Condensed Unaudited Results for FY 31 Dec 2021

RNS Number : 6035D

Globalworth Real Estate Inv Ltd

04 March 2022

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this information is considered to be in the public domain.

4 March 2022

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Condensed Unaudited Financial Results for the year ended 31 December 2021

Globalworth, the leading office investor in Central and Eastern Europe, announces the release of its Unaudited Consolidated Statement of Comprehensive Income and Unaudited Consolidated Statement of Financial Position for the year ended 31 December 2021.

The Company intends to announce its audited Financial Results for the year ended 31 December 2021 and publish its 2021 Annual Report towards the end of March 2022.

The Company will continue to report under International Financial Reporting Standards as adopted by the European Union ("EU IFRS"), as it has done since incorporation. As such, the condensed Unaudited Financial Results have been prepared under EU IFRS, as will the audited Financial Results for the year ended 31 December 2021 in due course.

Key Highlights for the year ended 31 December 2021

· Total combined portfolio value up by 3.9% to €3.2 billion.

· Focused development program in select high-quality projects.

o Romania; delivered a class "A" office comprising 29.2k sqm of GLA, with 5 logistics facilities under development which are expected to have a total GLA of 98.9k sqm

o Poland; two mixed-use properties under refurbishment/repositioning.

· Acquired two high-quality logistics facilities in Romania, with a total area of 27.0k sqm, for €17.9 million.

· Overall standing portfolio net increase of 2.4% to 1.3m sqm of GLA in 66 standing buildings.

· Leasing transactions of 285.5k sqm of commercial space at an average WALL of 4.6 years, registering our second highest yearly volume to date.

· Average standing occupancy of 88.5% (88.7% including tenant options), lower by 2.3% compared to 31 December 2020.

· Total annualised contracted rent up by 0.2% to €183.7m, of which 91.4% from office and industrial properties.

· Rate of collections invoiced and due remained high at 99.0% for 2021.

· Net Operating Income was lower by 8.3% compared to 2020 at €144.3 million.

· EPRA earnings decreased by 28.2% to €59.1 million (2020: €82.3 million), partially impacted by the exceptional one-off costs associated with the cash offer for Globalworth's shares initiated in May 2021.

· Adjusted normalised EBITDA decreased by 8.1% to €130.2 million (2020: €141.6 million), due to lower NOI, as offset by the positive impact of the €1.6 million (10.2% lower compared to 2020) savings in recurring administrative expenses¹.

· Net profit significantly improved to €47.5 million (2020: net loss of €46.8 million) due to marginal revaluation losses of €5.7 million in 2021 compared to the €116.2 million revaluation losses in 2020.

· Cash dividend paid to shareholders of €0.30 per share in 2021.

· Preliminary EPRA Net Reinstatement Value (NRV) of €1.9 billion, or €8.66 per share, a marginal decrease from €8.68 at 31 December 2020 mainly due to dividends paid, lower operating performance and non-recurring costs, offsetting the positive impact of lower revaluation losses (by €110.4 million compared to 2020).

· High liquidity of €418.7 million (vs €527.8 million at 2020 year-end) plus €215 million in undrawn RCF facility, and an LTV at 40.1% at 31 December 2021 (vs 37.8% at 2020 year-end).

· Maintained investment grade rating by all three major rating agencies, improving our outlook to "Stable" (from "Negative) by Moody's.

· Sustainability:

o €2.7 million in 55 green certified properties

o Several green initiatives completed or in progress to improve our footprint.

o Issued the third sustainable development report and our inaugural Green Bond Report.

o Maintained low-risk rating by Sustainalitics and improved our MSCI rating to "A".

o Contributed €1.0 million to support 18 initiatives in Romania and Poland.

· The consortium of CPI Property Group and Aroundtown became the controlling shareholders of Globalworth with 60.6% of the share capital.

¹ Recurring administrative expenses for 2021 exclude €11.5 million exceptional and non-recurring costs incurred in connection with the cash offer for Globalworth shares, made by CPI Property Group S.A. and Aroundtown SA (through Zakiono Enterprises Limited) in May 2021 (non-recurring expenses for 2020: €2.3 million).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

	31 December	31 December
	2021	2020
	€'000	€'000
Revenue	219,350	223,309
Operating expenses	(75,098)	(66,031)
Net operating income	144,252	157,278
Administrative expenses	(25,622)	(17,986)
Acquisition costs	-	(2,689)
Fair value loss on investment property	(5,738)	(116,153)
Share-based payment expense	(532)	(1,071)
Depreciation and amortisation expense	(536)	(466)
Other expenses	(1,851)	(2,565)
Other income	1,051	494
Foreign exchange gain/(loss)	214	(395)
Loss from fair value of financial instruments at fair value through profit or loss	(386)	(47)
Profit before net financing cost	110,852	16,400
Finance cost	(55,539)	(51,140)
Finance income	1,749	2,383
Share of profit of equity-accounted investments in joint ventures	5,010	1,897
Profit/(loss) before tax	62,072	(30,460)
Income tax expense	(14,583)	(16,335)
Profit/(loss) for the year	47,489	(46,795)
Other comprehensive income	-	-
Total comprehensive income	47,489	(46,795)
Profit/(loss) attributable to equity holders of the Company	47,489	(46,795)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

	2021 €'000	2020 €'000
ASSETS
Non-current assets
Investment property	2,966,080	3,013,014
Goodwill	12,349	12,349
Advances for investment property	3,436	4,215
Investments in joint ventures	48,908	28,358
Equity investments	12,109	10,369
Other long-term assets	2,083	2,148
Prepayments	338	432
Deferred tax asset	151	786
Non-current assets	3,045,454	3,071,671

Financial assets at fair value through profit or loss	7,324	7,695
Trade and other receivables	16,208	16,025
Contract assets	6,106	2,819
Guarantees retained by tenants	885	894
Income tax receivable	117	931
Prepayments	2,104	2,227
Cash and cash equivalents	418,748	527,801
	451,492	558,392
Investment property held for sale	130,537	-
Total current assets	582,029	558,392
Total assets	3,627,483	3,630,063
EQUITY AND LIABILITIES
Equity
Issued share capital	1,704,476	1,704,374
Treasury shares	(4,917)	(12,977)
Share-based payment reserve	156	6,184
Retained earnings	38,914	57,783
Total equity	1,738,629	1,755,364

Interest-bearing loans and borrowings	1,285,641	1,604,043
Deferred tax liability	150,713	144,843
Lease liabilities	18,762	27,324
Guarantees retained from contractors	2,661	2,235
Deposits from tenants	3,844	3,449
Trade and other payables	956	692
Non-current liabilities	1,462,577	1,782,586

Interest-bearing loans and borrowings	348,279	26,051
Guarantees retained from contractors	3,361	4,032
Trade and other payables	39,788	40,209
Contract liability	1,940	2,088
Other current financial liabilities	261	875
Provision for tenant lease incentives	-	46
Current portion of lease liabilities	1,303	1,765
Deposits from tenants	16,068	16,245
Income tax payable	550	802
	411,550	92,113
Liabilities directly associated with the assets held for sale	14,727	-
Total current liabilities	426,277	92,113
Total equity and liabilities	3,627,483	3,630,063

COMBINED CONSOLIDATED PORTFOLIO SNAPSHOT

AS AT 31 DECEMBER 2021

Our real estate investments are in Poland and Romania, the two largest markets in the CEE. As at 31 December 2021, our portfolio was spread across 12 cities, with Poland accounting for 51.2% by value and Romania 48.8%.

Combined Portfolio Snapshot
	Poland	Romania	Combined Portfolio
Standing Investments⁽¹⁾	19	20	39
GAV⁽²⁾ / Standing GAV (€m)	€1,613m / €1,447m	€1,540m / €1,419m	€3,152m / €2,866m
Occupancy⁽³⁾	85.6%	90.7%	88.5%
		(91.0% including tenant options)	(88.7% including tenant options)
WALL⁽⁴⁾	3.9 years	5.5 years	4.7 years
Standing GLA (k sqm)⁽⁵⁾	542.1k sqm	760.2k sqm	1,302.3k sqm
Contracted Rent (€m)⁽⁶⁾	€94.7m	€89.0m	€183.7m
GAV Split by Asset Usage
Office	82.8%	77.4%	80.2%
Mixed-Use	17.2%	0.0%	8.8%
Industrial	0.0%	13.4%	6.6%
Others	0.0%	9.1%	4.5%
GAV Split by City
Bucharest	-	85.6%	41.8%
Timisoara	-	5.8%	2.8%
Pitesti	-	3.6%	1.7%
Constanta	-	3.6%	1.8%
Arad	-	1.1%	0.5%
Oradea	-	0.4%	0.2%
Warsaw	44.4%	-	22.7%
Krakow	21.2%	-	10.8%
Wroclaw	15.9%	-	8.2%
Katowice	10.8%	-	5.5%
Lodz	4.2%	-	2.2%
Gdansk	3.5%	-	1.8%
GAV as % of Total	51.2%	48.8%	100.0%

1. Standing Investments representing income producing properties. One investment can comprise multiple buildings. e.g. Green Court Complex comprises three buildings or one investment.
2. Includes all property assets, land and development projects valued at 31 December 2021.
3. Occupancy of standing commercial properties, and in the case of Poland, including office rental guarantees.
4. Includes pre-let commercial standing and development assets. WALL of standing commercial properties in Romania, Poland and the Combined portfolio are 5.4 years, 3.9 years and 4.7 years, respectively.
5. Including 30.3k sqm of residential assets in Romania.
6. Total rent comprises commercial (€174.5 million) and residential (€0.9 million in Romania) standing properties, which includes contracted rent under master lease agreement, rent in assets under redevelopment (€6.8 million in Poland) and development pre-lets (€1.5 million in Romania).

Annualised Commercial Portfolio Lease Expiration Profile
Year	2022	2023	2024	2025	2026	≥2027	Total
€ million	18.8	16.1	30.3	17.4	20.7	79.3	182.8
% of total	10.3%	8.8%	16.6%	9.5%	11.3%	43.4%	100%

For further information visit www.globalworth.com or contact:

Enquiries

Stamatis Sapkas Tel: +40 732 800 000

Deputy Chief Investment Officer

Panmure Gordon (Nominated Adviser and Broker) Tel: +44 20 7886 2500

Alina Vaskina

About Globalworth / Note to Editors:

Globalworth is a listed real estate company active in Central and Eastern Europe, quoted on the AIM-segment of the London Stock Exchange. It has become the pre-eminent office investor in the CEE real estate market through its market-leading positions both in Poland and Romania. Globalworth acquires, develops and directly manages high-quality office and industrial real estate assets in prime locations, generating rental income from high quality tenants from around the globe. Managed by over 240 professionals across Cyprus, Guernsey, Poland and Romania, a combined value of its portfolio is €3.2 billion, as at 31 December 2021. Approximately 95.9% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 660 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania its assets span Bucharest, Timisoara, Constanta, Pitesti, Arad and Oradea.

For more information, please visit www.globalworth.com and follow us on Facebook, Instagram and LinkedIn.

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