TIDMSRE
RNS Number : 9851G
Sirius Real Estate Limited
21 November 2022
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
21 November 2022
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius", the "Group" or the
"Company")
Condensed consolidated financial results for the six months
ended 30 September 2022
H1 2023 TRADING IN LINE WITH EXPECTATIONS, WITH CONTINUED RENTAL
GROWTH AND STRONG BALANCE SHEET
Sirius Real Estate, the leading owner and operator of branded
business and industrial parks providing conventional space and
flexible workspace in Germany and the U.K., provides an update on
trading for the six months to 30 September 2022.
Strong balance sheet and continued rental growth
Rental growth underpins FFO growth and dividend increases
-- Total revenue increased by 47.7% to EUR130.6 million (30 September 2021: EUR88.4 million)
-- Like-for-like annualised rent roll increased by 2.4% in
Germany during the period, to EUR115.2 million (31 March 2022:
EUR112.5 million), and 4.1% in the UK, to GBP46.5 million (31 March
2022: GBP44.7 million)
-- 47.0% growth in funds from operations(1) to EUR48.5 million
(30 September 2021: EUR33.0 million)
-- Profit before tax of EUR75.7 million (30 September 2021:
EUR78.2 million) with a 78.7% uplift in underlying profit to
EUR47.9 million (30 September 2021: EUR26.8 million) when adjusted
for EUR27.8 million of property valuation gains
-- Adjusted earnings per share, which excludes valuation
movements as well as exceptional items, increased 26.6% to 3.71c
per share (30 September 2021: 2.93c) reflecting the positive year
on year operational development
-- 32.4% increase in dividend per share to 2.70c (30 September 2021: 2.04c)
-- Continued valuation and NAV growth with NAV per share
increasing 1.8% to 103.90c (31 March 2022: 102.04c) with adjusted
NAV per share increasing by 2.0% to 110.72c (31 March 2022:
108.51c)
-- Valuation increase of EUR20.3 million and GBP6.3 million
(EUR7.5 million) representing a 1.8% and 2.1% like-for-like
valuation growth in Germany and the UK respectively
-- Increase in owned investment property to EUR2,081.4 million
(31 March 2022: EUR2,074.9 million)
Early loan refinancing further strengthens balance sheet
-- Completed the early financing of the new EUR170 million
Berlin Hyp AG loan facility approximately one year ahead of
maturity, with a seven year facility available 1 November 2023 to
31 October 2030 at a 4.26% fixed interest rate which increases the
Company's weighted average debt maturity to five years upon its
availability
-- Book value of unencumbered properties remaining at EUR1.6
billion (31 March 2022: EUR1.6 billion)
-- Weighted average cost of debt decreasing to 1.3% in the period (31 March 2022: 1.4%)
-- Net LTV of 41.0% (31 March 2022: 41.6%), including
unrestricted cash balance of EUR138.6 million (31 March 2022:
EUR127.3 million)
-- Fitch reaffirmed its BBB investment grade rating with "Stable Outlook" on 4 November 2022
Successful asset recycling
-- Disposal of two mature assets at a premium to book value in
Magdeburg, Germany, for EUR13.8 million and Camberwell, UK, for
EUR18.8 million which together represent a 9.4% premium to book
value at the time of agreeing the sale
-- These proceeds will be recycled into two value-add
acquisition assets in the second half of the financial year
amounting to EUR43.7 million in Düsseldorf (EUR39.8 million) and
Dreieich (EUR3.9 million)
Outlook
-- Sirius remains resilient and well positioned to navigate the
current macro-economic climate due to its intensive asset
management initiatives and the fixed priced contracts it has
secured for a significant portion of its utility demands in both
Germany and the UK, which should shelter its diverse tenant base
from some of the higher operating costs that most industrial
companies are facing
-- As such, the Company continues to expect to trade in line
with consensus and management expectations for the full year
Commenting on the period, Andrew Coombs, Chief Executive Officer
of Sirius Real Estate, said:
"It has been another solid six months for the business, with our
portfolio continuing to demonstrate its resilience in both Germany
and the UK. Dividend and FFO growth is being supported by strong
trading, with continued demand for space at our properties leading
to rent roll increases and a robust leasing pipeline taking this
positive momentum into the second half. There are also many
opportunities within our portfolio to unlock value and grow rental
income through our successful asset management platform.
The Company has taken a number of proactive measures to identify
and mitigate against future potential risks in light of current
market conditions. These include securing the Company's EUR170m
Berlin Hyp AG facility one year in advance of its due date, as well
as agreeing fixed price contracts for a significant proportion of
our utilities and slowing our acquisition pipeline. These early and
strategic efforts enable the business to remain extremely-well
positioned going forwards and we remain focused on growing our FFO
organically, in order to continue to deliver attractive
risk-adjusted returns to shareholders."
1 See note 25 of the Interim Report 2022.
2 Interim dividend representing 65% of FFO (30 September 2021: 65% of FFO).
3 See note 11 of the Interim Report 2022.
Webcast Presentation
Webcast Conference
There will be an audio webcast presentation for analysts at
08.30am BST / 10.30am SAST today, hosted by Andrew Coombs, Chief
Executive Officer of Sirius Real Estate, and Alistair Marks, Chief
Investment Officer and Interim Chief Financial Officer.
If you would like to join the webcast please use the
registration link below:
https://stream.brrmedia.co.uk/broadcast/6319d2c9b07f2a3ead2afd74
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Alistair Marks, CIO and Interim CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / James McEwan / Talia Shirion
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main and premium
market of the London Stock Exchange and the main board of the JSE
Limited. It is a leading owner and operator of branded business and
industrial parks providing conventional space and flexible
workspace in Germany and the UK. As of 31 March 2022, and following
the acquisition of BizSpace, a leading UK provider of regional
flexible workspace, the Group's portfolio comprised 140 assets let
to 9,452 tenants with a total book value of over EUR2 billion,
generating a total annualised rent roll of EUR167.1 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 name and alongside a range of branded
products. The business then seeks to reconfigure and upgrade
existing and vacant space to appeal to the local market via
intensive asset management and investment and may then choose to
selectively refinance or dispose of assets once they meet maturity,
to release capital for new investment. This active approach allows
the Company to generate attractive returns for shareholders through
growing rental income, improving cost recoveries and capital
values, and enhancing returns through securing efficient financing
terms. The Company has a strong track record for growing its income
and has delivered like-for-like rent roll growth in excess of 5%
for the last eight consecutive years.
For more information, please visit:
www.sirius-real-estate.com
Follow us on LinkedIn at
https://www.linkedin.com/company/siriusrealestate/
Follow us on Twitter at @SiriusRE
JSE Sponsor
PSG Capital
Business update
Strong trading performance despite uncertain market
conditions
Profit before tax
EUR75.7m
(3.2)%
2022 75.7
2021 78.2
Total revenue
EUR130.6m
47.7%
2022 130.6
2021 88.4
Funds from operations1
EUR48.5m
47.0%
2022 48.5
2021 33.0
Total annualised rent roll
EUR167.9
68.4%
2022 167.9
2021 99.7
Interim dividend
2.70c per share
32.4%2
2022 2.70
2021 2.04
Basic earnings per share
6.00c per share
(6.8)%
2022 6.00
2021 6.44
1 See note 25 of the Interim Report 2022.
2 Interim dividend representing 65% of FFO (30 September 2021: 65% of FFO).
Overview
Sirius had an exceptional trading period in the first six months
of the financial year ending 31 March 2023, considering the
economic backdrop and sentiment in both the German and UK
commercial property markets as further outlined in its principal
risks and uncertainties in note 2(f). Total revenue has increased
47.7% to EUR130.6 million (30 September 2021: EUR88.4 million) from
both substantial organic growth as well as the positive impact of
acquisitions, particularly with respect to the BizSpace purchase
which completed in November 2021.
Organically, the Company has seen a 2.4% increase in
like-for-like rent roll in Germany and a 4.1% increase in the UK
for the six month period and, given the leasing momentum we are
seeing at the start of the second half, the Company seems set for
another year of greater than 5% like-for-like rent roll increase as
it has achieved for the last eight years. This has helped the Group
report a 47.0% growth in FFO to EUR48.5 million (30 September 2021:
EUR33.0 million) which has supported a 32.4% increase in the
interim dividend to 2.70c per share compared to the 2.04c for H1
last year. Sirius has also seen NAV per share growth of around 2%
in the six month period which was helped by a 1.2% like-for-like
uplift in the valuation of owned investment property to EUR2,081.4
million from EUR2,074.9 million as at 31 March 2022.
Additionally, the Company continued to fuel its future organic
growth potential with some excellent asset recycling in the period
which also helped demonstrate the resilience of the Company's asset
valuations. The completion of the Magdeburg (Germany) and
Camberwell (UK) sales in the period and at premium to book values,
proves that the Group's assets remain desirable, and replacing
these non-core and mature assets with the Düsseldorf and Dreieich
assets in the second half of the financial year gives us the
opportunity to unlock substantial income and value growth potential
through our asset management platform.
Like-for-like annualised rent roll increased to EUR115.2 million
(31 March 2022: EUR112.5 million) in Germany which was driven by a
3.3% increase in like-for-like rate per sqm to EUR6.53 (31 March
2022: EUR6.32). In the UK, a strong increase in like-for-like rate
per sq ft of 8.4% to GBP12.64 (31 March 2022: GBP11.67) was also
the driver of the like-for-like rent roll increase to GBP46.5
million (31 March 2022: GBP44.7 million).
The Company has also further strengthened its balance sheet
through the financing of the EUR170 million Berlin Hyp AG loan
facility, for a period of seven years to 31 October 2030. This
extends Sirius' average debt maturity to 5.0 years once it comes
into effect on 1 November 2023. Sirius' average cost of debt, which
now sits at 1.3%, will increase by around 60bps when this new
facility is in place to 1.9%, maintaining reasonable cost of debt
levels. The early financing of the loan demonstrates the Company's
excellent relationship with its financiers and its ability to
refinance or take out new facilities at all stages of the property
cycle.
Looking forward, the Company is confident it can continue to
grow FFO organically through its intensive asset management
initiatives as well as through further asset recycling. In
addition, while the Company will continue to reduce its net LTV, it
will also seek to exploit any significantly accretive deals that it
comes across. However, the primary focus will be optimising the
significant growth opportunity which the existing portfolio
continues to offer, especially from the recently acquired assets,
which will continue to fuel this growth over the next few years.
Furthermore, asset recycling and acquisitions will only be
completed when they significantly enhance this growth whilst also
being in line with the Group's LTV objectives.
Financial performance
The Company reported a profit before tax for the six month
period of EUR75.7 million (30 September 2021: EUR78.2 million)
which includes EUR27.8 million of gains* from investment property
revaluations of its owned assets (30 September 2021: EUR51.4
million). Total revenue, which comprises rent, fee income from
Titanium, other income from investment properties and service
charge income, increased by 47.7% to EUR130.6 million (30 September
2021: EUR88.4 million).
As a result, FFO for the six months grew to EUR48.5 million
(4.15c per share) compared to EUR33.0 million (3.14c per share) for
the same period in the prior year, an increase of 32.2% on a per
share basis, which feeds through to the increase in interim
dividend. Basic earnings of EUR70.0 million and 6.0c per share
compares to EUR67.7 million and 6.44c in the prior year reflecting
the lower valuation increases coupled with a small lag on the asset
recycling between when assets were sold and the equity reinvested.
Adjusted EPS, which excludes valuation movements as well as
exceptional items, increased by 26.6% to 3.71c per share from 2.93c
in the prior year reflecting the positive year on year operational
development.
* Net of capex and adjustments in relation to lease incentives and broker fees.
The following table sets out the key earnings per share
metrics:
Table 1: Earnings per share
30 Sept 2022 30 Sept 2021
---------------------------------- ----------------------------------
earnings cents earnings cents Change
EUR000 no. of shares per share EUR000 no. of shares per share%
----------------- -------- ------------- --------- -------- ------------- --------- -----
Basic EPS 70,008 1,167,383,139 6.00 67,738 1,052,600,936 6.44 (6.8)%
Diluted EPS 70,008 1,183,403,147 5.92 67,738 1,070,514,305 6.33 (6.5)%
Adjusted EPS 43,294 1,167,383,139 3.71 30,862 1,052,600,936 2.93 26.5%
Basic EPRA EPS 41,226 1,167,383,139 3.53 32,550 1,052,600,936 3.09 14.2%
Diluted EPRA EPS 41,226 1,183,403,147 3.48 32,550 1,070,514,305 3.04 14.6%
----------------- -------- ------------- --------- -------- ------------- --------- ------
The Directors have chosen to disclose EPRA earnings, which are
widely used alternative metrics to their IFRS equivalents (further
details on EPRA best practice recommendations can be found at
www.epra.com). Refer to note 2(c) for further information.
The usual positive impact we would expect to see from
acquisitions made during the period was much lower than expected.
This is because the investment market has faced headwinds due to
interest rate increases, inflation and uncertainty of utilities
supply as a result of the Ukraine conflict, which led Sirius to
make the decision to hold back on deploying its cash reserves in
order to exercise discipline before fully investing again. As a
result, investment activity for both Sirius and the market in
general has been subdued over the last six months. The Company did,
however, complete the acquisitions of a small asset in Potsdam for
EUR0.9 million which is strategically located at the entrance to
one of Sirius' existing business parks in the period, as well as
two business parks worth EUR43.7 million in Düsseldorf (EUR39.8
million) and Dreieich (EUR3.9 million) in October 2022. Due to the
timing of completions, the impact from acquisitions will only
benefit the second half of this financial year. As mentioned above,
these acquisitions were predominantly funded by the sale of Sirius'
Magdeburg asset for EUR13.8 million, a parcel of non-income
producing land on the Company's books at EUR0.25 million, for EUR1
million, and the sale of its Camberwell asset for GBP16.0 million
(EUR18.8 million), at a 94% premium to the asset's value at the
time of the BizSpace purchase last year. Whilst the sale of these
assets at a premium to their book value demonstrates the Company's
ability to realise the value of its assets in all market
conditions, the loss of income from these assets will impact the
financial year.
Net asset value per share ("NAV") grew by 1.8% to 103.90c (31
March 2022: 102.04c) in the period whilst adjusted net asset value
per share ("adjusted NAV") increased by 2.0% to 110.72c (31 March
2022: 108.51c). EPRA net tangible assets ("EPRA NTA") per share
increased by 2.0% to 109.47c (31 March 2022: 107.28c) with the main
driver of these increases attributable to valuation uplift more
than offsetting the capex deployed in the period. The valuation
metrics are described in more detail below and the movement in net
asset value per share in the period can be seen in the following
table:
Table 2: Net assets per share
cents
per share
------------------------------------------------------- ----------
NAV as at 31 March 2022 102.04
------------------------------------------------------- ----------
Profit after tax 3.71
Gain on revaluation of investment properties 2.38
Deferred tax charge (0.46)
Scrip and cash dividend paid (2.51)
EBT share purchase and LTIP vesting 0.04
Foreign currency (1.67)
Adjusting items 0.37
------------------------------------------------------- ----------
NAV per share as at 30 September 2022 103.90
------------------------------------------------------- ----------
Deferred tax and adjustments to financial derivatives* 6.82
------------------------------------------------------- ----------
Adjusted NAV per share as at 30 September 2022 110.72
------------------------------------------------------- ----------
EPRA adjustments* (1.25)
------------------------------------------------------- ----------
EPRA NTA per share as at 30 September 2022 109.47
------------------------------------------------------- ----------
* See note 11 of the Interim Report.
Lettings and rental growth
Rental growth
Germany
In Germany, like-for-like annualised rent roll increased by 2.4%
in the six month period to EUR115.2 million (31 March 2022:
EUR112.5 million). The tenant retention rate at 65% was slightly
lower than the 71% recorded for the same period last year. However,
with continued strong demand for space across our assets, the
79,872 sqm of new lettings, bringing in EUR8.3 million of
annualised rental income, more than offset 91,963 sqm of moveouts
and the EUR8.2 million of income lost. This, combined with the
EUR2.6 million increase in annualised rent roll from existing
tenants, which came from contracted increases and uplifts on
renewal, has driven the like-for-like average rental rate to
EUR6.53 per sqm from EUR6.32 per sqm at 31 March 2022, a 3.3%
increase. This highlights the strong and diverse occupier demand
within the German portfolio as well as Sirius' ability to capture
the benefits of a high inflation rate. Like-for-like occupancy
dropped slightly to 83.8% from 84.5% at 31 March 2022 due to some
large known move-outs at three sites in Germany, where the Company
is confident of replacing these tenants quickly. The asset
recycling mentioned above, where high-occupied assets are sold and
replaced with assets with similar income but high vacancy and
opportunity, will further reduce occupancy levels and increase the
opportunity for further income, profit, cash flow and valuation
improvements going forward.
The movement in annualised rent roll is described in more detail
below:
Table 3a: Annualised rent roll - Germany
EURm
----------------------------------------------- -----
Annualised rent roll as at 31 March 2022 113.7
Acquisitions -
Disposals (1.2)
Move-outs (8.2)
Move-ins 8.3
Contracted uplifts and increases upon renewals 2.6
----------------------------------------------- -----
Annualised rent roll as at 30 September 2022 115.2
----------------------------------------------- -----
UK
In the UK, like-for-like annualised rent roll increased by 4.1%
in the six month period to GBP46.5 million (31 March 2022: GBP44.7
million). This was driven by an 8.4% increase in like-for-like
average rental rate to GBP12.64 per sq ft from GBP11.67 per sq ft
at 31 March 2022, highlighting the high reversion potential within
the UK portfolio which is realisable due to continued strong
occupier demand. Similar to what happened in Germany, the
like-for-like occupancy reduced to 87.0% from 90.5% in the period
due to a combination of large known move-outs, and the decision to
proactively manage the customer base in order to take advantage of
the high rent increases in the UK industrial market and high demand
for flexible workspace in the UK as well as bringing in new tenants
at higher rates.
Table 3b: Annualised rent roll - UK
GBPm
--------------------------------------------- -----
Annualised rent roll as at 31 March 2022 45.1
Disposals (0.4)
Move-outs (8.5)
Move-ins 8.0
Rental uplifts 2.3
--------------------------------------------- -----
Annualised rent roll as at 30 September 2022 46.5
--------------------------------------------- -----
Enquiries and new lettings
Germany
In Germany, the marketing platform generated a total 7,554
enquiries in the six month period for assets within the wholly
owned portfolio which compares to 8,036 enquiries for the same
period in the prior year. This was converted into an average of 145
deals per month which was slightly lower than the 175 deal monthly
average for the six months ended 31 March 2022. The total sqm let
in the period was 79,872, which was also slightly lower than the
83,757 sqm let in the same period last year; however, the average
deal size at 92 sqm per deal was higher than the 82 sqm per deal
last year. Details of monthly enquiries plus letting numbers and
sqm volumes are set out in the two tables below:
Table 4a: Enquiries - Germany
No. of No. of
enquiries enquiries
six months six months
to to Change
Sept 2022 Sept 2021 %
---------- ----------- ----------- -------
April 1,035 1,235 (16.2)%
May 1,304 1,333 (2.2)%
June 1,175 1,341 (12.4)%
July 1,298 1,305 (0.5)%
August 1,383 1,435 (3.6)%
September 1,359 1,387 (2.0)%
---------- ----------- ----------- -------
Total 7,554 8,036 (6.0)%
---------- ----------- ----------- -------
Table 5a: Deals - Germany
New deals New deals sqm sqm Average sqm Average sqm
six months to six months to six months to six months to six months to six months to
Sept 2022 Sept 2021 Sept 2022 Sept 2021 Sept 2022 Sept 2021
---------- -------------- -------------- -------------- -------------- -------------- --------------
April 172 219 12,697 13,463 74 61
May 87 170 10,448 15,953 120 94
June 148 166 11,711 12,629 79 76
July 125 139 13,945 15,185 112 109
August 167 182 12,411 11,877 74 65
September 170 175 18,659 14,650 110 84
---------- -------------- -------------- -------------- -------------- -------------- --------------
Total 869 1,051 79,871 83,757 92 82
---------- -------------- -------------- -------------- -------------- -------------- --------------
UK
Despite a challenging market, driven by market uncertainty over
inflation, the UK operating platform generated a total 8,056
enquiries during the period for an average of 1,343 per month.
These enquiries were translated into 377 new deals in the first
half of the year, an average of 63 per month, which was lower than
the 73 deal monthly average for the six months ended 31 March 2022.
The volume of sq ft let in the period was 161,470, lower than the
186,974 sq ft let in the second half of last year; however, the
average deal size was slightly higher at 429 sq ft per deal
compared to 423 sq ft per deal last year. Details of monthly
letting numbers and sqm volumes are set out in the table below:
Table 4b: Enquiries - UK
No. of enquiries
six months to
Sept 2022
---------- ----------------
April 1,494
May 1,548
June 1,319
July 1,181
August 1,158
September 1,356
---------- ----------------
Total 8,056
---------- ----------------
Table 5b: Lettings - UK
New deals sq ft Average sq ft
six months to six months to six months to
Sept 2022 Sept 2022 Sept 2022
---------- -------------- -------------- --------------
April 70 37,233 532
May 65 30,445 468
June 64 25,067 392
July 51 18,981 372
August 55 25,114 457
September 72 24,630 342
---------- -------------- -------------- --------------
Total 377 161,470 428
---------- -------------- -------------- --------------
Comparatives for the six months ended September 2021 are not
available as these relate to the pre-acquisition period of
BizSpace.
Cash collection
Germany
Billing tenants higher rents is one thing but this is of no
value unless they actually pay. The Company continues to achieve
high levels of cash collection, benefiting from an experienced
in-house team of professionals in Germany which has grown in
expertise throughout the Covid-19 pandemic and continues to
maintain close relationships with tenants. During the period under
review Sirius has continued to work with its tenants as they adapt
to new ways of working, their related space requirements and
inflationary pressures and help them to actively manage their debt.
Cash collection performance remained strong in the six month period
to 30 September 2022 relating to rent and service charge
prepayments and is detailed in the following table (excluding
VAT):
Table 6a: Cash collection to 30 September 2022 - Germany
Invoiced Outstanding Collection
EUR000 EUR000 %
---------- -------- ----------- ----------
April 14,527 188 98.7%
May 14,530 184 98.7%
June 14,684 240 98.4%
July 14,328 261 98.2%
August 14,054 347 97.5%
September 14,399 1,165 91.9%
---------- -------- ----------- ----------
Total 86,522 2,385 97.2%
---------- -------- ----------- ----------
In the six month period to 30 September 2022 the Company billed
a total of EUR86.5 million (excluding VAT) to tenants of which
EUR84.1 million or 97.2% was collected. The Company expects to
collect the majority of the EUR2.4 million outstanding debts, of
which
EUR0.5 million were collected in early October, with the
remaining EUR1.9 million expected to be collected through its
regular collection activities over the coming months. When
considering the EUR0.5 million collected in early October, the cash
collection rate increases to 97.8% for the six month period.
Write-offs with a value of less than EUR5,000 relating to the
period under review were recorded, with the twelve month rolling
balance amounting to EUR45,000. The twelve month rolling cash
collection rate was 98.0% in line with the 98.4% reported for the
twelve month period to 31 March 2022 and the 98.2% rolling cash
collection rates for the comparative period in the prior year. This
consistency in cash collection demonstrates the benefits of a
well-diversified portfolio and tenant base that represents a wide
range of industries combined with the asset management expertise of
the Company's internal operating platform.
UK
BizSpace also continued to maintain high cash collection rates
through the team's active management of its tenant base. Of the
GBP24.3 million (excluding VAT) which was billed in the period,
GBP24.0 million or 98.6% was collected. The remaining GBP0.3
million is expected to be collected in the normal course of regular
collection activities over the coming months. The Company wrote off
less than GBP11,000 in the period under review.
Table 6b: Cash collection to 30 September 2022 - UK
Invoiced Outstanding Collection
GBP000 GBP000 %
---------- -------- ----------- ----------
April 3,833 - 100%
May 3,750 - 100%
June 4,667 - 100%
July 3,917 1 100%
August 3,583 10 99.7%
September 4,583 318 93.1%
---------- -------- ----------- ----------
Total 24,333 329 98.6%
---------- -------- ----------- ----------
Portfolio valuation
Group
Taking into account investment property relating to leased
assets the total investment property book value as at 30 September
2022 was EUR2,105.0 million (31 March 2022: EUR2,100.0 million). In
accordance with IFRS 16, the Group recognises lease liabilities of
EUR23.6 million relating to leases on assets meeting the definition
of investment property. Accordingly, a revaluation loss of EUR0.9
million representing the fair value adjustment in the year was
recorded in the income statement.
The movement in book value in the period for both Germany and
the UK is set out in the table below:
Table 7: Movement in book value in the period
German investment German investment UK investment UK investment Investment
property - owned property - leased property - owned property - leased property - total
EUR000 EUR000 EUR000 EUR000 EUR000
--------------------- ----------------- ------------------ ----------------- ------------------ -----------------
Investment properties
at book value as at
31 March 2022 1,623,157 12,064 451,769 13,014 2,100,004
Additions relating to
owned investment
properties 832 - - 832
Capex investment and
capitalised broker
fees 9,593 - 1,943 - 11,536
Disposals - - (13,792) - (13,792)
Reclassified as
investment
properties held for
sale (1,000) - - (1,000)
Gain on revaluation
above capex
investment and
broker fees 20,306 - 7,448 - 27,754
Deficit on
revaluation relating
to leased investment
properties - (897) - (22) (919)
Adjustment in respect
of lease incentives (23) - - - (23)
Currency effects - - (18,801) (545) (19,346)
--------------------- ----------------- ------------------ ----------------- ------------------ -----------------
Investment properties
at book value as at
30 September 2022 1,652,865 11,167 428,567 12,447 2,105,046
--------------------- ----------------- ------------------ ----------------- ------------------ -----------------
Germany
The increase in value of the German portfolio by EUR29.7 million
was made up of EUR0.8 million of acquisitions, EUR9.6 million of
capex investment and EUR20.3 million of valuation uplift, offset by
EUR1.0 million transfer to assets held for sale on the back of the
2.4% increase in like-for-like rental income. The portfolio is now
valued on a gross yield of 7.0% which has increased from 6.9% at 31
March 2022. Despite all the pressures on the property market in
Germany, yields have been robust for the higher yielding asset
classes with sellers preferring to take assets off the market
rather than reduce prices significantly. Nevertheless, Sirius is
particularly well positioned to absorb any yield expansion in the
asset class due to the value-add potential remaining within its
portfolio and the fact that its assets are valued at yields which
are much higher than where similar assets have been trading at over
the last few years. Sirius' business model of upgrading and
repositioning assets which transforms underperforming assets with
issues through its capex programme into much more desirable
institutional type assets is one which works very effectively when
the market is strong as well as when it is more challenging.
As at the period end, just over 60% of the total portfolio
comprised assets benefiting from both income and value-add
potential which will be realised through Sirius' intensive asset
management and selective capex investment over the next few years.
These assets now have an average occupancy of 78.8% and are valued
on a gross yield of 7.3% and compare to the mature assets which are
on average around 95.8% occupied and valued on a gross yield of
6.5%. The unlocking of the potential in the value-add portfolio
will come from filling up sites and stabilising their rental
income. This will be achieved through our strategy of making the
properties much more appealing to a wider market which includes the
lower cost of capital investors who buy these types of assets on
much tighter yields. Hence, we would expect to see the gap between
the yields of the value-add assets and mature assets tighten as the
value-add assets approach maturity. This is why the capex
programme, which has so successfully and consistently improved the
occupancy, rental income, service charge cost leakage and overall
quality of the rent roll and site in general, has proven to be
extremely value accretive as well. The comparison of the key
metrics between the value-add and mature portfolios can be seen in
the table below.
Table 8a: Book value valuation metrics - Germany
Annualised Book Vacant Rate
rent roll value NOI Capital Gross Net space per sqm Occupancy
Owned properties EURm EURm EURm EURvalue/sqm yield yield sqm EUR %
------------------- ---------- ------- ------ -------------- ------- ------- ------- -------- -----------
Value-add assets 75.0 1,032.0 67.2 761 7.3% 6.5% 262,040 6.42 78.8%
Mature assets 40.2 621.9 38.6 1,347 6.5% 6.2% 21,671 6.76 95.8%
Other - - (0.8) - - - - - -
------------------- ---------- ------- ------ -------------- ------- ------- ------- -------- -----------
Total 115.2 1,653.9 105.0 910 7.0% 6.3% 283,711 6.53 83.8%
------------------- ---------- ------- ------ -------------- ------- ------- ------- -------- -----------
UK
The negative movement in owned investment property of the UK
portfolio of EUR23.2 million was made up of EUR13.8 million of
disposal, a net EUR7.5 million valuation uplift, after taking into
account EUR1.9 million of capital expenditure and EUR18.8 million
foreign currency translation adjustment.
The 30 September 2022 book value of the UK portfolio, which was
independently valued by Cushman & Wakefield LLP, of GBP378.4
million (31 March 2022: GBP370.4 million) represents an average
gross yield of 12.3% (31 March 2022: 11.8%) which translates to a
net yield of 8.7% (31 March 2022: 8.0%). The 2.2% valuation
increase compared to 31 March 2022 was driven by organic increases
in annualised rent roll of 4.1% reflecting the ability of the
operating platform to consistently grow income.
The average capital value per sqm of the portfolio of GBP90 per
sq ft remains well below replacement cost and illustrates the
potential for further growth from transformative investment through
leveraging the Group's capex investment programme. The book value
valuation metrics are detailed in the table below:
Table 8b: Book value valuation metrics - UK
Annualised Book Vacant Rate
rent roll value NOI Capital Gross Net space per sq ft Occupancy
Owned properties GBPm GBPm GBPm GBPvalue/sq ft yield yield sq ft GBP %
------------------- ---------- ------- ------ ---------------- ------- ------- ------- ---------- -----------
UK portfolio 46.5 378.4 32.9 90 12.3% 8.7% 547,033 12.64 87.0%
------------------- ---------- ------- ------ ---------------- ------- ------- ------- ---------- -----------
German capex investment programme
The Group's capex investment programme on the German assets has
historically been focused on the transformation of the poor-quality
vacant space that is typically acquired at very low cost due to it
being considered as structural vacancy by former owners. The
transformation and take up of this space has not only resulted in
significant income and valuation improvements for the Company but
also has yielded significant improvements in service charge cost
recovery and therefore further enhanced the improvements to net
operating income. The programme started in 2015 and to date 398,393
sqm of space has been completed for an investment of EUR60 million
and, at 30 September 2022, this space was generating EUR26.4
million in annualised rent roll (at 79% occupancy) plus the
substantial improvement in the recovery of service charge costs.
This transformed space has also been the major contributor towards
the large valuation increases seen on the portfolio over the last
7.5 years.
In addition to the space that has been completed and let or is
currently being marketed, a total of approximately 57,765 sqm of
space is either in progress of being transformed or is awaiting
approval to commence transformation. A further EUR14.9 million is
expected to be invested into this space on top of the EUR1.2
million already spent, and, based on achieving budgeted occupancy,
is expected to generate incremental annualised rent roll in the
region of EUR4.5 million. The details of the capex programme on
this low-quality vacant space are shown below:
Table 10: Capex investment programme
Annualised
-----------------
rent roll Rate
Annualised increase per sqm
rent roll achieved to Occupancy Rate achieved to
Investment Actual increase September achieved to per sqm September
budgeted spend budgeted 2022 Occupancy September budgeted 2022
New capex
investment
programme
progress sqm EURm EURm EURm EURm budgeted 2022 EUR EUR
----------------- ------- ---------- ------ ---------- ----------- --------- ----------- -------- -----------
Completed 398,393 65.2 60.0 24.3 26.4 82% 79% 6.24 7.04
In progress 35,046 10.0 1.2 3.0 0.0 83% - 8.48 -
To commence in
next financial
year 22,719 6.1 - 1.5 0.0 81% - 6.71 -
----------------- ------- ---------- ------ ---------- ----------- --------- ----------- -------- -----------
Total 456,158 81.3 61.2 28.8 26.4 82% 79% 6.44 -
----------------- ------- ---------- ------ ---------- ----------- --------- ----------- -------- -----------
In addition to the capex investment programme on acquired
"structural" vacant space, Sirius continually identifies and looks
for opportunities to upgrade the space that is vacated each year as
a result of move-outs. Within the existing vacancy at 30 September
2022, the Company has identified approximately 37,254 sqm of
recently vacated space that has potential to be significantly
upgraded before it is re-let. This space will require an investment
of approximately EUR6.0 million and, at current rates, is expected
to generate around EUR3.3 million in annualised rent roll when
re-let. Upgrading this vacated space allows the Company to further
enhance the reversionary potential of the portfolio whilst
significantly enhancing the quality, desirability and hence value
of not only the space that is invested into but the whole site.
The analysis below details the total vacancy of the German
portfolio as at 30 September 2022 and highlights the opportunity
from developing this space.
Table 11: Vacancy
Capex ERV
% of investment (post
total space sqm EURm investment)
-------------------------------------- ------------ ------- ----------- ------------
Subject to capex investment programme 3% 57,699 15.1 4.2
Recently vacated space to be upgraded 2% 37,254 6.0 3.3
-------------------------------------- ------------ ------- ----------- ------------
Total space subject to investment 5% 94,953 21.1 7.5
Structural vacancy 2% 38,012 - -
Smartspace vacancy 2% 27,017 - 3.0
Lettable vacancy 7% 123,729 0.3 8.0
-------------------------------------- ------------ ------- ----------- ------------
Total lettable vacancy 9% 150,746 0.3 11.0
-------------------------------------- ------------ ------- ----------- ------------
Total vacancy 16% 283,711 21.4 18.5
-------------------------------------- ------------ ------- ----------- ------------
The German portfolio's headline 84% occupancy rate means that in
total 283,711 sqm of space is vacant as at 30 September 2022. When
excluding the vacancy that is subject to investment (5% of total
space), and the structural vacancy, which is not economically
viable to develop (2% of total space), the Company's occupancy rate
based on space that is readily lettable is approximately 91%.
Whilst the capex investment programmes are a key part of Sirius'
strategy, they represent one of several ways in which the Company
can organically grow income and capital values. A wide range of
asset management capabilities including the capturing of
contractual rent increases (especially whilst inflation is high),
uplifts on renewals and the re-letting of space at higher rates are
expected to also contribute to the Company's annualised rent roll
growth going forward.
Asset recycling, acquisitions and disposals
Recycling equity from mature assets into new value-add
acquisitions has always been a significant part of the Sirius
business model. It benefits the Company in many ways including a)
proving enhanced valuations and that these can be crystallised; b)
replenishing the growth opportunity within the vacancy and the
capex programme; and c) being accretive to FFO per share (and hence
dividend per share) as well as contributing to NAV per share
growth. This is an element of the Company's strategy which Sirius
in general is able to execute effectively throughout the property
cycle and this has been evidenced by the disposals and acquisition
activity that has been conducted during the period under review.
Even though the market for both selling and buying remains a
challenging one due to the current economic climate, the Company
was able to recycle some non-core and mature assets in Germany and
the United Kingdom and reinvest these funds into some excellent
value-add opportunities in Germany, albeit this has been to an
intentionally lesser degree than in previous quarters.
Disposals
In Germany, the Company completed the sale of Magdeburg asset
for EUR13.8 million. This represented a 5.5% premium to book value
at the time of notarisation and allowed Sirius to dispose of an
asset located in a non-core location with only structural vacancy
for which it was not economically viable to transform, even for the
Sirius business model. In the UK, a mature asset in Camberwell was
sold for GBP16.0 million (EUR18.8 million) which represents a net
initial yield of approximately 2.0% and a 94% premium to the value
at the time of the Company's acquisition of BizSpace in November
2021. Additionally, the Company notarised the sale of 3,200 sqm of
non-income producing land in Heiligenhaus, Germany, for EUR1
million which has a book value of EUR0.25 million and is expected
to close in the fourth quarter of this financial year.
Acquisitions
The Company continues to take a conservative approach to
acquisitions over the last six months due to the current
uncertainty in the market and is more focused on reducing net LTV
and building up cash reserves for when opportunities do arise.
Hence, there were no acquisitions completed in the period apart
from a small building which sits at the entrance of an existing
Sirius site; however, two acquisitions did complete just after the
period end in October 2022.
The completed purchase was of a 239 sqm office building in
Potsdam, Germany, which strategically gives Sirius ownership of an
asset located at an entrance to one of the Company's existing
business parks. With total acquisition costs of EUR0.9 million the
building was purchased fully vacant and gives the Company control
of all buildings on a site which is located next to the world
famous Babelsberg Film Studios.
The post-period acquisitions included the previously
communicated Düsseldorf purchase for total acquisition costs of
EUR39.8 million. The multi-tenanted site is located in close
proximity to Düsseldorf International Airport and provides 24,400
sqm of office and 9,900 sqm of industrial space. With over 15,500
sqm of vacant space at the date of notarisation, the site provides
significant rental and valuation growth opportunity as well as
reasonable day-one net income to replace most of the income lost
from disposals. The Company has a number of assets in the
Düsseldorf area and Sirius expects to benefit from meaningful
operational synergies by adding another.
The final acquisition was in Dreieich and also completed in
October 2022. It comprises a warehouse asset located in a
well-developed commercial area in Dreieich, Germany, that is
strategically adjacent to an existing property owned by Sirius.
With total acquisition costs of EUR3.9 million, the asset consists
of 5,200 sqm of industrial space and 439 sqm of residential space
which will initially generate around EUR50,000 of annualised net
operating income at 54% occupancy. There are plenty of value-add
opportunities within this asset, which includes potentially
converting the property into a self-storage facility. If
progressed, this would add to the Company's existing Smartspace
self-storage brand and take advantage of the high demand for
self-storage in the area which Sirius has established through
operating its asset in the area for the last five years. Sirius
currently owns and operates at 32 self-storage locations across
Germany and this would be one of the largest and most
significant.
A summary of acquisitions and disposals is set out in the tables
below:
Table 12a: Acquisitions
Annualised
Total Total rental Annualised
investment acquired income NOI
Notarised/completed for acquisition Date EURm sqm EURm EURm Occupancy Gross yield
------------------------------------ ------- ----------- --------- ---------- ---------- --------- -----------
Düsseldorf* Oct-22 39.8 34,310 2.1 1.6 55% 5.3%
------------------------------------ ------- ----------- --------- ---------- ---------- --------- -----------
Dreieich* Oct-22 3.9 5,648 0.2 - 54% 4.1%
------------------------------------ ------- ----------- --------- ---------- ---------- --------- -----------
Potsdam May-22 0.9 239 - - 0% 0%
------------------------------------ ------- ----------- --------- ---------- ---------- --------- -----------
Total 44.6 40,198 2.3 1.6 54% 5.5%
--------------------------------------------- ----------- --------- ---------- ---------- --------- -----------
* Completed 1 October 2022.
Table 12b: Disposals and assets held for sale
Annualised
Total Total rental Annualised
sales price disposal income NOI
Notarised / completed for sale Date EURm sqm EURm EURm Occupancy Gross yield*
------------------------------- ------- ------------ --------- ---------- ---------- --------- ------------
Magdeburg Apr-22 13.8 32,070 1.3 1.0 69% 9.2%
------------------------------- ------- ------------ --------- ---------- ---------- --------- ------------
Heiligenhaus Land Sep-22 1.0 - - - 0% 0.0%
------------------------------- ------- ------------ --------- ---------- ---------- --------- ------------
Camberwell (UK) Jul-22 18.8 3,224 0.4 0.3 91% 2.1%
------------------------------- ------- ------------ --------- ---------- ---------- --------- ------------
Sub-total 33.6 35,294 1.7 1.3 71% 5.5%
---------------------------------------- ------------ --------- ---------- ---------- --------- ------------
* Calculated on net purchase price.
Net LTV and debt refinancing
Given the rising interest rates and the uncertainty that this
and the many other factors affecting the German and UK property
markets are causing at the moment, the Company has prioritised
improving its debt ratios and building up its cash reserves. Net
LTV, which reduces the loan balance by free cash (excluding
restricted cash balances) in its calculation, was 41.0% (31 March
2022: 41.6%) whilst interest cover at EBITDA level was 8.1x as at
30 September 2022 (31 March 2022: 7.3x). The Group is fully
committed to continue reducing its net LTV to be well within the
Group's policy of 40% or below in the near term.
In addition, with interest rates forecast to continue to rise,
Sirius has been proactive in its debt refinancing initiatives,
securing a new seven year loan facility of EUR170 million with
Berlin Hyp AG. The facility comes into effect on 1 November 2023 at
a fixed interest rate of 4.26% up to 31 October 2030 and is secured
against the same asset base as the existing facility, which is due
to mature in October 2023. This refinancing extends the Group's
total weighted average debt expiry to 5.0 years when the new
facility commences just over a year from now. It will increase the
Group's weighted average cost of debt by around 60bps from its
current 1.3% to 1.9%. The early financing of this loan facility is
a testament to the Company's strong relationship it has with its
financiers and their belief in the Sirius business model. This
ability to refinance debt at favourable rates in the current market
circumstances is a massive asset for the Company.
The Company has an additional EUR35 million in unsecured debt
coming due within the next twelve months, which Sirius' management
is already planning for. The Company is also currently in the
process of refinancing its EUR58 million Deutsche Pfandbriefbank AG
facility which expires at the end of 2023.
These early refinancing of facilities, along with the fact that
Sirius has more than EUR1.6 billion of unencumbered assets on its
balance sheet, provides substantial strength and comfort to ensure
that not only can the Company deal with any adverse conditions
within the property and finance markets but can also be on the
front foot should opportunities arise. Sirius does fully realise
that further improving its debt ratios is also an important part of
supporting this position.
All covenants were complied with in full during the period. A
summary of the movement in the Group's debt is set out below:
Table 13: Movement in debt *
EURm
----------------------------------- -------
Total debt as at 31 March 2022 995,557
Scheduled amortisation (2,699)
----------------------------------- -------
Total debt as at 30 September 2022 992,858
----------------------------------- -------
* Excludes loan issue costs.
Strength of well-diversified income and tenant base
A combination of the diversity of the Group's tenant base and
wide range of space offerings, which are underpinned by an
established operating platform, continues to be extremely
beneficial to Sirius and will be another key element to help the
Company continue to grow over the next few years, regardless of the
property and financing market conditions. Diversity in both space
type and tenancy is key to this. Sirius' portfolio includes
industrial, manufacturing, urban logistics/production, storage and
out of town office space that caters to multiple usages and a vast
range of sizes and tenant types. The diversity of the Company's
tenant base ranges from large stable and long-term anchor tenants
through to the flexible SME and private customers who are the
engine room of any economy.
Germany
In Germany, the Group's large anchor tenants are typically
multinational corporations occupying production, storage and
related office space. These tenants contribute around 40% of the
German rental income. The flexible tenant base is predominantly
those who are renting the Smartspace branded offices, self-storage
and workbox spaces and generally comprises much smaller tenants on
a more flexible basis. These flexible spaces are currently
contributing about 7% of the German rental income. The other half
of the German rental income comes from the SME sector which
occupies both smaller and larger space on a conventional basis.
Managing the SME tenant base is the bread and butter of what Sirius
does and which it can do far more effectively than its competitors
because of its in-house sales and marketing platform that the
Company has developed over the last 15 years. This, along with the
ability to convert, fill up and manage the Smartspace areas, which
are usually transformed from areas where Sirius' competitors leave
as structural vacancy, is a key differentiator for Sirius. This
skillset allows Sirius to run a value-add strategy which works well
in both
strong and weak markets and allows the Company to make much
higher returns for its equity providers at a much lower risk, which
also suits its debt providers.
The table below illustrates the diverse nature of tenant mix
within the German portfolio at the end of the reporting period:
Table 14a: Tenant breakdown - Germany
No. of % of total
tenants as at % of Annualised annualised Rate
30 September Occupied occupied rent income* rent income* per sqm
2022 sqm sqm EURm % EUR
------------------------ -------------- --------- --------- ------------- ------------- --------
Top 50 anchor tenants1 50 673,988 46% 45.5 40% 5.63
Smartspace SME tenants2 2,855 68,322 5% 7.9 7% 9.64
Other SME tenants3 2,897 727,497 49% 61.8 53% 7.07
------------------------ -------------- --------- --------- ------------- ------------- --------
Total 5,802 1,469,806 100% 115.2 100% 6.53
------------------------ -------------- --------- --------- ------------- ------------- --------
1 Mainly large national/international private and public tenants.
2 Mainly small and medium-sized private and public tenants.
3 Mainly small and medium-sized private and retail tenants.
* See glossary section of the Interim Report 2022.
As the conflict in Ukraine continues to constrain Europe's
energy supply, Germany is well positioned through its early
identification of the issue and shoring up of its gas reserves. As
at November 2022, Germany had managed to ensure 99.55% of its gas
storage capacity has been filled, enabling the German economy to
continue operating without expected interruptions this coming
winter. Additionally, the Company's robust and well diversified
tenant base does not have a significant reliance on gas supplies to
continue operating and, as such, the potential negative impact on
Sirius' rent roll and hence profit is low. In Germany, the Company
sources its utilities and facilities management services in bulk
for its properties and has managed to secure pricing until December
2023 at significantly below current market rates. As a result, its
tenants should be sheltered from some of the higher operating costs
that most industrial companies are facing right now. This is yet
another benefit and advantage offered by Sirius that it has from
its intense active management strategy.
UK
BizSpace's top 100 tenants are larger corporate customers
representing 25% of its annualised income, whilst the remaining 75%
are made up of SME and micro-SME tenants. With regard to energy
costs, while the UK is not reliant on gas from Russia, Sirius has
also secured long-term utility pricing across its BizSpace
portfolio to allow this platform to remain competitive.
Table 14b: Tenant breakdown - UK
No. of % of total
tenants as at % of Annualised annualised Rate
30 September Occupied occupied rent income* rent income* per sq ft
2022 sq ft sq ft GBPm % GBP
------------------ -------------- --------- --------- ------------- ------------- ----------
Top 100 tenants 100 952,157 25% 11.5 25% 12.11
Next 900 tenants 900 1,638,244 43% 19.8 43% 12.11
Remaining tenants 2,251 1,086,502 32% 15.1 32% 13.91
------------------ -------------- --------- --------- ------------- ------------- ----------
Total 3,251 3,676,923 100% 46.5 100% 12.64
------------------ -------------- --------- --------- ------------- ------------- ----------
* See glossary section of the Interim Report 2022.
Smartspace
The Company's Smartspace product has been mentioned throughout
this report and continues to be very attractive to a wide range of
customers. The Company expects this to continue to be the case, and
perhaps is expected to become even more so when the market weakens
and uncertainty is present. From Sirius' perspective, the
Smartspace brand and product range are created through its highly
effective capex programme into sub-optimal space which is otherwise
extremely difficult to let and usually left vacant by other
operators. The transformation of this space deals with the problems
of the site and massively improves the quality and feel of the
entire business park. From the customer perspective, Smartspace
offers them a range of affordable serviced offices, self-storage
units and workboxes on a flexible basis that can be tailored to
their needs. In the post-pandemic environment, as businesses manage
remote working, online selling, issues with supply chains and
supply shortages, the Smartspace product line becomes even more
attractive because of its flexibility, pricing and location being
on the fringes of major cities. The fact that the Company is
creating this space by converting sub-optimal and unutilised space
into this premium offering, space which is highly popular and
achieving rental rates well in excess of the rest of the portfolio,
means that even though this is only a small part of Sirius'
business, it is a huge part of the value enhancement process and
the asset transformation.
The annualised rental income now being generated from
Smartspace, excluding the element that covers service charge costs,
is now EUR7.9 million, an increase of 2.0% from the beginning of
the period and an 11.0% increase from the comparative period last
year. The occupancy of Smartspace has remained stable in the period
at 72% but the rate has increased by 4.4% in the last six months to
EUR9.64 per sqm.
A summary of Smartspace products and their contribution to the
Group is set out below:
Table 15: Smartspace
Annualised
Rate
rent roll % of total per sqm
(excl. (excl.
service Smartspace service
Total Occupied Occupancy charge) annualised charge)
Smartspace product type sqm sqm % EUR000 rent roll EUR
------------------------ ------ -------- --------- ---------- ---------- --------
First Choice Office 5,117 3,037 59% 825 10% 22.63
SMSP Office 31,789 24,029 76% 2,895 37% 10.04
SMSP Workbox 5,974 5,524 92% 431 5% 6.51
SMSP Storage 48,772 34,332 70% 3,316 42% 8.05
SMSP Containers - - - 290 4% -
------------------------ ------ -------- --------- ---------- ---------- --------
SMSP sub-total 91,652 66,922 73% 7,757 98% 9.66
------------------------ ------ -------- --------- ---------- ---------- --------
SMSP Flexilager 3,686 1,400 38% 145 2% 8.62
------------------------ ------ -------- --------- ---------- ---------- --------
SMSP total 95,338 68,322 72% 7,902 100% 9.64
------------------------ ------ -------- --------- ---------- ---------- --------
Environmental, social and governance ("ESG")
Our ESG programme has continued to develop throughout the period
as we work to fully integrate it into our overall strategy as well
as throughout our business and financial processes. We remain
focused on our commitment to having an established environmental,
social and governance framework that is both based on solid
analysis and detailed management planning, which delivers long-term
financial and sustainable value to all our stakeholders. We will be
publishing our first ESG Report in the next few weeks which will
carry further information on our ambitions, actions and oversight
of our ESG programme.
We have continued to make progress in our work to assess and
understand our decarbonisation pathway towards net-zero. Our
expertise is based on extending the life and purpose of older
buildings and the age and scale of our portfolio provides both
opportunities and challenges for decarbonisation, which will be
reflected in the pathway to net-zero we are developing in stages
across the business.
As we have previously announced, we will achieve net zero for
our Scope 1 and 2 emissions in Germany this year, supported in part
by our recent move to a new, more energy efficient head office in
Berlin, as well as the continued conversion of our cars to hybrid
or EV models and an improved travel policy.
We are now focused on addressing our Scope 3 emissions in
Germany, as well as understanding the implications of our UK
assets. We will soon complete the initial emissions analysis of all
our German assets in line with the Science Based Targets initiative
which will form the basis of a more detailed operational and
financial plan to net zero for the whole German portfolio.
We also intend to start a similar decarbonisation exercise for
our UK assets during the next financial year, after we have
completed a thorough review of BizSpace's environmental data and
EPCs, which will be finalised just after our first anniversary of
acquiring the business. As part of this environmental review, we
have also started to look at the opportunities within the BizSpace
portfolio for biodiversity enhancement and plan to start to bring
the programme we have developed across Germany to the UK in the new
financial year.
We continue to engage with our tenants and employees. We
recently completed our annual engagement surveys, which for the
first time covered both Germany and the UK, and we were pleased
with the level of responses. We are now reviewing the results and
taking the findings into account within our management processes.
We have also continued to unify the values between Sirius and
BizSpace and are focused on learning from each other as we look to
bring together our ESG programmes, specifically across training and
development, wellbeing and diversity and inclusion. This effort
will be further enhanced by the launch of the Sirius Training
Centre which will bring both Sirius and BizSpace employees onto the
same training and development platform and programme. We are also
exploring opportunities to drive further positive impact to our
local communities, starting with the introduction of formalised
community hours for our employees, to encourage community outreach
at employee level.
All of this work is being overseen by the ESG Working Groups
which now exist within both Sirius and BizSpace. Both groups are
chaired by Kremena Wissel, Chief Marketing and Impact Officer
("CMIO"), who reports through to the Sustainability and Ethics
Committee, which remains focused on improving the Group's economic
sustainability.
Outlook
Sirius is pleased with the trading performance of the first six
months of the financial year, which saw continued like-for-like
rent roll growth and strong cash collection rates in both Germany
and the UK.
The increase in rent roll in Germany as well as the positive
contribution from the BizSpace acquisition resulted in a 32.4%
increase in dividend to 2.70c per share compared to the same period
in the prior year. At the time of writing the Company has owned
BizSpace for a full year and it is now fully integrated into the
Group and operating well alongside the well-established Sirius
business. As such, the percentage increases in dividend growth are
expected to normalise going forward.
As the Company navigates through a challenging macro-economic
climate in Europe, it remains well positioned to continue to grow
due to its intensive asset management initiatives, diversified
offerings and extremely effective and dynamic business model. These
initiatives included putting in place the fixed priced contracts it
has secured for a significant portion of its utility demands in
both Germany and the UK which will help its customers manage the
energy crisis in Europe. This is also helped by the German and UK
governments shoring up their utilities supply and offering
significant relief packages to combat soaring energy prices to
support struggling businesses. As Germany has shored up its gas
reserves to more than 99% and provided a powerful government relief
package, the Company anticipates continued strong trading for the
Company's financial year despite the fact that a large proportion
of its tenant base uses gas and the impact from rising utilities
prices and concern over supply should be limited. In the UK, which
is not reliant on gas from Russia, BizSpace's position is very
strong and it remains committed to long-term utility pricing
allowing this segment to remain competitive as well.
The Company continues to further improve its debt ratios whilst
continuing to work with its lenders to extend or refinance any
expiring debt on the horizon so that any uncertainty over its
interest payments on debt going forward is removed. Additionally,
Sirius is committed to maintaining adequate levels of leverage well
within its target of 40% of net loan to value. Looking forward, the
Company will continue building up its available capital reserves as
it assesses a wide range of future opportunities and is expected to
continue to grow organically whilst remaining cautious on
acquisitive growth until the trajectory of the UK and German
markets becomes a bit clearer. Sirius' strong financial position
and excellent support from debt and equity providers give the
Sirius Board great optimism that the Company will come through
whatever happens over the next few years well and that it will be
able to take advantage of any opportunities that arise, including
planned acquisitions and strategic disposals, and remains confident
in its ability to continue to deliver attractive risk-adjusted
returns to all stakeholders.
Andrew Coombs
Chief Executive Officer
Alistair Marks
Chief Investment Officer and Interim Chief Financial Officer
18 November 2022
Statement of Directors' responsibilities
Each of the Directors, whose names and functions appear below,
confirm to the best of their knowledge that the unaudited condensed
consolidated interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting", as issued by
the IASB, and the interim management report herein includes a fair
review of the information required by the Disclosure Guidance and
Transparency Rules ("DTR"), namely:
-- DTR 4.2.7 (R): an indication of important events that have
occurred during the first six months of the financial year, and
their impact on the condensed set of consolidated interim financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- DTR 4.2.8 (R): any related party transactions that have taken
place in the six month period ended 30 September 2022 that have
materially affected, and any changes in the related party
transactions described in the 2022 Annual Report that could
materially affect, the financial position or performance of Sirius
Real Estate Limited during the period.
The Directors of Sirius Real Estate Limited as at the date of
this announcement are set out below:
-- Daniel Kitchen, Chairman*
-- Caroline Britton, Senior Independent Director*
-- Andrew Coombs, Chief Executive Officer
-- Alistair Marks, Chief Investment Officer and Interim Chief Financial Officer
-- Diarmuid Kelly, Chief Financial Officer**
-- James Peggy*
-- Mark Cherry*
-- Kelly Cleveland*
-- Joanne Kenrick*
* Non-Executive Directors.
** Resigned 16 August 2022
A list of the current Directors is maintained on the Sirius Real
Estate Limited website: www.sirius-real-estate.com.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
By order of the Board
Andrew Coombs
Chief Executive Officer
Alistair Marks
Chief Investment Officer and Interim Chief Financial Officer
18 November 2022
Independent review report
to Sirius Real Estate Limited
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises the unaudited
consolidated income statement, the unaudited consolidated statement
of comprehensive income, the unaudited statement of financial
position, the unaudited consolidated statement of changes in
equity, the unaudited consolidated statement of cash flow and the
related notes 1 to 28. We have read the other information contained
in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority, the South African Institute of
Chartered Accountants (SAICA) Financial Reporting Guides, as issued
by the South African Accounting Practices Committee and the
Financial Pronouncements as issued by the Financial Reporting
Standards Council of South Africa.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2(c), the annual financial statements of
the group are prepared in accordance with International Financial
Reporting Standards as issued by the IASB. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with:
- the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority;
- the South African Institute of Chartered Accountants (SAICA)
Financial Reporting Guides, as issued by the Accounting Practices
Committee; and
- the Financial Pronouncements as issued by the Financial
Reporting Standards Council of South Africa.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Guernsey
18 November 2022
Condensed consolidated income statement
for the six months ended 30 September 2022
Unaudited
(1) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
Notes EUR000 EUR000
--------------------------------------------------------- ----- ------------- -------------
Revenue 4 130,558 88,352
Direct costs 5 (57,350) (38,843)
--------------------------------------------------------- ----- ------------- -------------
Net operating income 73,208 49,509
Gain on revaluation of investment properties 12 26,812 48,414
Gain/(loss) on disposal of properties 4,801 (400)
Recoveries from prior disposals of subsidiaries - 94
Administrative expenses 5 (24,809) (12,311)
Share of profit of associates 17 2,597 2,463
--------------------------------------------------------- ----- ------------- -------------
Operating profit 82,609 87,769
--------------------------------------------------------- ----- ------------- -------------
Finance income 8 1,129 1,596
Finance expense 8 (9,249) (11,347)
Change in fair value of derivative financial instruments 8 1,244 160
--------------------------------------------------------- ----- ------------- -------------
Net finance costs (6,876) (9,591)
--------------------------------------------------------- ----- ------------- -------------
Profit before tax 75,733 78,178
Taxation 9 (5,673) (10,386)
--------------------------------------------------------- ----- ------------- -------------
Profit for the period after tax 70,060 67,792
--------------------------------------------------------- ----- ------------- -------------
Profit attributable to:
Owners of the Company 70,008 67,738
Non-controlling interest 52 54
--------------------------------------------------------- ----- ------------- -------------
70,060 67,792
--------------------------------------------------------- ----- ------------- -------------
Earnings per share
Basic earnings per share 10 6.00c 6.44c
Diluted earnings per share 10 5.92c 6.33c
--------------------------------------------------------- ----- ------------- -------------
(1) Refer to note 2(a)
All operations of the Group have been classified as
continuing.
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2022
Unaudited
(1) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
Notes EUR000 EUR000
------------------------------------------------------------ ----- ------------- -------------
Profit for the period after tax 70,060 67,792
------------------------------------------------------------ ----- ------------- -------------
Other comprehensive loss that may be reclassified
to profit or loss in subsequent periods
Foreign currency translation reserve 24 (19,542) -
------------------------------------------------------------ ----- ------------- -------------
Other comprehensive loss after tax that may be reclassified
to profit or loss in subsequent periods (19,542) -
------------------------------------------------------------ ----- ------------- -------------
Other comprehensive loss for the period after tax (19,542) -
------------------------------------------------------------ ----- ------------- -------------
Total comprehensive income for the period after tax 50,518 67,792
------------------------------------------------------------ ----- ------------- -------------
Total comprehensive income attributable to:
Owners of the Company 50,466 67,738
Non-controlling interest 52 54
------------------------------------------------------------ ----- ------------- -------------
50,518 67,792
------------------------------------------------------------ ----- ------------- -------------
(1) Refer to note 2(a)
Condensed consolidated statement of financial position
as at 30 September 2022
Unaudited
(1) Audited
30 September 31 March
2022 2022
Notes EUR000 EUR000
------------------------------------------------------- ----- ------------ -----------
Non-current assets
Investment properties 12 2,105,046 2,100,004
Plant and equipment 7,199 5,492
Intangible assets 14 4,129 4,283
Right of use assets 15 15,259 14,996
Other non-current financial assets 16 48,409 48,330
Investment in associates 17 26,739 24,142
------------------------------------------------------- ----- ------------ -----------
Total non-current assets 2,206,781 2,197,247
------------------------------------------------------- ----- ------------ -----------
Current assets
Trade and other receivables 18 24,420 24,571
Derivative financial instruments 1,573 329
Cash and cash equivalents 19 162,098 150,966
------------------------------------------------------- ----- ------------ -----------
Total current assets 188,091 175,866
------------------------------------------------------- ----- ------------ -----------
Assets held for sale 13 1,000 13,750
------------------------------------------------------- ----- ------------ -----------
Total assets 2,395,872 2,386,863
------------------------------------------------------- ----- ------------ -----------
Current liabilities
Trade and other payables 20 (76,993) (89,335)
Interest-bearing loans and borrowings 21 (37,243) (19,630)
Lease liabilities 15 (1,458) (1,090)
Current tax liabilities 9 (4,978) (10,423)
------------------------------------------------------- ----- ------------ -----------
Total current liabilities (120,672) (120,478)
------------------------------------------------------- ----- ------------ -----------
Non-current liabilities
Interest-bearing loans and borrowings 21 (943,176) (961,863)
Lease liabilities 15 (37,233) (37,571)
Deferred tax liabilities 9 (81,220) (75,893)
------------------------------------------------------- ----- ------------ -----------
Total non-current liabilities (1,061,629) (1,075,327)
------------------------------------------------------- ----- ------------ -----------
Total liabilities (1,182,301) (1,195,805)
------------------------------------------------------- ----- ------------ -----------
Net assets 1,213,571 1,191,058
------------------------------------------------------- ----- ------------ -----------
Equity
Issued share capital 23 - -
Other distributable reserve 24 544,419 570,369
Own shares held 23 (8,329) (6,274)
Foreign currency translation reserve 24 (21,243) (1,701)
Retained earnings 698,266 628,258
------------------------------------------------------- ----- ------------ -----------
Total equity attributable to the owners of the Company 1,213,113 1,190,652
------------------------------------------------------- ----- ------------ -----------
Non-controlling interest 458 406
------------------------------------------------------- ----- ------------ -----------
Total equity 1,213,571 1,191,058
------------------------------------------------------- ----- ------------ -----------
(1) Refer to note 2(a)
The financial statements above were approved by the Board of
Directors on 18 November 2022 and were signed on its behalf by:
Daniel Kitchen
Chairman
Company number: 46442
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2022
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 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
As at 31 March
2021
(audited) - 449,051 (2,903) - 480,385 926,533 292 926,825
Profit for the
period - - - - 67,738 67,738 54 67,792
Other
comprehensive
income for the
period - - - - - - - -
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
Total
comprehensive
income for
the
period - - - - 67,738 67,738 54 67,792
Dividends paid 9,195 (20,576) - - - (11,381) (5) (11,386)
Transfer of
share
capital (9,195) 9,195 - - - - - -
Share-based
payment
transactions - 1,403 - - - 1,403 - 1,403
Value of
shares
withheld to
settle
employee tax
obligations - (2,020) - - - (2,020) - (2,020)
Own shares
allocated - - 306 - - 306 - 306
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
As at 30
September
2021
(unaudited) - 437,053 (2,597) - 548,123 982,579 341 982,920
Profit for the
period - - - - 80,135 80,135 65 80,200
Other
comprehensive
income for
the
period - - - (1,701) - (1,701) - (1,701)
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
Total
comprehensive
income for
the
period - - - (1,701) 80,135 78,434 65 78,499
Shares issued 159,926 - - - - 159,926 - 159,926
Transaction
cost
relating to
share
issues (6,219) - - - - (6,219) - (6,219)
Dividends paid 4,478 (23,912) - - - (19,434) - (19,434)
Transfer of
share
capital (158,185) 158,185 - - - - - -
Share-based
payment
transactions - 542 - - - 542 - 542
Value of
shares
withheld to
settle
employee tax
obligations - (1,499) - - - (1,499) - (1,499)
Own shares
purchased - - (5,545) - - (5,545) - (5,545)
Own shares
allocated - - 1,868 - - 1,868 - 1,868
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
As at 31 March
2022
(audited) - 570,369 (6,274) (1,701) 628,258 1,190,652 406 1,191,058
Profit for the
period - - - - 70,008 70,008 52 70,060
Other
comprehensive
income for
the
period - - - (19,542) - (19,542) - (19,542)
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
Total
comprehensive
income for
the
period - - - (19,542) 70,008 50,466 52 50,518
Dividends paid 25 1,440 (27,651) - - - (26,211) - (26,211)
Transfer of
share
capital 25 (1,440) 1,440 - - - - - -
Share-based
payment
transactions 7 - 1,947 - - - 1,947 - 1,947
Value of
shares
withheld to
settle
employee tax
obligations 7 - (1,686) - - - (1,686) - (1,686)
Own shares
purchased 23 - - (2,389) - - (2,389) - (2,389)
Own shares
allocated 23 - - 334 - - 334 - 334
As at 30
September
2022
(unaudited)
(1) - 544,419 (8,329) (21,243) 698,266 1,213,113 458 1,213,571
-------------- ----- --------- ------------- ------- ----------- --------- ------------ ----------- ---------
(1) Refer to note 2(a)
Condensed consolidated statement of cash flow
for the six months ended 30 September 2022
Unaudited
(1) Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
Notes EUR000 EUR000
--------------------------------------------------------- ----- ------------- -------------
Operating activities
Profit for the period after tax 70,060 67,792
Taxation 9 5,673 10,386
--------------------------------------------------------- ----- ------------- -------------
Profit for the period before tax 75,733 78,178
--------------------------------------------------------- ----- ------------- -------------
(Gain)/loss on disposal of properties (4,801) 400
Net exchange differences (309) -
Share-based payments 7 1,947 1,403
Gain on revaluation of investment properties 12 (26,812) (48,414)
Change in fair value of derivative financial instruments 8 (1,244) (160)
Depreciation of property, plant and equipment 5 1,027 349
Amortisation of intangible assets 5 629 564
Depreciation of right of use assets 5 1,141 260
Share of profit of associates 17 (2,597) (2,463)
Finance income 8 (1,129) (1,596)
Finance expense 8 9,249 11,347
--------------------------------------------------------- ----- ------------- -------------
Changes in working capital
Decrease/(increase) in trade and other receivables 3,786 (2,598)
Decrease in trade and other payables (5,848) (2,053)
Taxation paid (2,717) (256)
--------------------------------------------------------- ----- ------------- -------------
Cash flows from operating activities 48,055 34,961
--------------------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of investment properties (832) (20,221)
Prepayments relating to new acquisitions (3,639) (75,771)
Capital expenditure on investment properties (11,904) (10,494)
Purchase of plant and equipment and intangible assets (3,210) (1,461)
Proceeds on disposal of properties (including held for
sale) 18,593 -
Increase in loan receivable due from associates (74) (1,124)
Interest received 1,129 1,596
--------------------------------------------------------- ----- ------------- -------------
Cash flows from/(used in) investing activities 63 (107,475)
--------------------------------------------------------- ----- ------------- -------------
Financing activities
Shares purchased (2,389) -
Payment relating to exercise of share options (1,686) (2,020)
Dividends paid to owners of the Company (26,211) (11,381)
Dividends paid to non-controlling interest - (5)
Proceeds from loans - 400,000
Repayment of loans (2,699) (173,791)
Payment of principal portion of lease liabilities (775) (2,931)
Exit fees/prepayment of financing penalties - (3,697)
Capitalised loan issue cost - (7,559)
Finance charges paid (2,747) (4,170)
--------------------------------------------------------- ----- ------------- -------------
Cash flows (used in)/from financing activities (36,507) 194,446
--------------------------------------------------------- ----- ------------- -------------
Increase in cash and cash equivalents 11,611 121,932
Net exchange difference (479) -
Cash and cash equivalents as at the beginning of the
period 150,966 65,674
--------------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents as at the period end 19 162,098 187,606
--------------------------------------------------------- ----- ------------- -------------
(1) Refer to note 2(a)
Notes forming part of the financial statements
for the six months ended 30 September 2022
1. General information
Sirius Real Estate Limited (the "Company" or "Sirius") is a
company incorporated in Guernsey and resident in the United Kingdom
for tax purposes, whose shares are publicly traded on the Main
Market of the London Stock Exchange ("LSE") (primary listing) and
the Main Board of the Johannesburg Stock Exchange ("JSE") (primary
listing).
The consolidated financial information of the Company comprises
that of the Company and its subsidiaries (together referred to as
the "Group") for the six month period to 30 September 2022.
The principal activity of the Group is the investment in, and
development of, commercial and industrial property to provide
conventional and flexible workspace in Germany and the United
Kingdom ("UK").
2. Significant accounting policies
(a) Basis of preparation
The unaudited interim condensed set of consolidated financial
statements has been prepared on a historical cost basis, except for
investment properties, investment properties held for sale and
derivative financial instruments, which have been measured at fair
value. The unaudited interim condensed set of consolidated
financial statements is presented in euros and all values are
rounded to the nearest thousand (EUR000), except where otherwise
indicated.
The Group prepares its interim condensed set of consolidated
financial statements in accordance with IAS 34 "Interim Financial
Reporting" and in compliance with the framework concepts and the
measurement and recognition requirements of the International
Financial Reporting Standards (IFRS) as a result of the primary
listing on the JSE. See also note 2(d) for statement of
compliance.
The financial information in these unaudited interim condensed
set of consolidated financial statements does not comprise
statutory accounts. This unaudited interim condensed set of
consolidated financial statements has been reviewed, not audited,
by the Group's auditor, Ernst & Young LLP, which issued an
unmodified review opinion. The financial information presented for
the year ended 31 March 2022 is derived from the statutory accounts
for that year. Statutory accounts for the year ended 31 March 2022
were approved by the Board on 10 June 2022. The report of the
auditor on those accounts was (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under Sections 263 (2) or (3) of The Companies
(Guernsey) Law, 2008.
As at 30 September 2022 the Group's unaudited interim condensed
set of consolidated financial statements reflect consistent
accounting policies and methods of computation as used in the
previous financial year, except for the changes in the application
of accounting policies as described in note 2(b). The operating
segment UK is a result of a business combination completed on 15
November 2021. As such there are no UK segment reportable figures
for the six months ended 30 September 2021.
(b) Changes in accounting policies
The new standards and interpretations to be applied as at 1
April 2022 do not have a material impact on the interim financial
statements of the Group.
(c) Non-IFRS measures
The Directors have chosen to disclose EPRA earnings and EPRA net
asset value metrics, which are widely used alternative metrics to
their IFRS equivalents (further details on EPRA best practice
recommendations can be found at www.epra.com). Note 10 to the
interim condensed financial statements includes a reconciliation of
basic and diluted earnings to EPRA earnings. Note 11 to the interim
condensed financial statements includes a reconciliation of net
assets to EPRA net asset value metrics.
The Directors are required, as part of the JSE Listing
Requirements, to disclose headline earnings; accordingly, headline
earnings are calculated using basic earnings adjusted for
revaluation gain (net of related tax), gains/losses on disposal of
properties (net of related tax), recoveries from prior disposals of
subsidiaries (net of related tax), NCI relating to revaluation and
revaluation gain/loss on investment property relating to associates
(net of related tax). Note 10 to the interim condensed financial
statements includes a reconciliation between IFRS and headline
earnings.
The Directors have chosen to disclose adjusted earnings in order
to provide an alternative indication of the Group's underlying
business performance; accordingly, it excludes the effect of
adjusting items (net of related tax). Note 10 to the interim
condensed financial statements includes a reconciliation of
adjusting items included within adjusted earnings, with certain
adjusting items stated within administrative expenses in note 5 and
certain finance costs in note 8.
The Directors have chosen to disclose adjusted profit before tax
and funds from operations in order to provide an alternative
indication of the Group's underlying business performance and to
facilitate the calculation of its dividend pool; a reconciliation
between profit before tax and funds from operations is included
within note 25 to the interim condensed financial statements.
Within adjusted profit before tax are adjusting items as described
above gross of related tax.
Further details on non-IFRS measures can be found in the
business analysis section of this document.
(d) Statement of compliance
The unaudited condensed interim financial statements have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom Financial Conduct Authority, the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the listing requirements of
JSE Limited, IAS 34 "Interim Financial Reporting" and in compliance
with the framework concepts and the measurement and recognition
requirements of the International Financial Reporting Standards
("IFRS") as well as The Companies (Guernsey) Law, 2008. They do not
include all of the information required for the full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 March 2022. The unaudited condensed interim financial
statements have been prepared on the basis of the accounting
policies set out in the Group's annual financial statements for the
year ended 31 March 2022 except for the changes in accounting
policies as shown in note 2(b). The financial statements for the
year ended 31 March 2022 have been prepared in accordance with
International Financial Reporting Standards issued by the IASB.
(e) Going concern
The Group has prepared its going concern assessment for the
period to the end of 31 December 2023 (the "going concern period"),
a period chosen to take into consideration the maturity date of the
Deutsche Pfandbriefbank loan, amounting to EUR57.2 million, which
falls due in December 2023. The Group's going concern assessment is
based on a forecast of the Group's future cash flows. This
considers management's base case scenario and a severe but
plausible downside scenario where sensitivities are applied to
model the outcome on the occurrence of downside assumptions
explained below. It considers the Group's principal risks and
uncertainties and is dependent on a number of factors including
financial performance, continued access to lending facilities (see
note 21) and the ability to continue to operate the Group's secured
and unsecured debt structure within its financial covenants.
The severe but plausible scenario models a potential downturn in
the Group's performance, including the potential impact of downside
macro-factors such as future energy shortages and further increases
in inflation, on the Group's financial position and future
prospects. The cash flow projections incorporate assumptions on
future trading performance and potential valuation movements in
order to estimate the level of headroom on facilities and covenants
for loan to value, debt service cover, EPRA NAV value, unencumbered
assets ratios, fixed charge ratios and occupancy ratios set out
within the relevant finance agreements.
The impact of the crisis in Ukraine and Covid-19 on the business
in the period ended 30 September 2022 did not result in any
deterioration in the Group's income streams or falls in asset
values, both of which increased in the period. However, the
Directors have been mindful of the challenging macro-factors
present in the market and have reflected this in an increase to the
severity of the falls in valuations assessed in the severe but
plausible downside scenario in the current period.
The base case and severe but plausible downside scenarios
include the following assumptions:
Base case:
-- growth in rent roll at 30 September 2022, principally from
contractual increases in rents and organic growth through lease
renewals;
-- increasing cost levels in line with forecast inflation of 7%
to March 2023 and 4% beyond March 2023;
-- continuation of forecast capex investment;
-- continuation of forecast dividend payments;
-- payment of loan interest and loan amortisation amounts and
assumed refinancing of EUR35.0 million of the Schuldschein facility
in December 2022 (EUR5.0 million), January 2023 (EUR10.0 million)
and July 2023 (EUR20.0 million) as well as the Deutsche
Pfandbriefbank facility of EUR57.2 million in December 2023;
-- payment of loan interest; and
-- no acquisitions over and above those legally committed to.
Severe but plausible downside scenario:
-- reduction in occupancy of 10% per annum from the base case assumptions;
-- reduction in service charge recovery of 10% per annum from the base case assumption;
-- reduction in property valuations of 10% per annum.
-- repayment of the EUR35.0 million Schuldschein facility in
December 2022 (EUR5.0 million), January 2023 (EUR10.0 million) and
July 2023 (EUR20.0 million) as well as the Deutsche Pfandbriefbank
facility of EUR57.2 million in December 2023
The Directors are of the view that there is a remote probability
of a more severe scenario arising than the above severe but
plausible downside scenario based upon the Group's track record of
performance in challenging scenarios, most recently through the
Covid-19 pandemic and the ongoing discussions with its current
lenders to secure re-financing as they come due.
In the severe but plausible downside scenario, the Group is
expected to comply with its loan covenants, with the exception of a
single soft covenant breach which can be remedied with available
cash.
The Directors are of the view that there is a high probability
of securing the refinancing or an alternative source of secured or
unsecured funding to replace the EUR35.0 million Schuldschein
facility and EUR57.2 million Deutsche Pfandbriefbank facility. This
judgement has been informed by the Group's financial forecasts, the
Group's track-record in previously refinancing maturing debt
(including the early refinancing of the secured EUR170 million
Berlin Hyp AG loan facility in August 2022) and the period of time
the Group has to arrange refinancing. The Company is in discussions
with its current lenders to secure re-financing as they come due.
Should the debt facilities falling due not be refinanced or
extended, alternative options could be considered, including the
use of mitigating factors referred to below. The mitigating factors
are within the control of the Directors and there is sufficient
time for such mitigating factors to be implemented, if
required.
In the severe but plausible downside scenario, the Company
assumes full repayment of the loan obligations as they fall due,
amounting to EUR92.2 million in the going concern period. Whilst
the Company forecasts having sufficient free cash available to
repay these funds in full, the Group's resultant level of available
liquidity in the severe but plausible downside scenario may require
the Directors to consider the use of the available mitigating
actions below, in the unlikely event refinancing could not be
completed along with the other factors modelled in the severe but
plausible downside scenario coming to pass.
In each of the scenarios considered for going concern, the Group
forecasts having sufficient free cash available and if required,
could utilise available mitigating actions which would be available
to the Group in the going concern review period, which include
restricting dividends, reducing capital expenditure or the disposal
of unencumbered assets that have a book value of EUR1.6 billion as
at 30 September 2022. The restriction of dividends or reducing
capital expenditure are within the control of the Directors and
there is sufficient time to implement these restrictions, if
required. The Directors have not identified any material
uncertainties which may cast significant doubt on the Group's
ability to continue as a going concern for the duration of the
going concern period.
After due consideration of the going concern assessment for the
period to the end of 31 December 2023, the Board believes it is
appropriate to adopt the going concern basis in preparing its
financial statements.
(f) Principal risks and uncertainties
The key risks that could affect the Group's medium-term
performance and the factors which mitigate these risks have not
changed substantially from those set out on pages 54 to 63 of the
Group's Annual Report and Accounts 2022 and have been assessed in
line with the requirements of the 2018 UK Corporate Governance
Code. The risks are reproduced below. Two new risks have been
identified which relate to Energy supply shortages caused by a
variety of economic and geopolitical factors and restricted access
to financing market due to higher requirements ("green financing").
The Board is satisfied that the Company continues to operate within
its risk profile for the remaining six months of the financial
year.
Principal risks summary
Risk area Principal risk(s)
-------------------- --------------------------------------------------------------
1. Financing -- Availability and pricing of debt
-- Compliance with loan facility covenants
-- Availability and pricing of equity capital
-- Reputational risk
-------------------- --------------------------------------------------------------
2. Valuation -- Property inherently difficult to value
-- Susceptibility of property market to change in value
-------------------- --------------------------------------------------------------
3. Markets -- Participation within two geographically diverse markets
-- Reliance on specific industries and the SME market
-- Reduction in occupancy
-------------------- --------------------------------------------------------------
4. Acquisitive -- 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 -- Impact of the Covid-19 pandemic
environment -- Inflationary pressure leading to increased costs
-- Interest rate movements impacting the commercial real
estate market
-- Delays in cash collection and tenant insolvencies
-- Energy supply shortages caused by a variety of economic
and geopolitical factors
-------------------- --------------------------------------------------------------
-- 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. Executive management considers that this is
best achieved through the operating segments of German assets and
United Kingdom assets. The Group's investment properties are
considered to be their own segment. The properties at each location
(Germany and UK) have similar economic characteristics. These have
been aggregated into two operating segments based on location in
accordance with the requirements of IFRS 8.
Consequently, the Group is considered to have two reportable
operating segments, as follows:
-- Germany; and
-- UK.
Consolidated information by segment is provided on a net
operating income basis, which includes revenues made up of gross
rents from third parties and direct expenses, gains/losses on
property valuations, property disposals, and control of
subsidiaries. All of the Group's share of profit of associates and
administrative expenses including amortisation and depreciation are
separately disclosed as part of operating profit. Group
administrative costs, finance income and expenses and change in
fair value of derivative financial instruments are disclosed.
Income taxes and depreciation are not reported to the Senior
Management Team on a segmented basis. There are no sales between
segments.
Unaudited six months Unaudited six months
ended 30 September 2022 ended 30 September 2021
----------------------------- -----------------------------
Germany UK Total Germany UK Total
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------------------------ --------- -------- -------- -------- -------- --------
Rental and other income
from investment properties 59,839 19,663 79,502 50,082 - 50,082
Service charge income
from investment properties 30,990 8,526 39,516 26,639 - 26,639
Rental and other income
from managed properties 4,768 - 4,768 5,321 - 5,321
Service charge income
from managed properties 6,772 - 6,772 6,310 - 6,310
------------------------------ --------- -------- -------- -------- -------- --------
Revenue 102,369 28,189 130,558 88,352 - 88,352
------------------------------ --------- -------- -------- -------- -------- --------
Direct costs (48,217) (9,133) (57,350) (38,843) - (38,843)
------------------------------ --------- -------- -------- -------- -------- --------
Net operating income 54,152 19,056 73,208 49,509 - 49,509
Gain on revaluation
of investment properties 19,386 7,426 26,812 48,414 - 48,414
Gain/(loss) on disposal
of properties - 4,801 4,801 (400) - (400)
Recoveries from prior
disposals of subsidiaries - - - 94 - 94
Depreciation and amortisation (2,136) (661) (2,797) (1,173) - (1,173)
Other administrative
expenses (18,731) (3,281) (22,012) (11,138) - (11,138)
Share of profit of associates 2,597 - 2,597 2,463 - 2,463
------------------------------ --------- -------- -------- -------- -------- --------
Operating profit 55,268 27,341 82,609 87,769 - 87,769
------------------------------ --------- -------- -------- -------- -------- --------
Finance income 1,129 - 1,129 1,596 - 1,596
Amortisation of capitalised
finance costs (1,625) - (1,625) (1,016) - (1,016)
Other finance expense (5,502) (2,122) (7,624) (10,331) - (10,331)
Change in fair value
of derivative financial
instruments 1,244 - 1,244 160 - 160
------------------------------ --------- -------- -------- -------- -------- --------
Net finance costs (4,754) (2,122) (6,876) (9,591) - (9,591)
------------------------------ --------- -------- -------- -------- -------- --------
Segment profit for the
period before tax 50,514 25,219 75,733 78,178 - 78,178
------------------------------ --------- -------- -------- -------- -------- --------
Unaudited 30 September 2022 Audited 31 March 2022
------------------------------- -----------------------------
Germany UK Total Germany UK Total
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------------------------- ---------- -------- --------- --------- ------- ---------
Segment assets
Investment properties 1,664,033 441,013 2,105,046 1,635,221 464,783 2,100,004
Investment in associates 26,739 - 26,739 24,142 - 24,142
Other non-current
assets (1) 22,308 4,279 26,587 21,535 3,236 24,771
-------------------------- ---------- -------- --------- --------- ------- ---------
Total segment non-current
assets 1,713,080 445,292 2,158,372 1,680,898 468,019 2,148,917
-------------------------- ---------- -------- --------- --------- ------- ---------
(1) Consists of plant and equipment, intangible assets and right of use assets.
4. Revenue
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
--------------------------------------------------- ------------- -------------
Rental and other income from investment properties 79,502 50,082
Service charge income from investment properties 39,516 26,639
Rental and other income from managed properties 4,768 5,321
Service charge income from managed properties 6,772 6,310
--------------------------------------------------- ------------- -------------
Total revenue 130,558 88,352
--------------------------------------------------- ------------- -------------
Other income relates primarily to income associated with
conferencing and catering of EUR2,113,000 (30 September 2021:
EUR1,265,000) and fee income from managed properties of
EUR2,476,000 (30 September 2021: EUR1,782,000).
As per IFRS 15 definition of total revenue from contracts with
customers this includes service charge income and other income
totalling EUR41,629,000 from investment properties (30 September
2021: EUR27,904,000) and EUR9,248,000 from managed properties (30
September 2021: EUR8,092,000). Service charge income and other
income totalling EUR41,968,000 from the German segment (30
September 2021: EUR35,996,000) and EUR8,909,000 from the UK segment
(30 September 2021: EURnil).
5. Operating profit
The following items have been charged in arriving at operating
profit:
Direct costs
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
------------------------------------------------------- ------------- -------------
Service charge costs relating to investment properties 44,967 29,803
Costs relating to managed properties 9,840 7,296
Non-recoverable maintenance costs 2,543 1,744
------------------------------------------------------- ------------- -------------
Direct costs 57,350 38,843
------------------------------------------------------- ------------- -------------
Administrative expenses
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
-------------------------------------------------- ------------- -------------
Audit and non-audit fees to audit firm 642 379
Legal and professional fees 2,735 1,683
Reversal of expected credit loss provision (360) (1,081)
Other administration costs 2,555 521
LTIP and SIP 1,947 1,403
Employee costs 11,819 6,934
Director fees and expenses 336 271
Depreciation of plant and equipment 1,027 349
Amortisation of intangible assets 629 564
Depreciation of right of use assets (see note 15) 1,141 260
Marketing 1,298 1,036
Exceptional items 1,040 (8)
-------------------------------------------------- ------------- -------------
Administrative expenses 24,809 12,311
-------------------------------------------------- ------------- -------------
The expected credit loss provision has decreased during the
period mainly due to the successful cash collection of outstanding
trade receivables that were previously provided for.
Other administration costs include net foreign exchange losses
in amount of EUR309,000 (30 September 2021: EURnil) as a result of
declining British pound sterling ("GBP") rates throughout the
period.
Employee costs as stated above relate to costs which are not
recovered through service charge.
Exceptional items are items which are outside the scope of the
Group's daily operations and are non-recurring in nature.
Exceptional items relate to the following:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
------------------------------------------------------ ------------- -------------
Other fees for projects 2,922 -
Legal case costs 343 -
Lease agreement termination fees 784 -
Decrease in tax liabilities recognised on acquisition
of BizSpace(1) (3,009) -
Other - (8)
------------------------------------------------------ ------------- -------------
Total 1,040 (8)
------------------------------------------------------ ------------- -------------
(1) In the current period, the Group identified an error in the
accrual of tax liabilities arising in BizSpace as at 31 March 2022,
resulting in an overstatement of the tax liability of EUR5.0
million of which EUR3.0 million arose on acquisition. These were
assessed as not being material to the 31 March 2022 financial
statements and the reduction in the liability has been recorded in
the current period. The amounts have been recorded within
administrative expenses under exceptional items and the taxation
(see note 9) line of the income statement.
6. Employee costs and numbers
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
----------------------- ------------- -------------
Wages and salaries 14,565 9,940
Social security costs 2,171 1,556
Pension 228 148
Other employment costs 452 39
----------------------- ------------- -------------
Total 17,416 11,683
----------------------- ------------- -------------
Included in the costs related to wages and salaries for the
period are expenses of EUR1,947,000 (30 September 2021:
EUR1,403,000) relating to the granting or award of shares under
LTIPs and SIPs (see note 7). The costs for all periods include
those relating to Executive Directors.
All employees are employed directly by one of the following
Group subsidiary companies: Sirius Facilities GmbH, Sirius
Facilities (UK) Limited, Curris Facilities & Utilities
Management GmbH, SFG NOVA GmbH, Sirius Finance (Cyprus) Limited,
BizSpace Limited, BizSpace II Limited, M25 Business Centres Limited
and Sirius Corporate Services B.V. The average number of people
employed by the Group during the period was 413 (30 September 2021:
270) expressed in full-time equivalents. In addition, as at 30
September 2022, the Board of Directors consists of six
Non-Executive Directors (30 September 2021: six) and two Executive
Directors (30 September 2021: two).
7. Employee schemes
Equity-settled share-based payments
2018 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2018 with three separate
grant dates. Awards granted under the LTIP are made in the form of
nil-cost options which vest after the three year performance period
with vested awards being subject to a further holding period of two
years. Awards are split between ordinary and outperformance awards.
Ordinary awards carry both adjusted net asset value per share
("TNR") (two-thirds of award) and relative total shareholder return
("TSR") (one-third of award) performance conditions and
outperformance awards carry a sole TNR performance condition. The
employees' tax obligation will be determined upon the vesting date
of the share issue.
June 2020 grant
3,600,000 ordinary share awards were granted under the scheme on
15 June 2020 with a total charge for the award of EUR2,265,552.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 15 June 2020 LTIP grant an expense of
EUR405,000 is recognised in the half year condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 15 June 2020:
TNR TSR
----------------------------------------------------- ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 0.84 0.84
Exercise price - EUR nil nil
Expected volatility - % 38.5 38.5
Performance projection period - years 2.79 2.67
Expected dividend yield - % 4.28 4.28
Risk-free rate based on European treasury bonds rate (0.677)
of return - % (0.677) p.a. p.a.
Expected outcome of performance conditions - % 100.0 67.2
Fair value per share - EUR 0.745 0.564
----------------------------------------------------- ------------- ------------
The weighted average fair value of share options granted on 15
June 2020 is EUR0.68.
Assumptions considered in this model include: expected
volatility of the Company's share price, as determined by
calculating the historical volatility of the Company's share price
over the period immediately prior to the date of grant and
commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share
price at the date of grant; performance projection period;
risk-free rate; and correlation between comparators.
June 2019 grant
3,760,000 ordinary share awards and 690,000 outperformance share
awards were granted under the scheme on 16 June 2019 with a total
charge for the awards of EUR2,145,511 over three years. Another
93,039 share awards have been granted throughout the performance
period as part of dividend equivalents resulting in a total number
of shares of 4,543,039. Charges for the awards are based on fair
values calculated at the grant date and expensed on a straight-line
basis over the period that individuals are providing service to the
Company in respect of the awards.
The fair value per share for the TNR and TSR elements of the
award was determined using Black-Scholes and Monte-Carlo models
respectively with the following assumptions used in the
calculation:
TNR TSR
--------------------------------- --------------------------------- ------------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary award/outperformance
Calculation for award 1/3 ordinary award
Share price at grant date -
EUR 0.73 0.73
Exercise price - EUR nil nil
Expected volatility - % 23.8 23.8
Performance projection period
- years 2.80 2.67
Expected dividend yield - % 4.56 4.56
Risk-free rate based on European
treasury bonds rate of return
- % (0.695) p.a. (0.695) p.a.
Expected outcome of performance
conditions - % 100.0/24.5 46.6
Fair value per share - EUR 0.643 0.340
--------------------------------- --------------------------------- ------------------
The weighted average fair value of share options granted on 16
June 2019 is EUR0.54.
Assumptions considered in this model include: expected
volatility of the Company's share price, as determined by
calculating the historical volatility of the Company's share price
over the period immediately prior to the date of grant and
commensurate with the expected life of the awards; dividend yield
based on the actual dividend yield as a percentage of the share
price at the date of grant; performance projection period;
risk-free rate; and correlation between comparators.
The June 2019 grant vested on 18 July 2022. Vesting was at
partial level for all participants resulting in the exercise of
1,620,093 shares with a weighted average share price of 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
EUR1,686,000 was paid for the participants' tax liabilities. An
amount of 1,531,361 share awards were kept for exercise later.
2021 LTIP
The LTIP for the benefit of the Executive Directors and the
Senior Management Team was approved in 2021. Awards granted under
the LTIP are made in the form of nil-cost options which vest after
the three year performance period with vested awards being subject
to a further restricted period of two years when shares acquired on
exercise cannot be sold. Awards are subject to adjusted net asset
value per share ("TNR") (two-thirds of award) and relative total
shareholder return ("TSR") (one-third of award) performance
conditions. The employees' tax obligation will be determined upon
the vesting date of the share issue.
August 2021 grant
4,154,119 ordinary share awards were granted under the scheme on
2 August 2021 with a total charge for the award of EUR4,705,196.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 2 August 2021 LTIP grant an expense of
EUR811,000 is recognised in the half year condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 2 August 2021:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 1.39 1.39
Exercise price - EUR nil nil
Expected volatility - % 40.5 40.5
Expected life - years 2.91 2.91
Performance projection period - years 2.66 2.66
Expected dividend yield - % 2.79 2.79
Risk-free rate based on European treasury bonds
rate of return - % (0.817) p.a. (0.817) p.a.
Fair value per share - EUR 1.28(1) 0.84(2)
------------------------------------------------ ------------- ------------
(1) In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated
using a Black-Scholes model and does not take the expected outcome
of the performance condition into account. The Company currently
estimates the expected vesting outcome for the TNR award to be
100%.
(2) In accordance with IFRS 2, relative TSR is classed as a
market-based performance condition. As such, projected performance
and the likelihood of achieving the condition have been taken into
account when calculating the fair value using a Monte-Carlo model.
The model also uses assumptions for the expected volatility of
comparator companies, the pairwise correlation between comparator
companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 2
August 2021 is EUR1.13.
Expected volatility of the Company's share price was determined
by calculating the historical volatility of the Company's share
price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance
period.
July 2022 Grant
3,480,028 ordinary share awards were granted under the scheme on
18 July 2022 with a total charge for the award of EUR2,610,477.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 18 July 2022 LTIP grant an expense of
EUR179,000 is recognised in the half year condensed consolidated
income statement to 30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 18 July 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 1.05 1.05
Exercise price - EUR nil nil
Expected volatility - % 41.2 41.2
Expected life - years 2.95 2.95
Performance projection period - years 2.70 2.70
Expected dividend yield - % 4.21 4.21
Risk-free rate based on European treasury bonds
rate of return - % (0.609) p.a. (0.609) p.a.
Fair value per share - EUR 0.93(1) 0.40(2)
------------------------------------------------ ------------- ------------
(1) In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated
using a Black-Scholes model and does not take the expected outcome
of the performance condition into account. The Company currently
estimates the expected vesting outcome for the TNR award to be
100%.
(2) In accordance with IFRS 2, relative TSR is classed as a
market-based performance condition. As such, projected performance
and the likelihood of achieving the condition have been taken into
account when calculating the fair value using a Monte-Carlo model.
The model also uses assumptions for the expected volatility of
comparator companies, the pairwise correlation between comparator
companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 18
July 2022 is EUR0.75.
Expected volatility of the Company's share price was determined
by calculating the historical volatility of the Company's share
price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance
period.
2021 SIP
Another SIP for the benefit of senior employees was approved in
2021. Awards granted under the SIP are made in the form of a
conditional right to receive a specified number of shares for nil
cost which vest after the three year performance period (on 1 March
2025 for the 2021 award) with vested awards being subject to a
further restricted period of one year when shares cannot be sold.
Awards are subject to adjusted net asset value per share ("TNR")
(two-thirds of award) and relative total shareholder return ("TSR")
(one-third of award) performance conditions. Awards are equity
settled. The employees' tax obligation will be determined upon the
vesting date of the share issue.
September 2021 grant
3,074,500 ordinary share awards were granted under the scheme on
7 September 2021 with a total charge for the award of EUR3,735,689.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 7 September 2021 SIP grant an expense of
EUR538,000 is recognised in the half year condensed consolidated
income statement 30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 7 September 2021:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 1.49 1.49
Exercise price - EUR n/a n/a
Expected volatility - % 40.7 40.7
Expected life - years 3.48 3.48
Performance projection period - years 2.56 2.56
Expected dividend yield - % 2.60 2.60
Risk-free rate based on European treasury bonds
rate of return - % (0.737) p.a. (0.737) p.a.
Fair value per share - EUR 1.36(1) 0.92(2)
------------------------------------------------ ------------- ------------
(1) In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated
using a Black-Scholes model and does not take the expected outcome
of the performance condition into account. The Company currently
estimates the expected vesting outcome for the TNR award to be
100%.
(2) In accordance with IFRS 2, relative TSR is classed as a
market-based performance condition. As such, projected performance
and the likelihood of achieving the condition have been taken into
account when calculating the fair value using a Monte-Carlo model.
The model also uses assumptions for the expected volatility of
comparator companies, the pairwise correlation between comparator
companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 7
September 2021 is EUR1.21.
Expected volatility of the Company's share price was determined
by calculating the historical volatility of the Company's share
price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance
period.
April 2022 grant
30,000 ordinary share awards were granted under the scheme on 1
April 2022 with a total charge for the award of EUR36,657. Charges
for the awards are based on fair values calculated at the grant
date and expensed on a straight-line basis over the period that
individuals are providing service to the Company in respect of the
awards. For the 1 April 2022 SIP grant an expense of EUR6,000 is
recognised in the half year condensed consolidated income statement
30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 1 April 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 1.51 1.51
Exercise price - EUR n/a n/a
Expected volatility - % 32.5 32.5
Expected life - years 2.92 2.92
Performance projection period - years 2.00 2.00
Expected dividend yield - % 2.93 2.93
Risk-free rate based on European treasury bonds
rate of return - % (0.074) p.a. (0.074) p.a.
Fair value per share - EUR 1.39(1) 0.89(2)
------------------------------------------------ ------------- ------------
(1) In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated
using a Black-Scholes model and does not take the expected outcome
of the performance condition into account. The Company currently
estimates the expected vesting outcome for the TNR award to be
100%.
(2) In accordance with IFRS 2, relative TSR is classed as a
market-based performance condition. As such, projected performance
and the likelihood of achieving the condition have been taken into
account when calculating the fair value using a Monte-Carlo model.
The model also uses assumptions for the expected volatility of
comparator companies, the pairwise correlation between comparator
companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 1
April 2022 is EUR1.22.
Expected volatility of the Company's share price was determined
by calculating the historical volatility of the Company's share
price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance
period.
August 2022 grant
150,000 ordinary share awards were granted under the scheme on 1
August 2022 with a total charge for the award of EUR124,817.
Charges for the awards are based on fair values calculated at the
grant date and expensed on a straight-line basis over the period
that individuals are providing service to the Company in respect of
the awards. For the 1 August 2022 SIP grant an expense of EUR8,000
is recognised in the half year condensed consolidated income
statement 30 September 2022.
The following assumptions were used in calculating the fair
value per share for the TNR and TSR elements of the awards that
were granted on 1 August 2022:
TNR TSR
------------------------------------------------ ------------- ------------
Valuation methodology Black-Scholes Monte-Carlo
2/3 ordinary 1/3 ordinary
Calculation for award award
Share price at grant date - EUR 1.51 1.51
Exercise price - EUR n/a n/a
Expected volatility - % 29.7 29.7
Expected life - years 2.58 2.58
Performance projection period - years 1.66 1.66
Expected dividend yield - % 3.96 3.96
Risk-free rate based on European treasury bonds
rate of return - % (0.184) p.a. (0.184) p.a.
Fair value per share - EUR 1.02(1) 0.46(2)
------------------------------------------------ ------------- ------------
(1) In accordance with IFRS 2, TNR is classed as a non-market
performance condition. As such, the fair value has been calculated
using a Black-Scholes model and does not take the expected outcome
of the performance condition into account. The Company currently
estimates the expected vesting outcome for the TNR award to be
100%.
(2) In accordance with IFRS 2, relative TSR is classed as a
market-based performance condition. As such, projected performance
and the likelihood of achieving the condition have been taken into
account when calculating the fair value using a Monte-Carlo model.
The model also uses assumptions for the expected volatility of
comparator companies, the pairwise correlation between comparator
companies and TSR performance between the start of the performance
period and the date of grant.
The weighted average fair value of share options granted on 1
August 2022 is EUR0.83.
Expected volatility of the Company's share price was determined
by calculating the historical volatility of the Company's share
price over the period immediately prior to the date of grant,
commensurate with the term to the end of the performance
period.
Number of share awards
Movements in the number of awards outstanding are as
follows:
Unaudited
six months ended Audited
30 September year ended
2022 31 March 2022
---------------------- ----------------------
Weighted Weighted
Number average Number average
of exercise of exercise
share price share price
awards EUR000 awards EUR000
------------------------------------------- ----------- --------- ----------- ---------
Balance outstanding as at the beginning of
the period (nil exercisable) 15,278,619 - 15,584,750 -
Maximum granted during the period 3,753,067 - 7,302,831 -
Forfeited during the period - - (195,000) -
Exercised during the period (1,620,093) - (4,934,934) -
Shares surrendered to cover employee tax
obligations (1,391,585) - (2,479,028) -
------------------------------------------- ----------- --------- ----------- ---------
Balance outstanding as at period end (nil
exercisable) 16,020,008 - 15,278,619 -
------------------------------------------- ----------- --------- ----------- ---------
Employee benefit schemes
A reconciliation of share-based payments and employee benefit
schemes and their impact on the condensed consolidated income
statement is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
-------------------------------------------------------------- ------------- -------------
Charge relating to 2018 LTIP - June 2019 grant - 383
Charge relating to 2018 LTIP - June 2020 grant 405 405
Charge relating to 2021 LTIP - August 2021 grant 811 261
Charge relating to 2021 LTIP - July 2022 grant 179 -
Charge relating to 2019 SIP - August 2019 grant - 284
Charge relating to 2021 SIP - September 2021 grant 538 70
Charge relating to 2021 SIP - April 2022 grant 6 -
Charge relating to 2021 SIP - August 2022 grant 8 -
-------------------------------------------------------------- ------------- -------------
Total condensed consolidated income statement charge relating
to LTIP and SIP 1,947 1,403
-------------------------------------------------------------- ------------- -------------
An amount of EUR1,947,000 (30 September 2021: EUR1,403,000) is
recognised in other distributable reserves as per the condensed
consolidated statement of changes in equity. In addition, an amount
of EUR1,686,000 has been paid for participants' tax liabilities in
relation to share based payment schemes.
8. Finance income, finance expense and change in fair value of
derivative financial instruments
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Bank interest income 18 42
Finance income from associates 1,111 1,554
--------------------------------------------------------- ------------- -------------
Finance income 1,129 1,596
--------------------------------------------------------- ------------- -------------
Bank loan interest expense (6,839) (4,136)
Interest expense related to lease liabilities (see note
15) (533) (143)
Amortisation of capitalised finance costs (1,625) (1,016)
--------------------------------------------------------- ------------- -------------
Total interest expense (8,997) (5,295)
Bank charges and bank interest expense on deposits (252) (473)
Refinancing costs, exit fees and prepayment penalties - (5,579)
--------------------------------------------------------- ------------- -------------
Other finance costs (252) (6,052)
--------------------------------------------------------- ------------- -------------
Finance expense (9,249) (11,347)
--------------------------------------------------------- ------------- -------------
Change in fair value of derivative financial instruments 1,244 160
--------------------------------------------------------- ------------- -------------
Net finance expense (6,876) (9,591)
--------------------------------------------------------- ------------- -------------
Included within refinancing costs are exit fees and early
prepayment penalties of EURnil (30 September 2021: EUR5,579,000)
that directly related to the early repayment of loans.
The change in fair value of derivative financial instruments of
EUR1,244,000 (30 September 2021: EUR160,000) reflects the change in
the market valuation of these financial instruments.
9. Taxation
Condensed consolidated income statement
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
-------------------------------------------------------------- ------------- -------------
Current income tax
Current income tax charge (2,021) (1,773)
Current income tax charge relating to disposal of investment
properties (52) -
Adjustment in respect of prior periods(1) 1,722 93
-------------------------------------------------------------- ------------- -------------
Total current income tax (351) (1,680)
-------------------------------------------------------------- ------------- -------------
Deferred tax
Relating to origination and reversal of temporary differences (5,322) (8,706)
-------------------------------------------------------------- ------------- -------------
Total deferred tax (5,322) (8,706)
-------------------------------------------------------------- ------------- -------------
Income tax charge reported in the income statement (5,673) (10,386)
-------------------------------------------------------------- ------------- -------------
(1) In the current period, the Group identified an error in the
accrual of tax liabilities arising in BizSpace as at 31 March 2022,
resulting in an overstatement of the tax liability of EUR5.0
million of which EUR3.0 million arose on acquisition. These were
assessed as not being material to the 31 March 2022 financial
statements and the reduction in the liability has been recorded in
the current period. The amounts have been recorded within
administrative expenses under exceptional items (see note 5) and
the taxation line of the income statement.
The German corporation tax rate of 15.825% is used in the tax
reconciliation for the Group. Taxation for other jurisdictions is
calculated at the rates prevailing in each jurisdiction.
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
------------------------ ------------------------ ------------------------
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 31 March 30 September 31 March 30 September 31 March
2022 2022 2022 2022 2022 2022
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Revaluation of investment
property - - (101,206) (95,411) (101,206) (95,411)
Rent free adjustments - - (644) (640) (644) (640)
Capitalised own works - - (55) (55) (55) (55)
Hedging (swaps) - - (249) (52) (249) (52)
Fair value adjustment
on leased investment
properties 3,935 4,059 (3,981) (4,283) (46) (224)
Tax losses 20,845 20,330 - - 20,845 20,330
Fixed asset temporary
differences 135 159 - - 135 159
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Deferred tax assets/(liabilities) 24,915 24,548 (106,135) (100,441) (81,220) (75,893)
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
In respect of IFRS 16, deferred tax had not previously been
recognised due to the application of the initial recognition
exemption. On 7 May 2021, the IASB issued "Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)" , which amends the application of the
initial recognition exemption for transactions giving rise to
offsetting deferred tax assets and deferred tax liabilities. A
deferred tax liability has been recognised on the IFRS 16 right of
use asset and a deferred tax asset in respect of the IFRS 16 lease
liability resulting in a net deferred tax liability recognised as
at 30 September 2022 and 31 March 2022. The amendments to the
initial recognition exemption under IAS 12 are effective for
accounting periods beginning on or after 1 January 2023 and have
been adopted early. The early adoption of this did not have a
material impact on the interim financial statements of the
Group
Movement in deferred tax during the period is as follows:
Audited Unaudited
31 March Recognised Exchange Acquisition 30 September
2022 in income differences of a subsidiary 2022
EUR000 EUR000 EUR000 EUR000 EUR000
----------------------------------- --------- ---------- ------------ ---------------- -------------
Revaluation of investment property (95,411) (5,795) - - (101,206)
Rent free adjustments (640) (4) - - (644)
Capitalised own works (55) - - - (55)
Hedging (swaps) (52) (197) - - (249)
Fair value adjustment on leased
investment properties (224) 178 - - (46)
Tax losses 20,330 515 - - 20,845
Fixed asset temporary differences 159 (19) (5) - 135
Other short-term temporary
differences - - - - -
----------------------------------- --------- ---------- ------------ ---------------- -------------
Total (75,893) (5,322) (5) - (81,220)
----------------------------------- --------- ---------- ------------ ---------------- -------------
Audited Audited
31 March Recognised Exchange Acquisition 31 March
2021 in income differences of a subsidiary 2022
EUR000 EUR000 EUR000 EUR000 EUR000
----------------------------------- --------- ---------- ------------ ---------------- ---------
Revaluation of investment property (73,946) (8,646) - (12,819) (95,411)
Rent free adjustments (570) (70) - - (640)
Capitalised own works (43) (12) - - (55)
Hedging (swaps) 249 (301) - - (52)
Fair value adjustment on leased
investment properties - (5,697) - 5,473 (224)
Tax losses 17,979 2,272 (2) 81 20,330
Fixed asset temporary differences - (1,128) (32) 1,319 159
Other short-term temporary
differences - (1,245) (31) 1,276 -
----------------------------------- --------- ---------- ------------ ---------------- ---------
Total (56,331) (14,827) (65) (4,670) (75,893)
----------------------------------- --------- ---------- ------------ ---------------- ---------
The Group has not recognised a deferred tax asset on EUR256
million (31 March 2022: EUR257 million) of tax losses carried
forward and future share scheme deductions due to uncertainties
over recovery. There is no expiration date on EUR256 million of the
losses and future share scheme tax deductions will convert to tax
losses on realisation.
A change in ownership of the Group may result in restriction on
the Group's ability to use tax losses in certain tax
jurisdictions.
The Group elected to join the UK REIT regime with effect from 1
April 2022. Income and gains from the Group's UK property business
are exempt from UK corporation tax provided that the Group meets a
number of conditions, including distributing at least 90% of the
Group's UK tax exempt income profits as property income
distributions ("PIDs"). The business in Germany and the residual
business in the UK are subject to corporation tax.
A deferred tax liability is recognised on temporary differences
of EURnil (31 March 2022: 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
2022 2022 2022 2022 2022 2022
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
UK 135 159 - - 135 159
Germany 24,780 24,389 (106,135) (100,441) (81,355) (76,052)
Cyprus - - - - - -
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Deferred tax assets/(liabilities) 24,915 24,548 (106,135) (100,441) (81,220) (75,893)
---------------------------------- ------------- --------- ------------- --------- ------------- ---------
Assets Liabilities Net
------------------------ ------------------------ ------------------------
Unaudited Audited Unaudited Audited Unaudited Audited
30 September 31 March 30 September 31 March 30 September 31 March
2022 2022 2022 2022 2022 2022
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
UK - - (526) (7,316) (526) (7,316)
Germany - - (4,232) (2,690) (4,232) (2,690)
Cyprus - - (220) (417) (220) (417)
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
Current tax assets/(liabilities) - - (4,978) (10,423) (4,978) (10,423)
--------------------------------- ------------- --------- ------------- --------- ------------- ---------
10. Earnings per share
The calculation of the basic, diluted, EPRA, headline and
adjusted earnings per share is based on the following data:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Earnings attributable to the owners of the Company
Basic earnings 70,008 67,738
Diluted earnings 70,008 67,738
EPRA earnings 41,226 32,550
Diluted EPRA earnings 41,226 32,550
Headline earnings 42,642 27,035
Diluted headline earnings 42,642 27,035
--------------------------------------------------------- ------------- -------------
Adjusted
Basic earnings 70,008 67,738
Deduct gain on revaluation of investment properties (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (4,801) 400
Deduct recoveries from prior disposals of subsidiaries
(net of related tax) - (94)
Tax in relation to the gain on revaluation of investment
properties and gain on disposal of properties above
less REIT related tax effects 5,546 8,610
Non-controlling interest ("NCI") relating to revaluation
(net of related tax) 46 42
Deduct revaluation gain on investment property relating
to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment
property relating to associates above 523 418
--------------------------------------------------------- ------------- -------------
Headline earnings after tax 42,642 27,035
Deduct change in fair value of derivative financial
instrument (net of related tax and NCI) (1,416) (64)
Deduct revaluation expense relating to leased investment
properties (919) (3,083)
Add adjusting items (net of related tax and NCI)(1) 2,987 6,974
--------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 43,294 30,862
--------------------------------------------------------- ------------- -------------
Number of shares
Weighted average number of ordinary shares for the
purpose of basic, headline, adjusted and basic EPRA
earnings per share 1,167,383,139 1,052,600,936
--------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted earnings, diluted headline earnings,
diluted adjusted earnings and diluted EPRA earnings
per share 1,183,403,147 1,070,514,305
--------------------------------------------------------- ------------- -------------
Basic earnings per share 6.00c 6.44c
--------------------------------------------------------- ------------- -------------
Diluted earnings per share 5.92c 6.33c
--------------------------------------------------------- ------------- -------------
Basic EPRA earnings per share 3.53c 3.09c
--------------------------------------------------------- ------------- -------------
Diluted EPRA earnings per share 3.48c 3.04c
--------------------------------------------------------- ------------- -------------
Headline earnings per share 3.65c 2.57c
--------------------------------------------------------- ------------- -------------
Diluted headline earnings per share 3.60c 2.53c
--------------------------------------------------------- ------------- -------------
Adjusted earnings per share 3.71c 2.93c
--------------------------------------------------------- ------------- -------------
Adjusted diluted earnings per share 3.66c 2.88c
--------------------------------------------------------- ------------- -------------
(1) See reconciliation between adjusting items as stated within
earnings per share and those stated within administrative expenses
in note 5.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
Notes EUR000 EUR000
------------------------------------------------------ ----- ------------- -------------
Exceptional items 5 1,040 (8)
Refinancing costs, exit fees and prepayment penalties 8 - 5,579
LTIP and SIP 5 1,947 1,403
------------------------------------------------------ ----- ------------- -------------
Adjusting items as per note 10 2,987 6,974
------------------------------------------------------ ----- ------------- -------------
The following table shows the reconciliation of basic to
headline earnings, separately disclosing the impact before tax
(gross column) and after tax (net column):
Unaudited six Unaudited six
months months
ended 30 September ended 30 September
2022 2021
--------------------- ---------------------
Gross Net Gross Net
EUR000 EUR000 EUR000 EUR000
------------------------------------------------- ---------- --------- ---------- ---------
Basic earnings 70,008 67,738
Deduct gain on revaluation of investment
properties (26,812) (21,318) (48,414) (39,804)
(Deduct gain)/add loss on disposal of properties (4,801) (4,749) 400 400
Deduct recoveries from prior disposals of
subsidiaries - - (94) (94)
NCI relating to revaluation 52 46 50 42
Deduct revaluation gain on investment property
relating to associates (1,868) (1,345) (1,665) (1,247)
------------------------------------------------- ---------- --------- ---------- ---------
Headline earnings 42,642 27,035
------------------------------------------------- ---------- --------- ---------- ---------
EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
--------------------------------------------------------------- ------------- -------------
Basic and diluted earnings attributable to owners of the
Company 70,008 67,738
Gain on revaluation of investment properties (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (net of
related tax) (4,749) 400
Deduct recoveries from prior disposals of subsidiaries (net
of related tax) - (94)
Refinancing costs, exit fees and prepayment penalties - 5,579
Change in fair value of derivative financial instruments (1,244) (160)
Deferred tax in respect of EPRA fair value movements on
investment properties 5,322 8,706
NCI relating to revaluation (net of related tax) 46 42
Deduct revaluation gain on investment property relating
to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment property
relating to associates 523 418
--------------------------------------------------------------- ------------- -------------
EPRA earnings 41,226 32,550
--------------------------------------------------------------- ------------- -------------
For more information on EPRA earnings refer to Annex 1.
For the calculation of basic, headline, adjusted, EPRA and
diluted earnings per share the number of shares has been reduced by
7,492,763 own shares held (30 September 2021: 3,295,750), which are
held by an Employee Benefit Trust on behalf of the Group.
The weighted average number of shares for the purpose of
diluted, diluted EPRA, diluted headline and adjusted diluted
earnings per share is calculated as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
----------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of basic, basic EPRA, headline and adjusted
earnings per share 1,167,383,139 1,052,600,936
Effect of grant of SIP shares 3,254,500 5,709,250
Effect of grant of LTIP shares 12,765,508 12,204,119
----------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the
purpose of diluted, diluted EPRA, diluted headline
and adjusted diluted earnings per share 1,183,403,147 1,070,514,305
----------------------------------------------------- ------------- -------------
The Company has chosen to report EPRA earnings per share ("EPRA
EPS"). EPRA EPS is a definition of earnings as set out by the
European Public Real Estate Association. EPRA earnings represents
earnings after adjusting for the revaluation of investment
properties, changes in fair value of derivative financial
instruments, gains/losses on disposal of properties (net of related
tax), recoveries from prior disposals of subsidiaries (net of
related tax), refinancing costs, exit fees and prepayment penalties
(collectively the "EPRA earnings adjustments"), deferred tax in
respect of the EPRA earnings adjustments, NCI relating to gain on
revaluation and gain on disposal of properties (net of related
tax), revaluation gain on investment property relating to
associates and the related tax thereon.
11. Net asset value per share
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
--------------------------------------------------------- ------------- -------------
Net asset value
Net asset value for the purpose of assets per share
(assets attributable to the owners of the Company) 1,213,113 1,190,652
Deferred tax liabilities/(assets) (see note 9) 81,220 75,893
Derivative financial instruments at fair value (1,573) (329)
-------------------------------------------------------- -------------- -------------
Adjusted net asset value attributable to the owners
of the Company 1,292,760 1,266,216
-------------------------------------------------------- -------------- -------------
Number of shares
Number of ordinary shares for the purpose of net asset
value per share and adjusted net asset value per share 1,167,559,601 1,166,880,684
Number of ordinary shares for the purpose of EPRA NTA
per share 1,183,579,609 1,182,159,303
Net asset value per share 103.9c 102.04c
Adjusted net asset value per share 110.72c 108.51c
EPRA NTA per share 109.47c 107.28c
-------------------------------------------------------- -------------- -------------
Net asset value at the end of the period (basic) 1,213,113 1,190,652
Derivative financial instruments at fair value (1,573) (329)
Deferred tax in respect of EPRA fair value movements
on investment properties 81,220 75,566
Intangibles as per note 14 (4,129) (4,283)
Deferred tax in respect of EPRA fair value movements
on investment properties in relation to investment in
associates 7,076 6,563
-------------------------------------------------------- -------------- -------------
EPRA NTA 1,295,707 1,268,169
-------------------------------------------------------- -------------- -------------
EPRA NRV EPRA NTA EPRA NDV
Unaudited 30 September 2022 EUR000 EUR000 EUR000
----------------------------------------------------- --------- --------- ---------
Net asset value as at period end (basic) 1,213,113 1,213,113 1,213,113
----------------------------------------------------- --------- --------- ---------
Diluted EPRA net asset value at fair value 1,213,113 1,213,113 1,213,113
----------------------------------------------------- --------- --------- ---------
Group
Derivative financial instruments at fair value (1,573) (1,573) n/a
Deferred tax in respect of EPRA fair value movements
on investment properties 81,220 81,220(1) n/a
Intangibles as per note 14 n/a (4,129) n/a
Fair value of fixed interest rate debt n/a n/a 48,681
Real estate transfer tax 163,198 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements
on investment properties 7,076 7,076(1) n/a
Fair value of fixed interest rate debt n/a n/a 9,762
Real estate transfer tax 9,353 n/a n/a
----------------------------------------------------- --------- --------- ---------
Total EPRA NRV, NTA and NDV 1,472,387 1,295,707 1,271,556
----------------------------------------------------- --------- --------- ---------
EPRA NRV, NTA and NDV per share 124.40c 109.47c 107.43c
----------------------------------------------------- --------- --------- ---------
EPRA NRV EPRA NTA EPRA NDV
Audited 31 March 2022 EUR000 EUR000 EUR000
----------------------------------------------------- --------- --------- ---------
Net asset value as at period end (basic) 1,190,652 1,190,652 1,190,652
----------------------------------------------------- --------- --------- ---------
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
----------------------------------------------------- --------- --------- ---------
Group
Derivative financial instruments at fair value (329) (329) n/a
Deferred tax in respect of EPRA fair value movements
on investment properties 75,893 75,566(1) n/a
Intangibles as per note 14 n/a (4,283) n/a
Fair value of fixed interest rate debt n/a n/a (22,229)
Real estate transfer tax 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements
on investment properties 6,563 6,563(1) n/a
Fair value of fixed interest rate debt n/a n/a 2,196
Real estate transfer tax 9,147 n/a n/a
----------------------------------------------------- --------- --------- ---------
Total EPRA NRV, NTA and NDV 1,442,618 1,268,169 1,170,619
----------------------------------------------------- --------- --------- ---------
EPRA NRV, NTA and NDV per share 122.03c 107.28c 99.02c
----------------------------------------------------- --------- --------- ---------
(1) The Group intends to hold and does not intend in the long
term to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at period end except for
deferred tax in relation to assets held for sale.
For more information on adjusted net asset value and EPRA NRV,
NTA and NDV, refer to Annex 1.
The number of ordinary shares for the purpose of EPRA NRV, NTA
and NDV per share is calculated as follows:
Unaudited Audited
30 September 31 March
2022 2022
-------------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of net asset
value per share and adjusted net asset value per share 1,167,559,601 1,166,880,684
Effect of grant of SIP shares 3,254,500 3,074,500
Effect of grant of LTIP shares 12,765,508 12,204,119
-------------------------------------------------------- ------------- -------------
Number of ordinary shares for the purpose of EPRA NRV,
NTA and NDV per share 1,183,579,609 1,182,159,303
-------------------------------------------------------- ------------- -------------
The number of shares has been reduced by 7,492,763 own shares
held (31 March 2022: 5,280,308 shares), which are held by an
Employee Benefit Trust on behalf of the Group.
12. Investment properties
The movement in the book value of investment properties is as
follows:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
---------------------------------------------------------------- ------------- ---------
Total investment properties at book value as at the beginning
of the period 2,100,004 1,362,192
Acquisition of a subsidiary - 421,105
Additions - owned investment properties 832 162,844
Additions - leased investment properties - 3,366
Capital expenditure and broker fees 11,536 22,607
Disposals (13,792) (1,808)
Reclassified as investment properties held for sale (see
note 13) (1,000) (13,739)
Gain on revaluation above capex and broker fees 27,754 147,017
Adjustment in respect of lease incentives (23) (561)
Deficit on revaluation relating to leased investment properties (919) (5,572)
Foreign exchange differences (19,346) 2,553
---------------------------------------------------------------- ------------- ---------
Total investment properties at book value as at period end(1) 2,105,046 2,100,004
---------------------------------------------------------------- ------------- ---------
(1) Excluding assets held for sale.
The reconciliation of the valuation carried out by the external
valuer to the carrying values shown in the condensed consolidated
statement of financial position is as follows:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
-------------------------------------------------------------- ------------- ---------
Owned investment properties at market value per valuer's
report(1) 2,085,500 2,079,079
Adjustment in respect of lease incentives (4,069) (4,153)
Leased investment property market value 23,615 25,078
-------------------------------------------------------------- ------------- ---------
Total investment properties at book value as at period end(1) 2,105,046 2,100,004
-------------------------------------------------------------- ------------- ---------
(1) Excluding assets held for sale.
The fair value (market value) of the Group's owned investment
properties at period end has been arrived at on the basis of a
valuation carried out at that date by Cushman & Wakefield LLP
(31 March 2022: Cushman & Wakefield LLP), an independent valuer
accredited in terms of the Royal Institution of Chartered Surveyors
("RICS"). The fee arrangement with Cushman & Wakefield LLP for
the valuation of the Group's properties is fixed, subject to an
adjustment for acquisitions and disposals.
The value of each of the properties has been assessed in
accordance with the RICS valuation standards on the basis of market
value. The methodology and assumptions used to determine the fair
value of the properties are consistent with the previous
period.
The weighted average lease expiry remaining across the owned
portfolio in Germany as at period end was 2.7 years (31 March 2022:
2.9 years). The weighted average lease expiry remaining across the
owned portfolio in the UK as at period end was 0.9 years (31 March
2022: 0.9 years). Licence agreements in the UK are rolling and are
included in the valuation.
The fair value (market value) of the Group's leased investment
properties as at period end has been arrived at on the basis of a
valuation carried out by management using discounted cash flows
similar to the approach of Cushman & Wakefield LLP.
The reconciliation of gain on revaluation above capex as per the
condensed consolidated income statement is as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
---------------------------------------------------------------- ------------- -------------
Gain on revaluation above capex and broker fees 27,754 51,445
Adjustment in respect of lease incentives (23) 52
Deficit on revaluation relating to leased investment properties (919) (3,083)
---------------------------------------------------------------- ------------- -------------
Gain on revaluation of investment properties reported in
the income statement 26,812 48,414
---------------------------------------------------------------- ------------- -------------
Included in the gain on revaluation of investment properties
reported in the income statement (excluding the revaluation effects
in respect of leased investment properties) are gross gains of
EUR41.6 million and gross losses of EUR14.8 million (30 September
2021: gross gains of EUR55.9 million and gross losses of EUR7.5
million).
Other than the capital commitments disclosed in note 27 the
Group is under no contractual obligation to purchase, construct or
develop any investment property. The Group is responsible for
routine maintenance to the investment properties.
All investment properties are categorised as Level 3 fair values
as they use significant unobservable inputs. There have not been
any transfers between levels during the period. Investment
properties have been classed according to their asset type.
Information on these significant unobservable inputs per class of
investment property is disclosed below (excluding leased investment
properties).
The valuation for owned investment properties is (including
assets classified as held for sale) performed on a lease-by-lease
basis due to the mixed-use nature of the sites using the discounted
cash flow technique for the German portfolio and on a capitalised
income basis, where income is capitalised by an appropriate yield
which reflects the age, location, ownership, customer base and
agreement type for the UK portfolio. This gives rise to large
ranges in the inputs.
Current Market Gross
rental rate rental rate initial Discount
per sqm per sqm Occupancy yield Net initial factor Void period
EUR EUR % % yield % % months
--------- ------------- ------------- ----------- ---------- -------------- ---------- -----------
Unaudited Market
30 September value
2022 EUR000 Low High Low High Low High Low High Low High Low High Low High
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Traditional
business
parks
Mature 383,800 2.67 8.48 2.65 7.68 92.4 100.0 4.0 8.9 3.2 7.0 3.9 5.9 6 12
Value
add 582,000 -(1) 8.16 3.54 8.46 -(1) 95.3 -(1) 10.9 (3.6)(1) 8.4 4.3 7.1 9 18
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
traditional
business
parks 965,800 -(1) 8.48 2.65 8.46 -(1) 100.0 -(1) 10.9 (3.6)(1) 8.4 3.9 7.1 6 18
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Modern
business
parks
Mature 202,700 5.38 8.26 3.83 7.95 95.0 100.0 5.0 10.4 4.1 9.0 3.9 5.3 6 15
Value
add 211,600 2.81 9.04 3.87 10.22 74.9 91.5 4.6 9.6 3.4 6.7 4.9 7.5 9 24
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
modern
business
parks 414,300 2.81 9.04 3.83 10.22 74.9 100.0 4.6 10.4 3.4 9.0 3.9 7.5 6 24
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Office
Mature 37,100 11.84 11.84 10.44 10.44 92.0 92.0 7.5 7.5 6.3 6.3 4.9 4.9 9 9
Value
add 239,990 2.03 10.13 6.34 12.18 40.0 86.4 2.2 8.2 0.1 5.8 4.8 7.0 9 18
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
office 277,090 2.03 11.84 6.34 12.18 40.0 92.0 2.2 8.2 0.1 6.3 4.8 7.0 9 18
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
Germany 1,657,190 -(1) 11.84 2.65 12.18 -(1) 100.0 -(1) 10.9 (3.6)(1) 9.0 3.9 7.5 6 24
------------ --------- ----- ------ ----- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Current
rental rate Market rental rate
per sqm per sqm Occupancy Net initial yield Void period
EUR EUR % % months
-------------- -------------------- ----------- ------------------- -------------
Market
Unaudited 30 value
September 2022 EUR000 Low High Low High Low High Low High Low High
-------------- ------- ------ ------ -------- ---------- ---- ----- --------- -------- ----- ------
Total
mixed-use
schemes 109,258 -(1) 23.23 5.54 22.91 -(1) 96.0 -(1) 10.9 4 12
-------------- ------- ------ ------ -------- ---------- ---- ----- --------- -------- ----- ------
Total office 146,262 5.89 30.24 7.90 25.21 38.2 100.0 -(1) 18.2 4 12
-------------- ------- ------ ------ -------- ---------- ---- ----- --------- -------- ----- ------
Total
industrial 173,046 1.75 10.54 2.39 12.45 70.8 100.0 3.4 10.5 4 12
-------------- ------- ------ ------ -------- ---------- ---- ----- --------- -------- ----- ------
Total UK 428,566 -(1) 30.24 2.39 25.21 -(1) 100.0 -(1) 18.2 4 12
-------------- ------- ------ ------ -------- ---------- ---- ----- --------- -------- ----- ------
(1)* The Group has vacant investment properties at as period
end. As a result the lower range for rental rates, occupancy and
yields is 0 or lower.
Market
Current rental Gross
rental rate rate initial Discount
per sqm per sqm Occupancy yield Net initial factor Void period
EUR EUR % % yield % % months
--------- ------------- ------------ ----------- ---------- -------------- ---------- -----------
Audited Market
31 March value
2022 EUR000 Low High Low High Low High Low High Low High Low High Low High
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Traditional
business
parks
Mature 329,100 2.67 8.32 2.65 7.42 91.5 100.0 4.5 8.5 3.7 6.7 3.6 5.4 6 12
Value
add 625,540 -(1) 8.16 3.49 8.46 -(1) 97.3 -(1) 9.0 (3.7)(1) 6.8 3.9 7.1 9 18
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
traditional
business
parks 954,640 -(1) 8.32 2.65 8.46 -(1) 100.0 -(1) 9.0 (3.7)(1) 6.8 3.6 7.1 6 18
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Modern
business
parks
Mature 195,750 5.03 8.13 3.74 7.68 91.8 100.0 5.0 9.8 4.1 8.4 3.6 5.0 6 15
Value
add 213,140 2.86 10.28 3.76 10.15 74.9 97.8 2.9 9.4 1.6 6.6 4.4 7.3 9 24
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
modern
business
parks 408,890 2.86 10.28 3.74 10.15 74.9 100.0 2.9 9.8 1.6 8.4 3.6 7.3 6 24
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Office
Mature 10,200 10.07 10.07 9.38 9.38 87.1 87.1 6.4 6.4 5.2 5.2 4.5 4.5 9 9
Value
add 266,880 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -(1) 7.2 4.6 6.6 9 18
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
office 277,080 2.03 11.78 6.15 12.18 40.0 92.0 2.0 9.5 -(1) 7.2 4.5 6.6 9 18
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Total
Germany 1,640,610 -(1) 11.78 2.65 12.18 -(1) 100.0 -(1) 9.8 (3.7)(1) 8.4 3.6 7.3 6 24
------------ --------- ----- ------ ---- ------ ---- ----- ---- ---- -------- ---- ---- ---- --- ------
Current
rental rate Market rental rate
per sqm per sqm Occupancy Net initial yield Void period
EUR EUR % % months
-------------- -------------------- ------------- ------------------- -------------
Market
Audited 31 value
March 2022 EUR000 Low High Low High Low High Low High Low High
------------ ------- ------- ----- -------- ---------- ------ ----- ----------- ------ ----- ------
Total
mixed-use
schemes 123,263 1.71 26.49 5.78 23.59 48.6 96.8 3.0 10.0 4 12
------------ ------- ------- ----- -------- ---------- ------ ----- ----------- ------ ----- ------
Total office 153,112 - ( (1) 25.38 5.83 26.50 -( (1) 100.0 -( (1) 10.0 4 12
------------ ------- ------- ----- -------- ---------- ------ ----- ----------- ------ ----- ------
Total
industrial 175,394 1.04 10.94 2.39 11.24 65.1 100.0 3.0 10.0 4 12
------------ ------- ------- ----- -------- ---------- ------ ----- ----------- ------ ----- ------
Total UK 451,769 -( (1) 26.49 2.39 26.50 -( (1) 100.0 -( (1) 10.0 4 12
------------ ------- ------- ----- -------- ---------- ------ ----- ----------- ------ ----- ------
(1) The Group acquired vacant investment properties during the
year ended 31 March 2022. As a result the lower range for rental
rates, occupancy and yields is 0 or lower.
As a result of the level of judgement and estimates used in
arriving at the market valuations, the amounts which may ultimately
be realised in respect of any given property may differ from
valuations shown in the statement of financial position. Key inputs
are considered to be inter-related whereby changes in one key input
can result in changes in other key inputs. The impact of changes in
relation to the key inputs is also shown in the table below:
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
Market in market rental in discount in gross initial in net initial
value rates rates yield yield
EUR000 EUR000 EUR000 EUR000 EUR000
--------- ------------------ ------------------- -------------------- --------------------
Unaudited
30 September
2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
------------ --------- -------- -------- -------- -------- --------- -------- --------- --------
Total
traditional
business
parks 965,800 48,720 (49,110) (19,700) 19,790 (77,583) 92,929 (102,169) 128,695
Total modern
business
parks 414,300 19,300 (19,680) (8,050) 8,250 (30,437) 35,982 (38,576) 43,616
Total office 277,090 14,640 (14,470) (5,590) 5,940 (23,120) 28,481 (29,788) 39,283
------------ --------- -------- -------- -------- --------- --------- --------- --------- -----------
Market value
Germany 1,657,190 82,660 (83,260) (33,340) 33,980 (131,140) 157,392 (170,533) 211,594
------------ --------- -------- -------- -------- --------- --------- --------- --------- -----------
Change of 5% Change of 0.5%
Market in market rental in net initial
value rates yield
EUR000 EUR000 EUR000
------------------- ------------------
Unaudited 30 September 2022 Increase Decrease Increase Decrease
---------------------------- ------- --------- -------- -------- --------
Total mixed-use schemes 109,258 90 (7,509) (10,467) 4,192
Total office 146,262 8,445 (1,235) (3,937) 12,153
Total industrial 173,046 6,755 (6,667) (11,212) 13,105
---------------------------- ------- --------- -------- -------- --------
Market value UK 428,566 15,290 (15,411) (25,616) 29,450
---------------------------- ------- --------- -------- -------- --------
Change of 5% Change of 0.25% Change of 0.5% Change of 0.5%
Market in market rental in discount in gross initial in net initial
value rates rates yield yield
EUR000 EUR000 EUR000 EUR000 EUR000
--------- ------------------ ------------------- -------------------- --------------------
Audited 31
March 2022 Increase Decrease Increase Decrease Increase Decrease Increase Decrease
------------ --------- -------- -------- -------- -------- --------- -------- --------- --------
Total
traditional
business
parks 954,640 48,450 (48,380) (19,640) 20,070 (84,224) 82,247 (98,020) 126,295
Total modern
business
parks 408,890 19,260 (19,420) (8,540) 8,510 (30,840) 36,820 (38,033) 48,091
Total office 277,080 14,470 (14,340) (5,840) 5,760 (23,005) 28,467 (37,901) 27,766
------------ --------- -------- -------- -------- --------- --------- --------- --------- -----------
Market value
Germany 1,640,610 82,180 (82,140) (34,020) 34,340 (138,069) 147,534 (173,954) 202,152
------------ --------- -------- -------- -------- --------- --------- --------- --------- -----------
Change of 5% Change of 0.5%
Market in market rental in net initial
value rates yield
EUR000 EUR000 EUR000
------------------- ------------------
Audited 31 March 2022 Increase Decrease Increase Decrease
------------------------ ------- --------- -------- -------- --------
Total mixed-use schemes 123,263 3,967 (4,423) (4,494) 4,389
Total office 153,112 5,754 (5,325) (4,295) 5,029
Total industrial 175,394 7,139 (6,333) (5,822) 6,843
------------------------ ------- --------- -------- -------- --------
Market value UK 451,769 16,860 (16,081) (14,611) 16,261
------------------------ ------- --------- -------- -------- --------
13. Assets held for sale
Investment properties held for sale
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------- ------------- ---------
Magdeburg - 13,750
Heiligenhausen Land 1,000 -
------------------------- ------------- ---------
Balance as at period end 1,000 13,750
------------------------- ------------- ---------
The disclosures regarding valuation in note 12 are also
applicable to assets held for sale. As at 31 March 2022, an amount
of EUR13,750,000 relating to the sale of the Magdeburg asset was
received prior to the completion date of 1 April 2022 and was
included in the cash at bank per note 19. As a result, an equal and
opposite position within other payables was recognised. See note 20
for further details.
14. Intangible assets
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------- ------------- ---------
Software and licences 4,129 4,283
------------------------- ------------- ---------
Balance as at period end 4,129 4,283
------------------------- ------------- ---------
15. Right of use assets and lease liabilities
Set out below are the carrying amounts of right of use assets
(excluding those classified as investment properties) recognised
and the movements during the period:
Office Total
EUR000 EUR000
------------------------------------ ------- -------
As at 31 March 2021 (audited) 1,919 1,919
Depreciation expense (260) (260)
------------------------------------ ------- -------
As at 30 September 2021 (unaudited) 1,659 1,659
------------------------------------ ------- -------
Additions 15,047 15,047
Depreciation expense (583) (583)
Lease modifications(1) (1,127) (1,127)
------------------------------------ ------- -------
As at 31 March 2022 (audited) 14,996 14,996
------------------------------------ ------- -------
Additions 1,450 1,450
Depreciation expense (1,141) (1,141)
Foreign exchange differences (46) (46)
------------------------------------ ------- -------
As at 30 September 2022 (unaudited) 15,259 15,259
------------------------------------ ------- -------
(1) Lease modifications relate to the early termination of the head office lease.
In addition to office spaces the Group is also counterparty to
long-term leasehold agreements and head leases relating to
commercial property. Right of use assets amounting to EUR23,615,000
(31 March 2022: EUR25,078,000) are classified as investment
properties, of which EUR3,180,000 (31 March 2022: EUR3,979,000)
relate to commercial property.
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
----------------------------------------------- ------------- ---------
Balance as at the beginning of the period (38,661) (14,987)
Acquisition of a subsidiary - (12,182)
Accretion of interest (533) (479)
Additions (1,400) (18,413)
Lease modifications(1) - 1,127
Payments 1,308 6,350
Foreign exchange differences 595 (77)
----------------------------------------------- ------------- ---------
Balance as at period end (38,691) (38,661)
----------------------------------------------- ------------- ---------
Current lease liabilities as at period end (1,458) (1,090)
----------------------------------------------- ------------- ---------
Non-current lease liabilities as at period end (37,233) (37,571)
----------------------------------------------- ------------- ---------
(1) Lease modifications relate to the early termination of the head office lease.
The following table sets out the carrying amount, by maturity,
of the Group's lease liabilities:
Within
1 year 1-5 years 5+ years Total
Unaudited 30 September 2022 EUR000 EUR000 EUR000 EUR000
---------------------------- ------- --------- -------- --------
Commercial property(1) (243) (956) (399) (1,598)
Long-term leasehold(1) (240) (1,017) (19,179) (20,436)
Office space (975) (7,503) (8,179) (16,657)
---------------------------- ------- --------- -------- --------
Total (1,458) (9,476) (27,757) (38,691)
---------------------------- ------- --------- -------- --------
Within
1 year 1-5 years 5+ years Total
Audited 31 March 2022 EUR000 EUR000 EUR000 EUR000
----------------------- ------- --------- -------- --------
Commercial property(1) (667) (945) (528) (2,140)
Long-term leasehold(1) (239) (1,013) (19,848) (21,100)
Office space (184) (6,197) (9,040) (15,421)
----------------------- ------- --------- -------- --------
Total (1,090) (8,155) (29,416) (38,661)
----------------------- ------- --------- -------- --------
(1) These lease liabilities relate to right of use assets recorded as investment properties.
The overall weighted average discount rate used for the period
is 2.7% (31 March 2022: 2.3%).
16. Other non-current financial assets
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------- ------------- ---------
Guarantees and deposits 4,057 4,052
Loans to associates 44,352 44,278
------------------------- ------------- ---------
Balance as at period end 48,409 48,330
------------------------- ------------- ---------
Loans to associates relate to shareholder loans granted to
associates by the Group. The loans terminate on 31 December 2026,
are fully subordinated and are charged at a fixed interest rate.
The expected credit loss has been considered based on multiple
factors such as history of repayments, forward looking budgets and
forecasts. Based on the assessment the expected credit loss was
immaterial.
17. Investment in associates
The principal activity of the associates is the investment in,
and development of, commercial property located in Germany and to
provide conventional and flexible workspace. Since the associates
are individually immaterial the Group is disclosing aggregated
information for the associates.
The following table illustrates the summarised financial
information of the Group's investment in associates:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
-------------------------------- ------------- ---------
Current assets 23,123 20,031
Non-current assets 356,813 349,796
Current liabilities (12,242) (10,406)
Non-current liabilities (296,061) (294,121)
-------------------------------- ------------- ---------
Equity 71,633 65,300
Unrecognised accumulated losses 4,765 3,679
-------------------------------- ------------- ---------
Subtotal 76,398 68,979
-------------------------------- ------------- ---------
Group's share in equity - 35% 26,739 24,142
-------------------------------- ------------- ---------
Unaudited
six months Audited
ended year ended
30 September 31 March
2022 2022
EUR000 EUR000
----------------------------------------------------------- ------------- -----------
Net operating income 9,965 19,872
Gain on revaluation of investment properties 4,226 18,856
Administrative expense (1,709) (3,001)
----------------------------------------------------------- ------------- -----------
Operating profit 12,482 35,727
Net finance costs (4,409) (9,753)
----------------------------------------------------------- ------------- -----------
Profit before tax 8,073 25,974
Taxation (1,731) (4,166)
Unrecognised loss/(profit) 1,077 (1,978)
----------------------------------------------------------- ------------- -----------
Total profit and comprehensive income for the period after
tax 7,419 19,830
----------------------------------------------------------- ------------- -----------
Group's share of profit for the period - 35% 2,597 6,940
----------------------------------------------------------- ------------- -----------
The Group's share of profit for the six months ended 30
September 2021 was EUR2,463,000.
Included within the non-current liabilities are shareholder
loans amounting to EUR126,719,000 (31 March 2022: EUR126,509,000).
As at period end no contingent liabilities existed (31 March 2022:
none). The associates had contracted capital expenditure for
development and enhancements of EUR278,000 as at period end (31
March 2022: EUR2,010,000).
The following table illustrates the movement in investment in
associates:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------------------------ ------------- ---------
Balance as at the beginning of the period 24,142 17,202
Share of profit 2,597 6,940
------------------------------------------ ------------- ---------
Balance as at period end 26,739 24,142
------------------------------------------ ------------- ---------
18. Trade and other receivables
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
-------------------------------------------- ------------- ---------
Gross trade receivables 14,521 18,791
Expected credit loss provision (see note 5) (7,362) (7,722)
-------------------------------------------- ------------- ---------
Net trade receivables 7,159 11,069
Other receivables 10,361 8,865
Prepayments 6,900 4,637
-------------------------------------------- ------------- ---------
Balance as at period end 24,420 24,571
-------------------------------------------- ------------- ---------
Other receivables include lease incentives of EUR4,069,000 (31
March 2022: EUR4,036,000) and accrued service charge income of
EUR4,453,000 (31 March 2022: EUR965,000).
Prepayments include costs of EUR3,639,000 relating to the
acquisitions of new sites in Düsseldorf and Dreieich that were
notarised before 30 September 2022 and have completed in the second
half of the financial year (31 March 2022: EUR1,860,000 relating to
the acquisition of a new site in Düsseldorf that was notarised
before 31 March 2022).
19. Cash and cash equivalents
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------- ------------- ----------
Cash at bank 138,641 127,285
Restricted cash 23,457 23,681
------------------------- ------------- ----------
Balance as at period end 162,098 150,966
------------------------- ------------- ----------
Cash at bank earns interest at floating rates based on daily
bank deposit rates. The fair value of cash as at period end is
EUR162,098,000 (31 March 2022: EUR150,966,000). Cash is held by
reputable banks and the Group assessed the expected credit loss to
be immaterial.
The following table illustrates the breakdown of cash held in
restricted accounts:
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------------- ------------- ----------
Deposits received from tenants 21,986 22,210
Office rent deposits 131 131
Deposit for bank guarantees 1,340 1,340
------------------------------- ------------- ----------
Total 23,457 23,681
------------------------------- ------------- ----------
The majority of the restricted cash is in relation to tenant
deposits. Tenants' deposits are legal securities of tenants
retained by the Group without the right to use these cash deposits
for purposes other than strictly tenant related transactions (e.g.
move-out costs, costs due to non-compliance with certain terms of
the lease agreement or late rent/service charge payments).
20. Trade and other payables
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
---------------------------------- ------------- ----------
Trade payables 1,107 6,488
Accrued expenses 31,725 25,093
Interest and amortisation payable 5,953 5,625
Tenant deposits 21,986 22,210
Unearned revenue 10,730 7,913
Other payables 5,492 22,006
---------------------------------- ------------- ----------
Balance as at period end 76,993 89,335
---------------------------------- ------------- ----------
Accrued expenses include costs totalling EUR14,363,000 (31 March
2022: EUR10,279,000) relating to service charge costs that have not
been invoiced to the Group.
Included within other payables are mainly credit balances due to
tenants in relation to over collections of service charge in amount
of EUR738,000 (31 March 2022: EUR2,624,000). As at 31 March 2022,
other payables included EUR13,750,000 of proceeds relating to the
sale of the Magdeburg asset that was categorised as an asset held
for sale at 31 March 2022 in advance of the completion date of 1
April 2022. See note 13 for details of assets held for sale.
Unearned revenue includes service charge amounts of EUR2,966,000
(31 March 2022: EUR1,164,000). Service charge income is only
recognised as income when the performance obligations are met. All
unearned revenue of the prior period was recognised as revenue in
the current period.
21. Interest-bearing loans and borrowings
Unaudited Audited
Interest 30 September 31 March
rate Loan maturity 2022 2022
% date EUR000 EUR000
-------------------------------- ----------- ---------------- ------------- ---------
Current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 1,923 1,909
- fixed rate facility 0.90 31 October 2023 1,487 1,480
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 777 771
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged(1) 31 December 2023 1,110 1,111
- floating rate facility Floating(1) 31 December 2023 140 140
Schuldschein
- floating rate facility Floating(2) 5 December 2022 5,000 5,000
Floating
- floating rate facility (2) 6 January 2023 10,000 10,000
- fixed rate facility 1.60 3 July 2023 20,000 -
Capitalised finance charges on
all loans (3,194) (781)
-------------------------------- ----------- ---------------- ------------- ---------
37,243 19,630
-------------------------------- ----------- ---------------- ------------- ---------
Non-current
Berlin Hyp AG
- fixed rate facility 1.48 31 October 2023 57,263 58,228
- fixed rate facility 0.90 31 October 2023 109,618 110,363
Saarbrücken Sparkasse
- fixed rate facility 1.53 28 February 2025 13,868 14,258
Deutsche Pfandbriefbank AG
- hedged floating rate facility Hedged(1) 31 December 2023 50,501 51,056
- floating rate facility Floating(1) 31 December 2023 6,171 6,241
Schuldschein
Floating
- floating rate facility (2) 6 January 2025 5,000 5,000
- fixed rate facility 1.70 3 March 2025 10,000 10,000
- fixed rate facility 1.60 3 July 2023 - 20,000
Corporate bond I
- fixed rate 1.125 22 June 2026 400,000 400,000
Corporate bond II
- fixed rate 1.75 24 November 2028 300,000 300,000
Capitalised finance charges on
all loans (9,245) (13,283)
-------------------------------- ----------- ---------------- ------------- ---------
943,176 961,863
-------------------------------- ----------- ---------------- ------------- ---------
Total 980,419 981,493
-------------------------------- ----------- ---------------- ------------- ---------
(1) Tranche 1 of this facility is fully hedged with a swap
charged at a rate of 1.40%; tranche 2 of this facility is fully
hedged with a swap charged at a rate of 1.25%; and EUR19.1 million
of tranche 3 of this facility is fully hedged with a swap charged
at a rate of 0.91%. A EUR6.5 million extension and the tranche 3
related EUR0.5 million arrangement fee are charged with a floating
rate of 1.20% over three-month EURIBOR (not less than 0%).
(2) This unsecured facility has a floating rate of 1.50% over
six month EURIBOR (not less than 0%) for the first two tranches and
a floating rate of 1.70% over six month EURIBOR (not less than 0%)
for tranche 3.
The Group has pledged 15 (31 March 2022: 15) investment
properties to secure several separate interest-bearing debt
facilities granted to the Group. The 15 (31 March 2022: 15)
properties had a combined valuation of EUR513,168,000 as at period
end (31 March 2022: EUR504,709,000). The Group's loans are subject
to various covenants with which the Group had complied with and had
a sufficient level of headroom as at period end.
Berlin Hyp AG
On 20 October 2016, the Group concluded an agreement with Berlin
Hyp AG to refinance and extend a facility which had an outstanding
balance of EUR39.2 million at 30 September 2016. The facility
totals EUR70.0 million and was scheduled to terminate on 29 October
2023. Amortisation was 2.5% per annum with the remainder due at
maturity. The facility was charged with an all-in fixed interest
rate of 1.48% for the full term of the loan. The facility was
secured over six property assets. The loan was subject to various
covenants with which the Group had complied. On 13 September 2019,
the facility was incorporated into the agreement as detailed below.
As a result, the maturity date of the loan was extended to 31
October 2023 with all other conditions remaining unchanged.
On 13 September 2019, the Group agreed to a facility agreement
with Berlin Hyp AG for EUR115.4 million. The loan terminates on 31
October 2023. Amortisation is 1.25% per annum with the remainder
due in the fourth year. The loan facility is charged at a fixed
interest rate of 0.90%. This facility is secured over nine property
assets. The facility is subject to various covenants with which the
Group has complied.
On 31 August 2022, the Group concluded an agreement with Berlin
Hyp AG to refinance the existing facility with a new facility which
amounts to EUR170.0 million. The new facility is a separate
financial instrument to the existing facility and will come into
effect on 1 November 2023 with a term of seven years and a fixed
interest rate of 4.26%.
Saarbrücken Sparkasse
On 28 March 2018, the Group agreed to a facility agreement with
Saarbrücken Sparkasse for EUR18.0 million. The loan terminates on
28 February 2025. Amortisation is 4.0% per annum with the remainder
due in one instalment on the final maturity date. The facility is
charged with an all-in fixed interest rate of 1.53% for the full
term of the loan. The facility is secured over one property asset
and is subject to various covenants with which the Group has
complied. No changes to the terms of the facility have occurred
during the six month period ended 30 September 2022.
Deutsche Pfandbriefbank AG
On 19 January 2019, the Group agreed to a facility agreement
with Deutsche Pfandbriefbank AG for EUR56.0 million. Tranche 1,
totalling EUR21.6 million, has been hedged at a rate of 1.40% until
31 December 2023 by way of an interest rate swap. A first drawdown
of tranche 3 totalling EUR0.5 million was charged at a fixed
interest rate of 1.20%. On 3 April 2019, tranche 2 was drawn down,
totalling EUR14.8 million, and has been hedged at a rate of 1.25%
until 31 December 2023 by way of an interest rate swap. On 28 June
2019, tranche 3 was drawn down, totalling EUR19.1 million. Tranche
3 has been hedged at a rate of 0.91% until 31 December 2023 by way
of an interest rate swap. The facility is secured over five
property assets and is subject to various covenants with which the
Group has complied.
On 19 February 2020, the Group agreed to extend tranche 3 of its
existing facility by EUR6.5 million. The loan is coterminous with
the existing facility maturing in December 2023. The loan has been
treated as a new loan and is charged with a floating interest rate
of 1.20% plus three month EURIBOR (not less than 0%). Amortisation
is 2% per annum with the remainder due in one instalment on the
final maturity date. No changes to the terms of the facility have
occurred during the six month period ended 30 September 2022.
Schuldschein
On 2 December 2019, the Group agreed new loan facilities in the
form of an unsecured Schuldschein for EUR20.0 million. On 25
February 2020, the Group agreed new loan facilities in the form of
an unsecured Schuldschein for EUR30.0 million. In total the
unsecured facility amounts to EUR50.0 million spread over five
tranches and is charged at a blended interest rate of 1.60% and
average maturity of 2.6 years with no amortisation. The
Schuldschein is subject to various covenants with which the Group
has complied. No changes to the terms of the facility have occurred
during the six month period ended 30 September 2022.
Corporate bond I
On 22 June 2021, the Group raised its inaugural corporate bond
for EUR400.0 million. The bond, which is listed at the Luxembourg
stock exchange has a term of five years and an interest rate of
1.125% due annually on its anniversary date, with the principal
balance coming due on 22 June 2026. The corporate bond is subject
to various covenants with which the Group has complied. No changes
to the terms of the facility have occurred during the six month
period ended 30 September 2022.
Corporate bond II
On 24 November 2021, the Group issued its second corporate bond
for EUR300.0 million. The bond, which is listed at the Luxembourg
stock exchange has a term of seven years and an interest rate of
1.750% due annually on its anniversary date, with the principal
balance coming due on 24 November 2028. The corporate bond is
subject to various covenants with which the Group has complied. No
changes to the terms of the facility have occurred during the six
month period ended 30 September 2022.
22. Financial instruments
Fair values
Set out below is a comparison by category of carrying amounts
and fair values of all of the Group's financial instruments that
are carried in the financial statements (excluding assets held for
sale and liabilities directly associated with assets held for
sale):
Unaudited
30 September Audited
2022 31 March 2022
----------------- -----------------
Fair
value Carrying Fair Carrying Fair
hierarchy amount value amount value
level EUR000 EUR000 EUR000 EUR000
----------------------------------------- ----------- -------- ------- -------- -------
Financial assets
Cash and cash equivalents 162,098 162,098 150,966 150,966
Trade and other receivables(1) 17,508 17,508 19,833 19,833
Loans to associates 2 44,352 44,352 44,278 44,278
Derivative financial instruments 2 1,573 1,573 329 329
----------------------------------------- ------------ -------- ------- -------- -------
Financial liabilities
Trade and other payables 34,538 34,538 56,329 56,329
Interest-bearing loans and borrowings(2)
Floating rate borrowings 2 26,311 26,311 26,381 26,381
Floating rate borrowings - hedged(3) 2 51,611 51,611 52,167 52,167
Fixed rate borrowings 2 914,936 866,255 917,009 939,238
----------------------------------------- ------------ -------- ------- -------- -------
All amounts in the table above are carried at amortised cost
except for derivative financial instruments which are held at fair
value.
(1) This is made up of net trade receivables, other receivables
(excluding lease incentives) and guarantees and deposits.
(2) Excludes loan issue costs.
(3) The Group holds interest rate swap contracts designed to
manage the interest rate and liquidity risks of expected cash flows
of its borrowings with the variable rate facilities with Deutsche
Pfandbriefbank AG. Please refer to note 21 for details of swap
contracts.
Fair value hierarchy
For financial assets or liabilities measured at amortised cost
and whose carrying value is a reasonable approximation to fair
value there is no requirement to analyse their value in the fair
value hierarchy.
The below analyses financial instruments measured at fair value
into a fair value hierarchy based on the valuation technique used
to determine fair value:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group holds interest rate swap contracts which are reset on
a quarterly basis. The fair value of interest rate swaps is based
on broker quotes. Those quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and
maturity of each contract and using market interest rates for a
similar instrument at the measurement date. The average interest
rate is based on the outstanding balances at the end of the
reporting period. The interest rate swap is measured at fair value
with changes recognised in profit or loss.
The fair values of the loans and borrowings have been calculated
based on a discounted cash flow model using the prevailing market
rates of interest.
23. Issued share capital
Share
Number capital
Authorised of shares EUR
--------------------------------------------------------------- ---------- --------
Ordinary shares of no par value Unlimited -
--------------------------------------------------------------- ---------- --------
As at 30 September 2022 (unaudited) and 31 March 2022 (audited) Unlimited -
--------------------------------------------------------------- ---------- --------
Share
Number capital
Issued and fully paid of shares EUR
---------------------------------------------------------- ------------- -------------
As at 31 March 2021 (audited) 1,049,132,259 -
Issued ordinary shares 11,367,372 9,195,000
Transfer of share capital to other distributable reserves - (9,195,000)
Shares allocated by the Employee Benefit Trust 388,858 -
---------------------------------------------------------- ------------- -------------
As at 30 September 2021 (unaudited) 1,060,888,489 -
Issued ordinary shares 107,976,753 158,185,000
Transfer of share capital to other distributable reserves - (158,185,000)
Shares issued to the Employee Benefit Trust (3,557,745) -
Shares allocated by the Employee Benefit Trust 1,573,187 -
---------------------------------------------------------- ------------- -------------
As at 31 March 2022 (audited) 1,166,880,684 -
Issued ordinary shares 2,891,372 1,440,000
Transfer of share capital to other distributable reserves - (1,440,000)
Shares issued to the Employee Benefit Trust (2,500,000) -
Shares allocated by the Employee Benefit Trust 287,545 -
---------------------------------------------------------- ------------- -------------
As at 30 September 2022 (unaudited) 1,167,559,601 -
---------------------------------------------------------- ------------- -------------
Holders of the ordinary shares are entitled to receive dividends
and other distributions and to attend and vote at any general
meeting. Shares held in treasury are not entitled to receive
dividends or to vote at general meetings.
Pursuant to a scrip dividend offering on 13 June 2022, the
Company issued 1,271,279 ordinary shares at an issue price of
GBP0.97384 resulting in the Company's overall issued share capital
being 1,175,052,364 ordinary shares.
In addition, the Company issued 1,620,093 shares in relation to
the exercise of the LTIP 2018 (June 2019 grant) as per note 7.
Treasury shares held by the Employee Benefit Trust are disclosed
as own shares held. During the period 2,500,000 shares were
acquired and 287,545 were allocated by the Employee Bene t Trust. A
total of 7,492,763 own shares purchased at an average share price
of EUR1.1116 are held by the Employee Benefit Trust (31 March 2022:
5,280,308 shares purchased at an average share price of EUR1.1882).
The total number of shares with voting rights was 1,175,052,364 (31
March 2022: 1,172,160,992). No votes are cast in respect of the
shares held in the Employee Benefit Trust in connection with the
Company's share plans and dividends paid and payable are subject to
a standing waiver.
All shares issued in the period were issued under general
authority. No shares were bought back in the period (31 March 2022:
none) and there are no Treasury Shares held directly by the parent
company at the period end (31 March 2022: none).
24. Other reserves
Other distributable reserve
The other distributable reserve was created for the payment of
dividends and the transfer of share capital in regard to scrip
dividends, share-based payment transactions and the buyback of
shares and is EUR544,419,000 in total at period end (31 March 2022:
EUR570,369,000).
Foreign currency translation reserve
The Group holds a foreign currency translation reserve amounting
to EUR21,243,000 deficit (31 March 2022: EUR1,701,000 deficit)
which relates to foreign currency translation effect during the
course of the business with the UK segment.
The negative movement in the period of EUR19,542,000 is a result
of a declining GBP rate which is lower at period end compared with
31 March 2022.
25. Dividends
On 13 June 2022, the Company announced a dividend of 2.37c per
share, with a record date of 8 July 2022 for UK and South African
("SA") shareholders and payable on 18 August 2022. On the record
date, 1,172,160,992 shares were in issue. Since there were no
shares held in treasury, 1,172,160,992 shares (including shares
held by the Employee Benefit Trust) were entitled to participate in
the dividend. Holders of 61,453,275 shares elected to receive the
dividend in ordinary shares under the scrip dividend alternative,
representing a dividend of EUR1,456,000 (EUR1,440,000 as at
settlement date) while holders of 1,110,707,717 shares opted for a
cash dividend with a value of EUR26,324,000. The Company's Employee
Benefit Trust waived its rights to the dividend, reducing the cash
payable to EUR26,200,000 (EUR26,211,000 as at settlement date). The
total dividend was EUR27,656,000 (EUR27,651,000 as at settlement
date).
The Group's profit attributable to the equity holders of the
Company for the period was EUR70.0 million (30 September 2021:
EUR67.7 million). The Board has authorised a dividend relating to
the six month period ended 30 September 2022 of 2.70c per share,
representing 65% of FFO*.
It is expected that, for the dividend authorised relating to the
six month period ended 30 September 2022, the ex-dividend date will
be 7 December 2022 for shareholders on the SA register and 8
December 2022 for shareholders on the UK register. It is further
expected that for shareholders on both registers the record date
will be 9 December 2022 and the dividend will be paid on 19 January
2023.
To facilitate settlement of the dividend to entitled SA
shareholders, share certificates may not be dematerialised or
rematerialised between Wednesday, 7 December 2022 (the SA
ex-dividend date) and Friday, 9 December 2022 (the record date). No
transfers of shares shall be registered in the SA share register,
or between the SA share register and the UK share register, between
Monday, 21 November 2022 (the declaration date) and Friday, 9
December 2022. All dates are inclusive.
The dividend has been declared in Euro. Shareholders on the UK
share register may choose to receive their entitlement to the
dividend in cash in either Euro or GBP. Shareholders on the UK
share register who do not make a valid GBP currency election will
receive any entitlement to the cash dividend in Euro. Shareholders
on the SA share register will receive any entitlement to the cash
dividend in SA Rand ("ZAR").
The Euro to GBP Conversion Rate (UK share register only)
For shareholders on the UK share register who make a valid GBP
currency election, the conversion rate for the purposes of
calculating the dividend for the six month period ended 30
September 2022 will be a Euro to GBP rate of GBP0.8702.
On this basis, shareholders on the UK share register will
receive a gross dividend of GBP2.35 (GBP) per ordinary share.
The Euro to ZAR Conversion Rate (SA share register only)
For shareholders on the SA share register, the conversion rate
for the purposes of calculating the dividend authorised in
connection with the period ended 30 September 2022 will be 17.836
ZAR to 1 Euro.
The Euro to ZAR conversion for payment of the dividend in ZAR
will be settled on Monday, 21 November 2022, using the Euro to ZAR
conversion rate which has been fixed by the Company as at the close
of business on Friday, 18 November 2022.
On this basis, shareholders on the SA share register will
receive a gross dividend of 48.157 (ZAR cents) per ordinary
share.
Information for shareholders on the SA share register
Tax
The dividend is subject to a SA dividend withholding tax ("DWT")
rate of 20% unless the shareholder is exempt from paying dividend
tax or is entitled to a reduced rate in terms of the applicable
double-tax agreement. The Company confirms that the net cash
dividend received by SA shareholders who are not exempt from DWT of
20%, is expected to be 38.525 (ZAR cents) per ordinary share.
General information
On Monday, 21 November 2022, being the declaration date of the
dividend, the Company is expected to have in issue 1,175,052,364
ordinary shares carrying voting rights, and there are no shares
expected to be held in treasury. The Company is incorporated in
Guernsey with Company number 46442. Sirius' tax registration number
in Guernsey is 1EC.956 whilst its UK tax number is GB
203993015.
The distribution is expected to be made from other distributable
reserves (for the purposes of the JSE Listings Requirements,
paragraph 11.17 (c), the distribution is expected to be made from
income reserves).
* Adjusted profit before tax adjusted for foreign exchange
effects, depreciation and amortisation (excluding depreciation
relating to IFRS 16), amortisation of financing fees, adjustments
in respect of IFRS 16, current tax receivable/incurred and current
tax relating to disposals.
The dividend per share was calculated as follows:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EURm EURm
--------------------------------------------------------------- ------------- -------------
Reported profit before tax 75.7 78.2
Adjustments for:
Gain on revaluation of investment properties (26.8) (48.4)
Deficit on revaluation expense relating to leased investment
properties (0.9) (3.1)
(Gain)/loss on disposal of properties (4.8) 0.4
Recoveries from prior disposals of subsidiaries - (0.1)
Deduct revaluation gain on investment property from associates
and related tax (1.3) (1.5)
Other adjusting items(1) 3.0 7.0
Change in fair value of financial derivatives (1.2) (0.2)
--------------------------------------------------------------- ------------- -------------
Adjusted profit before tax 43.7 32.3
Adjustments for:
Foreign exchange effects(2) 0.3 -
Depreciation and amortisation (excluding depreciation relating
to IFRS 16) 1.7 0.9
Amortisation of financing fees 1.6 1.0
Adjustment in respect of IFRS 16 1.5 0.5
Current taxes incurred (see note 9) (0.4) (1.7)
Add back current tax relating to disposals 0.1 -
--------------------------------------------------------------- ------------- -------------
Funds from operations, six months ended 30 September 48.5 33.0
--------------------------------------------------------------- ------------- -------------
Dividend pool, six months ended 30 September(3) 31.5 21.6
--------------------------------------------------------------- ------------- -------------
Dividend per share, six months ended 30 September 2.70c 2.04c
--------------------------------------------------------------- ------------- -------------
(1) Includes the effect of exceptional items and share awards. See note 5 and 7 for details.
(2) Management decided to exclude foreign exchange effects from
the funds from operations calculation amounting EUR0.3m (30
September 2021: EURnil).
(3) Calculated as 65% of FFO of 4.15c per share (30 September
2021: 3.14c per share using 65% of FFO), based on average number of
shares outstanding of 1,167,383,139 (30 September 2021:
1,052,600,936).
For more information on adjusted profit before tax and funds
from operations, refer to Annex 1.
Calculations contained in this table are subject to rounding
differences.
26. Related parties
Related parties are defined as those persons and companies that
control the Group, or that are controlled, jointly managed, or
subject to significant influence by the Group.
The following balances and transactions with associates exist as
at the reporting date:
Unaudited Audited
30 September 31 March
2022 2022
Condensed consolidated statement of financial position EUR000 EUR000
------------------------------------------------------- ------------- ---------
Loans to associates 44,352 44,278
Trade and other receivables 1,649 2,527
------------------------------------------------------- ------------- ---------
Total 46,001 46,805
------------------------------------------------------- ------------- ---------
Trade and other receivables relate to amounts owed from the
services supplied to the associates and are due to be settled in
the normal course of business.
As a result of unchanged credit quality no material expected
credit losses have been recognised in the period.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
Condensed consolidated income statement EUR000 EUR000
---------------------------------------- ------------- -------------
Services supplied 7,034 5,568
Interest income 1,111 1,554
---------------------------------------- ------------- -------------
Total 8,145 7,122
---------------------------------------- ------------- -------------
Services provided to related parties primarily relate to the
provision of property and asset management services. A performance
fee arrangement is in place between the associates and the Group.
The performance fee was EURnil during the period (30 September 2021
EURnil).
27. Capital and other commitments
As at period end, the Group had contracted capital expenditure
for development and enhancements on existing properties of
EUR14,579,000 (31 March 2022: EUR7,846,000) and capital commitments
in relation to the notarised assets in Düsseldorf and Dreieich of
EUR40,086,000.
On 31 August 2022, the Group concluded an agreement with Berlin
Hyp AG to refinance and extend the existing facility with a new
facility which amounts to EUR170.0 million which will come to
effect on 1 November 2023. The upfront fee for this facility to be
paid by the Group will be EUR595,000.
The above noted were committed but not yet provided for in the
financial statements.
28. Post balance sheet events
On 22 March 2022 the Group notarised for the acquisition of a
mixed-use property in Düsseldorf, Germany, situated 2.6 km from the
city's international airport. Total acquisition cost is expected to
be EUR39.8 million. The property comprises mainly office and
warehouse/light industrial space and is 55% occupied. The
acquisition was completed on 1 October 2022.
On 16 June 2022 the Group notarised for the acquisition of a
primarily warehouse asset located in a well-developed commercial
area in Dreieich, Germany, that is strategically adjacent to an
existing property owned by Sirius. Total acquisition cost is
expected to be EUR3.9 million. The acquisition was completed on 1
October 2022.
Business analysis
Non-IFRS measures
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
---------------------------------------------------------------- ------------- -------------
Total profit for the period attributable to the owners of
the Company 70,008 67,738
Gain on revaluation of investment properties (26,812) (48,414)
Gain/(loss) on disposal of properties (net of related tax) (4,749) 400
Recoveries from prior disposals of subsidiaries (net of
related tax) - (94)
Add refinancing costs, exit fees and prepayment penalties - 5,579
Change in fair value of derivative financial instruments (1,244) (160)
Deferred tax in respect of EPRA fair value movements on
investment properties 5,322 8,706
NCI relating to revaluation (net of related tax) 46 42
Deduct revaluation gain on investment property relating
to associates (1,868) (1,665)
Tax in relation to the revaluation gain on investment property
relating to associates above 523 418
---------------------------------------------------------------- ------------- -------------
EPRA earnings 41,226 32,550
---------------------------------------------------------------- ------------- -------------
Add/(deduct) change in deferred tax relating to derivative
financial instruments 172 (96)
Add change in fair value of derivative financial instruments 1,244 160
Deduct refinancing costs, exit fees and prepayment penalties - (5,579)
NCI in respect of the above - -
---------------------------------------------------------------- ------------- -------------
Headline earnings after tax 42,642 27,035
---------------------------------------------------------------- ------------- -------------
Deduct change in fair value of derivative financial instruments
(net of related tax and NCI) (1,416) (64)
Deduct revaluation expense relating to leased investment
properties (919) (3,083)
Add adjusting items(1) (net of related tax and NCI) 2,987 6,974
---------------------------------------------------------------- ------------- -------------
Adjusted earnings after tax 43,294 30,862
---------------------------------------------------------------- ------------- -------------
(1) See note 10 of the Interim Report.
For more information on EPRA earnings refer to Annex 1.
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
------------------------------------------------------ ------------- -------------
EPRA earnings 41,226 32,550
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
----------------------------------------------------- -------------- -------------
EPRA earnings per share (cents) 3.53 3.09
----------------------------------------------------- -------------- -------------
Headline earnings after tax 42,642 27,035
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
----------------------------------------------------- -------------- -------------
Headline earnings per share (cents) 3.65 2.57
----------------------------------------------------- -------------- -------------
Adjusted earnings after tax 43,294 30,862
Weighted average number of ordinary shares 1,167,383,139 1,052,600,936
----------------------------------------------------- -------------- -------------
Adjusted earnings per share (cents) 3.71 2.93
----------------------------------------------------- -------------- -------------
Annex 1 - non-IFRS measures
Basis of preparation
The Directors of Sirius Real Estate Limited ("Sirius") have
chosen to disclose additional non-IFRS measures; these include EPRA
earnings, adjusted net asset value, EPRA net reinstatement value,
EPRA net tangible assets, EPRA net disposal value, adjusted profit
before tax and funds from operations (collectively "Non-IFRS
Financial Information").
The Directors have chosen to disclose:
-- EPRA earnings in order to assist in comparisons with similar
businesses in the real estate sector. EPRA earnings is a definition
of earnings as set out by the European Public Real Estate
Association. EPRA earnings represents earnings after adjusting for
the revaluation of investment properties, changes in fair value of
derivative financial instruments, gains/losses on disposal of
properties (net of related tax), recoveries from prior disposals of
subsidiaries (net of related tax), refinancing costs, exit fees and
prepayment penalties (collectively the "EPRA earnings
adjustments"), deferred tax in respect of the EPRA earnings
adjustments, NCI relating to gain on revaluation and gain on
disposal of properties (net of related tax), revaluation gain on
investment property relating to associates and the related tax
thereon. The reconciliation between basic and diluted earnings and
EPRA earnings is detailed in table A below.
-- Adjusted net asset value in order to assist in comparisons
with similar businesses. Adjusted net asset value represents net
asset value after adjusting for derivative financial instruments at
fair value and deferred tax relating to valuation movements,
derivative financial instruments and LTIP valuation. The
reconciliation for adjusted net asset value is detailed in table B
below.
-- EPRA net reinstatement value ("EPRA NRV") in order to assist
in comparisons with similar businesses in the real estate sector.
EPRA NRV is a definition of net asset value as set out by the
European Public Real Estate Association. EPRA NRV represents net
asset value after adjusting for derivative financial instruments at
fair value, deferred tax relating to valuation movements and
derivatives and real estate transfer tax presented in the Valuation
Certificate (for the entire consolidated Group including wholly
owned entities and investment in associates). The reconciliation
for EPRA NRV is detailed in table C below.
-- EPRA net tangible assets ("EPRA NTA") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
NTA is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA NTA represents net asset value
after adjusting for derivative financial instruments at fair value,
deferred tax relating to valuation movements (excluding that
relating to assets held for sale) and derivatives and intangible
assets as per the note reference in the unaudited condensed
consolidated statement of financial position (for the entire
consolidated Group including wholly owned entities and investment
in associates). The reconciliation for EPRA NTA is detailed in
table C below.
-- EPRA net disposal value ("EPRA NDV") in order to assist in
comparisons with similar businesses in the real estate sector. EPRA
NDV is a definition of net asset value as set out by the European
Public Real Estate Association. EPRA NDV represents net asset value
after adjusting for the fair value of fixed interest rate debt (for
the entire consolidated Group including wholly owned entities and
investment in associates). The reconciliation for EPRA NDV is
detailed in table C below.
-- Adjusted profit before tax in order to provide an alternative
indication of Sirius Real Estate Limited and its subsidiaries' (the
"Group") underlying business performance. Accordingly, it adjusts
for the effect of the gain on revaluation of investment properties,
deficit on revaluation relating to leased investment properties,
other adjusting items, gains/losses on disposal of properties,
change in fair value of financial derivatives, recoveries from
prior disposals of subsidiaries, revaluation gain on investment
property relating to associates and related tax. The reconciliation
for adjusted profit before tax is detailed in table D below.
-- Funds from operations in order to assist in comparisons with
similar businesses and to facilitate the Group's dividend policy
which is derived from funds from operations. Accordingly, funds
from operations excludes depreciation and amortisation (excluding
depreciation relating to IFRS 16), net foreign exchange
differences, amortisation of financing fees, adjustment in respect
of IFRS 16 and current tax excluding tax on disposals. The
reconciliation for funds from operations is detailed in table D
below.
The Non-IFRS Financial Information is presented in accordance
with the JSE Listing Requirements and the guide on pro forma
financial information issued by SAICA. The Non-IFRS Financial
Information is the responsibility of the Directors. The Non-IFRS
Financial Information has been presented for illustrative purposes
and, due to its nature, may not fairly present the Group's
financial position or result of operations.
The Non-IFRS measures included in the Interim Report 2022 have
not been reviewed nor reported on by the independent reporting
accountant. The starting point for all the Non-IFRS Financial
Information has been extracted from the Group's unaudited interim
condensed set consolidated financial statements for the six months
ended 30 September 2022 (the "consolidated financial
statements").
Table A - EPRA earnings
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EUR000 EUR000
--------------------------------------------------------------- ------------- -------------
Basic and diluted earnings attributable to owners of the
Company((1)() 70,008 67,738
Gain on revaluation of investment properties(2) (26,812) (48,414)
(Deduct gain)/add loss on disposal of properties (net of
related tax)(3) (4,749) 400
Deduct recoveries from prior disposals of subsidiaries (net
of related tax) (4) - (94)
Refinancing costs, exit fees and prepayment penalties(5) - 5,579
Change in fair value of derivative financial instruments(6) (1,244) (160)
Deferred tax in respect of EPRA fair value movements on
investment properties(7) 5,322 8,706
NCI relating to revaluation (net of related tax) (8) 46 42
Deduct revaluation gain on investment property relating
to associates(9) (1,868) (1,665)
Tax in relation to the revaluation gain on investment property
relating to associates(10) 523 418
--------------------------------------------------------------- ------------- -------------
EPRA earnings (11) 41,226 32,550
--------------------------------------------------------------- ------------- -------------
Notes:
(1) Presents the profit attributable to owners of the Company
which has been extracted from the unaudited condensed consolidated
income statement within the consolidated financial statements.
(2) Presents the gain on revaluation of investment properties
which has been extracted from the unaudited condensed consolidated
income statement within the consolidated financial statements.
(3) Presents the gain or loss on disposal of properties (net of
related tax) which has been extracted from note 10 within the
consolidated financial statements.
(4) Presents the recoveries from prior disposals of subsidiaries
(net of related tax) which has been extracted from the unaudited
condensed consolidated income statement within the consolidated
financial statements.
(5) Presents the refinancing costs, exit fees and prepayment
penalties which have been extracted from note 8 within the
consolidated financial statements.
(6) Presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited condensed
consolidated income statement within the consolidated financial
statements.
(7) Presents deferred tax relating to origination and reversal
of temporary differences of the EPRA fair value movements on
investment properties which has been extracted from note 9 within
the consolidated financial statements.
(8) Presents the non-controlling interest relating to
revaluation (net of related tax) which has been extracted from note
10 within the consolidated financial statements.
(9) Presents the revaluation gain on investment property
relating to associates which has been extracted from note 10 within
the consolidated financial statements.
(10) Presents tax in relation to the revaluation gain on
investment property relating to associates which has been extracted
from note 10 within the consolidated financial statements.
(11) Presents the EPRA earnings for the period.
Table B - Adjusted net asset value
Unaudited Audited
30 September 31 March
2022 2022
EUR000 EUR000
------------------------------------------------------------ ------------- ----------
Net asset value
Net asset value for the purpose of assets per share (assets
attributable to the owners of the Company)(1) 1,213,113 1,190,652
Deferred tax liabilities/(assets) (see note 9)(2) 81,220 75,893
Derivative financial instruments at fair value(3) (1,573) (329)
------------------------------------------------------------ ------------- ----------
Adjusted net asset value attributable to the owners of the
Company (4) 1,292,760 1,266,216
------------------------------------------------------------ ------------- ----------
Notes:
(1) Presents the net asset value for the purpose of assets per
share (assets attributable to the owners of the Company) which has
been extracted from the unaudited condensed consolidated statement
of financial position within the consolidated financial
statements.
(2) Presents the net deferred tax liabilities or assets which
have been extracted from the unaudited condensed consolidated
statement of financial position within the consolidated financial
statements.
(3) Presents current derivative financial instrument assets
which have been extracted from the unaudited condensed consolidated
statement of financial position from the consolidated financial
statements.
(4) Presents the adjusted net asset value attributable to the
owners of the Company as at period end.
Table C - EPRA net asset measures
EPRA NRV EPRA NTA EPRA NDV
Unaudited 30 September 2022 EUR000 EUR000 EUR000
----------------------------------------------------- --------- --------- ---------
Net asset value as at period end (basic)(1) 1,213,113 1,213,113 1,213,113
----------------------------------------------------- --------- --------- ---------
Diluted EPRA net asset value at fair value 1,213,113 1,213,113 1,213,113
----------------------------------------------------- --------- --------- ---------
Group
Derivative financial instruments at fair value(2) (1,573) (1,573) n/a
Deferred tax in respect of EPRA fair value movements
on investment properties(3) 81,220 81,220* n/a
Intangibles as per note 14(4) n/a (4,129) n/a
Fair value of fixed interest rate debt(5) n/a n/a 48,681
Real estate transfer tax(6) 163,198 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements
on investment properties(3) 7,076 7,076* n/a
Fair value of fixed interest rate debt(5) n/a n/a 9,762
Real estate transfer tax(6) 9,353 n/a n/a
----------------------------------------------------- --------- --------- ---------
Total EPRA NRV, NTA and NDV (7) 1,472,387 1,295,707 1,271,556
----------------------------------------------------- --------- --------- ---------
EPRA NRV EPRA NTA EPRA NDV
Audited 31 March 2022 EUR000 EUR000 EUR000
----------------------------------------------------- --------- --------- ---------
Net asset value as at period end (basic)(1) 1,190,652 1,190,652 1,190,652
----------------------------------------------------- --------- --------- ---------
Diluted EPRA net asset value at fair value 1,190,652 1,190,652 1,190,652
----------------------------------------------------- --------- --------- ---------
Group
Derivative financial instruments at fair value(2) (329) (329) n/a
Deferred tax in respect of EPRA fair value movements
on investment properties(3) 75,893 75,566* n/a
Intangibles as per note 14(4) n/a (4,283) n/a
Fair value of fixed interest rate debt(5) n/a n/a (22,229)
Real estate transfer tax(6) 160,692 n/a n/a
Investment in associate
Deferred tax in respect of EPRA fair value movements
on investment properties(3) 6,563 6,563* n/a
Fair value of fixed interest rate debt(5) n/a n/a 2,196
Real estate transfer tax(6) 9,147 n/a n/a
----------------------------------------------------- --------- --------- ---------
Total EPRA NRV, NTA and NDV (7) 1,442,618 1,268,169 1,170,619
----------------------------------------------------- --------- --------- ---------
* The Group intends to hold and does not intend in the long term
to sell any of the investment properties and has excluded such
deferred taxes for the whole portfolio as at period end except for
deferred tax in relation to assets held for sale.
Notes:
(1) Presents the net asset value for the purpose of assets per
share (assets attributable to the owners of the Company) which has
been extracted from the unaudited condensed consolidated statement
of financial position within the consolidated financial
statements.
(2) Presents current derivative financial instrument assets
which have been extracted from the unaudited condensed consolidated
statement of financial position within the consolidated financial
statements.
(3) Presents for the Group the net deferred tax liabilities or
assets which have been extracted from note 9 of the consolidated
financial statements and for EPRA NTA only the additional credit
adjustment for the deferred tax expense relating to assets held for
sale of EURnil (31 March 2022: EUR327,000). For investment in
associates the deferred tax expense arising on revaluation gains
amounted to EUR7,076,000 (31 March 2022: EUR6,563,000).
(4) Presents the net book value of software and licences with
definite useful life which has been extracted from note 14 within
the consolidated financial statements.
(5) Presents the fair value of financial liabilities and assets
on the unaudited condensed consolidated statement of financial
position, net of any related deferred tax.
(6) Presents the add-back of purchasers' costs in order to
reflect the value prior to any deduction of purchasers' costs, as
shown in the Valuation Certificate of Cushman & Wakefield
LLP.
(7) Presents the EPRA NRV, EPRA NTA and EPRA NDV, respectively, as at period end.
Table D - Adjusted profit before tax and funds from
operations
Unaudited Unaudited
six months six months
ended ended
30 September 30 September
2022 2021
EURm EURm
------------------------------------------------------------------- ------------- -------------
Reported profit before tax (1) 75.7 78.2
Adjustments for:
Gain on revaluation of investment properties(2) (26.8) (48.4)
Deficit on revaluation relating to leased investment properties(3) (0.9) (3.1)
(Gain)/loss on disposal of properties(4) (4.8) 0.4
Recoveries from prior disposals of subsidiaries(5) - (0.1)
Deduct revaluation gain on investment property from associates
and related tax(6) (1.3) (1.5)
Other adjusting items(7) 3.0 7.0
Change in fair value of financial derivatives(8) (1.2) (0.2)
------------------------------------------------------------------- ------------- -------------
Adjusted profit before tax (9) 43.7 32.3
Adjustments for:
Foreign exchange effects(10) 0.3 -
Depreciation and amortisation (excluding depreciation relating
to IFRS 16)(11) 1.7 0.9
Amortisation of financing fees(12) 1.6 1.0
Adjustment in respect of IFRS 16(13) 1.5 0.5
Current taxes incurred (see note 9)(14) (0.4) (1.7)
Add back current tax relating to disposals(15) 0.1 -
------------------------------------------------------------------- ------------- -------------
Funds from operations (16) 48.5 33.0
------------------------------------------------------------------- ------------- -------------
Notes:
(1) Presents profit before tax which has been extracted from the
unaudited condensed consolidated income statement within the
consolidated financial statements.
(2) Presents the gain on revaluation of investment properties
which has been extracted from the unaudited condensed consolidated
income statement within the consolidated financial statements.
(3) Presents the deficit on revaluation relating to capitalised
head leases which has been extracted from note 12 within the
consolidated financial statements.
(4) Presents the gain or loss on disposal of properties which
has been extracted from the unaudited condensed consolidated income
statement within the consolidated financial statements.
(5) Presents the recoveries from prior disposals of subsidiaries
which has been extracted from the unaudited condensed consolidated
income within the consolidated financial statements.
(6) Presents the revaluation gain on investment property
relating to associates and related tax which has been extracted
from note 10 within the consolidated financial statements and
non-FFO related depreciation and amortisation of finance costs
totalling EURnil (30 September 2021: EUR237,000) relating to
associates.
(7) Presents the total adjusting items which has been extracted
from note 10 within the consolidated financial statements.
(8) Presents the change in fair value of derivative financial
instruments which has been extracted from the unaudited condensed
consolidated income statement within the consolidated financial
statements.
(9) Presents the adjusted profit before tax for the period.
(10) Presents the net foreign exchange losses as included in
other administration costs in note 5 within the consolidated
financial statements.
(11) Presents depreciation of plant and equipment and
amortisation of intangible assets which have been extracted from
note 5 within the consolidated financial statements.
(12) Presents amortisation of capitalised finance costs which
has been extracted from note 8 within the consolidated financial
statements.
(13) Presents the differential between the expense recorded in
the unaudited condensed consolidated income statement for the
period relating to head leases in accordance with IFRS 16 amounting
to EUR2.8 million (30 September 2021: EUR3.6 million) and the
actual cash expense recorded in the unaudited condensed
consolidated statement of cash flow for the period amounting to
EUR1.3 million (30 September 2021: EUR3.1 million).
(14) Presents the total current income tax which has been
extracted from note 9 within the consolidated financial
statements.
(15) Presents the current income tax charge relating to disposal
of investment properties which has been extracted from note 9
within the consolidated financial statements.
(16) Presents the funds from operations for the period.
Glossary of terms
Adjusted earnings is the earnings attributable to the owners of the
after tax Company, excluding the effect of adjusting items
(net of related tax and NCI), gains/losses on disposal
of properties (net of related tax), the revaluation
gains/losses on the investment properties (also
to associates) (net of related tax), changes in
fair value of derivative financial instruments (net
of related tax and NCI), recoveries from prior disposals
of subsidiaries (net of related tax), NCI relating
to revaluation (net of related tax) and adjustment
on revaluation expense relating to leased investment
properties
------------------------- -----------------------------------------------------------
Adjusted net asset is the assets attributable to the owners of the
value Company adjusted for derivative financial instruments
at fair value and deferred tax liabilities/assets
------------------------- -----------------------------------------------------------
Adjusted profit is the reported profit before tax adjusted for gain
before tax on revaluation of investment properties, deficit
on revaluation expense relating to lease investment
properties, gains/losses on disposal of properties,
changes in fair value of derivative financial instruments,
other adjusting items, recoveries from prior disposals
of subsidiaries, revaluation gain on investment
property relating to associates and related tax
------------------------- -----------------------------------------------------------
Annualised acquisition is the income generated by a property less directly
net operating income attributable costs at the date of acquisition expressed
in annual terms. Please see "annualised rent roll"
definition below for further explanatory information
------------------------- -----------------------------------------------------------
Annualised acquisition is the contracted rental income of a property at
rent roll the date of acquisition expressed in annual terms.
Please see "annualised rent roll" definition below
for further explanatory information
------------------------- -----------------------------------------------------------
Annualised rent is the contracted rental income of a property at
roll a specific reporting date expressed in annual terms.
Unless stated otherwise the reporting date is 30
September 2022. Annualised rent roll should not
be interpreted nor used as a forecast or estimate.
Annualised rent roll differs from rental income
described in note 5 of the Interim Report and reported
within revenue in the unaudited condensed consolidated
income statement for reasons including:
* annualised rent roll represents contracted rental
income at a specific point in time expressed in
annual terms;
* rental income as reported within revenue represents
rental income recognised in the period under review;
and
* rental income as reported within revenue includes
accounting adjustments including those relating to
lease incentives
------------------------- -----------------------------------------------------------
Capital value is the market value of a property divided by the
total sqm of a property
------------------------- -----------------------------------------------------------
Cumulative total is the return calculated by combining the movement
return in investment property value net of capex with the
total net operating income less bank interest over
a specified period of time
------------------------- -----------------------------------------------------------
EPRA earnings is earnings after adjusting the revaluation of investment
properties, changes in fair value of derivative
financial instruments, gains and losses on disposal
of properties (net of related tax), recoveries from
prior disposals of subsidiaries (net of related
tax), refinancing costs, exit fees and prepayment
penalties (collectively the "EPRA earnings adjustments"),
deferred tax in respect of the EPRA earnings adjustments,
NCI relating to gain on revaluation and gain on
disposal of properties (net of related tax), revaluation
gain on investment property relating to associates
and the related tax thereon
------------------------- -----------------------------------------------------------
EPRA net reinstatement is the net asset value after adjusting for derivative
value financial instruments at fair value, deferred tax
relating to valuation movements and derivatives
and real estate transfer tax presented in the Valuation
Certificate, including the amounts of the above
related to the investment in associates
------------------------- -----------------------------------------------------------
EPRA net tangible is the net asset value after adjusting for derivative
assets financial instruments at fair value, deferred tax
relating to valuation movements (just for the part
of the portfolio that the Company intends to hold
should be excluded) and derivatives and intangible
assets as per the note reference in the unaudited
condensed consolidated statement of financial position,
including the amounts of the above related to the
investment in associates
------------------------- -----------------------------------------------------------
EPRA net disposal is the net asset value after adjusting for 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
yield passing at reporting date, less non-recoverable
property operating expenses, divided by the market
value of the property, increased with (estimated)
purchasers' costs
------------------------- -----------------------------------------------------------
EPRA net yield is the net operating income generated by a property
expressed as a percentage of its value plus purchase
costs
------------------------- -----------------------------------------------------------
ERV is the estimated rental value which is the annualised
rental income at 100% occupancy
------------------------- -----------------------------------------------------------
Funds from operations is adjusted profit before tax adjusted for depreciation
and amortisation (excluding depreciation relating
to IFRS 16), amortisation of financing fees, net
foreign exchange differences, adjustment in respect
of IFRS 16 and current tax excluding tax on disposals
------------------------- -----------------------------------------------------------
Geared IRR is an estimate of the rate of return taking into
consideration debt
------------------------- -----------------------------------------------------------
Gross loan to value is the ratio of principal value of total debt to
ratio the aggregated value of investment property
------------------------- -----------------------------------------------------------
Like for like refers to the manner in which metrics are subject
to adjustment in order to make them directly comparable.
Like-for-like adjustments are made in relation to
annualised rent roll, rate and occupancy and eliminate
the effect of asset acquisitions and disposals that
occur in the reporting period
------------------------- -----------------------------------------------------------
Net loan to value is the ratio of principal value of total debt less
ratio cash, excluding that which is restricted, to the
aggregate value of investment property
------------------------- -----------------------------------------------------------
Net operating income is the rental, service charge and other income generated
from investment and managed properties less directly
attributable costs
------------------------- -----------------------------------------------------------
Net yield is the net operating income generated by a property
expressed as a percentage of its value
------------------------- -----------------------------------------------------------
Occupancy is the percentage of total lettable space occupied
as at reporting date
------------------------- -----------------------------------------------------------
Operating cash flow is an estimate of the rate of return based on operating
on investment (geared) cash flows and taking into consideration debt
------------------------- -----------------------------------------------------------
Operating cash flow is an estimate of the rate of return based on operating
on investment (ungeared) cash flows
------------------------- -----------------------------------------------------------
Operating profit is the net operating income adjusted for gain on
revaluation of investment properties, gains/losses
on disposal of properties, recoveries from prior
disposals of subsidiaries, administrative expenses
and share of profit of associates
------------------------- -----------------------------------------------------------
Rate for the German portfolio is rental income per sqm
expressed on a monthly basis as at a specific reporting
date
for the UK portfolio is rental income (includes
estimated service charge element) per sqm expressed
on a monthly basis as at a specific reporting date
in Euro
for the UK portfolio is rental income (includes
estimated service charge element) per sq ft expressed
on an annual basis as at a specific reporting date
in GBP
------------------------- -----------------------------------------------------------
Senior Management as set out on page 70 of the Group's Annual Report
Team and Accounts 2022
------------------------- -----------------------------------------------------------
Total debt is the aggregate amount of the interest-bearing
loans and borrowings
------------------------- -----------------------------------------------------------
Total shareholder is the return obtained by a shareholder calculated
accounting return by combining both movements in adjusted NAV per
share and dividends paid
------------------------- -----------------------------------------------------------
Total return is the return for a set period of time combining
valuation movement and income generated
------------------------- -----------------------------------------------------------
Ungeared IRR is an estimate of the rate of return
------------------------- -----------------------------------------------------------
Weighted average is the weighted effective rate of interest of loan
cost of debt facilities expressed as a percentage
------------------------- -----------------------------------------------------------
Weighted average is the weighted average time to repayment of loan
debt expiry facilities expressed in years
------------------------- -----------------------------------------------------------
Corporate directory
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
Registered office
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
Registered number
Incorporated in Guernsey under The Companies (Guernsey) Law,
2008, as amended, under number 46442
Company Secretary
A Gallagher
Sirius Real Estate Limited
Trafalgar Court
2nd Floor
East Wing
Admiral Park
St Peter Port
Guernsey GY1 3EL
Channel Islands
UK solicitors
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Financial PR
FTI Consulting LLP
200 Aldersgate Street
London EC1A 4HD
United Kingdom
JSE sponsor
PSG Capital Proprietary Limited
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch 7600
South Africa
Joint broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Joint broker
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Property valuer
Cushman & Wakefield LLP
Rathenauplatz 1
60313 Frankfurt am Main
Germany
Independent auditor
Ernst & Young LLP
PO Box 9, Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4AF
United Kingdom
Guernsey solicitors
Carey Olsen (Guernsey) LLP
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Channel Islands
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END
IR FFFFILTLIFIF
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