First Mutual Properties : 2022 HY Results & Audit Review

September 21, 2022 at 03:30 am EDT

ADRENALIN 00000

P R O P E R T I ES

Reviewed Abridged Consolidated Group Financial Results for the Six Months Ended 30 June 2022

Short-form Financial Announcement

This short form financial announcement has been issued in terms of the Zimbabwe Stock Exchange (ZSE) Practice note 13.

This short-form financial announcement is only a summary of the information contained in the reviewed abridged consolidated financial statements for the six months ended 30 June 2022. Any investment decision by investors and/or shareholders should be based on consideration of the reviewed abridged consolidated financial results for the six months ended 30 June 2022. The reviewed abridged consolidated financial statements have been released on the ZSE Data Portal: www.zse.co.zwand the Company's website: https://firstmutualpropertiesinvestor.com/

Financial performance

The summarised financial statement

	Inflation adjusted		Historical cost*
	30-Jun-22	30-Jun-21	Change %	30-Jun-22	30-Jun-21	Change %
	ZWL000	ZWL000		ZWL000	ZWL000
Revenue	746,274	595,460	25%	485,763	191,416	154%
Net property income (NPI)	247,196	314,737	(21%)	122,984	89,506	37%
Fair value movements- Investment properties	29,743,530	(4,651,593)	(739%)	55,970,982	358,404	15517%
Profit/(loss) before income tax	29,909,713	(4,586,123)	752%	56,478,288	402,384	13936%
Profit/(loss) for the period	25,064,733	(2,058,299)	1318%	48,547,060	340,160	14172%

	Inflation adjusted		Historical cost*
	30-Jun-22	31-Dec-21	Change %	30-Jun-22	31-Dec-21	Change %
	ZWL000	ZWL000		ZWL000	ZWL000
Investment properties	77,989,500	48,246,709	62%	77,989,500	22,039,000	254%
Total assets	79,223,670	49,285,243	61%	79,154,209	22,484,356	252%
	30-Jun-22	30-Jun-21		30-Jun-22	30-Jun-21
Cash generated from operations	236,573	87,663	170%	198,777	27,238	630%

	Inflation adjusted		Historical cost*
	30-Jun-22	30-Jun-21	Change %	30-Jun-22	30-Jun-21	Change %
Headline earnings per share (ZWL cents)	2,026.69	(166.42)	1318%	3,925.44	27.50	14173%
Basic earnings per share (ZWL cents)	2,026.69	(166.42)	1318%	3,925.44	27.50	14173%

*The historical cost information has been shown as supplementary information for the benefit of users. The historical cost information does not comply with the International Financial Reporting Standards in that it has not taken into account the requirements of International Accounting Standard 29 - Financial Reporting in Hyperinflationary Economies. As a result, the auditors have not expressed an opinion on this historic financial information and company financial information

Dividend

On 30 August 2022 the Board resolved that an interim dividend of ZWL 87 million and USD 100,000 be declared from the profits of the Company for the quarter ended 30 June 2022. Further details on the payment of the dividend will be communicated in a separate dividend announcement.

Review opinion

The consolidated inﬂation adjusted financial statements from which this abridged version has been extracted have been reviewed by the Group's external auditors, Ernst and Young Chartered Accountants (Zimbabwe). A qualified review conclusion has been issued thereon as a result of non- compliance with the requirements of International Accounting Standard 8 (Accounting policies, changes in accounting estimates and errors) and the consequential impact of applying International Accounting Standard 29 (Financial reporting in Hyperinﬂationary Economies) on incorrect base numbers for the corresponding (prior year) figures only. The auditor's review conclusion is available for inspection at the Group's registered office. The partner of this engagement was Fungai Kuipa (PAAB Practising certificate number 335).

E K Moyo

Chairman

30 August 2022

Directors: E K Moyo (Chairman), A M Chidakwa, D Hoto, S Jogi, C K Manyowa*, W M Marere, E Mkondo, T Ruvingo, S Wekwete (* Executive Director)

First Mutual Properties, First Mutual Park, First Floor, 100 Borrowdale Road, Borrowdale, Harare, Zimbabwe | P O Box MP 373, Mt Pleasant, Harare. Tel: +263 (242) 886 121 - 4 | Email: info@firstmutualproperties.co.zw | Website: www.firstmutual.co.zw | +263 778 917 309

ADRENALIN 16755

Reviewed Abridged Financial Results

For the half year ended 30 June 2022

HY 2022 CHAIRMAN'S STATEMENT

Overview of Operating Environment

Zimbabwe has been experiencing rising inﬂationary pressures and exchange rate volatility since the beginning of the year. This has also been worsened by geopolitical conﬂicts, particularly the Russia-Ukraine conﬂict and the Covid-19 induced supply chain disruptions. These developments during the period under review had signiﬁcant knock-on effects with global inﬂation reaching its highest since 2008 while economic growth remained mixed. Global issues coupled with climate

change (unpredictable rainfall and weather patterns) had important implications for Zimbabwe's operating environment, cost of doing business and hence strategy implementation as well as business viability.

Annual inﬂation rose to 191.6% in June 2022 from 60.7% in December 2021. Both the ofﬁcial and unofﬁcial exchange rates were under pressure during the period under review. The ofﬁcial rate depreciated by 70.7% from ZWL108.67 on 31

December 2021 to ZWL370.96 on 30 June 2022. Management, however, continued to implement effective strategies to

minimise the potentially huge negative effects of the changing operating environment on business.

Property Market Overview

Space absorption remained low during the period under review due to relatively weak demand that resulted in excess supply of space in the Central Business District (CBD) ofﬁces and Suburban Shopping centres. In contrast, the retail, warehousing and prime ofﬁce space segments enjoyed relatively strong demand resulting in high occupancy levels.

Achieving sustainable rentals has remained a major challenge for the industry given the inﬂationary and exchange rate

depreciation pressures experienced during the review period. Further, pressure to preserve value of the local currency denominated rentals remained a top priority for property companies including the First Mutual Properties. Against this, quarterly reviews of local currency denominated rentals were being made in tandem with the prevailing business conditions.

The country has seen some developments in the industrial and retail warehousing sectors. Further, there has been an increase in the development of owner-occupied ofﬁce park style buildings, cluster houses and residential house conversions

and new commercial developments especially in suburbs just outside the CBD and on major roads. First Mutual Properties has positioned itself to take advantage of the emerging growth opportunities for the beneﬁt of the shareholders.

Business performance overview

The Group's inﬂation adjusted Net Property Income after administration expenses decreased by 46% to ZWL67.4 million (HY 2021: ZWL125.8 million) despite growth in inﬂation adjusted revenue of 25% to ZWL746.3 million (HY 2021: ZWL595.5 million). Rental income remains the main source of revenue. In historical terms, revenue grew by 154% from ZWL191 million in June 2021 to ZWL486 million mainly due to timeous rental reviews and stable occupancy level averaged 89.23% for the 6 months ending 30 June 2022 (FY 2021: 89.53%).

Management continued to engage the tenants for timeous rental payments. This initiative resulted in the drop on the number of tenants who in the past deliberately delayed to meet their lease obligations leading to improved collection rate at 87% (FY 2021: 82%). The Company is committed to providing a quality and safe product (property) to its tenants. In light of this, ZWL 85.4 million and ZWL 3.4 million were committed towards maintenance and improvements respectively during the period under review.

Property valuations

An independent property valuation conducted by Knight Frank Zimbabwe as at 30 June 2022 valued the property portfolio at ZWL 78.018 billion (FY 2021: ZWL 22.039 billion). The growth in property values of 254% is driven by the growth in rentals in line with the inﬂationary environment.

Developments

The Group has positioned itself to create value for its shareholders by embarking on various projects that are at different stages of execution. We are happy to report on the Arundel Ofﬁce Park extension and Mbare retail warehouse for Gains

Cash and Carry.

With regards to the Arundel Ofﬁce Park extension, all the construction designs, tenders and approvals were obtained.

Construction is scheduled to commence in September 2022.

The Mbare retail warehouse was completed and handed over to the tenant (Gain Cash and Carry) in June 2022. Tenant

operations began in July 2022.

Sustainability

The Group will continue to run its operations sustainably in line with the environmental, social and governance (ESG) requirements. The adoption of "green" operations including investing in a solar power plant, energy efﬁcient operations and waste management initiatives remain key to the Group's strategy. We will continue to enhance the Group's ESG

framework in line with the global trends.

Dividend

On 30 August 2022 the Board resolved that an interim dividend of ZWL 87 million and USD 100,000 be declared from the proﬁts of the Company for the quarter ended 30 June 2022. Further details on the payment of the dividend will be

communicated in a separate dividend announcement.

Business Outlook

The business outlook remains highly uncertain. Despite this, the Company will continue to explore pragmatic strategies to grow the shareholder value including investing in high-yielding properties which will hedge the Company against inﬂation

and exchange rate risks. Maintaining high occupancy levels on the back of effective client relationship management, provision of quality and safe product through on-going property refurbishment, maintenance and upgrades will remain a

key focus area in the outlook.

E K Moyo

Chairman

30 August 2022

Interim Condensed Consolidated Statement of Financial Position

As at 30 June 2022
		Inﬂation Adjusted	Historical Cost
		Reviewed	Audited	Unaudited	Unaudited
	Note	30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
ASSETS		ZWL 000	ZWL 000	ZWL 000	ZWL 000
Non-current Assets
Investment properties	6.1	77 989 500	48 246 709	77 989 500	22 039 000
Investment in Associate	7	27 455	27 455	8 702	8 702
Vehicles and equipment	8	20 405	17 881	6 175	2 833
Financial assets at fair value through	9	27 185	18 473	27 185	8 438
proﬁt or loss - Unquoted shares
Financial assets at fair value through	9.1	3 522	3 061	3 522	1 398
proﬁt or loss - Quoted shares
Financial assets at amortised cost	10	200	855	200	390
		78 068 267	48 314 434	78 035 284	22 060 761
Current Assets
Inventory		155	1 052	24	121
Trade and other receivables	11	348 234	464 507	311 887	192 677
Investment Property held for sale	6.2	28 000	-	28 000	-
Cash and cash equivalents	12	779 014	505 250	779 014	230 797
		1 155 403	970 809	1 118 925	423 595
Total Assets		79 223 670	49 285 243	79 154 209	22 484 356
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Ordinary share capital		165 235	165 235	1 198	1 198
Retained earnings		68 113 130	43 141 966	68 245 733	19 760 449
Total Shareholders' Equity		68 278 365	43 307 201	68 246 931	19 761 647
Non-current liabilities
Deferred tax liabilities	13	10 502 270	5 702 520	10 483 981	2 598 083
		10 502 270	5 702 520	10 483 981	2 598 083
Current liabilities
Current income tax liability		14 120	14 498	14 120	6 623
Trade and other payables	14	428 915	261 024	409 177	118 003
		443 035	275 522	423 297	124 626
Total Liabilities		10 945 305	5 978 042	10 907 278	2 722 709
Total Equity and Liabilities		79 223 670	49 285 243	79 154 209	22 484 356

Interim Condensed Consolidated Statement of Comprehensive Income

for the period ended 30 June 2022

		Inﬂation Adjusted	Historical Cost
			Restated		Restated
		Reviewed	Reviewed	Unaudited	Unaudited
Note	30 Jun 2022	30 Jun 2021	30 Jun 2022	30 Jun 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
Revenue	15	746 274	595 460	485 763	191 416
Property expenses	16	(472 550)	(263 450)	(336 251)	(95 986)
Provision for credit losses		(26 528)	(17 273)	(26 528)	(5 924)
Net property income (NPI)		247 196	314 737	122 984	89 506
Employee related expenses		(55 002)	(83 715)	(38 593)	(27 184)
Other expenses		(124 810)	(105 233)	(84 653)	(22 059)
NPI after admin expenses		67 384	125 789	(262)	40 263
Fair value adjustment - investment
properties	18	29 743 530	(4 651 593)	55 970 982	358 404
Net monetary loss		(534 445)	(73 569)	-	-
Finance income	19	50 716	7 948	32 328	2 562
Other income	20	582 528	5 302	475 240	1 156
Proﬁt/(loss) before income tax	17	29 909 713	(4 586 123)	56 478 288	402 385
Income tax (expense) credit	21	(4 844 980)	2 527 824	(7 931 228)	(62 224)
Proﬁt/(loss) for the period		25 064 733	(2 058 299)	48 547 060	340 161
Other comprehensive income for

the period		-	-	-	-
Total comprehensive profit/(loss) for the
period		25 064 733	(2 058 299)	48 547 060	340 161
Attributable to:

-Owners of the parent		25 064 733	(2 058 299)	48 547 060	340 161

Total proﬁt/(loss) for the period		25 064 733	(2 058 299)	48 547 060	340 161


Basic and diluted earnings/(loss) per share
(ZWL cents)		2 027	(166)	3 925	28
Headline earnings per share (ZWL cents)		2 027	(166)	3 925	28
Weighted average number of shares in issue	1 236 730	1 236 730	1 236 730	1 236 730

Directors: E K Moyo (Chairman), A M Chidakwa, D Hoto, S Jogi, C K Manyowa*, W M Marere, E Mkondo, T Ruvingo, S Wekwete (* Executive Director)

First Mutual Properties, First Mutual Park, First Floor, 100 Borrowdale Road, Borrowdale, Harare, Zimbabwe | P O Box MP 373, Mt Pleasant, Harare | Tel: +263 (242) 886 121 - 4 | Email: info@ﬁrstmutualproperties.co.zw | Website: www.ﬁrstmutual.co.zw | +263 778 917 309

Reviewed Abridged Financial Results

For the half year ended 30 June 2022

ADRENALIN 16755

Interim Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2022
		Inﬂation Adjusted
		Attributable to owners of the parent
				Total
	Ordinary Share		Retained	Shareholders
	Capital	Treasury shares	Earnings	Equity
	ZWL 000	ZWL 000	ZWL 000	ZWL 000
At 1 January 2021	168 296	(3 061)	30 557 543	30 722 778
Loss for the period	-	-	(2 058 299)	(2 058 299)
Dividend paid	-	-	(69 878)	(69 878)
At 30 June 2021	168 296	(3 061)	28 429 366	28 594 601

At 1 January 2022	168 296	(3 061)	43 141 966	43 307 201
Acquisition of treasury shares	-	-	(518)	(518)
Proﬁt for the period	-	-	25 064 733	25 064 733
Dividend paid	-	-	(93 051)	(93 051)
At 30 June 2022	168 296	(3 061)	68 113 130	68 278 365

Interim Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2022
		Historical Cost
All ﬁgures in ZWL		Attributable to owners of the parent
				Total
	Ordinary Share		Retained	Shareholders
	Capital	Treasury shares	Earnings	Equity
	ZWL 000	ZWL 000	ZWL 000	ZWL 000
At 1 January 2021	1 238	(40)	8 723 959	8 725 157
Proﬁt for the period	-	-	340 160	340 160
Dividend paid	-	-	(21 511)	(21 511)
At 30 June 2021	1 238	(40)	9 042 608	9 043 806

At 1 January 2022	1 238	(40)	19 760 449	19 761 647
Acquisition of treasury shares	-	-	(518)	(518)
Proﬁt for the period	-	-	48 547 060	48 547 060
Dividend paid	-	-	(61 258)	(61 258)
At 30 June 2022	1 238	(40)	68 245 733	68 246 931

Interim Condensed Consolidated Statement of Cash Flows

for the period ended 30 June 2022
	Inﬂation Adjusted	Historical
	Reviewed	Reviewed	Unaudited	Unaudited
	30 Jun 2022	30 Jun 2021	30 Jun 2022	30 Jun 2021
	ZWL 000	ZWL 000	ZWL 000	ZWL 000
Proﬁt before tax	29 909 713	(4 586 123)	56 478 288	402 385
Adjustment for non-cash items**	(29 931 672)	4 760 046	(56 425 044)	(346 955)
Cash ﬂows from operating activities
before working capital adjustments	(21 959)	173 923	53 244	55 430
Working capital adjustments	258 533	(86 260)	145 533	(28 192)
Cash generated from operations	236 574	87 663	198 777	27 238
Tax paid	(51 567)	(75 648)	(37 758)	(24 678)
Net cash ﬂow from operating activities	185 007	12 015	161 019	2 560
Net cash ﬂows used in investing activities	(34 562)	(50 208)	(4 205)	(17 238)
Net cash ﬂows from ﬁnancing activities*	(68 052)	(65 016)	(61 777)	(21 511)
Net increase/(decrease) in cash and
cash equivalents	82 393	(103 209)	95 037	(36 189)
Inﬂation effect on overall cash ﬂows	(543 945)	(79 299)	-	-
Opening cash and cash equivalents	505 250	436 445	230 797	124 032
Effects of changes in foreign currency	735 316	26 858	453 180	8 464
Cashandcashequivalentsat30June2022	779 014	280 795	779 014	96 307

*Net cash ﬂow from ﬁnancing activities is entirely comprised of dividends paid out
**Adjustment for non cash items take into account the following
	Inﬂation adjusted	Historical
	30 Jun 2022	30 Jun 2021	30 Jun 2022	30 Jun 2021
	ZWL 000	ZWL 000	ZWL 000	ZWL 000
Proﬁt/(loss) before tax	29 909 713	(4 586 123)	56 478 288	402 385
Fair value adjustments	(29 743 530)	4 651 593	(55 970 982)	(358 404)
Impairment of trade receivables	26 528	17 273	26 528	5 924
Net monetary loss	534 445	73 569	-	-
Exchange (gain)/ loss	(706 110)	11 814	(435 179)	4 383
Other non cash items*	(43 005)	5 797	(45 411)	1 142
Cash ﬂows from operating activities
before working capital adjustments	(21 960)	173 923	53 244	55 430

*0ther non cash items includes depreciation, proﬁt on disposal, ﬁnance income and exchange gains

Notes to the Interim Condensed Consolidated Financial Results

for the period ended 30 June 2022

Corporate information
First Mutual Properties Limited is a public company incorporated and domiciled in Zimbabwe and its shares are publicly traded on the Zimbabwe Stock Exchange. The principal activities of the Group are property investment development and management. The condensed consolidated ﬁnancial statements of the Group for the period ended 30 June 2022 were authorised for issue in accordance with a resolution of the directors at a meeting held on 30 August 2022.

Statement of compliance
The Group's ﬁnancial statements have been prepared in accordance with International Financial Reporting
Standard ("IFRS") as issued by the International Accounting Standards Board ("the IASB"), International Financial Reporting Interpretations Committee ("IFRIC") as issued by the IFRS Interpretations Committee ("IFRS IC") and in a manner required by the Zimbabwe Companies and Other Business Entities Act (Chapter 24:31). The ﬁnancial statements are based on statutory records that are maintained under the historical cost convention except for investment properties and equity securities at fair value through proﬁt or loss that have been measured on a fair value basis.
Auditor's statement
The consolidated inﬂation adjusted ﬁnancial statements from which this abridged version has been extracted have been reviewed by the group's external auditors, Ernst and Young Chartered Accountants (Zimbabwe). A qualiﬁed review conclusion has been issued thereon as a result of non-compliance with the requirements of
International Accounting Standard 8 (Accounting policies, changes in accounting estimates and errors) and the consequential impact of applying International Accounting Standard 29 (Financial reporting in Hyperinﬂationary Economies) on incorrect base numbers for the corresponding (prior year) ﬁgures only. The auditor's review conclusion is available for inspection at the Group's registered ofﬁce. The partner of this engagement was Fungai Kuipa (PAAB Practising certiﬁcate number 335).

Notes to the Interim Condensed Consolidated Financial Results

for the period ended 30 June 2022

Inﬂation Adjustments

For the purpose of fair presentation in accordance with International Accounting Standard 29 "Financial Reporting in Hyper Inﬂationary Economies" the ﬁnancial statements have been restated for changes in the general purchasing power of the ZWL and appropriate adjustments have been made. The restatement has been calculated by means of conversion factors derived from the month on month Consumer Price Index (CPI) prepared by the Zimbabwe Statistical Agency. All items in the statement of comprehensive income are restated by applying the relevant monthly conversion factors. The conversion factors used are as follows:

Date	CPI	Conversion factor
30-Jun-22	8 707,35	1,00
31-Dec-21	3 977,50	2,19
30-Jun-21	2 986,40	2,92
31-Dec-20	2 608,79	3,52

Accounting policies
The principal accounting policies adopted in the presentation of these ﬁnancial statements are consistent with those of the previous ﬁnancial year. However the Group changed the classiﬁcation of staff related expenses and other ofﬁces expenses which are directly associated with the management of properties from administration expenses to property expenses in line with regional listed property companies. The reclassiﬁcation resulted in increase in property expenses and decrease in administration expenses with no effect on proﬁt for the period.

Reporting period and currency
The reporting period is 1 January 2022 to 30 June 2022. The ﬁnancial statements are presented in Zimbabwean dollars (ZWL) being the functional and reporting currency of the primary economic environment in which the
Group operates. There was no change in the functional currency and reporting currency of the Group from the previous ﬁnancial period. The Group used the RBZ auction rate to translate all transactions done in foreign currency to Zimbabwean dollars (ZWL).

Going concern assumption
The Directors have assessed the ability of the Group to continue operating as going concerns and believe that the preparation of these interim condensed ﬁnancial statements on a going concern basis is appropriate based on the Unaudited Historical ﬁnancial performance for the half year of 2022. The business also continues to implement futuristic plans in response to the market trends to ensure sustainable earnings, with investments planned for Arundel Ofﬁce Park expansion and participation in FMHL Group projects, retail land acquisitions and tenant driven expansion initiatives. In addition, borrowing capabilities continue to be pursued due to the positive cash ﬂow generation. These all provide evidence of business continuity and the thrust to implement strategic plans and targets. It is to this effect that First Mutual Properties Limited interim condensed ﬁnancial statements will continue to be prepared under the going concern basis.

Fair value measurement
The Group's fair values of its investment properties are based on valuations performed by Knight Frank Zimbabwe an accredited independent valuer. Knight Frank is a specialist in valuing these types of investment properties and has recent experience in the location and category of the investment properties being valued. The valuations are based upon assumptions on future rental income, anticipated maintenance costs, future development costs and the appropriate discount rate. Where the market information is available, the valuers make use of market information from transactions of similar properties . Signiﬁcant judgements were applied as at 30 June 2022 as a result of the uncertainties resulting from the hyperinﬂationary economic environment, currency shifts, excessive market volatility and lack of recent transactions conducted in ZWL.

		Inﬂation adjusted	Historical
6.1	Investment Properties
		30 Jun 2022 31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	At 1 January	48 246 709	33 062 434	22 039 000	9 395 892
	Additions	81 836	-	44 794	-
	Disposals	(58 055)	-	(40 756)	-
	Transfer to held for sale	(28 000)	-	(28 000)	-
	Improvements to existing properties	3 480	45 940	3 480	15 756
	Fair value adjustments	29 743 530	15 138 335	55 970 982	12 627 352
	Closing Balance	77 989 500	48 246 709	77 989 500	22 039 000

6.2 Investment property held for sale

During the half year ended 30 June 2022, the directors of First Mutual Properties Limited decided to dispose of a parcel of land, known as Good hope, Borrowdale, Harare as part of the Group's ongoing capital recycling strategy. Conditions for the classiﬁcation as held for sale (as stipulated in IFRS 5- Non-current assets held for sale and discontinued operations) were met as at 30 June 2022. The asset was reclassiﬁed to current assets from investment property as disclosed below.

		Inﬂation adjusted	Historical
6.2	Investment property held for sale
		30 Jun 2022 31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	At 1 January	-	171 780	-	48 818
	Reclassiﬁcation to held for sale	28 000	-	28 000	-
	Fair value adjustment	-	7 005	-	2 402
	Disposal	-	(178 785)	-	(51 220)
	Closing Balance	28 000	-	28 000	-

6.3 Valuation techniques and inputs

Valuation techniques used to derive level 3 fair values

The table below presents the following for each class of the investment property:

the fair value measurements at the end of the reporting period;
the level of the fair value hierarchy (in this case level 3) within which the fair value measurements are categorized in their entirety;
a description of the valuation techniques applied;
the inputs used in the fair value measurement, including the ranges of rent charged to different units within the same building; and
level 3 fair value measurements, quantitative information about the signiﬁcant observable inputs used in the fair value measurement.

	2
Directors: E K Moyo (Chairman), A M Chidakwa, D Hoto, S Jogi, C K Manyowa, W M Marere, E Mkondo, T Ruvingo, S Wekwete ( Executive Director)

Reviewed Abridged Financial Results

For the half year ended 30 June 2022

ADRENALIN 16755

Notes to the Interim Condensed Consolidated Financial Results

for the period ended 30 June 2022

	All ﬁgures in ZWL 000
		Fair value Valuation	Key Unobservable
	Class of Property	30-Jun 2022 Technique	Inputs

			Optimal Rental Per	ZWL1 400-ZWL2 500		Range
			Square Metre
	CBD Ofﬁces	13 850 000 Income	Return on Optimal	5.5.00%-8.5%		Range
		Capitalisation	Rental
			Vacancy Rate		26%	weighted average
			Optimal Rental Per	ZWL3 000-ZWL4 000		Range
			Square Metre
	Ofﬁce Parks	21 150 000 Income	Return on Optimal	5.00%-6.00%		Range
		Capitalisation	Rental
			Vacancy rate		13%	weighted average
			Optimal Rental Per	ZWL2 000 -ZWL5 700		Range
			Square Metre
	CBD Retail*	10 309 800 Income	Return on Optimal	4.00%-5.00%		Range
		Capitalisation	Rental
			Vacancy rate		0%
			Optimal Rental Per	ZWL2 500 -ZWL5 000		Range
			Square Metre
	Suburban Retail*	4 665 000 Income	Return on Optimal	4.00%-5.00%		Range
		Capitalisation	Rental
			Vacancy rate		0%
			Optimal Rental Per	ZWL700 - ZWL1 700		Range
			Square Metre
	Industrial	7 145 000 Income	Return on Optimal	7.00%-10.00%		Range
		Capitalisation	Rental
			Vacancy rate		0%

	Residential	2 833 500 Market	Comparable
		Comparable	transacted Property
			Prices
	Land - Residential	- Market	Rate per square	ZWL12 000.00-		Range
		Comparable	metre	ZWL21 000.00
			Comparable
			Transacted land
			Prices
	Land - Commercial	18 036 200 Market	Rate per square	ZWL25 000.00-		Range
		Comparable	metre	ZWL50 000.00
			Comparable
			Transacted land
			Prices
	Total	77 989 500

				Inﬂation adjusted		Historical
7	Investment in associate
				30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
				ZWL 000	ZWL 000	ZWL 000	ZWL 000
	As at 1 January		27 455	-	8 702	-
	Additions			-	27 455		-	8 702
	Closing Balance		27 455	27 455	8	702	8 702

				Inﬂation adjusted		Historical
8	Vehicles and Equipment
				30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
				ZWL 000	ZWL 000	ZWL 000	ZWL 000
	At I January		17 881	14 923	2 833	176
	Additions		7 715	9 745	3 877	3 291
	Disposals		(111)	(376)		(3)	(138)
	Depreciation			(5 080)	(6 411)	(532)	(496)
	Closing Balance		20 405	17 881	6	175	2 833

				Inﬂation adjusted		Historical
9	Financial Assets at fair value through proﬁt or
	loss - Unquoted shares
				30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
				ZWL 000	ZWL 000	ZWL 000	ZWL 000
	At 1 January		18 473	16 667	8 438	4 737
	Fair value adjustment		8 712	1 806	18 747	3 701
	Closing Balance		27 185	18 473	27	185	8 438

The Group has an investment of 8.91% of the ordinary shares of First Mutual Property Fund One (Private) Limited ("FMPFO") which is incorporated and domiciled in Zimbabwe and is unquoted. The fair value of the Group's investment in FMPFO is based on the net asset value of FMPFO. FMPFO is a property holding company which owns one building that is leased out to one tenant. The building constitutes 98% of the total assets of FMPFO. The fair value of the building was therefore a signiﬁcant element in determining the net asset value of FMPFO. The building was valued by an independent valuer using the income approach. The investment in FMPFO is categorised as level 3 in the IFRS 13 'Fair value measurement' hierarchy. This implies that the fair value is determined with reference to unobservable inputs. Key unobservable inputs used in the valuation included rental per square metre and the capital rate/prime yield. The total lettable space is 2 508 square metres.

The key inputs that were used to value the building that is owned by FMPFO are:

			Key
	Fair Value as	Valuation unobservable	Range of	Sensitivity of the
Class of property	at 30-Jun-22	technique	inputs	inputs	input to fair value
					10% (2021: 10%)
					increase (decrease)
					in the growth rate
					would result in an
			Optimal Rental		increase (decrease)
			Per Square	ZWL2 500	in fair value by ZWL
Fair value of the Full		Income	Metre Capital	-ZWL5 000 40,000,000 (2021: ZWL
Fund (CBD retail)	400 000 000,00	Capitalisation	rate	4.00%-5.00%	12,375,000)

Notes to the Interim Condensed Consolidated Financial Results

	for the period ended 30 June 2022
		Inﬂation adjusted	Historical
9.1 Financial Assets at fair value through proﬁt or
	loss - Quoted shares	30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	As at January	3 061	-	1 398	-
	Additions	-	2 337	-	897
	Fair value adjustment	461	724	2 124	501
		3 522	3 061	3 522	1 398
10	Financial Assets at Amortised Cost
		30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Treasury bills	200	438	200	200
	Housing bonds	-	417	-	190
		200	855	200	390
11	Trade and Other Receivables
		30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Tenant receivables	113 260	158 115	113 260	72 226
	Tenant operating cost recoveries	36 450	69 806	36 450	31 888
	Trade receivables	149 710	227 921	149 710	104 114
	Less: Allowance for Credit Losses	(59 706)	(72 633)	(59 706)	(33 179)
	Net Trade Receivables	90 004	155 288	90 004	70 935
	Prepayments	234 784	257 632	198 437	98 177
	Other receivables	18 814	27 539	18 814	12 580
	Related party receivables	4 632	24 048	4 632	10 985
		348 234	464 507	311 887	192 677
11.1	Reconciliation of allowance for credit losses
		30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	At 1 January	72 633	29 308	33 179	8 781
	Add: Charge for the year	26 528	53 410	26 527	24 398
	Effect of inﬂation	(39 455)	(10 085)	-	-
		59 706	72 633	59 706	33 179

11.2 Analysis of Allowance for Expected Credit Losses (Inﬂation adjusted)

June 2022
ZWL 000	Current	30 days +	60 days +	90 days +	120 days +	Total
Expected loss rate	7,39%	14,97%	23,77%	44,61%	100%
Gross carrying amount of trade
receivables provided for	44 935	22 625	13 961	9 165	45 112	135 798
Credit loss allowance*	3 322	3 386	3 318	4 089	45 112	59 227

Expected loss rate	3,43%	3,43%	3,43%	3,43%	3,43%
Gross carrying amount-trade
receivables provided for	10 218	467	175	2 044	1 080	13 984
Credit loss allowance**	350	16	6	70	37	479


Total credit loss allowance	3 673	3 402	3 324	4 159	45 149	59 706
December 2021
ZWL 000	Current	30 days +	60 days +	90 days +	120 days +	Total
Expected loss rate	6,65%	13,37%	32,56%	41,56%	100%
Gross carrying amount of trade
receivables provided for	78 310	33 512	27 405	12 703	47 428	199 358
Expected Credit loss allowance*	5 212	4 482	8 922	5 280	47 428	71 324

Expected loss rate	4,52%	4,52%	4,52%	4,52%	4,52%
Gross carrying amount of trade
receivables provided for	5 594	1 006	2 127	6 850	13 407	28 984
Expected Credit loss allowance**	253	45	96	309	606	1 309


Total credit loss allowance	5 464	4 527	9 018	5 589	48 034	72 633

11.2 Analysis of Allowance for Expected Credit Losses (Historical data)

June 2022
ZWL 000	Current	30 days +	60 days +	90 days +	120 days +	Total
Expected loss rate	7,39%	14,97%	23,77%	44,61%	100%
Gross carrying amount of trade
receivables provided for	44 935	22 625	13 961	9 165	45 112	135 798
Credit loss allowance*	3 322	3 386	3 318	4 089	45 112	59 227

Expected loss rate	3,43%	3,43%	3,43%	3,43%	3,43%
Gross carrying amount-trade
receivables provided for	10 218	467	175	2 044	1 080	13 984
Credit loss allowance**	350	16	6	70	37	479


Total credit loss allowance	3 672	3 402	3 324	4 159	45 149	59 706
December 2021
ZWL 000	Current	30 days +	60 days +	90 days +	120 days +	Total
Expected loss rate	6,65%	13,37%	32,56%	41,56%	100%
Gross carrying amount of trade
receivables provided for	35 806	15 308	12 518	5 803	21 665	91 100
Expected Credit loss allowance*	2 381	2 047	4 076	2 412	21 665	32 581

Expected loss rate	4,52%	4,52%	4,52%	4,52%	4,52%
Gross carrying amount of trade
receivables provided for	2 555	459	972	3 129	6 124	13 239
Expected Credit loss allowance**	115	21	44	141	277	598


Total credit loss allowance	2 496	2 068	4 120	2 553	21 942	33 179

*Credit loss allowance at different loss rates **Credit loss allowance at 4.52%

Change of provisioning matrix

As at 30 June 2022, the Group revised its Expected Credit Loss (ECL) provisioning matrix in line with changes in market and economic conditions affecting the tenants ability to settle their arrears. The revision took into account historical data for the past three years. Forward looking information was incorporated by adjusting historical loss rates using estimated GDP movements in the Zimbabwean economy.

	3
Directors: E K Moyo (Chairman), A M Chidakwa, D Hoto, S Jogi, C K Manyowa, W M Marere, E Mkondo, T Ruvingo, S Wekwete ( Executive Director)

Reviewed Abridged Financial Results

For the half year ended 30 June 2022

ADRENALIN 16755

Notes to the Interim Condensed Consolidated Financial Results

for the period ended 30 June 2022

		Inﬂation adjusted	Historical
12 Cash and Cash Equivalents
		30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Short-term Investments	177 130	25 500	177 130	11 648
	Cash at Bank: USD	573 148	454 899	573 148	207 797
	ZWL	28 736	24 851	28 736	11 352
		779 014	505 250	779 014	230 797

		Inﬂation adjusted	Historical
13	Deferred Tax Liability
		30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	1 January	5 702 520	2 965 728	2 598 083	841 971
	Recognised in the statement of proﬁt or loss
	-Arising on inventory	(162)	(257)	-	-
	-Arising from prepayments	2 640	3 960	-	-
	-Arising on vehicles and equipment	1 024	(174)	317	61
	-Arising on investment properties	4 792 523	2 731 190	7 893 146	1 761 443
	-Arising on ﬁnancial assets at fair value through
	proﬁt or loss	462	90	884	(2 231)
	-Arising on provisions for credit losses	3 196	(10 317)	(6 558)	(6 031)
	-Arising on leave pay provisions	67	12 300	(1 891)	2 870
		10 502 270	5 702 520	10 483 981	2 598 083

		Inﬂation adjusted	Historical
14 Trade and Other Payables
		30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Income received in advance	200 374	18 236	180 636	7 100
	Related party payables	50 851	14 355	50 851	6 558
	Sundry payables	89 174	108 817	89 174	49 707
	Trade payables	66 594	86 433	66 594	39 480
	Leave pay provision	14 321	14 596	14 321	6 667
	Group company payables	7 601	18 587	7 601	8 491
		428 915	261 024	409 177	118 003

		Inﬂation adjusted	Historical
15	Revenue
		30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Rental income	725 122	581 372	468 332	186 851
	Property Services income	21 152	14 088	17 431	4 565
		746 274	595 460	485 763	191 416

		Inﬂation adjusted		Historical
16	Property Expenses
		30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
		ZWL 000	ZWL 000	ZWL 000	ZWL 000
	Maintenance costs	110 983	45 737	85 444	14 782
	Property security and utilities	7 086	5 659	5 567	1 807
	Valuation fees	1 581	1 864	761	591
	Operating cost under recoveries	74 854	99 085	55 930	31 713
	Staff costs*	200 603	68 006	134 926	28 825
	Other costs*	77 443	43 099	53 623	18 268
		472 550	263 450	336 251	95 986

16.1 *Reclassiﬁcation effect on property expenses and administration

The Group changed the classiﬁcation of staff related expenses and other ofﬁces expenses which are directly associated with the management of properties from administration expenses to property expenses in line with regional listed property companies. The effect of the reclassiﬁcation is disclosed below.

Notes to the Interim Condensed Consolidated Financial Results

for the period ended 30 June 2022

					Inﬂation adjusted	Historical
20 Other Income
				30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
					ZWL 000		ZWL 000	ZWL 000	ZWL 000
Exchange gains				543 217		(11 813)	435 179	(4 382)
Shared service recoveries				29 137		16 629	18 510	5 378
Sundry income*				9 176		430	20 877	142
Disposal of Property Plant and Equipment			119		-	87	-
Other income**				879		56	587	18
					582 528		5 302	475 240	1 156

*Sundry income consists of lease fees, Operating Cost fee income and bad debts recovered
**Other income consists of exhibition fee income (2021) and proceeds from insurance claim (2022)
					Inﬂation adjusted	Historical
21 Income Tax Expense/ (Credit)
				30 Jun 2022	31 Dec 2021	30 Jun 2022 31 Dec 2021
					ZWL 000		ZWL 000	ZWL 000	ZWL 000
Current income tax				45 255		24 906	45 255	8 542
Deferred tax			4 799 725	(2 552 730)	7 885 973	53 682
				4 844 980	(2 527 824)	7 931 228	62 224
INFLATION ADJUSTED - AUDITED	2022
22 Segment Reporting for the half year ended 30 June 2022
								Consolidation
		Ofﬁce	Retail	Industrial	Other	Jrnls	Total
		ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000
Revenue	371 901	228 066	89 348	180 942	(123 984)	746 273
Property expenses and
allowance for credit losses		(130 481)	(40 910)	(10 419)	(317 268)	-	(499 078)
Segment results	241 420	187 156	78 929	(136 326)	(123 984)	247 195
Fair value adjustment -
Investment property		13 971 572	4 988 453	2 694 779	8 088 726	-	29 743 530
Segment proﬁt	14 212 992	5 175 609	2 773 708	7 952 400	(123 984) 29 990 725
Employee related expenses	-	-		-	(55 002)	-	(55 002)
Other Expenses	(249)	(38)		(1)	(248 505)	123 984	(124 809)
Finance income	26 586	8 660	5 921	9 549	-	50 716
Other income	394 987	-		-	187 541	-	582 528
Net monetary loss		-	-		-	-	(534 445)	(534 445)
Proﬁt before income tax
expense		14 634 316	5 184 231	2 779 628	7 845 983	(534 445)	29 909 713

Reconciliation of Segment Results for 30 June 2022
All ﬁgures in ZWL	Ofﬁce	Retail	Industrial	Other	Consolidation	Total
Jrnls
Assets	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000
Investment Property	35 000 000	14 974 800	7 145 000	20 869 700	-	77 989 500
Trade receivables		47 069	19 471	17 792	39 308	(33 636)	90 004
Segment Assets	35 047 069 14 994 271	7 162 792 20 909 008	(33 636)	78 079 504
Other non-current assets	-	-		-	78 768	-	78 768
Other current assets		-	-		-	1 066 242	(844)	1 065 398
Total Assets		35 047 069 14 994 271	7 162 792 22 054 018	(34 480)	79 223 670
Current Liabilities		225 800	20 424	4 792	226 499	(34 480)	443 035
Capital expenditure	3 480	-		-	-	-	3 480
			2021
Segment Reporting for the half year ended 30 June 2021
								Consolidation
All ﬁgures in ZWL	Ofﬁce	Retail	Industrial	Other	Jrnls	Total
		ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000

16.1

Increase in property expenses

Decrease in employee related expenses

Decrease in other expenses

Proﬁt before income tax takes into account the following
Directors fees -for services as directors
Audit fees
Information communication and technology expenses
Fees and other charges Depreciation
Ofﬁce costs
Group shared services
Fair value adjustments
Fair value adjustment on investment properties Fair value adjustment on investment property held for sale
Finance Income
Interest on overdue tenants accounts Interest on money market investments

30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
ZWL 000	ZWL 000	ZWL 000	ZWL 000
278 046	111 105	188 549	47 093
(200 603)	(68 006)	(134 926)	(28 825)
(77 443)	(43 099)	(53 623)	(18 268)
-	-	-	-

Inﬂation adjusted	Historical
30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
ZWL 000	ZWL 000	ZWL 000	ZWL 000
7 628	8 746	4 853	1 882
7 773	5 207	4 547	1 132
3 280	10 172	2 404	813
26 813	6 465	18 278	3 013
5 080	2 280	106	44
13 192	23 896	12 272	1 039
57 496	42 182	39 317	13 593
Inﬂation adjusted	Historical
30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
ZWL 000	ZWL 000	ZWL 000	ZWL 000
29 743 530	(4 628 417)	55 970 982	356 254
-	(23 176)	-	2 150
29 743 530	(4 651 593)	55 970 982	358 404

Inﬂation adjusted	Historical
30 Jun 2022	31 Dec 2021	30 Jun 2022	31 Dec 2021
ZWL 000	ZWL 000	ZWL 000	ZWL 000
48 392	7 447	30 451	2 401
2 324	501	1 877	161
50 716	7 948	32 328	2 562

Revenue	357306	150370	45301	99295	(56812)	595460
Property expenses and
allowance for credit losses	(94537)	(16290)	(7426)	(162470)	-	(280723)
Segment results	262 769	134080	37875	(63175)	(56812)	314737
Fair value adjustment -
Investment property	(2333023)	(405388)	(489814)	(1423368)	-	(4651593)
Segment proﬁt	(2070254)	(271308)	(451 939)	(1486543)	(56812)	(4336856)
Employee related expenses	-	-	-	(83715)	-	(83715)
Other Expenses	(37391)	(24838)	(8040)	(122084)	87120	(105233)
Finance income	4103	1569	504	1772	-	7948
Other income	(22516)	-	-	27818	-	5302
Net monetary gain	-	-	-	-	(73569)	(73569)
Loss before income tax
expense	(2126058)	(294 577)	(459 475)	(1662752)	(43261)	(4586123)

Reconciliation of Segment Results for 31 December 2021
					Consolidation
All ﬁgures in ZWL	Ofﬁce	Retail	Industrial	Other	Jrnls	Total
Assets	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000	ZWL 000
Investment Property	20 720 319	9 835 420	4 540 300	13 150 670	-	48 246 709
Trade receivables	82 055	37 109	20 855	17 117	(1 848)	155 288
Segment Assets	20 802 374	9 872 529	4 561 155	13 167 787	(1 848) 48 401 997
Other non-current assets	-	-	-	67 725	-	67 725
Other current assets	-	-	-	815 521	-	815 521
Total Assets	20 802 374	9 872 529	4 561 155	14 051 033	(1 848) 49 285 243
Current Liabilities	62 637	15 168	5 095	190 756	1 866	275 522
Capital expenditure	2 547	43 516	-	-	-	46 063

	4
Directors: E K Moyo (Chairman), A M Chidakwa, D Hoto, S Jogi, C K Manyowa, W M Marere, E Mkondo, T Ruvingo, S Wekwete ( Executive Director)

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First Mutual Properties Ltd. published this content on 21 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2022 07:29:06 UTC.

End-of-day quote Zimbabwe S.E. Other stock markets 06:00:00 2024-04-04 pm EDT			5-day change	1st Jan Change
644 ^ZWL	+0.01%		0.00%	+99.98%

	1st Jan change	Capi.
FIRST MUTUAL PROPERTIES LIMITED	+99.98%	0
JERUSALEM ECONOMY LTD	+61.90%	1.31B
TERREÏS	-3.83%	983M
ASHTROM PROPERTIES LTD	-12.77%	495M
HOIVATILAT OYJ	-1.25%	439M
SUMMIT PROPERTIES LIMITED	-56.68%	207M
MINRAV PROJECTS LTD	0.00%	158M
YTL LAND & DEVELOPMENT BERHAD	0.00%	90.69M
BEIJING HUAYE CAPITAL HOLDINGS CO.,LTD	-.--%	84.18M

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