REG - Sirius Real Estate - Half-year Report <Origin Href="QuoteRef">SRET.L</Origin> - Part 2
27/11/2017 07:10
- Part 2: For the preceding part double click ID:nRSa5180Xa
10 34,059
As at 31 March 2017 - 470,318 24,869 495,187 81 495,268
Shares issued, net of costs - 24,386 - 24,386 - 24,386
Share-based payment transactions - 2,475 - 2,475 - 2,475
Dividends paid - (8,378) - (8,378) - (8,378)
Total comprehensive income for the period - - 50,885 50,885 24 50,909
As at 30 September 2017 - 488,801 75,754 564,555 105 564,660
Unaudited consolidated statement of cash flow
for the six months ended 30 September 2017
Notes (Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Operating activities
Profit after tax 50,885 32,862 66,911
Taxation 3,840 4,632 9,500
Non-controlling interests 24 15 25
Loss/(gain) on sale of properties 807 - (79)
Share-based payments 2,475 2,305 4,290
Surplus on revaluation of investment properties 12 (41,580) (25,370) (49,782)
Change in fair value of derivative financial instruments (7) 126 (133)
Depreciation 5 561 416 868
Finance income 8 (5) (18) (23)
Finance expense 4,950 5,132 9,795
Exit fees/prepayment penalties 530 15 428
Cash flows from operations before changes in working capital 22,480 20,115 41,800
Changes in working capital
Decrease in trade and other receivables 3,547 3,738 4,984
(Decrease)/increase in trade and other payables (3,970) (2,206) 3,168
Taxation (paid)/received (22) 118 (17)
Cash flows from operating activities 22,035 21,765 49,935
Investing activities
Purchase of investment properties (83,656) (50,801) (76,265)
Prepayments relating to new acquisitions (395) (378) (6,547)
Capital expenditure (8,870) (7,955) (16,540)
Purchase of plant and equipment (809) (410) (1,523)
Net proceeds on disposal of properties 95,246 - 7,201
Interest received 5 18 23
Cash flows from/(used in) investing activities 1,521 (59,526) (93,651)
Financing activities
Issue of shares 24,378 29,117 43,620
Dividends paid (8,378) (5,503) (11,685)
Proceeds from loans - 141,500 211,500
Repayment of loans (50,379) (116,426) (159,077)
Exit fees/prepayment penalties (530) (15) (428)
Finance charges paid (3,677) (6,039) (11,393)
Cash flows (used in)/from financing activities (38,586) 42,634 72,537
(Decrease)/increase in cash and cash equivalents (15,031) 4,873 28,821
Cash and cash equivalents at the beginning of the period 48,695 19,874 19,874
Cash and cash equivalents at the end of the period 16 33,664 24,747 48,695
Notes forming part of the financial statements
for the six months ended 30 September 2017
1. General information
Sirius Real Estate Limited (the "Company") is a company incorporated in
Guernsey and resident in the United Kingdom, whose shares are publicly traded
on the main markets of the London Stock Exchange ("LSE") and the Johannesburg
Stock Exchange ("JSE").
The consolidated financial information of the Company comprises that of the
Company and its subsidiaries (together referred to as the "Group") for the six
month period to 30 September 2017.
The principal activity of the Group is the investment in, and development of,
commercial property to provide conventional and flexible workspace in
Germany.
2. Significant accounting policies
(a) Basis of preparation
The unaudited interim condensed set of 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 unaudited interim condensed set of
consolidated financial statements are presented in euros and all values are
rounded to the nearest thousand (E000), except where otherwise indicated.
The comparative figures for the financial year ended 30 September 2016 are not
the Company's statutory accounts for that financial year. Those accounts have
been reported on by the Company's auditors and delivered to the registrar of
companies. The report of the auditor was (i) unqualified (ii) did not include
a reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 263 (2) or (3) of the Companies (Guernsey) Law, 2008.
As at 31 March 2017, the Company elected to present consolidated financial
statements in a manner which makes them more comparable with similar
businesses that operate in the real estate sector who typically include only
costs that are considered directly attributable the underlying property assets
within net operating income. As a result, the consolidated statement of
comprehensive income for the six months ended 30 September 2016 has been
re-presented with the main impact being the reallocation of costs that are not
considered to be directly attributable to the underlying property assets from
direct costs to administrative expenses. The impact on total comprehensive
income for the comparative period is nil as shown in the table below:
Previously reportedsix months ended30 September 2016E000 Re-presentedsix months ended30 September 2016E000 MovementE000
Rental income 32,636 32,636 -
Direct costs (8,900) (5,308) 3,592
Net rental income/net operating income 23,736 27,328 3,592
Surplus on revaluation of investment properties 25,370 25,370 -
Administrative expenses (5,041) (9,865) (4,824)
Other operating expenses (1,301) - 1,301
Operating profit 42,764 42,833 70
Finance income 18 18 -
Finance expense (5,147) (5,217) (70)
Change in fair value of derivative financial instruments (126) (126) -
Net finance costs (5,255) (5,325) (70)-
Profit before tax 37,509 37,509 -
Taxation (4,632) (4,632) -
Profit for the year 32,877 32,877 -
Profit attributable to:
Owners of the Company 32,862 32,862 -
Non-controlling interest 15 15 -
Total comprehensive income for the year 32,877 32,877 -
(b) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings, which are widely used
alternate metrics to their IFRS equivalents (further details on EPRA best
practice recommendations can be found at www.epra.com). Note 10 of the Interim
Report includes a reconciliation of basic and diluted earnings to EPRA
earnings.
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 surplus net of related tax and
gain/loss on sale of properties net of related tax. Note 10 of the Interim
Report 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 10 of the Interim Report includes a reconciliation of adjusting items
included within adjusted earnings, with those adjusting items stated within
administrative expenses in note 5.
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
operation is included within note 22. 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.
(c) Statement of compliance
The condensed interim 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 JSE
Limited and IAS 34 'Interim Financial Reporting'. They do not include all of
the information required for the full annual financial statements and should
be read in conjunction with the consolidated financial statements of the Group
as at and for the year ended 31 March 2017. The condensed interim financial
statements have been prepared on the basis of the accounting policies set out
in the Group's annual financial statements for the year ended 31 March 2017.
The financial statements for the year ended 31 March 2017 have been prepared
in accordance with International Financial Reporting Standards ("IFRS") as
adopted for use in the EU. The Group's annual financial statements refer to
new standards and interpretations, none of which had a material impact on the
financial statements.
(d) Going concern
Having reviewed the Group's current trading and cash flow forecasts, together
with sensitivities and mitigating factors and the available facilities, the
Board has a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly, the
Board continued to adopt the going concern basis in preparing these financial
statements.
(e) Basis of consolidation
The unaudited interim condensed set of consolidated financial statements
comprises the financial statements of the Group as at 30 September 2017. The
financial statements of the subsidiaries are 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
statement of comprehensive income and within equity in the consolidated
statement of financial position, separately from the Company's shareholders'
equity.
(f) Significant accounting policies
The accounting policies applied by the Group in this unaudited interim
condensed set of consolidated financial statements are the same as those
applied by the Group in its audited consolidated financial statements as at
and for the year ended 31 March 2017.
(g) Principal risks and uncertainties
The key risks that could affect the Group's medium-term performance and the
factors which mitigate these risks have not materially changed from those set
out in the Group's Annual Report and Accounts 2017 and have been assessed in
line with the requirements of the 2014 UK Corporate Governance Code. The risks
are reproduced below. The Board is satisfied that the Company continues to
operate within its risk profile.
Principal risks summary
Risk category Principle risk(s)
1. Financing - Availability and pricing of debt
- Compliance with facility covenants
2. Valuation - Property inherently difficult to value
- Susceptibility of property market to change in value
3. Market - Reliance on Germany
- Reliance on SME market
4. Acquisitive growth - Failure to acquire suitable properties with desired returns
5. Organic growth - Failure to deliver capex investment programme
- Failure to achieve targeted returns from investment
6. Customer - Decline in demand for space
- Significant tenant move-outs or insolvencies
- Exposure to tenants' inability to meet rental and other lease commitments
7. Regulatory and tax - Non-compliance with tax or regulatory obligations
8. People - Inability to recruit and retain people with the appropriate skillset to deliver the Group strategy
9. Systems and data - System failures and loss of data
- Security breaches
- Data protection
3. Operating segments
The Directors are of the opinion that the Group is engaged in a single segment
of business, being property investment, and in one geographical area, Germany.
All rental income is derived from operations in Germany. There is no one
tenant that represents more than 10% of Group revenues. The chief operating
decision maker is considered to be the Board of Directors, which is provided
with consolidated IFRS, as adopted by the European Union ("EU"), information
on a quarterly basis.
4. Revenue
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Rental and other income from investment properties 35,301 32,636 68,793
68,793
5. Operating profit
The following items have been (credited)/charged in arriving at operating
profit:
Direct costs
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Service charge income (20,466) (18,184) (40,976)
Property costs 24,715 22,854 47,563
Non-recoverable maintenance 1,016 638 1,680
Irrecoverable property costs 5,265 5,308 8,267
Loss on disposal of properties
Within loss on disposal of properties of E807,000 (31 March 2017 E79,000 gain)
are various costs relating to the disposal of assets in the period including
the derecognition of lease incentives.
Administrative expenses
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Audit fee 174 213 293
Legal and professional fees 1,129 779 2,128
Other administration costs 90 171 2,368
LTIP 2,148 2,152 4,136
Staff costs 5,383 4,515 9,305
Director fees 166 94 241
Depreciation 561 416 868
Marketing 880 721 1,584
Selling costs relating to assets held for sale - - 551
Non-recurring items 60 804 2,409
Administrative expenses 10,591 9,865 23,883
Non-recurring items relate to costs associated with the admission of the
Company to the main markets of the London and Johannesburg stock exchanges
that completed on 6 March 2017.
6. Employee costs and numbers
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Wages and salaries 8,027 6,936 13,970
Social security costs 1,381 1,225 2,544
Pension 91 78 174
Other employment costs 44 48 215
9,543 8,287 16,903
The costs for the period ended 30 September 2017 include those relating to
Executive Directors and an accrual of E2,148,000 relating to the granting or
award of shares under LTIPs (see note 7).
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 and Sirius Corporate Services B.V. The average number of
people employed by the Group during the period was 224 (30 September 2016:
201; 31 March 2017: 204) expressed in full-time equivalents. In addition, the
Board of Directors consists of four Non-executive Directors and two Executive
Directors as at 30 September 2017.
7. Employee schemes
Equity-settled share-based payments
A new LTIP for the benefit of the Executive Directors and the Senior
Management Team was approved in October 2015. The fair value determined at the
grant date is expensed on a straight-line basis over the vesting and holding
period, based on the Company's estimate of the shares that will eventually
vest and adjusted for the effect of non-market-based vesting conditions. Under
the LTIP, the awards are granted in the form of whole shares at no cost to the
participants. Shares vest after the three year performance period followed by
a holding period of twelve months. The performance conditions used to
determine the vesting of the award are based on net asset value and total
shareholder return allowing vesting of 0% to a maximum of 125%. As a result, a
maximum of 25,150,000 shares were granted, subject to performance criteria,
under the scheme in December 2015.
No shares were forfeited in the six months to 30 September 2017. An expense of
E2,148,000 (30 September 2016: E2,152,000) was recognised in the statement of
comprehensive income to 30 September 2017.
Movements in the number of shares outstanding and their weighted average
exercise prices are as follows:
(Unaudited) six months ended30 September 2017 Year ended 31 March 2017
Number ofshares Weightedaverageexerciseprice E000 Number ofshares WeightedaverageexercisepriceE000
Balance outstanding as at the beginning of the period (nil exercisable) 23,850,000 - 25,150,000 -
Forfeited during the period - - (1,300,000) -
Balance outstanding as at the end of the period (nil exercisable) 23,850,000 - 23,850,000 -
The fair value per share was determined using the Monte-Carlo model, with the
following assumptions used in the calculation as at the grant date:
Weighted average share price - E 0.52
Weighted average exercise price - E -
Expected volatility - % 20
Expected life - years 2.48
Risk free rate based on European treasury bonds' rate of return - % (0.11)
Expected dividend yield - % 3.41
Assumptions considered in the 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 historic 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 share price at the
date of grant; expected life of the awards; risk free rates; and correlation
between comparators.
Employee benefit scheme
During the period, 487,166 shares were issued to the Company's management
through its MSP scheme.
A reconciliation of share-based payments and employee benefit schemes and
their impact on the consolidated statement of changes in equity is as
follows:
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Charge relating to MSP 327 153 153
Charge relating to new LTIP 2,148 2,152 4,136
Share-based payment transactions as per consolidated statement of changes in equity 2,475 2,305 4,289
The MSP was terminated in respect of any new awards with effect from 1 April
2017.
8. Finance income and expense
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Bank interest income 5 18 23
Finance income 5 18 23
Bank loan interest expense (3,432) (3,642) (7,151)
Bank charges (65) (70) (139)
Amortisation of capitalised finance costs (594) (583) (1,172)
Refinancing costs (1,390) (922) (1,762)
Finance expense (5,481) (5,217) (10,224)
Net finance expense (5,476) (5,199) (10,201)
9. Taxation
Consolidated statement of comprehensive income
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Current income tax
Current income tax charge (226) (59) (576)
Current income tax charge relating to disposals (2,061) - -
Adjustment in respect of prior periods 4 81 264
Total current income tax (2,283) 22 (312)
Deferred tax
Relating to origination and reversal of temporary differences (1,890) (4,738) (9,245)
Relating to LTIP charge for the period 333 84 57
Total deferred tax (1,557) (4,654) (9,188)
Income tax charge reported in the statement of comprehensive income (3,840) (4,632) (9,500)
Deferred income tax liability
(Unaudited)30 September 2017E000 (Unaudited)30 September 2016E000 31 March 2017E000
Opening balance (20,993) (11,747) (11,747)
Release due to disposals 4,845 - -
Taxes on the revaluation of investment properties and derivative financial instruments* (6,734) (4,738) (9,245)
Balance as at period end (22,882) (16,485) (20,993)
* Movement refers to the revaluation of investment properties to fair
value, the recognition of derivatives and adjustments for lease incentives
(e.g. rent free periods).
Deferred income tax asset
(Unaudited)30 September 2017E000 (Unaudited)30 September 2016E000 31 March 2017E000
Opening balance 240 183 183
Relating to LTIP charge for the year 333 84 57
Balance as at period end 573 267 240
Reductions in the UK corporation tax rate from 20% to 19% (effective from 1
April 2017) and 18% (effective from 1 April 2020) were substantively enacted
on 26 October 2015. A further reduction to the UK corporation tax rate was
announced in the 2016 Budget to further reduce the tax rate to 17% (to be
effective from 1 April 2020). This will reduce the Company's future current
tax charge accordingly. The deferred tax asset at the balance sheet date has
been calculated based on the rate of 19%, which represents the expected
relevant rate to apply to the period when the asset is realised.
The Group has tax losses of E246,521,000 (31 March 2017: E 262,525,000) that
are available for offset against future profits of its subsidiaries in which
the losses arose under the restrictions of the minimum taxation. Deferred tax
assets have not been recognised in respect of the revaluation losses on
investment properties and interest rate swaps as they may not be used to
offset taxable profits elsewhere in the Group as realisation is not assured.
Deferred tax assets have been recognised in respect of the valuation of the
Company LTIP.
10. Earnings per share
The calculation of the basic, diluted, headline and adjusted earnings per
share is based on the following data:
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Earnings
Basic earnings 50,885 32,862 66,911
Diluted earnings 50,885 32,862 66,911
EPRA earnings* 14,080 12,371 26,188
Headline earnings* 14,085 12,270 26,318
Diluted headline earnings 14,085 12,270 26,318
Adjusted
Basic earnings after tax 50,885 32,862 66,911
Deduct revaluation surplus, net of related tax (39,668) (20,592) (40,514)
Add loss/(deduct gain) on sale of properties, net of related tax 2,868 - (79)
Headline earnings after tax 14,085 12,270 26,318
(Deduct)/add change in fair value of derivative financial instrument, net of related tax (29) 86 (156)
Add adjusting items*, net of related tax 3,265 3,794 8,801
Adjusted earnings* after tax 17,321 16,150 34,963
Number of shares
Weighted average number of ordinary shares for the purpose of basic and headline earnings per share 894,104,933 803,512,009 822,957,685
Weighted average number of ordinary shares for the purpose of diluted earnings and diluted headline earnings per share 917,954,933 827,362,009 846,807,685
Weighted average number of ordinary shares for the purpose of adjusted earnings per share 894,104,933 803,512,009 822,957,685
Basic earnings per share 5.69c 4.09c 8.13c
Diluted earnings per share 5.54c 3.97c 7.90c
Basic EPRA earnings per share 1.57c 1.54c 3.18c
Diluted EPRA earnings per share 1.53c 1.50c 3.09c
Headline earnings per share 1.58c 1.53c 3.20c
Diluted headline earnings per share 1.53c 1.48c 3.11c
Adjusted earnings per share 1.94c 2.01c 4.25c
Adjusted diluted earnings per share 1.89c 1.95c 4.13c
*See Table 5 in Business Analysis section for further details.
The Directors have chosen to disclose adjusted earnings per share 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, gains/losses on sale of properties net of related tax, the
revaluation deficits/surpluses on the investment properties net of related tax
and derivative financial instruments net of related tax. In addition, the
Directors have chosen to disclose EPRA earnings in order to assist in
comparisons with similar businesses. The reconciliation between basic and
diluted earnings and EPRA earnings is as follows:
EPRA earnings
Basic and diluted earnings attributable to owners of the Company 50,885 32,862 66,911
Basic and diluted earnings attributable to non-controlling interests 24 15 25
Basic and diluted earnings attributable to owners of the Company and non-controlling interests 50,909 32,877 66,936
Surplus on revaluation of investment properties (41,580) (25,370) (49,782)
Loss/(gain) on disposal of properties (including tax) 2,868 - (79)
Change in fair value of derivative financial instruments (7) 126 (133)
Deferred tax in respect of EPRA adjustments 1,890 4,738 9,246
EPRA earnings 14,080 12,371 26,188
Non-recurring items as stated within earnings per share can be reconciled with
those stated within administrative expenses in note 5 as follows:
(Unaudited)six months ended30 September 2017E000 (Unaudited)six months ended30 September 2016E000 Year ended31 March 2017E000
Non-recurring items as per note 5 60 804 2,409
Finance restructuring costs 1,390 922 1,762
Selling costs relating to assets held for sale - - 551
LTIP 2,148 2,152 4,136
Change in deferred tax assets (333) (84) (57)
Adjusting items as per note 10 3,265 3,794 8,801
The number of shares has been reduced by 574,892 shares (30 September 2016:
1,062,058 shares; 31 March 2017: 1,062,058 shares), which are held by the
Company as Treasury Shares at 30 September 2017, for the calculation of basic,
headline, adjusted and diluted earnings per share.
The weighted average number of shares for the purpose of diluted and EPRA
diluted earnings per share is calculated as follows:
(Unaudited)30 September 2017Number of shares (Unaudited)30 September 2016Number of shares 31 March 2017Number of shares
Weighted average number of ordinary shares for the purpose of basic, EPRA basic and adjusted earnings per share 894,104,933 803,512,009 822,957,685
Effect of grant of LTIP shares 23,850,000 23,850,000 23,850,000
Weighted average number of ordinary shares for the purpose of diluted and EPRA diluted earnings per share 917,954,933 827,362,009 846,807,685
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 property
revaluation, changes in fair value of derivative financial instruments,
profits and losses on disposals and deferred tax in respect of EPRA
adjustments.
11. Net assets per share
(Unaudited)30 September 2017E000 (Unaudited)30 September 2016E000 31 March 2017E000
Net assets
Net assets for the purpose of assets per share (assets attributable to the equity holders of the Company) 564,555 450,833 495,187
Deferred tax arising on revaluation of properties and LTIP valuation 22,310 16,218 20,753
Derivative financial instruments 334 599 341
Adjusted net assets attributable to equity holders of the Company 587,199 467,650 516,281
Number of shares
Number of ordinary shares for the purpose of net assets per share 926,153,673 840,769,233 877,786,535
Number of ordinary shares for the purpose of diluted EPRA net assets per share 950,003,673 864,619,233 901,636,535
Net assets per share 60.96c 53.62c 56.41c
Adjusted net assets per share 63.40c 55.62c 58.82c
EPRA net assets per share 61.87c 54.80c 57.84c
Net assets at the end of the year (basic) 564,555 450,833 495,187
Directors' discretionary impairment of non-core assets - 5,910 4,968
Derivative financial instruments at fair value 334 599 341
Deferred tax in respect of EPRA adjustments 22,882 16,485 20,993
EPRA net assets 587,771 473,827 521,489
The Company has chosen to report EPRA net assets per share ("EPRA NAV per
share"). EPRA NAV per share is a definition of net asset value as set out by
the European Public Real Estate Association. EPRA NAV represents net assets
after adjusting for derivative financial instruments and deferred tax relating
to valuation movement and derivatives. EPRA NAV per share takes into account
the effect of the granting of shares relating to long-term incentive plans.
The number of shares has been reduced by 574,892 shares (31 March 2017:
1,062,058 shares), which are held by the Company as Treasury Shares at 30
September 2017, for the calculation of net assets and adjusted net assets per
share.
12. Investment properties
Most of the Group's properties are pledged as security for loans obtained by
the Group. See note 18 for details.
The movement in the book value of investment properties is as follows:
(Unaudited)30 September 2017E000 (Unaudited)30 September 2016E000 31 March 2017E000
Total investment properties at book value as at the beginning of the period* 727,295 687,453 687,453
Additions 83,656 50,801 76,265
Capital expenditure 11,926 7,236 16,493
Disposals (7,090) - (6,698)
Reclassified as investment properties held for sale not included in valuation (950) (5,870) (96,000)
Surplus on revaluation above capex 36,797 26,363 50,040
Adjustment in respect of lease incentives (185) (393) (600)
Movement in Directors' discretionary impairment of non-core assets 4,968 (600) 342
Total investment properties at book value as at the end of the period 856,417 764,990 727,295
* Excluding items held for sale.
A reconciliation of the valuation carried out by the external valuer to the
carrying values shown in the statement of financial position is as follows:
(Unaudited)30 September 2017E000 (Unaudited)30 September 2016E000 31 March 2017E000
Investment properties at market value per valuer's report* 859,600 773,720 735,290
Adjustment in respect of lease incentives (3,183) (2,820) (3,027)
Directors' discretionary impairment of non-core assets - (5,910) (4,968)
Balance as at period end 856,417 764,990 727,295
* Excluding assets held for sale.
The fair value (market value) of the Group's investment properties at 30
September 2017 has been arrived at on the basis of a valuation carried out at
that date by Cushman & Wakefield LLP (2016: Cushman & Wakefield LLP), an
independent valuer.
The value of each of the properties has been assessed in accordance with the
RICS valuation standards on the basis of market value. Market value was
primarily derived using a ten 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 year period. After ten years, a
determining residual value (exit scenario) is calculated. A capitalisation
rate is applied to the more uncertain future income, discounted to a present
value.
As at 30 September 2017, no Directors' discretionary
- More to follow, for following part double click ID:nRSa5180XcRecent news on Sirius Real Estate
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AnnouncementREG - Sirius Real Estate M&G PLC - Holding(s) in Company
AnnouncementREG - Stock Exch Notice - Admission to Trading - 20/02/2026
AnnouncementREG - Sirius Real Estate - Director/PDMR Shareholding
AnnouncementREG - Sirius Real Estate - Results of Capital Raise
Announcement