TIDMSRE
RNS Number : 9053T
Sirius Real Estate Limited
20 November 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
20 November 2023
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius", the "Group" or the
"Company")
Condensed interim consolidated financial results for the six
months ended 30 September 2023
Strong operational results drive FFO and dividend growth
Sirius Real Estate, the leading owner and operator of branded
business and industrial parks providing conventional space and
flexible workspace in Germany and the U.K., provides an update on
trading for the six months to 30 September 2023.
Rental growth delivers further FFO and dividend increases
-- 7.3% increase in total revenue to EUR140.1 million (30 September 2022: EUR130.6 million)
-- 7.7% increase in Group like-for-like rent roll (30 September 2022: 6.9%)
-- 7.0% in like-for-like annualised rent roll in Germany to
EUR122.5 million (30 September 2022: EUR114.5 million) and 9.0% in
the UK to GBP50.7 million (EUR58.6 million) (30 September 2022:
GBP46.5 million (EUR53.8 million)) demonstrating the quality of the
assets and continued occupier demand
-- Sirius remains on track to deliver its tenth consecutive year
of greater than 5% like-for-like rent roll increases at Group
level
-- 9.3% growth in funds from operations(1) to EUR53.0 million
(30 September 2022: EUR48.5 million)
-- 2.0% increase in adjusted profit before tax to EUR49.9
million (30 September 2022: EUR48.9 million) excluding property
valuations demonstrating continued strong operational
performance
-- 13.5% increase in adjusted earnings per share, which excludes
valuation movements as well as exceptional items, to 4.21c per
share (30 September 2022: 3.71c) reflecting the positive year on
year operational development, with basic EPRA earnings per share up
16.7% to 4.12c per share (30 September 2022: 3.53c)
-- 11.1%(2) increase in dividend per share to 3.00c (30 September 2022: 2.70c)
-- 0.4% increase in EPRA NTA per share to 108.51c (31 March 2023: 108.11c per share)
-- The book value of owned investment property increased in
Germany by EUR13.0 million (30 September 2022: EUR29.7 million),
whilst book value decreased in the UK by EUR6.1 million (30
September 2022: EUR23.2 million decrease) representing a 1.8%
like-for-like valuation growth and 2.1% like-for-like decrease
respectively
-- Increase in owned investment property to EUR2,112.8 million
(31 March 2023: EUR2,107.3 million) including assets held for sale
of EUR7.3 million
-- Group EPRA net yield to 6.7% (30 September 2022: 6.4%)
-- Like-for-like Group occupancy remained stable at 84.5% (30
September 2022: 84.4%) highlighting the Group's ability to manage
its tenant base and vacancy, especially in Germany where the tenant
retention rate rose to 78% compared to 65% in the prior year
-- 7.2% increase in Germany in like-for-like average rental rate
to EUR7.02 per sqm (30 September 2022: EUR6.55 per sqm) and 9.0%
increase in the UK to GBP13.78 per sq ft (EUR14.30(3) per sqm) from
GBP12.64 per sq ft at 30 September 2022, highlighting the high
reversion potential within the UK portfolio in particular
Strong Balance Sheet
-- Weighted average cost of debt remained stable at 1.4% in the
period (31 March 2023: 1.4%) with a weighted average debt expiry of
3.3 years, increasing to 2.1% with a weighted average debt expiry
of 4.2 years following Berlin Hyp AG and Deutsche Pfandbriefbank AG
financing
-- Net LTV of 40.8% (31 March 2023: 41.6%), including
unrestricted cash balance of EUR91.2 million (31 March 2023:
EUR138.6 million)
-- Fitch reaffirmed its BBB investment grade rating with "Stable Outlook" on 20 October 2023
Successful Post Balance Sheet Asset Recycling, including two
disposals at 5% average premium to book value
-- Recycling of approximately in total EUR100 million, in four
post balance sheet transactions, comprising EUR47.4 million of
disposals in Germany and EUR52.9 million of acquisitions in the UK
demonstrating that the Company's assets remain desirable and
opportunities remain in the market
Outlook
-- Sirius remains well positioned to navigate the current
macro-economic climate due to its intensive asset management
initiatives together with over 4 years weighted average debt
expiries cushioning the impact of higher interest rates affecting
many in our sector
-- As such, the Company continues to expect to trade in line
with management expectations for the full year.
Commenting on the period, Andrew Coombs, Chief Executive Officer
of Sirius Real Estate, said:
"The business has delivered another six months of strong
operational performance. Dividend and FFO growth is being supported
by continued robust trading, with occupier demand for our high
quality affordable products underpinning rental growth and keeping
us on track to deliver our tenth consecutive year of greater than
5% like-for-like rent roll increases.
"Our balance sheet is strong, as evidenced by Fitch's recent
reaffirmation of our BBB investment grade rating and stable
outlook, providing flexibility to leverage future opportunities as
they arise. We recycled c. EUR100 million of assets through four
post balance sheet transactions, making EUR47.4 million of
disposals in Germany and EUR52.9 million of acquisitions in the UK,
highlighting our ability to crystallise returns from our mature
assets. Furthermore, there are many further levers we can pull to
unlock value and grow rental income through our successful asset
management platform.
"We continue to be mindful of the uncertain market backdrop,
however, our asset management and marketing initiatives continue to
give us confidence in the Group's growth prospects. Looking ahead,
our outlook is positive and we remain confident in our ability to
continue to deliver attractive risk-adjusted returns to
shareholders."
Webcast Presentation
Webcast Conference
There will be an in person presentation for analysts at 09.00am
(10.00am CET/ 11.00am SAST) today, hosted by Andrew Coombs, Chief
Executive Officer of Sirius Real Estate, and Chris Bowman, Chief
Financial Officer. This will be held at Peel Hunt's offices: 100
Liverpool Street, London EC2M 2AT
For those unable to join in person, there will be an audio
webcast presentation, with registration available via the link
below:
https://stream.brrmedia.co.uk/broadcast/652f90524a974c05613633fb
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Chris Bowman, CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / James McEwan / Talia Shirion
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main and premium
market of the London Stock Exchange and the main board of the JSE
Limited. It is a leading owner and operator of branded business and
industrial parks providing conventional space and flexible
workspace in Germany and the UK. As of 30 September 2023, the
Group's portfolio comprised 139 assets let to 9,248 tenants with a
total book value of over EUR2 billion, generating a total
annualised rent roll of EUR184.2 million. Sirius also holds a 35%
stake in Titanium, its EUR350+ 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 and BizSpace names 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
refinance or dispose of assets selectively 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.
For more information, please visit:
www.sirius-real-estate.com
Follow us on LinkedIn at
https://www.linkedin.com/company/siriusrealestate/
Follow us on X (Twitter) at @SiriusRE
JSE Sponsor
PSG Capital
Business update
Strong operational performance highlights resilience of Sirius
platform
Total annualised rent roll
EUR184.2m(3)
9.0%
2023 EUR184.2m
2022 EUR169.0m
Total revenue
EUR140.1m
7.3%
2023 EUR140.1m
2022 EUR130.6m
Funds from operations1
EUR53.0m
9.3%
2023 EUR53.0m
2022 EUR48.5m
Profit before tax
EUR39.8m
(47.4%)
2023 EUR39.8m
2022 EUR75.7m
Interim dividend
3.00c per share
11.1%2
2023 3.00c
2022 2.70c
Basic earnings per share
2.71c per share
(54.8)%
2023 2.71c
2022 6.00c
1 See note 25 of the Interim Report 2023.
2 Interim dividend representing 66% of FFO (30 September 2022: 65% of FFO).
3 The Company has chosen to disclose certain Group rental income
figures utilising a constant foreign currency exchange rate of
GBP:EUR 1.1566, being the closing exchange rate as at 30 September
2023.
In summary:
-- Sirius remains resilient and well positioned to navigate the
current macro-economic climate due to its intensive asset
management initiatives and the fixed price contracts it has secured
for a significant portion of its utility demands in both Germany
and the UK, which should shelter its diverse tenant base from some
of the higher operating costs that most industrial companies are
facing. Further, having over 4 years weighted average debt expiries
is helping cushion the impact of higher interest rates affecting
many in our sector.
-- he Company looks ahead with confidence and continues to trade
in line with management expectations for the full year.
Key Group highlights:
30 September 30 September Movement
Metric 2023 2022 Movement %
--------------------------------- ------------ ------------ -------- --------
Total annualised rent roll* (EUR
million) 184.2 169.0 15.2 9.0%
Like-for-like annualised rent
roll* (EUR million) 181.2 168.3 12.9 7.7%
Average rate (EUR) per sqm* 8.42 7.77 0.65 8.4%
Average rate (EUR) per sqm like
for like* 8.40 7.79 0.61 7.8%
Total occupancy (%) 84.1 84.4 (0.3) (1.1)%
Like for like occupancy (%) 84.5 84.4 0.1 0.1%
Cash in bank (EUR million) 91.2 138.6 (47.4) (34.2)%
Cash collection (%) 97.5 97.6 (0.1) 0%
--------------------------------- ------------ ------------ -------- --------
* The Company has chosen to disclose certain Group rental income
figures throughout utilising a constant foreign currency exchange
rate of GBP:EUR 1.1566, being the closing exchange rate as at 30
September 2023, throughout this document.
Overview
Against a backdrop of negative headlines referencing challenging
economic conditions in both Germany and the UK, the Group is
pleased to report continued strong trading in line with
expectations, with all our key like for like operating metrics
showing positive momentum leading to like-for-like Group annualised
rent roll growth compared to the prior year of 7.7%*.
In Germany, occupancy remains stable and we continue to achieve
rental rate growth ahead of inflation as we utilise our proprietary
asset management platform to maximise the value we generate from
our space. The sale of Kassel at above book value, which we
announced on 3 October 2023, demonstrates the resilience of our
German portfolio, which has again achieved a modest uplift
valuation at the period end driven by continued strong rental
growth.
In the UK we continue to focus on driving value from BizSpace.
Rent roll growth is ahead of our German operations reflecting the
ongoing demand for our affordable, well-located space amid a higher
inflationary backdrop. Occupancy in the UK was higher than the six
months prior and it is particularly pleasing to report that UK rent
roll has exceeded GBP50 million for the first time, buoyed by a
record new business sales month in September. Nonetheless the UK
portfolio experienced a modest decrease in valuation in line with
an expansion in yields in the sector.
Group rent roll increased by 9.0%* year-on-year and 2.8% in the
period. Like-for-like rent roll in Germany increased by 2.4% in the
period (30 September 2022: 2.4%) whilst year-on-year like-for-like
rent roll growth was 7.0%. The UK enjoyed a boost to rent roll as
its price led strategy took hold with like-for-like rent roll
increasing by 4.6% in the period (30 September 2022: 4.1%) whilst
year-on-year like-for-like rent roll growth was 9.0%. Continued
strong demand for Company products in attractive locations indicate
that Sirius is poised for its tenth consecutive year of greater
than 5% like-for-like rent roll increases.
Rent roll growth is supported in Germany by a 2.6% increase in
like-for-like rate per sqm to EUR7.06 (31 March 2023: EUR6.88),
whilst the like-for-like year-on-year rate grew by 7.2% to EUR7.02
(30 September 2022: EUR6.55). In the UK, a strong increase
year-on-year in like-for-like rate per sq ft of 9.0% to GBP13.78
(30 September 2022: GBP12.64) was also the driver of the 9.0%
like-for-like rent roll increase to GBP50.7 million (30 September
2023: GBP46.5 million). These developments over the past year have
helped the Group report a 9.3% growth in FFO to EUR53.0 million (30
September 2022: EUR48.5 million).
The strong trading underpins the board's confidence to declare
an 11.1% increase in the interim dividend to 3.00c per share
compared to the 2.70c for H1 last year. NAV per share grew around
0.2% in the six month period which was helped by a 0.3% uplift in
the valuation of owned investment property to EUR2,112.8 million
from EUR2,107.3 million as at 31 March 2023, including those assets
held for sale.
The Group's balance sheet remains strong as a result of a number
of previously communicated early financings that have been agreed.
These comprise the EUR170 million Berlin Hyp AG loan facility, for
a period of seven years to 31 October 2030, and the EUR58.3 million
Deutsche Pfandbriefbank AG facility, for a period of seven years to
31 December 2030. From the commencement of the new Deutsche
Pfandbriefbank AG facility at the end of December 2023, the Group
will have a weighted average cost of debt of 2.1% and a weighted
average debt expiry of 4.2 years. In addition, the Company further
paid down its expiring Schuldschein debt of EUR20 million in the
period from existing cash flows. The early financing of the Berlin
Hyp AG and Deutsche Pfandbriefbank AG loans demonstrate the Group's
continued support from its banking partners and ability to
refinance or take out new facilities throughout the property
cycle.
The Group's track record of growing FFO organically through its
selective asset recycling is continuing well, as outlined in detail
under "Asset recycling, acquisitions and disposals" further on in
this report. In summary, the Group undertook several transactions
post the balance sheet date in both Germany and the UK amounting to
in total nearly EUR100 million, recycling EUR47.4 million of
disposals into EUR52.9 million of acquisitions in October and
November a testament to the Group's continued success in recycling
assets in all market environments.
The Group is further pleased to welcome Chris Bowman as CFO as
he joins the Sirius Board of Directors in August 2023 following a
handover from interim CFO Alistair Marks. Alistair Marks, who
stepped down from the Sirius board in July 2023, will be leaving
the Group at the end of March 2024 having been with Sirius since
inception in 2007, becoming CFO in 2012, following internalisation
and more recently as CIO. He goes with the Board's thanks for his
valuable contribution to the Group.
Financial performance
Excluding the effects from gains and losses from the revaluation
of investment properties profit before tax increased by 2.0% to
EUR49.9 million (30 September 2022: EUR48.9 million) demonstrating
continued strong operational performance. Total revenue, which
comprises rental income, fee income from Titanium, other income
from investment properties and service charge income, increased by
7.0% to EUR140.1 million (30 September 2022: EUR130.6 million). The
Company reported a profit before tax for the six month period of
EUR39.8 million (30 September 2022: EUR75.7 million) which includes
EUR9.6 million of deficit* from investment property revaluations of
its owned assets (30 September 2022: EUR27.8 million gain).
As a result, FFO for the six months grew to EUR53.0 million
(4.54c per share) compared to EUR48.5 million (4.15c per share) for
the same period in the prior year, an increase of 9.3% on a per
share basis. Reported profit after tax of EUR31.7 million and basic
earnings per share of 2.71c compares to EUR70.0 million and basic
earnings per share of 6.00c in the prior year, reflecting lower
valuations coupled with a small lag on the asset recycling between
when assets were sold and the equity reinvested. Adjusted earnings
per share, which excludes valuation movements as well as
exceptional items, increased by 13.5% to 4.21c per share from 3.71c
in the prior year, reflecting the positive year on year operational
activity.
* Net of capex and adjustments in relation to lease incentives and broker fees.
The following table sets out the key earnings per share
metrics:
Table 1: Earnings per share
six months six months
ended ended
30 September 2023 30 September 2022
----------------------------------- -----------------------------------
Earnings Cents Earnings Cents Change
EURm No. of shares per share EURm No. of shares per share %
------------- -------- ------------- ---------- -------- ------------- ---------- -------
Basic EPS 31.7 1,169,697,061 2.71 70.0 1,167,383,139 6.00 (54.8)%
Diluted EPS 31.7 1,185,416,141 2.67 70.0 1,183,403,147 5.92 (54.9)%
Adjusted EPS 49.3 1,169,697,061 4.21 43.3 1,167,383,139 3.71 13.5%
Basic EPRA
EPS 48.2 1,169,697,061 4.12 41.2 1,167,383,139 3.53 16.7%
Diluted EPRA
EPS 48.2 1,185,416,141 4.07 41.2 1,183,403,147 3.48 17.0%
------------- -------- ------------- ---------- -------- ------------- ---------- -------
The Directors have chosen to disclose EPRA earnings, which are
widely used alternative metrics to their IFRS equivalents (further
details on EPRA best practice recommendations can be found at
www.epra.com). Refer to note 2(c) for further information.
Net asset value per share ("NAV") grew to 102.65c (31 March
2023: 102.46c) in the period whilst adjusted net asset value per
share ("adjusted NAV") increased by 0.6% to 109.91c (31 March 2023:
109.21c). EPRA net tangible assets ("EPRA NTA") per share increased
by 0.4% to 108.51c (31 March 2023: 108.11c). The valuation metrics
are described in more detail below and the movement in net asset
value per share in the period can be seen in the following
table:
Table 2: Net assets per share
cents per
share
------------------------------------------------------- ---------
NAV per share as at 31 March 2023 102.46
------------------------------------------------------- ---------
Profit after tax 4.22
Deficit on revaluation of investment properties (0.80)
Deferred tax charge (0.44)
Cash dividend paid (3.15)
EBT share purchase and LTIP vesting (0.02)
Foreign currency 0.65
Adjusting items (0.26)
------------------------------------------------------- ---------
NAV per share as at 30 September 2023 102.65
------------------------------------------------------- ---------
Deferred tax and adjustments to financial derivatives* 7.25
------------------------------------------------------- ---------
Adjusted NAV per share as at 30 September 2023 109.91
------------------------------------------------------- ---------
EPRA adjustments* (1.40)
------------------------------------------------------- ---------
EPRA NTA per share as at 30 September 2023 108.51
------------------------------------------------------- ---------
* See note 11 of the Interim Report.
Lettings and rental growth
Rental growth
Germany
In Germany, like-for-like year-on-year annualised rent roll
increased by 7.0% to EUR122.5 million (30 September 2022: EUR114.5
million). The Company was also able to manage the inflationary
environment effectively, increasing its average like-for-like
rental rate per sqm by 7.2% to EUR7.02 per sqm from EUR6.55 per sqm
in the prior year. Like-for-like occupancy remained stable at 83.8%
(30 September 2022: 83.8%) highlighting the Company's ability to
manage its tenant base and vacancy, as evidenced by its tenant
retention rate of 78% compared to 65% in the prior year.
UK
In the UK, like-for-like year-on-year annualised rent roll
increased by 9.0% to GBP50.7 million (EUR58.7* million) (30
September 2022: GBP46.5 million (EUR52.6* million)). This was
driven by a 9.0% increase in like-for-like average rental rate to
GBP13.78 per sq ft (EUR14.30* per sqm) from GBP12.64 per sq ft as
at 30 September 2022, highlighting the high reversion potential
within the UK portfolio which is realisable due to continued strong
occupier demand. Like-for-like occupancy increased to 87.7% (30
September 2022: 87.0%) for the year due to proactive management of
its customer base in order to take advantage of the continued
rental growth in the industrial market and high demand for flexible
workspace, as well as its efforts to attract tenants at higher
rates.
* The Company has chosen to disclose certain Group rental income
figures throughout utilising a constant foreign currency exchange
rate of GBP:EUR 1.1566, being the closing exchange rate as at 30
September 2023, throughout this document.
Cash collection
As rental rates continue to increase in both Germany and in the
UK, the value of the Company's in-house team of cash collection
professionals who maintain close working relationships with tenants
is key to the Company's success in collecting its debts. As
inflationary pressures remain, the Company has been successful in
maintaining consistent cash collection rates across the Group of
97.5% (30 September 2022: 97.6%).
Germany
In the six months to 30 September 2023, the Company increased
its tenant billings by 12.7% to EUR97.5 million (excluding VAT) (30
September 2022: EUR86.5 million), of which EUR94.7 million or 97.1%
was collected, remaining consistent with the 97.2% collected in the
prior comparative period. The Company expects to collect the
majority of the EUR2.8 million outstanding debts through its
regular collection activities over the coming months. The Company
had only immaterial write offs in the period.
UK
BizSpace also continued to maintain high cash collection rates
through the team's active management of its tenant base. Of the
GBP25.4 million (excluding VAT) (EUR29.4 million) which was billed
in the period, GBP25.1 million (EUR29.1 million) or 98.9% was
collected. The remaining GBP0.3 million (EUR0.3 million) is
expected to be collected in the normal course of regular collection
activities over the coming months. The Company had immaterial write
offs in the period.
Portfolio valuation
Group
Taking into account investment property relating to leased
assets the total investment property book value as at 30 September
2023 was EUR2,129.5 million (31 March 2023: EUR2,123.0 million)
such valuations having been independently reviewed by Cushman and
Wakefield. In accordance with IFRS 16, the Group recognises leased
investment properties of EUR24.0 million; accordingly, a
revaluation loss of EUR0.7 million representing the fair value
adjustment in the period was recorded in the income statement.
Germany
The EUR13.0 million increase in value of the owned investment
properties in the German portfolio was made up of EUR11.2 million
of capex investment and EUR8.9 million of valuation uplift, offset
by a EUR7.3 million transfer in assets held for sale and EUR0.2
million adjustment with respect to lease incentives on the back of
the 2.4% increase in like-for-like rental income. The portfolio is
now valued on a gross yield of 7.4% and a net yield of 6.6% which
has increased from 7.3% and 6.5% respectively as at 31 March 2023.
Despite ongoing pressures on the commercial property market in
Germany, yields remain less volatile for higher yielding asset
classes, with sellers preferring to take assets off the market
rather than reduce prices significantly. Nevertheless, Sirius is
particularly well positioned to absorb any further yield expansion
in the asset class due to the value-add potential remaining within
its portfolio and the fact that, over the last few years, its
assets are valued at yields which are much higher than where
similar assets have been trading at over the last few years.
Sirius' business model of upgrading and repositioning
underperforming properties through its capex investment programme
to transform them into much more desirable institutional type
assets is one which works very effectively when the market is
strong as well as when it is more challenging.
As at the period end, just over 60% of the total portfolio
comprised assets benefiting from both income and value-add
potential which will be realised through Sirius' intensive asset
management and selective capex investment over the next few years.
These assets now have an average occupancy of 78.8% and are valued
on a gross yield of 7.7%, compared to the Company's mature assets
which are on average around 94.8% occupied and valued on a gross
yield of 6.8%. Unlocking the potential in the value-add portfolio
will come from filling up sites and stabilising their rental
income. This will be achieved through our strategy of making the
properties much more appealing to a wider market which includes the
lower cost of capital investors who buy these types of assets on
much tighter yields. Hence, we would expect to see the gap between
the yields of the value-add assets and mature assets tighten as the
value-add assets approach maturity. This is why the capex
programme, which has so successfully and consistently improved
occupancy, rental income, service charge cost leakage and overall
quality of the rent roll and sites in general, has proven to be
extremely value accretive.
UK
The EUR6.1 million negative movement in owned investment
property of the UK portfolio was made up of a EUR18.5 million
revaluation decrease, taking into account EUR5.3 million of capital
expenditure, offset by a favourable foreign currency translation
adjustment of EUR7.1 million.
The 30 September 2023 book value of the UK portfolio, which was
independently valued by Cushman & Wakefield LLP, was GBP355.9
million (EUR411.6 million) (31 March 2023: GBP367.2 million)
(EUR417.7 million), representing an average gross yield of 14.3%
(31 March 2023: 13.2%) which translates to a net yield of 9.7% (31
March 2023: 9.3%). The 30 September 2023 valuation represents a
3.2% valuation decrease when compared to the GBP367.2 million
valuation figure as at 31 March 2023, driven by an average 40bps of
yield expansion fully offsetting a 4.5% organic increase in
annualised rent roll across the same period.
The average capital value per sqm of the portfolio of GBP85 per
sq ft (EUR915 per sqm) remains well below replacement cost and
illustrates the potential for further growth from transformative
investment through leveraging the Group's capex investment
programme.
German capex investment programme
The Group's capex investment programme in relation to its German
assets has historically been focused on the transformation of
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 have not only
resulted in significant income and valuation improvements for the
Company but have also yielded significant improvements in service
charge cost recovery and therefore further enhanced the
improvements to net operating income. The programme started in 2015
and to date 433,632 sqm of space has been completed for an
investment of EUR69 million. As at 30 September 2023, this space
was generating EUR27.4 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 in the
portfolio over the last 8.5 years.
In addition to the space that has been completed and let or is
currently being marketed, a total of approximately 32,300 sqm of
space is either in the process of being transformed or is awaiting
approval to commence transformation. The Group is on track to
invest EUR8.8m into its capex investment programme this year and
expects to generate return on investment via rental income alone in
excess of 25%.
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 as at 30
September 2023, the Company has identified approximately 59,039 sqm
of vacated space that has potential to be significantly upgraded
before it is re-let. This space will require an investment of
approximately EUR6.2 million and, at current rates, is expected to
generate greater than 35% return on investment in annualised rent
roll when re-let. Upgrading this vacated space allows the Company
to enhance the reversionary potential of the portfolio further
whilst significantly improving the quality, desirability and hence
value of not only the space that is invested into but also the
whole site.
The German portfolio's headline 84% occupancy rate means that in
total 296,446 sqm of space is vacant as at 30 September 2023. When
excluding the vacancy that is subject to investment (5% of total
space), and the structural vacancy, which is not economically
viable to develop (2% of total space), the Company's occupancy rate
based on space that is readily lettable is approximately 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
expected to continue to contribute to the Company's annualised rent
roll growth going forward.
Asset recycling, acquisitions and disposals
Recycling equity from mature assets into new value-add
acquisitions has always been a significant part of the Sirius
business model. It benefits the Company in many ways including: a)
proving enhanced valuations that can also be crystallised; b)
replenishing the growth opportunity within the vacancy and the
capex investment programme; and c) being accretive to FFO per share
(and therefore dividend per share), with a consequent contribution
to NAV per share growth. This is an element of the Company's
strategy which Sirius is able to execute effectively throughout the
property cycle and this has been evidenced by the Company's
continued asset recycling initiatives. Even though the market for
both selling and buying remains a challenging one due to the
current economic climate, and with the Company remaining mindful of
its net LTV, it has been able since the balance sheet date to
recycle some non-core and mature assets in Germany and reinvest
these funds into some excellent accretive opportunities in the UK,
as detailed below.
Disposals
Whilst the Company did not complete any disposals in the period
in both Germany and in the UK, it did conduct two post balance
sheet transactions in Germany. The sale of its Kassel asset for
EUR7.3 million, which completed on 1 October 2023 represented a 5%
premium to book value at the time of notarisation. This allowed
Sirius to dispose of an asset located in a non-core location, which
was 92% let and comprised a total lettable area of 8,342 sqm of
industrial, office, logistics and other space within a 16,217 sqm
plot size. Additionally, the Company notarised the disposal of its
Maintal I asset on 1 November 2023, for a sales price of EUR40.1
million equating to 6% above book value, with an expected timing of
completion in March 2024. The mixed-use site consists of 38,000 sqm
of storage, industrial and office space, yielding EUR2.1 million on
NOI at 83% occupancy.
Acquisitions
The Company did not complete on any acquisitions during the
period, whilst it waited for opportunistic acquisitions to arise
given market conditions. Utilising recycled funds from disposals in
Germany and free cash on hand, the Company completed the purchase
of two post balance sheet transactions amounting to GBP45.8 million
(EUR52.9 million). The first was GBP10.1 million (EUR11.7 million)
acquisition, which completed on 2 October 2023 and comprised two
mixed use industrial assets located in Liverpool and the other in
Barnsley with a combined area of 71,957 sq ft (6,685 sqm) of
predominantly workshop space. The purchase price represented a NIY
of 9.6% (total acquisition costs). The second transaction, which
was completed on 6 November 2023, was the GBP35.7 million (EUR41.2
million) purchase of three multi-let studio sites located in
Islington and Camden in North London, representing a 7.3% net
initial yield after costs. The assets, with a combined area of
103,962 sq ft (9,658 sqm) are just under 70% let, providing
opportunity for the Company to implement its asset management
initiatives.
A summary of the acquisitions and disposals transacted post the
balance sheet date is set out in the tables below:
Table 3a: Acquisitions
Annualised
Total Total rental Annualised
Notarised/completed investment acquired income NOI
for acquisition Date GBPm sq ft GBPm GBPm Occupancy Gross yield
------------------------ ---------- ----------- --------- ---------- ---------- --------- -----------
Liverpool and Barnsley* Oct 2023 10.1 71,957 1.3 1.0 99.3% 12.4%
------------------------- --------- ----------- --------- ---------- ---------- --------- -----------
Islington and Camden** Nov 2023 35.7 103,962 2.8 2.6 69.8% 7.8%
------------------------- --------- ----------- --------- ---------- ---------- --------- -----------
Total 45.8 175,919 4.1 3.6 81.8% 9.0%
------------------------- --------- ----------- --------- ---------- ---------- --------- -----------
* Completed on 2 October 2023
** Completed on 6 November 2023
Table 3b: Assets held for sale
Annualised
Total Total rental Annualised
Notarised/completed sales price disposal income NOI Gross yield
for sale Date EURm sqm EURm EURm Occupancy *
-------------------- ------- ------------ --------- ---------- ---------- --------- -----------
Kassel** Oct 23 7.3 8,341 0.5 0.4 92% 7.1%
-------------------- ------- ------------ --------- ---------- ---------- --------- -----------
Maintal*** Nov23 40.1 37,871 2.4 2.1 83% 6.0%
-------------------- ------- ------------ --------- ---------- ---------- --------- -----------
Total 47.4 46,192 2.9 2.5 85% 7.1%
----------------------------- ------------ --------- ---------- ---------- --------- -----------
* Calculated on net purchase price.
** Completed 1 October 2023
*** Notarised 1 November 2023, expected completion March
2024
Net LTV and debt refinancing
Net LTV, which reduces the loan balance by free cash (excluding
restricted cash balances) in its calculation, has been reduced to
40.8% (31 March 2023: 41.6%) whilst interest cover at EBITDA level
was 8.2x as at 30 September 2023 (31 March 2023: 8.6x).
The Company's balance sheet remains strong through previously
communicated financings of the EUR170 million Berlin Hyp AG loan
facility, for a period of seven years to 31 October 2030 and the
EUR58.3 million Deutsche Pfandbriefbank AG facility, for a period
of seven years to 31 December 2030. From the commencement of the
new Deutsche Pfandbriefbank AG facility at the end of December
2023, the Group will have a weighted average cost of debt of 2.1%
and a weighted average debt expiry of 4.2 years. The Company
further paid down its expiring Schuldschein debt of EUR20 million
in the period from existing cash flows. This ability to refinance
debt at favourable rates in the current market circumstances is an
important asset for the Company. The Company has no debts maturing
within the next twelve months, with less than EUR30 million in
loans coming due between January and March 2025.
All covenants were complied with in full during the period. A
summary of the movement in the Group's debt is set out below:
Table 4: Movement in debt*
EURm
----------------------------------- ------
Total debt as at 31 March 2023 975.1
Debt repayment (20.0)
Scheduled amortisation (2.7)
----------------------------------- ------
Total debt as at 30 September 2023 952.4
----------------------------------- ------
* Excludes loan issue costs.
Strength of well-diversified income and tenant base
A combination of the diversity of the Group's tenant base and
wide range of space offerings, which are underpinned by an
established operating platform, continues to be extremely
beneficial to Sirius and will be another key element to help the
Company continue to grow over the next few years. Diversity in both
space type and tenancy is key to this. Sirius' portfolio includes
industrial, manufacturing, urban logistics/production, storage and
out of town office space that caters to multiple usages and a vast
range of sizes and tenant types. The diversity of the Company's
tenant base ranges from large, stable and long-term anchor tenants
through to the flexible SME and private customers who are the
engine room of any economy.
Germany
Against the backdrop of continued market disruption, resulting
in a high inflationary environment, the importance of a
well-diversified tenant base and wide range of products is evident.
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 high degree of flexibility. The Company's largest
single tenant contributes 2.2% of total annualised rent roll whilst
8.1% of its annualised rent roll comes from government tenants.
SMEs in Germany, the Mittelstand, are typically defined as
companies with revenues of up to EUR50.0 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 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 German
portfolio at the end of the reporting period:
Table 5a: Tenant breakdown - Germany
No. of % of total
tenants as at % of Annualised annualised Rate
30 September Occupied occupied rent income* rent income* per sqm
2023 sqm sqm EURm % EUR
------------------------ -------------- --------- --------- ------------- ------------- --------
Top 50 anchor tenants1 50 671,023 45% 48.3 39% 5.99
Smartspace SME tenants2 2,838 70,427 5% 8.0 6% 9.50
Other SME tenants
3 2,866 738,549 50% 69.2 55% 7.80
------------------------ -------------- --------- --------- ------------- ------------- --------
Total 5,754 1,479,999 100% 125.5 100% 7.06
------------------------ -------------- --------- --------- ------------- ------------- --------
1 Mainly large national/international private and public tenants.
2 Mainly small and medium-sized private and public tenants.
3 Mainly small and medium-sized private and retail tenants.
* See glossary section of the Interim Report 2023.
Even with the continuing conflict in Ukraine, Europe's energy
supply has successfully diversified away from Russia dependence.
Germany continues to be well positioned through its early
identification of the issue and shoring up of its gas reserves. As
at 30 September 2023, Germany had managed to ensure its gas storage
capacity had been filled, enabling the German economy to continue
operating without expected interruptions this coming winter.
Additionally, the Company's robust and well-diversified tenant base
does not have a significant reliance on gas supplies to continue
operating and, as such, the potential negative impact on Sirius'
rent roll is low. In Germany, the Company sources its utilities and
facilities management services in bulk for its properties and has
managed to secure a long-term, four-year contract after its current
utility contract expires in December 2023. This new utility
contract allows the Company to hedge up to 70% of the order volume
at a fixed price at any time, benefiting the expected trend in
reduced utility expenses in the coming years. As a result, its
tenants should be sheltered from some of the higher operating costs
that many industrial companies are facing right now. This is yet
another benefit and advantage offered by Sirius that it has from
its intense active management strategy.
UK
BizSpace's top 100 tenants are larger corporate customers
representing 23% of its annualised income, whilst the remaining 77%
of tenants are made up of SME and micro-SME. Whilst the top 100
tenants occupy 1% less space than in the comparative period, the
rent roll contribution has increased by 2% with rates increasing by
6%. The biggest contributor to rent roll continues to be the next
900 tenants, where rent roll increased by 16% as a result of a 6%
increase in rates and occupying 9% more space than in the
comparative period. The price led strategy has made very positive
contribution to rent roll in this segment.
Table 5b: Tenant breakdown - UK
No. of
tenants as % of total
at % of Annualised annualised Rate
30 September Occupied occupied rent income* rent income* per sq ft
2023 sq ft sq ft GBPm % GBP
------------------ ------------- --------- --------- ------------- ------------- ----------
Top 100 tenants 100 913,699 25% 11.7 23% 12.81
Next 900 tenants 900 1,790,712 49% 23.0 45% 12.84
Remaining tenants 2,494 977,620 27% 16.0 32% 16.37
------------------ ------------- --------- --------- ------------- ------------- ----------
Total 3,494 3,682,031 100% 50.7 100% 13.78
------------------ ------------- --------- --------- ------------- ------------- ----------
* See glossary section of the Interim Report 2023.
Smartspace Germany
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, across a
range of affordable serviced offices, self-storage units and
workboxes on a flexible basis that can be tailored to their needs.
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. In the post-pandemic
environment, as businesses manage remote working, online selling,
issues with supply chains and supply shortages, the Smartspace
product line becomes even more attractive because of its
flexibility, pricing and location being on the fringes of major
cities.
The fact that the Company is able to convert sub-optimal and
unutilised space into this premium, popular space and achieve
rental rates well in excess of the rest of the portfolio, means
that even though Smartspace is only a small part of Sirius'
business, it is a major part of the value enhancement process and
the asset transformation, while providing a valuable service for
tenants located elsewhere on the parks as well as those just using
this space.
The annualised rental income now being generated from
Smartspace, excluding the element that covers service charge costs,
has decreased by 4.8% to EUR8.0 million from EUR8.4 million at the
beginning of the period due to adjustments in service charge
allocation whilst it increased by 1.3% year-on-year. The occupancy
of Smartspace has remained stable in the period at 66% (31 March
2023: 65%) whilst the rates have decreased by 4.2% in the last six
months from EUR9.92 per sqm to EUR9.50 per sqm.
Environmental, social and governance ("ESG")
We are pleased to report that we continue to make progress in
embedding our ESG programme into our corporate strategy and our
business and financial planning cycles. Throughout this process, we
always ensure our approach remains commercially practical and
financially viable.
In Germany, and as announced in our 2022/23 Annual Report, we
have achieved our target reductions in net zero emissions for our
Scope 1 and 2 emissions. Our main focus is now on better
understanding the pathway to net zero emissions, including Scope 3,
by 2045 in line with the German national target. To support this
work, our previous assessments are being updated to reflect revised
CRREM methodology which was launched after our year end and are
being subjected to a detailed operational and financial assessment.
We intend to be in a position to outline a more detailed pathway,
including shorter-term decarbonisation plans and targets, in our
next Annual Report.
In the UK, we remain committed to achieving carbon neutrality
for Scope 1 and 2 emissions in the current financial year and we
are commencing an assessment to understand the potential pathway to
net zero emissions including Scope 3 for the UK by 2045 or 2050 in
line with CRREM and SBTi with aims to share initial results during
FY2024/25. Equally, our EPC programme continues as a priority, and
we are confident we can achieve the target rating of EPC 'C' by
2027 for our assets as a first stage and the final target of EPC
"B" by 2030.
Our ESG departments in both Germany and the UK, which were
formed this year, have been tasked with assessing the operational
and financial implications, including developing asset-by-asset
plans and capex requirements to achieve our net zero and EPC
ambitions. We believe these financial and operational indicators
require more detailed analysis and testing by us and will continue
to make progress in these areas and update as appropriate,
including through our TCFD reporting.
Our social and governance programmes remain well established and
accepted within both Sirius in Germany and BizSpace in the UK. Our
people are at the heart of everything we do, and we continue to
develop and expand our training and development offering through
the Sirius Training Centre and ensure we cultivate a supportive and
motivating working environment. A focus on wellbeing remains core
to our people strategy, as well as maintaining our strong
diversity, equity, and inclusion programme. We have also made
significant progress in the development of engagement programmes
targeted at benefiting the local communities in which we operate
and will be able to update further at year end.
Lastly, in order to support and test the progress of our ESG
roadmap, we have commenced our new ESG materiality assessment
covering both Germany and the UK. This process will enable us to
continue to align our ESG programme to our corporate strategy and
ensure we have taken into account the views of our stakeholders. We
intend to report on the findings of this process in our next Annual
Report.
Outlook
Sirius is pleased with the trading performance of the first six
months of the financial year, which saw continued like-for-like
rent roll growth and strong cash collection rates in both Germany
and the UK. The Company remains committed to a progressive dividend
to its shareholders as it continues to navigate through a
challenging macro-economic climate in the UK and Europe and remains
well positioned to continue to grow due to its intensive asset
management initiatives, diversified offerings and effective and
dynamic business model.
Andrew Coombs
Chief Executive Officer
Chris Bowman
Chief Financial Officer
17 November 2023
Statement of Directors' responsibilities
Each of the Directors, whose names and functions appear below,
confirm to the best of their knowledge that the unaudited condensed
interim set of consolidated interim financial statements have been
prepared in accordance with note 2(a), IAS 34 "Interim Financial
Reporting", as issued by the IASB, and the interim management
report herein includes a fair review of the information required by
the Disclosure Guidance and Transparency Rules ("DTR"), namely:
-- DTR 4.2.7 (R): an indication of important events that have
occurred during the first six months of the financial year, and
their impact on the condensed interim set of consolidated interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- DTR 4.2.8 (R): any related party transactions that have taken
place in the six month period ended 30 September 2023 that have
materially affected, and any changes in the related party
transactions described in the 2023 Annual Report that could
materially affect, the financial position or performance of Sirius
Real Estate Limited during the period.
The Directors of Sirius Real Estate Limited as at the date of
this announcement are set out below:
-- Daniel Kitchen, Chairman*
-- Caroline Britton, Senior Independent Director*
-- Andrew Coombs, Chief Executive Officer
-- Chris Bowman, Chief Financial Officer
-- James Peggie*
-- Mark Cherry*
-- Kelly Cleveland*
-- Joanne Kenrick*
* Non-Executive Directors.
A list of the current Directors is maintained on the Sirius Real
Estate Limited website: www.sirius-real-estate.com.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
By order of the Board
Andrew Coombs
Chief Executive Officer
Chris Bowman
Chief Financial Officer
17 November 2023
Independent review report
to Sirius Real Estate Limited
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes
in equity, the condensed consolidated statement of cash flows, and
the related notes 1 to 28. We have read the other information
contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with I International Accounting Standard 34 "Interim
Financial Reporting" the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority, the South
African Institute of Chartered Accountants (SAICA) Financial
Reporting Guides, as issued by the South African Accounting
Practices Committee and the Financial Pronouncements as issued by
the Financial Reporting Standards Council of South Africa.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2(d), the annual financial statements of
the Group are prepared in accordance with International Financial
Reporting Standards as issued by the IASB. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting", the South African
Institute of Chartered Accountants ("SAICA") Financial Reporting
Guides, as issued by the South African Accounting Practices
Committee, the Financial Pronouncements as issued by the Financial
Reporting Standards Council of South Africa and the JSE Limited
Listing requirements for condensed interim reports.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with:
- the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority;
- the South African Institute of Chartered Accountants (SAICA)
Financial Reporting Guides, as issued by the Accounting Practices
Committee;
- the Financial Pronouncements as issued by the Financial
Reporting Standards Council of South Africa;
- IAS 34 "Interim Financial Reporting" and in compliance with
the framework concepts and the measurement and recognition
requirements of the IFRS; and
- the JSE Limited Listing requirements for condensed interim reports.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
17 November 2023
Condensed interim consolidated income statement
for the six months ended 30 September 2023
Unaudited Unaudited
(1) (1)
six months six months
ended ended
30 September 30 September
2023 2022
Notes EURm EURm
---------------------------------------------- ----- ------------- -------------
Revenue 4 140.1 130.6
Direct costs 5 (58.8) (57.4)
---------------------------------------------- ----- ------------- -------------
Net operating income 81.3 73.2
(Loss)/gain on revaluation of investment
properties 12 (10.1) 26.8
Gain on disposal of properties 0.0 4.8
Movement in expected credit loss provision(2) 5 0.5 0.3
Administrative expenses(2) 5 (24.5) (25.1)
Share of profit of associates 17 0.3 2.6
---------------------------------------------- ----- ------------- -------------
Operating profit 47.5 82.6
---------------------------------------------- ----- ------------- -------------
Finance income 8 2.3 1.1
Finance expense 8 (9.2) (9.2)
Change in fair value of derivative financial
instruments 8 (0.8) 1.2
---------------------------------------------- ----- ------------- -------------
Net finance costs (7.7) (6.9)
---------------------------------------------- ----- ------------- -------------
Profit before tax 39.8 75.7
Taxation 9 (8.1) (5.6)
---------------------------------------------- ----- ------------- -------------
Profit for the period after tax 31.7 70.1
---------------------------------------------- ----- ------------- -------------
Profit attributable to:
Owners of the Company 31.7 70.0
Non-controlling interest 0.0 0.1
---------------------------------------------- ----- ------------- -------------
31.7 70.1
---------------------------------------------- ----- ------------- -------------
Earnings per share
Basic earnings per share 10 2.71c 6.00c
Diluted earnings per share 10 2.67c 5.92c
---------------------------------------------- ----- ------------- -------------
(1) Refer to note 2(a).
(2) To conform to the current period 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
period ended 30 September 2022.
All operations of the Group have been classified as
continuing.
Condensed interim consolidated statement of comprehensive
income
for the six months ended 30 September 2023
Unaudited
Unaudited(1) (1)
six months six months
ended ended
30 September 30 September
2023 2022
Notes EURm EURm
------------------------------------------ ----- ------------- -------------
Profit for the period after tax 31.7 70.1
------------------------------------------ ----- ------------- -------------
Other comprehensive income/(loss) that may be reclassified
to profit or loss in subsequent periods
Foreign currency translation reserve 24 7.6 (19.6)
------------------------------------------ ----- ------------- -------------
Other comprehensive income/(loss) after
tax that may be reclassified to profit
or loss in subsequent periods 7.6 (19.6)
------------------------------------------ ----- ------------- -------------
Other comprehensive income/(loss) for
the period after tax 7.6 (19.6)
------------------------------------------ ----- ------------- -------------
Total comprehensive income for the period
after tax 39.3 50.5
------------------------------------------ ----- ------------- -------------
Total comprehensive income attributable
to:
Owners of the Company 39.3 50.4
Non-controlling interest 0.0 0.1
------------------------------------------ ----- ------------- -------------
39.3 50.5
------------------------------------------ ----- ------------- -------------
(1) Refer to note 2(a).
Condensed interim consolidated statement of financial
position
as at 30 September 2023
Unaudited(1) Audited
30 September 31 March
2023 2023
Notes EURm EURm
---------------------------------------- ----- ------------ ---------
Non-current assets
Investment properties 12 2,129.5 2,123.0
Plant and equipment 7.4 7.2
Intangible assets 14 3.9 4.1
Right of use assets 15 13.5 14.4
Other non-current financial assets 16 48.4 48.4
Investment in associates 17 25.0 26.7
---------------------------------------- ----- ------------ ---------
Total non-current assets 2,227.7 2,223.8
---------------------------------------- ----- ------------ ---------
Current assets
Trade and other receivables 18 28.4 30.5
Derivative financial instruments 0.5 1.3
Cash and cash equivalents 19 115.7 124.3
---------------------------------------- ----- ------------ ---------
Total current assets 144.6 156.1
---------------------------------------- ----- ------------ ---------
Assets held for sale 13 7.3 8.8
---------------------------------------- ----- ------------ ---------
Total assets 2,379.6 2,388.7
---------------------------------------- ----- ------------ ---------
Current liabilities
Trade and other payables 20 (103.9) (101.5)
Interest-bearing loans and borrowings 21 (221.8) (243.7)
Lease liabilities 15 (2.3) (2.2)
Current tax liabilities 9 (6.3) (5.4)
---------------------------------------- ----- ------------ ---------
Total current liabilities (334.3) (352.8)
---------------------------------------- ----- ------------ ---------
Non-current liabilities
Interest-bearing loans and borrowings 21 (721.4) (720.7)
Lease liabilities 15 (36.5) (37.4)
Deferred tax liabilities 9 (85.4) (80.2)
---------------------------------------- ----- ------------ ---------
Total non-current liabilities (843.3) (838.3)
---------------------------------------- ----- ------------ ---------
Total liabilities (1,177.6) (1,191.1)
---------------------------------------- ----- ------------ ---------
Net assets 1,202.0 1,197.6
---------------------------------------- ----- ------------ ---------
Equity
Issued share capital 23 - -
Other distributable reserve 24 481.3 516.4
Own shares held 23 (8.1) (8.3)
Foreign currency translation reserve 24 (11.3) (18.9)
Retained earnings 739.6 707.9
---------------------------------------- ----- ------------ ---------
Total equity attributable to the owners
of the Company 1,201.5 1,197.1
---------------------------------------- ----- ------------ ---------
Non-controlling interest 0.5 0.5
---------------------------------------- ----- ------------ ---------
Total equity 1,202.0 1,197.6
---------------------------------------- ----- ------------ ---------
(1) Refer to note 2(a).
The financial statements were approved by the Board of Directors
on 17 November 2023 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Condensed interim consolidated statement of changes in
equity
for the six months ended 30 September 2023
Total
equity
attributable
Foreign to the
Issued Other Own currency owners Non-
share distributable shares translation Retained of controlling Total
capital reserve held reserve earnings the Company interest equity
Notes EURm EURm EURm EURm EURm EURm EURm EURm
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 31 March
2022
(audited) - 570.4 (6.3) (1.7) 628.3 1,190.7 0.4 1,191.1
Profit for the
period - - - - 70.0 70.0 0.1 70.1
Other
comprehensive
loss for
the period - - - (19.6) - (19.6) - (19.6)
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Total
comprehensive
income
for the
period - - - (19.6) 70.0 50.4 0.1 50.5
Dividends paid 1.4 (27.7) - - - (26.3) - (26.3)
Transfer of
share capital (1.4) 1.4 - - - - - -
Share-based
payment
transactions - 1.9 - - - 1.9 - 1.9
Value of
shares
withheld to
settle
employee tax
obligations - (1.6) - - - (1.6) - (1.6)
Own shares
purchased - - (2.3) - - (2.3) - (2.3)
Own shares
allocated - - 0.3 - - 0.3 - 0.3
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 30
September
2022
(unaudited)
(1) - 544.4 (8.3) (21.3) 698.3 1,213.1 0.5 1,213.6
Profit for the
period - - - - 9.6 9.6 - 9.6
Other
comprehensive
income
for the
period - - - 2.4 - 2.4 - 2.4
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Total
comprehensive
income
for the
period - - - 2.4 9.6 12.0 - 12.0
Dividends paid - (31.5) - - - (31.5) - (31.5)
Share-based
payment
transactions - 3.6 - - - 3.6 - 3.6
Value of
shares
withheld to
settle
employee tax
obligations - (0.1) - - - (0.1) - (0.1)
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 31 March
2023
(audited) - 516.4 (8.3) (18.9) 707.9 1,197.1 0.5 1,197.6
Profit for the
period - - - - 31.7 31.7 - 31.7
Other
comprehensive
income
for the
period - - - 7.6 - 7.6 - 7.6
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
Total
comprehensive
income
for the
period - - - 7.6 31.7 39.3 - 39.3
Dividends paid 25 - (35.0) - - - (35.0) - (35.0)
Share-based
payment
transactions 7 - 1.5 - - - 1.5 - 1.5
Value of
shares
withheld to
settle
employee tax
obligations 7 - (1.4) - - - (1.4) - (1.4)
Own shares
allocated 23 - (0.2) 0.2 - - - - -
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
As at 30
September
2023
(unaudited)
(1) - 481.3 (8.1) (11.3) 739.6 1,201.5 0.5 1,202.0
-------------- ----- -------- ------------- ------- ------------ --------- ------------- ------------ -------
(1) Refer to note 2(a).
Condensed interim consolidated statement of cash flows
for the six months ended 30 September 2023
Unaudited
(1) Unaudited(1)
six months six months
ended ended
30 September 30 September
2023 2022
Notes EURm EURm
------------------------------------------------- ----- ------------- -------------
Operating activities
Profit for the period before tax 39.8 75.7
Gain on disposal of properties 0.0 (4.8)
Net exchange differences in working capital - (0.3)
Share-based payments 7 1.5 1.9
Loss/(gain) on revaluation of investment
properties 12 10.1 (26.8)
Change in fair value of derivative financial
instruments 8 0.8 (1.2)
Depreciation of property, plant and equipment 5 1.0 1.0
Amortisation of intangible assets 5 0.7 0.6
Depreciation of right of use assets 5 0.9 1.1
Share of profit of associates 17 (0.3) (2.6)
Finance income 8 (2.3) (1.1)
Finance expense 8 9.2 9.3
Changes in working capital
Decrease in trade and other receivables 1.4 3.8
Increase/(decrease) in trade and other
payables 3.4 (5.8)
Taxation paid (2.0) (2.7)
------------------------------------------------- ----- ------------- -------------
Cash flows from operating activities 64.2 48.1
------------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of investment properties - (0.8)
Prepayments relating to new acquisitions - (3.6)
Capital expenditure on investment properties (16.4) (11.9)
Purchase of plant and equipment and intangible
assets (1.3) (3.2)
Proceeds on disposal of properties (including
held for sale) 13 7.3 18.6
Dividends received from investments in
associates 2.0 -
Increase in loan receivable due from associates - (0.1)
Interest received 2.3 1.1
------------------------------------------------- ----- ------------- -------------
Cash flows (used in)/from investing activities (6.1) 0.1
------------------------------------------------- ----- ------------- -------------
Financing activities
Shares purchased - (2.4)
Payment relating to exercise of share
options (1.4) (1.7)
Dividends paid to owners of the Company 25 (35.0) (26.2)
Repayment of loans 21 (22.7) (2.7)
Payment of principal portion of lease
liabilities (1.1) (0.8)
Finance charges paid (6.8) (2.8)
------------------------------------------------- ----- ------------- -------------
Cash flows used in financing activities (67.0) (36.6)
------------------------------------------------- ----- ------------- -------------
(Decrease)/increase in cash and cash equivalents (8.9) 11.6
Net exchange difference 0.3 (0.5)
Cash and cash equivalents as at the beginning
of the period 124.3 151.0
------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents as at the period
end 19 115.7 162.1
------------------------------------------------- ----- ------------- -------------
(1) Refer to note 2(a)
Notes forming part of the financial statements
for the six months ended 30 September 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 six month period ended 30
September 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 unaudited condensed interim set of consolidated financial
statements has been prepared on a historical cost basis, except for
investment properties, investment properties held for sale and
derivative financial instruments, which have been measured at fair
value. The unaudited condensed interim set of consolidated
financial statements is presented in euros and all values are
rounded to the nearest hundred thousand shown in millions (EURm),
except where otherwise indicated. For the comparative period for
the six months to 30 September 2022 the values were rounded to the
nearest thousand (EUR000) but are now shown in millions (EURm) to
the nearest hundred thousand. The unaudited Interim Reports in
prior years were presented in euros and all values were rounded to
the nearest thousand (EUR000).
The Group prepares its condensed interim set of financial
statements 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 JSE Limited Listings
Requirements, IAS 34 "Interim Financial Reporting" and in
compliance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") as well as The Companies (Guernsey) Law,
2008.
The financial information in this unaudited condensed interim
set of consolidated financial statements does not comprise
statutory accounts. This unaudited condensed interim set of
consolidated financial statements has been reviewed, not audited,
by the Group's auditor, Ernst & Young LLP, which issued an
unmodified review opinion. The financial information presented for
the year ended 31 March 2023 is derived from the statutory accounts
for that year. Statutory accounts for the year ended 31 March 2023
were approved by the Board on 2 June 2023. The report of the
auditor on those accounts was (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying its report, and (iii) did not
contain a statement under Sections 263 (2) or (3) of The Companies
(Guernsey) Law, 2008.
As at 30 September 2023 the Group's unaudited condensed interim
set of consolidated financial statements reflects consistent
accounting policies and methods of computation as used in the
previous financial year.
(b) Changes in accounting policies
There were several new, and amendments to, standards and
interpretations which were applicable for the first time for the
Group from 1 April 2023. None of them have had a significant impact
on the condensed interim financial statements of the Group.
(c) 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 10 to the condensed interim financial statements includes a
reconciliation of basic and diluted earnings to EPRA earnings. Note
11 to the condensed interim financial statements includes a
reconciliation of net assets to EPRA net asset value metrics. Note
21 to the condensed interim financial statements includes a
calculation of EPRA loan to value ratio.
The Directors are required, as part of the JSE Limited Listings
Requirements, to disclose headline earnings; accordingly, headline
earnings are calculated using basic earnings adjusted for
revaluation gains/losses (net of related tax), gains/losses on
disposal of properties (net of related tax), non-controlling
interest ("NCI") relating to revaluation (net of related tax) and
revaluation gain/loss on investment property relating to associates
(net of related tax). Note 10 to the condensed interim financial
statements includes a reconciliation between IFRS and headline
earnings.
The Directors have chosen to disclose adjusted earnings in order
to provide an alternative indication of the Group's underlying
business performance; accordingly, it excludes the effect of
adjusting items (net of related tax). Note 10 to the condensed
interim financial statements includes a reconciliation of adjusting
items included within adjusted earnings, with certain adjusting
items stated within administrative expenses in note 5 and certain
finance costs in note 8.
The Directors have chosen to disclose adjusted profit before tax
and funds from operations in order to provide an alternative
indication of the Group's underlying business performance and to
facilitate the calculation of its dividend pool; a reconciliation
between profit before tax and funds from operations is included
within note 25 to the condensed interim financial statements.
Within adjusted profit before tax are adjusting items as described
above gross of related tax.
Further details on non-IFRS measures can be found in the
business analysis section of this document.
(d) Statement of compliance
The unaudited condensed interim financial statements have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom Financial Conduct Authority, the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the JSE Limited Listings
Requirements, IAS 34 "Interim Financial Reporting" and in
compliance with the framework concepts and the measurement and
recognition requirements of IFRS as well as The Companies
(Guernsey) Law, 2008. They do not include all of the information
required for the full annual financial statements and should be
read in conjunction with the consolidated financial statements of
the Group as at and for the year ended 31 March 2023. The unaudited
condensed interim financial statements have been prepared on the
basis of the accounting policies set out in the Group's annual
financial statements for the year ended 31 March 2023 except for
the changes in accounting policies as shown in note 2 (b). The
financial statements for the year ended 31 March 2023 have been
prepared in accordance with IFRS issued by the IASB.
(e) Going concern
The Group has prepared its going concern assessment for the
period to 31 March 2025 (the "going concern period"), a period
greater than twelve months and chosen to include the maturity of
certain loans falling due in the fourth quarter of the year ended
31 March 2025. 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 21) 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 debt facilities mature, with a EUR5.0m tranche of the HSBC
Schuldschein loan falling due in January 2025 and a EUR10.0m
tranche falling due in March 2025 and the EUR12.8m Saarbrücken
Sparkasse facility falling due in February 2025. No further debt of
the Group matures until June 2026.
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 the Group's debt 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 has placed further
pressure on the costs of the business, however this did not result
in any deterioration in the Group's income streams in the year
ended 31 March 2023 or the period ended 30 September 2023 and asset
values remained relatively stable throughout. However, the
Directors continue to be mindful of the challenging macro-factors
present in the market and maintain their view held on 31 March 2023
on 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 30 September 2023,
principally from contractual increases in rents and organic growth
through lease renewals;
>> increasing cost levels in line with forecast inflation
of 6% to December 2024 and 2% to March 2025;
>> continuation of forecast capex investment;
>> utilisation of the contractually committed Berlin Hyp
AG and Deutsche Pfandbriefbank AG facilities on the maturity of
existing facilities in October and December 2023;
>> payment of contractual loan interest and loan
amortisation amounts, refinancing of EUR5.0m and EUR10.0m
Schuldschein facilities falling due in January and March 2025
respectively as well as the EUR12.8m Saarbrücken Sparkasse facility
and utilisation of the new Berlin Hyp AG and Deutsche
Pfandbriefbank AG facilities on the maturity of existing facilities
in October and December 2023; and
>> only acquisitions and disposals which are contractually
committed are made, which includes the EUR40.1m disposal of Maintal
which was notarised on 1 November 2023 and the EUR41.2m acquisition
of Islington and Camden which was completed on 6 November 2023.
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;
>> continuation of forecast capex investment;
>> continuation of forecast dividend payments in line with
historic dividend payouts;
>> utilisation of the contractually committed Berlin Hyp
AG and Deutsche Pfandbriefbank AG facilities on the maturity of
existing facilities in October and December 2023;
>> payment of contractual loan interest and loan
amortisation amounts, repayment of EUR5.0m and EUR10.0m
Schuldschein facilities falling due in January and March 2025
respectively as well as refinancing the EUR12.8m Saarbrücken
Sparkasse facility; and
>> only acquisitions and disposals which are contractually
committed are made, which includes the EUR40.1m disposal of Maintal
which was notarised on 1 November 2023 and the EUR41.2m acquisition
of Islington and Camden which was completed on 6 November 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 EUR58.3m Deutsche
Pfandbriefbank AG and EUR170.0m 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 maintain sufficient liquidity, and 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 aggregate EUR15.0m Schuldschein
facilities and the EUR12.8m Saarbrücken Sparkasse facility. This
judgement has been informed by the Group's financial forecasts and
the Group's track-record in previously refinancing maturing
debt.
In the severe but plausible downside scenario, the Group assumes
full repayment of the maturing loan obligations as they fall due,
amounting to EUR27.8m in the going concern period. The Group's
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 and income reductions during
the going concern period. This showed that the Group could
withstand a fall in valuations of 21%, before there was a loan to
value covenant breach and a reduction of 26% of income before any
income related covenants would breach, levels which the Group has
not seen before. 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 assets.
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 March 2025, the Board believes it is appropriate to
adopt the going concern basis in preparing its financial
statements.
(f) Principal risks and uncertainties
The key risks that could affect the Group's medium-term
performance and the factors which mitigate these risks have not
changed substantially from those set out on pages 72 to 81 of the
Group's Annual Report and Accounts 2023 and have been assessed in
line with the requirements of the 2018 UK Corporate Governance
Code. The risks are set out below. The Board is satisfied that the
Company continues to operate within its risk profile for the
remaining six months of the financial year.
Principal risks summary
Risk area Principal risk(s)
-------------------- --------------------------------------------------------------
1. Financing -- Availability and pricing of debt
-- Leverage on returns
-- Compliance with loan facility covenants
-- Availability and pricing of equity capital
-- Reputational risk
-------------------- --------------------------------------------------------------
2. Valuation -- Property inherently difficult to value
-- Susceptibility of property market to change in value
-------------------- --------------------------------------------------------------
3. Markets -- Participation within two geographically diverse markets
-- Reliance on specific industries and the SME market
-- Reduction in occupancy
-------------------- --------------------------------------------------------------
4. Acquisitive -- Decrease in number of acquisition opportunities coming
growth to market
-- Failure to acquire suitable properties with desired
returns
-------------------- --------------------------------------------------------------
5. Organic growth -- Failure to deliver capex investment programmes
-- Failure to refuel capex investment programmes
-- Failure to achieve targeted returns from investments
-------------------- --------------------------------------------------------------
6. Customer -- Decline in demand for space
-- Significant tenant move-outs or insolvencies
-- Exposure to tenants' inability to meet rental and other
lease commitments
-- Tenant affordability
-------------------- --------------------------------------------------------------
7. Regulatory
and tax -- Non-compliance with tax or regulatory obligations
-------------------- --------------------------------------------------------------
-- Inability to recruit and retain people with the appropriate
8. People skillset to deliver the Group strategy
-------------------- --------------------------------------------------------------
9. Systems and
data -- System failures and loss of data
-- Security breaches
-- Data protection
-------------------- --------------------------------------------------------------
10. Macro-economic -- Delays in cash collection and tenant insolvencies
environment -- Inflationary pressure leading to increased costs
-- Increasing energy costs caused by a variety of economic
and geopolitical factors
-- Interest rate movements impacting the commercial real
estate market
-------------------- --------------------------------------------------------------
-- Unforeseen costs relating to physical and transition
11. ESG risks associated with climate change
-- Reputational risk
-- Failure to meet shareholder and societal requirements
or expectations
-- Restricted access to financing market due to higher
requirements ("green financing")
-------------------- --------------------------------------------------------------
-- Financial impact of uncontrollable foreign currency
12. Foreign currency fluctuation on earnings and net asset value
-------------------- --------------------------------------------------------------
3. Operating segments
Information on each operating segment based on geographical
location in which the Group operates is provided to the chief
operating decision maker, namely the Group's Senior Management
Team, on an aggregated basis and represented as operating profit
and expenses.
The investment properties that the Group owns are aggregated
into segments with similar economic characteristics such as the
nature of the property, the products and services it provides, the
customer type for the product served, and the method in which the
services are provided. The Group's Senior Management Team considers
that this is best achieved through the operating segments of German
assets and UK assets. The Group's investment properties are
considered to be their own segment. The properties at each location
(Germany and the 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 12 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 and property disposals. All of the Group's
share of profit of associates and administrative expenses including
amortisation and depreciation and movement in expected credit loss
provision 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. There is no single tenant that makes up more than 10% of
each segment's revenue or Group revenue.
Unaudited six months Unaudited six months
ended 30 September 2023 ended 30 September 2022
---------------------------- ----------------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
------------------------------ --------- -------- ------- ---------- ------ --------
Rental income from investment
properties 62.5 17.7 80.2 58.1 19.3 77.4
Rental income from managed
properties - - - 2.3 - 2.3
Other income from investment
properties 1.9 0.4 2.3 1.7 0.4 2.1
Service charge income
from investment properties 37.2 12.0 49.2 31.0 8.5 39.5
Other income from managed
properties 3.1 - 3.1 2.5 - 2.5
Service charge income
from managed properties 5.3 - 5.3 6.8 - 6.8
------------------------------ --------- -------- ------- ---------- ------ --------
Revenue 110.0 30.1 140.1 102.4 28.2 130.6
------------------------------ --------- -------- ------- ---------- ------ --------
Direct costs (48.5) (10.3) (58.8) (48.3) (9.1) (57.4)
------------------------------ --------- -------- ------- ---------- ------ --------
Net operating income 61.5 19.8 81.3 54.1 19.1 73.2
(Loss)/gain on revaluation
of investment properties 8.4 (18.5) (10.1) 19.4 7.4 26.8
Gain on disposal of
properties 0.0 - 0.0 - 4.8 4.8
Depreciation and amortisation (2.1) (0.5) (2.6) (2.1) (0.7) (2.8)
Movement in expected
credit loss provision(1) 0.5 - 0.5 0.3 - 0.3
Other administrative
expenses(1) (16.8) (5.1) (21.9) (19.0) (3.3) (22.3)
Share of profit of associates 0.3 - 0.3 2.6 - 2.6
------------------------------ --------- -------- ------- ---------- ------ --------
Operating profit/(loss) 51.8 (4.3) 47.5 55.3 27.3 82.6
------------------------------ --------- -------- ------- ---------- ------ --------
Finance income 1.5 0.8 2.3 1.1 - 1.1
Amortisation of capitalised
finance costs (1.5) - (1.5) (1.6) - (1.6)
Other finance expense (5.6) (2.1) (7.7) (5.5) (2.1) (7.6)
Change in fair value
of derivative financial
instruments (0.8) - (0.8) 1.2 - 1.2
------------------------------ --------- -------- ------- ---------- ------ --------
Net finance costs (6.4) (1.3) (7.7) (4.8) (2.1) (6.9)
------------------------------ --------- -------- ------- ---------- ------ --------
Segment profit/(loss)
for the period before
tax 45.4 (5.6) 39.8 50.5 25.2 75.7
------------------------------ --------- -------- ------- ---------- ------ --------
(1) To conform to the current period 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 period ended 30 September 2022.
Unaudited 30 September 2023 Audited 31 March 2023
------------------------------- -------------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
---------------------------- ---------- -------- --------- -------- ------ -------
Segment assets
Investment properties 1,703.9 425.6 2,129.5 1,691.6 431.4 2,123.0
Investment in associates 25.0 - 25.0 26.7 - 26.7
Other non-current assets(1) 21.4 3.4 24.8 21.9 3.8 25.7
---------------------------- ---------- -------- --------- -------- ------ -------
Total segment non-current
assets 1,750.3 429.0 2,179.3 1,740.2 435.2 2,175.4
---------------------------- ---------- -------- --------- -------- ------ -------
(1) Consists of plant and equipment, intangible assets and right of use assets.
4. Revenue
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------- ------------- -------------
Rental income from investment properties 80.2 77.4
Rental income from managed properties - 2.3
Other income from investment properties 2.3 2.1
Service charge income from investment properties 49.2 39.5
Other income from managed properties 3.1 2.5
Service charge income from managed properties 5.3 6.8
------------------------------------------------- ------------- -------------
Total revenue 140.1 130.6
------------------------------------------------- ------------- -------------
Other income relates to income associated with conferencing and
catering of EUR2.3m (30 September 2022: EUR2.1m) and fee income
from managed properties of EUR3.1m (30 September 2022:
EUR2.5m).
Total revenue from contracts with customers includes service
charge income and other income totalling EUR51.5m from investment
properties (30 September 2022: EUR41.6m) and EUR8.4m from managed
properties (30 September 2022: EUR9.3m).
A reconciliation of the revenue from contracts with customers
with the amounts disclosed in the segment information (see note 3)
is as follows:
Unaudited six months Unaudited six months
ended 30 September 2023 ended 30 September 2022
---------------------------- ----------------------------
Germany UK Total Germany UK Total
EURm EURm EURm EURm EURm EURm
------------------------------ ---------- ------- ------- ---------- ------- -------
Rental income from investment
properties 62.5 17.7 80.2 58.1 19.3 77.4
Rental income from managed
properties - - - 2.3 - 2.3
------------------------------ ---------- ------- ------- ---------- ------- -------
Total rental income 62.5 17.7 80.2 60.4 19.3 79.7
------------------------------ ---------- ------- ------- ---------- ------- -------
Other income from investment
properties 1.9 0.4 2.3 1.7 0.4 2.1
Service charge income
from investment properties 37.2 12.0 49.2 31.0 8.5 39.5
Other income from managed
properties 3.1 - 3.1 2.5 - 2.5
Service charge income
from managed properties 5.3 - 5.3 6.8 - 6.8
------------------------------ ---------- ------- ------- ---------- ------- -------
Total revenue from contracts
with customers 47.5 12.4 59.9 42.0 8.9 50.9
------------------------------ ---------- ------- ------- ---------- ------- -------
Total revenue 110.0 30.1 140.1 102.4 28.2 130.6
------------------------------ ---------- ------- ------- ---------- ------- -------
5. Operating profit
The following items have been charged in arriving at operating
profit:
Direct costs
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------- ------------- -------------
Service charge costs relating to investment properties 48.8 45.0
Costs relating to managed properties 6.5 9.8
Non-recoverable maintenance costs 3.5 2.6
------------------------------------------------------- ------------- -------------
Direct costs 58.8 57.4
------------------------------------------------------- ------------- -------------
Movement in expected credit loss provision
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
----------------------------------------------- ------------- -------------
Expected credit loss recognised 8.2 7.4
Expected credit loss reversed (8.7) (7.7)
----------------------------------------------- ------------- -------------
Movement in expected credit loss provision (1) (0.5) (0.3)
----------------------------------------------- ------------- -------------
(1) To conform to the current period presentation, the movement
in expected credit loss provision has been shown as a separate line
in the condensed interim consolidated income statement and this is
a reallocation from other administrative expenses for the period
ended 30 September 2022.
The expected credit loss provision has decreased during the
period mainly due to the decrease of gross trade receivables.
Administrative expenses
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
-------------------------------------------------- ------------- -------------
Audit and non-audit fees to audit firm 0.6 0.6
Legal and professional fees 3.0 2.7
Other administration costs 2.8 2.6
Share-based payments 1.5 1.9
Employee costs 11.7 11.8
Director fees and expenses 0.3 0.3
Depreciation of plant and equipment 1.0 1.1
Amortisation of intangible assets 0.7 0.6
Depreciation of right of use assets (see note 15) 0.9 1.1
Marketing 1.7 1.3
Exceptional items 0.3 1.1
-------------------------------------------------- ------------- -------------
Administrative expenses (1) 24.5 25.1
-------------------------------------------------- ------------- -------------
(1) To conform to the current period presentation, the movement
in expected credit loss provision has been shown as a separate line
in the condensed interim consolidated income statement and this is
a reallocation from other administrative expenses for the period
ended 30 September 2022.
Other administration costs include net foreign exchange losses
in amount of EUR0.02m as a result of declining British pound
sterling ("GBP") rates throughout the period (30 September 2022:
EUR0.3m loss as a result of declining British pound sterling
("GBP") rates throughout the period).
Employee costs as stated above relate to costs which are not
recovered through service charge.
Exceptional items relate to the following:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------ ------------- -------------
Other fees for projects(1) - 2.9
Legal case costs(2) 0.3 0.3
Lease agreement termination fees(3) - 0.9
Decrease in tax liabilities recognised on acquisition
of BizSpace Group(4) - (3.0)
------------------------------------------------------ ------------- -------------
Total 0.3 1.1
------------------------------------------------------ ------------- -------------
(1) The other fees for projects amounting to EUR2.9m for the
period ended 30 September 2022 were related 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 EUR0.3m relates to one
legal case (see note 20). The legal cases in the period ended 30
September 2022 amounting to EUR0.3m relates to multiple legal cases
including the legal case mentioned in note 20. 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 EUR0.9m for
the period ended 30 September 2022 was 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 period ended 30 September 2022, 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 EUR5.0m, of which EUR3.0m arose on acquisition. These
were assessed as not being material to the 31 March 2022 financial
statements and the reduction in the liability was recorded in the
financial statements for the six months ended 30 September 2022.
The amounts have been recorded within administrative expenses under
exceptional items and the taxation (see note 9) lines of the income
statement.
6. Employee costs and numbers
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------ ------------- -------------
Wages and salaries 15.4 14.6
Social security costs 2.5 2.2
Defined contribution pension scheme 0.2 0.2
Other employment costs 0.4 0.4
------------------------------------ ------------- -------------
Total 18.5 17.4
------------------------------------ ------------- -------------
Included in the costs related to wages and salaries for the
period are expenses of EUR1.5m (30 September 2022: EUR1.9m)
relating to the granting or award of shares (see note 7). The costs
for all periods include those relating to Executive Directors.
All employees are employed directly by one of the following
Group subsidiary companies: Sirius Facilities GmbH, Sirius
Facilities (UK) Limited, Curris Facilities & Utilities
Management GmbH, SFG NOVA GmbH, Sirius Finance (Cyprus) Limited,
BizSpace Limited, BizSpace II Limited, M25 Business Centres Limited
and Sirius Corporate Services B.V. The average number of people
employed by the Group during the period was 407 (30 September 2022:
413) expressed in full-time equivalents. In addition, as at 30
September 2023, the Board of Directors consists of six
Non-Executive Directors (30 September 2022: six) and two Executive
Directors (30 September 2022: two).
7. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2018. 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. Awards are equity settled. The employees'
tax obligation will be determined upon the vesting date of the
share issue.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted:
June 2019 June 2020
grant grant
------------------------------- ---------------------------
TNR TSR TNR TSR
--------------------------------- ----------------- ------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo Black-Scholes Monte-Carlo
Calculation for 2/3 ordinary 1/3 ordinary 2/3 ordinary 1/3 ordinary
award/ award award award
outperformance
award
Total charge for the award
- EURm 2.1 2.3
Expected lapse rate 0% 0% 0% 0%
Share price at grant date
- EUR 0.73 0.73 0.84 0.84
Exercise price - EUR nil nil nil nil
Expected volatility - % (1) 23.8 23.8 38.5 38.5
Performance projection period
- years 2.80 2.67 2.79 2.67
Expected dividend yield -
% 4.56 4.56 4.28 4.28
Risk-free rate based on European (0.695) p.a. (0.695) p.a. (0.68) p.a. (0.68) p.a.
Expected outcome of performance
conditions - % 100/25 100 88.8 n/a
Fair value per share - EUR 0.643 0.340 0.745 0.564
Weighted average fair value
of share - EUR (2) 0.54 0.68
--------------------------------- ------------------------------- ---------------------------
Number of shares granted 2,506,667/690,000 1,253,333(3) 2,400,000 1,200,000
----------------- ------------ ------------- ------------
Forfeited during the performance
period - 500,000
--------------------------------- ------------------------------- ---------------------------
(1) 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.
(2) 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 Group in
respect of the awards.
(3) Another 93,039 share awards have been granted throughout the
performance period as part of dividend equivalents.
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 EUR1.02 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 EUR1.6m
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 EUR1.02 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.
The June 2020 grant vested on 22 May 2023. Vesting resulted in
the exercise of 1,859,000 shares with a weighted average share
price of EUR1.02 at the date of exercise. 1,241,000 shares have
been surrendered in relation to the partial settlement of certain
participants' tax liabilities arising in respect of the vesting. An
amount of EUR1.3m was paid for the participants' tax
liabilities.
2021 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2021. Awards granted under
the LTIP are made in the form of nil-cost options which vest after
the three year performance period with vested awards being subject
to a further restricted period of two years when shares acquired on
exercise cannot be sold. Awards are subject to TNR (two-thirds of
award) and relative 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.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted:
August 2021 July 2022 June 2023 September 2023
grant grant grant grant
-------------------------- -------------------------- -------------------------- --------------------------
TNR TSR TNR TSR TNR TSR TNR TSR
------------ ------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
Valuation Black-Scholes Monte-Carlo Black-Scholes Monte-Carlo Black-Scholes Monte-Carlo Black-Scholes Monte-Carlo
methodology
Calculation 2/3 ordinary 1/3 2/3 ordinary 1/3 2/3 ordinary 1/3 2/3 ordinary 1/3
for award ordinary award ordinary award ordinary award ordinary
award award award award
Total charge
for
the award -
EURm 4.7 2.6 2.9 0.8
Expected
lapse rate 0% 0% 0% 0% 0% 0% 0% 0%
Share price
at grant
date - EUR 1.39 1.39 1.05 1.05 1.04 1.04 1.03 1.03
Exercise
price -
EUR nil nil nil nil nil nil nil nil
Expected
volatility
- % (1) 40.5 40.5 41.2 41.2 32.7 32.7 31.4 31.4
Expected
life -
years 2.91 2.91 2.95 2.95 2.97 2.97 2.68 2.68
Performance
projection
period -
years 2.66 2.66 2.70 2.70 2.81 2.81 2.52 2.52
Expected
dividend
yield - % 2.79 2.79 4.21 4.21 5.52 5.52 5.47 5.47
Risk-free
rate based
on European
treasury
bonds rate
of return (0.817) (0.817) 0.609 0.609 3.05
- % p.a. p.a. p.a. p.a. 2.65 p.a. 2.65 p.a. 3.05 p.a. p.a.
Fair value
per share
- EUR 1.28 (2) 0.84 (3) 0.93 (2) 0.40 (3) 0.88(2) 0.59(3) 0.89 (2) 0.71 (3)
Weighted
average
fair value
of share
- EUR (4) 1.13 0.75 0.77 0.83
------------ -------------------------- -------------------------- -------------------------- --------------------------
Number of
shares
granted 2,769,413 1,384,706 2,320,019 1,160,009 2,462,171 1,231,086 604,001 302,001
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
Forfeited
during
the
performance
period 725,000 635,000 - -
------------ -------------------------- -------------------------- -------------------------- --------------------------
(1) 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.
(2) 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%.
(3) 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.
(4) 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 Group in
respect of the awards.
2021 SIP
A SIP for the benefit of senior employees was approved in 2021.
Awards granted under the SIP are made in the form of a conditional
right to receive a specified number of shares for nil cost which
vest after the three year performance period with vested awards
being subject to a further restricted period of one year when
shares cannot be sold. Awards are subject to TNR (two-thirds of
award) and relative 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.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted:
June 2023
September September
2021 April 2022 August 2022 (UK) June 2023 2023
grant grant grant grant grant grant
-------------------- ------------------------ ------------------------ ------------------------- ------------------------- ------------------------
TNR TSR TNR TSR TNR TSR TNR TSR TNR TSR TNR TSR
------------ --------- --------- ------------- --------- ------------- --------- ------------- ---------- ------------- ---------- ------------- ---------
Valuation Black- Monte- Black-Scholes Monte- Black-Scholes Monte- Black-Scholes Monte- Black-Scholes Monte- Black-Scholes Monte-
methodology Scholes Carlo Carlo Carlo Carlo Carlo Carlo
Calculation 2/3 1/3 2/3 1/3 2/3 1/3 2/3 1/3 2/3 1/3 2/3 1/3
for ordinary ordinary ordinary ordinary ordinary ordinary ordinary ordinary ordinary ordinary ordinary ordinary
award award award award award award award award award award award award
Total charge
for the
award
- EURm 3.7 0.03 1.5 1.3 0.4 0.4
Expected
lapse
rate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Share price
at grant
date
- EUR 1.49 1.49 1.51 1.51 1.13 1.13 1.04 1.04 1.04 1.04 1.03 1.03
Exercise
price
- EUR n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Expected
volatility
- % (1) 40.7 40.7 32.5 32.5 29.7 29.7 32.7 32.7 32.7 32.7 31.3 31.3
Expected
life
- years 3.48 3.48 2.92 2.92 2.58 2.58 3.73 3.73 2.97 2.97 3.49 3.49
Performance
projection
period -
years 2.56 2.56 2.00 2.00 1.66 1.66 2.81 2.81 2.81 2.81 2.57 2.57
Expected
dividend
yield - % 2.60 2.60 2.93 2.93 3.96 3.96 5.52 5.52 5.52 5.52 5.60 5.60
Risk-free
rate
based on
European
treasury
bonds
rate of
return (0.737) (0.737) (0.074) (0.074) 0.184 0.184 2.65 2.65 2.65 2.65 2.82 2.82
- % p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a.
Fair value
per share - 1.36 0.92 1.39 0.89 1.02 0.46 0.85 0.88 0.85 0.6
EUR (2) (3) (2) (3) (2) (3) (2) 0.56(3) (2) 0.60(3) (2) 5(3)
Weighted
average
fair value
of
share - EUR
(4) 1.21 1.22 0.83 0.77 0.77 0.78
------------ -------------------- ------------------------ ------------------------ ------------------------- ------------------------- ------------------------
Number of
shares
granted 2,049,667 1,024,833 20,000 10,000 1,166,667 583,333 1,166,667 583,333 333,333 166,667 426,667 213,333
------------- --------- ------------- --------- ------------- ---------- ------------- ---------- ------------- ---------
Forfeited
during
the perf.
period 366,000 - 350,000 - - -
------------ -------------------- ------------------------ ------------------------ ------------------------- ------------------------- ------------------------
(1) 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.
(2) 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%.
(3) 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.
(4) 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 Group in
respect of the awards.
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, 50% or 65% depending on the participants
are awarded as cash with the remainder transferred into shares in
the Company. Of the remaining 50% or 35% for certain participants
to be transferred in shares, half is deferred for one year and the
remaining half is deferred for two years.
For the period ended 30 September 2023, an amount of EUR0.1m was
paid for the participants' DBP tax liabilities.
Number of share awards
Movements in the number of awards outstanding are as
follows:
Unaudited Audited
six months ended year ended
30 September 2023 31 March 2023
------------------------ ------------------------
Weighted Weighted
average average
exercise exercise
Number of price Number of price
share awards EURm share awards EURm
---------------------------------------- ------------- --------- ------------- ---------
Balance outstanding as at the beginning
of the period (nil exercisable) 14,478,647 - 15,278,619 -
Maximum granted during the period 7,489,259 - 5,353,067 -
Forfeited during the period (966,000) - (1,610,000) -
Exercised during the period (1,859,000) - (2,431,714) -
Shares surrendered to cover employee
tax obligations (1,241,000) - (2,111,325) -
---------------------------------------- ------------- --------- ------------- ---------
Balance outstanding as at period end
(nil exercisable) 17,901,906 - 14,478,647 -
---------------------------------------- ------------- --------- ------------- ---------
Employee benefit schemes
A reconciliation of share-based payments and employee benefit
schemes and their impact on the condensed interim consolidated
income statement is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------ ------------- -------------
Charge relating to 2018 LTIP - June 2019 grant - -
Charge relating to 2018 LTIP - June 2020 grant - 0.4
Charge relating to 2021 LTIP - August 2021 grant 0.2 0.8
Charge relating to 2021 LTIP - July 2022 grant 0.2 0.2
Charge relating to 2021 LTIP - June 2023 grant 0.3 -
Charge relating to 2021 LTIP - September 2023 grant 0.0 -
Charge relating to 2021 SIP - September 2021 grant 0.2 0.5
Charge relating to 2021 SIP - April 2022 grant 0.0 0.0
Charge relating to 2021 SIP - August 2022 grant 0.2 0.0
Charge relating to 2021 SIP - June 2023 grant 0.2 -
Charge relating to 2021 SIP - September 2023 grant 0.0 -
DBP 0.2 -
------------------------------------------------------ ------------- -------------
Total condensed interim consolidated income statement
charge relating to share-based payments 1.5 1.9
------------------------------------------------------ ------------- -------------
An amount of EUR1.5m (30 September 2022: EUR1.9m) is recognised
in other distributable reserves as per the condensed interim
consolidated statement of changes in equity. In addition, an amount
of EUR1.4m (30 September 2022: EUR1.6m) has been paid for
participants' tax liabilities in relation to share-based payment
schemes.
8. Finance income, finance expense and change in fair value of
derivative financial instruments
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- ------------- -------------
Bank interest income 1.2 -
Finance income from associates 1.1 1.1
--------------------------------------------------------- ------------- -------------
Finance income 2.3 1.1
--------------------------------------------------------- ------------- -------------
Bank loan interest expense (6.8) (6.8)
Interest expense related to lease liabilities (see
note 15) (0.6) (0.5)
Amortisation of capitalised finance costs (1.5) (1.6)
--------------------------------------------------------- ------------- -------------
Total interest expense (8.9) (8.9)
--------------------------------------------------------- ------------- -------------
Bank charges (0.3) (0.3)
--------------------------------------------------------- ------------- -------------
Other finance costs (0.3) (0.3)
--------------------------------------------------------- ------------- -------------
Finance expense (9.2) (9.2)
--------------------------------------------------------- ------------- -------------
Change in fair value of derivative financial instruments (0.8) 1.2
--------------------------------------------------------- ------------- -------------
Net finance expense (7.7) (6.9)
--------------------------------------------------------- ------------- -------------
The change in fair value of derivative financial instruments of
EUR(0.8)m (30 September 2022: EUR1.2m) reflects the change in the
market valuation of these financial instruments.
9. Taxation
Condensed interim consolidated income statement
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------- ------------- -------------
Current income tax
Current income tax charge (2.6) (2.0)
Current income tax charge relating to disposal of
investment properties - (0.1)
Adjustment in respect of prior periods (0.3) 1.8(1)
--------------------------------------------------- ------------- -------------
Total current income tax (2.9) (0.3)
--------------------------------------------------- ------------- -------------
Deferred tax
Relating to origination and reversal of temporary
differences (5.2) (5.3)
--------------------------------------------------- ------------- -------------
Total deferred tax (5.2) (5.3)
--------------------------------------------------- ------------- -------------
Income tax charge reported in the income statement (8.1) (5.6)
--------------------------------------------------- ------------- -------------
(1) In the period ended 30 September 2022, the Group identified
an error in the accrual of tax liabilities arising in BizSpace
Group as at 31 March 2022, resulting in an overstatement of the tax
liability of EUR5.0m of which EUR3.0m arose on acquisition. These
were assessed as not being material to the 31 March 2022 financial
statements and the reduction in the liability was recorded in the
six months ended 30 September 2022 financial statements. The
amounts have been recorded within administrative expenses under
exceptional items (see note 5) and the taxation line of the income
statement.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
------------------------ ------------------------ ------------------------
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 31 March 30 September 31 March 30 September 31 March
2023 2023 2023 2023 2023 2023
EURm EURm EURm EURm EURm EURm
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Revaluation of investment
property - - (103.1) (99.5) (103.1) (99.5)
Lease incentives - - (0.7) (0.7) (0.7) (0.7)
Fixed asset temporary
differences - - - (0.1) - (0.1)
Financial instruments - - (0.1) (0.2) (0.1) (0.2)
Fair value adjustment
on leased investment properties 3.7 3.9 (3.6) (3.8) 0.1 0.1
Recognised tax losses 18.4 20.2 - - 18.4 20.2
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Deferred tax assets/(liabilities) 22.1 24.1 (107.5) (104.3) (85.4) (80.2)
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
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 the year ended 31 March 2022 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 year ended 31 March
2023.
The movement in deferred tax during the period is as
follows:
Audited Unaudited
31 March Recognised Exchange 30 September
2023 in income differences 2023
EURm EURm EURm EURm
-------------------------- --------- ---------- ------------ -------------
Revaluation of investment
property (99.5) (3.6) - (103.1)
Lease incentives (0.7) - - (0.7)
Fixed asset temporary
differences (0.1) 0.1 - -
Financial instruments (0.2) 0.1 - (0.1)
Fair value adjustment
on leased investment
properties 0.1 - - 0.1
Recognised tax losses 20.2 (1.8) - 18.4
-------------------------- --------- ---------- ------------ -------------
Total (80.2) (5.2) - (85.4)
-------------------------- --------- ---------- ------------ -------------
The Group has not recognised a deferred tax asset on EUR251.8m
(31 March 2023: EUR240.2m) of tax losses carried forward and future
share scheme deductions due to uncertainties over recovery. There
is no expiration date on EUR251.8m 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.
A deferred tax liability is recognised on temporary differences
of EURnil (31 March 2023: EURnil) relating to the unremitted
earnings of overseas subsidiaries as the Group is able to control
the timing of the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis. The following is
the analysis of the deferred tax balances (after offset) for
financial reporting purposes:
Assets Liabilities Net
------------------------ ------------------------ ------------------------
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 31 March 30 September 31 March 30 September 31 March
2023 2023 2023 2023 2023 2023
EURm EURm EURm EURm EURm EURm
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
UK - - - - - -
Germany 22.1 24.1 (107.5) (104.3) (85.4) (80.2)
Cyprus - - - - - -
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Deferred tax assets/(liabilities) 22.1 24.1 (107.5) (104.3) (85.4) (80.2)
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Assets Liabilities Net
------------------------ ------------------------ ------------------------
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 31 March 30 September 31 March 30 September 31 March
2023 2023 2023 2023 2023 2023
EURm EURm EURm EURm EURm EURm
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
UK 0.1 - - (0.4) 0.1 (0.4)
Germany - - (6.0) (4.6) (6.0) (4.6)
Cyprus - - (0.4) (0.4) (0.4) (0.4)
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
Current tax assets/(liabilities) 0.1 - (6.4) (5.4) (6.3) (5.4)
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
10. Earnings per share
The calculation of the basic, diluted, EPRA, headline and
adjusted earnings per share are based on the following data:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- ------------- -------------
Earnings attributable to the owners of the Company
Basic earnings 31.7 70.0
Diluted earnings 31.7 70.0
EPRA earnings 48.2 41.2
Diluted EPRA earnings 48.2 41.2
Headline earnings 47.5 42.6
Diluted headline earnings 47.5 42.6
--------------------------------------------------------- ------------- -------------
Adjusted
Basic earnings 31.7 70.0
Add loss/(deduct gain) on revaluation of investment
properties 10.1 (26.8)
Deduct gain on disposal of properties 0.0 (4.8)
Tax in relation to the revaluation gains/losses
of investment properties and gains/losses on disposal
of properties above less REIT related tax effects 5.3 5.6
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (1.9)
Tax in relation to the revaluation gains/losses
on investment property relating to associates above (0.1) 0.5
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 47.5 42.6
Add/(deduct) change in fair value of derivative
financial instrument (net of related tax and NCI) 0.7 (1.4)
Deduct revaluation loss relating to leased investment
properties (0.7) (0.9)
Add adjusting items (net of related tax and NCI)(1) 1.8 3.0
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 49.3 43.3
--------------------------------------------------------- ------------- -------------
Number of shares
Weighted average number of ordinary shares for the
purpose of basic, headline, adjusted and basic EPRA
earnings per share 1,169,697,061 1,167,383,139
--------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted earnings, diluted headline earnings,
diluted adjusted earnings and diluted EPRA earnings
per share 1,185,416,141 1,183,403,147
--------------------------------------------------------- ------------- -------------
Basic earnings per share 2.71c 6.00c
--------------------------------------------------------- ------------- -------------
Diluted earnings per share 2.67c 5.92c
--------------------------------------------------------- ------------- -------------
Basic EPRA earnings per share 4.12c 3.53c
--------------------------------------------------------- ------------- -------------
Diluted EPRA earnings per share 4.07c 3.48c
--------------------------------------------------------- ------------- -------------
Headline earnings per share 4.06c 3.65c
--------------------------------------------------------- ------------- -------------
Diluted headline earnings per share 4.01c 3.60c
--------------------------------------------------------- ------------- -------------
Adjusted earnings per share 4.21c 3.71c
--------------------------------------------------------- ------------- -------------
Adjusted diluted earnings per share 4.16c 3.66c
--------------------------------------------------------- ------------- -------------
(1) See reconciliation between adjusting items as stated within
earnings per share and those stated within administrative expenses
in note 5.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
Notes EURm EURm
------------------------------- ----- ------------- -------------
Exceptional items 5 0.3 1.1
Share-based payments 5 1.5 1.9
------------------------------- ----- ------------- -------------
Adjusting items as per note 10 1.8 3.0
------------------------------- ----- ------------- -------------
The following table shows the reconciliation of basic to
headline earnings, separately disclosing the impact before tax
(gross column) and after tax (net column):
Unaudited six months Unaudited six months
ended 30 September 2023 ended 30 September 2022
-------------------------- --------------------------
Gross Net Gross Net
EURm EURm EURm EURm
-------------------------------------- -------------- ---------- ------------ ------------
Basic earnings 31.7 70.0
Add loss/(deduct gain) on revaluation
of investment properties 10.1 15.4 (26.8) (21.3)
Deduct gain on disposal of
properties 0.0 0.0 (4.8) (4.7)
NCI relating to revaluation - - 0.1 -
Add loss/(deduct gain) on revaluation
of investment property relating
to associates 0.5 0.4 (1.9) (1.4)
-------------------------------------- -------------- ---------- ------------ ------------
Headline earnings 47.5 42.6
-------------------------------------- -------------- ---------- ------------ ------------
EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- ------------- -------------
Basic and diluted earnings attributable to owners
of the Company 31.7 70.0
Add loss/(deduct gain) on revaluation of investment
properties 10.1 (26.8)
Deduct gain on disposal of properties (net of related
tax) 0.0 (4.7)
Change in fair value of derivative financial instruments 0.8 (1.2)
Deferred tax in respect of EPRA fair value movements
on investment properties 5.2 5.3
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (1.9)
Tax in relation to the revaluation gains/losses
on investment property relating to associates (0.1) 0.5
--------------------------------------------------------- ------------- -------------
EPRA earnings 48.2 41.2
--------------------------------------------------------- ------------- -------------
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 does not include
7,292,222 own shares held (30 September 2022: 7,492,763 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:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
----------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of basic, basic EPRA, headline and adjusted
earnings per share 1,169,697,061 1,167,383,139
Weighted average effect of grant of LTIP and SIP
shares 15,719,080 16,020,008
----------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted, diluted EPRA, diluted headline
and adjusted diluted earnings per share 1,185,416,141 1,183,403,147
----------------------------------------------------- ------------- -------------
11. Net asset value per share
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
---------------------------------------------------- ------------- -------------
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) 1,201.5 1,197.1
Deferred tax liabilities (see note 9) 85.4 80.2
Derivative financial instruments at fair value (0.5) (1.3)
---------------------------------------------------- ------------- -------------
Adjusted net asset value attributable to the owners
of the Company 1,286.4 1,276.0
---------------------------------------------------- ------------- -------------
Number of shares
Number of ordinary shares for the purpose of net
asset value per share and adjusted net asset value
per share 1,170,430,763 1,168,371,222
Number of ordinary shares for the purpose of EPRA
NTA per share 1,188,332,669 1,182,849,869
Net asset value per share 102.65c 102.46c
Adjusted net asset value per share 109.91c 109.21c
EPRA NTA per share 108.51c 108.11c
---------------------------------------------------- ------------- -------------
EPRA NRV EPRA NTA EPRA NDV
Unaudited 30 September 2023 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at period end (basic) 1,201.5 1,201.5 1,201.5
------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,201.5 1,201.5 1,201.5
------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value (0.5) (0.5) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties 85.4 85.2 (1) n/a
Intangibles as per note 14 n/a (3.9) n/a
Fair value of fixed interest rate debt n/a n/a 114.7
Real estate transfer tax 165.3 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties 7.1 7.1 (1) n/a
Fair value of fixed interest rate debt n/a n/a 9.7
Real estate transfer tax 9.4 n/a n/a
------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV 1,468.2 1,289.4 1,325.9
------------------------------------------- -------- -------- --------
EPRA NRV, NTA and NDV per share 123.55c 108.51c 111.58c
------------------------------------------- -------- -------- --------
EPRA NRV EPRA NTA EPRA NDV
Audited 31 March 2023 EURm EURm EURm
------------------------------------------- -------- -------- --------
Net asset value as at period 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 14 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
------------------------------------------- -------- -------- --------
(1) The Group intends to hold and does not intend in the long
term to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at period end except for
deferred tax in relation to assets held for sale.
For more information on adjusted net asset value and EPRA NRV,
NTA and NDV, refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA
and NDV per share is calculated as follows:
Unaudited Audited
30 September 31 March
2023 2023
---------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of net
asset value per share and adjusted net asset value
per share 1,170,430,763 1,168,371,222
Effect of grant of LTIP and SIP shares 17,901,906 14,478,647
---------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of EPRA
NRV, NTA and NDV per share 1,188,332,669 1,182,849,869
---------------------------------------------------- ------------- -------------
The number of shares does not include 7,292,222 own shares held
(31 March 2023: 7,492,763 shares), which are held by an Employee
Benefit Trust on behalf of the Group.
12. Investment properties
The movement in the book value of investment properties is as
follows:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
---------------------------------------------------- ------------- ---------
Total investment properties at book value as at
the beginning of the period 2,123.0 2,100.0
Additions - owned investment properties - 44.7
Additions - leased investment properties - 1.4
Capital expenditure and broker fees 16.5 29.9
Disposals - (17.1)
Reclassified as investment properties held for sale
(see note 13) (7.3) (8.8)
Loss on revaluation above capex and broker fees (9.6) (7.7)
Adjustment in respect of lease incentives 0.2 (0.6)
Loss on revaluation relating to leased investment
properties (0.7) (1.5)
Foreign exchange differences 7.4 (17.3)
---------------------------------------------------- ------------- ---------
Total investment properties at book value as at
period end (1) 2,129.5 2,123.0
---------------------------------------------------- ------------- ---------
(1) Excluding assets held for sale.
The reconciliation of the valuation carried out by the external
valuer to the carrying values shown in the condensed interim
consolidated statement of financial position is as follows:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------------------------------ ------------- ---------
Owned investment properties at market value per
valuer's report (1) 2,110.0 2,103.1
Adjustment in respect of lease incentives (4.5) (4.6)
Leased investment property market value 24.0 24.5
------------------------------------------------ ------------- ---------
Total investment properties at book value as at
period end (1) 2,129.5 2,123.0
------------------------------------------------ ------------- ---------
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment
properties at period end has been arrived at on the basis of a
valuation carried out at that date by Cushman & Wakefield LLP
(31 March 2023: Cushman & Wakefield LLP), an independent valuer
accredited in terms of the Royal Institution of Chartered Surveyors
("RICS"). The fee arrangement with Cushman & Wakefield LLP for
the valuation of the Group's properties is fixed, subject to an
adjustment for acquisitions and disposals.
The value of each of the properties has been assessed in
accordance with the RICS valuation standards on the basis of market
value. The methodology and assumptions used to determine the fair
value of the properties are consistent with the previous
period.
The weighted average lease expiry remaining across the owned
portfolio in Germany as at period end was 2.6 years (31 March 2023:
2.8 years). The weighted average lease expiry remaining across the
owned portfolio in the UK as at period end was 1.05 years (31 March
2023: 1.01 years). Licence agreements in the UK are rolling and are
included in the valuation.
The fair value (market value) of the Group's leased investment
properties as at period end has been arrived at on the basis of a
valuation carried out by management using discounted cash flows
similar to the approach of Cushman & Wakefield LLP. 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 condensed interim consolidated income statement is as
follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
---------------------------------------------------- ------------- -------------
(Loss)/gain on revaluation above capex and broker
fees (9.6) 27.7
Adjustment in respect of lease incentives 0.2 -
Loss on revaluation relating to leased investment
properties (0.7) (0.9)
---------------------------------------------------- ------------- -------------
(Loss)/gain on revaluation of investment properties
reported in the income statement (10.1) 26.8
---------------------------------------------------- ------------- -------------
Included in the loss or gain on revaluation of investment
properties reported in the income statement are gross gains of
EUR28.6m and gross losses of EUR38.7m (30 September 2022: gross
gains of EUR41.6m and gross losses of EUR14.8m).
Other than the capital commitments disclosed in note 27 the
Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for
routine maintenance to the investment properties.
All investment properties are categorised as Level 3 fair values
as they use significant unobservable inputs. There have not been
any transfers between levels during the period. Investment
properties have been classed according to their asset type.
Information on these significant unobservable inputs per class of
investment property is disclosed below (excluding leased investment
properties).
The valuation for owned investment properties (including assets
classified as held for sale) is 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 Market
rental rental Gross Net
rate per rate per initial initial Discount
sqm sqm Occupancy yield yield factor Void period
EUR EUR % % % % months
------- ------------ ------------ ----------- --------- ------------ ---------- -----------
Unaudited Market
30 September value
2023 EURm Low High Low High Low High Low High Low High Low High Low High
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Traditional
business
parks
Mature 374.8 2.88 8.67 2.67 7.98 89.8 100.0 4.6 10.1 3.7 7.7 4.3 5.9 6 15
Value add 599.9 2.54 7.15 3.72 8.51 26.9 97.4 2.8 9.6 0.7 7.5 4.6 7.3 9 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Total
traditional
business
parks 974.7 2.54 8.67 2.67 8.51 26.9 100.0 2.8 10.1 0.7 7.7 4.3 7.3 6 18
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Modern
business
parks
Mature 228.9 5.67 10.50 4.16 10.35 92.1 100.0 5.3 10.0 4.4 9.1 4.3 5.4 6 15
Value add 229.0 3.17 7.09 4.00 8.43 58.9 92.6 5.2 9.9 3.9 7.3 5.3 7.3 9 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Total modern
business
parks 457.9 3.17 10.50 4.00 10.35 58.9 100.0 5.2 10.0 3.9 9.1 4.3 7.3 6 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Office
Mature 37.3 14.38 14.38 10.92 10.92 92.6 92.6 8.8 8.8 7.4 7.4 4.9 4.9 9 9
Value add 235.7 4.78 10.95 6.49 12.20 53.6 89.0 3.7 10.4 1.9 7.9 5.0 7.0 9 15
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Total office 273.0 4.78 14.38 6.49 12.20 53.6 92.6 3.7 10.4 1.9 7.9 4.9 7.0 9 15
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Total
Germany 1,705.6 2.54 14.38 2.67 12.20 26.9 100.0 2.8 10.4 0.7 9.1 4.3 7.3 6 24
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ------- ---- ---- --- ------
Average market
Average current rental
rental rate rate per Net initial
per sqm sqm Occupancy yield Void period
EUR EUR % % months
------ ----------------- ---------------- ----------- ------------- -------------
Market
Unaudited 30 September value
2023 EURm Low High Low High Low High Low High Low High
---------------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total mixed-use
schemes 98.9 1.98 23.60 5.63 23.07 43.2 94.0 4.2 12.1 4 12
---------------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total office 139.9 4.48 24.92 8.07 24.92 54.4 100.0 5.5 22.3 4 12
---------------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total industrial 172.9 1.99 11.81 3.19 13.21 62.8 100.0 3.2 10.4 4 12
---------------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total UK 411.7 1.98 24.92 3.19 24.92 43.2 100.0 3.2 22.3 4 12
---------------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Current Market
rental rental Gross Net
rate per rate per initial initial Discount
sqm sqm Occupancy yield yield factor Void period
EUR EUR % % % % months
------- ------------ ------------ ----------- --------- --------- ---------- -----------
Audited Market
31 March value
2023 EURm 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
------------ ------- ----- ----- ----- ----- ---- ----- --- ---- --- ---- ---- ---- --- ------
Average market
Average current rental
rental rate rate per Net initial
per sqm sqm Occupancy yield Void period
EUR EUR % % months
------ ----------------- ---------------- ----------- ------------- -------------
Market
Audited 31 March value
2023 EURm 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 12
----------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total office 143.7 5.42 33.89 7.94 24.68 50.5 100.0 4.9 23.2 4 12
----------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total industrial 171.6 2.23 8.19 2.55 12.99 64.1 100.0 3.8 12.4 4 12
----------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
Total UK 417.7 2.09 33.89 2.55 24.68 42.0 100.0 3.8 23.2 4 12
----------------- ------ ------- -------- ------- ------- ---- ----- ----- ------ ----- ------
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%
in market rental in discount in gross initial in net initial
rates rates yield yield
EURm EURm EURm EURm
------------------ -------- ------------------- ------------------ ------------------- ------------------
Unaudited Market
30 September value
2023 EURm Increase Decrease Increase Decrease Increase Decrease Increase Decrease
------------------ -------- --------- -------- -------- -------- --------- -------- -------- --------
Total traditional
business parks 974.7 49.4 (49.6) (19.4) 19.4 (74.4) 88.5 (96.9) 128.8
Total modern
business parks 457.9 22.8 (22.3) (9.0) 9.9 (31.7) 37.1 (38.7) 47.7
Total office 273.0 14.0 (13.9) (5.3) 5.7 (19.6) 23.1 (26.1) 34.0
------------------ -------- --------- -------- -------- -------- --------- -------- -------- --------
Market value
Germany 1,705.6 86.2 (85.8) (33.7) 35.0 (125.7) 148.7 (161.7) 210.5
------------------ -------- --------- -------- -------- -------- --------- -------- -------- --------
Change of 5% Change of 0.5%
in market rental rates in net initial yield
EURm EURm
------------------------ ------ ------------------------- -----------------------
Market
Unaudited 30 September value
2023 EURm Increase Decrease Increase Decrease
------------------------ ------ ------------ ----------- ----------- ----------
Total mixed-use schemes 98.9 3.4 (3.7) (5.9) 6.5
Total office 139.9 4.2 (4.2) (6.0) 6.7
Total industrial 172.9 6.7 (6.8) (10.8) 12.0
------------------------ ------ ------------ ----------- ----------- ----------
Market value UK 411.7 14.3 (14.7) (22.7) 25.2
------------------------ ------ ------------ ----------- ----------- ----------
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
in market rental in discount in gross initial in net initial
rates rates yield yield
EURm EURm EURm EURm
------------------ ------- ------------------- ------------------ ------------------- ------------------
Audited Market
31 March value
2023 EURm 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
business parks 450.5 22.0 (21.7) (8.5) 9.3 (32.2) 37.9 (41.5) 47.4
Total office 273.9 14.0 (14.1) (5.6) 5.6 (20.8) 24.8 (28.3) 36.8
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Market value
Germany 1,694.0 84.9 (85.0) (33.4) 34.0 (126.1) 149.5 (176.4) 193.2
------------------ ------- --------- -------- -------- -------- --------- -------- -------- --------
Change of 5% Change of 0.5%
in market rental rates in net initial yield
EURm EURm
------ ------------------------- -----------------------
Market
Audited 31 March value
2023 EURm 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 15.5 (14.7)
------------------------ ------ ------------ ----------- ----------- ----------
13. Assets held for sale
Investment properties held for sale
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------- ------------- ---------
Wuppertal - 8.8
Kassel 7.3 -
------------------------- ------------- ---------
Balance as at period end 7.3 8.8
------------------------- ------------- ---------
The disclosures regarding valuation in note 12 are also
applicable to assets held for sale.
As at 30 September 2023, an amount of EUR7.3m relating to the
sale of the Kassel asset was received prior to the completion date
of 1 October 2023 and was included in the cash at bank per note 19.
As at 31 March 2023, an amount of EUR8.8m 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 19.
As a result, an equal and opposite position within other
payables was recognised. See note 20 for further details.
14. Intangible assets
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------- ------------- ---------
Software and licences 3.9 4.1
------------------------- ------------- ---------
Balance as at period end 3.9 4.1
------------------------- ------------- ---------
15. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets
(excluding those classified as investment properties) recognised
and the movements during the period:
Office Total
EURm EURm
------------------------------------ ------ -----
As at 31 March 2022 (audited) 15.0 15.0
Additions 1.4 1.4
Depreciation expense (1.1) (1.1)
------------------------------------ ------ -----
As at 30 September 2022 (unaudited) 15.3 15.3
------------------------------------ ------ -----
Additions 0.1 0.1
Depreciation expense (1.0) (1.0)
------------------------------------ ------ -----
As at 31 March 2023 (audited) 14.4 14.4
------------------------------------ ------ -----
Depreciation expense (0.9) (0.9)
------------------------------------ ------ -----
As at 30 September 2023 (unaudited) 13.5 13.5
------------------------------------ ------ -----
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 EUR24.0m (31
March 2023: EUR24.5m) are classified as investment properties, of
which EUR2.3m (31 March 2023: EUR2.8m) relate to commercial
property.
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
----------------------------------------------- ------------- ---------
Balance as at the beginning of the period (39.6) (38.7)
Accretion of interest (0.6) (1.1)
Additions - (2.8)
Payments 1.7 2.3
Foreign exchange differences (0.3) 0.7
----------------------------------------------- ------------- ---------
Balance as at period end (38.8) (39.6)
----------------------------------------------- ------------- ---------
Current lease liabilities as at period end (2.3) (2.2)
----------------------------------------------- ------------- ---------
Non-current lease liabilities as at period end (36.5) (37.4)
----------------------------------------------- ------------- ---------
The following table sets out the carrying amount, by maturity,
of the Group's lease liabilities:
Within 1 year 1-5 years 5+ years Total
Unaudited 30 September 2023 EURm EURm EURm EURm
---------------------------- ------------- --------- -------- ------
Commercial property(1) (0.3) (1.1) - (1.4)
Long-term leasehold(1) (0.2) (1.0) (20.5) (21.7)
Office space (1.8) (7.5) (6.4) (15.7)
---------------------------- ------------- --------- -------- ------
Total (2.3) (9.6) (26.9) (38.8)
---------------------------- ------------- --------- -------- ------
Within 1 year 1-5 years 5+ years Total
Audited 31 March 2023 EURm EURm EURm EURm
----------------------- ------------- --------- -------- ------
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)
----------------------- ------------- --------- -------- ------
(1) These lease liabilities relate to right of use assets recorded as investment properties.
The overall weighted average discount rate used for the period
is 2.8% (31 March 2023: 2.7%).
16. Other non-current financial assets
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------- ------------- ---------
Deposits 4.1 4.1
Loans to associates 44.3 44.3
------------------------- ------------- ---------
Balance as at period end 48.4 48.4
------------------------- ------------- ---------
Loans to associates relate to shareholder loans granted to
associates by the Group. The loans terminate on 31 December 2026,
are fully subordinated and are charged at a fixed interest rate.
The expected credit loss has been considered based on multiple
factors such as history of repayments, forward looking budgets and
forecasts. Based on the assessment the expected credit loss was
immaterial.
17. Investment in associates
The principal activity of the associates is the investment in,
and development of, commercial property located in Germany and to
provide conventional and flexible workspace. Since the associates
are individually immaterial the Group is disclosing aggregated
information for the associates.
The following table illustrates the summarised financial
information of the Group's investment in associates:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
-------------------------------- ------------- ---------
Current assets 24.4 28.4
Non-current assets 358.6 354.7
Current liabilities (21.3) (15.6)
Non-current liabilities (296.7) (296.1)
-------------------------------- ------------- ---------
Equity 65.0 71.4
Unrecognised accumulated losses 6.1 4.9
-------------------------------- ------------- ---------
Subtotal 71.1 76.3
-------------------------------- ------------- ---------
Group's share in equity - 35% 25.0 26.7
-------------------------------- ------------- ---------
The accumulated losses of the investment in associates are not
recognised in line with the accounting policy as outlined in note
2(b).
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
----------------------------------------------------- ------------- -------------
Net operating income 9.8 10.0
(Loss)/gain on revaluation of investment properties (3.3) 4.2
Administrative expense (1.8) (1.7)
----------------------------------------------------- ------------- -------------
Operating profit 4.7 12.5
Net finance costs (4.4) (4.4)
----------------------------------------------------- ------------- -------------
Profit before tax 0.3 8.1
Taxation (0.5) (1.7)
Unrecognised loss 1.1 1.1
----------------------------------------------------- ------------- -------------
Total profit and comprehensive income for the period
after tax 0.9 7.5
----------------------------------------------------- ------------- -------------
Group's share of profit for the period - 35% 0.3 2.6
----------------------------------------------------- ------------- -------------
Included within the non-current liabilities are shareholder
loans amounting to EUR126.8m (31 March 2023: EUR126.8m). As at
period end no contingent liabilities existed (31 March 2023: none).
The associates had contracted capital expenditure for development
and enhancements of EUR6.5m as at period end (31 March 2023:
EUR3.4m).
The following table illustrates the movement in investment in
associates:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------------------------ ------------- ---------
Balance as at the beginning of the period 26.7 24.1
Dividend received (2.0) -
Share of profit 0.3 2.6
------------------------------------------ ------------- ---------
Balance as at period end 25.0 26.7
------------------------------------------ ------------- ---------
18. Trade and other receivables
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------------- ------------- ---------
Gross trade receivables 16.4 22.4
Expected credit loss provision (8.2) (8.7)
------------------------------- ------------- ---------
Net trade receivables 8.2 13.7
Other receivables 15.1 14.1
Prepayments 5.1 2.7
------------------------------- ------------- ---------
Balance as at period end 28.4 30.5
------------------------------- ------------- ---------
Other receivables include primarily accrued income from
investment in associates of EUR4.7m (31 March 2023: EUR2.2m) and
lease incentives of EUR4.5m (31 March 2023: EUR4.6m).
19. Cash and cash equivalents
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
----------------------------------------- ------------- ---------
Cash at bank 65.8 99.2
Short-term investments 25.4 -
Cash restricted under contractual terms:
Deposit for bank guarantees - 1.3
Deposits received from tenants 24.5 23.8
----------------------------------------- ------------- ---------
Balance as at period end 115.7 124.3
----------------------------------------- ------------- ---------
Cash at bank earns interest at floating rates based on daily
bank deposit rates. The fair value of cash as at period end is
EUR115.7m (31 March 2023: EUR124.3m).
Short-term investments are an investment in Money Market Funds.
The Group invests only in highly liquid products with short
maturities, which are readily convertible to a known amount of cash
and that are subject to an insignificant risk of changes in
value.
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.
20. Trade and other payables
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
---------------------------------- ------------- ---------
Trade payables 6.1 12.0
Accrued expenses 39.1 28.6
Provisions 3.3 3.3
Interest and amortisation payable 6.2 5.6
Tenant deposits 24.5 23.8
Unearned revenue 10.4 10.6
Other payables 14.3 17.6
---------------------------------- ------------- ---------
Balance as at period end 103.9 101.5
---------------------------------- ------------- ---------
Accrued expenses include costs relating to service charge
totalling EUR27.0m (31 March 2023: EUR16.4m), bonuses of EUR4.2m
(31 March 2023: EUR4.5m), costs relating to non-recurring projects
of EUR2.9m (31 March 2023: EUR2.8m) and administrative expenses of
EUR3.0m (31 March 2023: EUR2.4m) that have not been invoiced to the
Group.
The Group are subject to an ongoing legal claim in relation to a
property which was sold during 2017. The Group have recognised a
provision of EUR3.3m (31 March 2023: EUR3.3m) which represents the
Directors best estimate of the potential outflow at the present
time, however, the Directors recognise there is uncertainty
relating to this amount. At this stage, the Directors do not expect
to incur a liability over and above what has already been
recognised in the financial statements. As at 31 March 2023 the
liability of EUR3.3m was included in accrued expenses. The
Directors have chosen to disclose this as a separate line in the
disclosure note for trade and other payables to provide additional
information to the users of the financial statements.
Included within other payables are credit balances due to
tenants in relation to over collections of service charge in amount
of EUR2.1m (31 March 2023: EUR3.6m). As at 30 September 2023, other
payables included EUR7.3m relating to the sale of Kassel asset that
is categorised as an asset held for sale as at 30 September 2023 in
advance of the completion date of 1 October 2023. As at 31 March
2023, other payables included EUR8.8m of proceeds relating to the
sale of the Wuppertal asset that was categorised as an asset held
for sale as at 31 March 2023 in advance of the completion date of 1
April 2023. See note 13 for details of assets held for sale.
Unearned revenue includes service charge amounts of EUR1.7m (31
March 2023: EUR3.1m). Service charge income is only recognised as
income when the performance obligations are met. All unearned
revenue of the prior period was recognised as revenue in the
current period.
21. Interest-bearing loans and borrowings
Unaudited
Interest 30 September Audited
rate 2023 31 March 2023
% Loan maturity date EURm EURm
-------------------------------- ----------- ------------------ ------------- --------------
Current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 57.3 58.2
- fixed rate facility 0.90 31 October 2023 109.6 110.4
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 0.8 0.7
Deutsche Pfandbriefbank
AG
- hedged floating rate facility Hedged(1) 31 December 2023 50.5 51.1
- floating rate facility Floating(1) 31 December 2023 6.2 6.2
Schuldschein
- fixed rate facility 1.60 3 July 2023 - 20.0
Capitalised finance charges
on all loans (2.5) (2.9)
-------------------------------- ----------- ------------------ ------------- --------------
221.8 243.7
-------------------------------- ----------- ------------------ ------------- --------------
Non-current
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 13.0 13.5
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
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 (6.6) (7.8)
-------------------------------- ----------- ------------------ ------------- --------------
721.4 720.7
-------------------------------- ----------- ------------------ ------------- --------------
Total 943.2 964.4
-------------------------------- ----------- ------------------ ------------- --------------
(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 EUR19.1m of
tranche 3 of this facility is fully hedged with a swap charged at a
rate of 0.91%. A EUR6.5m extension and the tranche 3 related
EUR0.5m 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 movement of loans and borrowings for the period ended 30
September 2023 comprised of EUR22.7m repayment of loans and EUR1.5m
capitalisation of finance charges (30 September 2022: EUR2.7m and
EUR1.6m respectively).
The Group has pledged 15 (31 March 2023: 15) investment
properties to secure several separate interest-bearing debt
facilities granted to the Group. The 15 (31 March 2023: 15)
properties had a combined valuation of EUR518.2m as at period end
(31 March 2023: EUR510.7m).
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 period, 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 period end.
Refer to note 2(e) where the Group discloses forecast covenant
compliance with regard to management's going concern
assessment.
Berlin Hyp AG
On 13 September 2019, the Group agreed to a facility agreement
with Berlin Hyp AG for EUR115.4m. 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. No
changes to the terms of the facility have occurred during the six
month period ended 30 September 2023.
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 EUR170.0m. 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 EUR18.0m. The loan terminates on 28
February 2025. Amortisation is 4.0% per annum with the remainder
due in one instalment on the final maturity date. The facility is
charged with an all-in fixed interest rate of 1.53% for the full
term of the loan. The facility is secured over one property asset.
No changes to the terms of the facility have occurred during the
six month period ended 30 September 2023.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement
with Deutsche Pfandbriefbank AG for EUR56.0m. Tranche 1, totalling
EUR21.6m, 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 EUR0.5m was charged at a fixed interest rate of 1.20%. On
3 April 2019, tranche 2 was drawn down, totalling EUR14.8m, 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 was drawn down,
totalling EUR19.1m. 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 EUR6.5m. 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 2.0% per annum with the remainder due in one instalment on the
final maturity date.
On 26 May 2023, the Group concluded an agreement with Deutsche
Pfandbriefbank AG to refinance the existing facility with a new
facility which amounts to EUR58.3m. The new facility is a separate
financial instrument to the existing facility and will come into
effect on 1 January 2024 with a term of seven years and a fixed
interest rate of 4.25%.
Schuldschein
On 2 December 2019, the Group agreed new loan facilities in the
form of an unsecured Schuldschein for EUR20.0m. On 25 February
2020, the Group agreed new loan facilities in the form of an
unsecured Schuldschein for EUR30.0m. In total the unsecured
facility amounts to EUR50.0m 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 first and second tranches
totalling EUR15.0m were repaid during the twelve month period ended
31 March 2023.
On 30 June 2023, the Group repaid an amount of EUR20.0m
resulting in a remaining EUR15.0m for the loan facility. No changes
to the terms of the facility have occurred during the six month
period ended 30 September 2023.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond
for EUR400.0m. 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. No changes to the terms of the facility
have occurred during the six month period ended 30 September
2023.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond
for EUR300.0m. 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. No changes to the terms of the
facility have occurred during the six month period ended 30
September 2023.
EPRA loan to value ("LTV")
Proportionate
consolidation
--------------
Investment
Group in associates Total
Unaudited 30 September 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 243.2 52.2 295.4
Corporate bonds 700.0 - 700.0
Net payables 77.2 5.7 82.9
Cash and cash equivalents (115.7) (6.6) (122.3)
-------------------------------------- ------- -------------- -------
Net debt (a) 904.7 51.3 956.0
-------------------------------------- ------- -------------- -------
Investment properties 2,129.5 125.5 2,255.0
Assets held for sale 7.3 - 7.3
Plant and equipment 7.4 - 7.4
Intangible assets 3.9 - 3.9
Loan to associates 44.3 - 44.3
-------------------------------------- ------- -------------- -------
Total property value (b) 2,192.4 125.5 2,317.9
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) 41.3% 40.9% 41.2%
-------------------------------------- ------- -------------- -------
Proportionate
consolidation
--------------
Investment
Group in associates Total
Audited 31 March 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
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%
-------------------------------------- ------- -------------- -------
(1) Excludes corporate bonds as shown as a separate line.
22. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts
and fair values of all of the Group's financial instruments that
are carried in the financial statements (excluding assets held for
sale):
Unaudited Audited
30 September 2023 31 March 2023
-------------------- ----------------
Fair value Carrying Fair Carrying Fair
hierarchy amount value amount value
level EURm EURm EURm EURm
------------------------------- ---------- ----------- ------- -------- ------
Financial assets
Cash and cash equivalents 115.7 115.7 124.3 124.3
Trade and other receivables(1) 22.9 22.9 27.3 27.3
Loans to associates 2 44.3 44.3 44.3 44.3
Derivative financial
instruments 2 0.5 0.5 1.3 1.3
------------------------------- ---------- ----------- ------- -------- ------
Financial liabilities
Trade and other payables 51.1 51.1 59.0 59.0
Interest-bearing loans
and borrowings(2)
Floating rate borrowings 2 11.2 11.2 11.2 11.2
Floating rate borrowings
- hedged(3) 2 50.5 50.5 51.1 51.1
Fixed rate borrowings 2 890.6 776.0 912.8 813.6
------------------------------- ---------- ----------- ------- -------- ------
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 deposits.
(2) Excludes loan issue costs.
(3) The Group holds interest rate swap contracts designed to
manage the interest rate and liquidity risks of expected cash flows
of its borrowings with the variable rate facilities with Deutsche
Pfandbriefbank AG. Please refer to note 21 for details of swap
contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost
and whose carrying value is a reasonable approximation to fair
value there is no requirement to analyse their value in the fair
value hierarchy.
The below analyses financial instruments measured at fair value
into a fair value hierarchy based on the valuation technique used
to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on
a quarterly basis. The fair value of interest rate swaps is based
on broker quotes. Those quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and
maturity of each contract and using market interest rates for a
similar instrument at the measurement date. The average interest
rate is based on the outstanding balances at the end of the
reporting period. The interest rate swap is measured at fair value
with changes recognised in profit or loss.
The fair values of the loans and borrowings have been calculated
based on a discounted cash flow model using the prevailing market
rates of interest.
23. Issued share capital
Share
Number capital
Authorised of shares EURm
------------------------------------------------ ---------- --------
Ordinary shares of no par value Unlimited -
------------------------------------------------ ---------- --------
As at 30 September 2023 (unaudited) and 31 March
2023 (audited) Unlimited -
------------------------------------------------ ---------- --------
Share
Number capital
Issued and fully paid of shares EURm
------------------------------------------------- ------------- --------
As at 31 March 2022 (audited) 1,166,880,684 -
Issued ordinary shares 2,891,372 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 30 September 2022 (unaudited) 1,167,559,601 -
Issued ordinary shares 811,621 -
Transfer of share capital to other distributable -
reserves -
Shares issued to the Employee Benefit Trust - -
Shares allocated by the Employee Benefit Trust - -
------------------------------------------------- ------------- --------
As at 31 March 2023 (audited) 1,168,371,222 -
Issued ordinary shares 1,859,000 -
Transfer of share capital to other distributable -
reserves -
Shares issued to the Employee Benefit Trust - -
Shares allocated by the Employee Benefit Trust 200,541 -
------------------------------------------------- ------------- --------
As at 30 September 2023 (unaudited) 1,170,430,763 -
------------------------------------------------- ------------- --------
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.
The Company issued 1,859,000 shares in relation to the exercise
of the LTIP 2018 (Jun 2020 grant) as per note 7. 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 period nil shares were acquired and
200,541 were allocated by the Employee Bene t Trust. A total of
7,292,222 own shares purchased at an average share price of
EUR1.1108 are held by the Employee Benefit Trust (31 March 2023:
7,492,763 shares purchased at an average share price of EUR1.1185).
The total number of shares with voting rights was 1,177,722,985 (31
March 2023: 1,175,863,985). No votes are cast in respect of the
shares held in the Employee Benefit Trust in connection with the
Company's share plans and dividends paid and payable are subject to
a standing waiver.
All shares issued in the period were issued under general
authority. No shares were bought back in the period (31 March 2023:
none) and there are no Treasury Shares held directly by the Company
at the period end (31 March 2023: none).
24. Other reserves
Other distributable reserve
This reserve comprises amounts in relation to scrip dividends
transfers from share capital, share-based payment transactions and
the share buy-backs. The balance of EUR481.3m in total at period
end (31 March 2023: EUR516.4m) 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:
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------------------------ ------------- ---------
Balance as at the beginning of the period (18.9) (1.7)
Foreign currency translation 7.6 (17.2)
------------------------------------------ ------------- ---------
Balance as at period end (11.3) (18.9)
------------------------------------------ ------------- ---------
The movement in the period of EUR7.6m gain is a result of an
increasing GBP rate which is higher at period end compared with 31
March 2023 (31 March 2023: EUR17.2m deficit).
25. Dividends
On 5 June 2023, the Company announced a dividend of 2.98c per
share, with a record date of 14 July 2023 for the UK and South
African ("SA") shareholders and payable on 17 August 2023. On the
record date, 1,177,722,985 shares were in issue. Since there were
no shares held in treasury, 1,177,722,985 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 EUR35.1m to EUR34.9m (EUR35.0m 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
EUR31.7m to EUR31.5m (EUR31.5m 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 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 EUR1.4m (EUR1.4m as at settlement date) while holders
of 1,110,707,717 shares opted for a cash dividend with a value of
EUR26.3m. The Company's Employee Benefit Trust waived its rights to
the dividend, reducing the cash payable to EUR26.2m (EUR26.3m as at
settlement date). The total dividend was EUR27.7m (EUR27.7m).
The Group's profit attributable to the equity holders of the
Company for the period was EUR31.7m (30 September 2022: EUR70.0m).
The Board has authorised a dividend relating to the six month
period ended 30 September 2023 of 3.00c per share, representing 66%
of FFO(1) .
It is expected that, for the dividend authorised relating to the
six month period ended 30 September 2023, the ex-dividend date will
be 12 December 2023 for shareholders on the SA register and 14
December 2023 for shareholders on the UK register The record date
will be 14 December 2023 for shareholders on the SA register and 15
December 2023 for shareholders on the UK register. The dividend
will be paid on 25 January 2024. A detailed dividend announcement
will be made on 20 November 2023, including details of a dividend
reinvestment plan ("DRIP") alternative.
The dividend paid per the statement of changes in equity is the
value of the cash dividend.
(1) Adjusted profit before tax adjusted for foreign exchange
effects, depreciation and amortisation (excluding depreciation
relating to IFRS 16), amortisation of financing fees, adjustments
in respect of IFRS 16, current tax receivable/incurred and current
tax relating to disposals.
The dividend per share was calculated as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------ ------------- -------------
Reported profit before tax 39.8 75.7
Adjustments for:
Loss/(gain) on revaluation of investment properties 10.1 (26.8)
Loss on revaluation relating to leased investment
properties (0.7) (0.9)
Gain on disposal of properties 0.0 (4.8)
Loss/(gain) on revaluation of investment property
from associates and related tax 0.4 (1.4)
Other adjusting items(1) 1.8 3.0
Change in fair value of financial derivatives 0.8 (1.2)
------------------------------------------------------ ------------- -------------
Adjusted profit before tax 52.2 43.6
Adjustments for:
Foreign exchange effects(2) - 0.3
Depreciation and amortisation (excluding depreciation
relating to IFRS 16) 1.7 1.7
Amortisation of financing fees 1.5 1.6
Adjustment in respect of IFRS 16 0.5 1.5
Current taxes incurred (see note 9) (2.9) (0.3)
Add back current tax relating to disposals - 0.1
------------------------------------------------------ ------------- -------------
Funds from operations, six months ended 30 September 53.0 48.5
------------------------------------------------------ ------------- -------------
Dividend pool, six months ended 30 September(3) 35.1 31.5
------------------------------------------------------ ------------- -------------
Dividend per share, six months ended 30 September 3.00c 2.70c
------------------------------------------------------ ------------- -------------
(1) Includes the effect of exceptional items and share awards.
See note 7 for details.
(2) Management decided to exclude foreign exchange effects from
the funds from operations calculation amounting to EURnil (30
September 2022: EUR(0.3)m).
(3) Calculated as 66% of FFO of 3.00c per share (30 September
2022: 4.15c per share using 65% of FFO), based on average number of
shares outstanding of 1,169,697,061 (30 September 2022:
1,167,383,139).
For more information on adjusted profit before tax and funds
from operations, refer to Annex 1.
Calculations contained in this table are subject to rounding
differences.
26. Related parties
Related parties are defined as those persons and companies that
control the Group, or that are controlled, jointly 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 period
include:
Unaudited
six months
Unaudited ended
30 September 30 September
2023 2022
Condensed interim consolidated income statement EURm EURm
------------------------------------------------ ------------- -------------
Directors' fees 0.3 0.3
Salary and employee benefits 2.9 3.6
Share-based payments 1.0 1.8
------------------------------------------------ ------------- -------------
Total 4.2 5.7
------------------------------------------------ ------------- -------------
Included within salary and employee benefits are pension
contributions amounting to EUR 0.1m (30 September 2022:
EUR0.1m).
The amounts payable to people considered to be key management
personnel (the Senior Management Team) amount to EUR0.3m (31 March
2023: EURnil).
Associates
The following balances and transactions with associates exist as
at the reporting date:
Unaudited Audited
30 September 31 March
Condensed interim consolidated statement of financial 2023 2023
position EURm EURm
------------------------------------------------------ ------------- ---------
Loans to associates 44.3 44.3
Trade and other receivables 4.6 4.0
------------------------------------------------------ ------------- ---------
Total 48.9 48.3
------------------------------------------------------ ------------- ---------
Trade and other receivables relate to amounts owed from the
services supplied to the associates and are due to be settled in
the normal course of business.
As a result of unchanged credit quality no material expected
credit losses have been recognised in the period.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
Condensed interim consolidated income statement EURm EURm
------------------------------------------------ ------------- -------------
Services supplied 8.4 7.0
Interest income 1.1 1.1
------------------------------------------------ ------------- -------------
Total 9.5 8.1
------------------------------------------------ ------------- -------------
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.
Within services supplied, the performance fee was EUR0.8m (30
September 2022: EURnil).
For details regarding the investment in associates, including
dividends received, see note 17.
27. Capital and other commitments
As at period end, the Group had contracted capital expenditure
for development and enhancements on existing properties of EUR13.8m
(31 March 2023: EUR14.9m).
The above noted were committed but not yet provided for in the
financial statements.
28. Post balance sheet events
On 21 August 2023, the Group notarised for the disposal of an
asset in Kassel for a sale price of EUR7.3m. The mixed-use site
which comprises 16,217 sqm of storage, industrial, office and
logistics space is 92% occupied. The transaction completed on 1
October 2023.
On 2 October 2023, the Group completed the acquisition of two
mixed use industrial assets located in Liverpool and Barnsley.
Total acquisition costs are GBP10.1m (EUR11.7m). The property has a
combined lettable area of 71,957 sq ft (6,685 sqm).
On 1 November 2023, the Group notarised the disposal of an asset
in Maintal, for EUR40.1m. The mixed-use site which comprises 38,000
sqm of storage, industrial and office space is 83% occupied. The
sale is expected to complete in March 2024.
On 6 November 2023, the Group completed the acquisition of three
multi-let studio sites located in Islington and Camden, London.
Total acquisition costs are GBP35.7m (EUR41.2m). The sites have a
combined lettable area of 103,962 sq ft (9,658 sqm).
Business analysis
Non-IFRS measures
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
--------------------------------------------------------- ------------- -------------
Total profit for the period attributable to the
owners of the Company 31.7 70.0
Add loss/(deduct gain) on revaluation of investment
properties 10.1 (26.8)
Deduct gain on disposal of properties (net of related
tax) 0.0 (4.7)
Change in fair value of derivative financial instruments 0.8 (1.2)
Deferred tax in respect of EPRA fair value movements
on investment properties 5.2 5.3
Add loss/(deduct gain) on revaluation of investment
property relating to associates 0.5 (1.9)
Tax in relation to the revaluation gains/losses
on investment property relating to associates above (0.1) 0.5
--------------------------------------------------------- ------------- -------------
EPRA earnings 48.2 41.2
Deduct change in deferred tax relating to derivative
financial instruments 0.1 0.2
(Deduct)/add change in fair value of derivative
financial instruments (0.8) 1.2
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 47.5 42.6
Add/(deduct) change in fair value of derivative
financial instruments (net of related tax and NCI) 0.7 (1.4)
Deduct revaluation loss relating to leased investment
properties (0.7) (0.9)
Add adjusting items(1) (net of related tax and NCI) 1.8 3.0
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 49.3 43.3
--------------------------------------------------------- ------------- -------------
(1) See note 10 of the Interim Report.
For more information on EPRA earnings refer to Annex 1.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------- ------------- -------------
EPRA earnings 48.2 41.2
Weighted average number of ordinary shares 1,169,697,061 1,167,383,139
------------------------------------------- ------------- -------------
EPRA earnings per share (cents) 4.12 3.53
------------------------------------------- ------------- -------------
Headline earnings after tax 47.5 42.6
Weighted average number of ordinary shares 1,169,697,061 1,167,383,139
------------------------------------------- ------------- -------------
Headline earnings per share (cents) 4.06 3.65
------------------------------------------- ------------- -------------
Adjusted earnings after tax 49.3 43.3
Weighted average number of ordinary shares 1,169,697,061 1,167,383,139
------------------------------------------- ------------- -------------
Adjusted earnings per share (cents) 4.21 3.71
------------------------------------------- ------------- -------------
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
(where applicable) 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 combination, 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 asset/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 (where applicable) derivative financial
instruments at fair value, deferred tax relating to valuation
movements (excluding that relating to assets held for sale) and
derivative financial instruments, goodwill and intangible assets as
per the note reference in the unaudited condensed interim
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 (where applicable) goodwill and the fair value
of fixed interest rate debt (for the entire consolidated Group
including wholly owned entities and investment in associates). The
reconciliation for EPRA NDV is detailed in table C below.
-- 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 21. 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 the Group's underlying business performance.
Accordingly, it adjusts for the effect of the gains/losses on
revaluation of investment properties, gains/losses on revaluation
relating to leased investment properties, gains/losses on disposal
of properties, gains/losses on revaluation of investment property
relating to associates and related tax, other adjusting items 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 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 Limited 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 Limited Listings Requirements
solely relates to Headline Earnings Per Share and not EPRA.
The Non-IFRS measures included in the Interim Report 2023 have
not been reviewed nor reported on by the independent reporting
accountant. The starting point for all the Non-IFRS Financial
Information has been extracted from the Group's unaudited condensed
interim set of consolidated financial statements for the six months
ended 30 September 2023 (the "consolidated financial
statements").
Table A - EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------------ ------------- -------------
Basic and diluted earnings attributable to owners
of the Company(1) 31.7 70.0
Add loss/(deduct gain) on revaluation of investment
properties(2) 10.1 (26.8)
Deduct gain on disposal of properties (net of related
tax)(3) 0.0 (4.7)
Change in fair value of derivative financial instruments(4) 0.8 (1.2)
Deferred tax in respect of EPRA fair value movements
on investment properties(5) 5.2 5.3
Add loss/(deduct gain) on revaluation of investment
property relating to associates(6) 0.5 (1.9)
Tax in relation to the revaluation gains/losses
on investment property relating to associates(7) (0.1) 0.5
------------------------------------------------------------ ------------- -------------
EPRA earnings (8) 48.2 41.2
------------------------------------------------------------ ------------- -------------
Notes:
(1) Presents the profit attributable to owners of the Company
which has been extracted from the unaudited condensed interim
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 unaudited condensed
interim consolidated income statement within the consolidated
financial statements.
(3) Presents the gain or loss on disposal of properties (net of
related tax) which has been extracted from note 10 within the
consolidated financial statements.
(4) Presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited condensed
interim consolidated income statement within the consolidated
financial statements.
(5) Presents deferred tax relating to origination and reversal
of temporary differences of the EPRA fair value movements on
investment properties which has been extracted from note 9 within
the consolidated financial statements.
(6) Presents the gain or loss on revaluation of investment
property relating to associates which has been extracted from note
10 within the consolidated financial statements.
(7) Presents tax in relation to the revaluation gains/losses on
investment property relating to associates which has been extracted
from note 10 within the consolidated financial statements.
(8) Presents the EPRA earnings for the period.
Table B - Adjusted net asset value
Unaudited Audited
30 September 31 March
2023 2023
EURm EURm
------------------------------------------------------- ------------- ---------
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company)(1) 1,201.5 1,197.1
Deferred tax liabilities(2) 85.4 80.2
Derivative financial instruments at fair value(3) (0.5) (1.3)
------------------------------------------------------- ------------- ---------
Adjusted net asset value attributable to the owners
of the Company(4) 1,286.4 1,276.0
------------------------------------------------------- ------------- ---------
Notes:
(1) Presents the net asset value for the purpose of assets per
share (assets attributable to the owners of the Company) which has
been extracted from the unaudited condensed interim consolidated
statement of financial position within the consolidated financial
statements.
(2) Presents the net deferred tax liabilities or assets which
have been extracted from the unaudited condensed interim
consolidated statement of financial position within the
consolidated financial statements.
(3) Presents current derivative financial instrument assets
which have been extracted from the unaudited condensed interim
consolidated statement of financial position from the consolidated
financial statements.
(4) Presents the adjusted net asset value attributable to the
owners of the Company as at period end.
Table C - EPRA net asset measures
EPRA NRV EPRA NTA EPRA NDV
Unaudited 30 September 2023 EURm EURm EURm
-------------------------------------------- -------- -------- --------
Net asset value as at period end (basic)(1) 1,201.5 1,201.5 1,201.5
-------------------------------------------- -------- -------- --------
Diluted EPRA net asset value at fair value 1,201.5 1,201.5 1,201.5
-------------------------------------------- -------- -------- --------
Group
Derivative financial instruments at fair
value(2) (0.5) (0.5) n/a
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 85.4 85.2 * n/a
Intangibles(4) n/a (3.9) n/a
Fair value of fixed interest rate debt(5) n/a n/a 114.7
Real estate transfer tax(6) 165.3 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value
movements on investment properties(3) 7.1 7.1 * n/a
Fair value of fixed interest rate debt(5) n/a n/a 9.7
Real estate transfer tax(6) 9.4 n/a n/a
-------------------------------------------- -------- -------- --------
Total EPRA NRV, NTA and NDV (7) 1,468.2 1,289.4 1,325.9
-------------------------------------------- -------- -------- --------
EPRA NRV EPRA NTA EPRA NDV
Audited 31 March 2023 EURm EURm EURm
-------------------------------------------- -------- -------- --------
Net asset value as at period 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 properties(3) 80.2 80.1* n/a
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 properties(3) 7.0 7.0* n/a
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
-------------------------------------------- -------- -------- --------
* The Group intends to hold and does not intend in the long term
to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at period end except for
deferred tax in relation to assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per
share (assets attributable to the owners of the Company) which has
been extracted from the unaudited condensed interim consolidated
statement of financial position within the consolidated financial
statements.
(2) Presents current derivative financial instrument assets
which have been extracted from the unaudited condensed interim
consolidated statement of financial position within the
consolidated financial statements.
(3) Presents for the Group the net deferred tax liabilities or
assets which have been extracted from note 9 of the consolidated
financial statements and for EPRA NTA only the additional credit
adjustment for the deferred tax expense relating to assets held for
sale of EUR0.2m (31 March 2023: EUR0.1m). For investment in
associates the deferred tax income/(expense) arising on revaluation
gains/losses amounted to EUR0.1m (31 March 2023: EUR0.4m).
(4) Presents the net book value of software and licences with
definite useful life which has been extracted from note 14 within
the consolidated financial statements.
(5) Presents the fair value of financial liabilities and assets
on the unaudited condensed interim consolidated statement of
financial position, net of any related deferred tax.
(6) Presents the add-back of purchasers' costs in order to
reflect the value prior to any deduction of purchasers' costs, as
shown in the Valuation Certificate of Cushman & Wakefield
LLP.
(7) Presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively,
as at period end.
Table D - EPRA LTV metric
Proportionate
consolidation
--------------
Investment
Group in associates Total
Unaudited 30 September 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
Interest-bearing loans and borrowings
(1) 243.2 52.2 295.4
Corporate bonds (2) 700.0 - 700.0
Net payables(3) 77.2 5.7 82.9
Cash and cash equivalents(4) (115.7) (6.6) (122.3)
-------------------------------------- ------- -------------- -------
Net debt (a) (5) 904.7 51.3 956.0
-------------------------------------- ------- -------------- -------
Investment properties (6) 2,129.5 125.5 2,255.0
Assets held for sale (7) 7.3 - 7.3
Plant and equipment (8) 7.4 - 7.4
Intangible assets (9) 3.9 - 3.9
Loan to associates(10) 44.3 - 44.3
-------------------------------------- ------- -------------- -------
Total property value (b) (11) 2,192.4 125.5 2,317.9
-------------------------------------- ------- -------------- -------
EPRA LTV (a/b) (12) 41.3 % 40.9 % 41.2 %
-------------------------------------- ------- -------------- -------
Proportionate
consolidation
--------------
Investment
Group in associates Total
Audited 31 March 2023 EURm EURm EURm
-------------------------------------- ------- -------------- -------
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%
-------------------------------------- ------- -------------- -------
Notes:
(1) Presents the interest-bearing loans and borrowings which
have been extracted from the unaudited condensed interim
consolidated statement of financial position within the
consolidated financial statements less the corporate bonds which
have been extracted from note 21 within the consolidated financial
statements.
(2) Presents the corporate bonds which have been extracted from
note 21 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 unaudited condensed interim consolidated
statement of financial position within the consolidated financial
statements) and deposits which have been extracted from note 16
within the consolidated financial statements.
(4) Presents the cash and cash equivalents which have been
extracted from the unaudited condensed interim 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, and net payables, less cash
and cash equivalents which have been extracted from note 21 within
the consolidated financial statements.
(6) Presents the investment properties values which have been
extracted from the unaudited condensed interim consolidated
statement of financial position within the consolidated financial
statements.
(7) Presents the assets held for sale which have been extracted
from the unaudited condensed interim consolidated statement of
financial position within the consolidated financial
statements.
(8) Presents the plant and equipment which have been extracted
from the unaudited condensed interim consolidated statement of
financial position within the consolidated financial
statements.
(9) Presents the intangible assets which have been extracted
from the unaudited condensed interim consolidated statement of
financial position within the consolidated financial
statements.
(10) Presents the loan to associates which has been extracted
from note 16 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
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2023 2022
EURm EURm
------------------------------------------------------- ------------- -------------
Reported profit before tax (1) 39.8 75.7
Adjustments for:
Loss/(gain) on revaluation of investment properties(2) 10.1 (26.8)
Loss on revaluation relating to leased investment
properties(3) (0.7) (0.9)
Gain on disposal of properties(4) 0.0 (4.8)
Loss/(gain) on revaluation of investment property
from associates and related tax(5) 0.4 (1.4)
Other adjusting items(6) 1.8 3.0
Change in fair value of financial derivatives(7) 0.8 (1.2)
------------------------------------------------------- ------------- -------------
Adjusted profit before tax (8) 52.2 43.6
Adjustments for:
Foreign exchange effects(9) - 0.3
Depreciation and amortisation (excluding depreciation
relating to IFRS 16)(10) 1.7 1.7
Amortisation of financing fees(11) 1.5 1.6
Adjustment in respect of IFRS 16(12) 0.5 1.5
Current taxes incurred(13) (2.9) (0.3)
Add back current tax relating to disposals(14) - 0.1
------------------------------------------------------- ------------- -------------
Funds from operations (15) 53.0 48.5
------------------------------------------------------- ------------- -------------
Notes:
(1) Presents profit before tax which has been extracted from the
unaudited condensed interim 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 unaudited condensed
interim consolidated income statement within the consolidated
financial statements.
(3) Presents the gain or loss on revaluation relating to leased
investment properties which has been extracted from note 12 within
the consolidated financial statements.
(4) Presents the gain or loss on disposal of properties which
has been extracted from the unaudited condensed interim
consolidated income statement within the consolidated financial
statements.
(5) Presents the gain or loss on revaluation of investment
property relating to associates and related tax which has been
extracted from note 10 within the consolidated financial
statements.
(6) Presents the total adjusting items which has been extracted
from note 10 within the consolidated financial statements.
(7) Presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited condensed
interim consolidated income statement within the consolidated
financial statements.
(8) Presents the adjusted profit before tax for the period.
(9) Presents the net foreign exchange gains or losses as
included in other administration costs in note 5 within the
consolidated financial statements.
(10) Presents depreciation of plant and equipment and
amortisation of intangible assets which have been extracted from
note 5 within the consolidated financial statements.
(11) Presents amortisation of capitalised finance costs which
has been extracted from note 8 within the consolidated financial
statements.
(12) Presents the differential between the expense recorded in
the unaudited condensed interim consolidated income statement for
the period relating to head leases in accordance with IFRS 16
amounting to EUR2.2m (30 September 2022: EUR2.8m) and the actual
cash expense recorded in the unaudited condensed interim
consolidated statement of cash flow for the period amounting to
EUR1.7m (30 September 2022: EUR1.3m).
(13) Presents the total current income tax which has been
extracted from note 9 within the consolidated financial
statements.
(14) Presents the current income tax charge relating to disposal
of investment properties which has been extracted from note 9
within the consolidated financial statements.
(15) Presents the funds from operations for the period.
Glossary of terms
Adjusted earnings is the earnings attributable to the owners of the Company, adjusted for the effect of the
after tax 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, NCI relating to
revaluation
(net of related tax), changes in fair value of derivative financial instruments (net of
related
tax and NCI), revaluation gains/losses relating to leased investment properties and adjusting
items (net of related tax and NCI)
---------------------- ----------------------------------------------------------------------------------------------
Adjusted net is the assets attributable to the owners of the Company adjusted for derivative financial
asset value instruments at fair value and net deferred tax liabilities/assets
---------------------- ----------------------------------------------------------------------------------------------
Adjusted profit is the reported profit before tax adjusted for the effect of gains/losses on revaluation of
before tax investment properties, gains/losses on revaluation relating to lease investment properties,
gains/losses on disposal of properties, gains/losses on revaluation of investment property
relating to associates and related tax, other adjusting items and changes in fair value of
derivative financial instruments
---------------------- ----------------------------------------------------------------------------------------------
Annualised is the income generated by a property less directly attributable costs at the date of
acquisition acquisition
net operating expressed in annual terms. Please see "annualised rent roll" definition below for further
income explanatory information
---------------------- ----------------------------------------------------------------------------------------------
Annualised is the contracted rental income of a property at the date of acquisition expressed in annual
acquisition terms. Please see "annualised rent roll" definition below for further explanatory information
rent roll
---------------------- ----------------------------------------------------------------------------------------------
Annualised is the contracted rental income of a property at a specific reporting date expressed in annual
rent roll terms. Unless stated otherwise the reporting date is 30 September 2023. Annualised rent roll
should not be interpreted nor used as a forecast or estimate. Annualised rent roll differs
from rental income described in note 4 of the Interim Report and reported within revenue in
the unaudited condensed interim 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 is the return calculated by combining the movement in investment property value net of capex
total return with the total net operating income less bank interest over a specified period of time
---------------------- ----------------------------------------------------------------------------------------------
EPRA earnings is earnings after adjusting for (where applicable) 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 is the ratio of net debt to total property value as defined in note 21. It includes all
value 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,
value deferred tax relating to valuation movements and derivative 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 is the net asset value after adjusting for (where applicable) derivative financial instruments
assets at fair value, deferred tax relating to valuation movements (just the part of the portfolio
that the Group intends to hold should be excluded) and derivative financial instruments,
goodwill
and intangible assets as per the note reference in the unaudited condensed interim
consolidated
statement of financial position, including the amounts of the above related to the investment
in associates
---------------------- ----------------------------------------------------------------------------------------------
EPRA net disposal is the net asset value after adjusting for (where applicable) goodwill and the fair value
value of fixed interest rate debt, including the amounts of the above related to the investment
in associates
---------------------- ----------------------------------------------------------------------------------------------
EPRA net initial is the annualised rent roll based on the cash rents passing at reporting date, less
yield 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 is adjusted profit before tax adjusted for depreciation and amortisation (excluding
operations 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 is the ratio of principal value of total debt to the aggregated value of investment property
to value ratio
---------------------- ----------------------------------------------------------------------------------------------
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
---------------------- ----------------------------------------------------------------------------------------------
LTIP Long Term Incentive Plan
---------------------- ----------------------------------------------------------------------------------------------
LTV loan to value
---------------------- ----------------------------------------------------------------------------------------------
Net loan to is the ratio of principal value of total debt less cash, excluding that which is restricted
value ratio in contractual terms, to the aggregate value of investment property
---------------------- ----------------------------------------------------------------------------------------------
Net operating is the rental, service charge and other income generated from investment and managed
income 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 is an estimate of the rate of return based on operating cash flows and taking into
flow on investment consideration
(geared) debt
---------------------- ----------------------------------------------------------------------------------------------
Operating cash is an estimate of the rate of return based on operating cash flows
flow on investment
(ungeared)
---------------------- ----------------------------------------------------------------------------------------------
Operating profit is the net operating income adjusted for gains/losses on revaluation of investment properties,
gains/losses on disposal of properties, movement in expected credit loss provision,
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 EUR
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 as set out on page 88 of the Group's Annual Report and Accounts 2023
Team
---------------------- ----------------------------------------------------------------------------------------------
SIP Share Incentive Plan
---------------------- ----------------------------------------------------------------------------------------------
Total debt is the aggregate amount of the interest-bearing loans and borrowings
---------------------- ----------------------------------------------------------------------------------------------
Total shareholder is the return obtained by a shareholder calculated by combining both movements in adjusted
accounting NAV per share and dividends paid
return
---------------------- ----------------------------------------------------------------------------------------------
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 is the weighted effective rate of interest of loan facilities expressed as a percentage
cost of debt
---------------------- ----------------------------------------------------------------------------------------------
Weighted average is the weighted average time to repayment of loan facilities expressed in years
debt expiry
---------------------- ----------------------------------------------------------------------------------------------
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 Building
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
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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END
IR FFFSILALALIV
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