REG - Sirius Real Estate - Half-year Report
21/11/2022 07:00
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RNS Number : 9851G Sirius Real Estate Limited 21 November 2022
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
21 November 2022
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius", the "Group" or the "Company")
Condensed consolidated financial results for the six months ended 30 September
2022
H1 2023 TRADING IN LINE WITH EXPECTATIONS, WITH CONTINUED RENTAL GROWTH AND
STRONG BALANCE SHEET
Sirius Real Estate, the leading owner and operator of branded business and
industrial parks providing conventional space and flexible workspace in
Germany and the U.K., provides an update on trading for the six months to 30
September 2022.
Strong balance sheet and continued rental growth
Rental growth underpins FFO growth and dividend increases
• Total revenue increased by 47.7% to €130.6 million (30 September
2021: €88.4 million)
• Like-for-like annualised rent roll increased by 2.4% in Germany
during the period, to €115.2 million (31 March 2022: €112.5 million), and
4.1% in the UK, to £46.5 million (31 March 2022: £44.7 million)
• 47.0% growth in funds from operations¹ to €48.5 million (30
September 2021: €33.0 million)
• Profit before tax of €75.7 million (30 September 2021: €78.2
million) with a 78.7% uplift in underlying profit to €47.9 million (30
September 2021: €26.8 million) when adjusted for €27.8 million of property
valuation gains
• Adjusted earnings per share, which excludes valuation movements as
well as exceptional items, increased 26.6% to 3.71c per share (30 September
2021: 2.93c) reflecting the positive year on year operational development
• 32.4% increase in dividend per share to 2.70c (30 September 2021:
2.04c)
• Continued valuation and NAV growth with NAV per share increasing
1.8% to 103.90c (31 March 2022: 102.04c) with adjusted NAV per share
increasing by 2.0% to 110.72c (31 March 2022: 108.51c)
• Valuation increase of €20.3 million and £6.3 million (€7.5
million) representing a 1.8% and 2.1% like-for-like valuation growth in
Germany and the UK respectively
• Increase in owned investment property to €2,081.4 million (31
March 2022: €2,074.9 million)
Early loan refinancing further strengthens balance sheet
• Completed the early financing of the new €170 million Berlin Hyp
AG loan facility approximately one year ahead of maturity, with a seven year
facility available 1 November 2023 to 31 October 2030 at a 4.26% fixed
interest rate which increases the Company's weighted average debt maturity to
five years upon its availability
• Book value of unencumbered properties remaining at €1.6 billion
(31 March 2022: €1.6 billion)
• Weighted average cost of debt decreasing to 1.3% in the period (31
March 2022: 1.4%)
• Net LTV of 41.0% (31 March 2022: 41.6%), including unrestricted
cash balance of €138.6 million (31 March 2022: €127.3 million)
• Fitch reaffirmed its BBB investment grade rating with "Stable
Outlook" on 4 November 2022
Successful asset recycling
• Disposal of two mature assets at a premium to book value in
Magdeburg, Germany, for €13.8 million and Camberwell, UK, for €18.8
million which together represent a 9.4% premium to book value at the time of
agreeing the sale
• These proceeds will be recycled into two value-add acquisition
assets in the second half of the financial year amounting to €43.7 million
in Düsseldorf (€39.8 million) and Dreieich (€3.9 million)
Outlook
• Sirius remains resilient and well positioned to navigate the
current macro-economic climate due to its intensive asset management
initiatives and the fixed priced contracts it has secured for a significant
portion of its utility demands in both Germany and the UK, which should
shelter its diverse tenant base from some of the higher operating costs that
most industrial companies are facing
• As such, the Company continues to expect to trade in line with
consensus and management expectations for the full year
Commenting on the period, Andrew Coombs, Chief Executive Officer of Sirius
Real Estate, said:
"It has been another solid six months for the business, with our portfolio
continuing to demonstrate its resilience in both Germany and the UK. Dividend
and FFO growth is being supported by strong trading, with continued demand for
space at our properties leading to rent roll increases and a robust leasing
pipeline taking this positive momentum into the second half. There are also
many opportunities within our portfolio to unlock value and grow rental income
through our successful asset management platform.
The Company has taken a number of proactive measures to identify and mitigate
against future potential risks in light of current market conditions. These
include securing the Company's €170m Berlin Hyp AG facility one year in
advance of its due date, as well as agreeing fixed price contracts for a
significant proportion of our utilities and slowing our acquisition pipeline.
These early and strategic efforts enable the business to remain extremely-well
positioned going forwards and we remain focused on growing our FFO
organically, in order to continue to deliver attractive risk-adjusted returns
to shareholders."
1 See note 25 of the Interim Report 2022.
2 Interim dividend representing 65% of FFO (30
September 2021: 65% of FFO).
3 See note 11 of the Interim Report 2022.
Webcast Presentation
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, and Alistair Marks, Chief Investment Officer and Interim Chief
Financial Officer.
If you would like to join the webcast please use the registration link below:
https://stream.brrmedia.co.uk/broadcast/6319d2c9b07f2a3ead2afd74
(https://stream.brrmedia.co.uk/broadcast/6319d2c9b07f2a3ead2afd74)
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Alistair Marks, CIO and Interim CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / James McEwan / Talia Shirion
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main and premium market of the
London Stock Exchange and the main board of the JSE Limited. It is a leading
owner and operator of branded business and industrial parks providing
conventional space and flexible workspace in Germany and the UK. As of 31
March 2022, and following the acquisition of BizSpace, a leading UK provider
of regional flexible workspace, the Group's portfolio comprised 140 assets let
to 9,452 tenants with a total book value of over €2 billion, generating a
total annualised rent roll of €167.1 million. Sirius also holds a 35% stake
in Titanium, its €350+ million German-focused joint venture with clients of
AXA IM Alts.
The Company's strategy centres on acquiring business parks at attractive
yields and integrating them into its network of sites - both under the Sirius
name and alongside a range of branded products. The business then seeks to
reconfigure and upgrade existing and vacant space to appeal to the local
market via intensive asset management and investment and may then choose to
selectively refinance or dispose of assets once they meet maturity, to release
capital for new investment. This active approach allows the Company to
generate attractive returns for shareholders through growing rental income,
improving cost recoveries and capital values, and enhancing returns through
securing efficient financing terms. The Company has a strong track record for
growing its income and has delivered like-for-like rent roll growth in excess
of 5% for the last eight consecutive years.
For more information, please visit: www.sirius-real-estate.com
(http://www.sirius-real-estate.com/)
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
(https://www.linkedin.com/company/siriusrealestate/)
Follow us on Twitter at @SiriusRE
JSE Sponsor
PSG Capital
Business update
Strong trading performance despite uncertain market conditions
Profit before tax
€75.7m
(3.2)%
2022 75.7
2021 78.2
Total revenue
€130.6m
47.7%
2022 130.6
2021 88.4
Funds from operations1
€48.5m
47.0%
2022 48.5
2021 33.0
Total annualised rent roll
€167.9
68.4%
2022 167.9
2021 99.7
Interim dividend
2.70c per share
32.4%2
2022 2.70
2021 2.04
Basic earnings per share
6.00c per share
(6.8)%
2022 6.00
2021 6.44
1 See note 25 of the Interim Report 2022.
2 Interim dividend representing 65% of FFO (30 September 2021: 65% of
FFO).
Overview
Sirius had an exceptional trading period in the first six months of the
financial year ending 31 March 2023, considering the economic backdrop and
sentiment in both the German and UK commercial property markets as further
outlined in its principal risks and uncertainties in note 2(f). Total revenue
has increased 47.7% to €130.6 million (30 September 2021: €88.4 million)
from both substantial organic growth as well as the positive impact of
acquisitions, particularly with respect to the BizSpace purchase which
completed in November 2021.
Organically, the Company has seen a 2.4% increase in like-for-like rent roll
in Germany and a 4.1% increase in the UK for the six month period and, given
the leasing momentum we are seeing at the start of the second half, the
Company seems set for another year of greater than 5% like-for-like rent roll
increase as it has achieved for the last eight years. This has helped the
Group report a 47.0% growth in FFO to €48.5 million (30 September 2021:
€33.0 million) which has supported a 32.4% increase in the interim dividend
to 2.70c per share compared to the 2.04c for H1 last year. Sirius has also
seen NAV per share growth of around 2% in the six month period which was
helped by a 1.2% like-for-like uplift in the valuation of owned investment
property to €2,081.4 million from €2,074.9 million as at 31 March 2022.
Additionally, the Company continued to fuel its future organic growth
potential with some excellent asset recycling in the period which also helped
demonstrate the resilience of the Company's asset valuations. The completion
of the Magdeburg (Germany) and Camberwell (UK) sales in the period and at
premium to book values, proves that the Group's assets remain desirable, and
replacing these non-core and mature assets with the Düsseldorf and Dreieich
assets in the second half of the financial year gives us the opportunity to
unlock substantial income and value growth potential through our asset
management platform.
Like-for-like annualised rent roll increased to €115.2 million (31 March
2022: €112.5 million) in Germany which was driven by a 3.3% increase in
like-for-like rate per sqm to €6.53 (31 March 2022: €6.32). In the UK, a
strong increase in like-for-like rate per sq ft of 8.4% to £12.64 (31 March
2022: £11.67) was also the driver of the like-for-like rent roll increase to
£46.5 million (31 March 2022: £44.7 million).
The Company has also further strengthened its balance sheet through the
financing of the €170 million Berlin Hyp AG loan facility, for a period of
seven years to 31 October 2030. This extends Sirius' average debt maturity to
5.0 years once it comes into effect on 1 November 2023. Sirius' average cost
of debt, which now sits at 1.3%, will increase by around 60bps when this new
facility is in place to 1.9%, maintaining reasonable cost of debt levels. The
early financing of the loan demonstrates the Company's excellent relationship
with its financiers and its ability to refinance or take out new facilities at
all stages of the property cycle.
Looking forward, the Company is confident it can continue to grow FFO
organically through its intensive asset management initiatives as well as
through further asset recycling. In addition, while the Company will continue
to reduce its net LTV, it will also seek to exploit any significantly
accretive deals that it comes across. However, the primary focus will be
optimising the significant growth opportunity which the existing portfolio
continues to offer, especially from the recently acquired assets, which will
continue to fuel this growth over the next few years. Furthermore, asset
recycling and acquisitions will only be completed when they significantly
enhance this growth whilst also being in line with the Group's LTV objectives.
Financial performance
The Company reported a profit before tax for the six month period of €75.7
million (30 September 2021: €78.2 million) which includes €27.8 million of
gains* from investment property revaluations of its owned assets (30 September
2021: €51.4 million). Total revenue, which comprises rent, fee income from
Titanium, other income from investment properties and service charge income,
increased by 47.7% to €130.6 million (30 September 2021: €88.4 million).
As a result, FFO for the six months grew to €48.5 million (4.15c per share)
compared to €33.0 million (3.14c per share) for the same period in the prior
year, an increase of 32.2% on a per share basis, which feeds through to the
increase in interim dividend. Basic earnings of €70.0 million and 6.0c per
share compares to €67.7 million and 6.44c in the prior year reflecting the
lower valuation increases coupled with a small lag on the asset recycling
between when assets were sold and the equity reinvested. Adjusted EPS, which
excludes valuation movements as well as exceptional items, increased by 26.6%
to 3.71c per share from 2.93c in the prior year reflecting the positive year
on year operational development.
* Net of capex and adjustments in relation to lease incentives and
broker fees.
The following table sets out the key earnings per share metrics:
Table 1: Earnings per share
30 Sept 2022 30 Sept 2021
earnings cents earnings cents Change
€000 no. of shares per share €000 no. of shares per share %
Basic EPS 70,008 1,167,383,139 6.00 67,738 1,052,600,936 6.44 (6.8)%
Diluted EPS 70,008 1,183,403,147 5.92 67,738 1,070,514,305 6.33 (6.5)%
Adjusted EPS 43,294 1,167,383,139 3.71 30,862 1,052,600,936 2.93 26.5%
Basic EPRA EPS 41,226 1,167,383,139 3.53 32,550 1,052,600,936 3.09 14.2%
Diluted EPRA EPS 41,226 1,183,403,147 3.48 32,550 1,070,514,305 3.04 14.6%
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). Refer to note 2(c) for
further information.
The usual positive impact we would expect to see from acquisitions made during
the period was much lower than expected. This is because the investment market
has faced headwinds due to interest rate increases, inflation and uncertainty
of utilities supply as a result of the Ukraine conflict, which led Sirius to
make the decision to hold back on deploying its cash reserves in order to
exercise discipline before fully investing again. As a result, investment
activity for both Sirius and the market in general has been subdued over the
last six months. The Company did, however, complete the acquisitions of a
small asset in Potsdam for €0.9 million which is strategically located at
the entrance to one of Sirius' existing business parks in the period, as well
as two business parks worth €43.7 million in Düsseldorf (€39.8 million)
and Dreieich (€3.9 million) in October 2022. Due to the timing of
completions, the impact from acquisitions will only benefit the second half of
this financial year. As mentioned above, these acquisitions were predominantly
funded by the sale of Sirius' Magdeburg asset for €13.8 million, a parcel of
non-income producing land on the Company's books at €0.25 million, for €1
million, and the sale of its Camberwell asset for £16.0 million (€18.8
million), at a 94% premium to the asset's value at the time of the BizSpace
purchase last year. Whilst the sale of these assets at a premium to their book
value demonstrates the Company's ability to realise the value of its assets in
all market conditions, the loss of income from these assets will impact the
financial year.
Net asset value per share ("NAV") grew by 1.8% to 103.90c (31 March 2022:
102.04c) in the period whilst adjusted net asset value per share ("adjusted
NAV") increased by 2.0% to 110.72c (31 March 2022: 108.51c). EPRA net tangible
assets ("EPRA NTA") per share increased by 2.0% to 109.47c (31 March 2022:
107.28c) with the main driver of these increases attributable to valuation
uplift more than offsetting the capex deployed 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 2022 102.04
Profit after tax 3.71
Gain on revaluation of investment properties 2.38
Deferred tax charge (0.46)
Scrip and cash dividend paid (2.51)
EBT share purchase and LTIP vesting 0.04
Foreign currency (1.67)
Adjusting items 0.37
NAV per share as at 30 September 2022 103.90
Deferred tax and adjustments to financial derivatives* 6.82
Adjusted NAV per share as at 30 September 2022 110.72
EPRA adjustments* (1.25)
EPRA NTA per share as at 30 September 2022 109.47
* See note 11 of the Interim Report.
Lettings and rental growth
Rental growth
Germany
In Germany, like-for-like annualised rent roll increased by 2.4% in the six
month period to €115.2 million (31 March 2022: €112.5 million). The tenant
retention rate at 65% was slightly lower than the 71% recorded for the same
period last year. However, with continued strong demand for space across our
assets, the 79,872 sqm of new lettings, bringing in €8.3 million of
annualised rental income, more than offset 91,963 sqm of moveouts and the
€8.2 million of income lost. This, combined with the €2.6 million increase
in annualised rent roll from existing tenants, which came from contracted
increases and uplifts on renewal, has driven the like-for-like average rental
rate to €6.53 per sqm from €6.32 per sqm at 31 March 2022, a 3.3%
increase. This highlights the strong and diverse occupier demand within the
German portfolio as well as Sirius' ability to capture the benefits of a high
inflation rate. Like-for-like occupancy dropped slightly to 83.8% from 84.5%
at 31 March 2022 due to some large known move-outs at three sites in Germany,
where the Company is confident of replacing these tenants quickly. The asset
recycling mentioned above, where high-occupied assets are sold and replaced
with assets with similar income but high vacancy and opportunity, will further
reduce occupancy levels and increase the opportunity for further income,
profit, cash flow and valuation improvements going forward.
The movement in annualised rent roll is described in more detail below:
Table 3a: Annualised rent roll - Germany
€m
Annualised rent roll as at 31 March 2022 113.7
Acquisitions -
Disposals (1.2)
Move-outs (8.2)
Move-ins 8.3
Contracted uplifts and increases upon renewals 2.6
Annualised rent roll as at 30 September 2022 115.2
UK
In the UK, like-for-like annualised rent roll increased by 4.1% in the six
month period to £46.5 million (31 March 2022: £44.7 million). This was
driven by an 8.4% increase in like-for-like average rental rate to £12.64 per
sq ft from £11.67 per sq ft at 31 March 2022, highlighting the high reversion
potential within the UK portfolio which is realisable due to continued strong
occupier demand. Similar to what happened in Germany, the like-for-like
occupancy reduced to 87.0% from 90.5% in the period due to a combination of
large known move-outs, and the decision to proactively manage the customer
base in order to take advantage of the high rent increases in the UK
industrial market and high demand for flexible workspace in the UK as well as
bringing in new tenants at higher rates.
Table 3b: Annualised rent roll - UK
£m
Annualised rent roll as at 31 March 2022 45.1
Disposals (0.4)
Move-outs (8.5)
Move-ins 8.0
Rental uplifts 2.3
Annualised rent roll as at 30 September 2022 46.5
Enquiries and new lettings
Germany
In Germany, the marketing platform generated a total 7,554 enquiries in the
six month period for assets within the wholly owned portfolio which compares
to 8,036 enquiries for the same period in the prior year. This was converted
into an average of 145 deals per month which was slightly lower than the 175
deal monthly average for the six months ended 31 March 2022. The total sqm let
in the period was 79,872, which was also slightly lower than the 83,757 sqm
let in the same period last year; however, the average deal size at 92 sqm per
deal was higher than the 82 sqm per deal last year. Details of monthly
enquiries plus letting numbers and sqm volumes are set out in the two tables
below:
Table 4a: Enquiries - Germany
No. of enquiries No. of Change %
six months to enquiries
Sept 2022 six months to
Sept 2021
April 1,035 1,235 (16.2)%
May 1,304 1,333 (2.2)%
June 1,175 1,341 (12.4)%
July 1,298 1,305 (0.5)%
August 1,383 1,435 (3.6)%
September 1,359 1,387 (2.0)%
Total 7,554 8,036 (6.0)%
Table 5a: Deals - Germany
New deals New deals 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 2022 Sept 2021 Sept 2022 Sept 2021 Sept 2022 Sept 2021
April 172 219 12,697 13,463 74 61
May 87 170 10,448 15,953 120 94
June 148 166 11,711 12,629 79 76
July 125 139 13,945 15,185 112 109
August 167 182 12,411 11,877 74 65
September 170 175 18,659 14,650 110 84
Total 869 1,051 79,871 83,757 92 82
UK
Despite a challenging market, driven by market uncertainty over inflation, the
UK operating platform generated a total 8,056 enquiries during the period for
an average of 1,343 per month. These enquiries were translated into 377 new
deals in the first half of the year, an average of 63 per month, which was
lower than the 73 deal monthly average for the six months ended 31 March 2022.
The volume of sq ft let in the period was 161,470, lower than the 186,974 sq
ft let in the second half of last year; however, the average deal size was
slightly higher at 429 sq ft per deal compared to 423 sq ft per deal last
year. Details of monthly letting numbers and sqm volumes are set out in the
table below:
Table 4b: Enquiries - UK
No. of enquiries
six months to
Sept 2022
April 1,494
May 1,548
June 1,319
July 1,181
August 1,158
September 1,356
Total 8,056
Table 5b: Lettings - UK
New deals sq ft Average sq ft
six months to six months to six months to
Sept 2022 Sept 2022 Sept 2022
April 70 37,233 532
May 65 30,445 468
June 64 25,067 392
July 51 18,981 372
August 55 25,114 457
September 72 24,630 342
Total 377 161,470 428
Comparatives for the six months ended September 2021 are not available as
these relate to the pre-acquisition period of BizSpace.
Cash collection
Germany
Billing tenants higher rents is one thing but this is of no value unless they
actually pay. The Company continues to achieve high levels of cash collection,
benefiting from an experienced in-house team of professionals in Germany which
has grown in expertise throughout the Covid-19 pandemic and continues to
maintain close relationships with tenants. During the period under review
Sirius has continued to work with its tenants as they adapt to new ways of
working, their related space requirements and inflationary pressures and help
them to actively manage their debt. Cash collection performance remained
strong in the six month period to 30 September 2022 relating to rent and
service charge prepayments and is detailed in the following table (excluding
VAT):
Table 6a: Cash collection to 30 September 2022 - Germany
Invoiced Outstanding €000 Collection %
€000
April 14,527 188 98.7%
May 14,530 184 98.7%
June 14,684 240 98.4%
July 14,328 261 98.2%
August 14,054 347 97.5%
September 14,399 1,165 91.9%
Total 86,522 2,385 97.2%
In the six month period to 30 September 2022 the Company billed a total of
€86.5 million (excluding VAT) to tenants of which €84.1 million or 97.2%
was collected. The Company expects to collect the majority of the €2.4
million outstanding debts, of which
€0.5 million were collected in early October, with the remaining €1.9
million expected to be collected through its regular collection activities
over the coming months. When considering the €0.5 million collected in early
October, the cash collection rate increases to 97.8% for the six month period.
Write-offs with a value of less than €5,000 relating to the period under
review were recorded, with the twelve month rolling balance amounting to
€45,000. The twelve month rolling cash collection rate was 98.0% in line
with the 98.4% reported for the twelve month period to 31 March 2022 and the
98.2% rolling cash collection rates for the comparative period in the prior
year. 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.
UK
BizSpace also continued to maintain high cash collection rates through the
team's active management of its tenant base. Of the £24.3 million (excluding
VAT) which was billed in the period, £24.0 million or 98.6% was collected.
The remaining £0.3 million is expected to be collected in the normal course
of regular collection activities over the coming months. The Company wrote off
less than £11,000 in the period under review.
Table 6b: Cash collection to 30 September 2022 - UK
Invoiced Outstanding £000 Collection %
£000
April 3,833 - 100%
May 3,750 - 100%
June 4,667 - 100%
July 3,917 1 100%
August 3,583 10 99.7%
September 4,583 318 93.1%
Total 24,333 329 98.6%
Portfolio valuation
Group
Taking into account investment property relating to leased assets the total
investment property book value as at 30 September 2022 was €2,105.0 million
(31 March 2022: €2,100.0 million). In accordance with IFRS 16, the Group
recognises lease liabilities of €23.6 million relating to leases on assets
meeting the definition of investment property. Accordingly, a revaluation loss
of €0.9 million representing the fair value adjustment in the year was
recorded in the income statement.
The movement in book value in the period for both Germany and the UK is set
out in the table below:
Table 7: Movement in book value in the period
German investment German investment UK investment UK investment Investment
property - owned property - leased property - owned property - leased property - total
€000 €000 €000 €000 €000
Investment properties at book value as at 31 March 2022 1,623,157 12,064 451,769 13,014 2,100,004
Additions relating to owned investment properties 832 - - 832
Capex investment and capitalised broker fees 9,593 - 1,943 - 11,536
Disposals - - (13,792) - (13,792)
Reclassified as investment properties held for sale (1,000) - - (1,000)
Gain on revaluation above capex investment and broker fees 20,306 - 7,448 - 27,754
Deficit on revaluation relating to leased investment properties - (897) - (22) (919)
Adjustment in respect of lease incentives (23) - - - (23)
Currency effects - - (18,801) (545) (19,346)
Investment properties at book value as at 30 September 2022 1,652,865 11,167 428,567 12,447 2,105,046
Germany
The increase in value of the German portfolio by €29.7 million was made up
of €0.8 million of acquisitions, €9.6 million of capex investment and
€20.3 million of valuation uplift, offset by €1.0 million transfer to
assets held for sale on the back of the 2.4% increase in like-for-like rental
income. The portfolio is now valued on a gross yield of 7.0% which has
increased from 6.9% at 31 March 2022. Despite all the pressures on the
property market in Germany, yields have been robust for the higher yielding
asset classes with sellers preferring to take assets off the market rather
than reduce prices significantly. Nevertheless, Sirius is particularly well
positioned to absorb any yield expansion in the asset class due to the
value-add potential remaining within its portfolio and the fact that its
assets are valued at yields which are much higher than where similar assets
have been trading at over the last few years. Sirius' business model of
upgrading and repositioning assets which transforms underperforming assets
with issues through its capex programme into much more desirable institutional
type assets is one which works very effectively when the market is strong as
well as when it is more challenging.
As at the period end, just over 60% of the total portfolio comprised assets
benefiting from both income and value-add potential which will be realised
through Sirius' intensive asset management and selective capex investment over
the next few years. These assets now have an average occupancy of 78.8% and
are valued on a gross yield of 7.3% and compare to the mature assets which are
on average around 95.8% occupied and valued on a gross yield of 6.5%. The
unlocking of the potential in the value-add portfolio will come from filling
up sites and stabilising their rental income. This will be achieved through
our strategy of making the properties much more appealing to a wider market
which includes the lower cost of capital investors who buy these types of
assets on much tighter yields. Hence, we would expect to see the gap between
the yields of the value-add assets and mature assets tighten as the value-add
assets approach maturity. This is why the capex programme, which has so
successfully and consistently improved the occupancy, rental income, service
charge cost leakage and overall quality of the rent roll and site in general,
has proven to be extremely value accretive as well. The comparison of the key
metrics between the value-add and mature portfolios can be seen in the table
below.
Table 8a: Book value valuation metrics - Germany
Annualised Vacant Rate
rent roll Book NOI Capital Gross Net space per sqm Occupancy
Owned properties €m value €m €value/sqm yield yield sqm € %
€m
Value-add assets 75.0 1,032.0 67.2 761 7.3% 6.5% 262,040 6.42 78.8%
Mature assets 40.2 621.9 38.6 1,347 6.5% 6.2% 21,671 6.76 95.8%
Other - - (0.8) - - - - - -
Total 115.2 1,653.9 105.0 910 7.0% 6.3% 283,711 6.53 83.8%
UK
The negative movement in owned investment property of the UK portfolio of
€23.2 million was made up of €13.8 million of disposal, a net €7.5
million valuation uplift, after taking into account €1.9 million of capital
expenditure and €18.8 million foreign currency translation adjustment.
The 30 September 2022 book value of the UK portfolio, which was independently
valued by Cushman & Wakefield LLP, of £378.4 million (31 March 2022:
£370.4 million) represents an average gross yield of 12.3% (31 March 2022:
11.8%) which translates to a net yield of 8.7% (31 March 2022: 8.0%). The 2.2%
valuation increase compared to 31 March 2022 was driven by organic increases
in annualised rent roll of 4.1% reflecting the ability of the operating
platform to consistently grow income.
The average capital value per sqm of the portfolio of £90 per sq ft remains
well below replacement cost and illustrates the potential for further growth
from transformative investment through leveraging the Group's capex investment
programme. The book value valuation metrics are detailed in the table below:
Table 8b: Book value valuation metrics - UK
Annualised Vacant Rate
Owned properties rent roll Book NOI Capital Gross Net space per sq ft Occupancy
£m value £m £value/sq ft yield yield sq ft £ %
£m
UK portfolio 46.5 378.4 32.9 90 12.3% 8.7% 547,033 12.64 87.0%
German capex investment programme
The Group's capex investment programme on the German assets has historically
been focused on the transformation of the poor-quality vacant space that is
typically acquired at very low cost due to it being considered as structural
vacancy by former owners. The transformation and take up of this space has not
only resulted in significant income and valuation improvements for the Company
but also has yielded significant improvements in service charge cost recovery
and therefore further enhanced the improvements to net operating income. The
programme started in 2015 and to date 398,393 sqm of space has been completed
for an investment of €60 million and, at 30 September 2022, this space was
generating €26.4 million in annualised rent roll (at 79% occupancy) plus the
substantial improvement in the recovery of service charge costs. This
transformed space has also been the major contributor towards the large
valuation increases seen on the portfolio over the last 7.5 years.
In addition to the space that has been completed and let or is currently being
marketed, a total of approximately 57,765 sqm of space is either in progress
of being transformed or is awaiting approval to commence transformation. A
further €14.9 million is expected to be invested into this space on top of
the €1.2 million already spent, and, based on achieving budgeted occupancy,
is expected to generate incremental annualised rent roll in the region of
€4.5 million. The details of the capex programme on this low-quality vacant
space are shown below:
Table 10: Capex investment programme
New capex investment Annualised
programme progress
rent roll Rate
Annualised increase per sqm
rent roll achieved to Occupancy Rate achieved to
Investment Actual increase September achieved to per sqm September
budgeted spend budgeted 2022 Occupancy September budgeted 2022
sqm €m €m €m €m budgeted 2022 € €
Completed 398,393 65.2 60.0 24.3 26.4 82% 79% 6.24 7.04
In progress 35,046 10.0 1.2 3.0 0.0 83% - 8.48 -
To commence in next financial year 22,719 6.1 - 1.5 0.0 81% - 6.71 -
Total 456,158 81.3 61.2 28.8 26.4 82% 79% 6.44 -
In addition to the capex investment programme on acquired "structural" vacant
space, Sirius continually identifies and looks for opportunities to upgrade
the space that is vacated each year as a result of move-outs. Within the
existing vacancy at 30 September 2022, the Company has identified
approximately 37,254 sqm of recently vacated space that has potential to be
significantly upgraded before it is re-let. This space will require an
investment of approximately €6.0 million and, at current rates, is expected
to generate around €3.3 million in annualised rent roll when re-let.
Upgrading this vacated space allows the Company to further enhance the
reversionary potential of the portfolio whilst significantly enhancing the
quality, desirability and hence value of not only the space that is invested
into but the whole site.
The analysis below details the total vacancy of the German portfolio as at 30
September 2022 and highlights the opportunity from developing this space.
Table 11: Vacancy
% of sqm Capex ERV
total space investment (post
€m investment)
Subject to capex investment programme 3% 57,699 15.1 4.2
Recently vacated space to be upgraded 2% 37,254 6.0 3.3
Total space subject to investment 5% 94,953 21.1 7.5
Structural vacancy 2% 38,012 - -
Smartspace vacancy 2% 27,017 - 3.0
Lettable vacancy 7% 123,729 0.3 8.0
Total lettable vacancy 9% 150,746 0.3 11.0
Total vacancy 16% 283,711 21.4 18.5
The German portfolio's headline 84% occupancy rate means that in total 283,711
sqm of space is vacant as at 30 September 2022. When excluding the vacancy
that is subject to investment (5% of total space), and the structural vacancy,
which is not economically viable to develop (2% of total space), the Company's
occupancy rate based on space that is readily lettable is approximately 91%.
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 (especially whilst
inflation is high), uplifts on renewals and the re-letting of space at higher
rates are expected to also contribute to the Company's annualised rent roll
growth going forward.
Asset recycling, acquisitions and disposals
Recycling equity from mature assets into new value-add acquisitions has always
been a significant part of the Sirius business model. It benefits the Company
in many ways including a) proving enhanced valuations and that these can be
crystallised; b) replenishing the growth opportunity within the vacancy and
the capex programme; and c) being accretive to FFO per share (and hence
dividend per share) as well as contributing to NAV per share growth. This is
an element of the Company's strategy which Sirius in general is able to
execute effectively throughout the property cycle and this has been evidenced
by the disposals and acquisition activity that has been conducted during the
period under review. Even though the market for both selling and buying
remains a challenging one due to the current economic climate, the Company was
able to recycle some non-core and mature assets in Germany and the United
Kingdom and reinvest these funds into some excellent value-add opportunities
in Germany, albeit this has been to an intentionally lesser degree than in
previous quarters.
Disposals
In Germany, the Company completed the sale of Magdeburg asset for €13.8
million. This represented a 5.5% premium to book value at the time of
notarisation and allowed Sirius to dispose of an asset located in a non-core
location with only structural vacancy for which it was not economically viable
to transform, even for the Sirius business model. In the UK, a mature asset in
Camberwell was sold for £16.0 million (€18.8 million) which represents a
net initial yield of approximately 2.0% and a 94% premium to the value at the
time of the Company's acquisition of BizSpace in November 2021. Additionally,
the Company notarised the sale of 3,200 sqm of non-income producing land in
Heiligenhaus, Germany, for €1 million which has a book value of €0.25
million and is expected to close in the fourth quarter of this financial year.
Acquisitions
The Company continues to take a conservative approach to acquisitions over the
last six months due to the current uncertainty in the market and is more
focused on reducing net LTV and building up cash reserves for when
opportunities do arise. Hence, there were no acquisitions completed in the
period apart from a small building which sits at the entrance of an existing
Sirius site; however, two acquisitions did complete just after the period end
in October 2022.
The completed purchase was of a 239 sqm office building in Potsdam, Germany,
which strategically gives Sirius ownership of an asset located at an entrance
to one of the Company's existing business parks. With total acquisition costs
of €0.9 million the building was purchased fully vacant and gives the
Company control of all buildings on a site which is located next to the world
famous Babelsberg Film Studios.
The post-period acquisitions included the previously communicated Düsseldorf
purchase for total acquisition costs of €39.8 million. The multi-tenanted
site is located in close proximity to Düsseldorf International Airport and
provides 24,400 sqm of office and 9,900 sqm of industrial space. With over
15,500 sqm of vacant space at the date of notarisation, the site provides
significant rental and valuation growth opportunity as well as reasonable
day-one net income to replace most of the income lost from disposals. The
Company has a number of assets in the Düsseldorf area and Sirius expects to
benefit from meaningful operational synergies by adding another.
The final acquisition was in Dreieich and also completed in October 2022. It
comprises a warehouse asset located in a well-developed commercial area in
Dreieich, Germany, that is strategically adjacent to an existing property
owned by Sirius. With total acquisition costs of €3.9 million, the asset
consists of 5,200 sqm of industrial space and 439 sqm of residential space
which will initially generate around €50,000 of annualised net operating
income at 54% occupancy. There are plenty of value-add opportunities within
this asset, which includes potentially converting the property into a
self-storage facility. If progressed, this would add to the Company's existing
Smartspace self-storage brand and take advantage of the high demand for
self-storage in the area which Sirius has established through operating its
asset in the area for the last five years. Sirius currently owns and operates
at 32 self-storage locations across Germany and this would be one of the
largest and most significant.
A summary of acquisitions and disposals is set out in the tables below:
Table 12a: Acquisitions
Notarised/completed for acquisition Date Total Total Annualised Annualised Occupancy Gross yield
investment acquired rental NOI
€m sqm income €m
€m
Düsseldorf* Oct-22 39.8 34,310 2.1 1.6 55% 5.3%
Dreieich* Oct-22 3.9 5,648 0.2 - 54% 4.1%
Potsdam May-22 0.9 239 - - 0% 0%
Total 44.6 40,198 2.3 1.6 54% 5.5%
* Completed 1 October 2022.
Table 12b: Disposals and assets held for sale
Notarised / completed for sale Date Total Total Annualised Annualised Occupancy Gross yield*
sales price disposal rental NOI
€m sqm income €m
€m
Magdeburg Apr-22 13.8 32,070 1.3 1.0 69% 9.2%
Heiligenhaus Land Sep-22 1.0 - - - 0% 0.0%
Camberwell (UK) Jul-22 18.8 3,224 0.4 0.3 91% 2.1%
Sub-total 33.6 35,294 1.7 1.3 71% 5.5%
* Calculated on net purchase price.
Net LTV and debt refinancing
Given the rising interest rates and the uncertainty that this and the many
other factors affecting the German and UK property markets are causing at the
moment, the Company has prioritised improving its debt ratios and building up
its cash reserves. Net LTV, which reduces the loan balance by free cash
(excluding restricted cash balances) in its calculation, was 41.0% (31 March
2022: 41.6%) whilst interest cover at EBITDA level was 8.1x as at 30 September
2022 (31 March 2022: 7.3x). The Group is fully committed to continue reducing
its net LTV to be well within the Group's policy of 40% or below in the near
term.
In addition, with interest rates forecast to continue to rise, Sirius has been
proactive in its debt refinancing initiatives, securing a new seven year loan
facility of €170 million with Berlin Hyp AG. The facility comes into effect
on 1 November 2023 at a fixed interest rate of 4.26% up to 31 October 2030 and
is secured against the same asset base as the existing facility, which is due
to mature in October 2023. This refinancing extends the Group's total weighted
average debt expiry to 5.0 years when the new facility commences just over a
year from now. It will increase the Group's weighted average cost of debt by
around 60bps from its current 1.3% to 1.9%. The early financing of this loan
facility is a testament to the Company's strong relationship it has with its
financiers and their belief in the Sirius business model. This ability to
refinance debt at favourable rates in the current market circumstances is a
massive asset for the Company.
The Company has an additional €35 million in unsecured debt coming due
within the next twelve months, which Sirius' management is already planning
for. The Company is also currently in the process of refinancing its €58
million Deutsche Pfandbriefbank AG facility which expires at the end of 2023.
These early refinancing of facilities, along with the fact that Sirius has
more than €1.6 billion of unencumbered assets on its balance sheet, provides
substantial strength and comfort to ensure that not only can the Company deal
with any adverse conditions within the property and finance markets but can
also be on the front foot should opportunities arise. Sirius does fully
realise that further improving its debt ratios is also an important part of
supporting this position.
All covenants were complied with in full during the period. A summary of the
movement in the Group's debt is set out below:
Table 13: Movement in debt *
€m
Total debt as at 31 March 2022 995,557
Scheduled amortisation (2,699)
Total debt as at 30 September 2022 992,858
* Excludes loan issue costs.
Strength of well-diversified income and tenant base
A combination of the diversity of the Group's tenant base and wide range of
space offerings, which are underpinned by an established operating platform,
continues to be extremely beneficial to Sirius and will be another key element
to help the Company continue to grow over the next few years, regardless of
the property and financing market conditions. Diversity in both space type and
tenancy is key to this. Sirius' portfolio includes industrial, manufacturing,
urban logistics/production, storage and out of town office space that caters
to multiple usages and a vast range of sizes and tenant types. The diversity
of the Company's tenant base ranges from large stable and long-term anchor
tenants through to the flexible SME and private customers who are the engine
room of any economy.
Germany
In Germany, the Group's large anchor tenants are typically multinational
corporations occupying production, storage and related office space. These
tenants contribute around 40% of the German rental income. The flexible tenant
base is predominantly those who are renting the Smartspace branded offices,
self-storage and workbox spaces and generally comprises much smaller tenants
on a more flexible basis. These flexible spaces are currently contributing
about 7% of the German rental income. The other half of the German rental
income comes from the SME sector which occupies both smaller and larger space
on a conventional basis. Managing the SME tenant base is the bread and butter
of what Sirius does and which it can do far more effectively than its
competitors because of its in-house sales and marketing platform that the
Company has developed over the last 15 years. This, along with the ability to
convert, fill up and manage the Smartspace areas, which are usually
transformed from areas where Sirius' competitors leave as structural vacancy,
is a key differentiator for Sirius. This skillset allows Sirius to run a
value-add strategy which works well in both strong and weak markets and allows
the Company to make much higher returns for its equity providers at a much
lower risk, which also suits its debt providers.
The table below illustrates the diverse nature of tenant mix within the German
portfolio at the end of the reporting period:
Table 14a: Tenant breakdown - Germany
No. of Occupied % of Annualised % of total Rate
tenants as at sqm occupied rent income* annualised per sqm
30 September sqm €m rent income* €
2022 %
Top 50 anchor tenants1 50 673,988 46% 45.5 40% 5.63
Smartspace SME tenants2 2,855 68,322 5% 7.9 7% 9.64
Other SME tenants3 2,897 727,497 49% 61.8 53% 7.07
Total 5,802 1,469,806 100% 115.2 100% 6.53
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 2022.
As the conflict in Ukraine continues to constrain Europe's energy supply,
Germany is well positioned through its early identification of the issue and
shoring up of its gas reserves. As at November 2022, Germany had managed to
ensure 99.55% of its gas storage capacity has been filled, enabling the German
economy to continue operating without expected interruptions this coming
winter. Additionally, the Company's robust and well diversified tenant base
does not have a significant reliance on gas supplies to continue operating
and, as such, the potential negative impact on Sirius' rent roll and hence
profit is low. In Germany, the Company sources its utilities and facilities
management services in bulk for its properties and has managed to secure
pricing until December 2023 at significantly below current market rates. As a
result, its tenants should be sheltered from some of the higher operating
costs that most industrial companies are facing right now. This is yet another
benefit and advantage offered by Sirius that it has from its intense active
management strategy.
UK
BizSpace's top 100 tenants are larger corporate customers representing 25% of
its annualised income, whilst the remaining 75% are made up of SME and
micro-SME tenants. With regard to energy costs, while the UK is not reliant on
gas from Russia, Sirius has also secured long-term utility pricing across its
BizSpace portfolio to allow this platform to remain competitive.
Table 14b: Tenant breakdown - UK
No. of Occupied % of Annualised % of total Rate
tenants as at sq ft occupied rent income* annualised per sq ft
30 September sq ft £m rent income* £
2022 %
Top 100 tenants 100 952,157 25% 11.5 25% 12.11
Next 900 tenants 900 1,638,244 43% 19.8 43% 12.11
Remaining tenants 2,251 1,086,502 32% 15.1 32% 13.91
Total 3,251 3,676,923 100% 46.5 100% 12.64
* See glossary section of the Interim Report 2022.
Smartspace
The Company's Smartspace product has been mentioned throughout this report and
continues to be very attractive to a wide range of customers. The Company
expects this to continue to be the case, and perhaps is expected to become
even more so when the market weakens and uncertainty is present. From Sirius'
perspective, the Smartspace brand and product range are created through its
highly effective capex programme into sub-optimal space which is otherwise
extremely difficult to let and usually left vacant by other operators. The
transformation of this space deals with the problems of the site and massively
improves the quality and feel of the entire business park. From the customer
perspective, Smartspace offers them a range of affordable serviced offices,
self-storage units and workboxes on a flexible basis that can be tailored to
their needs. In the post-pandemic environment, as businesses manage remote
working, online selling, issues with supply chains and supply shortages, the
Smartspace product line becomes even more attractive because of its
flexibility, pricing and location being on the fringes of major cities. The
fact that the Company is creating this space by converting sub-optimal and
unutilised space into this premium offering, space which is highly popular and
achieving rental rates well in excess of the rest of the portfolio, means that
even though this is only a small part of Sirius' business, it is a huge part
of the value enhancement process and the asset transformation.
The annualised rental income now being generated from Smartspace, excluding
the element that covers service charge costs, is now €7.9 million, an
increase of 2.0% from the beginning of the period and an 11.0% increase from
the comparative period last year. The occupancy of Smartspace has remained
stable in the period at 72% but the rate has increased by 4.4% in the last six
months to €9.64 per sqm.
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 % €000 rent roll €
First Choice Office 5,117 3,037 59% 825 10% 22.63
SMSP Office 31,789 24,029 76% 2,895 37% 10.04
SMSP Workbox 5,974 5,524 92% 431 5% 6.51
SMSP Storage 48,772 34,332 70% 3,316 42% 8.05
SMSP Containers - - - 290 4% -
SMSP sub-total 91,652 66,922 73% 7,757 98% 9.66
SMSP Flexilager 3,686 1,400 38% 145 2% 8.62
SMSP total 95,338 68,322 72% 7,902 100% 9.64
Environmental, social and governance ("ESG")
Our ESG programme has continued to develop throughout the period as we work to
fully integrate it into our overall strategy as well as throughout our
business and financial processes. We remain focused on our commitment to
having an established environmental, social and governance framework that is
both based on solid analysis and detailed management planning, which delivers
long-term financial and sustainable value to all our stakeholders. We will be
publishing our first ESG Report in the next few weeks which will carry further
information on our ambitions, actions and oversight of our ESG programme.
We have continued to make progress in our work to assess and understand our
decarbonisation pathway towards net-zero. Our expertise is based on extending
the life and purpose of older buildings and the age and scale of our portfolio
provides both opportunities and challenges for decarbonisation, which will be
reflected in the pathway to net-zero we are developing in stages across the
business.
As we have previously announced, we will achieve net zero for our Scope 1 and
2 emissions in Germany this year, supported in part by our recent move to a
new, more energy efficient head office in Berlin, as well as the continued
conversion of our cars to hybrid or EV models and an improved travel policy.
We are now focused on addressing our Scope 3 emissions in Germany, as well as
understanding the implications of our UK assets. We will soon complete the
initial emissions analysis of all our German assets in line with the Science
Based Targets initiative which will form the basis of a more detailed
operational and financial plan to net zero for the whole German portfolio.
We also intend to start a similar decarbonisation exercise for our UK assets
during the next financial year, after we have completed a thorough review of
BizSpace's environmental data and EPCs, which will be finalised just after our
first anniversary of acquiring the business. As part of this environmental
review, we have also started to look at the opportunities within the BizSpace
portfolio for biodiversity enhancement and plan to start to bring the
programme we have developed across Germany to the UK in the new financial
year.
We continue to engage with our tenants and employees. We recently completed
our annual engagement surveys, which for the first time covered both Germany
and the UK, and we were pleased with the level of responses. We are now
reviewing the results and taking the findings into account within our
management processes. We have also continued to unify the values between
Sirius and BizSpace and are focused on learning from each other as we look to
bring together our ESG programmes, specifically across training and
development, wellbeing and diversity and inclusion. This effort will be
further enhanced by the launch of the Sirius Training Centre which will bring
both Sirius and BizSpace employees onto the same training and development
platform and programme. We are also exploring opportunities to drive further
positive impact to our local communities, starting with the introduction of
formalised community hours for our employees, to encourage community outreach
at employee level.
All of this work is being overseen by the ESG Working Groups which now exist
within both Sirius and BizSpace. Both groups are chaired by Kremena Wissel,
Chief Marketing and Impact Officer ("CMIO"), who reports through to the
Sustainability and Ethics Committee, which remains focused on improving the
Group's economic sustainability.
Outlook
Sirius is pleased with the trading performance of the first six months of the
financial year, which saw continued like-for-like rent roll growth and strong
cash collection rates in both Germany and the UK.
The increase in rent roll in Germany as well as the positive contribution from
the BizSpace acquisition resulted in a 32.4% increase in dividend to 2.70c per
share compared to the same period in the prior year. At the time of writing
the Company has owned BizSpace for a full year and it is now fully integrated
into the Group and operating well alongside the well-established Sirius
business. As such, the percentage increases in dividend growth are expected to
normalise going forward.
As the Company navigates through a challenging macro-economic climate in
Europe, it remains well positioned to continue to grow due to its intensive
asset management initiatives, diversified offerings and extremely effective
and dynamic business model. These initiatives included putting in place the
fixed priced contracts it has secured for a significant portion of its utility
demands in both Germany and the UK which will help its customers manage the
energy crisis in Europe. This is also helped by the German and UK governments
shoring up their utilities supply and offering significant relief packages to
combat soaring energy prices to support struggling businesses. As Germany has
shored up its gas reserves to more than 99% and provided a powerful government
relief package, the Company anticipates continued strong trading for the
Company's financial year despite the fact that a large proportion of its
tenant base uses gas and the impact from rising utilities prices and concern
over supply should be limited. In the UK, which is not reliant on gas from
Russia, BizSpace's position is very strong and it remains committed to
long-term utility pricing allowing this segment to remain competitive as well.
The Company continues to further improve its debt ratios whilst continuing to
work with its lenders to extend or refinance any expiring debt on the horizon
so that any uncertainty over its interest payments on debt going forward is
removed. Additionally, Sirius is committed to maintaining adequate levels of
leverage well within its target of 40% of net loan to value. Looking forward,
the Company will continue building up its available capital reserves as it
assesses a wide range of future opportunities and is expected to continue to
grow organically whilst remaining cautious on acquisitive growth until the
trajectory of the UK and German markets becomes a bit clearer. Sirius' strong
financial position and excellent support from debt and equity providers give
the Sirius Board great optimism that the Company will come through whatever
happens over the next few years well and that it will be able to take
advantage of any opportunities that arise, including planned acquisitions and
strategic disposals, and remains confident in its ability to continue to
deliver attractive risk-adjusted returns to all stakeholders.
Andrew Coombs
Chief Executive Officer
Alistair Marks
Chief Investment Officer and Interim Chief Financial Officer
18 November 2022
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 2022 that have materially
affected, and any changes in the related party transactions described in the
2022 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*
• Caroline Britton, Senior Independent Director*
• Andrew Coombs, Chief Executive Officer
• Alistair Marks, Chief Investment Officer and Interim Chief
Financial Officer
• Diarmuid Kelly, Chief Financial Officer**
• James Peggy*
• Mark Cherry*
• Kelly Cleveland*
• Joanne Kenrick*
* Non-Executive Directors.
** Resigned 16 August 2022
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 Investment Officer and Interim Chief Financial Officer
18 November 2022
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 2022 which comprises the unaudited consolidated income statement,
the unaudited consolidated statement of comprehensive income, the unaudited
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 28. 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 2022 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) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. 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(c), the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards as
issued by the IASB. 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".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
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;
and
- the Financial Pronouncements as issued by the Financial Reporting
Standards Council of South Africa.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
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, including our Conclusions
Relating to Going Concern, are 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) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. 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
Guernsey
18 November 2022
Condensed consolidated income statement
for the six months ended 30 September 2022
Notes Unaudited((1)) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Revenue 4 130,558 88,352
Direct costs 5 (57,350) (38,843)
Net operating income 73,208 49,509
Gain on revaluation of investment properties 12 26,812 48,414
Gain/(loss) on disposal of properties 4,801 (400)
Recoveries from prior disposals of subsidiaries - 94
Administrative expenses 5 (24,809) (12,311)
Share of profit of associates 17 2,597 2,463
Operating profit 82,609 87,769
Finance income 8 1,129 1,596
Finance expense 8 (9,249) (11,347)
Change in fair value of derivative financial instruments 8 1,244 160
Net finance costs (6,876) (9,591)
Profit before tax 75,733 78,178
Taxation 9 (5,673) (10,386)
Profit for the period after tax 70,060 67,792
Profit attributable to:
Owners of the Company 70,008 67,738
Non-controlling interest 52 54
70,060 67,792
Earnings per share
Basic earnings per share 10 6.00c 6.44c
Diluted earnings per share 10 5.92c 6.33c
(1) Refer to note 2(a)
All operations of the Group have been classified as continuing.
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2022
Notes Unaudited((1)) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Profit for the period after tax 70,060 67,792
Other comprehensive loss that may be reclassified to profit or loss in
subsequent periods
Foreign currency translation reserve 24 (19,542) -
Other comprehensive loss after tax that may be reclassified to profit or loss (19,542) -
in subsequent periods
Other comprehensive loss for the period after tax (19,542) -
Total comprehensive income for the period after tax 50,518 67,792
Total comprehensive income attributable to:
Owners of the Company 50,466 67,738
Non-controlling interest 52 54
50,518 67,792
(1) Refer to note 2(a)
Condensed consolidated statement of financial position
as at 30 September 2022
Unaudited((1)) Audited
30 September 31 March
2022 2022
Notes €000 €000
Non-current assets
Investment properties 12 2,105,046 2,100,004
Plant and equipment 7,199 5,492
Intangible assets 14 4,129 4,283
Right of use assets 15 15,259 14,996
Other non-current financial assets 16 48,409 48,330
Investment in associates 17 26,739 24,142
Total non-current assets 2,206,781 2,197,247
Current assets
Trade and other receivables 18 24,420 24,571
Derivative financial instruments 1,573 329
Cash and cash equivalents 19 162,098 150,966
Total current assets 188,091 175,866
Assets held for sale 13 1,000 13,750
Total assets 2,395,872 2,386,863
Current liabilities
Trade and other payables 20 (76,993) (89,335)
Interest-bearing loans and borrowings 21 (37,243) (19,630)
Lease liabilities 15 (1,458) (1,090)
Current tax liabilities 9 (4,978) (10,423)
Total current liabilities (120,672) (120,478)
Non-current liabilities
Interest-bearing loans and borrowings 21 (943,176) (961,863)
Lease liabilities 15 (37,233) (37,571)
Deferred tax liabilities 9 (81,220) (75,893)
Total non-current liabilities (1,061,629) (1,075,327)
Total liabilities (1,182,301) (1,195,805)
Net assets 1,213,571 1,191,058
Equity
Issued share capital 23 - -
Other distributable reserve 24 544,419 570,369
Own shares held 23 (8,329) (6,274)
Foreign currency translation reserve 24 (21,243) (1,701)
Retained earnings 698,266 628,258
Total equity attributable to the owners of the Company 1,213,113 1,190,652
Non-controlling interest 458 406
Total equity 1,213,571 1,191,058
(1) Refer to note 2(a)
The financial statements above were approved by the Board of Directors on 18
November 2022 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2022
Notes Issued Other Own Foreign Retained Total equity Non- Total
share distributable shares currency earnings attributable controlling equity
capital reserve held translation €000 to the interest €000
€000 €000 €000 reserve owners of €000
€000 the Company
€000
As at 31 March 2021 (audited) - 449,051 (2,903) - 480,385 926,533 292 926,825
Profit for the period - - - - 67,738 67,738 54 67,792
Other comprehensive income for the period - - - - - - - -
Total comprehensive income for the period - - - - 67,738 67,738 54 67,792
Dividends paid 9,195 (20,576) - - - (11,381) (5) (11,386)
Transfer of share capital (9,195) 9,195 - - - - - -
Share-based payment transactions - 1,403 - - - 1,403 - 1,403
Value of shares withheld to settle employee tax obligations - (2,020) - - - (2,020) - (2,020)
Own shares allocated - - 306 - - 306 - 306
As at 30 September 2021 (unaudited) - 437,053 (2,597) - 548,123 982,579 341 982,920
Profit for the period - - - - 80,135 80,135 65 80,200
Other comprehensive income for the period - - - (1,701) - (1,701) - (1,701)
Total comprehensive income for the period - - - (1,701) 80,135 78,434 65 78,499
Shares issued 159,926 - - - - 159,926 - 159,926
Transaction cost relating to share issues (6,219) - - - - (6,219) - (6,219)
Dividends paid 4,478 (23,912) - - - (19,434) - (19,434)
Transfer of share capital (158,185) 158,185 - - - - - -
Share-based payment transactions - 542 - - - 542 - 542
Value of shares withheld to settle employee tax obligations - (1,499) - - - (1,499) - (1,499)
Own shares purchased - - (5,545) - - (5,545) - (5,545)
Own shares allocated - - 1,868 - - 1,868 - 1,868
As at 31 March 2022 (audited) - 570,369 (6,274) (1,701) 628,258 1,190,652 406 1,191,058
Profit for the period - - - - 70,008 70,008 52 70,060
Other comprehensive income for the period - - - (19,542) - (19,542) - (19,542)
Total comprehensive income for the period - - - (19,542) 70,008 50,466 52 50,518
Dividends paid 25 1,440 (27,651) - - - (26,211) - (26,211)
Transfer of share capital 25 (1,440) 1,440 - - - - - -
Share-based payment transactions 7 - 1,947 - - - 1,947 - 1,947
Value of shares withheld to settle employee tax obligations 7 - (1,686) - - - (1,686) - (1,686)
Own shares purchased 23 - - (2,389) - - (2,389) - (2,389)
Own shares allocated 23 - - 334 - - 334 - 334
As at 30 September 2022 (unaudited)((1)) - 544,419 (8,329) (21,243) 698,266 1,213,113 458 1,213,571
(1) Refer to note 2(a)
Condensed consolidated statement of cash flow
for the six months ended 30 September 2022
Notes Unaudited((1)) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Operating activities
Profit for the period after tax 70,060 67,792
Taxation 9 5,673 10,386
Profit for the period before tax 75,733 78,178
(Gain)/loss on disposal of properties (4,801) 400
Net exchange differences (309) -
Share-based payments 7 1,947 1,403
Gain on revaluation of investment properties 12 (26,812) (48,414)
Change in fair value of derivative financial instruments 8 (1,244) (160)
Depreciation of property, plant and equipment 5 1,027 349
Amortisation of intangible assets 5 629 564
Depreciation of right of use assets 5 1,141 260
Share of profit of associates 17 (2,597) (2,463)
Finance income 8 (1,129) (1,596)
Finance expense 8 9,249 11,347
Changes in working capital
Decrease/(increase) in trade and other receivables 3,786 (2,598)
Decrease in trade and other payables (5,848) (2,053)
Taxation paid (2,717) (256)
Cash flows from operating activities 48,055 34,961
Investing activities
Purchase of investment properties (832) (20,221)
Prepayments relating to new acquisitions (3,639) (75,771)
Capital expenditure on investment properties (11,904) (10,494)
Purchase of plant and equipment and intangible assets (3,210) (1,461)
Proceeds on disposal of properties (including held for sale) 18,593 -
Increase in loan receivable due from associates (74) (1,124)
Interest received 1,129 1,596
Cash flows from/(used in) investing activities 63 (107,475)
Financing activities
Shares purchased (2,389) -
Payment relating to exercise of share options (1,686) (2,020)
Dividends paid to owners of the Company (26,211) (11,381)
Dividends paid to non-controlling interest - (5)
Proceeds from loans - 400,000
Repayment of loans (2,699) (173,791)
Payment of principal portion of lease liabilities (775) (2,931)
Exit fees/prepayment of financing penalties - (3,697)
Capitalised loan issue cost - (7,559)
Finance charges paid (2,747) (4,170)
Cash flows (used in)/from financing activities (36,507) 194,446
Increase in cash and cash equivalents 11,611 121,932
Net exchange difference (479) -
Cash and cash equivalents as at the beginning of the period 150,966 65,674
Cash and cash equivalents as at the period end 19 162,098 187,606
(1) Refer to note 2(a)
Notes forming part of the financial statements
for the six months ended 30 September 2022
1. General information
Sirius Real Estate Limited (the "Company" or "Sirius") is a company
incorporated in Guernsey and resident in the United Kingdom for tax purposes,
whose shares are publicly traded on the Main Market of the London Stock
Exchange ("LSE") (primary listing) and the Main Board of the Johannesburg
Stock Exchange ("JSE") (primary listing).
The consolidated financial information of the Company comprises that of the
Company and its subsidiaries (together referred to as the "Group") for the six
month period to 30 September 2022.
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 and the United Kingdom ("UK").
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,
investment properties held for sale and derivative financial instruments,
which have been measured at fair value. The unaudited interim condensed set of
consolidated financial statements is presented in euros and all values are
rounded to the nearest thousand (€000), except where otherwise indicated.
The Group prepares its interim condensed set of consolidated financial
statements in accordance with IAS 34 "Interim Financial Reporting" and in
compliance with the framework concepts and the measurement and recognition
requirements of the International Financial Reporting Standards (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 2022 is derived from the statutory accounts for that
year. Statutory accounts for the year ended 31 March 2022 were approved by the
Board on 10 June 2022. The report of the auditor on those accounts was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor 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 2022 the Group's unaudited interim condensed set of
consolidated financial statements reflect consistent accounting policies and
methods of computation as used in the previous financial year, except for the
changes in the application of accounting policies as described in note 2(b).
The operating segment UK is a result of a business combination completed on 15
November 2021. As such there are no UK segment reportable figures for the six
months ended 30 September 2021.
(b) Changes in accounting policies
The new standards and interpretations to be applied as at 1 April 2022 do not
have a material impact on the interim financial statements of the Group.
(c) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings and EPRA net asset value
metrics, which are widely used alternative metrics to their IFRS equivalents
(further details on EPRA best practice recommendations can be found at
www.epra.com). Note 10 to the interim condensed financial statements includes
a reconciliation of basic and diluted earnings to EPRA earnings. Note 11 to
the interim condensed financial statements includes a reconciliation of net
assets to EPRA net asset value metrics.
The Directors are required, as part of the JSE Listing Requirements, to
disclose headline earnings; accordingly, headline earnings are calculated
using basic earnings adjusted for revaluation gain (net of related tax),
gains/losses on disposal of properties (net of related tax), recoveries from
prior disposals of subsidiaries (net of related tax), NCI relating to
revaluation and revaluation gain/loss on investment property relating to
associates (net of related tax). Note 10 to the interim condensed 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 condensed 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 25 to the interim condensed 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 in compliance with
the framework concepts and the measurement and recognition requirements of the
International Financial Reporting Standards ("IFRS") as well as The 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 2022. 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 2022 except for the
changes in accounting policies as shown in note 2(b). The financial statements
for the year ended 31 March 2022 have been prepared in accordance with
International Financial Reporting Standards issued by the IASB.
(e) Going concern
The Group has prepared its going concern assessment for the period to the end
of 31 December 2023 (the "going concern period"), a period chosen to take into
consideration the maturity date of the Deutsche Pfandbriefbank loan, amounting
to €57.2 million, which falls due in December 2023. The Group's going
concern assessment is based on a forecast of the Group's future cash flows.
This considers management's base case scenario and a severe but plausible
downside scenario where sensitivities are applied to model the outcome on the
occurrence of downside assumptions explained below. It considers the Group's
principal risks and uncertainties and is dependent on a number of factors
including financial performance, continued access to lending facilities (see
note 21) and the ability to continue to operate the Group's secured and
unsecured debt structure within its financial covenants.
The severe but plausible scenario models a potential downturn in the Group's
performance, including the potential impact of downside macro-factors such as
future energy shortages and further increases in inflation, on the Group's
financial position and future prospects. The cash flow projections incorporate
assumptions on future trading performance and potential valuation movements in
order to estimate the level of headroom on facilities and covenants for loan
to value, debt service cover, EPRA NAV value, unencumbered assets ratios,
fixed charge ratios and occupancy ratios set out within the relevant finance
agreements.
The impact of the crisis in Ukraine and Covid-19 on the business in the period
ended 30 September 2022 did not result in any deterioration in the Group's
income streams or falls in asset values, both of which increased in the
period. However, the Directors have been mindful of the challenging
macro-factors present in the market and have reflected this in an increase to
the severity of the falls in valuations assessed in the severe but plausible
downside scenario in the current period.
The base case and severe but plausible downside scenarios include the
following assumptions:
Base case:
• growth in rent roll at 30 September 2022, principally from
contractual increases in rents and organic growth through lease renewals;
• increasing cost levels in line with forecast inflation of 7% to
March 2023 and 4% beyond March 2023;
• continuation of forecast capex investment;
• continuation of forecast dividend payments;
• payment of loan interest and loan amortisation amounts and assumed
refinancing of €35.0 million of the Schuldschein facility in December 2022
(€5.0 million), January 2023 (€10.0 million) and July 2023 (€20.0
million) as well as the Deutsche Pfandbriefbank facility of €57.2 million in
December 2023;
• payment of loan interest; and
• no acquisitions over and above those legally committed to.
Severe but plausible downside scenario:
• reduction in occupancy of 10% per annum from the base case
assumptions;
• reduction in service charge recovery of 10% per annum from the
base case assumption;
• reduction in property valuations of 10% per annum.
• repayment of the €35.0 million Schuldschein facility in December
2022 (€5.0 million), January 2023 (€10.0 million) and July 2023 (€20.0
million) as well as the Deutsche Pfandbriefbank facility of €57.2 million in
December 2023
The Directors are of the view that there is a remote probability of a more
severe scenario arising than the above severe but plausible downside scenario
based upon the Group's track record of performance in challenging scenarios,
most recently through the Covid-19 pandemic and the ongoing discussions with
its current lenders to secure re-financing as they come due.
In the severe but plausible downside scenario, the Group is expected to comply
with its loan covenants, with the exception of a single soft covenant breach
which can be remedied with available cash.
The Directors are of the view that there is a high probability of securing the
refinancing or an alternative source of secured or unsecured funding to
replace the €35.0 million Schuldschein facility and €57.2 million Deutsche
Pfandbriefbank facility. This judgement has been informed by the Group's
financial forecasts, the Group's track-record in previously refinancing
maturing debt (including the early refinancing of the secured €170 million
Berlin Hyp AG loan facility in August 2022) and the period of time the Group
has to arrange refinancing. The Company is in discussions with its current
lenders to secure re-financing as they come due. Should the debt facilities
falling due not be refinanced or extended, alternative options could be
considered, including the use of mitigating factors referred to below. The
mitigating factors are within the control of the Directors and there is
sufficient time for such mitigating factors to be implemented, if required.
In the severe but plausible downside scenario, the Company assumes full
repayment of the loan obligations as they fall due, amounting to €92.2
million in the going concern period. Whilst the Company forecasts having
sufficient free cash available to repay these funds in full, the Group's
resultant level of available liquidity in the severe but plausible downside
scenario may require the Directors to consider the use of the available
mitigating actions below, in the unlikely event refinancing could not be
completed along with the other factors modelled in the severe but plausible
downside scenario coming to pass.
In each of the scenarios considered for going concern, the Group forecasts
having sufficient free cash available and if required, could utilise available
mitigating actions which would be available to the Group in the going concern
review period, which include restricting dividends, reducing capital
expenditure or the disposal of unencumbered assets that have a book value of
€1.6 billion as at 30 September 2022. The restriction of dividends or
reducing capital expenditure are within the control of the Directors and there
is sufficient time to implement these restrictions, if required. The Directors
have not identified any material uncertainties which may cast significant
doubt on the Group's ability to continue as a going concern for the duration
of the going concern period.
After due consideration of the going concern assessment for the period to the
end of 31 December 2023, the Board believes it is appropriate to adopt the
going concern basis in preparing its 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 changed substantially from those
set out on pages 54 to 63 of the Group's Annual Report and Accounts 2022 and
have been assessed in line with the requirements of the 2018 UK Corporate
Governance Code. The risks are reproduced below. Two new risks have been
identified which relate to Energy supply shortages caused by a variety of
economic and geopolitical factors and restricted access to financing market
due to higher requirements ("green financing"). 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 area Principal risk(s)
1. Financing • Availability and pricing of debt
• Compliance with loan facility covenants
• Availability and pricing of equity capital
• Reputational risk
2. Valuation • Property inherently difficult to value
• Susceptibility of property market to change in value
3. Markets • Participation within two geographically diverse markets
• Reliance on specific industries and the SME market
• Reduction in occupancy
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
• Tenant affordability
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. Macro-economic • Impact of the Covid-19 pandemic
environment • Inflationary pressure leading to increased costs
• Interest rate movements impacting the commercial real estate market
• Delays in cash collection and tenant insolvencies
• Energy supply shortages caused by a variety of economic and
geopolitical factors
11. ESG • Unforeseen costs relating to physical and transition risks
associated with climate change
• Reputational risk
• Failure to meet shareholder and societal requirements or
expectations
• Restricted access to financing market due to higher requirements
("green financing")
12. Foreign currency • Financial impact of uncontrollable foreign currency fluctuation on
earnings and net asset value
3. Operating segments
Information on each operating segment based on geographical location in which
the Group operates is provided to the chief operating decision maker, namely
the Group's Senior Management Team, on an aggregated basis and represented as
operating profit and expenses.
The investment properties that the Group owns are aggregated into segments
with similar economic characteristics such as the nature of the property, the
products and services it provides, the customer type for the product served,
and the method in which the services are provided. Executive management
considers that this is best achieved through the operating segments of German
assets and United Kingdom assets. The Group's investment properties are
considered to be their own segment. The properties at each location (Germany
and UK) have similar economic characteristics. These have been aggregated into
two operating segments based on location in accordance with the requirements
of IFRS 8.
Consequently, the Group is considered to have two reportable operating
segments, as follows:
• Germany; and
• UK.
Consolidated information by segment is provided on a net operating income
basis, which includes revenues made up of gross rents from third parties and
direct expenses, gains/losses on property valuations, property disposals, and
control of subsidiaries. All of the Group's share of profit of associates and
administrative expenses including amortisation and depreciation are separately
disclosed as part of operating profit. Group administrative costs, finance
income and expenses and change in fair value of derivative financial
instruments are disclosed.
Income taxes and depreciation are not reported to the Senior Management Team
on a segmented basis. There are no sales between segments.
Unaudited six months Unaudited six months
ended 30 September 2022 ended 30 September 2021
Germany UK Total Germany UK Total
€000 €000 €000 €000 €000 €000
Rental and other income from investment properties 59,839 19,663 79,502 50,082 - 50,082
Service charge income from investment properties 30,990 8,526 39,516 26,639 - 26,639
Rental and other income from managed properties 4,768 - 4,768 5,321 - 5,321
Service charge income from managed properties 6,772 - 6,772 6,310 - 6,310
Revenue 102,369 28,189 130,558 88,352 - 88,352
Direct costs (48,217) (9,133) (57,350) (38,843) - (38,843)
Net operating income 54,152 19,056 73,208 49,509 - 49,509
Gain on revaluation of investment properties 19,386 7,426 26,812 48,414 - 48,414
Gain/(loss) on disposal of properties - 4,801 4,801 (400) - (400)
Recoveries from prior disposals of subsidiaries - - - 94 - 94
Depreciation and amortisation (2,136) (661) (2,797) (1,173) - (1,173)
Other administrative expenses (18,731) (3,281) (22,012) (11,138) - (11,138)
Share of profit of associates 2,597 - 2,597 2,463 - 2,463
Operating profit 55,268 27,341 82,609 87,769 - 87,769
Finance income 1,129 - 1,129 1,596 - 1,596
Amortisation of capitalised (1,625) - (1,625) (1,016) - (1,016)
finance costs
Other finance expense (5,502) (2,122) (7,624) (10,331) - (10,331)
Change in fair value of derivative financial instruments 1,244 - 1,244 160 - 160
Net finance costs (4,754) (2,122) (6,876) (9,591) - (9,591)
Segment profit for the period before tax 50,514 25,219 75,733 78,178 - 78,178
Unaudited 30 September 2022 Audited 31 March 2022
Germany UK Total Germany UK Total
€000 €000 €000 €000 €000 €000
Segment assets
Investment properties 1,664,033 441,013 2,105,046 1,635,221 464,783 2,100,004
Investment in associates 26,739 - 26,739 24,142 - 24,142
Other non-current assets((1)) 22,308 4,279 26,587 21,535 3,236 24,771
Total segment non-current assets 1,713,080 445,292 2,158,372 1,680,898 468,019 2,148,917
(1) Consists of plant and equipment, intangible assets and right of use
assets.
4. Revenue
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Rental and other income from investment properties 79,502 50,082
Service charge income from investment properties 39,516 26,639
Rental and other income from managed properties 4,768 5,321
Service charge income from managed properties 6,772 6,310
Total revenue 130,558 88,352
Other income relates primarily to income associated with conferencing and
catering of €2,113,000 (30 September 2021: €1,265,000) and fee income from
managed properties of €2,476,000 (30 September 2021: €1,782,000).
As per IFRS 15 definition of total revenue from contracts with customers this
includes service charge income and other income totalling €41,629,000 from
investment properties (30 September 2021: €27,904,000) and €9,248,000 from
managed properties (30 September 2021: €8,092,000). Service charge income
and other income totalling €41,968,000 from the German segment (30 September
2021: €35,996,000) and €8,909,000 from the UK segment (30 September 2021:
€nil).
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
2022 2021
€000 €000
Service charge costs relating to investment properties 44,967 29,803
Costs relating to managed properties 9,840 7,296
Non-recoverable maintenance costs 2,543 1,744
Direct costs 57,350 38,843
Administrative expenses
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Audit and non-audit fees to audit firm 642 379
Legal and professional fees 2,735 1,683
Reversal of expected credit loss provision (360) (1,081)
Other administration costs 2,555 521
LTIP and SIP 1,947 1,403
Employee costs 11,819 6,934
Director fees and expenses 336 271
Depreciation of plant and equipment 1,027 349
Amortisation of intangible assets 629 564
Depreciation of right of use assets (see note 15) 1,141 260
Marketing 1,298 1,036
Exceptional items 1,040 (8)
Administrative expenses 24,809 12,311
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.
Other administration costs include net foreign exchange losses in amount of
€309,000 (30 September 2021: €nil) as a result of declining British pound
sterling ("GBP") rates throughout the period.
Employee costs as stated above relate to costs which are not recovered through
service charge.
Exceptional items are items which are outside the scope of the Group's daily
operations and are non-recurring in nature.
Exceptional items relate to the following:
Unaudited Unaudited
six months six months
ended ended
30 September 2022 30 September
€000 2021
€000
Other fees for projects 2,922 -
Legal case costs 343 -
Lease agreement termination fees 784 -
Decrease in tax liabilities recognised on acquisition of BizSpace((1)) (3,009) -
Other - (8)
Total 1,040 (8)
(1) In the current period, the Group identified an error in the accrual of
tax liabilities arising in BizSpace as at 31 March 2022, resulting in an
overstatement of the tax liability of €5.0 million of which €3.0 million
arose on acquisition. These were assessed as not being material to the 31
March 2022 financial statements and the reduction in the liability has been
recorded in the current period. The amounts have been recorded within
administrative expenses under exceptional items and the taxation (see note 9)
line of the income statement.
6. Employee costs and numbers
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Wages and salaries 14,565 9,940
Social security costs 2,171 1,556
Pension 228 148
Other employment costs 452 39
Total 17,416 11,683
Included in the costs related to wages and salaries for the period are
expenses of €1,947,000 (30 September 2021: €1,403,000) 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, BizSpace Limited, BizSpace II Limited, M25 Business Centres
Limited and Sirius Corporate Services B.V. The average number of people
employed by the Group during the period was 413 (30 September 2021: 270)
expressed in full-time equivalents. In addition, as at 30 September 2022, the
Board of Directors consists of six Non-Executive Directors (30 September 2021:
six) and two Executive Directors (30 September 2021: 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 condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards 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 - % 100.0 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. Another 93,039 share awards have been granted
throughout the performance period as part of dividend equivalents resulting in
a total number of shares of 4,543,039. 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.
The fair value per share for the TNR and TSR elements of the award was
determined using Black-Scholes and Monte-Carlo models respectively with the
following assumptions used in the calculation:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award/outperformance award 1/3 ordinary award
Share price at grant date - € 0.73 0.73
Exercise price - € nil nil
Expected volatility - % 23.8 23.8
Performance projection period - years 2.80 2.67
Expected dividend yield - % 4.56 4.56
Risk-free rate based on European treasury bonds rate of return - % (0.695) p.a. (0.695) p.a.
Expected outcome of performance conditions - % 100.0/24.5 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.
The June 2019 grant vested on 18 July 2022. Vesting was at partial level for
all participants resulting in the exercise of 1,620,093 shares with a weighted
average share price of €1.02 at the date of exercise. 1,391,585 shares have
been surrendered in relation to the partial settlement of certain
participants' tax liabilities arising in respect of the vesting. An amount of
€1,686,000 was paid for the participants' tax liabilities. An amount of
1,531,361 share awards were kept for exercise later.
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 €811,000 is recognised in the half year condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards 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((1)) 0.84((2))
(1) 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%.
(2) 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.
July 2022 Grant
3,480,028 ordinary share awards were granted under the scheme on 18 July 2022
with a total charge for the award of €2,610,477. 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 18 July 2022 LTIP grant an
expense of €179,000 is recognised in the half year condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards that were granted on 18 July 2022:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.05 1.05
Exercise price - € nil nil
Expected volatility - % 41.2 41.2
Expected life - years 2.95 2.95
Performance projection period - years 2.70 2.70
Expected dividend yield - % 4.21 4.21
Risk-free rate based on European treasury bonds rate of return - % (0.609) p.a. (0.609) p.a.
Fair value per share - € 0.93((1)) 0.40((2))
(1) 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%.
(2) 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 18 July 2022 is
€0.75.
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.
2021 SIP
Another SIP for the benefit of senior employees was approved in 2021. Awards
granted under the SIP are made in the form of a conditional right to receive a
specified number of shares for nil cost which vest after the three year
performance period (on 1 March 2025 for the 2021 award) with vested awards
being subject to a further restricted period of one year when shares cannot be
sold. Awards are subject to adjusted net asset value per share ("TNR")
(two-thirds of award) and relative total shareholder return ("TSR") (one-third
of award) performance conditions. Awards are equity settled. The employees'
tax obligation will be determined upon the vesting date of the share issue.
September 2021 grant
3,074,500 ordinary share awards were granted under the scheme on 7 September
2021 with a total charge for the award of €3,735,689. 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 €538,000 is recognised in the half year condensed consolidated
income statement 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards 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((1)) 0.92((2))
(1) 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%.
(2) 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 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.
April 2022 grant
30,000 ordinary share awards were granted under the scheme on 1 April 2022
with a total charge for the award of €36,657. 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 1 April 2022 SIP grant an
expense of €6,000 is recognised in the half year condensed consolidated
income statement 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards that were granted on 1 April 2022:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.51 1.51
Exercise price - € n/a n/a
Expected volatility - % 32.5 32.5
Expected life - years 2.92 2.92
Performance projection period - years 2.00 2.00
Expected dividend yield - % 2.93 2.93
Risk-free rate based on European treasury bonds rate of return - % (0.074) p.a. (0.074) p.a.
Fair value per share - € 1.39((1)) 0.89((2))
(1) 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%.
(2) 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 1 April 2022 is
€1.22.
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.
August 2022 grant
150,000 ordinary share awards were granted under the scheme on 1 August 2022
with a total charge for the award of €124,817. 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 1 August 2022 SIP grant an
expense of €8,000 is recognised in the half year condensed consolidated
income statement 30 September 2022.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the awards that were granted on 1 August 2022:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.51 1.51
Exercise price - € n/a n/a
Expected volatility - % 29.7 29.7
Expected life - years 2.58 2.58
Performance projection period - years 1.66 1.66
Expected dividend yield - % 3.96 3.96
Risk-free rate based on European treasury bonds rate of return - % (0.184) p.a. (0.184) p.a.
Fair value per share - € 1.02((1)) 0.46((2))
(1) 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%.
(2) 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 1 August 2022 is
€0.83.
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.
Number of share awards
Movements in the number of awards outstanding are as follows:
Unaudited Audited
six months ended year ended
30 September 2022
31 March 2022
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) 15,278,619 - 15,584,750 -
Maximum granted during the period 3,753,067 - 7,302,831 -
Forfeited during the period - - (195,000) -
Exercised during the period (1,620,093) - (4,934,934) -
Shares surrendered to cover employee tax obligations (1,391,585) - (2,479,028) -
Balance outstanding as at period end (nil exercisable) 16,020,008 - 15,278,619 -
Employee benefit schemes
A reconciliation of share-based payments and employee benefit schemes and
their impact on the condensed consolidated income statement is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Charge relating to 2018 LTIP - June 2019 grant - 383
Charge relating to 2018 LTIP - June 2020 grant 405 405
Charge relating to 2021 LTIP - August 2021 grant 811 261
Charge relating to 2021 LTIP - July 2022 grant 179 -
Charge relating to 2019 SIP - August 2019 grant - 284
Charge relating to 2021 SIP - September 2021 grant 538 70
Charge relating to 2021 SIP - April 2022 grant 6 -
Charge relating to 2021 SIP - August 2022 grant 8 -
Total condensed consolidated income statement charge relating to LTIP and SIP 1,947 1,403
An amount of €1,947,000 (30 September 2021: €1,403,000) is recognised in
other distributable reserves as per the condensed consolidated statement of
changes in equity. In addition, an amount of €1,686,000 has been paid for
participants' tax liabilities in relation to share based payment schemes.
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
2022 2021
€000 €000
Bank interest income 18 42
Finance income from associates 1,111 1,554
Finance income 1,129 1,596
Bank loan interest expense (6,839) (4,136)
Interest expense related to lease liabilities (see note 15) (533) (143)
Amortisation of capitalised finance costs (1,625) (1,016)
Total interest expense (8,997) (5,295)
Bank charges and bank interest expense on deposits (252) (473)
Refinancing costs, exit fees and prepayment penalties - (5,579)
Other finance costs (252) (6,052)
Finance expense (9,249) (11,347)
Change in fair value of derivative financial instruments 1,244 160
Net finance expense (6,876) (9,591)
Included within refinancing costs are exit fees and early prepayment penalties
of €nil (30 September 2021: €5,579,000) that directly related to the early
repayment of loans.
The change in fair value of derivative financial instruments of €1,244,000
(30 September 2021: €160,000) reflects the change in the market valuation of
these financial instruments.
9. Taxation
Condensed consolidated income statement
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Current income tax
Current income tax charge (2,021) (1,773)
Current income tax charge relating to disposal of investment properties (52) -
Adjustment in respect of prior periods((1)) 1,722 93
Total current income tax (351) (1,680)
Deferred tax
Relating to origination and reversal of temporary differences (5,322) (8,706)
Total deferred tax (5,322) (8,706)
Income tax charge reported in the income statement (5,673) (10,386)
(1) In the current period, the Group identified an error in the accrual of
tax liabilities arising in BizSpace as at 31 March 2022, resulting in an
overstatement of the tax liability of €5.0 million of which €3.0 million
arose on acquisition. These were assessed as not being material to the 31
March 2022 financial statements and the reduction in the liability has been
recorded in the current period. The amounts have been recorded within
administrative expenses under exceptional items (see note 5) and the taxation
line of the income statement.
The German corporation tax rate of 15.825% is used in the tax reconciliation
for the Group. Taxation for other jurisdictions is calculated at the rates
prevailing in each jurisdiction.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the
following:
Assets Liabilities Net
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 2022 31 March 2022 30 September 2022 31 March 2022 30 September 2022 31 March 2022
€000 €000 €000 €000 €000 €000
Revaluation of investment property - - (101,206) (95,411) (101,206) (95,411)
Rent free adjustments - - (644) (640) (644) (640)
Capitalised own works - - (55) (55) (55) (55)
Hedging (swaps) - - (249) (52) (249) (52)
Fair value adjustment on leased investment properties 3,935 4,059 (3,981) (4,283) (46) (224)
Tax losses 20,845 20,330 - - 20,845 20,330
Fixed asset temporary differences 135 159 - - 135 159
Deferred tax assets/(liabilities) 24,915 24,548 (106,135) (100,441) (81,220) (75,893)
In respect of IFRS 16, deferred tax had not previously been recognised due to
the application of the initial recognition exemption. On 7 May 2021, the IASB
issued "Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)" , which amends the application of the
initial recognition exemption for transactions giving rise to offsetting
deferred tax assets and deferred tax liabilities. A deferred tax liability has
been recognised on the IFRS 16 right of use asset and a deferred tax asset in
respect of the IFRS 16 lease liability resulting in a net deferred tax
liability recognised as at 30 September 2022 and 31 March 2022. The amendments
to the initial recognition exemption under IAS 12 are effective for accounting
periods beginning on or after 1 January 2023 and have been adopted early. The
early adoption of this did not have a material impact on the interim financial
statements of the Group
Movement in deferred tax during the period is as follows:
Audited Recognised Exchange Acquisition Unaudited
31 March 2022 in income differences of a subsidiary 30 September 2022
€000 €000 €000 €000 €000
Revaluation of investment property (95,411) (5,795) - - (101,206)
Rent free adjustments (640) (4) - - (644)
Capitalised own works (55) - - - (55)
Hedging (swaps) (52) (197) - - (249)
Fair value adjustment on leased investment properties (224) 178 - - (46)
Tax losses 20,330 515 - - 20,845
Fixed asset temporary differences 159 (19) (5) - 135
Other short-term temporary differences - - - - -
Total (75,893) (5,322) (5) - (81,220)
Audited Recognised Exchange Acquisition Audited
31 March 2021 in income differences of a subsidiary 31 March 2022
€000 €000 €000 €000 €000
Revaluation of investment property (73,946) (8,646) - (12,819) (95,411)
Rent free adjustments (570) (70) - - (640)
Capitalised own works (43) (12) - - (55)
Hedging (swaps) 249 (301) - - (52)
Fair value adjustment on leased investment properties - (5,697) - 5,473 (224)
Tax losses 17,979 2,272 (2) 81 20,330
Fixed asset temporary differences - (1,128) (32) 1,319 159
Other short-term temporary differences - (1,245) (31) 1,276 -
Total (56,331) (14,827) (65) (4,670) (75,893)
The Group has not recognised a deferred tax asset on €256 million (31 March
2022: €257 million) of tax losses carried forward and future share scheme
deductions due to uncertainties over recovery. There is no expiration date on
€256 million of the losses and future share scheme tax deductions will
convert to tax losses on realisation.
A change in ownership of the Group may result in restriction on the Group's
ability to use tax losses in certain tax jurisdictions.
The Group elected to join the UK REIT regime with effect from 1 April 2022.
Income and gains from the Group's UK property business are exempt from UK
corporation tax provided that the Group meets a number of conditions,
including distributing at least 90% of the Group's UK tax exempt income
profits as property income distributions ("PIDs"). The business in Germany and
the residual business in the UK are subject to corporation tax.
A deferred tax liability is recognised on temporary differences of €nil (31
March 2022: €nil) relating to the unremitted earnings of overseas
subsidiaries as the Group is able to control the timing of the reversal of
these temporary differences and it is probable that they will not reverse in
the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis. The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes:
Assets Liabilities Net
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 2022 31 March 2022 30 September 2022 31 March 2022 30 September 2022 31 March 2022
€000 €000 €000 €000 €000 €000
UK 135 159 - - 135 159
Germany 24,780 24,389 (106,135) (100,441) (81,355) (76,052)
Cyprus - - - - - -
Deferred tax assets/(liabilities) 24,915 24,548 (106,135) (100,441) (81,220) (75,893)
Assets Liabilities Net
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 2022 31 March 2022 30 September 2022 31 March 2022 30 September 2022 31 March 2022
€000 €000 €000 €000 €000 €000
UK - - (526) (7,316) (526) (7,316)
Germany - - (4,232) (2,690) (4,232) (2,690)
Cyprus - - (220) (417) (220) (417)
Current tax assets/(liabilities) - - (4,978) (10,423) (4,978) (10,423)
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
2022 2021
€000 €000
Earnings attributable to the owners of the Company
Basic earnings 70,008 67,738
Diluted earnings 70,008 67,738
EPRA earnings 41,226 32,550
Diluted EPRA earnings 41,226 32,550
Headline earnings 42,642 27,035
Diluted headline earnings 42,642 27,035
Adjusted
Basic earnings 70,008 67,738
Deduct gain on revaluation of investment properties (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (4,801) 400
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (94)
Tax in relation to the gain on revaluation of investment properties and gain 5,546 8,610
on disposal of properties above less REIT related tax effects
Non-controlling interest ("NCI") relating to revaluation (net of related tax) 46 42
Deduct revaluation gain on investment property relating to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment property relating to 523 418
associates above
Headline earnings after tax 42,642 27,035
Deduct change in fair value of derivative financial instrument (net of related (1,416) (64)
tax and NCI)
Deduct revaluation expense relating to leased investment properties (919) (3,083)
Add adjusting items (net of related tax and NCI)((1)) 2,987 6,974
Adjusted earnings after tax 43,294 30,862
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, 1,167,383,139 1,052,600,936
adjusted and basic EPRA earnings per share
Weighted average number of ordinary shares for the purpose of diluted 1,183,403,147 1,070,514,305
earnings, diluted headline earnings, diluted adjusted earnings and diluted
EPRA earnings per share
Basic earnings per share 6.00c 6.44c
Diluted earnings per share 5.92c 6.33c
Basic EPRA earnings per share 3.53c 3.09c
Diluted EPRA earnings per share 3.48c 3.04c
Headline earnings per share 3.65c 2.57c
Diluted headline earnings per share 3.60c 2.53c
Adjusted earnings per share 3.71c 2.93c
Adjusted diluted earnings per share 3.66c 2.88c
(1) 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
2022 2021
€000 €000
Exceptional items 5 1,040 (8)
Refinancing costs, exit fees and prepayment penalties 8 - 5,579
LTIP and SIP 5 1,947 1,403
Adjusting items as per note 10 2,987 6,974
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 2022 ended 30 September 2021
Gross Net Gross Net
€000 €000 €000 €000
Basic earnings 70,008 67,738
Deduct gain on revaluation of investment properties (26,812) (21,318) (48,414) (39,804)
(Deduct gain)/add loss on disposal of properties (4,801) (4,749) 400 400
Deduct recoveries from prior disposals of subsidiaries - - (94) (94)
NCI relating to revaluation 52 46 50 42
Deduct revaluation gain on investment property relating to associates (1,868) (1,345) (1,665) (1,247)
Headline earnings 42,642 27,035
EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Basic and diluted earnings attributable to owners of the Company 70,008 67,738
Gain on revaluation of investment properties (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (net of related tax) (4,749) 400
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (94)
Refinancing costs, exit fees and prepayment penalties - 5,579
Change in fair value of derivative financial instruments (1,244) (160)
Deferred tax in respect of EPRA fair value movements on investment properties 5,322 8,706
NCI relating to revaluation (net of related tax) 46 42
Deduct revaluation gain on investment property relating to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment property relating to 523 418
associates
EPRA earnings 41,226 32,550
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 7,492,763 own shares held
(30 September 2021: 3,295,750), 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
2022 2021
Weighted average number of ordinary shares for the purpose of basic, basic 1,167,383,139 1,052,600,936
EPRA, headline and adjusted earnings per share
Effect of grant of SIP shares 3,254,500 5,709,250
Effect of grant of LTIP shares 12,765,508 12,204,119
Weighted average number of ordinary shares for the purpose of diluted, diluted 1,183,403,147 1,070,514,305
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/losses on disposal of properties (net of related
tax), recoveries from prior disposals of subsidiaries (net of related tax),
refinancing costs, exit fees and prepayment penalties (collectively the "EPRA
earnings adjustments"), deferred tax in respect of the EPRA earnings
adjustments, NCI relating to gain on revaluation and gain on disposal 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 Audited
30 September 31 March
2022 2022
€000 €000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 1,213,113 1,190,652
the owners of the Company)
Deferred tax liabilities/(assets) (see note 9) 81,220 75,893
Derivative financial instruments at fair value (1,573) (329)
Adjusted net asset value attributable to the owners of the Company 1,292,760 1,266,216
Number of shares
Number of ordinary shares for the purpose of net asset value per share and 1,167,559,601 1,166,880,684
adjusted net asset value per share
Number of ordinary shares for the purpose of EPRA NTA per share 1,183,579,609 1,182,159,303
Net asset value per share 103.9c 102.04c
Adjusted net asset value per share 110.72c 108.51c
EPRA NTA per share 109.47c 107.28c
Net asset value at the end of the period (basic) 1,213,113 1,190,652
Derivative financial instruments at fair value (1,573) (329)
Deferred tax in respect of EPRA fair value movements on investment properties 81,220 75,566
Intangibles as per note 14 (4,129) (4,283)
Deferred tax in respect of EPRA fair value movements on investment properties 7,076 6,563
in relation to investment in associates
EPRA NTA 1,295,707 1,268,169
EPRA NRV EPRA NTA EPRA NDV
Unaudited 30 September 2022 €000 €000 €000
Net asset value as at period end (basic) 1,213,113 1,213,113 1,213,113
Diluted EPRA net asset value at fair value 1,213,113 1,213,113 1,213,113
Group
Derivative financial instruments at fair value (1,573) (1,573) n/a
Deferred tax in respect of EPRA fair value movements on investment properties 81,220 81,220((1)) n/a
Intangibles as per note 14 n/a (4,129) n/a
Fair value of fixed interest rate debt n/a n/a 48,681
Real estate transfer tax 163,198 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment properties 7,076 7,076((1)) n/a
Fair value of fixed interest rate debt n/a n/a 9,762
Real estate transfer tax 9,353 n/a n/a
Total EPRA NRV, NTA and NDV 1,472,387 1,295,707 1,271,556
EPRA NRV, NTA and NDV per share 124.40c 109.47c 107.43c
EPRA NRV EPRA NTA EPRA NDV
Audited 31 March 2022 €000 €000 €000
Net asset value as at period end (basic) 1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value (329) (329) n/a
Deferred tax in respect of EPRA fair value movements on investment properties 75,893 75,566((1)) n/a
Intangibles as per note 14 n/a (4,283) n/a
Fair value of fixed interest rate debt n/a n/a (22,229)
Real estate transfer tax 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment properties 6,563 6,563((1)) n/a
Fair value of fixed interest rate debt n/a n/a 2,196
Real estate transfer tax 9,147 n/a n/a
Total EPRA NRV, NTA and NDV 1,442,618 1,268,169 1,170,619
EPRA NRV, NTA and NDV per share 122.03c 107.28c 99.02c
(1) The Group 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 except for deferred tax in relation to assets
held for sale.
For more information on adjusted net asset value and EPRA NRV, NTA and NDV,
refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per
share is calculated as follows:
Unaudited Audited
30 September 31 March
2022 2022
Number of ordinary shares for the purpose of net asset value per share and 1,167,559,601 1,166,880,684
adjusted net asset value per share
Effect of grant of SIP shares 3,254,500 3,074,500
Effect of grant of LTIP shares 12,765,508 12,204,119
Number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per share 1,183,579,609 1,182,159,303
The number of shares has been reduced by 7,492,763 own shares held (31 March
2022: 5,280,308 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 Audited
30 September 31 March
2022 2022
€000 €000
Total investment properties at book value as at the beginning of the period 2,100,004 1,362,192
Acquisition of a subsidiary - 421,105
Additions - owned investment properties 832 162,844
Additions - leased investment properties - 3,366
Capital expenditure and broker fees 11,536 22,607
Disposals (13,792) (1,808)
Reclassified as investment properties held for sale (see note 13) (1,000) (13,739)
Gain on revaluation above capex and broker fees 27,754 147,017
Adjustment in respect of lease incentives (23) (561)
Deficit on revaluation relating to leased investment properties (919) (5,572)
Foreign exchange differences (19,346) 2,553
Total investment properties at book value as at period end((1)) 2,105,046 2,100,004
(1) Excluding assets held for sale.
The reconciliation of the valuation carried out by the external valuer to the
carrying values shown in the condensed consolidated statement of financial
position is as follows:
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Owned investment properties at market value per valuer's report((1)) 2,085,500 2,079,079
Adjustment in respect of lease incentives (4,069) (4,153)
Leased investment property market value 23,615 25,078
Total investment properties at book value as at period end((1)) 2,105,046 2,100,004
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment properties at
period end has been arrived at on the basis of a valuation carried out at that
date by Cushman & Wakefield LLP (31 March 2022: Cushman & Wakefield
LLP), an independent valuer accredited in terms of the Royal Institution of
Chartered Surveyors ("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 period.
The weighted average lease expiry remaining across the owned portfolio in
Germany as at period end was 2.7 years (31 March 2022: 2.9 years). The
weighted average lease expiry remaining across the owned portfolio in the UK
as at period end was 0.9 years (31 March 2022: 0.9 years). Licence agreements
in the UK are rolling and are included in the valuation.
The fair value (market value) of the Group's leased investment properties as
at period end has been arrived at on the basis of a valuation carried out by
management using discounted cash flows similar to the approach of Cushman
& Wakefield LLP.
The reconciliation of gain on revaluation above capex as per the condensed
consolidated income statement is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Gain on revaluation above capex and broker fees 27,754 51,445
Adjustment in respect of lease incentives (23) 52
Deficit on revaluation relating to leased investment properties (919) (3,083)
Gain on revaluation of investment properties reported in the income statement 26,812 48,414
Included in the gain on revaluation of investment properties reported in the
income statement (excluding the revaluation effects in respect of leased
investment properties) are gross gains of €41.6 million and gross losses of
€14.8 million (30 September 2021: gross gains of €55.9 million and gross
losses of €7.5 million).
Other than the capital commitments disclosed in note 27 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 (including assets classified
as held for sale) performed on a lease-by-lease basis due to the mixed-use
nature of the sites using the discounted cash flow technique for the German
portfolio and on a capitalised income basis, where income is capitalised by an
appropriate yield which reflects the age, location, ownership, customer base
and agreement type for the UK portfolio. This gives rise to large ranges in
the inputs.
Current rental rate Market rental rate Occupancy Gross initial yield Net initial yield % Discount factor % Void period months
Market per sqm per sqm % %
value € €
€000
Unaudited 30 September 2022 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 383,800 2.67 8.48 2.65 7.68 92.4 100.0 4.0 8.9 3.2 7.0 3.9 5.9 6 12
Value add 582,000 -((1)) 8.16 3.54 8.46 -((1)) 95.3 -((1)) 10.9 (3.6)((1)) 8.4 4.3 7.1 9 18
Total traditional business parks 965,800 -((1)) 8.48 2.65 8.46 -((1)) 100.0 -((1)) 10.9 (3.6)((1)) 8.4 3.9 7.1 6 18
Modern business parks
Mature 202,700 5.38 8.26 3.83 7.95 95.0 100.0 5.0 10.4 4.1 9.0 3.9 5.3 6 15
Value add 211,600 2.81 9.04 3.87 10.22 74.9 91.5 4.6 9.6 3.4 6.7 4.9 7.5 9 24
Total modern business parks 414,300 2.81 9.04 3.83 10.22 74.9 100.0 4.6 10.4 3.4 9.0 3.9 7.5 6 24
Office
Mature 37,100 11.84 11.84 10.44 10.44 92.0 92.0 7.5 7.5 6.3 6.3 4.9 4.9 9 9
Value add 239,990 2.03 10.13 6.34 12.18 40.0 86.4 2.2 8.2 0.1 5.8 4.8 7.0 9 18
Total 277,090 2.03 11.84 6.34 12.18 40.0 92.0 2.2 8.2 0.1 6.3 4.8 7.0 9 18
office
Total Germany 1,657,190 -((1)) 11.84 2.65 12.18 -((1)) 100.0 -((1)) 10.9 (3.6)((1)) 9.0 3.9 7.5 6 24
Current Market rental rate Occupancy Net initial yield Void period
rental rate
per sqm % % months
per sqm
€
€
Unaudited 30 September 2022 Market Low High Low High Low High Low High Low High
value
€000
Total mixed-use schemes 109,258 -((1)) 23.23 5.54 22.91 -((1)) 96.0 -((1)) 10.9 4 12
Total office 146,262 5.89 30.24 7.90 25.21 38.2 100.0 -((1)) 18.2 4 12
Total industrial 173,046 1.75 10.54 2.39 12.45 70.8 100.0 3.4 10.5 4 12
Total UK 428,566 -((1)) 30.24 2.39 25.21 -((1)) 100.0 -((1)) 18.2 4 12
(1)* The Group has vacant investment properties at as period end. As a result
the lower range for rental rates, occupancy and yields is 0 or lower.
Current rental rate Market rental rate Occupancy Gross initial yield Net initial yield % Discount factor % Void period months
Market per sqm per sqm % %
value € €
€000
Audited 31 March 2022 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 329,100 2.67 8.32 2.65 7.42 91.5 100.0 4.5 8.5 3.7 6.7 3.6 5.4 6 12
Value add 625,540 -((1)) 8.16 3.49 8.46 -((1)) 97.3 -((1)) 9.0 (3.7)((1)) 6.8 3.9 7.1 9 18
Total traditional business parks 954,640 -((1)) 8.32 2.65 8.46 -((1)) 100.0 -((1)) 9.0 (3.7)((1)) 6.8 3.6 7.1 6 18
Modern business parks
Mature 195,750 5.03 8.13 3.74 7.68 91.8 100.0 5.0 9.8 4.1 8.4 3.6 5.0 6 15
Value add 213,140 2.86 10.28 3.76 10.15 74.9 97.8 2.9 9.4 1.6 6.6 4.4 7.3 9 24
Total modern business parks 408,890 2.86 10.28 3.74 10.15 74.9 100.0 2.9 9.8 1.6 8.4 3.6 7.3 6 24
Office
Mature 10,200 10.07 10.07 9.38 9.38 87.1 87.1 6.4 6.4 5.2 5.2 4.5 4.5 9 9
Value add 266,880 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -((1)) 7.2 4.6 6.6 9 18
Total 277,080 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -((1)) 7.2 4.5 6.6 9 18
office
Total Germany 1,640,610 -((1)) 11.78 2.65 12.18 -((1)) 100.0 -((1)) 9.8 (3.7)((1)) 8.4 3.6 7.3 6 24
Current Market rental rate Occupancy Net initial yield Void period
rental rate
per sqm % % months
per sqm
€
€
Audited 31 March 2022 Market Low High Low High Low High Low High Low High
value
€000
Total mixed-use schemes 123,263 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4 12
Total office 153,112 - (()(1)) 25.38 5.83 26.50 -(()(1)) 100.0 -(()(1)) 10.0 4 12
Total industrial 175,394 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4 12
Total UK 451,769 -(()(1)) 26.49 2.39 26.50 -(()(1)) 100.0 -(()(1)) 10.0 4 12
(1) The Group acquired vacant investment properties during the year ended
31 March 2022. As a result the lower range for rental rates, occupancy and
yields is 0 or lower.
As a result of the level of judgement and estimates used in arriving at the
market valuations, the amounts which may ultimately be realised in respect of
any given property may differ from valuations shown in the statement of
financial position. Key inputs are considered to be inter-related whereby
changes in one key input can result in changes in other key inputs. The impact
of changes in relation to the key inputs is also shown in the table below:
Market Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
value in market rental rates in discount rates in gross initial yield in net initial yield
€000 €000 €000 €000 €000
Unaudited 30 September 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 965,800 48,720 (49,110) (19,700) 19,790 (77,583) 92,929 (102,169) 128,695
Total modern business parks 414,300 19,300 (19,680) (8,050) 8,250 (30,437) 35,982 (38,576) 43,616
Total office 277,090 14,640 (14,470) (5,590) 5,940 (23,120) 28,481 (29,788) 39,283
Market value Germany 1,657,190 82,660 (83,260) (33,340) 33,980 (131,140) 157,392 (170,533) 211,594
Market Change of 5% Change of 0.5%
value in market rental rates in net initial yield
€000 €000 €000
Unaudited 30 September 2022 Increase Decrease Increase Decrease
Total mixed-use schemes 109,258 90 (7,509) (10,467) 4,192
Total office 146,262 8,445 (1,235) (3,937) 12,153
Total industrial 173,046 6,755 (6,667) (11,212) 13,105
Market value UK 428,566 15,290 (15,411) (25,616) 29,450
Market Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
value in market rental rates in discount rates in gross initial yield in net initial yield
€000 €000 €000 €000 €000
Audited 31 March 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 954,640 48,450 (48,380) (19,640) 20,070 (84,224) 82,247 (98,020) 126,295
Total modern business parks 408,890 19,260 (19,420) (8,540) 8,510 (30,840) 36,820 (38,033) 48,091
Total office 277,080 14,470 (14,340) (5,840) 5,760 (23,005) 28,467 (37,901) 27,766
Market value Germany 1,640,610 82,180 (82,140) (34,020) 34,340 (138,069) 147,534 (173,954) 202,152
Market Change of 5% Change of 0.5%
value in market rental rates in net initial yield
€000 €000 €000
Audited 31 March 2022 Increase Decrease Increase Decrease
Total mixed-use schemes 123,263 3,967 (4,423) (4,494) 4,389
Total office 153,112 5,754 (5,325) (4,295) 5,029
Total industrial 175,394 7,139 (6,333) (5,822) 6,843
Market value UK 451,769 16,860 (16,081) (14,611) 16,261
13. Assets held for sale
Investment properties held for sale
Unaudited Audited
30 September 2022 31 March
€000 2022
€000
Magdeburg - 13,750
Heiligenhausen Land 1,000 -
Balance as at period end 1,000 13,750
The disclosures regarding valuation in note 12 are also applicable to assets
held for sale. As at 31 March 2022, an amount of €13,750,000 relating to the
sale of the Magdeburg asset was received prior to the completion date of 1
April 2022 and was included in the cash at bank per note 19. As a result, an
equal and opposite position within other payables was recognised. See note 20
for further details.
14. Intangible assets
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Software and licences 4,129 4,283
Balance as at period end 4,129 4,283
15. 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 2021 (audited) 1,919 1,919
Depreciation expense (260) (260)
As at 30 September 2021 (unaudited) 1,659 1,659
Additions 15,047 15,047
Depreciation expense (583) (583)
Lease modifications((1)) (1,127) (1,127)
As at 31 March 2022 (audited) 14,996 14,996
Additions 1,450 1,450
Depreciation expense (1,141) (1,141)
Foreign exchange differences (46) (46)
As at 30 September 2022 (unaudited) 15,259 15,259
(1) Lease modifications relate to the early termination of the head office
lease.
In addition to office spaces the Group is also counterparty to long-term
leasehold agreements and head leases relating to commercial property. Right of
use assets amounting to €23,615,000 (31 March 2022: €25,078,000) are
classified as investment properties, of which €3,180,000 (31 March 2022:
€3,979,000) relate to commercial property.
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Balance as at the beginning of the period (38,661) (14,987)
Acquisition of a subsidiary - (12,182)
Accretion of interest (533) (479)
Additions (1,400) (18,413)
Lease modifications((1)) - 1,127
Payments 1,308 6,350
Foreign exchange differences 595 (77)
Balance as at period end (38,691) (38,661)
Current lease liabilities as at period end (1,458) (1,090)
Non-current lease liabilities as at period end (37,233) (37,571)
(1) Lease modifications relate to the early termination of the head office
lease.
The following table sets out the carrying amount, by maturity, of the Group's
lease liabilities:
Unaudited 30 September 2022 Within 1 year 1-5 years 5+ years Total
€000 €000 €000 €000
Commercial property((1)) (243) (956) (399) (1,598)
Long-term leasehold((1)) (240) (1,017) (19,179) (20,436)
Office space (975) (7,503) (8,179) (16,657)
Total (1,458) (9,476) (27,757) (38,691)
Audited 31 March 2022 Within 1 year 1-5 years 5+ years Total
€000 €000 €000 €000
Commercial property((1)) (667) (945) (528) (2,140)
Long-term leasehold((1)) (239) (1,013) (19,848) (21,100)
Office space (184) (6,197) (9,040) (15,421)
Total (1,090) (8,155) (29,416) (38,661)
(1) These lease liabilities relate to right of use assets recorded as
investment properties.
The overall weighted average discount rate used for the period is 2.7% (31
March 2022: 2.3%).
16. Other non-current financial assets
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Guarantees and deposits 4,057 4,052
Loans to associates 44,352 44,278
Balance as at period end 48,409 48,330
Loans to associates relate to shareholder loans granted to associates by the
Group. The loans terminate on 31 December 2026, are fully subordinated and are
charged at a fixed interest rate. The expected credit loss has been considered
based on multiple factors such as history of repayments, forward looking
budgets and forecasts. Based on the assessment the expected credit loss was
immaterial.
17. 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 for the associates.
The following table illustrates the summarised financial information of the
Group's investment in associates:
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Current assets 23,123 20,031
Non-current assets 356,813 349,796
Current liabilities (12,242) (10,406)
Non-current liabilities (296,061) (294,121)
Equity 71,633 65,300
Unrecognised accumulated losses 4,765 3,679
Subtotal 76,398 68,979
Group's share in equity - 35% 26,739 24,142
Unaudited Audited
six months year ended
ended 31 March
30 September 2022
2022 €000
€000
Net operating income 9,965 19,872
Gain on revaluation of investment properties 4,226 18,856
Administrative expense (1,709) (3,001)
Operating profit 12,482 35,727
Net finance costs (4,409) (9,753)
Profit before tax 8,073 25,974
Taxation (1,731) (4,166)
Unrecognised loss/(profit) 1,077 (1,978)
Total profit and comprehensive income for the period after tax 7,419 19,830
Group's share of profit for the period - 35% 2,597 6,940
The Group's share of profit for the six months ended 30 September 2021 was
€2,463,000.
Included within the non-current liabilities are shareholder loans amounting to
€126,719,000 (31 March 2022: €126,509,000). As at period end no contingent
liabilities existed (31 March 2022: none). The associates had contracted
capital expenditure for development and enhancements of €278,000 as at
period end (31 March 2022: €2,010,000).
The following table illustrates the movement in investment in associates:
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Balance as at the beginning of the period 24,142 17,202
Share of profit 2,597 6,940
Balance as at period end 26,739 24,142
18. Trade and other receivables
Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Gross trade receivables 14,521 18,791
Expected credit loss provision (see note 5) (7,362) (7,722)
Net trade receivables 7,159 11,069
Other receivables 10,361 8,865
Prepayments 6,900 4,637
Balance as at period end 24,420 24,571
Other receivables include lease incentives of €4,069,000 (31 March 2022:
€4,036,000) and accrued service charge income of €4,453,000 (31 March
2022: €965,000).
Prepayments include costs of €3,639,000 relating to the acquisitions of new
sites in Düsseldorf and Dreieich that were notarised before 30 September 2022
and have completed in the second half of the financial year (31 March 2022:
€1,860,000 relating to the acquisition of a new site in Düsseldorf that was
notarised before 31 March 2022).
19. Cash and cash equivalents
Unaudited
30 September Audited
2022 31 March
€000 2022
€000
Cash at bank 138,641 127,285
Restricted cash 23,457 23,681
Balance as at period end 162,098 150,966
Cash at bank earns interest at floating rates based on daily bank deposit
rates. The fair value of cash as at period end is €162,098,000 (31 March
2022: €150,966,000). Cash is held by reputable banks and the Group assessed
the expected credit loss to be immaterial.
The following table illustrates the breakdown of cash held in restricted
accounts:
Unaudited
30 September Audited
2022 31 March
€000 2022
€000
Deposits received from tenants 21,986 22,210
Office rent deposits 131 131
Deposit for bank guarantees 1,340 1,340
Total 23,457 23,681
The majority of the restricted cash is in relation to tenant deposits.
Tenants' deposits are legal securities of tenants retained by the Group
without the right to use these cash deposits for purposes other than strictly
tenant related transactions (e.g. move-out costs, costs due to non-compliance
with certain terms of the lease agreement or late rent/service charge
payments).
20. Trade and other payables
Unaudited
30 September Audited
2022 31 March
€000 2022
€000
Trade payables 1,107 6,488
Accrued expenses 31,725 25,093
Interest and amortisation payable 5,953 5,625
Tenant deposits 21,986 22,210
Unearned revenue 10,730 7,913
Other payables 5,492 22,006
Balance as at period end 76,993 89,335
Accrued expenses include costs totalling €14,363,000 (31 March 2022:
€10,279,000) 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 €738,000 (31
March 2022: €2,624,000). As at 31 March 2022, other payables included
€13,750,000 of proceeds relating to the sale of the Magdeburg asset that was
categorised as an asset held for sale at 31 March 2022 in advance of the
completion date of 1 April 2022. See note 13 for details of assets held for
sale.
Unearned revenue includes service charge amounts of €2,966,000 (31 March
2022: €1,164,000). 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.
21. Interest-bearing loans and borrowings
Interest rate Loan maturity date Unaudited Audited
% 30 September 31 March 2022
2022 €000
€000
Current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 1,923 1,909
- fixed rate facility 0.90 31 October 2023 1,487 1,480
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 777 771
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged((1)) 31 December 2023 1,110 1,111
- floating rate facility Floating((1)) 31 December 2023 140 140
Schuldschein
- floating rate facility Floating((2)) 5 December 2022 5,000 5,000
- floating rate facility Floating ((2)) 6 January 2023 10,000 10,000
- fixed rate facility 1.60 3 July 2023 20,000 -
Capitalised finance charges on all loans (3,194) (781)
37,243 19,630
Non-current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 57,263 58,228
- fixed rate facility 0.90 31 October 2023 109,618 110,363
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 13,868 14,258
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged((1)) 31 December 2023 50,501 51,056
- floating rate facility Floating((1)) 31 December 2023 6,171 6,241
Schuldschein
- floating rate facility Floating ((2)) 6 January 2025 5,000 5,000
- fixed rate facility 1.70 3 March 2025 10,000 10,000
- fixed rate facility 1.60 3 July 2023 - 20,000
Corporate bond I
- fixed rate 1.125 22 June 2026 400,000 400,000
Corporate bond II
- fixed rate 1.75 24 November 2028 300,000 300,000
Capitalised finance charges on all loans (9,245) (13,283)
943,176 961,863
Total 980,419 981,493
(1) Tranche 1 of this facility is fully hedged with a swap charged at a
rate of 1.40%; tranche 2 of this facility is fully hedged with a swap charged
at a rate of 1.25%; and €19.1 million of tranche 3 of this facility is fully
hedged with a swap charged at a rate of 0.91%. A €6.5 million extension and
the tranche 3 related €0.5 million arrangement fee are charged with a
floating rate of 1.20% over three-month EURIBOR (not less than 0%).
(2) This unsecured facility has a floating rate of 1.50% over six month
EURIBOR (not less than 0%) for the first two tranches and a floating rate of
1.70% over six month EURIBOR (not less than 0%) for tranche 3.
The Group has pledged 15 (31 March 2022: 15) investment properties to secure
several separate interest-bearing debt facilities granted to the Group. The 15
(31 March 2022: 15) properties had a combined valuation of €513,168,000 as
at period end (31 March 2022: €504,709,000). The Group's loans are subject
to various covenants with which the Group had complied with and had a
sufficient level of headroom as at period end.
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.
On 31 August 2022, the Group concluded an agreement with Berlin Hyp AG to
refinance the existing facility with a new facility which amounts to €170.0
million. The new facility is a separate financial instrument to the existing
facility and will come into effect on 1 November 2023 with a term of seven
years and a fixed interest rate of 4.26%.
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 2022.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement with Deutsche
Pfandbriefbank AG for €56.0 million. Tranche 1, totalling €21.6 million,
has been hedged at a rate of 1.40% until 31 December 2023 by way of an
interest rate swap. A first drawdown of tranche 3 totalling €0.5 million was
charged at a fixed interest rate of 1.20%. On 3 April 2019, tranche 2 was
drawn down, totalling €14.8 million, and has been hedged at a rate of 1.25%
until 31 December 2023 by way of an interest rate swap. On 28 June 2019,
tranche 3 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 2022.
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 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 2022.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond for €400.0
million. The bond, which is listed at the Luxembourg stock exchange 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 corporate
bond 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 2022.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond for €300.0
million. The bond, which is listed at the Luxembourg stock exchange has a term
of seven years and an interest rate of 1.750% due annually on its anniversary
date, with the principal balance coming due on 24 November 2028. The corporate
bond 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 2022.
22. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values
of all of the Group's financial instruments that are carried in the financial
statements (excluding assets held for sale and liabilities directly associated
with assets held for sale):
Unaudited Audited
30 September 2022 31 March 2022
Fair value Carrying Fair Carrying Fair
hierarchy amount value amount value
level €000 €000 €000 €000
Financial assets
Cash and cash equivalents 162,098 162,098 150,966 150,966
Trade and other receivables((1)) 17,508 17,508 19,833 19,833
Loans to associates 2 44,352 44,352 44,278 44,278
Derivative financial instruments 2 1,573 1,573 329 329
Financial liabilities
Trade and other payables 34,538 34,538 56,329 56,329
Interest-bearing loans and borrowings((2))
Floating rate borrowings 2 26,311 26,311 26,381 26,381
Floating rate borrowings - hedged((3)) 2 51,611 51,611 52,167 52,167
Fixed rate borrowings 2 914,936 866,255 917,009 939,238
All amounts in the table above are carried at amortised cost except for
derivative financial instruments which are held at fair value.
(1) This is made up of net trade receivables, other receivables (excluding
lease incentives) and guarantees and deposits.
(2) Excludes loan issue costs.
(3) 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 21 for details of swap contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost and whose
carrying value is a reasonable approximation to fair value there is no
requirement to analyse their value in the fair value hierarchy.
The below analyses financial instruments measured at fair value into a fair
value hierarchy based on the valuation technique used to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on a quarterly
basis. The fair value of interest rate swaps is based on broker quotes. Those
quotes are tested for reasonableness by discounting estimated future cash
flows based on the terms and maturity of each contract and using market
interest rates for a similar instrument at the measurement date. The average
interest rate is based on the outstanding balances at the end of the reporting
period. The interest rate swap is measured at fair value with changes
recognised in profit or loss.
The fair values of the loans and borrowings have been calculated based on a
discounted cash flow model using the prevailing market rates of interest.
23. Issued share capital
Authorised Number Share
of shares capital
€
Ordinary shares of no par value Unlimited -
As at 30 September 2022 (unaudited) and 31 March 2022 (audited) Unlimited -
Issued and fully paid Number Share
of shares capital
€
As at 31 March 2021 (audited) 1,049,132,259 -
Issued ordinary shares 11,367,372 9,195,000
Transfer of share capital to other distributable reserves - (9,195,000)
Shares allocated by the Employee Benefit Trust 388,858 -
As at 30 September 2021 (unaudited) 1,060,888,489 -
Issued ordinary shares 107,976,753 158,185,000
Transfer of share capital to other distributable reserves - (158,185,000)
Shares issued to the Employee Benefit Trust (3,557,745) -
Shares allocated by the Employee Benefit Trust 1,573,187 -
As at 31 March 2022 (audited) 1,166,880,684 -
Issued ordinary shares 2,891,372 1,440,000
Transfer of share capital to other distributable reserves - (1,440,000)
Shares issued to the Employee Benefit Trust (2,500,000) -
Shares allocated by the Employee Benefit Trust 287,545 -
As at 30 September 2022 (unaudited) 1,167,559,601 -
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 13 June 2022, the Company issued
1,271,279 ordinary shares at an issue price of £0.97384 resulting in the
Company's overall issued share capital being 1,175,052,364 ordinary shares.
In addition, the Company issued 1,620,093 shares in relation to the exercise
of the LTIP 2018 (June 2019 grant) as per note 7.
Treasury shares held by the Employee Benefit Trust are disclosed as own shares
held. During the period 2,500,000 shares were acquired and 287,545 were
allocated by the Employee Benefit Trust. A total of 7,492,763 own shares
purchased at an average share price of €1.1116 are held by the Employee
Benefit Trust (31 March 2022: 5,280,308 shares purchased at an average share
price of €1.1882). The total number of shares with voting rights was
1,175,052,364 (31 March 2022: 1,172,160,992). 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 2022: none) and there are no Treasury
Shares held directly by the parent company at the period end (31 March 2022:
none).
24. 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 €544,419,000 in total
at period end (31 March 2022: €570,369,000).
Foreign currency translation reserve
The Group holds a foreign currency translation reserve amounting to
€21,243,000 deficit (31 March 2022: €1,701,000 deficit) which relates to
foreign currency translation effect during the course of the business with the
UK segment.
The negative movement in the period of €19,542,000 is a result of a
declining GBP rate which is lower at period end compared with 31 March 2022.
25. Dividends
On 13 June 2022, the Company announced a dividend of 2.37c per share, with a
record date of 8 July 2022 for UK and South African ("SA") shareholders and
payable on 18 August 2022. On the record date, 1,172,160,992 shares were in
issue. Since there were no shares held in treasury, 1,172,160,992 shares
(including shares held by the Employee Benefit Trust) were entitled to
participate in the dividend. Holders of 61,453,275 shares elected to receive
the dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of €1,456,000 (€1,440,000 as at settlement date)
while holders of 1,110,707,717 shares opted for a cash dividend with a value
of €26,324,000. The Company's Employee Benefit Trust waived its rights to
the dividend, reducing the cash payable to €26,200,000 (€26,211,000 as at
settlement date). The total dividend was €27,656,000 (€27,651,000 as at
settlement date).
The Group's profit attributable to the equity holders of the Company for the
period was €70.0 million (30 September 2021: €67.7 million). The Board has
authorised a dividend relating to the six month period ended 30 September 2022
of 2.70c per share, representing 65% of FFO*.
It is expected that, for the dividend authorised relating to the six month
period ended 30 September 2022, the ex-dividend date will be 7 December 2022
for shareholders on the SA register and 8 December 2022 for shareholders on
the UK register. It is further expected that for shareholders on both
registers the record date will be 9 December 2022 and the dividend will be
paid on 19 January 2023.
To facilitate settlement of the dividend to entitled SA shareholders, share
certificates may not be dematerialised or rematerialised between Wednesday, 7
December 2022 (the SA ex-dividend date) and Friday, 9 December 2022 (the
record date). No transfers of shares shall be registered in the SA share
register, or between the SA share register and the UK share register, between
Monday, 21 November 2022 (the declaration date) and Friday, 9 December 2022.
All dates are inclusive.
The dividend has been declared in Euro. Shareholders on the UK share register
may choose to receive their entitlement to the dividend in cash in either Euro
or GBP. Shareholders on the UK share register who do not make a valid GBP
currency election will receive any entitlement to the cash dividend in Euro.
Shareholders on the SA share register will receive any entitlement to the cash
dividend in SA Rand ("ZAR").
The Euro to GBP Conversion Rate (UK share register only)
For shareholders on the UK share register who make a valid GBP currency
election, the conversion rate for the purposes of calculating the dividend for
the six month period ended 30 September 2022 will be a Euro to GBP rate of
£0.8702.
On this basis, shareholders on the UK share register will receive a gross
dividend of £2.35 (GBP) per ordinary share.
The Euro to ZAR Conversion Rate (SA share register only)
For shareholders on the SA share register, the conversion rate for the
purposes of calculating the dividend authorised in connection with the period
ended 30 September 2022 will be 17.836 ZAR to 1 Euro.
The Euro to ZAR conversion for payment of the dividend in ZAR will be settled
on Monday, 21 November 2022, using the Euro to ZAR conversion rate which has
been fixed by the Company as at the close of business on Friday, 18 November
2022.
On this basis, shareholders on the SA share register will receive a gross
dividend of 48.157 (ZAR cents) per ordinary share.
Information for shareholders on the SA share register
Tax
The dividend is subject to a SA dividend withholding tax ("DWT") rate of 20%
unless the shareholder is exempt from paying dividend tax or is entitled to a
reduced rate in terms of the applicable double-tax agreement. The Company
confirms that the net cash dividend received by SA shareholders who are not
exempt from DWT of 20%, is expected to be 38.525 (ZAR cents) per ordinary
share.
General information
On Monday, 21 November 2022, being the declaration date of the dividend, the
Company is expected to have in issue 1,175,052,364 ordinary shares carrying
voting rights, and there are no shares expected to be held in treasury. The
Company is incorporated in Guernsey with Company number 46442. Sirius' tax
registration number in Guernsey is 1EC.956 whilst its UK tax number is GB
203993015.
The distribution is expected to be made from other distributable reserves (for
the purposes of the JSE Listings Requirements, paragraph 11.17 (c), the
distribution is expected to be made from income reserves).
* Adjusted profit before tax adjusted for foreign exchange effects,
depreciation and amortisation (excluding depreciation relating to IFRS 16),
amortisation of financing fees, adjustments in respect of IFRS 16, 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
2022 2021
€m €m
Reported profit before tax 75.7 78.2
Adjustments for:
Gain on revaluation of investment properties (26.8) (48.4)
Deficit on revaluation expense relating to leased investment properties (0.9) (3.1)
(Gain)/loss on disposal of properties (4.8) 0.4
Recoveries from prior disposals of subsidiaries - (0.1)
Deduct revaluation gain on investment property from associates and related tax (1.3) (1.5)
Other adjusting items((1)) 3.0 7.0
Change in fair value of financial derivatives (1.2) (0.2)
Adjusted profit before tax 43.7 32.3
Adjustments for:
Foreign exchange effects((2)) 0.3 -
Depreciation and amortisation (excluding depreciation relating to IFRS 16) 1.7 0.9
Amortisation of financing fees 1.6 1.0
Adjustment in respect of IFRS 16 1.5 0.5
Current taxes incurred (see note 9) (0.4) (1.7)
Add back current tax relating to disposals 0.1 -
Funds from operations, six months ended 30 September 48.5 33.0
Dividend pool, six months ended 30 September((3)) 31.5 21.6
Dividend per share, six months ended 30 September 2.70c 2.04c
(1) Includes the effect of exceptional items and share awards. See note 5
and 7 for details.
(2) Management decided to exclude foreign exchange effects from the funds
from operations calculation amounting €0.3m (30 September 2021: €nil).
(3) Calculated as 65% of FFO of 4.15c per share (30 September 2021: 3.14c
per share using 65% of FFO), based on average number of shares outstanding of
1,167,383,139 (30 September 2021: 1,052,600,936).
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.
26. 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:
Condensed consolidated statement of financial position Unaudited Audited
30 September 31 March
2022 2022
€000 €000
Loans to associates 44,352 44,278
Trade and other receivables 1,649 2,527
Total 46,001 46,805
Trade and other receivables relate to amounts owed from the services supplied
to the associates and are due to be settled in the normal course of business.
As a result of unchanged credit quality no material expected credit losses
have been recognised in the period.
Condensed consolidated income statement Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Services supplied 7,034 5,568
Interest income 1,111 1,554
Total 8,145 7,122
Services provided to related parties primarily relate to the provision of
property and asset management services. A performance fee arrangement is in
place between the associates and the Group. The performance fee was €nil
during the period (30 September 2021 €nil).
27. Capital and other commitments
As at period end, the Group had contracted capital expenditure for development
and enhancements on existing properties of €14,579,000 (31 March 2022:
€7,846,000) and capital commitments in relation to the notarised assets in
Düsseldorf and Dreieich of €40,086,000.
On 31 August 2022, the Group concluded an agreement with Berlin Hyp AG to
refinance and extend the existing facility with a new facility which amounts
to €170.0 million which will come to effect on 1 November 2023. The upfront
fee for this facility to be paid by the Group will be €595,000.
The above noted were committed but not yet provided for in the financial
statements.
28. Post balance sheet events
On 22 March 2022 the Group notarised for the acquisition of a mixed-use
property in Düsseldorf, Germany, situated 2.6 km from the city's
international airport. Total acquisition cost is expected to be €39.8
million. The property comprises mainly office and warehouse/light industrial
space and is 55% occupied. The acquisition was completed on 1 October 2022.
On 16 June 2022 the Group notarised for the acquisition of a primarily
warehouse asset located in a well-developed commercial area in Dreieich,
Germany, that is strategically adjacent to an existing property owned by
Sirius. Total acquisition cost is expected to be €3.9 million. The
acquisition was completed on 1 October 2022.
Business analysis
Non-IFRS measures
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Total profit for the period attributable to the owners of the Company 70,008 67,738
Gain on revaluation of investment properties (26,812) (48,414)
Gain/(loss) on disposal of properties (net of related tax) (4,749) 400
Recoveries from prior disposals of subsidiaries (net of related tax) - (94)
Add refinancing costs, exit fees and prepayment penalties - 5,579
Change in fair value of derivative financial instruments (1,244) (160)
Deferred tax in respect of EPRA fair value movements on investment properties 5,322 8,706
NCI relating to revaluation (net of related tax) 46 42
Deduct revaluation gain on investment property relating to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment property relating to 523 418
associates above
EPRA earnings 41,226 32,550
Add/(deduct) change in deferred tax relating to derivative financial 172 (96)
instruments
Add change in fair value of derivative financial instruments 1,244 160
Deduct refinancing costs, exit fees and prepayment penalties - (5,579)
NCI in respect of the above - -
Headline earnings after tax 42,642 27,035
Deduct change in fair value of derivative financial instruments (net of (1,416) (64)
related tax and NCI)
Deduct revaluation expense relating to leased investment properties (919) (3,083)
Add adjusting items((1)) (net of related tax and NCI) 2,987 6,974
Adjusted earnings after tax 43,294 30,862
(1) 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
2022 2021
€000 €000
EPRA earnings 41,226 32,550
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
EPRA earnings per share (cents) 3.53 3.09
Headline earnings after tax 42,642 27,035
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
Headline earnings per share (cents) 3.65 2.57
Adjusted earnings after tax 43,294 30,862
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
Adjusted earnings per share (cents) 3.71 2.93
Annex 1 - non-IFRS measures
Basis of preparation
The Directors of Sirius Real Estate Limited ("Sirius") have chosen to disclose
additional non-IFRS measures; these include EPRA earnings, adjusted net asset
value, EPRA net reinstatement value, EPRA net tangible assets, EPRA net
disposal value, adjusted profit before tax and funds from operations
(collectively "Non-IFRS Financial Information").
The Directors have chosen to disclose:
• EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition of
earnings as set out by the European Public Real Estate Association. EPRA
earnings represents earnings after adjusting for the revaluation of investment
properties, changes in fair value of derivative financial instruments,
gains/losses on disposal of properties (net of related tax), recoveries from
prior disposals of subsidiaries (net of related tax), refinancing costs, exit
fees and prepayment penalties (collectively the "EPRA earnings adjustments"),
deferred tax in respect of the EPRA earnings adjustments, NCI relating to gain
on revaluation and gain on disposal of properties (net of related 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 and intangible assets as per the note reference in the unaudited
condensed 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 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 adjusts for the effect of the
gain on revaluation of investment properties, deficit on revaluation relating
to leased investment properties, other adjusting items, gains/losses on
disposal of properties, change in fair value of financial derivatives,
recoveries from prior disposals of subsidiaries, revaluation gain on
investment property relating to associates and related tax. The reconciliation
for adjusted profit before tax is detailed in table D below.
• Funds from operations in order to assist in comparisons with
similar businesses and to facilitate the Group's dividend policy which is
derived from funds from operations. Accordingly, funds from operations
excludes depreciation and amortisation (excluding depreciation relating to
IFRS 16), net foreign exchange differences, amortisation of financing fees,
adjustment in respect of IFRS 16 and current tax excluding tax on disposals.
The reconciliation for funds from operations is detailed in table D below.
The Non-IFRS Financial Information is presented in accordance with the JSE
Listing Requirements and the guide on pro forma financial information issued
by SAICA. The Non-IFRS Financial Information is the responsibility of the
Directors. The Non-IFRS Financial Information has been presented for
illustrative purposes and, due to its nature, may not fairly present the
Group's financial position or result of operations.
The Non-IFRS measures included in the Interim Report 2022 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 unaudited interim condensed set consolidated financial statements for
the six months ended 30 September 2022 (the "consolidated financial
statements").
Table A - EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
€000 €000
Basic and diluted earnings attributable to owners of the Company(()¹()) 70,008 67,738
Gain on revaluation of investment properties((2)) (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (net of related tax)((3)) (4,749) 400
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (94)
((4))
Refinancing costs, exit fees and prepayment penalties((5)) - 5,579
Change in fair value of derivative financial instruments((6)) (1,244) (160)
Deferred tax in respect of EPRA fair value movements on investment 5,322 8,706
properties((7))
NCI relating to revaluation (net of related tax) ((8)) 46 42
Deduct revaluation gain on investment property relating to associates((9)) (1,868) (1,665)
Tax in relation to the revaluation gain on investment property relating to 523 418
associates((10))
EPRA earnings((11)) 41,226 32,550
Notes:
(1) Presents the profit attributable to owners of the Company which has
been extracted from the unaudited condensed consolidated income statement
within the consolidated financial statements.
(2) Presents the gain on revaluation of investment properties which has
been extracted from the unaudited condensed consolidated income statement
within the consolidated financial statements.
(3) Presents the gain or loss on disposal of properties (net of related
tax) which has been extracted from note 10 within the consolidated financial
statements.
(4) Presents the recoveries from prior disposals of subsidiaries (net of
related tax) which has been extracted from the unaudited condensed
consolidated income statement within the consolidated financial statements.
(5) Presents the refinancing costs, exit fees and prepayment penalties
which have been extracted from note 8 within the consolidated financial
statements.
(6) Presents the change in fair value of derivative financial instruments
which has been extracted from the unaudited condensed consolidated income
statement within the consolidated financial statements.
(7) Presents deferred tax relating to origination and reversal of
temporary differences of the EPRA fair value movements on investment
properties which has been extracted from note 9 within the consolidated
financial statements.
(8) Presents the non-controlling interest relating to revaluation (net of
related tax) which has been extracted from note 10 within the consolidated
financial statements.
(9) Presents the revaluation gain on investment property relating to
associates which has been extracted from note 10 within the consolidated
financial statements.
(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) Presents the EPRA earnings for the period.
Table B - Adjusted net asset value
Unaudited
30 September Audited
2022 31 March
€000 2022
€000
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 1,213,113 1,190,652
the owners of the Company)((1))
Deferred tax liabilities/(assets) (see note 9)((2)) 81,220 75,893
Derivative financial instruments at fair value((3)) (1,573) (329)
Adjusted net asset value attributable to the owners of the Company((4)) 1,292,760 1,266,216
Notes:
(1) Presents the net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the unaudited condensed consolidated statement of financial position
within the consolidated financial statements.
(2) Presents the net deferred tax liabilities or assets which have been
extracted from the unaudited condensed consolidated statement of financial
position within the consolidated financial statements.
(3) Presents current derivative financial instrument assets which have
been extracted from the unaudited condensed consolidated statement of
financial position from the consolidated financial statements.
(4) Presents the adjusted net asset value attributable to the owners of
the Company as at period end.
Table C - EPRA net asset measures
Unaudited 30 September 2022 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at period end (basic)((1)) 1,213,113 1,213,113 1,213,113
Diluted EPRA net asset value at fair value 1,213,113 1,213,113 1,213,113
Group
Derivative financial instruments at fair value((2)) (1,573) (1,573) n/a
Deferred tax in respect of EPRA fair value movements on investment 81,220 81,220* n/a
properties((3))
Intangibles as per note 14((4)) n/a (4,129) n/a
Fair value of fixed interest rate debt((5)) n/a n/a 48,681
Real estate transfer tax((6)) 163,198 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment 7,076 7,076* n/a
properties((3))
Fair value of fixed interest rate debt((5)) n/a n/a 9,762
Real estate transfer tax((6)) 9,353 n/a n/a
Total EPRA NRV, NTA and NDV((7)) 1,472,387 1,295,707 1,271,556
Audited 31 March 2022 EPRA NRV EPRA NTA EPRA NDV
€000 €000 €000
Net asset value as at period end (basic)((1)) 1,190,652 1,190,652 1,190,652
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
Group
Derivative financial instruments at fair value((2)) (329) (329) n/a
Deferred tax in respect of EPRA fair value movements on investment 75,893 75,566* n/a
properties((3))
Intangibles as per note 14((4)) n/a (4,283) n/a
Fair value of fixed interest rate debt((5)) n/a n/a (22,229)
Real estate transfer tax((6)) 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment 6,563 6,563* n/a
properties((3))
Fair value of fixed interest rate debt((5)) n/a n/a 2,196
Real estate transfer tax((6)) 9,147 n/a n/a
Total EPRA NRV, NTA and NDV((7)) 1,442,618 1,268,169 1,170,619
* The Group 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 except for deferred tax in relation to
assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) which has been extracted
from the unaudited condensed consolidated statement of financial position
within the consolidated financial statements.
(2) Presents current derivative financial instrument assets which have
been extracted from the unaudited condensed consolidated statement of
financial position within the consolidated financial statements.
(3) Presents for the Group the net deferred tax liabilities or assets
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 2022:
€327,000). For investment in associates the deferred tax expense arising on
revaluation gains amounted to €7,076,000 (31 March 2022: €6,563,000).
(4) Presents the net book value of software and licences with definite
useful life which has been extracted from note 14 within the consolidated
financial statements.
(5) Presents the fair value of financial liabilities and assets on the
unaudited condensed consolidated statement of financial position, net of any
related deferred tax.
(6) 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.
(7) 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
2022 2021
€m €m
Reported profit before tax((1)) 75.7 78.2
Adjustments for:
Gain on revaluation of investment properties((2)) (26.8) (48.4)
Deficit on revaluation relating to leased investment properties((3)) (0.9) (3.1)
(Gain)/loss on disposal of properties((4)) (4.8) 0.4
Recoveries from prior disposals of subsidiaries((5)) - (0.1)
Deduct revaluation gain on investment property from associates and related (1.3) (1.5)
tax((6))
Other adjusting items((7)) 3.0 7.0
Change in fair value of financial derivatives((8)) (1.2) (0.2)
Adjusted profit before tax((9)) 43.7 32.3
Adjustments for:
Foreign exchange effects((10)) 0.3 -
Depreciation and amortisation (excluding depreciation relating to IFRS 1.7 0.9
16)((11))
Amortisation of financing fees((12)) 1.6 1.0
Adjustment in respect of IFRS 16((13)) 1.5 0.5
Current taxes incurred (see note 9)((14)) (0.4) (1.7)
Add back current tax relating to disposals((15)) 0.1 -
Funds from operations((16)) 48.5 33.0
Notes:
(1) Presents profit before tax which has been extracted from the unaudited
condensed consolidated income statement within the consolidated financial
statements.
(2) Presents the gain on revaluation of investment properties which has
been extracted from the unaudited condensed consolidated income statement
within the consolidated financial statements.
(3) Presents the deficit on revaluation relating to capitalised head
leases which has been extracted from note 12 within the consolidated financial
statements.
(4) Presents the gain or loss on disposal of properties which has been
extracted from the unaudited condensed consolidated income statement within
the consolidated financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries which has
been extracted from the unaudited condensed consolidated income within the
consolidated financial statements.
(6) Presents the revaluation gain on investment property relating to
associates and related tax which has been extracted from note 10 within the
consolidated financial statements and non-FFO related depreciation and
amortisation of finance costs totalling €nil (30 September 2021: €237,000)
relating to associates.
(7) Presents the total adjusting items which has been extracted from note
10 within the consolidated financial statements.
(8) Presents the change in fair value of derivative financial instruments
which has been extracted from the unaudited condensed consolidated income
statement within the consolidated financial statements.
(9) Presents the adjusted profit before tax for the period.
(10) Presents the net foreign exchange losses as included in other
administration costs in note 5 within the consolidated financial statements.
(11) Presents depreciation of plant and equipment and amortisation of
intangible assets which have been extracted from note 5 within the
consolidated financial statements.
(12) Presents amortisation of capitalised finance costs which has been
extracted from note 8 within the consolidated financial statements.
(13) Presents the differential between the expense recorded in the unaudited
condensed consolidated income statement for the period relating to head leases
in accordance with IFRS 16 amounting to €2.8 million (30 September 2021:
€3.6 million) and the actual cash expense recorded in the unaudited
condensed consolidated statement of cash flow for the period amounting to
€1.3 million (30 September 2021: €3.1 million).
(14) Presents the total current income tax which has been extracted from note
9 within the consolidated financial statements.
(15) Presents the current income tax charge relating to disposal of investment
properties which has been extracted from note 9 within the consolidated
financial statements.
(16) Presents the funds from operations for the period.
Glossary of terms
Adjusted earnings after tax is the earnings attributable to the owners of the Company, excluding the
effect of adjusting items (net of related tax and NCI), gains/losses on
disposal of properties (net of related tax), the revaluation gains/losses on
the investment properties (also to associates) (net of related tax), changes
in fair value of derivative financial instruments (net of related tax and
NCI), recoveries from prior disposals of subsidiaries (net of related tax),
NCI relating to revaluation (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
liabilities/assets
Adjusted profit before tax is the reported profit before tax adjusted for gain on revaluation of
investment properties, deficit on revaluation expense relating to lease
investment properties, gains/losses on disposal of properties, changes in fair
value of derivative financial instruments, other adjusting items, recoveries
from prior disposals of subsidiaries, revaluation gain on investment property
relating to associates and related tax
Annualised acquisition net operating income is the income generated by a property less directly attributable costs at the
date of acquisition expressed in annual terms. Please see "annualised rent
roll" definition below for further explanatory information
Annualised acquisition is the contracted rental income of a property at the date of acquisition
rent roll expressed in annual terms. Please see "annualised rent roll" definition below
for further explanatory information
Annualised rent roll is the contracted rental income of a property at a specific reporting date
expressed in annual terms. Unless stated otherwise the reporting date is 30
September 2022. Annualised rent roll should not be interpreted nor used as a
forecast or estimate. Annualised rent roll differs from rental income
described in note 5 of the Interim Report and reported within revenue in the
unaudited condensed consolidated income statement for reasons including:
• annualised rent roll represents contracted rental income at a
specific point in time expressed in annual terms;
• rental income as reported within revenue represents rental income
recognised in the period under review; and
• rental income as reported within revenue includes accounting
adjustments including those relating to lease incentives
Capital value is the market value of a property divided by the total sqm of a property
Cumulative total return is the return calculated by combining the movement in investment property
value net of capex with the total net operating income less bank interest over
a specified period of time
EPRA earnings is earnings after adjusting the revaluation of investment properties, changes
in fair value of derivative financial instruments, gains and losses on
disposal of properties (net of related tax), recoveries from prior disposals
of subsidiaries (net of related tax), refinancing costs, exit fees and
prepayment penalties (collectively the "EPRA earnings adjustments"), deferred
tax in respect of the EPRA earnings adjustments, NCI relating to gain on
revaluation and gain on disposal of properties (net of related tax),
revaluation gain on investment property relating to associates and the related
tax thereon
EPRA net reinstatement value is the net asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements and derivatives and
real estate transfer tax presented in the Valuation Certificate, including the
amounts of the above related to the investment in associates
EPRA net tangible assets is the net asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements (just for the part of
the portfolio that the Company intends to hold should be excluded) and
derivatives and intangible assets as per the note reference in the unaudited
condensed 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 the fair value of fixed interest
rate debt, including the amounts of the above related to the investment in
associates
EPRA net initial yield is the annualised rent roll based on the cash rents passing at reporting date,
less non-recoverable property operating expenses, divided by the market value
of the property, increased with (estimated) purchasers' costs
EPRA net yield is the net operating income generated by a property expressed as a percentage
of its value plus purchase costs
ERV is the estimated rental value which is the annualised rental income at 100%
occupancy
Funds from operations is adjusted profit before tax adjusted for depreciation and amortisation
(excluding depreciation relating to IFRS 16), amortisation of financing fees,
net foreign exchange differences, 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, service charge and other income generated from investment and
managed properties less directly attributable costs
Net yield is the net operating income generated by a property expressed as a percentage
of its value
Occupancy is the percentage of total lettable space occupied as at reporting date
Operating cash flow on investment (geared) is an estimate of the rate of return based on operating cash flows and taking
into consideration debt
Operating cash flow on investment (ungeared) is an estimate of the rate of return based on operating cash flows
Operating profit is the net operating income adjusted for gain on revaluation of investment
properties, gains/losses on disposal of properties, recoveries from prior
disposals of subsidiaries, administrative expenses and share of profit of
associates
Rate for the German portfolio is rental income per sqm expressed on a monthly basis
as at a specific reporting date
for the UK portfolio is rental income (includes estimated service charge
element) per sqm expressed on a monthly basis as at a specific reporting date
in Euro
for the UK portfolio is rental income (includes estimated service charge
element) per sq ft expressed on an annual basis as at a specific reporting
date in GBP
Senior Management Team as set out on page 70 of the Group's Annual Report and Accounts 2022
Total debt is the aggregate amount of the interest-bearing loans and borrowings
Total shareholder accounting return is the return obtained by a shareholder calculated by combining both movements
in adjusted NAV per share and dividends paid
Total return is the return for a set period of time combining valuation movement and income
generated
Ungeared IRR is an estimate of the rate of return
Weighted average cost of debt is the weighted effective rate of interest of loan facilities expressed as a
percentage
Weighted average debt expiry is the weighted average time to repayment of loan facilities expressed in
years
Corporate directory
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Registered office
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
Registered number
Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended,
under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Financial PR
FTI Consulting LLP
200 Aldersgate Street
London EC1A 4HD
United Kingdom
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditor
Ernst & Young LLP
PO Box 9, Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4AF
United Kingdom
Guernsey solicitors
Carey Olsen (Guernsey) LLP
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Channel Islands
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. END IR FFFFILTLIFIFRecent news on Sirius Real Estate
See all newsREG - Sirius Real Estate - Trading Update
AnnouncementREG - Sirius Real Estate - Sirius completes over EUR 100m of acquisitions
AnnouncementREG - Sirius Real Estate - Sirius expands U.K. portfolio with acquisition
AnnouncementREG - Sirius Real Estate - Holding(s) in Company
AnnouncementREG - Sirius Real Estate - Director/PDMR Shareholding
Announcement