The board of Directors (the “Board”) of Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro denominated long-term leases with high quality multinational tenants, today announces its audited consolidated results for the financial year ended 30 June 2024.

Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:

“Despite a year shaped by significant macroeconomic headwinds, particularly persistently high-interest rates impacting both earnings and asset valuations, the Group has demonstrated resilience and adaptability. Our property portfolio, in the face of these challenges, has continued to deliver consistent returns, bolstered by a deliberate shift towards higher-yielding, more defensive real estate assets that build on our longstanding, value-driven fundamentals.

“A key milestone was our acquisition of a majority stake in GREA, our development associate. While this acquisition had one-off impacts on this year’s financial results, it optimises our cost base, simplifies our reporting, and strengthens our capability to drive targeted, tenant-led developments. Additionally, it bolsters our Group’s robust platform, positioning us to capture growth opportunities in targeted sectors through the establishment of specialised sub-structures. These will be supported by long-term funding partners who share our commitment to unlock and generate high quality impact investment in Africa.

“The continued confidence and backing from our financial partners, particularly key financiers and leading development funding institutions, underscore the strength of our strategic direction. We are gratified by this support, which validates the Group’s commitment to disciplined and focused growth.

“On the operational front, our commitment to cost efficiency yielded a 14.0% reduction in administrative expenses, an achievement underscoring our focus on running a lean and efficient business while advancing our broader objectives.

“Looking ahead, our strategic priorities remain well defined: we are firmly committed to sustainable growth in distributable income and capital appreciation. By focusing on core portfolio metrics, such as lower loan-to-value (LTV) ratios, reduced vacancy rates, and optimised cost structures, we are establishing a resilient foundation for long-term growth.

“Asset recycling remains integral to our strategy, allowing us to reinforce the balance sheet, enhance liquidity, and dynamically adjust to market conditions.

“As we progress, we continue to prioritise disciplined capital allocation and a vigilant approach to cost management, ensuring we remain well-positioned to create sustainable value for our shareholders in an evolving market.”

Financial & Portfolio highlights as at 30 June 20241

Notes

Summarised results commentary:

• Despite global macroeconomic headwinds, the reported property portfolio revenue (based on the Group’s proportionate interest) grew by 9.8% in the year under review. This growth reflects the Group's increased interest in GREA, rising from 35.01% in the prior year to 54.22%, and the subsequent consolidation effective from 30 November 2023.

• Reported NOI (based on the Group’s proportionate interest) saw a year-on-year increase of 7.9%, driven by the annualised contribution of assets brought into operation in late FY2023, including ENEO CCI, which commenced commercial use this year. The growth was partially offset by the impact of BHI and LLR disposals completed in FY2023.

• Total income-producing assets rose by US$109.2 million, reaching US$971.2 million. This increase is primarily due to the GREA acquisition and consolidation, partly offset by US$30.0 million in property revaluations and the elimination of pre-existing investment relationships previously recognised under associates and joint ventures.

• Reported property values, based on the Group’s proportionate share (including joint ventures and GREA associates), grew by 11.1%. This increase was driven by the GREA consolidation and a step-up acquisition in DH1, along with ENEO CCI project completion and associated capital expenditure of US$20.7 million and US$22.1 million, respectively. Offsetting factors include the reclassification of Tamassa as a non-current asset held for sale and valuation adjustments of US$30.0 million.

• EPRA NRV per share declined by 20.5% to US$57.9cps (from US$72.8cps in the prior year), largely due to property revaluations and other non-cash items, including non-controlling interest.

• Rising global interest rates in 2023 and sustained higher rates through FY2024 raised Grit’s weighted average cost of debt to 10.0% (up from 8.4% as of June 2023). Base rate increases were the primary contributors to these higher financing costs.

• The Group maintained US$200 million in hedging instruments to mitigate interest rate impacts; however, the expiry and re-establishment of US$100 million in SOFR hedges at higher levels, coupled with the GREA consolidation, led to an increase in net finance costs year-on-year. US CPI-linked lease escalations across the portfolio offered some protection against funding cost increases, though the additional US$13.2 million charge weighed significantly on the annual financial results. The net finance charge includes amortised loan issuance costs and hedging impacts.

• Administrative expenses were reduced by 14.0% year-on-year, reflecting disciplined cost management and cost efficiencies obtained through the consolidation of group functions. As a percentage of total income-producing assets, the administrative expense ratio decreased from 2.42% at 30 June 2023 to 1.85% at 30 June 2024. The Group remains committed to a target administrative expense ratio of 1% relative to total income-producing assets.

• Persistent high interest rates and economic pressures in our operating regions have affected the Group’s financial flexibility, leading the Board to suspend dividends in the second half of the financial year. Total dividends declared for the year amount to US$1.50 cps.

Corporate highlights – execution on strategy

1. Acquisition of GREA and APDM Successfully Completed:

• Established Bora Africa as a specialised industrial sector sub-structure, attracting investment from the IFC, with further investment opportunities in the pipeline.

• Advanced negotiations to create DH Africa as a dedicated diplomatic real estate sub-structure, reflecting strategic focus on sector-specific asset growth.

2. Strong Leasing Momentum:

• Achieved an 86% tenant retention rate on renewals and a 5.2-year WALE.

• Notable leasing activity recorded at The Precinct in Mauritius and ENEO at Tatu Central, Kenya, with additional lease renewals and negotiations progressing.

3. Strategic Project Delivery:

• Completed ENEO at Tatu Central, Kenya’s largest Business Process Outsourcing development tenanted by CCI Global, ahead of schedule, delivering a robust yield exceeding 10%.

4. Asset Recycling Milestone:

• Reached the December 2023 asset recycling target of US$160 million. The Board extended the target by an additional US$200 million in non-core asset disposals, with US$76.4 million identified for near-term disposal.

5. Recognition for Excellence:

• Received multiple high-profile industry awards for sustainability and construction excellence for ENEO at Tatu Central, showcasing the Group’s leadership in sustainable development practices.

Notable Post balance sheet events

1. Enhanced Tenant Profile and Vacancy Reduction Initiatives:

• Since the balance sheet date, our Asset Management team has continued to secure high-quality tenants under long-term leases, positioning us to reduce the Group’s EPRA vacancy rate to below 7.5% by 31 December 2024. We have received strong interest from multinational corporations seeking to acquire office space in northern Mauritius, prompting us to initiate the sectionalisation of the Precinct Unity Building to cater to this demand.

2. Strengthened Hedging Strategy:

• Following the balance sheet date, the Group settled a US$6.25 million cross-currency swap that matured in August 2024. Concurrently, we expanded our hedging instruments, raising total coverage for SOFR debt from US$200 million to US$256.6 million, fortifying our risk management posture amidst global rate fluctuations.

3. Asset Recycling Through Strategic Disposals:

• The disposal process for Artemis Curepipe Hospital commenced post balance sheet and is on track to conclude within FY2025. This divestiture aligns with our ongoing strategy to streamline the portfolio and to reduce debt levels and support the development pipeline resulting in higher yielding assets.

4. Shareholder Call Notice and Capital Commitment to GREA - PIC Capital Investment

• On 28 June 2024, GREA issued a call notice to its shareholders, including Grit and the Public Investment Corporation SOC Limited of South Africa (“PIC”), as part of a US$100 million rights issue.

• While all conditions precedent for the PIC Capital Investment have been satisfied, the release of the US$48.5 million was delayed as a result of South Africa’s recent regulatory directive, restricting state-owned entities from investing in low-tax jurisdictions or using these as conduits for offshore investments.

• Notwithstanding this directive, the South African Reserve Bank (“the SARB”) on 30 October 2024 advised that the South African Minister of Finance has approved the request by the PIC, on behalf of the Government Employees Pension Fund of South Africa (“GEPF”) to participate in the rights issue as part of the capital raise exercise, subject to the condition that GREA redomicile from Mauritius to Kenya, within the next 12 months. Shareholders are further advised that the redomiciliation process is currently underway and expected to be completed imminently.

FOR FURTHER INFORMATION, PLEASE CONTACT:

NOTES:

Grit Real Estate Income Group Limited is the leading pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip multinational tenant covenants across a diverse range of robust property sectors.

The Company is committed to delivering strong and sustainable income for shareholders, with the potential for both income and capital growth.

The Company holds its primary listing on the main market of the London Stock Exchange (LSE: GR1T) and a dual currency trading secondary listing on the Stock Exchange of Mauritius (SEM: DEL.N0000 (USD) / DEL.C0000 (MUR)).

Further information on the Company is available at http://grit.group/.

Directors:

Peter Todd (Chairman), Bronwyn Knight (Chief Executive Officer) *, Gareth Schnehage (Chief Financial Officer) *, David Love+, Catherine McIlraith+, Nigel Nunoo+, Cross Kgosidiile and Lynette Finlay+.

(* Executive Director) (+ independent Non-Executive Director)

Company secretary: Intercontinental Fund Services Limited

Corporate Service provider: Mourant Governance Services (Guernsey) Limited

Registered office address: PO Box 186, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 4HP

Registrar and transfer agent (Mauritius): Onelink Ltd

SEM authorised representative and sponsor: Perigeum Capital Ltd

UK Transfer secretary: Link Market Services Limited

Mauritian Sponsoring Broker: Capital Markets Brokers Ltd

A Company presentation for all investors and analysts via live webcast and conference call

The Company will host a live webcast on Thursday, 31st October 2024 at 12:00pm Mauritius / 08:00am UK / 10:00am South African time via the Investor Meet Company platform, with the presentation being open to all existing and potential shareholders, and can be accessed at the following link: https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor

A playback of the webcast will be accessible on-demand within 48 hours via the Company website: https://grit.group/financial-results/

CHAIRMAN’S STATEMENT

Grit is a prominent, woman-led real estate platform providing property investment and associated real estate services across the African continent. The Group recognises its role in transforming the design of buildings and developments for long-term sustainability, especially with Africa rapidly urbanising, and focuses on impact, energy efficiency and carbon reduction in its activities. In addition to environmental responsibility, the Group prides itself on achieving more than 40% of women in leadership positions and the significant support it provides to local communities in Africa through extensive CSR and upliftment programmes. More information on Grit’s Environmental, Social and Governance initiatives is available in the Responsible Business Committee’s report in the Corporate Governance section of the Company’s Integrated Annual Report.

Strategic overview

2024 marks the 10-year anniversary since the inception of Grit Real Estate Income Group and as we reflect on the past year, it is clear that the Group continues to navigate a challenging macroeconomic environment. Despite these headwinds, our commitment to a diversified, high-quality real estate portfolio underpinned by predominantly US$ and Euro-denominated long-term leases with multinational tenants, as it has been over the last 10 years, remains unwavering.

This year has been pivotal in the evolution of our Group, where we made significant strides towards the implementation of the Grit 2.0 strategy that focuses us on internally developed, impact-led real estate assets, capturing development margins and generating additional revenue from providing development management services to third parties in addition to the rental incomes and real estate valuation returns we’ve traditionally earned. These activities are key in driving higher, and more sustainable, long-term asset returns and supporting a growing dividend over the next 10 years. Progress on the Group’s Grit 2.0 strategy is increasingly reflected in our financial results, with a notable shift in our revenue mix away from non-core assets towards our focus real estate sectors, and the completion of world class developments delivered by our newly controlled subsidiaries, GREA and APDM.

The Board have extensively reviewed the implementation of the Group’s strategy and continue to provide its unwavering support to the executive management team in their pursuit of a simplified operating structure, a focused and profitable development pipeline and pursuit of related additional revenues from professional services. An additional key priority is to further enhance the strength of the balance sheet to position the Group to capture future growth opportunities available on the acutely undersupplied African continent.

A significant milestone in the financial year is the Group obtaining control of GREA and APDM that resulted in the consolidation of these entities within the Group’s financial results, and importantly positions Grit with a platform for substantial capital value and income growth over the medium term. A key imperative was a simplified operational structure, and through the various corporate actions already undertaken, the Group’s real estate assets are now largely grouped into sector-focused subsidiaries, with the extensive future development opportunities owned within GREA where they can attract co-funding and investment. GREA's US$100 million capital raise underpins the funding of the attractive growth pipeline, and the combination of the businesses has already realised synergies, operational structure optimisations and a reduction of Group administrative costs, with further savings expected into 2025.

Financial and operational performance

The financial year ended 30 June 2024 has seen us achieve significant milestones, although not without some considerable near-term challenges. EPRA NRV per share declined 20.5% to US$57.9cps (versus prior year NRV US$72.8cps) predominantly as a result of negative property valuations and other non-cash items, including non-controlling interest. While we have not met our near-term financial targets, largely due to prevailing higher-than-anticipated interest rates, isolated tenant stress and property valuation pressures, our long-term strategic direction remains sound.

Delays in interest rate reductions and macro-economic pressure in the countries where we operate have placed constraints on the Group, which informed the Board’s decision to suspend dividends in the second half of the financial year. This was not a decision taken lightly, and the Board has introduced additional enhanced measures to defend operational and financial performance going forward, including a targeted strategy for debt reduction, asset disposals, and cost optimisation. The quality of Grit’s asset portfolio and the long-term structural demand in Africa which will underpin future development activity, are the cornerstones of our expected return to targeted shareholder distributions. 

In this financial year, the Group has already reduced reported administrative costs significantly from US$22.6 million in FY23 to US$18.0 million in FY24 and targets to further reduce this to approximately US$12 million in FY25 (amounting to c. 1.25% of total income producing assets) through a combination of already identified cost recoveries, reductions, and further operational efficiencies. The Board is cognisant of the complexities of doing business in several jurisdictions and will continue to ensure that the resources and performance of the Group are not compromised by these cost cutting measures.

Capital recycling and debt reduction

A key priority for the Board has been strengthening the balance sheet and we are targeting an additional US$200 million of non-core property sales by December 2025. Capital released through these disposals will primarily be applied towards reducing our debt levels and, to a lesser extent, co-funding new developments.

Post the balance sheet date, notable progress in our asset disposal program includes:

1. Tamassa Resort: Post the balance sheet date, we signed non-binding heads of terms for the sale of Tamassa Resort at a value of US$48.5 million. This disposal is aligned with our strategy of divesting non-core assets and applying proceeds towards debt reduction.
2. Proposed disposal of the Artemis Curepipe hospital - The Group is currently in discussions for the sale of its first newly built hospital in Mauritius at current book value. This will in turn pave the way for the development of the Group’s next hospital project – Coromandel Hospital.
3. Other retail and non-strategic corporate accommodation assets across the Group are currently the subject of early-stage disposal discussions and showing promising signs of resulting in disposal transactions.

These disposals are crucial steps contributing towards our near-term target of reducing our Loan-to-Value (LTV) ratio to below 45%.

Mezzanine financing update

In April 2024, The International Finance Corporation (“IFC”) (a division of the World Bank) subscribed for a 9-year US$16.9 million perpetual preference note. in our industrial sector subsidiary, Bora Africa, with the proceeds applied to the acquisition of African Data Centres phase 1 from GREA. Bora is also in advanced discussions with British Investment International (“BII”), the UK government funded development finance institution, for an equivalent perpetual preference note subscription, the proceeds of which are expected to be applied towards both the acquisition of completed assets and to fund prospective pipeline. BII placed significant value on the impact, as well as strong execution capability that Grit provides and specifically the strong focus on woman empowerment.

These mezzanine financing instruments are accounted as equity instruments under IFRS and demonstrate the substantial support and endorsement the Group continues to receive from experienced and credible financiers on the African continent.

Dividends

Largely as a result of higher-than-expected finance costs, the Group’s distributable earnings per share for the year ended 30 June 2024 was US$0.25cps. The Company’s dividend policy is to distribute at least 80% of distributable earnings and following the US$1.50 cps already paid in the first half of the financial year, the Board have not recommended a second half dividend. While we understand the importance of dividends to our shareholders, the Board will reevaluate the earnings position again in 2025 ahead of any further distribution decisions. The total dividend for the year ended 30 June 2024 therefore amounts to US$1.50 cps, which included a payment from prior period retained distributable earnings.

Changes to the Board

Leon van de Moortele, the Group CFO and member of the Board resigned in February 2024. The Board would like to express their gratitude to Leon for the integral role he has played in the Group since its inception and his immense dedication to navigating the complex Pan-Africa business landscape.

We welcomed Gareth Schnehage as replacement Chief Financial Officer and look forward to working with him during this critical time for the Group.  Gareth is a Chartered Accountant with over fifteen years of leading roles at multinational corporations, including extensive experience operating in African jurisdictions and executing asset backed debt financing solutions.

The Board is saddened to announce the sudden passing of Independent Non-Executive Director, Mr. Jonathan (“Johnny”) Crichton in September 2024. On behalf of all of us at Grit and GREA, we extend our heartfelt condolences to his wife and family. As a board member, Johnny was instrumental in driving Risk and Governance oversight and served as a mentor to the executive team, drawing from his deep knowledge and experience. We are grateful for his outstanding contributions, and he will be deeply missed. Lynette Finlay, Independent Non-Executive Director, has been appointed as a Member of the Audit Committee and Nigel Nunoo, Independent Non-Executive Director, appointed as a Member and Chair of the Risk Committee.

I have now served as a non-executive director on the Grit board for ten years, including six years as Chairman, which is the maximum recommended period under Provision 19 of the UK Code of Corporate Governance. The Nominations Committee, adhering to a rigorous and transparent selection process that prioritises diversity and merit, have elected existing Independent Non-Executive Nigel Nunoo as my successor. The Board has determined that his appointment shall take place in the latter half of 2025 financial year and have voted to extend my service for a further limited period facilitating the seamless transition. In the Board’s determination this extension and hand over period is crucial to maintaining leadership continuity during a critical phase of the company’s development allowing minimal disruption of the Grit 2.0 strategy.

Outlook

Looking ahead, the Board remains focused on delivering a total return of 12%-15% per annum over the medium term. We will continue to optimise our portfolio, enhance income generation, reduce costs, and execute on our development pipeline, all while maintaining a prudent approach to capital allocation and debt management. Our business optimisation and recovery plan focuses on the following key steps:

1. Strong and sustainable operations – continued focus on protecting our portfolio, tenant retention, collecting rentals and delivering best in class sustainable real estate. We will furthermore focus on increasing profitability of our operations through reducing direct property operating expenses and improving recoveries.

2. “Shrink to grow” - recycling non-core assets with capital redeployed towards debt reduction and investment in higher yielding core assets over the medium term.

3. De-leverage – reduce LTV to lower levels, creating headroom for future expansion, including a specific strategy to reduce overall funding costs.

4. Simplify and consolidate operations – arrange assets into independent and specialised substructures, leverage technology to optimise systems, staff and processes.

5. Reduce administration costs – stringently control expenditure to target 1% of income producing assets over the medium term.

6. Enhance new and existing capital partnerships – deeper collaboration with existing funders and new DFI funders.

We are confident that the actions we are taking today will position Grit for sustainable growth and value creation for our shareholders in the years to come.

In conclusion, I would like to thank our shareholders for their continued support and confidence in Grit’s strategic direction. The Board and management team remain committed to driving sustainable growth and delivering long-term value.

CHIEF EXECUTIVE’S STATEMENT

GRIT 2.0 Strategy Implementation

Introduction

In the year under review, our strategic transition from a generalist income real estate fund to a more specialised and streamlined entity gained significant momentum with the acquisition and consolidation of a controlling interest in GREA and APDM.

These acquisitions allow us to pivot towards internally developed, impact-led real estate assets in sub-asset classes that are more defensive and higher yielding than the traditional sectors we previously invested in. The focus sectors include:

1. Bora Africa, which will include:
   1. Light industrial and logistics assets,
   2. ICT-related assets, such as data centres; and
   3. Business Process Outsourcing (“BPO”) facilities .
2. Diplomatic housing assets, which will be consolidated in DH Africa; and
3. Healthcare assets under the Healthcare Impact Africa sector.

The below graphic provides the salient points of Grit’s transition:

The financial results show that the Group’s results have been significantly impacted on by the high interest rates. The agreed recapitalisation and delay of funds from the GREA capital raise (as described under the notable post balance sheet events section above) has caused a setback in the planned role out of the Grit 2.0 strategy. This has caused the Board to take short term measures that will ensure the Grit 2.0 strategy can be executed on. The focus areas include:

1. Simplified structure

We made significant progress in simplifying the Group’s structure. This was achieved primarily through asset recycling (detailed below) and the consolidation of assets into sector-focused subsidiaries, along with the development pipeline within GREA. This restructuring enables us to pursue a broader array of co-funding and investment opportunities at the substructure level.

Notable milestones in the financial year included obtaining control over GREA and APDM, the grouping of our diplomatic housing assets into a single vehicle called DH Africa, moving Bora Africa into the GREA structure in conjunction with a US$100 million recapitalisation for GREA and advancing disposal negotiations of our large hospitality asset, Tamassa resort in Mauritius.

As alluded to in the Chairman’s Statement, the combination of the businesses has already realised synergies and operational cost reductions, however, the full financial benefits of these sub-structures are expected to materialise increasingly over the next two financial years.

2. Focus on impact-led, more defensive assets

Despite significant progress, Africa's real estate market remains largely underdeveloped, leading to substantial premiums on quality assets that come to market. The availability of buildings in emerging sub-asset classes—such as data centres, business process outsourcing centres, healthcare facilities, and A-grade light industrial warehouses—remains highly constrained.

Since 2018, GREA has built a strong track record and pipeline of tenant-driven real estate developments in these and other sub-asset classes. Through Grit 2.0, the Group has transitioned from acquiring assets at high premiums to developing tenant-led buildings, leveraging the initial development yield uplift and annuity fee income opportunities through asset management services. This strategic approach aims to capture more value in the real estate value chain, which is expected to contribute to a higher and more sustainable Net Asset Value over the medium to long term.

Furthermore, Grit 2.0 serves as a catalyst for advancing the Group’s sustainability strategy, particularly in delivering on its six sustainability pillars. We are increasingly receiving recognition for these efforts, some of which included the following in this last year:

• The Precinct, Grand Baie was awarded the First Five Star Green Star Rated & Eco Districts Certified building in the Indian Ocean Islands region and the first Eco Districts commercial node in Africa.
• EPRA Silver Awards for Best Practice Recommendations in Global Reporting and Sustainability Reporting in 2024.
• Euromoney Best Developer in Africa Award in 2023 (GREA).
• Strategic Partnership with and milestone investment by the International Finance Corporation (IFC) into Bora Africa in 2024.
• Presidential inauguration of ENEO at Tatu Central, CCI’s new headquarters in Kenya in 2024, creating c. 7,600 new jobs for the country, with further growth on the horizon in the ICT/BPO space.

3. Asset recycling

Certain assets in the portfolio have reached maturity in the investment cycle or have been deemed non-core, leading to their classification as held for sale. Proceeds from these disposals have been earmarked for near-term debt reduction, but the key focus of these disposals, along with other asset management strategies, is to achieve a portfolio long term asset yield in excess of 8% through focusing on resilient and impact sectors (industrial, diplomatic housing, ICT/ BPOs, data centres and healthcare sectors) where Grit can also capture accretive development margins.

The Group achieved its asset recycling target of US$160 million of property assets during the financial year, with most assets being sold at or close to book value. The Board have now extended this recycling programme, with notable progress being made post the balance sheet date. The Tamassa resort and Artemis Curepipe hospital, both in Mauritius and 4 other non-core assets are currently in various stages of negotiation for disposal. 

Key operational trends

During the year under review, GREA delivered its first completed development as a Grit subsidiary, which is now added to the IFRS reported portfolio.

On 10 May 2024, ENEO @ Tatu Central, Kenya, was commissioned. The development was completed 6 months ahead of plan, 8% under budget and at a 10% development yield. The building is principally tenanted to CCI Global (CCI), a leading international call centre operator, with the balance of space occupied by financial services and other multinational companies.

The call centre segment is one of the largest in the world and has played a key role in the upliftment of countries like India and the Philippines.  As Africa’s largest international BPO operator, CCI has the potential to attract the likes of Amazon and Microsoft, supporting a strong development pipeline. The unveiling event demonstrated strong support from the Kenyan President and the US ambassador to Kenya, with the collaboration likely to lead to the emergence of further opportunities, which the DFI’s are interested in providing financial support to.

In line with Grit’s focus on impact real estate assets, significant socio-economic benefits were unlocked through the ENEO development including substantial job creation both in the construction phase and in ongoing operations in addition to the targeted EDGE Advanced and Green Star accreditation of these buildings.

Good leasing activity in the core portfolio

A significant number of leases were concluded or renewed during the year, which collectively helped to raise the weighted average lease expiry of the portfolio to 5.2 years (FY23 4.4 years). Grit achieved an 86% retention rate on tenants with expiring leases which included the following key transactions:

• 7-year lease renewal with the US Embassy in Acacia Estate corporate accommodation complex in Maputo.
• Renewal of a 3-year lease with Exxon Mobil in Commodity House phase 2.
• Total additional space leased in Commodity House 1, thereby now occupying the full building.
• ATC renewed a 5-year local currency lease in 5th Avenue Office Park, Ghana.
• Majorel (Teleperformance) 7-year lease renewal in 5th Avenue, Ghana. 
• Lease renegotiations currently underway with Orbit Africa within the Orbit industrial park in Nairobi, Kenya. Phase 2 development has been paused pending the discussions.
• US Embassy & UK Embassy additional available space taken in DH1; Ethiopia, upon the exit of Safaricom with c.50% of the Safaricom units vacated taken up by the respective embassies.
• AGL lease renewal at Bollore facility in Pemba, Mozambique.
• In May 2024, Vulcan, the anchor tenant in the VDE corporate accommodation estate in Mozambique renewed 115 units (57% renewal rate), however this was achieved at a significant rent reversion on prior lease.             

Vacancy increase as a result of newly completed developments

Reported EPRA vacancy for the portfolio at 30 June 2024 increased to 10.23% from 6.43% in June 2023, largely impacted by the newly completed ENEO development, which has subsequently enjoyed strong leasing activity. Excluding the impact of ENEO, the reported EPRA vacancy at 30 June 2024 would have been 8.8%. The other material impact related to the increased vacancy experienced at the VDE estate, which accounted for a further 2.9% increase. Excluding the effect of these two items, EPRA vacancy would have declined to 6.25% at 30 June 2024 as a result of good leasing activity in the retail sector.

Post balance sheet date, the asset management team has continued to secure high-quality tenants on long leases that are expected to reduce the Group EPRA vacancy rate to under 7.5% by 31 December 2024. Notable commentaries include:

1. ENEO at Tatu Central (Tatu City, Kenya)

• The development was completed in May 2024 with a GLA occupancy of 67.2% at June 2024.

• The development recorded GLA occupancy levels of 85,6% as at end August 2024, with the following tenants secured: 

• Naivas
• NCBA Bank
• Tamarind Restaurant
• Rendeavour

• Substantial demand from the tech industry and co-working space providers have been registered, and we expect the development to be fully let by 31 December 2024.

The Precinct – Unity Building (Grand Baie, Mauritius)

• As at June 2024, the GLA occupancy stood at 76.5% which is expected to increase to 99.2% by December 2024, based on current leases concluded or in the process of conclusion.

• Post balance sheet date, key leases were concluded with:
  • PSG
  • ABSA Wealth
  • Intagreat
  • Workshop 17

• Substantial interest from multinational corporations for outright purchases of office space in the north of Mauritius has been received.  Management has subsequently initiated the sectionalisation process of Unity Building to service this demand.

Sector and organisational update

In line with our strategy to simplify the Group organisational structure we achieved the following operational milestones in the year:

On 16 February 2024 shareholders approved the sale of Bora Africa, the Groups industrial sector assets, to GREA at book value. Bora has subsequently acquired GREA’s data centre asset ADC, Lagos Nigeria at book value. This positions Bora Africa as the Group’s vehicle to pursue industrial and data centre assets, the focus of which will be newly developed assets going forward.

In February 2024 shareholders additionally approved the sale of Grit’s 48.5% interest in Acacia Estate to DH Africa, a subsidiary with the specific mandate of furthering diplomatic housing assets. Post the balance sheet date, the Group announced preliminary discussions to join DH Africa with Verdant Ventures in a transaction that would position the enlarged platform for strong future growth. 

The Board has reviewed the retail and hospitality asset portfolios and earmarked several for disposal. The Group has received indicative offers for the Artemis Curepipe hospital and Tamassa resort, both in Mauritius and expects to conclude binding transaction documents before the end of the 2025 financial year. Occupancy rates for our retail assets have steadily improved year-on-year. However, these remain targets for further asset disposals. Our strategy of concentrating on smaller malls with non-discretionary food and service retailers has delivered positive results, and we are encouraged by the new tenant activity.

The light industrial portfolio, grouped under Bora Africa continues its focus on high quality light industrial and data centre assets across East and West Africa. During the year the IFC, a division of the World Bank, subscribed for a US$16.9 million equity accounted preference note for the acquisition of ADC from GREA. Bora is currently in advanced discussion from further development funding institutions for additional preference equity subscriptions that will enable further expansion of the Bora portfolio.

Post the balance sheet date, the Group announced that its development subsidiary, GREA, is exploring opportunities to join its Diplomatic Housing assets with Verdant Ventures, a strong industry player, providing the combined entity with scale and opportunity for increased exposure in this resilient sector which provides long term, hard currency, low risk returns. GREA and Verdant co-developed the award-winning Elevation Diplomatic Residences in Addis Ababa, Ethiopia as well as the Rosslyn Grove Diplomatic Apartment and Townhouse Complex in Nairobi, Kenya. The combined entity will provide a much larger and sustainable substructure, including an enhanced focus on its main tenant (and one of the Group’s largest clients), the US Government, and will allow for additional capital raising and equity contributions from third party investors.

ESG commitment

The Group's sustainability initiatives are centred around creating a positive community impact, empowering women, enhancing energy efficiency, and reducing carbon emissions.

Our transition toward a low-carbon economy is guided by global best practices, reflecting our dedication to sustainability. We are committed to having green principles included in the design of all new developments and that all new developments will obtain IFC EDGE certification.

Beyond environmental stewardship, the Group takes pride in having more than 40% of leadership roles held by women, over 65% of our workforce localized, and providing substantial support to local communities through comprehensive CSR and upliftment programs.

Financial performance

Despite a strong portfolio performance, prevailing higher than anticipated interest rates resulted in increased debt levels, which negatively impacted on EPRA NRV. In addition, vacancies, rental reversions and rental defaults as elaborated on above, as well as local currency devaluations placed pressure on property valuations.

This impacted the generation of distributable earnings in the period under review, resulting in the suspension of dividends for the second half of the financial year. The recovery in distributable earnings and the reduction in debt levels are both key focuses of the executive management team, elaborated on in more detail in the Chief Financial Officer’s section below.

Conclusion

The implementation of Grit 2.0 during the year under review delivered some encouraging results, although the most significant benefits will likely flow through to the bottom line in the 2025 and 2026 financial years. The Group remains positive about the African real estate landscape. Opportunities to develop and grow the business is strong. We have built a team of African real estate specialists, who are well positioned to deliver value from the high-quality Group platform.

Notwithstanding the optimal positioning of the business and solid growth opportunities ahead, our immediate focus remains on addressing challenges within our control, including the reduction of administrative costs to 1% of net operating income and reducing the overall cost of debt over the medium term funded through our asset recycling strategy and hopefully supported by an expected cycle of interest rate cuts by the US Federal Reserve.

Closely aligned to this is the ongoing reduction of debt and the concomitant improvement in key debt ratios. The disposal of the remaining non-core portfolio is a key driver of this. Our commitment to our ESG goals remains sacrosanct and will be enhanced by the ongoing delivery of GREA’s pipeline as well as our ongoing transition to impact-led assets.

I wish to thank the Board for their ongoing guidance and support, as well as our shareholders for their steadfast commitment to Grit 2.0 which is expected to unlock sustainable value over the medium term. 

CHIEF FINANCIAL OFFICER’S STATEMENT

Presentation of financial statements

The consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. Alternative performance measures (APMs) have also been provided to supplement the IFRS financial statements as the Directors believe that this adds meaningful insight into the operations of the Group and how the Group is managed. European Public Real Estate Association (“EPRA”) Best Practice Recommendations have been adopted widely throughout this report and are used within the business when considering the operational performance of our properties. Full reconciliations between IFRS and EPRA figures are provided in notes 14 to 16. Other APMs used are also reconciled below.

“Grit Proportionate Interest" income statement, presented below, is a management measure to assess business performance and is considered meaningful in the interpretation of the financial results. Grit Proportionate Interest Income Statement (including “Distributable Earnings”) are alternative performance measures. In the absence of the requirement for Distributable Reserves in the domicile countries of the group, Distributable Earnings is utilised to determine the maximum amount of operation earnings that would be available for distribution as dividend to shareholders in any financial period. This factors the various company specific nuances of operating across a number of diverse jurisdictions across Africa and the investments’ legal structures of externalising cash from the various regions. The IFRS statement of comprehensive income is adjusted for the component income statement line items of properties held in joint ventures and associates. This measure, in conjunction with adjustments for non-controlling interests (for properties consolidated by Grit, but part owned by minority partners), form the basis of the Group’s distributable earnings build up, which is alternatively shown in Note 15 “Distributable earnings”.

Financial and Portfolio summary

The Grit Proportionate Income Statement is further split to produce a Grit Property Portfolio Revenue2 and NOI 2 analysis by sector. Grit’s Property Portfolio Revenue has increased 9.8% from the prior year with the change in ownership of GREA from 35.01% in FY2023 to 54.22% in FY2024 and the consolidation of GREA with effect from 30 November 2023. Additionally, the annualised impact of properties brought into use during the latter part of FY2023 as well as the impact of ENEO CCI being brought into commercial use during the financial year, post the consolidation of GREA, contributed to growth while the impact of BHI and LLR, that were disposed of in FY2023, partially offset this resulting in a net increase in NOI by 7.9% from the prior year.

Notes

The retail sector benefitted from strong leasing activity and recovery in performance in Mukuba and Kafubu Malls (Zambia), which are now largely fully let, while Cosmopolitan Mall (Lusaka) has also seen good leasing activity and reduced vacancies. Buffalo Mall introduced Chandarana as a new significant anchor tenant. Further improved leasing activity is expected in the new financial year. AnfaPlace Mall is starting to show improved trading turnovers from the additional tenants that have enhanced the tenant mix.

The hospitality sector results were impacted by the disposal of BHI during the prior year, which contributed to the reduction in both reported revenue and NOI during the year. The year-on-year improvement in comparable revenue and NOI was largely driven by Club Med development revenues earned during the year as part of the Phase 1 development that was undertaken during FY2024.

The office sector assets benefited from the annualisation impact of the Precinct property in Mauritius that was completed during the latter part of FY2023 as well as the completion of the ENEO project in Kenya that were brought into commercial use during FY2024. These positive impacts were partially offset by rental reversions in Ghana and one-off fees generated in Mozambique and Ghana during FY2023 not occurring in FY2024.

The light Industrial sector results were largely impacted by lease incentives and once-off discounts provided to industrial tenants in Mozambique.

Corporate accommodation sector was positively impacted by the of change in ownership, the step up of the Kenya and Ethiopian properties to joint ventures of the Group on consolidation of GREA as well as lease escalations in Kenya and offset by rental reversions on renewal of lease terms on properties in Mozambique.

Medical assets increased mainly as a result of the annualised impact of the Artemis Curepipe hospital that was completed toward the end of FY2023 as well as the impact of change in control percentage and consolidation of GREA during the period.

Corporate sector reduction in both revenue and NOI is due to revenue streams that existed between joint venture parties and recognised under revenue and NOI in previous years, now being eliminated on consolidation post the acquisition of GREA and APDM as subsidiaries to the Group.

Cost control

During the financial year ended 30 June 2024 the Group commenced its cost savings programme along with streamlining of activities as a result of the consolidation of the subsidiaries. Subsequently, the Group decreased ongoing administrative expenses by 14.0% on a year-on-year basis. The administrative expense ratio as a percentage of total income producing assets reduced to 1.85% at 30 June 2024 from 2.42% at 30 June 2023. The Group remains committed to reducing the administrative expenses of the Group to 1% of total income producing assets.

Material finance costs increases

Global interest rates rose materially in the 2023 financial year and were then at these higher levels for the full year under review to 30 June 2024. The weighted average cost of debt rose to 10.0% (from 8.4% at the end of June 2023) largely driven by these increases. The Group held hedging instruments amounting to US$200 million that mitigates the impact of interest rate fluctuations, however during the financial year, US$100 million of our SOFR hedges expired and were reinitiated at higher levels. The consolidation of GREA during the year further contributed to an overall year-on-year increase in net finance cost. Annual contractual lease escalations over the portfolio that are mostly linked to US consumer price inflation partially shield the increase in ongoing funding costs.

The US$13.2 million increased charge resulted in a significant impact on the financial results for the year. The reported net finance charge includes an amortisation of loan issuance costs and the impact of hedging activities.

Interest rate risk exposure and management

The exposure to interest rate risk at 30 June 2024 is summarised below and the table highlights the value of the Group's interest-bearing borrowings that are exposed to the base rates indicated below:

Notes

The Group utilises hedging instruments, as well as back-to-back arrangement with joint venture partners to partially mitigate against the risk of rising interest rates. Taking this into consideration along with the impact of fixed interest instruments the Group is 61.0% hedged on its US$ SOFR exposure but remains largely unhedged to movements in EURIBOR and the Mauritian prime lending. The hedged position of the Group on 30 June 2024 is detailed below.

Notes

The following hedging instruments with floating benchmarks of USD - SOFR-Compounded 3 months, were effective on 30 June 2024. The hedging instruments contributed to reduce the weighted average cost of debt of the Group by c. 0.41% and finance charges by US$2.02 million.

Post balance sheet date the group settled a cross-currency swap that matured in August 2024 with a nominal value of US$6.25 million and entered into the following hedging instruments that increased the overall hedges in place for SOFR debt from US$200.0 million to US$256.6 million.

Notes

Management monitor and manages the business relative to the WACD, which is the net finance costs adjusted for the effects of hedging instruments that are in place as a percentage of the interest-bearing borrowings due at the reporting date. A sensitivity of the Group's expected WACD to further movements in base rates are summarised below:

Notes

Portfolio performance

Income producing assets increased by US$109.2 million on a year-on-year basis largely due to the acquisition and consolidation of GREA (US$141.8 million) and DH1 Elevation (US$76.9  million). This was partially offset by revaluations of properties during the year of US$30.0 million as well as the elimination of pre-existing relationships that were accounted for under other assets included within investment in associates and joint ventures in prior years being eliminated post consolidation of GREA during the current year.

Property valuations

Reported property values based on Grit’s proportionate share of the total property portfolio (including joint ventures and GREA associates) increased by 11.1%, primarily driven by the consolidation of GREA, and property acquired through the step up from joint venture to subsidiary (DH1 Elevation), which forms part of the change in ownership line as well as the completion of the ENEO CCI project in Kenya and other capital expenditure incurred during the year that contributed US$20.7 million and US$22.1 million respectively to the increase.

This was offset by the classification of Tamassa as a non-current asset held for sale as well as property valuation adjustments amounting to US$30.0 million that were incurred. The fair value of the light industrial sector was mainly impacted by the Orbit complex in Kenya, where a new framework agreement was entered into with the tenant for a reduced space. The corporate accommodation impact is largely driven by rental reversions and reduced space requirements in Mozambique.

Acquisition of Africa Property Development Managers Limited (“APDM”) and Gateway Real Estate Africa Limited (“GREA”)

On 30 November 2023, the Group obtained control of GREA and APDM. These entities were previously classified as joint ventures and have now been reclassified as subsidiaries following amendments made to their respective shareholder agreements, with control achieved through changes to the contractual terms, rather than through an exchange of additional consideration. The Group now consolidates GREA’s entire network of real estate investments, enhancing the Group’s strategic presence across key markets.

Prior to the acquisition, GREA and APDM were classified as investments in joint ventures and accounted for using the equity method in both the separate financial statements of the Company and the Group’s consolidated financial statements. The Group remeasured the previously held equity interests in GREA and APDM at fair value, with the resulting losses recognized in the income statement under "Fair value loss on revaluation of previously held interests."

Further details of the GREA and APDM acquisition can be found in Note 12a to the annual financial statements below.

Asset acquisition

Through the acquisition of GREA (refer to Note 12a), the Group also acquired GREA’s investments in joint ventures, DH One Real Estate PLC ("DH1") and DH3 Kenya Limited ("DH3"), assets co-owned with Verdant Ventures ("Verdant"), a U.S.-based real estate company. GREA and Verdant are currently exploring the potential to establish a single specialist platform for their respective diplomatic housing businesses, which would further consolidate their market leadership in this sector.

On 18th June 2024, an addendum to the shareholder agreement of DH1 between GREA and Verdant was signed, resulting in changes to its governance structure, that has now shifted control to GREA. As a result, the Group has consolidated DH1 as of 30 June 2024, triggered by contractual changes in the shareholder agreement rather than through the exchange of consideration. Refer note 12b in the annual financial statements below.

Transaction with non-controlling interest – disposal of BORA Africa

The Group identified an opportunity to create a specialised property platform focused on logistics, light industrial, manufacturing, and digital infrastructure properties. Bora Africa, a subsidiary of the Group, was established on 30 September 2023 and seeded with five property assets that were already part of the Group’s portfolio in Kenya and Mozambique. Grit disposed of its interests in Bora Africa to GREA at most recent book value. On 26 June 2024, GREA subscribed for 9,999 shares in Bora Africa, increasing its shareholding to 99.99%. Despite the transfer, Bora Africa remains consolidated within the Group as GREA is also a subsidiary. However, the transfer of Bora Africa to a partially owned entity has resulted in a decrease in Grit's effective shareholding in Bora Africa. Refer note 12c in the financial statements for further information.

GREA rights issue

On 28 June 2024, GREA issued a call notice to its shareholders, including Grit and PIC, as part of its US$100 million rights issue.

The capital call portion receivable from PIC has been recognised as a receivable of US$48.5 million and has been classified as a capital call receivable under trade and other receivables. Refer Note 5 to the annual financial statements.

While all conditions precedent for the PIC Capital Investment have been satisfied the release of the US$48.5 million was delayed as a result of South Africa’s recent regulatory directive, restricting state-owned entities from investing in low-tax jurisdictions or using these as conduits for offshore investments.

Notwithstanding this directive, the South African Reserve Bank (“the SARB”) on 30 October 2024 advised that the South African Minister of Finance has approved the request by the PIC, on behalf of the Government Employees Pension Fund of South Africa (“GEPF”) to participate in the rights issue as part of the capital raise exercise, subject to the condition that GREA redomicile from Mauritius to Kenya, within the next 12 months. Shareholders are further advised that the redomiciliation process is currently underway and expected to be completed imminently.

Asset recycling

The Group continued with its asset recycling strategy during the year, primarily focused on assets held in non-core sectors. The Tamassa resort disposal is expected to be concluded within FY2025 and consequently has the assets and liabilities pertaining to Tamassa has been classified under non-current assets classified as held for sale as more fully described under note 6 to the annual financial statements. Post balance sheet the disposal process of the Artemis Curepipe hospital commenced and is expected to be concluded in FY2025.

Interest bearing borrowings movements

On 30 June 2024 the Group had a total of US$501.2 million in interest-bearing borrowings outstanding as compared to US$396.7 million at the end of the comparative period. The increase in these balances is largely driven by the acquisition and consolidation of GREA during the year that contributed US$88.2 million to the increase, the consolidation of Diplomatic Housing 1 in Ethiopia that contributed US$10.8 million as well as a net increase in borrowings that were largely driven by additional borrowings provided to Gateway CCI upon completion of the development phase of the ENEO CCI project during the year. These increases were partially offset by borrowings relating to the Tamassa Resort that were classified to liabilities associated with assets held for sale and amounted to US$37.1 million.

For more meaningful analysis, a further breakdown is provided below to better reflect debt related to non-consolidated associates. At 30 June 2024, the Group had a total of US$562.5 million in interest-bearing borrowings outstanding, comprising US$537.5 million held in subsidiaries (inclusive of liabilities associated with asset held for sale) and US$25.0 million proportionately consolidated and held within its joint ventures.

Capital commitments

Upcoming capital commitments in the current financial year include:

Net Asset Value and EPRA Net Realisable Value

Further reconciliations and details of EPRA earnings per share and other metrics are provided in notes 14 to 16.

Comments

Material uncertainty relating to going concern

The Directors' assessment of the Group and Company’s ability to continue as a going concern is required when approving the financial statements.

The Directors have modelled a 'base case' and a 'severe but plausible downside' of the Group and Company’s expected liquidity and covenant position for a going concern assessment period through to March 2026, which is a period of at least 12 months following the approval of these financial statements. The Director's going concern assessment has involved a comprehensive review of the Group's risk register, an analysis of trading performance both pre and post year-end, extensive consultations with independent property valuers, and a review of operational indicators and economic data relevant to the Group's markets. As part of this, the Group and Company have a number of secured financing facilities that contain covenants requiring the Group and Company to maintain specified financial ratios including loan to value ratios, debt service and interest cover ratios.

The forecasts assume that the receivable of US$48.5 million due from the Public Investment Corporation SOC Limited of South Africa (PIC), as their contribution to the US$100 million rights issue called by Gateway Real Estate Africa Limited (“GREA”) on 28 June 2024, will be received by December 2024 at the latest. The payment was due within seven days of the rights issue being called and has been delayed due to an additional requirement for approval by the South African Reserve Bank before cash can be transferred out of South Africa.

This indicates the existence of a material uncertainty that may cast significant doubt on the Group and Company’s ability to continue as a going concern.

The Directors consider that all substantive conditions relating to the capital raise are fulfilled and were confirmed in writing by the PIC, except for the approval of the transaction by the South African Reserve Bank. The conditions that were fulfilled include inter alia:

• Under the terms of the GREA shareholder agreement the PIC has a contractual obligation to participate once a call notice issue is issued and the PIC (as the investment manager acting on behalf of the GEPF) confirmed in writing that they will participate in the rights issue, which was confirmed in September 2023.
• The capital raise has been approved by the Board of GREA in October 2023.
• The South African Government Employee Pension Fund (“GEPF”) provided shareholder approval on the 29th of April 2024.

In response to the submission made by the PIC to the SARB on 8 May 2024, the SARB had indicated that the exchange control application was declined based on the South African National Treasury’s current tax directive, whereby state-owned entities may not invest in low-tax havens and may not use low-tax jurisdictions as a conduit for offshore investments where such investments (especially to the rest of Africa) could be launched from South Africa.

On 14 of October 2024, the SARB notified the PIC of the immediate withdrawal of the decision to decline the application of the PIC’s participation in the GREA rights issue.

On 30 October 2024, the SARB issued a letter confirming that the Minister of Finance has approved the request by the PIC, on behalf of the Government Employee Pension Fund, to participate in the rights issue subject to the condition that GREA will redomicile to Kenya. The Directors have commenced the redomiciling process. At the date of this report, it is expected that the process will be completed by November 2024. In light of this, the timing of the receipt of the funds remains uncertain.

Once the SARB approves the transaction an updated draw request will be submitted to the PIC, whereafter payment is expected within 3 to 5 days, as confirmed by the PIC. The Directors’ note, however, that the timing of the receipt of funds is outside their control.

The forecasts assume that the funding can be used to repay debt to reduce the interest charge, decrease the Group LTV position and to provide additional liquidity to the Group. If the Group, through the Company, is unable to obtain the required funding by December 2024, it would need to seek alternative finance arrangements which may not be forthcoming. Consequently, these conditions represent a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern.

Mitigating Actions

In response to these uncertainties, the Company has undertaken several mitigating actions to enhance its liquidity position and ensure its ability to continue as a going concern including:

• Execution of the asset disposal strategy that the Group has embarked on, with the sale of both Tamassa and the Artemis Curepipe hospital close to being finalised, whilst further disposals within non-core sectors having started.
• The Company continues to use derivative financial instruments and has increased the hedged percentage of the debt portfolio, which over the short to medium term is expected to reduce Group finance costs as described under the Chief Financial Officer’s statement.
• Execution of targeted administrative and other cost savings initiatives.

Despite these mitigation measures, the material uncertainty concerning the timing of the receipt of the funding from PIC means that the Group and Company may not be able to realize its assets and discharge its liabilities in the normal course of business. Therefore, the appropriateness of the going concern assumption is dependent on the successful execution of these plans.

Due to the level of uncertainty the Directors made significant judgement in incorporating the receipt of the receivable from the PIC in the forecast scenario.

Base Case model

The base case reflects the Directors’ best expectations going forward and incorporates board-approved forecasts for the relevant period, adjusted for current business changes.  Key assumptions other than those discussed above include:

Severe but plausible downside model

In the severe but plausible downside scenario the base case assumptions are used as baseline and the following key adjustments were made:

Although unconditional approval from the SARB and the associated timing of the payment of funds from PIC is modelled under both scenarios, the Directors’ note that timing of the payment of funds is outside of their control.

For both scenarios, the Group has identified potential risks to its covenants and obtained specific condonements from its financiers if the forecasted scenarios materialise. These condonements require key actions undertaken by management that include the repayment of specific loan balances. The next repayment in relation to this is due on the 8th of November 2024, which will be partly funded through a new facility entered with Maubank Limited (“Maubank”). At the date of this report, the funds from Maubank have not been received, however, the agreement between the parties has been signed and is deemed to be unconditional with funds to be disbursed imminently. Furthermore, receipt of the US$48.5 million is required in order to comply with the condoned covenant tests by 31 December 2024.

In addition, a facility of the Group with ABSA (Mauritius) Limited of US$35.0 million matures during the going concern assessment period. Prior to the date of the financial statements, management entered into a binding legal agreement that confirms the extension of the facility to 31 March 2026, however the final signing of the documentation is conditional on normal banking conditions that management has reviewed and assessed to be within the Group’s control.

Under both the base case and the severe but plausible downside scenario the material uncertainty relating to the timing of the receipt of the receivable from the PIC relating to the GREA rights issue may result in the Group and Company being unable to meet its continued obligations as they fall due and may result in covenant pressures in future measuring periods if the receipt of the PIC funds are delayed beyond December 2024 as assumed under the various scenarios.Consequently, these conditions represent a material uncertainty that may cast significant doubt on the Group and Company’s ability to continue as a going concern.

The Board, based on the considerations highlighted above, and the recently obtained SARB approval believes that the funds will be received from the PIC within the timelines assumed under the various scenarios, which together with other remedies that are within management’s control and continued support from our existing lenders, concluded that it is appropriate to prepare the annual financial statements on a going concern basis.

The financial statements do not include any adjustments that might be necessary if the Group or the Company is unable to continue as a going concern.

PRINCIPAL RISKS AND UNCERTAINTIES

Grit has a detailed risk management framework in place that is reviewed annually and duly approved by the Risk Committee and the Board. Through this risk management framework, the Company has developed and implemented appropriate frameworks and effective processes for the sound management of risk.

The principal risks and uncertainties facing the Group as at 30 June 2024 are set out in the 2024 Integrated Annual Report together with the respective mitigating actions and potential consequences to the Group’s performance in terms of achieving its objectives. These principal risks are not an exhaustive list of all risks facing the Group but are a snapshot of the Company’s main risk profile as at year end.

The Board has reviewed the principal risks categories and existing mitigating actions and are satisfied that they remain appropriate to manage the relevant risks.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The responsibility statement has been prepared based on the Group’s 2024 Integrated Annual Report, extracts of which are included within this announcement.

The Directors are responsible for preparing financial statements for each financial year which give a true and fair view, in accordance with applicable Guernsey law and International Financial Reporting Standards, of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the directors are required to:

The directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

Directors’ confirmations

The Directors consider that the Integrated Report and Accounts, taken as a whole, is fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group’s position, performance, business model and strategy.

Each of the Directors, confirm that, to the best of their knowledge:

The financial statements were approved by the Board of Directors and signed on its behalf by:

On behalf of the Board

CONSOLIDATED STATEMENT OF INCOME

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION