REG-SEGRO PLC RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
27/07/2023 07:00
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RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
Continuing positive supply-demand dynamics drive further rental growth
SEGRO PLC (BOURSE:SGRO)
Commenting on the results, David Sleath, Chief Executive, said:
“SEGRO has performed well during the first six months of 2023, delivering
rental growth from our standing portfolio and from our largely pre-let
development programme. We have made great progress in capturing reversion,
delivering an average rental uplift of 20 per cent at lease events during the
period in addition to contracted indexation, whilst customer retention has
increased significantly to 85 per cent.
“The structural drivers of occupier demand remain evident across the UK and
Europe, whilst supply remains constrained in our chosen markets, helping to
drive rental growth in line with our expectations.
“Valuations have been relatively stable in the first half of this year,
following the deep valuation correction in the latter part of 2022. The
increased volume of transactions in the last quarter indicates that investors
see value at the current levels of pricing for prime industrial and logistics
assets, given the positive long-term outlook for our sector.
“We have significant opportunities to drive rent and create value both
within our standing portfolio and through the execution of our profitable
development programme. These factors give us confidence in our ability to
deliver attractive growth and returns into the years ahead.”
HIGHLIGHTS(A):
* Adjusted pre-tax profit of £198 million up 2.6 per cent compared with the
prior year (H1 2022: £193 million(1)), Adjusted EPS is 15.9 pence, up 1.9 per
cent (H1 2022: 15.6 pence(1)) excluding the impact of performance fees from
our SELP joint venture.
* Adjusted NAV per share is down 3.0 per cent to 937 pence (31 December 2022:
966 pence) driven by a 1.4 per cent decrease in the valuation of the portfolio
(UK -0.6 per cent, CE -2.7 per cent), due to outward yield shift, mitigated by
3.7 per cent growth in estimated rental values during the first half of the
year.
* Like-for-like rental growth of 5.1 per cent and £44 million of new headline
rent commitments generated during the six-month period (H1 2022: £55
million), driven by our customer focus and active management of the portfolio.
* 340,900 sq m of development completions were delivered, equating to £28
million of potential rent, of which 83 per cent of which is leased. 85 per
cent of these completions were BREEAM ‘Excellent’ certification (or local
equivalent).
* Future rent roll growth supported by our active development pipeline with
740,800 sq m of projects under construction or in advanced pre-let discussions
equating to £76 million of potential rent (31 December 2022: 915,600 sq m,
£86 million), of which 70 per cent is associated with pre-lets signed or in
advanced negotiations, substantially de-risking the 2023-24 pipeline. Yield on
cost for these projects is 7.2 per cent.
* Strong balance sheet, with a modest level of gearing and significant
liquidity. LTV of 34 per cent at 30 June 2023 (31 December 2022: 32 per cent)
and access to £1.7 billion of cash and committed bank facilities.
* Attractive cost of debt due to our diverse, long-term debt structure. No major
debt maturities until 2026 and 91 per cent of debt is fixed or capped with
half of the caps active until 2029. Average cost of debt at 30 June 2023 was
2.9 per cent (31 December 2022: 2.5 per cent).
* Interim dividend increased by 7.4 per cent to 8.7 pence (2022: 8.1 pence).
FINANCIAL SUMMARY
6 months to 6 months to Change
30 June 2023
30 June 2022
per cent
Adjusted(2) profit before tax (£m) 198 193(1) 2.6
IFRS (loss)/ profit before tax (£m) (33) 1,375 –
Adjusted(3) earnings per share (pence) 15.9 15.6(1) 1.9
IFRS earnings per share (pence) (1.9) 110.7 –
Dividend per share (pence) 8.7 8.1 7.4
Total Accounting Return (%)(4) (1.1) 11.3 –
30 June 2023 31 December Change
2022
per cent
Assets under Management (£m) 21,024 20,947
Portfolio valuation (SEGRO share, £m) 18,095 17,925 (1.4)(5)
Adjusted(6 7 )net asset value per share (pence, diluted) 937 966 (3.0)
IFRS net asset value per share (pence, diluted) 913 938 (2.7)
Net debt (SEGRO share, £m) 6,078 5,693
Loan to value ratio including joint ventures at share (per cent) 34 32
1. Adjusted profit before tax and Adjusted earnings per share have been
represented to exclude joint venture performance fee income as detailed
further in Note 2. The H1 2022 figures have been changed accordingly. The FY
2022 and H1 2023 reported results are not impacted by this change. Further
discussion of the sensitivity around the quantum of the performance fee is
given in Note 6.
2. A reconciliation between Adjusted profit before tax and IFRS profit before
tax is shown in Note 2 to the condensed financial information.
3. A reconciliation between Adjusted earnings per share and IFRS earnings per
share is shown in Note 11 to the condensed financial information.
4. Total Accounting Return is calculated based on the opening and closing
adjusted NAV per share adding back dividends paid during the period.
5. Percentage valuation movement during the period based on the difference
between opening and closing valuations for all properties including buildings
under construction and land, adjusting for capital expenditure, acquisitions
and disposals.
6. A reconciliation between Adjusted net asset value per share and IFRS net
asset value per share is shown in Note 11 to the condensed financial
information.
7. Adjusted net asset value is in line with EPRA Net Tangible Assets (NTA)
(see Table 5 in the Supplementary Notes for a NAV reconciliation).
(A) Figures quoted on pages 1 to 14 refer to SEGRO’s share, except for land
(hectares) and space (square metres) which are quoted at 100 per cent, unless
otherwise stated. Please refer to the Presentation of Financial Information
statement in the Financial Review for further details.
OPERATING SUMMARY & KEY METRICS
H1 2023 H1 2022 FY 2022
RENTAL GROWTH REMAINS STRONG, SMALL DECLINE IN PORTFOLIO VALUATION DUE TO
FURTHER YIELD SHIFT (see page 8):
Valuation decline driven by further yield expansion, mostly on the Continent,
and partly offset by estimated rental
value (ERV) growth and active asset management of the portfolio.
Portfolio valuation change (%) Group (1.4) 7.2 (11.0)
UK (0.6) 8.2 (13.1)
CE (2.7) 5.2 (7.3)
Estimated rental value (ERV) growth (%) Group 3.7 5.9 10.9
UK 3.0 7.3 11.5
CE 4.8 3.6 9.9
ACTIVE ASSET MANAGEMENT DRIVING OPERATIONAL PERFORMANCE (see page 9):
Standing portfolio contributing significantly to rent roll growth as a result
of reversion capture, indexation and leases
signed with existing and new customers from a wide range of sectors,
highlighting the versatility of our portfolio.
Total new rent contracted during the period (£m) 44 55 98
Pre-lets signed during the period (£m) 19 28 41
Like-for-like net rental income growth (%): Group 5.1 7.1 6.7
UK 4.3 8.9 7.7
CE 6.4 4.1 4.9
Uplift on rent reviews and renewals (%) Group 20.4 23.5 23.3
(note: excludes uplifts from indexation) UK 26.4 29.0 28.0
CE 9.9 1.8 1.7
Occupancy rate (%) 95.5 96.7 96.0
Customer retention (%) 85 79 76
INVESTMENT ACTIVITY REMAINS DISCIPLINED AND FOCUSED ON SECURING PROFITABLE
GROWTH (see page 14):
Capital investment continues to focus on our development programme, through
capex and securing land to provide future growth opportunities. Development
capex for 2023, including infrastructure, expected to be c.£600 million.
Development capex (£m) 299 358 787
Acquisitions (£m) 326 365 867
Disposals (£m) 74 181 367
EXECUTING AND GROWING OUR PROFITABLE DEVELOPMENT PIPELINE (see page 10):
Our active and largely pre-let development pipeline remains a key driver of
rent roll growth and attractive returns on capital. Potential rent of £76
million from projects currently on site or expected to commence shortly at a
yield on cost of 7.2 per cent.
Development completions:
– Space completed (sq m) 340,900 329,900 639,200
– Potential rent (£m) (Rent secured) 28 (83%) 15 (87%) 46 (80%)
Current development pipeline potential rent (£m) (Rent secured) 66 (65%) 84 (63%) 67 (73%)
Near-term pre-let development pipeline potential rent (£m) 10 34 19
OUTLOOK
SEGRO has one of the best and most modern pan-European industrial warehouse
portfolios, through which we can serve our customers’ entire regional and
local distribution needs. Our strategic focus is to ensure that our properties
are of the highest quality and in the most supply constrained locations, and
thus able to generate superior long-term rental growth. We are also able to
respond tactically to shorter-term changes in market conditions, including
adapting our approach to capital allocation based on the insights provided by
our market-leading operating platform.
Occupier demand for industrial and logistics space is proving resilient due to
the long-term, structural drivers at play in our sector. At the same time,
modern sustainable space is in short supply across our chosen sub-markets in
Europe and a lack of available land limits the potential supply response. We
expect that this supply-demand tension will drive further rental growth across
our portfolio, normalising over time towards our long-held expectations of two
to six per cent per annum. Net rental income growth will also be supported by
the £147 million of embedded reversionary potential within our portfolio,
equivalent to around a quarter of our current rent roll. Most of this
reversion is in the UK and will be captured by the five-yearly open market
rent review process, and we have index-linked uplifts on over half of our
leases (mostly in Continental Europe) that will also help to capture this
reversion and provide further rental growth.
Our high-quality land bank, with the potential to add £370 million of rental
income, provides us with the ability to respond quickly to changing occupier
demand through our development programme. Coupled with this, our strong
balance sheet provides significant financial flexibility to continue to invest
capital profitably in those development opportunities which offer the most
attractive risk-adjusted returns.
Valuations have been much more stable in the first half of 2023 and investment
has activity picked up across the market, including our own disposal of a UK
big box portfolio since the period end (which was sold ahead of June 2023 book
value). This demonstrates that investors are seeing value at current levels of
pricing, and we believe that demand will further increase as clarity emerges
around future interest rates, with investors attracted by the positive
fundamentals and long-term structural growth potential in logistics and
industrial warehousing.
Our prime portfolio and market-leading operating platform combine to create a
strong competitive advantage, and position us well to create value through the
cycle for all of our stakeholders. We therefore remain confident in our
ability to deliver attractive returns and continued growth in earnings and
dividends into the future.
WEBCAST / CONFERENCE CALL FOR INVESTORS AND ANALYSTS
A live webcast of the results presentation will be available from 08:30am (UK
time) at:
https://www.investis-live.com/segro/6491814000e68612004ca42e/hsgr
(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fprotect-eu.mimecast.com%2Fs%2FQ4gCCxGPWuQAGOYHgb3QS%3Fdomain%3Dsegro-comms.com&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=https%3A%2F%2Fwww.investis-live.com%2Fsegro%2F6491814000e68612004ca42e%2Fhsgr&index=1&md5=d4c1a40bda81172ca5996b1fbe3abb00)
The webcast will be available for replay at SEGRO’s website at:
http://www.segro.com/investors
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.segro.com%2Finvestors&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=http%3A%2F%2Fwww.segro.com%2Finvestors&index=2&md5=495119df66b34654f3af20acc081974f)
shortly after the live presentation.
A conference call facility will be available at 08:30 An audio recording of the conference call will be
(UK time) on the following number:
available until 3 August 2023 on:
Dial-in: +44 (0)800 358 1035
UK: +44 (0) 203 936 3001
+44 (0) 204 587 0498
Access code: 673798
Access code: 022413
A video of David Sleath, Chief Executive discussing the results will be
available to view on www.segro.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.segro.com&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=www.segro.com&index=3&md5=00f5fe02d5b9cc18c6fd19a6c4f67dfa)
, together with this announcement, the Half Year 2023 Property Analysis Report
and other information about SEGRO.
CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO Soumen Das Tel: + 44 (0) 20 7451 9110
(after 11am)
(Chief Financial Officer)
Claire Mogford Mob: +44 (0) 7710 153 974
(Head of Investor Relations)
Tel: +44 (0) 20 7451 9048
(after 11am)
FTI Consulting Richard Sunderland / Eve Kirmatzis Tel: +44 (0) 20 3727 1000
FINANCIAL CALENDAR
2023 interim dividend ex-div date 10 August 2023
2023 interim dividend record date 11 August 2023
2023 interim dividend scrip dividend price announced 17 August 2023
Last date for scrip dividend elections 1 September 2023
2023 interim dividend payment date 22 September 2022
2023 Third Quarter Trading Update 18 October 2023
Full Year 2023 Results (provisional) 16 February 2024
ABOUT SEGRO
SEGRO is a UK Real Estate Investment Trust (REIT), listed on the London Stock
Exchange and Euronext Paris, and is a leading owner, manager and developer of
modern warehouses and industrial property. It owns or manages 10.3 million
square metres of space (110 million square feet) valued at £21.0 billion
serving customers from a wide range of industry sectors. Its properties are
located in and around major cities and at key transportation hubs in the UK
and in seven other European countries.
For over 100 years SEGRO has been creating the space that enables
extraordinary things to happen. From modern big box warehouses, used primarily
for regional, national and international distribution hubs, to urban
warehousing located close to major population centres and business districts,
it provides high-quality assets that allow its customers to thrive.
A commitment to be a force for societal and environmental good is integral to
SEGRO’s purpose and strategy. Its Responsible SEGRO framework focuses on
three long-term priorities where the company believes it can make the greatest
impact: Championing Low-Carbon Growth, Investing in Local Communities and
Environments and Nurturing Talent.
Striving for the highest standards of innovation, sustainable business
practices and enabling economic and societal prosperity underpins SEGRO’s
ambition to be the best property company.
See www.SEGRO.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.SEGRO.com&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=www.SEGRO.com&index=4&md5=b60d05eec5bdac3e6862b233596e6ba2)
for further information.
Forward-Looking Statements: This announcement contains certain forward-looking
statements with respect to SEGRO’s expectations and plans, strategy,
management objectives, future developments and performance, costs, revenues
and other trend information. All statements other than historical fact are, or
may be deemed to be, forward-looking statements. Forward-looking statements
are statements of future expectations and all forward-looking statements are
subject to assumptions, risk and uncertainty. Many of these assumptions, risks
and uncertainties relate to factors that are beyond SEGRO’s ability to
control or estimate precisely and which could cause actual results or
developments to differ materially from those expressed or implied by these
forward-looking statements. Certain statements have been made with reference
to forecast process changes, economic conditions and the current regulatory
environment. Any forward-looking statements made by or on behalf of SEGRO are
based upon the knowledge and information available to Directors on the date of
this announcement. Accordingly, no assurance can be given that any particular
expectation will be met and you are cautioned not to place undue reliance on
the forward-looking statements. Additionally, forward-looking statements
regarding past trends or activities should not be taken as a representation
that such trends or activities will continue in the future. The information
contained in this announcement is provided as at the date of this announcement
and is subject to change without notice. Other than in accordance with its
legal or regulatory obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), SEGRO does not undertake to update forward-looking statements,
including to reflect any new information or changes in events, conditions or
circumstances on which any such statement is based. Past share performance
cannot be relied on as a guide to future performance. Nothing in this
announcement should be construed as a profit estimate or profit forecast. The
information in this announcement does not constitute an offer to sell or an
invitation to buy securities in SEGRO plc or an invitation or inducement to
engage in or enter into any contract or commitment or other investment
activities.
Neither the content of SEGRO’s website nor any other website accessible by
hyperlinks from SEGRO’s website are incorporated in, or form part of, this
announcement.
INTRODUCTION
The first half of 2023 has seen a strong operational performance supported by
the high quality of our portfolio, continued occupier demand and the active
approach to asset management that we take to unlock value and drive
performance.
We have a unique portfolio of prime warehouses, two-thirds of which are
located in the most supply constrained urban markets with the remaining
one-third close to transportation hubs and key logistics corridors; an
enviable land bank capable of supporting our profitable development programme;
an established pan-European, customer-focused operating platform; and strong,
strategic relationships with other key stakeholders. These combine to provide
us with what we believe is a significant competitive advantage which enhances
our ability to outperform through the cycle and to secure opportunities for
future growth.
The fundamentals for industrial assets remain attractive and we expect to see
continued rental growth in our markets due to the supply-demand imbalance of
high-quality space. This is in addition to the embedded reversionary potential
already within the portfolio and the increased levels of indexation that we
are capturing across Continental Europe.
With modest leverage, no near-term refinancing requirements, and a significant
amount of liquidity at our disposal we have financial flexibility to continue
to invest capital in the development opportunities that offer the most
attractive risk-adjusted returns.
We continue to invest in and de-risk the future of the business through our
Responsible SEGRO strategic priorities. We are making great steps in our
ambition to Champion low-carbon growth by focusing on: driving down the carbon
emissions produced by our development programme; making the running of our
warehouses more efficient; and adding solar panels to help reduce our
customers’ emissions.
Through Investing in our local communities and environments we are making a
real difference to the lives of thousands of people who live close to our
parks and estates. During the first half of 2023 our people volunteered 380
days to projects running within our Community Investment Plans (CIPs). In
addition, working with local delivery partners, SEGRO-funded projects have
delivered some great outcomes so far in 2023: more than 3,800 students
participated in our schools programme; 582 unemployed people took part in our
training, skills and job brokerage programme; and we delivered 18
environmental projects to enhance biodiversity and community health and
wellbeing.
Finally, the management changes that we announced in June show the importance
of Nurturing talent within our business. We were able to appoint four of our
existing leadership team into Executive Committee roles, helping us to benefit
from their many years of experience within SEGRO and the wider business world.
We are now in the process of making changes to align our operational business
units to the new organisational structure, which will create many more
opportunities for talent to progress within SEGRO and help to ensure that our
business is in the best shape possible for success in the coming years.
PORTFOLIO PERFORMANCE
The Group’s property portfolio was valued at £18.1 billion at 30 June 2023
(£21.0 billion of assets under management). The portfolio valuation,
including completed assets, land and buildings under construction, decreased
by 1.4 per cent (adjusting for capital expenditure and asset recycling) during
the first six months of the year, compared to an increase of 7.2 per cent in
the first half of 2022 and a decline of 16.6 per cent in the second half of
2022.
The slower rate of valuation declines in the first half of 2023 was due to
some modest, market-driven yield expansion, 30 basis points across the whole
portfolio (UK: 20bps, CE: 40bps), mostly offset by gains from strong rental
growth, development profits and asset management across the portfolio.
In the six months to 30 June 2023, the MSCI UK Monthly index showed capital
growth of 0.3 per cent, ahead of SEGRO’s UK portfolio. However, over the 12
months to 30 June 2023, which we consider to be a more appropriate period due
to the significant changes in the property investment market over the past
year, SEGRO’s UK portfolio outperformed the MSCI UK Monthly index, showing a
capital decline of -21.9 per cent vs -26.5 per cent respectively.
Occupier demand has remained healthy and occupancy rates across our markets
are high, driving further market rental growth. The external valuer’s
estimate of the market rental value of our portfolio increased by 3.7 per cent
(H1 2022: 5.9 per cent) during the period.
Assets held throughout the year decreased in value by 1.6 per cent. In the UK,
the decrease was 0.8 per cent (H1 2022: 7.5 per cent increase). The net true
equivalent yield applied to our UK portfolio was 5.0 per cent, 20 basis points
higher than at 31 December 2022 (4.8 per cent). Rental values improved by 3.0
per cent (H1 2022: 7.3 per cent).
Assets held throughout the year in Continental Europe decreased in value by
3.0 per cent (H1 2022: 4.2 per cent increase) on a constant currency basis,
reflecting a combination of yield expansion to 5.2 per cent (31 December 2022:
4.8 per cent) and rental value growth of 4.8 per cent (H1 2022: 3.6 per cent).
Property portfolio metrics at 30 June 2023(1)
Portfolio value, £m Yield(3)
Lettable Completed Land & develop-ment Combined property Combined property portfolio Valuation Topped-up net Net true equivalent Occupancy
area sq m
portfolio
movement(2
initial
%
(ERV)
)
%
%
%
(AUM) (AUM)
UK
Greater London 1,319,894 6,039 273 6,312 6,325 (1.5) 3.5 4.7 92.6
Thames Valley 607,770 2,390 838 3,228 3,228 0.6 4.3 5.4 97.7
National Logistics 817,388 1,369 602 1,971 1,971 0.2 5.3 5.4 98.9
UK Total 2,745,052 9,798 1,713 11,511 11,524 (0.8) 4.0 5.0 94.9
Continental Europe
Germany 1,838,304 1,664 289 1,953 2,800 – 4.0 4.5 96.8
Netherlands 260,042 162 24 186 371 (1.8) 4.7 5.3 100.0
France 1,606,749 1,663 446 2,109 2,632 (4.8) 4.4 5.3 94.1
Italy 1,608,488 983 166 1,149 1,648 (4.1) 5.1 5.2 99.8
Spain 313,199 247 70 317 510 (5.0) 4.5 4.8 100.0
Poland 685 84 769 1,336 (3.8) 6.0 6.3 96.1
1,711,512
Czech Republic 169,513 97 4 101 203 (2.0) 4.7 6.0 97.7
Continental Europe Total 7,507,807 5,501 1,083 6,584 9,500 (3.0) 4.6 5.2 96.7
GROUP TOTAL 10,252,859 15,299 2,796 18,095 21,024 (1.6) 4.2 5.1 95.5
1. Figures reflect SEGRO wholly-owned assets and its share of assets held in
joint ventures unless stated “AUM” which refers to all assets under
management.
2. Valuation movement is based on the difference between the opening and
closing valuations for properties held throughout the period, allowing for
capital expenditure, acquisitions and disposals.
More details of our property portfolio can be found in the H1 2023 Property
Analysis Report at www.SEGRO.com/investors
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.SEGRO.com%2Finvestors&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=www.SEGRO.com%2Finvestors&index=5&md5=8aa9164ec0019f3f780c09c6a29b3cd5)
.
INVESTMENT ACTIVITY
Net investment during the first half of the year was £551 million comprising:
development capital expenditure of £299 million and £326 million of
acquisitions, partly offset by £74 million of disposals during the period.
Acquisitions during the first half of 2023 focused on land acquisitions to
create future development opportunities (see page 13 for further information).
Disposals comprised £51 million of proceeds from the disposal of two non-core
office assets and £23 million of land disposals, primarily small plots of
residual land that were unsuitable for industrial development.
Since the period end, we agreed the conditional exchange of a portfolio of UK
big box assets in the Midlands, reflecting a price above 30 June 2023
valuation. The conditions have subsequently been met and the transaction is
expected to complete in early August.
ASSET MANAGEMENT
Our continued focus on Operational Excellence has helped us deliver £34
million of rent roll growth in the first half of 2023 (H1 2022: £43 million).
Growing rental income from capturing reversion, letting existing space and new
developments
At 30 June 2023, our portfolio generated passing rent of £605 million, rising
to £660 million once rent free periods expire (‘headline rent’). During
the period, we contracted £44 million of new headline rent, consistent with
our expectations after the elevated levels seen during the pandemic and its
immediate aftermath (H1 2022: £55 million). We grew the rent from our
existing space significantly through the capture of reversionary potential at
rent reviews and renewals and also due to the impact of index-linked leases.
Strong occupier demand for new space also helped us sign further pre-let
agreements for delivery over the next two years.
Our customer base remains well diversified, reflecting the flexibility of
warehouse space. Our top 20 customers account for 32 per cent of total
headline rent. Amazon remains our largest customer, accounting for 7 per cent
of our total rent roll.
Customers from the transport and logistics and retail sectors were the largest
takers of our space during the first six months of 2023, with these sectors
focused on ensuring they have efficient and resilient supply chains and
distribution networks, as well as building out their capability to respond to
increase levels of e-commerce penetration across Europe. The Slough Trading
Estate remains a popular location for data centres, and we signed a new lease
to deliver space with a leading global data centre operator during the period.
* £11 million of net new rent from existing assets. We generated £8 million of
headline rent from new leases on existing assets (H1 2022: £11 million) and
£12 million from rent reviews, lease renewals and indexation (H1 2022: £13
million). This was offset by rent from space returned of £9 million (H1 2022:
£10 million), much of it for refurbishment. Less than £1 million of rent was
lost due to insolvency (H1 2022: £1 million).
* Rental growth from lease reviews and renewals. These generated an uplift of
20.4 per cent (H1 2022: 23.5 per cent) for the portfolio, compared to previous
headline rent. During the year, new rents agreed at review and renewal were
26.4 per cent higher in the UK (H1 2022: 29.0 per cent) as reversion
accumulated over the past five years was reflected in new rents agreed. This
includes the impact of a particularly large rent review dating back to 2020,
and therefore agreed in line with 2020 ERVs; excluding this the uplift would
have been 24.0 per cent for the Group and 35.7 per cent for the UK. In
Continental Europe, rents agreed on renewal were 9.9 per cent higher (H1 2022:
1.8 per cent higher), as a result of market rental growth continuing to
outpace the indexation provisions that have accumulated over recent years.
* Continued strong demand from customers for pre-let agreements. We contracted
£19 million of headline rent from pre-let agreements and lettings of
speculative developments prior to completion (H1 2022: £28 million). This
includes a second pre-let at our new UK logistics park in Coventry, space for
third-party logistics operators, retailers and manufacturers across
Continental Europe, and a data centre in Slough.
* Rent roll growth of £34 million. Rent roll growth, which reflects net new
headline rent from existing space (adjusted for takebacks of space for
development), take-up of developments and pre-lets agreed during the period,
was £34 million in H1 2023 (H1 2022: £43 million).
Summary of key leasing data for H1 2023
Summary of key leasing data(1) for the six months to 30 June H1 2023 H1 2022
Take-up of existing space(2) (A) £m 8 11
Space returned(3) (B) £m (9) (10)
NET ABSORPTION OF EXISTING SPACE(2) (A-B) £m (1) 1
Other rental movements (rent reviews, renewals, indexation)(2) (C) £m 12 13
RENT ROLL GROWTH FROM EXISTING SPACE £m 11 14
Take-up of pre-let developments completed during the period (signed in prior £m 21 11
years)(2) (D)
Take-up of speculative developments completed in the past two years(2) (D) £m 6 4
TOTAL TAKE-UP(2) (A+C+D) £m 47 39
Less take-up of pre-lets and speculative lettings signed in prior years(2) £m (22) (12)
Pre-lets signed in the period for future delivery(2) £m 19 28
RENTAL INCOME CONTRACTED DURING THE PERIOD(2) £m 44 55
Takeback of space for redevelopment £m (1) (2)
Retention rate(4) % 85 79
1. All figures reflect exchange rates at 30 June 2023 and include joint
ventures at share.
2. Headline rent.
3. Headline rent, excluding space taken back for redevelopment.
4. Headline rent retained as a percentage of total headline rent at risk from
break or expiry during the period.
Existing portfolio continues to perform well and delivered another set of
strong operating metrics
We monitor a number of asset management indicators to assess the performance
of our existing portfolio:
* Occupancy has remained high. The occupancy rate at 30 June 2023 was 95.5 per
cent (31 December 2022: 96.0 per cent), reflecting the completion of
newly-completed speculative urban warehousing in South London as well as
relocating a number of other customers into brand new space at SEGRO Park
Hayes and SEGRO Park Tottenham, allowing us to refurbish and redevelop their
former, older space on existing estates. The occupancy rate excluding recently
completed speculative developments remains high at 96.7 per cent (31 December
2022: 97.3 per cent). The average occupancy rate during the period was 95.7
per cent (H1 2022: 96.7 per cent) which is at the high end of our 94 to 96 per
cent target.
* Customer retention rate increased to 85 per cent. Approximately £42 million
of headline rent at risk from a break or lease expiry during the period was
settled, of which we retained 82 per cent in existing space, with a further 3
per cent retained but in new premises.
* Lease terms continue to offer attractive income security. The level of
incentives agreed for new leases (excluding those on developments completed in
the period) represented 6.1 per cent of the headline rent (H1 2022: 5.9 per
cent). We maintained the portfolio’s weighted average lease length, with 7.0
years to first break and 8.2 years to expiry (31 December 2022: 7.0 years to
first break, 8.3 years to expiry). Lease terms are longer in the UK (8.0 years
to break) than in Continental Europe (5.6 years to break), reflecting the
market convention of shorter leases in countries such as France and Poland.
Focusing on visibility of customer energy use, highly sustainable
refurbishments and the installation of solar panels onto existing assets.
Integrated into the day-to-day management of our portfolio, our teams continue
to work hard on our Responsible SEGRO commitment to Champion low-carbon growth
and be a net-zero carbon business by 2030. We have a science-based target to
reduce the absolute corporate and customer carbon emissions from our portfolio
by 42 per cent by 2030 (compared to a 2020 baseline), in line with the 1.5
degree scenario.
The recent introduction of green lease clauses is helping us to improve our
visibility of customer emissions, which in turn allows us to better identify
opportunities to help them operate their buildings more efficiently, reducing
their carbon footprint and operating costs.
We continue to improve the carbon footprint of our portfolio through the
ongoing maintenance and refurbishment of our warehouses. One such
refurbishment, SEGRO Park Greenford in West London, was awarded BREEAM
‘Outstanding’ during the period and rated EPC A+. It is our most
sustainable refurbishment to date and includes the installation of photo
voltaic panels, SMART building sensors, dynamic LED lighting, a green wall
which is estimated to remove 260kg of carbon emissions per year (the
equivalent to planting ten trees), as well as other features such as EV
charging points and air purifiers.
We are also working hard to expand the solar capacity of our portfolio through
retrofitting onto existing assets and installing panels on every new
development where feasible. During the first half of the year our most
significant installation was 6,204 solar panels on a site in Granollers,
Spain, which added 2.6 MW to our capacity. We have a pipeline of further
projects expected to complete in the second half of the year.
DEVELOPMENT
Growing through development
Development activity
During the first six months of 2023, we invested over £600 million in our
development pipeline, which comprised £299 million (H1 2022: £358 million)
in development spend, of which £37 million was for infrastructure, and a
further £322 million of land to secure future development-led growth
opportunities.
Development projects completed
We completed 340,900 sq m of new space during the first half of 2023. These
projects were 77 per cent pre-let prior to the start of construction and were
83 per cent let as at 30 June 2023, generating £23 million of headline rent,
with a potential further £5 million to come when the remainder of the space
is let. The yield on total development cost (including land, construction and
finance costs) will be 6.1 per cent when fully let (excluding developments
completed by third parties on a forward funded basis acquired at investment
value), around 100bp above the portfolio investment yield. The completion
yield is slightly lower than in recent years mainly due to the mix of projects
and the fact that most of these projects commenced when land and construction
costs were at their peak in early 2022.
We completed 260,100 sq m of big box warehouse space, including on one of our
last remaining plots at SEGRO Logistics Park East Midlands Gateway. This also
included 155,900 sq m of big box warehouses across all of our major European
markets, let to third-party logistics operators, retailers and manufacturers.
We completed 80,800 sq m of urban warehouses and data centres in Slough,
London, Berlin and Paris, the majority of which was developed speculatively
and 65 per cent is already let.
Reducing embodied carbon in our development programme is critical to helping
us achieve net-zero carbon by 2030 and we continue to make progress in
reducing the carbon intensity of our developments towards our science-based
target of a 20 per cent reduction by 2030 (from a 2020 baseline). We use best
available data, including Building Information Modelling (BiM) for our life
cycle assessments at design stage, which helps us to assess how best to reduce
the carbon footprint of our developments.
All of our eligible development completions during the first half of 2023 have
been, or are expected to be, accredited at least BREEAM ‘Very Good’ (or
local equivalent), with 85 per cent ‘Excellent’ or ‘Outstanding’.
Current development pipeline
At 30 June 2023, we had development projects approved, contracted or under
construction totalling 616,500 sq m, representing £271 million of future
capital expenditure to complete and £66 million of annualised gross rental
income when fully let. 65 per cent of this rent has already been secured and
these projects should yield 7.2 per cent on total development cost when fully
occupied.
In the UK, we have 197,900 sq m of space approved or under construction.
Within this are our first multi-level warehouse scheme in West London, three
new data centres on the Slough Trading Estate and big box warehouses at our
logistics parks in Coventry and East Midlands Gateway.
In Continental Europe, we have 418,600 sq m of space approved or under
construction. This includes pre-let big box warehouses for a variety of
different occupiers, from retailers to manufacturers, across all our European
markets. We are also developing further phases of our successful urban
warehouse parks in Amsterdam, Cologne, Lyon and Paris.
We continue to focus our speculative developments on urban warehouse projects,
particularly in cities such as London, Paris and Berlin, where modern space is
in short supply and occupier demand is strong.
We have factored current construction and financing costs into the development
returns for our future development projects. Encouragingly, we are seeing
build costs stabilise across most of our markets and in some regions have
started to see construction tenders coming in at reduced prices. We expect to
be able to develop at a margin over the valuation yields on equivalent
standing assets of at least 150 basis points, meaning that it remains a
profitable way of growing the rent roll.
FUTURE DEVELOPMENT PIPELINE
Near-term development pipeline
Within the future development pipeline are a number of pre-let projects close
to being approved, awaiting either final conditions to be met or planning
approval to be granted. We expect to commence these projects within the next
six to 12 months.
These projects total 124,300 sq m of space, equating to approximately £94
million of future capital expenditure and £10 million of potential annual
rent.
Land bank
Our land bank identified for future development (including the near-term
projects detailed above) totalled 1,125 hectares as at 30 June 2023, valued at
£1.8 billion, roughly 10 per cent of our total portfolio value. This includes
£741 million of land acquired for future re-development but which is
currently income producing, reducing the holding costs until development can
start (equating to £20 million of annualised rent, excluded from passing
rent).
The land bank includes £322 million of land acquired during the first six
months of the year, including land associated with developments already
underway or expected to start in the short term. This includes the acquisition
of Bath Road Shopping Park in Slough, which creates significant further
potential for data centre development in the Slough Trading Estate. We also
acquired the former Radlett Aerodrome in Hertfordshire, a brown-field site on
the edge of London and close to the M25, which provides us with the
opportunity to develop an exceptionally rare site of scale that will deliver
over 330,000 sq m of logistics buildings. It will be supported by a strategic
rail freight interchange and we will also be creating a substantial country
park for use by the local community. We also purchased small plots of land in
Italy, France, Spain and Poland.
We estimate our land bank can support 3.7 million sq m of development over the
next five to seven years. The estimated capital expenditure associated with
the future pipeline is approximately £3.4 billion. It could generate £370
million of gross rental income, representing a yield on total development cost
(including land and notional finance costs) of around 7 per cent. These
figures are indicative, based on our current expectations, and are dependent
on our ability to secure pre-let agreements, planning permissions,
construction contracts and on our outlook for occupier conditions in local
markets.
Conditional land acquisitions and land held under option agreements
Land acquisitions (contracted but subject to further conditions) and land held
under option agreements are not included in the figures above, but represent
significant further development opportunities. These include sites for big box
warehouses in the UK Midlands as well as in Italy and Poland. They also
include urban warehouse sites in East and West London.
The options are held on the balance sheet at a value of £23 million
(including joint ventures and associates at share). Those we expect to
exercise over the next two to three years are for land capable of supporting
almost 1.6 million sq m of space and generating almost £154 million of
headline rent, for a blended yield of approximately 7 per cent.
Further details of our completed projects and development pipeline are
available in the H1 2023 Property Analysis Report, at www.SEGRO.com/investors
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.SEGRO.com%2Finvestors&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=www.SEGRO.com%2Finvestors&index=6&md5=e83fde23e155b2ab70c929b2ee3a3bec)
.
INTERIM DIVIDEND OF 8.7 PENCE PER SHARE
Consistent with its previous guidance that the interim dividend would normally
be set at one-third of the previous year’s total dividend, the Board has
declared an increase in the interim dividend of 0.6 pence per share to 8.7
pence (H1 2022: 8.1 pence), a rise of 7.4 per cent. This will be paid as a
Property Income Distribution (PID) on 22 September 2023 to shareholders on the
register at the close of business on 9 August 2023.
The Board will offer a scrip dividend option for the 2023 interim dividend,
allowing shareholders to choose whether to receive the dividend in cash or new
shares. In respect of the 2022 final dividend, 49 per cent of shareholders,
representing £107 million of dividend payments, elected for the scrip option
which resulted in the issue of 14.5 million new shares.
FINANCIAL REVIEW
Like-for-like net rental income growth and income from new developments were
the primary drivers of the 3 per cent increase in Adjusted profit before tax
compared to H1 2022. Adjusted NAV per share decreased by 3 per cent to 937
pence compared to December 2022, primarily due to the valuation deficit on the
property portfolio.
Financial highlights
30 June 30 June 31 December
2023
2022
2022
IFRS net asset value (NAV) per share (diluted) (p) 913 1,212 938
Adjusted NAV per share(1) (diluted) (p) 937 1,249 966
IFRS (loss)/profit before tax (£m) (33) 1,375 (1,967)
Adjusted profit before tax(2) (£m) 198 193(3) 386
IFRS earnings per share (EPS) (p) (1.9) 110.7 (159.7)
Adjusted( )EPS(2) (p) 15.9 15.6(3) 31.0
1. A reconciliation between IFRS NAV and Adjusted NAV is shown in Note 11.
2. A reconciliation between IFRS profit before tax and Adjusted profit before
tax is shown in Note 2 and between IFRS EPS and Adjusted EPS is shown in Note
11.
3. The Adjusted profit before tax and Adjusted EPS for HY 2022 has been
represented to exclude the impact of the SELP performance fee as detailed
further below and in Note 2.
Presentation of financial information
The condensed financial information is prepared under IFRS where the Group’s
interests in joint ventures and associates are shown as a single line item on
the income statement and balance sheet, whereas subsidiaries are consolidated
line by line.
The Adjusted profit measure better reflects the underlying recurring
performance of the Group’s property rental business, which is SEGRO’s core
operating activity. It is based on the Best Practices Recommendations of the
European Public Real Estate Association (EPRA) which are widely used alternate
metrics to their IFRS equivalents (further details on EPRA Best Practices
Recommendations can be found at www.epra.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.epra.com&esheet=53484578&newsitemid=20230726851648&lan=en-US&anchor=www.epra.com&index=7&md5=7f337876ba349aa60bf11e4ca4c3454c)
). In calculating Adjusted profit, the Directors may also exclude additional
items considered to be non-recurring, not in the ordinary course of business
or significant by virtue of size and nature.
At 30 June 2022 estimated SELP performance fees were included in Adjusted
Profit. They were not excluded because it was anticipated that further fees
would subsequently be recognised throughout the latter part of the performance
period and therefore these would not be considered unusual. The market
volatility that was seen in the latter half of 2022 significantly impacted
property valuations and consequentially, management’s consideration of SELP
performance fees, leading to the reversal of the fee recognised in the six
months to 30 June 2022 and no performance fee recognised for the year ended 31
December 2022 or the six months ended 30 June 2023. Based on this volatility,
these fees are now considered unusual as they are inherently uncertain and
sensitive to movements in property valuations (which themselves are excluded
from the EPRA profit metric). In excluding such items going forward,
management believe this gives a more reliable and relevant measure of the
underlying performance of the business. At 30 June 2022 (as previously
reported) the performance fee recognised was £42 million within Joint venture
fee income; a cost of £19 million within Share of joint ventures’ and
associates adjusted profit after tax (being the share of performance fee cost
of £21 million less a tax credit of £2 million); and a tax charge of £7
million was recognised in respect of the performance fee income. Overall, the
net profit after tax impact is a decrease in the previously reported Adjusted
profit of £16 million. The H1 2022 Adjusted profit has therefore been
represented to exclude these items and the previously reported amount has
decreased from £204 million to £188 million (as detailed further in Note 2).
The FY 2022 and H1 2023 reported results are not impacted by this change.
A detailed reconciliation between Adjusted profit after tax and IFRS profit
after tax is provided in Note 2 of the condensed financial information. The
Adjusted NAV per share measure reflects the EPRA Net Tangible Asset metric and
based on the EPRA Best Practices Reporting Recommendations. A detailed
reconciliation between Adjusted NAV and IFRS NAV is provided in Note 11(ii) of
the condensed financial information.
The Supplementary Notes to the condensed financial information include other
EPRA metrics as well as SEGRO’s Adjusted income statement and balance sheet
presented on a proportionately consolidated basis.
SEGRO monitors the above alternative metrics, as well as the EPRA metrics for
vacancy rate, net asset value, loan-to-value ratio and total cost ratio, as
they provide a transparent and consistent basis to enable comparison between
European property companies.
Look-through metrics provided for like-for-like net rental income include
joint ventures and associates at share in order that our full operations are
captured, therefore providing more meaningful analysis.
ADJUSTED PROFIT
Adjusted profit
Six months to Six months to
30 June 2023
30 June 2022
£m
(represented(3))
£m
Gross rental income 266 239
Property operating expenses (42) (36)
Net rental income 224 203
Joint venture management fee income 16 15
Management and development fee income 3 2
Net solar energy income – 1
Administrative expenses (33) (31)
Share of joint ventures and associates’ Adjusted profit after tax(1) 40 35
Adjusted operating profit before interest and tax 250 225
Net finance costs (52) (32)
Adjusted profit before tax 198 193
Tax on Adjusted profit (5) (5)
Adjusted profit after tax(2) 193 188
1. Comprises net property rental income and management income less
administrative expenses, net interest expenses and taxation.
2. A detailed reconciliation between Adjusted profit after tax and IFRS profit
after tax is provided in Note 2 to the condensed financial information.
3. Adjusted profit for HY 2022 has been represented to exclude the impact of
the SELP performance fee as detailed further in Note 2.
Adjusted profit before tax increased by £5 million (3 per cent) to £198
million (H1 2022: £193 million) during H1 2023. The results are driven by
growth in net rental income (including joint ventures and associates at share)
of £31 million which has been offset by an increase in net finance costs of
£20 million as detailed further below.
Adjusted profit is detailed further in Note 2 of the condensed financial
information.
Net rental income (including joint ventures and associates at share)
Net rental income Six months to Six months to
30 June 2023
30 June 2022
£m
£m
Change(3
)%
UK 153 147 4.3
Continental Europe 98 92 6.4
Like-for-like net rental income before other items(1) 251 239 5.1
Other(2) (3) (3)
Like-for-like net rental income (after other) 248 236 5.1
Development lettings 22 1
Properties taken back for development 7 9
Like-for-like net rental income plus developments 277 246
Properties acquired 3 1
Properties sold – 4
Net rental income before surrenders, dilapidations and exchange 280 251
Lease surrender premiums and dilapidations income 1 3
Other items and rent lost from lease surrenders 5 5
Impact of exchange rate difference between periods – (4)
Net rental income (including joint ventures and associates at share)(5) 286 255
SEGRO share of joint venture management fees (6) (6)
Net rental income after SEGRO share of joint venture management fees 280 249
1. Like-for-like change by Business Unit: Greater London 4.5%, Thames Valley
3.8%, National Logistics 4.5%, Northern Europe 8.1%, Southern Europe 4.8%,
Central Europe 8.7%.
2. Other includes the corporate centre and other costs relating to the
operational business which are not specifically allocated to a geographical
business unit.
3. Percentage change has been calculated using the figures presented in the
table above in millions accurate to one decimal place.
4. The like-for-like net rental growth metric is based on properties held
throughout both 2023 and 2022 on a proportionally consolidated basis. This
provides details of net rental income growth excluding the distortive impact
of acquisitions, disposals, and development completions. Where an asset has
been sold into a joint venture (sales to SELP, for example) the 50 per cent
share owned throughout the period is included in like-for-like calculation or
development lettings where applicable, with the balance shown as disposals.
5. Net rental income based on Adjusted profit metrics in Table 2 which exclude
joint venture management fees and performance fees.
The like-for-like rental growth metric is based on properties held throughout
both H1 2023 and H1 2022 and comprises wholly-owned assets (net rental income
of £224 million) and SEGRO’s share of net rental income held in joint
ventures and associates (£56 million) totalling £280 million.
Net rental income increased by £31 million in H1 2023, reflecting the
positive impact of like-for-like rental growth of £12 million and £21
million of additional income from development lettings.
On a like-for-like basis, before other items, net rental income increased by
£12 million, or 5.1 per cent, compared to H1 2022. In the UK there was a 4.3
per cent increase and in Continental Europe a 6.4 per cent increase. This is
due to strong rental performance from rent reviews and indexation across our
portfolio.
Income from joint ventures and associates
Joint venture management fee income increased by £1 million to £16 million
in H1 2023. The prior period recognition of a performance fee of £42 million
in respect of the SELP joint venture (as detailed further in Note 6 of the
condensed financial information) has been excluded from Adjusted profit as
discussed above.
SEGRO’s share of joint ventures and associates’ Adjusted profit after tax
increased by £5 million from £35 million in H1 2022 to £40 million in H1
2023 as a result of growth in net rental income in the SELP joint venture.
Administrative and operating costs
The Total Cost Ratio (‘TCR’) for H1 2023 of 20.4 per cent was broadly
consistent with H1 2022 (20.5 per cent). Excluding the impact of share-based
payments, the cost of which are directly linked to the relative total return
of the property portfolio, the Cost Ratio of 18.8 per cent in H1 2023 was also
broadly consistent with H1 2022 (18.7 per cent). The calculations are set out
in Table 9 of the Supplementary Notes to the condensed financial information.
Property operating expenses in the wholly-owned portfolio have increased in
the period from £36 million in H1 2022 to £42 million in H1 2023, as the
portfolio has grown in size. Administrative expenses have increased by £2
million, as a result of increased staff costs following headcount increases.
Net finance costs
Net finance costs have increased by £20 million during the period from £32
million in H1 2022 to £52 million in H1 2023. The increased net interest
costs on overdrafts, loans and related derivatives (£41 million higher)
reflect the higher interest rates in H1 2023 compared to H1 2022. This is
partially offset by an increase of £21 million interest capitalised on the
development of properties, reflecting the higher interest cost of new
borrowings to fund this expenditure.
Taxation
The tax charge on Adjusted profit of £5 million (H1 2022: £5 million)
reflects an effective tax rate of 2.5 per cent (H1 2022: 2.6 per cent).
The Group’s tax rate reflects the fact that over three-quarters of its
assets are located in the UK and France and qualify for REIT and SIIC status
respectively in those countries. This status means that income from rental
profits and gains on disposals of assets in the UK and France are exempt from
corporation tax, provided SEGRO meets a number of conditions including, but
not limited to, distributing 90 per cent of UK taxable profits.
Adjusted earnings per share
Adjusted earnings per share were 15.9 pence (H1 2022: 15.6 pence) reflecting
the £5 million increase in Adjusted profit after tax slightly offset by the
higher average number of shares compared to the prior period. The increase in
shares is primarily as a result of the scrip dividend take-up for the 2022
dividends.
IFRS (LOSS)/PROFIT
IFRS (loss)/profit before tax has decreased by £1,408 million from a profit
of £1,375 million in H1 2022 to a loss of £33 million in H1 2023 as a result
of the movements described below, primarily due to property revaluation losses
in the period.
IFRS (loss)/profit after tax has decreased by £1,357 million to a £23
million loss in H1 2023. This equated to post-tax IFRS loss per share of 1.9
pence compared with IFRS earnings per share of 110.7 pence for H1 2022.
The decrease in IFRS profit after tax is driven primarily by a fall in
valuation gains and losses on the property portfolio (including joint ventures
at share) of £1,620 million, from a surplus of £1,345 million at HY 2022 to
a deficit of £275 million in the current period. Further breakdown is
detailed in Note 7. These losses are partially offset by a reduction in tax
charge in respect of adjustments of £95 million (being £51 million in
respect of wholly-owned properties and £44 million in respect of joint
ventures and associates at share). These tax movements primarily arise as a
consequence of the revaluation deficits recognised.
In addition, IFRS profit in HY 2023 has fallen £16 million compared to HY
2022 due to the impact of the recognition of a performance fee in the prior
period. Further detail on the presentation and nature of this fee is given in
Note 2 and 6 respectively.
In addition, IFRS profit after tax includes £23 million in respect of fair
value gains from derivatives (compared to a loss of £150 million in HY 2022)
which mainly arise on interest rate swaps. The overall reduction in IFRS
profit after tax has therefore been offset by £173 million in respect of this
item.
A reconciliation between Adjusted profit before tax and IFRS profit before tax
is provided in Note 2 to the condensed financial information.
BALANCE SHEET
Adjusted net asset value
£m Shares Pence
million
per
share
Adjusted net assets attributable to ordinary shareholders at 31 December 2022 11,717 1,212.5 966
Realised and unrealised property gains and losses (including joint ventures (264) (22)
and associates)(1)
Adjusted profit after tax 193 16
Dividend net of scrip shares issued (2022 final) (113) (20)
Other including exchange rate movement (net of hedging) (33) (3)
Adjusted net assets attributable to ordinary shareholders at 30 June 2023 11,500 1,227.4 937
1. Includes unrealised valuation losses of £275 million and realised property
gains of £11 million (being: £9 million profit on sale of investment
properties and other investment income; and £2 million gain on sale of
trading properties). See Note 7 for further details.
At 30 June 2023, IFRS net assets attributable to ordinary shareholders (on a
diluted basis) were £11,203 million (31 December 2022: £11,373 million),
equating to 913 pence per share (31 December 2022: 938 pence).
Adjusted net asset value per share at 30 June 2023 was 937 pence measured on a
diluted basis (31 December 2022: 966 pence), a decrease of 3 per cent in the
period. The table above highlights the principal factors behind the decrease.
The dividend impact includes the dilutive effect of issuing scrip shares in
lieu of cash.
A reconciliation between IFRS and Adjusted net assets is available in Note 11
to the condensed financial information.
CASH FLOW AND NET DEBT RECONCILIATION
Cash flow from operations for the period was £254 million, an increase of
£29 million from H1 2022 (£225 million), consistent with the increased
rental income received during the period.
The largest cash outflow in the period relates to acquisitions and
developments of investment properties at £580 million, which primarily
reflects the Group’s investment activity during the period and ongoing
development activity (see Investment Activity and Development sections above
for more details). Cash flows from investment property sales are £41 million
and £1 million was spent on acquisitions of other property interests, giving
a net outflow of £540 million from property investment activity compared to
£441 million in the prior period.
Another significant financing cash flow is dividends paid of £113 million (H1
2022: £100 million) reflecting the increased dividend per share and level of
scrip dividend take-up. Furthermore, during the period, the Group paid £15
million to acquire the 5 per cent of Vailog s.r.l. it did not already own.
As a result of these factors there was a net funds outflow of £490 million
during the period compared to £385 million in H1 2022.
Cash flow and net debt reconciliation
Six months to Six months to
30 June 2023
30 June 2022
£m
£m
Opening net debt (4,722) (3,314)
Cash flow from operations 254 225
Finance costs (net) (65) (47)
Dividends received 3 5
Tax paid (4) (13)
Free cash flow 188 170
Dividends paid (113) (100)
Acquisitions and development of investment properties (580) (658)
Investment property sales 41 223
Acquisitions of other interests in property and other investments (1) (6)
Purchase of non-controlling interest (15) –
Net settlement of foreign exchange derivatives (2) 15
Net investment in joint ventures and associates 1 (31)
Other items (9) 2
Net funds flow (490) (385)
Non-cash movements (4) (4)
Exchange rate movements 88 (82)
Closing net debt (5,128) (3,785)
Capital expenditure
The table below sets out analysis of the capital expenditure on property
assets during the period on a basis consistent with the EPRA Best Practices
Recommendations. This includes acquisition and development spend, on an
accruals basis, in respect of the Group’s wholly‑owned investment and
trading property portfolios, as well as the equivalent amounts for joint
ventures and associates at share.
Total spend for the period was £702 million, a decrease of £69 million
compared to H1 2022. Acquisitions for the period were £326 million, a
decrease of £39 million compared to H1 2022 and primarily related to land at
Radlett and the Bath Road Shopping Park in Slough. Development capital
expenditure for the period was £299 million, a decrease of £59 million
compared to H1 2022, with the largest spend continuing to be on our schemes in
the UK National Logistics business unit and in Italy.
Spend on existing completed properties totalled £27 million (H1 2022: £21
million), over half of which was for value-enhancing major refurbishment and
fit-out costs prior to re-letting.
EPRA capital expenditure analysis
Six months to 30 June 2023 Six months to 30 June 2022
Wholly- Joint ventures Total Wholly Joint ventures Total
owned
and associates
£m
- owned
and associates
£m
£m
£m
£m
£m
Acquisitions 323(1) 3 326 328(1) 37 365
Development(5) 248(2) 51 299 324(2) 34 358
Capitalised interest(4,5) 27 2 29 6 – 6
Investment properties:
Incremental lettable space 1 – 1 1 – 1
Non-incremental lettable space 21 5 26 16 4 20
Tenant incentives(3) 17 4 21 16 5 21
Total 637 65 702 691 80 771
1. Being £323 million investment property and £nil trading property (H1
2022: £328 million and £nil respectively) see Note 12.
2. Being £248 million investment property and £nil trading property (H1
2022: £320 million and £4 million respectively) see Note 12.
3. Includes tenant incentives, letting fees and rental guarantees.
4. Capitalised interest on development expenditure.
5. Development and capitalised interest on development expenditure were
previously presented in total as a single line items in the table above. In
line with EPRA BPR Guidelines, development and capitalised interest are now
presented as separate line items and the prior period comparative has been
represented in the table.
FINANCIAL POSITION AND FUNDING
Financial Key Performance Indicators
GROUP ONLY 30 June 30 June 31 December
2023
2022
2022
Net borrowings (£m)(3) 5,128 3,785 4,722
Available cash and undrawn committed facilities (£m)( 4) 1,410 1,778 1,720
Gearing (%) 45 26 41
LTV ratio (%) 34 22 32
Weighted average cost of debt1 (%) 3.0 1.7 2.6
Interest cover2 (times) 3.2 6.1 4.3
Average duration of debt (years) 8.1 9.0 9.4
INCLUDING JOINT VENTURES AND ASSOCIATES AT SHARE
Net borrowings (£m)( 3) 6,078 4,717 5,693
Available cash and undrawn committed facilities (£m)( 4) 1,687 1,966 2,007
LTV ratio (%) 34 23 32
Weighted average cost of debt1 (%) 2.9 1.6 2.5
Interest cover2 (times) 3.4 6.2 4.5
Average duration of debt (years) 7.5 8.0 8.6
1. Based on gross debt, excluding commitment fees and non-cash interest.
2. Net rental income/adjusted net finance costs (before capitalisation) on a
rolling 12 month basis.
3. SEGRO Group cash and cash equivalents have been restated as at 30 June
2022. See Note 1 for further details. Net borrowings as at 30 June 2022 have
been restated to reflect this change.
4. Available cash and undrawn committed facilities exclude tenant deposit
balances and uncommitted facilities as detailed further in Note 13.
At 30 June 2023, the Group’s net borrowings (including the Group’s share
of borrowings in joint ventures and associates) were £6,078 million (31
December 2022: £5,693 million). The loan to value ratio (including joint
ventures and associates at share) was 34 per cent (31 December 2022: 32 per
cent) with £1,687 million of cash and undrawn facilities available for
investment.
Gross borrowings of SEGRO Group were £5,231 million at 30 June 2023, all but
£1 million of which were unsecured, and cash and cash equivalent balances
were £103 million. SEGRO’s share of gross borrowings in its joint ventures
and associates was £990 million (all of which were advanced on a non-recourse
basis to SEGRO) and cash and cash equivalent balances of £40 million.
Cash and cash equivalent balances, together with the Group’s interest rate
and foreign exchange derivative portfolio, are spread amongst a strong group
of banks, all of which have a credit rating of A- or better.
During the period, SEGRO drew down £300 million and €407 million term loan
facilities which were the main contributors to the reduction in the duration
of debt.
In May 2023, SEGRO extended the maturity of €200 million of its revolving
credit facilities for a further year to 2028. SELP also extended the maturity
of its €600 million revolving credit facilities for a further year to 2027.
In June 2023, SEGRO arranged two further term loan facilities. The first
facility has £100 million of commitment maturing in 2026; the second facility
has €150 million of commitment also maturing in 2026. Both term loan
facilities were undrawn at 30 June 2023.
MONITORING AND MITIGATING FINANCIAL RISK
The Group monitors a number of financial metrics to assess the level of
financial risk being taken and to mitigate that risk.
Treasury policies and governance
The Group Treasury function operates within a formal policy covering all
aspects of treasury activity, including funding, counterparty exposure and
management of interest rate, currency and liquidity risks. Group Treasury
reports on compliance with these policies on a quarterly basis and policies
are reviewed regularly by the Board.
Gearing and financial covenants
The key leverage metric for SEGRO is its loan to value ratio (LTV), which
incorporates assets and net debt on SEGRO’s balance sheet and SEGRO’s
share of assets and net debt on the balance sheets of its joint ventures and
associates. The LTV at 30 June 2023 on this ‘look-through’ basis was 34
per cent (31 December 2022: 32 per cent).
Our borrowings contain gearing covenants based on Group net debt and net asset
value, excluding debt in joint ventures and associates. The gearing ratio of
the Group at 30 June 2023, as defined within the principal debt funding
arrangements of the Group, was 45 per cent (31 December 2022: 41 per cent).
This is significantly lower than the Group’s tightest financial gearing
covenant within these debt facilities of 160 per cent. Property valuations
would need to fall by around 45 per cent from their 30 June 2023 levels to
reach the gearing covenant threshold of 160 per cent.
The Group’s other key financial covenant within its principal debt funding
arrangements is interest cover, requiring that net interest before
capitalisation be covered at least 1.25 times by net property rental income.
At 30 June 2023, the Group comfortably met this ratio at 3.2 times, calculated
on a rolling 12 month basis in line with covenant requirements. On a
look-through basis, including joint ventures and associates, this ratio was
3.4 times.
We mitigate the risk of over-gearing the Company and breaching debt covenants
by carefully monitoring the impact of investment decisions on our LTV and by
stress-testing our balance sheet to potential changes in property values. We
also expect to continue to recycle assets which would also provide funding for
future investment.
Our intention for the foreseeable future is to maintain our LTV at around 30
per cent, although the evolution of the property cycle will inevitably mean
that there are periods of time when our LTV is higher or lower than this.
However, this level of LTV through the cycle provides the flexibility to take
advantage of investment opportunities arising and ensures significant headroom
compared against our tightest gearing covenant should property values decline.
The Group’s debt has a range of maturities. The next debt maturity for the
Group is the £82 million of SEGRO 2024 sterling bonds, which are now due in
August 2023 following the announcement of their early redemption. There are no
other significant debt maturities until the second half of 2025. This long
average debt maturity translates into a favourable, well spread debt funding
maturity profile which reduces future refinancing risk.
Interest rate risk
The Group’s interest rate risk policy is designed to ensure that we limit
our exposure to volatility in interest rates. The policy states that between
50 and 100 per cent of net borrowings (including the Group’s share of
borrowings in joint ventures and associates) should be at fixed or capped
rates, including the impact of derivative financial instruments.
As at 30 June 2023, including the impact of derivative instruments, 91 per
cent (31 December 2022: 95 per cent) of the net borrowings of the Group
(including the Group’s share of borrowings within joint ventures and
associates) were at fixed or capped rates.
GROUP ONLY 30 June 30 June 31 December
2023
2022
(% of net borrowings)
2022
Fixed rate 72 70 79
Capped rate – triggered 13 – 9
Capped rate – not triggered 4 21 6
Floating rate 11 9 6
TOTAL 100 100 100
INCLUDING JOINT VENTURES AND ASSOCIATES AT SHARE
(% of net borrowings)
Fixed rate 76 74 83
Capped rate – triggered 12 – 8
Capped rate – not triggered 3 17 4
Floating rate 9 9 5
TOTAL 100 100 100
As a result of the fixed and capped rate cover in place, if short term
interest rates had been 1 per cent higher throughout the six month period to
30 June 2023, the adjusted net finance cost of the Group would have increased
by approximately £3 million representing around 2 per cent of Adjusted profit
after tax.
The Group elects not to hedge account its interest rate derivatives portfolio.
Therefore, movements in derivative fair values are taken to the income
statement but, in accordance with EPRA Best Practices Recommendations
Guidelines, these gains and losses are excluded from Adjusted profit after
tax.
Foreign currency translation risk
The Group has negligible transactional foreign currency exposure but does have
a potentially significant currency translation exposure arising on the
conversion of its substantial foreign currency denominated assets (mainly
euro) and euro denominated earnings into sterling in the Group consolidated
accounts.
The Group seeks to limit its exposure to volatility in foreign exchange rates
by hedging at a level between the period-end Group LTV percentage and 100 per
cent of its foreign currency gross assets through either borrowings or
derivative instruments. At 30 June 2023, the Group had gross foreign currency
assets which were 77 per cent hedged by gross foreign currency denominated
liabilities (including the impact of derivative financial instruments).
The exchange rate used to translate euro denominated assets and liabilities as
at 30 June 2023 into sterling within the balance sheet of the Group was
€1.16:£1 (31 December 2022: €1.13:£1). Including the impact of forward
foreign exchange and currency swap contracts used to hedge foreign currency
denominated net assets, if the value of the other currencies in which the
Group operates at 30 June 2023 weakened by 10 per cent against sterling
(€1.28, in the case of euros), net assets would have decreased by
approximately £124 million and there would have been a reduction in gearing
of approximately 2.5 per cent and in the LTV of approximately 1.5 per cent.
The average exchange rate used to translate euro denominated earnings
generated during the six months ended 30 June 2023 into sterling within the
consolidated income statement of the Group was €1.14:£1 (H1 2022:
€1.19:£1).
Based on the hedging position at 30 June 2023, and assuming that this position
had applied throughout the six month period, if the euro had been 10 per cent
weaker than the average exchange rate (€1.25:£1), Adjusted profit after tax
for the six month period would have been approximately £4 million (2.1 per
cent) lower than reported. If it had been 10 per cent stronger, adjusted
profit after tax for the period would have been approximately £4 million (2.1
per cent) higher than reported.
GOING CONCERN
As noted in the Financial Position and Funding section above, the Group has
significant available liquidity to meet its capital commitments, a long-dated
debt maturity profile and substantial headroom against financial covenants.
* In June 2023, the Group executed two additional term loan facilities. The
first facility has a commitment of £100 million, and a second facility has a
commitment of €150 million. Both term loan facilities were undrawn at 30
June 2023 and have a three year maximum term.
* Cash and available committed facilities, excluding tenant deposits, at 30 June
2023 were £1.4 billion.
* The Group continuously monitors its liquidity position compared to committed
and expected capital and operating expenses on a rolling forward 18 month
basis. The quantum of committed capital expenditure at any point in time is
typically low due to the short timeframe to construct warehouse buildings.
* The Group also regularly stress-tests its financial covenants. As noted above,
at 30 June 2023, property values would need to fall by around 45 per cent
before breaching the gearing covenant. In terms of interest cover, net rental
income would need to fall by 60 per cent or the average interest rate would
need to reach 8% before breaching the interest cover covenant. All would be
significantly in excess of the Group’s experience during the financial
crisis.
Having made enquiries and having considered the principal risks facing the
Group, including liquidity and solvency risks, and material uncertainties, the
Directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable
future (a period of at least 12 months from the date of approval of the
financial statements). Accordingly, they continue to adopt the going concern
basis in preparing these financial statements.
STATEMENT OF PRINCIPAL RISKS
The Board has overall responsibility for ensuring that risk is effectively and
consistently managed across the Group. The Audit Committee monitors the
effectiveness of the Group’s risk management process on behalf of the Board.
The risk management process is designed to identify, evaluate and respond to
the significant risks (including emerging risks) that the Group faces. The
process aims to understand, document and mitigate, rather than eliminate, the
risk of failure to achieve business objectives, and therefore can only provide
reasonable and not absolute assurance.
The identification and review of emerging risks are integrated into our risk
review process.
The Group’s risk management process including risk appetite, its integrated
approach, governance arrangements in place remain as described in the Managing
Risks section of the 2022 Annual Report on pages 64 to 74. The Board has
performed a robust assessment of the principal and emerging risks facing the
Group and has concluded that they continue to apply and expected to be
relevant for the remaining six months of the year.
The principal risks and uncertainties are summarised below:
* Macroeconomic Impact on Market Cycle. The property market is cyclical in
nature and there is a continuous risk that the Group could either misread or
fail to react appropriately to changing property market cost of finance or
wider macroeconomic/geopolitical conditions. This could result in an incorrect
strategy or the ability to deliver a strategy being inhibited and
consequential impact on property performance and shareholder value.
* Portfolio Strategy and Execution. The Group’s Total Property and/or
Shareholder Returns could underperform in absolute or relative terms as a
result of an inappropriate portfolio strategy.
* Major Event / Business Disruption. Unexpected global, regional or national
events result in severe adverse disruption to SEGRO, such as sustained asset
value or revenue impairment, solvency or covenant stress, liquidity or
business continuity challenges. A global event or business disruptor may
include but is not limited to a global financial crisis, health pandemic,
power/water shortages, civil unrest, act of terrorism, cyber-attack or other
IT disruption. Events may be singular or cumulative, and lead to
acute/systemic issues in the business and/or operating environment.
* Health & Safety. A health and safety incident may occur which may involve
harm to an individual or loss of life. This may be due to the failure of
management processes, failure of a building or other physical asset, or
negligence of a third party. Furthermore, the Group may breach relevant
legislation and fail to provide suitable employee support. This may
consequentially result in litigation, fines, serious reputational damage and a
negative impact on employees.
* Environmental Sustainability and Climate Change. Failure to anticipate and
respond to the impact of both physical and transitional risks from climate
change on the sustainability of our environment is both a principal and
emerging risk. The likelihood of increased severity and unpredictability of
weather-related events may result in more frequent damage to our buildings
causing disruption and increased costs to SEGRO and our customers.
Non-compliance with changing laws, regulations, policies, taxation and
obligations could cause loss of value to the Group. Not keeping pace with
social attitudes and customer behaviours and preferences whereby SEGRO may
need to alter the design and build and/or energy provision of their assets
could additionally cause reputational damage and reduce the attractiveness and
value of our assets. The volume of new legislation and guidance in this area
have continued to increase.
* Development Plan Execution. The Group could suffer significant financial
losses from cost over-runs, for example, due to contractor default or poor
performance and management; increased construction costs; above-appetite
exposure to non-income producing assets; inappropriate land acquisition due
diligence (including energy accessibility); and market competition reducing
access to suitable land bank and/or increasing acquisition costs.
* Financing Strategy. The Group could suffer an acute liquidity or solvency
crisis, financial loss or financial distress as a result of a failure in the
design or execution of its financing strategy. Such an event may be caused by
a failure to obtain debt or equity funding; having an inappropriate debt
structure; poor forecasting; defaulting on loan agreements as a result of a
breach of financial or other covenants; or counterparty default. The recent
inflationary pressures have caused increases to debt costs and impacted
property yields.
* Legal, Political and Regulatory. The Group could fail to anticipate
significant political, legal, tax or regulatory changes, leading to a
significant unexpected financial or reputational impact.
* People and Talent. The performance of the business could be impaired due to
SEGRO: not having the appropriate culture, organisational structure and
skilled people to deliver its strategy and its strategic priorities; failing
to attract, motivate, retain and develop diverse talent as part of our
Nurturing Talent ambition; and failing to prepare adequate succession plans.
Transition risks arise as the Group moves to a new operational structure and
reporting lines.
* Operational Delivery. The Group’s ability to protect its reputation,
revenues and shareholder value could be damaged by operational failures such
as: major customer default; supply chain failure or the structural failure of
one of our assets.
RESPONSiBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the interim condensed set of financial statements has been prepared in
accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the
United Kingdom and European Union;
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties’ transactions and
changes therein).
By order of the Board,
David Sleath
Chief Executive
Soumen Das
Chief Financial Officer
Independent review report to SEGRO plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed SEGRO plc’s condensed consolidated interim financial
statements (the “interim financial statements”) in the half year results
of SEGRO plc for the 6 month period ended 30 June 2023 (the “period”).
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and International Accounting
Standard 34, ‘Interim Financial Reporting’ as adopted by the European
Union and the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom’s Financial Conduct Authority.
The interim financial statements comprise:
* the Condensed Group Balance Sheet as at 30 June 2023;
* the Condensed Group Income Statement and Condensed Group Statement of
Comprehensive Income for the period then ended;
* the Condensed Group Cash Flow Statement for the period then ended;
* the Condensed Group Statement of Changes in Equity for the period then ended;
and
* the explanatory notes to the interim financial statements.
The interim financial statements included in the half year results of SEGRO
plc have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and International Accounting
Standard 34, ‘Interim Financial Reporting’ as adopted by the European
Union and the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom’s Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, ‘Review of Interim Financial Information Performed by
the Independent Auditor of the Entity’ issued by the Financial Reporting
Council for use in the United Kingdom (“ISRE (UK) 2410”). A review of
interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the half year results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half year results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the half year results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority. In preparing the half year results,
including the interim financial statements, the directors are responsible for
assessing the group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the half year results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We do not,
in giving this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2023
CONDENSED GROUP INCOME STATEMENT
For the six months ended 30 June 2023
Notes Half year to Half year to Year to
30 June
30 June
31 December
2023
2022
2022
(unaudited)
(unaudited)
(audited)
£m
£m
£m
Revenue 4 342 330 669
Costs 5 (97) (65) (214)
245 265 455
Administrative expenses (33) (31) (59)
Share of (loss)/profit from joint ventures and associates after tax 6 (28) 151 (144)
Realised and unrealised property gains and losses 7 (188) 1,172 (1,946)
Operating (loss)/profit (4) 1,557 (1,694)
Finance income 8 38 36 67
Finance costs 8 (67) (218) (340)
(Loss)/profit before tax (33) 1,375 (1,967)
Tax 9 10 (41) 37
(Loss)/profit after tax (23) 1,334 (1,930)
Attributable to equity shareholders (23) 1,333 (1,927)
Attributable to non-controlling interests – 1 (3)
Earnings per share (pence)
Basic 11 (1.9) 110.7 (159.7)
Diluted 11 (1.9) 110.4 (159.7)
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Half year to Half year to Year to
30 June
2023
30 June
31 December
(unaudited)
2022
2022
£m
(unaudited)
£m
(audited)
£m
(Loss)/profit for the period (23) 1,334 (1,930)
Items that may be reclassified subsequently to profit or loss
Foreign exchange movement arising on translation of international operations (89) 100 179
Fair value movements on derivatives and borrowings in effective hedge 51 (49) (98)
relationships
(38) 51 81
Tax on components of other comprehensive income – – –
Other comprehensive (expense)/income (38) 51 81
Total comprehensive (expense)/income for the period (61) 1,385 (1,849)
Attributable to – equity shareholders (61) 1,385 (1,845)
– non-controlling interests – – (4)
CONDENSED GROUP BALANCE SHEET
As at 30 June 2023
Notes 30 June 30 June 31 December
2023
2022 (restated)(1
2022
(unaudited) )
(audited)
£m (unaudited)
£m
£m
Assets
Non-current assets
Intangible assets 17 9 12
Investment properties 12 15,234 17,209 14,939
Other interests in property 23 28 30
Property, plant and equipment 23 23 23
Investments in joint ventures and associates 6 1,698 2,022 1,768
Other investments 10 8 9
Other receivables 81 38 81
Derivative financial instruments 71 47 58
17,157 19,384 16,920
Current assets
Trading properties 12 2 57 35
Trade and other receivables 204 250 199
Tax asset 11 – 21
Derivative financial instruments 4 – 11
Cash and cash equivalents 13 103 138 162
324 445 428
Total assets 17,481 19,829 17,348
Liabilities
Non-current liabilities
Borrowings 13 5,149 3,923 4,884
Deferred tax liabilities 9 203 296 226
Trade and other payables 74 77 77
Derivative financial instruments 168 192 188
Tax liabilities 10 19 10
5,604 4,507 5,385
Current liabilities
Trade and other payables 580 552 560
Borrowings 13 82 – –
Derivative financial instruments 2 3 14
Tax liabilities 10 72 16
674 627 590
Total liabilities 6,278 5,134 5,975
Net assets 11,203 14,695 11,373
Equity
Share capital 122 121 121
Share premium 3,556 3,447 3,449
Capital redemption reserve 114 114 114
Own shares held (1) (3) (1)
Other reserves 187 191 227
Retained earnings 7,225 10,825 7,463
Total shareholders' equity 11,203 14,695 11,373
Non-controlling interests – – –
Total equity 11,203 14,695 11,373
Net assets per ordinary share (pence)
Basic 11 915 1,216 941
Diluted 11 913 1,212 938
1. Cash and cash equivalents and Trade and other receivables have been
restated as at 30 June 2022 following IFRIC’s agenda decision in respect of
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party. See Note 1 for further details.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Attributable to owners of the parent
Other reserves
(unaudited) Ordinary share capital £m Share Capital Own Share- Translation, Merger Retained Total Non- Total
premium
redemption
shares
based
hedging
reserve
earnings
equity
controlling
equity
£m
reserve
held
payment
and other
£m
£m
attributable
interest(1
£m
(
£m
reserve
reserve
to owners )
)£m
£m
£m
of the £m
parent
£m
Balance at 1 January 2023 121 3,449 114 (1) 25 33 169 7,463 11,373 – 11,373
Loss for the period – – – – – – – (23) (23) – (23)
Other comprehensive expense – – – – – (38) – – (38) – (38)
Total comprehensive expense for the period – – – – – (38) – (23) (61) – (61)
Transactions with owners of the Company
Issue of shares – 1 – – – – – – 1 – 1
Own shares acquired – – – (3) – – – – (3) – (3)
Equity-settled share-based payment transactions – – – 3 (2) – – 5 6 – 6
Dividends 1 106 – – – – – (220) (113) – (113)
Movement in non-controlling interest(1) – – – – – – – – – – –
Total transactions with owners of the Company 1 107 – – (2) – – (215) (109) – (109)
Balance at 30 June 2023 122 3,556 114 (1) 23 (5) 169 7,225 11,203 – 11,203
1. During the period to 30 June 2023, the non-controlling interest held in
Vailog s.r.l was acquired by the Group. There is no non-controlling interest
held at 30 June 2023.
For the six months ended 30 June 2022
Attributable to owners of the parent
Other reserves
(unaudited) Ordinary share capital £m Share premium £m Capital redemption reserve Own shares held Share-based payment reserve Translation, hedging and other reserve Merger reserve Retained earnings Total equity attributable to owners of the parent Non-controlling interest(1 Total equity
(
£m
£m
£m
£m
£m
£m )
£m
)£m £m
Balance at 1 January 2022 120 3,371 114 (1) 20 (49) 169 9,692 13,436 – 13,436
Profit for the period – – – – – – – 1,333 1,333 1 1,334
Other comprehensive income/(expense) – – – – – 52 – – 52 (1) 51
Total comprehensive income for the period – – – – – 52 – 1,333 1,385 – 1,385
Transactions with owners of the Company
Issue of shares – – – – – – – – – – –
Own shares acquired – – – (5) – – – – (5) – (5)
Equity-settled share-based payment transactions – – – 3 (1) – – 3 5 – 5
Dividends 1 76 – – – – – (203) (126) – (126)
Movement in non-controlling interest(1) – – – – – – – – – – –
Total transactions with owners of the Company 1 76 – (2) (1) – – (200) (126) – (126)
Balance at 30 June 2022 121 3,447 114 (3) 19 3 169 10,825 14,695 – 14,695
1. Non-controlling interest relates to Vailog s.r.l.
For the year ended 31 December 2022
Attributable to owners of the parent
Other reserves
(audited) Ordinary share capital £m Share premium £m Capital redemption reserve Own shares held Share-based payment reserve Translation, hedging and other reserve Merger reserve Retained earnings Total equity attributable to owners of the parent Non-controlling interest(1 Total equity
(
£m
£m
£m
£m
£m
£m )
£m
)£m £m
Balance at 1 January 2022 120 3,371 114 (1) 20 (49) 169 9,692 13,436 – 13,436
Loss for the year – – – – – – – (1,927) (1,927) (3) (1,930)
Other comprehensive income/(expense) – – – – – 82 – – 82 (1) 81
Total comprehensive income/(expense) for the year – – – – – 82 – (1,927) (1,845) (4) (1,849)
Transactions with owners of the Company
Issue of shares – – – – – – – – – – –
Own shares acquired – – – (4) – – – – (4) – (4)
Equity-settled share-based payment transactions – – – 4 5 – – 2 11 – 11
Dividends 1 78 – – – – – (301) (222) – (222)
Movement in non-controlling interest(1) – – – – – – – (3) (3) 4 1
Total transactions with owners of the Company 1 78 – – 5 – – (302) (218) 4 (214)
Balance at 31 December 2022 121 3,449 114 (1) 25 33 169 7,463 11,373 – 11,373
1. Non-controlling interest relates to Vailog s.r.l.
CONDENSED GROUP CASH FLOW STATEMENT
For the six months ended 30 June 2023
Notes Half year to Half year to Year to
30 June
30 June
31 December
2023
2022 (restated)(1)
2022
(unaudited)
(unaudited)
(audited)
£m
£m
£m
Cash flows from operating activities 14 254 225 479
Interest received 15 14 28
Dividends received 3 5 9
Interest paid (79) (61) (131)
Cost of early close out of interest rate derivatives and new interest rate (1) – (77)
derivatives transacted
Tax paid (4) (13) (95)
Net cash received from operating activities 188 170 213
Cash flows from investing activities
Purchase and development of investment properties (580) (658) (1,472)
Sale of investment properties 41 223 310
Acquisition of other interests in property – (3) (6)
Purchase of plant and equipment and intangibles (8) (3) (9)
Acquisition of other investments (1) (3) (3)
Investment and loans to joint ventures and associates (6) (67) (112)
Divestment and repayment of loans from joint ventures and associates 7 36 37
Net cash used in investing activities (547) (475) (1,255)
Cash flows from financing activities
Dividends paid to ordinary shareholders (113) (100) (222)
Proceeds from borrowings 14 710 1,833 2,752
Repayment of borrowings 14 (277) (1,385) (1,421)
Principal element of lease payments (1) (1) (2)
Settlement of foreign exchange derivatives (2) 15 15
Purchase of non-controlling interest (15) – –
Proceeds from issue of ordinary shares 1 – –
Purchase of ordinary shares (3) (5) (4)
Net cash generated from financing activities 300 357 1,118
Net (decrease)/increase in cash and cash equivalents (59) 52 76
Cash and cash equivalents at the beginning of the period 162 85 85
Effect of foreign exchange rate changes – 1 1
Cash and cash equivalents at the end of the period 13 103 138 162
1. Cash and cash equivalents and Trade and other receivables have been
restated as at 30 June 2022 following IFRIC’s agenda decision in respect of
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party. See Note 1 for further details.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed set of financial statements for the six months ended 30 June
2023 were approved by the Board of Directors on 26 July 2023.
The condensed set of financial statements for the six months ended 30 June
2023 is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The financial information
contained in this report for the year ended 31 December 2022 does not
constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and has been extracted from the statutory accounts, which
were prepared in accordance with UK-adopted International Accounting Standards
(IAS) and the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards and International Financial
Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 as
it applies in the European Union and were delivered to the Registrar of
Companies. The auditor’s opinion on these accounts was unqualified, did not
draw attention to any matters by way of emphasis and did not contain a
statement made under S498(2) or S498(3) of the Companies Act 2006. The
condensed set of financial statements included in this half-yearly report has
been prepared in accordance with both UK-adopted International Accounting
Standard 34 ‘Interim Financial Reporting’, and the Disclosure Rules and
Transparency Rules of the United Kingdom’s Financial Conduct Authority as
well as EU-adopted International Accounting Standard 34 ‘Interim Financial
Reporting’.
UK-adopted International Accounting Standards differs in certain respects from
International Financial Reporting Standards as adopted by the EU. The
differences have no material impact on the Group’s condensed financial
statements for the periods presented, which therefore also comply with
International Financial Reporting Standards as adopted by the EU. The
condensed set of financial statements have been prepared on a going concern
basis for a period of at least 12 months from the date of approval of the
financial statements. This is discussed further in the Financial Review
section.
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the
Group’s latest financial statements, unless otherwise stated below.
The following new accounting amendments became effective for the financial
year beginning on 1 January 2023:
- Amendments to IAS 1, “Presentation of financial statements”
- Amendments to IAS 8, “Accounting Policies, changes in accounting estimates
and errors”
- Amendments to IAS 12, “Deferred tax related to assets and liabilities
arising from a single transaction”
- Amendments to IAS 12, “International Tax Reform – Pillar Two Model
Rules”
The amendments did not have any impact on the amounts recognised in the prior
or current period and are not expected to significantly affect future periods.
The Group acknowledges that on 23 May 2023, the IASB issued narrow-scope
amendments to IAS 12, ‘Income Taxes’ which provide temporary relief from
accounting for deferred taxes arising from the implementation of the Pillar
Two model rules.
As set out in the Annual report and accounts for the year ended 31 December
2022, the Group assessed the impact of the IFRS Interpretation Committee’s
recent Agenda Decision in respect of Demand Deposits with Restrictions on Use
arising from a Contract with a Third Party (IAS 7). The 30 June 2022
comparative balances have been restated where applicable to reflect this
change in classification which resulted in £47 million of tenant deposits
being reclassified from ‘Other receivables’ to ‘Cash and cash
equivalents’.
The Group’s definition of Adjusted profit has changed as detailed further in
Note 2 below.
The principal exchange rates used to translate foreign currency denominated
amounts are:
Balance sheet: £1 = €1.16 (30 June 2022: £1 = €1.16; 31 December 2022:
£1 = €1.13)
Income statement: £1 = €1.14 (30 June 2022: £1 = €1.19; 31 December
2022: £1 = €1.17)
The Group’s business is not seasonal, and the results relate to continuing
operations unless otherwise stated.
2. ADJUSTED PROFIT
Adjusted profit is a non-GAAP measure and is the Group’s measure of
underlying profit, which is used by the Board and senior management to measure
and monitor the Group’s income performance.
It is based on the Best Practices Recommendations of European Public Real
Estate Association (EPRA), which calculate profit excluding investment and
development property revaluations and gains or losses on disposals, changes in
the fair value of financial instruments and associated close-out costs and
their related taxation, as well as other permitted one-off items. Refer to the
Supplementary Notes for all EPRA adjustments.
The Directors may also exclude from the EPRA profit measure additional items
(gains and losses) which are considered by them to be non-recurring, not in
the ordinary course of business or significant by virtue of size and nature.
At 30 June 2022 estimated SELP performance fees were included in Adjusted
Profit. They were not excluded because it was anticipated that further fees
would subsequently be recognised throughout the latter part of the performance
period and therefore these would not be considered unusual. The market
volatility that was seen in the latter half of 2022 significantly impacted
property valuations and consequentially, management’s consideration of SELP
performance fees, leading to the reversal of the fee recognised in the six
months to 30 June 2022 and no performance fee recognised for the year ended 31
December 2022 or the six months ended 30 June 2023. Based on this volatility,
these fees are now considered unusual as they are inherently uncertain and
sensitive to movements in property valuations (which themselves are excluded
from the EPRA profit metric). In excluding such items going forward,
management believe this gives a more reliable and relevant measure of the
underlying performance of the business. For the half year to 30 June 2022, the
net profit after tax impact of the SELP performance fee recognised of £16
million has been excluded from the calculation of Adjusted profit, see
footnote 3 below for further details. No non-EPRA adjustments to underlying
profits were made in the current period and for the year ended 31 December
2022.
The following table provides a reconciliation of Adjusted profit to IFRS
(loss)/profit:
Notes Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
(represented(3))
£m
£m
Gross rental income 4 266 239 488
Property operating expenses 5 (42) (36) (76)
Net rental income 224 203 412
Joint venture management fee income 4 16 15 30
Management and development fee income 4 3 2 5
Net solar energy income(2) – 1 1
Administrative expenses (33) (31) (59)
Share of joint ventures and associates' adjusted profit after tax(1) 6 40 35 71
Adjusted operating profit before interest and tax 250 225 460
Net finance costs (including adjustments) 8 (52) (32) (74)
Adjusted profit before tax 198 193 386
Adjustments to reconcile to IFRS:
Adjustments to the share of gains and losses from joint ventures and 6 (68) 116 (215)
associates after tax(1)
Realised and unrealised property gains and losses 7 (188) 1,172 (1,946)
Gain on sale of trading properties 2 2 7
Net fair value gain/(loss) on interest rate swaps and other derivatives 8 23 (150) (199)
Joint venture performance fee income 4 – 42 –
Total adjustments (231) 1,182 (2,353)
(Loss)/profit before tax (33) 1,375 (1,967)
Tax
On Adjusted profit 9 (5) (5) (11)
In respect of adjustments 9 15 (36) 48
Total tax adjustments 10 (41) 37
(Loss)/profit after tax before non-controlling interests (23) 1,334 (1,930)
Non-controlling interests:
Less: share of adjusted profit attributable to non-controlling – – (1)
Interests
: share of adjustments attributable to non-controlling – (1) 4
interests
(Loss)/profit after tax and non-controlling interests (23) 1,333 (1,927)
Of which:
Adjusted profit after tax and non-controlling interests 193 188 374
Total adjustments after tax and non-controlling interests (216) 1,145 (2,301)
(Loss)/profit attributable to equity shareholders (23) 1,333 (1,927)
1. A detailed breakdown of the adjustments to the share of (loss)/profit from
joint ventures and associates is included in Note 6.
2. Net solar income of £nil (31 December 2022: £1 million; 30 June 2022: £1
million) is calculated as Solar energy income of £1 million (31 December
2022: £2 million; 30 June 2022: £1 million) shown in Note 4, less Solar
energy expenses of £1 million (31 December 2022: £1 million; 30 June 2022:
£nil) shown in Note 5.
3. For the half year to 30 June 2022 (as previously reported) the impact of
the joint venture performance fee from SELP was recognised within Adjusted
profit being: performance fee of £42 million within Joint venture fee
management fee income (previously named joint venture fee income); a cost of
£19 million within Share of joint ventures’ and associates adjusted profit
after tax (being the share of performance fee cost of £21 million less a tax
credit of £2 million); and a tax charge of £7 million recognised in respect
of the performance fee income. Overall, the net profit after tax impact was
£16 million, the half year to 30 June 2022 Adjusted profit in the table above
has been represented to exclude these items.
3. SEGMENTAL ANALYSIS
The Group’s reportable segments are the geographical business units: Greater
London (UK), Thames Valley (UK), National Logistics (UK), Northern Europe
(principally Germany), Southern Europe (principally France and Italy) and
Central Europe (principally Poland), which are managed and reported to the
Board as separate and distinct Business Units.
Gross rental Net rental Share of joint Adjusted Total directly Investments Capital
income
ventures and
operating
owned
in joint
expenditure(3
£m
income
associates’
PBIT(2
property
ventures
)£m
Adjusted
)£m
assets
and
£m
profit
£m
associates
£m
£m
30 June 2023
Thames Valley 64 59 – 58 3,228 – 144
National Logistics 26 25 – 27 1,971 – 276
Greater London 107 98 – 97 6,297 15 12
Northern Europe 19 13 17 34 1,106 961 20
Southern Europe 46 34 24 63 2,432 1,125 147
Central Europe 4 2 13 18 202 601 21
Other(1) – (7) (14) (47) – (1,004)(4) 8
Total 266 224 40 250 15,236 1,698 628
30 June 2022
Thames Valley 57 53 – 52 3,512 – 59
National Logistics 21 20 – 22 2,039 – 139
Greater London 101 93 – 92 8,066 13 271
Northern Europe 15 11 14 28 1,053 1,037 40
Southern Europe 41 32 18 56 2,397 1,350 160
Central Europe 4 2 10 14 199 630 6
Other(1) – (8)(1) (7) (39) – (1,008)(4) 3
Total 239 203 35(5) 225(5) 17,266 2,022 678
31 December 2022
Thames Valley 116 109 – 107 3,011 – 80
National Logistics 47 43 – 45 1,721 – 362
Greater London 203 185 – 183 6,401 11 325
Northern Europe 33 23 29 60 1,149 958 345
Southern Europe 82 63 40 114 2,503 1,191 474
Central Europe 7 3 22 31 189 616 7
Other(1) – (14)(1) (20)(1) (80)(1) – (1,008)(4) 9
Total 488 412 71 460 14,974 1,768 1,602
1. ‘Other’ category includes the corporate centre, SELP holding companies
and costs relating to the operational business which are not specifically
allocated to a geographical Business Unit.
2. A reconciliation of total Adjusted PBIT to the IFRS (loss)/profit before
tax is provided in Note 2.
3. Capital expenditure includes additions and acquisitions of investment and
trading properties but does not include tenant incentives, letting fees and
rental guarantees. Part of the capital expenditure incurred is in response to
climate change including the reduction of the carbon footprint of the
Group’s existing investment properties and developments. The “Other”
category includes non-property related spend, primarily IT.
4. Includes the bonds held by SELP Finance S.à.r.l, a Luxembourg entity.
5. Share of joint ventures and associates’ Adjusted profit and Adjusted
operating PBIT for the half year to 30 June 2022 have been represented. See
Note 2 for further details.
4. REVENUE
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Rental income from investment and trading properties 260 230 473
Rent averaging 6 8 14
Surrender premiums – 1 1
Gross rental income(1) 266 239 488
Joint venture fees – management fees* 16 15 30
– performance fees*(2) – 42 –
Joint venture fee income 16 57 30
Management and development fee income* 3 2 5
Service charge income* 22 22 44
Solar energy income* 1 1 2
Proceeds from sale of trading properties* 34 9 100
Total revenue 342 330 669
* The above income streams are recognised under IFRS 15 Revenue from Contracts
with Customers and total £76 million (31 December 2022: £181 million; 30
June 2022: £91 million).
1. Net rental income of £224 million (31 December 2022: £412 million; 30
June 2022: £203 million) is calculated as gross rental income of £266
million (31 December 2022: £488 million; 30 June 2022: £239 million) less
total property operating expenses of £42 million (31 December 2022: £76
million; 30 June 2022: £36 million) shown in Note 5.
2. Performance fees recognised by SEGRO. Due to changes in the estimation of
the performance fee, between 30 June 2022 and 31 December 2022, the
performance fee of £42 million recognised for the half year to 30 June 2022
was reversed and no fee was recognised for the year to 31 December 2022. No
performance fee has been recognised for the half year to 30 June 2023. See
Note 6(ii) for further details on the performance fee from SELP.
5. COSTS
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Vacant property costs 7 4 10
Letting, marketing, legal and professional fees 7 9 17
Loss allowance and impairment of receivables 1 1 3
Other expenses 8 6 12
Property management expenses 23 20 42
Property administrative expenses(1) 25 23 45
Costs capitalised(2) (6) (7) (11)
Total property operating expenses 42 36 76
Service charge expense 22 22 44
Solar energy expense 1 – 1
Trading properties cost of sales 32 7 93
Total costs 97 65 214
1. Property administrative expenses predominantly relate to the employee staff
costs of personnel directly involved in managing the property portfolio.
2. Costs capitalised relate to staff costs of those internal employees
directly involved in developing the property portfolio.
6. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
6(i) Share of (loss)/profit from joint ventures and associates after tax
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
(represented(4))
£m
£m
Revenue(1) 171 146 303
Gross rental income 132 112 237
Property operating expenses:
-underlying property operating expenses (7) (8) (16)
-vacant property costs (1) (1) (1)
-property management fees(2) (12) (12) (25)
Net rental income 112 91 195
Management fee income 2 2 3
Administrative expenses (2) (2) (6)
Net finance costs (including adjustments) (20) (13) (34)
Adjusted profit before tax 92 78 158
Tax (11) (8) (16)
Adjusted profit after tax 81 70 142
At share 40 35 71
Adjustments:
Valuation (deficit)/surplus on investment properties (156) 343 (472)
Early close out of debt – – (3)
Performance fees(3) – (42) –
Tax in respect of adjustments 19 (70) 46
Total adjustments (137) 231 (429)
At share (68) 116 (215)
(Loss)/profit after tax (56) 301 (287)
At share (28) 151 (144)
Total comprehensive (expense)/income for the period (56) 301 (287)
At share (28) 151 (144)
1. Total revenue of £171 million (31 December 2022: £303 million; 30 June
2022: £146 million) includes: Gross rental income £132 million (31 December
2022: £237 million; 30 June 2022: £112 million); service charge income £37
million (31 December 2022: £63 million; 30 June 2022: £32 million); and
management fee income of £2 million (31 December 2022: £3 million; 30 June
2022: £2 million). Service charge income is netted against the equal and
opposite service charge expense in calculating Adjusted profit before tax.
2. Property management fees paid to SEGRO.
3. Performance fees recognised by SEGRO. Due to changes in the estimation of
the performance fee, between 30 June 2022 and 31 December 2022, the
performance fee of £42 million recognised for the half year to 30 June 2022
was reversed and no fee was recognised for the year to 31 December 2022. No
performance fee has been recognised for the half year to 30 June 2023. See
Fees section below for further details.
4. Adjusted profit after tax and Total adjustments for the half year to 30
June 2022 have been represented. See Note 2 for further details.
The Group has not recognised losses totalling £1 million at share in the
period (31 December 2022: £12 million; 30 June 2022: £nil) in relation to
its interests in associates, because the Group has no obligation in respect of
these losses.
6(ii) Summarised balance sheet information of the Group’s share of joint
ventures and associates
As at As at As at 31
December 2022
30 June 2023
30 June 2022
£m
£m
£m
Investment properties 5,857 6,552 6,044
Property, plant and equipment 9 2 6
Other receivables 2 – 3
Total non-current assets 5,868 6,554 6,053
Trade and other receivables 72 139 72
Cash and cash equivalents 79 110 63
Total current assets 151 249 135
Total assets 6,019 6,803 6,188
Borrowings (1,979) (1,974) (2,005)
Deferred tax liabilities (454) (589) (482)
Other liabilities (33) – (40)
Total non-current liabilities (2,466) (2,563) (2,527)
Trade and other liabilities (183) (195) (148)
Total current liabilities (183) (195) (148)
Total liabilities (2,649) (2,758) (2,675)
Unrecognised share of losses 25 – 23
Net assets 3,395 4,045 3,536
At share 1,698 2,022 1,768
Fees
SEGRO provides certain services, including venture advisory and asset
management, to the SELP joint venture and receives fees for doing so.
A 10 year performance fee, denominated in euros, is payable from SELP to SEGRO
in October 2023 based on SELP’s internal rate of return (IRR) subject to
certain hurdle rates. The IRR calculation is based on a 10 year performance
period from the inception of SELP in October 2013 to October 2023. The IRR
calculation to determine whether the hurdle rates will be met when the
performance period ends is currently an estimation and sensitive to movements
and assumptions in property valuations over the remaining performance period.
The cumulative performance fee recognised by SEGRO in its Income Statement in
the periods to 31 December 2022 was £26 million (€29 million). An
equivalent performance fee expense at share of £13 million was recognised
within the share of profit from joint ventures and associates.
In the six months to 30 June 2023, no further performance fee has been
recognised by SEGRO, and therefore no equivalent performance fee expense has
been recognised within the share of profit from joint ventures and associates
and reflected in Note 6(i).
This means the cumulative 10 year performance fee recognised by SEGRO to 30
June 2023 totals £26 million (€29 million) (accumulated fee as at 31
December 2022: £26 million (€29 million) plus six months to 30 June 2023:
£nil). The full amount of the cumulative performance fee recognised is
subject to future reversal based on performance over the remaining period to
October 2023.
Performance fee income is recognised during the performance period to the
extent that it is highly probable there will not be a significant future
reversal and the fee can be reliably estimated. None of the cumulative £26
million performance fee recognised will be reversed if property values fall by
up to 12 per cent between 30 June 2023 and the end of the performance period
in October 2023. If property values fall by over 14 per cent, all of the £26
million cumulative performance fee recognised to date would be reversed.
SEGRO management notes the inherent uncertainty caused by the market
conditions at the period end and the sensitivities detailed below. The
volatility that was seen in the latter half of 2022 has impacted
management’s consideration of the point at which it is highly probable that
there will not be a significant reversal relative to the estimations
undertaken previously. Having considered these market conditions, the market
outlook and the track record of property market trends, management believes it
is highly probable that there will not be a significant reversal of the
cumulative performance fee recognised to date.
A 12 per cent reduction in property values between June and October 2023 would
result in no further performance fee being recognised. This reduction is not
dissimilar to the reduction in property values in SELP in the second half of
2022. When considering this, and wider market factors, management do not
believe recognition of any additional performance fee at 30 June 2023 meets
the highly probably recognition criteria.
Sensitivity
Based on current estimates of the IRR of SELP from inception in October 2013
to 30 June 2023, an additional performance fee (beyond the cumulative fee of
€29 million recognised to 30 June 2023) due to SEGRO in October 2023 could
be in the region of €160 million (€80 million at share after accounting
for the corresponding performance fee expense recognised in SELP). However,
this is dependent on future events, in particular property valuation
movements, to the end of the performance period in October 2023. The current
estimate of the IRR is based on property values as at 30 June 2023; a 5 per
cent decrease in property values from 30 June 2023 would result in a €70
million decrease in the estimated fee and a 5 per cent increase in property
values would result in a €70 million increase in the estimated fee. Whilst
property valuations continue to be volatile, using a 5 per cent
increase/decrease is considered appropriate to provide transparency on the
relative sensitivity of the estimate.
7. REALISED AND UNREALISED PROPERTY GAINS AND LOSSES
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Profit/(loss) on sale of investment properties and other investment income(1) 9 (1) 9
Valuation (deficit)/surplus on investment properties (197) 1,164 (1,970)
Decrease in provision for impairment of trading properties – 9 15
Total realised and unrealised property gains and losses (188) 1,172 (1,946)
1. Includes profit on sale of investment properties of £3 million (31
December 2022: £9 million; 30 June 2022: £1 million loss) and other property
related investment income of £6 million (31 December 2022: £nil; 30 June
2022: £nil).
The above table does not include realised gains on sale of trading properties
of £2 million (31 December 2022: £7 million; 30 June 2022: £2 million) as
detailed further in Note 2.
Valuation deficit on investment and trading properties totals £275 million
(31 December 2022: £2,191 million deficit; 30 June 2022: £1,345 million
surplus). This comprises £197 million deficit from investment properties (31
December 2022: £1,970 million deficit; 30 June 2022: £1,164 million
surplus), £nil impairment from trading properties (31 December 2022: £15
million impairment reversal; 30 June 2022: £9 million impairment reversal)
and £78 million deficit from joint ventures and associates at share (31
December 2022: £236 million deficit; 30 June 2022: £172 million surplus).
Valuation deficits are discussed further in the Portfolio Performance section
above.
8. NET FINANCE COSTS
Finance income Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Interest received on bank deposits and related derivatives 13 11 21
Fair value gain on interest rate swaps and other derivatives 25 25 46
Total finance income 38 36 67
Finance costs
Interest on overdrafts, loans and related derivatives (86) (43) (104)
Amortisation of issue costs (4) (4) (9)
Interest on lease liabilities (2) (1) (3)
Total borrowing costs (92) (48) (116)
Less amount capitalised on the development of properties 27 6 22
Net borrowing costs (65) (42) (94)
Fair value loss on interest rate swaps and other derivatives (2) (175) (245)
Exchange differences – (1) (1)
Total finance costs (67) (218) (340)
Net finance costs (29) (182) (273)
Net finance costs (including adjustments) in Adjusted profit (see Note 2) are
£52 million (31 December 2022: £74 million; 30 June 2022: £32 million).
This excludes net fair value gain on interest rate swaps and other derivatives
of £23 million (31 December 2022: loss of £199 million; 30 June 2022: loss
of £150 million) in the table above.
9. TAX
9(i) Tax on (loss)/profit
Half year to Half year to Year to
30 June 2023
30 June 2022
£m
31 December 2022
(represented(1))
£m
£m
Tax:
On Adjusted profit (5) (5) (11)
In respect of adjustments 15 (36) 48
Total tax credit/(charge) 10 (41) 37
Current tax
Current tax charge (8) (27) (24)
Total current tax charge (8) (27) (24)
Deferred tax
Origination and reversal of temporary differences (7) (5) (13)
Released in respect of property disposals in the period (1) 18 25
On valuation movements 26 (25) 50
Total deferred tax in respect of investment properties 18 (12) 62
Other deferred tax – (2) (1)
Total deferred tax credit/(charge) 18 (14) 61
Total tax credit/(charge) on (loss)/profit on ordinary activities 10 (41) 37
1. Tax on Adjusted profit and In respect of adjustments for the half year to
30 June 2022 have been represented. See Note 2 for further details.
The Group operates in a number of jurisdictions and is subject to periodic
challenges by local tax authorities on a range of tax matters during the
normal course of business. The tax impact can be uncertain until a conclusion
is reached with the relevant tax authority or through a legal process. The
Group uses in-house expertise when assessing uncertain tax positions and seeks
the advice of external professional advisors where appropriate. The Group
believes that its provisions for tax liabilities and associated penalties are
adequate for all open tax years based on its assessment of many factors,
including tax laws and prior experience. The most significant assessment
relates to the recognition of withholding tax in France.
9(ii) Deferred tax liabilities
Movement in deferred tax was as follows:
Balance Exchange Acquisitions/ Recognised Balance
1 January
movement
(disposals)
in income
30 June 2023
£m
£m
£m
£m
Balance
2023
£m
30 June
2022
£m
Valuation surplus and deficits on properties/accelerated tax allowances 209 – (18) 186 280
(5)
Others 17 – – – 17 16
Total deferred tax liabilities 226 (5) – (18) 203 296
10. DIVIDENDS
Half year to Half year to Year to
30 June 2023
30 June 2022
£m
£m
31 December 2022
£m
Ordinary dividends paid
Final dividend for 2022 @ 18.2 pence per share 220 – –
Interim dividend for 2022 @ 8.1 pence per share – – 98
Final dividend for 2021 @ 16.9 pence per share – 203 203
220 203 301
The Board has declared an interim dividend of 8.7 pence per ordinary share
(2022: 8.1 pence). This dividend has not been recognised in the condensed
financial statements.
11. EARNINGS AND NET ASSETS PER SHARE
The earnings per share calculations use the weighted average number of shares
in issue during the period and the net assets per share calculations use the
number of shares in issue at the period end. Earnings per share calculations
exclude 0.2 million shares (0.2 million for the full year 2022 and 0.2 million
for half year 2022) being the average number of shares held on trust during
the period for employee share schemes and net assets per share exclude 0.3
million shares (0.2 million for the full year 2022 and 0.2 million for the
half year 2022) being the actual number of shares held on trust for employee
share schemes at the period end.
11(i) Earnings per ordinary share (EPS)
Half year to 30 June 2023 Half year to 30 June 2022 (represented(3)) Year to 31 December 2022
Earnings Shares Pence Earnings Shares Pence Earnings Shares Pence
£m
million
per
£m
million
per
£m
million
per
share
share
share
Basic EPS (23) 1,213.9 (1.9) 1,333 1,204.2 110.7 (1,927) 1,206.6 (159.7)
Dilution adjustments:
Share and save as you earn schemes – – – – 3.3 (0.3) – – –
Diluted EPS(2) (23) 1,213.9 (1.9) 1,333 1,207.5 110.4 (1,927) 1,206.6 (159.7)
Basic EPS (23) 1,213.9 (1.9) 1,333 1,204.2 110.7 (1,927) 1,206.6 (159.7)
Adjustments to profit before tax(1) 231 19.0 (1,182) (98.2) 2,353 195.0
Tax in respect of Adjustments (15) (1.2) 36 3.1 (48) (4.0)
Non-controlling interest on adjustments – – 1 – (4) (0.3)
Adjusted Basic EPS 193 1,213.9 15.9 188 1,204.2 15.6 374 1,206.6 31.0
Adjusted Diluted EPS 193 1,217.1 15.9 188 1,207.5 15.6 374 1,210.0 30.9
1. Details of adjustments are included in Note 2.
2. In the half year to 30 June 2023 and year to 31 December 2022, share
options are excluded from the weighted average diluted number of shares when
calculating IFRS diluted loss per share because they are not dilutive.
3. Adjusted earnings and Adjusted EPS for the half year to 30 June 2022 have
been represented. See Note 2 for further details.
11(II) NET ASSET VALUE PER SHARE (NAV)
The EPRA Net Tangible Assets (NTA) metric is considered to be most consistent
with the nature of SEGRO’s business as a UK REIT providing long-term
progressive and sustainable returns. EPRA NTA acts as the primary measure of
net asset value and is also referred to as Adjusted Net Asset Value (or
Adjusted NAV).
A reconciliation from IFRS NAV to Adjusted NAV is set out in the table below
along with the net asset per share metrics.
Table 5 of the supplementary notes provides a reconciliation for each of the
three EPRA net asset value metrics.
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
Equity Shares Pence Equity Shares Pence Equity Shares Pence
attributable
million
per
attributable
million
per
attributable
million
per
to ordinary
share
to ordinary
share
to ordinary
share
shareholders
shareholders
shareholders
£m £m £m
Basic NAV 11,203 1,224.4 915 14,695 1,208.9 1,216 11,373 1,209.1 941
Dilution adjustments:
Share and save as you earn schemes – 3.0 (2) – 3.2 (4) – 3.4 (3)
Diluted NAV 11,203 1,227.4 913 14,695 1,212.1 1,212 11,373 1,212.5 938
Fair value adjustment in respect of interest rate derivatives – Group 107 9 161 13 131 11
Fair value adjustment in respect of trading properties – Group 1 – 10 1 2 –
Deferred tax in respect of depreciation and valuation surpluses – Group(1) 94 7 139 12 104 8
Deferred tax in respect of depreciation and valuation surpluses – Joint 112 9 143 12 119 10
ventures and associates(1)
Intangible assets (17) (1) (9) (1) (12) (1)
Adjusted NAV 11,500 1,227.4 937 15,139 1,212.1 1,249 11,717 1,212.5 966
(EPRA NTA)
1. 50 per cent of deferred tax in respect of depreciation and valuation
surpluses has been excluded in calculating Adjusted NAV in line with option 3
of EPRA Best Practices Recommendations guidelines.
12. PROPERTIES
12(i) Investment properties
Completed Development Total
£m
£m
£m
At 1 January 2023 12,113 2,589 14,702
Exchange movement (73) (23) (96)
Property acquisitions 1 322 323
Additions to existing investment properties 22 275 297
Disposals(2) (16) (21) (37)
Transfers on completion of development and completed properties taken back for 432 (432) –
redevelopment
Revaluation deficit during the period (127) (70) (197)
At 30 June 2023 12,352 2,640 14,992
Add tenant lease incentives, letting fees and rental guarantees 171 – 171
Investment properties excluding head lease liabilities at 30 June 2023 12,523 2,640 15,163
Add head lease liabilities (ROU assets)(1) 71 – 71
Total investment properties at 30 June 2023 12,594 2,640 15,234
Total investment properties at 30 June 2022 14,630 2,579 17,209
1. At 30 June 2023 investment properties included £71 million (31 December
2022: £73 million; 30 June 2022: £72 million) for the head lease liabilities
(ROU assets) recognised under IFRS 16.
2. Total disposals completed in H1 2023 of £74 million shown in the
Investment Activity includes: Carrying value of investment properties disposed
by the Group of £37 million plus profit generated on disposal of £3 million
(see Note 7); proceeds from the sale of trading properties by the Group of
£34 million (see Note 4); share of joint venture and associate investment
properties disposal proceeds of £nil; carrying value of lease incentives,
letting fees and rental guarantees disposed by the Group and joint ventures
and associates (at share) of £nil.
Investment properties are stated at fair value based on external valuations
performed by professionally qualified, independent valuers. The Group’s
wholly-owned property portfolio and joint venture and associates property
valuations were performed by CBRE Ltd. The valuations conform to International
Valuation Standards and were arrived at by reference to market evidence of the
transaction prices paid for similar properties. In estimating the fair value
of the properties, the valuers consider the highest and best use of the
properties. All investment property would be classified as level 3 fair value
measurements, there has been no change in the valuation technique and no
significant changes in the assumptions used during the period. The valuation
deficit recognised during the period is discussed further in the Portfolio
Performance section above.
CBRE Ltd also undertakes some professional and agency work on behalf of the
Group. This is carried out by departments separate from the Valuation team in
CBRE and overall the total fees earned from the Group are below 5% of CBRE’s
total income. This work does not therefore lead to a conflict of interest for
the properties being valued by CBRE at the period end.
Sensitivity analysis
An increase/decrease to ERV will increase/decrease valuations, while an
increase/decrease to yield will decrease/increase valuations. Sensitivity
analysis showing the impact on valuations of changes in yields and ERV on the
property portfolio (including joint ventures and associates at share) and the
impact on valuations of changes in development costs on the development
property and land portfolio (including joint ventures and associates at share)
is shown below. Management continues to consider a +/- 25bp change in yield, a
+/- 5% change in ERV and a +/- 10% change in development costs to be
reasonably possible changes to the assumptions.
Impact on valuation Impact on valuation of Impact on valuation
of 25bp change
5% change
of 10% change in
in nominal equivalent
in estimated rental
estimated
yield
value (ERV)
development costs
Group(1) Increase Decrease Increase Decrease Increase Decrease
£m
£m
£m
£m
£m
£m
£m
30 June 2023
Completed property 15,299 (731) 735 572 (566) – –
Development property and land 2,796 (233) 251 323 (323) (371) 371
Group total property portfolio 18,095 (964) 986 895 (889) (371) 371
30 June 2022
Completed property 17,743 (1,155) 1,322 683 (680) – –
Development property and land 2,737 (238) 260 285 (285) (299) 299
Group total property portfolio 20,480 (1,393) 1,582 968 (965) (299) 299
31 December 2022
Completed property 15,191 (793) 883 580 (576) – –
Development property and land 2,734 (226) 245 295 (295) (321) 321
Group total property portfolio 17,925 (1,019) 1,128 875 (871) (321) 321
1. For further details see Table 7 of the supplementary notes.
There are interrelationships between all these inputs as they are determined
by market conditions. The existence of an increase in more than one input
would be to magnify the impact on the valuation. The impact on the valuation
will be mitigated by the interrelationship of two inputs in opposite
directions, e.g. an increase in rent may be offset by an increase in yield.
Completed properties include buildings that are occupied or are available for
occupation. Development properties include land available for development
(land bank), land under development, construction in progress and covered
land. The carrying value of covered land held within Development properties is
£741 million (31 December 2022: £656 million; 30 June 2022: £648 million).
At 30 June 2023 investment properties included £171 million tenant lease
incentives, letting fees and rent guarantees (31 December 2022: £164 million;
30 June 2022: £152 million).
The carrying value of investment properties situated on land held under
leaseholds amount to £203 million (excluding head lease ROU assets) (31
December 2022: £209 million; 30 June 2022: £216 million).
The disposals of completed properties during the period includes properties
with a carrying value of £nil (31 December 2022: £215 million; 30 June 2022:
£172 million) sold to the SELP joint venture.
12(ii) Trading properties
The carrying value of trading properties at 30 June 2023 was £2 million (31
December 2022: £35 million; 30 June 2022: £57 million). Based on the fair
value at 30 June 2023, the portfolio has unrecognised surplus of £1 million
(31 December 2022: £2 million; 30 June 2022: £10 million).
13. NET BORROWINGS AND FINANCIAL INSTRUMENTS
As at As at As at
30 June 2023
30 June 2022
31 December 2022
£m
£m
(restated)(1
)
£m
In one year or less 82 – –
In more than one year but less than two 1 169 83
In more than two years but less than five 1,958 759 1,562
In more than five years but less than ten 1,630 1,757 1,662
In more than ten years 1,560 1,238 1,577
In more than one year 5,149 3,923 4,884
Total borrowings 5,231 3,923 4,884
Cash and cash equivalents(1,2) (103) (138) (162)
Net borrowings 5,128 3,785 4,722
Total borrowings is split between secured and unsecured as follows:
Secured (on land and buildings) 1 2 1
Unsecured 5,230 3,921 4,883
Total borrowings 5,231 3,923 4,884
Currency profile of total borrowings after derivative instruments
Sterling 1,402 730 1,120
Euros 3,829 3,193 3,764
Total borrowings 5,231 3,923 4,884
Maturity profile of undrawn borrowing facilities
In one year or less 147 17 150
In more than one year but less than two – 862 –
In more than two years 1,366 825 1,608
Total available undrawn facilities(3) 1,513 1,704 1,758
Fair value of financial instruments
Book value of debt 5,231 3,923 4,884
Interest rate derivatives 107 161 131
Foreign exchange derivatives (12) (13) 2
Book value of debt including derivatives 5,326 4,071 5,017
Net fair market value 4,656 3,656 4,345
Mark to market adjustment (pre-tax) (670) (415) (672)
1. Cash and cash equivalents have been restated as at 30 June 2022 following
IFRIC’s agenda decision in respect of Demand Deposits with Restrictions on
Use arising from a Contract with a Third Party. See Note 1 for further
details.
2. Cash and cash equivalents also include tenant deposits held in separate
designated bank accounts of £59 million (31 December 2022: £50 million; 30
June 2022: £47 million), the use of the deposits is subject to restrictions
as set out in the tenant lease agreement and therefore not available for
general use by the Group.
3. Total available undrawn facilities include committed facilities of £1,366
million (31 December 2022: £1,608 million; 30 June 2022: £1,687 million) and
uncommitted facilities of £147 million (31 December 2022: £150 million; 30
June 2022: £17 million).
During the period, SEGRO drew down £300 million and €407 million term loan
facilities.
In May 2023, SEGRO extended the maturity of €200 million of its revolving
credit facilities for a further year to 2028.
In June 2023, SEGRO arranged two further term loan facilities. The first
facility has £100 million of commitment maturing in 2026; the second facility
has €150 million of commitment also maturing in 2026. Both term loan
facilities were undrawn at 30 June 2023.
The debt financing is discussed in more detail in the Financial Position and
Funding section.
14. NOTES TO THE CONDENSED GROUP CASH FLOW STATEMENTS
14(i) Reconciliation of cash generated from operations
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
(restated)(1) £m
Operating (loss)/profit (4) 1,557 (1,694)
Adjustments for:
Depreciation of property, plant and equipment 3 2 4
Share of loss/(profit) from joint ventures and associates after tax 28 (151) 144
(Profit)/loss on sale of investment properties (3) 1 (9)
Revaluation deficit/(surplus) on investment properties 197 (1,164) 1,970
Other provisions 7 (5) (6)
228 240 409
Changes in working capital:
Decrease in trading properties 32 1 33
Increase in debtors and tenant incentives (14) (48) (6)
Increase in creditors 8 32 43
Net cash inflow generated from operations 254 225 479
1. Cash and cash equivalents and Trade and other receivables have been
restated as at 30 June 2022 following IFRIC’s agenda decision in respect of
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party. See Note 1 for further details.
14(ii) Analysis of net debt
Non-cash movements
At 1 January Cash Cash Exchange Other non-cash At 30 June
movement
2023
2023
inflow(1)
Outflow(2
£m
adjustments(3)
£m
£m
)£m
£m
£m
Bank loans and loan capital 4,928 710 (277) (88) – 5,273
Capitalised finance costs (44) – (2) – 4 (42)
Total borrowings 4,884 710 (279) (88) 4 5,231
Cash in hand and at bank (162) – 59 – – (103)
Net debt 4,722 710 (220) (88) 4 5,128
1. Proceeds from borrowings of £710 million.
2. Cash outflow of £279 million, comprises the repayment of borrowings of
£277 million and capitalised costs of £2 million.
3. Total other non-cash adjustments of £4 million relates to the amortisation
of issue costs offset against borrowings.
15. RELATED PARTY TRANSACTIONS
There have been no undisclosed material changes in the related party
transactions as described in the last annual report.
16. SUBSEQUENT EVENTS
Since the period end, SEGRO agreed the conditional exchange of a portfolio of
UK big box assets in the Midlands, reflecting a price above 30 June 2023
valuation. The conditions have subsequently been met and the transaction is
expected to complete in early August.
SUPPLEMENTARY NOTES NOT PART OF CONDENSED FINANCIAL INFORMATION
TABLE 1: EPRA PERFORMANCE MEASURES SUMMARY
Half year to 30 June 2023 Half year to 30 June Year to 31 December 2022
2022
Notes £m Pence per £m Pence per £m Pence per
share
share
share
EPRA Earnings Table 4 193 15.9 204 16.9 374 31.0
EPRA NTA (Adjusted NAV) Table 5 11,500 937 15,139 1,249 11,717 966
EPRA NRV Table 5 12,669 1,032 16,520 1,363 12,879 1,062
EPRA NDV Table 5 11,983 976 15,257 1,259 12,170 1,004
EPRA LTV Table 6 36.1% 25.3% 34.2%
EPRA net initial yield Table 7 3.8% 2.9% 3.7%
EPRA ‘topped up’ net initial yield Table 7 4.2% 3.2% 3.9%
EPRA vacancy rate Table 8 4.5% 3.3% 4.0%
EPRA cost ratio (including vacant property costs) Table 9 20.4% 20.5% 20.3%
EPRA cost ratio (excluding vacant property costs) Table 9 18.2% 19.0% 18.5%
TABLE 2: INCOME STATEMENT, PROPORTIONALLY CONSOLIDATED
Half year to 30 June 2023 Half year to 30 June 2022 Year to 31 December 2022
(represented(2))
Notes Group JV and Total Group JV and Total Group JV and Total
associates
associates
associates
£m
£m
£m
£m
£m
£m
£m
£m
£m
Gross rental income 2, 6 266 66 332 239 56 295 488 119 607
Property operating expenses 2, 6 (42) (4) (46) (36) (4) (40) (76) (9) (85)
Net rental income 224 62 286 203 52 255 412 110 522
Joint venture management fee income(1) 2 16 (6) 10 15 (6) 9 30 (13) 17
Management and development fee income 2 3 1 4 2 1 3 5 2 7
Net solar energy income 2 – – – 1 – 1 1 – 1
Administrative expenses 2 (33) (1) (34) (31) (1) (32) (59) (3) (62)
Adjusted operating profit before interest and tax 210 56 266 190 46 236 389 96 485
Net finance costs (including adjustments) 2, 6 (52) (10) (62) (32) (7) (39) (74) (17) (91)
Adjusted profit before tax 158 46 204 158 39 197 315 79 394
Tax on adjusted profit 2, 6 (5) (6) (11) (5) (4) (9) (11) (8) (19)
Adjusted earnings before non-controlling interests 153 40 193 153 35 188 304 71 375
Non-controlling interest on adjusted profit – – – – – – (1) – (1)
Adjusted earnings after tax and non-controlling interests (A) 153 40 193 153 35 188 303 71 374
Number of shares, million 1,213.9 1,204.2 1,206.6
Adjusted EPS, pence per share 15.9 15.6 31.0
Number of shares, million 1,217.1 1,207.5 1,210.0
Adjusted EPS, pence per share – diluted 15.9 15.6 30.9
EPRA earnings
Adjusted earnings after tax and non-controlling interests (A) 153 40 193 153 35 188 303 71 374
Joint venture performance fee income (net) – 16 –
EPRA earnings after tax and non-controlling interests 193 204 374
Number of shares, million 1,213.9 1,204.2 1,206.6
EPRA, EPS, pence per share 15.9 16.9 31.0
Number of shares, million 1,217.1 1,207.5 1,210.0
EPRA, EPS, pence per share – diluted 15.9 16.9 30.9
1. Joint venture management fee income includes the cost of such fees borne by
the joint ventures which are shown in Note 6 within net rental income.
2. Adjusted earnings and Adjusted EPS for the half year to 30 June 2022 have
been represented. See Note 2 for further details.
TABLE 3: BALANCE SHEET, PROPORTIONAL CONSOLIDATION
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
(restated)(2)
Notes Group JV and Total Group JV and Total Group JV and Total
associates
associates
associates
£m
£m
£m
£m
£m
£m
£m
£m
£m
Investment properties 12, 6 15,234 2,929 18,163 17,209 3,276 20,485 14,939 3,022 17,961
Trading properties 12, 6 2 – 2 57 – 57 35 – 35
Total properties 15,236 2,929 18,165 17,266 3,276 20,542 14,974 3,022 17,996
Investment in joint ventures and associates 6 1,698 (1,698) – 2,022 (2,022) – 1,768 (1,768) –
Other net liabilities (603) (281) (884) (808) (322) (1,130) (647) (283) (930)
Net borrowings 13,6 (5,128) (950) (6,078) (3,785) (932) (4,717) (4,722) (971) (5,693)
Total shareholders’ equity(1) 11,203 – 11,203 14,695 – 14,695 11,373 – 11,373
EPRA adjustments 11 297 444 344
Adjusted NAV 11 11,500 15,139 11,717
Number of shares, million 11 1,227.4 1,212.1 1,212.5
Adjusted NAV pence per share 11 937 1,249 966
1. After non-controlling interests.
2. Cash and cash equivalents and Trade and other receivables have been
restated as at 30 June 2022 following IFRIC’s agenda decision in respect of
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party. See Note 1 for further details.
The portfolio valuation deficit of 1.4 per cent shown in the Portfolio
Performance section is not directly derivable from the condensed financial
statements and is calculated to be comparable with published MSCI Real Estate
indices against which SEGRO are measured. Based on the condensed financial
statements there is a valuation deficit of £275 million (see Note 7) and
property value of £18,095 million (see Table 7) giving a valuation deficit of
1.5 per cent. The primary reason for the +0.1 per cent difference is due to
the portfolio valuation deficit excluding the impact of rent-free incentives
and capitalised interest.
TABLE 4: EPRA EARNINGS
Notes Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
(represented(2))
£m
£m
Equity shareholder earnings per IFRS income statement (23) 1,333 (1,927)
Adjustments to calculate EPRA Earnings, exclude:
Valuation deficit/(surplus) on investment properties 7 197 (1,164) 1,970
(Profit)/loss on sale of investment properties and other investment income 7 (9) 1 (9)
Profit on sale of trading properties 7 (2) (2) (7)
Decrease in provision for impairment of trading properties 7 – (9) (15)
Tax on profits on disposals(1) 3 16 15
Net fair value (gain)/loss on interest rate swaps and other derivatives 8 (23) 150 199
Deferred tax in respect of EPRA adjustments(1) (18) 13 (63)
EPRA adjustments to the share of loss/(profit) from joint ventures and 68 (135) 215
associates after tax(3)
Non-controlling interests in respect of the above 2 – 1 (4)
EPRA earnings 193 204 374
Basic number of shares, million 11 1,213.9 1,204.2 1,206.6
EPRA Earnings per Share (EPS) 15.9 16.9 31.0
Company specific adjustment:
Exclude: Net impact of joint venture performance fees(4) 2 – (16) –
Adjusted earnings 193 188 374
Adjusted EPS 15.9 15.6 31.0
1. Total tax credit in respect of adjustments per Note 2 of £15 million (H1
2022: £36 million charge, FY 2022: £48 million credit) comprises tax charge
on profits on disposals of £3 million (H1 2022: £16 million, FY 2022: £15
million), deferred tax credit of £18 million (H1 2022: £13 million charge,
FY 2022: £63 million credit) and tax charge on joint venture performance fee
income of £nil (H1 2022: £7 million charge, FY 2022: £nil). The tax charge
on joint venture performance fee income is included within the Company
specific adjustment in the table above.
2. Adjusted earnings and Adjusted EPS for the half year to 30 June 2022 have
been represented. See Note 2 for further details.
3. Total adjustments to share of profit from joint ventures and associates
after tax for the half year to 30 June 2022 of £116 million per Note 2 and 6
includes the impact of the performance fee expense of £19 million. The
performance fee expense is shown within the company specific adjustment to
exclude the net impact of joint venture performance fees in the table above.
There was no performance fee expense in half year to 30 June 2023 and year to
31 December 2022.
4. See Note 2 for further details on the company specific adjustment to
exclude the net impact of joint venture performance fees from Adjusted
earnings.
TABLE 5: EPRA NET ASSET MEASURES
The European Public Real Estate Association (‘EPRA’) Best Practices
Recommendations (BPR) for financial disclosures by public real estate
companies sets out three net asset value measures: EPRA net tangible assets
(NTA), EPRA net reinstatement value (NRV) and EPRA net disposal value (NDV).
The EPRA Net Tangible Assets (NTA) metric is considered to be most consistent
with the nature of SEGRO’s business as a UK REIT providing long-term
progressive and sustainable returns. EPRA NTA acts as the primary measure of
net asset value and is also referred to as Adjusted Net Asset Value (or
Adjusted NAV).
A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the
table below.
EPRA measures
As at 30 June 2023 EPRA NTA EPRA NRV EPRA NDV
(Adjusted NAV)
£m £m £m
Equity attributable to ordinary shareholders 11,203 11,203 11,203
Fair value adjustment in respect of interest rate derivatives – Group 107 107 –
Fair value adjustment in respect of trading properties – Group 1 1 1
Deferred tax in respect of depreciation and valuation surpluses – Group(1) 94 188 –
Deferred tax in respect of depreciation and valuation surpluses – 112 224 –
Joint ventures and associates(1)
Intangible assets (17) – –
Fair value adjustment in respect of debt – Group – – 670
Fair value adjustment in respect of debt – Joint ventures and associates – – 109
Real estate transfer tax(2) – 946 –
Net assets 11,500 12,669 11,983
Diluted shares (million) 1,227.4 1,227.4 1,227.4
Diluted net assets per share 937 1,032 976
1. 50 per cent of deferred tax in respect of depreciation and valuation
surpluses has been excluded in calculating EPRA NTA in line with option 3 of
EPRA BPR guidelines.
2. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’
costs. Purchasers’ costs are added back when calculating EPRA NRV.
EPRA measures
As at 30 June 2022 EPRA NTA EPRA NRV EPRA NDV
(Adjusted NAV)
£m £m £m
Equity attributable to ordinary shareholders 14,695 14,695 14,695
Fair value adjustment in respect of interest rate derivatives – Group 161 161 –
Fair value adjustment in respect of trading properties – Group 10 10 10
Deferred tax in respect of depreciation and valuation surpluses – Group(1) 139 278 –
Deferred tax in respect of depreciation and valuation surpluses – 143 286 –
Joint ventures and associates(1)
Intangible assets (9) – –
Fair value adjustment in respect of debt – Group – – 415
Fair value adjustment in respect of debt – Joint ventures and associates – – 137
Real estate transfer tax(2) – 1,090 –
Net assets 15,139 16,520 15,257
Diluted shares (million) 1,212.1 1,212.1 1,212.1
Diluted net assets per share 1,249 1,363 1,259
1. 50 per cent of deferred tax in respect of depreciation and valuation
surpluses has been excluded in calculating EPRA NTA in line with option 3 of
EPRA BPR guidelines.
2. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’
costs. Purchasers’ costs are added back when calculating EPRA NRV.
EPRA measures
As at 31 December 2022 EPRA NTA EPRA NRV EPRA NDV
(Adjusted NAV)
£m £m £m
Equity attributable to ordinary shareholders 11,373 11,373 11,373
Fair value adjustment in respect of interest rate derivatives – Group 131 131 –
Fair value adjustment in respect of trading properties – Group 2 2 2
Deferred tax in respect of depreciation and valuation surpluses – Group(1) 104 208 –
Deferred tax in respect of depreciation and valuation surpluses – Joint 119 238 –
ventures and associates(1)
Intangible assets (12) – –
Fair value adjustment in respect of debt – Group – – 672
Fair value adjustment in respect of debt – Joint ventures and associates – – 123
Real estate transfer tax(2) – 927 –
Net assets 11,717 12,879 12,170
Diluted shares (million) 1,212.5 1,212.5 1,212.5
Diluted net assets per share 966 1,062 1,004
1. 50 per cent of deferred tax in respect of depreciation and valuation
surpluses has been excluded in calculating EPRA NTA in line with option 3 of
EPRA BPR guidelines.
2. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’
costs. Purchasers’ costs are added back when calculating EPRA NRV.
TABLE 6: EPRA LTV, PROPORTIONAL CONSOLIDATION
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
(restated)(4,5)
Notes Group JV and Total Group JV and Total Group JV and Total
associates
£m
associates
£m
associates
£m
£m
£m
£m
£m
£m
£m
Borrowings(1,2) 2,468 27 2,495 1,505 131 1,636 2,085 15 2,100
Bonds(1,2) 2,805 970 3,775 2,455 862 3,317 2,843 996 3,839
Exclude:
Cash and cash equivalents(4) 13 (103) (40) (143) (138) (55) (193) (162) (32) (194)
Net Debt (a) 5,170 957 6,127 3,822 938 4,760 4,766 979 5,745
Foreign currency derivatives 13 (12) – (12) (13) – (13) 2 – 2
Net payables(3,4) 378 72 450 432 28 460 362 57 419
EPRA Net Debt (b) 5,536 1,029 6,565 4,241 966 5,207 5,130 1,036 6,166
Investment properties at fair value (excluding head lease ROU asset) 12 15,163 2,929 18,092 17,137 3,276 20,413 14,866 3,022 17,888
Trading properties 12 2 – 2 57 – 57 35 – 35
Total Property Value (c) 15,165 2,929 18,094 17,194 3,276 20,470 14,901 3,022 17,923
Head lease ROU asset 12 71 – 71 72 – 72 73 – 73
Unrecognised valuation surplus on trading properties 12 1 – 1 10 – 10 2 – 2
Other interest in property 23 – 23 28 – 28 30 – 30
Intangibles 17 – 17 9 – 9 12 – 12
EPRA Total Property Value (d) 15,277 2,929 18,206 17,313 3,276 20,589 15,018 3,022 18,040
LTV (a/c) 34.1% 33.9% 22.2% 23.3% 32.0% 32.1%
EPRA LTV (b/d) 36.2% 36.1% 24.5% 25.3% 34.2% 34.2%
1.Total borrowings as at 30 June 2023 per Note 13 of £5,231 million (30 June
2022: £3,923 million; 31 December 2022: £4,884 million) consists of: Nominal
value of borrowings from financial institutions of £2,468 million (30 June
2022: £1,505 million; 31 December 2022: £2,085 million) less unamortised
finance costs of £14 million (30 June 2022: £12 million; 31 December 2022:
£14 million) and nominal value of bond loans of £2,805 million (30 June
2022: £2,455 million; 31 December 2022: £2,843 million) less unamortised
finance costs of £28 million (30 June 2022: £25 million; 31 December 2022:
£30 million).
2. JV and associates borrowings as at 30 June 2023 per Note 6 of £990 million
at share (30 June 2022: £987 million; 31 December 2022: £1,003 million)
consists of: Nominal value of borrowings from financial institutions of £27
million (30 June 2022: £131 million; 31 December 2022: £15 million) less
unamortised finance costs of £1 million (30 June 2022: £1 million; 31
December 2022: £2 million) and nominal value of bond loans of £970 million
(30 June 2022: £862 million; 31 December 2022: £996 million) less
unamortised finance costs of £6 million (30 June 2022: £5 million; 31
December 2022: £6 million).
3. Net payables is calculated as the net position of the following line items
shown on the Balance Sheet: Non-current other receivables, current trade and
other receivables, tax asset, non-current trade and other payables,
non-current tax liabilities, current trade and other payables and current tax
liabilities.
4. Cash and cash equivalents and Trade and other receivables have been
restated as at 30 June 2022 following IFRIC’s agenda decision in respect of
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party. See Note 1 for further details.
5. Borrowings and bonds have been restated as at 30 June 2022 to exclude
unamortised finance costs.
TABLE 7: EPRA NET INITIAL YIELD AND TOPPED-UP NET INITIAL YIELD
Combined property portfolio including joint ventures and associates at share Notes UK Continental Total
– 30 June 2023
£m
Europe
£m
£m
Total properties per financial statements Table 3 11,510 6,655 18,165
Add valuation surplus not recognised on trading properties(1) 1 – 1
Less head lease ROU assets 12 – (71) (71)
Combined property portfolio per external valuers’ report 11,511 6,584 18,095
Less development properties (investment, trading and joint venture and (1,713) (1,083) (2,796)
associates)
Net valuation of completed properties 9,798 5,501 15,299
Add notional purchasers’ costs 665 281 946
Gross valuation of completed properties including notional purchasers’ costs A 10,463 5,782 16,245
Income
Gross passing rents(2) 383 252 635
Less irrecoverable property costs (1) (9) (10)
Net passing rents B 382 243 625
Adjustment for notional rent in respect of rent frees 33 22 55
Topped up net rent C 415 265 680
Including fixed/minimum uplifts(3) 12 2 14
Total topped up net rent 427 267 694
Yields – 30 June 2023 UK Continental Total
%
Europe
%
%
EPRA net initial yield(4) B/A 3.7 4.2 3.8
EPRA topped up net initial yield(4) C/A 4.0 4.6 4.2
Net true equivalent yield 5.0 5.2 5.1
1. Trading properties are recorded in the Financial Statements at the lower of
cost and net realisable value, therefore valuations above cost have not been
recognised.
2. Gross passing rent excludes short term lettings and licences.
3. Certain leases contain clauses which guarantee future rental increases,
whereas most leases contain five yearly, upwards-only rent review clauses (UK)
or indexation clauses (Continental Europe).
4. In accordance with the Best Practices Recommendations of EPRA.
5. Total assets under management of £21,024 million includes Combined
property portfolio (including JV and associates at share) of £18,095 million
plus 50 per cent of JV and associates properties not owned but under
management of £2,929 million.
TABLE 8: EPRA VACANCY RATE
Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Annualised potential rental value of vacant premises 38 24 32
Annualised potential rental value for the completed property portfolio 845 729 797
EPRA vacancy rate(1,2) 4.5% 3.3% 4.0%
1. EPRA vacancy rate has been calculated using the figures presented in the
table above in millions accurate to one decimal place.
2. There are no significant or distorting factors influencing the EPRA vacancy
rate.
TABLE 9: TOTAL COST RATIO / EPRA COST RATIO
Total cost ratio Notes Half year to Half year to Year to
30 June 2023
30 June 2022
31 December 2022
£m
£m
£m
Costs
Property operating expenses(1) 5 42 36 76
Administrative expenses 33 31 59
Share of joint venture and associates’ property operating and administrative 6 11 11 25
expenses(2)
Less:
Joint venture and associates’ property management fee income, management (19) (18) (37)
fees and other costs recovered through rents but not separately invoiced(3)
Total costs (A) 67 60 123
Gross rental income
Gross rental income 4 266 239 488
Share of joint venture and associates property gross rental income 6 66 56 119
Less:
Other costs recovered through rents but not separately invoiced(3) (1) (1) (3)
Total gross rental income (B) 331 294 604
Total cost ratio (A)/(B)(4) 20.4% 20.5% 20.3%
Total costs (A) 67 60 123
Share-based payments (5) (5) (9)
Total costs after share based payments (C) 62 55 114
Total cost ratio after share based payments (C)/(B)(4) 18.8% 18.7% 18.8%
EPRA cost ratio
Total costs (A) 67 60 123
Non-EPRA adjustments(5) – – –
EPRA total costs including vacant property costs (D) 67 60 123
Group vacant property costs (7) (4) (10)
Share of joint venture and associates vacant property costs – – (1)
EPRA total costs excluding vacant property costs (E) 60 56 112
Total gross rental income (B) 331 294 604
Total EPRA costs ratio (including vacant property costs) (D)/(B)(4) 20.4% 20.5% 20.3%
Total EPRA costs ratio (excluding vacant property costs) (E)/(B)(4) 18.2% 19.0% 18.5%
1. Property operating expenses are net of costs capitalised in accordance with
IFRS of £6 million (H1 2022: £7 million, FY 2022: £11 million) (see Note 5
for further detail on the nature of costs capitalised).
2. Share of joint venture and associates property operating and administrative
expenses.
3. Total deduction of £19 million (H1 2022: £18 million, FY 2022: £37
million) from costs includes: joint venture and associates management fees
income of £16 million (H1 2022: £15 million, FY 2022: £30 million),
management fees of £2 million (H1 2022: £2 million, FY 2022: £4 million)
and other costs recovered through rents but not separately invoiced, including
joint ventures and associates, of £1 million (H1 2022: £1 million, FY 2022:
£3 million). These items have been represented as an offset against costs
rather than a component of income in accordance with EPRA BPR Guidelines as
they are reimbursing the Group for costs incurred. Gross rental income of
£266 million (H1 2022: £239 million, FY 2022: £488 million) does not
include joint venture and associates management fee income and management fee
income and these fees are not required to be included in the total deduction
to income.
4. Cost ratio percentages have been calculated using the figures presented in
the table above in millions accurate to one decimal place.
5. Joint venture performance fee income and expense are not included within
the EPRA cost ratio, therefore no non-EPRA adjustment is required for the
performance fee in reconciling from the Total cost ratio to the EPRA cost
ratio.
GLOSSARY OF TERMS
Associate: An entity in which the Group has significant influence but not
control or joint control. This is generally the case where the Group holds
between 20 per cent and 50 per cent of the voting rights.
BREEAM: BREEAM provides sustainability assessment and certification for real
estate assets.
Completed portfolio: The completed investment properties and the Group’s
share of joint ventures and associates’ completed investment properties.
Includes properties held throughout the period, completed developments and
properties acquired during the period.
Covered land: Income-producing assets acquired with the explicit intention to
take back for redevelopment in the short to medium term. Valued on the balance
sheet as land plus remaining contracted income.
Development pipeline: The Group’s current programme of developments
authorised or in the course of construction at the Balance Sheet date (Current
Pipeline), together with potential schemes not yet commenced on land owned or
controlled by the Group (Future Pipeline).
EPRA: The European Public Real Estate Association, a real estate industry
body, which has issued Best Practices Recommendations Guidelines in order to
provide consistency and transparency in real estate reporting across Europe.
ESG: Environmental, Social and Governance issues.
Estimated cost to completion: Costs still to be expended on a development or
redevelopment to practical completion, including attributable interest.
Estimated rental value (ERV): The estimated annual market rental value of
lettable space as determined biannually by the Group’s valuers. This will
normally be different from the rent being paid.
Gearing: Net borrowings divided by total shareholders’ equity excluding
intangible assets and deferred tax provisions.
GRESB: An organisation which provides independent benchmarking of ESG metrics
for the property industry.
Gross rental income: Contracted rental income recognised in the period in the
Income Statement, including surrender premiums. Lease incentives, initial
costs and any contracted future rental increases are amortised on a straight
line basis over the lease term.
Headline rent: The annual rental income currently receivable on a property as
at the balance sheet date (which may be more or less than the ERV) ignoring
any rent-free period.
Hectares (Ha): The area of land measurement used in this analysis. The
conversion factor used, where appropriate, is 1 hectare = 2.471 acres.
Investment property: Completed land and buildings held for rental income
return and/or capital appreciation.
Joint venture: An entity in which the Group holds an interest and which is
jointly controlled by the Group and one or more partners under a contractual
arrangement whereby decisions on financial and operating policies essential to
the operation, performance and financial position of the venture require each
partner’s consent.
Life cycle assessments: Life cycle assessment (LCA) is a methodology for
assessing the environmental impacts associated with all the stages of the life
cycle of a building.
Loan to value (LTV): Net borrowings excluding capitalised transaction costs
divided by the carrying value of total property assets (investment, owner
occupied and trading properties and excludes head lease ROU asset). This is
reported on a ‘look‑through’ basis (including joint ventures and
associates at share) except where stated.
MSCI: MSCI Real Estate calculates indices of real estate performance around
the world.
Net debt: Borrowings less cash and cash equivalents.
Net initial yield: Passing rent less non recoverable property expenses such as
empty rates, divided by the property valuation plus notional purchasers’
costs. This is in accordance with EPRA’s Best Practices Recommendations.
Net rental income: Gross rental income less ground rents paid and property
operating expenses.
Net true equivalent yield: The internal rate of return from an investment
property, based on the value of the property assuming the current passing rent
reverts to ERV and assuming the property becomes fully occupied over time.
Rent is assumed to be paid quarterly in advance, in line with standard UK
lease terms.
Passing rent: The annual rental income currently receivable on a property as
at the Balance Sheet date (which may be more or less than the ERV). Excludes
rental income where a rent free period is in operation. Excludes service
charge income.
Pre-let: A lease signed with an occupier prior to commencing construction of a
building.
REIT: A qualifying entity which has elected to be treated as a Real Estate
Investment Trust for tax purposes. In the UK, such entities must be listed on
a recognised stock exchange, must be predominantly engaged in property
investment activities and must meet certain ongoing qualifications. SEGRO plc
and its UK subsidiaries achieved REIT status with effect from 1 January 2007.
Rent-free period: An incentive provided usually at commencement of a lease
during which a customer pays no rent. The amount of rent free is the
difference between passing rent and headline rent.
Rent roll: See Passing Rent.
SELP: SEGRO European Logistics Partnership, a 50-50 joint venture between
SEGRO and Public Sector Pension Investment Board (PSP Investments).
SIIC: Sociétés d’investissements Immobiliers Cotées are the French
equivalent of UK Real Estate Investment Trusts (see REIT).
Speculative development: Where a development has commenced prior to a lease
agreement being signed in relation to that development.
Square metres (sq. m): The area of buildings measurements used in this
analysis. The conversion factor used, where appropriate, is one square metre =
10.7639 square feet.
Take-back: Rental income lost due to lease expiry, exercise of break option,
surrender or insolvency.
Topped up net initial yield: Net initial yield adjusted to include notional
rent in respect of let properties which are subject to a rent free period at
the valuation date. This is in accordance with EPRA’s Best Practices
Recommendations.
Total accounting return (TAR): A measure of the growth in Net Asset Value
(NAV) per share calculated as change in Adjusted NAV per share in the period
plus dividend per share paid in the period, expressed as a percentage of
Adjusted NAV per share at the beginning of the period.
Total property return (TPR): A measure of the ungeared return for the
portfolio and is calculated as the change in capital value, less any capital
expenditure incurred, plus net income, expressed as a percentage of capital
employed over the period concerned, as calculated by MSCI Real Estate and
excluding land.
Total shareholder return (TSR): A measure of return based upon share price
movement over the period and assuming reinvestment of dividends.
Trading property: Property being developed for sale or one which is being held
for sale after development is complete.
Yield on cost: The expected gross yield based on the estimated current market
rental value (ERV) of the developments when fully let, divided by the book
value of the developments at the earlier of commencement of the development or
the balance sheet date, plus future development costs and estimated finance
costs to completion.
Yield on new money: The yield on cost excluding the book value of land if the
land is owned by the Group in the reporting period prior to commencement of
the development.
CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:
SEGRO
Soumen Das
(Chief Financial Officer)
Tel: + 44 (0) 20 7451 9110
(after 11am)
Claire Mogford
(Head of Investor Relations)
Mob: +44 (0) 7710 153 974
Tel: +44 (0) 20 7451 9048
(after 11am)
FTI Consulting
Richard Sunderland / Eve Kirmatzis
Tel: +44 (0) 20 3727 1000
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