 48,555 10,903 28,834 7,835 983
Estimation for WE disposal realisation costs and losses - - - - -
Closing number of shares in issue (million) ~
Net Asset Value per share (eurocents) 132 72 52 12 (3)
Tangible Net Asset Value per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
BALANCE SHEET (DEC 2021) 31 Dec 2021
Total CEE DJV WE Co
NET ASSET VALUE (6,979) 10,275 (13,352) (3,902) -
Assets (33,161) (13,591) (19,570) - -
Income property - - - - -
Developments - income property - - - - -
Developments - residential property - - - - -
Preference shares - - - - -
Listed securities (19,570) - (19,570) - -
Goodwill (1,696) (1,696) - - -
Deferred tax asset - - - - -
Other assets - - - - -
VAT receivable - - - - -
Share-based payment prepayments (11,895) (11,895) - - -
Trade and other receivables - - - - -
Cash and cash equivalents - - - - -
Liabilities (26,182) (23,866) (6,218) 3,902 -
Debt financing - - - - -
Other liabilities - - - - -
Deferred tax liability (30,084) (23,866) (6,218) - -
Trade and other payables - - - - -
Estimation for WE disposal realisation costs and losses 3,902 - - 3,902 -
Closing number of shares in issue (million) ~
Net Asset Value per share (eurocents)
Tangible Net Asset Value per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
BALANCE SHEET (DEC 2021) 31 Dec 2021
Total CEE DJV WE Co
NET ASSET VALUE 888,060 496,440 338,693 75,435 (22,508)
Assets 1,304,644 507,343 392,491 124,567 280,243
Income property 700,034 486,855 124,456 88,723 -
Developments - income property 27,522 713 26,809 - -
Developments - residential property 48,306 - 48,306 - -
Preference shares 180,005 - 180,005 - -
Listed securities 110,619 - - - 110,619
Goodwill - - - - -
Deferred tax asset 2,505 1,428 129 948 -
Other assets 1,009 154 717 132 6
VAT receivable 3,078 522 1,911 429 216
Share-based payment prepayments - - - - -
Trade and other receivables 30,092 7,478 2,396 19,482 736
Cash and cash equivalents 201,474 10,193 7,762 14,853 168,666
Liabilities 416,584 10,903 53,798 49,132 302,751
Debt financing 363,056 - 23,893 37,395 301,768
Other liabilities 1,071 - 1,071 - -
Deferred tax liability - - - - -
Trade and other payables 48,555 10,903 28,834 7,835 983
Estimation for WE disposal realisation costs and losses 3,902 - - 3,902 -
Closing number of shares in issue (million) ~ 676.1
Net Asset Value per share (eurocents)
Tangible Net Asset Value per share (eurocents) 131 73 50 11 (3)
*** 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.
~ Weighted number of shares for the period and Closing number of shares for proportionate accounting purposes are computed by elimination of
MAS' 40% share of own shares acquired by the associate.
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, 7 March 2022 and available at: https://senspdf.jse.co.za/documents/2022/jse/isse/msp/MASHYFS22.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 7 March 2022 to 21 March 2022.
The condensed consolidated interim financial statements have been reviewed by the Company's auditors, PricewaterhouseCoopers LLC, 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: 07-03-2022 07:30:00
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