Audited condensed consolidated financial results for the year to 30 June 2022 and changes to the board of directors
MAS P.L.C.
Registered in Malta
Registration number: C99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
(MAS, the Company or the Group)
SHORT-FORM ANNOUNCEMENT: AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR TO 30 JUNE 2022 AND CHANGES TO THE BOARD OF DIRECTORS
INTRODUCTION AND BACKGROUND
MAS (hereafter referred to as the Group or Company) continued performing very well during the second half of the financial year ended
30 June 2022, achieving adjusted total earnings of EUR76.7million. Adjusted total earnings for the entire financial year were EUR168.1million.
The Group achieved adjusted distributable earnings per share for the year of 6.83eurocents per share (15.2% above adjusted distributable
earnings per share for the previous financial year) and is on track to achieve its strategic objectives set until end of the 2026 financial year.
The Group’s financial results and progress with strategic matters are discussed within.
In addition to the reported International Financial Reporting Standards (IFRS) results, this commentary also includes segmental reporting
prepared on a proportionate consolidated basis, which assists the interpretation of the former rather than replacing it. Detailed financial
results and Company Profile, updated on 30 June 2022, including highlights and supplemental operational information, are available on MAS’
corporate website. Unless otherwise stated, all amounts are presented on an adjusted proportionate consolidated basis.
MAS’ primary business is the investment in, and operation of, retail assets in Central and Eastern Europe (CEE). The Group, with its
approximately 230 real estate professionals, is well positioned to leverage the region’s continual high consumption growth and generate
strong like-for-like (LFL) net rental income (NRI) growth from retail holdings by increasing tenants’ sales and implementing asset
management initiatives. MAS benefits from downside-protected exposure to retail and residential developments via the development joint
venture (DJV)(1) with developer Prime Kapital.
On 30 June 2022, MAS’ shareholders approved two transactions between MAS and the DJV, namely (i) to acquire 100% of the share capital
and shareholder loans for six subsidiaries of PKM Development Limited (the DJV), owning six Romanian commercial centres (the Acquisition),
and (ii) to extend the duration of the relationship with Prime Kapital via the DJV and to increase MAS’ funding commitment to the DJV (the
Extension, and collectively, the Transactions). The Transactions are effective on 30 June 2022, and, as such, relevant outcomes are included
in MAS’ year-end financial results.
FINANCIAL RESULTS
Group adjusted total earnings are, on a segmented basis, the combined return of: (i) directly-owned income property and operations in CEE;
(ii) Central and Eastern European investments with Prime Kapital in the DJV (including earnings from a proportion of completed DJV-owned
income properties, net results on residential sales and development activities); (iii) remaining directly-owned income property operations in
Western Europe (WE), and (iv) investments in listed securities (including other elements disclosed as Corporate).
Adjusted total earnings for the six months to 30 June 2022 were EUR76.7million and consist of adjusted distributable earnings of EUR26.1million
and adjusted non-distributable earnings of EUR50.6million. Tangible net asset value (NAV) is EUR1.40 per share on 30 June 2022, an increase of
6.9% from 31 December 2021 and 12.9% compared to the end of the previous financial year (30 June 2021). Adjusted distributable earnings
for the financial year is 6.83eurocents per share and resulted from 3.87eurocents per share for the six months to 30 June 2022, (4.6% above
the guidance provided March 2022), and 2.96eurocents per share for the preceding six months.
Variance in MAS’ adjusted total earnings compared to the preceding six months (to 31 December 2021), is mostly due to positive outcomes
generated by:
(i) persistent exceptional performance of, and increase in, NRI from retail properties in CEE, high rental and service charge collections and
excellent trading achieved at commercial developments completed by the DJV during the first six months of the financial year (Barlad
Value Centre and Prahova Value Centre);
(ii) improvements in Central and Eastern European asset valuations due to previous point and valuation discount rates reverting to pre-
Covid-19 levels;
(iii) completed first deliveries of finalised residential units at Marmura Residence, and
(iv) increases in dividends from MAS’ listed securities following additional investments in the current period and previous six months,
offsetting the negative impact of Western European asset sales on NRI.
These positives have been partially offset by unfavourable variances in earnings, mainly due to (i) significant earnings in the previous period,
and resulting from a reduction in management’s estimate for disposal realisation costs and losses for Western European assets remaining
to be sold, not being repeated, and (ii) (unrealised) decrease in value of the Group’s listed securities, which was caused by macroeconomic
uncertainty affecting European markets and listed real estate share prices.
OPERATIONS
Information regarding MAS’ Central and Eastern European gross leasable area (GLA) affected by restrictions, LFL footfall (compared to
2019), LFL tenants’ sales (compared to 2019), income entitlements (including invoicing, waivers and deferrals), collection rates (collections
compared to invoicing) and pro forma collection rates (compared to the total expected income disregarding Covid-19’s impact) for the six
months to 30 June 2022, is detailed in Table 1. Information regarding tenants’ sales in new properties that became operational after the first
six months of 2019 is detailed with reference to weighted average tenants’ sales in similar types of properties, in Table 2. All figures were
reported on 18 August 2022.
Table 1
Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Total
Open GLA(2) % 9 24 85 100 100 100 70
Restricted GLA(3) % 91 76 15 – – – 30
Closed GLA(4) % – – – – – – –
Footfall (2022 compared to 2019) % 78 82 95 104 105 97 94
Open-air malls % 89 91 97 110 109 102 100
Enclosed malls % 68 72 92 98 100 91 87
Tenants’ sales per m2 (2022 compared to 2019) % 103 107 111 125 129 113 115
Open-air malls % 109 113 113 126 125 115 117
Enclosed malls % 93 97 108 123 133 110 112
Total pre-pandemic income expectation EURm 4.5 4.5 4.6 4.6 4.6 4.6 27.4
Income waived, deferred, or suspended EURm 0.1 0.1 – – – – 0.2
Due income (invoiced) EURm 4.4 4.4 4.6 4.6 4.6 4.6 27.2
Collection rate % 100 100 99 99 100 99 99
Pro forma collection rate % 98 98 99 99 100 99 99
Table 2
Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Total
Tenants’ sales per m2 (2022 compared to weighted % 122 124 127 141 130 116 127
average sales for similar properties in 2019)
Open-air malls % 117 118 123 135 132 120 125
Enclosed malls % 133 137 138 162 130 113 135
For the first six months of the 2022 calendar year, trading in the Group’s Central and Eastern European countries was exceptional. After all
restrictions were removed by Romanian and Bulgarian authorities in March 2022, footfall and tenant sales improved significantly.
Footfall in CEE was satisfactory for the second half of the financial year, especially once restrictions were lifted, with open-air malls
consistently performing better than the same period in 2019. The trend observed in previous periods continued, as open-air malls achieved
pre-pandemic levels (the same period in 2019), as compared to enclosed malls (13% decrease).
Tenants’ sales on a LFL basis have continued to comfortably exceed pre-pandemic levels up to March, prior to pandemic restrictions being
lifted. In April and May, once restrictions were lifted, LFL sales in both open-air and enclosed malls substantially accelerated, with strong
performance continuing in June. Overall, tenants’ sales outperformed prepandemic levels by 17% in open-air malls and 12% in enclosed malls.
Most categories performed admirably, reflecting overall growth trend, with some tenants achieving all-time record sales at stores within
assets the Group operates. Food service, health and beauty, complements, DIY, pet shops and toys have had a notable outperformance.
Leisure and specialist tenants’ sales have still not returned to pre-pandemic levels, despite improving sales after March.
Tenants’ sales in the Group’s newer assets, that became operational after the first half of 2019 calendar year, have performed exceptionally
during the six months, and have outperformed pre-pandemic levels in both open-air malls (25% increase) and enclosed malls (35% increase)
compared to tenants’ sales in similar assets that were operational in the same period of 2019.
Pro forma collection rates were excellent throughout the six-month period, achieving pre-pandemic levels of 99% despite restrictions in the
first two months of the 2022 calendar year.
Occupancy cost ratios (excluding certain tenant categories: supermarkets, DIY stores, entertainment and services) up to 30 June 2022
remained healthy, at 11.1% and improved over the figure on 31 December 2021 (11.3%), despite higher absolute occupancy costs due to
increased rentals and service charges.
Leasing and ongoing asset management initiatives are progressing well, aimed at achieving MAS’ strategic asset management targets by the
end of the 2026 financial year. Consequently, occupancy of Central and Eastern European assets increased to 96.3% on 30 June 2022 (95.3%
on 31 December 2021). Passing NRI increased by 4.7% during the second half of the financial year and by 13.6% on a year-on-year basis. This
is partly attributable to higher rent indexation due to Euro inflation, as well as rental from overage. MAS’ properties benefit from Euro-based,
triple-net, leases, with full Euro indexation to base (minimum) rents and turnover clauses. As a result, MAS can fully pass indexation to
tenants, which are expected to comfortably absorb higher rents, as occupancy cost ratios are expected to remain healthy due to continued
robust tenants’ sales.
In WE, operations, including collections were consistent with the six months to 31 December 2021.
PROPERTY VALUATIONS
Valuation of MAS’ (and the DJV’s) properties is determined biannually by external, independent professional valuers, with appropriate,
recognised qualifications and recent experience in the relevant location and category of property. Valuations are primarily based on
discounted forecast cash flows and are therefore forward-looking.
The income property fair value uplift of EUR63.8million was due to positive fair value adjustments to income property in CEE of EUR66.8million (an
improvement of 11.5% compared to the independent valuations on 31 December 2021 and 19.3% compared to June 2021) and a decrease of
EUR3.0million in WE (a decrease of 3.4% compared to valuations on 31 December 2021, which was mainly driven by an increase in the valuation
discount rate used for Flensburg Galerie, as well as the negative impact of foreign exchange rates regarding UK assets held for sale).
Valuation uplift of assets in CEE was primarily the result of (i) LFL passing NRI increases of 4.7% since December 2021 due to strong
operational metrics following the lifting of all Covid-19 restrictions March 2022, and (ii) valuation discount rates reverting to pre-pandemic
levels. Valuation discount rates had been subject to a risk premium of approximately 75 basis points at the pandemic’s onset, which was
partly eliminated by external valuers in the second half of the 2021 calendar year. For most properties, the remaining pandemic-related
risk premium was eliminated once all restrictions had been lifted, based on evidence that footfall was returning to pre-pandemic levels and
tenants’ turnovers were reverting to pre-pandemic growth trends. The weighted average unlevered discount rate for income property in
CEE decreased from 10.01% to 9.71% compared to valuations for the six months to 31 December 2021 (and from 10.17% on 30 June 2021).
Indicators regarding property valuations for the six assets acquired by MAS from the DJV are presented on a comparable basis.
ASSET SALES IN WE
MAS’ remaining Western European assets held for sale are Flensburg Galerie (Germany), Arches street retail units and Langley Park (UK).
These assets had a combined book value of EUR78.5million with EUR34.1million secured bank debt outstanding on 30 June 2022.
MAS has contracted the disposal of the development land at Langley Park for GBP20.2million to a local property developer, Vistry Partnerships
Limited, subject to the receipt of planning consent for the developer’s envisaged project. This is expected to be received by 31 December
2022, with proceeds payable in two instalments (approximately half on receipt of the planning consent, with the balance payable on the first
anniversary of the transaction’s closing date). Flensburg Galerie, where asset management initiatives are progressing well, and the Arches
street retail units are planned to be disposed of in competitive sales processes commencing September 2022.
Valuations of income properties held for sale in WE on 30 June 2022 have further decreased, as has management’s estimate of expected
sales proceeds. Management’s estimation for Western European disposal realisation costs and losses of EUR4.2millon on 30 June 2022 has not
significantly changed compared to 31 December 2021, as it is expected that the positive result on sale of Langley Park will be offset by net
losses incurred on sale of other assets in WE. The estimate had been re-assessed from EUR27.1million on 30 June 2021, to EUR3.9million on
31 December 2021, following the successful results of sales completed in the first six months of the financial year, as well as progress with asset
management initiatives implemented at Flensburg Galerie (aimed at protecting shareholder value and preparing the asset for disposal), and
expecting that remaining assets will be disposed of at book value. Management’s current estimation accounts for the expected result on
sales, punitive fixed-interest arrangements on secured debt, early bank debt repayment penalties, agency fees and other related costs to be
incurred in completing the sales processes for the remaining assets held for sale.
RESIDENTIAL SALES
By 30 June 2022, the DJV handed over to clients 308 units at Marmura Residence, resulting in EUR3million net profits on residential sales
included in MAS’ adjusted distributable earnings for the six months. This represents 93% of units sold in the project’s first four buildings.
LISTED SECURITIES AND MAS SHARE REPURCHASES
On 30 June 2022, MAS held listed securities, shares in NEPI Rockcastle S.A. (NRP), to the value of EUR97.7million. MAS holds 19,078,242 shares
in NRP, of which 13,207,375 were acquired during the six months to 31 December 2021. Total adjusted returns during the six months to 30
June 2022 on this investment, of which EUR4.3million represent accrued dividend returns for the period and EUR15.2million unrealised fair value
losses, have been negatively impacted by macroeconomic uncertainty affecting European listed real estate companies’ share prices. MAS
continues to expect its investment, at the average price of EUR5.58 per share, to generate total annual returns ranging between 10% and 12%
by 2026.
In May and June 2022, MAS repurchased 16,586,906 of its issued shares via one of its subsidiaries, at a weighted average share price of EUR1.21
per share, pursuant to the Company’s general authority to repurchase shares.
DEVELOPMENTS, EXTENSIONS AND REFURBISHMENTS IN THE DJV
New development projects, with an estimated total cost of EUR280.6million, have been secured in Romania, increasing the DJV’s secured
estimated commercial and residential development pipelines to EUR776million and EUR1,194.3million, respectively, at cost (figures not
proportionally consolidated). Progress with developments and additions to secured pipeline are detailed below.
Commercial developments
Construction of Alba Iulia Mall continues. As a consequence of delays caused by third parties in relocation of high voltage electricity lines
passing over the property, the project’s planned opening, previously scheduled in December 2022, is estimated for September 2023. Leasing
is progressing well, with over 80% of the project’s total 28,900m2 GLA currently leased to national and international tenants.
Construction of Mall Moldova, extending and redeveloping Era Shopping Centre (29,600m2 GLA) into a super-regional enclosed mall and
retail node incorporating approximately 101,300m2 of destination GLA, is scheduled to begin in November 2022. Leasing is ongoing with
outstanding interest from national and international tenants.
Construction and leasing for the first phase of the Silk District office and permitting for the following two phases are progressing well.
Construction and leasing are on track at Baia Mare Value Centre and Roman Value Centre extensions, which are scheduled to become
operational in October and December 2022, respectively. Permitting and leasing for the extension to Slobozia Value Centre is ongoing.
Permitting of Arges Mall and related bridge access infrastructure is complete and, after finalising relocation and demolition works,
construction is scheduled to start February 2023. Leasing continues with national and international tenants showing significant interest.
Zoning is progressing for the DJV’s commercial projects in Bucharest (28,000m2 GLA open-air mall component on a 54ha of a former
industrial platform, where a mixed-use urban regeneration project is planned), Brasov (19,800m2 GLA open-air mall) and Cluj (73,300m2
GLA enclosed mall and 49,200m2 GLA office components on a 17ha land plot where the DJV plans a large-scale mixed-use project urban
regeneration project).
Residential developments
At Marmura Residence, the DJV’s first completed residential project, handover was performed for 308 units (67%) in the first four buildings
of the project’s total five buildings comprising 458 units, by 30 June 2022. Construction on the fifth building is substantially complete and
handover will commence soon.
Construction and sales continue for approximately half of the development comprising 746 dwellings on the Avalon Estate residential project.
To date, 70% of the 352 residential units currently released for sale have been sold. Construction and finishing works on the first buildings
are complete, the sales office has been operational in the project’s gatehouse since March 2022 and fit-out commenced on four show units.
Construction of the first phase of Silk District’s residential component (315 units; 71% sold) is progressing well. Permitting for the second
phase (346 units; 48% sold) has been obtained and it is ongoing in respect of the third phase (312 units; 25% reserved).
Permitting for the first phase of Pleiades Residence (142 units in two of the seven buildings planned in the residential component of the
10.1ha mixed use urban regeneration in downtown Ploiesti) has completed and construction works have commenced. Rezoning of the
remaining land for the following stages of development is ongoing in parallel with permitting for the planned extension on Prahova Value
Centre, the 21,700m2 GLA open-air mall component of the project. Sales (launched in December 2021) are progressing well with 22.5% of the
apartments in the first phase contracted to date.
Zoning is progressing for Roman Residential (2,137 apartments in Brasov) and Elba Residential (1,251 apartments in Timisoara) as well
as for the residential components of the large-scale mixed-use projects mentioned above in Bucharest (3,149 apartments) and Cluj
(1,461 apartments).
New pipeline
A 6.9ha site was secured in south-eastern Timisoara, Romania, in an area being converted from industrial to retail and residential, for the
DJV’s second large-scale residential development in the city. It will consist of approximately 2,300 apartments and support functions.
Romania’s third largest city, Timisoara’s fundamentals are strong and suitable for multiple quality residential developments. Timisoara’s
current residential stock is low in terms of average living area per capita. Existing stock and planned or ongoing residential developments are
generally of poor quality. The project is well positioned, between two main boulevards, with excellent public transport connectivity to the city
centre, and within a 15-minute drive of the city’s office hubs, historical centre and main shopping destinations.
The DJV has secured land and is currently undergoing due diligence for a large-scale enclosed residential estate of approximately 920
apartments, in a major secondary city in Romania. Further details will be provided in due course.
In addition to the above, the DJV has secured an approximately 5.9ha site in Giurgiu, Romania, on the European Route E85 to Bucharest,
a major freight and leisure road transport artery, connecting Romania to Bulgaria, Greece and Turkey. Based on annual river traffic on the
Danube River, Giurgiu is one of Romania’s largest harbour cities. The site has an excellent location adjacent to Giurgiu’s border with Bulgaria
and good visibility from the city centre. It is earmarked for an approximately 14,200m2 GLA open-air shopping centre, with potential for
an additional 4,300m2 GLA extension. The project’s catchment area includes approximately 110,000 residents within a 30-minute drive.
EXTENSIONS AND REFURBISHMENTS TO DIRECTLY-OWNED ASSETS
The extension to Galleria Burgas was reconsidered and the centre will undergo a major refurbishment instead, including a reconfiguration of
the food court, to improve the leisure and entertainment facilities and triple the existing food court’s seating capacity. This will rejuvenate the
centre and enhance its attractivity to the 479,000 residents within a 60-minute drive, as well as position it as one of the main entertainment
attractions for Burgas’ 3million annual tourists.
Further updates regarding the leisure and entertainment extensions at Prahova Value Centre (5,700 m2) and Barlad Value Centre (1,300 m2
GLA), both centres recently acquired by MAS (with the Acquisition), as well as re-assessed, previously planned, extension projects at Nova
Park and Militari Shopping will be provided in due course.
DEBT, COST OF DEBT AND LIQUIDITY
On 30 June 2022, MAS had EUR202million in cash, listed securities and undrawn credit facilities (figure not proportionally consolidated), net of
its EUR89.8million cash payment obligation to be settled after the financial year end in respect of the Acquisition. Further to the Acquisition’s
completion, on 30 June 2022, the Group has an ongoing undrawn preferred equity investment commitment of EUR233.9million to the DJV, as
well as a EUR30million undrawn committed revolving facility to the DJV (figures not proportionally consolidated).
Interest rates on MAS’ debt are hedged, except for its undrawn revolving credit facility. MAS’ secured debt (in respect of Flensburg Galerie)
carries a fixed interest rate, and the bond carries a 4.25% fixed coupon, therefore neither would be impacted by rising variable rates. Secured
debt on properties acquired from the DJV effective 30 June 2022, carries an attractive weighted average annual interest of 3-month EURIBOR
plus a margin of approximately 3.3% and is fully hedged via interest rate caps until end of 2028 financial year.
On 30 June 2022, the Group’s bond and unsecured facility ratios demonstrated significant headroom compared to covenant tolerances, on
both IFRS and proportionate consolidation bases.
Tolerance Actual IFRS Actual proportionate consolidated basis
Solvency ratio Shall not exceed 0.6 0.30 0.29
Consolidated coverage ratio At least 2.5:1 3.46 3.70
Unencumbered consolidated total assets/
unsecured consolidated total debt Minimum 180% 379% 407%
The self-imposed, long-term Group overall debt limit, which is considerably more restrictive than its covenant tolerances, is a maximum loan-
to-value (LTV) ratio of 40%, or, on a forward-looking basis, seven times net rental income. On 30 June 2022, the Group had EUR463.5million of
outstanding debt (bonds and bank loans) and the LTV ratio was 21.5%. The effective LTV ratio, taking account of the cash settlement with
respect to the Acquisition, is 28.4%. The weighted average cost of debt was 4.41% per annum for the financial year ended 30 June 2022.
CHANGES TO THE BOARD OF DIRECTORS AND COMPANY SECRETARY
Since the transaction with Prime Kapital in November 2019 and the appointment of Prime Kapital founders Martin Slabbert and Victor
Semionov as Executive Directors, MAS has achieved excellent progress in its transition towards becoming a fully focused Central and Eastern
European property investor and operator. The terms of the transaction included a mandate of up to three years for the appointed executives
to oversee the re-positioning and transitioning of the business before returning full-time to Prime Kapital. With the transition substantially
completed, Martin and Victor stepped down. Martin remains a member of MAS’ Board of Directors as a Non-Executive Director. MAS’ pre-
existing and ongoing business relationship with Prime Kapital via the DJV was extended, after Martin stepped down as CEO, via the Extension
approved by an overwhelming majority of MAS’ independent shareholders (96.69%). This is expected to continue having a major positive
impact on the Group’s future financial performance.
With MAS’ Executive Director roles assigned to individuals with no affiliation to, or interest in, Prime Kapital, allowing the two groups to
remain closely connected for the foreseeable future with independent executives, MAS’ Board re-assessed its size, composition, as well as
the appropriate skills and experience required to guide and oversee MAS’ business in its next phase.
The Group is pleased to announce the appointment of Nadine Bird as Chief Financial Officer (CFO) with effect from 1 February 2023,
taking over Raluca Buzuleac’s financial responsibilities. Nadine is a highly experienced finance professional, with approximately 17 years
of relevant experience, including a strong background in financial reporting, stock exchange listings and crisis management for complex,
multi-jurisdictional public companies. She previously worked in audit, at Deloitte in South Africa, before acting as CFO for Steinhoff Africa,
and being promoted to Deputy CFO for Steinhoff International after eruption of the group’s crisis in 2017. At Steinhoff International, among
many other responsibilities, she assisted external forensic teams with investigations and ensured accurate financial information restatement
and subsequent re-publication, while also maintaining her responsibilities for Steinhoff Africa. Nadine will be based in MAS’ Bucharest office.
MAS is pleased to announce the appointment of Roxana Bordeanu as Company Secretary, replacing Nathalie Vella, with effect from
25 August 2022. Roxana, who will also be part of MAS’ Capital Management team, is based in Malta. She has extensive experience with financing
and capital markets, mergers and acquisitions, litigation and arbitration management, corporate governance, compliance and policy
development in respect of public companies. The Board thanks the outgoing Company Secretary for her dedicated service to the Company
during her tenure.
Melt Hamman, originally appointed on the request of Attacq Ltd, steps down from the Board effective 25 August 2022. The Board thanks
Melt for his loyal service to the Group.
Malcolm Levy, MAS’ co-founder, steps down as Non-Executive Director effective 25 August 2022. Malcolm served as CFO for over 9 years
following the Group’s foundation, becoming a Non-Executive Director June 2019, and providing valuable guidance to management
throughout MAS’ re-positioning from a Western European business, which is substantially complete. The Board is grateful and thanks Malcolm
for his long-tenured service to the Group.
Following and considering directorship changes mentioned, the Board has restructured its committees as follows:
Audit and Risk Committee Chair: Vasile Iuga; Members: Brett Nagle, Martin Slabbert
Remuneration and Nomination Committee Chair: Dan Pascariu; Members: Martin Slabbert, Werner Alberts
Environmental, Social and Ethics Committee Chair: Pierre Goosen; Members: Claudia Pendred, Irina Grigore
All changes to committee membership are effective 25 August 2022. The Board remains compliant with the King IV Code on Corporate
Governance following these changes to its composition and committee memberships.
LISTING ON A2X
MAS aims to identify opportunities providing its shareholders with optimal returns. Therefore, in addition to being traded on the Johannesburg
Stock Exchange, its ordinary shares will be traded on the A2X market, a licensed stock exchange authorised to provide a secondary listing
venue for companies and regulated by the Financial Sector Conduct Authority in South Africa in terms of the Financial Markets Act 19 of 2012.
An announcement with further details will follow in due course.
LONG-TERM STRATEGY UPDATE
MAS is committed to maximising total long-term returns from property investments on a per share basis. The Group aims to achieve
this by concentrating on capital allocation, operational excellence, sensible leveraging, and cost efficiency, thereby sustainably growing
distributable earnings per share. Benefiting from the continual high growth in Central and Eastern European consumption, the Group
operates directly-owned income property and employs capital in commercial and residential developments owned indirectly via the DJV
with co-investor and developer Prime Kapital.
In the absence of unforeseen circumstances, MAS intends to maintain a full pay-out of distributable earnings and provided that the
Company’s long-term objectives, including self-imposed gearing limitations, are not considered at any point during this period to be at
undue risk. However, if this is the case, or if attractive investment opportunities expected to substantially enhance total returns per share
which cannot be otherwise more efficiently funded (for instance by selling assets, taking on additional gearing or issuing new share capital)
become available, then dividends relative to distributable earnings will be reduced.
With the release of the Group’s 30 June 2021 financial statements, MAS published four quantified strategic objectives set to be achieved over
five years (by the end of the 2026 financial year), using its existing capital base (at the time) and maintaining a full payout of distributable
earnings to shareholders without breaching self-imposed gearing limitations, and is committed to periodic reporting on these. Achieving
these targets is expected to lead to substantial improvements in total returns per share, and implies an increase in scale, positioning the
Company well for an investment-grade credit rating, which will enable further flexible access to debt finance at optimal cost. Current progress
is detailed below.
Asset management
MAS aims to maximise property values through sustainable asset management initiatives. The Group plans to achieve this through specific
asset management initiatives to improve occupancy rates for current Central and Eastern European retail assets to 99% by 30 June 2026 and
achieving LFL NRI growth of at least 4% per annum (from a normalised post Covid-19 base).
Progress continues to be excellent. On 30 June 2022, occupancy for Central and Eastern European assets increased to 96.3% (95.3% on
31 December 2021) and annualised LFL passing NRI in CEE is 4.7% higher than six months earlier on 31 December 2021 (13.6% higher than on
30 June 2021).
Commercial developments
The Group expects to enlarge its investment in newly developed, high quality, income properties rolled-out by joint venture partner Prime
Kapital, and the DJV aims to complete commercial developments to the cost of approximately EUR600million at a weighted initial yield of more
than 9% over the relevant five years (figure not proportionally consolidated).
The DJV is well positioned to achieve these targets. Secured commercial projects to the value of EUR517.1million are currently estimated to
be completed by 30 June 2026 at a weighted average initial yield of 9.3%. During the first six months of the 2022 financial year, the DJV
completed projects worth EUR50.8million at cost, in Barlad and Ploiesti, with initial yields of 9.8% and 9.9%, respectively.
Residential developments
MAS aims to benefit from a sustainable and growing distributable income stream, through residential sales and deliveries by the DJV
of approximately EUR200million per annum by the 2026 financial year (figure not proportionally consolidated) at net after tax margins of
approximately 20%.
A significant residential pipeline of approximately EUR1.2billion has been secured for the DJV, which is expected to achieve in excess of the DJV’s
target of EUR200million in annual sales by 2026.
Direct acquisitions
MAS aimed to complete direct acquisitions of high-quality, Central and Eastern European commercial assets to the value of at least
EUR150million during the 2022 financial year and a further EUR50million by the end of the 2023 financial year. To this end, by completing the
Acquisition, as well as via its investment in NRP during the current and previous six months, MAS has exceeded the targets previously set for
acquisitions of direct property. MAS continues to be focused on considering appropriate direct acquisition opportunities in the CEE.
The Company is well positioned to execute on the ambitious but achievable strategic targets adopted, which are expected to generate best-
in-class long-term total shareholder returns. It is expected that real GDP and consumption growth in Romania will endure during this period,
and that long-term growth in Romania and other CEE countries will continue to remain robust and significantly surpass growth in Western
European countries for the foreseeable future. The transactions approved by MAS’ shareholders will continue to add scale to the Group’s
CEE operations via increasing MAS’ investment commitments to the DJV. Management expects the higher inflationary impact on rentals and
service charges through to 2023 to be easily absorbed by tenants.
Long-term earnings targets
MAS expects delivery on its strategic objectives to result in significant per share distributable earnings (and dividend) growth. Targeted
distributable earnings ranging between 14.5eurocents and 15eurocents per share for the 2026 financial year should comfortably be
achieved. To achieve these results, it is assumed that, amongst others,
(i) the remaining Western European assets are sold as per management’s estimates;
(ii) stated asset management targets are achieved;
(iii) secured commercial and residential development pipeline is permitted and rolled out as planned;
(iv) NRP performs as expected and that its shares trade at the projected Tangible NAV per share;
(v) no further MAS shares are issued, during this period, and
(vi) no major economic disruptions occur before 30 June 2026.
EARNINGS GUIDANCE AND PROSPECTS
Distributable earnings per share for the 2023 financial year have been revised upward in light of the completed Acquisition on 30 June 2022,
and it is now expected to range from 9.40eurocents to 10.10eurocents per share (of which 0.65 to 1.10eurocents per share is expected to
be from residential sales). This guidance is based on the assumptions that no additional material macroeconomic disruption occurs, a stable
political environment prevails in the Groups’ markets, developments continue as scheduled, and no major corporate failures ensue.
Shareholders should note that the Company’s estimates and distributable earnings per share targets have not been audited and are subject
to change. Inevitably, some assumptions will not materialise, plans will change, and unanticipated events and circumstances may affect
the ultimate financial results. The Company will not hesitate to adopt changes in strategy, or to take action that will impact negatively on
distributable income per share, if this is considered appropriate from a long-term, risk-adjusted, total return perspective.
This forecast has not been audited or reviewed by MAS’ auditors and is the responsibility of the Board of Directors.
DIVIDEND DECLARATION
The Company achieved 3.87eurocents adjusted distributable earnings per share, and 3.82eurocents diluted adjusted distributable
earnings per share (taking account of share purchase plan issued shares) in respect of the six-month period to 30 June 2022. The Board has
consequently declared a cash dividend of 3.82eurocents per share for the six months ending then. Payment is expected by 26 September
2022 and further details will be announced separately.
Irina Grigore, Chief Executive Officer 25 August 2022, Malta Released on 29 August 2022
(1) DJV is an abbreviation for a separate corporate entity named PKM Development Limited (PKM Development), an associate of MAS since 2016 with
independent governance. MAS owns 40% of the ordinary share capital of PKM Development, an investment conditional on it irrevocably undertaking
to provide preferred equity to PKM Development on notice of drawdown. MAS’ undertakings to PKM Development arose prior to Prime Kapital’s
founders joining MAS’ Board in November 2019 and have been modified, with MAS’ shareholders’ approval, via the Extension. On 30 June 2022,
MAS invested EUR236.1million in preferred equity and had an obligation of EUR233.9million outstanding, as well as an undrawn revolving credit
facility of EUR30million (figures not proportionally consolidated). The balance of the ordinary share capital in PKM Development was taken up by
Prime Kapital in 2016 for EUR30million in cash, and, in terms of applicable contractual undertakings and restrictions, Prime Kapital: (i) is not
permitted to undertake real estate development in CEE outside of PKM Development until the DJV’s capital commitments are fully drawn and invested
or 2030 (end of exclusivity period); (ii) contributes secured development pipeline to PKM Development at cost; (iii) takes responsibility for
sourcing further developments, and (iv) provides PKM Development with all necessary construction and development services via integrated
in-house platform.
(2) GLA open for trade without restrictions.
(3) GLA open for trade subject to restrictions (pro-rated to reflect days with restrictions).
(4) GLA closed for trade (pro-rated to reflect days closed).
All amounts in EUR thousand unless otherwise stated. Audited Audited
CONDENSED CONSOLIDATED STATEMENT 30 Jun 22 30 Jun 21
OF FINANCIAL POSITION
Non-current assets 1,141,198 758,253
Current assets 388,402 568,327
Total assets 1,529,600 1,326,580
Equity attributable to owners of the Group 928,150 869,423
Total equity 928,150 869,423
Non-current liabilities 450,826 321,059
Current liabilities 150,624 136,098
Total liabilities 601,450 457,157
Total shareholder equity & liabilities 1,529,600 1,326,580
Audited Audited
CONDENSED CONSOLIDATED Year to Year to
STATEMENT OF PROFIT OR LOSS 30 Jun 22 30 Jun 21
Continuing operations
Rental income 36,344 34,864
Service charge income and other recoveries 11,575 10,499
Gross revenue 47,919 45,363
Impairment of receivables (338) (6,090)
Service charge and other property operating expenses (13,478) (12,355)
Net rental income 34,103 26,918
Corporate expenses (6,564) (5,700)
Other income 5,006 2,690
Investment expenses (1,858) (631)
Fair value adjustments 61,223 28,432
Foreign currency exchange differences (770) 3,100
Share of profit from equity-accounted investee, net of tax 40,901 10,629
Profit before finance income/(costs) 132,041 65,438
Finance income 21,733 15,397
Finance costs (15,256) (9,401)
Profit before tax 138,518 71,434
Current tax (872) (180)
Deferred tax (6,832) (5,443)
Profit from continuing operations 130,814 65,811
Discontinued operations
Profit from discontinued operations, net of tax 10,357 5,931
Profit for the year 141,171 71,742
Attributable to:
Owners of the Group 141,171 71,742
Profit for the year 141,171 71,742
Audited Audited
FINANCIAL PERFORMANCE 30 Jun 22 30 Jun 21
IFRS Net Asset Value attributable to owners of the Group 928,150 869,423
IFRS Net Asset Value per share (eurocents) 134.9 123.4
IFRS Gross revenue from continuing operations 47,919 45,363
Earnings per share (eurocents)* 20.07 10.18
Diluted earnings per share (eurocents) 20.01 10.14
Adjusted distributable earnings per share (eurocents) 6.83 5.93
Cash dividend (eurocents) 6.78 5.93
Gross headline earnings 25,628 36,744
Net headline earnings 40,050 48,414
Gross headline earnings per share (eurocents) 3.64 5.22
Net headline earnings per share (eurocents) 5.69 6.87
Gross diluted headline earnings per share (eurocents) 3.63 5.19
Net diluted headline earnings per share (eurocents) 5.67 6.84
Number of shares in issue** 687,906,892 704,493,798
* The Group’s earnings per share have increased by 97% vs. 30 Jun 2021.
** Excluding treasury shares.
SEGMENTAL ANALYSIS Proportionate accounts
INCOME STATEMENT (JAN – JUN 2022) Six months to 30 Jun 2022
Total CEE DJV WE Co***
EARNINGS 74,260 58,627 37,216 97 (21,680)
Distributable earnings 25,718 15,890 15,150 162 (5,484)
Net rental income – income property 22,678 17,073 4,312 1,293 –
Net margin – residential sales 2,959 – 2,959 – –
Net income – preferred equity 6,555 – 6,555 – –
Net dividends – listed securities 4,177 – 841 – 3,336
Net corporate expenses (2,715) (595) (423) (270) (1,427)
Interest on debt financing (8,437) – (511) (797) (7,129)
Interest capitalised on developments 1,457 – 1,457 – –
Other distributable net income/(cost) (330) (122) 25 (26) (207)
Income tax (626) (466) (65) (38) (57)
Non-distributable earnings 48,542 42,737 22,066 (65) (16,196)
Fair value adjustments – income property 64,659 50,567 16,233 (2,141) –
Fair value adjustments – interest rate derivatives 829 – 829 – –
Fair value adjustments – listed securities (14,242) – – – (14,242)
Foreign currency exchange differences (369) – – – (369)
Investment expenses (1,053) (73) (16) (158) (806)
Share-based payment expense (1,269) (609) – – (660)
Other non-distributable income/(cost) (185) – (66) – (119)
Tax on sale of property 1,802 – – 1,802 –
Deferred tax (1,630) (7,148) 5,086 432 –
Estimation for WE disposal realisation costs and losses – – – – –
Weighted average adjusted number of shares (million)
Diluted weighted average adjusted number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Diluted adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
INCOME STATEMENT (JAN – JUN 2022) Six months to 30 Jun 2022
Total CEE DJV WE Co
EARNINGS 2,433 7,757 (5,927) (261) 864
Distributable earnings 366 – (841) – 1,207
Net rental income – income property – – – – –
Net margin – residential sales – – – – –
Net income – preferred equity – – – – –
Net dividends – listed securities 162 – (841) – 1,003
Net corporate expenses – – – – –
Interest on debt financing – – – – –
Interest capitalised on developments – – – – –
Other distributable net income/(cost) 204 – – – 204
Income tax – – – – –
Non-distributable earnings 2,067 7,757 (5,086) (261) (343)
Fair value adjustments – income property (882) – – (882) –
Fair value adjustments – interest rate derivatives – – – – –
Fair value adjustments – listed securities (1,003) – – – (1,003)
Foreign currency exchange differences – – – – –
Investment expenses 61 – – 61 –
Share-based payment expense 1,269 609 – – 660
Other non-distributable income/(cost) – – – – –
Tax on sale of property – – – – –
Deferred tax 2,062 7,148 (5,086) – –
Estimation for WE disposal realisation costs and losses 560 – – 560 –
Weighted average adjusted number of shares (million)
Diluted weighted average adjusted number of shares (million) ~
Adjusted distributable earnings per share (eurocents)
Diluted adjusted distributable earnings per share (eurocents)
Dividend per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
INCOME STATEMENT (JAN – JUN 2022) Six months to 30 Jun 2022
Total CEE DJV WE Co
EARNINGS 76,693 66,384 31,289 (164) (20,816)
Distributable earnings 26,084 15,890 14,309 162 (4,277)
Net rental income – income property 22,678 17,073 4,312 1,293 –
Net margin – residential sales 2,959 – 2,959 – –
Net income – preferred equity 6,555 – 6,555 – –
Net dividends – listed securities 4,339 – – – 4,339
Net corporate expenses (2,715) (595) (423) (270) (1,427)
Interest on debt financing (8,437) – (511) (797) (7,129)
Interest capitalised on developments 1,457 – 1,457 – –
Other distributable net income/(cost) (126) (122) 25 (26) (3)
Income tax (626) (466) (65) (38) (57)
Non-distributable earnings 50,609 50,494 16,980 (326) (16,539)
Fair value adjustments – income property 63,777 50,567 16,233 (3,023) –
Fair value adjustments – interest rate derivatives 829 – 829 – –
Fair value adjustments – listed securities (15,245) – – – (15,245)
Foreign currency exchange differences (369) – – – (369)
Investment expenses (992) (73) (16) (97) (806)
Share-based payment expense – – – – –
Other non-distributable income/(cost) (185) – (66) – (119)
Tax on sale of property 1,802 – – 1,802 –
Deferred tax 432 – – 432 –
Estimation for WE disposal realisation costs and losses 560 – – 560 –
Weighted average adjusted number of shares (million) 673.9
Diluted weighted average adjusted number of shares (million) ~ 683.5
Adjusted distributable earnings per share (eurocents) 3.87
Diluted adjusted distributable earnings per share (eurocents) 3.82
Dividend per share (eurocents) 3.82
SEGMENTAL ANALYSIS Proportionate accounts
BALANCE SHEET (JUN 2022) 30 Jun 2022
Total CEE DJV WE Co***
NET ASSET VALUE 928,150 739,969 261,322 68,720 (141,861)
Assets 1,596,230 914,697 327,955 108,475 245,103
Income property 952,822 859,816 14,536 78,470 –
Developments – income property 41,573 720 40,853 – –
Developments – residential property 50,293 – 50,293 – –
Preferred equity 141,640 – 141,640 – –
Listed securities 117,225 – 19,570 – 97,655
Goodwill 1,696 1,696 – – –
Deferred tax asset 3,824 2,419 23 1,382 –
Interest rate derivative financial assets 5,066 4,562 504 – –
Other assets 2,545 158 1,860 135 392
VAT receivable 3,145 778 1,968 254 145
Share-based payment prepayments 11,287 11,287 – – –
Trade and other receivables 82,457 14,205 48,227 18,960 1,065
Cash and cash equivalents 182,657 19,056 8,481 9,274 145,846
Liabilities 668,080 174,728 66,633 39,755 386,964
Debt financing 463,537 123,544 9,828 34,126 296,039
Other liabilities 109 – 109 – –
Deferred tax liability 32,203 30,623 1,580 – –
Trade and other payables 172,231 20,561 55,116 5,629 90,925
Estimation for WE disposal realisation costs and losses – – – – –
Adjusted number of shares in issue (million)
Diluted adjusted number of shares in issue (million) ~
Tangible net asset value per share (eurocents)
Diluted tangible net asset value per share (eurocents)
SEGMENTAL ANALYSIS Adjustments
BALANCE SHEET (JUN 2022) 30 Jun 2022
Total CEE DJV WE Co
NET ASSET VALUE (4,514) 17,640 (17,990) (4,164) –
Assets (122,431) (12,983) (19,570) – (89,878)
Income property – – – – –
Developments – income property – – – – –
Developments – residential property – – – – –
Preferred equity – – – – –
Listed securities (19,570) – (19,570) – –
Goodwill (1,696) (1,696) – – –
Deferred tax asset – – – – –
Interest rate derivative financial assets – – – – –
Other assets – – – – –
VAT receivable – – – – –
Share-based payment prepayments (11,287) (11,287) – – –
Trade and other receivables (35,951) – (35,951) – –
Cash and cash equivalents (53,927) – 35,951 – (89,878)
Liabilities (117,917) (30,623) (1,580) 4,164 (89,878)
Debt financing – – – – –
Other liabilities – – – – –
Deferred tax liability (32,203) (30,623) (1,580) – –
Trade and other payables (89,878) – – – (89,878)
Estimation for WE disposal realisation costs and losses 4,164 – – 4,164 –
Adjusted number of shares in issue (million)
Diluted adjusted number of shares in issue (million) ~
Tangible net asset value per share (eurocents)
Diluted tangible net asset value per share (eurocents)
SEGMENTAL ANALYSIS Adjusted proportionate accounts
BALANCE SHEET (JUN 2022) 30 Jun 2022
Total CEE DJV WE Co
NET ASSET VALUE 923,636 757,609 243,332 64,556 (141,861)
Assets 1,473,799 901,714 308,385 108,475 155,225
Income property 952,822 859,816 14,536 78,470 –
Developments – income property 41,573 720 40,853 – –
Developments – residential property 50,293 – 50,293 – –
Preferred equity 141,640 – 141,640 – –
Listed securities 97,655 – – – 97,655
Goodwill – – – – –
Deferred tax asset 3,824 2,419 23 1,382 –
Interest rate derivative financial assets 5,066 4,562 504 – –
Other assets 2,545 158 1,860 135 392
VAT receivable 3,145 778 1,968 254 145
Share-based payment prepayments – – – – –
Trade and other receivables 46,506 14,205 12,276 18,960 1,065
Cash and cash equivalents 128,730 19,056 44,432 9,274 55,968
Liabilities 550,163 144,105 65,053 43,919 297,086
Debt financing 463,537 123,544 9,828 34,126 296,039
Other liabilities 109 – 109 – –
Deferred tax liability – – – – –
Trade and other payables 82,353 20,561 55,116 5,629 1,047
Estimation for WE disposal realisation costs and losses 4,164 – – 4,164 –
Adjusted number of shares in issue (million) 659.5
Diluted adjusted number of shares in issue (million) ~ 669.7
Tangible net asset value per share (eurocents) 140
Diluted tangible net asset value per share (eurocents) 138
*** Corporate (Co), other assets, liabilities and activities related to the Group’s management, including investments in listed securities,
Group level financing, as well as corporate level administration.
~ Diluted weighted average adjusted number of shares and Diluted adjusted number of shares in issue are computed by elimination of
MAS’ 40% proportion of shares owned by the DJV in MAS and increased by the number of share purchase plan shares (on a proportionate
consolidation basis).
This short-form announcement is the responsibility of the Directors and is only a summary of the information contained in the full announcement
released on SENS on Monday, 29 August 2022 and available at: https://senspdf.jse.co.za/documents/2022/jse/isse/msp/MASFS22.pdf or on the Company’s
website: https://www.masrei.com/investors/financials. This short-form announcement does not contain full or complete details, any investment decisions
by investors and/or shareholders should be based on consideration of the full announcement. The full announcement is available for inspection or may
be requested and obtained in person, at no charge, at the head office of the Company on Suite 11, Marina Business Centre, Abate Rigord Street,
Ta’ Xbiex, XBX1129, Malta, and at the offices of our sponsor, Java Capital Trustees and Sponsors Proprietary Limited, at 6th Floor, 1 Park Lane,
Wierda Valley, Sandton, Johannesburg, 2196, South Africa, during office hours from 29 August 2022 to 12 September 2022. The consolidated annual
financial statements have been audited by the Company’s auditors, PricewaterhouseCoopers (Malta), who expressed an unmodified audit opinion thereon.
The auditor’s opinion includes communication of key audit matters in respect of valuation of investment property, investment property held for sale
and the equity-accounted associate and the acquisition of the Spark II Portfolio. The opinion, together with the consolidated annual financial
statements are available on the Company’s website at the above link.
Date: 29-08-2022 08:00:00
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The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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