Grit Real Estate Income Group Notification of Transfer to a Premium Listing (3582J)

TIDMGR1T

RNS Number : 3582J

Grit Real Estate Income Group

21 December 2020

THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY ORDINARY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.

GRIT REAL ESTATE INCOME GROUP LIMITED

Notification of Transfer to a Premium Listing

Grit Real Estate Income Group Limited ("Grit" or the "Company" and, together with its subsidiaries the "Group") announces that it is proposing to transfer the listing category of its ordinary shares of no par value (the "Ordinary Shares") from a standard listing (shares) (a "Standard Listing") to a premium listing (commercial company) on the Official List of the Financial Conduct Authority ("FCA") in accordance with Rule 5.4A of the Listing Rules issued by the FCA (a "Premium Listing") (the "Transfer").

The provision of a minimum of 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Transfer. No Shareholder approval is required in connection with the Transfer. It is anticipated that the Transfer will take effect at 8.00 a.m. on 22 January 2021, conditional on the approval of the FCA.

This announcement is being made in accordance with Listing Rule 5.4A.5.

   1             Background to and Reasons for the Transfer 

Grit is a leading pan-African real estate company focused on the acquisition of real estate assets in pre-selected African countries (excluding South Africa). The Company's entire issued ordinary share capital was admitted to a Standard Listing in July 2018 ("Admission"). Grit also currently has a listing on the Official Market of the SEM. Since the time of Admission, Grit has intended to move to a Premium Listing.

The Board is of the opinion that a Premium Listing would be the most appropriate listing segment for the Company.

The Board believes that a Premium Listing will:

-- facilitate potential inclusion in the FTSE Indices (subject to meeting certain other eligibility criteria) in due course;

-- provide a more appropriate platform for the continued growth of the Company and further raise its profile and status as a real estate business focused on Africa;

-- afford increased protection for Shareholders under the Listing Rules as a result of the higher standards placed on premium listed companies, including in relation to significant and related party transactions; and

-- place the Company in a better position to raise additional capital and improve liquidity in its Ordinary Shares.

The Company has therefore requested that the FCA approves the Transfer with effect from 8.00 a.m. on 22 January 2021. All of the Ordinary Shares in issue at such time will be subject to the Transfer. As at 18 December 2020 (being the latest practicable date prior to this announcement), the Company had 316,235,546 Ordinary Shares in issue. As announced by the Company on 16 December 2020, following the successful placing, application has also been made to the FCA and the London Stock Exchange for 15,000,000 additional Ordinary Shares (the "Placing Shares") to be admitted to the Official List and to trading on the Main Market respectively. On admission of the Placing Shares becoming effective, the total number of Ordinary Shares of the Company in issue will be 331,235,546.

In conjunction with (but not conditional upon) the Premium Listing, the Company is also seeking to migrate its domicile from Mauritius to Guernsey (the "Migration"). A key driver for the Migration is that, in addition to the Premium Listing, a key eligibility requirement for inclusion in the FTSE Indices relates to the nationality of a company. Ordinary shares in limited companies registered in Guernsey are eligible for inclusion in the FTSE Indices. The Migration is conditional, amongst other things, on the approval of Shareholders at the Company's annual general meeting convened for 28 December 2020.

   2             Effect of the Transfer to Premium Listing 

No changes to the Company's business have been, or are proposed to be made, in connection with the Transfer.

Following the Transfer, certain additional provisions of the Listing Rules (some of which since Admission have applied only on a voluntary basis) will apply to the Company. These provisions, set out under Chapters 6 to 13 (inclusive) of the Listing Rules, relate to the following matters:

-- the application of certain requirements that are specific to companies with a Premium Listing (Chapter 6);

   --      the application of the Premium Listing Principles (Chapter 7); 
   --      the requirement to appoint a sponsor in certain circumstances (Chapter 8); 

-- the requirement to comply with various continuing obligations, including compliance with all relevant provisions of the UK Corporate Governance Code (or to provide an explanation for any non-compliance, if applicable, in its annual report and accounts) (Chapter 9);

-- the requirement to announce, or obtain shareholder approval for, certain transactions (depending on their size and nature) and for certain transactions with "related parties" of the Company (Chapters 10 and 11);

-- certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and

-- various specific contents requirements that will apply to circulars issued by the Company to its Shareholders (Chapter 13).

   3             Working Capital 

The Company is of the opinion that the working capital available to the Group is sufficient for its present requirements, that is for at least the next 12 months from the date of this announcement.

Impact of COVID-19

In preparing the working capital statement, the Company is required to identify, define and consider a reasonable worst-case scenario. This has involved making certain assumptions regarding the potential evolution of the COVID-19 pandemic and its potential impact on the Group in that reasonable worst-case scenario.

COVID-19 reasonable worst-case assumptions

COVID-19 has resulted in significantly increased levels of uncertainty with a wide range of possible scenarios and financial impacts. In determining the potential further impact resulting from COVID-19, the Directors' projections take into account the underlying legal positions of the Group's long-term lease contracts, the financial obligations of the Group and current policy measures introduced by various governments which could impact the performance of the Group's assets. This results in the following COVID-19 related assumptions under a reasonable worst-case scenario upon which the working capital statement depends:

1. Rent concessions provided to a range of tenants, particularly in the retail and hospitality sectors, including extended assumptions on vacancy take up as detailed below:

   --      a delay in vacancy take up of 12 months for all vacant space; 

-- additional rental concessions of 30% on all non-essential services tenants in the retail sector; and

   --      average rental concessions of approximately 35% across the hospitality sector. 
   2.            Cumulative decline in property valuations of: 
   --      30% peak to trough (December 2019 to June 2022) on all retail assets; 

-- 30% peak to trough (December 2019 to June 2022) on hospitality assets in Mauritius where government support is pending, and declines of 15% on hospitality assets in Mauritius where government support has been obtained and on the hospitality assets in Senegal;

   --      5% decline in valuations of light industrial assets from June 2020 to June 2022; 
   --      5% decline in valuations of corporate accommodation from June 2020 to June 2022; and 

-- weighted average decline of 6.7% in valuations of office sector assets from June 2020 to June 2022.

Basis of working capital statement

The working capital statement in this announcement has been prepared in accordance with the ESMA Recommendations as they relate to working capital statements, and the technical supplement to the FCA Statement of Policy published on 8 April 2020 relating to the coronavirus crisis.

   4             Corporate Governance 

The Board is committed to, and recognises the importance and value of, good corporate governance. The Company has taken steps to comply with the recommendations set out in the UK Corporate Governance Code (the "Code") and will report on its compliance and provide any reasons for non-compliance in its 2021 annual report.

The Company expects to be in compliance with the recommendations set out in the Code immediately prior to the Transfer, other than in respect of provisions 36 and 37 with specific reference to the current Grit LTIP scheme which allows for retesting performance conditions.

The Remuneration Committee has commenced a comprehensive review of the Company's remuneration policy and, in particular, the terms of the current LTIP scheme. The purpose of the review is to ensure that the remuneration policy and LTIP scheme continue to align with the Company's strategic aims, vision, attitude to risk and culture, and is appropriately aligned with the UK Corporate Governance Code. Completion of this review has been delayed whilst the Company, the Directors and senior management focused their attentions on securing the stability of the Company throughout the COVID-19 pandemic and migrating the Company to Guernsey.

The review remains ongoing and the Remuneration Committee recently re-engaged consulting with some of the Company's major Shareholders on, amongst other things, the design and implementation of a new LTIP scheme to replace the existing LTIP scheme. It is intended that this new LTIP scheme for executives will be put before Shareholders for approval together with a new remuneration policy at a general meeting to be held in or around the first quarter of 2021. Until such time as a new long-term incentive plan is approved by Shareholders in general meeting, no further awards shall be granted to executive Directors under the existing LTIP scheme. Furthermore, in respect of outstanding awards held by executive Directors under the existing LTIP scheme, the Remuneration Committee has decided that it will not retest the performance conditions applying to those awards to the extent that the performance conditions are not satisfied in full at the end of the original performance period.

   5             UK Takeover Code 

As a company registered by continuation in Mauritius, the UK Takeover Code does not currently apply to the Company and Grit is subject to the takeover rules that apply to companies listed on the SEM. The UK Takeover Code applies, inter alia, to all companies which have their registered offices in Guernsey and whose shares are admitted to trading on the main market of the London Stock Exchange. Accordingly, subject to and with effect from completion of the Migration, the UK Takeover Code would apply to the Company.

   6             Appointment of joint sponsors 

Deloitte LLP and finnCap Ltd are acting as joint sponsors to the Company. Each of Deloitte LLP and finnCap Ltd has given and has not withdrawn its written consent to the inclusion in this announcement of the references to its name in the form and context in which they are included.

   7             Financial information incorporated by reference 

In order to provide a three-year track record of the Group, as required by Chapter 6 of the Listing Rules, the financial information listed below is incorporated by reference into this announcement and can be found in the Group's consolidated financial statements for the years ended 30 June 2018, 2019 and 2020 which can be viewed on the Company's website, http://grit.group. The parts of the consolidated financial statements of the Group for the years ended 30 June 2018, 2019 and 2020 which are not incorporated by reference are not relevant for the purposes of this announcement.

 
 Information               Reference document             Page number(s) in 
  incorporated                                             reference document 
  by reference 
  into this announcement 
 Annual Report             Directors' report              Pages 123-125 
  and Accounts 
  2018 
                          -----------------------------  -------------------- 
                           Independent auditor's          Pages 131-138 
                            report 
                          -----------------------------  -------------------- 
                           Consolidated statement         Page 139 
                            of financial position 
                          -----------------------------  -------------------- 
                           Consolidated statement         Page 140 
                            of comprehensive income 
                          -----------------------------  -------------------- 
                           Consolidated statement         Pages 141-142 
                            of changes in equity 
                          -----------------------------  -------------------- 
                           Consolidated statement         Page 143 
                            of cash flows 
                          -----------------------------  -------------------- 
                           Notes to the consolidated      Pages 144-232 
                            financial statements 
                          -----------------------------  -------------------- 
 Annual Report             Directors' report              Pages 106-107 
  and Accounts 
  2019 
                          -----------------------------  -------------------- 
                           Independent auditor's          Pages 112-123 
                            report 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 124 
                            statements of financial 
                            position 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 125 
                            income statements 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 126 
                            statements of comprehensive 
                            income 
                          -----------------------------  -------------------- 
                           Consolidated statement         Page 127 
                            of changes in equity 
                          -----------------------------  -------------------- 
                           Separate statement of          Page 128 
                            changes in equity 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 129 
                            statements of cash flows 
                          -----------------------------  -------------------- 
                           Notes to the consolidated      Pages 130-229 
                            financial statements 
                          -----------------------------  -------------------- 
 Annual Report             Directors' report              Page 162-165 
  and Accounts 
  2020 
                          -----------------------------  -------------------- 
                           Independent auditor's          Page 170-181 
                            report 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 182 
                            statements of financial 
                            position 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 183 
                            income statements 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 184 
                            statements of comprehensive 
                            income 
                          -----------------------------  -------------------- 
                           Consolidated statement         Page 185 
                            of changes in equity 
                          -----------------------------  -------------------- 
                           Separate statement of          Page 186 
                            changes in equity 
                          -----------------------------  -------------------- 
                           Consolidated and separate      Page 187 
                            statements of cash flows 
                          -----------------------------  -------------------- 
                           Notes to the consolidated      Pages 188-276 
                            financial statements 
                          -----------------------------  -------------------- 
 
   8             Definitions 

"Board" or "Directors" means the board of directors of the Company;

"FCA" means the UK Financial Conduct Authority;

"Listing Rules" means the listing rules made by the FCA under Section 73A of the Financial Services and Markets Act 2000;

"LTIP" means long-term incentive plan;

"Official List" means the Official List of the FCA;

"Premium Listing" means a premium listing (commercial company) requiring compliance with Chapter 6 of the Listing Rules and the other requirements of the Listing Rules that are expressed to apply to such a listing;

"Remuneration Committee" means the remuneration committee established by the Board;

"SEM" means the Stock Exchange of Mauritius Ltd;

"Shareholder" means a holder of Ordinary Shares;

"Standard Listing" means a listing which is not a Premium Listing and which requires compliance with Chapter 14 of the Listing Rules; and

"UK Corporate Governance Code" or "Code" means the UK Corporate Governance Code published in July 2018 by the Financial Reporting Council.

FOR FURTHER INFORMATION, PLEASE CONTACT:

 
 Grit Real Estate Income Group Limited 
 Bronwyn Corbett, Chief Executive Officer        [phone] 
                                                ----------------------------- 
 Darren Veenhuis, Chief Strategy Officer 
  and Investor Relations                         [phone] 
                                                ----------------------------- 
 
 Maitland/AMO - Communications Adviser 
                                                ----------------------------- 
 James Benjamin                                  [phone] 
                                                ----------------------------- 
 Jason Ochere                                    [e-mail] 
                                                ----------------------------- 
 
 Deloitte LLP - Joint Sponsor 
                                                ----------------------------- 
 Chris Nicholls                                  [phone] 
                                                ----------------------------- 
 Craig Lukins 
                                                ----------------------------- 
 Iain McKenzie 
                                                ----------------------------- 
 
 finnCap Ltd - Joint Sponsor and UK Financial 
  Adviser & Broker 

                                                ----------------------------- 
 William Marle/Giles Rolls/Teddy Whiley 
  (Corporate Finance)                            [phone] 
                                                ----------------------------- 
 Mark Whitfeld/Pauline Tribe (Sales)             [phone] 
                                                ----------------------------- 
 Monica Tepes (Research)                         [phone] 
                                                ----------------------------- 
 
 Perigeum Capital Ltd - SEM Authorised 
  Representative and Sponsor 
                                                ----------------------------- 
 Shamin A. Sookia                                [phone] 
                                                ----------------------------- 
 Kesaven Moothoosamy                             [phone] 
                                                ----------------------------- 
 

The Company's LEI is: 21380084LCGHJRS8CN05

NOTES:

Grit Real Estate Income Group Limited is a leading pan-African real estate company focused on investing in 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 multi-national 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 income and capital growth. The Company is targeting net total shareholder return inclusive of NAV growth of 12.0% p.a.*

The Company currently holds a primary listing on the Main Market of the London Stock Exchange (LSE: GR1T), while its listing on the Official Market of the Stock Exchange of Mauritius Ltd is termed as a secondary listing (SEM: DEL.N0000).

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

 
 *   This is a target only and not a profit forecast and there can be no assurance that it will 
      be met. Any forward-looking statements and the assumptions underlying such statements are 
      the responsibility of the Board of directors and have not been reviewed or reported on by 
      the Company's external auditors. 
 

Directors : Peter Todd(+) (Chairman), Bronwyn Corbett (Chief Executive Officer)*, Leon van de Moortele (Chief Financial Officer)*, Jonathan Crichton(+) , Sir Samuel Esson Jonah(+,) Nomzamo Radebe, Catherine McIlraith(+) , David Love(+) , and Bright Laaka (Permanent Alternate Director to Nomzamo Radebe).

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

Company secretary : Intercontinental Fund Services Limited

Registered office address : c/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebène 72201, Mauritius

Registrar and transfer agent (Mauritius) : Intercontinental Secretarial Services Limited

Sponsoring broker : Capital Markets Brokers Ltd

SEM authorised representative and sponsor : Perigeum Capital Ltd

UK Transfer secretary : Link Assets Services Limited

IMPORTANT NOTICE:

The contents of this announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any Ordinary Shares or other securities in connection with the proposals described in this announcement. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.

The timetable to Transfer set out in this announcement is subject to change. There can be no guarantee that the Transfer will become effective in the timeframe set out in this announcement or at all.

The contents of the Company's website do not form part of this announcement.

Deloitte LLP ("Deloitte") is acting for Grit and no-one else in connection with Transfer and will not be responsible to anyone other than Grit for providing the protections offered to clients of Deloitte or for providing advice in relation to the Transfer. Deloitte is authorised and regulated in the United Kingdom by the Financial Conduct Authority in respect of regulated activities. Deloitte can be contacted at its principal office: 1 New Street Square, London EC4A 3HQ.

finnCap Limited ("finnCap"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for Grit and no-one else in connection with the Transfer and will not be responsible to anyone other than Grit for providing the protections offered to clients of finnCap or for providing advice in relation to the Transfer.

No representation or warranty, express or implied, is made by Deloitte or finnCap as to, and no liability is accepted by Deloitte or finnCap in respect of, any of the contents of this announcement.

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December 21, 2020 05:15 ET (10:15 GMT)