REG - Sirius Real Estate - Final Results
13/06/2022 07:00
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RNS Number : 5583O Sirius Real Estate Limited 13 June 2022
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Results for the year ended 31 March 2022
CONTINUED STRONG RETURNS IN TRANSFORMATIVE YEAR
13 June 2022. Sirius Real Estate (LSE/JSE: SRE), the leading operator of
branded business and industrial parks providing conventional space and
flexible workspace in Germany and the UK, announces condensed consolidated
financial results for the year to 31 March 2022.
Operating platform continuing to drive rental growth, FFO and dividend
· Group annualised rent roll increased 73.1% to €167.0 million (2021:
€96.5 million(1)) as a result of demand and asset management led organic
growth, acquisitions and the impact of BizSpace following completion in
November 2021
· Like-for-like annualised rent roll in Germany increased by 6.4%
reflecting the eighth consecutive year of like-for-like annualised rent roll
growth in excess of 5.0%
· Like-for-like annualised rent roll in the UK increased by 7.6% in
the Company's 4.5 month period of ownership of BizSpace
· Profit before tax of €168.9 million, representing a 3.2%
year-on-year increase (2021: €163.7 million)
· Funds From Operations ("FFO") increased by 22.5% to €74.6
million (2021: €60.9 million)
· H2 dividend of 2.37c, an increase of 19.7% on the 1.98c dividend
relating to the same period in the prior year. Total dividend relating to the
financial year ended 31 March 2022 of 4.41c, an increase of 16.1% (2021:
3.80c) with the same pay-out ratio of 65% of FFO
· Total shareholder accounting return of 20.0% (2021: 19.5%)
Continued acquisitive growth, asset recycling and entry into new market
· €201.9 million of acquisitions in Germany completed or notarised
across 10 sites, providing an attractive mix of income and value-add
opportunity
· Entry into UK market via acquisition of BizSpace for cash
consideration of approximately £245.0 million based on an enterprise value of
£380.0 million and representing a net initial yield of 7.1%.
· Two strategic disposals providing c.€30 million of capital to
recycle into the business completed or expected to complete after the period
end:
o €13.75 million sale of the Company's Magdeburg asset in Germany
representing a 5.5% increase on the last reported book value
o £16.0 million sale of BizSpace business park in Camberwell, London,
representing a 94% premium to the valuation at the time of Sirius' acquisition
of BizSpace
Strengthened balance sheet and income driven valuation gains
· €737.8 million or 54.2% increase in investment property book
value(2) to €2,100.0 million (2021: €1,362.2 million) as a result of
acquisitive growth in Germany, the acquisition of BizSpace and strong
valuation gains
· Like-for-like increase in valuations in Germany of 9.4% or €127.2
million driven predominantly by annualised rent roll growth of €6.2 million
but also 20 bps of gross yield compression
· Gross yield of German portfolio of 6.9% (2021: 7.2%) with two-thirds
of the portfolio representing value add assets at a gross yield of 7.3% and
one-third representing mature assets at a gross yield of 6.1%
· Like-for-like increase in valuations relating to the 4.5 month period
of ownership of BizSpace in the UK of 10.6% or £36.7 million driven
predominantly by annualised rent roll growth of 7.6% during the 4.5 month
period but also 30 bps of gross yield compression
· NAV per share increased by 15.5% to 102.04c (2021: 88.31c) with
adjusted NAV increasing by 15.7% to 108.51c (2021: 93.79c) and EPRA NTA per
share increasing by 16.2% to 107.28c (2021: 92.29c)
· Transformative corporate bond issuances totalling €700.0 million
providing financial capacity for acquisitions and repayment of secured debt as
well as providing significant flexibility for asset recycling and enhanced
cash flows for investment
· Reduction in the weighted average cost of debt to 1.4%, extension
of the weighted average term of debt to 4.3 years and an increase in the
number of unencumbered assets to 127 with a book value of €1.6 billion
· Total cash balance of €151.0 million at year end (2021: €65.7
million), of which €127.2 million is unrestricted
· Net LTV of 41.6% (2021: 31.4%)
Outlook
· Post year end trading in line with market expectations, driven by
continued strong occupier demand, transformative investment and ongoing
on-shoring of production and supply chains by German and UK manufacturers
· Positive impact of FY22 acquisitions expected to be more
pronounced in the new financial year
· Actively assessing further opportunities for growth in both
Germany and the UK
· Whilst the business is mindful of global macro-economic conditions
causing uncertainty, Sirius remains well placed to continue to deliver
attractive returns for shareholders
Commenting on the results Andrew Coombs, Chief Executive Officer of Sirius
Real Estate, said: "Against an ongoing period of challenging market
conditions, Sirius has delivered another very positive set of annual results
leading to a 20% total accounting return including a 16.1% increase in
dividend for shareholders. This strong operating performance was underpinned
by continued demand and asset management led rental growth across both our
German and UK platforms. The Company grew acquisitively through the commitment
of over €200 million into acquisitions in Germany, as well as the
acquisition of BizSpace in November 2021 for £380 million. Further, in
issuing two corporate bonds amounting to €700.0 million the Company not only
benefited from increased financial capacity but also reduced its weighted
average cost of debt to 1.4%, increased its weighted average term of debt to
4.3 years and increased the value of its unencumbered properties to €1.6
billion.
"We remain focused on driving property returns through the capability of our
internal operating platforms and, despite the inflationary environment and the
uncertainty created by the situation in Ukraine, are confident that we can
continue to deliver attractive risk-adjusted returns through active asset
management. Looking ahead, we expect the ten assets acquired or notarised in
Germany during the period to have a greater impact on earnings in FY23
compared to FY22, whilst the encouraging operating performance of BizSpace
provides further income growth opportunities."
Notes:
1 - Excludes €0.7m of annualised rent roll and 7,000 sqm relating to the
Daimler moveout in the Fellbach 2 asset that was anticipated at the time of
acquisition in March 2021.
2 - Including leased investment properties
CONFERENCE CALL
Webcast Conference
There will be an audio webcast presentation for analysts at 08.30am BST /
09.30am SAST today, hosted by Andrew Coombs, Chief Executive Officer of Sirius
Real Estate and Diarmuid Kelly, Chief Financial Officer.
If you would like to join the webcast please use the registration link below:
https://webcasting.brrmedia.co.uk/broadcast/6278ccab8eb4f178d1efa68a
(https://webcasting.brrmedia.co.uk/broadcast/6278ccab8eb4f178d1efa68a)
For further information:
Sirius Real Estate
Andrew Coombs, CEO
Diarmuid Kelly, CFO
Alistair Marks, CIO
+49 (0) 30 285010110
FTI Consulting (Financial PR)
Richard Sunderland / James McEwan / Talia Jessener
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main and premium market of the
London Stock Exchange and the main board of the JSE Limited. It is a leading
owner and operator of branded business and industrial parks providing
conventional space and flexible workspace in Germany and the UK. As of 31
March 2022, and following the acquisition of BizSpace, a leading UK provider
of regional flexible workspace, the Group's portfolio comprised 140 assets let
to 9,452 tenants with a total book value of over €2 billion, generating a
total annualised rent roll of €167.1 million. Sirius also holds a 35% stake
in Titanium, its €350+ million German-focused joint venture with clients of
AXA IM Alts.
The Company's strategy centres on acquiring business parks at attractive
yields and integrating them into its network of sites - both under the Sirius
name and alongside a range of branded products. The business then seeks to
reconfigure and upgrade existing and vacant space to appeal to the local
market via intensive asset management and investment and may then choose to
selectively refinance or dispose of assets once they meet maturity, to release
capital for new investment. This active approach allows the Company to
generate attractive returns for shareholders through growing rental income,
improving cost recoveries and capital values, and enhancing returns through
securing efficient financing terms. The Company has a strong track record for
growing its income and has delivered like-for-like rent roll growth in excess
of 5% for the last eight consecutive years.
For more information, please visit: www.sirius-real-estate.com
(http://www.sirius-real-estate.com/)
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
(https://www.linkedin.com/company/siriusrealestate/)
Follow us on Twitter at @SiriusRE
LEI: 213800NURUF5W8QSK566
JSE Sponsor: PSG Capital
Chairman's statement
Building on successful foundations
"The team are deploying their experience and asset management expertise
across both markets and in doing so are delivering results both organically
and through acquisitions."
Overview
This is my fourth Annual Report as Chairman and I am pleased to record another
period of operational and strategic success for the business despite the
continued disruption and challenges that have arisen from the Covid 19
pandemic, and more latterly, the inflationary environment which has been
exacerbated by the conflict in the Ukraine. I would like once again to express
my thanks to the management and employees who continued to operate with such
resilience when servicing our tenants and executing the Company strategy in
the most challenging circumstances. Notably, this year the business entered
the UK market with the acquisition of BizSpace and I am delighted to welcome
all our employees in the UK to the wider group. I have absolute confidence in
the ability of the management teams in Germany and the UK to ensure the
ongoing integration process is successful, as well as to unlock new growth
opportunities in the UK. Undoubtedly lots of that work still lies ahead and I
look forward to reporting back on progress next year.
Looking forward, Sirius is well placed to keep delivering on our growth
strategy. Our primary focus remains on our largest market, Germany, where we
expect to continue to deliver attractive and sustainable returns for
shareholders there. The year ahead looks set to be shaped by the fallout from
the conflict in the Ukraine. Whilst premature to speculate on how the crises
will impact our markets, the Company considers itself well positioned to trade
through any potential headwinds and, most importantly, we all hope for an
immediate cessation of hostilities and de-escalation of the conflict.
Executing the strategy
Our core strategy continues to focus on the acquisition of business parks in
Germany which have either attractive yields or value-add potential or both.
Sirius transforms these business parks into higher-quality assets through
investment and intensive asset management. When sites are mature and net
income and values have been optimised, Sirius may refinance sites to release
capital for investment in new sites or consider the disposal of sites in order
to recycle equity into assets which present greater opportunity to deploy the
asset management capabilities of the Company's internal operating platform.
Germany
The capex investment programmes upgrade and transform space that would often
be considered as structurally void and, in doing so, aim to deliver excellent
returns by growing income and capital values. The primary focus in Germany
remains on its seven largest cities of Berlin, Hamburg, Düsseldorf, Cologne,
Frankfurt, Stuttgart and Munich, with a secondary focus on a selection of key
towns such as Aachen, Saarbrücken and Freiburg which benefit from
cross-border opportunities. Sirius seeks mixed-use properties, primarily light
industrial units, business parks or office buildings outside city centres or
on the edge of towns where there is a high density of commercial and
industrial activity and good transport links. The Company has approximately
6,000 tenants across Germany representing a wide range of industries. The
Company also manages seven business parks owned by Titanium, a venture with
AXA IM Alts where Sirius holds a 35% equity share.
United Kingdom
BizSpace is a natural fit for Sirius and provides the combined business with
opportunities for meaningful operational and financial synergies. Like Sirius'
German business, BizSpace primarily owns out of town offices and industrial
assets with similar characteristics. We see significant organic growth
potential in rental pricing and other opportunities in intensive asset
management , particularly given the high level of exposure to the regions
where the UK Government's levelling up initiatives are being focused. In the
UK, we expect acquisition opportunities to come primarily from portfolio
acquisitions or consolidation rather than acquiring single new assets which
are generally much smaller than those available in Germany. BizSpace owns and
operates 72 sites, across 4.3 million sq ft providing a range of office,
studio and workshop units to the SME sector in convenient locations across the
UK.
Shareholder returns
Reflecting the continued robust operational performance and the strength of
the Company's balance sheet, the Board has authorised a dividend in respect of
the second half of the financial year ended 31 March 2022 of 2.37c per share
representing 65% of FFO, an increase of 19.7% on the 1.98c dividend for the
equivalent dividend last year. This brings total dividend for the year to
4.41c compared to 3.80c for the year ended 31 March 2021 and reflects an
increase of 16.1%.
The Sirius business model continues to deliver not only progressive income
returns but also attractive capital growth as measured by adjusted net asset
value ("adjusted NAV") per share. Combining the growth in adjusted NAV and
taking into account dividends paid in the period, the Company has delivered a
total shareholder accounting return of 20.0% for the year to 31 March 2022.
While dividend distributions have typically contributed approximately one
third and adjusted NAV growth two thirds of returns, it is pleasing to note
that the valuation movement of our investment properties continues to be
derived predominantly from organic increases in income rather than yield
movement. The consistent delivery of impressive double digit accounting
returns is a testament to the continued excellence of our people who continue
to execute our core strategy that focuses on growing income at property level
and selective asset recycling.
Sustainability
We have continued to develop our approach to sustainability and ESG as we look
to further embed environmental and social value within the business, with the
Board and Senior Management Team leading on this important topic. We have made
significant progress, but also recognise that we have more to do, in
particular as we start our journey of reducing our environmental footprint
with the ambition of having an overall positive impact on the planet and
society. I would like to thank Kremena Wissel, our Chief Marketing and Impact
Officer, and her team for their work, which now also includes the integration
of BizSpace into our ESG programme.
During the year we have started to implement the core drivers of our
sustainability programme that were identified through the ESG materiality
assessment exercise completed in early 2022. We have provided more details on
our ESG objectives and actions within this annual report, and we are aiming to
provide additional insight into our ESG strategy, roadmap and targets in our
first standalone ESG Report later in 2022. We have recognised our
responsibility to the environment for a number of years, evidenced by us
providing 100% certified green energy to over 94% of our portfolio. This year
we are going further and have started on our journey to become a net zero
emissions business, as identified in our implementation of the Task Force on
Climate-Related Financial Disclosures ('TCFD'). As we have made clear before,
our ESG decisions will be grounded in economic viability. As such, we have
recently given permission for a detailed structural and emissions assessment
of a sample of our portfolio which will give the management team the necessary
information to make informed operational and financial decisions towards
taking the business forward on its net zero emissions pathway.
Our strength this year is best evidenced, yet again, by our employees. For the
second year, the Covid 19 pandemic had the potential to disrupt our
operations, however our employees embraced the challenge and delivered across
the whole business. I have also been fortunate to be able to visit BizSpace's
buildings and meet as many of the team as possible. I hope that I was able to
adequately demonstrate our welcome to them and the recognition of the value
they will bring to our combined team. People are core to our business success,
and we will continue to develop our approach to creating a positive social
impact, both inside and outside the company. This includes working with our
tenants. I am pleased that the tenant survey we conducted this financial year
showed they recognise the efforts we made for them and the support we
implemented throughout the pandemic. Our purpose is to empower small and
medium-sized business to grow and to unlock the potential of our people and
our properties. With the support of our people and all our stakeholders, I can
say with confidence we have achieved our purpose again this year.
Governance and culture
On 1 September 2021, we welcomed Joanne Kenrick to the Board as an independent
Non-Executive Director. Joanne brings a wealth of commercial marketing
experience to the Sirius Board with extensive listed, private and charitable
board experience and has already provided valuable contributions throughout
the year. I am pleased that the Sirius Board now has a better gender balance
with three female appointees in place which we have already appointed or are
about to be appointed to the important roles of Chairs of the Audit and
Remuneration Committees and as the Senior Independent Director.
I would also like to congratulate Diarmuid Kelly, who was promoted to the
Board to be Chief Financial Officer, taking over from Alistair Marks, who we
are pleased remains with us on the Board in a new role as Chief Investment
Officer. Further information relating to these Board changes is provided in
the Corporate Governance Report on page 72 and in the Nomination Committee
report on page 86.
The Board is fully committed to compliance with the UK Corporate Governance
Code as published in July 2018 by the Financial Reporting Council (the "2018
Code"). Under a dispensation issued by the Johannesburg Stock Exchange, the
Company is not required to apply the King IV Code on Governance™ for South
Africa 2016. A detailed description of our governance and leadership
arrangements and how we have complied with the principles and provisions of
the 2018 Code is provided in the Corporate Governance Report on pages 71
to 79. This includes an explanation of the link between the Board's
decision-making and the Group's purpose and strategy. It also details how
stakeholder interests and the other matters set out in Section 172 of the UK
Companies Act 2006 have been considered in the Board's discussions and
decision making. Information on the Group's culture can be found on page 72
of the Corporate Governance Report.
Outlook
On behalf of the Board, I would like to thank all those connected with Sirius
for their hard work which has allowed the Company to record another strong
year, with the business continuing to execute its strategy effectively and
further building on the successful foundations that have been laid over the
last decade. The leadership team has performed extremely well through the
Covid-19 pandemic, and this gives me every confidence of its ability to
deliver returns in both good and more challenging times. Following the
issuance of two corporate bonds which resulted in a reduction of its weighted
average interest rate to 1.4% and extension of its weighted average debt term
to 4.3 years Sirius is in a strong position to continue to execute on its
ambitious growth strategy in both Germany and the UK.
Daniel Kitchen
Chairman
10 June 2022
Asset management review - Germany
Active asset management
€113.7m
total annualised rent roll
€6.31 per sqm
average rate
€201.9m
of new on balance sheet acquisitions completed or notarised in the period
Introduction
Sirius owns and manages business parks and industrial estates in and around
the top seven cities in Germany, as well as some sites located in border towns
to France and the Netherlands. Sirius operates a value add business model
where it utilises the asset management expertise of its internal operating
platform and aims to increase occupancy, net operating income and capital
values in the properties it owns. The Company currently owns a total of 69
mixed-use industrial, warehouse and office properties in Germany whilst
managing an additional nine (seven of which it holds a 35% interest through
the Titanium venture with AXA IM Alts).
In Germany the Company provides 1.8 million sqm of lettable production,
storage and office space, most of which is offered on a conventional basis
with approximately 6% of space converted into Sirius' unique and highly
effective Smartspace products which are offered on a more flexible basis with
a range of services. Smartspace products include serviced offices,
self-storage and workboxes and are usually created from excess office space,
basements and redundant halls which most conventional property owners would
often leave as structural vacancy as they do not have the capacity or know-how
to deal with such space. Key to providing such a wide range of options to its
tenants is the Company's internal operating platform and sophisticated online
marketing and IT infrastructure which it has developed over the last 15 years.
Sirius has over 6,000 tenants in Germany; 38% of the annualised rent roll is
attributable to the top 50 tenants which are generally large multinational
businesses and 55% to around 3,000 SME tenants which form the backbone of the
German economy. The remaining 7% of its annualised rent roll comes from the
3,000 micro-SMEs and individual tenants which rent space through the Company's
Smartspace range of products where they benefit from cost certainty and
maximum flexibility.
The Company's ability to provide a mix of conventional and flexible space
significantly enhances the returns and sustainability of income that can be
generated from German light industrial and out of town office assets. This has
been proven by the Company's track record of being able to deliver significant
organic increases in net operating income in Germany over the last 15 years in
all market conditions.
Lettings and rental growth
The Company recorded a like-for-like increase in its German annualised rent
roll of 6.4% to €102.7 million (31 March 2021: €96.5 million*) whilst the
German total annualised rent roll increased in the year end by €17.2 million
to €113.7 million with €6.2 million relating to organic growth and
€11.0 million representing the impact from acquisitions.
Encouragingly, like-for-like average rate per sqm increased by 5.3% to €6.50
(2021: €6.17*) demonstrating the reversionary potential within the portfolio
that the Company is confident of realising through its range of intensive
asset management activities.
Like for like occupancy increased to 87.4% (March 2021: 86.6%*) whilst,
importantly, the acquisitions made during the year resulted in total occupancy
reducing to 84.2% (March 21; 86.6%*) providing significant opportunity to add
value and grow income which is expected to help Sirius continue its strong
organic growth record into the future.
The increase in annualised rent roll in the period can be broken down into
move-outs of 127,091 sqm that were generating €10.2 million of annualised
rent roll at an average rate of €6.67 per sqm being offset by move-ins of
140,087 sqm generating €13.5 million of annualised rent roll at an average
rate of €8.02 per sqm. Additionally, contracted rental rate increases and
uplifts on renewals added a further €2.9 million to the annualised rent
roll at the period end. As mentioned above, the acquisitions that completed in
the financial year added €11.0 million to the annualised rent roll.
The movement in annualised rent roll is illustrated in the table below:
€m
Annualised rent roll 31 March 2021 96.5 *
Move-outs (10.2)
Move-ins 13.5
Contracted uplifts 2.9
Acquisitions 11.0
Annualised rent roll 31 March 2022 113.7
* Annualised rent roll of €96.5 million when excluding the expected
move-out in the first half of the March 2022 financial year relating to the
Fellbach II acquisition which completed in March 2021.
Underpinning the strong increase in rent roll in the year was an 8.6% increase
in the number of enquiries generated compared to the previous year, while a
conversion rate of 13% remained steady year on year. A month-by-month
comparison of enquiries relating to the wholly owned portfolio in Germany is
set out in the table below:
Enquiries comparison FY22 to FY21
No. of enquiries No. of enquiries Change
FY22 FY21 %
April 1,235 1,031 19.8%
May 1,333 1,044 27.7%
June 1,341 1,176 14.0%
July 1,305 1,198 8.9%
August 1,435 1,241 15.6%
September 1,387 1,353 2.5%
October 1,351 1,354 (0.2)%
November 1,421 1,341 6.0%
December 1,183 1,049 12.8%
January 1,495 1,376 8.6%
February 1,324 1,268 4.4%
March 1,370 1,467 (6.6)%
Total 16,180 14,898 8.6%
Against the backdrop of the pandemic, disruption to supply chains and changes
in tenant demands the Company continued to adopt a highly progressive and
flexible approach to its marketing activities with several initiatives
launched based on data generated from detailed analysis of online search
patterns. Flexibility and competitive pricing continued to be key factors in
decision making whilst demand for storage and flexible office space also
increased compared to the prior year.
As a result of having direct line of sight into the marketplace the Company
was able to focus its marketing strategies on spaces and products that meet
fast changing demand dynamics. Accordingly, the Company generated an increased
number of enquiries compared with the prior year which resulted in an increase
in the volume of sales by sqm.
Details of the month-by-month lettings performance and square metre volumes
compared to the same period in the previous year are set out in the table
below:
Lettings comparison FY22 to FY21
New deals New deals Total sqm Total sqm Average sqm per Average sqm per
twelve months twelve months let twelve months let twelve months deal twelve months deal twelve months
to March 2022 to March 2021 to March 2022 to March 2021 to March 2022 to March 2021
April 219 115 13,463 8,025 61 70
May 170 130 15,953 11,282 94 87
June 166 165 12,629 11,242 76 68
July 139 215 15,185 13,170 109 61
August 182 259 11,877 15,324 65 59
September 175 226 14,650 15,052 84 67
October 193 220 14,336 12,371 74 56
November 163 192 10,357 14,193 64 74
December 171 168 12,042 12,327 70 73
January 138 215 15,065 13,248 109 62
February 198 197 13,769 14,502 70 74
March 157 143 12,778 20,329 81 142
Total 2,071 2,245 162,102 161,065 78 72
Tenant retention in the period was encouraging with a 75% renewal rate by
square metres in the period being successfully extended (2021: 72%). Overall,
the continued positive performance in marketing, lettings and renewals
provides a clear demonstration of the ability of the Company to grow against
the backdrop of rapidly changing market dynamics.
Cash collection
Having visibility and close control of cash collection continues to be an
advantage of having an internal operating platform as the impact of the
pandemic remains. As a result of the combination of close collaboration
between the Company's experienced cash collection team and on-site staff the
Company was able to increase its cash collection rate to 98.4% (March 2021:
98.2%) as set out in the table below. This was also despite the material
increase in total billing to €163.0 million (net of VAT) from €143.8
million in 31 March 2021.
Cash collection
Invoiced Outstanding Collection
€000 €000 %
April 12,551 135 98.9%
May 12,488 149 98.8%
June 12,747 144 98.9%
July 12,895 165 98.7%
August 12,932 161 98.8%
September 13,113 180 98.6%
October 13,085 164 98.7%
November 14,090 190 98.7%
December 14,833 251 98.3%
January 14,565 313 97.9%
February 14,859 327 97.8%
March 14,863 431 97.1%
Total 163,021 2,610 98.4%
As at year end uncollected debt amounted to €2.6 million with outstanding
rent of €2.0 million and service charge prepayments of €0.6 million. From
a tenant base of approximately 6,000 tenants the Group issued ten deferred
payment plans amounting to €0.6 million whilst total write-offs amounted to
€45,000. The Company expects to collect most of the outstanding debt
for the period over the next twelve months through its regular debt
collection activities.
Acquisitions and disposals
As investment markets in Germany grew in confidence following the easing of
the pandemic, the Company was able to increase its investment activity,
finishing the year with a total of €201.9 million invested or committed in
ten acquisitions. These fully owned assets are expected to contribute a total
of €8.8 million of net operating income at 62% occupancy, representing an
EPRA net initial yield of 4.4%. The acquisitions provide the opportunity to
grow income through increasing occupancy, with more than 118,000 sqm of vacant
space and significant scope for selective investment in unused or
underutilised space.
A summary of the acquisitions that completed or were notarised in the year are
detailed in the table below:
Total Total Acquisition Acquisition Annualised Acquisition Acquisition Annualised EPRA net
investment acquisition occupancy vacant acquisition non-recoverable maintenance acquisition initial
(incl. acquisition sqm % sqm rent roll * service charge costs NOI * yield *(1)
costs) €000 costs €000 € %
€000 €000
Sirius
Essen I 10,706 14,711 80 2,897 829 (125) (13) 691 6.5
Öhringen 9,023 18,010 - 18,010 - (609) (32) (641) (7.1)
Heiligenhaus 14,237 45,081 77 10,269 1,396 (233) (41) 1,123 7.9
Frankfurt III 21,245 10,187 54 4,696 849 (209) (43) 598 2.8
Essen II 12,151 11,709 81 2,248 954 (92) (11) 851 7.0
Erfurt 11,679 22,333 81 4,143 766 (123) (20) 623 5.3
Oberhausen 39,843 77,605 63 28,680 3,218 (795) (90) 2,334 5.9
Neckartenzlingen 34,485 54,514 80 10,705 2,196 (237) (22) 1,937 5.6
Rastatt 8,783 21,426 - 21,426 3 (220) (19) (236) (2.7)
Subtotal 162,152 275,576 63 103,074 10,211 (2,643) (291) 7,280 4.5
Notarised
Düsseldorf III** 39,789 34,310 55 15,517 2,105 (521) (31) 1,552 3.9
Total 201,941 309,886 62 118,591 12,316 (3,164) (322) 8,832 4.4
(1) Includes purchaser costs.
* See the Glossary section of the Annual Report and Accounts 2022.
** Expected to complete July 2022.
A summary of the opportunities and characteristics of each asset acquired in
the period is detailed below.
· The Essen I asset completed in May 2021 and was acquired for
total acquisition costs of €10.7 million. The asset provides a mix of
production, storage and office space located in the heart of Germany's
industrial Rhein-Ruhr region. The acquisition represents the Company's first
of two investments in Essen during the period, providing for meaningful
operational synergies in a location the Company knows well through its
long-standing management of an asset located in the city.
· The Öhringen asset was completed in August 2021 for total
acquisition costs of €9.0 million. Located in the town of Öhringen in
Baden-Württemberg, the asset provides over 18,000 sqm of lettable space
including 15,800 sqm of desirable warehouse space. The site includes a land
parcel that may be considered for future light industrial development
amounting to 11,600 sqm. The asset, having been acquired wholly vacant,, has
already benefited from integration into the Sirius operating platform with
occupancy rapidly increasing to approximately 92% and generating
€1.0 million of annualised rent roll as at 31 March 2022.
· The Oberhausen business park, completed in November 2021 for
€39.8 million, is located in a well-developed commercial area of the city of
Oberhausen, in the northwest of Germany's Rhein-Ruhr region. Providing day one
net operating income of €2.3 million, the asset offers a wide range of uses
with approximately 77,600 sqm of lettable space, of which 47,400 sqm is office
space, 19,200 sqm warehouse space, 4,600 sqm storage and 6,400 sqm other
space.
· The multi-tenanted business park at Heiligenhaus,
Nordrhein‑Westfalen, was acquired for total acquisition costs of €14.2
million. The asset provides approximately 45,000 sqm of lettable space
consisting of 23,200 sqm of office space, 11,400 sqm of warehouse space, 7,800
sqm of production space and 2,600 sqm of other space. The town of Heiligenhaus
is located between the cities of Essen, Duisburg, Düsseldorf and Wuppertal
and benefits from good autobahn and public transport links. The property was
acquired with annualised net operating income of €1.1 million per annum
at 77% occupancy and, with an undemanding average rent of €2.44 per sqm
(excluding parking and other income), it provides opportunity through vacancy
and to capture reversionary income growth.
· The Company completed the acquisition of a multi-tenanted office
tower in Frankfurt comprising total lettable area of approximately 10,000 sqm
for total acquisition costs of €21.2 million. At acquisition, the property
generated annualised net operating income of €598,000 at 54% occupancy
equating to an average rent of €11.02 per sqm (excluding parking and other
income). The property benefits from its location close to two main autobahn
routes and aligns to the Company's strategy of providing a range of flexible
out of town office products that appeal to the local market.
· Following on from the completion of the Company's first
investment in Essen in May 2021 the Company added to its footprint through the
completion of the Essen II property for total acquisition costs of €12.2
million in November 2021. The Essen II asset comprises 11,709 sqm of office
and production space and, at 81% occupancy, generated annualised net operating
income of €851,000 representing an attractive day one net initial yield of
7.0%.
· The completion of the multi-tenanted business park asset in
Erfurt, lying halfway between Frankfurt and Berlin, represents the Company's
first investment into this key logistics location. With total acquisition
costs of €11.7 million the asset consists of 14,000 sqm of industrial space,
7,400 sqm of office space and 760 sqm of other space. At date of acquisition,
the site generated €623,000 of annualised net operating income at 81%
occupancy providing opportunity to grow income through the letting of vacant
space as well as the potential to invest into the 18,000 sqm land parcel
acquired as part of the transaction.
· The Company completed the acquisition of the Neckartenzlingen
property, located to the south of Stuttgart, for total acquisition costs of
€34.5 million in December 2021. The high-quality asset comprises 54,515 sqm
of predominantly production and warehouse space with annualised net operating
income of €1.9 million and a WALE of 8.1 years providing stable, long-term
cash flows. Income growth opportunity is expected to come from the letting of
vacant space which amounted to 10,700 sqm (19.6% of total space) at date of
acquisition.
· The fully vacant Rastatt asset completed in March 2022 for total
acquisition costs amounting to €8.8 million. Located in a key logistical
city on the French-German border, this property provides 6,000 sqm of office
space and 15,000 sqm of industrial space. With over 21,000 sqm of high-quality
vacant space the Company is confident of quickly growing occupancy and rental
income.
· Within the period the Company notarised the acquisition of the
Düsseldorf III asset which is expected to complete in July 2022 for total
acquisition costs of €39.8 million. The multi-tenanted site is located in
close proximity to the Düsseldorf international airport and provides 24,400
sqm of office and 9,900 sqm of industrial space. With over 15,500 sqm of
vacant space at the date of notarisation, the site provides significant rental
growth opportunity. In addition, as the Company's third investment in the
Düsseldorf market, Sirius expects to benefit from meaningful operational
synergies.
The marketing and sales capabilities within the operating platform are part of
several asset management disciplines that provide the Company with a
significant competitive advantage over other owners of light industrial and
business park assets in Germany. This allows Sirius to be more flexible with
how it configures and offers its vacant space which should result in
the Company being able to more easily to fill up and transform these newly
acquired sites and hence make the high returns at the asset level which
underpins the Company's significant organic growth it generates each year.
Capex investment programmes
The Group's capex investment programmes have historically and continue to be
focused on the transformation of sub-optimal vacant space acquired through the
Company's acquisition programme, but now also includes undervalued and lower
quality space which it receives back from vacating tenants. This acquired
vacant space is usually purchased for very little or no cost due to it being
considered as structurally void by former owners, whilst the low quality
vacated space has significant potential to increase income and value through
investment before re-letting.
The capex investment programme commenced in 2014 on sub-optimal vacant space
identified within the existing portfolio and has been expanded significantly
through all of the acquisitions which have taken place since then. To date,
approximately 381,000 sqm of space has been transformed with a total
investment of €58.5 million generating €24.3 million of annualised rent
roll at 78% occupancy. As occupancy increases to budgeted levels, an
additional €0.9 million of annualised rent roll is expected to be generated
from this transformed space. The success of the investments made has been
attributable in part to the unique marketing and sales initiatives that Sirius
deploys.
Not only has a significant amount of incremental annualised rent roll been
generated but also the transformation and let up of this suboptimal space has
made a strong contribution to the improvement in service charge cost recovery
and valuation gains the Company has recorded in recent years. In addition, the
transformative nature of the Company's capex investment programmes increases
the overall desirability and quality of the portfolio.
More detail on the Company's capex investment programme to date is provided in
the following table:
Combined capex programmes Sqm Investment Actual Annualised Annualised Occupancy Occupancy Rate Rate
budgeted spend rent roll * rent roll * budgeted achieved to per sqm per sqm
€m €m increase increase % March 2022 budgeted achieved to
budgeted achieved to % € March 2022
€m March 2022 €
€m
Completed 380,876 64.0 58.5 23.2 24.3 81% 78% 6.27 6.85
In progress 1,652 1.2 0.6 0.1 - 80% - 6.99 -
To commence in next financial year 62,497 15.8 - 4.4 - 81% - 7.26 -
Total 445,025 81.0 59.1 27.7 24.3 81% - 6.41 -
* See the Glossary section of the Annual Report and Accounts 2022.
In addition to the space that has been completed and let or is currently being
marketed, a total of approximately 64,000 sqm of space is either in progress
of transformation or awaiting approval to commence transformation. A further
€16.4 million is expected to be invested into this space, on top of the
€0.6 million already spent, and, based on achieving budgeted occupancy,
incremental annualised rent roll in the region of €4.5 million is expected
to be generated from it.
As set out within the acquisitions analysis within this report, approximately
118,000 sqm of vacant space was acquired relating to assets that completed or
were notarised in the year under review. A total of 76,361 sqm of space was
identified as suitable for investment within these assets and have
subsequently been added to the capex investment programme. The capex
investment programmes have been one of the key income and valuation growth
drivers over the last few years and the Company will continue to seek to
acquire assets with sub-optimal vacancy in order to refuel these highly
accretive programmes.
In addition to the capex investment programmes on the acquired sub-optimal
vacancy, Sirius also looks for opportunities to upgrade recently vacated
space that is returned as a result of move-outs. Within the existing vacancy
as at 31 March 2022, the Company has identified approximately 27,300 sqm of
recently vacated space that has potential to be upgraded. This space was
generating €1.0 million in annualised rent roll from the existing tenants
and can be upgraded with an investment of €6.4 million to generate
€2.4 million in annualised rent roll when re-let. This selective investment
in vacated space allows the Company to capture reversionary potential whilst
significantly enhancing the desirability and value of lower quality space.
The analysis below details the sub-optimal space and vacancy at 31 March 2022
and highlights the opportunity from developing this space.
Vacancy analysis - March 2022
Total space (sqm) 1,785,276
Occupied space (sqm) 1,503,097
Vacant space (sqm) 282,179
Occupancy 84%
% of total Sqm Capex ERV *
space investment (post investment)
€m
Structural vacancy 2% 39,879 - -
New acquisitions capex investment programme 4% 64,145 (16.4) 4.5
Recently vacated space 2% 27,300 (6.4) 2.4
Total space subject to investment 5% 91,445 (22.8) 6.9
Lettable vacancy:
Smartspace vacancy 1% 26,455 - 2.8
Other vacancy 7% 124,400 (0.7) 7.1
Total lettable space 8% 150,855 (0.7) 9.9
Total vacancy 16% 282,179 (23.5) 16.8
* See the Glossary section of the Annual Report and Accounts 2022.
As a result of adding the vacant space within the acquired assets in the
period, the Company's headline occupancy rate reduced to 84.2% (March 2021:
86.6%). When excluding the structural vacancy, the Company has over 240,000
sqm of space to let with an ERV of approximately €16.8 million.
Whilst the capex investment programmes are a key part of Sirius' strategy,
they represent one of several ways in which the Company can organically grow
income and capital values. A wide range of asset management capabilities
including the capturing of contractual rent increases, uplifts on renewals and
the re-letting of space at higher rates are expected to continue to make a
strong contribution to the Company's annualised rent roll. Should a high
inflationary environment persist the contribution to annualised rent roll from
rent increases is expected to increase.
Whilst adding vacancy through acquisitions enhances the organic growth
opportunity into the future, the Company maintains a risk adjusted strategy
and expects to continue to hold a significant amount of core mature assets in
order to maintain a balanced portfolio that provides a combination of stable,
long-term financeable income with value-add assets with growth potential.
Well-diversified income and tenant base
Against the backdrop of continued market disruption, the importance of a
well-diversified tenant base and wide range of products is clear. Sirius'
portfolio includes production, storage and out of town office space that
caters to multiple usages and a range of sizes and types of tenants. The
Company's business model is underpinned by its tenant mix which provides
stability through its large long-term anchor tenants and opportunity through
the SME and flexible individual tenants.
The Group's large anchor tenants are typically multinational corporations
occupying production, storage and related office space whereas the SMEs and
individual tenants occupy space on both a conventional and a flexible basis
including space marketed under the Company's popular Smartspace brand which
provides tenants with a fixed cost and maximum flexibility. The Company's
largest single tenant contributes 2.2% of total annualised rent roll whilst
7.1% of its annualised rent roll comes from government tenants.
SMEs in Germany, the Mittelstand, are typically defined as companies with
revenues of up to €50.0 million and up to 500 employees. SME tenants remain
a key target group which the Company's internal operating platform has
demonstrated an ability to attract in significant volumes as evidenced through
the high number of enquiries that are generated each month, mainly through
the Company's own marketing channels. The wide range of tenants that the
Sirius marketing and sales team is able to attract is a key competitive
advantage for the Company and results in a significantly de-risked business
model when compared to other owners of multi-tenanted light industrial and
business park assets.
The table below illustrates the diverse nature of tenant mix within the Sirius
portfolio at the end of the reporting period:
No. of Occupied % of Annualised % of total Rate
tenants as at sqm occupied sqm rent roll * annualised per sqm
31 March 2022 €m rent roll * €
%
Top 50 anchor tenants(1) 50 671,748 45% 43.7 38% 5.41
Smartspace SME tenants(2) 3,016 69,935 5% 7.7 7% 9.23
Other SME tenants(3) 3,010 761,414 50% 62.3 55% 6.82
Total 6,076 1,503,097 100% 113.7 100% 6.31
(1) Mainly large national/international private and public tenants.
(2) Mainly small and medium-sized private and public tenants.
(3) Mainly small and medium-sized private and individual tenants.
* See the Glossary section of the Annual Report and Accounts 2022.
Smartspace and First Choice
Sirius' Smartspace products are designed with flexibility in mind, allowing
tenants to benefit from a fixed cost which has proven to be desirable in all
market conditions. The majority of Smartspace has been developed from space
that is either sub-optimal or considered to be structurally void by most light
industrial real estate operators. Following conversion, the area is
transformed into space that can be let at significantly higher rents than the
rest of the business park and, as a result, is highly accretive to both income
and value.
5,267 sqm of Smartspace was created in the year including 3,592 sqm of
Smartspace storage product developed as a direct result of the increased
demand for storage space identified by the Company's sales and marketing teams
in the last few years. The Company was also able to capitalise on high storage
demand by providing additional container space storage on non-income producing
land. At 31 March 2022, these containers were generating €305,000 (31 March
2021: €168,000) in annualised rent roll.
The total amount of Smartspace in the portfolio at the year end was 96,390 sqm
(31 March 2021: 93,705 sqm), generating €7.7 million (31 March 2021:
€6.5 million) of annualised rent roll which equates to 6.8% of the Company's
total annualised rent roll. Most encouragingly, average rate per sqm increased
by 10.6% year on year, highlighting the premium pricing opportunity associated
with flexibility.
The table below illustrates how Smartspace products contribute to the
portfolio as a whole:
Smartspace product type Total sqm Occupied sqm Occupancy Annualised % of total Rate *
% rent roll * Smartspace per sqm
(excl. service annualised (excl. service
charge) rent roll * charge)
€ % €
First Choice office 5,117 3,156 62% 838,000 11% 22.13
SMSP office 32,031 23,890 75% 2,744,000 35% 9.57
SMSP workbox 5,974 5,829 98% 435,000 6% 6.22
SMSP storage 47,817 34,870 73% 3,216,000 42% 7.69
SMSP container - - - 305,000 4% n/a
SMSP subtotal 90,939 67,745 74% 7,538,000 97% 9.27
SMSP FlexiLager 5,451 2,190 40% 209,000 3% 7.95
SMSP total 96,390 69,935 73% 7,747,000 100% 9.23
* See the Glossary section of the Annual Report and Accounts 2022.
Asset management review - UK
Ongoing integration and identification of new opportunities
£45.1m
total annualised rent roll
£11.69 per sq ft
average rate
99.6%
cash collection rate
Introduction
BizSpace currently owns and operates a total of 72 industrial and out of town
office properties across the UK. Through its internal operating platform it
aims to increase occupancy, net operating income and capital values. BizSpace
provides over 4.2 million sq ft of lettable light industrial, studio, storage
and office space, on both conventional and flexible terms.
BizSpace has approximately 3,400 customers; 26% of the annualised rent roll is
attributable to the Company's top 100 tenants which are generally larger
corporate customers and 74% is attributable to SME and micro-SME customers.
Lettings and rental growth
Since the Group completed the acquisition of BizSpace on 15 November 2021,
annualised rent roll has increased by 7.6% to £45.1 million* (15 November
2021: £41.9 million*). The increase in annualised rent roll was delivered
through a combination of increases in occupancy and strong growth in average
rate.
Occupancy increased to 90.5%* from 88.7%* within the 4.5 month period of
ownership, highlighting the attraction of BizSpace's range of spaces and
products to a variety of tenants. Encouragingly, the 4.5 month period of
ownership saw a 6.5% increase in average rate from £10.98* per sq ft to
£11.69* per sq ft, highlighting the Company's ability, through its internal
operating platform, to capture reversion in a market characterised by
undersupply.
The positive net take-up of space in the period can be broken down into
move-ins of 323,528 sq ft generating £5.8 million of annualised rent roll at
an average rate of £18.04 per sq ft being offset by move-outs of 282,037 sq
ft that were generating £4.4 million of annualised rent roll at an average
rate of £15.64 per sq ft. Additionally, rental uplifts on existing tenants
added a further £1.8 million to the annualised rent roll at the period end.
The movement in annualised rent roll is illustrated in the table below:
£m
Annualised rent roll 15 November 2021 41.9 *
Move-ins 5.8
Move-outs (4.4)
Uplifts on existing tenants 1.8
Annualised rent roll 31 March 2022 45.1 *
* Excluding the Ipswich asset, which is unoccupied.
With tenants needs continuing to change rapidly and flexibility becoming more
of a necessity BizSpace is well placed to continue its strong lettings and
rental growth into the new financial year.
Cash collection
A combination of its dedicated cash collection team and the strong tenant
relationships maintained by its on-site staff resulted in the BizSpace
recording a 99.6% cash collection rate for the period under review. A
month-by-month summary detailing cash collection is set out in the table
below.
Cash collection
Invoiced Outstanding Collection
£000 £000 %
November 3,281 - 100.0%
December 4,413 5 99.9%
January 3,822 5 99.9%
February 3,608 33 99.1%
March 4,405 29 99.3%
Total 19,529 72 99.6%
From total net of VAT billing amounting to £19.5 million, uncollected debt
for the period amounted to £72,000, representing a cash collection rate of
99.6%. From a tenant base of approximately 3,400 tenants the Company has one
deferred payment plan in place whilst total write-offs amounted to £21,000.
The Company expects to collect the majority of the outstanding debt for the
period over the next twelve months through its regular debt collection
activities.
Site investment
BizSpace has historically invested in its sites in order to maintain and
upgrade its spaces and allow it to adapt to changes in tenant demand and drive
occupancy and price. In the period under review the BizSpace invested a total
of £1.6 million into its sites focussed primarily on improving the condition
of spaces and expects to identify further similar investment opportunities
in the new financial year whilst at the same time it will continue to progress
its ESG related investment in order to align itself with the wider Group.
Well-diversified income and tenant base
BizSpace's portfolio includes light industrial, studio and out of town office
space and storage that caters to multiple usages and a range of sizes and
types of tenants. As a result, the Company's business model is underpinned by
a well-diversified tenant base.
The Company's top 100 tenants, which are typically large corporates, account
for 26% of the annualised rent roll with the next 900 SME tenants accounting
for 44% of annualised rent roll. The remaining 31% of annualised rent roll
relates to over 2,000 SME and micro-SME tenants which occupy 23% of the
overall estate.
The table below illustrates the diverse nature of tenant mix within the
BizSpace portfolio at the end of the reporting period:
No. of Occupied % of Annualised % of total Rate
tenants as at sq ft * occupied sq ft * rent roll * annualised per sq ft
31 March 2022 * £m rent roll * £
%
Top 100 tenants 100 1.1 28% 11.5 26% 10.21
Next 900 tenants 900 1.9 49% 19.7 44% 10.61
Remaining SME tenants 2,376 0.9 23% 13.9 30% 15.92
Total 3,376 3.9 100% 45.1 100% 11.69
* Excluding the Ipswich asset, which is unoccupied.
SMEs in the UK are typically defined as companies with revenues of up to
£50.0 million and up to 250 employees. The Company's internal operating
platform and product offering have a strong track record of attracting and
retaining customers in this segment of the market which is expected to
continue to grow as a result of structural trends impacting the UK market.
Financial review
Strong profits and total shareholder accounting return in transformational
year
"Sirius has delivered another strong return for shareholders through a
combination of continued organic and acquisitive growth in Germany, the
acquisition of BizSpace in the UK and the issuance of €700 million in
corporate bonds."
Strong trading, growth and diversification
The Company delivered profit before tax of €168.9 million for the year ended
31 March 2022 representing a 3.2% increase on the prior year. Despite markets
and our tenants continuing to be affected by the lingering effects of the
Covid-19 pandemic, the Company recorded a transformative year in which it
achieved significant organic and acquisitive growth and issued its first
corporate bonds. In addition, the Company completed the acquisition of
BizSpace in November 2021 representing the first significant corporate
transaction in the Company's history and its first entry into a new market
outside of Germany.
Total funds from operations(1) ("FFO"), which is the key measure used by
Sirius for operational performance, increased by 22.5% to €74.6 million,
which drove a 19.7% increase in the dividend for the six months ended 31 March
2022. The increase in adjusted net asset value per share(2) combined with
dividends paid in the period resulted in a total accounting return of 20.0%
(31 March 2021: 19.5%).
Trading performance and earnings
As mentioned above, the Company reported a profit before tax in the year ended
31 March 2022 of €168.9 million (31 March 2021: €163.7 million),
representing an increase of 3.2%. FFO increased by 22.5% to €74.6 million
(31 March 2021: €60.9 million) with BizSpace contributing €5.8 million in
respect of the 4.5 months of ownership following the completion of the
acquisition on 15 November 2021. Along with the impact from BizSpace,
the increase in FFO came from a combination of strong organic growth within
the existing portfolio in Germany together with a modest contribution from
assets acquired in the period.
Further detail on the Company's financial performance and contribution from
BizSpace in the year ended 31 March 2022 is set out below.
Germany UK Group
€m €m €m
Net operating income 109.1 13.4 122.5
Funds from operations 68.8 5.8 74.6
Profit after tax 138.7 9.3 148.0
(1) Refer to note 29 in the Annual Report and Accounts 2022.
(2) Refer to Glossary of terms of the Annual Report and Accounts 2022.
The organic growth within Germany came predominantly from another strong
improvement in like-for-like annualised rent roll which increased by 6.4% and
was supported by a combination of ongoing capex investment programmes,
contracted escalations, uplifts on renewals and other asset management
initiatives. Following completion of the acquisition of BizSpace, the Company
starts the new financial year with annualised rent roll of €167.0 million.
Whilst the Company's basic and diluted earnings per share figures were
impacted by one-off costs relating to the acquisition of BizSpace and
refinancing activity, significant growth was recorded in adjusted earnings,
basic EPRA earnings and diluted EPRA earnings. The impact of costs relating to
the repayment of secured debt facilities using proceeds from the corporate
bond issuances, the BizSpace acquisition and write off of the related goodwill
resulted in a 4.8% decrease in basic EPS to 13.48c per share. Adjusted EPS,
Basic EPRA EPS and Diluted EPRA EPS which exclude the impact of the one-off
effects described above, increased by approximately 15.6%, 14.4% and 14.5%
respectively reflecting the strong operational performance in the year.
Earnings No. of shares 31 March 2022 Earnings No. of shares 31 March 2021 Change
€000 cents per share €000 cents per share %
Basic EPS 147,873 1,097,082,162 13.48 147,451 1,040,956,722 14.16 (4.8)
Diluted EPS 147,873 1,112,360,781 13.29 147,451 1,056,541,472 13.96 (4.7)
Adjusted EPS* 71,125 1,097,082,162 6.48 58,400 1,040,956,722 5.61 15.6
Basic EPRA EPS 70,695 1,097,082,162 6.44 58,633 1,040,956,722 5.63 14.4
Diluted EPRA EPS 70,695 1,112,360,781 6.36 58,633 1,056,541,722 5.55 14.5
* See note 13 and the Business analysis section of the Annual Report
and Accounts 2022.
Total revenue, which comprises rent, fee income relating to Titanium, other
income from investment properties, and service charge income, increased from
€165.4 million to €210.2 million in the period. Annualised rent roll in
Germany increased by 17.8% from €96.5 million to €113.7 million with
acquisitions contributing €11.0 million with organic growth contributing
€6.2 million. The acquisition of BizSpace resulted in rent roll increasing
by €49.6 million with organic growth since the date of completion
contributing an additional €3.7 million in annualised rent roll.
Germany UK * Group
€m €m €m
Opening annualised rent roll 96.5** - 96.5
BizSpace acquisition - 49.6 49.6
Additions 11.0 - 11.0
Move-ins/outs 3.3 1.6 4.9
Uplifts 2.9 2.1 5.0
Closing annualised rent roll 113.7 53.3 167.0
* Translated at GBP:EUR rate (1.18) as of 31 March 2022.
** Annualised rent roll €96.5 million when excluding the expected
move-out in the first half of the March 2022 financial year relating to the
Fellbach II acquisition which completed in March 2021.
Looking forward, notwithstanding the ongoing potential impact of Covid-19 and
the conflict in Ukraine, the Company is confident that through the
continuation of its capex investment programmes and wide range of other
intensive asset management initiatives, it will continue to grow FFO
organically in the new financial year.
Furthermore, following the Company's financing activity detailed within this
report, the Company considers itself to have a strong balance sheet and the
financial capability to continue its acquisitive strategy across the markets
in which it operates as and when the right opportunities present themselves.
BizSpace
The Company was pleased to complete the acquisition of BizSpace in November
2021 for a cash consideration of approximately £245.0 million, based on an
enterprise value of £380.0 million and representing a 7.1% net operating
yield. The Company funded the transaction by stepping into the BizSpace
existing financial debt amounting to approximately £146.0 million, raising
£137.0 million through a successful equity raise that resulted in 105 million
shares being issued and utilising existing cash resources. Following
completion, the Company repaid the existing debt within BizSpace using
proceeds generated from its second corporate bond issuance.
As a leading provider of regional flexible workspace across the UK, BizSpace
has provided Sirius with an opportunity to diversify geographically at scale
through the single acquisition of an established platform. The transaction
provides a number of organic growth opportunities, overlaid with meaningful
operational and financial synergies which the Company continues to realise
through its ongoing integration efforts.
Within the 4.5 month period of ownership trading has been strong with
like-for-like annualised rent roll increasing by 7.6% from £41.9 million to
£45.1 million. Over the same period, occupancy increased to 90.5% (excluding
Ipswich which is unoccupied) from 88.7% whilst like-for-like average rate per
sq ft has increased by 6.5% from £10.98 per sq ft to £11.69 per sq ft,
highlighting the opportunity to capture the strong growth seen in rental
pricing in the UK industrial property market. For further detail please see
the Asset management review - UK section on page 34 of this report.
Sirius has also converted the UK business into a UK Real Estate Investment
Trust ("REIT") with effect from 1 April 2022, resulting in BizSpace no longer
being subject to UK corporation tax on income from its property rental
business, as well as on profits on disposals of assets.
Portfolio valuation - Group
The portfolio of owned assets was independently valued at €2,079.0 million
by Cushman & Wakefield LLP at 31 March 2022 (31 March 2021: €1,350.8
million), which converts to a book value of €2,100.0 million after the
adjustments in relation to lease incentives and inclusion of leased investment
property. A breakdown of the movement in owned and leased investment property,
excluding assets held for sale, is detailed in the table below.
German investment German investment UK investment UK investment Investment
property - owned property - leased property - owned property - leased property - total
€000 €000 €000 €000 €000
Investment properties at book value as at 31 March 2021* 1,347,167 15,025 - - 1,362,192
Acquisitions arising from business combinations - - 408,923 12,182 421,105
Additions relating to owned investment properties 162,844 - - - 162,844
Additions relating to leased investment properties - 2,587 - 779 3,366
Capex investment and capitalised broker fees 20,464 - 2,143 - 22,607
Reclassified as investment property held for sale (13,739) - (13,739)
Disposal - - (1,808) - (1,808)
Surplus on revaluation above capex investment and broker fees 106,982 - 40,035 - 147,017
Deficit on revaluation relating to leased investment properties - (5,548) - (24) (5,572)
Adjustment in respect of lease incentives (561) - - - (561)
Currency effects - - 2,476 77 2,553
Investment properties at book value as at 31 March 2022* 1,623,157 12,064 451,769 13,014 2,100,004
* Excluding assets held for sale.
The movement in owned investment property relating to the German portfolio of
€276.0 million was made up of €162.8 million of asset acquisitions,
€13.7 million of disposals, a €107.0 million valuation uplift, capital
expenditure of €20.5 million and a €0.6 million adjustment in respect of
lease incentives.
The movement in owned investment property relating to the 4.5 month period of
ownership of the UK portfolio of €42.8 million was made up of a €1.8
million of disposals, a €2.5 million foreign currency effect, a €40.0
million valuation uplift and capital expenditure of €2.1 million.
In accordance with IFRS 16, the Group recognises leased investment properties
amounting to €12.1 million relating to the German portfolio and €13.0
million relating to the UK portfolio which meet the definition of investment
property. Accordingly, an expense of €5.6 million representing the fair
value adjustment in the year was recorded in the income statement. During the
year under review the Group extended a lease on an asset in Germany meeting
the definition of investment property resulting in an increase in the carrying
value of €2.6 million.
The total valuation gain recorded in the income statement of €140.9 million
includes movements relating to both owned and leased investment property and
is stated net of capex investment, broker fees and adjustments in respect of
lease incentives.
Portfolio valuation - Germany
Focusing on the like-for-like portfolio that was owned for the full period,
the book value of these assets increased by €127.2 million or 9.4% from
€1,347.2 million to €1,474.4 million. The increase in book value for the
period was predominantly driven by an increase in annualised rent roll of
€6.2 million and approximately 20 bps of gross yield compression. The assets
that were acquired during the year end were revalued at only €0.2 million
below the total acquisition costs paid, which is 7.1% above the property
purchase prices paid.
The portfolio of owned properties comprised 69 assets at 31 March 2022 and the
reconciliation of book value to the independent Cushman & Wakefield LLP
valuation is as follows:
31 March 2022 31 March 2021
€m €m
Investment properties at market value* 1,627.3 1,350.8
Adjustment in respect of lease incentives (4.1) (3.6)
Book value of investment properties as at 31 March 2022* 1,623.2 1,347.2
* Excluding assets held for sale.
The 31 March 2022 book value of owned investment properties of €1,623.2
million represents an average gross yield of 6.9% (31 March 2021: 7.2%),
which translates to a net yield of 6.2% (31 March 2021: 6.5%) and an EPRA net
yield (including estimated purchaser costs) of 5.9% (31 March 2021: 6.1%).
Despite yields continuing to tighten, the average gross yield of the German
portfolio of 6.9% still appears conservative when compared to transactions
that have completed over the last year in the industrial, logistics and office
sectors in Germany but also in part reflects the work yet to be done in
transforming more recently acquired assets.
As a result of acquisitive growth, 67% of the German portfolio represents
value-add assets which, with average occupancy of 80.8% and valued at a gross
yield of 7.3%, provide significant opportunity for further earnings and value
growth. The mature assets which make up about one-third of the German
portfolio have reached an occupancy level of 95.5% and, at a gross yield of
6.1%, are valued at a yield that is 120 bps lower than the value-add assets.
As the transformation of the value-add assets continues, the yield gap between
the mature and value-add assets is expected to reduce.
Annualised Book value NOI Capital Gross yield * Net yield * Vacant Rate psqm Occupancy
rent roll €m €m value % % space € * % *
€m €m/sqm * sqm *
Value-add assets** 79.9 1,089.6 69.6 804 7.3% 6.4% 252,430 6.27 80.8%
Mature assets 32.6 533.5 32.0 1,156 6.1% 6.0% 19,786 6.44 95.5%
Other - - (1.1) - - - - - -
Total 112.5 1,623.2 100.5 893 6.9% 6.2% 272,216 6.31 84.2%
* Expressed as averages.
** Excluding assets held for sale.
The average capital value per sqm of the entire portfolio of €893 (31 March
2021: €863) remains well below replacement cost and illustrates the
excellent opportunity for further growth from upgrading and letting up the
sub-optimal vacant space through the Company's capex investment programmes.
This remains a major competitive advantage for Sirius and is one of the main
reasons that its business model is able to produce higher returns with lower
risk than the typical operator of light industrial and office business parks
in Germany in all market conditions. The full details of the capex investment
programmes are provided in the Asset management review - Germany section of
this report.
Portfolio valuation - UK
Since the acquisition of BizSpace on 15 November 2021 the book value of the UK
portfolio has increased by £36.7 million or 10.6% from £345.5 million to
£382.2 million. Encouragingly, the significant increase in book value was
primarily driven by strong annualised rent roll growth amounting to £3.2
million or 7.6% in the 4.5 month period of ownership together with some yield
compression.
The 31 March 2022 book value of owned properties of £382.2 million represents
an average gross yield of 11.8% (15 November 2021: 12.1%), which translates
into a net yield of 8.0% (15 November 2021: 8.0%) and an EPRA net yield
(including estimated purchaser costs) of 7.5%. Despite yields continuing to
tighten as a result of increased demand and limited supply, the average gross
yield of the UK portfolio of 11.8% still appears conservative when compared to
transactions that have completed over the last year in the light industrial,
mixed-use and office sectors in the UK.
Annualised Book value NOI Capital Gross yield Net yield Vacant Rate psqft Occupancy **
rent roll £m £m * value % % space £ %
£m £m/sq ft sq ft
UK portfolio 45.1 382.2 30.5 88 11.8% 8.0% 406,132 11.69 90.5%
* Based on the 4.5 months from 15 November 2021 to 31 March 2022
annualised.
** Excluding the Ipswich asset, which is unoccupied.
As set out above, the average capital value per sq ft of the UK portfolio
remains well below replacement cost at £88 per sq ft (15 November 2021: £79
per sq ft). Similarly, with 406,132 sq ft of vacant space and an undemanding
average rate of £11.69 per sq ft significant opportunity exists for the UK
operating platform to increase rental and capital values further.
Net asset value
The valuation increases along with profit retention resulted in an increase in
net asset value per share to 102.04c at 31 March 2022, an uplift of 15.5% from
88.31c as at 31 March 2021. Similarly, the adjusted net asset value1 per share
increased to 108.51c at 31 March 2022, an uplift of 15.7% from 93.79c as at
31 March 2021. In addition, the Company paid out 4.02c per share of dividends
during the financial year which contributed to a total shareholder accounting
return (adjusted NAV growth plus dividends paid) of 20.0% (31 March 2021:
19.5%). The movement in NAV per share is explained in the following table:
Cents per share
NAV per share as at 31 March 2021 88.31
Recurring profit after tax 6.10
Equity raise 5.26
Surplus on revaluation 12.55
Deferred tax charge (1.27)
Scrip and cash dividend paid (3.76)
Adjusting items (5.15)*
**NAV per share at 31 March 2022 102.04
Deferred tax and derivatives 6.47
Adjusted NAV per share at 31 March 2022((1)) 108.51
EPRA adjustments((2)) (1.23)
EPRA NTA per share at 31 March 2022(1) 107.28
* Adjusting items includes non-recurring items including restructuring
costs, share of profit in associates, gains and losses on investments, and
foreign currency effects.
(1) Excludes the provisions for deferred tax and derivative financial
instruments.
(2) See Annex for further details.
The EPRA NTA per share, which, like adjusted NAV per share, excludes the
provisions for deferred tax and fair value of derivative financial instruments
but also includes the potential impact of shares issued in relation to the
Company's long-term incentive programmes and excludes intangible assets, was
107.28c, an increase of 16.2% from 92.29c as at 31 March 2021.
Financing
As communicated last year to shareholders the Company had been assessing
opportunities to optimise its funding structure to support its future growth
ambitions. The Company's inaugural bond issuance in June 2021 followed the
award of a BBB stable investment grade credit rating from Fitch in May 2021.
Bonds totalling €400.0 million were issued attracting a coupon of 1.125%
with a maturity date of June 2026. In November 2021 the Company issued bonds
amounting to €300.0 million attracting a coupon of 1.75% with a maturity
date of November 2028.
The bond issuances coupled with the repayment of €340.2 million of existing
secured debt, inclusive of €169.6 million that the Company stepped into and
subsequently repaid as part of the BizSpace transaction, has transformed the
Company's balance sheet and provided it with several benefits including:
· financial capacity to fund acquisitions and other investment
opportunities;
· reduction in the Group's weighted average cost of debt to 1.4%
(31 March 2021: 1.5%);
· increase in the Group's weighted average term of debt to 4.3
years (31 March 2021: 2.7 years); and
· increase in the number of unencumbered assets to 127, with a book
value of €1.6 billion.
Following the bond issuances and related secured debt repayments, the Group
holds total debt amounting to €995.6 million, of which €750.0 million (or
75%) is unsecured (31 March 2021: 11%). The transformation of the Group's
financing arrangements is expected to have a positive impact on earnings,
facilitate asset recycling and reduce annual amortisation payments.
Net LTV, which excludes restricted cash balances, was 41.6% (31 March 2021:
31.4%) whilst interest cover at EBITDA level was 7.3x as at 31 March 2022 (31
March 2021: 9.9x). All covenants were complied with in full during the period.
A summary of the movement in the Group's debt is set out below:
Movement in debt
€000
Total debt as at 31 March 2021 472,032
Bond issuances 700,000
Draw down of credit facility 50
Repayment of credit facility (50)
Repayment of secured facilities (170,709)
Assumed BizSpace debt 169,500
Repayment of BizSpace debt (169,500)
Scheduled amortisation (5,766)
Total debt as at 31 March 2022 995,557
Dividend
The Board has authorised a dividend in respect of the second half of the
financial year ended 31 March 2022 of 2.37c per share, representing a pay-out
of 65% of FFO and an increase of 19.7% on the equivalent dividend last year
which was also based on 65% of FFO. The total dividend in respect of the
financial year is 4.41c, an increase of 16.1% on the 3.80c total dividend paid
in respect of the financial year ended 31 March 2021.
The table below shows the dividends paid and full year pay-out ratios over the
last five years, demonstrating the manner in which the Board chose to increase
the dividend pay-out ratio in previous years in order to maintain positive
dividend trajectory whilst the proceeds of asset disposals were invested.
First half dividend Second half Total dividend Blended
per share dividend per share pay-out ratio
cents per share cents % of FFO
cents
Year ended March 2018 1.56 1.60 3.16 75%
Year ended March 2019 1.63 1.73 3.36 70%
Year ended March 2020* 1.77 1.80 3.57 66%
Year ended March 2021 1.82 1.98 3.80 65%
Year ended March 2022 2.04 2.37 4.41 65%
* First half 67%, second half 65% of FFO.
It is expected that, for the dividend authorised in respect of the six-month
period ended 31 March 2022, the ex-dividend date will be 6 July 2022 for
shareholders on the South African register and 7 July 2022 for shareholders on
the UK register. The last day to trade is the day prior to the ex-dividend
date, 5 July 2022 and 6 July 2022 for shareholders on the South African and UK
register respectively. It is further expected that for shareholders on both
registers the record date will be 8 July 2022 and the dividend will be paid on
18 August 2022. A detailed dividend announcement will be made on 20 June 2022,
including details of a scrip dividend alternative. At the date of the results
announcement relating to the year to 31 March 2022, the number of ordinary
shares in issue was 1,172,160,992.
Summary
Despite challenging market conditions, the year to 31 March 2022 proved
transformational for Sirius as the Company recorded strong trading results
whilst growing acquisitively, issuing two corporate bonds and entering the UK
market. Whilst one off costs and the write off of goodwill impacted earnings,
the Group has delivered significant increases in income and valuations while
maintaining high cash collection rates. Organic growth in annualised rent
roll, further improvements to service charge recovery and the impact of the
BizSpace acquisition were the primary drivers behind the Group's increase in
FFO and dividend. With ten assets acquired or notarised in Germany in the year
under review the Company expects a greater impact from these assets on
earnings in the new financial year whilst the positive trading trajectory of
BizSpace provides further income growth opportunities, with considerable
further trading flexibility and tax benefits arising from the conversion of
BizSpace to a REIT.
The Company remains focused on maximising the capability of its internal
operating platforms to continue to deliver attractive risk-adjusted returns
through active asset management. Looking forward the Company will take a
well-balanced and measured approach whilst trading through what continue to be
uncertain times. Despite positive developments over recent months, the
recovery from the Covid-19 pandemic continues to present challenges whilst the
economic, political and human fallout from the ongoing conflict in Ukraine is
yet to be fully understood. Growing concerns about inflation, particularly
that in relation to utilities and expected interest rate increases, will no
doubt create challenges; however, following the successful bond issuances
during the year under review the Company's financial profile has never been
stronger whilst its internal operating platform has proven itself to be well
capable of adapting to changing market conditions. With acquisition firepower
available, further vacancy to develop and reversion potential to capture, as
well as a defensively positioned portfolio, the Company is well set to meet
the challenges ahead and looks forward to continuing to deliver attractive and
sustainable returns for shareholders in the future.
Diarmuid Kelly
Chief Financial Officer
10 June 2022
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors confirm that, to the best of their knowledge the preliminary
consolidated financial statements have been prepared in accordance with
international financial reporting standards, and give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Group
and that this announcement includes a fair summary of the development and
performance of the business and the position of the Group. After making
enquiries, the directors considered it appropriate to adopt the going concern
basis in preparing the financial statements. The names and functions of the
Company's directors are listed on the Company's website.
Daniel Kitchen
Chairman
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group are included on pages
55 to 63 of the Group's Annual Report and Accounts 2022 available on the
website at: www.sirius-real-estate.com
Consolidated income statement
for the year ended 31 March 2022
Notes Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Revenue 6 210,182 165,361
Direct costs 7 (87,689) (71,541)
Net operating income 122,493 93,820
Gain on revaluation of investment properties 14 140,884 99,585
(Loss)/gain on disposal of properties (623) 54
Recoveries from prior disposals of subsidiaries 94 65
Administrative expenses 7 (40,718) (27,823)
Goodwill impairment 17 (40,906) -
Share of profit of associates 20 6,940 4,977
Operating profit 188,164 170,678
Finance income 10 2,986 2,712
Finance expense 10 (23,219) (9,869)
Change in fair value of derivative financial instruments 10 996 136
Net finance costs (19,237) (7,021)
Profit before tax 168,927 163,657
Taxation 11 (20,935) (16,097)
Profit for the year after tax 147,992 147,560
Profit attributable to:
Owners of the Company 147,873 147,451
Non-controlling interest 119 109
147,992 147,560
Earnings per share
Basic earnings per share 12 13.48c 14.16c
Diluted earnings per share 12 13.29c 13.96c
All operations of the Group have been classified as continuing.
Consolidated statement of comprehensive income
for the year ended 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Profit for the year after tax 147,992 147,560
Other comprehensive loss that may be reclassified to profit or loss in
subsequent periods
Foreign currency translation reserve (1,701) -
Other comprehensive loss after tax that may be reclassified to profit or loss (1,701) -
in subsequent periods
Other comprehensive loss for the year after tax (1,701) -
Total comprehensive income for the year after tax 146,291 147,560
Total comprehensive income attributable to:
Owners of the Company 146,172 147,451
Non-controlling interest 119 109
146,291 147,560
Consolidated statement of financial position
as at 31 March 2022
Notes 31 March 2022 31 March 2021
€000 €000
Non-current assets
Investment properties 14 2,100,004 1,362,192
Plant and equipment 16 5,492 2,682
Intangible assets 17 4,283 6,568
Right of use assets 18 14,996 1,919
Other non-current financial assets 19 48,330 44,960
Investment in associates 20 24,142 17,202
Total non-current assets 2,197,247 1,435,523
Current assets
Trade and other receivables 21 24,571 18,731
Derivative financial instruments 329 70
Cash and cash equivalents 22 150,966 65,674
Total current assets 175,866 84,475
Assets held for sale 15 13,750 -
Total assets 2,386,863 1,519,998
Current liabilities
Trade and other payables 23 (89,335) (50,527)
Interest-bearing loans and borrowings 24 (19,630) (9,114)
Lease liabilities 18 (1,090) (5,857)
Current tax liabilities 11 (10,423) (2,063)
Derivative financial instruments - (414)
Total current liabilities (120,478) (67,975)
Non-current liabilities
Interest-bearing loans and borrowings 24 (961,863) (458,940)
Lease liabilities 18 (37,571) (9,130)
Derivative financial instruments - (797)
Deferred tax liabilities 11 (75,893) (56,331)
Total non-current liabilities (1,075,327) (525,198)
Total liabilities (1,195,805) (593,173)
Net assets 1,191,058 926,825
Equity
Issued share capital 27 - -
Other distributable reserve 28 570,369 449,051
Own shares held 27 (6,274) (2,903)
Foreign currency translation reserve (1,701) -
Retained earnings 628,258 480,385
Total equity attributable to the owners of the Company 1,190,652 926,533
Non-controlling interest 406 292
Total equity 1,191,058 926,825
The financial statements on pages 127 to 130 were approved by the Board of
Directors on 10 June 2022 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the year ended 31 March 2022
Notes Issued Other Own Foreign Retained Total equity Non- Total
share distributable shares currency earnings attributable controlling equity
capital reserve held translation €000 to the interest €000
€000 €000 €000 reserve owners of €000
€000 the Company
€000
As at 31 March 2020 - 470,151 (1,515) - 332,934 801,570 246 801,816
Profit for the year - - - - 147,451 147,451 109 147,560
Other comprehensive income for the year - - - - - - - -
Total comprehensive income for the year - - - - 147,451 147,451 109 147,560
Share-based payment transactions - 3,148 - - - 3,148 - 3,148
Own shares purchased 27 - - (1,613) - - (1,613) - (1,613)
Own shares allocated 27 - - 225 - - 225 - 225
Dividends paid 29 13,169 (37,417) - - - (24,248) (63) (24,311)
Transfer of share capital 29 (13,169) 13,169 - - - - - -
As at 31 March 2021 - 449,051 (2,903) - 480,385 926,533 292 926,825
Profit for the year - - - - 147,873 147,873 119 147,992
Other comprehensive income for the year - - - (1,701) - (1,701) - (1,701)
Total comprehensive income for the year - - - (1,701) 147,873 146,172 119 146,291
Shares issued 27 159,926 - - - - 159,926 - 159,926
Transaction cost relating to share issues 27 (6,219) - - - - (6,219) - (6,219)
Dividends paid 29 13,673 (44,488) - - - (30,815) (5) (30,820)
Transfer of share capital 29 (167,380) 167,380 - - - - - -
Share-based payment transactions 9 - 1,945 - - - 1,945 - 1,945
Value of shares withheld to settle employee tax obligations 9 - (3,519) - - - (3,519) - (3,519)
Own shares purchased 27 - - (5,545) - - (5,545) - (5,545)
Own shares allocated 27 - - 2,174 - - 2,174 - 2,174
As at 31 March 2022 - 570,369 (6,274) (1,701) 628,258 1,190,652 406 1,191,058
Consolidated statement of cash flows
for the year ended 31 March 2022
Notes Year ended Year ended
31 March 31 March
2022 2021
€000 €000
Operating activities
Profit for the year after tax 147,992 147,560
Taxation 11 20,935 16,097
Profit for the year before tax 168,927 163,657
Loss/(gain) on disposal of properties 623 (54)
Recoveries from prior disposals of subsidiaries (94) (65)
Net exchange differences (1,975) -
Share-based payments 9 4,173 3,148
Gain on revaluation of investment properties 14 (140,884) (99,585)
Change in fair value of derivative financial instruments 10 (996) (136)
Depreciation of property, plant and equipment 16 1,167 669
Amortisation of intangible assets 17 1,164 897
Depreciation of right of use assets 18 843 521
Goodwill impairment 17 40,906 -
Share of profit of associates 20 (6,940) (4,977)
Finance income 10 (2,986) (2,712)
Finance expense 10 23,219 9,869
Changes in working capital
Increase in trade and other receivables (5,196) (2,518)
Increase in trade and other payables 3,470 2,913
Taxation paid (3,671) (632)
Cash flows from operating activities 81,750 70,995
Investing activities
Purchase of investment properties (162,844) (35,484)
Prepayments relating to new acquisitions (1,860) -
Proceeds from loss on control of subsidiaries (net of cash disposed) 94 65
Capital expenditure on investment properties (23,786) (31,104)
Purchase of plant and equipment and intangible assets (3,540) (2,718)
Acquisition of a subsidiary (net of cash acquired) (254,730) -
Proceeds on disposal of properties (including held for sale) 14, 15 15,297 30
Increase in loans receivable due from associates (1,124) (5,950)
Interest received 2,986 1,627
Cash flows used in investing activities (429,507) (73,534)
Financing activities
Proceeds from issue of share capital 27 159,926 -
Transaction costs on issue of shares 27 (6,219) -
Shares purchased (5,545) (1,613)
Payment relating to exercise of share options 9 (3,519) -
Dividends paid to owners of the Company 29 (30,815) (24,248)
Dividends paid to non-controlling interest (5) (63)
Proceeds from loans 750,000 20,000
Repayment of loans (399,431) (33,753)
Payment of principal portion of lease liabilities (5,871) (5,681)
Exit fees/prepayment of financing penalties (5,335) -
Capitalised loan issue cost (14,369) (134)
Finance charges paid (7,067) (7,558)
Cash flows from/(used in) financing activities 431,750 (53,050)
Increase/(decrease) in cash and cash equivalents 83,993 (55,589)
Net exchange difference 1,299 -
Cash and cash equivalents as at the beginning of the year 65,674 121,263
Cash and cash equivalents as at the year end 22 150,966 65,674
Notes to the financial statements
for the year ended 31 March 2022
1. General information
Sirius Real Estate Limited (the "Company" or "Sirius") is a company
incorporated in Guernsey and resident in the United Kingdom for tax purposes,
whose shares are publicly traded on the Main Market of the London Stock
Exchange ("LSE") (primary listing) and the Main Board of the Johannesburg
Stock Exchange ("JSE") (primary listing).
The consolidated financial information of the Company comprises that of the
Company and its subsidiaries (together referred to as the "Group") for the
year ended 31 March 2022.
The principal activity of the Group is the investment in, and development of,
commercial property to provide conventional and flexible workspace in Germany
and the United Kingdom ("UK").
2. Significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for investment properties, investment properties held for sale
and derivative financial instruments, which have been measured at fair value.
The consolidated financial information is presented in euros and all values
are rounded to the nearest thousand (€000), except where otherwise
indicated.
The Company has chosen to prepare its annual consolidated financial statements
in accordance with International Financial Reporting Standards as issued by
the IASB ("IFRS") as a result of the primary listing on the JSE. See also note
2(c) for statement of compliance.
As at 31 March 2022 the Group's consolidated financial statements reflect
consistent accounting policies and methods of computation as used in the
previous financial year, except for the changes in the application of
accounting policies as described in note 2(b), in accordance with IFRS.
(b) Changes in accounting policies
There were several new and amendments to standards and interpretations which
are applicable for the first time for the Group from 1 April 2021. None of
them have had a significant impact on the Group or Company's income statement
or balance sheet. In May 2021, the IASB published amendments to IAS 12 "Income
Taxes". The IASB issued "Deferred Tax related to Assets and Liabilities
arising from a Single Transaction". The amendments narrowed the scope of the
recognition exemption in paragraphs 15 and 24 of IAS 12 (recognition
exemption) so that it no longer applies to transactions that, on initial
recognition, give rise to equal taxable and deductible temporary differences.
The amendments are effective for annual reporting periods beginning on or
after 1 January 2023. As earlier application is permitted the Group has
adopted the amendments early as described in note 11.
The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective. See note 2(ab).
(c) Statement of compliance
The consolidated financial statements have been prepared in accordance with
the Disclosure and Transparency Rules of the United Kingdom Financial Conduct
Authority, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the listing requirements of the JSE
Limited, IFRS and Companies (Guernsey) Law, 2008. The consolidated financial
statements have been prepared on the same basis as the accounting policies set
out in the Group's annual financial statements for the year ended 31 March
2021, except for the changes in accounting policies as shown in note 2(b). All
forward-looking information is the responsibility of the Board of Directors
and has not been reviewed or reported on by the Group's auditors.
(d) Going concern
The Group has prepared its going concern assessment for the period to the end
of June 2023 (the "going concern period"). The Group's going concern
assessment is based on a forecast of the Group's future cash flows. This
considers management's base case scenario and a severe but plausible scenario
where sensitivities are applied to model the outcome on the occurrence of
downside assumptions explained below. It considers the Group's principal risks
and uncertainties and is dependent on a number of factors including financial
performance, continued access to lending facilities (see note 24) and the
ability to continue to operate the Group's secured and unsecured debt
structure within its financial covenants.
The severe but plausible scenario models a potential downturn in the Group's
performance, including the potential impact of downside macro-factors such as
the Ukrainian crisis and new Covid-19 variants, on the Group's financial
position and future prospects. The cash flow projections incorporate
assumptions on future trading performance and potential valuation movements in
order to estimate the level of headroom on facilities and covenants for loan
to value, debt service cover and occupancy ratios set out within the relevant
finance agreements.
The impact of the crisis in Ukraine and Covid-19 on the business in the year
to 31 March 2022 did not result in any deterioration in the Group's income
streams or falls in asset values, both of which increased in the period.
The base case and severe but plausible downside scenarios include the
following assumptions:
Base case:
· growth in rent roll at 31 March 2022, principally from
contractual increases in rents and organic growth through lease renewals;
· increasing cost levels in line with forecast inflation of 7%;
· continuation of forecast capex investment;
· continuation of forecast dividend payments;
· payment of loan interest and loan amortisation amounts and
assumed refinancing of the €15 million of the Schuldschein facility in
December 2022 and January 2023; and
· no acquisitions over and above those legally committed to.
Severe but plausible downside scenario:
· reduction in occupancy of 5% per annum from the 31 March 2022
rent roll;
· reduction in service charge recovery of 5% per annum from the 31
March 2022 recovery levels; and
· reduction in property valuations of 5% per annum.
In the severe but plausible downside scenario, the Group is expected to comply
with its loan covenants with no cure payments or breaches forecast, continue
to operate within the terms of its facilities and have sufficient cash
reserves.
The Directors also evaluated potential events and conditions beyond 30 June
2023 that may cast significant doubt on the Group's ability to continue as a
going concern, specifically, the ability of the Group to refinance or extend
the €20 million Schuldschein facility in July 2023, €172 million Berlin
Hyp AG loan in October 2023 and €58 million Deutsche Pfandbriefbank AG loan
in December 2023. The Directors are of the view that they have a realistic
prospect of securing this refinancing or an alternative source of secured or
unsecured funding, a judgement which was informed by the Group's financial
forecasts, the Group's track-record in previously refinancing maturing debt
(including the recent €300 million corporate bond issuance in November 2021)
and the period of time the Group has to arrange refinancing. Should the debt
facilities falling due in July 2023, October 2023 and December 2023 not be
refinanced or extended, alternative options could be considered, including the
use of mitigating factors referred to below. The mitigating factors are within
the control of the Directors and there is sufficient time for such mitigating
factors to be implemented, if required.
In each of the scenarios considered for going concern, the Group is not
dependent on any mitigating actions which would be available to the Group in
the going concern review period to June 2023, which include restricting
dividends, reducing capital expenditure or the disposal of unencumbered assets
that have a book value of €1.6 billion as at 31 March 2022.
The Directors have not identified any material uncertainties which may cast
significant doubt on the Group's ability to continue as a going concern for
the duration of the going concern period. After due consideration, the Board
believes it is appropriate to adopt the going concern basis in preparing the
financial statements.
(e) Basis of consolidation
The consolidated financial information comprises the financial information of
the Group as at 31 March 2022. The financial information of the subsidiaries
is prepared for the same reporting period as the Company, using consistent
accounting policies.
All intra-group balances and transactions and any unrealised income and
expenses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net
assets not held by the Group and are presented separately in the consolidated
income statement and the consolidated statement of comprehensive income and
within equity in the consolidated statement of financial position, separately
from the Company's shareholders' equity.
(f) Acquisitions
Where a property is acquired through the acquisition of corporate interests,
management considers the substance of the assets and activities of the
acquired entity in determining whether the acquisition represents the
acquisition of a business.
The Group accounts for an acquisition as a business combination where an
integrated set of activities is acquired in addition to the property (see
policy in note 2(aa)). More specifically, consideration is made of the extent
to which substantive processes are acquired and, in particular, the extent of
services provided by the subsidiary. IFRS 3 "Business Combinations" sets out
an optional concentration test designed to simplify the evaluation of whether
an acquired set of activities and assets is not a business. An acquired set of
activities and assets is not a business if substantially all of the fair value
of the gross assets acquired is concentrated in a single identifiable asset or
group of similar identifiable assets.
Where such acquisitions are not deemed to be an acquisition of a business,
they are not treated as business combinations. Instead, they are treated as
asset acquisitions, with the cost to acquire the corporate entity being
allocated between the identifiable assets and liabilities of the entity based
on their relative fair values on the acquisition date. Accordingly, no
goodwill arises.
(g) Foreign currency translation
The consolidated financial information is presented in euros, which is the
functional and presentational currency of the parent company. For each entity,
the Group determines the functional currency and items included in the
financial statements of each entity are measured using the functional
currency.
Transactions in foreign currencies are initially recorded in the functional
currency at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into
the functional currency at the exchange rate ruling at the statement of
financial position date. All differences are taken to the statement of profit
and loss. Non-monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rates at the dates of the
initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair
value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of the
gain or loss on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other
comprehensive income ("OCI") or profit or loss are also recognised in OCI or
profit or loss, respectively).
On consolidation, the assets and liabilities of foreign operations are
translated into euros at the rate of exchange prevailing at the reporting date
and their statements of profit or loss are translated at the exchange rates at
the dates of the transactions, or where appropriate, the average exchange
rates for the period. The foreign exchange differences arising on translation
for consolidation are recognised in other comprehensive income ("OCI"). On
disposal of a foreign operation, the component of OCI relating to that
particular foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising on
the acquisition are treated as assets and liabilities of the foreign operation
and translated at the spot rate of exchange at the reporting date.
(h) Revenue recognition
Rental income
Rental income from operating leases and licence agreements containing leases
is recognised on a straight-line basis over the term of the relevant lease
unless another systematic basis is more representative of the time pattern in
which the benefit derived from the leased asset is diminished. Fixed or
determinable rental increases, which can take the form of actual amounts or
agreed percentages, are recognised on a straight-line basis over the term of
material leases. If the increases are related to a price index to cover
inflationary cost increases, then the policy is not to spread the amount but
to recognise them when the increase takes place.
The value of rent free periods and all similar lease incentives is spread on a
straight-line basis over the term of material leases only. Where there is a
reasonable expectation that the tenant will exercise break options, the value
of rent free periods and all similar lease incentives is booked up to the
break date.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods
or services is transferred to the customer at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services.
The Group mainly generates revenue from contracts with customers for services
rendered to tenants including management charges and other expenses
recoverable from tenants based on the Group's right to recharge tenants for
costs incurred (with or without markup) on a day-to-day basis ("service charge
income"). These services are specified in the lease agreements and separately
invoiced. Service charge income is recognised as revenue when the performance
obligations of the services specified in the lease agreements are met.
The individual activities vary significantly throughout the day and from day
to day; however, the nature of the overall promise of providing property
management service remains the same each day. Accordingly, the service
performed each day is distinct and substantially the same. These services
represent a series of daily services that are individually satisfied over time
because the tenants simultaneously receive and consume the benefits provided
by the Group. The actual service provided during each reporting period is
determined using cost incurred as the input method.
Transaction prices are regularly updated and are estimated at the beginning of
each year based on previous costs and estimated spend. Service charge budgets
are prepared carefully to make sure that they are realistic and reasonable.
Variable consideration is only included in the transaction price to the extent
it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur. Performance obligations related to service
charge revenue is discharged by the Company continuously and on a daily basis,
through the provision of utilities and other services to tenants. Changes in
service charge revenue are linked to changes in the cost of fulfilling the
obligation or the value to a tenant at a given period of time. Accordingly,
the variable consideration is allocated to each distinct period of service
(i.e. each day) as it meets the variable consideration allocation exception
criteria.
Service charge expenses are based on actual costs incurred and invoiced
together with an estimate of costs to be invoiced in future periods as receipt
of final invoices from suppliers can take up to twelve months after the end of
the financial period. The estimates are based on expected consumption rates
and historical trends and take into account market conditions at the time of
recording.
Service charge income is based on service charge expense and takes into
account recovery rates which are largely derived from estimated occupancy
levels. Service charge costs related to vacant space are irrecoverable.
The Group acts as a principal in relation to these services, and records
revenue on a gross basis, as it controls the specified goods or services
before transferring them to tenants.
Where amounts invoiced to tenants are greater than the revenue recognised at
the period end date, the difference is recognised as unearned revenue when the
Group has unconditional right to consideration, even if the payments are
non-refundable. Where amounts invoiced are less than the revenue recognised at
the period end date, the difference is recognised as contract assets or, when
the Group has a present right to payment, as receivables albeit unbilled.
Rental income, fee income and other income from managed properties
As the Group derives income and incurs expenses relating to properties it
manages but does not own, such income and expense is disclosed separately
within revenue and direct costs. Income relating to managed properties is
accounted for according to revenue recognition accounting policies set out
above.
Allocation of revenues earned through all-inclusive lease and licence
arrangements
The Group has entered into leases and licensing arrangements (which contain a
lease) where the revenue due from the tenant is an all-inclusive price,
representing lease income (recognised in accordance with IFRS 16) and service
charge income (recognised in accordance with IFRS 15). Management have
estimated the allocation of the revenues using the relevant service charge
costs incurred and the occupancy of the properties where all-inclusive lease
and license arrangements are in place. The allocation resulted in €5.7
million being recorded as service charge income.
Interest income
Interest income is recognised as it accrues (using the effective interest
method, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument).
(i) Leases
Group as lessor
Leases where the Group does not transfer substantially all the risks and
benefits of ownership of the asset are classified as operating leases.
Group as lessee
All contracts that give the Group the right to control the use of an
identified asset over a certain period of time in return for consideration are
considered leases within the meaning of IFRS 16 "Leases" ("IFRS 16").
For all contracts that meet the definition of leases according to IFRS 16, the
Group, at the commencement date of the lease (i.e. the date the underlying
asset is available for use), recognises lease liabilities equal to the present
value of the future lease payments, discounted to reflect the term-specific
incremental borrowing rate if the interest rate implicit in the lease is not
readily determinable. Lease liabilities are subsequently increased by the
periodic interest expenses and reduced by the lease payments made during the
financial year.
Correspondingly, right of use assets are initially recognised at cost under
IFRS 16 which is the amount of the lease liabilities (plus any advance
payments that have already been made or any initial direct costs).
Subsequently, the right of use assets are generally measured at cost, taking
depreciation (calculated straight line over the lease term) and impairments
into account and are presented separately in the statement of financial
position except for right of use assets that meet the definition of IAS 40
"Investment Property" ("IAS 40") which are presented as investment property
and subsequently measured at fair value in line with the measurement rules set
out in IAS 40.
Periods resulting from extension or termination options granted on a
unilateral basis are assessed on a case-by-case basis and are only taken into
account if their use is sufficiently probable.
The Group utilises the recognition exemptions provided by IFRS 16 and does not
apply IFRS 16 to leases with a contractual term of twelve months or less or to
leases in which the underlying asset is of low value (on a case-by-case
basis).
Lease payments associated with short-term leases and with leases of low-value
assets are recognised as expenses on a straight-line basis over the lease
term.
Right-of-use assets relating to office spaces are depreciated on a
straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
(j) Income tax
Current income tax
Current income tax assets and liabilities are measured at the reporting date
at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.
Certain subsidiaries may be subject to foreign taxes in respect of foreign
sources of income. Sirius Real Estate Limited is a UK resident for tax
purposes.
Deferred income tax
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements, with the following exceptions:
· where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a transaction that is
not a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss;
· in respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future; and
· deferred tax assets are only recognised to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be
utilised.
Deferred income tax assets and liabilities are measured on an undiscounted
basis at the tax rates that are expected to apply in the year when the related
asset is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the reporting date.
The Group has converted the UK business into a UK Real Estate Investment Trust
("REIT") with effect from 1 April 2022, with all relevant steps for the REIT
conversion taken prior to the accounting period end date of 31 March 2022,
resulting in the Group no longer being subject to UK corporation tax on income
from its property rental business, as well as on profits on disposals of
assets. Accordingly, the Group reflected the impact of the conversion into a
UK REIT as at 31 March 2022 and all deferred tax balances in relation to the
change in fair value of investment property, lease liabilities and right of
use assets according to IFRS 16, losses and other short term related deferred
tax assets have been released as at 31 March 2022.
(k) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax
except:
· where the sales tax incurred on a purchase of assets or services
is not recoverable from the taxation authority, in which case the sales tax is
recognised as part of the cost of acquisition of the asset or as part of the
expense item as applicable; and
· receivables and payables that are stated with the amount of sales
tax included.
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
(l) Investment properties
Investment properties are properties that are either owned by the Group or
held under a lease which are held for long-term rental income and/or capital
appreciation.
Investment properties owned by the Group are initially recognised at cost,
including transaction costs when the control of the property is transferred.
Where recognition criteria are met, the carrying amount includes subsequent
costs to add to or replace part of an investment property. Subsequent to
initial recognition, investment properties are stated at fair value, which
reflects market conditions at the reporting date. Gains or losses arising from
changes in the fair values of investment properties are included in the income
statement in the period in which they arise.
The fair value of the Group's owned investment properties at 31 March 2022 is
based on a valuation carried out at that date by Cushman & Wakefield LLP
(2021: Cushman & Wakefield LLP), an independent valuer, on the basis of
highest and best use. The valuation is in accordance with standards complying
with the Royal Institute of Chartered Surveyors' ("RICS's") approval and the
conceptual framework that has been set by the International Valuation
Standards Committee.
The Cushman & Wakefield LLP valuation is based upon assumptions including
those relating to current rental rates, market rental rates, occupancy, gross
initial yields, discount factors and void periods. The German properties are
valued on the basis of a ten to fourteen year discounted cash flow model
supported by comparable evidence. The discounted cash flow calculation is a
valuation of rental income considering non-recoverable costs and applying a
discount rate for the current income risk over a ten to fourteen year period.
After ten to fourteen years, a determining residual value (exit scenario) is
calculated, discounted to present value. The UK properties are valued on a
traditional basis, where the income being generated is capitalised by an
appropriate yield. Yields are based on comparable evidence of similar quality
assets which have traded in the open market. The yield applied reflects the
age, location, ownership, customer base and agreement type.
Investment properties relating to leased assets are recognised in accordance
with IFRS 16 (see policy in note 2(i)). Subsequent to initial recognition,
investment properties relating to leased assets are stated at fair value,
which reflects market conditions at the reporting date. Gains or losses
arising from changes in the fair values of investment properties are included
in the income statement in the period in which they arise.
The fair value of investment properties relating to leased assets at 31 March
2022 has been arrived at on the basis of a valuation carried out at that date
by management. The valuation is based upon assumptions including future rental
income and expenditure in accordance with the conditions of the related lease
agreements. The properties are valued on the basis of a discounted cash flow
model with the measurement period equal to the term of the lease agreements.
(m) Disposals of investment property
Investment property disposals are recognised when control of the property
transfers to the buyer, which typically occurs on the date of completion.
Profit or loss arising on disposal of investment properties is calculated by
reference to the most recent carrying value of the asset adjusted for
subsequent capital expenditure.
(n) Assets held for sale and disposal groups
(i) Investment properties held for sale
Investment properties held for sale are separately disclosed at the asset's
fair value. In order for an investment property held for sale to be
recognised, the following conditions must be met:
· the asset must be available for immediate sale in its present
condition and location;
· the asset is being actively marketed;
· the asset's sale is expected to be completed within twelve months
of classification as held for sale;
· there must be no expectation that the plan for selling the asset
will be withdrawn or changed significantly; and
· the successful sale of the asset must be highly probable.
(ii) Disposal groups
The Group classifies non-current assets and disposal groups as held for sale
if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of a disposal group,
excluding finance costs and income tax expense.
The criteria for held-for-sale classification is regarded as met only when the
sale is highly probable and the disposal group is available for immediate sale
in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made
or that the decision to sell will be withdrawn. Management must be committed
to the plan to sell the asset with the sale expected to be completed within
one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or
amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately in
the statement of financial position.
Additional disclosures are provided in note 15.
(o) Plant and equipment
Recognition and measurement
Items of plant and equipment are stated at cost less accumulated depreciation
and impairment losses.
Depreciation
Where parts of an item of plant and equipment have different useful lives,
they are accounted for as separate items of plant and equipment.
Depreciation is charged in the income statement on a straight-line basis over
the estimated useful lives of each part of an item of the fixed assets. The
estimated useful lives are as follows:
Plant and equipment three to ten years
Fixtures and fittings three to fifteen years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date.
(p) Intangible assets
The Group recognises only acquired intangible assets. These intangibles are
valued at cost.
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated impairment losses.
Intangible assets with a definite useful life are amortised on a straight-line
basis over their respective useful lives. Their useful lives are between three
and five years. Any amortisation of these assets is recognised as such under
administrative expenses in the consolidated income statement.
Intangible assets with an indefinite useful life, including goodwill, are not
amortised.
Goodwill arising on consolidation represents the excess of the cost of the
purchase consideration over the Group's interest in the fair value of the
identifiable assets and liabilities of a subsidiary at the date of
acquisition.
Goodwill is initially recognised at cost and is subsequently measured at cost
less any accumulated impairment losses. Goodwill is tested annually for
impairment, or more frequently when there is an indication that the business
to which the goodwill applies may be impaired.
(q) Trade and other receivables
Rent and service charge receivables and any contract assets do not contain
significant financing components and are measured at the transaction price.
Other receivables are initially measured at fair value plus transaction costs.
Subsequently, trade and other receivables are measured at amortised cost and
are subject to impairment (see note 2(y)). The Group applies the simplified
impairment model of IFRS 9 in order to determine expected credit losses in
trade and other receivables, including lease incentives.
The Group assesses on a forward-looking basis the expected credit losses
associated with its trade and other receivables. A provision for impairment is
made for the lifetime expected credit losses on initial recognition of the
receivable. If collection is expected in more than one year, the balance is
presented within non-current assets.
(r) Treasury Shares and shares issued to the Employee Benefit Trust
Own equity instruments are deducted from equity. No gain or loss is recognised
in the income statement on the purchase, sale, issue or cancellation of the
Group's equity instruments.
(s) Share-based payments
The grant date fair value of share-based payment awards granted to employees
is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees unconditionally become entitled to the
awards.
The amount recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately recognised as an expense
is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
(t) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits
and other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to a known amount of cash
and are subject to an insignificant risk of change in value.
(u) Bank borrowings
Interest-bearing bank loans and borrowings are initially recorded at fair
value net of directly attributable transaction costs.
Subsequent to initial recognition, interest-bearing loans and borrowings are
measured at amortised cost using the effective interest rate method.
When debt refinancing exercises are carried out, existing liabilities will be
treated as being extinguished when the new liability is substantially
different from the existing liability. In making this assessment, the Group
will consider the transaction as a whole, taking into account both qualitative
and quantitative characteristics in order to make the assessment.
(v) Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost, using the effective interest rate method.
(w) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
(x) Dividends
Interim dividend distributions to shareholders are recognised in the financial
statements when paid. Final dividend distributions to the Company's
shareholders are recognised as a liability in the consolidated financial
information in the period in which the dividends are approved by the
shareholders. The final dividend relating to the year ended 31 March 2022 will
be approved and recognised in the financial year ending 31 March 2023.
(y) Impairment excluding investment properties
(i) Financial assets
A financial asset (excluding financial assets at fair value through profit and
loss) is assessed at each reporting date to determine whether there is any
impairment. The Group recognises an allowance for expected credit losses
("ECLs") for all receivables and contract assets held by the Group. ECLs are
based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms and
that are not recognised separately by the Group.
For rent and other trade receivables and any contract assets, the Group
applies a simplified approach in calculating ECLs. The Group does not track
changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date (i.e. a loss allowance for credit losses
expected over the remaining life of the exposure, irrespective of the timing
of the default). In determining the ECLs the Group takes into account any
recent payment behaviours and future expectations of likely default events
(i.e. not making payment on the due date) based on individual customer credit
ratings, actual or expected insolvency filings or Company voluntary
arrangements and market expectations and trends in the wider macroeconomic
environment in which our customers operate.
Impairment losses are recognised in the income statement. For more information
refer to note 7. Trade and other receivables are written off once all avenues
to recover the balances are exhausted and the lease has ended.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
investment property, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of
assets that generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the
"cash-generating unit").
An impairment loss is recognised if the carrying amount of an asset or
cash-generating unit exceeds its estimated recoverable amount. Impairment
losses are recognised in the income statement. Impairment losses recognised in
profit or loss in respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to the units and then to
reduce the carrying amount of the other assets in the unit (or group of units)
on a pro rata basis.
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification, except for deferred tax
assets and liabilities which are classified as non-current assets and
liabilities. An asset is current when it is:
· expected to be realised or intended to be sold or consumed in the
normal operating cycle;
· held primarily for the purpose of trading;
· expected to be realised within twelve months after the reporting
period; or
· cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when:
· it is expected to be settled in the normal operating cycle;
· it is held primarily for the purpose of trading;
· it is due to be settled within twelve months after the reporting
period; or
· there is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
(aa) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration
transferred, which is measured at acquisition date fair value, and the amount
of any non-controlling interests in the acquiree. Assets acquired and
liabilities assumed (including contingent liabilities) are recognised at fair
value. For each business combination, the Group elects whether to measure the
non-controlling interests in the acquiree at fair value or at the
proportionate share of the acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred and included in
administrative expenses.
The Group determines that it has acquired a business when the acquired set of
activities and assets include an input and a substantive process that together
significantly contribute to the ability to create outputs. The acquired
process is considered substantive if it is critical to the ability to continue
producing outputs, and the inputs acquired include an organised workforce with
the necessary skills, knowledge or experience to perform that process or it
significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost,
effort or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be
recognised at fair value at the acquisition date. Contingent consideration
classified as equity is not remeasured and its subsequent settlement is
accounted for within equity. Contingent consideration classified as an asset
or liability that is a financial instrument and within the scope of IFRS 9
"Financial Instruments" is measured at fair value with the changes in fair
value recognised in the statement of profit or loss in accordance with IFRS 9.
Other contingent consideration that is not within the scope of IFRS 9 is
measured at fair value at each reporting date with changes in fair value
recognised in profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of
the consideration transferred and the amount recognised for non-controlling
interests and any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group
reassesses whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or
loss (see policy in note 2(y)).
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in
a business combination is, from the acquisition date, monitored at the lowest
level within the entity at which is monitored for internal management purposes
(see policy in note 2(y)).
Where goodwill has been allocated to a cash-generating unit ("CGU") and part
of the operation within that unit is disposed of, the goodwill associated with
the disposed operation is included in the carrying amount of the operation
when determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposed
operation and the portion of the CGU retained.
(ab) Standards and interpretations in issue and not yet effective
A number of new standards, amendments to standards and interpretations have
been issued but are not yet effective for the Group. The application of these
new standards, amendments and interpretations is not expected to have a
significant impact on the Group's income statement or balance sheet.
(ac) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings and EPRA net asset value
metrics, which are widely used alternative metrics to their IFRS equivalents
(further details on EPRA best practice recommendations can be found at
www.epra.com). Note 12 to the financial statements includes a reconciliation
of basic and diluted earnings to EPRA earnings. Note 13 to the financial
statements includes a reconciliation of net assets to EPRA net asset value
metrics.
The Directors are required, as part of the JSE Listing Requirements, to
disclose headline earnings; accordingly, headline earnings are calculated
using basic earnings adjusted for revaluation gain net of related tax,
gain/loss on sale of properties net of related tax, recoveries from prior
disposals of subsidiaries net of related tax, NCI relating to revaluation and
revaluation gain/loss on investment property relating to associates net of
related tax. Note 12 to the financial statements includes a reconciliation
between IFRS and headline earnings.
The Directors have chosen to disclose adjusted earnings in order to provide an
alternative indication of the Group's underlying business performance;
accordingly, it excludes the effect of adjusting items net of related tax.
Note 12 to the financial statements includes a reconciliation of adjusting
items included within adjusted earnings, with certain adjusting items stated
within administrative expenses in note 7 and certain finance costs in note 10.
The Directors have chosen to disclose adjusted profit before tax and funds
from operations in order to provide an alternative indication of the Group's
underlying business performance and to facilitate the calculation of its
dividend pool; a reconciliation between profit before tax and funds from
operations is included within note 29 to the financial statements. Within
adjusted profit before tax are adjusting items as described above gross of
related tax.
Further details on non-IFRS measures can be found in the business analysis
section of this document.
3. Significant accounting judgements, estimates and assumptions
Judgements
In the process of applying the Group's accounting policies, which are
described in note 2, the Directors have made the following judgements that
have the most significant effect on the amounts recognised in the financial
information:
Acquisition and disposal of properties
Property transactions can be complex in nature and material to the financial
statements. To determine when an acquisition or disposal should be recognised,
management considers whether the Group assumes or relinquishes control of the
property, and the point at which this is obtained or relinquished.
Consideration is given to the terms of the acquisition or disposal contracts
and any conditions that must be satisfied before the contract is fulfilled. In
the case of an acquisition, management must also consider whether the
transaction represents an asset acquisition or business combination.
On 15 November 2021 the Group acquired the BizSpace Group. A key judgment was
made by Management as to whether the acquisition represented a business
combination or asset acquisition, concluding it represented a business
combination. Refer to note 2aa above.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Assessing goodwill for impairment (see also note 17)
Each year the Group considers cashflow forecasts from cash generating units in
order to estimate whether an impairment provision is required in respect of
goodwill. In making this estimate, judgement is applied as to the extent to
which the cash flow forecasts prepared to assess value in use are
distinguishable and separate from cash flows already considered in the
carrying value of other assets held by the group, such as investment property.
Goodwill arose during the year following the acquisition of Helix Investments
Limited. Having performed the assessment of value in use, the Group determined
that the identified cash flows could not be distinguished from those included
in other assets held by the cash generating units, in particular those
associated with the fair value of investment property. Consequently, the
goodwill was impaired during the year.
Historic goodwill was recognised in January 2012 following the internalisation
of the Asset Management Agreement. Given the time that has passed and
performance and investment in the business since acquisition, the Group has
determined that the identified cash flows could no longer be distinguished
from those included in other assets held by the cash generating units.
Consequently, the goodwill was impaired during the year.
Valuation of owned and leased investment properties (including those
recognised within assets held for sale or a disposal group)
The fair value of the Group's owned investment properties was determined by
Cushman & Wakefield LLP (2021: Cushman & Wakefield LLP), an
independent valuer. After adjusting investment properties for lease incentive
accounting, the book value of investment properties including assets held for
sale is shown as €2,074.9 million (2021: €1,347.2 million) as disclosed in
note 14.
The Cushman & Wakefield LLP valuation approach is explained in note 2(l).
The fair value of the Group's leased investment properties was determined by
the management. The book value of leased investment properties is shown as
€25.1 million (2021: €15.0 million) as disclosed in note 14.
As a result of the level of judgement used in arriving at the market
valuations, the amounts which may ultimately be realised in respect of any
given property may differ from the valuations shown on the statement of
financial position.
Cash flow and covenant compliance forecasts
Cash flow forecasts and covenant compliance forecasts are prepared by
management to assess the going concern assumption and viability of the Group.
Estimations of future revenue and expenditure are made to determine the
expected cash inflows and outflows, considering expectations for occupancy
levels, forecast expenditure and the current market climate. The impact of the
forecasted cash flows and underlying property valuations are considered when
assessing forecast covenant compliance and anticipated levels of headroom on
the Group's debt facilities.
Refer to note 2(d) for further details, which includes the assessment of
forecasted cash flows and covenant compliance in management's going concern
assessment.
Sustainability
In preparing the financial statements, management considered the impact of
climate change, taking into account the relevant disclosures in the Strategic
Report, including those made in accordance with the recommendations of the
Taskforce on Climate related Financial Disclosure. The Group also considered
the work performed to date in preparing its net zero pathway which it plans to
be in line with the Science Based Targets Initiative (SBTIs). At the time of
preparing the financial statements, the Group expects a limited exposure in
relation to the investment properties, based on the current climate-related
requirements. On this basis, the Directors concluded that climate change did
not have a material impact on the financial reporting judgements and
estimates, consistent with the assessment that this is not expected to have a
significant impact on the Group's going concern or viability assessment.
4. Business combinations
The provisions of IFRS 3 are applied to all business combinations.
Acquisitions in 2022
Acquisition of Helix Investments Limited
Company Type of Date of Acquired
acquisition acquisition voting rights
Helix Investments Limited, Jersey Purchase 15 Nov 2021 100%
The purchase price amounted to €242,779,000 (£206,763,000). The
consideration was transferred in the form of cash. On completion a loan
advanced by the seller and held by Helix Investments Limited of €45,021,000
(£38,342,000) was also repaid in cash.
The Group incurred costs of €5,299,000 for legal advice and due diligence in
connection with the business combination and these are included in
administrative expenses.
Helix Investments Limited is the holding company of the BizSpace Group
business, which is a leading provider of regional flexible workspace, offering
light industrial, workshop, studio and out of town office units to a wide
range of businesses across the UK. The acquisition therefore provides Sirius
with a unique opportunity to enter with immediate scale an under-served market
via a one-step acquisition of an established platform. It provides Sirius with
a high-quality portfolio, offering significant organic growth potential in
rental pricing in a UK market characterised by supply constraints. The
BizSpace Group business is also highly complementary to Sirius' existing
platform, allowing for meaningful operational and financial synergies to drive
value creation for Sirius shareholders. The acquired identifiable assets and
liabilities as at 15 November 2021 are presented at their fair values in the
following table in accordance with the final purchase price allocation:
Helix Investments
Limited
€000
Investment property 421,105
Other non-current assets 3,033
Current assets 3,478
Cash and cash equivalents 33,069
Loans (214,495)
Current liabilities (23,727)
Lease liabilities (12,182)
Deferred tax liabilities (4,670)
Net assets 205,611
Purchase price 242,779
Goodwill 37,168
Based on final purchase price allocation, goodwill arising on the purchase of
Helix Investments Limited amounts to €37,168,000 as at 15 November 2021. At
31 March 2022, the Directors assessed the computed goodwill to determine if it
represented recoverable value over and above the value included in the
acquired investment properties and other net assets, and concluded that there
was insufficient evidence to support such recovery and so wrote-off the
goodwill. As at 31 March 2022 the carrying amount of the goodwill is €nil as
it has been impaired as per note 17.The gross amounts of acquired trade
receivables and impairment losses recognised were as follows as at 15 November
2021:
Helix Investments
Limited
€000
Gross trade receivables 1,111
Expected credit loss provision (498)
Trade receivables 613
Due to first-time consolidation as at 15 November 2021, the acquired company
has contributed revenue of €20,954,000 and profit after tax of €47,891,000
to consolidated revenue and consolidated profit.
Had the company already been fully consolidated as at 1 April 2021,
consolidated revenue and consolidated profit after tax would have been as
follows:
1 April 2021 to
31 March 2022
€000
Group revenue 243,879
Group profit after tax 211,060
5. Operating segments
Information on each operating segment based on geographical location in which
the Group operates is provided to the chief operating decision maker, namely
the Group's executive management team, on an aggregated basis and represented
as operating profit and expenses.
The investment properties that the Group owns are aggregated into segments
with similar economic characteristics such as the nature of the property, the
products and services it provides, the customer type for the product served,
and the method in which the services are provided. Executive management
considers that this is best achieved through the operating segments of German
assets and United Kingdom assets. The Group's investment properties are
considered to be their own segment. The properties at each location (Germany
and UK) have similar economic characteristics. These have been aggregated into
two operating segments based on location in accordance with the requirements
of IFRS 8.
Consequently, the Group is considered to have two reportable operating
segments, as follows:
· Germany; and
· United Kingdom ("UK").
Consolidated information by segment is provided on a net operating income
basis, which includes revenues made up of gross rents from third parties and
direct expenses, gains and losses on property valuations, property disposals,
and control of subsidiaries. All of the Group's share of profit of associates
and administrative expenses including goodwill impairment, amortisation and
depreciation are separately disclosed as part of operating profit. Group
administrative costs, finance income and expenses and change in fair value of
derivative financial instruments are disclosed.
Income taxes and depreciation are not reported to the executive management
team on a segmented basis. There are no sales between segments.
The operating segment UK is a result of a business combination as disclosed in
note 4. As such the UK segment reportable figures are those from 15 November
2021 until 31 March 2022 whilst the Germany segment consists of the full
annual period ended 31 March 2022.
Year ended Year ended
31 March 2022 31 March 2021
Germany UK Total Germany UK Total
€000 €000 €000 €000 €000 €000
Rental and other income from investment properties 108,716 15,258 123,974 95,288 - 95,288
Service charge income from investment properties 55,009 5,696 60,705 51,041 - 51,041
Rental and other income from managed properties 10,884 - 10,884 9,699 - 9,699
Service charge income from managed properties 14,619 - 14,619 9,333 - 9,333
Revenue 189,228 20,954 210,182 165,361 - 165,361
Direct costs (80,118) (7,571) (87,689) (71,541) - (71,541)
Net operating income 109,110 13,383 122,493 93,820 - 93,820
Gain on revaluation of investment properties 100,872 40,012 140,884 99,585 - 99,585
(Gain)/loss on disposal of properties (363) (260) (623) 54 - 54
Recoveries from prior disposals of subsidiaries 94 - 94 65 - 65
Depreciation and amortisation (2,685) (486) (3,171) (2,087) - (2,087)
Other administrative expenses (34,321) (3,226) (37,547) (25,736) - (25,736)
Goodwill impairment (3,738) (37,168) (40,906) - - -
Share of profit of associates 6,940 - 6,940 4,977 - 4,977
Operating profit 175,909 12,255 188,164 170,678 - 170,678
Finance income 2,986 - 2,986 2,712 - 2,712
Amortisation of capitalised (2,544) (30) (2,574) (1,683) - (1,683)
finance costs
Other finance expense (15,759) (4,886) (20,645) (8,186) - (8,186)
Change in fair value of derivative financial instruments 996 - 996 136 - 136
Net finance costs (14,321) (4,916) (19,237) (7,021) - (7,021)
Segment profit for the year before tax 161,588 7,339 168,927 163,657 - 163,657
31 March 2022 31 March 2021
Germany UK Total Germany UK Total
€000 €000 €000 €000 €000 €000
Segment assets
Investment properties 1,635,221 464,783 2,100,004 1,362,192 - 1,362,192
Investment in associates 24,142 - 24,142 17,202 - 17,202
Other non-current assets 21,535 3,236 24,771 11,169 - 11,169
Total segment non-current assets 1,680,898 468,019 2,148,917 1,390,563 - 1,390,563
6. Revenue
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Rental and other income from investment properties 123,974 95,288
Service charge income from investment properties 60,705 51,041
Rental and other income from managed properties 10,884 9,699
Service charge income from managed properties 14,619 9,333
Total revenue 210,182 165,361
Other income relates primarily to income associated with conferencing and
catering of €2,977,000 (2021: €2,314,000) and fee income from managed
properties of €4,084,000 (2021: €7,338,000).
The total revenue from contracts with customers includes service charge income
and other income totalling €63,682,000 from investment properties (2021:
€53,355,000) and €18,703,000 from managed properties (2021:
€16,671,000).
7. Operating profit
The following items have been charged in arriving at operating profit:
Direct costs
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Service charge costs relating to investment properties 66,128 56,184
Costs relating to managed properties 16,985 11,274
Non-recoverable maintenance 4,576 4,083
Direct costs 87,689 71,541
Administrative expenses
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Audit and non-audit fees to audit firm 1,426 683
Legal and professional fees 3,901 2,778
Expected credit loss provision (see note 25) 2,291 1,791
Other administration costs (328) 2,781
LTIP and SIP 4,173 3,395
Employee costs 16,004 11,109
Director fees and expenses 604 493
Depreciation of plant and equipment (see note 16) 1,167 669
Amortisation of intangible assets (see note 17) 1,164 897
Depreciation of right of use assets (see note 18) 843 521
Marketing 2,345 2,009
Selling costs relating to assets held for sale 20 -
Exceptional items 7,108 697
Administrative expenses 40,718 27,823
The expected credit loss provision has increased during the year mainly due to
the increase of gross trade receivables as a result of acquired assets in the
financial year.
Other administration costs include net foreign exchange gains in amount of
€1,975,000 as a result of the increased foreign currency cash balances as at
the period end.
Employee costs as stated above relate to costs which are not recovered through
service charge.
Exceptional items relate to the following:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Acquisition costs in relation to business combinations 5,299 -
Legal case costs 894 247
Office termination fees 500 -
Internal tax restructuring costs 415 250
Signage and hygiene costs related to Covid-19 - 200
Total 7,108 697
The following services have been provided by the Group's auditors:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Audit fees to audit firm:
Audit of consolidated financial statements 1,135 532
Audit of subsidiary undertakings 226 88
Total audit fees 1,361 620
Audit related assurance services 65 63
Other assurance services 234 -
Total assurance services 299 63
Total fees for non-audit services 299 63
Total fees 1,660 683
The other assurance services include services relating to the corporate bond
issuances in amount of €234,000 which have been capitalised to the loan
issue costs.
8. Employee costs and numbers
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Wages and salaries 24,337 19,013
Social security costs 3,848 2,925
Pension 336 253
Other employment costs 335 71
Total 28,856 22,262
Included in the costs related to wages and salaries for the year are expenses
of €4,173,000 (2021: €3,395,000) relating to the granting or award of
shares under LTIPs and SIPs (see note 9). The costs for all periods include
those relating to Executive Directors.
All employees are employed directly by one of the following Group subsidiary
companies: Sirius Facilities GmbH, Sirius Facilities (UK) Limited, Curris
Facilities & Utilities Management GmbH, SFG NOVA GmbH, Sirius Finance
(Guernsey) Limited, BizSpace Limited, BizSpace II Limited, M25 Business
Centres Limited and Sirius Corporate Services B.V. The average number of
people employed by the Group during the year was 416 (2021: 256), expressed in
full-time equivalents. In addition, as at 31 March 2022, the Board of
Directors consists of six Non-Executive Directors (2021: five) and three
Executive Directors (2021: two).
9. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management
Team was approved in 2018 with three separate grant dates. Awards granted
under the LTIP are made in the form of nil-cost options which vest after the
three year performance period with vested awards being subject to a further
holding period of two years. Awards are split between ordinary and
outperformance awards. Ordinary awards carry both adjusted net asset value per
share ("TNR") (two-thirds of award) and relative total shareholder return
("TSR") (one-third of award) performance conditions and outperformance awards
carry a sole TNR performance condition. The employee's tax obligation will be
determined upon the vesting date of the share issue.
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on 15 June 2020
with a total charge for the award of €2,265,552. Charges for the awards are
based on fair values calculated at the grant date and expensed on a
straight-line basis over the period that individuals are providing service to
the Company in respect of the awards. For the 15 June 2020 LTIP grant an
expense of €811,000 is recognised in the consolidated income statement to 31
March 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 15 June 2020:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 0.84 0.84
Exercise price - € nil nil
Expected volatility - % 38.5 38.5
Performance projection period - years 2.79 2.67
Expected dividend yield - % 4.28 4.28
Risk-free rate based on European treasury bonds rate of return - % (0.677) p.a. (0.677) p.a.
Expected outcome of performance conditions - % 100 67.2
Fair value per share - € 0.745 0.564
The weighted average fair value of share options granted on 15 June 2020 is
€0.68.
Assumptions considered in this model include: expected volatility of the
Company's share price, as determined by calculating the historical volatility
of the Company's share price over the period immediately prior to the date of
grant and commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share price at the
date of grant; performance projection period; risk-free rate; and correlation
between comparators.
June 2019 grant
3,760,000 ordinary share awards and 690,000 outperformance share awards were
granted under the scheme on 16 June 2019 with a total charge for the awards of
€2,145,511 over three years. Charges for the awards are based on fair values
calculated at the grant date and expensed on a straight-line basis over the
period that individuals are providing service to the Company in respect of the
awards. For the 16 June 2019 LTIP grant an expense of €1,126,000 is
recognised in the consolidated income statement to 31 March 2022.
The fair value per share for the TNR and TSR elements of the award was
determined using Black-Scholes and Monte-Carlo models respectively with the
following assumptions used in the calculation:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award/ outperformance award 1/3 ordinary award
Share price at grant date - € 0.73 0.73
Exercise price - € nil nil
Expected volatility - % 23.8 23.8
Performance projection period - years 2.80 2.67
Expected dividend yield - % 4.56 4.56
Risk-free rate based on European treasury bonds rate of return - % (0.695) p.a. (0.695) p.a.
Expected outcome of performance conditions - % 100/24.5 46.6
Fair value per share - € 0.643 0.340
The weighted average fair value of share options granted on 16 June 2019 is
€0.54.
Assumptions considered in this model include: expected volatility of the
Company's share price, as determined by calculating the historical volatility
of the Company's share price over the period immediately prior to the date of
grant and commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share price at the
date of grant; performance projection period; risk-free rate; and correlation
between comparators.
January 2019 grant
In addition, as disclosed in the 2019 Annual Report, 4,000,000 ordinary share
awards and 700,000 outperformance share awards were previously granted under
the scheme on 15 January 2019.
The January 2019 grant vested on 21 May 2021. Vesting was at maximum level for
all participants resulting in the exercise of 3,266,210 shares with a weighted
average share price of €1.20 at the date of exercise. 1,433,790 shares have
been surrendered in relation to the partial settlement of certain
participants' tax liabilities arising in respect of the vesting. An amount of
€1,944,000 was paid for the participants' tax liabilities.
2021 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management
Team was approved in 2021. Awards granted under the LTIP are made in the form
of nil-cost options which vest after the three year performance period with
vested awards being subject to a further restricted period of two years when
shares acquired on exercise cannot be sold. Awards are subject to adjusted net
asset value per share ("TNR") (two-thirds of award) and relative total
shareholder return ("TSR") (one-third of award) performance conditions. The
employees' tax obligation will be determined upon the vesting date of the
share issue.
August 2021 grant
4,154,119 ordinary share awards were granted under the scheme on 2 August 2021
with a total charge for the award of €4,705,196. Charges for the awards are
based on fair values calculated at the grant date and expensed on a
straight-line basis over the period that individuals are providing service to
the Company in respect of the awards. For the 2 August 2021 LTIP grant an
expense of €1,066,000 is recognised in the consolidated income statement to
31 March 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 2 August 2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.39 1.39
Exercise price - € nil nil
Expected volatility - % 40.5 40.5
Expected life - years 2.91 2.91
Performance projection period - years 2.66 2.66
Expected dividend yield - % 2.79 2.79
Risk-free rate based on European treasury bonds rate of return - % (0.817) p.a. (0.817) p.a.
Fair value per share - € 1.28 * 0.84**
* In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated using a
Black-Scholes model and does not take the expected outcome of the performance
condition into account. The Company currently estimates the expected vesting
outcome for the TNR award to be 100%.
** In accordance with IFRS 2, relative TSR is classed as a market-based
performance condition. As such, projected performance and the likelihood of
achieving the condition have been taken into account when calculating the fair
value using a Monte-Carlo model. The model also uses assumptions for the
expected volatility of comparator companies, the pairwise correlation between
comparator companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 2 August 2021 is
€1.13.
Expected volatility of the Company's share price was determined by calculating
the historical volatility of the Company's share price over the period
immediately prior to the date of grant, commensurate with the term to the end
of the performance period.
2019 SIP
A SIP for the benefit of senior employees of the Company was approved in
August 2019. The fair value was based on the Company's estimate of the shares
that will eventually vest. Under the SIP, the awards were granted in the form
of whole shares at no cost to the participants. Shares will vest after a three
year performance period followed by a holding period of twelve months. The
performance conditions used to determine the vesting of the award were based
on the adjusted net asset value including dividends paid. As a result, under
the scheme in August 2019 2,784,750 shares were granted (with an additional
70,000 allocated in the 2021 financial year), subject to performance criteria,
and an expense including related costs of €567,000 is recognised in the
consolidated income statement to 31 March 2022.
The SIP 2019 grant vested on 14 March 2022. Vesting was at maximum level for
all participants resulting in the exercise of 2,534,750 shares with a weighted
average share price of €1.45 at the date of exercise. 1,020,775 shares have
been surrendered in relation to the partial settlement of certain
participants' tax liabilities arising in respect of the vesting. An amount of
€1,500,000 was paid for the participants' tax liabilities.
During the year 195,000 shares were forfeited due to employees in the scheme
leaving the employment of the Company.
2020 SIP
Another SIP for the benefit of senior employees of the Company was approved in
July 2020. The July 2020 grant vested on 21 May 2021. Vesting was at maximum
level for all participants resulting in the exercise of 95,537 shares with a
weighted average share price of €1.26 at the date of exercise. 24,463 shares
have been surrendered in relation to the partial settlement of certain
participants' tax liabilities arising in respect of the vesting. An amount of
€75,000 was paid for the participants' tax liabilities.
2021 SIP
Another SIP for the benefit of the senior employees was approved in 2021.
Awards granted under the SIP are made in the form of a conditional right to
receive a specified number of shares for nil cost which vest after the three
year performance period (on 1 March 2025 for the 2021 award) with vested
awards being subject to a further restricted period of one year when shares
cannot be sold. Awards are subject to adjusted net asset value per share
("TNR") (two-thirds of award) and relative total shareholder return ("TSR")
(one-third of award) performance conditions. Awards are equity settled. The
employees' tax obligation will be determined upon the vesting date of the
share issue.
September 2021 grant
3,074,500 share awards were granted under the scheme on 7 September 2021 with
a total charge for the award of €3,735,689 on the basis that 0% of awards
are forfeited during the vesting period. Charges for the awards are based on
fair values calculated at the grant date and expensed on a straight-line basis
over the period that individuals are providing service to the Company in
respect of the awards. For the 7 September 2021 SIP grant an expense of
€603,000 is recognised in the consolidated income statement to 31 March
2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 7 September
2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.49 1.49
Exercise price - € n/a n/a
Expected volatility - % 40.7 40.7
Expected life - years 3.48 3.48
Performance projection period - years 2.56 2.56
Expected dividend yield - % 2.60 2.60
Risk-free rate based on European treasury bonds rate of return - % (0.737) p.a. (0.737) p.a.
Fair value per share - € 1.36 * 0.92**
* In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated using a
Black-Scholes model and does not take the expected outcome of the performance
condition into account. The Company currently estimates the expected vesting
outcome for the TNR award to be 100%.
** In accordance with IFRS 2, relative TSR is classed as a market-based
performance condition. As such, projected performance and the likelihood of
achieving the condition have been taken into account when calculating the fair
value using a Monte-Carlo model. The model also uses assumptions for the
expected volatility of comparator companies and the pairwise correlation
between comparator companies and TSR performance between the start of the
performance period and the date of grant. Expected volatility of the Company's
share price was determined by calculating the historical volatility of the
Company's share price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance period.
The weighted average fair value of share options granted on 7 September 2021
is €1.21.
Expected volatility of the Company's share price was determined by calculating
the historical volatility of the Company's share price over the period
immediately prior to the date of grant, commensurate with the term to the end
of the performance period.
Movements in the number of awards outstanding are as follows:
Year ended Year ended
31 March 2022
31 March 2021
Number of Weighted Number of Weighted
share awards average share awards average
exercise exercise
price price
€000 €000
Balance outstanding as at the beginning of the year (nil exercisable) 15,584,750 - 11,934,750 -
Maximum granted during the year 7,302,831 - 3,790,000 -
Forfeited during the year (195,000) - (140,000) -
Exercised during the year (4,934,934) - - -
Shares surrendered to cover employee tax obligations (2,479,028) - - -
Balance outstanding as at year end (nil exercisable) 15,278,619 - 15,584,750 -
Employee benefit schemes
A reconciliation of share-based payments and employee benefit schemes and
their impact on the consolidated income statement is as follows:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Charge relating to 2018 LTIP - January 2019 grant - 1,202
Charge relating to 2018 LTIP - June 2019 grant 1,126 766
Charge relating to 2018 LTIP - June 2020 grant 811 645
Charge relating to 2021 LTIP - August 2021 grant 1,066 -
Charge relating to 2019 SIP - August 2019 grant 567 679
Charge relating to 2020 SIP - July 2020 grant - 103
Charge relating to 2021 SIP - September 2021 grant 603 -
Total consolidated income statement charge relating to LTIP and SIP 4,173 3,395
An amount of €1,945,000 is recognised in other distributable reserves as per
the consolidated statement of changes in equity. Own shares held in amount of
€1,868,000 have been used to settle the 2019 SIP award. In addition, an
amount of €360,000 has been accrued for future employers 'tax obligations in
relation to share based payment schemes.
10. Finance income, finance expense and change in fair value of derivative
financial instruments
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Bank interest income 95 38
Finance income from associates 2,891 2,674
Finance income 2,986 2,712
Bank loan interest expense (11,482) (7,402)
Interest expense related to lease liabilities (see note 18) (479) (349)
Amortisation of capitalised finance costs (2,574) (1,683)
Total interest expense (14,535) (9,434)
Bank charges and bank interest expense on deposits (863) (435)
Refinancing costs, exit fees and prepayment penalties (7,821) -
Other finance costs (8,684) (435)
Finance expense (23,219) (9,869)
Change in fair value of derivative financial instruments 996 136
Net finance expense (19,237) (7,021)
Included within refinancing costs are exit fees and early prepayment penalties
of €6,947,000 that directly related to the early repayment of loans and cost
in relation to the restructuring of debt in amount of €874,000.
The change in fair value of derivative financial instruments of €996,000
(2021: €136,000) reflects the change in the market valuation of these
financial instruments.
11. Taxation
Consolidated income statement
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Current income tax
Current income tax charge (6,220) (1,641)
Current income tax charge relating to disposals of investment properties - (87)
Adjustments in respect of prior periods 112 (189)
Total current income tax (6,108) (1,917)
Deferred tax
Relating to origination and reversal of temporary differences (14,827) (14,180)
Total deferred tax (14,827) (14,180)
Income tax charge reported in the income statement (20,935) (16,097)
The German corporation tax rate of 15.825% is used in the tax reconciliation
for the Group. Taxation for other jurisdictions is calculated at the rates
prevailing in each jurisdiction.
The reconciliation of the effective tax rate is explained below:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Profit before tax 168,927 163,657
Current tax using the German corporation tax rate of 15.825% (2021: 15.825%) 26,733 25,899
Effects of:
Deductible interest on internal financing(1) (5,398) (7,207)
Tax exempt gain from selling of investments and dividends(2) (1,113) (798)
Non-deductible expenses 452 290
Change in unrecognised deferred tax - tax effect of utilisation of tax losses (10,478) (2,498)
not previously recognised(3)
Property valuation movements due to differences in accounting treatments - (210)
Adjustments in respect of prior periods (112) 189
German trade tax 19 236
Other - 196
Goodwill impairment(4) 6,473 -
Difference in foreign tax rates(5) 1,452 -
Deferred tax - current year movements(6) 961 -
Rate difference between current tax and deferred tax(7) 1,946 -
Total income tax charge in the income statement 20,935 16,097
(1) Amounts non-taxable on interest on internal financing have decreased
from the prior year as a result of the financing company being tax resident in
Cyprus for the full period and taxed on a portion of its interest income, with
the remainder not taxed at 15.825% being included in the reconciliation above
to show the difference in foreign tax rates.
(2) The tax exempt gain from selling of investments and dividends in the
current year relates to the profits of joint ventures/associates only.
(3) Following the acquisition of the BizSpace Group on 15 November 2021,
the BizSpace Group has entered into the UK REIT regime effective from 1 April
2022. The result of the REIT conversion included the de-recognition of
deferred tax assets and deferred tax liabilities on investment properties,
shown above in the reconciliation.
(4) An impairment of €40.9 million in relation to the goodwill is
included as a permanent item in the tax reconciliation.
(5) As the current UK corporation tax rate is 19% this item shows the
difference between this rate and the German corporation tax rate of 15.825%
used in the above reconciliation.
(6) The deferred tax only adjustment relates to movements in UK temporary
differences on investment properties and lease liabilities which do not impact
the income statement or current taxes.
(7) As the substantively enacted UK main corporation tax rate effective
from 1 April 2023 is currently 25%, the difference between the current UK
corporation tax rate of 19% and the deferred tax rate of 25% (for deferred tax
unwinding after 1 April 2023) is also included within the tax reconciliation.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the
following:
Assets Liabilities Net
31 March 2022 31 March 2021 31 March 2022 31 March 2021 31 March 2022 31 March 2021
€000 €000 €000 €000 €000 €000
Revaluation of investment property - - (95,411) (73,946) (95,411) (73,946)
Rent free adjustments - - (640) (570) (640) (570)
Capitalised own works - - (55) (43) (55) (43)
Hedging (swaps) - 249 (52) - (52) 249
IFRS 16 4,059 - (4,283) - (224) -
Tax losses 20,330 17,979 - - 20,330 17,979
Fixed asset temporary differences 159 - - - 159 -
Deferred tax assets/(liabilities) 24,548 18,228 (100,441) (74,559) (75,893) (56,331)
In respect of IFRS 16, deferred tax had not previously been recognised due to
the application of the initial recognition exemption. To align with IASB
ED/2019/5, which amends the application of the initial recognition exemption
for transactions giving rise to offsetting deferred tax assets and deferred
tax liabilities, a deferred tax liability has been recognised on the IFRS 16
right of use asset and a deferred tax asset in respect of the IFRS 16 lease
liability resulting in a net deferred tax liability recognised as at 31 March
2022. The amendments to the initial recognition exemption under IAS 12 are
effective for accounting periods beginning on or after 1 January 2023 and have
been adopted early.
Movement in deferred tax during the year is as follows:
31 March 2021 Recognised Exchange Acquisition 31 March 2022
in income differences of a subsidiary
€000 €000 €000 €000 €000
Revaluation of investment property (73,946) (8,646) - (12,819) (95,411)
Rent free adjustments (570) (70) - - (640)
Capitalised own works (43) (12) - - (55)
Hedging (swaps) 249 (301) - - (52)
IFRS 16 - (5,697) - 5,473 (224)
Tax losses 17,979 2,272 (2) 81 20,330
Fixed asset temporary differences - (1,128) (32) 1,319 159
Other short-term temporary differences - (1,245) (31) 1,276 -
Total (56,331) (14,827) (65) (4,670) (75,893)
The Group has not recognised a deferred tax asset on €257 million (2021:
€238 million) of tax losses carried forward and future share scheme
deductions due to uncertainties over recovery. There is no expiration date on
€257 million of the losses and future share scheme tax deductions will
convert to tax losses on realisation.
Recognised and unrecognised temporary differences in the acquired BizSpace
Group of €54 million, largely driven by deferred tax liability on investment
properties, has been derecognised as at 31 March 2022 following the BizSpace
Group's entry to the UK REIT regime effective 1 April 2022 (see note 2(j)
above for further discussion of this). A deferred tax asset of €0.2 million
relating to the excess of capital allowances over qualifying net book value in
the BizSpace Group is expected to be recoverable by the residual business of
the BizSpace Group post REIT conversion. A change in ownership of the Group
may result in restriction on the Group's ability to use tax losses in certain
tax jurisdictions.
A deferred tax liability is recognised on temporary differences of €nil
(2021: €nil) relating to the unremitted earnings of overseas subsidiaries as
the Group is able to control the timing of the reversal of these temporary
differences and it is probable that they will not reverse in the foreseeable
future. In his Budget Statement of 3 March 2021, the UK Chancellor announced
that the main rate of UK corporation tax would increase to 25% from 1 April
2023. This may have a potential impact on any taxable profits made by the
residual business of the BizSpace Group post REIT conversion and other UK
operations only from that date.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis. The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes:
31 March 2022
Assets Liabilities Net
€000 €000 €000
UK 159 - 159
Germany 24,389 (100,441) (76,052)
Cyprus - - -
Deferred tax assets/(liabilities) 24,548 (100,441) (75,893)
31 March 2022
Assets Liabilities Net
€000 €000 €000
UK - (7,316) (7,316)
Germany - (2,690) (2,690)
Cyprus - (417) (417)
Current tax assets/(liabilities) - (10,423) (10,423)
12. Earnings per share
The calculations of the basic, diluted, EPRA, headline and adjusted earnings
per share are based on the following data:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Earnings attributable to the owners of the Company
Basic earnings 147,873 147,451
Diluted earnings 147,873 147,451
EPRA earnings 70,695 58,633
Diluted EPRA earnings 70,695 58,633
Headline earnings 58,368 58,848
Diluted headline earnings 58,368 58,848
Adjusted
Basic earnings 147,873 147,451
Deduct gain on revaluation of investment properties (140,884) (99,585)
Add loss/(deduct gain) on sale of properties 623 (54)
Deduct recoveries from prior disposals of subsidiaries (94) (65)
Tax in relation to the gain on revaluation of investment properties and gain 14,624 14,346
on sale of properties above less REIT related tax effects
Non-controlling interest ("NCI") relating to revaluation, net of related tax 85 82
Goodwill impairment 40,906 -
Deduct revaluation gain on investment property relating to associates (6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to 1,256 872
associates above
Headline earnings after tax 58,368 58,848
Deduct change in fair value of derivative financial instruments, net of (793) (215)
related tax and NCI
Deduct revaluation expense relating to leased investment properties (5,572) (4,325)
Add adjusting items, net of related tax and NCI(1) 19,122 4,092
Adjusted earnings after tax 71,125 58,400
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, 1,097,082,162 1,040,956,722
adjusted and basic EPRA earnings per share
Weighted average number of ordinary shares for the purpose of diluted 1,112,360,781 1,056,541,472
earnings, diluted headline earnings, diluted adjusted earnings and diluted
EPRA earnings per share
Basic earnings per share 13.48c 14.16c
Diluted earnings per share 13.29c 13.96c
Basic EPRA earnings per share 6.44c 5.63c
Diluted EPRA earnings per share 6.36c 5.55c
Headline earnings per share 5.32c 5.65c
Diluted headline earnings per share 5.25c 5.57c
Adjusted earnings per share 6.48c 5.61c
Adjusted diluted earnings per share 6.39c 5.53c
(1) See reconciliation between adjusting items as stated within earnings
per share and those stated within administrative expenses in note 7.
Notes Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Exceptional items 7 7,108 697
Refinancing costs, exit fees and prepayment penalties 10 7,821 -
Selling costs relating to assets held for sale 7 20 -
LTIP and SIP 7 4,173 3,395
Adjusting items as per note 12 19,122 4,092
The following table shows the reconciliation of basic to headline earnings,
separately disclosing the impact before tax (gross column) and after tax (net
column):
Year ended Year ended
31 March 2022 31 March 2021
Gross Net Gross Net
€000 €000 €000 €000
Basic earnings 147,873 147,451
Deduct gain on revaluation of investment properties (140,884) (126,260) (99,585) (85,326)
Add loss on sale of properties 623 623 (54) 33
Deduct recoveries from prior disposals of subsidiaries (94) (94) (65) (65)
NCI relating to revaluation 104 85 101 82
Goodwill impairment 40,906 40,906 - -
Deduct revaluation gain on investment property relating to associates (6,021) (4,765) (4,199) (3,327)
Headline earnings 58,368 58,848
EPRA earnings
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Basic and diluted earnings attributable to owners of the Company 147,873 147,451
Gain on revaluation of investment properties (140,884) (99,585)
Add loss on disposal of properties (including tax) 623 33
Deduct recoveries from prior disposals of subsidiaries (94) (65)
Refinancing costs, exit fees and prepayment penalties 7,821 -
Goodwill impairment 40,906 -
Acquisition costs in relation to business combinations 5,299 -
Change in fair value of derivative financial instruments (996) (136)
Deferred tax in respect of EPRA earnings adjustments 14,827 14,180
NCI in respect of the above 85 82
Deduct revaluation gain on investment property relating to associates (6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to 1,256 872
associates
EPRA earnings 70,695 58,633
For more information on EPRA earnings refer to Annex 1.
For the calculation of basic, headline, adjusted, EPRA and diluted earnings
per share the number of shares has been reduced by 5,280,308 own shares held
(2021: 3,684,608 shares), which are held by an Employee Benefit Trust on
behalf of the Group.
The weighted average number of shares for the purpose of diluted, diluted
EPRA, diluted headline and adjusted diluted earnings per share is calculated
as follows:
Year ended Year ended
31 March 2022 31 March 2021
Weighted average number of ordinary shares for the purpose of basic, basic 1,097,082,162 1,040,956,722
EPRA, headline and adjusted earnings per share
Effect of grant of SIP shares 3,074,500 2,834,750
Effect of grant of LTIP shares 12,204,119 12,750,000
Weighted average number of ordinary shares for the purpose of diluted, diluted 1,112,360,781 1,056,541,472
EPRA, diluted headline and adjusted diluted earnings per share
The Company has chosen to report EPRA earnings per share ("EPRA EPS"). EPRA
EPS is a definition of earnings as set out by the European Public Real Estate
Association. EPRA earnings represents earnings after adjusting for the
revaluation of investment properties, changes in fair value of derivative
financial instruments, gains and losses on disposals of properties (net of
related tax), recoveries from prior disposals of subsidiaries (net of related
tax), refinancing costs, exit fees and prepayment penalties (collectively the
"EPRA earnings adjustments"), deferred tax in respect of the EPRA earnings
adjustments, NCI relating to gain on revaluation and gain on sale of
properties net of related tax, revaluation gain on investment property
relating to associates and the related tax thereon.
13. Net asset value per share
31 March 2022 31 March 2021
€000 €000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 1,190,652 926,533
the owners of the Company)
Deferred tax liabilities/(assets) (see note 11) 75,893 56,331
Derivative financial instruments at fair value (329) 1,141
Adjusted net asset value attributable to the owners of the Company 1,266,216 984,005
Number of shares
Number of ordinary shares for the purpose of net asset value per share and 1,166,880,684 1,049,132,259
adjusted net asset value per share
Number of ordinary shares for the purpose of EPRA NTA per share 1,182,159,303 1,064,717,009
Net asset value per share 102.04c 88.31c
Adjusted net asset value per share 108.51c 93.79c
EPRA NTA per share 107.28c 92.29c
Net asset value as at year end (basic) 1,190,652 926,533
Derivative financial instruments at fair value (329) 1,141
Deferred tax in respect of EPRA earnings adjustments 75,566 56,331
Goodwill as per note 17 - (3,738)
Intangibles as per note 17 (4,283) (2,830)
Deferred tax in respect of EPRA adjustments in relation to investment in 6,563 5,212
associates
EPRA NTA 1,268,169 982,649
31 March 2022 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at year end (basic) 1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value (329) (329) n/a
Deferred tax in respect of EPRA earnings adjustments 75,893 75,566 * n/a
Goodwill as per note 17 n/a - -
Intangibles as per note 17 n/a (4,283) n/a
Fair value of fixed interest rate debt n/a n/a (22,229)
Real estate transfer tax 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments 6,563 6,563 * n/a
Fair value of fixed interest rate debt n/a n/a 2,196
Real estate transfer tax 9,147 n/a n/a
Total EPRA NRV, NTA and NDV 1,442,618 1,268,169 1,170,619
EPRA NRV, NTA and NDV per share 122.03c 107.28c 99.02c
31 March 2021 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at year end (basic) 926,533 926,533 926,533
Diluted EPRA net asset value at fair value 926,533 926,533 926,533
Group
Derivative financial instruments at fair value 1,141 1,141 n/a
Deferred tax in respect of EPRA earnings adjustments 56,331 56,331 * n/a
Goodwill as per note 17 n/a (3,738) (3,738)
Intangibles as per note 17 n/a (2,830) n/a
Fair value of fixed interest rate debt n/a n/a (3,485)
Real estate transfer tax 106,274 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments 5,212 5,212 * n/a
Fair value of fixed interest rate debt n/a n/a (1,772)
Real estate transfer tax 6,772 n/a n/a
Total EPRA NRV, NTA and NDV 1,102,263 982,649 917,538
EPRA NRV, NTA and NDV per share 103.53c 92.29c 86.18c
* The Company intends to hold and does not intend in the long term to
sell any of the investment properties and has excluded such deferred taxes for
the whole portfolio as at year end except for deferred tax in relation to
assets held for sale.
For more information on adjusted net asset value and EPRA NRV, NTA and NDV,
refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per
share is calculated as follows:
31 March 2022 31 March 2021
Number of ordinary shares for the purpose of net asset value per share and 1,166,880,684 1,049,132,259
adjusted net asset value per share
Effect of grant of SIP shares 3,074,500 2,834,750
Effect of grant of LTIP shares 12,204,119 12,750,000
Number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per share 1,182,159,303 1,064,717,009
The number of shares has been reduced by 5,280,308 own shares held (2021:
3,684,608 shares), which are held by an Employee Benefit Trust on behalf of
the Group.
14. Investment properties
The movement in the book value of investment properties is as follows:
31 March 2022 31 March 2021
€000 €000
Total investment properties at book value as at the beginning of the year 1,362,192 1,193,915
Acquisition of a subsidiary (see note 4)* 421,105 -
Additions - owned investment properties 162,844 35,484
Additions - leased investment properties 3,366 1,518
Capital expenditure and broker fees 22,607 31,720
Disposals (1,808) (30)
Reclassified as investment properties held for sale (see note 15) (13,739) -
Gain on revaluation above capex and broker fees 147,017 104,156
Adjustment in respect of lease incentives (561) (246)
Deficit on revaluation relating to leased investment properties (5,572) (4,325)
Foreign exchange differences 2,553 -
Total investment properties at book value as at year end(1) 2,100,004 1,362,192
* An amount of €12,182,000 relate to leased investment properties.
The reconciliation of the valuation carried out by the external valuer to the
carrying values shown in the statement of financial position is as follows:
31 March 2022 31 March 2021
€000 €000
Owned investment properties at market value per valuer's report(1) 2,079,079 1,350,770
Adjustment in respect of lease incentives (4,153) (3,603)
Leased investment property market value 25,078 15,025
Total investment properties at book value as at year end(1) 2,100,004 1,362,192
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment properties as at
year end has been arrived at on the basis of a valuation carried out at that
date by Cushman & Wakefield LLP (2021: Cushman & Wakefield LLP), an
independent valuer accredited in terms of the RICS. The fee arrangement with
Cushman & Wakefield LLP for the valuation of the Group's properties is
fixed, subject to an adjustment for acquisitions and disposals.
The value of each of the properties has been assessed in accordance with the
RICS valuation standards on the basis of market value. The methodology and
assumptions used to determine the fair values of the properties are consistent
with the previous year.
The weighted average lease expiry remaining across the owned portfolio in
Germany as at year end was 2.9 years (2021: 2.9 years). The weighted average
lease expiry remaining across the owned portfolio in the UK as at year end was
0.9 years. Licence agreements in the UK are rolling and are included in the
valuation.
The fair value (market value) of the Group's leased investment properties as
at year end has been arrived at on the basis of a valuation carried out by
management using discounted cash flows similar to the approach of Cushman
& Wakefield LLP.
The reconciliation of gain on revaluation above capex as per the income
statement is as follows:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Gain on revaluation above capex and broker fees 147,017 104,156
Adjustment in respect of lease incentives (561) (246)
Deficit on revaluation relating to leased investment properties (5,572) (4,325)
Gain on revaluation of investment properties reported in the income statement 140,884 99,585
Included in the gain on revaluation of investment properties reported in the
income statement (excluding the revaluation effects in respect of leased
investment properties) are gross gains of €160.4 million and gross losses of
€19.5 million (2021: gross gains of €106.4 million and gross losses of
€6.8 million).
Other than the capital commitments disclosed in note 31, the Group is under no
contractual obligation to purchase, construct or develop any investment
property. The Group is responsible for routine maintenance of the investment
properties.
All investment properties are categorised as Level 3 fair values as they use
significant unobservable inputs. There have not been any transfers between
levels during the year. Investment properties have been classed according to
their asset type. Information on these significant unobservable inputs per
class of investment property is disclosed below (excluding leased investment
properties).
The valuation for owned investment properties is (including assets classified
as held for sale) performed on a lease-by-lease basis due to the mixed-use
nature of the sites using the discounted cash flow technique for the German
portfolio and on a capitalised income basis, where income is capitalised by an
appropriate yield which reflects the age, location, ownership, customer base
and agreement type for the UK portfolio. This gives rise to large ranges in
the inputs.
Market Current rental rate Market rental rate Occupancy Gross initial yield Net initial yield % Discount factor Void period months
value per sqm per sqm % % %
(€000) € €
31 March 2022 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 329,100 2.67 8.32 2.65 7.42 91.5 100.0 4.5 8.5 3.7 6.7 3.6 5.4 6 12
Value add 625,540 -* 8.16 3.49 8.46 -* 97.3 -* 9.0 (3.7) 6.8 3.9 7.1 9 18
Total traditional business parks 954,640 -* 8.32 2.65 8.46 -* 100.0 -* 9.0 (3.7) 6.8 3.6 7.1 6 18
Modern business parks
Mature 195,750 5.03 8.13 3.74 7.68 91.8 100.0 5.0 9.8 4.1 8.4 3.6 5.0 6 15
Value add 213,140 2.86 10.28 3.76 10.15 74.9 97.8 2.9 9.4 1.6 6.6 4.4 7.3 9 24
Total modern business parks 408,890 2.86 10.28 3.74 10.15 74.9 100.0 2.9 9.8 1.6 8.4 3.6 7.3 6 24
Office
Mature 10,200 10.07 10.07 9.38 9.38 87.1 87.1 6.4 6.4 5.2 5.2 4.5 4.5 9 9
Value add 266,880 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -* 7.2 4.6 6.6 9 18
Total office 277,080 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -* 7.2 4.5 6.6 9 18
Total Germany 1,640,610 -* 11.78 2.65 12.18 -* 100.0 -* 9.8 (3.7) 8.4 3.6 7.3 6 24
Market Average current Average market rental Occupancy Net initial yield Void period
rental rate
rate
value
% % months
per sqm per sqm
(€000)
€ €
31 March 2022 Low High Low High Low High Low High Low High
Total mixed-use schemes 123,263 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4.00 12.00
Total office 153,112 - * 25.38 5.83 26.50 -* 100.0 -* 10.0 4.00 12.00
Total industrial 175,394 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4.00 12.00
Total UK 451,769 -* 26.49 2.39 26.50 -* 100.0 -* 10.0 4.00 12.00
* The Group has acquired vacant investment properties during the
financial year. As a result the lower range for rental rates, occupancy and
yields is 0.
Market Current rental rate per sqm Market rental rate Occupancy Gross initial yield Net initial yield Discount factor Void period months
value € per sqm % % % %
(€000) €
31 March 2021 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 326,650 2.67 8.16 2.65 8.46 91.3 100.0 4.7 8.8 3.8 7.2 3.8 5.9 6 12
Value add 439,100 1.99 6.44 3.33 6.91 49.5 97.3 4.7 9.3 3.4 7.2 4.3 7.4 9 18
Total traditional business parks 765,750 1.99 8.16 2.65 8.46 49.5 100.0 4.7 9.3 3.4 7.2 3.8 7.4 6 18
Modern business parks
Mature 209,600 4.78 10.01 3.63 9.79 91.6 100.0 5.4 10.0 4.5 8.6 3.8 5.4 6 15
Value add 144,400 3.61 7.09 4.35 8.24 77.2 88.2 5.9 8.6 4.7 7.1 5.0 5.9 9 24
Total modern business parks 354,000 3.61 10.01 3.63 9.79 77.2 100.0 5.4 10.0 4.5 8.6 3.8 5.9 6 24
Office
Mature 17,080 7.81 9.70 9.19 9.21 91.6 94.0 4.7 6.9 3.6 5.8 4.6 4.8 9 9
Value add 213,940 3.93 11.35 6.02 10.30 57.9 99.5 2.6 10.4 0.7 8.3 4.9 6.9 9 15
Total office 231,020 3.93 11.35 6.02 10.30 57.9 99.5 2.6 10.4 0.7 8.3 4.6 6.9 9 15
Total Germany 1,350,770 1.99 11.35 2.65 10.30 49.5 100.0 2.6 10.4 0.7 8.6 3.8 7.4 6 24
As a result of the level of judgement and estimates used in arriving at the
market valuations, the amounts which may ultimately be realised in respect of
any given property may differ from valuations shown in the statement of
financial position. Key inputs are considered to be inter-related whereby
changes in one key input can result in changes in other key inputs. The impact
of changes in relation to the key inputs is also shown in the table below:
Market Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
value in market rental rates in discount rates in gross initial yield in net initial yield
€000
€000 €000 €000 €000
31 March 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 954,640 48,450 (48,380) (19,640) 20,070 (84,224) 82,247 (98,020) 126,295
Total modern 408,890 19,260 (19,420) (8,540) 8,510 (30,840) 36,820 (38,033) 48,091
business parks
Total office 277,080 14,470 (14,340) (5,840) 5,760 (23,005) 28,467 (37,901) 27,766
Market value 1,640,610 82,180 (82,140) (34,020) 34,340 (138,069) 147,534 (173,954) 202,152
Germany
Market Change of 5% Change of 0.5%
value in market rental rates in net initial yield
€000 €000 €000
31 March 2022 Increase Decrease Increase Decrease
Total mixed-use schemes 123,263 3,967 (4,423) (4,494) 4,389
Total office 153,112 5,754 (5,325) (4,295) 5,029
Total industrial 175,394 7,139 (6,333) (5,822) 6,843
Market value UK 451,769 16,860 (16,081) (14,611) 16,261
Market Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
value in market rental rates in discount rates
€000 €000 €000
in gross initial yield
in net initial yield
€000 €000
31 March 2021 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 765,750 38,310 (38,000) (15,030) 15,950 (58,824) 69,947 (74,243) 93,306
Total modern business parks 354,000 17,350 (17,190) (7,560) 7,960 (24,479) 28,561 (29,189) 35,288
Total office 231,020 11,680 (11,480) (4,520) 4,850 (18,859) 23,308 (26,769) 53,359
Market value Germany 1,350,770 67,340 (66,670) (27,110) 28,760 (102,162) 121,816 (130,201) 181,953
15. Assets held for sale
Investment properties held for sale
31 March 2022 31 March 2021
€000 €000
Magdeburg 13,750 -
Balance as at year end 13,750 -
The disclosures regarding valuation in note 14 are also applicable to assets
held for sale. An amount of €13,750,000 relating to the sale of the
Magdeburg asset was received prior to the completion date of 1 April 2022 and
is included in the cash at bank per note 22. As a result, an equal and
opposite position within other payables was recognised. See note 23 for
further details.
16. Plant and equipment
Plant and Fixtures Total
equipment and fittings €000
€000 €000
Cost
As at 31 March 2021 1,035 6,052 7,087
Acquisition of a subsidiary (see note 4) 727 1,826 2,553
Additions in year 889 519 1,408
Disposals in year - (3) (3)
Foreign exchange differences 13 22 35
As at 31 March 2022 2,664 8,416 11,080
Depreciation
As at 31 March 2021 (691) (3,714) (4,405)
Charge for year (389) (778) (1,167)
Disposals in year - 3 3
Foreign exchange differences (8) (11) (19)
As at 31 March 2022 (1,088) (4,500) (5,588)
Net book value as at 31 March 2022 1,576 3,916 5,492
Cost
As at 31 March 2020 716 5,394 6,110
Additions in year 319 658 977
Disposals in year - - -
As at 31 March 2021 1,035 6,052 7,087
Depreciation
As at 31 March 2020 (615) (3,121) (3,736)
Charge for year (76) (593) (669)
Disposals in year - - -
As at 31 March 2021 (691) (3,714) (4,405)
Net book value as at 31 March 2021 344 2,338 2,682
17. Intangible assets
Software and Goodwill Total
licences with €000 €000
definite useful life
€000
Cost
As at 31 March 2021 7,848 3,738 11,586
Acquisition of a subsidiary (see note 4) 480 37,168 37,648
Additions in year 2,132 - 2,132
Disposals in year - - -
Foreign exchange differences 5 - 5
As at 31 March 2022 10,465 40,906 51,371
Amortisation
As at 31 March 2021 (5,018) - (5,018)
Charge for year (1,164) - (1,164)
Disposals in year - - -
Impairment - (40,906) (40,906)
Foreign exchange differences - - -
As at 31 March 2022 (6,182) (40,906) (47,088)
Net book value as at 31 March 2022* 4,283 - 4,283
Cost
As at 31 March 2020 6,107 3,738 9,845
Additions in year 1,741 - 1,741
Disposals in year - - -
As at 31 March 2021 7,848 3,738 11,586
Amortisation
As at 31 March 2020 (4,121) - (4,121)
Charge for year (897) - (897)
Disposals in year - - -
As at 31 March 2021 (5,018) - (5,018)
Net book value as at 31 March 2021* 2,830 3,738 6,568
* Included in the net book value is an amount of €2,393,000 relating
to intangible assets under development not yet amortised (2021: €1,600,000).
All these development projects are expected to finalise in the next financial
year.
Internalisation of Asset Management Agreement
On 30 January 2012, a transaction was completed to internalise the Asset
Management Agreement and, as a result of the consideration given exceeding the
net assets acquired, goodwill of €3,738,000 was recognised. The goodwill is
allocated to the cash-generating units comprising the Germany segment.
As explained in note 3, in the year ended 31 March 2022 indicators of
impairment relating to the goodwill balance were noted as the Group has
determined that the identified cash flows could no longer be distinguished
from those included in other assets held by the cash generating units in the
Germany segment. This resulted in the entirety of the balance being impaired
and a consequent impairment loss of €3,738,000 being recognised. Goodwill
which has been impaired may not be reversed in future periods.
Helix Investment Limited
On 15 November 2021, the business combination described in note 4 resulted in
the recognition of goodwill due to the consideration given exceeding the net
assets required by €37,168,000. The goodwill balance was allocated to the
cash-generating units comprising the UK segment and an impairment test was
performed at 31 March 2022 to determine whether the recoverable amount of the
cash-generating units exceed the carrying value. The key assumptions regarding
value in use were three-year cash flow forecasts as prepared by management of
the group of cash-generating units and the discount rate applied. Cash flows
beyond three years are extrapolated using an inflation figure of 2%. The
discount rate used is a pre-tax rate and reflects the risks specific to the
real estate industry in the UK. A discount rate of 7.13% and terminal value of
5.13% were applied in the impairment review.
In the period since acquisition, the properties held by BizSpace and the rent
roll of the UK segment have increased in value significantly. The Group has
considered these factors along with the value in use calculation in assessing
whether the goodwill is recoverable and has concluded that it is not. Whilst
the Group's longer term plans for the business and the potential synergies
with the broader Group are at an early stage, based on the impairment review
conducted the Group has concluded that there is not sufficient evidence to
support the goodwill balance over and above the cash flows already included in
the assessment of the fair value of investment properties and other assets
held by the Group. As a result, an impairment loss of €37,168,000 was
recognised for the year ended 31 March 2022. Goodwill which has been impaired
may not be reversed in future periods.
18. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets (excluding those
disclosed under investment properties) recognised and the movements during the
year:
Office Total
€000 €000
As at 31 March 2020 2,440 2,440
Additions - -
Depreciation expense (521) (521)
As at 31 March 2021 1,919 1,919
Additions 15,047 15,047
Depreciation expense (843) (843)
Lease modifications* (1,127) (1,127)
As at 31 March 2022 14,996 14,996
* Lease modifications relate to the early termination of the head
office lease.
In addition to office spaces the Group is also counterparty to long-term
leasehold agreements and head leases relating to commercial property. Right of
use assets amounting to €25,078,000 (2021: €15,025,000) are classified as
investment properties, of which €3,979,000 (2021: €9,355,000) relate to
commercial property.
Set out below are the carrying amounts of lease liabilities and the movements
during the year:
31 March 2022 31 March 2021
€000 €000
Balance as at the beginning of the year (14,987) (19,150)
Acquisition of a subsidiary (see note 4) (12,182) -
Accretion of interest (479) (349)
Additions (18,413) (1,518)
Lease modifications 1,127 -
Payments 6,350 6,030
Foreign exchange differences (77) -
Balance as at year end (38,661) (14,987)
Current lease liabilities as at year end (1,090) (5,857)
Non-current lease liabilities as at year end (37,571) (9,130)
The following table sets out the carrying amount, by maturity, of the Group's
lease liabilities:
31 March 2022 Within 1 year 1-5 years 5+ years Total
€000 €000 €000 €000
Commercial property* (667) (945) (528) (2,140)
Long-term leasehold* (239) (1,013) (19,848) (21,100)
Office space (184) (6,197) (9,040) (15,421)
Total (1,090) (8,155) (29,416) (38,661)
31 March 2021 Within 1 year 1-5 years 5+ years Total
€000 €000 €000 €000
Commercial property* (5,208) (1,364) (776) (7,348)
Long-term leasehold* (133) (560) (4,977) (5,670)
Office space (516) (1,453) - (1,969)
Total (5,857) (3,377) (5,753) (14,987)
* These lease liabilities relate to right of use assets recorded as
investment properties.
Maturity analysis of lease liabilities using contractual undiscounted payments
is disclosed in note 25.
The overall weighted average discount rate used for the year is 2.3% (2021:
1.9%).
During the year expenses paid for leases of low-value assets and short-term
leases which are recognised straight line over the lease term (included in the
administrative expenses) amounted to €494,000 (2021: €379,000).
In addition to leases of low-value assets and payments resulting from
short-term leases that are included in the cash flow from operating
activities, interest payments and repayments of lease liabilities totalling
€6,350,000 (2021: €6,030,000) were incurred for the year and are included
in the cash flow from financing activities.
19. Other non-current financial assets
31 March 2022 31 March 2021
€000 €000
Guarantees and deposits 4,052 1,806
Loans to associates 44,278 43,154
Balance as at year end 48,330 44,960
Loans to associates relate to shareholder loans granted to associates by the
Group. The loans terminate on 31 December 2026, are fully subordinated and are
charged at a fixed interest rate. The ECL has been considered based on
multiple factors such as history of repayments, forward looking budgets and
forecasts. Based on the assessment the ECL was immaterial.
20. Investment in associates
The principal activity of the associates is the investment in, and development
of, commercial property located in Germany and to provide conventional and
flexible workspace. Since the associates are individually immaterial the Group
is disclosing aggregated information of the associates.
The following table illustrates the summarised financial information of the
Group's investment in associates:
31 March 2022 31 March 2021
€000 €000
Current assets 20,031 31,183
Non-current assets 349,796 244,289
Current liabilities (10,406) (10,224)
Non-current liabilities (294,121) (221,756)
Equity 65,300 43,492
Unrecognised accumulated losses 3,679 5,657
Subtotal 68,979 49,149
Group's share in equity - 35% 24,142 17,202
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Net operating income 19,872 14,063
Gain on revaluation of investment properties 18,856 12,693
Administrative expense (3,001) (1,976)
Operating profit 35,727 24,780
Net finance costs (9,753) (9,078)
Profit before tax 25,974 15,702
Taxation (4,166) (2,590)
Unrecognised (profit)/losses (1,978) 1,109
Total comprehensive income for the year after tax 19,830 14,221
Group's share of profit for the year - 35% 6,940 4,977
Included within the non-current liabilities are shareholder loans amounting to
€126,509,000 (2021: €123,296,000). As at year end no contingent
liabilities existed (2021: none). The associates had contracted capital
expenditure for development and enhancements of €2,010,000 as at year end
(2021: €296,000).
The following table illustrates the movement in investment in associates:
31 March 2022 31 March 2021
€000 €000
Balance as at the beginning of the year 17,202 12,306
Dividend received - (81)
Share of profit 6,940 4,977
Balance as at year end 24,142 17,202
21. Trade and other receivables
31 March 2022 31 March 2021
€000 €000
Gross trade receivables 18,791 11,758
Expected credit loss provision (refer to note 25) (7,722) (5,431)
Net trade receivables 11,069 6,327
Other receivables 8,865 11,334
Prepayments 4,637 1,070
Balance as at year end 24,571 18,731
Other receivables include lease incentives of €4,036,000 (2021:
€3,603,000).
Prepayments include costs totalling €1,860,000 (31 March 2021: €nil)
relating to the acquisition of a new site in Düsseldorf that was notarised
before 31 March 2022 and is expected to complete in the first half of the next
financial year (see note 31).
22. Cash and cash equivalents
31 March 2022 31 March 2021
€000 €000
Cash at bank 127,285 49,305
Restricted cash 23,681 16,369
Balance as at year end 150,966 65,674
Cash at bank earns interest at floating rates based on daily bank deposit
rates. The fair value of cash as at year end is €150,966,000 (2021:
€65,674,000). Cash is held by reputable banks and the Group assessed the ECL
to be immaterial.
The following table illustrates the breakdown of cash held in restricted
accounts:
31 March 2022 31 March 2021
€000 €000
Deposits received from tenants 22,210 12,736
Office rent deposits 131 131
Cash reserved for future bank loan interest and amortisation payments of the - 2,192
Group's banking facilities
Deposit for bank guarantees 1,340 1,310
Total 23,681 16,369
The majority of the restricted cash is in relation to tenant deposits.
Tenants' deposits are legal securities of tenants retained by the Group
without the right to use these cash deposits for purposes other than strictly
tenant related transactions (e.g. move-out costs, costs due to non-compliance
with certain terms of the lease agreement or late rent/service charge
payments).
23. Trade and other payables
31 March 2022 31 March 2021
€000 €000
Trade payables 6,488 7,107
Accrued expenses 25,093 19,034
Interest and amortisation payable 5,625 489
Tenant deposits 22,210 12,736
Unearned revenue 7,913 4,642
Other payables 22,006 6,519
Balance as at year end 89,335 50,527
Accrued expenses include costs totalling €10,279,000 (2021: €9,465,000)
relating to service charge costs that have not been invoiced to the Group.
Included within other payables are mainly credit balances due to tenants in
relation to over collections of service charge in amount of €2,624,000
(2021: €3,830,000). As at 31 March 2022, other payables included
€13,750,000 of proceeds relating to the sale of the Magdeburg asset that is
categorised as an asset held for sale at 31 March 2022 in advance of the
completion date of 1 April 2022. See note 15 for details of assets held for
sale.
Unearned revenue includes service charge amounts of €1,164,000 (2021:
€1,068,000). Service charge income is only recognised as income when the
performance obligations are met. All unearned revenue of the prior year was
recognised as revenue in the current year.
24. Interest-bearing loans and borrowings
Interest rate Loan maturity date 31 March 2022 31 March 2021
% €000 €000
Current
SEB AG
- fixed rate facility 1.84 1 September 2022 - 1,180
- hedged floating rate facility Hedged (4) 30 October 2024 - 459
- capped floating rate facility Capped (3) 25 March 2025 - 760
Berlin Hyp AG/Deutsche Pfandbriefbank AG
- fixed rate facility 1.66 27 April 2023 - 2,968
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 1,909 1,881
- fixed rate facility 0.90 31 October 2023 1,480 1,467
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 771 760
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged (1) 31 December 2023 1,111 1,110
- floating rate facility Floating (2) 31 December 2023 140 140
Schuldschein
- floating rate facility Floating (2) 5 December 2022 5,000 -
- floating rate facility Floating (2) 6 January 2023 10,000 -
Capitalised finance charges on all loans (781) (1,611)
19,630 9,114
Non-current
SEB AG
- fixed rate facility 1.84 1 September 2022 - 51,330
- hedged floating rate facility Hedged (4) 30 October 2024 - 21,325
- floating rate facility Floating (4) 30 October 2024 - 2,000
- capped floating rate facility Capped (3) 25 March 2025 - 34,960
Berlin Hyp AG/Deutsche Pfandbriefbank AG
- fixed rate facility 1.66 27 April 2023 - 56,135
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 58,228 60,137
- fixed rate facility 0.90 31 October 2023 110,363 111,843
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 14,258 15,030
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged (1) 31 December 2023 51,056 52,166
- floating rate facility Floating (1) 31 December 2023 6,241 6,381
Schuldschein
- floating rate facility Floating (2) 5 December 2022 - 5,000
- floating rate facility Floating (2) 6 January 2023 - 10,000
- floating rate facility Floating (2) 6 January 2025 5,000 5,000
- fixed rate facility 1.70 3 March 2025 10,000 10,000
- fixed rate facility 1.60 3 July 2023 20,000 20,000
Corporate bond I
- fixed rate 1.125 22 June 2026 400,000 -
Corporate bond II
- fixed rate 1.75 24 November 2028 300,000 -
Capitalised finance charges on all loans (13,283) (2,367)
961,863 458,940
Total 981,493 468,054
(1) Tranche 1 of this facility is fully hedged with a swap charged at a
rate of 1.40%; tranche 2 of this facility is fully hedged with a swap charged
at a rate of 1.25%; and €19.1 million of tranche 3 of this facility is fully
hedged with a swap charged at a rate of 0.91%. A €6.5 million extension and
the tranche 3 related €0.5 million arrangement fee are charged with a
floating rate of 1.20% over three-month EURIBOR (not less than 0%).
(2) This unsecured facility has a floating rate of 1.50% over six month
EURIBOR (not less than 0%) for the first two tranches and a floating rate of
1.70% over six month EURIBOR (not less than 0%) for tranche 3.
(3) This facility was hedged with a cap rate at 0.75% and charged with a
floating rate of 1.58% over six month EURIBOR (not less than 0%) for the full
term of the loan.
(4) Tranche 1 of this facility was fully hedged with a swap charged at a
rate of 2.58%; tranche 2 of this facility was fully hedged with a swap charged
at a rate of 2.56%. The capex facility was charged with a floating rate of
1.88% over six month EURIBOR (not less than 0%) for the full term of the loan.
The borrowings (excluding capitalised loan issue cost) are repayable as
follows:
31 March 2022 31 March 2021
€000 €000
On demand or within one year 20,411 10,724
In the second year 246,671 75,977
In the third to tenth years inclusive 728,475 385,331
Total 995,557 472,032
The Group has pledged 15 (2021: 42) investment properties to secure several
separate interest-bearing debt facilities granted to the Group. The 15 (2021:
42) properties had a combined valuation of €504,709,000 as at year end
(2021: €1,101,689,000).
SEB AG
On 2 September 2015, the Group agreed to a facility agreement with SEB AG for
€59.0 million to refinance two existing Macquarie loan facilities. The loan
was scheduled to terminate on 1 September 2022. Amortisation was charged at 2%
per annum with the remainder scheduled to be due in the seventh year. The loan
facility was charged at a fixed interest rate of 1.84%. This facility was
secured over eleven property assets that were previously financed through the
Macquarie loan facilities. The facility was subject to various covenants with
which the Group had complied. The facility was repaid in full during the year.
On 30 October 2017, the Group agreed to a second facility agreement with SEB
AG for €22.9 million. Tranche 1, totalling €20.0 million, was hedged at a
rate of 2.58% until 30 October 2024 by way of an interest rate swap. Tranche
2, totalling €2.9 million, was hedged at a rate of 2.56% until 30 October
2024 by way of an interest rate swap. The loan was scheduled to terminate on
30 October 2024. Amortisation was 2.0% per annum across the full facility with
the remainder scheduled to be due in one instalment on the final maturity
date. The facility was secured over three property assets and was subject to
various covenants with which the Group had complied. In addition, the Group
agreed a capex facility for €7.1 million until 30 October 2024. The capex
facility was not subject to amortisation and was charged with a floating
interest rate of 1.88% over six month EURIBOR (not less than 0%) for the full
term of the loan. The capex facility is no longer available following the
repayment of the SEB AG debt facilities during the year.
On 26 March 2018, the Group agreed to a third facility agreement with SEB AG
for €38.0 million. The loan was scheduled to terminate on 25 March 2025.
Amortisation was 2% per annum with the remainder scheduled to be due in one
instalment on the final maturity date. The loan facility was charged with a
floating rate of 1.58% over six month EURIBOR (not less than 0%) for the full
term of the loan. In accordance with the requirements of the loan facility the
Group hedged its exposure to floating interest rates by purchasing a cap in
June 2018 which limited the Group's interest rate exposure on the facility to
2.33%. The facility was secured over six property assets and was subject to
various covenants with which the Group had complied. In addition, the Group
agreed a capex facility for €8.0 million until 25 March 2025. The capex
facility was not subject to amortisation and was charged at an interest rate
of 1.58%. The capex facility was undrawn and is no longer available following
the repayment of the SEB AG debt facilities during the twelve month period
ended 31 March 2022.
Berlin Hyp AG/Deutsche Pfandbriefbank AG
On 31 March 2014, the Group agreed to a facility agreement with Berlin Hyp AG
and Deutsche Pfandbriefbank AG for €115.0 million. Amortisation was 2% p.a.
for the first two years, 2.5% for the third year and 3.0% thereafter, with the
remainder due in the fifth year. Half of the facility (€55.2 million) was
charged interest at 3% plus three months' EURIBOR and was capped at 4.5%, and
the other half (€55.2 million) was hedged at a rate of 4.265% until 31 March
2019. This facility was secured over nine property assets and was subject to
various covenants with which the Group has complied. On 28 April 2016, the
Group agreed to refinance this facility which had an outstanding balance of
€110.4 million at 31 March 2016. The new facility was split in two tranches
totalling €137.0 million and was scheduled to terminate on 27 April 2023.
Tranche 1, totalling €94.5 million, was charged at a fixed interest rate of
1.66% for the full term of the loan. Tranche 2, totalling €42.5 million, was
charged with a floating rate of 1.57% over three month EURIBOR (not less than
0%) for the full term of the loan. Amortisation was set at 2.5% across the
full facility with the remainder scheduled to be due in one instalment on the
final maturity date.
On 30 June 2017, the Group repaid a total of €5.8 million following the
disposal of the Düsseldorf asset. On 30 September 2017, the Group repaid
tranche 2 of the loan in full, amounting to €40.9 million, following the
disposal of the Munich Rupert Mayer Strasse asset.
On 1 August 2019, the Group repaid a total of €16.8 million including
€10.1 million recorded within liabilities directly associated with assets
held for sale as at 31 March 2019, following the disposal of two assets that
acted as security for the loan into the Titanium venture with AXA Investment
Managers - Real Assets.
The facility was repaid in full during the twelve month period ended 31 March
2022.
Berlin Hyp AG
On 20 October 2016, the Group concluded an agreement with Berlin Hyp AG to
refinance and extend a facility which had an outstanding balance of €39.2
million on 30 September 2016. The facility totals €70.0 million and was
scheduled to terminate on 29 October 2023. Amortisation was 2.5% per annum
with the remainder due at maturity. The facility was charged with an all-in
fixed interest rate of 1.48% for the full term of the loan. The facility was
secured over six property assets. The loan was subject to various covenants
with which the Group had complied. On 13 September 2019, the facility was
incorporated into the agreement as detailed below. As a result, the maturity
date of the loan was extended to 31 October 2023 with all other conditions
remaining unchanged.
On 13 September 2019, the Group agreed to a facility agreement with Berlin Hyp
AG for €115.4 million. The loan terminates on 31 October 2023. Amortisation
is 1.25% per annum with the remainder due in the fourth year. The loan
facility is charged at a fixed interest rate of 0.90%. This facility is
secured over nine property assets. The facility is subject to various
covenants with which the Group has complied. No changes to the terms of the
facility have occurred during the twelve month period ended 31 March 2022.
Saarbrücken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with Saarbrücken
Sparkasse for €18.0 million. The loan terminates on 28 February 2025.
Amortisation is 4.0% per annum with the remainder due in one instalment on the
final maturity date. The facility is charged with an all-in fixed interest
rate of 1.53% for the full term of the loan. The facility is secured over one
property asset and is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred during the
twelve month period ended 31 March 2022.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement with Deutsche
Pfandbriefbank AG for €56.0 million. Tranche 1, totalling €21.6 million,
has been hedged at a rate of 1.40% until 31 December 2023 by way of an
interest rate swap. A first drawdown of tranche 3 totalling €0.5 million was
charged at a fixed interest rate of 1.20%. On 3 April 2019, tranche 2 was
drawn down, totalling €14.8 million, and has been hedged at a rate of 1.25%
until 31 December 2023 by way of an interest rate swap. On 28 June 2019,
tranche 3 has been drawn down, totalling €19.1 million. Tranche 3 has been
hedged at a rate of 0.91% until 31 December 2023 by way of an interest rate
swap. The facility is secured over five property assets and is subject to
various covenants with which the Group has complied.
On 19 February 2020, the Group agreed to extend tranche 3 of its existing
facility by €6.5 million. The loan is coterminous with the existing facility
maturing in December 2023. The loan has been treated as a new loan and is
charged with a floating interest rate of 1.20% plus three month EURIBOR (not
less than 0%). Amortisation is 2% per annum with the remainder due in one
instalment on the final maturity date. No changes to the terms of the facility
have occurred during the twelve month period ended 31 March 2022.
Schuldschein
On 2 December 2019, the Group agreed to new loan facilities in the form of
unsecured Schuldschein for €20.0 million. On 25 February 2020, the Group
agreed new loan facilities in the form of unsecured Schuldschein for €30.0
million. In total the unsecured facility amounts to €50.0 million spread
over five tranches and is charged at a blended interest rate of 1.60% and
average maturity of 2.6 years with no amortisation. The Schuldschein is
subject to various covenants with which the Group has complied. No changes to
the terms of the facility have occurred during the twelve month period ended
31 March 2022.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond for €400.0
million. The bond has a term of five years and an interest rate of 1.125% due
annually on its anniversary date, with the principal balance coming due on 22
June 2026. The funds from the bond have been partially utilised to repay the
SEB AG and Berlin Hyp AG/Deutsche Pfandbriefbank AG loans and fund
acquisitions. The corporate bond is subject to various covenants with which
the Group has complied. No changes to the terms of the facility have occurred
since the date of issuance.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond for €300.0
million. The bond has a term of seven years and an interest rate of 1.750% due
annually on its anniversary date, with the principal balance coming due on 24
November 2028. The funds from the bond have been utilised to fund the BizSpace
Group acquisition and fund repayment of external loans held by BizSpace Group
amounting to €214.5 million at acquisition date. The corporate bond is
subject to various covenants with which the Group has complied. No changes to
the terms of the facility have occurred since the date of issuance.
HSBC revolving credit facility
On 4 November 2021 the Company agreed a €75.0 million bi-lateral revolving
credit facility with HSBC Trinkaus & Burkhardt. The loan facility is
charged with a variable interest rate tied to the Company's Fitch credit
rating as follows: (a) BBB+ (1.2%), (b) BBB (1.2%) and (c) BBB- or lower
(1.5%) with a 0% EURIBOR floor. In addition, the facility's loan covenants are
consistent with the corporate bond covenants. The loan facility is comprised
of a (i) €25.0 million bilateral credit facility which has a two year term
and which may be extended twice for an additional year per extension and (ii)
a €50 million bilateral top-up credit facility which is repayable in full
six months after draw down. The Company €50 million top-up credit facility
was drawn down and subsequently repaid in full during the period.
Group debt covenants
A summary of the Group's debt covenants is set out below:
31 March 2022 31 March 2021
€000 €000
Carrying amount of interest-bearing loans and borrowings (note 24) 981,493 468,054
Unamortised borrowing costs 14,064 3,978
Book value of owned investment properties* 2,088,665 1,347,167
Gross loan to value ratio 47.7% 35.0%
* Includes assets held for sale.
Banking covenants vary according to each loan agreement and typically include
loan to value and income related covenants.
During the year, the Group did not breach any of its loan covenants, nor did
it default on any of its obligations under its loan agreements.
Reconciliation of movements of liabilities arising from financing activities:
31 March Cash flows New leases Acquisition Changes in Other * 31 March
2021 €000 €000 of a subsidiary fair values €000 2022
€000 €000 €000 €000
Interest-bearing loans and borrowings 468,054 523,524 - - - (10,085) 981,493
Lease liabilities 14,987 (6,350) 18,413 12,182 (571) 38,661
Derivative financial instruments 1,211 (544) (996) (329)
Total 484,252 516,630 18,413 12,182 (996) (10,656) 1,019,825
31 March Cash flows New leases Non-cash Changes in Other * 31 March
2020 €000 €000 settlement fair values €000 2021
€000 €000 €000 €000
Interest-bearing loans and borrowings 480,228 (13,887) - - - 1,713 468,054
Lease liabilities 19,150 (5,681) 1,518 - - - 14,987
Derivative financial instruments 1,368 - - - (157) - 1,211
Total 500,746 (19,568) 1,518 - (157) 1,713 484,252
* Changes in the capitalised finance charges on all loans, foreign
exchange differences and accretion of interest on lease liabilities.
25. Financial risk management objectives and policies
The Group's principal financial liabilities comprise bank loans, derivative
financial instruments and trade payables. The main purpose of these financial
instruments is to raise finance for the Group's operations. The Group has
various financial assets, such as trade receivables and cash, which arise
directly from its operations.
The main risks arising from the Group's financial instruments are credit risk,
liquidity risk, market risk, currency risk and interest rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the reporting date. The credit risk on liquid funds is
limited because the counterparties are banks with high credit ratings assigned
by international credit rating agencies. The risk management policies employed
by the Group to manage these risks are discussed below.
In the event of a default by an occupational tenant, the Group will suffer a
rental shortfall and incur additional costs, including expenses incurred to
try and recover the defaulted amounts and legal expenses in maintaining,
insuring and marketing the property until it is re-let. During the year, the
Group monitored the tenants in order to anticipate and minimise the impact of
defaults by occupational tenants, as well as to ensure that the Group has a
diversified tenant base. The credit risk on tenants is also addressed through
the performance of credit checks, collection of deposits and regular
communication with the tenants.
Included in loans to associates are loans provided to associate entities from
Group entities. During the year the Group assessed credit risk relating to
loans to associates by reviewing business plans and monitoring cash collection
rates and the operational performance of each associate in order to anticipate
and minimise the impact of any impairment.
Included in other receivables are lease incentives. During the year the Group
monitored tenants in order to anticipate and minimise the impact of defaults
and move-outs from tenants which received lease incentives.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was:
31 March 2022 31 March 2021
€000 €000
Trade receivables 11,069 6,327
Other receivables 8,764 9,537
Loans to associates 44,278 43,154
Derivative financial instruments 329 70
Cash and cash equivalents 150,966 65,674
Total 215,406 124,762
Included in other receivables are guarantees and deposits in amount of
€4,052,000 (2021: €1,806,000).
The ageing of trade receivables at the statement of financial position date
was:
Year ended Year ended
31 March 2022 31 March 2021
Gross Impairment Gross Impairment
€000 €000 €000 €000
0-30 days 12,117 (2,704) 6,287 (1,936)
31-120 days (past due) 1,296 (406) 1,206 (585)
More than 120 days 5,378 (4,612) 4,265 (2,910)
Total 18,791 (7,722) 11,758 (5,431)
The movement in the allowance for impairment in respect of trade receivables
during the year was as follows:
31 March 2022 31 March 2021
€000 €000
Balance as at the beginning of the year (5,431) (3,640)
Expected credit loss recognised (2,291) (1,791)
Balance as at year end (7,722) (5,431)
The allowance account for trade receivables is used to record impairment
losses unless the Group believes that no recovery of the amount owing is
possible; at that point the amounts considered irrecoverable are written off
against the trade receivables directly.
Most trade receivables are generally due one month in advance. The exception
is service charge balancing billing, which is due ten days after it has been
invoiced. Included in the Group's trade receivables are debtors with carrying
amounts of €11,069,000 (2021: €6,327,000) that are past due at the
reporting date for which the Group has not provided significant impairment as
there has not been a significant change in credit quality and the amounts are
still considered recoverable.
No significant impairment has been recognised relating to non-current
receivables in the period due to unchanged credit quality and the amounts are
still considered recoverable.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. An unmatched position potentially enhances
profitability but can also increase the risk of losses. The Group has
procedures with the objective of minimising such losses, such as maintaining
sufficient cash and other highly liquid current assets and having available an
adequate amount of committed credit facilities. The Group prepares cash flow
forecasts and continually monitors its ongoing commitments compared to
available cash. Cash and cash equivalents are placed with financial
institutions on a short-term basis which allows immediate access. This
reflects the Group's desire to maintain a high level of liquidity in order to
meet any unexpected liabilities that may arise due to the current financial
position. Similarly, accounts receivable are due either in advance (e.g. rents
and recharges) or within ten days (e.g. service charge reconciliations),
further bolstering the Group's management of liquidity risk.
The table below summarises the maturity profile of the Group's financial
liabilities, based on contractual undiscounted payments:
31 March 2022 Bank Derivative Trade Lease Total
loans financial and other liabilities €000
€000 instruments payables €000
€000 €000
Undiscounted amounts payable in:
6 months or less (9,520) (119) (56,329) (1,311) (67,279)
6 months-1 year (24,486) (118) - (789) (25,393)
1-2 years (258,758) (232) - (2,910) (261,900)
2-5 years (454,658) (58) - (9,001) (463,717)
5-10+ years (308,688) - - (92,307) (400,995)
(1,056,110) (527) (56,329) (106,318) (1,219,284)
Interest 60,553 527 - 67,657 128,737
(995,557) - (56,329) (38,661) (1,090,547)
31 March 2021 Bank Derivative Trade Lease Total
loans financial and other liabilities €000
€000 instruments payables €000
€000 €000
Undiscounted amounts payable in:
6 months or less (8,755) (220) (26,851) (3,047) (38,873)
6 months-1 year (8,588) (216) - (3,048) (11,852)
1-2 years (81,895) (426) - (1,492) (83,813)
2-5 years (389,971) (435) - (2,428) (392,834)
5-10+ years - - - (7,223) (7,223)
(489,209) (1,297) (26,851) (17,238) (534,595)
Interest 17,177 1,297 - 2,251 20,725
(472,032) - (26,851) (14,987) (513,870)
Currency risk
The Group's exposure to currency risk relates primarily to the Group's
exposure to the British pound and to a lesser extent the South African rand.
This exposure is driven primarily by the acquisition of the BizSpace Group as
detailed in Note 4. In addition thereto, the Group has dividend obligations in
both the British Pound and South African rand. The foreign currency risk in
relation to the British pound is mitigated as a result of the BizSpace Group
generating British pound denominated income in order to fund its obligations
when they come due and, in addition, the Group's British pound dividend
obligations. The Group holds small deposits in South African rand for the
purposes of working capital and dividend obligations.
Interest rate risk
The Group's exposure to interest rate risk relates primarily to the Group's
long-term floating rate debt obligations. The Group's policy is to mitigate
interest rate risk by ensuring that a minimum of 80% of its total borrowing is
at fixed or capped interest rates by taking out fixed rate loans or derivative
financial instruments to hedge interest rate exposure, or interest rate caps.
A change in interest will only have an impact on loans fixed by a swap. An
increase of 100 bps in interest rate would result in a decreased post tax
profit in the consolidated income statement of €275,000 (2021: €562,000)
(excluding the movement on derivative financial instruments) and a decrease of
100 bps in interest rate would result in an increased post tax profit in the
consolidated income statement of €275,000 (2021: €562,000) (excluding the
movement on derivative financial instruments).
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments that are exposed to interest rate risk:
31 March 2022 Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
€000 €000 €000 €000 €000 €000
Deutsche Pfandbriefbank AG (140) (6,241) - - - (6,381)
Schuldschein (15,000) - (5,000) - - (20,000)
31 March 2021 Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
€000 €000 €000 €000 €000 €000
SEB AG - capped (760) (760) (760) (33,440) - (35,720)
SEB AG - floating - - - (2,000) - (2,000)
Deutsche Pfandbriefbank AG (140) (140) (6,241) - - (6,521)
Schuldschein - (15,000) - (5,000) - (20,000)
The other financial instruments of the Group that are not included in the
above tables are non-interest bearing or have fixed interest rates and are
therefore not subject to interest rate risk.
Market risk
The Group's activities are within the real estate market, exposing it to very
specific industry risks.
The yields available from investments in real estate depend primarily on the
amount of revenue earned and capital appreciation generated by the relevant
properties, as well as expenses incurred. If properties do not generate
sufficient revenues to meet operating expenses, including debt service and
capital expenditure, the Group's revenue will be adversely affected.
Revenues from properties may be adversely affected by: the general economic
climate; local conditions, such as an oversupply of properties, or a reduction
in demand for properties, in the market in which the Group operates; the
attractiveness of the properties to the tenants; the quality of the
management; competition from other available properties; and increased
operating costs.
In addition, the Group's revenue would be adversely affected if a significant
number of tenants were unable to pay rent or its properties could not be
rented on favourable terms. Certain significant expenditures associated with
each equity investment in real estate (such as external financing costs, real
estate taxes and maintenance costs) are generally not reduced when
circumstances cause a reduction in revenue from properties. By diversifying in
product, risk categories and tenants, the Group expects to lower the risk
profile of the portfolio.
Capital management
For the purpose of the Group's capital management, capital includes all equity
reserves attributable to the equity holders of the parent. The Group seeks to
enhance shareholder value both by investing in the business so as to improve
the return on investment and by managing the capital structure. The Group
manages its capital structure and in doing so takes into consideration the
impact of changes in economic conditions. The Group assesses its capital
management through the total accounting shareholder return which was 20.0% as
at 31 March 2022 (31 March 2021: 19.5%) and the net loan to value which was
41.6% as at 31 March 2022 (31 March 2021: 31.4%).
To maintain or adjust the capital structure, the Group may undertake a number
of actions including but not limited to share issuances and changes to its
distribution policy to shareholders. The transfer of amounts recorded in share
capital to other distributable reserves is made in accordance with The
Companies (Guernsey) Law, 2008. The Group's distribution policy takes into
account the concept of solvency under The Companies (Guernsey) Law, 2008. The
Group is not subject to externally imposed capital requirements other than
those related to the covenants of the bank loan facilities. There have been no
breaches of the financial covenants of any interest-bearing loans and
borrowings in the current period.
26. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values
of all of the Group's financial instruments that are carried in the financial
statements (excluding assets held for sale and liabilities directly associated
with assets held for sale):
31 March 2022 31 March 2021
Fair value Carrying Fair Carrying Fair
hierarchy level amount value amount value
€000 €000 €000 €000
Financial assets
Cash and cash equivalents 150,966 150,966 65,674 65,674
Trade and other receivables 19,833 19,833 15,864 15,864
Loans to associates 2 44,278 44,278 43,154 43,154
Derivative financial instruments 2 329 329 70 70
Financial liabilities
Trade and other payables 56,329 56,329 26,851 26,851
Derivative financial instruments 2 - - 1,211 1,211
Interest-bearing loans and borrowings(1)
Floating rate borrowings 2 26,381 26,381 28,521 28,521
Floating rate borrowings - hedged(2) 2 52,167 52,167 75,060 75,060
Floating rate borrowings - capped 2 - - 35,720 35,720
Fixed rate borrowings 2 917,009 939,238 332,731 336,216
All amounts in the table above are carried at amortised cost except for
derivative financial instruments which are held at fair value.
(1) Excludes loan issue costs.
(2) The Group holds interest rate swap contracts designed to manage the
interest rate and liquidity risks of expected cash flows of its borrowings
with the variable rate facilities with Deutsche Pfandbriefbank AG. Please
refer to note 24 for details of swap contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost and whose
carrying value is a reasonable approximation to fair value there is no
requirement to analyse their value in the fair value hierarchy.
The below analyses financial instruments measured at fair value into a fair
value hierarchy based on the valuation technique used to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on a quarterly
basis. The fair value of interest rate swaps is based on broker quotes. Those
quotes are tested for reasonableness by discounting estimated future cash
flows based on the terms and maturity of each contract and using market
interest rates for a similar instrument at the measurement date. The average
interest rate is based on the outstanding balances at the end of the reporting
period. The interest rate swap is measured at fair value with changes
recognised in profit or loss.
The fair values of the loans and borrowings have been calculated based on a
discounted cash flow model using the prevailing market rates of interest.
27. Issued share capital
Authorised Number Share
of shares capital
€
Ordinary shares of no par value Unlimited -
As at 31 March 2022 and 31 March 2021 Unlimited -
Issued and fully paid Number Share
of shares capital
€
As at 31 March 2020 1,036,257,101 -
Issued ordinary shares 14,447,046 13,169,000
Transfer of share capital to other distributable reserves - (13,169,000)
Shares issued to Employee Benefit Trust (1,883,980) -
Shares allocated by the Employee Benefit Trust 312,092 -
As at 31 March 2021 1,049,132,259 -
Issued ordinary shares 119,344,125 167,380,000
Transfer of share capital to other distributable reserves - (167,380,000)
Shares issued to Employee Benefit Trust (3,557,745) -
Shares allocated by the Employee Benefit Trust 1,962,045 -
As at 31 March 2022 1,166,880,684 -
Holders of the ordinary shares are entitled to receive dividends and other
distributions and to attend and vote at any general meeting. Shares held in
treasury are not entitled to receive dividends or to vote at general meetings.
Pursuant to a scrip dividend offering on 14 June 2021, the Company issued
8,101,162 ordinary shares at an issue price of £1.00432 resulting in the
Company's overall issued share capital being 1,064,184,239 ordinary shares.
Pursuant to an equity raise of €159.9 million on 12 November 2021, the
Company issued 105,281,686 ordinary shares at an issue price of £1.30,
resulting in the Company's overall issued share capital being 1,169,465,925
ordinary shares. Costs associated with the equity raise amounted to
€6,219,000.
Pursuant to a scrip dividend offering on 29 November 2021, the Company issued
2,695,067 ordinary shares at an issue price of £1.37726 resulting in the
Company's overall issued share capital being 1,172,160,992 ordinary shares.
In addition, during the year the Company issued 3,266,210 shares in relation
to the exercise of the LTIP 2019 (January 2019 grant) as per note 9.
Treasury shares held by the Employee Benefit Trust are disclosed as own shares
held. During the year 3,557,745 shares were acquired and 1,962,045 were
allocated by the Employee Benefit Trust. A total of 5,280,308 own shares
purchased at an average share price of €1.1882 are held by the Employee
Benefit Trust (2021: 3,684,608 own shares purchased at an average share price
of €0.7878). The total number of shares with voting rights was 1,172,160,992
(2021: 1,052,816,867). No votes are cast in respect of the shares held in the
Employee Benefit Trust in connection with the Company's share plans and
dividends paid and payable are subject to a standing waiver.
All shares issued in the year were issued under general authority. No shares
were bought back in the year (2021: none) and there are no Treasury Shares
held directly by the parent company at the year end (2021: none).
28. Other reserves
Other distributable reserve
The other distributable reserve was created for the payment of dividends and
the transfer of share capital in regard to scrip dividends, share-based
payment transactions and the buyback of shares and is €570,369,000 in total
at year end (2021: €449,051,000).
29. Dividends
On 1 June 2020, the Company announced a dividend of 1.80c per share, with a
record date of 10 July 2020 for UK and South African shareholders and payable
on 20 August 2020. On the record date, 1,038,369,821 shares were in issue with
none held in treasury and 1,038,369,821 (including shares held by the EBT)
were entitled to participate in the dividend. Holders of 335,705,489 shares
elected to receive the dividend in ordinary shares under the scrip dividend
alternative, representing a dividend of €6,043,000 (€5,830,000 as at
settlement date), while holders of 700,213,704 shares opted for a cash
dividend with a value of €12,603,000. The Company's Employee Benefit Trust
waived its rights to the dividend, reducing the cash payable to €12,595,000
(€12,595,000 as at settlement date). The total dividend was €18,646,000.
On 30 November 2020, the Company announced a dividend of 1.82c per share, with
a record date of 18 December 2020 for UK and South African shareholders and
payable on 21 January 2021. On the record date, 1,045,351,272 shares were in
issue. Since there were no shares held in treasury, 1,045,351,272 (including
shares held by the EBT) shares were entitled to participate in the dividend.
Holders of 403,075,659 shares elected to receive the dividend in ordinary
shares under the scrip dividend alternative, representing a dividend of
€7,336,000 (€7,339,000 as at settlement date) while holders of 638,591,005
shares opted for a cash dividend with a value of €11,622,000. The Company's
Employee Benefit Trust waived its rights to the dividend, reducing the cash
payable to €11,555,000 (€11,653,000 as at settlement date). The total
dividend was €18,958,000.
On 7 June 2021, the Company announced a dividend of 1.98c per share, with a
record date of 9 July 2021 for UK and South African shareholders and payable
on 19 August 2021. On the record date, 1,054,755,527 shares were in issue.
Since there were no shares held in treasury, 1,054,755,527 shares (including
shares held by the Employee Benefit Trust) were entitled to participate in the
dividend. Holders of 476,206,726 shares elected to receive the dividend in
ordinary shares under the scrip dividend alternative, representing a dividend
of €9,429,000 (€9,195,000 as at settlement date) while holders of
578,548,801 shares opted for a cash dividend with a value of €11,455,000.
The Company's Employee Benefit Trust waived its rights to the dividend,
reducing the cash payable to €11,388,000 (€11,381,000 as at settlement
date). The total dividend was €20,817,000 (€20,576,000 as at settlement
date).
On 8 November 2021, the Company announced a dividend of 2.04c per share, with
a record date of 17 December 2021 for UK and South African shareholders and
payable on 20 January 2022. On the record date, 1,169,465,925 shares were in
issue. Since there were no shares held in treasury, 1,169,465,925 shares
(including shares held by the Employee Benefit Trust) were entitled to
participate in the dividend. Holders of 216,062,440 shares elected to receive
the dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of €4,408,000 (€4,478,000 as at settlement date)
while holders of 953,403,485 shares opted for a cash dividend with a value of
€19,449,000. The Company's Employee Benefit Trust waived its rights to the
dividend, reducing the cash payable to €19,373,000 (€19,434,000 as at
settlement date). The total dividend was €23,781,000 (€23,912,000 as at
settlement date).
The Group's profit attributable to the equity holders of the Company for the
year was €147.9 million (2021: €147.5 million). The Board has authorised a
dividend in respect of the second half of the financial year ended 31 March
2022 of 2.37c per share representing 65% of FFO, an increase of 19.7% on the
equivalent dividend last year, which represented 65% of FFO(1). The total
dividend for the year is 4.41c, an increase of 16.1% on the 3.80c total
dividend for the year ended 31 March 2021.
It is expected that, for the dividend authorised relating to the six month
period ended 31 March 2022, the ex-dividend date will be 6 July 2022 for
shareholders on the South African register and 7 July 2022 for shareholders on
the UK register. It is further expected that for shareholders on both
registers the record date will be 8 July 2022 and the dividend will be paid on
18 August 2022. A detailed dividend announcement was made on 20 June 2022,
including details of a scrip dividend alternative.
The dividend paid per the statement of changes in equity is the value of the
cash dividend.
(1) Adjusted profit before tax adjusted for foreign exchange effects,
depreciation and amortisation (excluding depreciation relating to IFRS 16),
amortisation of financing fees, adjustments in respect of IFRS 16 and current
tax receivable/incurred and current tax relating to disposals.
The dividend per share was calculated as follows:
Year ended Year ended
31 March 2022 31 March 2021
€m €m
Reported profit before tax 168.9 163.7
Adjustments for:
Gain on revaluation of investment properties (140.9) (99.6)
Deficit on revaluation expense relating to leased investment properties (5.6) (4.3)
Loss/(gain) of disposals of properties 0.6 (0.1)
Recoveries from prior disposals of subsidiaries (0.1) (0.1)
Deduct revaluation gain on investment property from associates and related tax (4.8) (3.3)
Other adjusting items(1) 19.1 4.1
Goodwill impairment 40.9 -
Change in fair value of financial derivatives (1.0) (0.1)
Adjusted profit before tax 77.1 60.3
Adjustments for:
Foreign exchange effects(2) (1.9) -
Depreciation and amortisation (excluding depreciation relating to IFRS 16) 2.3 1.6
Amortisation of financing fees 2.6 1.7
Adjustment in respect of IFRS 16 0.6 (0.9)
Current taxes incurred (see note 11) (6.1) (1.9)
Add back current tax relating to disposals - 0.1
Funds from operations, year ended 31 March 74.6 60.9
Funds from operations, 6 months ended 30 September 33.0 29.1
Funds from operations, 6 months ended 31 March 41.6 31.8
Dividend pool, 6 months ended 30 September 21.6 19.0
Dividend pool, 6 months ended 31 March(3) 27.6 20.7
Dividend per share, 6 months ended 30 September 2.04c 1.82c
Dividend per share, 6 months ended 31 March 2.37c 1.98c
(1) Includes the effect of exceptional items, refinancing activity, share
awards and expected selling costs relating to assets held for sale. See note
12 for details.
(2) Management decided to exclude foreign exchange effects from the funds
from operations calculation (2021: €nil).
(3) Calculated as 65% of FFO of 3.64c per share (2021: 3.04c per share
using 65% of FFO) based on average number of shares outstanding of
1,141,807,790 (2021: 1,044,538,046).
For more information on adjusted profit before tax and funds from operations
refer to Annex 1.
Calculations contained in this table are subject to rounding differences.
30. Related parties
Fees paid to people considered to be key management personnel of the Group
during the year include:
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Directors' fees 530 437
Salary and employee benefits 4,294 3,531
Share-based payments 2,643 2,623
Total 7,467 6,591
The share-based payments relating to key management personnel for the year
include an expense of €2,643,000 (2021: €2,623,000) for the granting of
shares under the LTIP (see note 8). Included within salary and employee
benefits are pension contributions amounting to €180,000 (2021: €146,000).
Information on Directors' emoluments is given in the Remuneration report on
pages 91 to 112. Related parties are defined as those persons and companies
that control the Group, or that are controlled, jointly managed or subject to
significant influence by the Group.
The following balances and transactions with associates exist as at the
reporting date:
Consolidated statement of financial position 31 March 2022 31 March 2021
€000 €000
Loans to associates 44,278 43,154
Trade and other receivables 2,527 3,371
Total 46,805 46,525
Trade and other receivables relate to amounts owed from the services supplied
to the associates and are due to be settled in the normal course of business.
As a result of unchanged credit quality no material impairments have been
recognised in the year.
Consolidated income statement Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Services supplied 13,153 7,338
Interest income 2,891 2,674
Total 16,044 10,012
Services provided to related parties primarily relate to the provision of
property and asset management services. A performance fee arrangement is in
place between the associates and the Group. The performance fee was €nil
during the year (2021: €nil).
31. Capital and other commitments
As at year end, the Group had contracted capital expenditure for development
and enhancements on existing properties of €7,846,000 (2021: €8,666,000)
and capital commitments in relation to the notarised asset in Düsseldorf of
€35,300,000.
These were committed but not yet provided for in the financial statements.
32. Operating lease arrangements
Group as lessor
All properties leased by the Group are under operating leases and the future
minimum lease payments receivable under non-cancellable leases are as follows:
31 March 2022 31 March 2021
€000 €000
Less than 1 year 118,118 84,417
1-2 years 96,086 61,549
2-3 years 75,726 41,491
3-4 years 57,676 33,044
4-5 years 35,616 18,792
More than 5 years 68,566 35,211
Total 451,788 274,504
The Group leases out its investment properties under operating leases. Most
operating leases are for terms of one to ten years.
The Group consists of 122 subsidiary companies (2021: 94 subsidiary
companies). All subsidiaries are consolidated in full in accordance with IFRS.
The principal activity of the subsidiaries is the investment in, and
development of, commercial property to provide conventional and flexible
workspace in Germany and UK. The acquired subsidiaries in the UK have aligned
their reporting period to the Group's reporting period.
Company name Country Ownership at Ownership at
of incorporation 31 March 2022 31 March 2021
% %
BizSpace Acquisitions Ltd Jersey 100.00 n/a
BizSpace Developments Ltd UK 100.00 n/a
BizSpace Green Holdings Ltd UK 100.00 n/a
BizSpace Green Operations Ltd UK 100.00 n/a
BizSpace Holdings Ltd UK 100.00 n/a
BizSpace II Ltd UK 100.00 n/a
BizSpace Ltd UK 100.00 n/a
BizSpace Property 100 Ltd Jersey 100.00 n/a
BizSpace Property I Ltd UK 100.00 n/a
BizSpace Property SSP Ltd UK 100.00 n/a
Curris Facilities & Utilities Management GmbH Germany 100.00 100.00
DDS Aspen B.V. Netherlands 100.00 100.00
DDS Bagnut B.V. Netherlands 100.00 100.00
DDS Business Centres B.V. Netherlands 100.00 100.00
DDS Coconut B.V. Netherlands 100.00 100.00
DDS Conferencing & Catering GmbH Germany 100.00 100.00
DDS Elm B.V. Netherlands 100.00 100.00
DDS Fir B.V. Netherlands 100.00 100.00
DDS Hawthorn B.V. Netherlands 100.00 100.00
DDS Hazel B.V. Netherlands 100.00 100.00
DDS Hyacinth B.V. Netherlands 100.00 100.00
DDS Lark B.V. Netherlands 100.00 100.00
DDS Mulberry B.V. Netherlands 100.00 100.00
DDS Rose B.V. Netherlands 100.00 100.00
DDS Walnut B.V. Netherlands 100.00 100.00
DDS Yew B.V. Netherlands 100.00 100.00
Helix FinCo Ltd Jersey 100.00 n/a
Helix Investments Ltd* Jersey 100.00 n/a
Helix Property Ltd Jersey 100.00 n/a
LB² Catering and Services GmbH Germany 100.00 100.00
M25 Business Centres Ltd UK 100.00 n/a
Marba Apple B.V. Netherlands 100.00 100.00
Marba Bamboo B.V. Netherlands 100.00 100.00
Marba Cherry B.V. Netherlands 100.00 100.00
Marba Daffodil B.V. Netherlands 100.00 100.00
Marba Holland B.V.* Netherlands 100.00 100.00
Marba Lavender B.V. Netherlands 100.00 100.00
Marba Mango B.V. Netherlands 100.00 100.00
Marba Olive B.V. Netherlands 100.00 100.00
Marba Sunflower B.V. Netherlands 100.00 100.00
Marba Violin B.V. Netherlands 100.00 100.00
Marba Willstätt B.V. Netherlands 100.00 100.00
SFG NOVA Construction and Services GmbH Germany 100.00 100.00
Sirius Alder B.V. Netherlands 100.00 100.00
Sirius Aloe GmbH & Co. KG Germany 100.00 100.00
Sirius Ash B.V. Netherlands 100.00 100.00
Sirius Aster GmbH & Co. KG Germany 100.00 100.00
Sirius Beech B.V. Netherlands 100.00 100.00
Sirius Birch GmbH & Co. KG Germany 100.00 100.00
Sirius Coöperatief B.A.* Netherlands 100.00 100.00
Sirius Dahlia GmbH & Co. KG Germany 100.00 100.00
Sirius Facilities (UK) Ltd* UK 100.00 100.00
Sirius Facilities GmbH Germany 100.00 100.00
Sirius Finance (Cyprus) Ltd.* Cyprus 100.00 100.00
Sirius Four B.V. Netherlands 100.00 100.00
Sirius Frankfurt Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Frankfurt Zweite GmbH & Co. KG Germany 100.00 n/a
Sirius Gum B.V. Netherlands 100.00 100.00
Sirius Ivy B.V. Netherlands 100.00 100.00
Sirius Jasmine GmbH & Co. KG Germany 100.00 n/a
Sirius Juniper B.V. Netherlands 100.00 100.00
Sirius Kale GmbH & Co. KG Germany 100.00 n/a
Sirius Krefeld Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Lily B.V. Netherlands 100.00 100.00
Sirius Lotus GmbH & Co. KG Germany 100.00 n/a
Sirius Management One GmbH Germany 100.00 100.00
Sirius Management Two GmbH Germany 100.00 100.00
Sirius Management Three GmbH Germany 100.00 100.00
Sirius Management Four GmbH Germany 100.00 100.00
Sirius Management Five GmbH Germany 100.00 100.00
Sirius Management Six GmbH Germany 100.00 100.00
Sirius Management Seven GmbH Germany 100.00 100.00
Sirius Management Eight GmbH Germany 100.00 100.00
Sirius Management Nine GmbH Germany 100.00 100.00
Sirius Management Ten GmbH Germany 100.00 100.00
Sirius Mannheim B.V. Netherlands 100.00 100.00
Sirius Narcissus GmbH & Co. KG Germany 100.00 n/a
Sirius Oak B.V. Netherlands 100.00 100.00
Sirius One B.V. Netherlands 100.00 100.00
Sirius Orange B.V. Netherlands 100.00 100.00
Sirius Palm B.V. Netherlands 100.00 n/a
Sirius Pear B.V. Netherlands 100.00 100.00
Sirius Pepper GmbH & Co. KG Germany 100.00 n/a
Sirius Pine B.V. Netherlands 100.00 100.00
Sirius Tamarack B.V. Netherlands 100.00 100.00
Sirius Three B.V. Netherlands 100.00 100.00
Sirius Thyme B.V. Netherlands 100.00 n/a
Sirius Tulip B.V. Netherlands 100.00 100.00
Sirius Two B.V. Netherlands 100.00 100.00
Sirius UK1 Ltd* UK 100.00 n/a
Sirius UK2 Ltd* UK 100.00 n/a
Sirius Willow B.V. Netherlands 100.00 100.00
Marba Bonn B.V. Netherlands 99.73 99.73
Marba Bremen B.V. Netherlands 99.73 99.73
Marba Brinkmann B.V. Netherlands 99.73 99.73
Marba Catalpa B.V. Netherlands 99.73 99.73
Marba Cedarwood B.V. Netherlands 99.73 99.73
Marba Chestnut B.V. Netherlands 99.73 99.73
Marba Dutch Holdings B.V. Netherlands 99.73 99.73
Marba Foxglove B.V. Netherlands 99.73 99.73
Marba HAG B.V. Netherlands 99.73 99.73
Marba Hornbeam B.V. Netherlands 99.73 99.73
Marba Königswinter B.V. Netherlands 99.73 99.73
Marba Maintal B.V. Netherlands 99.73 99.73
Marba Marigold B.V. Netherlands 99.73 99.73
Marba Merseburg B.V. Netherlands 99.73 99.73
Marba Mimosa B.V. Netherlands 99.73 99.73
Marba Regensburg B.V. Netherlands 99.73 99.73
Marba Saffron B.V. Netherlands 99.73 99.73
Marba Troisdorf B.V. Netherlands 99.73 99.73
Sirius Acerola GmbH & Co. KG Germany 99.73 99.73
Sirius Almond GmbH & Co. KG Germany 99.73 99.73
Sirius Bluebell GmbH & Co. KG Germany 99.73 99.73
Sirius Cypress GmbH & Co. KG Germany 99.73 99.73
Sirius Grape GmbH & Co. KG Germany 99.73 100.00
Sirius Hibiscus GmbH & Co. KG Germany 99.73 n/a
Sirius Indigo GmbH & Co. KG Germany 99.73 n/a
Sirius Mayflower GmbH & Co. KG Germany 99.73 n/a
Sirius Oyster GmbH & Co. KG Germany 99.73 n/a
Sirius Administration One GmbH & Co KG Germany 94.80 94.80
Sirius Administration Two GmbH & Co KG Germany 94.80 94.80
Verwaltungsgesellschaft Gewerbepark Bilderstöckchen GmbH Germany 94.15 94.15
* Subsidiary company directly held by the parent entity, Sirius Real
Estate Limited.
Investment in associates which are accounted for with the equity method:
Company name Country Ownership at Ownership at
of incorporation 31 March 2022 31 March 2021
% %
DDS Daisy B.V. Netherlands 35.00 35.00
DDS Edelweiss B.V. Netherlands 35.00 35.00
DDS Lime B.V. Netherlands 35.00 35.00
DDS Maple B.V. Netherlands 35.00 35.00
Sirius Boxwood B.V. Netherlands 35.00 35.00
Sirius Laburnum B.V. Netherlands 35.00 35.00
Sirius Orchid B.V. Netherlands 35.00 35.00
34. Post balance sheet events
The Group converted the UK business into a REIT with effect from 1 April 2022,
resulting in the BizSpace Group no longer being subject to UK corporation tax
on income from its property rental business, as well as on profits on
disposals of assets.
On 29 October 2021, the Company notarised for the disposal of an asset in
Magdeburg for a sale price of €13.8 million. The transaction completed on 1
April 2022.
On 1 May 2022, the Group completed the acquisition of an office building
adjacent to and integrated into its existing business park in Potsdam. Total
acquisition costs are expected to be €0.8 million. The property is 100%
vacant and has a gross lettable area of 239 sqm.
On 16 May 2022 the Group notarised the sale of an asset in Camberwell, London,
for £16.0 million (€18.9 million). The multi-tenanted business park, which
comprises approx. 34,700 sq ft (3,224 sqm) of industrial and office space, is
91% occupied. The sale is expected to complete in July 2022.
Business analysis (Unaudited Information)
Non-IFRS measures
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Total profit for the year attributable to the owners of the Company 147,873 147,451
Gain on revaluation of investment properties (140,884) (99,585)
Loss on disposal of properties (net of related tax) 623 33
Recoveries from prior disposals of subsidiaries (net of related tax) (94) (65)
Add finance restructuring costs 7,821 -
Goodwill impairment 40,906 -
Acquisition costs in relation to business combinations 5,299 -
Change in fair value of derivative financial instruments (996) (136)
Deferred tax in respect of EPRA earnings adjustments 14,827 14,180
NCI in respect of the above 85 82
Deduct revaluation surplus relating to investment in associates (6,021) (4,199)
Tax in relation to the above 1,256 872
EPRA earnings 70,695 58,633
(Deduct)/add change in deferred tax relating to derivative financial (203) 79
instruments
Add change in fair value of derivative financial instruments 996 136
Deduct finance restructuring costs (7,821) -
Deduct acquisition costs in relation to business combinations (5,299) -
NCI in respect of the above - -
Headline earnings after tax 58,368 58,848
Deduct change in fair value of derivative financial instruments (net of (793) (215)
related tax)
Deduct revaluation expense relating to leased investment properties (5,572) (4,325)
Add adjusting items(1) (net of related tax) 19,122 4,092
Adjusted earnings after tax 71,125 58,400
(1) See note 12 to the financial statements.
For more information on EPRA earnings refer to Annex 1.
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
EPRA earnings 70,695 58,633
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
EPRA earnings per share (cents) 6.44 5.63
Headline earnings after tax 58,368 58,848
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
Headline earnings per share (cents) 5.32 5.65
Adjusted earnings after tax 71,125 58,400
Weighted average number of ordinary shares 1,097,082,162 1,040,956,722
Adjusted earnings per share (cents) 6.48 5.61
Geographical property analysis - owned investment properties
Germany
March 2022 No. of owned Total sqm Occupancy Rate psqm Annualised % of Value Gross Net WALE WALE
properties 000 € rent roll portfolio by €m (2) yield yield rent sqm
€m annualised
rent roll
Frankfurt 16 371 88.5% 6.72 26.5 23% 361.5 7.3% 6.7% 2.6 2.6
Berlin 4 103 97.6% 7.82 9.5 8% 162.4 5.8% 5.7% 2.4 2.4
Stuttgart 9 331 87.3% 4.91 17.0 15% 241.2 7.1% 6.3% 3.5 3.8
Cologne 7 129 87.5% 8.01 10.8 10% 155.4 7.0% 6.5% 3.0 2.9
Munich 3 124 83.6% 8.17 10.2 9% 197.8 5.1% 5.0% 2.2 2.5
Düsseldorf 15 352 78.1% 5.59 18.4 16% 248.9 7.4% 6.2% 3.0 3.3
Hamburg 4 91 82.1% 5.13 4.6 4% 61.8 7.5% 6.4% 2.3 2.2
Other 11 284 76.9% 6.37 16.7 15% 207.9 8.0% 7.0% 3.3 3.2
Total Germany 69 1,785 84.2% 6.31 113.7 100% 1,636.9 6.9% 6.2% 2.9 3.0
UK
March 2022 No. of owned Total sqm Occupancy Rate psqm Annualised % of Value Net WALE WALE
properties 000 € (1) rent roll portfolio by €m (2) yield rent sqm
€m (1) annualised
rent roll
Midlands 11 63 88.7% 11.81 7.8 15% 63.6 9.1% 0.6 1.3
North 12 77 93.7% 8.14 7.1 13% 67.1 8.0% 1.1 1.4
North East 9 59 90.4% 6.11 3.9 7% 35.5 6.4% 0.9 1.1
North West 12 85 92.2% 10.16 9.5 18% 77.5 9.2% 0.9 1.6
South 11 39 90.2% 27.24 11.5 22% 101.5 8.3% 0.9 1.8
South East 8 32 66.4% 19.37 5.0 9% 46.4 6.5% 0.8 1.6
South West 9 48 87.6% 16.39 8.5 16% 60.2 6.7% 1.1 1.7
Total UK 72 403 88.9% 12.39 53.3 100% 451.8 8.0% 0.8 1.3
(1) The Group's UK business charge licence customers an all inclusive
rate, which includes an implicit element of service charge.
(2) Book value of owned investment properties including assets held for
sale.
Usage analysis
Germany
Usage Total % of total Occupied % of occupied Annualised % of Vacant Rate psqm
sqm sqm sqm sqm rent roll annualised sqm €
€m rent roll
Office 601,332 33.7% 478,571 31.8% 44.5 39.2% 122,761 7.76
Storage 578,521 32.4% 482,271 32.1% 26.4 23.2% 96,250 4.57
Production 372,855 20.9% 353,131 23.5% 20.0 17.6% 19,724 4.72
Smartspace 101,915 5.7% 75,461 5.0% 7.9 6.9% 26,454 8.71
Other(1) 130,653 7.3% 113,663 7.6% 14.9 13.1% 16,990 10.90
Total Germany 1,785,276 100.0% 1,503,097 100.0% 113.7 100.0% 282,179 6.31
UK
Usage Total % of total Occupied % of occupied Annualised % of annualised Vacant Rate psqm
sqm sqm sqm sqm rent roll rent roll sqm € (3)
€m (3)
Office 132,545 32.9% 104,470 29.1% 31.5 59.1% 28,075 25.17
Workshop 261,090 64.7% 246,216 68.7% 20.3 38.0% 14,874 6.85
Storage 2,082 0.5% 1,481 0.4% 0.3 0.6% 601 16.82
Other(2) 7,753 1.9% 6,418 1.8% 1.2 2.3% 1,335 15.86
Total UK 403,470 100.0% 358,585 100.0% 53.3 100.0% 44,885 12.39
(1) Other includes: catering, other usage, residential and technical
space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering
and residential.
(3) The Group's UK business charge licence customers an all inclusive
rate, which includes an implicit element of service charge.
Lease expiry profile of future minimum lease payments receivable under
non-cancellable leases
Germany by income
Office Production Storage Smartspace Other (1) Adjustments Total
€000 €000 €000 €000 €000 in relation to €000
lease incentives
€000
Less than 1 year 39,894 19,207 23,930 3,654 12,631 (1,057) 98,259
Between 1 and 5 years 97,553 55,687 60,588 2,364 32,465 (484) 248,173
More than 5 years 21,593 15,922 13,764 71 10,696 (5) 62,041
Total 159,040 90,816 98,282 6,089 55,792 (1,546) 408,473
Germany by sqm
Office Production Storage Smartspace Other (1) Total
€000 €000 €000 €000 €000 sqm
Less than 1 year 133,037 74,472 136,439 63,694 19,436 427,078
Between 1 and 5 years 280,668 213,157 281,559 11,518 70,914 857,816
More than 5 years 64,866 65,502 64,273 249 23,313 218,203
Total 478,571 353,131 482,271 75,461 113,663 1,503,097
(1) Other includes: catering, other usage, residential and technical
space, land and car parking.
UK by income
Office Workshop Storage Other (2) Adjustments Total
€000 €000 €000 €000 in relation to €000
lease incentives
€000
Less than 1 year 7,500 4,442 69 379 - 12,390
Between 1 and 5 years 10,490 8,709 - 9 - 19,208
More than 5 years 6,469 5,010 - 1,378 - 12,857
Total 24,459 18,161 69 1,766 - 44,455
UK by sqm
Office Workshop Storage Other (2) Total
€000 €000 €000 €000 sqm
Less than 1 year 81,962 172,694 1,481 6,416 262,553
Between 1 and 5 years 16,184 58,852 - - 75,036
More than 5 years 6,324 14,670 - 2 20,996
Total 104,470 246,216 1,481 6,418 358,585
(2) Other includes: aerials, car parking, retail units, yards, catering
and residential.
The Group's UK business provides flexible leases that represent approximately
75% of annualised rent roll and conventional leases that represent 25% of
annualised rent roll.
Escalation profile per usage
Germany
The Group's German business' primary source of revenue relates to leasing
contracts with tenants. The Group's German business realises escalations as a
result of renewals, inflation linked indexations and contractually agreed
uplifts. Approximately 33.4% of contracts in place at 31 March 2022 are
subject to contractual uplifts. The average contractual uplift over the coming
twelve months split by usage is detailed as follows:
Usage Increase in %
Office 3.30%
Storage 2.99%
Production 3.20%
Smartspace 2.18%
Other(1) 10.42%
Total 3.27%
(1) Other includes: catering, other usage, residential and technical
space, land and car parking.
UK
The Group's UK business' primary source of revenue relates to leasing
contracts and licence fee agreements with tenants. The Group's UK business
realises escalations as a result of renewals, inflation linked indexations and
contractually agreed uplifts. Of the lease contracts in place at 31 March
2022, approximately 12.8% are subject to contractual uplifts. The average
contractual lease contract uplifts over the coming twelve months split by
usage is detailed twelve follows:
Usage Increase in %
Office 9.80%
Workshop 10.86%
Total 10.04%
Property profile March 2022*
Germany
Property and location Total Office Storage Production Other (1) Rate psqm
sqm sqm sqm sqm sqm €
Rostock 18,632 8,228 1,569 6,606 2,229 6.13
Hanover 22,850 8,850 3,923 6,431 3,646 6.28
Mahlsdorf 29,333 11,592 10,796 1,963 4,982 7.79
Mahlsdorf II 12,736 5,765 1,262 1,906 3,803 7.55
Magdeburg 29,993 10,704 9,779 4,210 5,300 5.19
Gartenfeld 25,396 5,107 11,029 3,297 5,963 8.52
Neuruppin 22,959 1,403 7,629 13,133 794 5.10
Potsdam 35,864 12,372 12,555 4,956 5,981 7.47
Schenefeld 40,252 10,265 26,522 1,961 1,504 4.60
Erfurt 23,238 7,586 11,980 - 3,672 3.45
Dresden 57,643 26,191 17,388 10,931 3,133 7.72
Hamburg Lademannbogen 10,277 7,829 1,048 - 1,400 9.84
Buxtehude 28,216 1,120 10,819 13,420 2,857 4.11
Norderstedt 12,627 3,052 7,507 173 1,895 5.32
Neuss 17,589 13,397 1,283 153 2,756 11.99
Bonn 10,586 4,531 2,412 477 3,166 7.88
Bonn - Dransdorf 19,062 5,367 6,882 1,665 5,148 7.19
Aachen I 24,443 12,622 2,324 5,510 3,987 8.75
Aachen II 9,750 1,452 6,600 1,505 193 5.78
Cologne 30,263 2,672 12,578 2,709 12,304 4.93
Wuppertal 14,600 855 5,589 3,613 4,543 4.76
Solingen 13,333 2,475 4,409 4,924 1,525 2.67
Düsseldorf - Sud 21,416 2,814 12,910 1,970 3,722 6.08
Cölln Parc 13,480 6,509 3,371 2,867 733 10.68
Krefeld III 9,668 4,916 3,344 924 484 8.05
Düsseldorf II 9,839 4,433 4,949 - 457 7.66
Oberhausen 82,837 48,064 27,903 1,739 5,131 5.23
Heiligenhaus 44,485 21,999 7,453 12,467 2,566 3.81
Essen II 11,899 8,616 1,829 627 827 7.77
Krefeld II 6,101 2,893 325 2,171 712 7.45
Krefeld 11,322 7,453 2,545 592 732 8.49
Cologne Porz 21,087 15,083 2,416 279 3,309 11.39
Bochum 55,793 12,762 35,970 3,965 3,096 4.54
Bochum II 4,318 3,502 479 12 325 8.70
Neuss II 33,357 8,498 17,210 6,058 1,591 4.50
Essen 15,259 6,040 6,241 2,367 611 6.03
Mannheim II 14,551 6,555 4,122 586 3,288 6.01
Mannheim III 3,035 2,278 740 - 17 6.65
Neu-Isenburg 8,250 5,752 1,244 - 1,254 9.78
Mannheim 68,695 13,102 22,215 27,139 6,239 5.16
Maintal 36,999 7,231 14,718 8,289 6,761 6.44
Maintal Mitte 11,023 462 4,523 5,685 353 4.11
Offenbach I 15,044 3,641 2,414 2,351 6,638 6.31
Pfungstadt 32,662 6,707 12,300 9,786 3,869 5.37
Kassel 8,142 3,312 683 3,875 272 5.55
Offenbach Carl Legien-Strasse 45,175 9,761 9,307 17,649 8,458 5.60
Frankfurt Röntgenstraße 5,496 3,957 444 36 1,059 11.62
Saarbrücken 46,827 30,116 10,012 820 5,879 8.42
Alzenau 66,511 27,681 7,450 24,087 7,293 6.55
Frankfurt III 10,320 7,849 1,391 - 1,080 13.06
Friedrichsdorf 17,536 6,793 5,250 2,763 2,730 6.98
Dreieich 12,886 7,404 2,929 - 2,553 7.84
Frankfurt 4,260 2,260 484 68 1,448 10.72
Wiesbaden 18,364 14,334 1,369 - 2,661 14.04
Ludwigsburg 28,233 7,522 9,788 3,837 7,086 6.25
Nuremberg 14,101 2,323 3,241 7,532 1,005 6.90
Heidenheim 46,877 8,240 15,458 13,981 9,198 4.24
Stuttgart - Kirchheim 57,863 20,109 12,957 18,737 6,060 5.91
Munich - Neuaubing 91,234 15,990 31,880 29,645 13,719 7.49
Nabern II 5,578 1,620 491 2,376 1,091 8.54
Markgröningen 57,673 4,532 30,794 20,341 2,006 3.44
Fellbach 27,055 2,493 16,207 340 8,015 5.33
Fellbach II 9,717 4,724 205 - 4,788 5.78
Öhringen 18,650 1,859 7,425 8,784 582 4.76
Frickenhausen 27,876 6,515 6,534 12,680 2,147 5.50
Freiburg Teningen 20,797 7,151 6,046 5,578 2,022 5.06
Rastatt 19,143 6,565 6,099 6,222 257 n/a
Neckartenzlingen 51,577 15,755 18,842 14,087 2,893 4.39
Grasbrunn 14,274 7,269 4,743 - 2,262 11.42
Hallbergmoos 18,349 12,453 3,388 - 2,508 9.86
Total 1,785,276 601,332 578,521 372,855 232,568 6.31
UK
Property and location Total Office Workshop Storage Other (2) Rate psqm
sqm sqm sqm sqm sqm € (3)
Albion Mills Business Centre 15,136 5,537 5,936 840 2,823 8.59
Altrincham 4,498 1,353 3,058 - 87 18.86
Ashford 1,823 1,823 - - - 39.04
Barnsley 6,637 545 5,930 - 162 7.72
Basingstoke 11,086 10,957 26 - 103 24.22
Birmingham - Tyseley 12,643 924 10,124 1,242 353 8.50
Bradford - Dudley Hill 10,998 810 10,170 - 18 7.34
Bristol - Equinox 1,304 1,303 - - 1 41.68
Bury 3,911 3,911 - - - 14.31
Camberwell - Lilford 3,224 1,361 1,788 - 75 15.37
Camberwell - Lomond 2,004 1,224 757 - 23 32.71
Cardiff 4,110 4,110 - - - 29.67
Cheadle 1,666 1,637 - - 29 36.73
Christchurch 2,663 2,058 605 - - 28.37
Consett 3,094 - 3,094 - - 4.69
Coventry 1,622 1,622 - - - 17.51
Design Works 4,921 3,521 1,325 - 75 15.03
Didcot 1,021 510 510 - 1 29.96
Dinnington 3,647 999 2,648 - - 9.81
Doncaster 3,106 3,052 12 - 42 22.20
Dorking 2,148 1,406 715 - 27 40.79
Egham 996 926 69 - 1 31.11
Fareham 1,758 1,758 - - - 45.08
Gateshead 13,160 - 11,965 - 1,195 3.32
Gloucester 21,411 3,143 18,149 - 119 5.49
Gloucester - Barnwood 3,402 3,378 24 - - 35.08
Hartlepool - Oakesway 2,585 - 2,585 - - 2.57
Hebburn 5,463 - 5,462 - 1 7.00
Hemel Hempstead 4,381 4,380 - - 1 28.69
Hooton 1,383 1,230 152 - 1 23.63
Hove 2,963 2,194 732 - 37 29.51
Huddersfield - Linthwaite 2,365 - 2,364 - 1 7.00
Ipswich 7,155 7,155 - - - -
Leeds - Brooklands 2,133 2,042 32 - 59 20.61
Leeds - Wortley 3,734 - 3,733 - 1 6.65
Letchworth 3,090 2,427 661 - 2 14.55
Littlehampton 1,998 1,998 - - - 37.13
London - Colney 1,804 1,767 36 - 1 28.13
M25 Business Centre 3,285 2,154 1,084 - 47 35.87
Maidstone 1,644 1,643 - - 1 37.45
Manchester - Trafford Park 8,695 - 8,694 - 1 8.33
Manchester - Newton Heath 5,884 2,348 3,393 - 143 14.49
Manchester - Old Trafford 4,577 1,344 3,091 - 142 22.79
Milton Keynes 3,654 3,592 14 - 48 27.39
New Addington - Croydon 6,540 381 6,158 - 1 13.28
Newcastle - Amber Court 4,297 4,297 - - - 20.19
Northampton - K2 4,706 74 4,631 - 1 11.71
Northampton - KG 12,911 910 11,952 - 49 8.86
Nottingham - Arnold 5,444 1,373 4,057 - 14 8.68
Nottingham - Park Row 4,459 4,409 - - 50 23.60
Nottingham - Roden 5,291 9 5,252 - 30 7.01
Oldham - Hollinwood 5,525 5,447 49 - 29 20.72
Perivale 2,132 526 1,605 - 1 27.91
Peterlee 18,603 - 18,602 - 1 3.93
Poole 6,735 6,586 - - 149 25.22
Preston 5,340 1,855 3,484 - 1 14.82
Rochdale - Fieldhouse 22,903 483 22,418 - 2 3.69
Rochdale - Moss Mill 16,321 14 16,244 - 63 3.96
Rotherham 4,504 1,361 3,112 - 31 12.84
Sandy Business Park 9,261 108 9,152 - 1 8.08
Sheffield - Cricket 1,928 - 1,928 - - 8.53
Shipley 2,238 2,238 - - - 12.95
Solihull 1,715 1,715 - - - 49.25
Stanley 3,776 - 3,776 - - 5.12
Stoke 5,119 - 5,118 - 1 6.49
Sunderland - North Sands 2,819 2,818 - - 1 16.75
Swindon 6,834 339 6,420 - 75 14.04
Theale 2,857 2,800 - - 57 53.99
Wakefield 20,634 620 18,443 - 1,571 4.46
Warrington - Craven Court 3,830 - 3,830 - - 9.71
Wimbledon 3,031 1,459 1,569 - 3 37.60
Wolverhampton - Willenhall 4,935 581 4,352 - 2 8.92
Total 403,470 132,545 261,090 2,082 7,753 12.39
* Excluding commercial leased investment properties.
(1) Other includes: Smartspace, catering, other usage, residential and
technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering
and residential.
(3) The Group's UK business charge licence customers an all inclusive
rate, which includes an implicit element of service charge.
Annex 1- Non-IFRS Measures
Basis of preparation
The Directors of Sirius Real Estate Limited ("Sirius") have chosen to disclose
additional non-IFRS measures; these include EPRA earnings, adjusted net asset
value, EPRA net reinstatement value, EPRA net tangible assets, EPRA net
disposal value, adjusted profit before tax and funds from operations
(collectively "Non-IFRS Financial Information").
The Directors have chosen to disclose:
· EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition of
earnings as set out by the European Public Real Estate Association. EPRA
earnings represents earnings after adjusting for the revaluation of investment
properties, changes in fair value of derivative financial instruments, gains
and losses on disposals of properties (including tax), recoveries from prior
disposals of subsidiaries, refinancing costs, goodwill impairment, acquisition
costs in relation to business combinations, exit fees and prepayment penalties
(collectively the "EPRA earnings adjustments"), deferred tax in respect of the
EPRA earnings adjustments, NCI relating to gain on revaluation and gain on
sale of properties (including tax), revaluation gain on investment property
relating to associates and the related tax thereon. The reconciliation between
basic and diluted earnings and EPRA earnings is detailed in table A below.
· Adjusted net asset value in order to assist in comparisons with
similar businesses. Adjusted net asset value represents net asset value after
adjusting for derivative financial instruments at fair value and deferred tax
relating to valuation movements, derivative financial instruments and LTIP
valuation. The reconciliation for adjusted net asset value is detailed in
table B below.
· EPRA net reinstatement value ("EPRA NRV") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA NRV is a
definition of net asset value as set out by the European Public Real Estate
Association. EPRA NRV represents net asset value after adjusting for
derivative financial instruments at fair value, deferred tax relating to
valuation movements and derivatives and real estate transfer tax presented in
the Valuation Certificate (for the entire consolidated Group including wholly
owned entities and investment in associates). The reconciliation for EPRA NRV
is detailed in table C below.
· EPRA net tangible assets ("EPRA NTA") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA NTA is a
definition of net asset value as set out by the European Public Real Estate
Association. EPRA NTA represents net asset value after adjusting for
derivative financial instruments at fair value, deferred tax relating to
valuation movements (excluding that relating to assets held for sale) and
derivatives, goodwill and intangible assets as per the note reference in the
consolidated statement of financial position (for the entire consolidated
Group including wholly owned entities and investment in associates). The
reconciliation for EPRA NTA is detailed in table C below.
· EPRA net disposal value ("EPRA NDV") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA NDV is a
definition of net asset value as set out by the European Public Real Estate
Association. EPRA NDV represents net asset value after adjusting for goodwill
as per the note reference in the consolidated statement of financial position
and the fair value of fixed interest rate debt (for the entire consolidated
Group including wholly owned entities and investment in associates). The
reconciliation for EPRA NDV is detailed in table C below.
· Adjusted profit before tax in order to provide an alternative
indication of Sirius Real Estate Limited and its subsidiaries' (the "Group")
underlying business performance. Accordingly, it excludes the effect of the
gain on revaluation of investment properties, goodwill impairment, other
adjusting items, gains/losses on sale of properties, change in fair value of
financial derivatives, recoveries from prior disposals of subsidiaries,
revaluation gain on investment property relating to associates and related tax
and includes the deficit on revaluation relating to leased investment
properties. The reconciliation for adjusted profit before tax is detailed in
table D below.
· Funds from operations in order to assist in comparisons with
similar businesses and to facilitate the Group's dividend policy which is
derived from funds from operations. Accordingly, funds from operations
excludes depreciation and amortisation (excluding depreciation relating to
IFRS 16), net foreign exchange differences, amortisation of financing fees,
adjustment in respect of IFRS 16 and current tax excluding tax on disposals.
The reconciliation for funds from operations is detailed in table D below.
The Non-IFRS Financial Information is presented in accordance with the JSE
Listing Requirements and the guide on pro forma financial information issued
by SAICA. The Non-IFRS Financial Information is the responsibility of the
Directors. The Non-IFRS Financial Information has been presented for
illustrative purposes and, due to its nature, may not fairly present the
Group's financial position or result of operations.
Ernst & Young Inc have issued a reporting accountant report on the
Non-IFRS Financial Information for the year ended 31 March 2022 which is
available for inspection at the Group's registered office. The starting point
for all the Non-IFRS Financial Information has been extracted from the Group's
consolidated financial statements for the year ended 31 March 2022 (the
"consolidated financial statements").
Table A - EPRA earnings
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Basic and diluted earnings attributable to owners of the Company(1) 147,873 147,451
Gain on revaluation of investment properties(2) (140,884) (99,585)
Add loss on disposal of properties (including tax)(3) 623 33
Deduct recoveries from prior disposals of subsidiaries(4) (94) (65)
Refinancing costs, exit fees and prepayment penalties(5) 7,821 -
Goodwill impairment(6) 40,906 -
Acquisition costs in relation to business combinations(7) 5,299 -
Change in fair value of derivative financial instruments(8) (996) (136)
Deferred tax in respect of EPRA earnings adjustments(9) 14,827 14,180
NCI in respect of the above(10) 85 82
Deduct revaluation gain on investment property relating to associates(11) (6,021) (4,199)
Tax in relation to the revaluation gain on investment property relating to 1,256 872
associates(12)
EPRA earnings(13) 70,695 58,633
Notes:
(1) Presents the profit attributable to owners of the Company which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(2) Presents the gain on revaluation of investment properties which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(3) Presents the gain or loss on disposal of properties (including tax)
which has been extracted from note 11 within the consolidated financial
statements.
(4) Presents the recoveries from prior disposals of subsidiaries which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(5) Presents the refinancing costs, exit fees and prepayment penalties
which have been extracted from note 10 within the consolidated financial
statements.
(6) Presents the goodwill impairment which has been extracted from the
consolidated income statement within the consolidated financial statements
(2021: €nil).
(7) Presents the acquisition costs in relation to business combinations
which have been extracted from note 4 within the consolidated financial
statements (2021: €nil).
(8) Presents the change in fair value of derivative financial instruments
which has been extracted from the consolidated income statement within the
consolidated financial statements.
(9) Presents deferred tax relating to origination and reversal of
temporary differences of the EPRA earnings adjustments which has been
extracted from note 11 within the consolidated financial statements.
(10) Presents the non-controlling interest relating to gain on revaluation and
gain or loss on disposal of properties (including tax) which has been
extracted from note 12 within the consolidated financial statements.
(11) Presents the revaluation gain on investment property relating to
associates which has been extracted from note 12 within the consolidated
financial statements.
(12) Presents tax in relation to the revaluation gain on investment property
relating to associates which has been extracted from note 12 within the
consolidated financial statements.
(13) Presents the EPRA earnings for the year.
Table B - Adjusted net asset value
31 March 2022 31 March 2021
€000 €000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 1,190,652 926,533
the owners of the Company)(1)
Deferred tax liabilities/(assets) (see note 11)(2) 75,893 56,331
Derivative financial instruments at fair value(3) (329) 1,141
Adjusted net asset value attributable to owners of the Company(4) 1,266,216 984,005
Notes:
(1) Presents the net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the consolidated statement of financial position within the consolidated
financial statements.
(2) Presents deferred tax liabilities which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
Notes continued
(3) Presents current derivative financial instrument assets of €329,000
(2021: €70,000) less current derivative financial instrument liabilities of
€nil (2021: €414,000) less non-current derivative financial instrument
liabilities of €nil (2021: €797,000) which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(4) Presents the adjusted net asset value attributable to the owners of
the Company as at year end.
Table C - EPRA net asset measures
31 March 2022 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at year end (basic)(1) 1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value(2) (329) (329) n/a
Deferred tax in respect of EPRA earnings adjustments(3) 75,893 75,566* n/a
Goodwill as per note 17(4) n/a - -
Intangibles as per note 17(5) n/a (4,283) n/a
Fair value of fixed interest rate debt(6) n/a n/a (22,229)
Real estate transfer tax(7) 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments(3) 6,563 6,563* n/a
Fair value of fixed interest rate debt(6) n/a n/a 2,196
Real estate transfer tax(7) 9,147 n/a n/a
Total EPRA NRV, NTA and NDV(8) 1,442,618 1,268,169 1,170,619
31 March 2021 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at year end (basic)(1) 926,533 926,533 926,533
Diluted EPRA net asset value at fair value 926,533 926,533 926,533
Group
Derivative financial instruments at fair value(2) 1,141 1,141 n/a
Deferred tax in respect of EPRA earnings adjustments(3) 56,331 56,331 * n/a
Goodwill as per note 17(4) n/a (3,738) (3,738)
Intangibles as per note 17(5) n/a (2,830) n/a
Fair value of fixed interest rate debt(6) n/a n/a (3,556)
Real estate transfer tax(7) 106,274 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments(3) 5,212 5,212* n/a
Fair value of fixed interest rate debt(6) n/a n/a (1,772)
Real estate transfer tax(7) 6,772 n/a n/a
Total EPRA NRV, NTA and NDV(8) 1,102,263 982,649 917,467
* The Company intends to hold and does not intend in the long term to
sell any of the investment properties and has excluded such deferred taxes for
the whole portfolio as at year end except for deferred tax in relation to
assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the consolidated statement of financial position within the consolidated
financial statements.
(2) Presents current derivative financial instrument assets of €329,000
(2021: €70,000) less current derivative financial instrument liabilities of
€nil (2021: €414,000) less non-current derivative financial instrument
liabilities of €nil (2021: €797,000) which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(3) Presents for the Group the deferred tax liabilities which have been
extracted from note 11 within the consolidated financial statements and for
EPRA NTA only the additional credit adjustment for the deferred tax expense
relating to assets held for sale of €327,000 (2021: €nil). For investment
in associates the deferred tax expense arising on revaluation gains amounted
to €6,563,000 (2021: €5,212,000).
(4) Presents the net book value of goodwill which has been extracted from
note 17 within the consolidated financial statements.
(5) Presents the net book value of software and licences with definite
useful life which has been extracted from note 17 within the consolidated
financial statements.
Notes continued
(6) Presents the fair value of financial liabilities and assets on the
statement of financial position, net of any related deferred tax.
(7) Presents the add-back of purchasers' costs in order to reflect the
value prior to any deduction of purchasers' costs, as shown in the Valuation
Certificate of Cushman & Wakefield LLP.
(8) Presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively, as at year
end.
Table D - Adjusted profit before tax and funds from operations
Year ended Year ended
31 March 2022 31 March 2021
€000 €000
Reported profit before tax(1) 168.9 163.7
Adjustments for:
Gain on revaluation of investment properties(2) (140.9) (99.6)
Deficit on revaluation relating to leased investment properties(3) (5.6) (4.3)
Loss/(gain) on disposals of properties(4) 0.6 (0.1)
Recoveries from prior disposals of subsidiaries(5) (0.1) (0.1)
Deduct revaluation gain on investment property from associates and related (4.8) (3.3)
tax(6)
Other adjusting items(7) 19.1 4.1
Goodwill impairment(8) 40.9 -
Change in fair value of financial derivatives(9) (1.0) (0.1)
Adjusted profit before tax(10) 77.1 60.3
Adjustments for:
Foreign exchange effects(11) (1.9) -
Depreciation and amortisation (excluding depreciation relating to IFRS 16)(12) 2.3 1.6
Amortisation of financing fees(13) 2.6 1.7
Adjustment in respect of IFRS 16(14) 0.6 (0.9)
Current taxes incurred (see note 11)(15) (6.1) (1.9)
Add back current tax relating to disposals(16) - 0.1
Funds from operations(17) 74.6 60.9
Notes:
(1) Presents profit before tax which has been extracted from the
consolidated income statement within the consolidated financial statements.
(2) Presents the gain on revaluation of investment properties which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(3) Presents the deficit on revaluation relating to capitalised head
leases which has been extracted from note 14 within the consolidated financial
statements.
(4) Presents the gain or loss on disposal of properties which has been
extracted from the consolidated income statement within the consolidated
financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(6) Presents the revaluation gain on investment property relating to
associates and related tax which has been extracted from note 12 within the
consolidated financial statements.
(7) Presents the total adjusting items which has been extracted from note
12 within the consolidated financial statements.
(8) Presents the goodwill impairment which has been extracted from the
consolidated income statement within the consolidated financial statements.
(9) Presents the change in fair value of derivative financial instruments
which has been extracted from the consolidated income statement within the
consolidated financial statements.
(10) Presents the adjusted profit before tax for the year.
(11) Presents the net foreign exchange gains as included in other
administration costs in note 7 within the consolidated financial statements
(2021: €nil).
(12) Presents depreciation of plant and equipment and amortisation of
intangible assets which have been extracted from note 7 within the
consolidated financial statements.
(13) Presents amortisation of capitalised finance costs which has been
extracted from note 10 within the consolidated financial statements.
(14) Presents the differential between the expense recorded in the
consolidated income statement for the year relating to head leases in
accordance with IFRS 16 amounting to €6.9 million (2021: €5.1 million) and
the actual cash expense recorded in the consolidated statement of cash flows
for the year amounting to €6.3 million (2021: €6.0 million).
(15) Presents the total current income tax which has been extracted from note
11 within the consolidated financial statements.
(16) Presents the current income tax charge relating to disposals of
investment properties which has been extracted from note 11 within the
consolidated financial statements.
(17) Presents the funds from operations for the year.
Glossary of terms
Adjusted earnings is the earnings attributable to the owners of the Company, excluding the
effect of adjusting items net of related tax, gains/losses on sale of
properties net of related tax, the revaluation deficits/surpluses on the
investment properties (also to associates) net of related tax, profits and
losses on disposals of properties net of related tax, changes in fair value of
derivative financial instruments net of related tax, recoveries from prior
disposals of subsidiaries net of related tax, finance restructuring costs net
of related tax and adjustment on revaluation expense relating to leased
investment properties
Adjusted net asset value is the assets attributable to the equity owners of the Company adjusted for
derivative financial instruments at fair value and deferred tax arising on
revaluation gain, derivative financial instruments and LTIP valuation
Adjusted profit before tax is the reported profit before tax adjusted for gain on revaluation of
investment properties, gains/losses on sale of properties, changes in fair
value of derivative financial instruments, other adjusting items, goodwill
impairment, recoveries from prior disposals of subsidiaries, revaluation gain
on investment property relating to associates and related tax
Annualised acquisition net operating income is the income generated by a property less directly attributable costs at the
date of acquisition expressed in annual terms. Please see "annualised rent
roll" definition below for further explanatory information
Annualised acquisition is the contracted rental income of a property at the date of acquisition
rent roll expressed in annual terms. Please see "annualised rent roll" definition below
for further explanatory information
Annualised rent roll is the contracted rental income of a property at a specific reporting date
expressed in annual terms. Unless stated otherwise the reporting date is 31
March 2022. Annualised rent roll should not be interpreted nor used as a
forecast or estimate. Annualised rent roll differs from rental income
described in note 5 of the Annual Report and reported within revenue in the
consolidated income statement for reasons including:
annualised rent roll represents contracted rental income at a specific point
in time expressed in annual terms;
rental income as reported within revenue represents rental income recognised
in the period under review; and
rental income as reported within revenue includes accounting adjustments
including those relating to lease incentives
Capital value is the market value of a property divided by the total sqm of a property
Cumulative total return is the return calculated by combining the movement in investment property
value net of capex with the total net operating income less bank interest over
a specified period of time
EPRA earnings is earnings after adjusting the revaluation of investment properties, changes
in fair value of derivative financial instruments, gains and losses on
disposals of properties (net of related tax), recoveries from prior disposals
of subsidiaries (net of related tax), refinancing costs, goodwill impairment,
acquisition costs in relation to business combinations, exit fees and
prepayment penalties (collectively the "EPRA earnings adjustments"), deferred
tax in respect of the EPRA earnings adjustments, NCI relating to gain on
revaluation and gain on sale of properties net of related tax, revaluation
gain on investment property relating to associates and the related tax thereon
EPRA net reinstatement value is the net asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements and derivatives and
real estate transfer tax presented in the Valuation Certificate, including the
amounts of the above related to the investment in associates
EPRA net tangible assets is the net asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements (just for the part of
the portfolio that the Company intends to hold should be excluded) and
derivatives, goodwill and intangible assets as per the note reference in the
consolidated statement of financial position, including the amounts of the
above related to the investment in associates
EPRA net disposal value is the net asset value after adjusting for goodwill as per the note reference
in the consolidated statement of financial position and the fair value of
fixed interest rate debt, including the amounts of the above related to the
investment in associates
EPRA net initial yield is the annualised rent roll based on the cash rents passing at the statement
of financial position date, less non-recoverable property operating expenses,
divided by the market value of the property, increased with (estimated)
purchasers' costs
EPRA net yield is the net operating income generated by a property expressed as a percentage
of its value plus purchase costs
ERV is the estimated rental value which is the annualised rental income at 100%
occupancy
Funds from operations is adjusted profit before tax adjusted for depreciation and amortisation
(excluding depreciation relating to IFRS 16), amortisation of financing fees,
net foreign exchange gains, adjustment in respect of IFRS 16 and current tax
excluding tax on disposals
Geared IRR is an estimate of the rate of return taking into consideration debt
Gross loan to value ratio is the ratio of principal value of total debt to the aggregated value of
investment property
Like for like refers to the manner in which metrics are subject to adjustment in order to
make them directly comparable. Like-for-like adjustments are made in relation
to annualised rent roll, rate and occupancy and eliminate the effect of asset
acquisitions and disposals that occur in the reporting period
Net loan to value ratio is the ratio of principal value of total debt less cash, excluding that which
is restricted, to the aggregate value of investment property
Net operating income is the rental and other income from investment properties generated by a
property less directly attributable costs
Net yield is the net operating income generated by a property expressed as a percentage
of its value
Occupancy is the percentage of total lettable space occupied as at reporting date
Operating cash flow on investment (geared) is an estimate of the rate of return based on operating cash flows and taking
into consideration debt
Operating cash flow on investment (ungeared) is an estimate of the rate of return based on operating cash flows
Operating profit is the net operating income adjusted for gain on revaluation of investment
properties, loss on disposal of properties, recoveries from prior disposals of
subsidiaries, administrative expenses, goodwill impairment and share of profit
of associates
Rate for the German portfolio is rental income per sqm expressed on a monthly basis
as at a specific reporting date
for the UK portfolio is rental income (includes estimated service charge
element) per sqm expressed on a monthly basis as at a specific reporting date
in Euro
for the UK portfolio is rental income (includes estimated service charge
element) per sq ft expressed on an annual basis as at a specific reporting
date in GBP
Senior Management Team as set out on page 70 of the Group's Annual Report and Accounts 2022
Total debt is the aggregate amount of the Company's interest-bearing loans and borrowings
Total shareholder accounting return is the return obtained by a shareholder calculated by combining both movements
in adjusted NAV per share and dividends paid
Total return is the return for a set period of time combining valuation movement and income
generated
Ungeared IRR is an estimate of the rate of return
Weighted average cost of debt is the weighted effective rate of interest of loan facilities expressed as a
percentage
Weighted average debt expiry is the weighted average time to repayment of loan facilities expressed in
years
Corporate directory
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Registered office
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
Registered number
Incorporated in Guernsey under the Companies (Guernsey) Law, 2008, as amended,
under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Financial PR
FTI Consulting LLP
200 Aldersgate Street
London EC1A 4HD
United Kingdom
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
United Kingdom
Guernsey solicitors
Carey Olsen
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Channel Islands
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. END FR UUAORUBUNAARRecent news on Sirius Real Estate
See all newsREG - Sirius Real Estate - Trading Update
AnnouncementREG - Sirius Real Estate - Sirius completes over EUR 100m of acquisitions
AnnouncementREG - Sirius Real Estate - Sirius expands U.K. portfolio with acquisition
AnnouncementREG - Sirius Real Estate - Holding(s) in Company
AnnouncementREG - Sirius Real Estate - Director/PDMR Shareholding
Announcement