REG - Sirius Real Estate - Results for the year ended 31 March 2023
05/06/2023 07:00
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RNS Number : 6098B Sirius Real Estate Limited 05 June 2023
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
5 June 2023
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius", the "Group" or the "Company")
Results for the year ended 31 March 2023
Sirius grows FFO growth to exceed €100 million FFO ambition and supports 29%
dividend increase
-Record like-for-like rental growth drives 9th consecutive year of dividend
increase-
Sirius Real Estate, the leading owner and operator of branded business and
industrial parks providing conventional space and flexible workspace in
Germany and the UK, announces its consolidated financial results for the year
to 31 March 2023.
Operating platform continues to drive rental and FFO growth
· 36.9% increase in Funds from Operations ("FFO") to €102.1 million
(2022: €74.6 million), exceeding five-year €100 million target set in 2018
· 7.7%* increase in Group annualised like-for-like rent roll to
€175.9* million (2022: €163.3* million) driven by continued strong
occupier demand in Germany and the UK
· 24.5% increase in adjusted profit before tax to €96.0 million
(2022: €77.1 million). Profit before tax decreased 48.5% to €87.0 million
(2022: €168.9 million) primarily as a result of €7.7 million valuation
deficit in 2023 compared to a €140.9 million surplus in the previous year.
· 28.9% increase in FFO per share to 8.74c (2022: 6.78c)
· 17.2% increase of EPRA EPS to 7.55c (2022: 6.44c)
Strong operational performance supporting 28.8% increase in dividend and
strong total return
· 25.7% increase in H2 dividend to 2.98c per share (2022: 2.37c per
share), amounting to a 28.8% uplift in the total dividend for the financial
year to 5.68c (2022: 4.41c), maintaining the same pay-out ratio of 65% of FFO
Income driven valuation gains
· 1.1% increase in investment property book value** to €2,123.0
million (2022: €2,100.1 million) as a result of strong income growth and
investment offsetting yield expansion
· Gross yield of 7.3% (2022: 6.9%) in Germany and 9.3% net yield
(2022: 8.0%) in the UK
· EPRA NTA per share increasing by 0.8% to 108.11c (2022: 107.28c)
demonstrating the resilience of the portfolio
· Adjusted NAV per share increased 0.6% to 109.21c (2022: 108.51)
€90 million of asset recycling, with disposals achieved at 25% combined
aggregate premium to book value
· €44.6 million of acquisitions with annualised NOI of €1.6
million and 54% occupancy completed across three new sites in Germany
· €45.8 million of disposals with annualised NOI of €1.8 million
and limited further growth opportunity completed across six transactions
(including the sale of two non-income producing land parcels in Germany),
achieving a combined 25% aggregate premium to the last book value prior to
each sale
Strong balance sheet with only c. 5% of total debt expiring within next 3
years
· Total cash balance of €124.3 million, of which €99.2 million of
cash in is unrestricted, providing capacity for further acquisitions and
investment (2022: €151.0 million total cash of which €127.3 million
unrestricted)
· 41.6% net LTV (March 2022: 41.6%) and Net Debt to EBITDA of 7.7x
· 95% of total Group debt (€975.1 million) at fixed interest rates
for a minimum of 3.25 years
· €170.0 million facility with Berlin Hyp AG and €58.3 million
Deutsche Pfandbriefbank facility have been refinanced (the latter post period
end) to 2030 extending the Group weighted debt expiry to 5.0 years and
increase the weighted cost of debt to 2.1% (from 1.4% at 31 March 2022)
· €1.6 billion of unencumbered assets (2022: €1.6 billion)
Outlook
· The new financial year has started well, driven by continued strong
occupier demand in both markets and the Group continues to trade in line with
market expectations
· In Germany, stable occupancy rates and the easing of energy price
pressures continue to offset wider macro-economic concerns
· Sirius continues to assess further growth options in both Germany and
the U.K. on an opportunistic basis, including recycling of mature assets and
reinvesting in value-add opportunities
· Organic growth opportunities remain strong, particularly with further
investment into the portfolio as well as taking advantage of the high
inflationary environment
Commenting on the results, Andrew Coombs, Chief Executive Officer of Sirius
Real Estate, said: "Sirius has delivered another positive set of annual
results, with sizeable rental growth underpinned by continued occupier demand
for our high-quality and affordable products in both Germany and the UK. This
is now the ninth consecutive year of like-for-like rental growth in excess of
5% in the year. This strong operational performance enabled us to deliver a
significant increase to the annual dividend, which rose 29%, and to surpass
our €100 million FFO ambition, with a 37% increase over the prior year to
€102.1 million. The Company also recycled €90 million of assets over the
past twelve months, including six disposals achieved at a 25% combined
aggregate premium to book value. We will continue to pursue an opportunistic
asset recycling programme where we see opportunities to crystalise returns and
drive value."
"Looking ahead, our outlook remains positive: our balance sheet is strong,
with cash reserves of €124 million and around 95% of the Group's debt
secured at fixed interest rates for at least the next three years, and we
continue to trade in line with market expectations. While we remain alert to
the potential impact of ongoing global macro-economic uncertainty, Sirius
remains well placed to continue to deliver attractive returns for
shareholders."
Notes:
*Group rent roll and rental income KPI's have been translated utilising a
constant foreign currency exchange rate of GBP:EUR 1.1374, being the closing
exchange rate as at 31 March 2023.
** Including leased investment properties
WEBCAST
There will be an in-person presentation for analysts/investors at 08:30 BST
(09.30 CET/ SAST) today, hosted by Andrew Coombs, Chief Executive Officer, and
Alistair Marks, Chief Investment Officer and Interim Chief Financial Officer,
at Peel Hunt's offices (100 Liverpool Street, London, EC2M 2AT).
There will also be a live webcast available, which can be accessed via the
below link:
Webcast link: https://stream.brrmedia.co.uk/broadcast/642c14c009685ed988693297
(https://stream.brrmedia.co.uk/broadcast/642c14c009685ed988693297)
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 / Sebastian Duran de Huerta
+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 2023, the Group's portfolio comprised 140 assets let to 9,201 tenants
with a total book value of over €2.1 billion, generating a total annualised
rent roll of €178.3 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 nine consecutive years.
For more information, please visit: www.sirius-real-estate.com
(http://www.sirius-real-estate.com/)
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
(https://www.linkedin.com/company/siriusrealestate/)
Follow us on Twitter at @SiriusRE
LEI: 213800NURUF5W8QSK566
JSE Sponsor: PSG Capital
Chairman's Statement
Delivering on our ambition
I am pleased to be writing this as part of my fifth Annual Report as Chairman,
and doubly pleased to be able to share another year of strong financial and
operational performance despite a backdrop of continuing macroeconomic and
geopolitical volatility.
Sirius has continued to execute on its strategy, which remains focused on the
acquisition and management of business parks in Germany and the UK that have
attractive yields, value-add potential or both. We use our operating platform
to transform these parks into higher quality assets through investment and
intensive asset management, an approach which has paid dividends as it has
enabled us to work with customers through this present inflationary
environment.
The Group continues to deliver on its ambition by capturing rent roll growth
in both Germany and the United Kingdom whilst maintaining a robust balance
sheet. The Board has authorised a dividend of 2.98c per share for the second
half of the financial year, representing 65% of FFO, and a 25.7% increase on
the 2.37c per share dividend for the equivalent period in the prior year. This
brings the total dividend for the year to 5.68c, an increase of 28.8% on the
4.41c dividend for the year ended 31 March 2022.
Our sustainability agenda
We are proud of the progress we are making on our work to build a sustainable
future, and we recognise the significant challenges that our sector and
portfolio face in the coming years. These challenges remain a key focus in
Board discussions and in recognition of the importance of this work, our Chief
Executive Officer, Andrew Coombs, continues to chair the Sirius Real Estate
Sustainability and Ethics Committee.
Chief Marketing and Impact Officer Kremena Wissel, a long-standing member of
the Sirius leadership team, has overall responsibility for leading our
sustainability initiatives as well as the broader ESG agenda within the
operating companies. This year we are establishing a dedicated internal ESG
team, reporting to Kremena, and we look forward to welcoming new colleagues
who will further strengthen and accelerate our progress in this space.
Board changes
In March, we announced the appointment of Chris Bowman as Chief Financial
Officer and we look forward to welcoming him to both the business and the
Board of Sirius Real Estate in August 2023. Chris brings nearly 25 years'
accounting, finance and capital markets experience, and he is extremely well
qualified to oversee the continued financial management of the Group.
Chris' arrival allows Alistair Marks, our interim Chief Financial Officer, to
resume his focus on his role as Chief Investment Officer, which he has held
since January 2021. Alistair will step down from the Sirius Board at this
year's AGM in July and I'd like to thank him for returning to his former Chief
Financial Officer role allowing us to undertake a thorough search for the best
permanent candidate, and for his continued valuable contribution to the Group.
Our leadership team
A key strength of the business continues to be the long-term commitment of our
senior leadership team. Chief Executive Officer Andrew Coombs has been with
the business for more than ten years and has recently restated his commitment
to see through a number of our sustainability and growth ambitions to 2030.
Additionally, a significant number of the executive leadership team have
accompanied Andrew on this journey, from rescuing and turning Sirius around in
2010 to the successful multi-geography business it is today. Andrew is
supported by a core group of long-standing and committed leaders throughout
the business, including Kremena Wissel, Rüdiger Swoboda, Alistair Marks and
Craig Hoskins, all of whom have been with Sirius for more than a decade as
well as Tariq Khader, Mo Jiwaji, Anthony Payne and Vince Scammell in the UK,
all of whom and remain dedicated to driving future growth.
Of course, these individuals are complemented by experienced experts who are
more recent joiners to the business - adding capabilities in areas ranging
from asset management to ESG and more, including our BizSpace leadership team
in the UK.
Looking ahead
There are a number of headwinds on the horizon that will challenge the Sirius
business model in the coming years, most notably the higher interest rate
environment, broader geopolitical uncertainty, and cost-of-living challenges
in both the UK and Germany. We remain alert in assessing these risks, and the
impact they will have on our business, and take confidence from our strong
track record of adapting and thriving in the face of other significant
external challenges in recent years.
Overall, we are confident that the strength of our balance sheet, our
experienced management team and our long-term strategic view will enable our
business to continue its growth journey in the years ahead. Sirius is well run
and adaptive and continues to be a highly investible proposition.
Thank you
On behalf of the Board, I would like to express my gratitude to everyone
across Sirius for their contributions to our successes in this financial year.
I look forward to the coming financial year with confidence in our team, our
business model and our ambition as we build on our strong foundations.
Daniel Kitchen
Chairman
2 June 2023
"We are confident that the strength of our balance sheet, our experienced
management team and our long-term strategic view will enable our business to
continue its growth journey in the years ahead."
Asset management review - Group highlights
Key highlights:
Metric 31 March 2023 31 March 2022 Variance € Variance %
Total annualised rent roll* (€ million) 178.3 165.0 13.3 8.1
Like-for-like annualised rent roll* (€ million) 175.9 163.3 12.6 7.7
Average rate (€) per sqm* 8.11 7.39 0.72 9.7
Average rate (€) per sqm like for like* 8.10 7.40 0.70 9.5
Total occupancy (%) 83.9 85.3 - (1.6)
Like for like occupancy (%) 84.5 85.6 - (1.3)
Cash in bank (€ million) 99.2 127.3 (28.1) (22.1)
Cash collection (%) 98.6 98.4 - 0.2
* The Company has chosen to disclose certain Group rental income figures
utilising a constant foreign currency exchange rate of GBP:EUR 1.1374, being
the closing exchange rate as at 31 March 2023.
Introduction
The last financial year has been one of a changing environment and uncertainty
around the European commercial real estate market, which is why the Company
has decided to concentrate on what it has rather than continue to grow
acquisitively as it has over the last years. Sirius' management has always
indicated that the Company's business model works well in both good and bad
times and now is the opportunity to show that. Its ability to provide a mix
of conventional and flexible space allows it to adapt to a changing
environment and continue to grow organically when others in the market face
difficulty.
The focus over the last twelve months has been to continue the Group's capex
investment into its vacant space with the aim of continuing to increase
occupancy and rate achieved per lettable sqm as well as to replenish this
opportunity within its portfolio through selective asset recycling. Success
has been achieved on all fronts with substantial like-for-like rental income
increases in both the UK and Germany along with some excellent recycling of
equity from mature or non-core assets with limited growth opportunity into
assets with substantial value-add and income growth opportunity which can be
realised over the next few years. As such, the Company has seen record
like-for-like rental growth but the total shareholder returns, including NAV
growth, seen in the last financial year have not reached similar hights.
Nevertheless, the Company has a solid foundation to continue to provide
excellent risk-adjusted returns for its stakeholders over the next few
potentially turbulent years.
Operational platform continues to capture rental growth
Despite the current economic environment, the Company continues to see strong
demand for the range of conventional and flexible spaces it offers both in the
UK and in Germany. Across both Germany and the UK, the Company was able to
sign 2,737 new deals, occupying 203,263 sqm and providing new annual
contractual revenue of €28.0* million.
As such, like-for-like annualised rent roll increased by 7.3% in Germany and
8.7% in the UK, which blends to 7.7*% at Group level. This represents the
ninth consecutive year of like-for-like rent roll growth in excess of 5%.
These improvements were driven by an 8.1% and 14.8% increase in the
like-for-like average rental rate in Germany and the UK respectively. However,
the Group's total occupancy was lower at 83.9% (31 March 2022: 85.3%),
reflecting a slight drop in like-for-like occupancy due to the focus on price
in both Germany and the UK as well as some recycling of mature assets into
value-add assets with more vacancy and hence opportunity. The strong demand
that Sirius is able to generate for its offerings allows the Company to focus
on capturing inflationary increases as well as reversion within its existing
tenant base. Achieving the largest like-for-like rental growth in the
Company's history whilst also increasing the opportunity within its vacancy
puts Sirius in an excellent position to continue this growth over the next few
years without the need for substantial acquisitive growth.
€178.3m
total annualised rent roll
€8.11 per sqm
average rate
98.6%
cash collection rate
Asset management review - Germany
Key highlights:
Metric 31 March 2023 31 March 2022 Variance Variance %
Total annualised rent roll (€ million) 123.1 113.7 9.4 8.3
Like-for-like annualised rent roll (€ million) 120.7 112.5 8.2 7.3
Average rate (€) per sqm 6.86 6.31 0.55 8.7
Average rate (€) per sqm like for like 6.83 6.32 0.51 8.1
Total occupancy (%) 83.4 84.2 - (1.0)
Like for like occupancy (%) 84.0 84.5 - (0.6)
Cash collection (%) 98.4 98.4 - -
German market overview
As the German economy recovered from the effects of the Covid-19 pandemic,
market uncertainty increased due to the escalation of the Ukraine war and the
resulting energy and cost of living crisis. The impacts of these were softened
by initiatives of the German Government such as the "Energiepreisbremse" where
the consumers were sheltered from increasing costs up to 80% of the previous
year's consumption as well as other initiatives such as not being required to
pay for energy consumption for the month of December. These savings, which are
to be passed onto the consumer, dampened some of the negative impact of the
inflationary pressures faced by companies operating within the German economy.
Nevertheless, this has resulted in a slow-down in the German economy where
only 1.8% GDP growth was recorded in 2022 compared to 2.7% in 2021. The
increase in prices, coupled with dampening foreign demand and supply chain
bottlenecks, has created uncertainty, which when combined with higher costs of
borrowing has resulted in decisions for take-up of larger industrial,
logistics and in particular office spaces being delayed. Conversely the demand
for flexible and smaller spaces has been increasing which is an area in which
Sirius can take advantage. Despite these challenges and in light of the supply
chain bottlenecks, the Company has still managed to let some larger storage
spaces in the year. Overall, however the occupier market has been more
challenging over the last year than it was prior to the Covid-19 pandemic.
The Company has been able to reduce the impact of higher energy prices on its
tenants through some fixed-price contracts it put in place before the large
increases came into force. This, coupled with the competitive rental rates
that Sirius offers its tenants, positions the Company well to continue to
support its tenant base and grow its rental income for many years to come. The
Company continued to adopt a highly dynamic and flexible approach to its
marketing activities with several initiatives launched based on data generated
from detailed analysis of online search patterns and take advantage of the
increase in demand for storage and flexible office space. Flexibility and
competitive pricing continued to be key factors in decision making.
Accordingly, the Company generated an increased number of enquiries compared
with the prior year which resulted in an increase in the volume of sales by
sqm.
€123.1m
total annualised rent roll
€6.86 per sqm
average rate
98.4%
cash collection rate
Lettings and rental growth
The German portfolio recorded a like-for-like increase in its annualised rent
roll of 7.3% to €120.7 million (31 March 2022: €112.5 million) whilst the
total annualised rent roll increased in the year end by €9.4 million to
€123.1 million (31 March 2022: €113.7 million). Of this growth €8.2
million related to organic growth, €1.2 million was lost from disposals and
€2.4 million represented the impact from acquisitions.
The €8.2 million organic growth was made up of €6.3 million coming from
uplifts from existing tenants, either through contractual lease indexation or
increases upon renewal, as well as €1.9 million from the net of move-ins
over move-outs. The latter can be further broken down into move-outs of
164,562 sqm that were generating €14.7 million of annualised rent roll at an
average rate of €7.47 per sqm being offset by move-ins of 154,110 sqm
generating €16.6 million of annualised rent roll at an average rate of
€8.98 per sqm. The combination of the above has resulted in like-for-like
rate per sqm increasing by 8.1% to €6.83 (31 March 2022: €6.32)
demonstrating the ability of the Company to realise the benefits of the
investments into its portfolio, even in challenging markets.
Like-for-like occupancy in Germany has decreased by 0.5% to 84.0% (31 March
2022: 84.5%) due to some large known move-outs in the first half of the
financial year. The Company has nevertheless made further progress in
investing in its sub-optimal vacant space through its capex investment
programme, so the space available to let has increased significantly
throughout the year. Additionally, the acquisitions made during the year
resulted in a further 18,277 sqm of vacant space, with upgrade potential,
being added to this opportunity. Consequently, Sirius has been able to grow
like-for-like annualised rent roll by 7.3% in the year whilst further
increasing the opportunity to add value and grow income from its vacancy,
especially through Sirius' well documented capex investment programme which is
described in more detail later in this section.
The movement in annualised rent roll is illustrated in the table below:
€m
Annualised rent roll 31 March 2022 113.7
Move-outs (14.7)
Move-ins 16.6
Contracted uplifts 6.3
Disposals (1.2)
Acquisitions 2.4
Annualised rent roll 31 March 2023 123.1
The key to another excellent year of organic rental growth, despite a more
challenging market, is the Company's ability to generate so many enquiries for
its vacant space. This is because most of the enquiries Sirius receives are
generated through the Company's in-house marketing platform which is able to
adapt to changing markets and always attract a substantial amount of the
demand towards Sirius' offerings. Total enquiries for the year were 15,412
compared to 16,180 enquiries generated in the period ended 31 March 2022,
which, considering the market conditions, was another strong performance.
However, whilst generating leads is important, the ability to convert these
into new lettings is paramount. The Sirius operating platform was able to
convert these enquiries at a rate of 12% (31 March 2022: 13%) which is
indicative of the quality of lead Sirius is able to generate as well as the
procedures it has in place to make the sale. As such, a total of 164,184 sqm
of space was let (31 March 2022: 162,102 sqm) contributing €17.1 million (31
March 2022: €15.0 million) to the annual rent roll at an average rate of
€8.68 per sqm (31 March 2022: €7.72 per sqm). This strong lettings
performance has more than offset the large move-outs mentioned above and, when
coupled with the Company's ability to be able to take advantage of the high
inflationary environment and the improvements it is making to its properties,
means that Sirius has had another strong year of organic growth and is well
positioned to take advantage of further growth over the near term.
Despite those large move-outs, overall tenant retention in the period was
encouraging with a 75% renewal rate by sqm in the period being successfully
extended (31 March 2022: 75%). Overall, the continued positive performance in
marketing, lettings and renewals provides a clear demonstration of the ability
of the Company to grow against the backdrop of rapidly changing market
dynamics, which included the Covid-19 pandemic, the war in Ukraine, the energy
crisis in Germany and resulting inflationary pressures.
Cash collection
The Company continued its trend of strong cash collection performance in the
period. Sirius is very focused on cash collection and the advantage of its
substantial operating platform is very evident here. The experienced cash
collection team, combined with the on-site staff who have established strong
relationships with our top tenants, has been key to keeping cash collection
rates steady at 98.4% (31 March 2022: 98.4%), even though total billings (net
of VAT) increased by 12.0% to €182.6 million from €163.0 million in 31
March 2022. This demonstrates the resilience of Sirius' tenant base and
strength of the Company's cash collection initiatives.
As at year end uncollected debt amounted to €2.9 million (31 March 2022: 2.6
million) which mainly related to recently billed service charge and repair and
maintenance balancing for prior years. The outstanding rent and service
charge prepayments were €5.1 million and €1.3 million respectively. The
Group has issued 48 deferred payment plans (31 March 2022: 10 deferred payment
plans) amounting to €0.3 million (31 March 2022: €0.6 million) and
immaterial write offs in the period (31 March 2022: €0.01 million). Whilst
the number of deferred payment plans has increased, the overall value has
decreased. The Company expects to collect most of the outstanding debt for the
period over the next twelve months through its regular debt collection
activities.
Asset recycling
Given the uncertainty around property values and occupier demand on the back
of interest rate increases, changes in office working patterns and ESG, the
Company has decided to hold back on substantial acquisitive growth and focus
on selective asset recycling whilst retaining strong cash reserves to allow
the Company to strike when new opportunities arise. Additionally asset
recycling remains an important factor in proving values and replenishing the
opportunity from vacancy which is realised through the Group's capex
investment programme. The Company was able to complete over €90 million in
deals in the period.
A summary of the acquisitions and disposals that completed or were notarised
in the year is detailed in the table below:
Acquisitions
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 II Oct-22 3.9 5,648 0.2 - 54% 5.1%
Potsdam Villa May-22 0.9 239 - - 0% 0%
Total 44.6 40,197 2.3 1.6 54% 5.2%
* Includes purchaser costs.]
A summary of the opportunities and characteristics of each asset acquired in
the period is detailed below.
• The Düsseldorf asset was purchased 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 sufficient 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.
• Dreieich 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 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.
• The final 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 marketing and sales capabilities within the operating platform are part of
several asset management disciplines that provide the Company with a
significant competitive advantage over other owners of light industrial and
business park assets in Germany. This allows Sirius to be more flexible with
how it configures and offers its vacant space which should result in the
Company being able to more easily fill up and transform these newly acquired
sites and hence make the high returns at the asset level which underpins the
Company's significant organic growth it generates each year.
Disposals
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% 9.4%
Heiligenhaus Land (3,200 sqm) Sep-22 1.0 - - - - -
Camberwell (UK) Jul-22 18.8 3,224 0.4 0.3 91% 2.1%
Ipswich (UK) Dec-22 3.4 7,616 - (0.2) - -
Wuppertal** Apr-23 8.8 15,006 0.7 0.7 79% 8.0%
Dresden Land Apr-23 - - - - - -
(413 sqm)**
Total 45.8 57,916 2.4 1.8 64% 5.2%
* Calculated on net purchase price.
** Asset held for sale, completed 1 April 2022.
Over the last twelve months, the Group sold six assets (including the sale of
two non-income producing land parcels in Germany) for a total sales price of
€45.8 million compared with a book value of €36.7 million, representing a
25% aggregate premium to the last book value prior to each sale. These
disposals of mature and non-core assets at or above book value demonstrate the
Company's ability to recycle its assets even in uncertain market conditions.
German capex investment programmes
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 has also yielded significant improvements in service charge cost recovery
and therefore further increased net operating income. The programme started in
2015 and to date 428,037 sqm of space has been fully transformed for an
investment of €64.1 million. As at 31 March 2023, this space was generating
€27.1 million in annualised rent roll (at 73% 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 eight years.
In addition to the space that has been completed and let or is currently being
marketed, a total of approximately 40,920 sqm of space is either in progress
of being transformed or is awaiting approval to commence transformation. A
further €10.5 million is expected to be invested into this space on top of
the €1.8 million already spent, and, based on achieving budgeted occupancy,
is expected to generate incremental annualised rent roll in the region of
€3.8 million.
The details of the capex investment programme on this low-quality vacant space
is detailed below:
Combined capex programmes Sqm Investment Actual Annualised Annualised Occupancy Occupancy Rate Rate
budgeted spend rent roll * rent roll * budgeted achieved to per sqm per sqm
€m €m increase increase % March 2023 budgeted achieved to
budgeted achieved to % € March 2023
€m March 2023 €
€m
Completed 428,037 69.5 64.1 26.9 27.1 82% 73% 6.38 7.25
In progress 9,292 2.3 1.8 1.0 - 90% - 10.23 -
To commence in next financial year 31,628 10.0 - 2.8 - 84% 73% 8.90 -
Total 468,957 81.8 65.9 30.7 27.1 82% 73% 6.62 -
* See the Glossary section of the Annual Report and Accounts 2023.
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 31 March 2023, the Company has identified approximately
47,000 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 €6.8 million and, at current rates, is expected to generate
around €3.9 million in annualised rent roll when re-let. Upgrading this
vacated space allows the Company to enhance the reversionary potential of the
portfolio whilst significantly improving the quality, desirability and hence
value of not only the space that is invested into but the whole site.
The analysis below details the sub-optimal space and vacancy at 31 March 2023
and highlights the opportunity from developing this space.
Vacancy analysis - March 2023
Total space (sqm) 1,792,670
Occupied space (sqm) 1,494,727
Vacant space (sqm) 297,943
Occupancy 83%
% of total Sqm Capex ERV *
space investment (post investment)
€m
Structural vacancy 2% 40,024 - -
Capex investment programme 2% 38,891 (10.5) 3.8
Recently vacated space 3% 47,155 (6.8) 3.9
Total space subject to investment 5% 86,046 (17.3) 7.7
Lettable vacancy:
Smartspace vacancy 2% 38,635 - 4.4
Other vacancy 7% 133,238 (2.1) 9.4
Total lettable space 9% 171,873 (2.1) 13.8
Total vacancy 17% 297,943 (19.4) 21.5
* See the Glossary section of the Annual Report and Accounts 2023.
The German portfolio's headline 83% occupancy rate means that in total 297,943
sqm of space is vacant as at 31 March 2023. When excluding the vacancy which
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 90%.
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 also expected to contribute to the Company's annualised rent roll
growth going forward.
Whilst the Company will continue to look to asset recycling to replenish the
vacancy which is let up after transformation, the Company maintains a risk
adjusted strategy and expects to continue to hold a significant amount of core
mature assets in order to maintain a balanced portfolio that provides a
combination of stable, long-term financeable income with value-add assets with
growth potential.
Well-diversified income and tenant base
Against the backdrop of continued market disruption, be it geopolitical
conflict or a high inflationary environment, the importance of a
well-diversified tenant base and wide range of products is evident. Sirius'
portfolio includes production, storage and out of town office space that
caters to multiple uses and a range of sizes and types of tenants. The
Company's business model is underpinned by its tenant mix which provides
stability through its large long-term anchor tenants and opportunity through
the SME and flexible individual tenants.
The Group's large anchor tenants are typically multinational corporations
occupying production, storage and related office space whereas the SMEs and
individual tenants occupy space on both a conventional and a flexible basis
including space marketed under the Company's popular Smartspace brand which
provides tenants with a fixed cost and maximum flexibility. The Company's
largest single tenant contributes 2.1% of total annualised rent roll whilst
7.9% of its annualised rent roll comes from government tenants.
SMEs in Germany, the Mittelstand, are typically defined as companies with
revenues of up to €50.0 million and up to 500 employees. SME tenants remain
a key target group which the Company's internal operating platform has
demonstrated an ability to attract in significant volumes as evidenced through
the high number of enquiries that are generated each month, mainly through the
Company's own marketing channels. The wide range of tenants that the Sirius
marketing and sales team is able to attract is a key competitive advantage for
the Company and results in a significantly de-risked business model when
compared to other owners of multi-tenanted light industrial and business park
assets.
The table below illustrates the diverse nature of tenant mix within the Sirius
portfolio at the end of the reporting period:
No. of Occupied % of Annualised % of total Rate
tenants as at sqm occupied sqm rent roll * annualised per sqm
31 March 2023 €m rent roll * €
%
Top 50 anchor tenants(1) 50 668,734 45% 47.5 38% 5.91
Smartspace SME tenants(2) 2,868 70,113 5% 8.3 7% 9.92
Other SME tenants(3) 2,939 755,880 50% 67.3 55% 7.42
Total 5,857 1,494,727 100% 123.1 100% 6.86
(1) Mainly large national/international private and public tenants.
(2) Mainly small and medium-sized private and public tenants.
(3) Mainly small and medium-sized private and individual tenants.
* See the Glossary section of the Annual Report and Accounts 2023.
Smartspace and First Choice
Sirius' Smartspace products are designed with flexibility in mind, allowing
tenants to benefit from a fixed cost which continues to be desirable even in
challenging market conditions. The majority of Smartspace has been developed
from space that is either sub-optimal or considered to be structurally void by
most light industrial real estate operators. Following conversion, the area is
transformed into space that can be let at significantly higher rents than the
rest of the business park and, as a result, is highly accretive to both income
and value. The Company was able to add 11,006 sqm of Smartspace offering from
96,390 sqm in the prior year to 107,396 sqm which is an increase of more than
11%. Whilst this has reduced total Smartspace occupancy to 65% (31 March
2022: 73%), the Company has been able to capture rate increases across all of
its product lines which has more than offset this lower occupancy.
The most significant growth occurred in the Smartspace storage product. The
Company's market research through its marketing and sales platforms indicated
strong demand in this sector and Sirius was able to act accordingly to capture
some of this. The addition of 6,569 sqm of Smartspace storage helped grow this
product line's rental income contribution by €0.4 million.
Additionally a further 2,374 sqm of First Choice Office space and 4,661 sqm of
Smartspace Office space were created in the period which contributed to rental
growth of €0.1 million and €0.3 million respectively.
The total amount of Smartspace in the portfolio at the year end was 107,396
sqm (31 March 2022: 96,390 sqm), generating €8.4 million (31 March 2022:
€7.7 million) of annualised rent roll which equates to 6.8% of the Company's
total annualised rent roll. Average rate per sqm continued to increase by 7.5%
year on year, highlighting the premium pricing opportunity associated with
flexibility.
The table below illustrates the contribution of each of the Smartspace
products:
Smartspace product type Total sqm Occupied sqm Occupancy Annualised % of total Rate *
% rent roll * Smartspace per sqm
(excl. service annualised (excl. service
charge) rent roll * charge)
m€ % €
First Choice office 7,491 3,231 43% 0.9 11% 22.31
SMSP office 36,692 24,265 66% 3.0 36% 10.28
SMSP workbox 5,972 5,510 92% 0.5 6% 7.02
SMSP storage 54,386 35,942 66% 3.6 43% 8.35
SMSP container - - - 0.3 3% n/a
SMSP subtotal 104,541 68,948 66% 8.3 99% 9.93
SMSP FlexiLager 2,855 1,166 41% 0.1 1% 9.21
SMSP total 107,396 70,114 65% 8.4 100% 9.92
* See the Glossary section of the Annual Report and Accounts 2023.
Asset management review - UK
Key highlights:
Metric 31 March 2023 31 March 2022 Variance Variance %
Total annualised rent roll (£ million) 48.5 45.1 3.4 7.0
Like-for-like annualised rent roll (£ million) 48.5 44.7 3.8 8.5
Average rate (£) per sq ft 13.39 11.69 1.70 14.5
Average rate (£) per sq ft like for like 13.39 11.67 1.72 14.7
Total occupancy (%) 86.5% 90.5% - (4.6)
Like-for-like occupancy (%) 86.5% 90.5% - (4.6)
Cash collection (%) 99.3% 99.6% - (0.3)
Lettings and rental growth
The UK recorded a like-for-like increase in its annualised rent roll of 8.5%
to £48.5 million (31 March 2022: £44.7 million) equating to a 4.5% increase
in euro terms to €55.2 million (31 March 2022: €52.8 million) due to a
weakening British pound compared to the euro. The total annualised rent roll
increase in the year was £3.4 million (€3.9 million), with £3.9 million
(€4.4 million) organic growth offset by asset disposals totalling £0.6
million (€0.7 million).
Encouragingly, like-for-like average rate per sq ft increased by 14.7% to
£13.39 (31 March 2022: £11.67), equating to a 10.4% increase in euro terms
to €13.66 (31 March 2022: €12.37), reflecting management's ability to
capture rental growth in the current inflationary environment. In order to
capture rate increases in excess of inflation, we have been comfortable ceding
a small amount of occupancy in return for these higher rates and we believe
this positions us well as the economy begins to recover. Like-for-like
occupancy decreased to 86.5% from 90.5% as a result of the price led strategy
as well as a small number of known large leavers.
The increase in annualised rent roll over the period can be broken down into
move-outs of 1,084,070 sq ft (100,713 sqm) generating £17.7 million (€20.4
million) of annualised rent roll at an average rate of £16.29 per sq ft
(€16.92 per sqm) being offset by move-ins of 880,861 sq ft that were
generating £17.6 million (€20.3 million) of annualised rent roll at an
average rate of £19.94 per sq ft (€20.70 per sqm). Additionally, rental
uplifts on existing tenants added a further £4.0 million to the annualised
rent roll during the period. As mentioned above two assets were disposed of
during the period which accounted for a £0.5 million (€0.5 million)
reduction in annualised rent roll.
The movement in annualised rent roll is illustrated in the table below:
£m
Annualised rent roll 31 March 2022 45.1
Disposals (0.5)
Move-ins 17.6
Move-outs (17.7)
Uplifts on existing tenants 4.0
Annualised rent roll 31 March 2023 48.5
Despite a challenging market, driven by market uncertainty over inflation, the
UK operating platform generated a healthy number of enquiries for the year,
totalling 15,511 for the period ended 31 March 2023 (4.5 months to 31 March
2022: 6,647). In the period 963 deals were secured totalling 420,647 sq ft
(39,079 sqm) with an average deal per sqm of 437 sq ft (40 sqm). During the
second half of the year the Company averaged 97 deals per month compared to an
average of 63 deals per month in the first six months. The annual sales
conversion rate of 6.2% was an improvement on the 5.6% for the 4.5 months to
15 November 2021 reflecting the management's focus on improving the sales and
marketing functions within BizSpace.
Cash collection
Through a combination of its experienced cash collection team and the team's
active management of its tenant base, the cash collection rates remained
steady at 99.3% (4.5 months to 31 March 2022: 99.6%). The 99.3% cash
collection rate can analysed as total net of VAT billing amounting to £48.3
million, total uncollected debt at year end amounting to £0.3 million (€0.4
million) and £29,859 (€34,562) written off during the period. There are no
deferred payment plans in place and the Company expects to collect the
majority of the outstanding debt at year end through its regular debt
collection activities.
£48.5m
total annualised rent roll
£13.39 per sq. ft
average rate
99.3%
cash collection rate
Site Investment
BizSpace has historically invested in its sites in order to maintain and
upgrade its spaces which allows it to adapt to changes in tenant demand. In
the period under review the Company invested a total of £4.8 (€5.6) million
into its sites focused primarily on improving the condition of spaces to drive
occupancy and price. The Company expects to identify further opportunities to
invest into its assets in the new financial year whilst continuing to progress
its ESG-related investment in order to align itself with the wider Group.
Well-diversified income and tenant base
BizSpace's portfolio includes light industrial, studio, out of town office
space and storage that caters to multiple usages and a range of sizes and
types of tenants. As a result, the Company's business model is underpinned by
a well-diversified tenant base.
The Company's top 100 tenants, which are typically large corporates, account
for 24% of the annualised rent roll with the next 900 tenants accounting for
46% of annualised rent roll. The remaining 30% of annualised rent roll relates
to over 2,000 SME and micro-SME tenants which occupy 28% of the overall
estate.
The table below illustrates the diverse nature of tenant mix within the Sirius
portfolio at the end of the reporting period:
No. of Occupied % of Annualised % of total Rate
tenants as at Sq ft m occupied sq ft rent roll annualised per sq ft £
31 March 2022 £m rent roll
Top 100 tenants 100 0.9 25% 11.6 24% 12.90
Next 900 900 1.7 47% 22.2 46% 12.54
Remaining SME 2,344 1.0 28% 14.7 30% 15.43
Total 3,344 3.6 100% 48.5 100% 13.39
SMEs in the UK are typically defined as companies with revenues of up to
£50.0 million and up to 250 employees. The Company's internal operating
platform and product offering have a strong track record of attracting and
retaining customers in this segment of the market which is expected to
continue to grow as a result of structural trends impacting the UK market.
Financial review
€100 million FFO milestone achieved
"Sirius has achieved its €100 million funds from operations goal with
further organic growth as the Company continues its price driven strategy in
both Germany and the UK."
Alistair Marks
Interim Chief Financial Officer
Substantial FFO growth
The Company has reported in excess of €100 million in FFO for the first
time, a five year target that was set in FY18/19 when the FFO run rate was
below €50 million. Sirius recorded FFO of €102.1 million which
represents a 36.9% increase over the €74.6 million FFO reported last year.
Whilst a significant portion of this growth has come from the full year effect
of acquisitions that were made in the last financial year, including BizSpace,
Sirius has benefited from substantial organic growth and excellent asset
recycling despite the challenging markets which are continuing to be affected
by instability from the Ukraine conflict and the cost of living crisis in both
Germany and the UK. The main driver of organic growth was the 7.7%((1))
increase in like-for-like rent roll which increases to 8.1%((1)) rent roll
growth when incorporating the effect of asset recycling and taking the total
rent roll of the Group. This level of like-for-like rental growth was a record
for the Company and has mainly come from the Group's price driven strategy
which focuses on replacing rental contracts which are under-rented with those
closer to market rates whilst also capturing inflationary increases where it
can. This has resulted in a slight decline in the Group's total occupancy but
the rent growth numbers speak to the success of this strategy.
Trading performance and earnings
The Company has reported a profit before tax in the year ended 31 March 2023
of €87.0 million (31 March 2022: €168.9 million), representing a decrease
of 48.5% from the prior year. This reduction in profit is mainly due to the
FFO growth mentioned above being offset by a net valuation deficit of €7.7
million (€21.4 million valuation increase less €29.9 million capex) being
reported in the period whereas in the prior year a net valuation gain of
€140.9 million (€163.5 million valuation increase less €22.6 million
capex) was reported. The €27.5 million increase in FFO to €102.1 million
(31 March 2022: €74.6 million) included BizSpace contributing € 25.5
million, its first full year contribution to the Group (31 March 2022: €5.8
million). The organic growth within this FFO increase came mainly from the
6.4% and 7.7%((1)) increases in like-for-like annualised rental income
achieved in the March 2022 and March 2023 years respectively.
Both the German and UK businesses saw strong demand for their offerings which
translated to the excellent rental growth in the period as explained in more
detail in the Asset management section of this report. Additionally, Sirius
was able to achieve further improvements to its ancillary income streams which
have more than offset some increases in overhead costs due to inflation as
well as increasing the capacity of its management platform.
Further acquisitive growth was limited because the Company has decided to
pause its large-scale acquisitive growth plans in favour of selective asset
recycling due to the uncertainties that exist in the property investment
markets within which Sirius operates. As such, the Company can focus more on
its organic growth opportunities of which there remain plenty.
The split between the contribution from German operations and BizSpace for the
year ended 31 March 2023 is set out in the table below.
Germany UK Group
€m €m €m
NOI 116.1 37.3 153.4
FFO 75.4 26.7 102.1
Profit after tax 53.1 26.1 79.7
(1) The Company has chosen to disclose certain Group rental income figures
utilising a constant foreign currency exchange rate of GBP:EUR 1.1374, being
the closing exchange rate as at 31 March 2023.
On a per share basis, most of what was discussed above is reflected with only
a small number of new shares being issued in the period. The impact of
valuations stabilising resulted in a 49.4% decrease in basic EPS for the
period to 6.82c per share. Adjusted EPS, basic EPRA EPS and diluted EPRA EPS,
which exclude the impact of valuations described above, increased by
approximately 22.8%, 17.2% and 17.1% respectively reflecting the strong
operational performance in the year.
Earnings No. of shares 31 March 2023 Earnings No. of shares 31 March 2022 Change
€m cents per share €m cents per share %
Basic EPS 79.6 1,167,757,975 6.82 147.9 1,097,082,162 13.48 (49.4)
Diluted EPS 79.6 1,183,626,763 6.73 147.9 1,112,360,781 13.29 (49.4)
Adjusted EPS* 92.9 1,167,757,975 7.96 71.1 1,097,082,162 6.48 22.8
Basic EPRA EPS 88.2 1,167,757,975 7.55 70.7 1,097,082,162 6.44 17.2
Diluted EPRA EPS 88.2 1,183,626,763 7.45 70.7 1,112,360,781 6.36 17.1
* See note 12 and the Business analysis section of the Annual Report and
Accounts 2023.
Sirius converted the UK business into a UK Real Estate Investment Trust
("REIT") with effect from 1 April 2022, resulting in BizSpace no longer being
subject to UK corporation tax on income from its property rental business, as
well as on profits on disposals of assets.
Income
Total revenue reported in the period, which comprises rent, fee income
relating to Titanium, other ancillary income from investment properties, and
service charge income, increased from €210.2 million for the 31 March 2022
year to €270.1 million this year. The detail of the €59.9 million increase
in income is shown on the following table.
Year ended Year ended
31 March 2023 31 March 2022
Germany UK Total Germany UK Total
€m €m €m €m €m €m
Rental and other income from investment properties 125.5 33.3 158.8 108.7 15.3 124.0
Service charge income from investment properties 66.6 24.0 90.6 55.0 5.7 60.7
Rental and other income from managed properties 10.9 - 10.9 10.9 - 10.9
Service charge income from managed properties 9.8 - 9.8 14.6 - 14.6
Revenue 212.8 57.3 270.1 189.2 21.0 210.2
Annualised rent roll in Germany increased by 8.3% from €113.7 million to
€123.1 million with net acquisitions and organic growth contributing €2.4
million and €8.2 million respectively. BizSpace's annualised rent roll
increased 7.4%((1)) from €51.3((1)) million to €55.1((1)) million in the
period, with the impact of organic growth of €4.4 million being reduced by
disposals of €0.6 million. This is shown in more detail in the following
table:
Germany UK ((1)) Group
€m €m €m
Opening annualised rent roll 113.7 51.3 165.0
Acquisitions 2.4 - 2.4
Disposals (1.2) (0.6) (1.8)
Move-ins/outs 1.9 (0.1) 1.8
Uplifts 6.3 4.5 10.8
Closing annualised rent roll 123.1 55.1 178.2
Whilst the rental growth in the period was impressive, the fact that this was
achieved without reducing vacancy levels means that the opportunity that
remains within this vacancy for further organic growth over the next few years
has been preserved. The key to unlocking this in the most effective way is
through the continuation of Sirius' capex investment programmes combined with
a wide range of other intensive asset management initiatives. Additionally,
whilst inflation levels continue to be high, Sirius is able to boost its
organic growth numbers because of its ability to capture inflationary
increases within its contracted rents as well as when tenants renew and new
tenants are coming in.
Portfolio valuation - Group
The portfolio of owned assets was independently valued at €2,103.2 million
by Cushman & Wakefield LLP at 31 March 2023 (31 March 2022: €2,079.0
million), which converts to a book value of €2,123.0 million after the
adjustments in relation to lease incentives and inclusion of leased investment
property. A breakdown of the movement in owned and leased investment property,
excluding assets held for sale, is detailed in the table below.
German investment German investment UK investment UK investment Investment
property - owned property - leased property - owned property - leased property - total
€m €m €m €m €m
Investment properties at book value as at 31 March 2022* 1,623.2 12.1 451.8 13.0 2,100.1
Acquisitions arising from business combinations - - - - -
Additions relating to owned investment properties 44.6 - - - 44.6
Additions relating to leased investment properties - - - 1.4 1.4
Capex investment and capitalised broker fees 24.4 - 5.5 - 29.9
Reclassified as investment property held for sale (8.8) - - - (8.8)
Disposal - - (17.1) - (17.1)
Deficit on revaluation above capex investment and broker fees (2.0) - (5.7) - (7.7)
Deficit on revaluation relating to leased investment properties - (1.3) - (0.2) (1.5)
Adjustment in respect of lease incentives (0.6) - (0.6)
Currency effects - - (16.8) (0.5) (17.3)
Investment properties at book value as at 31 March 2023* 1,680.8 10.8 417.7 13.7 2,123.0
* Excluding assets held for sale.
The increase in value of the German portfolio of €57.6 million was made up
of €44.6 million of asset acquisitions, less €8.8 million of disposals,
plus a €22.4 million valuation increase on the existing portfolio and
finally a €0.6 million negative adjustment in respect of lease incentives.
The €22.4 million valuation increase was lower than the €24.4 million of
capex spent on that portfolio; hence, the net of these resulted in a €2.0
million deficit being booked through the Company's profit.
In the UK, the value of the BizSpace portfolio reduced by €34.1 million due
to €17.1 million of disposals partly offset by €1.4 million of additions*,
a valuation decrease of €0.2 million on the existing portfolio and a €17.3
million foreign currency reduction due to the weakening of GBP against the EUR
for the year. In addition to the €0.2 million valuation reduction, capex of
€5.5 million was invested into the UK portfolio resulting in a €5.7
million deficit being reported through the Company's profit.
* Sirius extended a lease on an asset in the UK resulting in an increase in
the carrying value of €1.4 million.
Portfolio valuation - Germany
The book value of the existing German portfolio that was owned for the full
period increased by €21.7 million or 1.3% from €1,623.2 million to
€1,644.8 million. This was driven by an increase in annualised rent roll of
€8.2 million in the year which more than compensated for a gross yield
expansion of approximately 40 bps. The assets that were acquired during the
year end were revalued at €44.4 million which is €0.2 million below the
total acquisition costs paid and 7.8% above the net purchase prices paid for
these properties, indicating that these assets were purchased well.
The German portfolio at 31 March 2023 comprises 70 assets with a book value of
€1,689.6 million generating €125.5 million of rental income and €109.8
million of net operating income based on an occupancy of 83.4%. This
represents an average gross yield of 7.3% (31 March 2022: 6.9%), which
translates to a net yield of 6.5% (31 March 2022: 6.2%) and an EPRA net yield
(including estimated purchaser costs) of 6.2% (31 March 2022: 5.9%).
Whilst yields have expanded within the German portfolio valuation by around 40
bps in the period to 7.3%, this still appears to be conservative when compared
to transactions that have completed over the last year in the industrial,
logistics and office sectors in Germany. The average capital value per sqm of
the portfolio of €912 (31 March 2022: €893) also remains below replacement
cost and, when considered with the level of vacancy that remains within the
portfolio, illustrates the excellent opportunity for further growth,
particularly from upgrading and letting up the sub-optimal vacant space
through the Company's capex investment programmes.
The acquisitions made over the last couple of years have replenished a lot of
the vacancy that was transformed and let up through Sirius' capex investment
programmes. As a result, at 31 March 2023, 65% of the German portfolio are
considered value-add assets which, with average occupancy of 79.3% and valued
at a gross yield of 7.6%, provide significant opportunity for further earnings
and value growth. The mature assets which make up about one-third of the
German portfolio have reached an occupancy level of 94.4% and, at a gross
yield of 6.7%, are valued at a yield that is 90 bps lower than the value-add
assets. As the transformation of the value-add assets continues, the yield gap
between the mature and value-add assets is expected to reduce. The full
details of the capex investment programmes are provided in the Asset
management review - Germany section of this report. The specifics of the
value-add and mature portfolios are detailed in the table below:
Annualised Book value NOI Capital Gross yield * Net yield * Vacant Rate psqm Occupancy
rent roll €m €m value % % space € * % *
€m €m/sqm * sqm *
Value-add assets** 83.0 1,091.3 72.7 812 7.6% 6.7% 270,454 6.68 79.3%
Mature assets 40.1 598.3 38.6 1,174 6.7% 6.4% 27,488 7.26 94.4%
Other - - (1.5) - - - - - -
Total 123.1 1,689.6 109.8 912 7.3% 6.5% 297,942 6.86 83.4%
* Expressed as averages.
** Including assets held for sale.
The reconciliation of book value to the independent Cushman & Wakefield
LLP valuation excluding assets held for sale is as follows:
31 March 2023 31 March 2022
€m €m
Investment properties at market value* 1,685.5 1,627.3
Adjustment in respect of lease incentives (4.7) (4.1)
Book value of investment properties* 1,680.8 1,623.2
* Excluding assets held for sale.
Portfolio valuation - UK
At 31 March 2023, the value of the UK portfolio was £367.2 million (€417.7
million) which was broadly flat compared to the £367.4 million (€434.3
million) valuation of this portfolio at 31 March 2022. The benefits of the
£3.8 million (8.7%) increase in annualised rent roll for this portfolio in
the period were more than offset by yield expansion of around 100 bps to 9.3%
(31 March 2022: 8.3%). Similar to the German portfolio, the EPRA net yield
(including estimated purchaser costs) of 8.7% (31 March 2022: 7.6%) looks
conservative compared to transactions seen in the market. On a euro basis the
reduction in value was €16.6 million which was higher than the £0.2 million
stated above due to the weakening of GBP against EUR.
The total portfolio valuation decreased by £15.0 million across the period to
£367.2 million (31 March 2022: £382.2 million), being the combination of the
£0.2 million valuation reduction as described above and the disposal of
Camberwell and Ipswich during the period.
The average capital value per sqm of the portfolio of £88 per sq ft (€1,072
per sqm) (31 March 2022: £88 per sq ft (€1,105 per sqm)) also remains below
replacement cost and further supports the sentiment that there remains
value-add potential within the portfolio.
Annualised Book value NOI Capital Gross yield Net yield Vacant Rate psqft Occupancy
rent roll £m £m value % % space £ %
£m £/sq ft sq ft
UK portfolio 48.5 367.2 34.0 88 13.2% 9.3% 567,899 13.39 86.5%
The UK does not have material lease incentives adjusting the investment
property values.
Net asset value
The valuation movements mentioned above along with a dividend pay-out ratio of
65% of FFO resulted in a slight increase in net asset value per share to
102.46c at 31 March 2023, an uplift of 0.4% from 102.04c as at 31 March 2022.
Similarly, the adjusted net asset value per share increased to 109.21c at 31
March 2023, an uplift of 0.6% from 108.51c as at 31 March 2022. In addition,
the Company paid out 5.07c per share of dividends during the financial year
which contributed to a total shareholder accounting return (adjusted NAV
growth plus dividends paid) of 5.3% (31 March 2022: 20.0%). The movement in
NAV per share is explained in the following table:
Cents per share
NAV per share as at 31 March 2022 102.04
Recurring profit after tax 7.96
Equity raise -
Deficit on revaluation (net of capex) (0.71)
Deferred tax charge (0.37)
Scrip and cash dividend paid (5.27)
Adjusting items(1) (1.19)
NAV per share at 31 March 2023 102.46
Deferred tax and derivatives 6.75
Adjusted NAV per share at 31 March 2023(2) 109.21
EPRA adjustments(3) (1.10)
EPRA NTA per share at 31 March 2023(2) 108.11
(1) Adjusting items includes non-recurring items including restructuring
costs, share of profit in associates, gains and losses on investments, and
foreign currency effects.
(2) See Annex of 2023 Annual accounts for further details.
(3) Adjusted for the potential impact of shares issued in relation to the
Company's long-term incentive programmes, intangible assets, provisions for
deferred tax and derivative financial instruments.
The EPRA NTA per share, which, like adjusted NAV per share, excludes the
provisions for deferred tax and fair value of derivative financial instruments
but also includes the potential impact of shares issued in relation to the
Company's long-term incentive programmes and excludes intangible assets, was
108.11c, an increase of 0.8% from 107.28c as at 31 March 2022.
Financing
In May 2023 the Company refinanced its €57.3 million Deutsche Pfandbriefbank
(PBB) loan facility, seven months in advance of it falling due on 31 December
2023. The new facility amounting to €58.3 million has a term of seven years
at a fixed interest rate of 4.25%. In addition to this early refinancing, in
August 2022 the Company secured a refinancing with Berlin Hyp AG, one year in
advance, of its €170 million facility due in October 2023, agreeing a new
7-year €170 million facility commencing on 1 November 2023 with a fixed
interest rate of 4.26%. When these facilities commence, the weighted average
cost of debt will increase from 1.4% to 2.1% and the weighted term of debt
will increase from 3.3 years to 5.0 years. Whilst Berlin Hyp and PBB
facilities are classified as a current liability due to their accounting
treatment, these do not have a negative impact on working capital as these
have been financed as new loans.
Of the €975.1 million of total debt, the Company has €49.3 million of debt
coming due in the next three years which is made up of three tranches of the
HSBC Schuldschein totalling €35 million and €14.3 million Saarbrücken
Sparkasse. Of this debt, €20 million of the HSBC Schuldschein is due in July
2023, which the Company is in negotiations with the current lender to
refinance ahead of expiry but has the ability to repay if required.
During December 2022 and January 2023 of the financial year, the Company
repaid two tranches of its HSBC Schuldschein amounting to €5 million and
€10 million respectively. The debt structure of the Company remains such
that 75% of its debt is unsecured (31 March 2022: 75%) allowing the Company to
maintain flexibility over its €1.6 billion of unencumbered assets.
Net LTV was 41.6% (31 March 2022: 41.6%) whilst interest cover at EBITDA level
was 8.6x as at 31 March 2023 (31 March 2022: 7.3x). All covenants were
complied with in full during the period. A summary of the movement in the
Group's debt is set out below:
Movement in debt
€m
Total debt as at 31 March 2022 995.6
Repayment of credit facility (15.0)
Scheduled amortisation (5.5)
Total debt as at 31 March 2023 975.1
Dividend
The Board has authorised a dividend in respect of the second half of the
financial year ended 31 March 2023 of 2.98c per share, representing a pay-out
of 65% of FFO and an increase of 25.7% on the equivalent dividend last year
which was also based on 65% of FFO. The total dividend in respect of the
financial year is 5.68c, an increase of 28.8% on the 4.41c total dividend paid
in respect of the financial year ended 31 March 2022.
The table below shows the dividends paid and pay-out ratios over the last five
years, demonstrating the excellent progression the Company has made in the
period as well as the ability of the Board to increase the dividend pay-out
ratio whilst the proceeds of asset disposals are invested.
First half dividend Second half Total dividend Blended
per share dividend per share pay-out ratio
cents per share cents % of FFO
cents
Year ended March 2019 1.63 1.73 3.36 70%
Year ended March 2020* 1.77 1.80 3.57 66%
Year ended March 2021 1.82 1.98 3.80 65%
Year ended March 2022 2.04 2.37 4.41 65%
Year ended March 2023 2.70 2.98 5.68 65%
* First half 67%, second half 65% of FFO.
Details of the dividend distribution and announcement are detailed in note 30
of the Annual Report and Accounts.
Summary
Despite continuing challenging market conditions, the year to 31 March 2023
demonstrated the resilience of the Sirius platform as it was able to achieve
its goal of €100 million of FFO. Organic growth was mainly achieved through
capturing rate increases via the Company's price driven strategy as well as
continuing improvements to the service charge cost recovery. Having a full
year impact of the deals done in the prior year obviously helped but plenty
remains in the tank as far as further FFO and dividend growth is concerned
over the next few years.
In addition, the Company has significantly improved the strength of its
balance sheet over the last few years which will allow it to focus on this
growth and not have to worry about yield expansion, debt refinancing and cash
flow like many of the other property companies operating throughout the world.
Regardless of what transpires in the markets that Sirius operates in, from
increasing interest rates and high inflation, to further geopolitical issues,
supply chain problems and volatile energy prices and investment markets,
Sirius is in an excellent position to navigate through and continue to grow.
Should substantial acquisition opportunities arise then the Company is also
well positioned to take advantage.
The Company's strong financial profile, along with its proven internal
operating platform, means the Company is fully capable of adapting to changing
market conditions. With acquisition firepower available, further vacancy to
develop and reversion potential to capture, as well as a defensively
positioned portfolio, the Company is well set to meet the challenges ahead and
looks forward to continuing to deliver attractive and sustainable returns for
shareholders in the future.
Alistair Marks
Chief Financial Officer
2 June 2023
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors confirm that, to the best of their knowledge the preliminary
consolidated financial statements have been prepared in accordance with
international financial reporting standards, and give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Group
and that this announcement includes a fair summary of the development and
performance of the business and the position of the Group. After making
enquiries, the directors considered it appropriate to adopt the going concern
basis in preparing the financial statements. The names and functions of the
Company's directors are listed on the Company's website.
Daniel Kitchen
Chairman
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group are included on pages
74 to 81 of the Group's Annual Report and Accounts 2023 available on the
website at: www.sirius-real-estate.com
Consolidated INCOME statement
for the year ended 31 March 2023
Notes Year ended Year ended
31 March 2023 31 March 2022
€m €m
Revenue 6 270.1 210.2
Direct costs 7 (116.7) (87.7)
Net operating income 153.4 122.5
(Loss)/gain on revaluation of investment properties 14 (9.8) 140.9
Gain/(loss) on disposal of properties 4.7 (0.6)
Recoveries from prior disposals of subsidiaries - 0.1
Movement in expected credit loss provision((1)) 7 (1.0) (2.3)
Administrative expenses((1)) 7 (48.3) (38.4)
Goodwill impairment 17 - (40.9)
Share of profit of associates 20 2.6 6.9
Operating profit 101.6 188.2
Finance income 10 2.8 3.0
Finance expense 10 (18.3) (23.3)
Change in fair value of derivative financial instruments 10 0.9 1.0
Net finance costs (14.6) (19.3)
Profit before tax 87.0 168.9
Taxation 11 (7.3) (20.9)
Profit for the year after tax 79.7 148.0
Profit attributable to:
Owners of the Company 79.6 147.9
Non-controlling interest 0.1 0.1
79.7 148.0
Earnings per share
Basic earnings per share 12 6.82c 13.48c
Diluted earnings per share 12 6.73c 13.29c
(1) To conform to the current year presentation, the movement in expected
credit loss provision has been shown as a separate line and this is a
reallocation from administrative expenses for the year ended 31 March 2022.
All operations of the Group have been classified as continuing.
Consolidated statement of comprehensive income
for the year ended 31 March 2023
Notes Year ended Year ended
31 March 2023 31 March 2022
€m €m
Profit for the year after tax 79.7 148.0
Other comprehensive loss that may be reclassified to profit or loss in
subsequent periods
Foreign currency translation reserve 28 (17.2) (1.7)
Other comprehensive loss after tax that may be reclassified to profit or loss (17.2) (1.7)
in subsequent periods
Other comprehensive loss for the year after tax (17.2) (1.7)
Total comprehensive income for the year after tax 62.5 146.3
Total comprehensive income attributable to:
Owners of the Company 62.4 146.2
Non-controlling interest 0.1 0.1
62.5 146.3
Consolidated statement of financial position
as at 31 March 2023
Notes 31 March 2023 31 March 2022
€m €m
Non-current assets
Investment properties 14 2,123.0 2,100.0
Plant and equipment 16 7.2 5.5
Intangible assets 17 4.1 4.3
Right of use assets 18 14.4 15.0
Other non-current financial assets 19 48.4 48.3
Investment in associates 20 26.7 24.1
Total non-current assets 2,223.8 2,197.2
Current assets
Trade and other receivables 21 30.5 24.6
Derivative financial instruments 1.3 0.3
Cash and cash equivalents 22 124.3 151.0
Total current assets 156.1 175.9
Assets held for sale 15 8.8 13.8
Total assets 2,388.7 2,386.9
Current liabilities
Trade and other payables 23 (101.5) (89.3)
Interest-bearing loans and borrowings 24 (243.7) (19.6)
Lease liabilities 18 (2.2) (1.1)
Current tax liabilities 11 (5.4) (10.4)
Total current liabilities (352.8) (120.4)
Non-current liabilities
Interest-bearing loans and borrowings 24 (720.7) (961.9)
Lease liabilities 18 (37.4) (37.6)
Deferred tax liabilities 11 (80.2) (75.9)
Total non-current liabilities (838.3) (1,075.4)
Total liabilities (1,191.1) (1,195.8)
Net assets 1,197.6 1,191.1
Equity
Issued share capital 27 - -
Other distributable reserve 28 516.4 570.4
Own shares held 27 (8.3) (6.3)
Foreign currency translation reserve 28 (18.9) (1.7)
Retained earnings 707.9 628.3
Total equity attributable to the owners of the Company 1,197.1 1,190.7
Non-controlling interest 0.5 0.4
Total equity 1,197.6 1,191.1
The financial statements on pages 149 to 292 were approved by the Board of Directors on 2 June 2023 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Consolidated statement of changes in equity
for the year ended 31 March 2023
Notes Issued Other Own Foreign Retained Total equity Non- Total
share distributable shares currency earnings attributable controlling equity
capital reserve held translation €m to the interest €m
€m €m €m reserve owners of €m
€m the Company
€m
As at 31 March 2021 - 449.1 (3.0) - 480.4 926.5 0.3 926.8
Profit for the year - - - - 147.9 147.9 0.1 148.0
Other comprehensive income for the year - - - (1.7) - (1.7) - (1.7)
Total comprehensive income for the year - - - (1.7) 147.9 146.2 0.1 146.3
Shares issued 159.9 - - - - 159.9 - 159.9
Transaction cost relating to share issues (6.2) - - - - (6.2) - (6.2)
Dividends paid 30 13.7 (44.5) - - - (30.8) - (30.8)
Transfer of share capital 30 (167.4) 167.4 - - - - - -
Share-based payment transactions 9 - 1.9 - - - 1.9 - 1.9
Value of shares withheld to settle employee tax obligations 9 - (3.5) - - - (3.5) - (3.5)
Own shares purchased 27 - - (5.5) - - (5.5) - (5.5)
Own shares allocated 27 - - 2.2 - - 2.2 - 2.2
As at 31 March 2022 - 570.4 (6.3) (1.7) 628.3 1,190.7 0.4 1,191.1
Profit for the year - - - - 79.6 79.6 0.1 79.7
Other comprehensive income for the year - - - (17.2) - (17.2) - (17.2)
Total comprehensive income for the year - - - (17.2) 79.6 62.4 0.1 62.5
Dividends paid 30 1.4 (59.2) - - - (57.8) - (57.8)
Transfer of share capital 30 (1.4) 1.4 - - - - - -
Share-based payment transactions 9 - 5.5 - - - 5.5 - 5.5
Value of shares withheld to settle employee tax obligations 9 - (1.7) - - - (1.7) - (1.7)
Own shares purchased 27 - - (2.3) - - (2.3) - (2.3)
Own shares allocated 27 - - 0.3 .- - 0.3 - 0.3
As at 31 March 2023 - 516.4 (8.3) (18.9) 707.9 1,197.1 0.5 1,197.6
Consolidated statement of cash flows
for the year ended 31 March 2023
Notes Year ended Year ended
31 March 31 March
2023 2022
€m €m
Operating activities
Profit for the year before tax 87.0 168.9
(Gain)/loss on disposal of properties (4.7) 0.6
Recoveries from prior disposals of subsidiaries - (0.1)
Net exchange differences (0.2) (2.0)
Share-based payments 9 5.5 4.2
Loss/(gain) on revaluation of investment properties 14 9.8 (140.9)
Change in fair value of derivative financial instruments 10 (0.9) (1.0)
Depreciation of property, plant and equipment 16 2.1 1.2
Amortisation of intangible assets 17 1.3 1.2
Depreciation of right of use assets 18 2.1 0.8
Goodwill impairment 17 - 40.9
Share of profit of associates 20 (2.6) (6.9)
Finance income 10 (2.8) (3.0)
Finance expense 10 18.3 23.2
Increase in trade and other receivables (5.9) (5.2)
Increase in trade and other payables 12.4 3.5
Taxation paid (8.0) (3.7)
Cash flows from operating activities 113.4 81.8
Investing activities
Purchase of investment properties (42.8) (162.8)
Prepayments relating to new acquisitions - (1.9)
Proceeds from loss on control of subsidiaries (net of cash disposed) - 0.1
Capital expenditure on investment properties (28.4) (23.8)
Purchase of plant and equipment and intangible assets (5.3) (3.5)
Acquisition of a subsidiary (net of cash acquired) - (254.7)
Proceeds on disposal of properties (including held for sale) 32.0 15.3
Increase in loans receivable due from associates (0.1) (1.1)
Interest received 2.8 3.0
Cash flows used in investing activities (41.8) (429.5)
Financing activities
Proceeds from issue of share capital 27 - 159.9
Transaction costs on issue of shares 27 - (6.2)
Shares purchased (2.3) (5.5)
Payment relating to exercise of share options 9 (1.7) (3.5)
Dividends paid to owners of the Company 30 (57.8) (30.8)
Dividends paid to non-controlling interest - -
Proceeds from loans - 750.0
Repayment of loans (20.4) (399.4)
Payment of principal portion of lease liabilities (1.2) (5.9)
Exit fees/prepayment of financing penalties - (5.3)
Capitalised loan issue cost - (14.4)
Finance charges paid (15.2) (7.1)
Cash flows from financing activities (98.6) 431.8
(Decrease)/increase in cash and cash equivalents (27.0) 84.0
Net exchange difference 0.3 1.3
Cash and cash equivalents as at the beginning of the year 151.0 65.7
Cash and cash equivalents as at the year end 22 124.3 151.0
Notes to the financial statements
for the year ended 31 March 2023
1. General information
Sirius Real Estate Limited (the "Company") is a company incorporated in
Guernsey and resident in the United Kingdom for tax purposes, whose shares are
publicly traded on the Main Market of the London Stock Exchange ("LSE")
(primary listing) and the Main Board of the Johannesburg Stock Exchange
("JSE") (primary listing).
The consolidated financial information of the Company comprises that of the
Company and its subsidiaries (together referred to as the "Group" or
"Sirius") for the year ended 31 March 2023.
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 consolidated financial statements have been prepared on a historical cost
basis, except for investment properties, investment properties held for sale
and derivative financial instruments, which have been measured at fair value.
The consolidated financial information has been presented in euros and all
values are rounded to the nearest thousand (€000) in prior years. The
consolidated financial information in the current year is presented in euros
and all values are rounded to the nearest hundred thousand shown in millions
(€m), except where otherwise indicated.
The Company has prepared its annual consolidated financial statements in
accordance with International Financial Reporting Standards as issued by the
IASB ("IFRS") as a result of the primary listing on the JSE. See also note
2(c) for statement of compliance.
As at 31 March 2023 the Group's consolidated financial statements reflect
consistent accounting policies and methods of computation as used in the
previous financial year, except for the changes in the application of
accounting policies as described in note 2(b), in accordance with IFRS.
(b) Changes in accounting policies
There were several new and amendments to standards and interpretations which
are applicable for the first time for the Group from 1 April 2022. None of
them have had a significant impact on the Group's income statement or balance
sheet.
IFRIC: Demand Deposits with restrictions on use arising from a contract with a
Third Party (IAS 7 Statement of Cash Flows).
The agenda decision considered accounting for deposits subject to contractual
restrictions on use. The Committee clarified the position such that where an
entity has a contractual obligation with a third party to keep a specified
amount of cash in a separate demand deposit for specified purposes, but
accessibility of cash amounts in these deposits are assured, the entity
includes the demand deposit as a component of "cash and cash equivalents" in
its statement of financial position and statement of cash flows. The Committee
concluded that the contractual restrictions do not change the nature of the
deposit if the entity can access those amounts on demand. Therefore, the Group
has reviewed the deposits in respect of accessibility and concluded no
adjustment is required. Deposits that are determined to be restricted only as
to their use are separately disclosed (see note 22).
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 31 March 2023 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 annual financial
statements of the Group.
A number of new other standards and amendments to standards have been issued
but are not yet effective for the Group and have not been early adopted. The
application of these new standards and amendments are not expected to have a
material impact on the Group's financial statements.
(c) Statement of compliance
The consolidated financial statements have been prepared in accordance with
the Disclosure and Transparency Rules of the United Kingdom Financial Conduct
Authority, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the listings requirements of the JSE
Limited, IFRS, IAS 34 Interim Reporting and The Companies (Guernsey) Law,
2008. The consolidated financial statements have been prepared on the same
basis as the accounting policies set out in the Group's annual financial
statements for the year ended 31 March 2022, except for the changes in
accounting policies as shown in note 2(b). All forward-looking information is
the responsibility of the Board of Directors and has not been reviewed or
reported on by the Group's auditors.
(d) Going concern
The Group has prepared its going concern assessment for the period to 31
October 2024 (the "going concern period"), a period greater than twelve months
and chosen to align with the expected timing of the approval of the Company's
subsidiary entities financial statements where a letter of support is expected
to be required from the Company. The Directors also evaluated potential events
and conditions beyond the going concern period that may cast significant doubt
on the Group's ability to continue as a going concern, with no significant
transactions or events of material uncertainty identified.
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 24) and the ability to continue to operate the Group's
secured and unsecured debt structure within its financial covenants. Within
the going concern period, three of the Group's facilities mature, with the
€20.0 million tranche of the HSBC Schuldschein loan falling due in July
2023, the Berlin Hyp facility of €170.0 million having already been
refinanced in August 2022 one year ahead of its maturity in October 2023 (see
note 24) and the Deutsche Pfandbriefbank loan of €57.3 million, which falls
due in December 2023 having been refinanced on 26 May 2023 through a new
€58.3 million facility extending to 31 December 2030 (see note 35). No
further debt of the Group matures until 2025.
The severe but plausible scenario models a potential downturn in the Group's
performance, including the potential impact of downside macro-factors such as
geopolitical instability, future energy shortages, further cost increases due
to inflation, pressures from increasing interest rates and outward yield
movements 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 net asset
value, unencumbered assets ratios, fixed charge ratios and occupancy ratios
set out within the relevant finance agreements.
The impact of the macro-factors above have placed further pressure on the
costs of the business, however this did not result in any deterioration in the
Group's income streams in FY23 and asset values remained relatively stable.
However, the Directors have been mindful of the challenging macro-factors
present in the market from 31 March 2022 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 going concern period.
The base case and severe but plausible downside scenarios include the
following assumptions applied to both the German and UK portfolios:
Base case:
» 5.5% growth in rent roll at 31 March 2023, principally from contractual
increases in rents and organic growth through lease renewals;
» increasing cost levels in line with forecast inflation of 6% to March 2024
and 2% beyond;
» continuation of forecast capex investment;
» continuation of forecast dividend payments in line with historic dividend
payouts;
» payment of contractual loan interest and loan amortisation amounts,
repayment of €20.0 million of the Schuldschein facility in July 2023 and
utilisation of the new Berlin Hyp and Deutsche Pfandbriefbank facilities on
the maturity of existing facilities in October and December 2023;
» no acquisitions or sale of assets within the period.
Severe but plausible downside scenario:
» reduction in occupancy and rental income of 10% per annum from the base
case assumptions;
» reduction in service charge recovery of 10% per annum from the base case
assumptions;
» reduction in property valuations of 10% per annum; and
» payment of contractual loan interest and loan amortisation amounts,
repayment of €20.0 million of the Schuldschein facility in July and
utilisation of the new Berlin Hyp and Deutsche Pfandbriefbank facilities on
the maturity of existing facilities in October and 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 high inflationary environment in both Germany and
the UK, the Covid-19 pandemic and post-pandemic period. In addition, the Group
has already secured the refinancing of the Deutsche Pfandbriefbank and Berlin
Hyp AG facilities in advance of their maturity dates in the going concern
period.
In the severe but plausible downside scenario, the Group is expected to comply
with its loan covenants, with no covenant breaches forecasted.
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 €20.0 million Schuldschein facility. This judgement has been
informed by the Group's financial forecasts and the Group's track-record in
previously refinancing maturing debt. The Company is in discussions with its
current lender to secure re-financing as it comes due. Should the debt
facility falling due not be refinanced or extended, the group has available
cash to repay the facility and could call upon 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 maturing loan obligations as they fall due, amounting to
€20.0 million in the going concern period. The Company forecasts indicate
sufficient free cash would be available to repay these funds in full and
maintain sufficient liquidity to not require the additional mitigating actions
as outlined below available to it, should the severe but plausible downside
scenario come to pass.
The Group also performed a reverse stress test over the impact of a fall in
its property valuations during the going concern period. This showed that the
Group could withstand a fall in valuations of 21%, (a level not previously
seen by the Group) before there was a loan to value covenant breach. This is
therefore considered to be a remote possibility during the going concern
period. 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 31 March 2023. 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 31
October 2024, the Board believes it is appropriate to adopt the going concern
basis in preparing its financial statements.
(e) Basis of consolidation
The consolidated financial information comprises the financial information of
the Group as at 31 March 2023. The financial information of the subsidiaries
is prepared for the same reporting period as the Company, using consistent
accounting policies.
All intra-group balances and transactions and any unrealised income and
expenses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated
until the date that such control ceases.
Non-controlling interests represent the portion of profit or loss and net
assets not held by the Group and are presented separately in the consolidated
income statement and the consolidated statement of comprehensive income and
within equity in the consolidated statement of financial position, separately
from the Company's shareholders' equity.
(f) Acquisitions
Where a property is acquired through the acquisition of corporate interests,
management considers the substance of the assets and activities of the
acquired entity in determining whether the acquisition represents the
acquisition of a business.
The Group accounts for an acquisition as a business combination where an
integrated set of activities is acquired in addition to the property (see
policy in note 2(aa)). More specifically, consideration is made of the extent
to which substantive processes are acquired and, in particular, the extent of
services provided by the subsidiary. IFRS 3 "Business Combinations" sets out
an optional concentration test designed to simplify the evaluation of whether
an acquired set of activities and assets is not a business. An acquired set
of activities and assets is not a business if substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable
asset or group of similar identifiable assets.
Where such acquisitions are not deemed to be an acquisition of a business,
they are not treated as business combinations. Instead, they are treated as
asset acquisitions, with the cost to acquire the corporate entity being
allocated between the identifiable assets and liabilities of the entity based
on their relative fair values on the acquisition date. Accordingly, no
goodwill arises.
(g) Foreign currency translation
The consolidated financial information is presented in euros, which is the
functional and presentational currency of the parent company. For each entity,
the Group determines the functional currency and items included in the
financial statements of each entity are measured using the functional
currency.
Transactions in foreign currencies are initially recorded in the functional
currency at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into
the functional currency at the exchange rate ruling at the statement of
financial position date. All differences are taken to the statement of profit
and loss. Non‑monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at the dates
of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the
fair value is determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value gain or loss is recognised
in other comprehensive income ("OCI") or profit or loss are also recognised in
OCI or profit or loss, respectively).
On consolidation, the assets and liabilities of foreign operations are
translated into euros at the rate of exchange prevailing at the reporting date
and their statements of profit or loss are translated at the exchange rates at
the dates of the transactions, or where appropriate, the average exchange
rates for the period. The foreign exchange differences arising on translation
for consolidation are recognised in OCI. On disposal of a foreign operation,
the component of OCI relating to that particular foreign operation is
reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising
on the acquisition are treated as assets and liabilities of the foreign
operation and translated at the spot rate of exchange at the reporting date.
(h) Revenue recognition
Rental income
Rental income from operating leases and licence agreements containing leases
is recognised on a straight-line basis over the term of the relevant lease
unless another systematic basis is more representative of the time pattern in
which the benefit derived from the leased asset is diminished. Fixed or
determinable rental increases, which can take the form of actual amounts or
agreed percentages, are recognised on a straight-line basis over the term of
material leases. If the increases are related to a price index to cover
inflationary cost increases, then the policy is to apply the price index from
the date it is known on a straight-line basis.
The value of rent free periods and all similar lease incentives is spread on a
straight-line basis over the term of material leases only. Where there is a
reasonable expectation that the tenant will exercise break options, the value
of rent free periods and all similar lease incentives is booked up to the
break date.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods
or services is transferred to the customer at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services.
The Group mainly generates revenue from contracts with customers for services
rendered to tenants including management charges and other expenses
recoverable from tenants based on the Group's right to recharge tenants for
costs incurred (with or without markup) on a day-to-day basis ("service
charge income"). These services are specified in the lease agreements
and separately invoiced. Service charge income is recognised as revenue when
the performance obligations of the services specified in the lease agreements
are met.
The individual activities vary significantly throughout the day and from day
to day; however, the nature of the overall promise of providing property
management service remains the same each day. Accordingly, the service
performed each day is distinct and substantially the same. These services
represent a series of daily services that are individually satisfied over time
because the tenants simultaneously receive and consume the benefits provided
by the Group. The actual service provided during each reporting period is
determined using cost incurred as the input method.
Transaction prices are regularly updated and are estimated at the beginning of
each year based on previous costs and estimated spend. Service charge budgets
are prepared carefully to make sure that they are realistic and reasonable.
Variable consideration is only included in the transaction price to the extent
it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur. Performance obligations related to service
charge revenue is discharged by the Company continuously and on a daily basis,
through the provision of utilities and other services to tenants. Changes in
service charge revenue are linked to changes in the cost of fulfilling the
obligation or the value to a tenant at a given period of time. Accordingly,
the variable consideration is allocated to each distinct period of service
(i.e. each day) as it meets the variable consideration allocation exception
criteria.
Service charge expenses are based on actual costs incurred and invoiced
together with an estimate of costs to be invoiced in future periods as receipt
of final invoices from suppliers can take up to twelve months after the end of
the financial period. The estimates are based on expected consumption rates
and historical trends and take into account market conditions at the time of
recording.
Service charge income is based on service charge expense and takes into
account recovery rates which are largely derived from estimated occupancy
levels. Service charge costs related to vacant space are irrecoverable.
The Group acts as a principal in relation to these services, and records
revenue on a gross basis, as it controls the specified goods or services
before transferring them to tenants.
Where amounts invoiced to tenants are greater than the revenue recognised at
the period end date, the difference is recognised as unearned revenue when
the Group has unconditional right to consideration, even if the payments are
non-refundable. Where amounts invoiced are less than the revenue recognised at
the period end date, the difference is recognised as contract assets or, when
the Group has a present right to payment, as receivables albeit unbilled.
Rental income, fee income and other income from managed properties
As the Group derives income and incurs expenses relating to properties it
manages but does not own, such income and expense is disclosed separately
within revenue and direct costs. Income relating to managed properties is
accounted for according to revenue recognition accounting policies set out
above. The Group identifies itself as a Principal in this arrangement as it
controls and manages the services provide to its customers.
Allocation of revenues earned through all-inclusive lease and licence
arrangements
The Group has entered into leases and licensing arrangements (which contain a
lease) where the revenue due from the tenant is an all-inclusive price,
representing lease income (recognised in accordance with IFRS 16) and service
charge income (recognised in accordance with IFRS 15). Management have
estimated the allocation of the revenues using the relevant service charge
costs incurred and the occupancy of the properties where all-inclusive lease
and license arrangements are in place. The allocation resulted in €24.0m
(2022: €5.7m) being recorded as service charge income.
Interest income
Interest income is recognised as it accrues (using the effective interest
method, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument).
(i) Leases
Group as lessor
Leases where the Group does not transfer substantially all the risks and
benefits of ownership of the asset are classified as operating leases.
Group as lessee
All contracts that give the Group the right to control the use of an
identified asset over a certain period of time in return for consideration are
considered leases within the meaning of IFRS 16 "Leases" ("IFRS 16").
For all contracts that meet the definition of leases according to IFRS 16, the
Group, at the commencement date of the lease (i.e. the date the underlying
asset is available for use), recognises lease liabilities equal to the present
value of the future lease payments, discounted to reflect the term-specific
incremental borrowing rate if the interest rate implicit in the lease is not
readily determinable. Lease liabilities are subsequently increased by the
periodic interest expenses and reduced by the lease payments made during the
financial year.
Correspondingly, right of use assets are initially recognised at cost under
IFRS 16 which is the amount of the lease liabilities (plus any advance
payments that have already been made or any initial direct costs).
Subsequently, the right of use assets are generally measured at cost, taking
depreciation (calculated straight-line over the lease term) and impairments
into account and are presented separately in the statement of financial
position except for right of use assets that meet the definition of IAS 40
"Investment Property" ("IAS 40") which are presented as investment property
and subsequently measured at fair value in line with the measurement rules set
out in IAS 40.
Periods resulting from extension or termination options granted on a
unilateral basis are assessed on a case-by-case basis and are only taken into
account if their use is sufficiently probable.
The Group utilises the recognition exemptions provided by IFRS 16 and does not
apply IFRS 16 to leases with a contractual term of twelve months or less or
to leases in which the underlying asset is of low value (on a case-by-case
basis).
Lease payments associated with short-term leases and with leases of low-value
assets are recognised as expenses on a straight-line basis over the lease
term.
Right-of-use assets relating to office spaces are depreciated on a
straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
(j) Income tax
Certain subsidiaries may be subject to foreign taxes in respect of foreign
sources of income. Sirius Real Estate Limited is a UK resident for tax
purposes. The Group's UK property business is a UK Real Estate Investment
Trust ("REIT"). As a result, the Group's UK property business does not pay UK
corporation tax on its profits and gains from the qualifying rental business
in the UK. Non-qualifying UK profits and gains continue to be subject to
corporation tax as normal.
Current income tax
Current income tax assets and liabilities are measured at the reporting date
at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.
Deferred income tax
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements, with the following exceptions:
• where the temporary difference arises from the initial recognition
of goodwill or of an asset or liability in a transaction that is not a
business combination that at the time of the transaction, does not give rise
to equal taxable and deductible temporary differences and affects neither
accounting nor taxable profit or loss;
• in respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future; and
• deferred tax assets are only recognised to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be
utilised.
Deferred income tax assets and liabilities are measured on an undiscounted
basis at the tax rates that are expected to apply in the year when the
related asset is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the reporting
date.
(k) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax
except:
• where the sales tax incurred on a purchase of assets or services is
not recoverable from the taxation authority, in which case the sales tax is
recognised as part of the cost of acquisition of the asset or as part of the
expense item as applicable; and
• receivables and payables that are stated with the amount of sales
tax included.
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
(l) Investment properties
Investment properties are properties that are either owned by the Group or
held under a lease which are held for long-term rental income and/or capital
appreciation.
Investment properties owned by the Group are initially recognised at cost,
including transaction costs when the control of the property is transferred.
Where recognition criteria are met, the carrying amount includes subsequent
costs to add to or replace part of an investment property. Subsequent to
initial recognition, investment properties are stated at fair value, which
reflects market conditions at the reporting date as determined by professional
external valuer. Gains or losses arising from changes in the fair values of
investment properties are included in the income statement in the period in
which they arise.
The German properties are valued on the basis of a ten to fourteen year
discounted cash flow model supported by comparable evidence. The discounted
cash flow calculation is a valuation of rental income considering
non-recoverable costs and applying a discount rate for the current income risk
over a ten to fourteen year period. After ten to fourteen years, a determining
residual value (exit scenario) is calculated, discounted to present value.
The UK properties are valued in accordance with the RICS Traditional Red Book
valuation methodology, where the income being generated is capitalised by an
appropriate yield. Yields are based on comparable evidence of similar quality
assets which have traded in the open market. The yield applied reflects the
age, location, ownership, customer base and agreement type.
Investment properties relating to leased assets are recognised in accordance
with IFRS 16 (see policy in note 2(i)). Subsequent to initial recognition,
investment properties relating to leased assets are stated at fair value,
which reflects market conditions at the reporting date. Gains or losses
arising from changes in the fair values of investment properties are included
in the income statement in the period in which they arise.
The fair value of investment properties relating to leased assets as at 31
March 2023 and 31 March 2022 have been arrived at on the basis of a valuation
carried out at that date by management. The valuation is based upon
assumptions including future rental income and expenditure in accordance with
the conditions of the related lease agreements. The properties are valued on
the basis of a discounted cash flow model with the measurement period equal to
the term of the lease agreements.
(m) Disposals of investment property
Investment property disposals are recognised when control of the property
transfers to the buyer, which typically occurs on the date of completion.
Profit or loss arising on disposal of investment properties is calculated by
reference to the most recent carrying value of the asset adjusted for
subsequent capital expenditure.
(n) Assets held for sale and disposal groups
(i) Investment properties held for sale
Investment properties held for sale are separately disclosed at the asset's
fair value. In order for an investment property held for sale to be
recognised, the following conditions must be met:
• the asset must be available for immediate sale in its present
condition and location;
• the asset is being actively marketed;
• the asset's sale is expected to be completed within twelve months of
classification as held for sale;
• there must be no expectation that the plan for selling the asset
will be withdrawn or changed significantly; and
• the successful sale of the asset must be highly probable.
(ii) Disposal groups
The Group classifies non-current assets and disposal groups as held for sale
if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of a disposal group,
excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the
sale is highly probable and the disposal group is available for immediate sale
in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be
made or that the decision to sell will be withdrawn. Management must be
committed to the plan to sell the asset with the sale expected to be
completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or
amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately in
the statement of financial position.
Additional disclosures are provided in note 15.
(o) Plant and equipment
Recognition and measurement
Items of plant and equipment are stated at historical cost less accumulated
depreciation and any impairment loss.
Depreciation
Where parts of an item of plant and equipment have different useful lives,
they are accounted for as separate items of plant and equipment.
Depreciation is charged in the income statement on a straight-line basis over
the estimated useful lives of an item of the fixed assets. The estimated
useful lives are as follows:
Plant and equipment three to ten years
Fixtures and fittings three to fifteen years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date.
(p) Intangible assets
The Group recognises both internally developed and acquired intangible assets.
These intangibles are valued at cost.
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated impairment losses.
Intangible assets with a definite useful life are amortised on a straight-line
basis over their respective useful lives. Their useful lives are between three
and five years. Any amortisation of these assets is recognised as such under
administrative expenses in the consolidated income statement.
Intangible assets with an indefinite useful life, including goodwill, are not
amortised.
Development expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate:
• the technical feasibility of completing the intangible asset so that the
asset will be available for use or sale;
• its intention to complete and its ability and intention to use or sell the
asset;
• how the asset will generate future economic benefits;
• the availability of resources to complete the asset; and
• the ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised over the period
of expected future benefit. Amortisation is recorded in cost of sales. During
the period of development, the asset is tested for impairment annually.
Goodwill arising on consolidation represents the excess of the cost of the
purchase consideration over the Group's interest in the fair value of the
identifiable assets and liabilities of a subsidiary at the date of
acquisition.
Goodwill is initially recognised at cost and is subsequently measured at cost
less any accumulated impairment losses. Goodwill is tested annually for
impairment, or more frequently when there is an indication that the business
to which the goodwill applies may be impaired.
(q) Trade and other receivables
Rent and service charge receivables and any contract assets do not contain
significant financing components and are measured at the transaction price.
Other receivables are initially measured at fair value plus transaction costs.
Subsequently, trade and other receivables are measured at amortised cost and
are subject to impairment (see note 2(y)). The Group applies the simplified
impairment model of IFRS 9 in order to determine expected credit losses in
trade and other receivables, including lease incentives.
The Group assesses on a forward-looking basis the expected credit losses
associated with its trade and other receivables. A provision for impairment
is made for the lifetime expected credit losses on initial recognition of the
receivable. If collection is expected in more than one year, the balance is
presented within non-current assets.
(r) Treasury Shares and shares issued to the Employee Benefit Trust
Own equity instruments are deducted from equity. No gain or loss is recognised
in the income statement on the purchase, sale, issue or cancellation of the
Group's equity instruments.
(s) Share-based payments
The grant date fair value of share-based payment awards granted to employees
is recognised as an employee expense, with a corresponding increase in
equity, over the period that the employees unconditionally become entitled to
the awards.
The amount recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately recognised as an expense
is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
(t) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits
and other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to a known amount of cash
and are subject to an insignificant risk of change in value. Cash is measured
at amortised cost.
(u) Bank borrowings
Interest-bearing bank loans and borrowings are initially recorded at fair
value net of directly attributable transaction costs.
Subsequent to initial recognition, interest-bearing loans and borrowings are
measured at amortised cost using the effective interest rate method.
When debt refinancing exercises are carried out, existing liabilities will be
treated as being extinguished when the new liability is substantially
different from the existing liability. In making this assessment, the Group
will consider the transaction as a whole, taking into account both
qualitative and quantitative characteristics in order to make the assessment.
(v) Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost, using the effective interest rate method.
(w) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
(x) Dividends
Interim dividend distributions to shareholders are recognised in the financial
statements when paid. Final dividend distributions to the Company's
shareholders are recognised as a liability in the consolidated financial
information in the period in which the dividends are approved by the
shareholders. The final dividend relating to the year ended 31 March 2023 will
be approved and recognised in the financial year ending 31 March 2024.
(y) Impairment excluding investment properties
(i) Financial assets
A financial asset (excluding financial assets at fair value through profit and
loss) is assessed at each reporting date to determine whether there is any
impairment. The Group recognises an allowance for expected credit losses
("ECLs") for all receivables and contract assets held by the Group. ECLs are
based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms and
that are not recognised separately by the Group.
For rent and service charge receivables and any contract assets, the Group
applies a simplified approach in calculating ECLs. The Group does not track
changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date (i.e. a loss allowance for credit losses
expected over the remaining life of the exposure, irrespective of the timing
of the default). In determining the ECLs the Group takes into account any
recent payment behaviours and future expectations of likely default events
(i.e. not making payment on the due date) based on individual customer credit
ratings, actual or expected insolvency filings or Company voluntary
arrangements and market expectations and trends in the wider macroeconomic
environment in which our customers operate.
Impairment losses are recognised in the income statement. For more information
refer to note 7. Trade and other receivables are written off once all avenues
to recover the balances are exhausted and there is no expectation of recovery.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
investment property, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of
assets that generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the
"cash-generating unit").
An impairment loss is recognised if the carrying amount of an asset or
cash-generating unit exceeds its estimated recoverable amount. Impairment
losses are recognised in the income statement. Impairment losses recognised in
profit or loss in respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to the units and then to
reduce the carrying amount of the other assets in the unit (or group of units)
on a pro rata basis.
(z) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification, except for deferred tax
assets and liabilities which are classified as non-current assets and
liabilities. An asset is current when it is:
• expected to be realised or intended to be sold or consumed in the
normal operating cycle;
• held primarily for the purpose of trading;
• expected to be realised within twelve months after the reporting
period; or
• cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when:
• it is expected to be settled in the normal operating cycle;
• it is held primarily for the purpose of trading;
• it is due to be settled within twelve months after the reporting
period; or
• there is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
(aa) Business combinations and goodwill
(i) Subsidiary undertakings
Business combinations are accounted for using the acquisition method at the
acquisition date, which is the date on which control is transferred to the
Group. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee. In assessing
control, the Group takes into consideration potential voting rights that
currently are exercisable, as well as other factors including board
representation. The financial statements of subsidiaries are included in the
Consolidated Financial Statements from the date that control passes.
The Group measures goodwill as the fair value of the consideration paid or
payable less the net fair value of the identifiable assets, liabilities
assumed and contingent liabilities acquired, all measured as of the
acquisition date.
(ii) Associates
Associates are those entities over which the Group has significant influence,
but which are not subsidiary undertakings or joint ventures. The results and
assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting. Investments in associates
are carried in the balance sheet at cost as adjusted by post-acquisition
changes in the Group's share of the net assets of the associate, less any
impairment in the value of individual investments.
(ab) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings, EPRA net asset value
metrics and EPRA loan to value, which are widely used alternative metrics to
their IFRS equivalents (further details on EPRA best practice recommendations
can be found at www.epra.com). Note 12 to the financial statements includes a
reconciliation of basic and diluted earnings to EPRA earnings. Note 13 to the
financial statements includes a reconciliation of net assets to EPRA net asset
value metrics. Note 24 to the financial statements includes a calculation of
EPRA loan to value ratio.
The Directors are required, as part of the JSE Listing Requirements, to
disclose headline earnings; accordingly, headline earnings are calculated
using basic earnings adjusted for revaluation gain net of related tax,
gain/loss on sale of properties net of related tax, recoveries from prior
disposals of subsidiaries net of related tax, NCI relating to revaluation and
revaluation gain/loss on investment property relating to associates net of
related tax. Note 12 to the financial statements includes a reconciliation
between IFRS and headline earnings.
The Directors have chosen to disclose adjusted earnings in order to provide an
alternative indication of the Group's underlying business performance;
accordingly, it excludes the effect of adjusting items net of related tax.
Note 12 to the financial statements includes a reconciliation of adjusting
items included within adjusted earnings, with certain adjusting items stated
within administrative expenses in note 7 and certain finance costs in note 10.
The Directors have chosen to disclose adjusted profit before tax and funds
from operations in order to provide an alternative indication of the Group's
underlying business performance and to facilitate the calculation of its
dividend pool; a reconciliation between profit before tax and funds from
operations is included within note 29 to the financial statements. Within
adjusted profit before tax are adjusting items as described above gross of
related tax.
Further details on non-IFRS measures can be found in the business analysis
section of this document.
3. Significant accounting judgements, estimates, assumptions and other sources
of estimation uncertainty
Judgements
In the process of applying the Group's accounting policies, which are
described in note 2, the Directors have made the following judgements that
have the most significant effect on the amounts recognised in the financial
information:
Acquisition and disposal of properties
Property transactions can be complex in nature and material to the financial
statements. To determine when an acquisition or disposal should be recognised,
management considers whether the Group assumes or relinquishes control of the
property, and the point at which this is obtained or relinquished.
Consideration is given to the terms of the acquisition or disposal contracts
and any conditions that must be satisfied before the contract is fulfilled. In
the case of an acquisition, management must also consider whether the
transaction represents an asset acquisition or business combination.
Estimates and assumptions
Key estimates
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Valuation of owned and leased investment properties (including those
recognised within assets held for sale or a disposal group)
The fair value of the Group's owned investment properties was determined by
Cushman & Wakefield LLP (2022: Cushman & Wakefield LLP), an
independent valuer. After adjusting investment properties for lease incentive
accounting, the book value of investment properties excluding assets held for
sale is shown as €2,098.5m (2022: €2,074.9m) as disclosed in note 14.
The Cushman & Wakefield LLP valuation approach is explained in note 2(l).
The fair value of the Group's leased investment properties was determined by
management. The book value of leased investment properties is shown as
€24.5m (2022: €25.1m) as disclosed in note 14.
As a result of the level of estimation used in arriving at the market
valuations, the amounts which may ultimately be realised in respect of any
given property may differ from the valuations shown on the statement of
financial position. Refer to note 14 for further information, including
sensitivity analysis.
Cash flow and covenant compliance forecasts
Cash flow forecasts and covenant compliance forecasts are prepared by
management to assess the going concern assumption and viability of the Group.
Estimations of future revenue and expenditure are made to determine the
expected cash inflows and outflows, considering expectations for occupancy
levels, forecast expenditure and the current market climate. The impact of the
forecasted cash flows and underlying property valuations are considered when
assessing forecast covenant compliance and anticipated levels of headroom on
the Group's debt facilities.
Refer to note 2(d) for further details, which includes the assessment of
forecasted cash flows and covenant compliance in management's going concern
assessment.
Other sources of estimation uncertainty
The following areas of estimation uncertainty are not presented to comply with
the requirements of paragraph 125 of IAS 1 "Presentation of Financial
Statements" as it is not expected there is a risk of a material adjustment to
the carrying amount of assets and liabilities within the next financial year.
They are presented as additional disclosure of estimates used in the accounts.
Sustainability
In preparing the financial statements, Management considered the impact of
climate change, taking into account the relevant disclosures in the Strategic
Report, including those made in accordance with the recommendations of the
Taskforce on Climate-related Financial Disclosures. The Group also considered
the work performed to date in preparing its potential net zero pathway for the
German portfolio to 2045 based on the CRREM ("Carbon Risk Real Estate
Monitor") methodology, the leading global standard for operational
decarbonisation of real estate assets, and in line with the Science Based
Target initiative ("SBTi") and the Energy Performance Certificate ("EPC")
regulatory requirements for the UK. At the time of preparing the financial
statements, the Group expects a limited exposure in relation to the investment
properties, based on the current climate-related requirements. On this basis,
the Directors concluded that climate change did not have a material impact on
the financial reporting judgements and estimates for the period, consistent
with this assessment this is not expected to have a significant impact on the
Group's going concern of viability assessment.
4. Business combinations
The provisions of IFRS 3 are applied to all business combinations.
Acquisitions in 2022
Acquisition of Helix Investments Limited
Company Type of Date of Acquired
acquisition acquisition voting rights
Helix Investments Limited, Jersey Purchase 15 Nov 2021 100%
The purchase price amounted to €242.8m (£206.8m). The consideration was
transferred in the form of cash. On completion a loan advanced by the seller
and held by Helix Investments Limited of €45.0m (£38.3m) was also repaid in
cash.
The Group incurred costs of €5.3m for legal advice and due diligence in
connection with the business combination and these are included in
administrative expenses.
Helix Investments Limited is the holding company of the BizSpace Group
business, which is a leading provider of regional flexible workspace, offering
light industrial, workshop, studio and out of town office units to a wide
range of businesses across the UK. The acquisition therefore provides Sirius
with a unique opportunity to enter with immediate scale an under-served market
via a one-step acquisition of an established platform. It provides Sirius with
a high-quality portfolio, offering significant organic growth potential in
rental pricing in a UK market characterised by supply constraints. The
BizSpace Group business is also highly complementary to Sirius' existing
platform, allowing for meaningful operational and financial synergies to drive
value creation for Sirius shareholders.
The acquired identifiable assets and liabilities as at 15 November 2021 are
presented at their fair values in the following table in accordance with the
final purchase price allocation:
Helix Investments
Limited
€m
Investment property 421.1
Other non-current assets 3.0
Current assets 3.5
Cash and cash equivalents 33.1
Loans (214.5)
Current liabilities (23.7)
Lease liabilities (12.2)
Deferred tax liabilities (4.7)
Net assets 205.6
Purchase price 242.8
Goodwill 37.2
Based on final purchase price allocation, goodwill arising on the purchase of
Helix Investments Limited amounts to €37.2m as at 15 November 2021. At 31
March 2022, the Directors assessed the computed goodwill to determine if it
represented recoverable value over and above the value included in the
acquired investment properties and other net assets, and concluded that there
was insufficient evidence to support such recovery and so wrote-off the
goodwill. As at 31 March 2022 the carrying amount of the goodwill is €nil as
it has been impaired as per note 17.
The gross amounts of acquired trade receivables and impairment losses
recognised were as follows as at 15 November 2021.
Helix Investments
Limited
€m
Gross trade receivables 1.1
Expected credit loss provision (0.5)
Net trade receivables 0.6
Due to first-time consolidation as at 15 November 2021, the acquired company
has contributed revenue of €21.0m and profit after tax of €47.9m to
consolidated revenue and consolidated profit in the year ended 31 March 2022.
Had the company already been fully consolidated as at 1 April 2021,
consolidated revenue and consolidated profit after tax in the year ended 31
March 2022 would have been as follows:
1 April 2021 to
31 March 2022
€m
Group revenue 243.9
Group profit after tax 211.1
5. Operating segments
Information on each operating segment based on the 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. The Group's Senior
Management Team considers that this is best achieved through the operating
segments of the German assets and the UK 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. The Group's Senior Management Team considers
the two locations to be separate segments. Further disaggregation of the
investment properties is disclosed in note 14 owing to the range in values of
key inputs and assumptions underpinning the property valuation. Consequently,
the Group is considered to have two reportable operating segments, as follows:
• Germany; and
• the 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 goodwill impairment, amortisation and
depreciation are separately disclosed as part of operating profit. Group
administrative costs, finance income and expenses and change in fair value of
derivative financial instruments are disclosed.
Income taxes and depreciation are not reported to the Senior Management Team
on a segmented basis. There are no sales between segments.
The UK operating segment is a result of a business combination as disclosed in
note 4. As such the UK segment reportable figures from the prior year
are those from 15 November 2021 until 31 March 2022 whilst the Germany
segment consists of the full annual period ended 31 March 2022. There is no
single tenant that makes up more than 10% of each segment's revenue or Group
revenue.
Year ended Year ended
31 March 2023 31 March 2022
Germany UK Total Germany UK Total
€m €m €m €m €m €m
Rental and other income from investment properties 125.5 33.3 158.8 108.7 15.3 124.0
Service charge income from investment properties 66.6 24.0 90.6 55.0 5.7 60.7
Rental and other income from managed properties 10.9 - 10.9 10.9 - 10.9
Service charge income from managed properties 9.8 - 9.8 14.6 - 14.6
Revenue 212.8 57.3 270.1 189.2 21.0 210.2
Direct costs (96.7) (20.0) (116.7) (80.1) (7.6) (87.7)
Net operating income 116.1 37.3 153.4 109.1 13.4 122.5
(Loss)/gain on revaluation of investment properties (3.9) (5.9) (9.8) 100.9 40.0 140.9
Gain/(loss) on disposal of properties - 4.7 4.7 (0.4) (0.2) (0.6)
Recoveries from prior disposals of subsidiaries - - - 0.1 - 0.1
Depreciation and amortisation (4.2) (1.3) (5.5) (2.7) (0.5) (3.2)
Movement in expected credit loss provision((1)) (1.0) - (1.0) (2.2) (0.1) (2.3)
Other administrative expenses((1)) (36.1) (6.7) (42.8) (32.1) (3.1) (35.2)
Goodwill impairment - - - (3.7) (37.2) (40.9)
Share of profit of associates 2.6 - 2.6 6.9 - 6.9
Operating profit 73.5 28.1 101.6 175.9 12.3 188.2
Finance income 2.5 0.3 2.8 3.0 - 3.0
Amortisation of capitalised (3.3) - (3.3) (2.6) - (2.6)
finance costs
Other finance expense (10.8) (4.2) (15.0) (15.8) (4.9) (20.7)
Change in fair value of derivative financial instruments 0.9 - 0.9 1.0 - 1.0
Net finance costs (10.7) (3.9) (14.6) (14.4) (4.9) (19.3)
Segment profit for the year before tax 62.8 24.2 87.0 161.5 7.4 168.9
(1) To conform to the current year presentation, the movement in expected
credit loss provision has been shown as a separate line and this is a
reallocation from other administrative expenses for the year ended 31 March
2022.
31 March 2023 31 March 2022
Germany UK Total Germany UK Total
€m €m €m €m €m €m
Segment assets
Investment properties 1,691.6 431.4 2,123.0 1,635.2 464.8 2,100.0
Investment in associates 26.7 - 26.7 24.1 - 24.1
Other non-current assets((1)) 21.9 3.8 25.7 21.6 3.2 24.8
Total segment non-current assets 1,740.2 435.2 2,175.4 1,680.9 468.0 2,148.9
(1) Consists of plant and equipment, intangible assets and right of use
assets.
6. Revenue
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Rental and other income from investment properties 158.8 124.0
Service charge income from investment properties 90.6 60.7
Rental and other income from managed properties 10.9 10.9
Service charge income from managed properties 9.8 14.6
Total revenue 270.1 210.2
Other income relates primarily to income associated with conferencing and
catering of €4.3m (2022: €3.0m) and fee income from managed properties of
€5.3m (2022: €4.1m).
Total revenue from contracts with customers includes service charge income and
other income totalling €94.9m from investment properties (2022: €63.7m)
and €15.1m from managed properties (2022: €18.7m). Service charge income
and other income totalling €85.2m from the German segment (2022: €76.4m)
and €24.8m from the UK segment (2022: €6.0m).
7. Operating profit
The following items have been charged in arriving at operating profit:
Direct costs
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Service charge costs relating to investment properties 92.8 66.1
Costs relating to managed properties 17.4 17.0
Non-recoverable maintenance 6.5 4.6
Direct costs 116.7 87.7
Movement in expected credit loss provision
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Expected credit loss recognised 8.7 7.7
Expected credit loss reversed (7.7) (5.4)
Movement in expected credit loss provision((1)) (see note 25) 1.0 2.3
(1) To conform to the current year presentation, the movement in expected
credit loss provision has been shown as a separate line in the consolidated
income statement and this is a reallocation from other administrative expenses
for the year ended 31 March 2022.
The expected credit loss provision has increased during the year mainly due to
the increase of gross trade receivables as a result of acquired assets in the
financial year.
Administrative expenses
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Audit and non-audit fees to audit firm 1.7 1.4
Legal and professional fees 6.0 3.9
Other administration costs 5.7 (0.3)
Share-based payments 5.5 4.2
Employee costs 19.4 16.0
Director fees and expenses 0.7 0.6
Depreciation of plant and equipment (see note 16) 2.1 1.2
Amortisation of intangible assets (see note 17) 1.3 1.2
Depreciation of right of use assets (see note 18) 2.1 0.8
Marketing 3.1 2.3
Exceptional items 0.7 7.1
Administrative expenses((1)) 48.3 38.4
(1) To conform to the current year presentation, the movement in expected
credit loss provision has been shown as a separate line in the consolidated
income statement and this is a reallocation from other administrative expenses
for the year ended 31 March 2022.
Other administration costs include net foreign exchange losses of €0.2m as a
result of declining British pound sterling ("GBP") rates throughout the year
(2022: €2.0m gain as a result of the increased foreign currency cash
balances as at the year end).
Employee costs as stated above relate to costs which are not recovered through
service charge.
Exceptional items relate to the following:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Acquisition costs in relation to business combinations - 5.3
Other fees for projects((1)) 2.4 -
Legal case costs((2)) 0.4 0.9
Lease agreement termination fees((3)) 0.9 0.5
Internal tax restructuring costs - 0.4
Decrease in tax liabilities recognised on acquisition of the BizSpace (3.0) -
Group((4))
Total 0.7 7.1
(1) The other fees for projects amounting to €2.4m (2022: €nil)
relate to capital management measures undertaken by the Group. These measures
are non-recurring in nature, outside the normal course of business and have
been identified as exceptional items.
(2) The legal case costs amounting to €0.4m relate to multiple cases
which differ from the cases the Group faced in the year end 31 March 2022
amounting to €0.9m. These legal cases are non-recurring in nature, outside
the normal course of business and have been identified as exceptional items.
(3) The lease agreement termination fee amounting to €0.9m (2022:
€0.5m) was paid in compensation for early termination of a rental contract
at the end of July 2022 within the UK segment of the Group. These termination
fees are non-recurring in nature, outside the normal course of business and
have been identified as exceptional items.
(4) In the current year, the Group identified an error in the accrual of
tax liabilities arising in the BizSpace Group as at 31 March 2022, resulting
in an overstatement of the tax liability of €5.0m, of which €3.0m 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 year financial statements. The amounts have been recorded within
administrative expenses under exceptional items and the taxation (see note 11)
lines of the income statement.
The following services have been provided by the Group's auditor:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Audit fees to audit firm:
Audit of consolidated financial statements 1.0 1.1
Audit of subsidiary undertakings 0.2 0.2
Total audit fees 1.2 1.3
Audit related assurance services 0.1 0.1
Other assurance services 0.4 0.2
Total assurance services 0.5 0.3
Total fees for non-audit services 0.5 0.3
Total fees 1.7 1.6
For the year ended 31 March 2022, other assurance services include services in
the amount of €0.2m relating to the corporate bond issuances which have been
capitalised to the loan issue costs.
8. Employee costs and numbers
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Wages and salaries 30.7 24.3
Social security costs 4.3 3.8
Defined contribution pension scheme 0.5 0.4
Other employment costs 0.9 0.4
Total 36.4 28.9
Included in the costs related to wages and salaries for the year are expenses
of €5.5m (2022: €4.2m) relating to the granting or award of shares (see
note 9). The costs for all periods include those relating to Executive
Directors.
All employees are employed directly by one of the following Group subsidiary
companies: Sirius Facilities GmbH, Sirius Facilities (UK) Limited, Curris
Facilities & Utilities Management GmbH, SFG NOVA GmbH, Sirius Finance
(Guernsey) Limited, BizSpace Limited, BizSpace II Limited, M25 Business
Centres Limited and Sirius Corporate Services B.V. The average number of
people employed by the Group during the year was 421 (2022: 416), expressed in
full-time equivalents. In addition, as at 31 March 2023, the Board of
Directors consists of six Non-Executive Directors (2022: six) and two
Executive Directors (2022: three).
9. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management
Team was approved in 2018 with three separate grant dates. Awards granted
under the LTIP are made in the form of nil-cost options which vest after the
three year performance period with vested awards being subject to a further
holding period of two years. Awards are split between ordinary and
outperformance awards. Ordinary awards carry both adjusted net asset value per
share ("TNR") (two-thirds of award) and relative total shareholder return
("TSR") (one-third of award) performance conditions and outperformance awards
carry a sole TNR performance condition. The employee's tax obligation will be
determined upon the vesting date of the share issue.
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on 15 June 2020
with a total charge for the award of €2.3m. 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 €0.8m
is recognised in the consolidated income statement to 31 March 2023. A total
of 250,000 shares were forfeited during the performance period by two
participants who left the Group.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 15 June 2020:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 0.84 0.84
Exercise price - € nil nil
Expected volatility - % 38.5 38.5
Performance projection period - years 2.79 2.67
Expected dividend yield - % 4.28 4.28
Risk-free rate based on European treasury bonds rate of return - % (0.677) p.a. (0.677) p.a.
Expected outcome of performance conditions - % 100 67.2
Fair value per share - € 0.745 0.564
The weighted average fair value of share options granted on 15 June 2020 is
€0.68.
Assumptions considered in this model include: expected volatility of the
Company's share price, as determined by calculating the historical volatility
of the Company's share price over the period immediately prior to the date of
grant and commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share price at the
date of grant; performance projection period; risk-free rate; and correlation
between comparators.
June 2019 grant
3,760,000 ordinary share awards and 690,000 outperformance share awards were
granted under the scheme on 16 June 2019 with a total charge for the awards of
€2.1m 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. For the 16 June 2019 LTIP grant an expense of €nil is
recognised in the consolidated income statement to 31 March 2023.
The fair value per share for the TNR and TSR elements of the award was
determined using Black-Scholes and Monte-Carlo models respectively with the
following assumptions used in the calculation:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award/ outperformance award 1/3 ordinary award
Share price at grant date - € 0.73 0.73
Exercise price - € nil nil
Expected volatility - % 23.8 23.8
Performance projection period - years 2.80 2.67
Expected dividend yield - % 4.56 4.56
Risk-free rate based on European treasury bonds rate of return - % (0.695) p.a. (0.695) p.a.
Expected outcome of performance conditions - % 100/24.5 46.6
Fair value per share - € 0.643 0.340
The weighted average fair value of share options granted on 16 June 2019 is
€0.54.
Assumptions considered in this model include: expected volatility of the
Company's share price, as determined by calculating the historical volatility
of the Company's share price over the period immediately prior to the date of
grant and commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share price at the
date of grant; performance projection period; risk-free rate; and correlation
between comparators.
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
€1.7m was paid for the participants' tax liabilities.
The remaining 1,531,361 shares vested on 23 November 2022. Final vesting
resulted in the exercise of 811,621 shares with a weighted average share price
of €1.02 at the date of exercise. 719,740 shares have been surrendered in
relation to the settlement of certain participants' tax liabilities arising in
respect of the vesting.
2021 LTIP
The LTIP for the benefit of the Executive Directors and the Senior Management
Team was approved in 2021. Awards granted under the LTIP are made in the form
of nil-cost options which vest after the three year performance period with
vested awards being subject to a further restricted period of two years when
shares acquired on exercise cannot be sold. Awards are subject to adjusted
net asset value per share ("TNR") (two-thirds of award) and relative total
shareholder return ("TSR") (one-third of award) performance conditions. The
employees' tax obligation will be determined upon the vesting date of the
share issue.
August 2021 grant
4,154,119 ordinary share awards were granted under the scheme on 2 August 2021
with a total charge for the award of €4.7m. Charges for the awards are based
on fair values calculated at the grant date and expensed on a straight-line
basis over the period that individuals are providing service to the Company in
respect of the awards. For the 2 August 2021 LTIP grant an expense of €1.6m
is recognised in the consolidated income statement to 31 March 2023. A total
of 725,000 shares were forfeited during the performance period by two
participants who left the Group.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 2 August 2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.39 1.39
Exercise price - € nil nil
Expected volatility - % 40.5 40.5
Expected life - years 2.91 2.91
Performance projection period - years 2.66 2.66
Expected dividend yield - % 2.79 2.79
Risk-free rate based on European treasury bonds rate of return - % (0.817) p.a. (0.817) p.a.
Fair value per share - € 1.28 ((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 €2.6m. 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 €0.6m
is recognised in the consolidated income statement to 31 March 2023. A total
of 635,000 shares were forfeited during the performance period by two
participants who left the Group.
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 the senior employees was approved in 2021.
Awards granted under the SIP are made in the form of a conditional right to
receive a specified number of shares for nil cost which vest after the three
year performance period (on 1 March 2025 for the 2021 award) with vested
awards being subject to a further restricted period of one year when shares
cannot be sold. Awards are subject to adjusted net asset value per share
("TNR") (two-thirds of award) and relative total shareholder return ("TSR")
(one-third of award) performance conditions. Awards are equity settled. The
employees' tax obligation will be determined upon the vesting date of the
share issue.
September 2021 grant
3,074,500 share awards were granted under the scheme on 7 September 2021 with
a total charge for the award of €3.7m on the basis that 0% of awards are
forfeited during the vesting period. Charges for the awards are based on fair
values calculated at the grant date and expensed on a straight-line basis over
the period that individuals are providing service to the Company in respect of
the awards. For the 7 September 2021 SIP grant an expense of €1.1m is
recognised in the consolidated income statement to 31 March 2023.
The following assumptions were used in calculating the fair value per share
for the TNR and TSR elements of the award that were granted on 7 September
2021:
TNR TSR
Valuation methodology Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary award 1/3 ordinary award
Share price at grant date - € 1.49 1.49
Exercise price - € n/a n/a
Expected volatility - % 40.7 40.7
Expected life - years 3.48 3.48
Performance projection period - years 2.56 2.56
Expected dividend yield - % 2.60 2.60
Risk-free rate based on European treasury bonds rate of return - % (0.737) p.a. (0.737) p.a.
Fair value per share - € 1.36 ((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 and the pairwise correlation
between comparator companies and TSR performance between the start of the
performance period and the date of grant.
The weighted average fair value of share options granted on 7 September 2021
is €1.21.
Expected volatility of the Company's share price was determined by calculating
the historical volatility of the Company's share price over the period
immediately prior to the date of grant, commensurate with the term to the end
of the performance period.
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 €0.03m. 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 €0.01m is recognised in the consolidated income statement to
31 March 2023.
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 €0.1m. 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 €0.03m
is recognised in the consolidated income statement to 31 March 2023.
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.
August 2022 grant - the BizSpace Group awards
1,600,000 ordinary share awards were granted under the scheme on 1 August 2022
for certain BizSpace Group employees with a total charge for the award of
€1.3m. 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 €0.4m is recognised in the
consolidated income statement to 31 March 2023.
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.
Deferred Bonus Plan
The Deferred Bonus Plan ("DBP") is subject to rules approved by the Board and
to the Directors' Remuneration Policy (approved by shareholders triennially)
for Executive Directors of Sirius Real Estate Limited only.
The Executive Directors consisting of the Chief Executive Officer, the Chief
Financial Officer and the Chief Investment Officer of the Company are
currently required to participate in the DBP.
The participants are subject to annual performance bonus conditions and
objectives to be agreed by the Remuneration Committee. At the end of the
applicable financial year, and on receipt of an annual performance bonus, as
determined by the Remuneration Committee, 65% or more is awarded as cash with
the remainder transferred into shares in the Company. Of the 35%, half is
deferred for one year and the remaining half is deferred for two years. The
DBP had been previously treated as cash settled as it was not material to the
financial statements.
Number of share awards
Movements in the number of awards outstanding are as follows:
Year ended Year ended
31 March 2023
31 March 2022
Number of Weighted Number of Weighted
share awards average share awards average
exercise exercise
price price
€m €m
Balance outstanding as at the beginning of the year (nil exercisable) 15,278,619 - 15,584,750 -
Maximum granted during the year 5,353,067 - 7,302,831 -
Forfeited during the year (1,610,000) - (195,000) -
Exercised during the year (2,431,714) - (4,934,934) -
Shares surrendered to cover employee tax obligations (2,111,325) - (2,479,028) -
Balance outstanding as at year end (nil exercisable) 14,478,647 - 15,278,619 -
Employee benefit schemes
A reconciliation of share-based payments and employee benefit schemes and
their impact on the consolidated income statement is as follows:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Charge relating to 2018 LTIP - June 2019 grant - 1.1
Charge relating to 2018 LTIP - June 2020 grant 0.8 0.8
Charge relating to 2021 LTIP - August 2021 grant 1.6 1.1
Charge relating to 2021 LTIP - July 2022 grant 0.6 -
Charge relating to 2019 SIP - August 2019 grant - 0.6
Charge relating to 2021 SIP - September 2021 grant 1.1 0.6
Charge relating to 2021 SIP - August 2022 grant (including the BizSpace Group 0.4 -
awards)
DBP 1.0 -
Total consolidated income statement charge relating to share-based payments 5.5 4.2
An amount of €5.5m (2022: €1.9m) is recognised in other distributable
reserves as per the consolidated statement of changes in equity. In addition,
an amount of €1.7m has been paid for participants' tax liabilities in
relation to share-based payment schemes.
10. Finance income, finance expense and change in fair value of derivative
financial instruments
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Bank interest income 0.6 0.1
Finance income from associates 2.2 2.9
Finance income 2.8 3.0
Bank loan interest expense (13.6) (11.5)
Interest expense related to lease liabilities (see note 18) (1.1) (0.5)
Amortisation of capitalised finance costs (3.3) (2.6)
Total interest expense (18.0) (14.6)
Bank charges and bank interest expense on deposits (0.3) (0.9)
Refinancing costs, exit fees and prepayment penalties - (7.8)
Other finance costs (0.3) (8.7)
Finance expense (18.3) (23.3)
Change in fair value of derivative financial instruments 0.9 1.0
Net finance expense (14.6) (19.3)
For the year ended 31 March 2022, included within refinancing costs are exit
fees and early prepayment penalties of €6.9m that directly related to the
early repayment of loans and cost in relation to the restructuring of debt in
the amount of €0.9m.
The change in fair value of derivative financial instruments of €0.9m (2022:
€1.0m) reflects the change in the market valuation of these financial
instruments.
11. Taxation
Consolidated income statement
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Current income tax
Current income tax charge (4.8) (6.2)
Current income tax charge relating to disposals of investment properties - -
Adjustments in respect of prior periods((1)) 1.8 0.1
Total current income tax (3.0) (6.1)
Deferred tax
Relating to origination and reversal of temporary differences (4.3) (14.8)
Total deferred tax (4.3) (14.8)
Income tax charge reported in the income statement (7.3) (20.9)
(1) In the current year, the Group identified an error in the accrual of
tax liabilities arising in the BizSpace Group as at 31 March 2022, resulting
in an overstatement of the tax liability of €5.0m of which €3.0m 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 year financial statements. The amounts have been recorded within
administrative expenses under exceptional items and the taxation (see note 11)
lines 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.
The reconciliation of the effective tax rate is explained below:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Profit before tax 87.0 168.9
Current tax using the German corporation tax rate of 15.825% (2022: 15.825%) 13.8 26.7
Effects of:
Deductible interest on internal financing((1)) (4.4) (5.4)
Tax exempt gain from selling of investments and dividends((2)) (0.4) (1.1)
Non-deductible expenses (0.3) 0.4
Change in unrecognised deferred tax - tax effect of utilisation of tax losses 2.8 (10.5)
not previously recognised((3))
Adjustments in respect of prior periods((4)) (1.8) (0.1)
German trade tax 0.4 -
Tax exempt income under REIT regime((5)) (3.7) -
Goodwill impairment((6)) - 6.5
Difference in foreign tax rates ((7)) 0.9 1.5
Deferred tax - current year movements - 1.0
Rate difference between current tax and deferred tax - 1.9
Total income tax charge in the income statement 7.3 20.9
(1) The item refers to intra-group financing and also includes the
difference in foreign tax rates within the jurisdiction of the recipient of
the interest income and the German corporation tax rate.
(2) The tax exempt gain from selling of investments and dividends in the
current year relates to the profits of associates only.
(3) Following the acquisition of the BizSpace Group on 15 November 2021,
the BizSpace Group has entered into the UK REIT regime effective from 1 April
2022. The result of the REIT conversion included the derecognition of deferred
tax assets and deferred tax liabilities on investment properties as at 31
March 2022. The reconciling item increased as at 31 March 2023 due to the use
of previously not recognised tax losses.
(4) To align with tax returns filed for previous years, an adjustment
(primarily arising on tax gains on disposal of investment properties) has been
made within the financial year.
(5) The BizSpace Group has entered into the UK REIT regime effective from 1
April 2022 which exempts income from property rental business and profits from
disposal of assets from UK tax charge.
(6) An impairment of €40.9m in relation to the goodwill was included as a
permanent item in the tax reconciliation of last year.
(7) As the current UK corporation tax rate is 19% this item shows the
difference between this rate and the German corporation tax rate of 15.825%
used in the above reconciliation.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the
following:
Assets Liabilities Net
31 March 2023 31 March 2022 31 March 2023 31 March 2022 31 March 2023 31 March 2022
€m €m €m €m €m €m
Revaluation of investment property - - (99.5) (95.4) (99.5) (95.4)
Rent free adjustments - - (0.7) (0.6) (0.7) (0.6)
Capitalised own works - - (0.1) (0.1) (0.1) (0.1)
Hedging (swaps) - - (0.2) (0.1) (0.2) (0.1)
Fair value adjustment on leased investment properties 3.9 4.1 (3.8) (4.3) 0.1 (0.2)
Tax losses 20.2 20.3 - - 20.2 20.3
Fixed asset temporary differences - 0.2 - - - 0.2
Deferred tax assets/(liabilities) 24.1 24.6 (104.3) (100.5) (80.2) (75.9)
For accounting periods beginning on or after 1 January 2023 IASB ED/2019/5
amended the application of the initial recognition exemption for transactions
giving rise to offsetting deferred tax assets and deferred tax liabilities. In
respect of IFRS 16, the Group adopted the amendments to the initial
recognition exemption under IAS 12 already in last year and recognises a
deferred tax asset in respect of the IFRS 16 lease liabilities and a deferred
tax liability in respect of IFRS 16 right of use, resulting in a net deferred
tax asset for the current year.
Movement in deferred tax during the year is as follows:
31 March 2022 Recognised Exchange Acquisition 31 March 2023
in income differences of a subsidiary
€m €m €m €m €m
Revaluation of investment property (95.4) (4.1) - - (99.5)
Rent free adjustments (0.6) (0.1) - - (0.7)
Capitalised own works (0.1) - - - (0.1)
Hedging (swaps) (0.1) (0.1) - - (0.2)
Fair value adjustment on leased investment properties (0.2) 0.3 - - 0.1
Tax losses 20.3 (0.1) - - 20.2
Fixed asset temporary differences 0.2 (0.2) - - -
Other short-term temporary differences - - - - -
Total (75.9) (4.3) - - (80.2)
31 March 2021 Recognised Exchange Acquisition 31 March 2022
in income differences of a subsidiary
€m €m €m €m €m
Revaluation of investment property (73.9) (8.7) - (12.8) (95.4)
Rent free adjustments (0.6) - - - (0.6)
Capitalised own works - (0.1) - - (0.1)
Hedging (swaps) 0.2 (0.3) - - (0.1)
Fair value adjustment on leased investment properties - (5.7) - 5.5 (0.2)
Tax losses 18.0 2.3 - - 20.3
Fixed asset temporary differences - (1.0) - 1.2 0.2
Other short-term temporary differences - (1.3) - 1.3 -
Total (56.3) (14.8) - (4.8) (75.9)
The Group has not recognised a deferred tax asset on €240.2m (2022:
€256.9m) of tax losses carried forward and future share scheme deductions
due to uncertainties over recovery. There is no expiration date on €240.2m
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.
Recognised and unrecognised temporary differences in the acquired BizSpace
Group of €54m were derecognised as at 31 March 2022 following the BizSpace
Group's entry to the UK REIT regime effective 1 April 2022. A deferred tax
asset of €0.05m relating to the excess of capital allowances over qualifying
net book value in the BizSpace Group is expected to be recoverable by the
residual business of the BizSpace Group post REIT conversion. For the
financial year beginning 1 April 2023 the normal corporation tax rate was
increased from 19% to 25%. This may have a potential impact on any taxable
profits made by the residual business of the BizSpace Group post REIT
conversion and other UK operations only from that date.
A deferred tax liability is recognised on temporary differences of €nil
(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
31 March 2022
31 March 2023 31 March 2022 31 March 2023 31 March 2022 31 March 2023
€m €m €m €m €m €m
UK - 0.2 - - - 0.2
Germany 24.1 24.4 (104.3) (100.5) (80.2) (76.1)
Cyprus - - - - - -
Deferred tax assets/(liabilities) 24.1 24.6 (104.3) (100.5) (80.2) (75.9)
Assets Liabilities Net
31 March 2022
31 March 2023 31 March 2022 31 March 2023 31 March 2022 31 March 2023
€m €m €m €m €m €m
UK - - (0.4) (7.3) (0.4) (7.3)
Germany - - (4.6) (2.7) (4.6) (2.7)
Cyprus - - (0.4) (0.4) (0.4) (0.4)
Current tax liabilities - - (5.4) (10.4) (5.4) (10.4)
12. Earnings per share
The calculations of the basic, diluted, EPRA, headline and adjusted earnings
per share are based on the following data:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Earnings attributable to the owners of the Company
Basic earnings 79.6 147.9
Diluted earnings 79.6 147.9
EPRA earnings 88.2 70.7
Diluted EPRA earnings 88.2 70.7
Headline earnings 89.0 58.4
Diluted headline earnings 89.0 58.4
Adjusted
Basic earnings 79.6 147.9
Add loss/(deduct gain) on revaluation of investment properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (0.1)
Tax in relation to the revaluation gains/losses of investment properties and 4.2 14.6
gains/losses on disposal of properties above less REIT related tax effects
Non-controlling interest ("NCI") relating to revaluation (net of related tax) - 0.2
Goodwill impairment - 40.9
Add loss/(deduct gain) on revaluation of investment property relating to 0.5 (6.0)
associates
Tax in relation to the revaluation gains/losses on investment property (0.4) 1.2
relating to associates above
Headline earnings after tax 89.0 58.4
Deduct change in fair value of derivative financial instruments (net of (0.8) (0.8)
related tax and NCI)
Deduct revaluation expense relating to leased investment properties (1.5) (5.6)
Add adjusting items (net of related tax and NCI)((1)) 6.2 19.1
Adjusted earnings after tax 92.9 71.1
Number of shares
Weighted average number of ordinary shares for the purpose of basic, headline, 1,167,757,975 1,097,082,162
adjusted and basic EPRA earnings per share
Weighted average number of ordinary shares for the purpose of diluted 1,183,626,763 1,112,360,781
earnings, diluted headline earnings, diluted adjusted earnings and diluted
EPRA earnings per share
Basic earnings per share 6.82c 13.48c
Diluted earnings per share 6.73c 13.29c
Basic EPRA earnings per share 7.55c 6.44c
Diluted EPRA earnings per share 7.45c 6.36c
Headline earnings per share 7.62c 5.32c
Diluted headline earnings per share 7.52c 5.25c
Adjusted earnings per share 7.96c 6.48c
Adjusted diluted earnings per share 7.85c 6.39c
(1) See reconciliation between adjusting items as stated within earnings
per share and those stated within administrative expenses in note 7.
Notes Year ended Year ended
31 March 2023 31 March 2022
€m €m
Exceptional items 7 0.7 7.1
Refinancing costs, exit fees and prepayment penalties 10 - 7.8
Share-based payments 7 5.5 4.2
Adjusting items as per note 12 6.2 19.1
The following table shows the reconciliation of basic to headline earnings,
separately disclosing the impact before tax (gross column) and after tax (net
column):
Year ended Year ended
31 March 2023 31 March 2022
Gross Net Gross Net
€m €m €m €m
Basic earnings 79.6 147.9
Add loss/(deduct gain) on revaluation of investment properties 9.8 14.0 (140.9) (126.3)
(Deduct gain)/add loss on disposal of properties (4.7) (4.7) 0.6 0.6
Deduct recoveries from prior disposals of subsidiaries - - (0.1) (0.1)
NCI relating to revaluation 0.1 - 0.2 0.2
Goodwill impairment - - 40.9 40.9
Add loss/(deduct gain) on revaluation of investment property relating to 0.5 0.1 (6.0) (4.8)
associates
Headline earnings 89.0 58.4
EPRA earnings
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Basic and diluted earnings attributable to owners of the Company 79.6 147.9
Add loss/(deduct gain) on revaluation of investment properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties (net of related tax) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (0.1)
Refinancing costs, exit fees and prepayment penalties - 7.8
Goodwill impairment - 40.9
Acquisition costs in relation to business combinations - 5.3
Change in fair value of derivative financial instruments (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements on investment properties 4.3 14.8
NCI relating to revaluation (net of related tax) - 0.2
Add loss/(deduct gain) on revaluation of investment property relating to 0.5 (6.0)
associates
Tax in relation to the revaluation gains/losses on investment property (0.4) 1.2
relating to associates
EPRA earnings 88.2 70.7
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
(2022: 5,280,308 shares), which are held by an Employee Benefit Trust on
behalf of the Group.
The weighted average number of shares for the purpose of diluted, diluted
EPRA, diluted headline and adjusted diluted earnings per share is calculated
as follows:
Year ended Year ended
31 March 2023 31 March 2022
Weighted average number of ordinary shares for the purpose of basic, basic 1,167,757,975 1,097,082,162
EPRA, headline and adjusted earnings per share
Weighted average effect of grant of LTIP and SIP shares 15,868,789 15,278,619
Weighted average number of ordinary shares for the purpose of diluted, diluted 1,183,626,764 1,112,360,781
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
gains/losses on revaluation of investment properties, gains/losses on
disposals of properties (net of related tax), recoveries from prior disposals
of subsidiaries (net of related tax), refinancing costs, exit fees and
prepayment penalties, goodwill impairment, acquisition costs in relation to
business combinations, changes in fair value of derivative financial
instruments, (collectively, the "EPRA earnings adjustments"), deferred tax in
respect of the EPRA earnings adjustments, NCI relating to revaluation (net of
related tax), gains/losses on revaluation of investment property relating to
associates and the related tax thereon.
13. Net asset value per share
31 March 2023 31 March 2022
€m €m
Net asset value
Net asset value for the purpose of assets per share (assets attributable to 1,197.1 1,190.7
the owners of the Company)
Deferred tax liabilities (see note 11) 80.2 75.9
Derivative financial instruments at fair value (1.3) (0.3)
Adjusted net asset value attributable to the owners of the Company 1,276.0 1,266.3
Number of shares
Number of ordinary shares for the purpose of net asset value per share and 1,168,371,222 1,166,880,684
adjusted net asset value per share
Number of ordinary shares for the purpose of EPRA NTA per share 1,182,849,869 1,182,159,303
Net asset value per share 102.46c 102.04c
Adjusted net asset value per share 109.21c 108.51c
EPRA NTA per share 108.11c 107.28c
31 March 2023 EPRA NRV EPRA NTA EPRA NDV
€m €m €m
Net asset value as at year end (basic) 1,197.1 1,197.1 1,197.1
Diluted EPRA net asset value at fair value 1,197.1 1,197.1 1,197.1
Group
Derivative financial instruments at fair value (1.3) (1.3) n/a
Deferred tax in respect of EPRA fair value movements on investment properties 80.2 80.1((1)) n/a
Intangibles as per note 17 n/a (4.1) n/a
Fair value of fixed interest rate debt n/a n/a 99.2
Real estate transfer tax 164.4 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment properties 7.0 7.0((1)) n/a
Fair value of fixed interest rate debt n/a n/a 9.9
Real estate transfer tax 9.3 n/a n/a
Total EPRA NRV, NTA and NDV 1,456.7 1,278.8 1,306.2
EPRA NRV, NTA and NDV per share 123.15c 108.11c 110.43c
31 March 2022 EPRA NRV EPRA NTA EPRA NDV
€m €m €m
Net asset value as at year end (basic) 1,190.7 1,190.7 1,190.7
Diluted EPRA net asset value at fair value 1,190.7 1,190.7 1,190.7
Group
Derivative financial instruments at fair value (0.3) (0.3) n/a
Deferred tax in respect of EPRA fair value movements on investment properties 75.9 75.6 ((1)) n/a
Intangibles as per note 17 n/a (4.3) n/a
Fair value of fixed interest rate debt n/a n/a (22.2)
Real estate transfer tax 160.7 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment properties 6.5 6.5((1)) n/a
Fair value of fixed interest rate debt n/a n/a 2.1
Real estate transfer tax 9.1 n/a n/a
Total EPRA NRV, NTA and NDV 1,442.6 1,268.2 1,170.6
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 year end except for deferred tax in relation to assets
held for sale.
For more information on adjusted net asset value and EPRA NRV, NTA and NDV,
refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per
share is calculated as follows:
31 March 2023 31 March 2022
Number of ordinary shares for the purpose of net asset value per share and 1,168,371,222 1,166,880,684
adjusted net asset value per share
Effect of grant of LTIP & SIP shares 14,478,647 15,278,619
Number of ordinary shares for the purpose of EPRA NRV, NTA and NDV per share 1,182,849,869 1,182,159,303
The number of shares has been reduced by 7,492,763 own shares held (2022:
5,280,308 shares), which are held by an Employee Benefit Trust on behalf of
the Group.
14. Investment properties
The movement in the book value of investment properties is as follows:
31 March 2023 31 March 2022
€m €m
Total investment properties at book value as at the beginning of the year 2,100.0 1,362.2
Acquisition of a subsidiary (see note 4)((1)) - 421.1
Additions - owned investment properties 44.7 162.8
Additions - leased investment properties 1.4 3.4
Capital expenditure and broker fees 29.9 22.5
Disposals (17.1) (1.8)
Reclassified as investment properties held for sale (see note 15) (8.8) (13.7)
(Loss)/gain on revaluation above capex and broker fees (7.7) 147.0
Adjustment in respect of lease incentives (0.6) (0.5)
Deficit on revaluation relating to leased investment properties (1.5) (5.6)
Foreign exchange differences (17.3) 2.6
Total investment properties at book value as at year end((2)) 2,123.0 2,100.0
(1) An amount of €12.2m relate to leased investment properties.
(2) Excluding assets held for sale.
The reconciliation of the valuation carried out by the external valuer to the
carrying values shown in the consolidated statement of financial position is
as follows:
31 March 2023 31 March 2022
€m €m
Owned investment properties at market value per valuer's report((1)) 2,103.1 2,079.1
Adjustment in respect of lease incentives (4.6) (4.2)
Leased investment property market value 24.5 25.1
Total investment properties at book value as at year end((1)) 2,123.0 2,100.0
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment properties as at
year end has been arrived at on the basis of a valuation carried out at that
date by Cushman & Wakefield LLP (2022: Cushman & Wakefield LLP), an
independent valuer accredited by the Royal Institute 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 values of the properties are consistent
with the previous year.
The weighted average lease expiry remaining across the owned portfolio in
Germany as at year end was 2.8 years (2022: 2.9 years). The weighted average
lease expiry remaining across the owned portfolio in the UK as at year end was
1.01 years (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 year end has been arrived at on the basis of a valuation carried out by
management using discounted cash flows similar to the approach of Cushman
& Wakefield LLP. A sensitivity analysis is not provided on the lease
investment properties as the balance is not considered material to the
financial statements.
The reconciliation of loss or gain on revaluation above capex as per the
consolidated income statement is as follows:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
(Loss)/gain on revaluation above capex and broker fees (7.7) 147.0
Adjustment in respect of lease incentives (0.6) (0.5)
Deficit on revaluation relating to leased investment properties (1.5) (5.6)
(Loss)/gain on revaluation of investment properties reported in the income (9.8) 140.9
statement
Included in the loss or 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 €39.2m and gross losses of
€49.0m (2022: gross gains of €160.4m and gross losses of €19.5m).
Other than the capital commitments disclosed in note 32, the Group is under no
contractual obligation to purchase, construct or develop any investment
property. The Group is responsible for routine maintenance of the investment
properties.
All investment properties are categorised as Level 3 fair values as they use
significant unobservable inputs. There have not been any transfers between
levels during the year. Investment properties have been classed according to
their asset type. Information on these significant unobservable inputs per
class of investment property is disclosed below (excluding leased investment
properties).
The valuation for owned investment properties is (including assets classified
as held for sale) performed on a lease-by-lease basis due to the mixed-use
nature of the sites using the discounted cash flow technique for the German
portfolio and on a capitalised income basis (where income is capitalised by an
appropriate yield which reflects the age, location, ownership, customer base
and agreement type) for the UK portfolio. This gives rise to large ranges in
the inputs.
Current rental rate Market rental rate Occupancy Gross initial yield Net initial yield Discount factor Void period months
Market per sqm per sqm % % % %
value € €
€m
31 March 2023 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 362.0 2.88 8.58 2.67 7.80 64.7 100.0 4.7 9.9 3.7 7.6 4.1 5.8 6 15
Value add 607.6 2.25 6.64 3.58 8.46 26.9 97.4 2.9 9.8 0.8 7.5 4.5 7.1 9 18
Total traditional business parks 969.6 2.25 8.58 2.67 8.46 26.9 100.0 2.9 9.9 0.8 7.6 4.1 7.1 6 18
Modern business parks
Mature 200.4 5.38 8.64 3.93 8.15 94.3 100.0 3.6 10.5 2.4 9.3 4.1 5.4 6 15
Value add 250.1 2.92 9.76 3.91 10.35 54.5 92.8 5.5 9.4 3.8 7.4 4.8 7.3 9 24
Total modern business parks 450.5 2.92 9.76 3.91 10.35 54.5 100.0 3.6 10.5 2.4 9.3 4.1 7.3 6 24
Office
Mature 37.5 14.34 14.34 10.78 10.78 92.6 92.6 8.7 8.7 7.3 7.3 4.9 4.9 9 9
Value add 236.4 4.05 10.27 6.42 12.19 49.7 87.5 4.4 9.3 2.4 6.8 5.0 6.9 9 18
Total office 273.9 4.05 14.34 6.42 12.19 49.7 92.6 4.4 9.3 2.4 7.3 4.9 6.9 9 18
Total Germany 1,694.0 2.25 14.34 2.67 12.19 26.9 100.0 2.9 10.5 0.8 9.3 4.1 7.3 6 24
Current Market rental Occupancy Net initial yield Void period
rental rate
rate
Market
% % months
per sqm per sqm
value
€ €
€m
31 March 2023 Low High Low High Low High Low High Low High
Total mixed-use schemes 102.4 2.09 20.25 5.46 23.58 42.0 93.3 4.0 10.8 4.00 12.00
Total office 143.7 5.42 33.89 7.94 24.68 50.5 100.0 4.9 23.2 4.00 12.00
Total industrial 171.6 2.23 8.19 2.55 12.99 64.1 100.0 3.8 12.4 4.00 12.00
Total UK 417.7 2.09 33.89 2.55 24.68 42.0 100.0 3.8 23.2 4.00 12.00
Current rental rate Market rental rate Occupancy Gross initial yield Net initial yield Discount factor Void period months
Market per sqm per sqm % % % %
value € €
€m
31 March 2022 Low High Low High Low High Low High Low High Low High Low High
Traditional business parks
Mature 329.1 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 625.5 -((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 954.6 -((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 195.8 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 213.1 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 408.9 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 10.2 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 266.9 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 office 277.1 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
Total Germany 1,640.6 -((1)) 11.78 2.65 12.18 -((1)) 100.0 -((1)) 9.8 (3.7)((1)) 8.4 3.6 7.3 6 24
Market Current Market rental Occupancy Net initial yield Void period
rental rate
rate
value
% % months
per sqm per sqm
€m
€ €
31 March 2022 Low High Low High Low High Low High Low High
Total mixed-use schemes 123.3 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4 12
Total office 153.1 -((1)) 25.38 5.83 26.50 -((1)) 100.0 -((1)) 10.0 4 12
Total industrial 175.4 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4 12
Total UK 451.8 -((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:
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
Market in market rental rates in discount rates in gross initial yield in net initial yield
€m
value €m €m €m
€m
31 March 2023 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 969.6 48.9 (49.2) (19.3) 19.1 (73.1) 86.8 (106.6) 109.0
Total modern 450.5 22.0 (21.7) (8.5) 9.3 (32.2) 37.9 (41.5) 47.4
business parks
Total office 273.9 14.0 (14.1) (5.6) 5.6 (20.8) 24.8 (28.3) 36.8
Market value 1,694.0 84.9 (85.0) (33.4) 34.0 (126.1) 149.5 (176.4) 193.2
Germany
Change of 5% Change of 0.5%
Market in market rental rates in net initial yield
value €m €m
€m
31 March 2023 Increase Decrease Increase Decrease
Total mixed-use schemes 102.4 (6.2) 7.5 3.8 (3.6)
Total office 143.7 (6.8) 7.8 4.7 (4.5)
Total industrial 171.6 (10.8) 12.7 7.0 (6.6)
Market value UK 417.7 (23.8) 28.0 15.4 (14.8)
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
€m €m €m €m €m
31 March 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Total traditional business parks 954.6 48.5 (48.4) (19.6) 20.1 (84.2) 82.2 (98.0) 126.3
Total modern business parks 408.9 19.2 (19.4) (8.6) 8.4 (30.9) 36.8 (38.1) 48.1
Total office 277.1 14.5 (14.3) (5.8) 5.8 (23.0) 28.5 (37.9) 27.8
Market value Germany 1,640.6 82.2 (82.1) (34.0) 34.3 (138.1) 147.5 (174.0) 202.2
Market Change of 5% Change of 0.5%
value in market rental rates in net initial yield
€m €m €m
31 March 2022 Increase Decrease Increase Decrease
Total mixed-use schemes 123.3 4.0 (4.4) (4.5) 4.4
Total office 153.1 5.8 (5.4) (4.3) 5.1
Total industrial 175.4 7.1 (6.3) (5.8) 6.8
Market value UK 451.8 16.9 (16.1) (14.6) 16.3
15. Assets held for sale
Investment properties held for sale
31 March 2023 31 March 2022
€m €m
Magdeburg - 13.8
Wuppertal 8.8 -
Balance as at year end 8.8 13.8
The disclosures regarding valuation in note 14 are also applicable to assets
held for sale.
As at 31 March 2023, an amount of €8.8m relating to the sale of the
Wuppertal asset was received prior to the completion date of 1 April 2023 and
was included in the cash at bank per note 22. As at 31 March 2022, an amount
of €13.8m 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 22.
As a result, an equal and opposite position within other payables was
recognised. See note 23 for further details.
16. Plant and equipment
Plant and Fixtures Total
equipment and fittings €m
€m €m
Cost
As at 31 March 2022 2.7 8.4 11.1
Additions in year 0.8 3.3 4.1
Disposals in year (0.8) (1.4) (2.2)
Foreign exchange differences - (0.2) (0.2)
As at 31 March 2023 2.7 10.1 12.8
Depreciation
As at 31 March 2022 (1.1) (4.5) (5.6)
Charge for year (0.6) (1.5) (2.1)
Disposals in year 0.8 1.3 2.1
Foreign exchange differences (0.1) 0.1 -
As at 31 March 2023 (1.0) (4.6) (5.6)
Net book value as at 31 March 2023 1.7 5.5 7.2
Cost
As at 31 March 2021 1.0 6.1 7.1
Acquisition of a subsidiary (see note 4) 0.8 1.8 2.6
Additions in year 0.9 0.5 1.4
Disposals in year - - -
Foreign exchange differences - - -
As at 31 March 2022 2.7 8.4 11.1
Depreciation
As at 31 March 2021 (0.7) (3.7) (4.4)
Charge for year (0.4) (0.8) (1.2)
Disposals in year - - -
Foreign exchange differences - - -
As at 31 March 2022 (1.1) (4.5) (5.6)
Net book value as at 31 March 2022 1.6 3.9 5.5
17. Intangible assets
Software and Goodwill Total
licences with €m €m
definite useful life
€m
Cost
As at 31 March 2022 10.5 40.9 51.4
Additions in year 1.1 - 1.1
Disposals in year - - -
Foreign exchange differences - - -
As at 31 March 2023 11.6 40.9 52.5
Amortisation
As at 31 March 2022 (6.2) (40.9) (47.1)
Charge for year (1.3) - (1.3)
Disposals in year - - -
Foreign exchange differences - - -
As at 31 March 2023 (7.5) (40.9) (48.4)
Net book value as at 31 March 2023((1)) 4.1 - 4.1
Cost
As at 31 March 2021 7.9 3.7 11.6
Acquisition of a subsidiary (see note 4) 0.5 37.2 37.7
Additions in year 2.1 - 2.1
Disposals in year - - -
Foreign exchange differences - - -
As at 31 March 2022 10.5 40.9 51.4
Amortisation
As at 31 March 2021 (5.0) - (5.0)
Charge for year (1.2) - (1.2)
Disposals in year - - -
Impairment - (40.9) (40.9)
Foreign exchange differences - - -
As at 31 March 2022 (6.2) (40.9) (47.1)
Net book value as at 31 March 2022((1)) 4.3 - 4.3
(1) Included in the net book value is an amount of €1.1m relating to
intangible assets under development not yet amortised (2022: €2.4m). All
these development projects are expected to finalise in the next financial
year.
Internalisation of Asset Management Agreement
On 30 January 2012, a transaction was completed to internalise the Asset
Management Agreement and, as a result of the consideration given exceeding the
net assets acquired, goodwill of €3.7m was recognised. The goodwill was
allocated to the cash-generating units comprising the Germany segment.
In the year ended 31 March 2022 indicators of impairment relating to the
goodwill balance were noted as the Group has determined that the identified
cash flows could no longer be distinguished from those included in other
assets held by the cash-generating units in the Germany segment. This resulted
in the entirety of the balance being impaired and a consequent impairment loss
of €3.7m being recognised. Goodwill which has been impaired may not be
reversed in future periods.
Helix Investment Limited
On 15 November 2021, the business combination described in note 4 resulted in
the recognition of goodwill due to the consideration given exceeding the net
assets required by €37.2m. The goodwill balance was allocated to the
cash-generating units comprising the UK segment and an impairment test was
performed at 31 March 2022 to determine whether the recoverable amount of the
cash-generating units exceeds the carrying value. The key assumptions
regarding value in use were three year cash flow forecasts as prepared by
management of the group of cash-generating units and the discount rate
applied. Cash flows beyond three years are extrapolated using an inflation
figure of 2%. The discount rate used is a pre-tax rate and reflects the risks
specific to the real estate industry in the UK. A discount rate of 7.13% and
terminal value of 5.13% were applied in the impairment review.
In the period between acquisition and the prior year ended 31 March 2022, the
properties held by the BizSpace Group and the rent roll of the UK segment
increased in value significantly. The Group considered these factors along
with the value in use calculation in assessing whether the goodwill was
recoverable and concluded that it was not. Whilst the Group's longer-term
plans for the business and the potential synergies with the broader Group are
at an early stage, based on the impairment review conducted the Group
concluded that there was not sufficient evidence to support the goodwill
balance over and above the cash flows already included in the assessment of
the fair value of investment properties and other assets held by the Group. As
a result, an impairment loss of €37.2m was recognised for the year ended 31
March 2022. Goodwill which has been impaired may not be reversed in future
periods.
18. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets (excluding those
disclosed under investment properties) recognised and the movements during the
year:
Office Total
€m €m
As at 31 March 2021 1.9 1.9
Additions 15.0 15.0
Depreciation expense (0.8) (0.8)
Lease modifications((1)) (1.1) (1.1)
As at 31 March 2022 15.0 15.0
Additions 1.5 1.5
Depreciation expense (2.1) (2.1)
As at 31 March 2023 14.4 14.4
(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 €24.5m (2022: €25.1m) are classified as investment
properties, of which €2.8m (2022: €4.0m) relate to commercial property.
Set out below are the carrying amounts of lease liabilities and the movements
during the year:
31 March 2023 31 March 2022
€m €m
Balance as at the beginning of the year (38.7) (15.0)
Acquisition of a subsidiary (see note 4) - (12.2)
Accretion of interest (1.1) (0.5)
Additions (2.8) (18.4)
Lease modifications((1)) - 1.1
Payments 2.3 6.4
Foreign exchange differences 0.7 (0.1)
Balance as at year end (39.6) (38.7)
Current lease liabilities as at year end (2.2) (1.1)
Non-current lease liabilities as at year end (37.4) (37.6)
(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:
31 March 2023 Within 1 year 1-5 years 5+ years Total
€m €m €m €m
Commercial property((1)) (0.2) (1.0) (0.3) (1.5)
Long-term leasehold((1)) (0.2) (1.0) (20.4) (21.6)
Office space (1.8) (7.5) (7.2) (16.5)
Total (2.2) (9.5) (27.9) (39.6)
31 March 2022 Within 1 year 1-5 years 5+ years Total
€m €m €m €m
Commercial property((1)) (0.7) (0.9) (0.5) (2.1)
Long-term leasehold((1)) (0.2) (1.0) (19.9) (21.1)
Office space (0.2) (6.3) (9.0) (15.5)
Total (1.1) (8.2) (29.4) (38.7)
(1) These lease liabilities relate to right of use assets recorded as
investment properties.
Maturity analysis of lease liabilities using contractual undiscounted payments
is disclosed in note 25.
The overall weighted average discount rate used for the year is 2.7% (2022:
2.3%).
During the year expenses paid for leases of low-value assets and short-term
leases which are recognised straight-line over the lease term (included in the
administrative expenses) amounted to €0.6m (2022: €0.5m).
In addition to leases of low-value assets and payments resulting from
short-term leases that are included in the cash flow from operating
activities, interest payments and repayments of lease liabilities totalling
€2.3m (2022: €6.4m) were incurred for the year and are included in the
cash flow from financing activities.
19. Other non-current financial assets
31 March 2023 31 March 2022
€m €m
Deposits 4.1 4.1
Loans to associates 44.3 44.2
Balance as at year end 48.4 48.3
Loans to associates relate to shareholder loans granted to associates by the
Group. The loans terminate on 31 December 2026 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.
20. Investment in associates
The principal activity of the associates is the investment in, and development
of, commercial property located in Germany and to provide conventional and
flexible workspace. Since the associates are individually immaterial the Group
is disclosing aggregated information of the associates.
The following table illustrates the summarised financial information of the
Group's investment in associates:
31 March 2023 31 March 2022
€m €m
Current assets 28.4 20.0
Non-current assets 354.7 349.8
Current liabilities (15.6) (10.4)
Non-current liabilities (296.1) (294.1)
Equity 71.4 65.3
Unrecognised accumulated losses 4.9 3.7
Subtotal 76.3 69.0
Group's share in equity - 35% 26.7 24.1
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Net operating income 21.1 19.9
(Loss)/gain on revaluation of investment properties (0.7) 18.9
Administrative expense (3.7) (3.0)
Operating profit 16.7 35.8
Net finance costs (8.8) (9.8)
Profit before tax 7.9 26.0
Taxation (1.9) (4.2)
Unrecognised loss/(profit) 1.3 (2.0)
Total profit and comprehensive income for the year after tax 7.3 19.8
Group's share of profit for the year - 35% 2.6 6.9
Included within the non-current liabilities are shareholder loans amounting to
€126.8m (2022: €126.5m). As at year end no contingent liabilities existed
(2022: none). The associates had contracted capital expenditure for
development and enhancements of €3.4m as at year end (2022: €2.0m).
The following table illustrates the movement in investment in associates:
31 March 2023 31 March 2022
€m €m
Balance as at the beginning of the year 24.1 17.2
Dividend received - -
Share of profit 2.6 6.9
Balance as at year end 26.7 24.1
21. Trade and other receivables
31 March 2023 31 March 2022
€m €m
Gross trade receivables 22.4 18.8
Expected credit loss provision (see note 25) (8.7) (7.7)
Net trade receivables 13.7 11.1
Other receivables 14.1 8.9
Prepayments 2.7 4.6
Balance as at year end 30.5 24.6
Other receivables include lease incentives of €4.6m (2022: €4.0m) and
accrued service charge income of €nil (2022: €1.0m).
For the year ended 31 March 2022, prepayments included costs of €1.9m
relating to the acquisition of a new site in Düsseldorf that was notarised
before 31 March 2022.
22. Cash and cash equivalents
31 March 2023 31 March 2022
€m €m
Cash at bank 99.2 127.4
Cash restricted under contractual terms:
Deposit for bank guarantees 1.3 1.4
Deposits received from tenants 23.8 22.2
Balance as at year end 124.3 151.0
Cash at bank earns interest at floating rates based on daily bank deposit
rates. The fair value of cash as at year end is €124.3m (2022: €151.0m).
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).
Cash is held by reputable banks and the Group assessed the expected credit
loss to be immaterial.
23. Trade and other payables
31 March 2023 31 March 2022
€m €m
Trade payables 12.0 6.5
Accrued expenses 31.9 25.1
Interest and amortisation payable 5.6 5.6
Tenant deposits 23.8 22.2
Unearned revenue 10.6 7.9
Other payables 17.6 22.0
Balance as at year end 101.5 89.3
Accrued expenses include primarily costs totalling €16.4m (2022: €11.0 m)
relating to service charge costs, bonuses of €4.5m (2022: €5.7m), costs
relating to non-recurring project costs of €2.8m (2022: €2.5m) and
administrative expenses of €2.4m (2022: €2.0m) that have not been invoiced
to the Group.
Included within other payables are credit balances due to tenants in relation
to over collections of service charge in amount of €3.6m (2022: €2.6m). As
of 31 March 2023, other payables included €8.8m of proceeds relating to the
sale of the Wuppertal asset that is categorised as an asset held for sale at
31 March 2023 in advance of the completion date of 1 April 2023. As at 31
March 2022, other payables included €13.8m of proceeds relating to the sale
of the Magdeburg asset that is categorised as an asset held for sale at 31
March 2022 in advance of the completion date of 1 April 2022. See note 15 for
details of assets held for sale. Unearned revenue includes service charge
amounts of €3.1m (2022: €1.2m). Service charge income is only recognised
as income when the performance obligations are met. All unearned revenue of
the prior year was recognised as revenue in the current year.
24. Interest-bearing loans and borrowings
Interest rate Loan maturity date 31 March 2023 31 March 2022
% €m €m
Current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 58.2 1.9
- fixed rate facility 0.90 31 October 2023 110.4 1.5
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 0.7 0.8
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged ((1)) 31 December 2023 51.1 1.1
- floating rate facility Floating ((1)) 31 December 2023 6.2 0.1
Schuldschein
- floating rate facility Floating ((2)) 5 December 2022 - 5.0
- floating rate facility Floating ((2)) 6 January 2023 - 10.0
- fixed rate facility 1.60 3 July 2023 20.0 -
Capitalised finance charges on all loans (2.9) (0.8)
243.7 19.6
Non-current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 - 58.2
- fixed rate facility 0.90 31 October 2023 - 110.4
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 13.5 14.3
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged ((1)) 31 December 2023 - 51.1
- floating rate facility Floating ((1)) 31 December 2023 - 6.2
Schuldschein
- floating rate facility Floating ((2)) 6 January 2025 5.0 5.0
- fixed rate facility 1.70 3 March 2025 10.0 10.0
- fixed rate facility 1.60 3 July 2023 - 20.0
Corporate bond I
- fixed rate 1.125 22 June 2026 400.0 400.0
Corporate bond II
- fixed rate 1.75 24 November 2028 300.0 300.0
Capitalised finance charges on all loans (7.8) (13.3)
720.7 961.9
Total 964.4 981.5
(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 €19.1m of tranche 3 of this facility is fully hedged
with a swap charged at a rate of 0.91%. A €6.5m extension and the tranche 3
related €0.5m arrangement fee are charged with a floating rate of 1.20% over
three-month EURIBOR (not less than 0%). The Group has not adopted any hedge
accounting.
(2) This unsecured facility has a floating rate of 1.70% over six month
EURIBOR (not less than 0%).
The borrowings (excluding capitalised loan issue cost) are repayable as
follows:
31 March 2023 31 March 2022
€m €m
On demand or within one year 246.6 20.4
In the second year 28.5 246.7
In the third to tenth years inclusive 700.0 728.5
Total 975.1 995.6
The Group has pledged 15 (2022: 15) investment properties to secure several
separate interest-bearing debt facilities granted to the Group. The 15 (2022:
15) properties had a combined valuation of €510.7m as at year end (2022:
€504.7m).
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 €39.2m
on 30 September 2016. The facility totals €70.0m and was scheduled to
terminate on 29 October 2023. Amortisation was 2.50% 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 €115.4m. 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
€170.0m. 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 €18.0m. The loan terminates on 28 February 2025. Amortisation
is 4.00% per annum with the remainder due in one instalment on the final
maturity date. The facility is charged with an all-in fixed interest rate of
1.53% for the full term of the loan. The facility is secured over one property
asset and is subject to various covenants with which the Group has complied.
No changes to the terms of the facility have occurred during the twelve month
period ended 31 March 2023.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement with Deutsche
Pfandbriefbank AG for €56.0m. Tranche 1, totalling €21.6m, 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 €0.5m was charged at a fixed interest
rate of 1.20%. On 3 April 2019, tranche 2 was drawn down, totalling €14.8m,
and has been hedged at a rate of 1.25% until 31 December 2023 by way of an
interest rate swap. On 28 June 2019, tranche 3 has been drawn down, totalling
€19.1m. 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 €6.5m. 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 2.00% per annum with the remainder due in one
instalment on the final maturity date. No changes to the terms of the facility
have occurred during the twelve month period ended 31 March 2023.
Schuldschein
On 2 December 2019, the Group agreed to new loan facilities in the form of
unsecured Schuldschein for €20.0m. On 25 February 2020, the Group agreed new
loan facilities in the form of unsecured Schuldschein for €30.0m. In total
the unsecured facility amounts to €50.0m 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. The first and second tranches totalling €15.0m
were repaid during the twelve month period ended 31 March 2023.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond for €400.0m.
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 twelve month period ended
31 March 2023.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond for €300.0m.
The bond, which is listed at the Luxembourg Stock Exchange, has a term of
seven years and an interest rate of 1.75% 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 twelve month
period ended 31 March 2023.
Group debt covenants
A summary of the Group's debt covenants is set out below:
31 March 2023 31 March 2022
€m €m
Carrying amount of interest-bearing loans and borrowings 964.4 981.5
Unamortised borrowing costs 10.7 14.1
Book value of owned investment properties((1)) 2,107.3 2,088.7
Gross loan to value ratio 46.3% 47.7%
(1) Includes assets held for sale.
The Group's loans are subject to various covenants, which include interest
cover ratio, loan to value, debt service cover, occupancy, etc. as stipulated
in the loan agreements.
During the year, the Group did not breach any of its loan covenants, nor did
it default on any of its obligations under its loan agreements and the Group
has a sufficient level of headroom as at year end.
Refer to note 2(d) where the Group discloses forecast covenant compliance with
regard to management's going concern assessment.
EPRA loan to value ("LTV")
Proportionate consolidation
31 March 2023 Group Investment in associates Total
€m €m €m
Interest-bearing loans and borrowings((1)) 264.4 52.1 316.5
Corporate bonds 700.0 - 700.0
Net payables 71.0 4.5 75.5
Cash and cash equivalents (124.3) (8.6) (132.9)
Net debt (a) 911.1 48.0 959.1
Investment properties 2,123.0 124.2 2,247.2
Assets held for sale 8.8 - 8.8
Plant and equipment 7.2 - 7.2
Intangible assets 4.1 - 4.1
Loan to associates 44.3 - 44.3
Total property value (b) 2,187.4 124.2 2,311.6
EPRA LTV (a/b) 41.7% 38.6% 41.5%
Proportionate consolidation
31 March 2022 Group Investment in associates Total
€m €m €m
Interest-bearing loans and borrowings((1)) 281.5 51.9 333.4
Corporate bonds 700.0 - 700.0
Net payables 70.7 3.1 73.8
Cash and cash equivalents (151.0) (6.2) (157.2)
Net debt (a) 901.2 48.8 950.0
Investment properties 2,100.0 122.4 2,222.4
Assets held for sale 13.8 - 13.8
Plant and equipment 5.5 - 5.5
Intangible assets 4.3 - 4.3
Loan to associates 44.2 - 44.2
Total property value (b) 2,167.8 122.4 2,290.2
EPRA LTV (a/b) 41.6% 39.9% 41.5%
(1) Excludes corporate bonds as shown as a separate line.
25. Financial risk management objectives and policies
The Group's principal financial liabilities comprise bank loans, derivative
financial instruments and trade payables. The main purpose of these financial
instruments is to raise finance for the Group's operations. The Group has
various financial assets, such as trade receivables and cash, which arise
directly from its operations.
The main risks arising from the Group's financial instruments are credit risk,
liquidity risk, market risk, currency risk and interest rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the reporting date. The credit risk on liquid funds is
limited because the counterparties are banks with high credit ratings assigned
by international credit rating agencies. The risk management policies employed
by the Group to manage these risks are discussed below.
In the event of a default by an occupational tenant, the Group will suffer a
rental shortfall and incur additional costs, including expenses incurred to
try and recover the defaulted amounts and legal expenses in maintaining,
insuring and marketing the property until it is re-let. During the year, the
Group monitored the tenants in order to anticipate and minimise the impact of
defaults by occupational tenants, as well as to ensure that the Group has a
diversified tenant base. The credit risk on tenants is also addressed through
the performance of credit checks, collection of deposits and regular
communication with the tenants.
Included in loans to associates are loans provided to associate entities from
Group entities. During the year the Group assessed credit risk relating to
loans to associates by reviewing business plans and monitoring cash collection
rates and the operational performance of each associate in order to anticipate
and minimise the impact of any impairment.
Included in other receivables are lease incentives. During the year the Group
monitored tenants in order to anticipate and minimise the impact of defaults
and move-outs from tenants which received lease incentives.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was:
31 March 2023 31 March 2022
€m €m
Net trade receivables 13.7 11.1
Other receivables 13.6 8.8
Loans to associates 44.3 44.2
Derivative financial instruments 1.3 0.3
Cash and cash equivalents 124.3 151.0
Total 197.2 215.4
Included in other receivables are guarantees and deposits in the amount of
€4.1m (2022: €4.1m).
The ageing of trade receivables at the statement of financial position date
was:
31 March 2023 31 March 2022
Gross Impairment Gross Impairment
€m €m €m €m
0-30 days 13.9 (4.3) 12.1 (2.7)
31-120 days (past due) 1.3 (0.5) 1.3 (0.4)
More than 120 days 7.2 (3.9) 5.4 (4.6)
Total 22.4 (8.7) 18.8 (7.7)
The movement in the allowance for impairment in respect of trade receivables
during the year was as follows:
31 March 2023 31 March 2022
€m €m
Balance as at the beginning of the year (7.7) (5.4)
Expected credit loss recognised (8.7) (7.7)
Expected credit loss reversed 7.7 5.4
Balance as at year end (8.7) (7.7)
The allowance account for trade receivables is used to record impairment
losses unless the Group believes that no recovery of the amount owing is
possible; at that point the amounts considered irrecoverable are written off
against the trade receivables directly.
Most trade receivables are generally due one month in advance. The exception
is service charge balancing billing, which is due ten days after it has been
invoiced. Included in the Group's trade receivables are debtors with carrying
amounts of €13.7m (2022: €11.1m) that are past due at the reporting date
for which the Group has not provided significant impairment as there has not
been a significant change in credit quality and the amounts are still
considered recoverable.
No significant impairment has been recognised relating to non-current
receivables in the period due to unchanged credit quality and the amounts are
still considered recoverable.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. An unmatched position potentially enhances
profitability but can also increase the risk of losses. The Group has
procedures with the objective of minimising such losses, such as maintaining
sufficient cash and other highly liquid current assets and having available an
adequate amount of committed credit facilities. The Group prepares cash flow
forecasts and continually monitors its ongoing commitments compared
to available cash. Cash and cash equivalents are placed with financial
institutions on a short-term basis which allows immediate access. This
reflects the Group's desire to maintain a high level of liquidity in order to
meet any unexpected liabilities that may arise due to the current financial
position. Similarly, accounts receivable are due either in advance (e.g. rents
and recharges) or within ten days (e.g. service charge reconciliations),
further bolstering the Group's management of liquidity risk.
The table below summarises the maturity profile of the Group's financial
liabilities, based on contractual undiscounted payments:
31 March 2023 Interest-bearing loans Derivative Trade Lease Total
€m financial and other liabilities €m
instruments payables €m
€m €m
Undiscounted amounts payable in:
6 months or less (28.5) (0.8) (59.0) (1.6) (89.9)
6 months-1 year (229.4) (0.4) - (1.7) (231.5)
1-2 years (38.8) - - (3.3) (42.1)
2-5 years (421.3) - - (10.0) (431.3)
5-10+ years (303.4) - - (94.7) (398.1)
(1,021.4) (1.2) (59.0) (111.3) (1,192.9)
Interest 46.3 1.2 - 71.7 119.2
(975.1) - (59.0) (39.6) (1,073.7)
31 March 2022 Interest-bearing loans Derivative Trade Lease Total
€m financial and other liabilities €m
instruments payables €m
€m €m
Undiscounted amounts payable in:
6 months or less (9.5) (0.1) (56.3) (1.3) (67.2)
6 months-1 year (24.5) (0.1) - (0.8) (25.4)
1-2 years (258.8) (0.2) - (2.9) (261.9)
2-5 years (454.7) (0.1) - (9.0) (463.8)
5-10+ years (308.7) - - (92.4) (401.1)
(1,056.2) (0.5) (56.3) (106.4) (1,219.4)
Interest 60.6 0.5 - 67.7 128.8
(995.6) - (56.3) (38.7) (1,090.6)
Currency risk
The Group's exposure to currency risk relates primarily to the Group's
exposure to the GBP and to a lesser extent the South African rand. This
exposure is driven primarily by the acquisition of the BizSpace Group as
detailed in note 4. In addition thereto, the Group has dividend obligations in
both the GBP and South African rand. The foreign currency risk in relation to
the GBP is mitigated as a result of the BizSpace Group generating GBP
denominated income in order to fund its obligations when they come due and, in
addition, the Group's GBP dividend obligations. The Group holds small deposits
in South African rand for the purposes of working capital and dividend
obligations.
Interest rate risk
The Group's exposure to interest rate risk relates primarily to the Group's
long-term floating rate debt obligations. The Group's policy is to mitigate
interest rate risk by ensuring that a minimum of 80% of its total borrowing is
at fixed or capped interest rates by taking out fixed rate loans or derivative
financial instruments to hedge interest rate exposure, or interest rate caps.
A change in interest will only have an impact on loans fixed by a swap. An
increase of 100 bps in interest rate would result in a decreased post tax
profit in the consolidated income statement of €0.04m (2022: €0.3m)
(excluding the movement on derivative financial instruments) and a decrease of
100 bps in interest rate would result in an increased post tax profit in the
consolidated income statement of €0.04m (2022: €0.3m) (excluding the
movement on derivative financial instruments).
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments that are exposed to interest rate risk:
31 March 2023 Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
€m €m €m €m €m €m
Deutsche Pfandbriefbank AG (6.2) - - - - (6.2)
Schuldschein - (5.0) - - - (5.0)
31 March 2022 Within 1 year 1-2 years 2-3 years 3-4 years 4+ years Total
€m €m €m €m €m €m
Deutsche Pfandbriefbank AG (0.1) (6.2) - - - (6.3)
Schuldschein (15.0) - (5.0) - - (20.0)
The other financial instruments of the Group that are not included in the
above tables have fixed interest rates and are therefore not subject to
interest rate risk.
Market risk
The Group's activities are within the real estate market, exposing it to very
specific industry risks.
The yields available from investments in real estate depend primarily on the
amount of revenue earned and capital appreciation generated by the relevant
properties, as well as expenses incurred. If properties do not generate
sufficient revenues to meet operating expenses, including debt service and
capital expenditure, the yield is affected, and it can have an impact on the
decision of our investors and banks. Revenues from properties may be adversely
affected by: the general economic climate; local conditions, such as an
oversupply of properties, or a reduction in demand for properties, in the
market in which the Group operates; the attractiveness of the properties to
the tenants; the quality of the management; competition from other available
properties; and increased operating costs.
In addition, the Group's profit would be adversely affected if a significant
number of tenants were unable to pay rent or its properties could not be
rented on favourable terms. Certain significant expenditures associated with
each equity investment in real estate (such as external financing costs, real
estate taxes and maintenance costs) are generally not reduced when
circumstances cause a reduction in revenue from properties. By diversifying in
product, risk categories and tenants, the Group expects to lower the risk
profile of the portfolio.
Capital management
For the purpose of the Group's capital management, capital includes all equity
reserves attributable to the equity holders of the parent. The Group seeks to
enhance shareholder value both by investing in the business so as to improve
the return on investment and by managing the capital structure. The Group
manages its capital structure and in doing so takes into consideration the
impact of changes in economic conditions. The Group assesses its capital
management through the total accounting shareholder return which was 4.8% as
at 31 March 2023 (2022: 20.0%) and the net loan to value which was 41.6% as at
31 March 2023 (2022: 41.6%).
To maintain or adjust the capital structure, the Group may undertake a number
of actions including but not limited to share issuances and changes to its
distribution policy to shareholders. The transfer of amounts recorded in share
capital to other distributable reserves is made in accordance with The
Companies (Guernsey) Law, 2008. The Group's distribution policy takes into
account the concept of solvency under The Companies (Guernsey) Law, 2008. The
Group is not subject to externally imposed capital requirements other than
those related to the covenants of the bank loan facilities. There have been no
breaches of the financial covenants of any interest-bearing loans and
borrowings in the current year (note 2d).
26. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts and fair values
of all of the Group's financial instruments that are carried in the financial
statements (excluding assets held for sale and liabilities directly associated
with assets held for sale):
31 March 2023 31 March 2022
Fair value
hierarchy level
Carrying Fair Carrying Fair
amount value amount value
€m €m €m €m
Financial assets
Cash and cash equivalents 124.3 124.3 151.0 151.0
Trade and other receivables((1)) 27.3 27.3 19.9 19.9
Loans to associates 2 44.3 44.3 44.2 44.2
Derivative financial instruments 2 1.3 1.3 0.3 0.3
Financial liabilities
Trade and other payables 59.0 59.0 56.3 56.3
Derivative financial instruments 2 - - - -
Interest-bearing loans and borrowings((2))
Floating rate borrowings 2 11.2 11.2 26.3 26.3
Floating rate borrowings - hedged((3)) 2 51.1 51.1 52.2 52.2
Floating rate borrowings - capped 2 - - - -
Fixed rate borrowings 2 912.8 813.6 917.1 939.3
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 24 for details of swap contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost and whose
carrying value is a reasonable approximation to fair value there is no
requirement to analyse their value in the fair value hierarchy.
The below analyses financial instruments measured at fair value into a fair
value hierarchy based on the valuation technique used to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on a quarterly
basis. The fair value of interest rate swaps is based on broker quotes. Those
quotes are tested for reasonableness by discounting estimated future cash
flows based on the terms and maturity of each contract and using market
interest rates for a similar instrument at the measurement date. The average
interest rate is based on the outstanding balances at the end of the reporting
period. The interest rate swap is measured at fair value with changes
recognised in profit or loss.
The fair values of the loans and borrowings have been calculated based on a
discounted cash flow model using the prevailing market rates of interest.
27. Issued share capital
Authorised Number Share
of shares capital
€m
Ordinary shares of no par value Unlimited -
As at 31 March 2023 and 31 March 2022 Unlimited -
Issued and fully paid Number Share
of shares capital
€m
As at 31 March 2021 1,049,132,259 -
Issued ordinary shares 119,344,125 167.4
Transfer of share capital to other distributable reserves - (167.4)
Shares issued to Employee Benefit Trust (3,557,745) -
Shares allocated by the Employee Benefit Trust 1,962,045 -
As at 31 March 2022 1,166,880,684 -
Issued ordinary shares 3,702,993 1.4
Transfer of share capital to other distributable reserves - (1.4)
Shares issued to Employee Benefit Trust (2,500,000) -
Shares allocated by the Employee Benefit Trust 287,545 -
As at 31 March 2023 1,168,371,222 -
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, during the year the Company issued 2,431,714 shares in relation
to the exercise of the LTIP 2018 (June 2019 grant) as per note 9. These shares
were issued at nil-cost, and the fair value of these shares recorded in the
share capital account has been transferred back to the other distributable
reserves.
Treasury shares held by the Employee Benefit Trust are disclosed as own shares
held. During the year 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 €1.1185 are held by the Employee
Benefit Trust (2022: 5,280,308 own shares purchased at an average share price
of €1.1882). The total number of shares with voting rights was 1,175,863,985
(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 year were issued under general authority. No shares
were bought back in the year (2022: none) and there are no Treasury Shares
held directly by the Company at the year end (2022: none).
28. Other reserves
Other distributable reserve
This reserve comprises of amounts in relation to scrip dividend transfers from
share capital, share-based payment transactions and share buy-backs. The
balance of €516.4m in total at year end (2022: €570.4m) is considered
distributable.
Foreign currency translation reserve
The Group holds a foreign currency translation reserve which relates to
foreign currency translation effect during the course of the business with the
UK segment.
The following table illustrates the movement in the foreign currency
translation reserve:
31 March 2023 31 March 2022
€m €m
Balance as at the beginning of the year (1.7) -
Foreign currency translation (17.2) (1.7)
Balance as at year end (18.9) (1.7)
The movement in the year of €17.2m deficit is a result of a declining GBP
rate which is lower at year end compared with 31 March 2022 (2022: €1.7m
deficit).
29. Notes to cash flow
Changes in liabilities arising from financing activities
Reconciliation of movements of liabilities arising from financing activities:
31 March Cash flows New leases Acquisition Changes in Other ((1)) 31 March
2022 €m €m of a subsidiary fair values €m 2023
€m €m €m €m
Interest-bearing loans and borrowings 981.5 (20.4) - - - 3.3 964.4
Lease liabilities 38.7 (2.3) 2.8 - - 0.4 39.6
Derivative financial instruments (0.3) - - - (0.9) (0.1) (1.3)
Total 1,019.9 (22.7) 2.8 - (0.9) 3.60 1,002.7
31 March Cash flows New leases Acquisition Changes in Other ((1)) 31 March
2021 €m €m of a subsidiary fair values €m 2022
€m €m €m €m
Interest-bearing loans and borrowings 468.1 523.5((2)) - - - (10.1) 981.5
Lease liabilities 15.0 (6.4) 18.4 12.2 - (0.5) 38.7
Derivative financial instruments 1.2 (0.5) - - (1.0) - (0.3)
Total 484.3 516.6 18.4 12.2 (1.0) (10.6) 1,019.9
(1) Changes in the capitalised finance charges on all loans, foreign
exchange differences and accretion of interest on lease liabilities.
(2) The cash flows relating to the interest-bearing loans and borrowings of
€523.5m in the year ended 31 March 2022 includes the €153.1m repayment of
the AgFe external loan facility as part of the acquisition of Helix
Investments Limited on 15 November 2021
30. Dividends
On 7 June 2021, the Company announced a dividend of 1.98c per share, with a
record date of 9 July 2021 for the UK and South African ("SA") shareholders
and payable on 19 August 2021. On the record date, 1,054,755,527 shares were
in issue. Since there were no shares held in treasury, 1,054,755,527 shares
(including shares held by the Employee Benefit Trust) were entitled to
participate in the dividend. Holders of 476,206,726 shares elected to receive
the dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of €9.3m (€9.2m as at settlement date) while
holders of 578,548,801 shares opted for a cash dividend with a value of
€11.5m. The Company's Employee Benefit Trust waived its rights to the
dividend, reducing the cash payable to €11.4m (€11.4m as at settlement
date). The total dividend was €20.8m (€20.6m as at settlement date).
On 8 November 2021, the Company announced a dividend of 2.04c per share, with
a record date of 17 December 2021 for the UK and SA shareholders and payable
on 20 January 2022. On the record date, 1,169,465,925 shares were in issue.
Since there were no shares held in treasury, 1,169,465,925 shares (including
shares held by the Employee Benefit Trust) were entitled to participate in the
dividend. Holders of 216,062,440 shares elected to receive the dividend in
ordinary shares under the scrip dividend alternative, representing a dividend
of €4.4m (€4.5m as at settlement date) while holders of 953,403,485 shares
opted for a cash dividend with a value of €19.4m. The Company's Employee
Benefit Trust waived its rights to the dividend, reducing the cash payable to
€19.4m (€19.4m as at settlement date). The total dividend was €23.8m
(€23.9m as at settlement date).
On 13 June 2022, the Company announced a dividend of 2.37c per share, with a
record date of 8 July 2022 for the UK and 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 €1.4m (€1.4m as at settlement date) while holders of 1,110,707,717
shares opted for a cash dividend with a value of €26.3m. The Company's
Employee Benefit Trust waived its rights to the dividend, reducing the cash
payable to €26.2m (€26.3m as at settlement date). The total dividend was
€27.7m (€27.7m as at settlement date).
On 21 November 2022, the Company announced a dividend of 2.70c per share, with
a record date of 9 December 2022 for the UK and SA shareholders and payable on
19 January 2023. On the record date, 1,175,863,985 shares were in issue. Since
there were no shares held in treasury, 1,175,863,985 shares (including shares
held by the Employee Benefit Trust) were entitled to participate in the
dividend. The Company's Employee Benefit Trust waived its rights to the
dividend, reducing the total dividend (payable in cash) from €31.7m to
€31.5m (€31.5m as at settlement date).
The Group's profit attributable to the equity holders of the Company for the
year was €77.2m (2022: €147.9m). The Board has authorised a dividend in
respect of the second half of the financial year ended 31 March 2023 of 2.98c
per share representing 65% of FFO, an increase of 25.7% on the equivalent
dividend last year, which represented 65% of FFO((1)). The total dividend for
the year is 5.68c, an increase of 28.8% on the 4.41c total dividend for the
year ended 31 March 2022.
It is expected that, for the dividend authorised relating to the six month
period ended 31 March 2023, the ex-dividend date will be 12 July 2023 for
shareholders on the SA register and 13 July 2023 for shareholders on the UK
register. It is further expected that for shareholders on both registers the
record date will be 14 July 2023 and the dividend will be paid on 17 August
2023. A detailed dividend announcement was made on 5 June 2023.
The dividend paid per the statement of changes in equity is the value of the
cash dividend.
(1) Adjusted profit before tax adjusted for foreign exchange effects,
depreciation and amortisation (excluding depreciation relating to IFRS 16),
amortisation of financing fees, adjustments in respect of IFRS 16 and current
tax receivable/incurred.
The dividend per share was calculated as follows:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Reported profit before tax 87.0 168.9
Adjustments for:
Loss/(gain) on revaluation of investment properties 9.8 (140.9)
Deficit on revaluation relating to leased investment properties (1.5) (5.6)
(Gain)/loss of disposals of properties (4.7) 0.6
Recoveries from prior disposals of subsidiaries - (0.1)
Loss/(gain) on revaluation of investment property from associates and related 0.1 (4.8)
tax
Other adjusting items((1)) 6.2 19.1
Goodwill impairment - 40.9
Change in fair value of financial derivatives (0.9) (1.0)
Adjusted profit before tax 96.0 77.1
Adjustments for:
Foreign exchange effects((2)) 0.2 (1.9)
Depreciation and amortisation (excluding depreciation relating to IFRS 16) 3.4 2.4
Amortisation of financing fees 3.3 2.6
Adjustment in respect of IFRS 16 2.2 0.5
Current taxes incurred (see note 11) (3.0) (6.1)
Funds from operations, year ended 31 March 102.1 74.6
Funds from operations, six months ended 30 September 48.5 33.0
Funds from operations, six months ended 31 March 53.6 41.6
Dividend pool, six months ended 30 September 31.5 21.6
Dividend pool, six months ended 31 March((3)) 34.8 27.6
Dividend per share, six months ended 30 September 2.70c 2.04c
Dividend per share, six months ended 31 March 2.98c 2.37c
(1) Includes the effect of exceptional items, refinancing activity and
share awards. See note 12 for details.
(2) Management decided to exclude foreign exchange effects from the funds
from operations calculation of €(0.2)m (2022: €1.9m).
(3) Calculated as 65% of FFO of 4.59c per share (2022: 3.64c per share
using 65% of FFO) based on average number of shares outstanding of
1,168,134,871 (2022: 1,141,807,790).
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.
31. Related parties
Related parties are defined as those persons and companies that control the
Group, or that are controlled, jointly controlled or subject to significant
influence by the Group.
Key management personnel
Fees paid to people considered to be key management personnel (the Senior
Management Team) of the Group during the year include:
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Directors' fees 0.5 0.5
Salary and employee benefits 5.0 4.4
Share-based payments 3.0 2.6
Total 8.5 7.5
Included within salary and employee benefits are pension contributions
amounting to €0.2m (2022: €0.2m).
Directors' emoluments have been disclosed in the Annual report in the
Remuneration report under the 'Single figure table' and in the additional
disclosures in respect of the single figure table section on pages 122 to 123.
Associates
The following balances and transactions with associates exist as at the
reporting date:
Consolidated statement of financial position 31 March 2023 31 March 2022
€m €m
Loans to associates 44.3 44.2
Trade and other receivables 4.0 2.6
Total 48.3 46.8
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 year.
Consolidated income statement Year ended Year ended
31 March 2023 31 March 2022
€m €m
Services supplied 15.1 13.1
Interest income 2.2 2.9
Total 17.3 16.0
Services provided to associates primarily relate to the provision of property
and asset management services. A performance fee arrangement is in place
between the associates and the Group. The performance fee was €nil during
the year (2022: €nil).
32. Capital and other commitments
As at year end, the Group had contracted capital expenditure for development
and enhancements on existing properties of €14.9m (2022: €7.8m) and
capital commitments amounting to €nil (2022: in relation to the notarised
asset in Düsseldorf of €35.3m).
The above noted were committed but not yet provided for in the financial
statements.
33. Operating lease arrangements
Group as lessor
All properties leased by the Group are under operating leases and the future
minimum lease payments receivable under non‑cancellable leases are as
follows:
31 March 2023 31 March 2022
€m €m
Less than 1 year 125.3 118.1
1-2 years 98.2 96.1
2-3 years 76.6 75.7
3-4 years 58.7 57.7
4-5 years 36.7 35.6
More than 5 years 68.1 68.6
Total 463.6 451.8
The Group leases out its investment properties under operating leases. Most
operating leases are for terms of one to ten years.
34. List of subsidiary undertakings and investments in associates
The Group consists of 122 subsidiary companies (2022: 122 subsidiary
companies). All subsidiaries are consolidated in full in accordance with IFRS.
The principal activity of the subsidiaries is the investment in, and
development of, commercial property to provide conventional and flexible
workspace in Germany and the UK.
Company name Country Ownership at Ownership at
of incorporation 31 March 2023 31 March 2022
% %
BizSpace Acquisitions Ltd Jersey 100.00 100.00
BizSpace Developments Ltd UK 100.00 100.00
BizSpace Green Holdings Ltd UK 100.00 100.00
BizSpace Green Operations Ltd UK 100.00 100.00
BizSpace Holdings Ltd UK 100.00 100.00
BizSpace II Ltd UK 100.00 100.00
BizSpace Ltd UK 100.00 100.00
BizSpace Property 100 Ltd Jersey 100.00 100.00
BizSpace Property I Ltd UK 100.00 100.00
BizSpace Property SSP Ltd UK 100.00 100.00
Curris Facilities & Utilities Management GmbH Germany 100.00 100.00
DDS Aspen B.V. Netherlands 100.00 100.00
DDS Bagnut B.V. Netherlands 100.00 100.00
DDS Business Centres B.V. Netherlands 100.00 100.00
DDS Coconut B.V. Netherlands 100.00 100.00
DDS Conferencing & Catering GmbH Germany 100.00 100.00
DDS Elm B.V. Netherlands 100.00 100.00
DDS Fir B.V. Netherlands 100.00 100.00
DDS Hawthorn B.V. Netherlands 100.00 100.00
DDS Hazel B.V. Netherlands 100.00 100.00
DDS Hyacinth B.V. Netherlands 100.00 100.00
DDS Lark B.V. Netherlands 100.00 100.00
DDS Mulberry B.V. Netherlands 100.00 100.00
DDS Rose B.V. Netherlands 100.00 100.00
DDS Walnut B.V. Netherlands 100.00 100.00
DDS Yew B.V. Netherlands 100.00 100.00
Helix FinCo Ltd Jersey 100.00 100.00
Helix Investments Ltd((1)) Jersey 100.00 100.00
Helix Property Ltd Jersey 100.00 100.00
LB² Catering and Services GmbH Germany 100.00 100.00
M25 Business Centres Ltd UK 100.00 100.00
Marba Apple B.V. Netherlands 100.00 100.00
Marba Bamboo B.V. Netherlands 100.00 100.00
Marba Cherry B.V. Netherlands 100.00 100.00
Marba Daffodil B.V. Netherlands 100.00 100.00
Marba Holland B.V.((1)) Netherlands 100.00 100.00
Marba Lavender B.V. Netherlands 100.00 100.00
Marba Mango B.V. Netherlands 100.00 100.00
Marba Olive B.V. Netherlands 100.00 100.00
Marba Sunflower B.V. Netherlands 100.00 100.00
Marba Violin B.V. Netherlands 100.00 100.00
Marba Willstätt B.V. Netherlands 100.00 100.00
SFG NOVA Construction and Services GmbH Germany 100.00 100.00
Sirius Alder B.V. Netherlands 100.00 100.00
Sirius Aloe GmbH & Co. KG Germany 100.00 100.00
Sirius Ash B.V. Netherlands 100.00 100.00
Sirius Aster GmbH & Co. KG Germany 100.00 100.00
Sirius Beech B.V. Netherlands 100.00 100.00
Sirius Birch GmbH & Co. KG Germany 100.00 100.00
Sirius Coöperatief B.A.((1)) Netherlands 100.00 100.00
Sirius Dahlia GmbH & Co. KG Germany 100.00 100.00
Sirius Facilities (UK) Ltd((1)) UK 100.00 100.00
Sirius Facilities GmbH Germany 100.00 100.00
Sirius Finance (Cyprus) Ltd.((1)) Cyprus 100.00 100.00
Sirius Four B.V. Netherlands 100.00 100.00
Sirius Frankfurt Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Frankfurt Zweite GmbH & Co. KG Germany 100.00 100.00
Sirius Gum B.V. Netherlands 100.00 100.00
Sirius Ivy B.V. Netherlands 100.00 100.00
Sirius Jasmine GmbH & Co. KG Germany 100.00 100.00
Sirius Juniper B.V. Netherlands 100.00 100.00
Sirius Kale GmbH & Co. KG Germany 100.00 100.00
Sirius Krefeld Erste GmbH & Co. KG Germany 100.00 100.00
Sirius Lily B.V. Netherlands 100.00 100.00
Sirius Lotus GmbH & Co. KG Germany 100.00 100.00
Sirius Management One GmbH Germany 100.00 100.00
Sirius Management Two GmbH Germany 100.00 100.00
Sirius Management Three GmbH Germany 100.00 100.00
Sirius Management Four GmbH Germany 100.00 100.00
Sirius Management Five GmbH Germany 100.00 100.00
Sirius Management Six GmbH Germany 100.00 100.00
Sirius Management Seven GmbH Germany 100.00 100.00
Sirius Management Eight GmbH Germany 100.00 100.00
Sirius Management Nine GmbH Germany 100.00 100.00
Sirius Management Ten GmbH Germany 100.00 100.00
Sirius Mannheim B.V. Netherlands 100.00 100.00
Sirius Narcissus GmbH & Co. KG Germany 100.00 100.00
Sirius Oak B.V. Netherlands 100.00 100.00
Sirius One B.V. Netherlands 100.00 100.00
Sirius Orange B.V. Netherlands 100.00 100.00
Sirius Palm B.V. Netherlands 100.00 100.00
Sirius Pepper GmbH & Co. KG Germany 100.00 100.00
Sirius Pine B.V. Netherlands 100.00 100.00
Sirius Renewable Energy GmbH((2)) Germany 100.00 n/a
Sirius Tamarack B.V. Netherlands 100.00 100.00
Sirius Three B.V. Netherlands 100.00 100.00
Sirius Thyme B.V. Netherlands 100.00 100.00
Sirius Tulip B.V. Netherlands 100.00 100.00
Sirius Two B.V. Netherlands 100.00 100.00
Sirius UK1 Ltd((1)) UK 100.00 100.00
Sirius UK2 Ltd((1)) UK 100.00 100.00
Sirius Willow B.V. Netherlands 100.00 100.00
Marba Bonn B.V. Netherlands 99.73 99.73
Marba Bremen B.V. Netherlands 99.73 99.73
Marba Brinkmann B.V. Netherlands 99.73 99.73
Marba Catalpa B.V. Netherlands 99.73 99.73
Marba Cedarwood B.V. Netherlands 99.73 99.73
Marba Chestnut B.V. Netherlands 99.73 99.73
Marba Dutch Holdings B.V. Netherlands 99.73 99.73
Marba Foxglove B.V. Netherlands 99.73 99.73
Marba HAG B.V. Netherlands 99.73 99.73
Marba Hornbeam B.V. Netherlands 99.73 99.73
Marba Königswinter B.V. Netherlands 99.73 99.73
Marba Maintal B.V. Netherlands 99.73 99.73
Marba Marigold B.V. Netherlands 99.73 99.73
Marba Merseburg B.V. Netherlands 99.73 99.73
Marba Mimosa B.V. Netherlands 99.73 99.73
Marba Regensburg B.V. Netherlands 99.73 99.73
Marba Saffron B.V. Netherlands 99.73 99.73
Marba Troisdorf B.V. Netherlands 99.73 99.73
Sirius Acerola GmbH & Co. KG Germany 99.73 99.73
Sirius Almond GmbH & Co. KG Germany 99.73 99.73
Sirius Bluebell GmbH & Co. KG Germany 99.73 99.73
Sirius Cypress GmbH & Co. KG Germany 99.73 99.73
Sirius Grape GmbH & Co. KG Germany 99.73 99.73
Sirius Hibiscus GmbH & Co. KG Germany 99.73 99.73
Sirius Indigo GmbH & Co. KG Germany 99.73 99.73
Sirius Mayflower GmbH & Co. KG Germany 99.73 99.73
Sirius Oyster GmbH & Co. KG Germany 99.73 99.73
Sirius Administration One GmbH & Co KG Germany 94.80 94.80
Sirius Administration Two GmbH & Co KG Germany 94.80 94.80
Verwaltungsgesellschaft Gewerbepark Bilderstöckchen GmbH Germany 94.15 94.15
(1) Subsidiary company directly held by the parent entity, Sirius Real
Estate Limited.
(2) New incorporated subsidiary company.
Investment in associates which are accounted for with the equity method:
Company name Country Ownership at Ownership at
of incorporation 31 March 2023 31 March 2022
% %
DDS Daisy B.V. Netherlands 35.00 35.00
DDS Edelweiss B.V. Netherlands 35.00 35.00
DDS Lime B.V. Netherlands 35.00 35.00
DDS Maple B.V. Netherlands 35.00 35.00
Sirius Boxwood B.V. Netherlands 35.00 35.00
Sirius Laburnum B.V. Netherlands 35.00 35.00
Sirius Orchid B.V. Netherlands 35.00 35.00
Sirius Pear B.V. Netherlands 35.00 100.00
35. Post balance sheet events
On 30 December 2022, the Company notarised for the disposal of an asset in
Wuppertal for a sale price of €8.8 million. The transaction completed on 1
April 2023.
In May 2023 the Company refinanced its €57.3 million Deutsche Pfandbriefbank
(PBB) loan facility, seven months in advance of it falling due on 31 December
2023. The new facility amounting to €58.3 million has a term of seven years
at a fixed interest rate of 4.25%.
Business analysis (Unaudited Information)
Non-IFRS measures
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Total profit for the year attributable to the owners of the Company 79.6 147.9
Add loss/(deduct gain) on revaluation of investment properties 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties (net of related tax) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (0.1)
Add restructuring costs, exit fees and prepayment penalties - 7.8
Goodwill impairment - 40.9
Acquisition costs in relation to business combinations - 5.3
Change in fair value of derivative financial instruments (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements on investment properties 4.3 14.8
NCI relating to revaluation (net of related tax) - 0.2
Add loss/(deduct gain) on revaluation of investment property relating to 0.5 (6.0)
associates
Tax in relation to the revaluation gains/losses on investment property (0.4) 1.2
relating to associates above
EPRA earnings 88.2 70.7
Deduct change in deferred tax relating to derivative financial instruments (0.1) (0.2)
Add change in fair value of derivative financial instruments 0.9 1.0
Deduct restructuring costs, exit fees and prepayment penalties - (7.8)
Deduct acquisition costs in relation to business combinations - (5.3)
NCI in respect of the above - -
Headline earnings after tax 89.0 58.4
Deduct change in fair value of derivative financial instruments (net of (0.8) (0.8)
related tax and NCI)
Deduct revaluation expense relating to leased investment properties (1.5) (5.6)
Add adjusting items((1)) (net of related tax and NCI) 6.2 19.1
Adjusted earnings after tax 92.9 71.1
(1) See note 12 to the financial statements.
For more information on EPRA earnings refer to Annex 1.
Year ended Year ended
31 March 2023 31 March 2022
€m €m
EPRA earnings 88.2 70.7
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
EPRA earnings per share (cents) 7.55 6.44
Headline earnings after tax 89.0 58.4
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
Headline earnings per share (cents) 7.62 5.32
Adjusted earnings after tax 92.9 71.1
Weighted average number of ordinary shares 1,167,757,975 1,097,082,162
Adjusted earnings per share (cents) 7.96 6.48
Geographical property analysis - owned investment properties
Germany
March 2023 No. of owned Total sqm Occupancy Rate psqm Annualised % of Value Gross Net WALE WALE
properties 000 € rent roll portfolio by €m ((2)) yield yield rent sqm
€m annualised
rent roll
Frankfurt 17 376 84.5% 7.41 28.3 23% 369.9 7.6% 6.9% 2.6 2.5
Berlin 4 104 95.7% 8.57 10.2 8% 166.7 6.1% 5.9% 2.6 2.6
Stuttgart 9 330 91.5% 5.36 19.4 16% 248.5 7.8% 7.3% 3.1 3.4
Cologne 7 127 88.6% 8.58 11.6 9% 158.1 7.3% 7.0% 3.1 3.0
Munich 3 124 82.7% 8.66 10.6 9% 202.8 5.2% 4.7% 2.1 2.2
Düsseldorf 16 386 73.8% 6.27 21.4 17% 290.7 7.4% 6.0% 3.0 3.1
Hamburg 4 91 83.7% 5.43 5.0 4% 64.2 7.8% 7.2% 2.3 2.2
Other 10 255 78.5% 6.91 16.6 13% 196.7 8.4% 7.4% 2.7 2.6
Total Germany 70 1,793 83.4% 6.86 123.1 100% 1,697.6 7.3% 6.5% 2.8 2.8
UK
March 2023 No. of owned Total sqm Occupancy Rate psqm Annualised % of Value Net WALE WALE
properties 000 € ((1)) rent roll portfolio by €m ((2)) yield rent sqm
€m ((1)) annualised
rent roll
Midlands 11 55 83.3% 16.02 8.7 16% 65.0 9.0% 0.8 0.8
North 13 73 83.1% 11.58 8.4 15% 65.0 9.0% 0.8 1.0
North East and North 13 91 93.7% 6.69 6.9 13% 60.8 8.0% 1.8 2.3
North West 12 84 87.8% 11.04 9.8 18% 77.9 8.9% 1.1 1.0
South East 10 25 76.5% 31.47 7.3 13% 66.0 7.9% 0.5 1.3
South West 11 62 84.8% 22.46 14.1 26% 83.0 12.0% 1.1 0.8
Total UK 70 390 86.5% 13.66 55.2 100% 417.7 9.3% 1.0 1.3
(1) The Group's UK business charges licence customers an all-inclusive
rate, which includes an implicit element of service charge.
(2) Book value of owned investment properties including assets held for
sale.
Usage analysis
Germany
Usage Total % of total Occupied % of occupied Annualised % of annualised Vacant Rate psqm
sqm sqm sqm sqm rent roll rent roll sqm €
€m
Office 604,976 33.7% 473,914 31.7% 47.5 38.6% 131,061 8.36
Storage 583,655 32.6% 498,496 33.3% 30.4 24.7% 85,158 5.09
Production 364,201 20.3% 337,942 22.6% 20.8 16.9% 26,259 5.12
Smartspace 112,896 6.3% 74,262 5.0% 8.5 6.9% 38,635 9.55
Other((1)) 126,942 7.1% 110,114 7.4% 15.9 12.9% 16,829 12.01
Total Germany 1,792,670 100.0% 1,494,728 100.0% 123.1 100.0% 297,942 6.86
UK
Usage Total % of total Occupied % of occupied Annualised % of annualised Vacant Rate psqm
sqm sqm sqm sqm rent roll rent roll sqm € ((3))
€m ((3))
Office 122,711 31.5% 98,151 29.2% 33.7 61.1% 24,560 28.65
Workshop 251,510 64.6% 228,076 67.7% 19.8 35.9% 23,434 7.23
Storage 2,070 0.5% 1,376 0.4% 0.3 0.5% 694 17.09
Other((2)) 13,246 3.4% 9,175 2.7% 1.4 2.5% 4,071 12.55
Total UK 389,537 100.0% 336,778 100.0% 55.2 100.0% 52,759 13.66
(1) Other includes: catering, other usage, residential and technical space,
land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and
residential.
(3) The Group's UK business charge licences customers an all-inclusive
rate, which includes an implicit element of service charge.
Lease expiry profile of future minimum lease payments receivable under
non-cancellable leases
Germany by income
Office Production Storage Smartspace Other ((1)) Adjustments Total
€m €m €m €m €m in relation to €m
lease incentives
€m
Less than 1 year 42.5 19.6 27.4 3.3 13.6 (0.3) 106.1
Between 1 and 5 years 74.5 36.5 48.7 0.8 24.1 (0.1) 184.5
More than 5 years 11.9 8.4 9.2 - 6.5 - 36.0
Total 128.9 64.5 85.3 4.1 44.2 (0.4) 326.6
Germany by sqm
Office Production Storage Smartspace Other ((1)) Total
sqm sqm sqm sqm sqm sqm
Less than 1 year 131,555 46,388 132,915 65,365 22,833 399,056
Between 1 and 5 years 287,951 241,220 305,391 8,897 71,560 915,019
More than 5 years 54,408 50,334 60,190 - 15,721 180,653
Total 473,914 337,942 498,496 74,262 110,114 1,494,728
(1) Other includes: catering, other usage, residential and technical space,
land and car parking.
UK by income
Office Workshop Storage Other ((2)) Adjustments Total
€m €m €m €m in relation to €m
lease incentives
€m
Less than 1 year 8.8 4.5 0.1 0.2 - 13.6
Between 1 and 5 years 18.6 11.4 - 0.4 - 30.4
More than 5 years 5.5 3.6 - 2.9 - 12.0
Total 32.9 19.5 0.1 3.5 - 56.0
UK by sqm
Office Workshop Storage Other ((2)) Total
sqm sqm sqm sqm sqm
Less than 1 year 65,641 134,958 1,367 3,543 205,509
Between 1 and 5 years 29,043 83,120 9 1,582 113,754
More than 5 years 3,467 14,047 - 1 17,515
Total 98,151 232,125 1,376 5,126 336,778
(2) Other includes: aerials, car parking, retail units, yards, catering and
residential.
The Group's UK business provides flexible leases that represent approximately
75% of annualised rent roll and conventional leases that represent 25% of
annualised rent roll.
Escalation profile per usage
Germany
The Group's German business' primary source of revenue relates to leasing
contracts with tenants. The Group's German business realises escalations as a
result of renewals, inflation linked indexations and contractually agreed
uplifts. Approximately 33.4% of contracts in place at 31 March 2023 are
subject to contractual uplifts. The average contractual uplift over the coming
twelve months split by usage are detailed as follows:
Usage Increase in %
Office 3.09%
Storage 3.42%
Production 2.82%
Smartspace 7.59%
Other((1)) 3.37%
Total 3.25%
(1) Other includes: catering, other usage, residential and technical space,
land and car parking.
UK
The Group's UK business' primary source of revenue relates to leasing
contracts and licence fee agreements with tenants. The Group's UK business
realises escalations as a result of renewals, inflation linked indexations and
contractually agreed uplifts. Of the lease contracts in place at 31 March
2023, approximately 5.1% are subject to contractual uplifts. The average
contractual lease contract uplifts over the coming twelve months split by
usage are detailed as follows:
Usage Increase in %
Office 3.34%
Workshop 6.14%
Total 5.13%
Property profile March 2023*
Germany
Property and location Total Office Storage Production Other( (1)) Rate psqm
sqm sqm sqm sqm sqm €
Aachen I 24,443 12,701 2,246 5,510 3,986 9.31
Aachen II 9,751 1,437 6,610 1,510 194 6.67
Alzenau 66,533 27,702 7,451 24,087 7,293 7.10
Bochum 55,511 12,696 35,970 3,965 2,880 4.71
Bochum II 4,249 3,502 479 12 256 11.41
Bonn 9,030 3,087 2,403 477 3,063 8.21
Bonn - Dransdorf 19,202 5,505 6,891 1,665 5,141 7.63
Buxtehude 28,238 1,120 10,831 13,420 2,867 4.25
Cölln Parc 13,480 6,512 3,386 2,867 715 10.70
Cologne 30,250 2,672 13,509 2,709 11,360 5.83
Dreieich 12,886 7,404 2,929 - 2,553 8.22
Dreieich II 5,514 546 4,543 - 425 4.24
Dresden 57,658 25,925 17,437 11,153 3,143 8.42
Düsseldorf - Süd 21,403 2,814 12,376 1,970 4,243 7.48
Düsseldorf II 9,839 4,433 4,949 - 457 8.16
Düsseldorf III 33,937 22,491 10,611 169 666 10.33
Erfurt 23,184 7,531 11,980 - 3,673 3.59
Essen 15,228 6,075 4,806 2,367 1,980 6.63
Essen II 11,899 8,538 1,829 627 905 7.91
Fellbach 26,214 1,751 16,168 340 7,955 6.05
Fellbach II 9,707 5,023 205 - 4,479 10.54
Frankfurt 4,260 2,260 484 68 1,448 11.39
Frankfurt III 10,141 5,398 1,370 - 3,373 14.16
Frankfurt Röntgenstraße 5,496 3,957 444 36 1,059 12.37
Freiburg Teningen 20,796 7,151 6,108 5,578 1,959 5.19
Frickenhausen 27,859 6,515 8,499 10,742 2,103 5.66
Friedrichsdorf 17,572 6,492 5,475 3,199 2,406 8.14
Gartenfeld 25,453 5,375 10,821 3,297 5,960 9.28
Grasbrunn 14,274 7,269 4,743 - 2,262 11.87
Hallbergmoss 18,384 11,978 3,388 - 3,018 10.59
Hamburg Lademannbogen 10,305 8,081 1,049 - 1,175 10.17
Hanover 22,884 8,030 3,547 6,423 4,884 6.80
Heidenheim 46,843 8,415 15,384 13,864 9,180 4.62
Heiligenhaus 44,485 21,999 7,453 12,467 2,566 3.90
Kassel 8,142 3,312 683 3,875 272 5.76
Köln Porz 21,086 15,154 2,363 279 3,290 12.32
Krefeld 11,318 7,462 2,533 594 729 8.33
Krefeld II 6,101 2,893 325 2,171 712 7.96
Krefeld III 9,668 4,918 3,342 924 484 8.32
Ludwigsburg 28,351 7,393 10,158 3,585 7,215 6.75
Mahlsdorf 29,333 11,592 10,796 1,963 4,982 8.36
Mahlsdorf II 12,737 5,765 1,263 1,906 3,803 8.14
Maintal 36,509 7,586 14,362 8,289 6,272 6.44
Maintal Mitte 11,016 462 4,523 5,685 346 4.60
Mannheim 68,789 13,378 21,595 27,139 6,677 5.18
Mannheim II 14,316 6,234 4,038 586 3,458 6.61
Mannheim III 3,033 2,276 741 - 16 7.12
Markgröningen 57,312 4,532 30,853 19,921 2,006 3.62
Munich - Neuaubing 91,185 15,991 31,821 29,645 13,728 8.02
Nabern II 5,578 1,620 491 2,376 1,091 8.86
Neckartenzlingen 51,577 15,296 19,466 14,087 2,728 4.73
Neu-Isenburg 8,250 5,752 1,244 - 1,254 9.98
Neuruppin 22,959 1,404 7,629 13,133 793 5.38
Neuss 17,621 13,397 1,284 153 2,787 12.63
Neuss II 33,351 7,957 17,210 6,058 2,126 5.76
Norderstedt 12,627 3,052 7,507 172 1,896 5.47
Nürnberg 14,106 2,323 3,241 7,532 1,010 6.99
Oberhausen 82,891 47,219 26,339 1,739 7,594 5.65
Offenbach Carl Legien-Strasse 45,596 9,844 9,326 17,677 8,749 7.02
Offenbach I 15,044 3,610 2,335 2,351 6,748 6.95
Öhringen 18,761 1,969 7,448 8,772 572 5.60
Pfungstadt 32,662 6,707 12,300 9,786 3,869 6.06
Potsdam 35,863 12,490 12,720 4,956 5,697 8.40
Potsdam II 236 165 71 - - -
Rastatt 19,884 5,739 7,280 2,199 4,666 7.05
Rostock 18,640 8,228 1,569 6,606 2,237 6.60
Saarbrücken 46,899 28,752 9,753 2,280 6,114 9.21
Schenefeld 40,250 10,283 26,500 1,961 1,506 5.02
Solingen 13,333 2,475 4,409 4,924 1,525 2.88
Stuttgart - Kirchheim 18,260 14,335 1,261 - 2,664 6.46
Wiesbaden 14,619 855 5,608 3,613 4,543 16.99
Wuppertal 18,260 14,335 1,261 - 2,664 4.41
Total 1,792,670 604,976 583,655 364,201 239,839 6.86
UK
Property and location Total Office Workshop Storage Other( (2)) Rate psqm
sqm sqm sqm sqm sqm € ((3))
Altrincham 4,498 1,442 2,768 - 288 18.74
Ashford 1,823 1,823 - - - 39.88
Barnsley 6,637 546 5,929 - 162 7.73
Basingstoke 10,313 10,138 - - 175 31.67
Birmingham - Tyseley 12,154 805 9,576 1,233 540 9.59
Bradford - Dudley Hill 15,070 5,476 5,436 837 3,321 8.98
Bristol - Equinox 11,282 1,104 10,014 - 164 7.59
Bury 1,304 1,303 - - 1 47.63
Camberwell - Lomond 2,015 1,243 557 - 215 35.40
Cardiff 4,106 4,105 - - 1 32.31
Cheadle 1,628 1,600 - - 28 36.59
Christchurch 2,663 2,058 605 - - 29.10
Consett 3,094 - 3,094 - - 4.56
Coventry 1,622 1,622 - - - 17.76
Design Works 4,803 3,402 582 - 819 15.95
Didcot 1,021 491 510 - 20 33.01
Dinnington 3,648 1,000 2,648 - - 11.07
Doncaster 3,040 3,039 - - 1 24.69
Dorking 2,148 1,406 715 - 27 41.72
Egham 1,001 926 - - 75 36.83
Fareham 1,758 1,758 - - - 43.76
Gateshead 13,160 - 11,927 - 1,233 4.11
Gloucester 20,767 2,989 16,685 - 1,093 5.89
Gloucester - Barnwood 3,402 3,378 24 - - 37.77
Hartlepool - Oakesway 2,585 - 2,585 - - 2.48
Hebburn 5,463 - 5,397 - 66 7.32
Hemel Hempstead 4,389 4,387 - - 2 33.29
Hooton 1,383 1,230 - - 153 25.64
Hove 2,939 2,194 695 - 50 33.84
Huddersfield - Linthwaite 2,365 - 2,364 - 1 8.08
Leeds - Brooklands 2,133 2,042 - - 91 23.32
Leeds - Wortley 3,734 - 3,733 - 1 6.86
Letchworth 3,048 2,385 661 - 2 16.49
Littlehampton 1,992 1,991 - - 1 38.95
London - Colney 1,887 1,767 - - 120 34.03
M25 Business Centre 3,282 2,151 1,085 - 46 36.03
Maidstone 1,644 1,643 - - 1 40.81
Manchester - Trafford Park 8,695 - 8,676 - 19 9.51
Manchester - Newton Heath 5,660 2,273 3,353 - 34 17.50
Manchester - Old Trafford 4,578 1,513 2,996 - 69 25.32
Milton Keynes 3,654 3,593 13 - 48 31.14
New Addington - Croydon 6,540 381 6,158 - 1 14.41
Newcastle - Amber Court 4,297 4,297 - - - 25.21
Northampton - K2 4,688 57 4,630 - 1 12.46
Northampton - KG 12,617 910 11,609 - 98 9.56
Nottingham - Arnold 5,547 1,337 4,009 - 201 9.43
Nottingham - Park Row 4,160 4,110 - - 50 38.41
Nottingham - Roden 4,604 35 4,537 - 32 7.58
Oldham - Hollinwood 5,525 5,496 - - 29 23.09
Perivale 2,148 543 1,604 - 1 31.66
Peterlee 18,306 - 18,305 - 1 4.19
Poole 6,735 6,586 - - 149 26.51
Preston 5,341 1,741 3,577 - 23 16.67
Rochdale - Fieldhouse 23,042 527 22,329 - 186 3.98
Rochdale - Moss Mill 15,950 14 14,442 - 1,494 4.20
Rotherham 4,504 1,361 3,112 - 31 13.30
Sandy Business Park 9,261 108 9,152 - 1 8.07
Sheffield - Cricket 1,928 - 1,928 - - 10.29
Shipley 2,238 2,238 - - - 13.22
Solihull 1,715 1,714 - - 1 55.99
Stanley 3,776 - 3,776 - - 5.54
Stoke 5,119 - 5,118 - 1 6.01
Sunderland - North Sands 2,819 2,818 - - 1 18.84
Swindon 6,833 338 6,414 - 81 15.73
Theale 2,765 2,708 - - 58 57.57
Wakefield 20,703 619 18,443 - 1,641 4.51
Warrington - Craven Court 3,830 - 3,830 - - 11.08
Wimbledon 3,170 1,459 1,569 - 142 39.01
Wolverhampton - Willenhall 5,077 581 4,340 - 156 9.69
Total 389,537 122,711 251,510 2,070 13,246 13.66
* Excluding commercial leased investment properties.
(1) Other includes: Smartspace, catering, other usage, residential and
technical space, land and car parking.
(2) Other includes: aerials, car parking, retail units, yards, catering and
residential.
(3) The Group's UK business charges licence customers an all-inclusive
rate, which includes an implicit element of service charge.
Annex 1- Non-IFRS Measures
Basis of preparation
The Directors of Sirius Real Estate Limited 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,
EPRA loan to 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 gains/losses on revaluation
of investment properties, 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, goodwill
impairment, acquisition costs in relation to business combinations, changes in
fair value of derivative financial instruments, (collectively, the "EPRA
earnings adjustments"), deferred tax in respect of the EPRA earnings
adjustments, NCI relating to revaluation (net of related tax), gains/losses on
revaluation of 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 net deferred
tax liability. 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 derivative financial instruments 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
derivative financial instruments and intangible assets as per the note
reference in the audited 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.
• EPRA loan to value ("EPRA LTV") in order to assist in comparisons
with similar businesses in the real estate sector. EPRA LTV is a definition of
loan to value ratio as set out by the European Public Real Estate Association.
EPRA LTV represents net debt to total property value as defined in note 24. It
includes all capital which is not equity as debt, irrespective of its IFRS
classification, and is based upon proportional consolidation, therefore
including the Group's share in the net debt and net assets of associates.
Assets are included at fair value, net debt at nominal value. The
reconciliation for EPRA LTV is detailed in table D below.
• Adjusted profit before tax in order to provide an alternative
indication of Sirius Real Estate Limited and it's subsidiaries' (the "Group")
underlying business performance. Accordingly, it adjusts for the effect of the
gains/losses on revaluation of investment properties, deficit on revaluation
relating to leased investment properties, gains/losses on disposal of
properties, recoveries from prior disposals of subsidiaries, gains/losses on
revaluation of investment property from associates and related tax, other
adjusting items, goodwill impairment and change in fair value of derivative
financial instruments. The reconciliation for adjusted profit before tax is
detailed in table E 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
is adjusted profit before tax. 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 E below.
The Non-IFRS Financial Information is presented in accordance with the JSE
Listings 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 Financial
Information required by the JSE Listings Requirements solely relates to
Headline Earnings Per Share and not EPRA.
Ernst & Young Inc have issued a reporting accountant's report on the
Non-IFRS Financial Information for the year ended 31 March 2023 which is
available for inspection at the Group's registered office. The starting point
for all the Non-IFRS Financial Information has been extracted, without
adjustment, from the audited Group's consolidated financial statements for the
year ended 31 March 2023 (the "consolidated financial statements").
Table A - EPRA earnings
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Basic and diluted earnings attributable to owners of the Company((1)) 79.6 147.9
Add loss/(deduct gain) on revaluation of investment properties((2)) 9.8 (140.9)
(Deduct gain)/add loss on disposal of properties (net of related tax)((3)) (4.7) 0.6
Deduct recoveries from prior disposals of subsidiaries (net of related tax) - (0.1)
((4))
Refinancing costs, exit fees and prepayment penalties((5)) - 7.8
Goodwill impairment((6)) - 40.9
Acquisition costs in relation to business combinations((7)) - 5.3
Change in fair value of derivative financial instruments((8)) (0.9) (1.0)
Deferred tax in respect of EPRA fair value movements on investment 4.3 14.8
properties((9))
NCI relating to revaluation (net of related tax)((10)) - 0.2
Add loss/(deduct gain) on revaluation of investment property relating to 0.5 (6.0)
associates((11))
Tax in relation to the revaluation gains/losses on investment property (0.4) 1.2
relating to associates((12))
EPRA earnings((13)) 88.2 70.7
Notes:
(1) Presents the profit attributable to owners of the Company which has
been extracted from the consolidated income statement within the consolidated
financial statements.
(2) Presents the gain or loss on revaluation of investment properties which
has been extracted from the consolidated income statement within the
consolidated financial statements.
(3) Presents the gain or loss on disposal of properties (net of related
tax) which has been extracted from note 12 within the consolidated financial
statements.
(4) Presents the recoveries from prior disposals of subsidiaries (net of
related tax) which has been extracted from the consolidated income statement
within the consolidated financial statements.
(5) Presents the refinancing costs, exit fees and prepayment penalties
which have been extracted from note 10 within the consolidated financial
statements.
(6) Presents the goodwill impairment which has been extracted from the
consolidated income statement within the consolidated financial statements.
(7) Presents the acquisition costs in relation to business combinations
which have been extracted from note 4 within the consolidated financial
statements.
(8) Presents the change in fair value of derivative financial instruments
which has been extracted from the consolidated income statement within the
consolidated financial statements.
(9) Presents deferred tax relating to origination and reversal of temporary
differences of the EPRA fair value movements on investment properties which
has been extracted from note 11 within the consolidated financial statements.
(10) Presents the non-controlling interest relating to revaluation (net of
related tax) which has been extracted from note 12 within the consolidated
financial statements.
(11) Presents the gain or loss on revaluation of investment property relating
to associates which has been extracted from note 12 within the consolidated
financial statements.
(12) Presents tax in relation to the revaluation gains/losses on investment
property relating to associates which has been extracted from note 12 within
the consolidated financial statements.
(13) Presents the EPRA earnings for the year.
Table B - Adjusted net asset value
31 March 2023 31 March 2022
€m €m
Net asset value
Net asset value for the purpose of assets per share (total equity attributable 1,197.1 1,190.7
to the owners of the company)((1))
Deferred tax liabilities((2)) 80.2 75.9
Derivative financial instruments at fair value((3)) (1.3) (0.3)
Adjusted net asset value attributable to owners of the Company((4)) 1,276.0 1,266.3
Notes:
(1) Presents the net asset value for the purpose of assets per share (total
equity attributable to the owners of the company) which has been extracted
from the consolidated statement of financial position within the consolidated
financial statements
(2) Presents the net deferred tax liabilities or assets which have been
extracted from the consolidated statement of financial position within the
consolidated financial statements relating to valuation movements, derivative
financial instruments and LTIP valuation.
(3) Presents current derivative financial instrument assets which have been
extracted from the consolidated statement of financial position within the
consolidated financial statements.
(4) Presents the adjusted net asset value attributable to the owners of the
Company as at year end.
Table C - EPRA net asset measures
31 March 2023 EPRA NRV EPRA NTA EPRA NDV
€m €m €m
Net asset value as at year end (basic)((1)) 1,197.1 1,197.1 1,197.1
Diluted EPRA net asset value at fair value 1,197.1 1,197.1 1,197.1
Group
Derivative financial instruments at fair value((2)) (1.3) (1.3) n/a
Deferred tax in respect of EPRA fair value movements on investment 80.2 80.1 n/a
properties((3))
Intangibles((4)) n/a (4.1) n/a
Fair value of fixed interest rate debt((5)) n/a n/a 99.2
Real estate transfer tax((6)) 164.4 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment 7.0 7.0 n/a
properties((3))
Fair value of fixed interest rate debt((5)) n/a n/a 9.9
Real estate transfer tax((6)) 9.3 n/a n/a
Total EPRA NRV, NTA and NDV((7)) 1,456.7 1,278.8 1,306.2
31 March 2022 EPRA NRV EPRA NTA EPRA NDV
€m €m €m
Net asset value as at year end (basic)((1)) 1,190.7 1,190.7 1,190.7
Diluted EPRA net asset value at fair value 1,190.7 1,190.7 1,190.7
Group
Derivative financial instruments at fair value((2)) (0.3) (0.3) n/a
Deferred tax in respect of EPRA fair value movements on investment 75.9 75.6* n/a
properties((3))
Intangibles((4)) n/a (4.3) n/a
Fair value of fixed interest rate debt((5)) n/a n/a (22.2)
Real estate transfer tax((6)) 160.7 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements on investment 6.5 6.5* n/a
properties((3))
Fair value of fixed interest rate debt((5)) n/a n/a 2.1
Real estate transfer tax((6)) 9.1 n/a n/a
Total EPRA NRV, NTA and NDV((7)) 1,442.6 1,268.2 1,170.6
* The Company intends to hold and does not intend in the long term to
sell any of the investment properties and has excluded such deferred taxes for
the whole portfolio as at year end except for deferred tax in relation to
assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per share (total
equity attributable to the owners of the company) which has been extracted
from the consolidated statement of financial position within the consolidated
financial statements.
(2) Presents current derivative financial instrument assets which have been
extracted from the 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 11 within the consolidated financial statements
and for EPRA NTA only the additional credit adjustment for the deferred tax
expense relating to assets held for sale of €0.1m (2022: €0.3m). For
investment in associates the deferred tax income/(expense) arising on
revaluation losses/gains amounted to €0.4m (2022: €6.6m).
(4) Presents the net book value of software and licences with definite
useful life which has been extracted from note 17 within the consolidated
financial statements.
(5) Presents the fair value of financial liabilities and assets on the
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 year
end.
Table D - EPRA LTV metric
Proportionate consolidation
31 March 2023 Group Investment in associates Total
€m €m €m
Interest-bearing loans and borrowings((1)) 264.4 52.1 316.5
Corporate bonds((2)) 700.0 - 700.0
Net payables((3)) 71.0 4.5 75.5
Cash and cash equivalents((4)) (124.3) (8.6) (132.9)
Net debt (a)((5)) 911.1 48.0 959.1
Investment properties((6)) 2,123.0 124.2 2,247.2
Assets held for sale((7)) 8.8 - 8.8
Plant and equipment((8)) 7.2 - 7.2
Intangible assets((9)) 4.1 - 4.1
Loan to associates((10)) 44.3 - 44.3
Total property value (b)((11)) 2,187.4 124.2 2,311.6
EPRA LTV (a/b)((12)) 41.7% 38.6% 41.5%
Proportionate consolidation
31 March 2022 Group Investment in associates Total
€m €m €m
Interest-bearing loans and borrowings((1)) 281.5 51.9 333.4
Corporate bonds((2)) 700.0 - 700.0
Net payables((3)) 70.7 3.1 73.8
Cash and cash equivalents((4)) (151.0) (6.2) (157.2)
Net debt (a)((5)) 901.2 48.8 950.0
Investment properties((6)) 2,100.0 122.4 2,222.4
Assets held for sale((7)) 13.8 - 13.8
Plant and equipment((8)) 5.5 - 5.5
Intangible assets((9)) 4.3 - 4.3
Loan to associates((10)) 44.2 - 44.2
Total property value (b)((11)) 2,167.8 122.4 2,290.2
EPRA LTV (a/b)((12)) 41.6% 39.9% 41.5%
Notes:
(1) Presents the interest-bearing loans and borrowings which have been
extracted from the consolidated statement of financial position within the
consolidated financial statements less the corporate bonds which have been
extracted from note 24 within the consolidated financial statements.
(2) Presents the corporate bonds which have been extracted from note 24 within
the consolidated financial statements.
(3) Presents the net payables, which is the sum of trade and other
receivables, derivative financial instruments, trade and other payables,
current tax liabilities (all of which have been extracted from the
consolidated statement of financial position within the consolidated
financial statements) and guarantees and deposits which have been extracted
from note 19 within the consolidated financial statements.
(4) Presents the cash and cash equivalents which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(5) Presents the net debt, which is the sum of interest-bearing loans and
borrowings, corporate bonds, net payables, less cash and cash equivalents
which have been extracted from note 24 within the consolidated financial
statements.
(6) Presents the investment properties values which have been extracted from
the consolidated statement of financial position within the consolidated
financial statements.
(7) Presents the assets held for sale which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(8) Presents the plant and equipment which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(9) Presents the intangible assets which have been extracted from the
consolidated statement of financial position within the consolidated financial
statements.
(10) Presents the loan to associates which has been extracted from note 25
within the consolidated financial statements.
(11) Presents the total property value, which is the sum of investment
properties, assets held for sale, plant and equipment, intangible assets and
loan to associates.
(12) Presents the EPRA LTV which is net debt divided by total property value
in percentage.
Table E - Adjusted profit before tax and funds from operations
Year ended Year ended
31 March 2023 31 March 2022
€m €m
Reported profit before tax((1)) 87.0 168.9
Adjustments for:
Loss/(gain) on revaluation of investment properties((2)) 9.8 (140.9)
Deficit on revaluation relating to leased investment properties((3)) (1.5) (5.6)
(Gain)/loss on disposals of properties((4)) (4.7) 0.6
Recoveries from prior disposals of subsidiaries((5)) - (0.1)
Loss/(gain) on revaluation of investment property from associates and related 0.1 (4.8)
tax((6))
Other adjusting items((7)) 6.2 19.1
Goodwill impairment((8)) - 40.9
Change in fair value of financial derivatives((9)) (0.9) (1.0)
Adjusted profit before tax((10)) 96.0 77.1
Adjustments for:
Foreign exchange effects((11)) 0.2 (1.9)
Depreciation and amortisation (excluding depreciation relating to IFRS 3.4 2.4
16)((12))
Amortisation of financing fees((13)) 3.3 2.6
Adjustment in respect of IFRS 16((14)) 2.2 0.5
Current taxes incurred((15)) (3.0) (6.1)
Funds from operations((16)) 102.1 74.6
Notes:
(1) Presents profit before tax which has been extracted from the
consolidated income statement within the consolidated financial statements.
(2) Presents the gain or loss on revaluation of investment properties which
has been extracted from the consolidated income statement within the
consolidated financial statements.
(3) Presents the deficit on revaluation relating to leased investment
properties which has been extracted from note 14 within the consolidated
financial statements.
(4) Presents the gain or loss on disposal of properties which has been
extracted from the consolidated income statement within the consolidated
financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries which have
been extracted from the consolidated income statement within the consolidated
financial statements.
(6) Presents the gain or loss on revaluation of investment property
relating to associates and related tax which has been extracted from note 12
within the consolidated financial statements.
(7) Presents the total adjusting items which have been extracted from note
12 within the consolidated financial statements.
(8) Presents the goodwill impairment which has been extracted from the
consolidated income statement within the consolidated financial statements.
(9) Presents the change in fair value of derivative financial instruments
which has been extracted from the consolidated income statement within the
consolidated financial statements.
(10) Presents the adjusted profit before tax for the year.
(11) Presents the net foreign exchange gains or losses as included in other
administration costs in note 7 within the consolidated financial statements.
(12) Presents depreciation of plant and equipment and amortisation of
intangible assets which have been extracted from note 7 within the
consolidated financial statements.
(13) Presents amortisation of capitalised finance costs which has been
extracted from note 10 within the consolidated financial statements.
(14) Presents the differential between the expense recorded in the
consolidated income statement for the year relating to head leases in
accordance with IFRS 16 amounting to €4.5m (2022: €6.9m) and the actual
cash expense recorded in the consolidated statement of cash flows for the year
amounting to €2.3m (2022: €6.3m).
(15) Presents the total current income tax which has been extracted from note
11 within the consolidated financial statements.
(16) Presents the funds from operations for the year.
Glossary of terms
Adjusted earnings after tax is the earnings attributable to the owners of the Company, adjusted for the
effect of the gains/losses on revaluation of investment properties and related
tax, (also to associates net of related tax), gains/losses on disposal of
properties and related tax, recoveries from prior disposals of subsidiaries
(net of related tax), NCI relating to revaluation (net of related tax),
goodwill impairment, changes in fair value of derivative financial instruments
(net of related tax and NCI), revaluation expense relating to leased
investment properties, adjusting items (net of related tax and NCI)
Adjusted net asset value is the assets attributable to the owners of the Company adjusted for
derivative financial instruments at fair value and net deferred tax
liabilities/assets
Adjusted profit before tax is the reported profit before tax adjusted for the effect of gains/losses on
revaluation of investment properties, deficit on revaluation relating to lease
investment properties, gains/losses on disposal of properties, recoveries from
prior disposals of subsidiaries, gains/losses on revaluation of investment
property from associates and related tax, other adjusting items, goodwill
impairment and changes in fair value of derivative financial instruments
Annualised acquisition net operating income is the income generated by a property less directly attributable costs at the
date of acquisition expressed in annual terms. Please see "annualised rent
roll" definition below for further explanatory information
Annualised acquisition is the contracted rental income of a property at the date of acquisition
rent roll expressed in annual terms. Please see "annualised rent roll" definition below
for further explanatory information
Annualised rent roll is the contracted rental income of a property at a specific reporting date
expressed in annual terms. Unless stated otherwise the reporting date is 31
March 2023. Annualised rent roll should not be interpreted or 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
audited 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
Company is Sirius Real Estate Limited, 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 (primary listing) and the
Main Board of the Johannesburg Stock Exchange (primary listing)
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 for gains/losses on revaluation of investment
properties, 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, goodwill impairment,
acquisition costs in relation to business combinations, changes in fair value
of derivative financial instruments, (collectively, the "EPRA earnings
adjustments"), deferred tax in respect of the EPRA earnings adjustments, NCI
relating to revaluation (net of related tax), gains/losses on revaluation of
investment property relating to associates and the related tax thereon
EPRA loan to value is the ratio of net debt to total property value as defined in note 24. It
includes all capital which is not equity as debt, irrespective of its IFRS
classification, and is based upon proportional consolidation, therefore
including the Group's share in the net debt and net assets of associates.
Assets are included at fair value, net debt at nominal value.
EPRA net reinstatement is the net asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements and derivative
value financial instruments 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
derivative financial instruments and intangible assets as per the note
reference in the audited consolidated statement of financial position,
including the amounts of the above related to the investment in associates. It
also takes into account the effect of the granting of shares relating to
long-term incentive plans
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
Group comprises that of the Company and its subsidiaries
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 in contractual terms, 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 88 of the Group's Annual Report and Accounts 2023
Sirius comprises that of the Company and its subsidiaries
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
Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey GY1 1EW
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
Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey GY1 1EW
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
Channel Islands
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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