REG - Sirius Real Estate - Half-year Report
08/11/2021 07:05
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RNS Number : 5758R Sirius Real Estate Limited 08 November 2021
This announcement is not, does not constitute or form part of, and should not
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not subject to the registration requirements of the Securities Act and in
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jurisdiction of the United States. No public offering of the securities
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8 November 2021
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Condensed consolidated financial results for the six months ended 30 September
2021
Strong H1 organic growth, inaugural bond issuance and progress on
acquisitions
Sirius Real Estate, the leading operator of branded business parks providing
conventional space and flexible workspace in Germany, today announces its half
year results for the six months ended 30 September 2021.
Organic and acquisitive growth continuing to drive rental income, FFO and
dividend
• 25.7% increase in profit before tax to €78.2 million (30
September 2020: €62.2 million)
• 13.4% growth in funds from operations ("FFO") to €33.0
million (30 September 2020: €29.1 million)
• 12.1%(1) increase in dividend per share to 2.04c (30 September
2020: 1.82c)
• 2.5% increase in like-for-like annualised rent roll to €98.9
million (31 March 2021 €96.5 million(2)) driven by a 2.6% increase in
like-for-like rate per sqm to €6.33 (31 March 2021: €6.17) with further
improvement expected in the second half of the year as assets notarised in the
period complete and contribute to earnings.
Sirius platform continues to deliver against improving market
• High percentage of German population have now been vaccinated
• German economy forecast to grow at c.4% in 2022
• Like-for-like occupancy remained broadly flat at 86%, whilst
total occupancy reduced to 85% (31 March 2021: 87%) primarily as a result of
the acquisition of 23,000 sqm of vacant space within acquisition assets that
completed within the period
• Consistently high cash collection rate of 97.4% for the
six-month period to 30 September 2021 (30 September 2020: 97.3%) and a 12
month trailing rate of 98.2%, reflecting Sirius' tenant diversification and
resilience of its portfolio
• Maintained ratings across MSCI, improved ratings on
Sustainalytics and GRESB Public Disclosure with a fuller ESG update to be
provided at the year-end.
Strong balance sheet and valuation growth
• NAV per share grew 4.9% to 92.62c (31 March 2021: 88.31c) with
adjusted NAV per share increasing by 5.3% to 98.80c (31 March 2021: 93.79c)
• Increase in valuation of like-for-like owned investment property
by €62.1 million to €1,409.3.5 million (31 March 2021:
€1,347.2 million)resulting in 4.6% like-for-like(3) valuation growth
• Total cash balance of €187.6 million (31 March 2021: €65.7
million), of which €172.7 million is unrestricted (31 March 2021: €49.3
million), providing capacity for further acquisitions and investment.
Transformation of balance sheet with inaugural bond issuance
• Completion of €400.0 million oversubscribed corporate bond
issuance in June 2021 attracting a coupon of 1.125% until maturity in June
2026
• Repayment of €170.7 million of secured debt and increase in book
value of unencumbered properties to €944.1 million (31 March 2021: 245.5
million)
• Weighed average cost of debt reduced to 1.2% (31 March 2021: 1.5%)
and weighted average term of debt extended to 3.7 years (31 March 2021: 2.7
years)
• Net LTV of 36.8% (31 March 2021: 31.4%)
Progress on acquisitions
• €153.4 million deployed or committed to eight on balance sheet
acquisitions
• Two acquisition assets completed in the period amounting to
€19.7 million, comprising business parks in Essen and Öhringen
• Six acquisitions notarised in the period and expected to
complete in the second half, amounting to €133.6 million, including business
parks in Heiligenhaus, Oberhausen, Frankfurt, Essen, Erfurt and
Neckartenzlingen.
• Completion of the €79.9 million acquisition of the Sigma
Technopark in Augsburg through the Titanium venture with AXA IM Alts
• The Company also completed the purchase of a land parcel
adjacent to its existing business park in Neuruppin, for €0.5 million.
Board appointment
• Appointment of independent non-executive director Joanne
Kenrick, whose 30 years of commercial marketing experience and ESG strategy
development brings an invaluable contribution to the business.
Outlook
· Trading in line with expectations for the full year
Post period transaction
• Sirius is separately announcing today an acquisition which
will be in part funded by a placing of the Company's new ordinary shares.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: "The
improving economy and renewed market confidence has been reflected in a
positive set of results for Sirius for the first half of the financial year.
The business has grown both organically and acquisitively during the period
which has resulted in our FFO increasing by 13.4% and enabled us to increase
our dividend per share by over 12%. Additionally, the success of our
oversubscribed inaugural corporate bond issuance has allowed us to reduce our
cost of debt further and provide us with significant resources for future
investment whilst also highlighting the conviction investors have in our
strategy.
"As the vaccination roll-out continues across Germany and trading conditions
improve further, Sirius is well-positioned to capitalise on the wider macro
trends being felt in the market, with increased nearshoring and the
localisation of supply chains driving demand for space within our asset class.
We have made strong progress throughout the first half and, with the
contribution from recently notarised properties that have not yet completed to
come, we remain well placed to continue to perform in the second half of the
financial year and beyond."
(1 )Interim dividend representing 65% of FFO (30 September 2020: 65% of FFO)
(2) Excludes €0.7m of annualised rent roll relating to the expected Daimler
moveout in the Fellbach 2 asset that was acquired in March 2021
(3) Like for like comparison assesses assets that were in the portfolio
previously and excludes acquisitions and disposals
CONFERENCE CALL
Webcast Conference
There will be an audio webcast presentation for analysts at 08.30am BST /
10.30am SAST today, hosted by Andrew Coombs, Chief Executive Officer of Sirius
Real Estate.
If you would like to join the webcast please use the registration link below:
https://brrmedia.co.uk/sirius-real-estate-hy22/
(https://brrmedia.co.uk/sirius-real-estate-hy22/)
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Alistair Marks, CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / Claire Turvey / 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 market and premium segment of
the London Stock Exchange and the main board of the Johannesburg Stock
Exchange. It is a leading operator of branded business parks providing
conventional space and flexible workspace in Germany. The Company's purpose is
to create and manage optimal workspaces that empower small and medium-sized
businesses to grow, evolve and thrive. Sirius seeks to unlock the potential of
its people, its properties, and the communities in which it operates, so that
together we can create sustainable impact, and long-term financial and social
value.
The Company's core strategy is the acquisition of business parks at attractive
yields, the integration of these business parks into its network of sites
under the Company's own name as well as offering a range of branded products
within those sites, and the reconfiguration and upgrade of existing and vacant
space to appeal to the local market, through intensive asset management and
investment. The Company's strategy aims to deliver attractive returns for
shareholders by increasing rental income and improving cost recoveries and
capital values, as well as by enhancing those returns through financing its
assets on favourable terms. Once sites are mature and net income and values
have been optimised, the Company may take the opportunity to refinance the
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 for the asset management skills of the Company's team.
Sirius also has a venture with clients represented by AXA IM Alts. Titanium
was formed through the acquisition by AXA IM Alts, on behalf of its clients,
from Sirius, of a 65% stake in five business parks across Germany. Sirius
retained the remaining 35%. The venture seeks to grow primarily through the
acquisition of larger stabilised business park assets and portfolios of assets
with strong tenant profiles and occupancy. As well as its equity interest,
Sirius acts as operator of the assets in the venture, on a fee basis. Sirius
will continue to grow its wholly owned portfolio through acquisitions of more
opportunistic assets, where it can capitalise on its asset management
expertise to maximise utilisation of the space, grow occupancy and improve
quality of the tenants. The strategies have been clearly defined so that the
venture does not conflict with Sirius's existing business.
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
JSE Sponsor
PSG Capital
€78.2m
↑ 25.7%
Profit before tax
2021 78.2
2020 62.2
€88.4m
↑ 11.5%
Total revenue
2021 88.4
2020 79.3
€33.0m
↑ 13.4%
Funds from operations1
2021 33.0
2020 29.1
€99.7m
↑ 11.8%
Total annualised rent roll
2021 99.7
2020 89.2
2.04c per share
↑ 12.1%2
Interim dividend
2021 2.04
2020 1.82
6.44c per share
↑ 18.2%
Basic earnings per share
2021 6.44
2020 5.45
1 See note 24 of the Interim Report 2021
2 Interim dividend representing 65% of FFO (30 September 2020: 65% of
FFO).
3 See note 11 of the Interim Report 2021
Business update
Strong organic and acquisitive growth
In summary:
• Positive trading momentum in first half of the financial year
• Profit before tax of €78.2 million (30 September 2020: €62.2
million)
• 13.4% increase in funds from operations ("FFO") to €33.0 million
(30 September 2020: €29.1 million)
• Dividend of 2.04c per share declared, 1.5 times covered by FFO (30
September 2020: 1.82c)
• Completion of €400.0 million inaugural unsecured bond issuance
• €153.9 million of acquisitions completed or notarised in the
period
Overview
Sirius has had a positive six-month trading period with strong organic growth
and revenue increasing 11.5% to €88.4 million (30 September 2020: €79.3
million) resulting in a 2.5% increase in like-for-like annualised rent roll,
13.4% increase in FFO to €33.0 million (30 September 2020: €29.1 million)
and a 4.6% like-for-like uplift in the valuation of its investment property.
The period under review saw the successful completion of the Company's
inaugural bond issuance with a €400.0 million placing transforming the
Company's balance sheet and increasing the amount of unencumbered assets to
€944.1 million. The issuance also resulted in a reduction in the average
cost of debt to 1.2% (31 March 2021: 1.5%) and increase in average debt
maturity to 3.7 years (31 March 2021: 2.7 years). The Company made good
progress in the deployment of funds generated from the issuance with the
acquisition of two assets and one land parcel completing within the period for
€20.2 million and the acquisition of six assets notarised for completion
after the period end amounting to €133.6 million.
The Company has declared a dividend in respect of six months ended 30
September 2021 of 2.04c per share representing 65% of FFO. This is a 12.1%
increase on the 1.82c declared in relation to the same period in the prior
year.
Looking forward, the Company is confident it can continue to grow FFO
organically through its intensive asset management initiatives and through
acquisitions, as assets that were recently acquired or notarised for
completion are integrated into the operating platform in the second half of
the financial year.
Financial performance
The Company reported a profit before tax for the six-month period of €78.2
million (30 September 2020: €62.2 million) including €51.4 million of
gains (30 September 2020: €33.5 million) from owned property revaluations
(net of capex and adjustments in relation to lease incentives and broker
fees). Total revenue, which comprises rent, fee income from Titanium, other
income from investment properties and service charge income, increased by
11.5% to €88.4 million (30 September 2020: €79.3 million).
FFO for the six months grew to €33.0 million (3.14c per share) compared to
€29.1 million (2.80c per share) for the same period in the prior year, an
increase of 12.1% on a per share basis, which feeds through to the increase in
dividend pay-out. Basic earnings of €67.7 million and 6.44c per share
increased by 18.2% on a per share basis from 5.45c reflecting the increases in
valuations, organic growth and the impact of acquisitions compared to the same
period in the prior year. Similarly, adjusted EPS, which excludes valuation
movements as well as exceptional items, increased 7.3% to 2.93c per share from
2.73c reflecting the positive year on year operational development. The
following table sets out the key earnings per share metrics:
Table 1: Earnings per share
30 Sept 2021 30 Sept 2021 30 Sept 2020 30 Sept 2020
earnings 30 Sept 2021 cents earnings 30 Sept 2020 cents
€000 no. of shares per share €000 no. of shares per share Change %
Basic EPS 67,738 1,052,600,936 6.44 56,549 1,037,394,967 5.45 18.2%
Diluted EPS 67,738 1,070,514,305 6.33 56,549 1,053,039,717 5.37 17.9%
Adjusted EPS 30,862 1,052,600,936 2.93 28,322 1,037,394,967 2.73 7.3%
Basic EPRA EPS 32,550 1,052,600,936 3.09 28,326 1,037,394,967 2.73 13.2%
Diluted EPRA EPS 32,550 1,070,514,305 3.04 28,326 1,053,039,717 2.69 13.0%
The Directors have chosen to disclose EPRA earnings, which are widely used
alternative metrics to their IFRS equivalents (further details on EPRA best
practice recommendations can be found at www.epra.com (http://www.epra.com) ).
Refer to note 2(c) for further information.
As the investment market continued to open up, the Company was able to deploy
or commit a total of €153.9 million on acquisitions. Due to the timing of
completions the impact from acquisitions in the six-month period to 30
September 2021 was not material, however based on estimated completion dates
of notarised assets the contribution for the second half of the financial year
is expected to be more significant.
Net asset value per share ("NAV") grew by 4.9% to 92.62c (31 March 2021:
88.31c) in the period whilst adjusted net asset value per share ("adjusted
NAV") increased by 5.3% to 98.80c (31 March 2021: 93.79c). EPRA net tangible
assets ("EPRA NTA") per share increased by 5.1% to 97.02c (31 March 2021:
92.29c) with the main driver of these increases attributable to valuation
uplift more than offsetting the dividend paid to shareholders in the period.
The valuation metrics are described in more detail below and the movement in
net asset value per share in the period can be seen in the following table:
Table 2: Net assets per share
cents per share
NAV as at 31 March 2021 88.31
Profit after tax 2.89
Gain on revaluation of investment properties 4.86
Deferred tax charge (0.82)
Scrip and cash dividend paid (2.08)
Adjusting items (0.54)
NAV per share as at 30 September 2021 92.62
Deferred tax and adjustments to financial derivatives* 6.18
Adjusted NAV per share as at 30 September 2021 98.80
EPRA adjustments* (1.78)
EPRA NTA per share as at 30 September 2021 97.02
*See note 11 of the Interim Report 2021.
Lettings and rent roll development
Like-for-like annualised rent roll increased by 2.5% to €98.9 million (31
March 2021: €96.5* million) driven by a 2.6% increase in like-for-like
average rental rate to €6.33 per sqm from €6.17 per sqm highlighting
strong occupier demand and realisation of some potential within the portfolio
whilst total annualised rent roll increased by 3.3% to €99.7 million (31
March 2021: €96.5* million). Like-for-like occupancy remained broadly flat
at 86%, whilst total occupancy reduced to 85% (March 2021: 87%) primarily as a
result of the acquisition of 21,000 sqm of vacant space within
the Essen and Ohringen assets that completed within the period. The movement
in annualised rent roll is described in more detail below:
Table 3: Annualised rent roll €m
Annualised rent roll 31 March 2021* 96.5
Acquisitions 0.8
Move-outs (5.7)
Move-ins 6.8
Contracted uplifts 1.3
Annualised rent roll as at 30 September 2021 99.7
*Excludes €0.7 million of annualised rent roll relating to the expected
Daimler moveout in the Fellbach 2 asset that was acquired in March 2021.
Sirius generated a total of 8,036 enquiries** during the period compared to
8,284 for the same period in the prior year. Analysis of the enquiries showed
an increase in demand for commercial and self-storage spaces as onshoring of
production and the related impact on supply chains continues to gain momentum.
The monthly development of like-for-like enquiries compared to the same period
in the prior year is detailed in the table below:
**Includes enquiries relating to assets under operating and management
contracts and Titanium
Table 4: Enquiries
No. of enquiries No. of enquiries Change %
six months to six months to
Sept 2020 Sept 2021
April 1,202 1,235 2.7%
May 1,248 1,333 6.8%
June 1,368 1,341 -2.0%
July 1,367 1,305 -4.5%
August 1,477 1,435 -2.9%
September 1,622 1,387 -14.5%
Total 8,284 8,036 -3.0%
Whilst the six months to September 2021 saw a similar number of leasing deals
to the same period in the prior year the volume of sqms let in the period
increased to 83,757 from 74,095 whilst the average deal size increased to 82
sqm from 67 sqm. Conversion rates remained stable at 13.1% compared to 13.4%
for the same period in the prior year. Details of monthly letting numbers and
square metre volumes compared to the same period in the previous year are set
out in the table below:
Table 5: Lettings
New lettings New lettings sqm sqm Average sqm Average sqm
six months to six months to six months to six months to six months to six months to
Sept 2020 Sept 2021 Sept 2020 Sept 2021 Sept 2020 Sept 2021
April 115 219 8,025 13,463 70 61
May 130 170 11,282 15,953 87 94
June 165 166 11,242 12,629 68 76
July 215 139 13,170 15,185 61 109
August 259 182 15,324 11,877 59 65
September 226 175 15,052 14,650 67 84
Total 1,110 1,051 74,095 83,757 69 82
Tenant retention in the period was encouraging with 71% of square metres up
for renewal in the period being successfully extended (30 September 2020:
68%), especially given the changeable economic environment during the period.
The consistency in renewals, enquiry levels and sales conversion levels
demonstrate the capability of the Company's internal operating platform to
create value in a variety of market conditions. Furthermore, with a number of
new acquisition assets expected to complete in the second half of the
financial year, the Company is well placed to take advantage of the
opportunity those assets present to increase occupancy and operating income.
Cash collection
The Company benefits from an experienced in-house team of cash collection
professionals who maintain close relationships with tenants. During the period
under review Sirius worked with its tenants as they continued to adapt to new
ways of working and related space requirements whilst actively managing their
debt. The Group's cash collection performance in the six-month period to 30
September 2021 relating to rent and service charge prepayments (excluding VAT)
is detailed in the following table:
Table 6: Cash collection to 30 September 2021
Invoiced €000 Outstanding €000 Collection %
April 12,551 179 98.6%
May 12,488 220 98.2%
June 12,747 232 98.2%
July 12,895 284 97.8%
August 12,932 373 97.1%
September 13,113 722 94.5%
Total 76,726 2,010 97.4%
In the six-month period to 30 September 2021 the Company billed a total of
€76.7 million (excluding VAT) to tenants of which €74.7 million or 97.4%
was collected. The Company expects to collect the majority of the €2.0
million outstanding debt from the period through its regular collection
activities over the coming months. Write offs with a value of less than
€50,000 relating to the period under review were recorded. The rolling
twelve month cash collection rate was 98.2% in line with the 98.2% reported
for the twelve-month period to 31 March 2021. This consistency in cash
collection demonstrates the benefits of a well-diversified portfolio and
tenant base that represents a wide range of industries combined with the asset
management expertise of the Company's internal operating platform. Further,
the Group continued to collect cash from rent and service charge invoices that
were outstanding as at 31 March 2021.
Portfolio valuation
Demand from investors for industrial and office business parks in Germany has
increased as vaccination rates accelerate and markets return to growth.
Domestic and foreign sources of capital are again active in the market and
competing for assets that provide well-diversified, attractive cashflows and
growth potential. Whilst yield movement has been a strong feature of valuation
development in recent periods, the upgrading and repositioning of assets
through the Company's capex investment programmes and the resulting organic
rental growth continue to be a major driver of value for the Company.
The portfolio of owned investment properties, which excludes leased investment
properties and the assets within Titanium, comprised 62 assets as at 30
September 2021 and was independently valued by Cushman & Wakefield LLP at
€1,432.0 million (31 March 2021: €1,350.8 million), converting to a book
value of €1,428.5 million (31 March 2021: €1,347.2 million) after allowing
for the provision for lease incentives.
The movement in book value for the period relating to owned investment
properties can be reconciled as follows:
Table 7: Reconciliation of market value to book value
30 September 31 March
2021 2021
€m €m
Owned investment properties at market value 1,432.0 1,350.8
Adjustment in respect of lease incentives (3.5) (3.6)
Book value as at period end 1,428.5 1,347.2
Taking into account investment property relating to leased assets the total
investment property book value as at 30 September 2021 was €1,444.8 million
(31 March 2021: €1,362.2 million). The movement in book value in the period
is set out in the table below:
Table 8: Movement in book value in the period
Investment Investment Investment
property - owned property - leased property -
€000 €000 total
€000
Investment properties at book value as at 31 March 2021 1,347,167 15,025 1,362,192
Additions 20,221 4,378 24,599
Capex investment and capitalised broker fees 9,574 - 9,574
Disposals - - -
Surplus on revaluation above capex investment and broker fees 51,445 - 51,445
Deficit on revaluation relating to leased investment properties - (3,083) (3,083)
Adjustment in respect of lease incentives 52 - 52
Investment properties at book value as at 30 September 2021 1,428,459 16,320 1,444,779
The positive movement in owned investment property of €81.3 million was made
up of €20.2 million of acquisitions, a net €51.0 million valuation
uplift, after taking into account €9.6m of capital expenditure and a €0.1
million adjustment in respect of lease incentives. In accordance with IFRS 16,
the Group recognises lease liabilities of €14.7 million relating to leases
on assets meeting the definition of investment property. Accordingly, an
expense of €3.1 million representing the fair value adjustment in the year
was recorded in the statement of comprehensive income. During the period under
review the Group entered into a ground lease agreement meeting the definition
of investment property as a result of acquisition activity. Accordingly, an
addition to leased investment property was recorded amounting to €4.4
million.
Whilst the valuation uplift for the period relating to owned investment
properties was €61.0 million, the net valuation gain after taking into
account €9.6 million of capital expenditure and adjustments for broker fees
was €51.5 million. The gain on revaluation on investment properties recorded
in the consolidated statement of comprehensive income, which also adjusts for
lease incentives and deficit on revaluation relating to leased assets, was
€48.4 million.
The book value of the like-for-like assets increased by €62.1 million or
4.6% from €1,347.2 million to €1,409.3 million. The assets that were
acquired in the period were revalued at €0.3 million above the property
purchase prices paid but €1.1 million less than the total acquisition costs
paid for them.
Table 9: Book value valuation metrics
Owned properties Annualised Vacant
rent roll Book value NOI Capital Gross Net space Rate per sqm Occupancy
€m €m €m value/sqm yield yield sqm € %
Value-add assets 62.4 851.1 54.6 794 7.3% 6.4% 204,936 6.23 80.3%
Mature assets 37.3 577.4 35.8 1,103 6.5% 6.2% 23,620 6.49 95.3%
Other - - (1.3) - - - - - -
Total 99.7 1,428.5 89.1 895 7.0% 6.2% 228,556 6.33 85.2%
The 30 September 2021 book value of owned properties of €1,428.5 million
represents an average gross yield of 7.0% (31 March 2021: 7.2%) which
translates to a net yield of 6.2% (31 March 2021: 6.5%). The valuation
increase compared to 31 March 2021 was primarily driven by organic increases
in annualised rent roll of €2.4 million reflecting the ability of the
operating platform to consistently grow income. Gross yield compression was
approximately 20 bps.
Importantly, just over 60% of the total portfolio relates to assets with
value-add potential which can be unlocked by utilising the Company's platform
to undertake intensive asset management and selective capex investment. With
average occupancy of 80.3% and valuations at a gross yield of 7.3%,
significant income and capital value growth within the value-add assets can be
achieved in future periods. Whilst the average occupancy of the mature assets
has now increased to 95.3%, they are valued at a yield that is around 80 bps
lower than the value-add assets highlighting the scope for growth in the
value-add assets.
The average capital value per sqm of the portfolio of €895 per sqm remains
well below replacement cost and illustrates the potential for further growth
from transformative investment within the Group's capex investment programmes.
Capex investment programmes
The Group's capex investment programmes have historically been focused on the
transformation of underutilised vacant space that is typically acquired at low
cost due to it being considered as structurally void by former owners, and is
subjected to ongoing capex investment programmes. The take up of this space
has resulted in significant improvements in service charge cost recovery and
therefore increased operating income and consistently makes a strong
contribution to the valuation increases the Company has been recording now for
many years. The completed original capex programme included an investment of
€25.7 million into 204,182 sqm which, at 30 September 2021, was generating
€12.8 million in annualised rent roll representing a return on cost of
49.8%.
The new acquisition programme which began in 2017 now extends to 185,180 sqm
of space that is subject to a budgeted investment of €40.3 million from
which the Company expects to generate €13.2 million in annualised rent roll.
As at 30 September 2021 a total of 154,905 sqm had been transformed with an
investment of €30.8 million which, at 72% occupancy, was generating
annualised rent roll of €10.0 million. In addition to the space that has
been completed and let or is currently being marketed, a total of
approximately 30,275 sqm of space is either in progress of being transformed
or is awaiting approval to commence transformation. A further €4.9 million
is expected to be invested into this space on top of the €0.8 million
already spent, and, based on achieving budgeted occupancy, incremental
annualised rent roll in the region of €1.9 million is expected to be
generated. Further information on the new acquisition capex programme is
detailed below:
Table 10: New acquisition capex investment programme
Annualised
rent roll
increase
achieved to
September
2021
€m
Rate
per sqm
achieved to
September
2021
€
Annualised
rent roll
increase
budgeted
€m
Occupancy Rate
achieved to per sqm
September budgeted
2021
€
Investment Actual
budgeted spend
€m
€m
Occupancy
budgeted
New capex investment programme progress sqm
Completed 154,905 34.6 30.8 11.2 10.0 82% 72% 7.31 7.49
In progress 13,934 2.3 0.8 0.9 0.1 95% - 5.65
To commence in next financial year 16,341 3.4 - 1.1 - 80% - 7.01 -
Total 185,180 40.3 31.6 13.2 10.1 83% - 7.14 -
Whilst the income returns expected to be achieved on the more recent projects
are less than those of the original programme, the extent of transformative
work involved suggests the impact on valuations may be more pronounced. The
capex investment programmes have been one of the key income and valuation
growth drivers over the last few years and, as a result, the Company continues
to seek to acquire assets with sub-optimal vacancy in order to refuel them.
In addition to the capex investment programmes Sirius also looks for
opportunities to upgrade recently vacated space that is returned each year as
a result of move-outs. Within the existing vacancy at 30 September 2021, the
Company has identified approximately 34,273 sqm of recently vacated space that
has potential to be upgraded. This space can be upgraded with an investment of
€7.2 million and generate €2.8 million in annualised rent roll when
re-let. This selective investment into vacated space allows the Company to
capture reversionary potential whilst significantly enhancing the desirability
and value of lower quality space.
The Company's headline 85% occupancy rate means that in total 228,556 sqm of
space is vacant as at 30 September 2021. When excluding the vacancy, which is
subject to investment (4% of total space), and the structural vacancy, which
is not economically viable to develop (3% of total space), the Company's
occupancy rate based on space that is readily lettable is approximately 92%.
The analysis below details the underutilised space and vacancy at 30 September
2021 and highlights the opportunity from developing this space.
Table 11: Vacancy
% of total Capex ERV
space sqm investment (post investment)
€m
Subject to capex investment programmes 2% 28,821 (4.9) 1.9
Recently vacated space 2% 34,273 (7.2) 2.8
Total space subject to investment 4% 63,094 (12.1) 4.7
Structural vacancy 3% 40,090 - -
Lettable vacancy
Smartspace vacancy 2% 26,116 - 2.6
Other vacancy 6% 99,256 (0.9) 6.3
Total lettable space 8% 125,372 (0.9) 8.9
Total vacancy 15% 228,556 (13.0) 13.6
The opportunity within the vacant space as at 30 September 2021 can be
summarised as follows:
• 63,094 sqm of sub-optimal and recently vacated space, which
requires €12.1 million of capex and will have an ERV of €4.7 million when
completed; and
• 125,372 sqm of lettable space, which requires €0.9 million of
capex and has an ERV of €8.9 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 growth.
Excellent progress with acquisitions
Building on the momentum achieved when the investment markets
in Germany gathered momentum at the end of last year, the Company made good
progress in terms of capital deployment in the period. A total
of €153.4 million was committed to eight business park acquisitions, with
two assets completing in the period and the remaining six notarised for
completion post period end. In addition, the Company completed the purchase of
a land parcel adjacent to an existing business park asset for €0.5 million.
The Company also completed the previously announced acquisition of a business
park in Augsburg for €79.9 million through its Titanium venture with AXA
IM Alts, which comprises seven assets with a combined value
of €333.3 million for the period ended 30 September 2021 (31 March 2021:
€244.2 million).
A summary of acquisitions is set out in the table below:
Table 12:Acquisitions
Total Acquisition
investment non-
(incl. Annualised recoverable Acquisition Annualised
acquisition Total Acquisition acquisition service maintenance acquisition
costs) acquisition Acquisition vacant rent roll charge costs costs NOI EPRA net
Completed Acquisitions €000 sqm occupancy sqm €000 €000 €000 € initial yield
Essen I 10,706 14,711 80% 2,897 829 (125) (13) 691 6.5%
Öhringen 9,023 18,010 0% 18,010 - (609) (32) (641) -7.1%
Sub-total 19,729 32,721 36% 20,907 829 (734) (45) 50 0.3%
Notarised Acquisitions
Oberhausen 39,843 77,605 63% 28,680 3,218 (795) (90) 2,334 5.9%
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%
Neckartenzlingen 34,485 54,514 80% 10,705 2,196 (237) (22) 1,937 5.6%
Sub-total 133,640 221,429 73% 60,741 9,379 (1,689) (227) 7,466 5.6%
Core portfolio total 153,369 254,150 68% 81,648 10,208 (2,423) (272) 7,515 4.9%
Notarised Acquisitions
(Titanium venture)
Augsburg 79,896 112,784 90% 11,481 5,426 (569) (71) 4,786 6.0%
Titanium venture subtotal 79,896 112,784 90% 11,481 5,426 (569) (71) 4,786 6.0%
Grand total 233,265 366,934 75% 93,129 15,635 (2,992) (342) 12,301 5.3%
The acquisition assets are located in markets underpinned by strong demand
dynamics that in some cases are complementary to the Company's existing
business parks. With total annualised net operating income of €7.5
million, the acquisition assets provide attractive and well-diversified
cashflows that, once fully integrated, will make a significant contribution to
the Company's FFO growth. Additionally, with approximately 82,000 sqm of
vacant space these acquisition assets provide opportunity for the Company to
make selective investments that upgrade the space and drive income growth.
Further information on the acquisitions assets is detailed below:
· The Essen I asset completed in May 2021, was acquired for total
acquisition costs of €10.7 million and provides a mix of production, storage
and office space located in the heart of Germany's industrial Rhein-Ruhr
region. Whilst the acquisition represents the Company's first of two
investments in Essen during the period, the Company knows the location 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 approximately 18,000 sqm of lettable
space including 15,800 sqm of 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
increasing to approximately 50% as at 30 September 2021.
· The Oberhausen business park notarised for €39.8 million, and
once completed will be one of the Company's physically larger assets and is
located in a well-developed commercial area of the city of Oberhausen, in the
northwest of Germany's Rhein-Ruhr region. The asset offers a wide mix of
uses with approximately 77,600 sqm of lettable space, comprising around 47,400
sqm of offices, 19,200 sqm of warehouse space, 4,600 sqm of storage and 6,400
sqm of other space. The asset is 63% occupied and provides strong day one
cash flows with the opportunity to grow income through the letting of vacant
space and reduction of service charge costs supported by targeted investment
and refurbishment.
· The multi-tenanted business park at Heiligenhaus, Nord
Rhein-Westfalen, was notarised in the period under review for total
acquisition costs amounting to €14.2 million. The asset provides
approximately 45,000 sqm of lettable space consisting of around 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 currently generates
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), provides the opportunity to capture reversionary income
growth.
· The Company notarised the acquisition of its third asset
in Frankfurt, a multi-tenanted office tower comprising total lettable area of
approximately 10,000 sqm for total acquisition costs of €21.2 million. The
property generates annualised net operating income of €598,000 per annum
at 54% occupancy at an average rent of €11.02 per sqm (excluding parking
and other income) and has a remaining WALE of 2.9 years. The property benefits
from its location close to two this major city's main autobahns and aligns to
the Company's strategy of providing a range of flexible out of town office
products that it expects to appeal to the local market.
· Following on from the completion of the Company's first
investment in Essen in May 2021 the Company was able to build scale in the
local market through the notarisation of the Essen II property for total
acquisition costs of €12.2 million in August 2021. The Essen II asset
comprises 11,709 sqm of office and production space and, at 81% occupancy,
generates annualised net operating income of €851,000.
· The notarisation of the multi-tenanted business park in Erfurt
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.
The site generates €623,000 of annualised net operating income at 81%
occupancy providing opportunity to grow income through the letting of vacant
space and potential investment into an 18,000 sqm development land parcel that
formed part of the acquisition.
· The Company notarised the acquisition of the high quality
Neckartenzlingen property, located to the south of Stuttgart, for total
acquisition costs of €34.5 million shortly before the period end. The asset
comprises 54,515 sqm of predominantly production and warehouse space with net
operating income of €1.9 million and WALE of 8.1 years providing stable,
long term cashflows with the opportunity to grow income coming from the let up
of vacant space which amounts to more than 10,000 sqm at the date of
notarisation.
· The Company completed the acquisition of Augsburg within the
Titanium venture with AXA IM Alts (of which Sirius owns 35%) which it had
notarised in the prior year for total acquisition costs of €79.9 million.
The business park is located in one of the most well-known industrial areas in
Bavaria and benefits from strong public transportation connections to the city
centre. The asset provides stable day one cash flows through its 90% occupancy
rate whilst providing opportunity for Sirius to add value through
redevelopment and active asset management. The site generates annualised rent
roll of €5.4 million and has total lettable space of 112,784 sqm of which
11,300 sqm is vacant, and produces an average rate per sqm of €4.46.
In addition, the Company has also completed the acquisition of an
approximately 16,000 sqm land parcel adjacent to its asset in Neuruppin
for €0.5 million (total acquisition cost), to assist in its plans to
expand and develop the existing property.
Inaugural bond issuance
As previously communicated 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 was significantly
oversubscribed and successfully completed in June 2021 following the award of
a BBB stable investment grade credit rating from Fitch in May 2021. Bonds
totalling €400.0 million, listed on the Luxembourg stock exchange, were
issued attracting a coupon of 1.125% with a maturity date of June 2026.
The bond issuance coupled with the repayment of €170.7 million of existing
secured debt provides the Group with a number of benefits including:
· strong financial capacity to fund acquisitions and other investment
opportunities;
· reduction in the Group's weighted average cost of debt to 1.2% (31
March 2021: 1.5%) and increase in weighted average term of debt to 3.7 years
(31 March 2021: 2.7 years); and
· increase in the number of unencumbered assets to 48, with a book value
of approximately €944.1 million.
Following the bond issuance and related secured debt repayments, the Group
holds total debt amounting to €698.2 million of which €450.0
million or 65% is unsecured (31 March 2021: 11%). The transformation of the
Group's financing arrangements is expected to provide positive support to
Sirius' operations notably will and make asset recycling much easier and less
expensive. Net LTV, which excludes restricted cash balances, was 36.8% (31
March 2021: 31.4%) whilst interest cover at EBITDA level was 9.8x as at 30
September 2021 (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:
€000
Table 13:Movement in debt*
Total debt as at 31 March 2021 472,032
Bond issuance 400,000
Repayment of secured facilities (170,709)
Scheduled amortisation (3,081)
Total debt as at 30 September 2021 698,242
*Excludes loan issue costs
Well-diversified income and tenant base
Against the backdrop of the pandemic the combination of having a
well-diversified tenant base and wide range of products underpinned by an
established operating platform has been proven. Sirius' portfolio includes
production, storage and out of town office space that cater to multiple usages
and a range of size and types of tenants. The Company's tenant base is
well-diversified providing stability through its large long-term anchor
tenants and opportunity through the flexible SME and private customers.
The Group's large anchor tenants are typically multinational corporations
occupying production, storage and related office space. The balance comprises
primarily SME tenants and private customers who occupy space on both
conventional and 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 2.5% of total
annualised rent roll whilst 7.9% of its annualised rent roll comes from
government tenants.
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:
Table 14: Tenant breakdown
No. of Occupied % of occupied sqm Annualised % of total Rate
tenants as at sqm rent income* annualised per sqm
30 September 2021 €m rent income* €
%
Top 50 anchor tenants1 50 571,860 44% 39.3 39% 5.72
Smartspace SME tenants2 2,921 68,198 5% 7.1 7% 8.69
Other SME tenants3 2,829 673,011 51% 53.3 54% 6.60
Total 5,800 1,313,069 100% 99.7 100% 6.33
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 retail tenants.
* See glossary section of the Interim Report 2021.
Smartspace
A key differentiator for Sirius continues to be the ability to provide a
variety of flexible products that meet local market demand. The Company's
Smartspace products are specifically designed to provide tenants with a range
of options in terms of type and size of space, price, lease length and the
provision of services, As the pandemic has necessitated businesses to adapt to
new and still evolving ways of working the Company's Smartspace products have
proven popular with occupancy increasing to 72% from 69% and rate increasing
by 4.1% to €8.69 psm within the six-month period to 30 September 2021. The
range of products and ability of the Sirius operating platform to increase
occupancy and rate within this segment positions the Company well as working
patterns continue to shift. Smartpace now contributes total annualised rent
roll of €7.1 million, an increase of 9.3% from the beginning of the period.
A summary of Smartspace products and their contribution to the Group is set
out below:
Table 15: Smartspace
Annualised
rent roll % of total Rate per sqm
(excl. service Smartspace (excl. service
Total Occupied Occupancy charge) annualised charge)
Smartspace product type sqm sqm % € rent roll €
First Choice Office 5,117 2,979 58% 760,000 11% 21.26
SMSP Office 31,171 23,631 76% 2,617,000 36% 9.23
SMSP Workbox 6,997 5,926 85% 409,000 6% 5.75
SMSP Storage 44,952 33,267 74% 2,884,000 41% 7.22
SMSP Containers - - - 230,000 3% -
SMSP subtotal 88,237 65,803 75% 6,900,000 97% 8.74
SMSP Flexilager 6,077 2,395 39% 214,000 3% 7.45
SMSP total 94,314 68,198 72% 7,114,000 100% 8.69
In addition, having identified at an early stage an increase in demand for
storage products, the Group has grown its storage container investment and is
generating annualised rent roll of €230,000 as at 30 September 2021
(€168,000 as at 31 March 2021) on its otherwise non income producing land.
Environmental, Social, Governance ("ESG")
During the period under review the Company continued to develop its ESG
programme and to integrate it into its strategy and business processes.
Operating sustainably, recognising the importance of environmental
responsibility, and creating long-term social and financial value are
essential elements of the Company's purpose. The business is built on the
recycling of working spaces and refurbishing and revitalising older buildings.
Sirius is committed to developing a carbon reduction strategy that will be
based on solid analysis and delivered within a timeframe that is financially
and sustainably viable. People also remain at the heart of the business, both
our own employees and those of our tenants, and the Company has continued to
enhance its engagement with these key stakeholders during the first half of
the financial year. The Company looks forward to providing further
information and more detailed reporting as part of its Annual Report and
Accounts 2022.
Outlook
Sirius is pleased with the trading momentum achieved in the first six months
of the financial year which came predominantly as a result of organic growth
and resulted in a 12.1% increase in dividend to 2.04c per share compared to
the same period in the prior year. The inaugural €400.0 million bond
issuance that completed in June 2021 has resulted in an improvement in the
Company's financial position and balance sheet strength whilst also providing
significant firepower for acquisitive growth. The Company has made good
progress in deploying or committing funds raised through the bond issuance and
looks forward to continuing to integrate acquisition assets into its platform
in the second half of the financial year. The Company remains committed to
delivering attractive risk adjusted returns to shareholders and continues to
assess a wide range of future growth opportunities, including planned
acquisitions and continues to trade in line with expectations for the full
year
Statement of Directors' responsibilities
Each of the Directors, whose names and functions appear below, confirm to the
best of their knowledge that the unaudited condensed consolidated interim
financial statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting", as issued by the IASB, and the interim management report
herein includes a fair review of the information required by the Disclosure
Guidance and Transparency Rules ("DTR"), namely:
• DTR 4.2.7 (R): an indication of important events that have
occurred during the first six months of the financial year, and their impact
on the condensed set of consolidated interim financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• DTR 4.2.8 (R): any related party transactions that have taken
place in the six-month period ended 30 September 2021 that have materially
affected, and any changes in the related party transactions described in the
2021 Annual Report that could materially affect, the financial position or
performance of Sirius Real Estate Limited during the period.
The Directors of Sirius Real Estate Limited as at the date of this
announcement are set out below:
• Daniel Kitchen, Chairman*
• James Peggie, Senior Independent Director*
• Andrew Coombs, Chief Executive Officer
• Alistair Marks, Chief Financial Officer
• Caroline Britton*^
• Mark Cherry(*)
• Kelly Cleveland*^
• Joanne Kenrick *°
* Non-Executive Directors.
^ Appointed 1 June 2020.
° Appointed 1 September 2021.
A list of the current Directors is maintained on the Sirius Real Estate
Limited website: www.sirius-real-estate.com.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in Guernsey governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
By order of the Board
Andrew Coombs
Chief Executive Officer
Alistair Marks
Chief Financial Officer
5 November 2021
Independent review report
to Sirius Real Estate Limited
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021 which comprises the unaudited consolidated statement of
comprehensive income, the unaudited consolidated statement of financial
position, the unaudited consolidated statement of changes in equity, the
unaudited consolidated statement of cash flow and the related notes 1 to 27.
We have read the other information contained in the half yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority, the South African Institute of Chartered
Accountants (SAICA) Financial Reporting Guides, as issued by the South African
Accounting Practices Committee and the Financial Pronouncements as issued by
the Financial Reporting Standards Council of South Africa.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the UK Auditing
Practices Board. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting".
Responsibilities of the Directors
The directors are responsible for preparing the half-yearly financial report
in accordance with:
- the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority;
- the South African Institute of Chartered Accountants (SAICA)
Financial Reporting Guides, as issued by the Accounting Practices Committee;
- the Financial Pronouncements as issued by the Financial Reporting
Standards Council of South Africa.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion is based on procedures that are
less extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the UK Auditing Practices Board. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our work, for this report, or for the
conclusions we have formed.
Ernst & Young LLP
London
5 November 2021
Consolidated statement of comprehensive income
for the six months ended 30 September 2021
Notes Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Revenue 4 88,352 79,288
Direct costs 5 (38,843) (35,377)
Net operating income 49,509 43,911
Gain on revaluation of investment properties 12 48,414 31,909
Loss on disposal of properties (400) (10)
Gain on loss of control of subsidiaries 94 -
Administrative expenses 5 (12,311) (11,864)
Share of profit of associates 16 2,463 2,096
Operating profit 87,769 66,042
Finance income 8 1,596 1,317
Finance expense 8 (11,347) (5,036)
Change in fair value of derivative financial instruments 8 160 (132)
Net finance costs (9,591) (3,851)
Profit before tax 78,178 62,191
Taxation 9 (10,386) (5,593)
Profit and total comprehensive income for the period after tax 67,792 56,598
Profit and total comprehensive income attributable to:
Owners of the Company 67,738 56,549
Non-controlling interest 54 49
Total comprehensive income for the period after tax 67,792 56,598
Earnings per share
Basic earnings per share 10 6.44c 5.45c
Diluted earnings per share 10 6.33c 5.37c
All operations of the Group have been classified as continuing.
Consolidated statement of financial position
as at 30 September 2021
Unaudited
30 September 31 March
2021 2021
Notes €000 €000
Non-current assets
Investment properties 12 1,444,779 1,362,192
Plant and equipment 2,623 2,682
Intangible assets 13 7,175 6,568
Right of use assets 14 1,659 1,919
Other non-current assets 15 47,585 44,960
Investment in associates 16 19,665 17,202
Total non-current assets 1,523,486 1,435,523
Current assets
Trade and other receivables 17 95,599 18,731
Derivative financial instruments - 70
Cash and cash equivalents 18 187,606 65,674
Total current assets 283,205 84,475
Total assets 1,806,691 1,519,998
Current liabilities
Trade and other payables 19 (49,175) (50,527)
Interest-bearing loans and borrowings 20 (4,786) (9,114)
Lease liabilities 14 (3,915) (5,857)
Current tax liabilities (3,487) (2,063)
Derivative financial instruments (234) (414)
Total current liabilities (61,597) (67,975)
Non-current liabilities
Interest-bearing loans and borrowings 20 (684,345) (458,940)
Lease liabilities 14 (12,519) (9,130)
Derivative financial instruments (273) (797)
Deferred tax liabilities 9 (65,037) (56,331)
Total non-current liabilities (762,174) (525,198)
Total liabilities (823,771) (593,173)
Net assets 982,920 926,825
Equity
Issued share capital 22 - -
Other distributable reserve 23 437,053 449,051
Own shares held 22 (2,597) (2,903)
Retained earnings 548,123 480,385
Total equity attributable to the owners of the Company 982,579 926,533
Non-controlling interest 341 292
Total equity 982,920 926,825
The financial statements on pages 13 to 39 were approved by the Board of
Directors on 5 November 2021 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the six months ended 30 September 2021
Notes Issued Other Own shares Retained Total equity Non- Total
share distributable held earnings attributable controlling equity
capital reserve €000 €000 to the owners of interest €000
€000 €000 the Company €000
€000
As at 31 March 2020 - 470,151 (1,515) 332,934 801,570 246 801,816
Share-based payment transactions 7 - 1,448 - - 1,448 - 1,448
Own shares purchased - - (1,613) - (1,613) - (1,613)
Own shares allocated - - 225 - 225 - 225
Dividends paid 6,043 (18,638) - - (12,595) (63) (12,658)
Transfer of share capital (6,043) 6,043 - - - - -
Total comprehensive income for the period - - - 56,549 56,549 49 56,598
As at 30 September 2020 (unaudited) - 459,004 (2,903) 389,483 845,584 232 845,816
Share-based payment transactions - 1,700 - - 1,700 - 1,700
Own shares purchased - - - - - - -
Own shares allocated - - - - - - -
Dividends paid 7,126 (18,779) - - (11,653) - (11,653)
Transfer of share capital (7,126) 7,126 - - - - -
Total comprehensive income for the period - - - 90,902 90,902 60 90,962
As at 31 March 2021 - 449,051 (2,903) 480,385 926,533 292 926,825
Share-based payment transactions 7 - 1,403 - - 1,403 - 1,403
Value of shares withheld to settle employee tax obligations 7
- (2,020) - - (2,020) - (2,020)
Own shares purchased 22 - - - - - - -
Own shares allocated 22 - - 306 - 306 - 306
Dividends paid 24 9,195 (20,576) - - (11,381) (5) (11,386)
Transfer of share capital 24 (9,195) 9,195 - - - - -
Total comprehensive income for the period - - - 67,738 67,738 54 67,792
As at 30 September 2021 (unaudited) - 437,053 (2,597) 548,123 982,579 341 982,920
Consolidated statement of cash flow
for the six months ended 30 September 2021
Notes Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Operating activities
Profit for the period after tax 67,792 56,598
Taxation 9 10,386 5,593
Loss on disposal of properties 400 10
Share-based payments 7 1,403 1,448
Gain on revaluation of investment properties 12 (48,414) (31,909)
Change in fair value of derivative financial instruments 8 (160) 132
Depreciation of property, plant and equipment 5 349 317
Amortisation of intangible assets 5 564 462
Depreciation of right of use assets 5 260 260
Share of profit of associates 16 (2,463) (2,096)
Finance income 8 (1,596) (1,317)
Finance expense 8 11,347 5,036
Changes in working capital
Increase in trade and other receivables (2,598) (721)
Decrease in trade and other payables (2,053) (1,502)
Taxation paid (256) (228)
Cash flows from operating activities 34,961 32,083
Investing activities
Purchase of investment properties (20,221) -
Prepayments relating to new property acquisitions (75,771) (871)
Capital expenditure on investment properties (10,494) (17,005)
Purchase of plant and equipment and intangible assets (1,461) (1,211)
Increase in loan receivable due from associates (1,124) -
Interest received 1,596 940
Cash flows used in investing activities (107,475) (18,147)
Financing activities
Shares purchased - (1,613)
Payment relating to exercise of share options (2,020) -
Dividends paid to owners of the Company (11,381) (12,595)
Dividends paid to non-controlling interest (5) (63)
Proceeds from loans 400,000 20,000
Repayment of loans (173,791) (5,585)
Payment of principal portion of lease liabilities (2,931) (2,827)
Exit fees/prepayment of financing penalties (3,697) -
Capitalised loan issue cost (7,559) (133)
Finance expenses paid (4,170) (3,954)
Cash flows from/(used in) financing activities 194,446 (6,770)
Increase in cash and cash equivalents 121,932 7,166
Cash and cash equivalents at the beginning of the period 65,674 121,263
Cash and cash equivalents as at the period end 18 187,606 128,429
Notes forming part of the financial statements
for the six months ended 30 September 2021
1. General information
Sirius Real Estate Limited (the "Company") 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 six
month period to 30 September 2021.
The principal activity of the Group is the investment in, and development of,
commercial and industrial 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 has
been prepared on a historical cost basis, except for investment properties and
derivative financial instruments, which have been measured at fair value. The
unaudited interim condensed set of consolidated financial statements 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 interim condensed set of 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(d) for statement of compliance.
The financial information in these unaudited interim condensed set of
consolidated financial statements does not comprise statutory accounts. This
unaudited interim condensed set of consolidated financial statements has been
reviewed, not audited, by the Group's auditor, Ernst & Young LLP, which
issued an unmodified review opinion. The financial information presented for
the year ended 31 March 2021 is derived from the statutory accounts for that
year. Statutory accounts for the year ended 31 March 2021 were approved by the
Board on 4 June 2021. The report of the auditors on those accounts 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 Sections 263 (2) or (3) of the
Companies (Guernsey) Law, 2008.
As at 30 September 2021 the Group's consolidated interim condensed 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).
(b) Changes in accounting policies
The new standards and interpretations to be applied as at 1 April 2021 do not
have an impact on the interim financial statements of the Group.
(c) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings, 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 10 to the interim
financial statements 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 gain net of related tax,
gain/loss on sale of properties net of related tax, gain/loss on loss of
control 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 10 to the interim 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 10 to the interim financial statements includes a reconciliation of
adjusting items included within adjusted earnings, with certain adjusting
items stated within administrative expenses in note 5 and certain finance
costs in note 8.
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 24 to the interim 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.
(d) Statement of compliance
The unaudited 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, IAS 34 "Interim Financial Reporting" and Companies (Guernsey)
Law 2008. 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 2021. The unaudited 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 2021 except for the changes
in accounting policies as shown in note 2(b). The financial statements for the
year ended 31 March 2021 have been prepared in accordance with International
Financial Reporting Standards ("IFRS") issued by the IASB.
(e) Going concern
The Group has prepared its going concern assessment for the period to the end
of January 2023 (the 'going concern period'), a period chosen in order to
consider the repayment of €15m of the Schuldschein facility in December 2022
and January 2023. The Group's going concern assessment is based on the same
financial model that supported the Group's going concern and viability
statement detailed within its Annual Report and Accounts 2021, updated on the
basis of the assumptions set out below. It considers the Group's Principal
Risks and Uncertainties set out in note 2 (f) and is dependent on a number of
factors including financial performance, continued access to lending
facilities (see note 20) and the ability to continue to operate the Group's
secured and unsecured debt structure within its financial covenants.
In considering going concern, the Directors reviewed a detailed base case
scenario and a severe but plausible downside scenario provided by Management.
The severe but plausible downside scenario takes into account a potential
downturn in the Group's performance, including the potential impact of
Covid-19 on the Group's financial position and future prospects. The cashflow
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 respective loan agreements.
The impact of Covid-19 on the business within the six-month period to 30
September 2021 indicated no deterioration in the Group's income streams or
asset values, both of which increased in the period. The assumptions on which
the base case and severe but plausible downside scenario relating to the going
concern period are based included:
Base case and severe but plausible downside scenario
• continuation of forecast capex investment;
• continuation of forecast dividend payments;
• payment of loan interest and loan repayment amounts, including
€15m of the Schuldschein facility in December 2022 and January 2023;
• no acquisitions over and above those contractually committed to;
and
• sale of assets notarised for sale.
Severe but plausible downside scenario
• reduction in occupancy of 5% per annum;
• reduction in service charge recovery of 5% per annum; 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 breaches forecast, continue to operate within
the terms of its facilities and have sufficient cash reserves, with a lowest
cash position forecast in the going concern period of approximately €110
million in January 2023. As disclosed in note 27, subsequent to year-end a
€75 million revolving credit facility was entered into, comprising a €25
million tranche with a two-year term which may be extended for two additional
one-year terms, and €50 million tranche with a six-month term. This facility
is available in addition to the forecast cash position of €110 million under
the severe but plausible scenario.
The Directors also considered the impact of the planned acquisition of all
shares of Helix Investments Limited held by BizSpace Group Limited
(hereinafter referred to as "Bizspace") on the cash flow forecasts prepared
for the base case scenario and severe but plausible downside scenario and its
impact on the going concern assumption. The acquisition is conditional upon a
successful equity raise of approximately €150 million.
Bizspace had external debt facilities of approximately €173 million which
mature in July 2022. Consent from the existing lenders relating to the change
of control of Bizspace is a condition precedent of the transaction. The
Directors have also considered the likelihood of being able to access
refinancing options for the Bizspace external debt facility and the €50
million tranche of the revolving credit facility with a six-month term ahead
of their maturity dates, including accessing the corporate bond market and
refinancing with Bizspace's existing lender, who have provided the Directors
with a non-binding term-sheet to refinance the loan facility prior to its
expiration.
The assessment of the probability of completing the refinancing of Bizspace's
€173 million external debt facility, should the planned acquisition
complete, and the refinancing of the €50 million tranche of the revolving
credit facility in May 2022 is a significant judgement made by the Directors
in assessing going concern. This judgement has been made by the Directors by
assessing the refinancing options available to the Group, its history of
refinancing debt facilities including accessing the corporate bond market,
discussions with its advisors and its evaluation of the availability of debt
financing from lenders and investors and ability to complete the refinancing
in the approximately six months available subsequent to the approval of these
financial statements.
Having considered these factors the Directors have concluded that should the
Bizspace acquisition proceed, following a successful equity raise, the Group
has sufficient available cash and facilities to complete the transaction and
there is a remote likelihood of not being able to arrange the required
refinancing of the loan facilities in the timeframe required within the going
concern period. As such, the Directors have not identified any material
uncertainties which would cast significant doubt on the Group's ability to
continue as a going concern for the duration of the going concern period. In
each of the scenarios considered for going concern, including the impact of
the planned acquisition of Bizspace, the Company is not dependent on any
mitigating actions which would be available to the Group and include
restricting dividends, reducing capital expenditure or the disposal of
unencumbered assets that have a book value of €944.1 million as at 30
September 2021.
After due consideration, the Board believes it is appropriate to adopt the
going concern basis in preparing the financial statements.
(f) 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 on pages 38 to 47 of the Group's Annual Report and Accounts 2021 (except
for the principal risks and uncertainties related to the planned acquisition
referred to in note 2(e)) and have been assessed in line with the requirements
of the 2018 UK Corporate Governance Code. The risks are reproduced below. The
Board is satisfied that the Company continues to operate within its risk
profile for the remaining six months of the financial year.
Principal risks summary
Risk category Principal risk(s)
1. Financing - Availability and pricing of debt
- Compliance with facility covenants
- Availability and pricing of equity capital
- Increased reputational risk
2. Valuation - Property inherently difficult to value
- Susceptibility of property market to change in value
3. Market - Reliance on Germany and the German economy
- Reliance on specific industries and the SME market
4. Acquisitive growth - Decrease in number of acquisition opportunities coming to market
- Failure to acquire suitable properties with desired returns
5. Organic growth - Failure to deliver capex investment programmes
- Failure to refuel capex investment programmes
- Failure to achieve targeted returns from investments
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
10. Covid-19 - Reduction in occupancy due to insolvencies
- Delays in cash collection
- Impact on business continuity and wellbeing of colleagues
11. ESG - Climate change - physical and transition risks
- Ethics and governance
- Diversity and inclusion
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 revenue is derived from operations in Germany. The majority of the Group's
investment properties are multi-tenanted and mixed use and accordingly cannot
be evaluated according to separate segments. There is no one tenant that
represents more than 10% of Group revenues. The chief operating decision maker
is considered to be the Senior Management Team, which is provided with
consolidated IFRS information on a monthly basis.
4. Revenue
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Rental and other income from investment properties 50,082 46,676
Service charge income from investment properties 26,639 25,932
Rental and other income from managed properties 5,321 4,192
Service charge income from managed properties 6,310 2,488
Total revenue 88,352 79,288
Other income relates primarily to income associated with conferencing and
catering of €1,265,000 (30 September 2020: €972,000) and fee income from
managed properties of €1,782,000 (30 September 2020: €1,044,000).
5. Operating profit
The following items have been charged in arriving at operating profit:
Direct costs
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Service charge costs relating to investment properties 29,803 30,335
Costs relating to managed properties 7,296 3,377
Non-recoverable maintenance 1,744 1,665
Direct costs 38,843 35,377
Administrative expenses
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Audit and non-audit fees to audit firm 379 390
Legal and professional fees 1,683 1,293
Expected credit loss provision (1,081) (255)
Other administration costs 521 1,168
LTIP and SIP 1,403 1,448
Employee costs 6,934 5,397
Director fees and expenses 271 253
Depreciation of plant and equipment 349 317
Amortisation of intangible assets 564 462
Depreciation of right of use assets (see note 14) 260 260
Marketing 1,036 966
Exceptional items (8) 165
Administrative expenses 12,311 11,864
The expected credit loss provision has decreased during the period mainly due
to the successful cash collection of outstanding trade receivables that were
previously provided for. Exceptional items relate to a legal claim accrual
adjustment (30 September 2020: costs directly attributable to Covid-19 which
were mainly cost for signage and hygiene products). Employee costs as stated
above relate to costs which are not recovered through service charge.
6. Employee costs and numbers
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Wages and salaries 9,940 8,816
Social security costs 1,556 1,358
Pension 148 125
Other employment costs 39 26
Total 11,683 10,325
Included in the costs related to wages and salaries for the period are
expenses of €1,403,000 (30 September 2020: €1,448,000) relating to the
granting or award of shares under LTIPs and SIPs (see note 7). 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
(Cyprus) Limited and Sirius Corporate Services B.V. The average number of
people employed by the Group during the period was 270 (30 September 2020:
251) expressed in full-time equivalents. In addition, as at 30 September 2021,
the Board of Directors consists of six Non-executive Directors (30 September
2020: five) and two Executive Directors (30 September 2020: two).
7. 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 employees' 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 €405,000 is recognised in the half year consolidated statement of
comprehensive income to 30 September 2021.
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 €383,000 was
recognised in the half year consolidated statement of comprehensive income to
30 September 2021.
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/ 1/3 ordinary award
outperformance 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.
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 €261,000 is recognised in the half year consolidated statement of
comprehensive income to 30 September 2021.
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 €284,000 was recognised in the
half year consolidated statement of comprehensive income to 30 September 2021.
During the period 180,000 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.
2021 SIP
Another SIP for the benefit of senior employees of the Company 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 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. The employees' tax obligation will be determined upon the vesting
date of the share issue.
September 2021 grant
3,174,500 ordinary share awards were granted under the scheme on 7 September
2021 with a total charge for the award of €3,857,195. 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 €70,000 is recognised in the half year consolidated statement of
comprehensive income to 30 September 2021.
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.
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:
Unaudited Year ended
31 March 2021
six months ended
30 September 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 period (nil exercisable) 15,584,750 - 11,934,750 -
Maximum granted during the period 7,328,619 - 3,790,000 -
Forfeited during the period (180,000) - (140,000) -
Exercised during the period (3,361,747) - - -
Shares surrendered to cover employee tax obligations (1,458,253) - - -
Balance outstanding as at period end (nil exercisable) 17,913,369 - 15,584,750 -
Employee benefit schemes
A reconciliation of share-based payments and employee benefit schemes and
their impact on the consolidated statement of comprehensive income is as
follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Charge relating to 2018 LTIP - January 2019 grant - 447
Charge relating to 2018 LTIP - June 2019 grant 383 383
Charge relating to 2018 LTIP - June 2020 grant 405 240
Charge relating to 2021 LTIP - August 2021 grant 261 -
Charge relating to 2019 SIP - August 2019 grant 284 352
Charge relating to 2020 SIP - July 2020 grant - 26
Charge relating to 2021 SIP - September 2021 grant 70 -
Total consolidated statement of comprehensive income charge relating to LTIP 1,403 1,448
and SIP
8. Finance income, finance expense and change in fair value of derivative
financial instruments
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Bank interest income 42 15
Finance income from associates 1,554 1,302
Finance income 1,596 1,317
Bank loan interest expense (4,136) (3,779)
Interest expense related to lease liabilities (see note 14) (143) (188)
Bank charges and bank interest expense on deposits (473) (235)
Amortisation of capitalised finance costs (1,016) (834)
Refinancing costs, exit fees and prepayment penalties (5,579) -
Finance expense (11,347) (5,036)
Change in fair value of derivative financial instruments 160 (132)
Net finance expense (9,591) (3,851)
Included within refinancing costs in the six month period ended 30 September
2021 were exit fees and early prepayment penalties of €5,579,000 that
directly related to the early repayment of loans.
The change in fair value of derivative financial instruments of €160,000 (30
September 2020: (€132,000)) reflects the change in the market valuation of
these financial instruments.
9. Taxation
Consolidated statement of comprehensive income
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Current income tax
Current income tax charge (1,773) (636)
Current income tax charge relating to disposals of investment properties - (151)
Adjustment in respect of prior periods 93 (132)
Total current income tax (1,680) (919)
Deferred tax
Relating to origination and reversal of temporary differences (8,706) (4,674)
Total deferred tax (8,706) (4,674)
Income tax charge reported in the statement of comprehensive income (10,386) (5,593)
Deferred income tax liability
Unaudited
30 September 31 March
2021 2021
€000 €000
Balance as at beginning of the period (56,331) (42,151)
Release due to disposals - 483
Taxes on the revaluation of investment properties and derivative financial (8,706) (14,663)
instruments
Balance as at period end (65,037) (56,331)
The Group is mainly subject to taxation in Germany with the income from the
Germany-located rental business with a tax rate of 15.825% (31 March 2021:
15.825%). It has tax losses of €338,289,000 (31 March 2021: €325,257,000)
that are for an indefinite period of time available for offset against future
profits of its subsidiaries in which the losses arose under the restrictions
of the minimum taxation rule. Deferred tax assets have not been recognised in
respect of the revaluation losses on investment properties, the valuation of
the Company LTIP and SIP, interest rate swaps and IFRS 16 "Leases" as they may
not be used to offset taxable profits elsewhere in the Group as realisation is
not assured. However, the available losses have been considered in the
calculation of the deferred tax liability in relation to the revaluation of
investment properties.
10. Earnings per share
The calculation of the basic, diluted, EPRA, headline and adjusted earnings
per share is based on the following data:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Earnings attributable to the owners of the Company
Basic earnings 67,738 56,549
Diluted earnings 67,738 56,549
EPRA earnings 32,550 28,326
Diluted EPRA earnings 32,550 28,326
Headline earnings 27,035 28,246
Diluted headline earnings 27,035 28,246
Adjusted
Basic earnings 67,738 56,549
Deduct gain on revaluation of investment properties (48,414) (31,909)
Add loss on sale of properties 400 10
Deduct gain on loss of control of subsidiaries (94) -
Tax in relation to the gain on revaluation of investment properties and loss 8,610 4,877
on sale of properties above
Non-controlling interest ("NCI") relating to revaluation, net of related tax 42 46
Deduct revaluation gain on investment property relating to associates (1,665) (1,673)
Tax in relation to the revaluation gain on investment property relating to 418 346
associates above
Headline earnings after tax 27,035 28,246
Add change in fair value of derivative financial instrument, net of related (64) 80
tax and NCI
Deduct revaluation expense relating to leased investment properties (3,083) (1,617)
Add adjusting items, net of related tax and NCI* 6,974 1,613
Adjusted earnings after tax 30,862 28,322
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, 1,052,600,936 1,037,394,967
adjusted and basic EPRA earnings per share
Weighted average number of ordinary shares for the purpose of diluted 1,070,514,305 1,053,039,717
earnings, diluted headline earnings, diluted adjusted earnings and diluted
EPRA earnings per share
Basic earnings per share 6.44c 5.45c
Diluted earnings per share 6.33c 5.37c
Basic EPRA earnings per share 3.09c 2.73c
Diluted EPRA earnings per share 3.04c 2.69c
Headline earnings per share 2.57c 2.72c
Diluted headline earnings per share 2.53c 2.68c
Adjusted earnings per share 2.93c 2.73c
Adjusted diluted earnings per share 2.88c 2.69c
* See reconciliation between adjusting items as stated within earnings
per share and those stated within administrative expenses in note 5.
Notes Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Exceptional items 5 (8) 165
Refinancing costs, exit fees and prepayment penalties 8 5,579 -
LTIP and SIP 5 1,403 1,448
Adjusting items as per note 10 6,974 1,613
The following table shows the reconciliation of basic to headline earnings,
separately disclosing the impact before tax (gross column) and after tax (net
column):
Unaudited six months Unaudited six months
ended 30 September 2021 ended 30 September 2020
€000 €000
Gross Net Gross Net
Basic earnings 67,738 56,549
Deduct gain on revaluation of investment properties (48,414) (39,804) (31,909) (27,183)
Add loss on sale of properties 400 400 10 161
Deduct gain on loss of control of subsidiaries (94) (94) - -
NCI relating to revaluation 50 42 46 46
Deduct revaluation gain on investment property relating to associates (1,665) (1,247) (1,673) (1,327)
Headline earnings 27,035 28,246
EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Basic and diluted earnings attributable to owners of the Company 67,738 56,549
Gain on revaluation of investment properties (48,414) (31,909)
Add loss on disposal of properties (including tax) 400 161
Deduct gain on loss of control of subsidiaries (94) -
Refinancing costs, exit fees and prepayment penalties 5,579 -
Change in fair value of derivative financial instruments (160) 132
Deferred tax in respect of EPRA earnings adjustments 8,706 4,674
NCI in respect of the above 42 46
Deduct revaluation gain on investment property relating to associates (1,665) (1,673)
Tax in relation to the revaluation gain on investment property relating to 418 346
associates
EPRA earnings 32,550 28,326
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 3,295,750 own shares held
(30 September 2020: 3,684,608), 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:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
Weighted average number of ordinary shares for the purpose of basic, basic 1,052,600,936 1,037,394,967
EPRA, headline and adjusted earnings per share
Effect of grant of SIP shares 5,709,250 2,894,750
Effect of grant of LTIP shares 12,204,119 12,750,000
Weighted average number of ordinary shares for the purpose of diluted, diluted 1,070,514,305 1,053,039,717
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), the gain on loss of control 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.
11. Net asset value per share
Unaudited
30 September 31 March
2021 2021
€000 €000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 982,579 926,533
the owners of the Company)
Deferred tax arising on revaluation gain, derivative financial instruments and 65,037 56,331
LTIP valuation
Derivative financial instruments at fair value 507 1,141
Adjusted net asset value attributable to the owners of the Company 1,048,123 984,005
Number of shares
Number of ordinary shares for the purpose of net asset value per share and 1,060,888,489 1,049,132,259
adjusted net asset value per share
Number of ordinary shares for the purpose of EPRA NTA per share 1,078,801,858 1,064,717,009
Net asset value per share 92.62c 88.31c
Adjusted net asset value per share 98.80c 93.79c
EPRA NTA per share 97.02c 92.29c
Net asset value at the end of the period (basic) 982,579 926,533
Derivative financial instruments at fair value 507 1,141
Deferred tax in respect of EPRA earnings adjustments 65,037 56,331
Goodwill as per note 13 (3,738) (3,738)
Intangibles as per note 13 (3,437) (2,830)
Deferred tax in respect of EPRA adjustments in relation to investment in 5,676 5,212
associates
EPRA NTA 1,046,624 982,649
EPRA NRV EPRA NTA EPRA NDV
30 September 30 September 30 September
2021 2021 2021
€000 €000 €000
Net asset value as at period end (basic) 982,579 982,579 982,579
Diluted EPRA net asset value at fair value 982,579 982,579 982,579
Group
Derivative financial instruments at fair value 507 507 n/a
Deferred tax in respect of EPRA earnings adjustments 65,037 65,037* n/a
Goodwill as per note 13 n/a (3,738) (3,738)
Intangibles as per note 13 n/a (3,437) n/a
Fair value of fixed interest rate debt n/a n/a (12,253)
Real estate transfer tax 112,700 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments 5,676 5,676* n/a
Fair value of fixed interest rate debt n/a n/a (3,757)
Real estate transfer tax 8,684 n/a n/a
Total EPRA NRV, NTA and NDV 1,175,183 1,046,624 962,831
EPRA NRV, NTA and NDV per share 108.93c 97.02c 89.25c
EPRA NRV EPRA NTA EPRA NDV
31 March 2021 31 March 2021 31 March 2021
€000 €000 €000
Net asset value as at period 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 13 n/a (3,738) (3,738)
Intangibles as per note 13 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 period end.
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:
Unaudited
30 September 31 March
2021 2021
Number of ordinary shares for the purpose of net asset value per share and 1,060,888,489 1,049,132,259
adjusted net asset value per share
Effect of grant of SIP shares 5,709,250 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 1,078,801,858 1,064,717,009
The number of shares has been reduced by 3,295,750 own shares held (31 March
2021: 3,684,608 shares), which are held by an Employee Benefit Trust on behalf
of the Group.
12. Investment properties
The movement in the book value of investment properties is as follows:
Unaudited
30 September 31 March
2021 2021
€000 €000
Total investment properties at book value as at the beginning of the period 1,362,192 1,193,915
Additions - owned investment properties 20,221 35,484
Additions - leased investment properties 4,378 1,518
Capital expenditure and broker fees 9,574 31,720
Disposals - (30)
Gain on revaluation above capex and broker fees 51,445 104,156
Adjustment in respect of lease incentives 52 (246)
Deficit on revaluation relating to leased investment properties (3,083) (4,325)
Total investment properties at book value as at period end 1,444,779 1,362,192
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:
Unaudited
30 September 31 March
2021 2021
€000 €000
Owned investment properties at market value per valuer's report 1,432,010 1,350,770
Adjustment in respect of lease incentives (3,551) (3,603)
Leased investment property market value 16,320 15,025
Total investment properties at book value as at period end 1,444,779 1,362,192
The fair value (market value) of the Group's owned investment properties at 30
September 2021 has been arrived at on the basis of a valuation carried out at
that date by Cushman & Wakefield LLP (31 March 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 value of the properties are consistent
with the previous year.
The weighted average lease expiry remaining across the whole portfolio at 30
September 2021 was 2.7 years (31 March 2021: 2.9 years).
The fair value (market value) of the Group's leased investment properties as
at 30 September 2021 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 statement of
comprehensive income is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2021
€000 €000
Gain on revaluation above capex and broker fees 51,445 34,379
Adjustment in respect of lease incentives 52 (853)
Deficit on revaluation relating to leased investment properties (3,083) (1,617)
Gain on revaluation of investment properties reported in the statement of 48,414 31,909
comprehensive income
Included in the gain on revaluation of investment properties reported in the
statement of comprehensive income (excluding the revaluation effects in
respect of leased investment properties) are gross gains of €55.9 million
and gross losses of €7.5 million (30 September 2020: gross gains of €42.2
million and gross losses of €10.3 million).
Other than the capital commitments disclosed in note 26 the Group is under no
contractual obligation to purchase, construct or develop any investment
property. The Group is responsible for routine maintenance to 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 period. 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 performed on a lease-by-lease
basis due to the mixed-use nature of the sites using the discounted cash flow
technique. This gives rise to large ranges in the inputs.
30 September 2021
Current rental rate Market rental rate Occupancy (%) Gross initial yield (%) Discount factor (%) Void period (months)
per sqm (€)
per sqm (€)
Market Low High Low High Low High Low High Low High Low High
value (€000)
Traditional business parks
Mature 341,010 2.67 8.29 2.65 8.46 87.9 100.0 4.0 8.6 3.6 5.8 6 12
Value add 476,540 2.14 6.46 3.41 6.91 49.4 96.4 4.0 9.1 4.1 7.5 9 18
Total traditional business parks 817,550 2.14 8.29 2.65 8.46 49.4 100.0 4.0 9.1 3.6 7.5 6 18
Modern business parks
Mature 220,190 5.05 10.14 3.66 9.92 93.9 100.0 4.7 10.1 3.6 5.3 6 15
Value add 154,200 3.76 7.54 4.36 8.24 77.2 90.6 5.4 8.3 4.6 5.6 9 18
Total modern business parks 374,390 3.76 10.14 3.66 9.92 77.2 100.0 4.7 10.1 3.6 5.6 6 18
Office
Mature 17,480 7.72 9.70 9.19 9.30 86.6 89.9 4.6 6.6 4.5 4.8 9 9
Value add 222,590 0.86 11.27 5.98 10.30 17.9 92.0 1.1 9.9 4.8 6.8 9 15
Total office 240,070 0.86 11.27 5.98 10.30 17.9 92.0 1.1 9.9 4.5 6.8 9 15
Total 1,432,010 0.86 11.27 2.65 10.30 17.9 100.0 1.1 10.1 3.6 7.5 6 18
31 March 2021
Current rental rate Market rental rate Occupancy (%) Gross initial yield (%) Discount factor (%) Void period (months)
per sqm (€)
per sqm (€)
Market Low High Low High Low High Low High Low High Low High
value (€000)
Traditional business parks
Mature 326,650 2.67 8.16 2.65 8.46 91.3 100.0 4.7 8.8 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 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 3.8 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 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 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 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 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 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 4.6 6.9 9 15
Total 1,350,770 1.99 11.35 2.65 10.30 49.5 100.0 2.6 10.4 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 interrelated 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:
30 September 2021
Change of 5% in Change of 0.25% in Change of 0.5% in
market rental rates (€000)
discount rates (€000)
gross initial yield (€000)
Market Increase Decrease Increase Decrease Increase Decrease
value (€000)
Total traditional business parks 817,550 40,990 (41,270) (16,910) 17,250 (66,605) 80,237
Total modern business parks 374,390 18,270 (18,250) (7,800) 8,050 (27,258) 32,114
Total office 240,070 12,480 (12,220) (4,910) 5,060 (21,561) 30,568
Market value 1,432,010 71,740 (71,740) (29,620) 30,360 (115,424) 142,919
31 March 2021
Change of 5% in Change of 0.25% in Change of 0.5% in
market rental rates (€000)
discount rates (€000)
gross initial yield (€000)
Market Increase Decrease Increase Decrease Increase Decrease
value (€000)
Total traditional business parks 765,750 38,310 (38,000) (15,030) 15,950 (58,824) 69,947
Total modern business parks 354,000 17,350 (17,190) (7,560) 7,960 (24,479) 28,561
Total office 231,020 11,680 (11,480) (4,520) 4,850 (18,859) 23,308
Market value 1,350,770 67,340 (66,670) (27,110) 28,760 (102,162) 121,816
13. Intangible assets
Unaudited
30 September 31 March
2021 2021
€000 €000
Goodwill 3,738 3,738
Software and licences 3,437 2,830
Balance as at period end 7,175 6,568
14. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets (excluding those
classified as investment properties) recognised and the movements during the
period:
Office Total
€000 €000
As at 31 March 2020 2,440 2,440
Additions - -
Depreciation expense (260) (260)
As at 30 September 2020 (unaudited) 2,180 2,180
Additions - -
Depreciation expense (261) (261)
As at 31 March 2021 1,919 1,919
Additions - -
Depreciation expense (260) (260)
As at 30 September 2021 (unaudited) 1,659 1,659
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 €16,320,000 (31 March 2021: €15,025,000) are
classified as investment properties, of which €6,355,000 (31 March 2021:
€9,355,000) relate to commercial property.
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Unaudited
30 September 2021 31 March
€000 2021
€000
Balance as at the beginning of the period (14,987) (19,150)
Accretion of interest (143) (349)
Additions (4,378) (1,518)
Payments 3,074 6,030
Balance as at period end (16,434) (14,987)
Current lease liabilities as at period end (3,915) (5,857)
Non-current lease liabilities as at period end (12,519) (9,130)
The following table sets out the carrying amount, by maturity, of the Group's
lease liabilities:
30 September 2021 Within 1 year 1-5 years 5+ years Total
€000 €000 €000 €000
Commercial property* (3,159) (945) (653) (4,757)
Long-term leasehold* (234) (978) (8,753) (9,965)
Office space (522) (1,190) - (1,712)
Total (3,915) (3,113) (9,406) (16,434)
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.
The overall weighted average discount rate used for the period is 1.9% (31
March 2021: 1.9%).
15. Other non-current assets
Unaudited
30 September 31 March
2021 2021
€000 €000
Guarantees and deposits 3,307 1,806
Loans to associates 44,278 43,154
Balance as at period end 47,585 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.
16. 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:
Unaudited
30 September 31 March 2021
2021 €000
€000
Current assets 18,603 31,183
Non-current assets 332,451 244,289
Current liabilities (8,346) (10,224)
Non-current liabilities (291,380) (221,756)
Equity 51,328 43,492
Unrecognised accumulated losses 4,858 5,657
Subtotal 56,186 49,149
Group's share in equity - 35% 19,665 17,202
Unaudited Year ended
six months 31 March 2021
ended €000
30 September
2021
€000
Net operating income 9,934 14,063
Gain on revaluation of investment properties 5,717 12,693
Administrative expense (1,448) (1,976)
Operating profit 14,203 24,780
Net finance costs (4,744) (9,078)
Profit before tax 9,459 15,702
Taxation (1,624) (2,590)
Unrecognised (profit)/loss (799) 1,109
Total comprehensive income for the period after tax 7,036 14,221
Group's share of profit for the period - 35% 2,463 4,977
Included within the non-current liabilities are shareholder loans amounting to
€126,509,000 (31 March 2021: €123,296,000). As at period end no contingent
liabilities existed (31 March 2021: none). The associates had contracted
capital expenditure for development and enhancements of €2,783,000 as at
period end (31 March 2021: €296,000).
The following table illustrates the movement in investment in associates:
Unaudited
30 September 31 March 2021
2021 €000
€000
Balance as at the beginning of the period 17,202 12,306
Dividend received - (81)
Share of profit 2,463 4,977
Balance as at period end 19,665 17,202
17. Trade and other receivables
Unaudited 31 March 2021
30 September
€000
2021
€000
Gross trade receivables 10,968 11,758
Expected credit loss provision (refer to Note 5) (4,350) (5,431)
Net trade receivables 6,618 6,327
Other receivables 10,914 11,334
Prepayments 78,067 1,070
Balance as at period end 95,599 18,731
Other receivables include lease incentives of €3,551,000 (31 March 2021:
€3,603,000).
Prepayments include costs totalling €75,771,000 (31 March 2021: €nil)
relating to the acquisitions of new sites in Oberhausen, Frankfurt, Essen,
Heiligenhaus and Neckartenzlingen that were notarised before 30 September 2021
and are expected to complete in the second half of the financial year (see
note 27).
18. Cash and cash equivalents
Unaudited
30 September 31 March
2021 2021
€000 €000
Cash at bank 172,715 49,305
Restricted cash 14,891 16,369
Balance as at period end 187,606 65,674
Cash at bank earns interest at floating rates based on daily bank deposit
rates. The fair value of cash as at period end is €187,606,000 (31 March
2021: €65,674,000).
The following table illustrates the breakdown of cash held in restricted
accounts:
Unaudited
30 September 31 March
2021 2021
€000 €000
Deposits received from tenants 13,551 12,736
Office rent deposits - 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 14,891 16,369
19. Trade and other payables
Unaudited
30 September 31 March
2021 2021
€000 €000
Trade payables 6,130 7,107
Accrued expenses 18,891 19,034
Interest and amortisation payable 1,495 489
Tenant deposits 13,551 12,736
Unearned revenue 4,373 4,642
Other payables 4,735 6,519
Balance as at period end 49,175 50,527
Accrued expenses include costs totalling €8,789,000 (31 March 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 €2,260,000 (31
March 2021: €3,830,000).
Unearned revenue includes service charge amounts of €952,000 (31 March 2021:
€1,068,000). Service charge income is only recognised as income when the
performance obligations are met. All unearned revenue of the prior period was
recognised as revenue in the current period.
20. Interest-bearing loans and borrowings
Interest rate Loan maturity date Unaudited 31 March
% 30 September 2021
2021 €000
€000
Current
SEB AG
- fixed rate facility 1.84 1 September 2022 - 1,180
- hedged floating rate facility Hedged(1) 30 October 2024 - 459
- capped floating rate facility Capped (2) 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 1,895 1,881
- fixed rate facility 0.90 31 October 2023 1,473 1,467
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 766 760
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged(3) 31 December 2023 1,110 1,110
- floating rate facility Floating(3) 31 December 2023 140 140
Capitalised finance charges on all loans (598) (1,611)
4,786 9,114
Non-current
SEB AG
- fixed rate facility 1.84 1 September 2022 - 51,330
- hedged floating rate facility Hedged (1) 30 October 2024 - 21,325
- floating rate facility Floating(1) 30 October 2024 - 2,000
- capped floating rate facility Capped(2) 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 59,186 60,137
- fixed rate facility 0.90 31 October 2023 111,105 111,843
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 14,645 15,030
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged (3) 31 December 2023 51,611 52,166
- floating rate facility Floating(3) 31 December 2023 6,311 6,381
Schuldschein
- floating rate facility Floating (4) 5 December 2022 5,000 5,000
- floating rate facility Floating(4) 6 January 2023 10,000 10,000
- floating rate facility Floating (4) 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 1.125 22 June 2026 400,000 -
Capitalised finance charges on all loans (8,513) (2,367)
684,345 458,940
Total 689,131 468,054
(1) Tranche 1 of this facility is fully hedged with a swap charged at a
rate of 2.58%; tranche 2 of this facility is fully hedged with a swap charged
at a rate of 2.56%. The capex facility is charged with a floating rate of
1.88% over six month EURIBOR (not less than 0%) for the full term of the loan.
The facility was repaid in full during the six month period ended 30 September
2021.
(2) This facility is 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. The facility was repaid in full during the six month period
ended 30 September 2021.
(3) 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%. €6.5 million and €0.5
million are charged with a floating rate of 1.20% over three month EURIBOR
(not less than 0%).
(4) 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.
The Group has pledged 15 (31 March 2021: 42) investment properties to secure
several separate interest-bearing debt facilities granted to the Group. The 15
(31 March 2021: 42) properties had a combined valuation of €484,329,000 as
at period end (31 March 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 six
month period ended 30 September 2021.
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 six month period ended 30
September 2021.
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 six month period ended
30 September 2021.
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 six month period ended 30 September
2021.
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 at 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 six month period ended 30 September 2021.
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 six
month period ended 30 September 2021.
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 was 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 six month period ended 30 September 2021.
Schuldschein
On 2 December 2019, the Group agreed new loan facilities in the form of an
unsecured Schuldschein for €20.0 million. On 25 February 2020, the Group
agreed new loan facilities in the form of an unsecured Schuldschein for
€30.0 million. In total the fully drawn down 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 six
month period ended 30 September 2021.
Corporate Bond
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.
21. 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:
Unaudited
30 September 2021 31 March 2021
Fair value Carrying Fair Carrying Fair
hierarchy amount value amount value
level €000 €000 €000 €000
Financial assets
Cash and cash equivalents 187,606 187,606 65,674 65,674
Trade and other receivables 17,288 17,288 15,864 15,864
Loans to associates 2 44,278 44,278 43,154 43,154
Derivative financial instruments 2 - - 70 70
Financial liabilities
Trade and other payables 25,911 25,911 26,851 26,851
Derivative financial instruments 2 507 507 1,211 1,211
Interest-bearing loans and borrowings*
Floating rate borrowings 2 26,451 26,451 28,521 28,521
Floating rate borrowings - hedged** 2 52,721 52,721 75,060 75,060
Floating rate borrowings - capped** 2 - - 35,720 35,720
Fixed rate borrowings 2 619,070 631,323 332,731 336,216
* Excludes loan issue costs.
** 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 20 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 table above 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 and interest rate cap contracts.
The interest rate swap contract is reset on a quarterly basis, the cap
contract on a half year 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 value of the interest rate
cap reflects the mark to market valuation with changes recognised in the
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.
22. Issued share capital
Authorised Number Share
of shares capital
€
Ordinary shares of no par value Unlimited -
As at 30 September 2021 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 6,981,451 6,043,000
Transfer of share capital to other distributable reserves - (6,043,000)
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust (1,883,980) -
Shares allocated by the Employee Benefit Trust 312,092 -
As at 30 September 2020 1,041,666,664 -
Issued ordinary shares 7,465,595 7,126,000
Transfer of share capital to other distributable reserves - (7,126,000)
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust - -
Shares allocated by the Employee Benefit Trust - -
As at 31 March 2021 1,049,132,259 -
Issued ordinary shares 11,367,372 9,195,000
Transfer of share capital to other distributable reserves - (9,195,000)
Issued Treasury Shares - -
Shares issued to Employee Benefit Trust - -
Shares allocated by the Employee Benefit Trust 388,858 -
As at 30 September 2021 1,060,888,489 -
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. In
addition, the Company issued 3,266,210 shares in relation to the exercise of
the LTIP 2019 (January 2019 grant) as per note 7.
During the period no shares were acquired and 388,858 were allocated by the
Employee Benefit Trust. A total of 3,295,750 shares purchased at an average
share price of €0.7880 are held by the Employee Benefit Trust (31 March
2021: 3,684,608 shares purchased at an average share price of €0.7878). The
total number of shares with voting rights was 1,064,184,239 (31 March 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 period were issued under general authority. No shares
were bought back in the period (31 March 2021: none) and there are no treasury
shares held at the period end (31 March 2021: none).
23. 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 €437,053,000 in total
at period end (31 March 2021: €449,051,000).
24. Dividends
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 "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).
The Group's profit attributable to the owners of the Company for the period
was €67.7 million (30 September 2020: €56.5 million). The Board has
authorised a dividend relating to the six month period ended 30 September 2021
of 2.04c per share, representing 65% of FFO*.
It is expected that, for the dividend authorised relating to the six month
period ended 30 September 2021, the ex-dividend date will be 14 December 2021
for shareholders on the South African register and 16 December 2021 for
shareholders on the UK register. It is further expected that for shareholders
on both registers the record date will be 17 December 2021 and the dividend
will be paid on 20 January 2022. A detailed dividend announcement will be made
on 29 November 2021, including details of a scrip dividend alternative.
The dividend paid per the statement of changes in equity is the value of the
cash dividend.
* Adjusted profit before tax adjusted for depreciation and
amortisation (excluding depreciation relating to IFRS 16), amortisation of
financing fees, adjustments in respect to IFRS 16 and current tax
receivable/incurred and current tax relating to disposals.
The dividend per share was calculated as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€m €m
Reported profit before tax 78.2 62.2
Adjustments for:
Gain on revaluation of investment properties (48.4) (31.9)
Deficit on revaluation expense relating to leased investment properties (3.1) (1.6)
Loss on disposals of properties 0.4 -
Gain on loss of control of subsidiaries (0.1) -
Deduct revaluation gain on investment property from associates and related tax (1.5) (1.3)
Other adjusting items* 7.0 1.6
Change in fair value of financial derivatives (0.2) 0.1
Adjusted profit before tax 32.3 29.1
Adjustments for:
Depreciation and amortisation (excluding depreciation relating to IFRS 16) 0.9 0.8
Amortisation of financing fees 1.0 0.8
Adjustment in respect of IFRS 16 0.5 (1.0)
Current taxes incurred (see note 9) (1.7) (0.9)
Add back current tax relating to disposals - 0.3
Funds from operations, six months ended 30 September 33.0 29.1
Dividend pool, six months ended 30 September** 19.0
21.6
Dividend per share, six months ended 30 September 2.04c 1.82c
* Includes expense relating to share awards and refinancing costs,
exit fees and prepayment penalties. See note 10 for details.
** Calculated as 65% of FFO of 3.14c per share (30 September 2020: 2.80c
per share using 65% of FFO), based on average number of shares outstanding of
1,052,600,936 (30 September 2020: 1,037,394,967).
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.
25. Related parties
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 Unaudited
30 September 31 March 2021
2021 €000
€000
Loans to associates 44,278 43,154
Trade and other receivables 2,014 3,371
Total 46,292 46,525
Trade and other receivables relate to amounts owed from the services supplied
to the associates and are due to be settled 14 days after being invoiced.
As a result of unchanged credit quality no material impairments have been
recognised in the period.
Consolidated statement of comprehensive income Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Services supplied 5,568 1,045
Interest income 1,554 1,302
Total 7,122 2,347
Services provided to related parties primarily relate to the provision of
property and asset management services. A performance fee arrangement is in a
place between the associates and the Group. The performance fee was €nil
during the period.
26. Capital and other commitments
As at period end, the Group had contracted capital expenditure for development
and enhancements on existing properties of €8,389,000 (31 March 2021:
€8,666,000) and capital commitments in relation to the notarised asset in
amount of €52,150,000.
These were committed but not yet provided for in the financial statements.
27. Post balance sheet events
On 1 October 2021, the Group completed the acquisition of a business park at
Heiligenhaus, North Rhine-Westphalia. The total acquisition cost amounted to
€14.2 million. The property is a multi-tenant business park, providing
approximately 45,000 sqm of lettable space consisting of around 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 property currently generates annualised net
operating income of €1.12 million per annum on 77% occupancy.
On 1 November 2021, the Group completed the acquisition of a business park in
Frankfurt, a multi-tenanted office tower comprising total lettable area of
approximately 10,000 sqm for €21.2 million. The property generates
annualised net operating income of €0.6 million per annum at 54% occupancy
and has a remaining weighted average lease term of 2.9 years.
On 1 November 2021, the Group completed the acquisition of a business park in
Erfurt. The total acquisition cost amounted to €11.7 million. The
multi-tenant park consists of 14,000 sqm of lettable industrial space with an
office portion of c7,400 sqm and 760 sqm of other space. The property
currently generates annualised net operating income of €0.6 million per
annum at 81% occupancy.
On 1 November 2021, the Group completed the acquisition of a business park in
Essen. The total acquisition cost amounted to €12.2 million. The property
generates annualised net operating income of €0.8 million per annum at 81%
occupancy.
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 is expected to
complete in the second half of the financial year.
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 described in note 20. 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. At the approval date of the
Interim Report, no drawdowns of this facility have been made.
Business analysis
Non-IFRS measures
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Total comprehensive income for the period attributable to the owners of the 67,738 56,549
Company
Gain on revaluation of investment properties (48,414) (31,909)
Loss on disposal of properties (net of related tax) 400 161
Gain on loss of control of subsidiaries (net of related tax) (94) -
Add finance restructuring costs 5,579 -
Change in fair value of derivative financial instruments (160) 132
Deferred tax in respect of EPRA earnings adjustments 8,706 4,674
NCI in respect of the above 42 46
Deduct revaluation gain relating to investment in associates (1,665) (1,673)
Tax in relation to the above 418 346
EPRA earnings 32,550 28,326
Add change in deferred tax relating to derivative financial instruments (96) 52
Add change in fair value of derivative financial instruments 160 (132)
Deduct finance restructuring costs (5,579) -
NCI in respect of the above - -
Headline earnings after tax 27,035 28,246
Add change in fair value of derivative financial instruments (net of related (64) 80
tax)
Deduct revaluation expense relating to leased investment properties (3,083) (1,617)
Add adjusting items* (net of related tax) 1,613
6,974
Adjusted earnings after tax 30,862 28,322
* See note 10 of the Interim Report.
For more information on EPRA earnings refer to Annex 1.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
EPRA earnings 32,550 28,326
Weighted average number of ordinary shares 1,052,600,936 1,037,394,967
EPRA earnings per share (cents) 3.09 2.73
Headline earnings after tax 27,035 28,246
Weighted average number of ordinary shares 1,052,600,936 1,037,394,967
Headline earnings per share (cents) 2.57 2.72
Adjusted earnings after tax 30,862 28,322
Weighted average number of ordinary shares 1,052,600,936 1,037,394,967
Adjusted earnings per share (cents) 2.93 2.73
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 revaluation of investment
properties, changes in fair value of derivative financial instruments, gains
and losses on disposals of properties (including tax), the gain on loss of
control of subsidiaries, 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 (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, other adjusting items,
gains/losses on sale of properties, change in fair value of financial
derivatives, gain on loss of control of subsidiaries, revaluation gain on
investment property relating to associates and related tax and includes the
deficit on revaluation expense 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), 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 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.
The Non-IFRS measures included in the Interim Report 2021 have not been
reviewed nor reported on by the independent reporting accountant. The starting
point for all the Non-IFRS Financial Information has been extracted from the
Group's consolidated financial statements for the six months ended 30
September 2021 ("consolidated financial statements").
Table A - EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2021 2020
€000 €000
Basic and diluted earnings attributable to owners of the Company¹ 67,738 56,549
Gain on revaluation of investment properties2 (48,414) (31,909)
Add loss on disposal of properties (including tax)3 400 161
Deduct gain on loss of control of subsidiaries4 (94) -
Refinancing costs, exit fees and prepayment penalties5 5,579 -
Change in fair value of derivative financial instruments6 (160) 132
Deferred tax in respect of EPRA earnings adjustments7 8,706 4,674
NCI in respect of the above8 42 46
Deduct revaluation gain on investment property relating to associates9 (1,665) (1,673)
Tax in relation to the revaluation gain on investment property relating to 346
associates10
418
EPRA earnings11 28,326
32,550
Notes:
1. Row 1 presents the profit and total comprehensive income attributable
to owners of the Company which has been extracted from the unaudited
consolidated statement of comprehensive income within the condensed set of
consolidated financial statements for the six months ended 30 September 2021
(the "consolidated financial statements").
2. Row 2 presents the gain on revaluation of investment properties which
has been extracted from the unaudited consolidated statement of comprehensive
income within the consolidated financial statements.
3. Row 3 presents the gain or loss on disposal of properties (including
tax) which has been extracted from note 10 within the consolidated financial
statements.
4. Row 4 presents the gain on loss of control of subsidiaries which has
been extracted from the unaudited consolidated statement of comprehensive
income within the consolidated financial statements.
5. Row 5 presents the refinancing costs, exit fees and prepayment
penalties which have been extracted from note 8 within the consolidated
financial statements.
6. Row 6 presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited consolidated statement
of comprehensive income within the consolidated financial statements.
7. Row 7 presents deferred tax relating to origination and reversal of
temporary differences of the EPRA earnings adjustments which has been
extracted from note 9 within the consolidated financial statements.
8. Row 8 presents the non-controlling interest relating to gain on
revaluation and gain or loss on sale of properties (including tax) which has
been extracted from note 10 within the consolidated financial statements.
9. Row 9 presents the revaluation gain on investment property relating
to associates which has been extracted from note 10 within the consolidated
financial statements.
10. Row 10 presents tax in relation to the revaluation gain on investment
property relating to associates which has been extracted from note 10 within
the consolidated financial statements.
11. Row 11 presents the EPRA earnings for the period.
Table B - Adjusted net asset value
Unaudited
30 September 31 March
2021 2021
€000 €000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 982,579 926,533
the owners of the Company)1
Deferred tax arising on revaluation gain, derivative financial instruments and 65,037 56,331
LTIP valuation2
Derivative financial instruments at fair value3 1,141
507
Adjusted net asset value attributable to the owners of the Company4 984,005
1,048,123
Notes:
1. Row 1 presents net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the unaudited consolidated statement of financial position within the
consolidated financial statements.
2. Row 2 presents deferred tax expense arising on revaluation gains of
€65,094,000 (31 March 2021: €56,484,000) and a credit of €57,000 (31
March 2021: €153,000) arising on derivative financial instruments which have
been extracted from note 9 within the consolidated financial statements. There
is no deferred tax on the LTIP valuation.
3. Row 3 presents current derivative financial instrument assets of
€nil (31 March 2021: €70,000) less current derivative financial instrument
liabilities of €234,000 (31 March 2021: €414,000) less non-current
derivative financial instrument liabilities of €273,000 (31 March 2021:
€797,000) which have been extracted from the unaudited consolidated
statement of financial position from the consolidated financial statements.
4. Row 4 presents the adjusted net asset value attributable to the
owners of the Company as at period end.
Table C - EPRA net asset measures
EPRA NRV EPRA NTA EPRA NDV
30 September 30 September 30 September
2021 2021 2021
€000 €000 €000
Net asset value as at period end (basic)1
982,579 982,579 982,579
Diluted EPRA net asset value at fair value 982,579 982,579 982,579
Group
Derivative financial instruments at fair value2 507 507 n/a
Deferred tax in respect of EPRA earnings adjustments3 65,037 65,037* n/a
Goodwill as per note 134 n/a (3,738) (3,738)
Intangibles as per note 135 n/a (3,437) n/a
Fair value of fixed interest rate debt6 n/a n/a (12,253)
Real estate transfer tax7 112,700 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments3 5,676 5,676* n/a
Fair value of fixed interest rate debt6 n/a n/a (3,757)
Real estate transfer tax7
8,684 n/a n/a
Total EPRA NRV, NTA and NDV8
1,175,183 1,046,624 962,831
EPRA NRV EPRA NTA EPRA NDV
31 March 2021 31 March 2021 31 March 2021
€000 €000 €000
Net asset value as at period 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 value2 1,141 1,141 n/a
Deferred tax in respect of EPRA earnings adjustments3 56,331 56,331* n/a
Goodwill as per note 134 n/a (3,738) (3,738)
Intangibles as per note 135 n/a (2,830) n/a
Fair value of fixed interest rate debt6 n/a n/a (3,485)
Real estate transfer tax7 106,274 n/a n/a
Investment in associate
Deferred tax in respect of EPRA earnings adjustments3 5,212 5,212* n/a
Fair value of fixed interest rate debt6 n/a n/a (1,772)
Real estate transfer tax7
6,772 n/a n/a
Total EPRA NRV, NTA and NDV8
1,102,263 982,649 917,538
* 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 period end.
Notes:
1. Row 1 presents net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the unaudited consolidated statement of financial position within the
consolidated financial statements.
2. Row 2 presents current derivative financial instrument assets of
€nil (31 March 2021: €70,000) less current derivative financial instrument
liabilities of €234,000 (31 March 2021: €414,000) less non-current
derivative financial instrument liabilities of €273,000 (31 March 2021:
€797,000) which have been extracted from the unaudited consolidated
statement of financial position within the consolidated financial statements.
3. Row 3 presents for the Group deferred tax expense arising on
revaluation gains of €65,094,000 (31 March 2021: €56,484,000) and a credit
of €57,000 (31 March 2021: €153,000) arising on derivative financial
instruments which have been extracted from note 9 of 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 €nil (31
March 2021: €nil). For investment in associates the deferred tax expense
arising on revaluation gains amounted to €5,676,000 (31 March 2021:
€5,212,000). There is no deferred tax on the LTIP valuation.
4. Row 4 presents the net book value of goodwill which has been
extracted from note 13 within the consolidated financial statements.
5. Row 5 presents the net book value of software and licences with
definite useful life which has been extracted from note 13 within the
consolidated financial statements.
6. Row 6 presents the fair value of financial liabilities and assets on
the unaudited consolidated statement of financial position, net of any related
deferred tax.
7. Row 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. Row 8 presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively, as
at period end.
Table D - Adjusted profit before tax and funds from operations
Unaudited Unaudited
six months six months ended
ended 30 September
30 September 2020
2021 €m
€m
Reported profit before tax1 78.2 62.2
Adjustments for:
Gain on revaluation of investment properties2 (48.4) (31.9)
Deficit on revaluation relating to leased investment properties3 (3.1) (1.6)
Loss on disposals of properties4 0.4 -
Gain on loss of control of subsidiaries5 (0.1) -
Deduct revaluation gain on investment property from associates and related (1.5) (1.3)
tax6
Other adjusting items7 7.0 1.6
Change in fair value of financial derivatives8
(0.2) 0.1
Adjusted profit before tax9 32.3 29.1
Adjustments for:
Depreciation and amortisation (excluding depreciation relating to IFRS 16)10 0.9 0.8
Amortisation of financing fees11 1.0 0.8
Adjustment in respect of IFRS 1612 0.5 (1.0)
Current taxes incurred (see note 9)13 (1.7) (0.9)
Add back current tax relating to disposals14
- 0.3
Funds from operations15 33.0
29.1
Notes:
1. Row 1 presents profit before tax which has been extracted from the
unaudited consolidated statement of comprehensive income within the
consolidated financial statements.
2. Row 2 presents the gain on revaluation of investment properties which
has been extracted from the unaudited statement of comprehensive income within
the consolidated financial statements.
3. Row 3 presents the deficit on revaluation relating to capitalised
head leases which has been extracted from note 12 within the consolidated
financial statements.
4. Row 4 presents the gain or loss on disposal of properties which has
been extracted from the unaudited consolidated statement of comprehensive
income within the consolidated financial statements.
5. Row 5 presents the gain on loss of control of subsidiaries which has
been extracted from the unaudited consolidated statement of comprehensive
income within the consolidated financial statements.
6. Row 6 presents the revaluation gain on investment property relating
to associates and related tax which has been extracted from note 10 within the
consolidated financial statements and non-FFO related depreciation and
amortisation of finance costs totalling €237,000 (30 September 2020: €nil)
relating to associates.
7. Row 7 presents the total adjusting items which has been extracted
from note 10 within the consolidated financial statements.
8. Row 8 presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited consolidated statement
of comprehensive income within the consolidated financial statements.
9. Row 9 presents the adjusted profit before tax for the period.
10. Row 10 presents depreciation of plant and equipment and amortisation of
intangible assets which have been extracted from note 5 within the
consolidated financial statements.
11. Row 11 presents amortisation of capitalised finance costs which has been
extracted from note 8 within the consolidated financial statements.
12. Row 12 presents the differential between the expense recorded in the
unaudited consolidated statement of comprehensive income for the period
relating to head leases in accordance with IFRS 16 amounting to €3.6 million
(30 September 2020: €2.0 million) and the actual cash expense recorded in
the unaudited consolidated statement of cash flow for the period amounting to
€3.1 million (30 September 2020: €3.0 million).
13. Row 13 presents the total current income tax which has been extracted
from note 9 within the consolidated financial statements.
14. Row 14 presents the current income tax charge relating to disposals of
investment properties which has been extracted from note 9 within the
consolidated financial statements.
15. Row 15 presents the funds from operations for the period.
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 gains/losses 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, gain on loss of control
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 owners of the Company adjusted for
derivative financial instruments at fair value and deferred tax arising on
revaluation gain, financial derivative instruments and LTIP valuation
Adjusted profit before tax is the reported profit before tax adjusted for gain on revaluation of owned
investment properties, gains/losses on sale of properties, changes in fair
value of derivative financial instruments, other adjusting items, gain on loss
of control 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 rent roll is the contracted rental income of a property at the date of acquisition
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 30
September 2021. Annualised rent roll should not be interpreted nor used as a
forecast or estimate. Annualised rent roll differs from rental income
described in note 4 of the Interim Report and reported within revenue in the
unaudited consolidated statement of comprehensive income 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
• 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), the gain on loss of control 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
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 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
unaudited 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 unaudited 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 as at the
reporting date, less non-recoverable property operating expenses, divided by
the market value of the property, increased by (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
Funds from operations is adjusted profit before tax adjusted for depreciation and amortisation
(excluding depreciation relating to IFRS 16), amortisation of financing fees,
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
Rate is rental income per sqm expressed on a monthly basis as at a specific
reporting date
Senior Management Team as set out on page 52 of the Group's Annual Report and Accounts 2021
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 plus 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
WALE is the weighted average lease expiry remaining
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: ISIN 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
Financial PR
FTI Consulting LLP
Aldersgate Street
London EC1A 4HD
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch
7600
South Africa
Joint broker
Peel Hunt LLP
120 London Wall
London EC2Y 5ET
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
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
7 New Street
St Peter Port
Guernsey GY1 4BZ
Channel Islands
This announcement is not, does not constitute or form part of, and should not
be construed as, any offer or invitation to sell or issue, or any solicitation
or any offer to purchase or subscribe for or otherwise acquire, any securities
of the Company nor shall it or any part of it nor the fact of its
distribution form the basis of, or be relied on in connection with, any
contractual commitment or investment decision in relation thereto. This
announcement does not constitute a recommendation regarding any securities.
This announcement is not an offer of securities for sale into the United
States. The securities referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933 (the "Securities Act"), or
with any securities regulatory authority of any state or other jurisdiction of
the United States. The securities may not be offered or sold in the United
States, except pursuant to an applicable exemption from or in a transaction
not subject to the registration requirements of the Securities Act and in
compliance with any applicable securities laws of any state or other
jurisdiction of the United States. No public offering of the securities
referred to herein is being made in the United States.
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