THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

11 March 2024

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Preliminary Unaudited Financial Results for the year ended 31 December 2023

Globalworth, the leading office investor in Central and Eastern Europe, is pleased to provide a comprehensive update of its operations, along with a preliminary release of its unaudited Consolidated Financial Statements for the year ended 31 December 2023.  

Dennis Selinas, Chief Executive Officer of Globalworth, commented: "Globalworth's performance throughout the year remained resilient, despite global challenges, as we continued to implement our "local landlord" approach, with an increasing focus on sustainability."

 

Operational Highlights

 

·        Record year in leasing with 314.4 k sqm taken-up or extended at an average WALL of 6.0 years despite continued challenging market conditions.

o  Improved our average WALL in our standing commercial properties to 4.9 years (from 4.4 years as of December 2022).

 

·        As of 31 December 2023, the average standing occupancy of our combined commercial portfolio was 88.3% (88.7% including tenant options), representing a 2.6% rebound compared to the previous year-end,

o  Resilient performance of our capital cities standing commercial properties at 92.0% average occupancy.

 

·        The total annualised contracted rent of our combined portfolio increased by 6.3% to €201.2 million, compared to year-end 2022,

o  Like-for-like annualised commercial contracted rents in our combined standing commercial portfolio increased by 4.9% to €190.0 million.

 

·        Standing portfolio GLA stood at 1.4m sqm marginally decreasing with 19.6k sqm compared to year-end 2022.

o  Successfully finalised the sale of Warta Tower in Warsaw

o  Delivered our first logistic/light industrial facility in Targu Mures, Romania

 

·        Total combined portfolio value decreased by 5.2% to €3.0 billion, mainly due to sales and negative revaluation adjustments.

o  Like-for-like decrease of 4.0% in the appraised value of our standing commercial properties compared to year-end 2022

 

·        Developments activity scaled down and focused on high-quality logistic / light-industrial facilities in Romania (19.3k sqm) and the finalization of refurbishment/repositioning of two mixed-use properties in Poland.

 

·        Continued our active investment and upgrade program, investing over €43.2 million during the year in our standing commercial portfolio aiming at bringing all our buildings at the highest level of energy efficiency, technology, and comfort.

 

·        Sustainability:

o  €2.5bn in 59 green-certified properties in our portfolio accounting for 92.5% of our standing commercial portfolio by value;

o  27 properties were certified or recertified with BREEAM Very Good or higher certifications in the period

o  Maintained our "low-risk" rating by Sustainalytics at 11.1 and "A" rating by MSCI;

o  SBTi approved our targets to reduce GHG emissions intensity by 46% by 2030 versus our baseline 2019 levels (for Scope 1 and 2) and commit to measuring and reducing Scope 3

 

 

Financial Highlights

 

 

Combined Portfolio Value (OMV) €3.0bn (5.3)% on 31 Dec. 2022	Shareholders' equity €1.6bn (0.03)% on 31 Dec. 2022	EPRA NRV per share €6.94 (16.2)% on 31 Dec. 2022
IFRS Earnings before tax €(61.3)m €(11.2)m in. 2022	Adjusted normalised EBITDA €131.4m 4.3% on 2022	NOI €147.0m 5.2% on 2022
IFRS Earnings per share (23) cents (8) cents in 2022	EPRA Earnings per share 26 cents (19)% on 2022	Revenues €240.4m 0.5% on 2022

 

 

Outlook

For the year ahead of us, we expect that macroeconomic developments and the financial market evolution, especially the response of monetary authorities to the trajectory of inflation, among other variables, will have a significant impact on the real estate market.

 

We remain focused on our goal of providing sustainable spaces where our partners can grow and succeed while closely weighing various liquidity initiatives to provide our group with resources for improving and simplifying our capital structure.

 

 

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

 

Enquiries
Rashid Mukhtar Group CFO	Tel: +40 732 800 000
Panmure Gordon (Nominated Adviser and Broker) Dominic Morley	Tel: +44 20 7886 2500

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 269 professionals across Cyprus, Guernsey, Poland and Romania the combined value of its portfolio is €3.0 billion, as at 31 December 2023. Approximately 96.8% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 715 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania it has assets in Bucharest and seven other cities. For more information, please visit www.globalworth.com and follow us on Facebook, Instagram and LinkedIn.

 

 

 

 

 

 

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

PRELIMINARY RESULTS AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

MANAGEMENT REVIEW

REVIEW OF DEVELOPMENTS

In 2023, we continued developing high-quality logistics / light-industrial facilities in Romania. At the beginning of the year, we had two projects (with three facilities) under construction (30.0k sqm) out of which we have delivered the Targu Mures project with the other two facilities waiting to be delivered in the first part of 2024.

In November 2023, we have started our first logistic project in Craiova, by acquiring a plot of land, north of the city. The built to suite project is aimed to deliver 6.0k sqm of high-quality GLA in the first part of 2024 and was 100% pre-leased to Returo SGR as of 31 December 2023 through a 20-year lease.

Delivery of Targu Mures Logistic Hub

In the first half of 2023, we delivered our first project in Targu Mures with a leasable area of 18.3k sqm. At the end of December, the project, which is held through a JV partnership, was 100% let to two large multinational companies, Friesland Campina and EKR Elektrokontakt (Nexans Group) at an average WALL of 10.1 years.

Delivery
	Targu Mures Logistic Hub*
Location	Targu Mures
GLA (k sqm)	18.3
Occupancy (%)	100.0%
Development Cost (€ m)	14.0
GAV (€ m)	15.5
Contracted Rent (€ m)	1.5
WALL (years)	10.1
Estimated Yield on Development Cost	10.4%
(*) Joint Venture in which Globalworth owns 50%; figures shown on 100% basis.

 

Developments in Progress

We currently have two projects under development (with three facilities) expected to be delivered in 2024, further expanding our industrial footprint by 19.3k sqm of high-quality GLA and at full occupancy are expected to generate €1.3 million of annualised rent.

Developments
	Business Park Stefanesti1 (Phases B and C)		Craiova Logistic Park
Location	Bucharest		Craiova
GLA (k sqm)	13.3		6.0
Occupancy (%)	34.7%		100%
Development Cost (€ m)	9.4		4.5
GAV (€ m)	11.7		1.8
Contracted Rent (€ m)	0.3		0.4
100% Rent (€ m)	1.0		0.4
Estimated Yield on Development Cost	10.4%		8.2%

(1) 75% owned by Globalworth; figures shown on 100% basis

 

Refurbishment / Repositioning of Mixed-Use Properties (Poland)

Following the review back in 2020 of our portfolio and in response to market conditions, we commenced refurbishing/repositioning two of our three mixed-use properties in Poland. Aiming to increase their class "A" office space and improve their retail/commercial offering, work started in our Renoma landmark property in Wroclaw in H2-2020 and our centrally located Supersam property in Katowice in H2-2021. 

·    In Renoma, the refurbishment has increased the offer of Class "A" office space on the higher floors. It had also repositioned the property's retail offer towards a more attractive food court and a selected fashion mix on the ground floor and convenience facilities, including a supermarket, gym and drugstore located on the -1 level.

·    In Supersam, we have redeveloped the entire level 1 into an office function. On level -1, we have repositioned selected retail modules into high-quality retail and commercial spaces with food and entertainment.

In 2022 and 2023 we invested €22.6 million in the two properties, and we expect to deliver the properties in the coming months.

Properties Under Refurbishment / Repositioning
	Renoma	Supersam
Location	Wroclaw	Katowice
Status	Refurbishment / Repositioning	Refurbishment / Repositioning
Expected Delivery	H1-2024	H1-2024
GLA - on Completion (k sqm)	48.3	26.7
CAPEX to 31 Dec 23 (€ m)	22.0	4.0
GAV (€ m)	111.8	51.3
Estimated CAPEX to Go (€ m)*	6.7	2.2
ERV (€ m)	9.5	4.5
Estimated Yield on Completion of Project**	9.3%	10.7%
* Estimated CAPEX to Go partially excludes tenant contributions which are subject to tenant negotiation and may impact the final yield on Completion of the Project. ** Estimated Rental Value increase versus current Contracted rent + ERV on vacant spaces divided by total Development Capex.

Ongoing Investment & Upgrade Programme of Our Standing Properties

Offering best-in-class real estate space to our business partners is a key component of our strategy at Globalworth.

We believe that through a "hands-on" approach with continuous active management and investment in our portfolio, we can preserve and enhance the value of our properties, generate long-term income, and offer best-in-class real estate space to our business partners.

To be able to provide spaces for our current and future business partners' requirements, we keep (re)investing in our properties, maintaining and, where required, improving the quality of our buildings and our services.

We manage all our properties in Poland internally, and in Romania, we manage all but one of our offices in-house. This translates to 1,086.6k sqm of high-quality commercial spaces with an appraised value of €2.4 billion internally managed by our team.

Internally Managed Commercial Portfolio as at 31 Dec. 2023
	Poland	Romania	Group
GLA (k sqm)	508.5	578.1	1,086.6
% of Commercial GLA	100%	67%	79%
% of Office and Mixed-Use GLA	100%	91%	96%
GAV (€ m)	1,304.7	1,137.3	2,442.0
% of Commercial GAV	100%	82%	90%
% of Office and Mixed-Use GAV	100%	93%	97%

 

In 2023, we invested €43.2 million in select improvement initiatives in our standing commercial portfolio. As a result of our ongoing in-house initiatives and property additions, we hold a modern portfolio with 54 of our standing commercial properties, accounting for 79.3% by GLA and 78.3% by commercial portfolio value, having been delivered or significantly refurbished in the last 10 years.

Future Developments

We own, directly or through JV partnerships, other land plots in prime locations in Bucharest, regional cities in Romania and Poland, covering a total land surface of 1.2 million sqm (comprising 2.7% of the Group's combined GAV), for future developments of office, industrial or mixed-use properties. When fully developed, these land plots have the potential to add a total of a further 785.7k sqm of high-quality GLA to our standing portfolio footprint.

These projects, which are classified as "Future Development", continue to be reviewed by the Group, albeit periodically, with the pace at which they will be developed subject to tenant demand and general market conditions.

Future Developments
	Podium Park III	Green Court D	Globalworth West	Constanta Business Park (Phased)*	Timisoara Industrial Park I and II (Phased)	Luterana
Location	Krakow	Bucharest	Bucharest	Constanta	Timisoara	Bucharest
Status	Constr. Postponed	Constr. Postponed	Constr. Postponed	Planned	Planned	Planned
GLA (k sqm)	17.7	17.2	33.4	525.8	165.2	26.4
CAPEX to 31 Dec 23 (€ m)	8.5	2.5	5.2	12.3	7.0	7.4
GAV (€ m)	7.1	7.5	6.6	37.2	11.0	12.5
Estimated CAPEX to Go (€ m)**	29.7	23.9	38.5	243.6	63.5	39.7
ERV (€ m)	3.1	3.6	5.2	27.7	6.9	6.7
Estimated Yield on Development Cost	8.1%	13.6%	12.0%	10.8%	9.8%	14.1%
(*) 50:50 Joint Venture; figures shown on 100% basis.

  (**) Initial preliminary development budgets on future projects; to be revised prior to permitting.               

Divestment of Warta Tower and other divestments

In July we have finalised the sale of Warta Tower office building in Warsaw to a company from the Cornerstone Investment Management platform, the transaction being initially agreed upon back in 2021 but was delayed as the buyer had to reorganise the financing arrangement due to the start of the war in Ukraine in the early 2022.

 

The value of the transaction has been set at over EUR €63 million, which is above book value of the property, as valued in December 2022 and in June 2023 and this stands, once again, as a confirmation of the quality of our properties.

Warta Tower was completed in 2000 and acquired by Globalworth in March 2018 and as of June 2023 the property was fully vacant, following the relocation of its main tenant.

Also, in the course of the year we have sold a non-core plot of land in the northern part of Bucharest to a local entrepreneur, and we have sold our 25% share in My Place II, an office project in Warsaw, to a Czech real estate fund.

ASSET MANAGEMENT REVIEW

New Leases

Our principal focus continued to be the prolongation of leases with existing tenants in our portfolio and the take-up of available spaces in standing properties and developments.

In the twelve months of 2023, the Group successfully negotiated the take-up (including expansions) or extension of 314.4k sqm of commercial spaces in Poland (29.7% of transacted GLA) and Romania (70.3% of transacted GLA), with an average WALL of 6.0 years, making 2023 our best year in terms of leased GLA since Globalworth was created.

Between 1 January and 31 December 2023, our leasing activity was almost equally split between new take-up of available spaces, with such leases accounting for 48.8% of our total leasing activity being signed at a WALL of 6.8 years and renewals accounting for 51.2% signed at a WALL of 5.4 years.

In total, we signed new leases for 153.5k sqm of GLA, with the majority involving spaces (+90.0%) leased to new tenants, and the remaining areas being taken up by existing tenants which were expanding their operations.

·    New leases were signed with 83 new tenants for 138.3k sqm of GLA at a WALL of 7.0 years. The majority were for office and industrial spaces, accounting for 49.8% and 47.5% respectively, with the remainder involving retail/other commercial spaces.

 

Selected New Leases Signed in 2023
	City	Property	Use	GLA
Mediapost Hit Mail	Bucharest (RO)	Chitila Logistic Hub III	Industrial	18.1k
Banca Transilvania	Bucharest (RO)	Green Court Complex	Office	10.1k
Dante International (eMAG)	Bucharest (RO)	Globalworth Square	Office	9.6k
LeverX Poland	Wroclaw (PL)	Retro Office House	Office	3.3k
Aramco Fuels	Gdansk (PL)	Tryton	Office	2.6k

 

·    In addition, 37 tenants signed new leases, expanding their operations by 15.2k sqm at an average WALL of 5.9 years.

We also renewed leases for a total of 160.8 sqm of GLA with 101 of our tenants at a WALL of 5.4 years. It is important to note that c.82% (by GLA) of these renewals were for leases that were expiring in 2024 or later.

Selected Leases Extensions Signed in 2023
	City	Property	Use	GLA
Honeywell Romania	Bucharest (RO)	BOC Tower	Office	24.4k
Unicredit Bank	Bucharest (RO)	Unicredit HQ	Office	17.4k
Google	Krakow (PL)	Quattro Business Park	Office	13.0k
Deutsche Bank	Bucharest (RO)	BOB Tower	Office	12.9k
Huawei	Bucharest (RO)	Globalworth Tower	Office	12.5k

 

Summary Leasing Activity for Combined Portfolio in 2023
	GLA (k sqm)	No. of Tenants*	WALL (yrs)
New Leases (incl. expansions)	153.5	117	6.8
Renewals / Extensions	160.8	101	5.4
Total	314.4	201	6.0
*Number of individual tenants

 

Rental Levels

Headline market rental levels have shown an upward trend during last 12 months, mostly influenced by indexation, despite the challenges in the market and a cautious approach of tenants related to the renewal of the expiring leases, thus reflecting the quality of our properties, our active asset management initiatives, and our approach to sustainable development.

Our leases typically adjust annually in the first quarter of the year, with eligible leases indexed at an average of 8.5% in 2023. However, this positive impact is not fully reflected in our averages, as the rates at which leases were renewed or new leases signed were at their respective ERV rates.

Average Portfolio Headline Rents in Standing Portfolio (€ / sqm / m)
	31 Dec. 2023	31 Dec. 2022	Change (%)
Office	15.0	14.2	5.5%
Industrial	4.3	4.0	7.0%
Retail/Commercial	16.7	14.2	17.1%

 

Rental levels can vary significantly between type of spaces, buildings and submarkets. Leases signed in 2023 were at €12.9/sqm/m, 8.3% higher than the previous year group averages.

Average Headline Rents of New Leases Signed (€ / sqm / m)
	31 Dec. 2023	31 Dec. 2022	Change (%)
Office	14.8	14.8	0.2%
Industrial	4.4	3.7	17.2%
Retail/Commercial	16.2	14.1	14.9%
Average:	12.9	11.9	8.3%

 

Contracted Rents (on annualised basis)

Total annualised contracted rent across our portfolio in Poland and Romania increased by 6.3% to €201.2 million compared to year-end 2022, driven by active asset management, indexation, a new acquisition and lease-up in our development projects (completed or in-progress).

Total annualised contracted rents in our standing commercial portfolio were €191.5 million on 31 December 2023, up by 5.6% compared to 31 December 2022, increasing to €192.0 million when including rental income generated by renting 132 residential units and other auxiliary spaces in Upground, the residential complex in Bucharest which we partially own.

Like-for-like annualised commercial contracted rents in our standing commercial portfolio also increased by 4.9% to €190.0 million at the end of December 2023 compared to the same period in 2022, mainly as an effect of rent indexation.

Annualised Contracted Rent Evolution 2023 (€m)
	Poland	Romania	Group
Rent from Standing Commercial Properties ("SCP") 31 Dec. 2022	86.6	94.7	181.3
Less: Assets Sold (Warta Tower)	(0.1)	-	(0.1)
Rent from SCP Adj. for Properties Sold 31 Dec 2022	86.5	94.7	181.2
Less: Space Returned	(11.3)	(7.6)	(18.9)
Plus: Rent Indexation	6.5	7.7	14.2
Plus/Less: Lease Renewals (net impact) & Other	(0.6)	(2.2)	(2.8)
Plus: New Take-up	5.4	11.0	16.4
Total L-f-L Rent from SCP 31 Dec. 2023	86.4	103.6	190.0
Plus: Developments Completed During the Period	-	1.5	1.5
Total Rent from Standing Commercial Properties	86.4	105.1	191.5
Plus: Residential Rent	-	0.5	0.5
Total Rent from Standing Properties	86.4	105.6	192.0
Plus: Active and Pre-lets of Space on Projects Under Development / Refurbishment	8.4	0.7	9.1
Total Contracted Rent as at 31 Dec 2023	94.9	106.3	201.2

 

 

Combined Annualised Commercial Portfolio Contracted Rent Profile as at 31 Dec. 2023
	Poland	Romania	Group
Contracted Rent (€ m)	94.9	105.8	200.6
Tenant origin - %
Multinational	66.7%	83.1%	75.3%
National	32.1%	15.4%	23.3%
State Owned	1.3%	1.5%	1.4%
Note: Commercial Contracted Rent excludes c.€0.5 million from residential spaces as at 31 December 2023

 

Annualised Contracted Rent by Period of Commencement Date as at 31 Dec. 2023 (€m)
	Active Leases	H1-2024	H2-2024	Total
Standing Properties	186.1	3.9	2.0	192.0
Developments	8.4	0.8	-	9.1
Total	194.5	4.7	2.0	201.2

 

Annualised Commercial Portfolio Lease Expiration Profile as at 31 Dec. 2023 (€m)
Year	2024	2025	2026	2027	2028	2029	3030	2031	2032	>2032
Total	18.6	12.1	21.4	27.3	25.5	26.3	31.6	15.7	5.8	16.4
% of total	9.3%	6.0%	10.7%	13.6%	12.7%	13.1%	15.8%	7.8%	2.9%	8.2%

 

The Group's rent roll across its combined portfolio is well diversified, with the largest tenant accounting for 5.3% of contracted rents, while the top three tenants account for 10.5% and the top 10 account for 24.1%.

Cost of Renting Spaces

Renting spaces typically involves certain costs, such as rent-free periods, fitouts for the space leased, and brokerage fees, which the landlord incurs. These incentives can vary significantly between leases and depend on market conditions, type of lease signed (new take-up or lease extension), space leased (office, industrial, other), contract duration and other factors.

Headline (base) rents present the reference point typically communicated in the real estate market when referring to the level at which lease contracts are expected to be signed or are signed. However, the effective rent is a more useful indicator of a rental agreement's profitability.

In calculating our effective rent, we account for the costs incurred over the lease's lifetime, which we deduct from the headline (base) rent, thus allowing us to assess the profitability of a rental agreement. To analyse the effective rent more accurately in this period we excluded short term leases and leases signed and ended during the year.

Overall, in 2023, we successfully negotiated the take-up (including expansions) or extension of 294.3k sqm of commercial spaces in our portfolio (excluding short term leases). The weighted average effective rent for these new leases was €9.5/sqm/month with a WALL of 6.1 years.

·    Leases for industrial spaces signed in the period accounted for 18.0% of the total leasing activity, resulting in the lower average headline and effective rent.

The difference between headline (base) and effective rents in 2023 was, on average, 26.2%, which is very close to the level recorded in FY2022 (average of 26.1%) reflecting a stabilizing but still challenging market.

In total, new leases signed during the year will generate a future rental income of €297.4 million (including auxiliary spaces), with leases from office properties accounting for 78.9% of future rental income. 

Weighted Average Effective Rent (€ / sqm / m) - 2023
	Poland	Romania	Group
Headline Commercial Rent	16.4	11.3	12.9
Less: Rent Free Concessions	(2.6)	(1.2)	(1.6)
Less: Tenant Fitouts	(1.8)	(1.3)	(1.5)
Less: Broker Fees	(0.6)	(0.2)	(0.3)
Effective Commercial Rent	11.5	8.6	9.5
WALL (in years)	4.7	7.1	6.1

 

Portfolio Valuation

In line with our practice of biannual valuations, we valued our entire portfolio in Poland and Romania as of 30 June and 31 December 2023.

The valuations were performed by Knight Frank for our properties in Poland, with Colliers and Cushman and Wakefield valuing our properties in Romania (more information is available under note 3 of the audited annual condensed consolidated financial statements as of and for the period ended 31 December 2023).

Assigning the appraisal of our portfolio to three independent and experienced service providers makes the process of determining the value of our properties transparent and impartial. Through our oversight, we ensure that a consistent methodology, reporting, and timeframe are respected.

The main drivers in the evolution of our portfolio value since the inception of the Group have been:

·    Acquisition or development of high-quality properties in Poland and Romania,

·    Active asset management of the properties, and

·    The performance of the real estate markets in which we operate.

Overall, our total combined portfolio value was €3.0 billion at the end of 2019, and remained effectively unchanged in 2020 due to the impact of the COVID-19 pandemic, increasing to €3.2 billion at 31 December 2021 due to additions and remained relatively constant in the year after.

In valuing our properties, key market indicators used by the four independent appraisers, although they vary, consider factors such as the commercial profile of the property, its location and the country in which it is situated.

As at 31 December 2023 and throughout the year, third-party appraisals continued to be impacted by high inflation and interest rates, with market volatility and outlook uncertainty remaining at high levels. This has led to the application of moderate yield expansion and higher discount rates in determining the valuations.

As such, the portfolio's third-party appraised value on 31 December 2023 was estimated at €3.0 billion, impacted by the sale of assets worth €70.6 million and the like-for-like decrease (€110.6 million / 4.0%) in the appraised value of our standing commercial properties, leading to an overall decrease of 5.2% compared to the end of 2022.

Combined Portfolio Value Evolution 31 Dec. 2023 (€m)
	Poland	Romania	Group
Total Portfolio Value at 31 Dec 2022	1,584.5	1,574.4	3,158.9
Less: Properties Held in Joint Venture (*)	-	(119.3)	(119.3)
Total Investment Properties at 31 Dec 2022	1,584.5	1,455.1	3,039.6
Plus/Less: Transactions	(55.1)	(15.1)	(70.2)
o/w New Acquisitions	-	0.4	0.4
o/w Disposals	(55.1)	(15.5)	(70.6)
Plus: Capital Expenditure	31.4	19.9	51.3
o/w Developments	8.6	2.3	10.9
o/w Standing Properties	22.8	17.6	40.4
o/w Future Developments	-	-	-
Plus/Less: Net Revaluations Adjustments	(86.0)	(69.0)	(154.9)
o/w Developments/Re-developments	(0.4)	0.4	(0.1)
o/w Standing Properties	(85.5)	(68.3)	(153.8)
o/w Lands, Future Developments & Acquisitions	-	(1.1)	(1.1)
Total Investment Properties at 31 Dec. 2023	1,474.8	1,391.0	2,865.8
Plus: Properties Held in Joint Venture (*)	-	129.0	129.0
o/w Capital Expenditure & Acquisitions	-	6.8	6.8
o/w Net Revaluation Adjustments	-	2.9	2.9
Total Portfolio Value at 31 Dec. 2023	1,474.8	1,520.0	2,994.8

 (*) Properties held through joint ventures are shown at 100%, Globalworth owns 50% stake in the respective joint ventures

Note: Certain casting differences in subtotals / totals are due to figures presented in 1 decimal place

 

REVIEW OF STANDING PORTFOLIO

Maintained our footprint at 1.4m sqm.

We provide our business partners with high-quality spaces in 13 major real estate markets in Poland and Romania that are sustainable, technologically advanced, and custom-fitted to their requirements, offering premium services to allow the businesses to succeed.

Overall, our standing portfolio predominantly comprises 29 Class "A" offices (49 properties in total) and a mixed-use investment (with five properties in total) in central locations in Bucharest (Romania), Warsaw (Poland) and five of the largest office markets/cities in Poland (Krakow, Wroclaw, Katowice, Gdansk and Lodz), which in total account for 88.2% of our standing portfolio by value.

In addition, in Romania, we fully own five logistic / light-industrial parks with ten facilities in Timisoara, Arad, Oradea and Pitesti and own the majority stake in two small business units projects in Bucharest (with two standing facilities). We also have 50% ownership through joint venture agreements in three other logistics/business parks (with four standing facilities) in Bucharest, Constanta and Targu Mures and own part of a residential complex in Bucharest.

During the year, our standing commercial portfolio's total GLA slightly decreased with 15.8k sqm or 1.1% to reach 1,367.4k sqm at the end of December 2023 whilst our overall standing portfolio (commercial and other) decreased in GLA by 1.4% to 1,386.0k sqm after considering the sale of residential units in our Upground residential project.

Globalworth Combined Standing Portfolio: 2023 Evolution

Total Standing YE 2022	1,405.6k sqm
of which Standing Commercial YE 2022	1,383.2k sqm
+ Mures Logistic Hub / logistics facility developed in Targu Mures (RO)	+18.3k sqm
- Sale of Warta Tower / office property in Warsaw (PL)	-33.7k sqm
+/- Net remeasurement adjustments & other (RO & PL)	-0.4k sqm
Standing Commercial YE 2023	1,367.4k sqm
Upground residential in Bucharest (RO)(*)	18.6k sqm
Total Standing YE 2023	1,386.0k sqm

* In 2023, units with 3.8k GLA were sold in our Upground residential complex.

 

Standing Portfolio Value at €2.7bn

The appraised value of our combined standing portfolio as of 31 December 2023 was €2.7 billion (more than 98% in commercial properties) which was 5.4% lower compared to 31 December 2022. This overall decrease is mainly attributable to the sale of Warta Tower (valued at €55.1m as of 31 December 2022) and negative revaluation differences which were partly offset by the delivery of Targu Mures Logistic Hub in the first half of the year.

The value of like-for-like standing commercial properties decreased by 4.0% as of 31 December 2023 compared to the prior year, as the reduction in value by 4.6% of our like-for-like standing office and mixed-use properties was offset by the increase in value of our industrial properties.

Globalworth Combined Standing Portfolio: 2023 Evolution

GAV - 31 December 2022	€2,893.6m
Like for Like Change(*)	-€110.7m
Acquisitions of Properties	-
Delivery of Properties	+€15.5m
Sales	-€61.9m
GAV - 31 December 2023	€2,736.4m

(*) Like-for-Like change represents the changes in GAV of standing properties owned by the Group at 31 December 2022 and 31 December 2023.

 

Like-for-Like Occupancy Slightly Improving 

Our standing commercial portfolio's average occupancy as of 31 December 2023 was 88.3% (88.7% including tenant options), representing a 2.6% increase over the previous twelve months (85.6% as of 31 December 2022 / 85.9% including tenant options).

This increase is mainly attributable to the positive net take-up recorded in our standing commercial portfolio, the sale of Warta Tower in July (vacant at the date of sale) and the addition of Mures Logistic Hub which was 100% leased as of 31 December 2023.

On a like-for-like basis, occupancy increased by 0.7% to 88.1% at the end of the year, as effect of positive net take-up in our capital cities office properties and lease-up of our industrial portfolio during the year.

Across our standing portfolio, at 31 December 2023, we had 1,206.9k sqm of commercial GLA leased to more than 600 tenants at an average WALL of 4.9 years, the majority of which is let to national and multinational corporates that are well-known within their respective markets.

 

Occupancy Evolution 2023 (GLA 'k sqm) - Commercial Portfolio
	Poland	Occupancy Rate (%)	Romania	Occupancy Rate (%)	Group	Occupancy Rate (%)
Standing Available GLA - 31 Dec. 22	542.1		841.0		1,383.2
Sold GLA	(33.7)		-		(33.7)
New Built GLA	-		18.3		18.3
Remeasurements, reclassifications	(0.0)		(0.4)		(0.4)
Standing Available GLA - 31 Dec. 23	508.5		858.9		1,367.4
Occupied Standing GLA - 31 Dec. 22	440.6	81.3%	743.7	88.4%	1,184.3	85.6%
Sale of Occupied GLA	(3.3)		-		(3.3)
Acquired/Developed Occupied GLA	-		18.3		18.3
Expiries & Breaks	(57.7)		(58.6)		(116.3)
Renewals	58.5		97.3		155.8
New Take-up	23.9		99.7		123.6
Other Adj. (relocations, remeasurements, etc)	0.1		0.3		0.5
Occupied Standing GLA - 31 Dec. 23	403.4	79.3%	803.5	93.5%	1,206.9	88.3%

 

Not included in our standing portfolio metrics are: 45.6k sqm leased in our two mixed-use properties which are currently under refurbishment/repositioning, and 10.6k sqm in our industrial properties which are under development in Romania (Bucharest and Craiova).

Standing Portfolio Snapshot

As of 31 December 2023, our combined standing portfolio comprised 41 investments (41 on 31 December 2022) with 71 buildings (71 on 31 December 2021) in Poland and Romania. The appraised value of the portfolio was €2,736.4 million, of which 91.3% was green-certified.

 

Globalworth Combined Portfolio: Key Metrics

Total Standing Properties	31 Dec. 2021	31 Dec. 2022	31 Dec. 2023
Number of Investments	39	41	41
Number of Assets	66	71	71
GLA (k sqm)	1,302.3	1,405.6	1,386.0
GAV (€ m)	2,866.3	2,893.6	2,736.4
Contracted Rent (€ m)	175.4	182.0	192.0

 

Of which Commercial Properties	31 Dec. 2021	31 Dec. 2022	31 Dec. 2023
Number of Investments	38	40	40
Number of Assets	65	70	70
GLA (k sqm)	1,272.0	1,383.2	1,367.4
GAV (€ m)	2,810.3	2,850.6	2,700.0
Occupancy (%)	88.5% (88.7%1)	85.6% (86.0%1)	88.3% (88.7%1)
Contracted Rent (€ m)	174.5	181.3	191.5
Potential rent at 100% occupancy (€ m)	201.2	211.4	217.7
WALL (years)	4.7	4.4	4.9
1) Including tenant options

 

CAPITAL MARKETS REVIEW

Equity Markets Review

In 2023 we have seen the return of high interest rates and an overall tightening of credit conditions in a real estate world that was still recovering from the impact of the 2020 pandemic. These evolutions have started to ease down in the last several months as the inflation in European Union is moderating and central banks are cautiously assessing the tempo for interest cuts in their plans for the following period.

Direct real estate valuations have shown small adjustments during the year impacted by the changes of valuation variables used by professional appraisers. Equity investors have reassessed their risk premiums and allocations considering higher interest rates environment resulting in higher discount rates and exit yields for office and other real estate assets, thus leading to slightly lower valuation figures by the end of the year.

Since 23 July 2021, Globalworth has been controlled by Zakiono Enterprises Ltd, which is jointly and equally owned by CPI Property Group S.A. ("CPI") and Aroundtown SA ("Aroundtown"), currently holding 60.8% of the share capital of the Group. In addition, Growthpoint Properties Ltd has 29.5% and Oak Hill Advisors 5.3%; thus, the effective trading free-float by the end of 2023 was limited to 4.4% of the share capital of Globalworth.

As of 31 December 2023, it is essential to place Globalworth's share price performance in the context of the prevailing macroeconomic landscape. Throughout the year, the FTSE EPRA Developed Europe and the FTSE EPRA Global indices demonstrated a positive performance of +10.7% and +10.8%, respectively, for the twelve months starting on 1 January 2023.

In contrast, despite several favourable factors such as the high quality of its portfolio, robust leasing activity, and the company's presence in high-growth, low office stock markets, Globalworth's share price experienced a notable decline of -30.5%. It is pertinent to acknowledge that this decline can be attributed in part to the limited free float of the Group.

Globalworth's share price in this period has been trading consistently below its latest reported 31 December 2022 and 30 June 2023 EPRA NRV levels of €8.29 and €7.55 / share, respectively, reaching its lowest closing price on 02 November at €2.05 per share and its highest price on 2 January at €3.73 per share.

In the first part of the year, as a measure of safeguarding cash resources of the company, the group has offered a scrip dividend alternative to the shareholders, meaning that they could elect to receive newly issued shares at a pre-determined price instead of cash in connection to dividends announced by the company. As a result, at each of the two dividend payments during 2023, shareholders representing more than 98% of the total issued share capital have elected to receive the Scrip Dividend Alternative, emphasizing the strong shareholder support for the company.

 

Globalworth Shareholding
		31 Dec. 23	31 Dec. 22
CPI	Together: Zakiono Enterprises	60.8%	60.6%
Aroundtown
Growthpoint Properties		29.5%	29.4%
Oak Hill Advisors		5.3%	5.3%
Other		4.7%	4.7%

 

Basic Data on Globalworth Shares (Information as at 31 Dec 2023)
Number of Shares	252.2m plus 0.8m shares held in treasury
Share Capital		€1.7bn
WKN / ISIN		GG 00B979FD04
Symbol		GWI
Free Float		7.7%
Exchange		London AIM

 

Globalworth Share Performance
	2023	2022
Market Capitalisation (€ million) - 31 Dec	653	914
31-Dec Closing Price (€)	2.59	4.13
52-week high (€)	3.73	6.68
52-week low (€)	2.05	3.90
Dividend paid per share	0.29	0.27

 

 

Globalworth FY-2023 Share Price Performance

 

 

Bonds Update

We finance ourselves through a combination of equity and debt, and we compete with many other real estate companies for investor trust to support our initiatives.

In order to be able to issue Eurobonds in an efficient and quick way, potentially benefiting from favourable market opportunities, in 2018 we established a Euro Medium Term Notes (EMTN) programme allowing the Group to issue up to €1.5 billion of bonds. Out of this amount the Group has raised €950 million issued in March 2018 and July 2020 (inaugural green bond) and expiring in 2025 and 2026.

At the beginning of 2023, our two Eurobonds outstanding in total of €950 million had a weighted average maturity of 2.8 years. In the first six months of 2023, the bonds performance has been impacted by rising interest rates and investor risk aversion leading our 18/25 and 20/26 bonds to be traded, by the end of the period, at 14.9% and 13.2% yield to maturity. Considering the context and looking to proactively manage the Company's debt maturity profile, we have completed in June a cash tender offer for our outstanding notes due 2025 and 2026 and, as a result, we have purchased €100.0 million of the 2025 notes.

As a result, at 31 December 2023, our two Eurobonds outstanding amounted to €850 million having a weighted average cost of 2.98%. Considering tightening credit market conditions and looking to manage in advance our debt maturities we have accessed, during the year, several secured financings both in Poland and Romania with reputable credit institutions from the CEE.

Globalworth is rated by two of the three major agencies, with Fitch maintaining their investment credit rating following their review of the Group and changing the outlook to negative while S&P downgraded the group's corporate credit rating to BB+ with a negative outlook considering the volatile and challenging market environment.

In 2023, our bonds' performance has been impacted by the higher volatility in the market and rising interest rates. On average, our 18/25 and 20/26 bonds traded at 86.1% and 78.6% respectively, during the period. However, as the inflation cooled down and with interest rate cuts on the horizon, by the end of the year our yield to maturity has adapted, closing at 11.0% and 11.1% on 31 December 2023.

Rating
	S&P	Fitch
Rating	BB+	BBB-
Outlook	Negative (from Stable)	Negative (from Stable)

 

Basic Data on the Globalworth Bonds
	GWI bond 18/25	GWI bond 20/26
ISIN	XS1799975922	XS2208868914
SEDOL	BD9MPV	-
Segment	Euronext Dublin, BVB	Euronext Dublin
Minimum investment amount	€100,000 and €1,000 thereafter	€100,000 and €1,000 thereafter
Coupon	3.000%	2.950%
Issuance volume	€550 million	€400 million
Outstanding 31 Dec. 2023	€450 million	€400 million
Maturity	29 March 2025	29 July 2026

 

Performance of the Globalworth Bonds
	2023	2022
GWI bond 18/25
31 December closing price	91.2	87.7
Yield to maturity at 31 December	10.992%	9.317%
GWI bond 20/26
31 December closing price	82.6	79.4
Yield to maturity at 31 December	11.080%	10.085%

 

 

Globalworth FY-2023 Eurobond Yield Performance

ENVIRONMENTAL REVIEW

Our "Places"

Consistent with our commitment to energy-efficient properties, during 2023 we certified or recertified 27 of the properties in our portfolio with BREEAM Very Good or higher certifications.

In Romania, we were able to improve the level of certification, from BREEAM Very Good to LEED Gold, for Tower Center International, our iconic office building located in Bucharest CBD, while certifying for the first time five of our industrial / light logistic properties in Bucharest, Constanta, Arad and Oradea.

In total, 22 properties had their certifications updated during the year with 11 in Romania and 11 in Poland.

Overall, as of 31 December 2023, our combined standing portfolio comprised 59 green-certified properties, accounting for 92.5% of our standing commercial portfolio by value. BREEAM accredited properties account for 82.0% of our green-certified standing portfolio by value, with the remainder of properties being holders of other certifications (LEED Platinum or LEED Gold).

We remain committed to our green goals, aiming for 100% of our commercial portfolio to be green accredited. We are currently in the process of certifying or recertifying 12 other properties in our portfolio, principally targeting BREEAM certifications.

In addition, in 2023, we maintained our policy of securing 100% of the energy used in our Polish properties and in our Romanian office portfolio from renewable sources. The switch to green energy is part of our broader preparatory actions for nZEB, which also involves other steps, including introducing intelligent metering and implementing FORGE for monitoring.

In 2023, we successfully certified or recertified all our office and mixed-use buildings in Poland and Romania with WELL Health-Safety Rating, which is an evidence-based, third-party verified rating for all new and existing types of building and space, focusing on operational policies, maintenance protocols, stakeholder engagement and emergency plans to address a post-COVID-19 environment now and into the future.

As a result, by the end of 2023, all our standing office and mixed-use properties had a WELL Health-Safety Rating, with a total value of €2.4 billion, standing as further evidence of the quality of our portfolio.

In September 2022, Globalworth obtained the European certification mark "access4you" for 10 of the office buildings in Bucharest. These are the first buildings to obtain such a certification in Romania.

As part of our ambitious ESG strategy, we are committed to contribute towards the global efforts to limit global temperature rise by reducing our direct and indirect greenhouse emissions in our operations and value chain. As such, in 2022, we performed a detailed review of how we can improve our footprint and we set our environmental target to reduce GHG emissions intensity by +40% by 2030 versus our baseline 2019 levels (for Scope 1 and 2) and we committed to measuring and reducing Scope 3 too. In setting this target, we used a science-based approach to align with a 1.5^oC trajectory.

These targets were approved and validated by the globally recognised Science Based Targets initiative (SBTi), and will form key stepping blocks to enable Globalworth to deliver on its long-term strategy and ambition to become the first choice in sustainable real estate.

Social Review

"People": Our Team

Our most important asset is our team of dedicated professionals, who have been selected by employing the best available candidate for each and every position, regardless of gender, ethnic group This team has been offering premium services to our partners, efficiently managing our high-quality portfolio, facilitating growth and creating value for our shareholders and stakeholders.

One of our key objectives is for our team to meet the highest standards, and to achieve this (through our Human Resources teams in Romania and Poland), we organise a series of in-house and third-party led training programs, designed to improve our team's skillset, knowledge, operational experience, and interaction with our stakeholders.

Our approach starts with transparent recruiting, an orientation program for new employees, continuous staff support and consulting, training, regular feedback sessions and annual performance appraisals.

All our team members also receive a wide array of benefits that include, inter alia, private health insurance, and experience and sport activities vouchers.

At the end of 2023, our team comprised 269 professionals, most of which sit in our two main offices in Warsaw and Bucharest. Team members are also located in regional cities in Poland and Romania, Cyprus and the UK.

"People": Our Communities

We view our role as increasingly responsible towards the people who work at and visit our properties and the broader community of which we consider ourselves to be an integral part.

Our significant footprint in Poland and Romania creates this responsibility for us. Our communities include more than 200k daily workers in / visitors to our properties under normal conditions, with the lives of many more people in the broader community also being touched.

In 2023, we maintained our strong focus on giving back to our community and, together with the Globalworth Foundation, we contributed over €180k in more than 13 initiatives in Romania and Poland, having over 29.000 beneficiaries.

 

 

 

Rashid Mukhtar

Group Chief Financial Officer

 

1.    Introduction and Highlights

To help explain our performance, we use a number of measures typically observed in our sector. These include quoting several measures on a consolidated basis (including our joint ventures), as it best describes how we manage our portfolio and overall business, like-for-like measures and measures prescribed by EPRA.

The measures defined by EPRA are designed to enhance transparency and comparability across the European real estate sector.

Revenues €240.4m 0.5% on 2022	NOI €147.0m 5.2% on 2022
IFRS Earnings per share (23) cents (8) cents in 2022	Combined Portfolio Value (OMV)1 €3.0bn (5.3)% on 31 Dec. 2022
EPRA NRV €1,750.6m (4.6)% on 31 Dec. 2022	EPRA NRV per share €6.94 (16.2)% on 31 Dec. 2022
Adjusted normalised EBITDA €131.4m 4.3% on 2022	EPRA Earnings per share 26 cents (19)% on 2022
LTV 42.2% 42.7% at 31 Dec. 2022	Dividends paid in 2023 per share 29 cents 7.4% on 2022

 

2.    Revenues and Profitability

Our primary income comes from rent paid by our partners who lease space in our properties. We also generate additional income from service charges. These charges cover the costs of maintaining common areas and providing shared services within our properties. However, any income from service charges is offset by the actual costs we incur in providing those services.

Total Revenue & Net Operating Income

	2023	2022
Year ended December 31,	€'m	€'m
Contracted rent	191.9	180.9
Adjustment for lease incentives	(31.5)	(31.1)
Rental income	160.4	149.8
Service charge income	75.0	86.8
Other income	5.0	2.5
Operating Expenses	(93.4)	(99.6)
Net Operating expense	(13.4)	(10.1)
Net Operating Income (NOI)	147.0	139.7

 

Globalworth generated total consolidated revenue of €240.4 million during 2023, reflecting a modest 0.5% increase over 2022 revenue of €239.3 million.

Our core revenue stream, gross rental income, grew by a healthy 6.1% to €191.9 million in 2023, compared to the previous year. This increase is primarily due to a 7% rise in net rental income (10% increase in Romania and 2% increase in Poland), which climbed to €160.4 million in 2023 from €149.8 million in 2022.

	2023	2022
Year ended December 31,	€'m	€'m
Office	132.7	126.9
Bucharest	67.5	61.4
Regional	39.0	41.1
Warsaw	26.2	24.4
Mixed-Use	12.4	10.4
Industrial	13.9	11.1
Other	1.3	1.4
Rental Income by Segment	160.4	149.8

 

Rental income from our standing properties on like for like basis grew by a solid 5.8% in 2023, reaching €153.5 million. This represents an increase of €7.8 million year-over-year. Romania led the growth with rental income up 11.6% to €82.5 million, while Poland saw a modest increase of 0.8%, bringing rental income to €71.0 million.

Rental Income received during the year from properties delivered or under refurbishment in 2022 and 2023 was €6.9 million. This income was received from Supersam and Renoma (refurbished) and two industrial facilities which were delivered in 2023.

The Service Charge Income for 2023 was €75.0 million, 14% lower compared to €86.8 million in 2022. Net service charge margin decreased with €3.3 million, due to void vacancy costs and increase in service charge rate per square metre across our standing portfolio.

In addition, we received €5.0 million in 2023 (2022: €2.6 million) from other services provided to tenants and partners which included fit-out services, marketing fees and other.

Year ended December 31,	2023	2022
Revenue Share per Country	€'m	€'m
Poland	52.1%	51.0%
Romania	47.9%	49.0%

 

Our Net Operating Income ("NOI"), for the full year 2023 reached €147.0 million, this reflects a €7.3 million increase compared to 2022, after accounting for property and fitout costs, marketing and other income that contributed with €2.3 million more compared to prior year. Overall operating expenses in our portfolio decreased by €6.1 million to €93.4 million with 84.5% were reinvoiced to tenants. The remaining portion typically relates to vacant spaces that are currently available for lease.

Year ended December 31,	YoY change
Net Operating Income Build Up	€'m
NOI - 2022	139.7
NOI Change - Poland	(1.2)
NOI Change - Romania	8.5
NOI - 2023	147.0

 

Year ended December 31,	YoY change
Net Operating Income Build Up	€'m
NOI - 2021	144.3
NOI Change - Poland	(8.6)
NOI Change - Romania	4.0
NOI - 2022	139.7

 

Year ended December 31,	2023	2022
Net Operating Income Share per Country	€'m	€'m
Poland	53.0%	50.3%
Romania	47.0%	49.7%

 

Adjusted Normalised EBITDA

To assess the ongoing performance of our core operations, we focus on a key metric called Adjusted Normalized EBITDA. This measure excludes non-recurring or non-cash items that wouldn't reflect our typical business activity, as revaluations, gains or losses from asset sales and unusual expenses.

Our adjusted normalised EBITDA was €131.4 million (excluding share of minority interests, EBITDA was €131.1 million), higher by 4.3% compared to 2022 (€125.9 million), the improvement was driven primarily by higher NOI. However, a slight rise in administrative and other expenses partially offset this gain.

	2023	2022
Year ended December 31,	€'m	€'m
(Loss)/Profit before net financing cost	(29.7)	35.4
Plus: Fair value loss on investment property	164.9	89.5
Plus: Depreciation on other long-term assets	0.6	0.7
Plus: Other expenses	3.4	2.0
Plus: Other income	(2.0)	(0.5)
Plus: Foreign exchange (gain)/loss	1.5	(0.9)
Plus: Loss/(Gain) from fair valuation of financial instrument	1.4	(0.2)
Plus: Profit on disposal of investment property and subsidiary	(9.1)	-
Plus: Non-recurring expenses	0.4	-
Adjusted Normalised EBITDA	131.4	126.0
Share of minority interest	(0.3)	(0.1)
Adjusted Normalised EBITDA (excluding minority share)	131.1	125.9

 

Property Valuation

Recent economic and geopolitical headwinds have put downward pressure on property values in our markets over the past year. This, combined with factors impacting our operating performance, has resulted in a €164.9 million revaluation decrease in our consolidated property portfolio as of December 31, 2023. The revaluation fully reflects current market conditions and portfolio operations.

Properties located in Poland accounted for 56.4% of this net decrease, while those in Romania comprised the remaining 43.6%. It's important to note that there was a positive €3.4 million value increase in our industrial portfolio, partially offsetting these losses.

Year ended December 31,	2023	2022
	€'m	€'m
Fair value loss on investment property	164.9	89.5

 

Finance Costs and Income

Year ended December 31,	2023	2022
Finance Cost & Income	€'m	€'m
Finance Cost	57.1	52.5
Gain from bond buy-back	15.8	-
Income from bank deposits	3.8	0.7
Other finance income	3.6	2.0
Net Finance Cost	33.9	49.8

 

Our financing activity mainly include interest on bonds, bank loans and other under unsecured financing sources. In 2023, the total finance cost increased by €4.6 million to €57.1 million compared to the prior year. The rise is due to new secured facilities draw down in 2023, €6.8 million expense recorded, and increase in Euribor base rates particularly in the latter half of 2023 which also existing secured facilities (up by €2.0 million as compared to 2022). Also, we recorded in 2023 expense for the entire year on unsecured facilities, up with €3.0 million as compared to 2022 since those were draw down in June 2022.

Interest in secured and unsecured facilities increased with €11.9 million, however, this was partially offset by a decrease in other areas:

-     Bond buyback, we repurchased €100 million of our Eurobond 18/25 bond and repayment of Eurobond 17/22 in prior year, resulting in €5.7 million less interest expense

-     Reduced debt amortisation costs by €0.6 million and,

-     Other finance costs decreased slightly up by €1.0 million

The bond buyback, at €83.2 million (nominal value €100 million) also generated some positive cash flow resulting in €15.8 million in finance income from this transaction after adjusting for the associated unamortised debt costs.

We also received income from other sources:

-     Joint Venture Loans: Interest earned on loans provided to our joint ventures increased by €0.6 million to €2.1 million.

-     Cash Deposits: Higher cash balances throughout the year led to €3.1 million more interest income on deposits, reaching €3.8 million.

-     Other Financial Income: This category saw a rise from €0.5 million in 2022 to €1.5 million in 2023 mainly from charge on consideration receivable on Warta sale that carries an interest of 13%.

Overall, net finance costs for the full 2023 came in at €33.9 million, reflecting a 31.9% rise over 2022.

 

Share in Joint Venture

Our joint ventures in Romania focus on developing and managing industrial parks. While our share of profit from these ventures decreased to €2.1 million in 2023 compared to €3.2 million in 2022, this is primarily due to the effect from a property revaluation.

However, the ventures' underlying business performance is strong. This is reflected in a significant 55% increase in EBITDA (earnings before interest, taxes, depreciation, and amortization) by €1.2 million, on a like for like basis, from €2.4 million in 2022 to €3.6 million, excluding €0.2 million EBITDA in 2023 of Targu Mures joint venture property which was acquired in Q4 2022. This growth is a result of our continued investment in the facilities and successful leasing activity as we fill available space. In other words, even though there was a decline in profit sharing due to a non-cash accounting adjustment, the core business of the joint ventures is performing well.

Income tax expense

During 2023, our current income tax expense on a like for like basis increased with €1.8 million, following the increase in fiscal profits and withholding tax has been paid in amount of €3.9 million. Moreover, following the sale of Warta Tower, we recorded a capital gain tax of €3.3 million associated with this transaction and there is €0.7 million one off tax for another entity.

 IFRS and EPRA Earnings

We measure our performance using two key metrics: IFRS earnings and EPRA earnings. IFRS Earnings being a standard accounting measure that reflects our overall profit or loss. However, it can be impacted by non-cash or one-off costs like property revaluations, gain on bond buy backs and gain/loss on property disposals. EPRA Earnings adjust for such non-recurring and non-cash items and reflect a relevant measure for real estate companies like ours providing a clearer picture of our ongoing operational performance.

Our 2023 IFRS earnings were negative €53.8 million (or -23 cents per share), reflecting a significant drop from 2022's negative €16.1 million (-8 cents per share). This decline is primarily due to a much larger revaluation loss recorded in 2023 (€164.9 million vs. €89.5 million in 2022). Revaluations adjust the carrying value of our properties based on market changes, but they don't affect actual cash flow.

However, when we adjust for revaluation losses, related deferred tax and other non-recurring costs, our underlying profitability improved in 2023. Adjusted IFRS profit after tax reached €82.7 million, an increase of €9.8 million compared to 2022.

Our EPRA earnings for 2023 were €61.3 million (26 cents per share), down 14.4% from the previous year. This decrease is due to a combination of factors, including increased administrative of €2.2million and other net costs of €0.9 million, loss from foreign exchange fluctuations of €2.4 million, and higher income of €8.3 million and deferred tax expenses not related to investment property valuation of €4.1 million.

	Total	Per Share
IFRS Earnings Vs EPRA Earnings	€'m	cents
IFRS Earnings	(54.2)	(23)
FV loss on properties	164.9	70
Profit on disposal of investment properties and related tax	(5.5)	(3)
FV gain on financial instrument	(14.4)	(6)
Deferred Tax on investment property	(28.8)	(12)
JVs & Others	(0.7)	0
EPRA Earnings	61.3	26

 

3.    Assets

		31-Dec-23	31-Dec-22
Assets	Note to the financial statements	€'m	€'m
NCA - Investment property	3	2,843.1	2,945.5
CA - Investment property held for sale		50.4	126.0
Total Investment Property		2,893.5	3,071.5
NCA - Investments in joint-ventures	21	70.1	68.0
Cash and cash equivalents	14	396.3	163.8
Other Assets		85.3	65.7
Total Assets		3,445.2	3,368.9

 

Our Assets: Primarily Real Estate

Real estate makes up the bulk of our assets, with investment properties and cash equivalents exceeding 95% of our total value.

Investment Property Breakdown (as of December 31st): 2023: €3.0 billion (compared to €3.1 billion in 2022), this includes both freehold properties (land and buildings we own outright) and properties held for sale.

We actively manage our portfolio through sales and reinvestment in development projects.

2023 Property Transactions: We successfully sold Warta Tower, a property held for sale, for €63.4 million, exceeding its book value of €53.3 million. Additionally, we sold a land plot and residential units for a combined total of €13.7 million (€7.0 million and €6.8 million respectively).

Investing in the Future: Throughout 2023, we invested a significant amount (€50.8 million) in capital expenditures (CAPEX) for properties under development and improvements to existing properties, in Poland €30.8 million and €20.0 million in Romania.

 

Capital expenditure	€'m
HVAC	5.2
Automations	5.7
Electrical & Green Energy	0.6
Health & Safety	2.1
Operational/ Efficiency	6.3
Common & outdoor areas	13.1
Tenant improvements	17.8
	50.8

 

Country	Segment		€'m
Poland	Mixed - used (incl. refurbishment)		9.1
	Regional		13.7
	Warsaw		8.0
Total Poland			30.8
Romania	Office		14.9
	Residential		0.2
	Industrial developments		4.9
Total Romania			20.0
			50.8

 

Market Impact (2023): Due to market conditions and lower yields, we experienced a net fair value loss on our freehold properties of €164.1 million. Additionally, there was a minor €0.8 million loss on leasehold properties.

			Romania	Poland	Total
OMV Dec 22			1,572.3	1,584.5	3,156.8
JV properties - Dec 22			119.0	-	119.0
Investment Property - Dec 22			1,453.3	1,584.5	3,037.8
CAPEX Standing1			20.2	25.1	45.3
CAPEX Under development1			2.6	10.7	13.3
Land acquisition			0.4	-	0.4
Fair value loss - standing			(70.8)	(89.7)	(160.5)
Fair value gain/loss - dev/refurb.			(1.1)	(2.5)	(3.6)
Apartment Disposals			(6.8)	-	(6.8)
Land Disposal			(7.0)	-	(7.0)
Investment Property disposal			-	(53.3)	(53.3)
Investment Property - Dec 23			1,390.9	1,474.8	2,865.7
JV properties - Dec 23			129.0	-	129.0
OMV Dec 23			1,519.9	1,474.8	2,994.7

^{1 Including net lease incentive movement, please refer to note 3 of the condensed consolidated financial statements for calculation.}

We ended the year with a significant increase in our cash and cash equivalents, reaching €396.3 million on December 31, 2023, compared to €163.8 million at the end of 2022. This positive change reflects strong cash flow generation from our core operations together with successfully additional secured debts raised in the second half of 2023. Our cash reserves grew substantially in 2023, demonstrating the financial strength of our core business and our ability to secure additional liquidity to address mid-term debt maturities.

Our investment in joint ventures totalled €70.1 million at year-ended 31 December 2023, from €68.0 million, with €1.7 million invested during the year and €2.1 million contributed from the share of profit for the year. In terms of financing, we provided €10.8 million to support properties under development and recorded €2.1 million interest income from loans provided. After successfully drawing bank facilities, the joint ventures repaid to the Group €14.5 million loans and interest.

Other assets mainly include trade and other receivables of €23.1 million, equity investments of €7.8 million and consideration receivables from sale of Warta Tower of €21.2 million with maturity date Q4 2025.

Total assets reached €3,445.2 million at the end of 2023, reflecting a modest increase of 2.3% compared to €3,368.9 million at the end of 2022.

 

4.    LIABILITIES

		31-Dec-23	31-Dec-22
Liabilities	Note to the financial statements	€'m	€'m
NCL - Interest-bearing loans and borrowings	14	1,574.8	1,433.6
CL - Interest-bearing loans and borrowings	14	28.6	21.6
Total Interest-bearing loans and borrowings		1,603.4	1,455.2
Deferred Tax Liabilities (including liabilities associated with the assets held for sale)	11.1	139.3	154.9
Other Current Liabilities		72.7	74.6
Other Non-Current Liabilities		27.2	26.8
Total Liabilities		1,842.6	1,711.5

 

Total Liabilities for the Group increased by 8% to €1,842.6 million at year-end 2023, compared to €1,711.5 million at the end of 2022. This rise is mainly due to an increase in Interest-bearing loans and borrowings, which now make up 87% of the Group's liabilities (up from 85% in 2022). However, a decrease in Deferred Tax Liabilities helped offset this growth. These liabilities went down by €15.5 million, primarily due to a loss on the revaluation of investment properties.

Other Current and Non-Current Liabilities, such as tenant deposits, lease obligations, and other debts, account for a smaller portion (5.4%) of the total. These liabilities increased slightly by €1.4 million during the year.

 

5.    Interest-bearing Loans and Borrowings

Overview and Select Initiatives

The total consolidated debt for the Group on 31 December 2023 was €1,603.4 million (31 December 2022: €1,455.2 million) comprising of long-term secured debt and medium-term unsecured Eurobond, denominated entirely in Euro.

In 2023, we bought back €100m nominal value of our €550 million Eurobond by paying a cash consideration of €83.2m thus reducing the debt maturing March 2025.

In addition, during 2023 we:

·    paid the annual coupon of the 2025 Eurobond,

·    drew the €110 million ten-year term secured debt facility which was signed with Erste Group Bank AG and Banca Comerciala Romana SA in December 2022 for refinancing of the Company's logistics / light industrial portfolio in Romania. Out of the €110 million, €96.5 million was made available to the Group and the difference to one of the Group's joint ventures companies,

·    repaid the €60 million outstanding balance on the RCF,

·    drew the €145 million seven-year term secured debt facility which was signed with Aareal Bank AG secured with 2 properties in Warsaw,

·    drew the €55 million ten-year term secured facility (€1 million available for further drawdown until June 2024),

·    drew the €45m 7-year term secured debt facility from BCR (out of which €33m is refinancing of existing debt maturing in Dec 24),

·    extended the €11 million bank facility held with Unicredit Bank until March 2031.

It is important to note that there is no debt maturing within 12 months other than normal amortisation of principal.

Interest-bearing Loans and Borrowings Profile

Most of the debt remained in unsecured facilities, which accounted for 58.4% (31 December 2022: 75.4%) of the total debt outstanding. Unsecured facilities included the two Eurobonds maturing in March 2025 and July 2026 accounting for €850.0 million and the €85.0 million facility from the IFC. The remainder debt (41.6%) is secured with real estate mortgages, pledges on shares, receivables, and loan subordination agreements in favour of the financing banks.

The weighted average interest rate cost for the Group increased marginally by end of the year due to additional secured facilities from Q4 2023. However, as of 31 December 2023 majority or our debt (76.1%) carry fixed interest rate and 5.6% of debt facilities are hedged through interest rates caps and swaps, therefore the weighted average cost of debt on 31 December 2023 reached to 3.70% (from 2.89% in 2022).

The high level of fixed interest rate debt ensures natural hedging to the Euro, the currency in which the most significant part of our liquid assets (cash and cash equivalents and rental receivables) is originally denominated and the currency for the fair market value of our investment property. Based on the Group's debt balances on 31 December 2023, an increase of 100 basis points in the Euribor would result in a higher interest expense of €2.9 million per annum.

The average maturity period of our debt remained above 3.0 years reaching 3.7 years (2022: 3.3 years)

Interest charges for secured loans is based either on three months or six months Euribor plus a margin. As of 31 December 2023, 18.3% of the outstanding balance is exposed to changes in Euribor (compared to 19.3% at 31 December 2022).

	30 Jun 21	31 Dec 21	30 Jun 22	31 Dec 22	30 Jun 23	31 Dec 23
Weighted average interest rate	2.73%	2.73%	2.55%	2.89%	3.29%	3.70%
Weighted average duration to maturity	4.0	3.5	3.8	3.3	3.4	3.7

 

During 2023, we repaid €5.5 million in bank debt principal amounts, we bought back €100m nominal value of our €550 million bond by paying a cash consideration of €83.2m, and €45.7 million of accrued interest on the Group's outstanding debt facilities, including €37.6 million in relation to the full annual coupon for the Eurobonds of the Company. Maturity Profile (by year) of the Principal Loan Outstanding at 31 December 2023 (€ million)

	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034	Total
Bonds		450.0	400.0									850.0
Unsecured					85.0							85.0
Bank Loans	10.3	111.5	12.0	75.0	13.1	148.3	190.1	9.0	65.8	4.9	25.2	665.3
Minority Shareholder Debt						0.6						0.6
Total	10.3	561.5	412.0	75.0	98.1	148.8	190.1	9.0	65.8	4.9	25.2	1,600.8

 

Debt Covenants

As of 31 December 2023, the Group was in compliance with all of its debt covenants.

The Group's financial indebtedness is arranged with standard terms and financial covenants, the most notable as at 31 December 2023 being the following:

Unsecured Eurobonds, RCF and IFC loan

·    the Consolidated Coverage Ratio, with minimum value of 200% (150% applicable for the RCF and IFC loan);

·    the Consolidated Leverage Ratio, with maximum value of 60%;

·    the Consolidated Secured Leverage Ratio with a maximum value of 30%; and

·    the Total Unencumbered Assets Ratio, with minimum value of 125% (additional covenant applicable for the RCF and IFC loan).

Secured Bank Loans

·    the debt service cover ratio ('DSCR') / interest cover ratio ('ICR'), with values ranging from 120% to 350% (be it either historic or projected); and

·    the LTV ratio, with contractual values ranging from 45% to 83%.

There have been no breaches of the aforementioned covenants occurring during the period ended 31 December 2023.

 

6.    Liquidity & Loan to value ratio (LTV")

Managing our liquidity has been a key area of focus for the Group, especially since the COVID-19 pandemic outbreak, and medium-term debt maturities. This careful management has carried on throughout this period of higher volatility.

As of 31 December, 2023, the Group had cash and cash equivalents of €396.3.million (31 December 2021: €163.7 million), of which €20 million was restricted due to various conditions imposed by the financing Banks.

In addition, the Group had undrawn borrowing facilities of €272 million, out of which €50 million in available until December 2025. The RCF of €215 million is no longer available after March 2024.

The Group's loan-to-value ratio on 31 December 2023 was 42.2%, compared to 42.7% on 31 December 2022, mainly due to the impact of negative revaluations in our standing properties, and positive effect from bond buy back at a discounted price.

7.    EPRA NRV

EPRA NRV is a metric that reflects the estimated long-term value of a company's net assets, assuming the company keeps its properties and doesn't sell them.

The EPRA Net Reinstatement Value ("NRV") is a metric that reflects the estimated long-term value of a company's net assets, assuming the company keeps its properties and doesn't sell them.

EPRA NRV reached €1,750.6 million at year ended 2023. This represents a 4.6% decrease to €1,835.5 million at the end of 2022. EPRA NRV per share also reflects this decline, going down to €6.94 per share at the end of 2023 (compared to €8.29 per share at the end of 2022). The main factor behind the decrease in EPRA NRV was primarily due to negative revaluations that occurred throughout 2023 of €164.9 million offset by EPRA Earnings and one off gain on Eurobonds.

	€m	€
EPRA NRV Dec-22	1,835.5	8.29
EPRA Earnings	61.3	0.26
Bond gain	15.8	0.06
FV loss on Property portfolio	(164.9)	(0.70)
Scrip shares	(1.0)	(0.98)
Others	3.9	0.01
EPRA NRV Dec-23	1,750.6	6.94

 

8.    Cash Flows

	2023	2022
Year ended December 31,	€'m	€'m
Operating Profit before Changes in Working Capital	132.7	126.4
Changes in Working Capital	(45.4)	(63.3)
Cash Flows from Operating Activities	87.3	63.1
Cash Flows used in Investing Activities	(11.0)	(73.8)
Cash Flows from/(used) in Financing Activities	153.8	(243.9)
Net Increase in Cash and Cash Equivalents	235.0	(254.6)
Effect of foreign exchange fluctuations	2.5	0.0
Cash and Cash Equivalents at Year End	396.3	163.8

^{Note: The total in the table do not add up due to roundings}

Our cash flow from operations before working capital changes increased by 5% to €132.7 million in 2023, mirroring the rise in Net Operating Income (NOI) for the year.

Overall, cash inflow from operations reached €87.3 million in 2023, a significant €24.2 million improvement compared to 2022. This growth is primarily due to increase in NOI of €7.3 million, €6.3 million from improving collection of outstanding receivables, €3.9 million increase in advances received for rent and service charges, €3.1 million interest received on cash deposits and €3.6 million from other working capital movements.

In 2023, our net cash used in investments was €11.0 million. This includes €62.5 million spent on capital expenditures for our properties, netted off by the €50.4 million proceeds from selling investment properties and €1.4 million from net investments and loans provided to joint ventures.

Cash generated from financing activities significantly improved in 2023, reaching €153.8 million (compared to a net cash outflow of €243.9 million in 2022). This positive change represents our focus to enhance the liquidity by successfully drawing down funds from new credit facilities secured in 2023 (€344.8 million). Also, we repaid part of existing debts, including €83.2 million on the 18/25 Eurobond, €60 million on the RCF facility, and €39.5 million in amortizations and principal on other loans. Other financing activities in 2023, such as interim dividend payments, lease liabilities and loan arrangement fees, totalled €8.3 million.

9.    Dividends

Year ended December 31,	2023	2022
	€ m	€ m
Dividends declared	66.3	59.8
Share capital increase - scrip shares	(65.2)	-
Dividends paid	1.1	59.8
Dividends per Share - Cents	29	27

Globalworth distributes bi-annually at least 90% of its EPRA Earning to its shareholders. During 2023, the distributions included the option to a scrip dividend alternative so that qualifying shareholders can elect to receive new ordinary shares in the Company instead of cash in respect of all or part of their entitlement to the Dividend. Qualifying shareholders who validly elect to receive the Scrip Dividend Alternative become entitled to a number of Scrip Dividend Shares in respect of their entitlement to the Dividend that is based on a price per Scrip Dividend Share calculated on the basis of a discount of 20% to the average of the middle market quotations for the Company's shares on the five consecutive dealing days from and including the Ex-Dividend Date, the "Reference Price".

The dividend declared for the six-month period ended 31 December 2022 was 15 cents per share and 14 cents per share for the six-month period ended 30 June 2023.

Following the election of scrip dividend 14.3 million new shares were issued in Aprill and 16.3 million shares were issued in October 2023, while the Group paid in total €1.1 million as cash dividend, resulting in 98.4% shareholders opted to reinvest in the Company.

 

 

 

 

 

 

 

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

Consolidated statement of comprehensive income

For the year ended 31 December 2023
	Note	31 December 2023 €'000	31 December 2022 €'000
Revenue	7	240,429	239,251
Operating expenses	8	(93,471)	(99,571)
Net operating income		146,958	139,680
Administrative expenses		(15,948)	(13,712)
Acquisition costs		-	(7)
Fair value loss on investment property	3	(164,908)	(89,471)
Share-based payment expense	18	(502)	-
Loss on disposal of subsidiary		(474)	-
Profit on disposal of investment property	3.5	9,579	-
Depreciation and amortisation expense		(588)	(673)
Other expenses		(2,916)	(2,013)
Other income		2,056	524
Foreign exchange (loss)/gain		(1,533)	851
(Loss)/profit from fair value of financial instruments at fair value through profit or loss		(1,393)	222
(Loss)/Profit before net financing cost		(29,669)	35,401
Finance cost	9	(57,146)	(52,532)
Finance income	9.2	23,220	2,694
Share of profit of equity-accounted investments in joint ventures	21	2,063	3,219
Loss before tax		(61,532)	(11,218)
Income tax income/(expense)	1 0	7,692	(4,886)
Loss for the year		(53,840)	(16,104)
Items that will not be reclassified to profit or loss
Loss on equity instruments designated at fair value through other comprehensive income		-	(5,391)
Total comprehensive income for the year		(53,840)	(21,495)
Loss attributable to:		(53,840)	(16,104)
- ordinary equity holders of the Company		(54,152)	(16,961)
- non-controlling interests		312	857
Total comprehensive income attributable to:		(53,840)	(21,495)
- ordinary equity holders of the Company		(54,152)	(22,352)
- non-controlling interests		312	857
Earnings per share (€ cents)			Restated*
- Basic	11	(23)	(7)
- Diluted	11	(23)	(7)

*The IFRS earnings per share for the year 2022 have been restated following the IAS 33 "Earnings per share" requirements regarding accounting for scrip dividend shares issued in 2023.

 

Consolidated statement of financial position

As at 31 December 2023
	Note	2023 €'000	2022 €'000
ASSETS
Investment property	3	2,843,085	2,945,460
Goodwill	20	12,039	12,349
Advances for investment property	5	7,175	4,393
Investments in joint ventures	21	70,098	67,967
Equity investments	13	7,844	7,521
Other long-term assets		1,780	1,784
Other receivables	3.5	21,182	-
Prepayments		448	226
Deferred tax asset	10.1	1,423	161
Non-current assets		2,965,074	3,039,861
Financial assets at fair value through profit or loss		197	3,554
Trade and other receivables		23,122	22,337
Contract assets		6,985	9,967
Guarantees retained by tenants		99	98
Income tax receivable		1,084	840
Prepayments		2,002	2,430
Cash and cash equivalents	14	396,259	163,767
		429,748	202,993
Investment property held for sale	3.3	50,352	126,009
Total current assets		480,100	329,002
Total assets		3,445,174	3,368,863
EQUITY AND LIABILITIES
Issued share capital	16	1,769,456	1,704,476
Treasury shares		(4,797)	(4,859)
Fair value reserve of financial assets at FVOCI		(5,469)	(5,469)
Share-based payment reserve		-	156
Retained earnings		(158,066)	(37,798)
Equity attributable to ordinary equity holders of the Company		1,601,124	1,656,506
Non-controlling interests		1,411	862
Total equity		1,602,535	1,657,368
Interest-bearing loans and borrowings	12	1,574,771	1,433,631
Deferred tax liability	10.1	139,299	154,866
Lease liabilities	3.2	20,482	19,861
Deposits from tenants		3,774	3,897
Guarantees retained from contractors		2,902	1,995
Trade and other payables		78	1,034
Non-current liabilities		1,741,306	1,615,284
Interest-bearing loans and borrowings	12	28,609	21,600
Guarantees retained from contractors		5,594	3,652
Trade and other payables		36,051	35,679
Contract liability		3,289	1,743
Other current financial liabilities		1,311	67
Current portion of lease liabilities	3.2	1,956	1,669
Deposits from tenants		18,018	17,477
Income tax payable		807	382
		95,635	82,269
Liabilities directly associated with the assets held for sale	3.3	5,698	13,942
Total current liabilities		101,333	96,211
Total equity and liabilities		3,445,174	3,368,863

 

Consolidated statement of cash flows

For the year ended 31 December 2023

		2023	2022
	Note	€'000	€'000
Loss before tax		(61,532)	(11,218)
Adjustments to reconcile profit/(loss) before tax to cash flows from operating activities
Fair value loss on investment property	3.4	164,908	89,471
Loss on sale of residential properties		269	1,851
Share-based payment expense	18	502	-
Depreciation and amortisation expense		588	673
Net increase in allowance for expected credit losses		2,283	44
Foreign exchange loss/(gain)		1,533	(851)
Loss/(gain) from fair valuation of financial instrument at fair value
through profit or loss		1,393	(222)
Loss on disposal of subsidiary		474	-
Profit on disposal of investment property	3.5	(9,579)	-
Share of profit of equity-accounted joint ventures	21	(2,063)	(3,219)
Finance income	9.2	(23,220)	(2,694)
Financing cost	9	57,146	52,532
Operating profit before changes in working capital		132,702	126,367
Decrease/(Increase) in contract assets, trade and other receivables		5,418	(10,547)
Increase/(Decrease) in contract liabilities, trade and other payables		5,305	(6,435)
Interest paid		(47,836)	(45,662)
Interest received		3,801	723
Income tax paid		(12,734)	(2,168)
Interest received from joint ventures		614	797
Cash flows from operating activities		87,270	63,075
Investing activities
Expenditure on investment property completed and under development or refurbishment		(62,463)	(71,235)
Payment for land acquisitions		(435)	(1,732)
Advances received for sale of investment property		1,200	4,100
Proceeds from sale of land		4,000	502
Payment for acquisition of investment property		-	(5,584)
Proceeds from sale of investment property		46,440	12,411
Investment in financial assets at fair value through profit or loss		-	(38)
Proceeds from sale of financial assets through profit and loss		-	4,030
Payments for investment in equity investments	13	(323)	(803)
Investment in and loans given to joint ventures	21	(12,500)	(28,510)
Repayment of loan from joint ventures	21	13,893	13,429
Payment for purchase of other long-term assets		(847)	(371)
Cash flows used in investing activities		(11,035)	(73,801)
Financing activities
Payment of transaction costs on issuance of scrip dividend shares		(154)	-
Proceeds for issuance of new shares in subsidiary from non-controlling interest		-	5
Proceeds from interest-bearing loans and borrowings	12	344,794	146,825
Repayment of interest-bearing loans and borrowings	12	(182,727)	(325,963)
Payment of interim dividend to equity holders of the Company	22	(1,076)	(59,771)
Payment for lease liability obligations	3.2	(1,986)	(2,289)
Payment of bank loan arrangement fees and other financing costs		(5,081)	(2,725)
Cash flows used in financing activities		153,770	(243,918)
Net increase/(decrease) in cash and cash equivalents		230,005	(254,644)
Effect of exchange rate fluctuations on cash and bank deposits held		2,487	(337)
Cash and cash equivalents at the beginning of the year		163,767	418,748
Cash and cash equivalents at the end of the year		396,259	163,767

 

Consolidated statement of changes in equity

For the year ended 31 December 2023

		Issued share capital	Treasury shares	Share-based payment reserve	Fair value reserve of financial assets at FVOCI	Retained earnings	Total	Non-controlling interests	Total Equity
	Note	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
As at 1 January 2022		1,704,476	(4,917)	156	-	38,914	1,738,629	-	1,738,629
Interim dividends	17	-	58	-	-	(59,829)	(59,771)	-	(59,771)
Shares issued in a newly acquired subsidiary		-	-	-	-	-	-	5	5
Settlement of fair value reserve of equity instruments designated at FVOCI in cash		-	-	-	(78)	78	-	-	-
Total comprehensive income for the year		-	-	-	(5,391)	(16,961)	(22,352)	857	(21,495)
As at 31 December 2022		1,704,476	(4,859)	156	(5,469)	(37,798)	1,656,506	862	1,657,368
Interim dividends paid in cash and scrip dividend	17	65,134	62	-	-	(66,272)	(1,076)	-	(1,076)
Transaction costs on issuance of shares for cash		(154)	-	-	-	-	(154)	-	(154)
Transfer from reserve to retained earnings		-	-	(156)	-	156	-	-	-
Shares issued in subsidiary with NCI		-	-	-	-	-	-	237	237
Total comprehensive income for the period		-	-	-	-	(54,152)	(54,152)	312	(53,840)
As at 31 December 2023		1,769,456	(4,797)	-	(5,469)	(158,066)	1,601,124	1,411	1,602,535

 

1 Basis of Preparation

Corporate Information

Globalworth Real Estate Investments Limited (the "Company" or "Globalworth") is a company with liability limited by shares (domiciled in Guernsey) and incorporated in Guernsey on 14 February 2013, with registered number 56250. The registered office of the company is at Anson Court, La Route Des Camps, St Martin, Guernsey GY4 6AD. Globalworth, being a real estate Company, has had its ordinary shares admitted to trading on AIM (Alternative Investment Market of the London Stock Exchange) under the ticker "GWI" since 2013.

On 23 July 2021 Zakiono Enterprises Limited, a company wholly owned by Tevat Limited, become a controlling shareholder by holding 60.6% share capital of the company through public offer. Tevat Limited is a joint venture between CPI Property Group S.A. and Aroundtown SA.

The Company's Eurobonds have been admitted to trading on the Official List of the Irish Stock Exchange in March 2018 and July 2020, respectively. In addition, the Company's Eurobonds maturing in March 2025 have been admitted to trading on the Bucharest Stock Exchange in May 2018. The main country of operation of the Company is Guernsey. The Group's principal activities and nature of its operations are mainly investments in real estate properties, through both acquisition and development, as set out in the Strategic Report section of the Annual Report 2022.

Basis of Preparation and Compliance

These consolidated financial statements have been prepared in conformity with the International Financial Reporting Standards ("IFRS"), as adopted by the European Union ("EU"), give a true and fair view of the state of affairs as at 31 December 2023 and 2022 and of the profit or loss and other comprehensive income for the year then ended 31 December 2023 and 31 December 2022, and are in compliance with The Companies (Guernsey) Law, 2008, as amended.

These consolidated financial statements ("financial statements") have been prepared on a historical cost basis, except for investment property, financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss which are measured at fair value.

The material accounting policies adopted are set out in the relevant notes to the financial statements and consistently applied throughout the periods presented except for the new and amended IFRS (see note 25), which were adopted on 1 January 2023. These consolidated financial statements are presented in Euro ("EUR" or "€"), rounded to the nearest thousand ('000) unless otherwise indicated, being the functional currency and presentation currency of the Company.

These financial statements are prepared on a going concern basis. The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The Directors based their assessment on the Group's cash flow projections for the period up to 30 June 2025. These projections consider available cash resources of the Group of c.€396 million, the undrawn financing facilities of €50 million, the latest contracted rental income, anticipated additional rental income from new possible lease agreements during the period covered by the projections, secured bank financing and SPA signed subsequent to the year-end 2023 for the disposal of investment property, as well as the repayment of debt financing maturing within the projected period, CAPEX, and other commitments. The projections and related sensitivity analysis carried out show that in the period up to 30 June 2025, the Company anticipates having sufficient liquid resources to continue to fund ongoing operations without the need to raise any additional debt or equity financing.

 

Basis of Consolidation

These consolidated financial statements comprise the financial statements of the Company and its subsidiaries (the "Group") as of and for the year ended 31 December 2023 and 31 December 2022. Subsidiaries are fully consolidated (refer to note 22) from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the period from the date of obtaining control to 31 December, using consistent accounting policies. All intra-group balances, transactions and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Non-controlling interest represents the portion of profit or loss, other comprehensive income and net assets not held by the Group and is presented separately in the income statement and within equity in the consolidated statement of financial position, separately from net assets and profit and loss attributable to the equity holders of the Company.

 

Foreign Currency Transactions and Balances

Foreign currency transactions during the year are initially recorded in the functional currency at the exchange rates approximating those ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies other than the functional currency of the Company and its subsidiaries are retranslated at the rates of exchange prevailing on the statement of financial position date. Gains and losses on translation are taken to profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

 

2 Critical Accounting Judgements, Estimates and Assumptions

The preparation of consolidated financial statements in conformity with IFRS requires management to make certain judgements, estimates and assumptions that affect reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures and the disclosures of contingent liabilities.

 

Selection of Functional Currency

The Company and its subsidiaries used their judgement, based on the criteria outlined in IAS 21 "The Effects of Changes in Foreign Exchanges Rates", and determined that the functional currency of all the entities is the EUR. In determining the functional currency consideration is given to the denomination of the major cash flows of the entity e.g. revenues and financing.

 

As a consequence, the Company uses EURO (€) as the functional currency, rather than the local currency Romanian Lei ("RON") for the subsidiaries incorporated in Romania, Polish Zloty ("PLN") for the subsidiaries in Poland and Pounds Sterling ("GBP") for the Company and the subsidiary incorporated in Guernsey.

Further additional material accounting judgements, estimates and assumptions are disclosed in the following notes to the financial statements.

•   Investment Property, see note 3;

•   Commitments (operating leases commitments - Group as lessor), see note 6;

•   Taxation, see note 10;

• Equity Investments, see note 13;

•   Share-Based Payment Reserve, see note 18;

•   Goodwill, see note 20;

•   Investment in Joint Ventures, see note 21; and

•   Investment in Subsidiaries, see note 22.

 

3 Investment Property

 

3.1          Investment property - freehold

 

			Investment property - freehold
			Completed investment property	Investment property under refurbishment	Investment property under development	Land for further development	Sub-total	Investment property leasehold - Right of usufruct of land	Total
		Note	€'000	€'000	€'000	€'000	€'000	€'000	€'000
1 January 2022			2,718,260	156,001	30,850	39,300	2,944,411	21,669	2,966,080
Investment property acquisition			5,584	-	-	-	5,584	-	5,584
Land acquired during the year			-	-	-	1,785	1,785	-	1,785
Subsequent expenditure			24,897	11,512	12,430	1,258	50,097	-	50,097
Net lease incentive movement			15,411	1,664	134	-	17,209	-	17,209
Capitalised borrowing costs			-	119	46	-	165	-	165
Transfer to completed investment property			18,600	-	(14,700)	(3,900)	-	-	-
Disposal during the year			(14,120)	-	-	-	(14,120)	-	(14,120)
Additions to nominal lease liability			-	-	-	-	-	2,814	2,814
Fair value gain/(loss) on investment property			(69,078)	(16,915)	690	1,757	(83,546)	(608)	(84,154)
31 December 2022			2,699,554	152,381	29,450	40,200	2,921,585	23,875	2,945,460
Land acquired during the year			-	-	435	-	435	-	435
Subsequent expenditure			40,618	8,584	1,569	33	50,804	-	50,804
Net lease incentive movement			4,886	3,035	(43)	-	7,878	-	7,878
Capitalised borrowing costs		9.1	6	-	144	-	150	-	150
Transfer to completed investment property			15,740	-	(4,000)	-	11,740	-	11,740
Disposal during the year		3.5	(6,792)	-	-	(7,000)	(13,792)	-	(13,792)
Fair value loss on investment property			(155,394)	(1,000)	(385)	(2,233)	(159,012)	(578)	(159,590)
31 December 2023			2,598,618	163,000	27,170	31,000	2,819,788	23,297	2,843,085

 

3.2          Investment Property - Leasehold

 

Key inputs to determine the present value		31 December 2023	31 December 2022
Gross operating lease commitments (€'000)		100,590	126,549
Remaining individual lease term (years)		67-83	67-84
Discount rate (%)		5.77	5.77

 

	Note	31 December 2023	31 December 2022
Investment property - leasehold		€'000	€'000
Opening balance		23,875	21,669
Additions to nominal lease liabilities		-	2,814
Transferred to assets held for sale		-	-
Fair value loss on investment property	3.1	(578)	(608)
Closing balance		23,297	23,875

 

The Group measures the lease liability at the present value of the lease payments that are not paid until the statement of financial position date. The lease payments are discounted at 5.77% after deducting from the opening carrying value the annual rental payments and translating at the closing exchange rate into Euro resulted in a foreign exchange loss. The interest expense for the unwinding effect of the present value of the lease liability for an amount of €1.8 million (2022: €2.4 million) was presented in the statement of comprehensive income under the line "Finance expense".

Additions to nominal lease liabilities represents the parking spaces leased from third-party lessor on a long-term basis. Considering the insignificant nominal amount contributed by these parking leases, as compared to the outstanding nominal lease liability amount, there was no significant change in discount rate applied as compared to the prior year.

 

Lease liability	31 December 2023	31 December 2022
	€'000	€'000
Opening balance	21,530	20,065
Additions to nominal lease liabilities	-	2,814
Payment during the year	(1,381)	(1,684)
Interest expense on lease liability	1,366	1,819
Foreign exchange loss/(gain)	923	(1,484)
Closing balance	22,438	21,530
- Current portion	1,956	1,669
- Non-current portion	20,482	19,861

 

	31 December 2023	31 December 2022
Lease liability - held for sale	€'000	€'000
Opening balance	8,877	9,141
Liabilities directly associated with the assets held for sale	(4,889)	-
Payment during the year	(605)	(605)
Interest expense on lease liability	411	568
Foreign exchange loss/(gain)	525	(227)
Net movement	(4,558)	(264)
Closing balance	4,319	8,877

 

3.3          Assets Held for Sale

 

In 2021, the Group entered into a preliminary agreement to sell the properties namely Batory Building I , Bliski Centrum, Philips House, Nordic Park and Warta Tower (held by Dolfia sp. z o.o., Ebgaron sp. z o.o., Lamantia sp. z o.o., Nordic Park Offices sp. z o.o. and Warta Tower sp. z o.o.), for a total consideration of €125.2 million.

In July 2023 Warta Tower sale was concluded (please refer to note 3.5 for further details) and terminated the original SPA for remaining four properties.

 

In November 2023 the Group signed SPAs for the sale of properties namely Philips House and Nordic Park with a new buyer for amount of €12.9 million and €22.9 million, the sale is expected to be completed by end of March and June 2024, respectively.

 

At 31 December 2023, the properties classified as held for sale were valued at €45.9 million.

 

		31 December 2022	CAPEX	Fair value loss	Disposal during the year	Transfer to investment property	Movement during the period	31 December 2023
	Note	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Completed investment property	3.1	116,199	(165)	(5,124)	(53,270)	(11,740)	(70,299)	45,900
Investment property - leasehold	3.2	9,810	-	(194)	(5,164)	-	(5,358)	4,452
Investment property held for sale		126,009	(165)	(5,318)	(58,434)	(11,740)	(75,657)	50,352
Lease liabilities	3.2	8,877	-	-	-	-	(4,558)	4,319
Deferred tax liability	10.1	5,065	-	-	-	-	(3,686)	1,379
Liabilities directly associated with the assets held for sale		13,942	-	-	-	-	(8,244)	5,698
Net assets held for sale		112,067	-	-	-	-	67,413	44,654

 

3.4 Fair Value Loss on Investment Property

 

		31 December 2023	31 December 2022
	Note	€'000	€'000
Fair value loss on investment property		(164,908)	(89,471)
- Related to investment property − freehold	3.1	(159,590)	(84,154)
- Related to investment property − held for sale	3.3	(5,318)	(5,317)

 

3.5 Sale of investment property

 

In March 2023, the Group sold a fully owned subsidiary, Nord 50 Herastrau Premium SRL, owning a non-core plot of land of 3.2k sqm located in the northern part of Bucharest for total consideration of €7.0 million out of which €4.0 million was paid in cash on disposal date and remaining €3.0 million was collected on 7^th March 2024. At the disposal date, the Group derecognised net asset of €7.2 million and recorded €0.5 million net loss (including €0.3 million for derecognition of goodwill recognised for deferred tax liability at initial acquisition date (note 20).

In July 2023 the Company sold the Warta Tower office building, a fully vacant building, in Warsaw to a company from the Cornerstone Investment Management platform. The transaction was valued €63.4 million, out of which €20 million are deferred and will be received in October 2025. The receivable carries an interest of 13% p.a., total interest receivables as of 31 December 2023 was €1.1 million. At the disposal date, the Group recognised in the income statement €9.5 million profit after adjusting incidental costs.

 

4.  Investment Properties Owned by Joint Ventures

 

	Completed investment property	Investment property under development	Land for further development	TOTAL
	€'000	€'000	€'000	€'000
1 January 2022	37,400	13,700	35,600	86,700
Land acquisition	8	1,592	802	2,402
Subsequent expenditure	964	22,167	92	23,223
Net lease incentive movement	(17)	155	-	138
Capitalised borrowing costs	92	336	-	428
Transfer to completed investment property	34,700	(34,700)	-	-
Disposal during the year	-	-	(28)	(28)
Fair value gain on investment property	553	5,150	434	6,137
31 December 2022	73,700	8,400	36,900	119,000
Subsequent expenditure	7,037	-	382	7,419
Net lease incentive movement	251	-	-	251
Transfer to completed investment property	8,400	(8,400)	-	-
Fair value gain/(loss) on investment property	2,412	-	(35)	2,377
31 December 2023	91,800	-	37,247	129,047

 

5. Advances for Investment Property

 

	2023 €'000	2022 €'000
Advances for land and other property acquisitions	2,000	2,000
Advances to contractors for completed and under development/refurbishment properties	5,175	2,393
	7,175	4,393

 

6. Commitments

Commitments for Investment Property

As at 31 December 2023 the Group had agreed to construction contracts with third parties and is consequently committed to future capital expenditure in respect of completed investment property of €8.2 million (2022: €10.9 million), investment property under development of nil (2022: €0.7 million) and had committed with tenants to incur incentives (such as fit-out works and other lease incentives) of €11.8 million (2022: €10.3 million).

 

Judgements Made for Properties Under Operating Leases, being the Lessor

The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of the investment properties leased to third parties and, therefore, being the lessor accounts for these leases as operating leases.

The duration of these leases is one year or more (2022: one year or more) and rentals are subject to annual upward revisions based on the consumer price index. The future aggregate minimum rentals receivable under non-cancellable operating leases for investment properties - freehold are as follows:

 

	2023 €'000	2022 €'000
Not later than 1 year	181,839	169,880
Later than 1 year and not later than 5 years	507,919	426,748
Later than 5 years	175,006	152,843
	864,764	749,471

 

7. Revenue

 

Rendering of Services

Revenue from asset management fees, marketing and other income which are recognised at the time the service is provided.

 

	2023 €'000	2022 €'000
Contracted rent	191,913	180,920
Adjustment for lease incentives	(31,548)	(31,093)
Rental income	160,365	149,827
Revenue from contracts with customers Service charge income	75,056	86,809
Fit-out services income	4,185	2,374
Asset management fees	122	66
Marketing and other income	701	175
	80,064	89,424
	240,429	239,251

The adjustment for lease incentives includes no amortisation impact for COVID-19-related rent concession given during the year-ended 2023 (2022: €0.1 million).

The total contingent rents and surrender premia recognised as rental income during the year amount to €2.3 million (2022: €1.9 million) and €1.1 million (2022: €0.2 million), respectively.

 

8.    Operating Expenses

 

	2023 €'000	2022 €'000
Property management, utilities and insurance	86,722	96,433
Property maintenance costs and other non-recoverable costs	2,087	746
Property expenses arising from investment property that generate rental income	88,809	97,179
Property expenses arising from investment property that did not generate rental income	19	19
Fit-out services costs	4,643	2,373
	93,471	99,571

 

9.    Finance Cost

 

	Note	2023 €'000	2022 €'000
Interest on secured loans		15,929	7,054
Interest on the unsecured revolving facility		4,683	1,588
Interest on fixed-rate bonds		26,779	32,496
Debt cost amortisation and other finance costs	9.1	7,742	8,305
Interest on lease liability	3.2	1,777	2,387
Bank charges		236	702
		57,146	52,532
9.1 Debt Cost Amortisation and Other Finance Costs
		2023 €'000	2022 €'000
Debt issue cost amortisation - secured bank loans		712	930
Debt issue cost amortisation - unsecured revolving facility		1,856	1,461
Debt issue cost amortisation - fixed rate bonds		5,174	5,914
		7,742	8,305

 

The Company capitalised borrowing costs in the value of investment property, amounting to €0.2 million (2022: €0.2 million), using a capitalisation weighted average rate of 3.33% (2022: 3.33%).

 

9.2 Finance income

	Note	2023	2022
		€'000	€'000
Gain on Bond buyback		15,809	-
Income from bank deposits		3,801	722
Interest income from joint venture loans		2,075	1,526
Interest income on other receivables	3.5	1,284	-
Other financial income		251	446
		23,220	2,694

 

10.       Taxation

 

	2023 €'000	2022 €'000
Current income tax expense	12,908	1,264
- Related to the current year	13,554	3,253
- Related to the prior year	(646)	(1,989)
Deferred income tax expense	(20,600)	3,622
	(7,692)	4,886

 

Current Income Tax Expense

The subsidiaries in Romania, Poland and Cyprus are subject to tax on local sources of income. The current income tax expense of €12.9 million (2022: €1.3 million) represents the profit tax for the Group. The taxable income arising in each jurisdiction is subject to the following standard corporate income tax rates: Poland at 19% (however small entities with revenue up to €2 million in the given tax year and entities starting a new business for their first tax year of operation, under certain conditions, are charged a reduced rate of 9%), Romania at 16% and Cyprus at 12.5%.

The Group's subsidiaries in Poland are subject to the minimum tax, which is applied to income from ownership of certain high-value fixed assets having an initial value of the asset exceeding PLN 10 million at a rate of 0.035% per month. From 2019, the taxpayer has a right to apply for the refund of previously paid minimum tax which was not deducted from the advance corporate income tax. This minimum tax can be set off against CIT if CIT is higher. The tax is applied only to leased buildings while no tax applies on vacant buildings or vacant space in partially occupied buildings. Due to the COVID-19 pandemic, the minimum tax scheme was suspended from 1 March 2020 until 31 May 2022 and the Group's subsidiaries are subject to corporate income tax.

Starting 1 January 2024, there is a minimum tax on turnover introduced in Romania and it applies to entities which have a turnover over certain limit. Therefore, some Romanian entities which are part of the tax consolidation will be captured by this new rule and they will be paying the higher amount between corporate income tax or a minimum tax on turnover, which is 1% applicable on certain adjusted elements of income.

The Group's subsidiaries incorporated and tax resident in Cyprus need to comply with the tax regulations in their country of incorporation. The income generated by subsidiaries located in Cyprus is represented by dividend and interest income which are the most significant sources of income. Dividend income is tax-exempt under certain conditions, while interest income is subject to corporate income tax at the rate of 12.5% in Cyprus.

Judgements and Assumptions Used in the Computation of Current Income Tax Liability

There are uncertainties in Romania and Poland, where the Group has significant operations and this is due to the interpretation of complex tax regulations, frequent changes in tax laws and lack of predictability over these tax changes with possible impact on the amount and timing of future taxable income. Differences arising between the actual results and the assumptions made, or changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective company's domicile. In Romania and Poland, the tax position is open to further verification for five years and no subsidiary in Romania has had a corporate income tax audit in the last five years, while in Poland some entities are currently under tax audit with respect to the corporate income tax and withholding tax settlements for the fiscal year 2018, 2019, 2020 and 2021.

 

10.1     Deferred Tax (asset)/liabilities

 

		2023 €'000	2022 €'000
Deferred tax asset		(1,423)	(161)
Deferred tax liabilities directly associated with the assets held for sale		1,379	5,065
Deferred tax liabilities		139,299	154,866
		139,255	159,770

 

 

Deferred Income Tax Expense	Consolidated statement of financial position		Consolidated statement of comprehensive income
Net Deferred Tax	2023 €'000	2022 €'000	2023 €'000	2022 €'000
Valuation of investment property at fair value	152,280	181,070	(28,790)	(472)
Deductible temporary differences	(2,397)	(1,247)	(1,150)	1,340
Interest expense and foreign exchange loss
on intra-group loans	(8,803)	(18,743)	9,940	866
Discounting of tenant deposits and long-term
deferred costs	118	68	50	(4)
Share issue cost recognised in equity	(7)	(7)	-	-
Valuation of financial instruments at fair value	48	72	(24)	(67)
Recognised unused tax losses	(2,069)	(1,443)	(626)	1,959
Derecognised on subsidiary disposal	85	-	-	-
	139,255	159,770	(20,600)	3,622

 

The Group has unused assessed tax losses carried forward of €32.3 million (2022: €49.7 million) in Romania and €14.7 million (2022: €19.1 million) in Poland that are available for offset against future taxable profits of the entity which has the tax losses. The tax losses recorded by Romanian subsidiaries before 1st January 2024 can be carried forward for seven years from the year of generation. However, starting 2024, tax losses can be used up to the 70% of the taxable income computed by the entity. Also, the tax losses incurred starting with 1st January 2024 can be carried forward only for five consecutive years and within the 70% limit mentioned above.

The tax losses in Poland can be carried forward for a period of five consecutive tax years from the year of origination. In Poland, in any particular tax year, the taxpayer may not deduct more than 50% of the loss incurred in the year for which it was reported. Additionally, starting from 2020, the taxpayer may utilise one-time tax losses generated after 31 December 2018 in the amount of greater than PLN 5 million or 50% of tax loss of a given fiscal year in the following five fiscal years.

As of the statement of financial position date the Group recognised deferred tax assets of €1.9 million (2022: €1.4 million) in Romania and Poland for which deferred tax asset recognition criteria were met under IAS 12, out of the total available deferred tax assets of €8.0million (2022: €10.7 million), calculated at the corporate income tax rates of 16% in Romania and 19% (9% for small entities) in Poland. Therefore, the available deferred tax assets, €6.0 million (2022: €9.2 million) deferred tax asset was not recognised (Romania and Poland) in the income statement of the Group as the amount could not be utilised from the future taxable income as per the criteria under IAS 12.

 

Expiry year	2024	2025	2026	2027	2028	2029	2030	TOTAL
Total available deferred tax assets (€m)	4.0	0.6	1.5	0.7	1.1	0.1	0.0	8.0

There are also temporary non-deductible interest expenses and net foreign exchange losses of €215.6 million, of which €41.2 million in Romania and €174.4 million in Poland (2022: €276.5 million, of which €38.9 million in Romania and €237.6 million in Poland) related to intercompany and bank loans. Each year an amount up to 30% of tax EBITDA (plus PLN 3 million in Poland based on the recent Supreme Court sentence for the periods 2019-2021) and for 2022 not less than PLN 3 million would become tax-deductible, for which €8.8 million (€1.1 million in Romania and €7.7 million in Poland) deferred tax asset was recorded (2022: €18.7 million, €1.1 million in Romania and €17.7 million in Poland).

In Romania such temporary non-deductible interest expenses can be carried forward indefinitely until it is tax deductible as per EBITDA threshold. Nevertheless, starting 1st January 2024, the threshold for deductibility of interest expense which will be subject to 30% of tax EBIDTA is decreased from EUR 1 million to EUR 500 thousand. On the other hand in Poland, the interest expense which was already paid prior to the financial position date (and corresponding net foreign exchange loss on such interest expense) can only be utilised over five consecutive tax years from the year of origination and unpaid interest expense (and corresponding net foreign exchange loss on such interest expense) is available for utilisation indefinitely. As of 31 December 2023, out of the total €7.7 million (2022: €17.7 million) deferred tax asset on interest expense and foreign exchange loss recognised in Poland, €1.5 million (2022: €2.6 million) is available for utilisation in five years from the origination.

At each statement of financial position date, the Group assesses whether the realisation of future tax benefits is sufficiently probable to recognise deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to, among other things, benefits that could be realised from available tax strategies and future taxable income, as well as other positive and negative factors. Based on the above assessment, the Group recognised deferred tax expense related to deferred tax asset for fiscal losses carried forward for an amount of €0.6 million (2022: deferred tax expense of €2.0 million) representing derecognition of deferred tax assets of nil (2022: derecognition of €1.5 million) in Romania, due to improved actual tax results and transition of some subsidiaries to a taxable profit position, and derecognition of deferred tax assets of €0.6 million (2022: derecognition of €0.5 million) in Poland, due to improved actual tax results.

The recorded amount of total deferred tax assets could be reduced if estimates of projected future taxable income or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Group's ability to utilise future tax benefits.

 

11.       Earnings Per Share

The following table reflects the data used in the calculation of basic and diluted earnings per share per IFRS and EPRA guidelines:

 

 

		Number of shares issued	% of the	Weighted average
Date	Event	('000)	year	('000)
01-Jan-2022	At the beginning of the year	221,373		221,373
	Bonus effect of scrip dividend shares (Apr-23)*	2,861		2,861
	Bonus effect of scrip dividend shares (Oct-23)*	3,252		3,252
2022	Shares in issue at year-end (basic)	227,486		227,486
Jan- Dec 2022	Effect of dilutive shares	97	77%	75
2022	Shares in issue at year-end (diluted)	227,583		227,561
Jan-2023	At the beginning and end of the year	227,486		227,486
Apr-23	Shares issued for scrip dividend (excluding bonus effect)	11,445	74%	8,521
Oct-23	Shares issued for scrip dividend (excluding bonus effect)	13,007	23%	2,930
2023	Shares in issue at year-end (basic)	251,937		238,936
Jan-Dec 2023	Effect of dilutive shares	150	91%	137
2023	Shares in issue at year-end (diluted)	252,087		239,073

 

 

 

	2023 €'000	2022 €'000
Loss attributable to equity holders of the Company for the basic and diluted earnings per share	(54,152)	(16,961)
		Restated*
IFRS earnings per share	Cents	Cents
- Basic	(23)	(7)
- Diluted	(23)	(7)

*The IFRS earnings per share for the year 2022 have been restated following the IAS 33 "Earnings per share" requirements regarding accounting for scrip dividend issued in 2023, the number of Scrip Dividend Share being calculated based on a discount of 20%.

 

Key Alternative Performance Measures

The Company distributes on a semi-annual basis a dividend to its shareholders of not less than 90% of the Company's funds from operations, estimated using EPRA Earnings, subject to solvency and other legal requirements. EPRA Earnings is a non-IFRS measure.

EPRA Earnings Per Share

The following table reflects the reconciliation between IFRS Earnings as per the statement of comprehensive income and EPRA Earnings (non-IFRS measure):

	Note	2023 €'000	2022 €'000
Earnings attributable to equity holders of the Company (IFRS)		(54,152)	(16,961)
Changes in fair value of financial instruments and associated close-out costs		-	(429)
Fair value loss on investment property	3.4	164,908	89,471
Profit on disposal of investment property and related tax credit		(5,794)	-
Loss on sale of residential properties		269	1,851
Loan close-out costs		(15,809)	-
Changes in the value of financial assets at fair value through profit or loss		1,393	(222)
Acquisition costs		-	7
Deferred tax charge in respect of above adjustments		(28,814)	(539)
Non-controlling interests share of above		284	783
Adjustments in respect of joint ventures		(975)	(2,376)
EPRA Earnings attributable to equity holders of the Company		61,310	71,585

 

EPRA Earnings per share		cents	cents
Basic		26	32
Diluted		26	32

 

12.       Interest-Bearing Loans and Borrowings

	2023 €'000	2022 €'000
Current portion of: Secured loans and accrued interest	13,086	3,845
Unsecured fixed-rate bonds and accrued interest	15,523	17,755
Sub-total	28,609	21,600
Non-current
Secured loans	650,460	353,978
Unsecured fixed rate bonds	924,311	1,079,653
Sub-total	1,574,771	1,433,631
TOTAL	1,603,380	1,455,231

 

12.1 Key Terms and Conditions of Outstanding Debt

 

				2023		2022
				Face value	Carrying value	Face value	Carrying value
Facility	Currency	Nominal interest rate	Maturity date	€'000	€'000	€'000	€'000
Loan 16	EUR	EURIBOR 3-month + margin	March 2031	11,000	10,999	12,220	12,218
Loan 37	EUR	Fixed rate Bond	March 2025	460,247	458,649	562,522	558,569
Loan 38	EUR	Fixed rate & Floating rate EURIBOR 3-month + margin	May 2025	100,121	100,083	100,115	99,874
Loan 41	EUR	EURIBOR 3-month + margin	March 2029	85,991	85,503	85,552	84,959
Loan 43	EUR	EURIBOR 3-month + margin	December 2024	-	-	34,522	34,423
Loan 44/45	EUR	Fixed rate	February 2027	62,295	62,122	62,295	62,062
Loan 46	EUR	Fixed rate	November 2029	65,043	64,542	65,045	64,462
Loan 47	EUR	EURIBOR 3-month + margin	April 2024	-	-	60,060	60,060
Loan 48	EUR	Fixed rate Bond	July 2026	405,011	396,120	405,011	392,658
Loan 49	EUR	Fixed rate	March 2029	272	272	449	449
Loan 50	EUR	Fixed rate	March 2029	380	380	1,429	1,421
Loan 51	EUR	EURIBOR 6-month + margin	May 2028	85,217	84,413	85,162	84,076
Loan 53	EUR	EURIBOR 3-month + margin	December 2032	94,860	93,663	-	-
Loan 54	EUR	EURIBOR 3-month + margin	September 2034	3,206	3,151	-	-
Loan 55	EUR	EURIBOR 3-month + margin	October 2030	145,351	143,811	-	-
Loan 56	EUR	EURIBOR 3-month + margin	December 2030	45,033	44,741	-	-
Loan 57	EUR	EURIBOR 3-month + margin	June 2034	55,155	54,931	-	-
Total				1,619,182	1,603,380	1,474,382	1,455,231

 

Unsecured Corporate Bonds

In March 2018, the Group issued a €550 million unsecured Eurobond (Loan 37). The seven-year Euro-denominated Bond matures on 29 March 2025 and carries a fixed interest rate of 3.0%. In June 2023 a buyback of €100 million nominal value was successfully completed, by paying a cash consideration of €83.2 million, resulting in a net gain of €15.8 million.

In July 2020 the Group completed under its €1.5 billion Euro Medium Term Notes Programme the issuance of €400 million new notes, due in 2026, by exchanging €226.9 million of the €550 million notes due in June 2022 (subsequently repaid at maturity) and the remaining amount of €158.7 million, after deduction of buy-back premium and issuance fees, was received in cash.

Financial Covenants

Financial covenants on unsecured fixed-rate bonds are calculated on a semi-annual basis at 30 June and 31 December each year and include the Consolidated Coverage Ratio, with a minimum value of 200%, the Consolidated Leverage Ratio, with a maximum value of 60%, and the Consolidated Secured Leverage Ratio, with a maximum value of 30%.

 

Unsecured Revolving Credit Facility ("RCF")

On 16 June 2022, the amount of €60 million was drawn down to strengthen the liquidity of the Group (Loan 47) until 27 March 2023 when it was repaid in full. As of 31 December 2023, the amount of €215 million was available for utilisation under the RCF. The facility is no longer available for drawdown after March 2024.

 

At the end of December 2022, the Group entered a new three-year term unsecured Revolving Credit Facility for €50 million with Erste Group Bank AG, the new liquidity being available to be drawn until December 2025. The RCF loan terms have been structured to, generally, align with the Company's existing Euro Medium Term Note ("EMTN") programme for fixed-rate bonds. In addition to the financial covenants applicable for unsecured fixed-rate bonds, the RCF contains a supplementary financial covenant of the Total Unencumbered Assets Ratio with a minimum value of 125%.

 

Unsecured International Finance Corporation ("IFC") Loan

At the end of May 2022, the Group entered into a six-year term unsecured loan agreement for €85 million with IFC (loan 51). The IFC loan terms have been aligned with the Company's Revolving Credit Facility terms including financial covenants.

Secured Facilities

In December 2022, the Group entered into a ten-year term secured loan agreement for €110 million with Erste Group Bank AG and Banca Comerciala Romana for refinancing of the Company's logistics/light- industrial portfolio in Romania. Out of the €110 million, €96.5 million was available to the Group and the difference was available to Black Sea Vision SRL, one of the Group's joint venture companies, to refinance the existing debt held with Banca Comerciala Romana and to obtain additional liquidity. The loan was drawn in full in March 2023 (Loan 53).

In October 2023, the Group:

• entered into a eleven-year term secured loan agreement of €9.5 million with Banca Transilvania (Loan 54) for refinancing of industrial property. Out of this facility, at 31 December 2023 €6.3 million was available for further drawdown until October 2024.

• entered a seven-year bank financing of €145 million (Loan 55) with Aareal Bank AG secured against two office properties in Poland.

In December 2023 the Group:

• entered a seven-year bank facility of €45 million (Loan 56) secured against an office property in Romania. This facility was drawdown to refinance the existing debt held with Banca Comerciala Romana (Loan 43) and to obtain additional liquidity.

• entered a ten and a half-year facility (Loan 57) with Banca Transilvania secured against three office properties in Romania.

• extended the €11 million bank facility held with Unicredit Bank (Loan 16) until March 2031.

Financial Covenants

Financial covenants on secured loans are calculated based on the individual financial statements of the respective subsidiaries and subject to the following ratios:

• gross loan-to-value ratio ("LTV") with maximum values ranging from 45%-83% (2022: 60%-83%). LTV is calculated as the loan value divided by the market value of the relevant property (for a calculation date);

• the debt service cover ratio ("DSCR") minimum values of 120% (2022: 120%). DSCR is calculated, depending on the respective credit facility, on the preceding 12-month historical ratio or projected future 12-month period ratio;

• minimum interest cover ratio ("ICR"), historic with minimum values from 350% and projected with minimum values from 140% (2022: 250%), which was applicable to two properties as at 31 December 2023 (31 December 2022: two). Historic ICR is calculated as Actual Net Rental Income as a percentage of the Actual Interest Costs for the 12 preceding months period from the calculation date. Projected ICR is calculated as Projected Net Rental Income as a percentage of the Projected Interest Costs for the 12-month period commencing immediately after the date of the calculation; and

• debt yield ratio ("DYR") with minimum values of 5%. DYR is calculated as the 12-month projected Net Operating Income divided by the loan outstanding value at a relevant calculation date.

Secured bank loans are secured by investment properties which were recognised in the statement of financial position at the fair value of €1,427 million at 31 December 2023 (2022: €794.4 million) and also carry pledges on rent receivable balances of €8.5 million (2022: €7.4 million), VAT receivable balances of €0.4 million (2022: €0.8 million) and a moveable charge on the respective bank accounts (refer to note 12).

The Group is in compliance with all financial covenants and there were no payment defaults during the year 2023 (2022: no). As of 31 December 2023, the Group had undrawn borrowing facilities of €272 million (2022: €300 million), however the RCF of €215 million is no longer available to draw after March 2024.

 

Loan from non-controlling interest holders to a subsidiary

In March 2022 and April 2022, North Logistics Hub SRL and Logistics Hub Chitila SRL, two newly incorporated subsidiaries, received a loan from minority shareholders for an amount of €0.4 million and €1.4 million respectively, representing 25% of CAPEX investment in the projects which were financed through shareholders' loans both from the Group and minority shareholder in proportion to the equity interest in the Company. During 2023 the loan outstanding decreased to €0.2 million and respectively €0.4 million with keeping the proportion of the equity interest in the Company. The loans are unsecured and carry a fixed interest of 4%.

 

13.       Equity Investments       

	31-Dec-23 €'000	31-Dec-22 €'000
Name of investees
Mindspace Ltd	4,254	4,254
Early Game Venture Fund I Coöperatief U.A.	1,668	1,464
Gapminder Fund Coöperatief U.A.	1,922	1,803
Equity investments (unquoted)	7,844	7,521

 

Investment in Mindspace Ltd

In 2018, the Group entered into an agreement with Mindspace Ltd, receiving a 4.99% stake in Mindspace Ltd (which was subsequently decreased to 3.69% following an equity raise in 2021) in return for investing €8.6 million in the company's Preferred A-2 class shares. At 31 December 2023 the Group hold 3.77% of total equity.

Mindspace Ltd commenced its operations in 2013 with subsidiaries in Cyprus, Poland, Germany, the UK, the USA, the Netherlands and Romania. The company leases office spaces for long-term periods, renovates them and turns them into modern shared offices/coworking spaces while providing its customers with office spaces and additional services. The company is also a tenant of the Group, in Poland and Romania.

 

Fair value measurement

The fair value of the Group's participation in Mindspace Ltd was calculated based on a third-party valuation (Level 3 under IFRS 13) organised by the investee.

The fair value of the Group's participation in Mindspace Ltd was calculated, internally by the management (2022: based on third party valuation), based on the net present value of estimated future cash flows, using a discounted cash flows model. The valuation methodology requires to make certain assumptions about the key inputs used, including forecasted discounted cash flows (which were based on the investee's forecast earnings as per business plan, the discount rate of 7.5% and EBITDA multiple of 13.4 (based on the 3-year EBITDA multiple of a comparable quoted global company operating in a similar industry). Based on the above analysis as at 31 December 2023, the fair value amount was marginally higher than the carrying value therefore no fair value gain or loss was recorded in the other comprehensive income (2022: €5.5 million fair value loss).

Furthermore, as at 31 December 2023, a 10% change in EBITDA multiple or 83 bps change in the discount rate would have an insignificant impact on the carrying value. Since, the capital gains or losses on the underlying investments are subject to 0% capital gains taxes in Cyprus therefore no deferred tax asset was recorded in other comprehensive income related to fair value loss.

As at 31 December 2022, a 1% increase or (decrease) in fair value of equity share in the investee would have increased/(decreased) the fair value loss/(gains) on the investment by €0.08 million (2022: €43 million).

Investment in Venture Funds

Early Game Venture Fund I Coöperatief U.A.

Early Game is a venture fund that invests in tech start-ups in Romania through the Competitiveness Operational Program and is co-funded by the European Regional Development Fund. Globalworth Tech Limited, a fully owned subsidiary of the Group, is committed to investing in total €2.0 million in this fund.

Globalworth Tech Limited invested €1.4 million in Early Game Venture Fund I Coöperatief U.A. ("Early Game") in the prior years. During 2023, the subsidiary participated in further equity calls and invested another €0.2 million (2022: €0.3 million).

Gapminder Fund Coöperatief U.A.

In the prior years, Globalworth Tech Limited invested €1.8 million in Gapminder Fund Coöperatief U.A. ("Gapminder") and participated in further equity calls of €0.1 million during 2023 (2022: €0.6 million). Gapminder is a venture fund that invests in tech start-ups in Romania through the Entrepreneurship Accelerator and Seed Fund Financial Instrument in Romania and is co-funded by the European Investment Fund. The Group is committed to investing in total €2.4 million out of the fund's total planned investment value of €50 million.

At 31 December 2023, the Group assessed the fair value of its investments based on the latest available management accounts of both funds and the underlying enterprise value of each tech start up and seed investments by Early Game and Gapminder. The enterprise value of underlying investments is based on last capital raises initiated by such seed investment and pre-seed investment which is participated in by third parties.

Based on this analysis, no fair value gain was recognised in other comprehensive income as the change in the value of both investments was insignificant to the cost of the initial investment (2022: €0.07 million).

 

14.       Cash and Cash Equivalents         

 

	2023 €'000	2022 €'000
Cash at bank	171,596	143,515
Short-term deposits	224,663	20,252
Cash and cash equivalents as per statement of financial position	396,259	163,767

Cash at bank and in hand includes restricted cash balances of €5.7 million (2022: €7.8 million) and short-term deposits include restricted deposits of €14.9 million (2022: €0.1 million). The restricted cash balance can be used to repay the outstanding debts and repayment of deposits to tenants.

Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interest at rates on Euro deposits ranging from minus 0.6% to positive 3.9% (2022: minus 0.60% to positive 0.01%) per annum, for PLN deposits from 1.83% to 4.70% (2022: 0.24% to 4.56%) per annum and for RON deposits from 5.3% to 5.8% (2022: 0.68% to 6.25%) per annum. For RON deposits the highest interest rate was earned on overnight deposits.

 

15.       Capital Management

The Company has no legal capital regulatory requirement. The Group's policy is to maintain a strong equity capital base so as to maintain investor, creditor and market confidence and to sustain the continuous development of its business. The Board considers from time to time whether it may be appropriate to raise new capital by a further issue of shares. The Group monitors capital primarily using an LTV ratio and manages its gearing strategy to a long-term target LTV of less than 40%.

The LTV is calculated as the amount of outstanding debt (the Group's debt balance plus 50% of joint ventures' debt balance), less cash and cash equivalents (the Group's cash balance plus 50% of joint ventures' cash balance), divided by the open market value of its investment property portfolio (the Group's investment property

− freehold portfolio plus 50% of joint ventures' investment property - freehold value) as certified by external valuers. The future share capital raise or debt issuance are influenced, in addition to other factors, by the prevailing LTV ratio.

 

 

	Note	2023 €'000	2022 €'000
Interest-bearing loans and borrowings (face value)	12	1,619,182	1,474,382
Less:
Cash and cash equivalents	14	396,259	163,767
Group interest-bearing loans and borrowings (net of cash)		1,222,923	1,310,615
Add:
50% share of joint ventures' interest-bearing loans and borrowings		17,513	11,764
50% share of joint ventures' cash and cash equivalents		(2,506)	(1,524)
Combined interest-bearing loans and borrowings (net of cash)		1,237,931	1,320,855
Group open market value as of financial position date		2,865,688	3,037,784
Add:
50% share of joint ventures' open market value as of financial position date	21	64,524	59,500
Open market value as of financial position date		2,930,212	3,097,284
Loan-to-value ratio ("LTV")		42.2%	42.7%

 

16.       Issued Share Capital

 

	2023		2022
	€'000	Number ('000)	€'000	Number ('000)
Opening balance	1,704,476	222,427	1,704,476	222,427
Shares issued for scrip dividend	65,134	30,563	-	-
Transaction costs on the issuance of shares	(154)	-	-	-
Balance at 31 December	1,769,456	252,990	1,704,476	222,427

 

17.       Dividends

 

	2023	2022
	€'000	€'000
Declared and paid during the year
Interim dividend: €0.29 per share (2022: €0.27 per share)	66,272	59,771

 

On 8 March 2023, the Board of Directors of the Company approved the distribution of an interim dividend in respect of the six-month financial period ended 31 December 2022 of €0.15 per ordinary share.

On 30 August 2023, the Board of Directors of the Company approved the distribution of an interim dividend in respect of the six-month financial period ended 30 June 2023 of €0.14 per ordinary share.

 

18.       Share-Based Payment Reserve

 

Share-based payments reserve		2023 €'000	Number ('000)	2022 €'000	Number ('000)
Executive share option plan		-	-	156	-

 

Executive Share Option Plan

Under the plan, the Directors of the Group were awarded share option warrants as remuneration for services performed.

In 2013, the Group granted warrants to the Founder and the Directors which entitle each holder to subscribe for ordinary shares in the Company at an exercise price of €5.00 per share if the market price of an ordinary share, on a weighted average basis over 60 consecutive days, exceeds €10.00 per share and €12.50 per share for each tranche respectively and the holder is employed on such date. The fair value of the warrants was estimated at the grant date (i.e. July 2013) at €0.073 per share. Under the share option warrants scheme, Zakiono Enterprises Limited had the right to subscribe in two tranches of 2.83 million ordinary shares in total (1.415 million for each tranche) at an exercise price of €5.00 per share.

The contractual term of each warrant granted was 10 years. Therefore at 31 July 2023, subsequent to 10 years anniversary the share option warrants were expired.

 

Share-based payments expense

 

 

	2023	2022
Share-based payments expense	€'000	€'000
Subsidiaries' employees share based payment expense	502	-

 

During 2023 the Group reward the performance of employees through an annual performance bonus with a total amount of €2.0 million in the form of either cash or shares. Out of this, the Group recorded salary expenses of €0.5 million, share based payment expense of €0.5 million and capitalised €0.8 million.

In Romania, the expense recorded in 2023 is €0.5 million, for shares assigned to employees with a vested period of one year and a further €0.2 million will be expensed in 2024 until vesting date. Under the bonus letter the employees have option to receive cash by selling the shares at a pre- determined fixed price. The Company estimate that all employees will opt to place the shares for cash once the vesting period ended.

 

 

19.       Treasury Shares

 

		2023		2022
		Amount €'000	Number ('000)	Amount €'000	Number ('000)
Opening balance		(4,859)	(1,053)	(4,917)	(1,053)
Dividend on treasury shares held by a subsidiary		62	-	58	-
Closing balance		(4,797)	(1,053)	(4,859)	(1,053)

 

The Company has 838,118 shares in treasury, and further 214,822 shares are held by one of the subsidiaries.

 

20.       Goodwill

	2023	2022
	€'000	€'000
Balance at 31 December	12,039	12,349

 

 

In 2023 the Group has derecognised of €0.3 million related to a sale of a land plot during 2023 (note 3.5) related to deferred tax liability arise from business combination at initial acquisition in 2014. The charge is recorded within loss on disposal of subsidiary in the statement of profit or loss.

 

 

21.       Investment in Joint Ventures

 

Investments	31-Dec-23 €'000	31-Dec-22 €'000
Opening balance	20,643	16,917
Investments in the joint ventures	1,660	507
Share of profit during the year	2,063	3,219
Equity investment in joint venture	24,366	20,643
Opening balance	47,324	31,991
Loan provided to the joint ventures	10,840	28,033
Loan repayments from the joint ventures	(13,893)	(13,429)
Interest repayment from the joint ventures	(614)	(797)
Interest income on the loans to joint ventures	2,075	1,526
Loans receivable from joint ventures	45,732	47,324
TOTAL	70,098	67,967

 

In April 2019, the Group's subsidiary, Globalworth Holdings Cyprus Limited, entered into a joint venture agreement with Bucharest Logistic Park SRL, through which it acquired a 50% shareholding interest (€0.09 million investment) in Global Logistics Chitila SRL ("Chitila Logistics Hub"), an unlisted company in Romania, owning land for further development, at the acquisition date, in Chitila, Romania.

In June 2019, the Group's subsidiary, Globalworth Holdings Cyprus Limited, entered into a joint venture agreement with Mr. Sorin Preda through which it acquired a 50% shareholding interest (€6.36 million investment) in Black Sea Vision SRL ("Constanta Business Park"), an unlisted company in Romania, owning land for further development, at acquisition date, in Constanta, Romania.

In September 2022, the Group's subsidiary, Globalworth Holdings Cyprus Limited, entered into a joint venture agreement with Global Vision Business Development SRL through which it acquired a 50% shareholding interest (€0.07 million investment) in Targu Mures Logistics Hub SRL ("Targu Mures Logistics Hub"), an unlisted company in Romania, owning land for further development, at acquisition date, in Mures, Romania.

As at 31 December 2023 and 31 December 2022 the investment properties owned by the joint ventures entities was classified as an industrial segment for the Group.

 

22.             Investment in Subsidiaries

Key Judgements and Assumptions Used in Determining the Control Over an Entity:

·      Power over the investee (i.e. existing rights, directly or indirectly, in the investee that gives it the current ability to direct the relevant activities of the investee). If the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including the contractual arrangement with the other vote holders of the investee, rights arising from other contractual arrangements and the Group's voting rights and potential voting rights.

·      Exposure, or rights, to variable returns from its involvement with the investee.

·      The ability to use its power over the investee to affect its returns (such as the appointment of an administrator or director in the subsidiary or investee).

Details on all direct and indirect subsidiaries of the Company, over which the Group has control and consolidated as of 31 December 2023 and 31 December 2022, are disclosed in the table below. The Group did not have any restrictions (statutory, contractual or regulatory) on its ability to transfer cash or other assets (or settle liabilities) between the entities within the Group.

As of 31 December 2023, the Group consolidated the following subsidiaries, being holding companies, as principal activities.

 

		31 December 2023	31 December 2022
Subsidiary	Note	Shareholding interest (%)	Shareholding interest (%)	Place of incorporation
Globalworth Investment Advisers Limited		100	100	Guernsey, Channel Islands
Globalworth Holdings Cyprus Limited
Zaggatti Holdings Limited
Tisarra Holdings Limited
Ramoro Limited
Vaniasa Holdings Limited
Serana Holdings Limited
Kusanda Holdings Limited		100	100	Cyprus
Kifeni Investments Limited
Casalia Holdings Limited
Pieranu Enterprises Limited
Oystermouth Holding Limited
Minory Investments Limited
Globalworth Tech Limited
IB 14 Fundusz Inwestycyjny Zamkniety Aktywow Niepublicznych		100	100	Poland

 

Key Judgements and Assumptions Used in Determining the Control Over an Entity continued

As of 31 December 2023, the Group consolidated the following subsidiaries, which own real estate assets in Romania and Poland, being asset holding companies as their principal activities, except for Globalworth Building Management SRL, GPRE Property Management Sp. z o.o. and GPRE Management Sp. z o.o. with building management activities in Romania and Poland, and Fundatia Globalworth in Romania non-profit organisations with corporate social responsibility activities

 

		31 December 2023	31 December 2022
Subsidiary	Note	Shareholding interest (%)	Shareholding interest (%)	Place of incorporation
Aserat Properties SRL
BOB Development SRL
BOC Real Property SRL
Corinthian Five SRL
Corinthian Tower SRL
Corinthian Twin Tower SRL
Elgan Automotive SRL
Elgan Offices SRL
Globalworth Asset Managers SRL
Globalworth Building Management SRL			100	Romania
Globalworth EXPO SRL
SPC Beta Property Development Company SRL
SPC Epsilon Property Development Company SRL
SPC Gamma Property Development Company SRL
Netron Investment SRL
SEE Exclusive Development SRL
Tower Center International SRL
Upground Estates SRL
Fundatia Globalworth
Industrial Park West SRL
Otopeni Logistics Hub SRL
West Logistics Hub SRL
Nord 50 Herastrau Premium SRL	3.5	-	100	Romania
North Logistics Hub SRL		75	75	Romania
Logistics Hub Chitila SRL		75	75	Romania
DH Supersam Katowice Sp. z o.o.
Hala Koszyki Sp. z o.o
Dolfia Sp. z o.o.
Ebgaron Sp. z o.o.
Bakalion Sp. z o.o.
Centren Sp. z o.o.,
Tryton Business Park Sp. z o.o.
GPRE Management Sp. z o.o.
GPRE Property Management Sp. z o.o.
Lima sp. z o.o
A4 Business Park Sp. z o.o.
West Link Sp. z o.o.
Lamantia Sp. z o.o.
Dom Handlowy Renoma Sp. z o.o.
Nordic Park Offices Sp. z o.o.
Warta Tower Sp. z o.o.
Quattro Business Park Sp. z o.o.
West Gate Sp. z o.o.		100	100	Poland
Gold Project Sp. z o.o.
Spektrum Tower Sp. z o.o.
Warsaw Trade Tower 2 Sp. z o.o.
Rondo Business Park Sp. z o.o.
Artigo Sp. z o.o.
Ingadi Sp. z o.o.
Imbali Sp. z o.o.
Kusini Sp. z o.o.
Podium Park Sp. z o.o.
Fundacja Globalworth
GW Tech sp. z o.o.		100	-	Poland

 

22.          Changes in Group Structure

22.1        Subsidiaries Under Liquidation Process

•           The following companies are dormant and have applied for voluntary liquation during 2020: Zaggatti Holdings Limited, Kifeni Investments Limited, Casalia Holdings Limited, Oystermouth Holding Limited, Pieranu Enterprises Limited, Ramoro Limited and Vaniasa Holdings Limited.

•           Fundacja Globalworth w likwidacji was liquidated on 2 November 2023 and subsequently was struck off from the Registrar of Companies in Poland on 12 February 2024.

22.2        New Subsidiaries

•              GW Tech z o.o was incorporated on 7 September 2023, with 100% effective interest, having services as principal activity.

•              In February 2024 Belfield sp. z o.o an empty SPV bought for €3,000 as a new service company.      

 

23.       Segmental Information

The Board of Directors is of the opinion that the Group is engaged mainly in real estate business, comprising offices, mixed-use, industrial and residential investment properties segments and property management services, in two geographical areas, Romania and Poland.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers. The chief operating decision-makers who are responsible for allocating resources and assessing the performance of the operating segments have been identified as the Executive Directors.

The Group earns revenue and holds non-current assets (investment properties) in Romania and Poland, the geographical area of its operations. For investment property, discrete financial information is provided on a property-by-property basis (including those under construction or refurbishment) to members of Executive Management, which collectively comprise the Executive Directors of the Group. The information provided is Net Operating Income ("NOI", i.e. gross rental income less property expenses) on a quarterly basis and valuation gains/losses from property valuation at each semi-annual basis. The individual properties are aggregated into office, mixed-use, industrial and residential segments.

The industrial property segment and head office segments are presented on a collective basis as Others in the table on the next page since their individual assets, revenue and absolute profit (or loss) are below 10% of all combined total asset, total revenue and total absolute profit (or loss) of all segments. All other segments are disclosed separately as these meet the quantitative threshold of IFRS 8.

Consequently, the Group is considered to have four reportable operating segments: the offices segment (acquires, develops, leases and manages offices and spaces), the residential segment (builds, acquires, develops and leases apartments), mixed-use and the other segment (acquires, develops, leases and manages industrial spaces and corporate office).

Share-based payments expense is not allocated to individual segments as underlying instruments are managed at the Group level. Segment assets and liabilities reported to Executive Management on a segmental basis are set out below

 

			2023
	Office	Mixed-use	Residential	Other	Inter- segment eliminations	Total
	€'000	€'000	€'000	€'000	€'000	€'000
Rental income - Total	132,932	12,387	1,472	13,861	(287)	160,365
Romania	67,675	-	1,472	13,861	(281)	82,727
Poland	65,257	12,387	-	-	(6)	77,638
Revenue from contract with customers - Total	68,844	8,104	760	5,668	(3,312)	80,064
Romania	37,046	-	760	5,668	(1,007)	42,467
Poland	31,798	8,104	-	-	(2,305)	37,597
Revenue - Total	201,776	20,491	2,232	19,529	(3,599)	240,429
Operating expenses	(77,704)	(9,660)	(886)	(6,247)	1,026	(93,471)
Segment NOI	124,072	10,831	1,346	13,282	(2,573)	146,958
NOI - Romania	64,086	-	1,346	13,503	(1,039)	77,896
NOI - Poland	59,765	10,831	-	-	(1,534)	69,062
Administrative expenses	(11,275)	(1,023)	(45)	(3,605)	-	(15,948)
Acquisition costs
Fair value loss on investment property	(164,329)	(3,025)	292	2,154		(164,908)
Depreciation and amortisation expense	(546)	(1)	(15)	(26)		(588)
Other expenses*	(2,511)	(184)	(107)	(114)		(2,916)
Other income	40	2,059	-	-	(43)	2,056
Loss on disposal of subsidiary	-	-	-	(474)		(474)
Profit on disposal of investment property	9,579	-	-	-		9,579
Foreign exchange gain/(loss)	(740)	(393)	(10)	(390)		(1,533)
Segment result	(45,931)	8,264	1,461	11,048	(2,616)	(27,774)
Finance cost	(13,396)	(855)	(1)	(42,894)	-	(57,146)
Finance income	3,339	122	66	19,693	-	23,220
Share-based payment expense	-	-	-	(502)		(502)
Loss from fair value of financial instruments	(85)	-	-	(1,308)		(1,393)
Share of profit of equity-accounted investments in joint ventures	-	-	-	2,063		2,063
Profit before tax	(56,073)	7,531	1,526	(11,900)	(2,616)	(61,532)

*  Other expenses include a loss on sale of non-core investment property (apartments) and other one-off expenses.

 

			2022
	Office	Mixed-use		Residential	Other		Inter- segment eliminations	Total
	€'000	€'000		€'000	€'000		€'000	€'000
Rental income - Total	127,028	10,503		1,623	11,137		(464)	149,827
Romania	61,459	-		1,623	11,137		(300)	73,919
Poland	65,569	10,503		-	-		(164)	75,908
Revenue from contract with customers - Total	73,455	7,747		764	10,405		(2,947)	89,424
Romania	32,891	-		764	10,405		(771)	43,289
Poland	40,564	7,747		-	-		(2,176)	46,135
Revenue - Total	200,483	18,250		2,387	21,542		(3,411)	239,251
Operating expenses	(78,926)	(9,529)		(957)	(10,991)		832	(99,571)
Segment NOI	121,557	8,721		1,430	10,551		(2,579)	139,680
NOI - Romania	58,390	-		1,430	10,551		(976)	69,395
NOI - Poland	63,167	8,721		-	-		(1,603)	70,285
Administrative expenses	(9,329)	(405)		(53)	(3,925)		-	(13,712)
Acquisition costs	-	-		-	(7)		-	(7)
Fair value loss on investment property	(81,549)	(21,379)		1,062	12,395		-	(89,471)
Depreciation and amortisation expense	(628)	-		(17)	(28)		-	(673)
Other expenses*	(198)	36		(1,851)*	-		-	(2,013)
Other income	515	29		1	8		(29)	524
Loss on disposal of subsidiary
Profit on disposal of investment property
Foreign exchange gain/(loss)	755	85		24	(13)		-	851
Segment result	31,123	(12,913)		596	18,981		(2,608)	35,179
Finance cost	(9,923)	(409)		(3)	(42,197)		-	(52,532)
Finance income	1,016	4		81	1,593		-	2,694
Share-based payment expense	-	-		-	-		-	-
Loss from fair value of financial instruments	222	-		-	-		-	222
Share of profit of equity-accounted investments in joint ventures	-	-		-	3,219		-	3,219
Profit before tax	22,438	(13,318)		674	(18,404)		(2,608)	(11,218)

*  Other expenses include a loss on sale of non-core investment property (apartments) and other one-off expenses.

 

				2023
		Office	Mixed-use	Residential	Other	Inter segment eliminations	Total
Segments		€'000	€'000	€'000	€'000	€'000	€'000
Segment non-current assets		2,301,312	288,822	46,493	208,974	(2,516)	2,843,085
Romania		1,136,100	-	46,493	208,974	(639)	1,390,928
Poland		1,165,212	288,822	-	-	(1,877)	1,452,157
Assets held for sale		50,352	-	-	-		50,352
Total assets		2,874,424	299,917	47,935	226,045	(3,147)	3,445,174
Total liabilities		705,685	79,421	3,793	1,054,244	(504)	1,842,639
Additions to non-current assets
- Romania		17,898	-	(23)	5,396		23,271
- Poland		23,911	12,085				35,996

 

				2022
		Office	Mixed-use	Residential	Other	Inter segment eliminations	Total
Segments		€'000	€'000	€'000	€'000	€'000	€'000
Segment non-current assets		2,414,875	279,612	53,067	199,930	(2,024)	2,945,460
Romania		1,200,703	-	53,067	199,930	(395)	1,453,305
Poland		1,214,172	279,612	-	-	(1,629)	1,492,155
Assets held for sale		126,009	-	-	-	-	126,009
Total assets		2,812,401	289,743	56,821	212,445	(2,547)	3,368,863
Total liabilities		557,192	23,334	3,983	1,113,450	(406)	1,697,553
Additions to non-current assets
- Romania		15,377	-	74	21,204	-	36,655
- Poland		27,651	13,348	-	-	-	40,999

 

24.             Transactions with Related Parties

The Group's immediate parent is Zakiono Enterprises Limited (2023: 60.8%), a wholly owned subsidiary of Tevat Limited. Tevat Limited is jointly owned by Aroundtown SA (indirectly) and CPI Property Group S.A. The Group's related parties are Aroundtown SA and CPI Property Group S.A, the Company's joint ventures, the Company's Executive and Non-Executive Directors, key other Executives, as well as all the companies controlled by them or under their joint control, or under significant influence. The related party transactions are set out in the table below:

 

		Income statement		Statement of financial position
		2023	2022	2023	2022
Name	Nature of transactions/balances amounts	€'000	€'000	€'000	€'000
Global Logistics Chitila SRL	Shareholder loan receivable	-	-	26,383	25,138
(50% Joint Venture)	Finance income	885	1,003	-	-
	Office rent	12	12	-	-
	Asset management fees	62	41	-	-
Black Sea Vision SRL	Shareholder loan receivable	-	-	11,346	14,209
(50% Joint Venture)	Finance income	505	451	-	-
	Office rent	12	12	-	-
	Asset management fees	52	24	-	-
Targu Mures Logistics Hub SRL	Shareholder loan receivable	-	-	8,004	7,976
(50% Joint Venture)	Finance income	700	77	-	-
	Office rent	6	1	-	-
	Asset management fees	9	-	-	-
Mr. Dimitris Raptis (Chief Executive Officer until 31 Dec. 2022)	Rent revenue	-	2	-	-
Mr. Adrian Danoiu (Chief Operating Officer until March 2024)	Revenue from sale of residential property	-	400	-	-

 

25.       New and Amended Standards

Starting from 1 January 2023 the Group adopted the following new and amended standards and interpretations. The new standards and amendments had no significant impact on the Group's financial position and performance.

 

	Effective Date
Narrow scope amendments and new Standards	(EU endorsement)
Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (issued on 23 May 2023)	Jan-23
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information	Jan-23
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction	Jan-23
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies	Jan-23
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates	Jan-23

 

For other standards issued but not yet effective and not early adopted by the Group, management believes that there will be no significant impact on the Group's consolidated financial statements.

	Effective Date
Narrow scope amendments and new Standards	(EU endorsement)
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023)	Jan-25
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (issued on 25 May 2023)	Jan-25
Amendments to IAS 1 Presentation of Financial Statements: • Classification of Liabilities as Current or Non-current (issued on 23 January 2020); • Classification of Liabilities as Current or Non-current - Deferral of Effective Date (issued on 15 July 2020); and Non-current Liabilities with Covenants (issued on 31 October 2022)	Jan-25
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022)	Jan-25

 

26.       Contingencies

Taxation

All amounts due to State authorities for taxes have been paid or accrued at the balance sheet date. There might be inconsistent interpretations of the tax law and frequent changes of tax law which creates unpredictability and may trigger the risk of additional taxes and penalties. Where the State authorities have findings from tax audits relating to misinterpretation of tax laws, and related regulations, these may result in confiscation of the amounts in case; additional tax liabilities are payable; fines and penalties (that are applied on the total outstanding amount). As a result, the fiscal penalties resulting from misinterpretation of the legal provisions may result in a significant amount payable to the State. The Group believes that it has paid in due time and in full all applicable taxes, penalties and penalty interests in the applicable extent.

 

Transfer Pricing

According to applicable relevant tax legislation in Cyprus, Romania and Poland, the tax assessment of related party transactions is based on the concept of market value for the respective transfers. Following this concept, the prices applicable for intra-group transactions reflect the market value that would have been set between unrelated companies acting independently (i.e. based on the "arm's length principle"). It is likely that transfer pricing reviews will be undertaken in the future to assess whether the transfer pricing policy observes the "arm's length principle".

 

Legal Proceedings

In recent years the Romanian State Authorities have initiated reviews of real estate restitution processes and in some cases commenced legal procedures where it has considered that the restitution was not performed in accordance with applicable legislation. The Group is involved in one such case, which is currently at a very early stage and may take a very long time to be concluded, and management believes that the risk of any significant loss occurring in future is remote.